Despite being under regulatory watch for apparent financial subterfuge, Prithvi Information Solutions appears to be unfazed. Its recent overseas acquisition should raise some eyebrows
IT solutions and engineering services company Prithvi Information Solutions (Prithvi) is shrouded in multiple cases of financial manoeuvrings. Over the past one year alone, the Hyderabad-based company has attracted one controversy after another, without drawing flak from the regulator. Now, it has announced a $3-million acquisition of US-based business intelligence firm, Percentix.
How is it that a company conspicuously involved in questionable practices continues to operate unfazed and unbridled, to the extent of making overseas acquisitions? Consider the facts: In the year 2009, three international audit firms walked away without signing the balance sheet. Ernst & Young resigned after signing a heavily qualified balance sheet in March 2009. It was followed by PriceWaterhouseCoopers (PwC), which resigned in panic in the wake of the Satyam scandal.
The firm that replaced PwC as an auditor made as fast an exit as PwC and resigned in less than four months without signing the accounts. In the subsequent Annual General Meeting (AGM) of Prithvi, the company appointed another firm, VK Asthana & Co, which did not show any hesitation and signed the accounts without raising any questions. The firm completed its audit within just 23 days and issued the report on the financial statements. Very convenient indeed!
Less than a month after the AGM on 30th January, there was a report in Tehelka magazine dated 27 February 2010 about another scandal where Prithvi was issued a summons by a city criminal court. The Rs200 crore alleged fraud involves unpaid dues to a leading Japanese corporation. Tehelka says that the company diverted money to be used for buying telecom equipment for State-owned Bharat Sanchar Nigam Ltd (BSNL) to itself, by shadily diverting payment terms and having the money credited to its own accounts, without informing Sojitz Corp of Japan.
A couple of days earlier, the company had planted a report in a couple of obscure journals that it was set to bag an order worth Rs200 crore—the exact amount diverted in the Sojitz case. It is also facing action from the Directorate of Revenue Intelligence (DRI), although the accuracy of these charges is not known.
Add to this, Deutsche Bank had filed a first information report (FIR) in June 2009 accusing Prithvi's promoters of a fraud of Rs40 crore, according to a CNBC report. Although Deutsche Bank has remained tight-lipped in public, it is reported that Prithvi had diverted bank funds to real estate and made false claims about significant global contracts.
For a while, the Securities and Exchange Board of India (SEBI) had surprisingly chosen to remain a mute spectator to the company’s brazen actions. After Moneylife exposed the company’s practices a couple of months ago, SEBI stood up and took notice, and claims to have been investigating the company since.
Amitava Lahiri, senior VP and head of IT services at Prithvi had told the Financial Chronicle a few days ago that this acquisition is part of an overall strategy to make Prithvi a $1 billion firm by revenues. This seems ambitious considering the state of the company’s financials, which are worsening every year. For the March 2010 quarter, the company has recorded a net loss of Rs49.58 crore as against a net loss of Rs6.87 crore for the previous corresponding quarter. Its year-on-year performance has also witnessed a substantial drop. For the year ended 31 March 2010, the company registered a net profit of Rs4.92 crore compared to Rs44.46 crore for the year ended 31 March 2009.
Yet, the company appears quite optimistic about its future. Prithvi expects to bag several new deals this year and has even firmed up plans to increase its headcount in view of the same. Reports state that the company is looking to recruit about 1,000 more people to cater to its ‘expanding’ business.
Considering the extent of Prithvi’s financial machinations, one would think either the regulator or the stock exchanges would have taken the company to task long ago. Their deafening silence till recently was really surprising. Now that SEBI has supposedly decided to take a closer look at the company, some concrete action should be expected soon.
It should be a worrying fact for SEBI that the company remains unabashed despite the regulator’s presence.
Retired bank employees who want to join a pension scheme will have to refund the entire amount paid by the bank to their provident fund account and the interest accrued thereon, along with their share in the contribution
Retired bank employees, who had opted for provident fund (PF) and gratuity at the time of retirement instead of a pension, are feeling left out from the benefits of the new wage settlement signed between the Indian Banks Association (IBA) and the United Forum of Bank Unions (UFBU), a body comprising nine bank unions.
According to the new wage agreement signed on 27 April 2010, about 8 lakh employees from 26 public sector banks (PSBs), 12 private sector and 8 foreign banks will get a salary hike of about 17.5%. The revision will cost banks Rs4,816 crore, including arrears payment from November 2007, which will be given in a lump sum, K Unnikrishnan, deputy chief executive, IBA said.
A total of 2.7 lakh employees and 60,000 pensioners will be benefited by the second pension option in the agreement. For employees who had not joined the pension scheme in 1995, the new agreement gives them another opportunity to join the scheme. However, there is a catch. They will have to refund the entire amount of the bank's contribution to their PF and interest accrued thereon received on retirement with the employee’s share in the contribution.
"On an individual basis, this payment over and above the bank's contribution to PF and interest thereon has been worked out at 56% of the said amount of the bank's contribution to the PF and interest thereon received by the employee on retirement," the agreement, a copy of which is with Moneylife, says.
According to a comment posted by ‘Bhas’ on forestlaneshul.com, new pension optees will have to pay 2.8 times of their November 2007 revised salary from the earlier agreed 1.6 times. "All unions kept mum on this, which came to light only after signing and yet they say this is historic. All plans were accepted as per IBA modifications, and for this it has taken almost two and a half years," the comment reads.
