PAC wants PPP projects under CAG, to sound out audit watchdog
The Public Accounts Committee strongly favours empowering the Comptroller and Auditor General to examine investment, expenditure and profit aspects in public-private partnership (PPP) projects and has decided to call the full CAG before it soon to discuss how to technically empower the audit watchdog in this regard. The move is significant as it comes in the backdrop of corruption allegations in various PPP projects in the past. The private sector has so far been resisting the move but the committee’s argument is that since public money is being spent even in PPP projects, it needs to be safeguarded. The PAC headed by Congress leader K V Thomas has decided to call a meeting of the full CAG, most likely this month, after which it will also be calling representatives from ministries. “The stand of private parties is that the CAG has no business to look into their transactions. PAC, however, strongly feels that wherever the government money is involved, the CAG indeed has a role to play. Since government money is also involved in PPP projects, the entire transaction has to be examined by the CAG,” a PAC member told PTI on the condition of anonymity. The issue was vigorously debated at a recent meeting of the PAC. Under the PPP mode, the project is implemented based on a contract or concession agreement between a government or statutory entity on the one side and a private sector company on the other side for delivering an infrastructure service on payment of user charges. PAC’s view that the CAG should also start examining public-private partnership (PPP) projects is not a new one. Former PAC Chairman Murli Manohar Joshi, a veteran BJP leader, had earlier also said that the CAG hould be given powers to look into the functioning of PPP projects, societies and NGOs. His argument was that every single paisa going through the budget should be looked into by the CAG. The PAC headed by Thomas has now decided to discuss in detail the manner in which the CAG can examine transactions in PPP projects and how the CAG can be technically assisted to do so. “We are keen that a mechanism is put in place whereby the CAG gets the needed the technical assistance to examine the PPP projects. We believe that the CAG should look into the entire gamut of of PPP projects–investment, expenditure and profit,” said the member. The member said that one argument from the private sector is that the CAG can at best only look into the profit part. “They also argue that only the ministry can look into the PPP projects and not the CAG. There is also a view that the move to involve CAG into the scrutiny of PPP projects will discourage foreign investment. That is why we have decided to call a full CAG meeting to discuss all these aspects,” the source said. In a report presented in the Lok Sabha in 2014, the CAG had made a case for comprehensive audit of public-private partnership projects by it. The auditor wanted the government to insert relevant clauses in PPP contracts for this purpose. The report had maintained that under PPP projects, private players use assets or funds held by the government and render services within a pre-set revenue-sharing agreement and hence a comprehensive audit was necessary in order to ascertain the project’s performance in delivery of services and its adherence to contractual obligations. The same year, the CAG had made some adverse comments about PPP projects in some key infrastructure sectors including the Mumbai airport and several railways projects. In 2011 earlier, the then Planning Commission had, however, voiced reservations against CAG scrutiny on the role of private sector players implementing the Public Private Partnership (PPP) projects. A bill seeking to expand the scope the Comptroller and Auditor General of India to scrutinise PPP projects besides regulators, including SEBI, TRAI and IRDA, was also under the consideration of the Finance Ministry then. The bill sought to replace the CAG Act, 1971 and expand its scope. However, it could not take off.
Competition Appellate Tribunal sets aside CCI penalty on the airline: SpiceJet
SpiceJetBSE -1.20 % today said Competition Appellate Tribunal has set aside CCI’s order imposing a penalty against it in the case of alleged cartelisation in relation to cargo fuel surcharge. The tribunal, on April 18, set aside the Rs 258 crore fine on Jet Airways, IndiGo and SpiceJet and directed the regulator to pass a fresh order. In November, Competition Commission of India (CCI) had penalised the carriers for alleged cartelisation in fixing fuel surcharge on air cargo. SpiceJet was slapped with a fine of Rs 42.48 crore. In a filing to BSE, SpiceJet said the tribunal has set aside CCI’s impunged order and that the matter has been remanded back to the regulator. The tribunal has asked CCI to reconsider the joint Director General’s report and then take appropriate decision, the filing noted. CCI’s order last year came after its investigation arm Director General ( DG) conducted a detailed inquiry. “In the event the CCI disagrees with the findings and conclusions recorded by the JDG, then the CCI shall indicate the reasons for such disagreement and issue notice to the parties incorporating the reasons of disagreement and give them opportunity to file their replies/ objections and thereafter to pass appropriate order in accordance with law,” filing said quoting Compat order.
