LIC has invested Rs3,600 crore in three tobacco companies in 2010-11, and has acquired more shares of ITC over the years. This has been revealed through an RTI query
Business moves do not get more ironical than this. When tobacco has been identified as the biggest preventable cause of death across the globe, public sector behemoth Life Insurance Corporation of India (LIC) has coughed up a huge amount to invest in tobacco companies.
LIC has invested more than Rs3,600 crore in three tobacco companies in 2010-11, an RTI query has revealed. Anti-tobacco activists and cancer specialists are outraged, and believe that it is unethical and ironical that India’s largest insurance company would invest in something that is injurious to health.
The information was sought by an activist’s consortium called Voices of Tobacco Victims. The public information officer’s (PIO) reply shows that LIC has invested Rs3,600 crore in three tobacco companies. Indian Tobacco Company (ITC) has seen the biggest investment of over Rs3,500 crore last year, while the other two companies are VST Industries and Dharmapal Satyapal (DS) Ltd, which manufactures smokeless (chewing) tobacco. LIC also owns shares of ITC, and the number has steadily gone up over the years—from 51 crore in 2009 to over 99 crore on 31 March 2011.
However, instances of the government holding shares in big companies are not new. The Specified Undertaking of the Unit Trust of India (SUUTI) held substantial shares in Axis Bank, ITC and Larsen and Toubro (L&T). These companies, though professionally managed, want the government to hold stock for fending off hostile takeover bids. British American Tobacco (BAT), the parent company of ITC, holds almost 32% stake in its Indian arm; and its attempts to gain a majority stake have been well-publicised.
Though the public insurer’s strategy may be perfectly legal, it is ethically incorrect for LIC to invest in tobacco companies without the prior approval of the investors, said Dr Vishal Rao, convener, Tobacco Free Bangalore and national executive member of the Federation of Head & Neck Oncology. “India is one of the early signatories to an international treaty called Framework Convention for Tobacco Control (FCTC). The huge investment by LIC in one of the biggest tobacco companies of India is surely against the spirit of FCTC,” he said.
In her reply, LIC CPIO (chief public information officer) Saroj S Dikhale has said that LIC does not charge any extra premium from tobacco users and smokers for issuing an insurance policy. “Depending on quantity, duration and type of tobacco consumption, while large numbers of customers are accepted without any extra premium, some of the applicants may be charged higher premium,” the reply said. However, it is not known how many claims have been rejected by LIC due to the insured’s habit of tobacco consumption.
According to a WHO (World Health Organization) study in 2010, around 34% of the population above 15 years in India consume tobacco in different forms. Minister of state S Gandhiselvam said in a written reply in Parliament a few months back that around eight to nine lakh Indians die every year due to diseases that result from tobacco consumption.
Dr PC Gupta, director, Shekharia Institute of Public Health said, “It is a shock that the investment with ITC has doubled in the last two financial years rather than coming down over the year. On one hand, the government is spending nearly Rs10,000 crore on treatment of tobacco-related illness and on the other hand, they are investing Rs3,500 crore in a leading cigarette manufacturer.”
A case against the harmful effects of gutka (chewing tobacco) is pending before the Supreme Court for an outright ban. “If the Supreme Court bans it, then what will happen to the invested public money in DS Group?” remarked Dr Pankaj Chaturvedi, associate professor at Tata Memorial Hospital, who has been working closely with the activist group.
Will LIC dump its tobacco shares? Only the health ministry can take a call—but the insurance giant is under the ambit of a different regulator.
Despite constant attempts by Moneylife to warn the public from ‘investing’ in MLM, get-rich-quick, pyramid and Ponzi schemes, the authorities have taken no notice. Nobody has learnt from the Speak Asia fiasco. Now, Emerald Multi Marketing, an MLM company registered in Mumbai, is rapidly increasing its customer base
Rapidly-mushrooming multi-level marketing (MLM) schemes, which dupe people for several crores and then do the vanishing act, has heightened the need to introduce a stringent law, curbing and regulating such fraudulent offers.
Moneylife recently reported (See: Speak Asia advisor finally confesses the company was running a Ponzi scheme) that Speak Asia’s financial consultant, Sanjeev Dandona, confessed to the Economic Offences Wing (EOW), that his company was running a Ponzi scheme.
But despite the police action and widespread publicity, many chain-marketing schemes continue to thrive. Be it income on filling e-surveys, direct selling, or forex trading, Ponzi schemes have made their presence felt everywhere.
