BANKING GIANT IN MAKING - Cabinet OKs Merger of SBI & Associates

BANKING GIANT IN MAKING - Cabinet OKs Merger of SBI & Associates





CCEA also approves award of contracts for 44 small hydrocarbon fields

The Cabinet approved a proposal to merge the five subsidiaries of State Bank of India with the parent, kick-starting consolidation among public sector lenders. The merger will bring nearly a quarter of all outstanding loans in India's banking sector to SBI's books. The combined entity will have a mammoth network of nearly 23,000 branches, further increasing the dominance of the nation's largest bank.
Two of the five associate banks -State Bank of Patiala and State Bank of Hyderabad -are unlisted. Among the other three, Mumbai-based SBI holds a 75% stake in State Bank of Bikaner & Jaipur, 90% in State Bank of Mysore and 79% in State Bank of Travancore.
“This merger will lead to far greater operational efficiency ,“ said FM Arun Jaitley in a briefing after a Cabinet meeting on Wednesday . “There will be synergy in operations within these banks, which will also cut down the cost of operations and thus cost of funds.“ The Cabinet Committee on Economic Affairs also approved the award of contracts to develop 31areas comprising 44 discovered small hydrocarbon fields that had been lying undeveloped for decades. This is expected to speed up commercial development of these fields.
In June last year, the government had given an in-principle approval for the merger of the associate banks with State Bank of India.
“We have now entered the last lap,“ State Bank of India chairman Arundhati Bhattacharya told ET.“Merger will create a stronger, more efficient (and) vibrant entity. Date (of the merger) will be as per (government) notification.“
The SBI-associate merger is an important step towards strengthening the banking sector through consolidation of public sector banks, a government statement said, suggesting the possibility of more consolidations.
“It is in pursuance of the Indradhanush action plan of the government (to revamp functioning of state-run banks) and it is expected to strengthen the banking sector and improve its efficiency and profitability,“ it noted.
State Bank of India's shares closed 0.68% lower at ` . 268.65 Wednesday, in line with the broader Mumbai market. The listed subsidiaries also closed almost flat, or lower.
The merger is likely to result in recurring savings, estimated at more than Rs 1,000 crore in the first year through a combination of enhanced operational efficiency and reduced cost of funds, the government said.
“The merger will also lead to bet ter management of high-value credit exposures through focussed monitoring and control over cash flows, instead of separate monitoring by six different banks,“ the statement said. Existing customers of subsidiary banks will benefit from access to SBI's global network, it added.
GLOBAL PLAYER
Jaitley said with this merger, SBI will become a large bank; in fact, a global player.
According to market estimates, after the merger, SBI will have more than 50 crore customers and an asset base of Rs 37 lakh crore.
A decision on Bharatiya Mahila Bank will be taken later.
The merger plans will follow as earlier decided, the government said. Earlier this month, SBI chairman Bhattacharya had hinted that the merger might get delayed.
“We were planning to do it by March but again because of demonetisaiton it will probably mean a deferment of a quarter,“ she had said. The government had given her one-year extension amid the lender's consolidation with its associate banks.
There has been no consolidation among state-run banks since State Bank of Indore was merged with SBI in 2010. SBI took over State Bank of Saurashtra in 2008.
The merger of State Bank of India with the associates will minimise vulnerability to any geographic concentration risks faced by the subsidiary banks, the government said. “It will create improved operational efficiency and economies of scale. It will also result in improved risk management and unified treasury operations.“ 

SOURCE : ECONOMIC TIMES

Sasikala: Poes To Prison





OVER TO RAJ BHAVAN NOW With the Supreme Court delivering a deadly blow to Sasikala's chief ministerial ambitions, governor Vidyasagar Rao is expected to order a floor test soon to end the impasse in Tamil Nadu
Jaya too found guilty; sentence disqualifies Sasi from contesting elections for 10 years

