Harassed by the needless delays, red tapism and alleged corruption, a Pune-based business journalist filed complaint with the ACB
Roop Karnani, Pune-based senior journalist has lodged a complaint with Director General of Police (DGP), Anti-Corruption Bureau, alleging corruption in the online appointment system of the Passport Seva Kendra (PSK). He says the system ‘crashes’ continuously due to ‘touts’ who are probably doing mass bookings. He has also complained against harassment of applicants by the passport officials who keep sending citizens back for want of documents, many a time not required at all, as per the documents listed on the website and against the clumsy working system at the PSK, Mundhwa run by Tata Consultancy Services (TCS).
As an acknowledgement, the ACB has replied thus: “We acknowledge receipt of your complaint dated 17/3/2013. The same has been forwarded to the office of CBI, ACB Mumbai for necessary action on email id: [email protected] You are requested to follow up your complaint with the said authority.’’
In his complaint, lodged on 17th March, Karnani had appealed to Raj Khilnani, DGP, ACB, Mumbai to direct Tata Consultancy Services (TCS) which in public private partnership (PPP) with the passport division of the ministry of external affairs (MEA) to direct the TCS to eliminate this problem by rectifying the software.
Since the last one month, Karnani who has applied for renewal of his passport, states, “On 28th February when I submitted my documents, they said, in 10 days the police verification will be done. If in 10 days you don't get a call from the police, you personally go to the police station and inquire. On the 12th day I went to Pimpri police station, but they said they have received forms upto 26th February. Yesterday, on the 15th day they said they have just received one or two forms of the 28th, but have received quite a few of 1st, 2nd and 3rd March. So just wait, it should come in a day or two. If its urgent, contact Commissioner of Police (CP) office and enquire. When I enquired at the CP office, they said system shows it has left for Pimpri office. So waited for a day or two ...I am still waiting.’’
Karnani, in his written complaint to Khilnani writes: “I have faced so many problems, for the last one month, for just online ‘renewal’ of my passport, that too for the 3rd time.
A major problem is that the site crashes within less than half a minute, sometimes in less than 10 seconds, with the message that 650 appointments have been given for today. This is because of touts, obviously. But this can be eliminated by software and to streamline the chaotic system of operation prevailing at Counters A, B and C at PSK, Mundhwa.
He writes in his complaint: “I had to put one person on the job at 2.45pm, because the site says to seek an appointment at exactly 3pm, and the site closes within the next 2 minutes, and says 650 appointments given, when it takes at least 5 minutes to log into the appointment page. For three weeks my person logged in everyday to get the appointment, thus doing unproductive work. This is ridiculous. The site should be open 24 x 7 to seek appointments, and if there is a heavy rush, I should get the option to get the next available appointment, which maybe the next week, the next month or after three months (as a hypothetical case). Which means that I have to log into the site only once, and my appointment is done. I am sure that you understand this can be done by a simple change in the software programme.’’
Karnani has also brought to the notice of the ACB, the harassment of citizens inside the PSK, Mundhwa. He writes: “When, I entered the PSK at the given time, there were about 200 people waiting in five different queues, which were very long, and people were shoving and pushing. I realized that they were not giving tokens, but they were returning people back for documents not brought. Some documents were not required at all, for which they were being sent back. After waiting for a couple of hours asking them to return again on a separate date is really frustrating. Imagine a guy from Kolhapur, who had not brought his residence proof—he had to go back to Kolhapur and seek a fresh appointment. Then they asked for a marriage certificate from a man, who was standing before me… This led to a huge argument, and delayed further the movement for the token. When people started shouting like in a fish market, this man was sent into the cabin of the officer concerned.
“I got through this, after waiting for an hour. I was then sent to the next room, which was designed to accommodate just 100 people but there were over 200 people and it was very stuffy and suffocating as the air conditioner was designed for just 100 people. There was no place to sit. There was a small cafeteria, which had run out of cold drinks, coffee, sandwiches… nothing was available. The water cooler was not working. The loos were in a bad shape because of the huge rush. If the first area had been used as a waiting area, 200 people could have been comfortably seated. After waiting for almost one-and-half hour here, I started feeling giddy. I complained to them and they made me sit in the manager’s cabin. My age is 58 and I was feeling unwell. But there were older people than me, senior citizens; I feel sorry for their plight. I was lucky enough to be sent to the manager’s cabin, which was in the next room. Looking at my plight, she tried to
expedite my application. They sent my file inside and I was asked to go to a particular counter for fingerprinting and photographs. After this I thought the process was over. But no, there were totally three counters- A, B, C—I had only just finished A. There was a screen announcing token numbers and the counter to which the person had to go.
Nobody knew what the token number was because it was printed on some page in the file but they never informed us when giving the file. These token numbers were being displayed at random, not in a sequence. So a person who had come later could be called ahead.
“When I finally reached the B and C counters, they just entered one line in the computer, and said now you can go to the next counter. When I was exiting—there was just one exit—I was sent back to another window, where one man was just scanning the barcode, only after which one could exit. You will agree that the entry of just one line at counters B and C, and the scanning of the barcode, could all have been done at one counter itself, by one single person. If 20 people at each counters of A, B and C had all been done at one counter, which is more practical, 60 people could have been cleared in five minutes in one counter instead of the current procedure which takes 20 people to be cleared after three hours.’’