Looking to develop retail assets at Delhi airport land: GMR
GMR Infrastructure today said its subsidiary DIAL has shortlisted players for submitting financial bids in order to develop retail assets on nearly 23 acres of land at the Delhi airport. Delhi International Airport (Pvt) Ltd (DIAL), a joint venture where GMR group is the majority stakeholder, is operating the airport in the national capital. Other stakeholders are Airports Authority of India and Germany’s Fraport. In a regulatory filing, GMR Infrastructure said DIAL has initiated a two-stage international competitive bidding process for “development of retail assets on approximately 23 acres of land at the Delhi airport”. The Request for Qualification (RFQ), the first stage of the bidding process, was initiated on November 5, 2015. Applications from entities with relevant experience and financial capacity were sought. “The second stage of the bidding process was initiated on April 6, 2016, whereby the RFP documents have been shared with the shortlisted players inviting them to submit their financial proposals,” the filing said. Sources said as many as five leading realty players, including DLF, have been shortlisted for submitting the financial bids. The proposal is for developing retail complex of over two million sq feet at the land available with DIAL, they added. According to them, in the financial bids, the shortlisted players need to provide details about the upfront payment as well as the revenue sharing formula. Currently, GMR holds 64 per cent in the airport venture while Fraport has 10 per cent and the remaining 26 per cent shareholding is with AAI. The GMR-led consortium was awarded the concession to operate, manage and develop the Indira Gandhi International Airport here in January 2006. It inked the Operations, Management and Development Agreement (OMDA) in April, 2006. DIAL is a special purpose vehicle formed to carry out development, operation and management of the Delhi airport.
Civil Aviation Ministry suggests shifting from airport-based security to aircraft-based security at smaller airports
The civil aviation ministry has suggested a shift from airport-based security to aircraft-based security at smaller airports to minimise cost of flying on regional routes, an idea that has not found favour with experts. The suggestion, which marks the first time the government has thought of economising on security in aviation sector, is part of the new aviation policy that was sent for interministerial consultation earlier this month. “The sole intent is to keep the cost of flying low for regional flights, where we plan to fix fares at Rs 2,500 per hour, and is part of the policy,” said an aviation ministry official, requesting not to be named. The official said the plan is to make security aircraft-based or flight-based at the small airports. “Under the plan, the airport will be sanitised about two hours before the flight is to arrive and the security will move out of the airport about one hour after the flight departs. Otherwise, the airport will not be used and will have minimal security,” he said. This will help keep the cost low, he said. Analysts, however, slammed the idea on the grounds that aviation security cannot discriminate on the size of the aircraft or airport. “The risk of a hijack is the same for a big and small aircraft. Aviation security cannot be lax at airports that are small or have regional flights,” said Shakti Lumba, former head of operations at Air India and IndiGo. The ideas, if implemented, will lead to further problems, Lumba said. “What if the flight is delayed or an aircraft is grounded at an airport that does not have security. It simply cannot work like the way it has been suggested only because the government wants to keep the cost low,” he said. According to the National Civil Aviation Policy 2016, which is likely to be taken up by the Cabinet by the end of this month, the ministry intends to roll out regional flights at 30 airports which have the infrastructure in place. The government has decided to subsidise airlines for their cost of flying passengers beyond the fixed tariff of Rs 2,500 per hour. The policy proposes to charge Rs 8,000 per landing or take off on domestic flights by planes with 80 or more seats to fund the subsidy for regional flights. This levy will help generate an estimated Rs 500 crore annually. Apart from the subsidy, the government plans to offer concessions such as a flat 2% excise duty on fuel at regional airports for three years and 1.4% service tax on regional flights for one year. Excise duty on aviation fuel is 14% at present, while airlines have to pay a 5.6% service tax on tickets.
