While Rajasthan police are taking on fraudsters who are operating various MLM and ponzi schemes, the state government is working on a bill to curb the MLM menace
The growing menace of multi level marketing (MLM) and ponzi schemes like Speak Asia are increasingly coming under the scrutiny of several state agencies.
After Andhra Pradesh and Kerala, police from Rajasthan have been pro-active in busting such schemes and are investigating the activities of such companies.
Recently, the Rajasthan police unearthed a MLM scheme operating under the name of Right Concept Marketing (RCM) in Bhilwara district, famous for its clothing industry. The police are tracking couple of other similar schemes.
According to an officer close to investigation, besides RCM, there are lot of schemes offering investment and high returns on gold, while others are selling some kind of products in Rajasthan.
The officer, preferring anonymity, told Moneylife that, “We are looking at the financial analysis of these schemes. Generally, they always promise high income on recruiting new people. There have been few complaints from the people. Apart from booking the master-minds of these schemes under the Prize Chits and Money Circulation Banning Act, we have also charged them with certain sections of the IPC (Indian Penal Code).”
Recently the bail applications of RCM directors were rejected by the Rajasthan High Court as it found prima facie evidence against them in money circulation scheme.
According to police estimates, the fraud is in the tune of Rs2,000 crore. The business model of RCM, was based on networking where it invited people to become member on the payment of Rs1,500. To avail 10% commission they were asked to recruit more people in the scheme. The company is not registered under the Companies Act.
“We are closely co-ordinating with different government agencies. For instance, we are in touch with enforcement wing of the Income Tax department,” the officer added.
In November, last year, ponzi scheme Gold Sukh made headline after it allegedly duped 1.75 lakh investors for more than Rs300 crore. Gold Sukh promised returns 27 times than the investment in just 15 months and was able to lure many politicians, police officers and businessmen. The Jaipur police are probing the scheme and had also issued a Red Corner Notice, through Interpol, against its absconding directors.
According to a news report, Rajasthan chief minister has asked officials to draft a bill against fraudulent MLM schemes against the backdrop of the on going investigation in the multi-crore Gold Sukh scam.
Brand Trust Report 2012 also throws up some strange names like DLF and Air India
There are names that inspire trust without asking. Like Google or Apple or mom-made food. Then there is the other kind of trust, like people’s trust in the government to perform even worse. But there are also names that make you wonder at what makes them trustworthy.
The Brand Trust Report 2012 has come up with some predictable and some surprising names which Indians trust. Nokia and Tata top the list once again. Nokia, whose market share has come down significantly globally, manages its hold on in India. Tatas too remain the second most trusted brand—despite the company’s name being linked to Niira Radia in the second generation (2G) scam.
However, Nokia’s Korean arch rivals— LG and Samsung are not far behind—they occupy the third and fourth positions, beating Japanese giant Sony. The others in the top-ten list are Maruti Suzuki, Bajaj, LIC and Airtel.
Undertaken by Trust Research Advisory (TRA), the survey takes into account the responses and views on 17,000 brands from over 2,700 participants across 15 cities in the country. It also included personalities as brands. 2011’s newsmaker, Anna Hazare, beat Sachin Tendulkar (after all, that 100th ton is still pending) to become the most trusted personality. Who are the other most trusted people in India? Salman Khan, Amitabh Bachchan and Aamir Khan. Incidentally, ‘Bodyguard’ Salman Khan was once involved in a hit-and-run case, and in hunting of an endangered deer species. But like his NGO ‘Being Human’, which has emerged as the most trusted name in the social sector, the Dabaang star has bounced back.
‘Most Trusted’ leaders in some other categories are Armani in branded fashion, NIIT in education, ONGC in energy, PVR in entertainment, Taj Hotels in hospitality, Google in internet, ACC in manufacturing and Thomas Cook in services.
There are names which seem to be resilient even in the face of controversy. Like leader in technology, Hewlett Packard—which became the centre of a sexual harassment scandal in 2010 and saw the exit of the then CEO Mark Hurd. The scandal has refused to die, despite HP’s many achievements in the last year. But maybe the incident hadn’t affected the Indian market—as HP continues to be the most trusted name in terms of computer and printer equipment.
Likewise, Pepsi, despite many reports and lawsuits about unwarranted content within bottles in other countries (traces of harmful fungicides in fruit juices imported from Brazil, a dead mouse in USA), is named the most trusted brand in the food and beverage category.
There are other Indian names which come as surprise. Like DLF in the construction category—which has been slapped with a Rs630 crore fine by the Competition Commission of India for setting a bad example as a market leader by following unethical anti-customer policies. Even the almost-bankrupt Air India, which has some negative incident reported about it almost on a daily basis; has been named as the ‘most trusted’ in its field.