Karnani submitted his suggestions to the ACB as follows:
“1) Just 20 people should be called in each half an hour time slot, and there should be three people to check the documents outside the waiting area, so that this can easily be done in 15 to 20 minutes, after which they can be let in. And at no point in time, they should let in more than 150 people in the waiting area, even though the capacity is 200, so that it is less congested.
2) The person at the first counter itself should take fingerprints, which will take two minutes, and make the online entries into the computer what the B and C counters were doing, in two minutes and scan the barcode in just one minute. So if 60 people can be cleared in five minutes, imagine 1,000 people could be accommodated in one day, smoothly. But they are overcapacitated with 650 people a day, due to their disorganized ways of functioning.
“In Ahmedabad there are five PSKs, and the city has much less population than Pune. Here the process of passport renewal gets done in just 10 minutes. In Pune there should be atleast three PSKs. There should a separate PSK in Kolhapur so that applicants from Kolhapur, Sangli, Satara do not have to come to Pune.’’
(Vinita Deshmukh is the consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)
“The type of promises these companies are giving are such that no legitimate business activity can provide that sort of returns,” the SEBI chairman UK Sinha said
Capital market regulator Securities and Exchange Board of India (SEBI) has expressed serious concern over the mushrooming growth of chit funds in the country, especially in the eastern region, and said strong action was needed to curb their activities.
“The type of promises (some of) these companies are giving are such that no legitimate business activity can provide that sort of returns,” the SEBI chairman, UK Sinha, said.
“We have initiated proceedings against some of these companies and investigations are being made. In some cases interim orders have also been given. But these firms are then going to courts to seek relief,” Sinha told a CII interaction in Kolkata.
Sinha said that large number of people are subscribing to such schemes that are risky. “These companies are taking advantage of the loopholes in the law,” he said.
“We have requested the government to come up with a new set of laws providing for a single regulator for these companies,” he said.
Rising royalty on their Indian operations will remain an overhang for the stocks of foreign consumer companies
The Indian consumer sector is a long-term growth opportunity led by growing incomes and increasing propensity to spend. It is dominated by foreign consumer companies which have been excellent long-term value creators. But now several foreign consumer companies are imposing royalties on their Indian operations.
Hindustan Unilever and Nestle India have already revised royalty rates, while Colgate and GSK Consumer are sitting on the fence. While it is difficult to predict the timing of any potential change in royalty rates, it will remain an overhang for the stocks. This is according to Nomura Equity Research in its report on the Indian consumer sector.
The idea behind the royalty hikes is that the Indian subsidiary needs to pay more to get access to the parent company’s technology and R&D capabilities and the right to leverage on the global portfolio in India. The increase in both the cases is a gradual change, which cushions the burden on minority shareholders. While it is difficult to conclusively say if the increase in royalty rates is justified, it does take out the near-term uncertainty over these companies. However, in the long-term, it does raise the question on how the move will impact the interests of minority shareholders, says Nomura.
The net impact on earnings is not much, according to Nomura’s analysts. While there will be some impact on earnings both for Hindustan Unilever as well as for Nestle India of the increases in royalty rates, the quantum will not be large. For Nestle India, the increase will kick in only on 1 January 2014, and for Hindustan Unilever, the increase in royalty rate will be 50bps (basis points) each year for the next two years starting 1 April 2014. The companies will also have the option of passing on these increases to consumers at an appropriate time. Royalty rates are high in the consumer sector relative to other sectors. Even if we look outside the consumer sector, there are a large number of listed subsidiaries of MNCs (multinational companies) which pay royalties to the parent. Some of the more prominent names and the royalty rates for them are below. Excluding Maruti, the royalty rates paid by both Nestle India and Hindustan Unilever are higher than those paid by companies in other sectors.
Valuations of consumer companies continue to remain at high levels relative to their long-term average. Within MNC companies, Hindustan Unilever, Nestle India, GSK Consumer and Colgate Palmolive trade at an average 26.1x FY15F (Nomura’s estimate), about 23% premium versus domestic consumer companies. While the companies have historically traded at a premium to domestic companies, the premium has shrunk over the past five years. If over the longer term royalty rates continue to rise, MNC firms are likely to become less attractive to minority shareholders. However, there is no risk in the medium term, as MNC companies continue to have a more complete portfolio of brands and have a significant head start versus domestic companies in the segments in which they operate in.
Nomura continues to prefer ITC among large cap consumer stocks, where visibility of earnings growth is much higher. It expects ITC to pass on the recent rise in excise duty and VAT (value added tax) in certain states by way of price hikes. Its long-term target of growing the cigarette business EBIT (earnings before interest and tax) by 15%-16% remains intact and is supported by valuations of 23.4x versus Hindustan Unilever at 25.7x and Nestle at 25.1x. In mid caps, Nomura prefers Emami which should deliver an 18% earnings growth over the next couple of years, and the stock currently trades at 20x FY15F earnings, a significant discount to the sector.