Online marketplaces depending on algorithms to crunch data on customer behaviour
By the end of this year, m -commerce-to-wallet company Paytm will have all its category pages made by machines. Paytm wants to respond to each customer who visits its website looking for fashion wear or sports gear or iPhone covers in a personalised way. The website will offer customer choices based on past usage and social media posts. For example, if you recently went to Goa on a holiday and posted photos of the trip on Facebook, you might get ‘beach-themed’ iPhone covers. The idea is to hook customers with what they prefer. Given that the choice of iPhone covers run into several hundreds, a customer visiting an online marketplace might not have the patience to browse through all the pages and options. But by throwing up just what he desires, the website might be able to coax him into buying. Online marketplaces like Paytm call this conversion rates the number of visitors who end up buying stuff. Helping them bump up conversion rates are algorithms. Algorithms are responsible for customers browsing for goods being greeted with shopping recommendations. Algorithms decide what to display for online marketplaces. They keep track of what customer are browsing and buying. “The goal is to improve conversion rates and help the industry become profitable,” says Vijay Shekhar Sharma, founder, Paytm. How does it work? Internet merchants are swamped with mind-boggling flow of data for example, Paytm has about 30 lakh visitors every day with about 3 million page views daily. Algorithms help it crunch data on customer preferences and increase sales. “Algorithms are the base for everything online shopping, shipping, packaging, payments, price points etc,” says Sandeep Aggarwal, founder, Shopclues. com, an e-commerce marketplace. The importance of algorithms becomes stark looking at the current online marketplace conversion rates. It is at less than 3% compared with that of offline retail at 22-25%. Algorithms will also underpin the future of ecommerce companies. There was a time when these companies could live with that poor statistic. Not anymore. They are stacking up $150-200 million in losses every month, throwing good money at customer acquisitions and deep discounts. Profitability was not a priority. But now they face a funding squeeze and pressure from investors to show profits. Pragya Singh, vice-president, retail, Technopak a retail consultancy, says the focus until now was on topline growth. “In the last few months it’s about how to come out of deep discounting and show profits.” Flipkart has been downgraded twice in the last four months by investors Morgan Stanley and T Rowe Price. In March, the Department of Industrial Promotion and Policy, the nodal agency for investments, while allowing 100% FDI in pure marketplaces banned deep discounts, predatory pricing and ‘big billion sales’. With no room for manoeuvring prices to attract buyers, the route to achieve better conversion and reduce losses is big data analysis and algorithms. Praveen Bhadada, partner and practice head, Zinnov, a Bengaluru-based management consulting firm, sees the reliance on algorithms as the second wave of ecommerce in India. “The first wave was about getting the model right, getting people used to the idea of shopping online. Now, a sizeable customer base is there (about 55-60 million internet users shop online) and in the second wave companies are using algorithms to improve profitability,” says Bhadada. Data as a Weapon: At any given time, there are 3 to 4 million visitors online. They spend an average of seven minutes viewing 8-10 pages. By the end of the day, about 15 million records are generated. ComScore data for February for all etailers shows 52.98 million unique visitors, 4.42 billion page views and about 55 minutes a visitor a month. The minutes spent on e-shopping leave a trail and clues that companies want to dive into. What was the shopper looking for? What are his previous purchases? What device did he use? How many times has he visited the website? “We have to use this basic data what did a person do for strategic advantage. So, if a user has not logged in for 3-4 days the listing might be stale and the algorithm refreshes it. If a customer does a lot of cancellations, the cash on delivery option for him is automatically disabled (the customer might be doing it just for fun),” says Aggarwal. Generating traffic is not the problem for etailers. Getting customers to buy is. “We are super ambitious about using data to help a person find what he is looking for. This will increase conversion rate and improve profitability,” says Rajiv Mangla, CTO, Snapdeal. “We want to detect patterns in user behaviour to improve conversion.” A number of companies are already using algorithms to improve conversion rates. Ugam Solutions is a Bengaluru based data analytics company whose clients include leading ecommerce platforms such as eBay, LG and Staples. The company analyses