The latest is Emerald Multi Marketing Pvt Ltd, which by all looks is an MLM scheme. The company was started in 2010 and is registered in Mumbai. Its business operations are similar to a direct-selling model, where an ‘investor’ sells kits of various products as an agent, and gets income.
Interestingly, according to its website, Emerald has gold & diamond jewellery as its products. It claims that it is introducing a ‘new’ business model, which is a combination of retail marketing and MLM. It says, “So in this business we (have) just done an experiment by bringing together both retail and multi-level marketing which we called “Multi Retail Trade”. This is a very new concept in the world of MLM business which will give you more and more benefits together from both MLM and (the) retail market.”
The company claims to be in association with gold jewellery showrooms from three districts of Maharashtra for “easy accessibility” to its ornaments. According to its website, it plans to tie up with more jewellery stores in local areas.
This is how this racket operates: In the beginning, one has to purchase or book a gold product deal, which fetches you ‘treasure cookies’, ranging from 10 to 1,000, along with freebies. On becoming a channel partner, you are entitled to “commissions, benefits, rank, bonus etc from the company, by joining new customers under your down-line (A: B) leg.” This is one of the typical features of a Ponzi swindle—the money that you can ostensibly make depends on the number of people whom you who can rope into the scheme.
In the Emerald game, there are two ways to become a channel partner. One way is when you are promoted/referred by your ‘Up-Line Channel Partner’. Here you can collect your ‘Spill Code’ and ‘E-Pin’ from your ‘Up Line’, then take a printout of the application form and customer-purchase form, fill up the necessary information, and make the purchase of your choice from the company’s associated jewellery products.
The second option is when if you are a direct customer, you can go to the company’s associated jewellery showroom in the specified area and make the purchase of your choice. But the purchase has to be done according to the value mentioned in Emerald’s purchase chart. The MLM company also promises that it will deliver high returns. “Minimum purchase value is mentioned according to the pure return percentage, starting from 70% to 100%,” says the website.
Emerald has more goodies in its kitty—there are various product packages including solar-energy pendants, watches (including the high-end Rado, no less), magnetic bracelets, etc.
And of course, the company promises binary commission, referral income, and royalty bonus. Binary commission increases from Rs200 to Rs10,000—depending on the number of new people that an investor can rope into the company. The company also claims to give ‘rank commission’, which it promises is a laptop. This machine will be gifted to a person who has introduced 500 new people on both sides of his down-line channel (500:500).
Now what will it take for the authorities before Emerald is exposed for its filthy lucre?
Moneylife has persistently exposed MLM companies promising extraordinary returns.
You might also want to read (these are just four examples of our previous stories on various pyramid schemes):
Cyclic timetable appears to be a well-tested scientific tool of timetable planning which has benefitted many countries in their public transport operations. It can also be used successfully on Mumbai's vast suburban rail network
Rajaram Bojji, former managing director of Konkan Railway and inventor of the anti-collision device (ACD) has supported the cyclic timetable (CTT) concept for suburban (local) trains in Mumbai. In an email, Mr Bojji said, "I remember for Skybus too, I had proposed a similar concept of running to keep average speeds higher. The halt time makes a difference to the average speed actually. Less halts, more average speed."
Several activists have been requesting the Railways to follow the cyclic timetable on Mumbai's vast rail network. After doing research and due diligence for years, Dipak Gandhi, chairman of the Mumbai Suburban Railway Passenger Association (MSRPA), and his colleagues have proposed a cyclic timetable, which they feel can reduce the passenger load on each local train by about 30% to 40% and also cut the travel time by 20% to 25% for long-distance commuters. Cyclic timetable also makes it possible to introduce 30% more services with the same number of rakes and tracks through super-fast and sector-wise services.
A simple mathematical analysis done by Mr Bojji or B Rajaram, as he is famously known, also shows that use of cyclic timetable can reduce the turnaround time for a local train by around 30% as well as waiting period for a commuter. He said, "A commuter has to wait, skipping a train to board the right one. To some extent, the railway platform may carry a little extra number of passengers. Maybe it is better than crowding the train. There are other factors like percentage failure of signals, track conditions and maintenance speed restrictions, the unauthorised slums crowding the track sides forcing motormen to drive cautiously, which may deny the benefit. However, the idea is worth trying."
Here is the analysis given by Mr Bojji...
