COVID19: Rapid Test Kits Supplier Would Have Earned a Massive 145% Profits, says Delhi HC
A trial in Delhi High Court has revealed massive profiteering and over-pricing by two firms in the COVID-19 test kits sold to Indian Council of Medical Research (ICMR). The $3 per test SARS CoV-2 antibody test kits are being imported from China's Wondfo Biotech and sold to ICMR at Rs600 or Rs30 crore for five lakh test kits.
 
While hearing a plea by Rare Metabolics Life Sciences to seek release of 7.24 lakh rapid test kits and other COVID-19 related material being imported by the respondent from China, the single bench of Justice Najmi Waziri found that the supplier had earned a massive profit of over 140%. 
 
 
ICMR had placed an order with Rare Metabolics for 500,000 test kits at Rs600 each on 27th and 28 March 2020 for a total cost of Rs30 crore. 
 
Rare Metabolics routed the order through Matrix, which is licensed to import medical material. Matrix imported the kits at Rs245 each, or a total of Rs12.25 crore, the court said.
 
It then supplied the kits to Rare Metabolics for Rs21 crore. Rare Metabolics then sold the five lakh test kits to ICMR for Rs30 crore. 
 
The court observed that Rare Metabolics in turn made a profit of Rs9 crore "despite no value addition to the imported medical material". Of the Rs30 crore, which is to be paid by ICMR, Rs18.7 crore constituted the intermediaries' margin, the court says.
 
"The country is going through an unprecedented medical crisis affecting public order. People have been cloistered in their homes or constrained to stay wherever they were on 24 March 2020. The economy is virtually at a standstill for the last one month. There is an element of disquiet apropos one's safety. Public interest must outweigh private gain. The lis between the parties should give way to the larger public good," the court observed.
 
The Delhi High Court then capped the maximum price of each rapid test kit imported by Matrix Labs at Rs400, including GST.
 
"For the people to be assured that the pandemic is under control and for the governments to ensure, and for agencies engaged in the frontline battle to safeguard people's health, more kits/tests should be made available urgently at the lowest cost throughout the country," said Justice Waziri while capping the price of the medical kits.
 
While the firms have delivered 276,000 kits to the ICMR, the court has instructed that the remaining 224,000 kits be delivered when the consignment lands in India.
 
Meanwhile, the union ministry of health and family welfare said that no payment has been made by the ICMR for the faulty Chinese testing kits for Covid-19.

Addressing a press conference, Lav Agarwal, joint secretary in the ministry, said that ICMR cancelled the order as soon as it found out that the kits were faulty.

"The ICMR followed the due process to finalise tenders for the purchase of rapid testing kits, based on sensitivity and specificity. When complaints from the field arose, ICMR reacted promptly and cancelled the orders. No payment was made to the vendors. No payment has been made by the ICMR to the companies whose testing kits were found to be faulty," Mr Agarwal told the media.

The ICMR had earlier clarified that it followed proper procedure for the procurement of the rapid testing kits from a Chinese company.
 
In a statement, the ICMR says that it tried to procure the kits directly from Wondfo company in China, but due to the terms and conditions regarding guarantee of the product and 100% advance payment, it decided to procure the kits from Wondfo's exclusive distributor for India, which quoted an all inclusive price for free on-boad (FOB) (logistics) without any clause for advance.

The quotation received for direct procurement had issues like being FOB without any commitment on logistics and 100% direct advance payment without any guarantee.

"There was no commitment on timelines. Also, the rates were communicated in US dollars without any clause for accounting for fluctuations in prices," ICMR says.
 
Separately, the ICMR has on Monday directed state governments to stop using rapid antibody test kits procured from China-based Guangzhou Wondfo Biotech and Zhuhai Livzon Diagnostics after their results showed wide variations.
 
