Serious investigations are going on against Speak Asia across the country, but the company chooses to portray itself as a victim, in an attempt to gain sympathy and more time from its agents who eagerly await their dues totalling over Rs1,900 crore
Speak Asia Online Pte Ltd (SAOL), which claimed to be 'Asia's largest online survey group' and has now changed its tagline from 'Asia's leading integrated market services agency' to 'Asia's largest community of sovereign consumers', is continuing to provide misleading answers on its website even today. In the meantime, Speak Asia has been allowed a meeting with the Reserve Bank of India (RBI) to explain its position by the Bombay High Court.
In an order dated 14th July, a bench of judges Dr DY Chandrachud and Anoop V Mohta, said, "We are of the view that the interference of this court is not warranted. However, in the interest of fairness, an opportunity should be granted to the petitioners (Speak Asia) to submit a representation to the Reserve Bank." The High Court, however, made it clear that even after the Speak Asia representation is made, it expects the RBI to take a decision in accordance with the law.
Disposing the petition filed by Speak Asia, the High Court said, "The bank (RBI) is legitimately entitled to protect the integrity of the financial set up, pending an investigation. Neither an investigation nor the directions issued by the Reserve Bank to facilitate it should be obstructed or curtailed. The bank has in our view acted within its statutory power to caution against remittances abroad in the case at hand."
According to the High Court order, Speak Asia sent a letter to the RBI requesting an appointment on 17th May to which the central bank replied on 16th June seeking a disclosure of information. Speak Asia responded on 20th June, but the matter appears to have rested there, the order said.
Now let's see how Speak Asia has played the High Court verdict to its favour. In an pop-up message to its agents (we are providing an image of the page below as there is no assurance that it will remain on the company's site after publishing this article), Speak Asia has claimed that it has received some 'moral vindication' from the High Court order.
It said, "We have got some moral vindication (for instance) the High Court of Hyderabad restrained harassment or arrest of any official or employee of our company against a complaint made by an NGO (criminal petition 5626/2011). The High Court in Mumbai directed the Reserve Bank of India to give us a hearing to understand our business model 'expeditiously' (writ petition (L) no. 1365/2011 - SAOL & Others vs Reserve Bank of India)."
The pop-up message tries to create a divide between 'them' and 'us', where 'us' is the multi-level marketing (MLM) company and 'them' is everyone else not associated with it. The message reads: "They are a product of misguided thinking, unbridled envy, and a desire to destroy what they cannot build. They are a set of people with deadly intent. They are the opportunity deniers. They are supported, cheered on and encouraged by certain vested interests like our competitors, some corrupt politicians and unscrupulous NGOs who have jumped into the fray to take advantage of our vulnerability."
Now, let us take a look at the company's method to misguide (aka golmaal) its panellists and other gullible people. On the frequently asked questions (FAQs) page (see the image below), Speak Asia says, "RBI, SEBI, Ministry of Corporate Affairs and PMO gave clearance to SpeakAsiaOnline?" For a common reader and Speak Asia panellist, it appears as if the company has already received clearances from these regulators and authorities. However, the reality is completely different.
In answer to this apparent question, the company says, "It has come to the notice of the company through its media sources that because of the negative campaign initiated by some organisations, that RBI, SEBI, the Ministry of Corporate Affairs and PMO initiated inquiry against the working of the company. However, till date SAOL has not been contacted by any of the government departments."
Although, Speak Asia forgot to mention the Income-Tax, Enforcement Directorate and Service Tax inquiries, the High Court order does mention these agencies. The order said, "It has been submitted that at present investigations are being conducted by the Directorate of Enforcement, the Registrar of Companies and by the law enforcing authorities in several states in respect of the activities of the petitioners (Speak Asia)."
Speak Asia has been insisting that the freeze on bank accounts of its distributors and agents (since the company neither has, nor operates any bank account under its name) was placed by the RBI. However, the central bank clarified, and the High Court accepted, that the debit freeze was placed by the respective banks on account of the investigations being conducted by the service tax and income-tax departments.
Last week, the division bench of Justice Ranjana Desai and Justice RV More remarked that the police should create a system to prevent the repetition of frauds like CU Marketing and City Limouzine. Hearing a public interest litigation (PIL) filed by Andheri resident Rajmani Shukla against Speak Asia, the High Court noted that “Having perused the petition, we feel that another scam is in the offing."