The Supreme Court has virtually ended AIADMK general secretary VK Sasikala's chief ministerial ambitions when it upheld her conviction in a `66-crore disproportionate assets case by a trial court that sentenced her to four years' imprisonment. Sasikala, who has roughly spent two months in jail earlier, will have to surrender before a Bangalore lower court, the top court directed.However, reports from Chennai said she was waiting for a copy of the verdict before surrendering. The conviction disqualifies her from contesting elections for six years in addition to the four years she will be in jail. Her camp said it would seek a review of the judgement, which may not help as the review will be done by the same bench. Justices Pinaki Chandra Ghose and Amitava Roy in their verdict held former TN CM Jayalalithaa too guilty of being part of the conspiracy to transfer her ill-gotten wealth to Sasikala and her extended family through several firms. J Elavarasi, Sasikala's elder brother's wife, and V Sudhakaran, son of Sasikala's elder sister, too have been convicted. Jaya had adopted Sudhakaran as her foster son, only to disown him later.
All of them were s e n t e n c e d by a Beng aluru trial court to four years imprisonment and asked to deposit `10 crore fine for abetting a criminal conspiracy . The trial was conducted in Karnataka under the SC order. They were also sentenced to another six months and `10,000 fine under the Prevention of Corruption Act.However, the Karnataka high court in May 2015 overturned the conviction.Tuesday's verdict has set aside the high court order and restored the trial court verdict. The trial court had also directed that the fine be recovered from Jayalalithaa's assets left over and the other convicts' fixed deposits, gold and other jewellery . The rest shall be sold to recover any shortfall.
All immovable properties registered in the 71 names of Lex Property Developments, Meadow Agro Farms, Ramaraj Agro Mills, Signora Business Enterprises, Riverway Agro Products and Indo Doha Chemicals and Pharmaceuticals, shall be confiscated, the SC verdict said, reviving the special court order.
“The facts and circumstances proved in evidence undoubtedly point out that A2 to A4 (Sasikala and her relatives) were accommodated in the house pursuant to the criminal conspiracy hatched by them to hold her assets,“ the court recorded.

Source :
The Economic Times

Voda, Idea may Call for Easing Spectrum Caps

SET TO APPROACH TELECOM DEPT - Voda, Idea may Call for Easing Spectrum Caps



Cos likely to argue that consolidation will cut no. of players, make current caps irrelevant

Vodafone India and Idea Cellular, in talks for a possible merger, are likely to ask the Department of Telecommunications for a relaxation in the amount of spectrum telcos can hold, citing the ongoing consolidation wave that would reduce the number of players and render existing limits irrelevant.If India's second and third-largest telcos do actually decide to merge, the resultant entity would need to surrender a significant amount of spectrum under the current rules. A telecom operator can only hold a maximum 25% of the total spectrum allottedissued in a circle and up to 50% of the airwaves allotted in any one bandwidth. That would mean breaching the cap in four circles for the coveted 900 MHz band and in 12 circles for the 2500 MHz band, according to a Credit Suisse report.
“Both the companies are first trying to figure out how they can combine their airwaves across all bands to get contiguous chunks of airwaves and for the balance airwaves, which exceed the caps, they could soon make a presentation to the department explaining that current market conditions require raising of caps on the quantum of airwaves that can be held,“ said a person familiar with the development. “Changing market conditions“ are reason for seeking a relaxation in the cap, said the person cited earlier.
Idea, part of the Aditya Birla Group, and the local unit of UK's Vodafone Group Plc are likely to propose raising the 25% cap by about 10 percentage points and abolition of the 50% cap, he said.
“In the current scenario, given the spate of consolidation in the industry , it makes sense to expand this to 35%, since this cap was put in place when the industry had well over six telecom players,“ the person said, adding that an Idea-Vodafone merger will likely result in four significant telecom operators in India. “As it is, the revenue market share caps will continue and are effective to check dominance.“
Vodafone declined to comment while Idea didn't respond to an emailed request for comment.
Rajan Mathews, director-general of the Cellular Operators Association of India (COAI) lobby group, backed such a move, saying the government should take another look at the limits since the department is reviewing licensing.
“Given the increasing consolidation across the industry, it is important the government adjust the caps accordingly,“ Mathews said.“We would like to raise this with the DoT in future.“
MERGER PLANS
Reliance Communications, MTS and Aircel are also in the process of forming a single entity, which will leave current market leader Bharti Airtel, Vodafone-Idea and new entrant Reliance Jio as the other major private sector players if all the merger plans go ahead. Vodafone Group and the Aditya Birla Group have said they are in negotiations over an equal merger of their telecom businesses in India. The talks are said to involve Vodafone buying fresh Idea stock in an allshare deal that would create India's largest telco by subscribers and revenue market share.
The two companies may argue that scrapping the 50% intra-band spectrum holding limit makes sense, given technological transformations in the capital-intensive sector.
“The restriction that the amount of airwaves an operator can hold in any one bandwidth shouldn't be more than 50% is also irrelevant today ,“ said another person familiar with the development. “With 4G taking precedence and mobile data subsuming the traditionally separate voice services, and all spectrum being purchased through auctions, the lines are getting blurred.“
The person said current restrictions would hurt tech deployment, which needs contiguous airwaves.
The Credit Suisse report pegged the aggregate value of the spectrum that would have to be foregone by Idea-Voda in the event of a merger at ` . 18,000 crore under current rules. “Anti-trust restrictions would require Voda-Idea merged entity to let go (some) `. 18,000 crore of excess spectrum, including over . 6,000 cr of airwaves in premium ` 900 MHz band alone in Maharashtra, Gujarat, Kerala and Haryana.“