  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    Prasanna

    7 months ago

    There needs to be clarity on (1) What are the different types of Tests that are recommended by ICMR (2) From which source is the material for these Tests being procured (3) Can it not be made in India (4) If yes, why is there a delay in making them?

    m.prabhu.shankar

    7 months ago

    Are citizens supposed to believe that there is absolutely no quid-pro-quo and this private company tried to cheat everybody - Central govt, ICMR and all others ? -::))). In that case is our estabilishment so stupid that an authorized distributor of a chinese company will be able to cheat the entire country ? Let us be very clear where is there is a money laundering there is a political estabilishment behind the scene. who are they in this case is the only question ?

    raviforjustice

    7 months ago

    While the nation does want to know why there wasn't a government to government transaction in this case, it may not be irrelevant to recollect that there was a report of a plane loaded with medical stores to France/Spain which was diverted to the US of A due to the latter offering payment by cash.

    In the current case I hope that the cost of Rs 400/- arrived at by the judge is based on hard facts, taking into consideration the cost of logistics in getting the stuff from the China to the users in India, whether the importers had paid the cost in advance, the interest on this amount as loan from a bank etc etc.

    About comments like 'Public interest must outweigh private gain', coming from the judiciary, I must say that it will be difficult to accept it even with a sack full of salt. The courts would do well to find some remedy for the total denial of justice by them, based on the fundamental principle that justice delayed is justice denied. When they can't even ensure the raison d'ĂȘtre for their existence they should stop making unwarranted comments.

    ongcalok

    7 months ago

    Middleman should not be allowed in purchase of goods and services by government or PSUs, it should be banned by law.

    rajiv.pec

    7 months ago

    The verdict reveals that corruption is only increasing. The fact is that only the beneficiaries change?
    Why ICMR could not buy directly? Why the GoI could not utilize their good office & force Beijng to ensure the supplies? Why the diplomacy could not be exercised for supply?
    Are the intermediaries not tolerated for facilitation of corruption & which is but obvious in this case?
    Did ICMR pay the complete value of these faulty kits in advance?
    Dr. Velumani of Thyrocare had pointed to such mis-management on the national television?
    The GoI wanted the private laboratories to conduct test for free while indulging into such blatant corruption?
    Is the GOI not responsible to find out the truth by conducting the forensic audit & identify the culprits?
    Why such looting of the exchequer be permitted & tolerated if we have a non corrupt government?

    balakrishnanr

    7 months ago

    The contract with MyLabs also needs to be delved in to. How come only one supplier? How was the tender framed? And what is the price? WHO OWNS MYLABS? Our businessmen and politicians do not even spare a national calamity. And the next big thing will be an unproven vaccine.

    Nahom

    7 months ago

    Appears Hon. Judge richly smelled the filth. Corruption knows no pandemic, wars or lives.

    mahesh.kalkar

    7 months ago

    Have sent this article to a Cabinet Minister who represents my constituency.

    Govt says IRS body's report ill-conceived, CBDT initiates inquiry
    A day after the Indian Revenue Service Association (IRSA) came out with recommendations including imposition of wealth tax to mobilise revenue, the Finance Ministry has slammed the report terming it ill-conceived and ordered an inquiry.
     
    Further, indicating that the association's act of releasing the report was "irresponsible", the Central Board of Direct Taxes (CBDT) said that neither the IRSA or any group of officers mentioned in the report were ever asked by the government to prepare such a report.
     
    "It is unequivocally stated that CBDT never asked IRS Association or these officers to prepare such a report. No permission was sought by the officers before going public with their personal views & suggestions, which is a violation of extant Conduct Rules. Necessary inquiry is being initiated in this matter," the CBDT said in a statement.
     
    Sources in the Finance Ministry that the officers concerned will have to explain their misconduct to CBDT Chairman for writing such "ill-conceived views" in public without having any authority to do so.
     
    The views and suggestions made by the IRS association do not reflect that of the ministry or the CBDT in any manner, it said.
     
    "People should completely disregard such report. In fact, the Finance Ministry is doing its best to provide relief and liquidity into the system and ease the lives of people in these trying times," said a source.
     
    The IRSA also has come up with a clarification and said in a tweet that the report titled 'FORCE' was sent to the CBDT for consideration and does not represent official views.
     
    "The paper FORCE by 50 young IRS officers suggesting policy measures had been forwarded by IRSA to CBDT for consideration. It does not purport to represent the official views of the entire IRS, or the IT Dept," said its tweet.
     