CH Venkatachalam, general secretary, All India Bank Employees Association (AIBEA) and convener for the UFBU, said, "People had made the mistake of not joining the pension scheme earlier and some of them are still not ready to accept it. What they are not willing to understand is with the pension scheme, they can receive a regular income more than the interest they may earn. Plus this pension has a provision for dearness allowance to be revised every six months."
Refunding the entire amount of the bank's contribution to their PF and interest accrued thereon received by the employee on retirement with the share in contribution has not gone down well with some retired bank employees. Whether the employee retired in 1997 or in 2007, there is no differentiation and both have to refund the entire amount of bank’s contribution along with interest. For example, an employee who retired in 1997 might have received Rs6 lakh as terminal dues. If he invests the same amount at an average interest rate of 8%, then he would receive about Rs48,000 per year just as interest. From 1997 to 2010, he most probably would have received more amount as interest than his investment.
"This second pension offer is nothing but a cruel joke on retired bank employees. Retired bank employees, especially those above the age of 66, are finding this offer unviable and unfair since they have to pay a heavy sum and chances of recovering the principal amount are less," said Jagdip H Vaishnav, a retired bank employee.
When asked to explain the contribution and pension per month, Mr Venkatachalam said that if for example, an employee had received Rs10 lakh as PF and gratuity on retirement, then he will have to refund this Rs10 lakh plus around Rs5.5 lakh as his own contribution. However, the bank will also contribute around the same amount and the actual amount an employee has to refund comes to Rs10 lakh. To add to this, he will receive pension arrears of eight months at a rate of about Rs15,000 per month. If he can use this money for the refund amount, then his actual contribution to the new pension scheme comes to just about Rs8.5 lakh. He will continue to receive Rs15,000 every month thereafter. In addition, after every six months, the dearness allowance component in his pension will increase, so he will receive more money. On the other hand if he invests Rs8.5 lakh, then he would get an interest of about Rs68,000 for a year or Rs5,700 per month. Now he has to decide whether to opt for Rs15,000 per month or Rs5,700 per month, Mr Venkatachalam said.
One problem with the pension scheme is that some of the retired employees may not have enough cash left with them since usually people try to buy expensive things such as a home or a four-wheeler from the money earned at retirement. They most likely would find it very difficult to garner the required money so as to receive monthly pension or regular income.
Vishwas Utagi, secretary, AIBEA said, “We have been advising employees to keep the funds they received at the time of retirement separate, in case they plan to opt for the new pension scheme. So, I think refunding the bank’s contribution and interest should not be an issue.”
The UFBU has been asking the IBA to allow another option to for those to join the pension scheme—employees who were in the service of banks prior to 29 September 1995 in case of PSBs, and 26 March 1996 in case of associate banks of the State Bank of India (SBI) and who did not opt for the scheme. IBA, however, was not ready for the same due to cost considerations. The UFBU then offered to share a portion of the initial funding liability on a one-time basis for extending pension to the non-optees.
An actuarial valuation of liability by actuaries showed an estimated funding gap of Rs6,000 crore. The UFBU offered to contribute 30% or about Rs1,800 crore to bridge the gap for retired employees. An actuarial valuation on similar lines as conducted for serving employees had estimated the funding gap as Rs3,115 crore for those retirees or their families.
“Moreover, as per the new wage agreement, bank employees, both in service and retired, will receive arrears effective from November 2007 and it would help them while contributing to the 30% funding gap,” Mr Utagi said.
UFBU is receiving calls from children of retired bank employees asking how much their parents will have to pay to get a regular monthly income and these children are ready to pay from their own pockets, Mr Venkatachalam added.
Online recruitment activity rose in 13 of the 14 occupational groups tracked, with online job demand for healthcare and engineering/production professionals witnessing the greatest monthly increase
Riding on improving business confidence, corporate India's online hiring activity rose for the fifth month in a row, reports PTI.
The Monster Employment Index, a monthly gauge based on a comprehensive review of employer job opportunities from a large selection of online job sites, climbed by 7% to 125 in April, from 117 in March.
"The April rise in Monster Employment Index India is a positive sign as employers continue to expand hiring efforts at the beginning of the second quarter," Monster Worldwide managing director (India, Middle East and Southeast Asia) Sanjay Modi told reporters.
With this, the online employment availability in healthcare, bio-technology, life science and pharmaceuticals witnessed its largest monthly rise. Overall, job opportunities rose in 18 of the 27 industry sectors tracked in the survey.
Healthcare led the rise with a 29-point gain in April, indicating a relatively high level of online recruiting in support of scientific research and development activity.
The banking, finance and information technology (IT) sectors also edged higher in April. Consumer-driven sectors, such as production and manufacturing, automotive, home appliances and real estate, witnessed strong growth over a three-month period.
In the IT industry, online job demand increased by 51% from January levels. Meanwhile, education was the only industry to grow month-over-month, over a six-month period.
"With other indicators, such as business confidence, improving and most industries and occupational categories in the index registering recent positive trends, we hope to see continued improvement in the future," Modi added.
Online job demand rose at all the 13 cities monitored by the index in April, with Kochi, Coimbatore and Ahmedabad registering the largest jumps.
Among major metropolitan areas, brisk hiring activity was witnessed in Mumbai.
Delhi-NCR and Bangalore grew by 5% over March levels, though hiring activity in Bangalore was relatively restrained compared to the previous month, the study said.
During April, online recruitment activity rose in 13 of the 14 occupational groups tracked, with online job demand for healthcare and engineering/production professionals witnessing the greatest monthly increase.