The Nasdaq Alternative

As late-stage funding dries up, Indian startups are exploring the option of getting listed on the American securities exchange

In 2010, a decade after it was founded, online travel portal MakeMyTrip (MMT) was ready to get listed on the stock ex changes. The only problem? The investors in MMT were split down the middle on where it should be listed: in India or the US. Two large investors along with a few independ ent directors were keen on a US listing, whereas another investor along with an independent director reckoned a local listing was best.

Cofounder Deep Kalra was torn. To make a decision, he decided to look beyond MMT, to at least six of India Inc's best minds, including Ajit Balakrishnan, founder of digital content firm Rediff.com -which listed on Nasdaq in 2000 -and Infosys director TV Mohandas Pai. Based on their inputs, Kalra took the call to list on the American exchange. “We wanted to raise $80 million in 2010, and we ended up collecting 15x,“ recalls Kalra.

In the seven years since, only two Indian companies -Azure Power and travel portal Yatra in 2016 -have gone on to list on the Ameri can exchange. But as valuations come under pressure and raising further rounds of funding becomes increasingly difficult, a listing may be one of the very few options for Indian tech and digital firms. And where better than the exchange that's home to tech and internet bellwethers like Microsoft, Intel, Cisco and Amazon?
Newspapers have been reporting since mid-2015 about etailer Flipkart readying for an IPO on Nasdaq. Last month, Business Standard reported that the decade-old ecommerce firm had hired top auditing firms to begin the process of filing for an IPO on the American bourse. Flipkart did not respond to queries from ET Magazine on a proposed listing.

Flipkart may not be the only internet firm eyeing a US listing. Another ecommerce unicorn ShopClues says it is planning to make its debut on the Nasdaq by the end of the year; online insurance platform PolicyBazaar is exploring a listing on the US stock exchange; and GirnarSoft, which runs auto portals CarDekho, Gaadi and ZigWheels, may also take the plunge.

So, are Indian startups finally ready for Nasdaq? Kalra reckons so.The ecosystem is maturing, even as another round of high-value funding looks tough. Entrepreneurs, contends Kalra, would look to go to a place where they would get a depth of investors -who are more likely to buy into their story than back home, where appetite for the new economy is still low. What's more, a listing is impossible for loss-making firms -which most online ventures are.“Even if you are unprofitable but have a sustainable business model, you will find tak ers at Nasdaq who realise the value of scale,“ adds Kalra.

For Yatra, the second online travel portal from India to get listed on Nasdaq through a reverse merger, it was a huge leap of faith.“We had the right internal structure, processes and systems in place to take this huge leap forward,“ says CEO Dhruv Shringi. Yatra was founded in August 2006, had raised $222 million before it got listed and counts Reliance Capital, IDG Ventures India, Intel Capital and Norwest Venture Partners among its investors. The company with a network of some 61,000 hotels, 14,000 travel agents across 1,100 cities and gross bookings of $897 million in fiscal 2016 has a market value of some $347 million after listing. Nasdaq provides e s t a b l i sh e d v a l u a t i o n benchmarks for companies, which is something missing in India, says Shringi.

A Key Stopover

Venture capitalists contend that Nasdaq is better suited to, and more appreciative of, the nuances of a new tech company than the Indian stock exchanges. So, it can offer better price realisation.“Time seems ripe for getting listed,“ says Shubhankar Bhattacharya, venture partner at Kae Capital.The relative dearth of funding will not only enforce frugality and more prudent business decisions, but also lead to a rationalisation of valuations that will be closer to public market norms, he says.

