In your interest.
Online Personal Finance Magazine
No beating about the bush.
The MLM company promises five-star travel packages on joining and lucrative compensation fees up to Rs4.5 lakh on its direct selling model
Travel Ventures International (TVI) Express, a multi-level marketing (MLM) company, is growing its base in India. And like in the recent case of another MLM, Speak Asia Online that is being investigated, some people are questioning the big promises on its business model.
TVI Express claims to be in the home-based direct selling business, inviting those interested, to become members on a payment of Rs15,500. Members get a seven-nights-eight-days travel package in 3/5 star hotels of their choice, from about 4,000 hotels that the company has a tie-up with. A new member also gets a personal portal, which is primarily a booking website.
The company has a business model which, it says, is compensation-based. The member can sell the travel package to two new members. Those two new members would in turn sell the travel package to a further two members each. This goes on till level four, which is known as "Traveller Board". On completion of Traveller Board the top member is paid a compensation of Rs31,000.
Beyond this there is an "Express Board" level. Once the Traveller Board is completed, members can enter the "Express Board". Here too, the number of new entrants increases, taking the original members a step ahead. On completion of "Express Board", the top member gets Rs4.5 lakh as compensation fees.
Members also get a 5%-10% bonus for every new member joining after he/she "cycles out of Express board". It also rewards the members with incentives "ranging from luxury cars to private jets and splendid villas in exotic locations around the world."
However, contrary to the company's claims, members have alleged that it is not paying the promised compensation. According to complaints posted on consumer forums on the Internet, the TVI Express business model is a scam, as many members who have increased their down line have not been paid any compensation.
TVI Express has a presence in many countries, among them the United Kingdom, South Africa, Canada, France, Germany and China.
Interestingly, according to a news report, The Bank of Namibia had warned people about investing in TVI Express and Holiday and Cash because they were operating in Namibia in violation of the laws.
When Moneylife called TVI Express, a company official said: "We abide by the laws. We follow all the rules and regulations. Ours is not an investment scheme; our business works on compensation fees which we pay to our members, who generate business for us. Those who work, earn. All these complaints are posted by our competitors who are jealous of our business growth."
Meanwhile, it has been reported that bank accounts in Singapore of Speak Asia, the online survey company which is being investigated, have been frozen, disrupting payouts to vendors, clients and staff.
Moneylife has consistently exposed the dubious claims made by such MLM companies that are promising high returns in a short span. (Read, "Stay on guard: Need to regulate MLM firms, websites, so investors don't suffer".)
As a nation, we are peddling our scarce natural resources that cannot be replenished. Global players are mining iron ore for a song, destroying the natural habitat around the mines and shipping it to metal-hungry destinations and making super-profits. As usual, the powers-that-be are silent
As an ex-seafarer, the first cargo I loaded on a ship, way back in 1975, was iron ore from Vishakhapatnam (or Vizag) to Japan. Always interested in matters beyond my purview, I remember that the charterer in this case was the government-controlled monolith, MMTC (Minerals and Metals Trading Corporation), the buyer a Japanese trading house connected with Sumitomo-and that the price achieved for this shipment, delivered at the port of Nagoya, way back then, was around $17 a tonne.
The price that the Indian Government achieved, through MMTC, was around $10-$11 per tonne -ex-Vizag, loaded onto our ship. The rest was on freight and other costs. Laughingly, it was pointed out that kickbacks were high, around 15%-20%, but were likely to be impacted because the Emergency was on everybody's heads in those days. Even people at MMTC and STC (State Trading Corporation) had to be careful.
This was for what is known as '60% FE lumps'. A very highly sought-after grade of iron ore that we export from India, and the rate is set in such a way that it permits for variations in quality along a few other parameters, using this as a benchmark.
60% FE in lumps is about as good as it gets. The Japanese term for it was the equivalent of malai, or "full cream", and we have a lot more in India. In the area, largely, called "Maoist", but that's not the subject of the debate.