The suburban railway system in Mumbai is the most complex, densely loaded and intensively utilised system in the world and has the highest passenger density in the world—69 lakh commuters travel every day. Specifically, a nine-car rake carries over 5,000 passengers against its carrying capacity of 1,700, which leads to unbearably overcrowded trains during peak hours. Traditional approaches of increasing capacity by increasing the number of coaches in rakes have not resulted in significant improvement in the problem of overcrowding. The situation is further aggravated with frequent delays and uneven frequency of trains.
"The basic wishes of any railway customer are fairly simple; he or she wants to travel fast and comfortably for a reasonable price. Furthermore, railway services should be transparent and reliable to provide a choice of service and comfort levels," said Mr Gandhi.
The Railways today is in a position to give not only safe but also speedy and comfortable rides to all its commuters from tomorrow, only if it redesigns its suburban timetable as per principles of timetable construction laid down under the Indian Railways Act and its rules—and in conformity with today's traffic needs, Mr Gandhi added.
Cyclic timetable as the name suggests is a timetable, which repeats itself after a fixed duration. A key feature of this timetable is that commuters do not have to memorise the whole timetable. All that they need to remember is the cycle time at which a train repeats itself; thus, if the cycle time is 12 minutes then even if someone has missed his train he knows that he will have to wait a maximum of 12 minutes to catch the next train.
Here is a sample time table developed by the MSRPA...
(Two Fast Services for VR Sector & One MX-VR Shuffle)
This timetable works on four basic principles.
The first principle of CTT states that all the services will have to repeat in a cyclic pattern. In the above table in case of the fast corridor Virar service, after the first service at 17:00 the next will be at 17:12—a gap of 12 minutes. Similarly all the other services will be repeated after a duration of every 12 minutes.
The second principle is Uniform Frequency: this is one of the most important principles on which CTT is based. According to this principle, if the frequency of the train services is uniform it will clearly help to segregate the demand by dividing the commuter traffic evenly in peak hours which is a basic necessity in order to reduce the level of overcrowding and thus the risk of accidents.
The third principle on which CTT works is; Dedicated Sector Wise Clearing as part of which the railway network is divided into various sectors, which are defined on the basis of passenger demand. In any sector a limited number of stations are served and not all the stations overlap or repeat in other sectors. Limited halts ensure that the rakes turn around faster leading to increased services.
Thus, currently, a Virar fast train starts from Churchgate and gets completely filled by the time it reaches Bandra. It then goes on to stop at Andheri and Borivali where there are already a number of people waiting to get in and only a few getting down. This leads to unbearably overcrowded situations and threat to the lives of those who are leaning outside the train. This is a daily pattern.
As per the specimen cyclical timetable illustrated above, the timetable is designed in such a manner that a fast train in the Virar sector would not stop at Andheri and Borivali ensuring that commuters from Churchgate would reach their destinations faster. It would also ensure that the same rake is available faster for a turnaround and can transport more commuters. In this time table commuters of Andheri and Borivali have no choice but to avoid a Virar train. In between stations would be served by other fast and slow services running for other sectors.
The fourth feature of CTT is Limited Loading: A cyclical timetable is made on par with Section (57) of the Railway Act 1989, according to which railway administration shall fix the maximum number of passengers, which may be carried in each compartment. Unlike the current overcrowded conditions CTT emphasises on limited loading by sequencing the services in such a way that it serves few stations with every service thus distributing passenger load evenly, resulting in limited loading.
According to MSRPA, the CTT, if implemented, would increase the services by 30% using the same number of rakes and railway tracks through super-fast and sector-wise services. It will also reduce overcrowding by 30% to 40% and may help in curbing accidents. Most importantly, CTT can be implemented without much additional cost.
Currently, several countries like the Netherlands, Austria, Belgium, Denmark, Germany, the UK, Norway and Switzerland use CTT for their railway networks. In the Czech Republic, the CTT was implemented during 2004-05 and increased the railway services by 7% in the first year itself. Later it went to 15% during 2007-08 and the railway operations in that country have now achieved stability in services.
While ideas like CTT or ACD sound like a magic wand, history tells us that when it comes to applying indigenous solutions, the Indian Railways and their babus are not the best. Ask Mr Bojji, he is still waiting for the ACDs to see light of day. The biggest sorry mistake is the patent for ACDs is held by none other than the Indian Railways itself and yet the babus don’t want to implement it for reasons known only to them.