"If the silence is a sign of its acceptance of the preconditions, Cairn India will have to explain at least to the minority shareholders what changed for it to suddenly accept the riders. Can it compromise on minority shareholder interest to facilitate one shareholder to exit," an analyst questioned
New Delhi: In first signs that Cairn India may do a somersault so that its parent Cairn Energy Plc can sell stake to Vedanta Resources, the company has gone silent on the government preconditions that it had so far been bitterly opposing, reports PTI.
Cairn India, whose board had on 10th February passed resolutions opposing change in contract to make the company liable for payment of royalty and cess on oil produced from its showpiece Rajasthan fields, does not mention a word in its annual report on the same being made a precondition by the government for approving Cairn-Vedanta deal.
The company has so far maintained that Oil and Natural Gas Corporation (ONGC) which got 30% stake in the prolific Rajasthan oil fields for free, is contractually liable to pay royalty and cess on the entire production.
Besides the board resolution, Cairn India had since its parent Cairn Energy announced sale of 40% interest in the company to Vedanta in August last year, written letters opposing it being asked to pay Rs2,500 per tonne cess and making royalty cost recoverable.
But now that the Cabinet Committee on Economic Affairs (CCEA) has actually made cost recovery of royalty and payment of cess as preconditions for approval of the $9-billion deal, Cairn India managing director and CEO Rahul Dhir in the annual report for 2010-11 did not mention a word on it.
"What ought to have been a straightforward transaction subject to shareholder approval has now been drawn into the government's decision-making ambit," he said, adding Cairn India has not been informed of CCEA decision till now.
Analysts tracking the deal said it was strange for a company, which was 'out-of-turn' so vocal, to have suddenly gone silent.
"Acceptance of the preconditions was for the current owner (Cairn Energy) and the new owner (Vedanta) to decide.
Yet Cairn India out-of-turn passed board resolution opposing it saying they were not in the interest of the company and its shareholders," an analyst said.
"If the silence is a sign of its acceptance of the preconditions, Cairn India will have to explain at least to the minority shareholders what changed for it to suddenly accept the riders. Can it compromise on minority shareholder interest to facilitate one shareholder to exit," another analyst asked.
The CCEA decision imposing preconditions was announced by the oil minister S Jaipal Reddy at a press conference.
Mr Dhir in the annual report said, "The long hiatus starting from mid-August 2010, when the deal was announced, has caused delays and uncertainty in managing a business that necessarily has to deal with the government and the Rajasthan joint venture partner, ONGC."
Though Mr Dhir did not elaborate on the 'hiatus' in decision making, he may have made an apparent reference to delay in government approval for raising output from Mangala oilfield in the Rajasthan block to 150,000 barrels per day (bpd) from current 125,000 bpd.
In the section 'Management Decision & Analysis', Cairn India said it in 2010-11 fiscal "faced considerable uncertainty arising out of the proposed transaction between Cairn Energy PLC and the Vedanta Resources Plc."
"Unfortunately, the transaction has been dogged by serious delays, objections by ONGC and major interventions by the ministry of petroleum and natural gas. These have been escalated to the level of the CCEA, which then sought the views of a Group of Ministers (GoM) of the Government of India (GoI)," it said.
Even before Vedanta made its move, ONGC had demanded that royalties it pays on its and Cairn India's share in the Rajasthan fields be added to costs and recouped through sales, citing provisions in its contract. After the deal was announced, it maintained it had pre-emption rights and that the acquisition could not go ahead without its agreement.
The CCEA last month overruled objections to ONGC's demand by Cairn/Vedanta and held these will have to be met before the approval is granted.
It on 30th June decided to give approval to the $9-billion deal subject to Cairn/Vedanta allowing royalties from Cairn India's prize Rajasthan oil fields to be added to project costs and recovered from sales. Also, it has to end arbitration proceedings against the government disputing its liability to pay cess, or tax, on its 70% share of oil from the fields.
Third, the deal has to be approved by ONGC, which has a stake in all three of Cairn India's producing assets and five of its seven exploration assets, waiving its pre-emption rights. And finally, the acquisition needs security clearance.