data for clients and offers signalswhat inventory to carry, what models are trending, what are users searching for and what competition is carrying. Say a marketplace wants to dominate luxury watches segment, should it carry the whole inventory from Rolex to Rado or focus on brands like Breitling or Chopard which have the more likelihood of sales. Mihir Kittur, co-founder & CEO, Ugam Solutions, says India is a growth market where the belt has tightened. To be sure, companies are looking at data with renewed interest. Saurabh Vashishtha, vice-president Paytm says his company “stores everything”. “There’s a huge push to dynamic content from static a year back.” So if six months back all visitors saw the similar content on each category page, now Paytm has a better idea and displays content based on what the algorithm picks up. Deepali Tamhane, senior director, product management, Flipkart, says the company is working towards achieving the next level of personalisation. “We want to provide our users with what they want, even before they know they want it, of course with their consent to use their data.” Finding the Sweet Spot: Adds Bhadada, “in the small window the user
Madhya Pradesh FDA gets ‘retailer friendly’
At a time when food safety is becoming a household concern, Madhya Pradesh Food and Drugs Administration (MP-FDA) is lowering its guard. A new food sample collection policy aims to ‘avoid harassment of retailers/producers’ and ‘follow standards as in developed countries’, according to an MPFDA official. As a result, food adulterators are now more unlikely to get penalised. “Food Safety and Standards Authority of India (FSSAI) Act is based on concept of allowing offenders a chance to reform. It would avoid undue harassment of businesses and inspectors will not collect samples without written permission,” said MP-FDA joint director Pramod Shukla. The agency’s preparedness was exposed last year. During a national-wide sample collection called for by FSSAI following the Maggie controversy, MPFDA was the body that could not send test reports twice in stipulated time. “You have to think from the perspective of a retailer or businessman. A customer will not return if he or she finds the product unsuitable,” said Shukla. In 2015, MP-FDA collected estimated 20,000 samples and only 9 samples were found unsafe for human consumption. Now two out of every three samples collected by FDA inspectors to determine food safety of product will not be liable to legal prosecution and only collected for surveillance. Making sample collection even more difficult, the FDA has further tied the hands of the inspectors. Now, FDA inspectors cannot collect a sample without prior written permission from designate officer – the district chief medical and health officer (CMHO). “New provision will save the energy of our staff and reduce pressure on our laboratories,” he said. The target for each inspector is now to collect four legal samples a month and eight surveillance samples. The decision comes after a meeting of FDA officials in Delhi.
CEO email fraud becoming rampant with hackers targeting high officials
In August 2015, a top official of one of the Indian regulators wrote a note to his IT team asking what they were doing to protect his emails. The official had enough reasons to be concerned as every decision that the regulator takes directly impacts the economy. The official’s fears weren’t unfounded too. Email hacking is now the leading information security concern among chief executives in India. Over the past one year, there has been a sharp uptick in email fraud. Hackers are increasingly targeting the top management of companies to retrieve confidential information, costing them millions of dollars. Tarun Wig, co-founder of Innefu Labs, an authentication security firm, says email hacking is the latest and probably one of the biggest challenges of information security. “In the corporate environment everyone is scared their email could be compromised, the impact of which could be on the professional or personal level.” Indeed, hacking of CEO mails is now rampant globally. According to the US Federal Bureau of Investigation, a scam in which criminals impersonate the email accounts of CEOs has cost businesses around the globe more than $2 billion in just over two years. The FBI has seen a sharp increase in “business email crime,” a simple scam that is also known as “CEO fraud”, with more than 12,000 victims affected globally and a 270% increase in the number of identified victims and exposed loss since January 2015, including in India. Easy Targets: The targets are usually high-level executives (CEOs/ CFOs etc) at medium and large organisations. The attackers target businesses working with foreign suppliers or businesses that regularly perform international money transfers. In India, examples are legion. The CEO of a Noida-based organisation was blackmailed into paying $40,000 to a group of people who had hacked into his mail and found pictures of him in compromising positions. In January, one of the “unicorn” startups in India discovered that a malware had entered the system. The malware had surreptitiously lurked on the company’s systems, invisible to most eyes and targetted the email ids of the CEO, CFO and eight other senior executives. It then began sending emails to an unknown server in Europe. Fortunately for the company, “nothing important was compromised”. In another case, a well-known CEO of a big Indian company, who is now retired, was targeted. Last October, the CEO got a threatening mail from a person who claimed to possess private emails. Some mails were sent as proof. The sender demanded money for not making public the emails. The CEO called a cyber-security expert who found that a hacker had managed to access his emails while he was in Europe. The cyber security expert believed that this was a targeted attack. The security expert refused to share the detail whether or not the money was paid to the hacker or what were the contents of the email. “While globally BEC (business e-mail compromise) is on the rise India has been among the top targets for hackers in the last one year,” says Burgess Cooper, partner – information & cyber security at EY. Wig says the government too is vulnerable to hacking. “If I want to make money as a hacker I can just hack into 15-20 mail IDs and carry out stock market trading using insider information,” says Wig, who works with government and private companies to combat hacking. There have been several cases in the past of government agencies coming under the glare of hackers. Recently, the e-mail account of a finance ministry spokesperson was hacked. Last year, fear of Lalit Modi’s email hacking spooked critical government officials who were reported to be growing rapidly averse to electronic communication for fear of being intercepted or hacked into. In 2014, India ranked second on a list of countries most targeted for cybercrimes through social media, following the US. The National Cyber Security Policy of India, announced in 2013, aims to create 500,000 skilled workers in the field of cyber security in India by 2018. “Over 100 billion emails are exchanged every day, and not one of us has got any formal training about using them responsibly. CEOs are no different. Targeting them especially becomes easy as they are generally public faces,” said Saken Modi, CEO, Lucideus Tech, a cyber-security firm. Problem is many Indian companies have become bigger, the hackers are going after the emails of the top guns, say industry trackers. In March, Flipkart’s finance chief got an email from an account that looked similar to that of cofounder Binny Bansal, with an instruction to transfer $80,000 to a bank account. Flipkart said it was a spoof where the email originates from an outside source with a falsified name and address and that its email accounts were secure. “Data security is of utmost priority for Flipkart… We use Advanced Encryption Standard (AES) to ensure data security,” says a company spokesperson. While Flipkart, a new-age company, may have put up safeguards against cyber threats, many others may not be prepared to handle such issues, with cyber criminals becoming more and more sophisticated. Callous Attitude: Experts say that often the top managers are quite careless. In one instance, the top boss of one of the biggest banks in the country was sitting in the lobby of a Mumbai five-star hotel and checking his bank statements in his emails after using the hotel’s WiFi. “When I pointed out to him that this could be dangerous, he just dismissed the whole thing saying I was being paranoid,” says a partner with a cyber-security consultancy who met the boss to exchange pleasantries. Experts say though there is concern among companies that their emails are prone to attack most of them are still quite casual about dealing with it in a planned manner. Many CEOs maintain more than one email thinking that security of one is not important. The opposite is true. “If a hacker can get into one account whose password your secretary knows, rest assured they can hack into all your
Phase of exuberance in e-commerce sector over: Mohandas Pai
From a period of exuberance, India’s e-commerce sector has entered a reality check phase with players focussing on cost cutting and business viability as investors seek performance, tech investor T V Mohandas Pai said today. Pai, ex-CFO of software major Infosys, said 2015 was a year of exuberance as a lot of money flowed into the sector but it is no longer the scene now. “Now, the funds have become very costlier. Now, they (investors) are demanding performance. Capital is also becoming scarce driven by interest rates in the US and potential meltdown in demand in China. Europe is not growing and Japan is not doing well and there is fear. “That’s why venture capital flows have come down. They (investors) have become very selective. People are now beginning to ask questions as to when