Apart from injecting the muchneeded liquidity, a listing provides an avenue for investors to make an exit. Any company -wheth er unicorn or otherwise -that has had investors for 10 years is under pressure to give investors a lucrative way out, says Sandeep Murthy, partner at Lightbox Ventures. “The pressure to get listed is real,“ he adds.

Last November, Morgan Stanley marked down the value of its holdings in Flipkart by about 38% -a fourth valuation markdown in a year -which pegged the etailer's valuation at $5.54 billion. And, last week, US mutual fund giant Fidelity Investments slashed the valuation of its holdings in Flipkart by more than a third, at roughly $5.58 billion.

For a highly funded company, explains a foreign VC who is an investor in one of the In dian unicorns, listing appears to be the only way out as raising a new round of funding at a drastically marked-down value would do more bad than good. “How long can investors burn money in any company? They are getting edgy,“ he says, requesting anonymity.

Radhika Aggarwal, cofounder of ecommerce marketplace ShopClues, insists it is not pressure from investors that's nudging her towards Nasdaq. Rather, it's a well-calibrated plan and a key stopover on the roadmap for growth. Aggarwal pegs ShopClues' valuation at over $1.1 billion; the firm that has raised $200 million so far from the likes of Nexus Venture, Helion and Tiger Global claims to be on track to break even in 2017-18. “We will be ready to list by year-end,“ she says, adding that the long-term goal of the company was always to go the IPO way.

Aggarwal stresses that “VCs are not running out of patience“, and that the private pool of capital is still dense enough to delay listing.For instance, Uber or Airbnb, which who have raised billions of dollars, are nowhere close to going public. “They feel that there is so much of opportunity to grow that way,“ she says. Yet, she maintains that ShopClues is on track to be one of the fastest -if not the fastest -unicorns to get listed.

Experts say that a listing is no walk in the park. To go public, says venture capitalist Sid Talwar, one needs to have strong corporate governance, discipline and excellent processes. “You go public when you have your business figured out,“ says Talwar, cofounder of Lightbox Ventures. And, once public, valuations normally reflect the profitability of a company or at least a roadmap to profitability at some point.

In today's market, Talwar explains, for many potential IPO candidates, there's the added burden of high valuations pre-IPO.Will they be able to achieve a publicly tradable price in the same range, irrespective of the quality of the business? One has to remember that less than 300 venture-backed technology companies have ever gone public. “And that's before you look at how many of them struggle post IPO,“ he says, asserting that Indian startups are not prepared, for one reason or the other, to list. “I do hope they will be soon.“

PolicyBazaar, an online financial products platform that has raised `500 crore since its inception in June 2008, believes that it is prepared for listing. “We are open to the idea of exploring listing on Nasdaq,“ says Alok Bansal, cofounder of PolicyBazaar. The company claims to be on track to break even this fiscal, has investors such as InfoEdge (Naukri.com), Tiger Global and

Premji Invest, and claims to have a valuation of over `2,500 crore. Bansal dismisses the theory that a funding crunch is making companies tread the listing path. “I don't think any of the scaled-up businesses have a liquidity problem,“ he says. Bansal believes that listing serves multiple purposes: it shows to the world that the company has come of age, and the business model is settled. And listing on Nasdaq gives an added edge as investor mindset in the US is slightly different than in India. The US market, he reckons, would focus on growth for a digital business, even if it's a loss making one. Back home a strong balance sheet and profitability are bigger concerns on the bourses. If the market is not rewarding one for growth, then the whole strategic positioning at the management level undergoes a makeover and can impact the business severely, explains Bansal.

Umesh Hora, chief financial officer of GirnarSoft, too maintains that it may be worth exploring Nasdaq listing as the US platform is the go-to stock exchange for growth-oriented tech companies. However, Hora sounds a word of caution for overzealous startups. An IPO requires introspection, a certain scale of business and long-term planning as going public, among other things, translates into ad ditional corporate governance, and increased regulatory and investor scrutiny and costs. Moreover, one needs to understand that the current funding crunch is simply a muchneeded course correction, he says.Rather than consider Nasdaq listing as the best option, the time is ripe for startups to rework their business models to get to a stage where they are able to build truly sustainable and profitable companies.

In sharp contrast to Hora, there are others like serial entrepreneur K Ganesh who prefer an Indian listing. Reason: norms of disclosures and compliance have been relaxed, the government is open to feedback and the authorities would be willing to go the extra mile to ensure that more startups get listed in India. “Listing in India provides good visibility, reinforces trust, brand recognition and gives credi bility across the country among retail investors,“ he says.