Accepting the royalty condition alone would mean about $900 million dent in revenues of Cairn India annually.
"At the time of writing this Management Discussion and Analysis, neither Cairn India nor its board of directors know what decisions might have been taken by the GoM, which are expected to subsequently flow to the Company as a note from the MoPNG via the CCEA. Whatever the outcome, the fact is that it has created considerable uncertainties," the report said.
"Since the company has not yet received a letter from the MoPNG containing the CCEA's decisions, it is inappropriate to comment on its unsubstantiated contents," it added.
Cairn said the Rajasthan block has a potential to produce 240,000 bpd of crude, subject to approval of the regulatory authorities and partner, ONGC.
Under Business Risk section, Cairn India said it "is and may become, involved in proceedings in relation to payment of royalty and cess for the production of crude oil from the Mangala field in Rajasthan."
Cairn India has a participating interest of 70% in the Rajasthan block (RJ-ON-90/1) and is also the operator. ONGC holds the remaining 30% stake.
"Under the Production Sharing Contract executed for this block, in the view of Cairn India, royalty and cess are payable by ONGC as the licencee and these are not part of the contract cost for the purpose of cost recovery," it said.
ONGC has been paying royalty to the Rajasthan government for the crude production every month. However, ONGC has contended that the royalty payable under this PSC should be considered as a contract cost for cost recovery purposes.
"However, to date, Cairn India has no formal intimation from Government of India or ONGC of any dispute, demand or allegation of royalty being part of contract cost for cost recovery purpose. Cairn India has secured legal opinions in its favour and believes that it has a strong case," the report said.
Cairn India has initiated arbitration proceedings against the government and ONGC pursuant to a claim notice seeking Cairn India to pay cess on oil produced from the Rajasthan block to the extent of the company's participating interest in the block.
"In the event that royalty is considered to be part of contract cost for cost recovery or Cairn India is held liable to pay its 70% share of cess, there would be a material adverse effect on its business, financial condition and results of operations," the annual report added.
While annual indicators of real GDP growth remained positive in 2010-11, there was a 'perceptible slowdown' in terms of quarterly growth rates in the last two quarters. The economy grew by just 8.3% in the third quarter last fiscal and 7.8% in the January-March period, the lowest in five quarters
New Delhi: Amid a likely moderation in industrial output, the government today lowered its gross domestic product (GDP) growth projection for 2011-12 to 8.6% from the earlier estimate of about 9%, reports PTI.
"Growth is estimated to be marginally higher at 8.6% this year over 2010-11 levels of 8.5%," the finance ministry said today.
The ministry added that as the first quarter growth figures for the current fiscal are still to be released, the outlook for 2011-12 has to be inferred from movements of past data, as well as higher frequency proxy economic indicators.
While annual indicators of real GDP growth remained positive in 2010-11, there was a 'perceptible slowdown' in terms of quarterly growth rates in the last two quarters.
The economy grew by just 8.3% in the third quarter last fiscal and 7.8% in the January-March period, the lowest in five quarters.
"This apparent slowdown in headline year-on-year growth rates on a quarterly basis, plus of movement in other higher frequency indicators... and slowing automobile sales, suggested that growth outlook for 2011-12 may be lower," it added.
While the Economic Survey had projected GDP expansion in FY11-12 at 9% (plus, minus 0.25%), the Reserve Bank of India (RBI) later lowered it to 8%.
The Indian economy is estimated to have expanded by 8.5% in the last fiscal.
The ministry said there is a slowdown in corporate investment and their profits have been affected due to cost escalation of input items and raw material.
"Industry will probably slow, given trends in high frequency proxy indicators like Purchase Managers Index (PMI) and Index of Industrial Production (IIP) for the current fiscal (up to June, 2011)...," it said.
However, it hoped the industrial slowdown may reverse once the base effect wears off.
The industrial output growth rate dipped to a nine-month low of 5.6% in May due to a poor showing by the manufacturing and mining sectors and lower offtake of capital goods.
On the agriculture front, the government expects that even though expansion would be 'strong', the high base effect of last year would have an impact on the overall numbers.
As per the ministry, the agricultural growth rate may moderate to 3%-4% this fiscal from 5% in 2010-11.
It further said barring finance, insurance, real estate and business services, the services sector is expected to witness strong quarterly growth.