    Among other suggestions, the IRSA in its report titled Fiscal Options & Response To COVID-19 Epidemic (FORCE) had suggested the imposition of wealth tax on the super rich, with net wealth at least Rs 5 crore and a one-time COVID relief cess of 4 per cent.
     
    It said that the "so-called super rich have a higher obligation towards ensuring the larger public good".
     
    The tax officers' body said they can be taxed through two alternative means, for a limited, fixed period -- 3-6 months. It suggested raising the highest slab rate to 40 per cent for total income levels above a minimum threshold of Rs 1 crore or re-introduction of the wealth tax for those with net wealth of Rs 5 crores or more.
     
    Suggesting the impostion a one-time COVID relief cess, the IRSA said as opposed to surcharges, cess are more broad-based since they relevied on every taxpayer and are likely to mobilise more revenue as well.
     
    The current rate of cess is 4 per cent, including 2 per cent health cess and 2 per cent education cess.
     
    "Thus, an additional one-time cess of 4 per cent on account of COVID Relief (could be called COVID Relief Cess) could help finance capital investment in COVID Relief work," the report said.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

     

  • Like this story? Get our top stories by email.

    User 

    COMMENTS

    Nahom

    7 months ago

    Wealth equality is a forbidden word in a Crony Third World Colonies.

    Home Ministry allows shops to open in and outside city limits except those in malls
    The government on Friday allowed opening of shops as part of the easing of lockdown restrictions announced on April 15 with neighbourhood shops and others being allowed within the city and all shops except those in malls allowed outside the municipal limits with 50 per cent strength of workers.
     
    No shops have been allowed to open in multi-brand or single brand malls. 
     
    On April 15, the government had notified the industries and commercial establishments which can open in certain zones where there are no or less coronavirus cases. 
     
    These relaxations are given by the state governments depending on the situation in a particular area. 
     
    In a modification of the earlier order, the Ministry of Home Affairs has replaced the term "shopping complexes" with "market complexes" within the limits of municipal corporations and "municipalities".
     
    Shops have been allowed outside the city limits except those in malls with 50 per cent workforce while wearing of masks has been made compulsory.
     
    Among the inclusions are shops registered under the Shops and Establishment Act of the respective states and UTs, including shops in residential complexes and market complexes, except shops in multi-brand and single brand malls.
     
    These have been allowed outside the limits of municipal corporations and municipalities, with 50 per cent strength of workers, making wearing of masks and social distancing mandatory.
     
    The other inclusion is the smaller shops in the neighbourhood areas and residential areas which are now allowed to operate within the city.
     
    It includes all shops including neighbourhood shops and standalone shops, shops in residential complexes, within the limits of municipal corporations, registered under the Shops and Establishment Act, except shops in market complexes and multi-brand and single brand malls, with 50 per cent strength of workers. As mentioned, wearing of masks and maintaining social distancing norms are mandatory.
     
    The ministry clarification issued by the ministry says...
    • In rural areas, all shops, except those in shopping malls are allowed to open.
    • In urban areas, all standalone shops, neighborhood shops & shops in residential complexes are allowed to open.  Shops in markets/market complexes and shopping malls are not allowed to open.
    • It is clarified that sale by e-commerce companies will continue to be permitted for essential goods only.
    • It is further clarified that sale of liquor and other items continues to be prohibited as specified in the national directives for COVID-19 management.
      As specified in the consolidated revised guidelines, these liquor shops will not be permitted to open in areas, whether rural or urban, which are declared as containment zones by respective states and union territories (UTs).
    This order has been sent to the Chief Secretaries of the states and administrators of the Union Territories and is in continuation of the guidelines for the enforcement of lockdown.
     
    This order carries out amendments in the order issued on April 15, which detailed which industries and commercial establishments can open with safeguards.
     
    One reason could be that if the industries open, the retail end of the supply chain has to be available for consumption purposes. It will also aid gradual pickup in the economic activities.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
     
  • Like this story? Get our top stories by email.

    User 

    We are listening!

    Solve the equation and enter in the Captcha field.
      Loading...
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email
    Close

    To continue


    Please
    Sign Up or Sign In
    with

    Email

    BUY NOW

    online financial advisory
    Pathbreakers
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 4 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone