Byapaar.com -The Indian Business Blog

Enough talk of the economic and financial crisis on my last few posts. So now let it pass by for some time and get little bit personal. Yes, sometimes I do write some posts which might be personal but might be useful to my readers if I share my experiences with them.

Today, I’ll focus on some fraudulent companies posing as up and coming financial or insurance companies. Some companies also pose as investment funds looking to raise funds for investment in certain industrial or realty projects.

Their modus operandi is quite impressive. Most of the time they target the country side – in rural and semi urban areas where a huge section of people have good income. These people have very little option to leverage their savings as they have little choices. Only traditional fixed deposits or recurring deposits at banks and post offices are available. So when good speaking marketers enter their domains with promises of huge returns within a short period of time for seemingly small investments – the unsuspecting villager falls prey. The company representatives carry with them some glitzy leaflets, brochure of their companies and give lectures on how they will grow as big as Peerless in the next few years.

Just last week, someone from a certain company approached me to invest in preferential shares of a new company working for government projects in West Bengal little knowing that I run a business blog and am well versant with the industry though I might live in a non-descript corner of India. When he started his usual sweet lecture about who the big shots are already in their board of directors, I politely asked him to show all the government approval papers and if they have the required documents from concerned authorities. He told that – he is not authorized to carry original documents! But all the information may be found on their website! Now here is a catch they usually use to allay suspicion of prospective clients. As internet penetration and literacy is too low in India, people from semi urban areas have a mystic impression about the internet and websites because they don’t know about it whatever their educational qualification might be. Most of the time they get convinced and the fraud run away with their hard earned money.

These financial agencies also offer extra benefits such as commission to get newer investors and it works on chain system. Someone with pure commonsense might understand that these are nothing but big SCAMs and Ponzi schemes. Otherwise they can never pay up the promised returns.

The most depressing thing about this whole phenomenon is that, cheated individuals have no where to go for complaints as most of these deals are done at homes and legal actions can hardly be taken due to lack of proper evidences. The so called company executives roam around from place to place and have no permanent or temporary office nearby as they claim that their company is still new and has only the registered office. The obviously promise to set up their office here in the future once their client base has grown substantially so that they can process client claims locally. But as I mentioned before –most of these are frauds, scams.

So be very careful with such shady companies. My advice would be – don’t fall for them at all. Just excuse yourself when such people approach you with offers. If you have intentions to save, save it in time proven schemes such as bank deposits, LICI policies, post office deposits. After all, there was a newspaper report recently that top leaders from across parties are all followers of traditional saving schemes like KVP, Government bonds or just normal recurring deposits.

Can you do business in India? – Probably yes.
Can you do business in Bengal? Keep reading the post ….

I thought I would not cover this story as it is so controversial and getting huge media coverage. But now I think I should do my bit of .the story.
It seems Communism has come full circle in India and West Bengal in particular. It was during 60’s and 70’s that the communists took the nation by storm with their war against then existing feudal system and were instrumental in the introduction of Land Reform Law in West Bengal after they came into power for the first time in 1967. They have been ruling the state continuously since 1977.
The turning point came in 2000 when the Patriarch of the party Jyoti Basu retired from Chief Ministership and handed it over to Buddhadeb Bhattacharya, a young and energetic leader with an eye for development. It must be noted that between 1977-2000, almost all industrial and business houses left Bengal and it became a industry back-burner from a leading state. Soon after assuming office Mr. Bhattacharya decided to correct it and started to transform the government into a business friendly one. His government were now wooing foreign investors and promoting Bengal as a favored business destination to set up industries. Business man too got impressed by his genuine attitude and signed lots of Memorandum of Understandings with the government. So came big business houses like Tata! The Tata Automobiles choose to set up their pet project of Rs. 100,000 car Nano factory in Singur.
The Nano is arguably the most inexpensive car in the world conceived in 2003 by the Tata Group Chairman Ratan Tata and aimed primarily to give a city car to millions of Indian middle class families who can’t afford other cars but can afford motor bikes and scooters. Presented for the first time in the 9th Auto Expo in Delhi in January 2008, the car has already created huge excitement among prospective consumers.
But the reason of this post is not about the car – rather its about the proposed manufacturing unit. In a state where land is of prime with a population density of 904 per square kilometer, the West Bengal government allocated 997 acres of land for the factory in a fertile agricultural area and about 15,000 farmers have been dislodged. Now they fear that the government will not compensate them and they would thus loose their livelihood. Enters Mamata Banerjee, the nemesis of the ruling communists and firebrand leader of Trinamul Congress, the main opposition party in the state. It seems her only goal in politics is to oust the communists from power, by hook or by crook. She immediately grabbed the opportunity at Singur (after she fought a prolonged battle with the ruling party at Nandigram where the Selim group was allocated thousands of acres of farmland for a proposed SEZ) and was now giving the same medicine like Hartals (strike), blockade to the communists who used these as their main weapons during the land reform movement in the state few decades back. The Tatas had to stop construction work due to continuous disturbance and finally announced on 2nd September that they were pulling out the project from Bengal! Read the rest of this entry »

In a recent survey by international consultancy major KPMG on corporate India ( “India Fraud Survey Report - 2008? ) , it has been revealed that fraudulent activities have become a huge concern to companies. The study has revealed that, corporate fraud has increased 54 percent since a similar report was done in 2006. Financial sector is leading the pack followed by real estate and infrastructure sector.

The survey shows that companies pay bribe or other facilitation payment to do business in India. And senior management employees are most likely to get involved in these shadow dealings than other employees as they have access to sensitive company information and can override controls. The unethical behavior and lack of clearly laid down anti-fraud measures have made India Inc. a haven for thugs. Service providers are also involved with corruption in a big way. Its no surprise that losses caused due to fraud or corruption is mounting really high. Read the rest of this entry »