The total wipe-out fiasco of the Tata Nano can be attributed to this one factor—feedback from the people never seemed to reach even the outer core of minders and managers. And even if it did, it probably did not go any further, since the corporate culture seemed to have become “see nothing that the boss may not like”
There is an interesting parade that takes place at every Auto Expo and never gets reported, it is known as the CEO parade. Where the heads of the automobile industry go walk-about in each other’s stalls, often without much advance notice or ado, but with different styles.
You have to understand one thing—the Auto Expo is also the biggest networking event for employees in the automobile industry, where head-hunters from across the country and sometimes beyond are on the prowl and willing candidates are available for selection. In ancient days, this used to be known as ‘swayamvar’, you get the drift? Eye contact is very important, as in, who is that smart guy?
Everybody is looking for something, and as an interested observer over the decades, it is always fascinating to watch people at the Auto Expo once the job of looking at wheels is done, and draw a variety of conclusions on diverse subjects. Another interesting side activity is to see which non-owner manager who spoke too much to the media the last time around, thereby garnering excessive publicity for himself, is now either not seen or is seen queuing up for entry in the general hours.
So, usually, management styles vary.
The South Korean and Japanese company bosses and their local factotums typically keep a very low profile as they scoot around without attracting attention. The Europeans and Americans tend to bring their own huge cars into the fair grounds for more free publicity, hang around in their own pavilions, visit the other stalls after hours, and then throw low IQ parties where they give high spirited access.
Which leaves the Indians. Each one has a different style.
Rahul Bajaj used to be the darling of the Expo masses with his quote-a-minute, and now his son Rajiv does even better by having perfected the art of garnering the maximum publicity with minimal effort and cost. The Munjals, with patriarch BM Munjal still in full flow, float around regally in open battery vans. Senior Firodia could be spotted looking around to give quotes on everything as he marched from stall to stall. Ashok Leyland would have a contingent of suited-booted managers of all levels wandering around, never bringing the Hindujas, the south Indians amongst them not to happy with the thought of going out in the cold and braving Delhi’s masses. So on, and so forth, including the lot from Maruti-Suzuki who would pretend to be invisible!
But it used to be the Ratan Tata parade from Tata Motors which was always something to watch. Ambling through without making eye contact, surrounded by an inner core of eager beaver senior managers and an outer layer of security bouncers and PR flunkies, all of them preceded and followed by a huge mixed group of media, camera-men and assorted people looking for sponsorship or similar, he strode through like the colossus that he is. No eye contact, a regal wave of a hand here and there, and that was it.
The point being made here is that he never ever really made contact of any sort with the people who were and are his consumers and customers. Those who will recall how JRD Tata and Russi Mody reached out to the most ordinary of people will spot the difference right away. And in that, over the years, some of the Tata magic has been lost. The boss is aloof and not accessible, fine, maybe that is the new dispensation, but down the line his complete entourage started emulating him.
Whether it was Ravi Kant, Mr Dubey or a host of others—barring Dr Sumantran who was always available and left to join the Hindujas—the complete crew from Tata Motors started behaving like their leader did.
Which would have been fine, if it had brought results—but unfortunately it did not. The total wipe-out fiasco of the Tata Nano can be attributed to this one factor—feedback from the people never seemed to reach even the outer core of minders and managers. And even if it did, it probably did not go any further, since the corporate culture seemed to have become “see nothing that the boss may not like”.
Personally, in my opinion and experience, there is nothing wrong with the Tata Nano as a new product. Most certainly it will need de-bugging, which was the approach used when the best-seller Tata Indica was launched, and Tata Motors did respond to feedback of the critical sort.
But with the Tata Nano, if anybody criticised the project or the vehicle, then he or she was like enemy No. 1. Instead, vast amounts of effort and money went into ‘brand-building’ and other such marketing gimmicks, while the product and service suffered because? Because the high number of bookings was taken as some sort of gate-pass to brilliance. Which it was not.
Today, the Tata Nano seems to be trying to get back on an even footing. Exclusive showrooms, better response to internet-based enquiries, and most of all—an openness in the way recalls and repairs are being done.
Now all that is needed is the magic of the Tata nuts and bolts sort—where the people on the ground reach out to their customers, just as they do with the trucks, buses and taxis.
The regal-royal walk at Auto Expo is fine, but it can’t be for everybody in the organisation, they have to get down and get to the customer. The real brand value of the Tata name is—get closer to the people.
(Of course, even more interesting are the political leaders and their parades, but that’s another subject altogether ...)
(Veeresh Malik started and sold a couple of companies and is now back to his first love—writing. He is also involved actively in helping small and midsize family-run businesses re-invent themselves. Mr Malik had a career in the Merchant Navy which he left in 1983, qualifications in ship-broking and chartering, a love for travel, and an active participation in print and electronic media as an alternate core competency, all these and more.)