e-commerce business will be viable and when they will create a sustainable business and value for the money they have put in. That’s good news”, he told . Many e-commerce players believed that if they go on giving fat discounts and sell more, they would get more revenues and higher valuation. “That model is not sustainable,” added Pai, co-founder of Aarin Capital. Now, investors are demanding performance. “Some sanity is coming (in the e-commerce space). E-commerce players should build business based upon efficiency and not upon steep discounting. Discounting can be there to the extent of savings they have compared to a conventional store. They are getting cautious and they are cutting costs, and that’s good news,” he said. As for whether some top Indian e-commerce players are overvalued, he said, “Whether they are overvalued or not depends on who is willing to pay money for that valuation. If they are raising capital, if somebody is paying money, then it’s fairly valued. It’s very difficult to make comments. Some funds write it down based on their model.” Pai does not think investment flows into the e-commerce play would slow down further. “Funding will come in for B2B and players with sustainable businesses and great technology. Direction of the funds may change. Funding will not come down in a substantial manner,” he said. Pai, who is also Chief Adviser to the Manipal Education and Medical Group, dismissed reports that hiring is slowing down and salary packages are being slashed in the sector. “Startups are also businesses. Some of them may succeed, many of them will fail. That’s the nature of the business. Nothing has changed in the last six months. Startups are coming, some of them are raising money, some of them are failing, it’s continuous,” he said.
Snapdeal co stole biz data: Paytm
A legal battle seems to be brewing between two leading Indian consumer internet firms. Online payments and commerce platform Paytm has filed a lawsuit against Snapdeal-owned Unicommerce, an e-commerce management software and fulfilment solutions provider, in the Delhi high court, sources aware of the development told TOI. Paytm, run by One97 Communication, has accused Unicommerce of accessing confidential business data on Paytm’s commerce platform via the sellers on this platform. Many sellers on Paytm’s platform use Unicommerce for managing orders and inventory across multiple marketplaces and carts. Paytm has also alleged that Unicommerce is using Paytm’s logo and name without any authorization. New Delhi-based online marketplace Snapdeal had acquired Unicommerce last year. When contacted, Paytm, Snapdeal and Unicommerce declined to comment saying the matter is sub judice. The hearing is expected to take place on Thursday. The development marks growing tensions between rival companies in the highly competitive consumer internet space. About a month ago, cab aggregator Uber had dragged rival Ola to court alleging that the latter was involved in false bookings and creating fake rider accounts on the former’s platform. Paytm and Snapdeal are rivals in two key business areas – payments and commerce marketplace. Snapdeal started as a marketplace and then acquired Freecharge for a play in the payments business. Paytm, backed by Chinese e-commerce giant Alibaba, started as a digital payments platform and later entered the marketplace business. Marketplace players connect merchants to consumers through a digital platform. The information and data flowing through the platform is valuable and companies want to keep it private. “Data is of utmost importance as it provides valuable insights on consumer behaviour. Company-specific data getting into the hands of rivals can impact the business negatively,” said a legal expert tracking startups in India.
Centre to fund incomplete projects of JNURM
The Centre will fund all incomplete projects approved under the phased-out JNURM during 2005-12 in which 50 per cent finances have been released and progress achieved, Jammu and Kashmir Chief Minister Mehbooba Mufti was told at a meeting held here today. The funding will be done under the newly-launched Atal Mission for Rejuvenation and Urban Transformation (AMRUT), she was told by officials at the meeting. Launched in 2015-16, the total allocation for J&K for the AMRUT mission for the period of five years is Rs 744 crore. At the meeting on urban development, Mehbooba asked policymakers to think out-of-box to address emerging challenges of urbanization in the state as she underlined the need for proper planning and management to ensure planned development, basic amenities and a decent urban life to its people. Expressing concern over the present state of urban planning and management, the Chief Minister called for a systemic overhaul and suggested a series of measures to provide efficient infrastructure,solid waste management and building capacities of municipalities so that the minimum service guarantees to the people are provided in a hassle-free manner.