The debate then was whether it was more profitable for the Nation of India to ship this iron ore to the US-East Coast (Norfolk) area-where the price achieved was around $25-$27 a tonne, landed.
What came in the way, in those days, was not just the freight rate-ships had to go around the Cape, since the Suez was closed. In addition, it was whispered, doing business with Japan was better for some corrupt people, since the Japanese were rumoured to not be averse to the idea of more than a few dollars per tonne as kickbacks, and making "relationships", while the Americans got slightly moralistic about such things then-5% to 7% was what was supposed to be their limit, and you often had to accept it in wheat.
Which was not a good idea, because India was getting 'free' wheat under the PL-480 scheme in any case in those days, which is a scam many may have forgotten.
In addition, the Japanese were very keen to provide the funding as well as technology for building a railway line from Vizag into the pristine Aruku Valley area, to get the iron ore out more efficiently, and this was pushed through as a 'people-friendly' step to help connect one of the remotest parts of central India to the rest of the country.
Of course, nothing is free, so India was going to pay the Japanese back. In iron ore. And remember, west of Hong Kong was a huge swamp called the Pearl River Delta, then. And South Korea? South Korea was still teaching its sailors to work on ships. Under Indians.
So, we sold our iron ore in Aruku Valley to the Japanese for a song. How much they sell it in further trading, now that China and South Korea are also consumers, would be interesting to learn. Chances are, the onwards sale is at market prices, while the first sale is at the old pre-negotiated prices. We are still paying for that Railway Line, remember?
Think of it like this-you have a home in a remote part of, say, Maharashtra. You have some great boulders there, which can be extracted, broken down, and made into brilliant granite slabs. But you don't want to sell them or move them, even to the nice Japanese guy who comes to your house, because technically you can't and even if you could, you want to sell it one rock at a time, because the house is in a remote place.
So now the Japanese guy goes back to the government guy, and makes him a deal-the Japanese will pretend he is loaning money to the government, which will then cover the loan through its public sector banks, and the Japanese guy will then make a road to your house which nobody else can use, not even you, and then he will take all the granite away as soon as he can, for free, in payment for the road he helped build.
You will be left sucking your thumb, you may have to pay a toll to enter your own house on that nice new road, and if you protest, you will be called Maoist. But then, this is not about them.
That railway line from Vizag up into one of the prettiest parts of India rapidly being mined out of existence (the natural caverns being formed nearby are used as oil reservoirs, incidentally) now stands as a tribute to Japanese engineering skills. And runs between 40-80 rakes of iron loaded trains to the port cities of Vizag and Gangavaram, from where it heads off mainly towards the hungry steel mills of China, South Korea and Japan. But there are hardly any passenger trains on that route, and the few that operate, have to give way to the iron ore trains. I have been on this route once-and reached the other end 24 hours late, as we kept giving "pass" to iron ore rakes thundering past us.
To anybody except the most foolish it is clear to those who know this industry that we are as a nation selling our resources. Fair enough, this does not want to become yet another article on the political and sociological, as well as economic aspects of this trade-people have been called 'Maoist' for less. But can we look at the numbers again?
The international prices of iron ore are shooting upwards, by as much as $20 to $30 in the last few weeks, and anticipated to go up by a similar amount to around $200 per metric tonne in the next few months. This is despite much lower requirements in Japan, and slightly reduced requirements in China, the two top global markets for iron ore. The top three suppliers of iron ore are Australia, Brazil and India.
The indicative price currently is around $170 per metric tonne for iron-ore lumps with a 60% FE content, cost plus freight landed at Qingdao in China as a benchmark, and freight rates varying from $8 to $16 per metric tonne depending on size of ship as well as market forces on freight rates. The sale price of this kind of iron ore from Australia or Brazil is around $130-$150 per metric tonne, and rising, with some minor amounts for insurance, loading costs, holding costs, and other such expenses.
The royalty paid to the Indian government by the new iron ore exporters being invited in, like Posco, is Rs27 rupees a tonne for iron ore lumps. That's all. 60 cents. Not even a dollar a tonne. The rest is, apparently, part of the whole loan-loan-loan and more loan cycle, since Posco will help develop the area. At every stage in this financial game, there is a transaction cost, and it is instead of being in percentage points, now into multiples of the costs involved.
Agreed, there is a cost involved in mining the iron ore, extracting it, and converting it into lumps, which even after allowing for all sorts of cost overruns is not going to exceed $20 a tonne-an extremely high outer estimate. Agreed there is a cost towards "developing" the area, whatever it means. Agreed, some babu somewhere can justify how after 35 years, our export price is down from $15 a tonne to 60 cents a tonne.
But can anybody justify why the Indian government, the state government, the various public sector entities, the watchdogs, the parliamentary committees, the environmentalists, the media, everybody and more-why can't we get even some percentage of the increase in iron ore prices to the country's account?
Assuming the price has gone up by $50 a tonne, all other costs remaining the same, shouldn't the nation get at least some part of it-especially when all we appear to be getting is 60 cents a tonne?
And that is why anybody who disagrees will be called a Maoist, a seditionist and an anti-national. But this article just wants to know-how much of the increased price will we in India get?
An aside: The same companies who bid for iron ore mines in India, also bid for iron ore mines elsewhere in the world. The higher costs being achieved make it feasible to prospect for and take iron ore out from all new areas. There are more than a few Indian companies in the running for this business, and the royalty that apparently some of them are willing to pay for "futures" is in the $100 plus levels-for future imports into India, when we become an iron ore scarce and deficit region. Already plans are being made to ensure that ports being developed under infrastructure loans are geared up to handle current export and future import of iron ore.
According to a survey undertaken by Venafi, organisations need to quickly come to terms with how crucial encryption keys are to safeguarding the entire enterprise, as well as the heightened need for automated key and certificate management with access controls, separation of duties and improved policies
Data security and managed encryption services provider Venafi Inc says about 40% of IT staff have admitted that they could hold their employers hostage-even after they've left for other employment-making it difficult or impossible for their bosses to access vital data by withholding or hiding encryption keys. This is due to the lack of oversight and poor management of their organisation's encryption keys.
In a survey, conducted during the InfoSecurity 2011, Venafi said around 82% of companies now use digital certificates and encryption keys, and 43% admitted to being locked out from their own information, because people had left the organisation or keys were lost, and 76% said they would use automation if they knew it existed.
When organisations rely on the Internet and its corporate networks to conduct global business and facilitate worldwide communications, they deploy multiple layers of IT security hardware and software technologies-all designed to protect networks from unauthorised intrusion, cyber attacks and regulatory compliance violations.
However, due to the absence of automated management processes, solutions and practices, many organisations fail to gain complete control of its data encryption keys and certificate inventories.
Jeff Hudson, chief executive, Venafi, said in a statement, "It (data encryption and management) is no longer rocket science. Yet recently, costly breaches at Sony, Epsilon and elsewhere reinforce the need for both more encryption and effective management."
The data is based on a survey sample of 500 IT security specialists that was undertaken at the InfoSecurity 2011 event in April.
The survey reveals that organisations are taking huge risks with mission critical and sensitive business data. This risk is reminiscent of the situation Anglo Irish Bank found itself in when ex-employees held the organisation's encryption keys ransom after they left the organisation.
A third of the survey respondents said that their knowledge of and access to encryption keys and certificates, used for both system authentication and data protection, means they could bring the company to a grinding halt with minimal effort and little to stop them.
"Astonishingly, they claim that even after they have left, they still could cause havoc with their knowledge of the encryption keys, shared passwords and weak controls. 40% of respondents admitted that they would still have access to vital information and could manipulate it to their own ends-both to their company's financial and reputational detriment," the survey found out.
Venafi stated that 31% of the respondents said they could still access organisational data because they could easily retain the encryption keys when they left and access the information remotely.