The Unwanted Pressure

While conceding that US listing gives access to the largest source of capital in the world and access to debt improves, Ganesh believes that the cost of listing, compliance and ongoing follow-up is substantial and off-putting for the Indian companies. The Securities and Exchange Commission's (SEC) accounting, disclosure and reporting require ments are cumbersome and a big distraction for an Indian company in the startup stage.

The investors might get wary more easily, leading to price variations unconnected to the core business metrics, he adds.

Though listing, lets on Ganesh, is definitely the best way to monetise in terms of returns to investors and shareholders, it is a tough life with continuous quarter­on-quarter pressures of dis closure and scrutiny by analysts.

While companies like Infosys have managed it brilliantly, there have been many who got listed and withered away, he adds. Last April, Rediff announced that it had applied to the US SEC to delist from the Nasdaq Capital Market. The decision came a couple of months after the portal received a notice from Nasdaq that it had failed to satisfy the minimum bid price requirement of $1 per share. “The company believes that it may be difficult and expensive to try to regain compliance... and therefore has determined to voluntarily delist from Nasdaq,“ Rediff had said in a media communication. Clearly, one way to avoid such a fate is not to list at all if one is not ready for the big leap. 

Source : Economic Times

Demonetisation Postpones Acche Din

Ahead of Election 2019, the government is pinning its hopes on an economic revival in 2017-18, but that will happen only if the note-ban effect is indeed short term

Prime Minister Narendra Modi's midnight “surgical strike“ of November 8 on black money has not only dealt a body blow to growth in the last five months of fiscal year 2016-17, but it also appears to have made life difficult for government's econ omists and the finance minister. It was reflected in the Union budget whose most striking feature was uncertainty.

With data still trickling in, it is under standable and prudent that neither Fi nance Minister Arun Jaitley nor Chief Economic Adviser Arvind Subramanian ventured to offer the real impact of de monetisation. While presenting the Eco nomic Survey on January 31, Subramani an urged journalists to not speculate and stick to his presentation. His Survey guessed demonetisation will shave off be tween 0.25 and 0.5 percentage points from GDP growth. It projected the real GDP growth for 2016-17 at 6.5%.The Inter national Monetary Fund, taking demon etisation into account, cut India's GDP forecast for 2016-17 to 6.6% and for 2017 18 to 7.2%.

The medium-term fiscal policy state ment in the budget emphasises that the effect of the note-ban would be short term and probably end by March 31.

Some assumptions, however, appear to indicate under-confidence. The budget says there will be a marginal dip in growth in the remaining months of the fiscal year. Factoring that in, the government has estimated nominal GDP growth for 2016-17 at 11%, lower than the Central Sta tistical Office's (CSO) projection of 11.9%.

The CSO estimate, which does not take into account demonetisation, puts real GDP growth at 7.1%. That means CSO has an average inflation expectation of 4.8%.

If inflation rate averages at 4.8%, then real GDP growth, according to budget num bers, should be 6.2%, lower than the Eco nomic Survey's projection of 6.5%.

To be fair, if the rate of inflation contin ues to dip, the number could be closer to the Survey's prediction. The Survey says economic output in 2017-18 would likely be between 6.75% and 7.5%. That is on the assumption that the economy will bounce back to normalcy and the effects of demonetisation would not spill over into the next year. It is not a certainty.

The government's revenues shot up in the first nine months of the year but again the trend may not hold in the last quarter as a sizeable amount of tax would have been paid in advance before December to use up old notes of `500 and `1,000. The last two months of the financial year are also when investments see a spike and consumer spending dips as individual taxpayers put money in savings instead of discretionary spending.

Expensive Borrowings

About 18 years ago, the government created a new mechanism to account for its liabilities in small savings and public provident fund without affecting the fis cal deficit. It created a National Small Savings Fund (NSSF) which aggregates money from all savings schemes such as Kisan Vikas Patra, National Savings Certificate, Sukanya Samriddhi Account and others. Until now this money was on-lent to states and the rest was borrowed by the Centre. In the past few years, however, states have declined NSSF funds as it is much cheaper to borrow from the market. Only Arunachal Pradesh, Kerala, Madhya Pradesh and Delhi continue to borrow from the NSSF.The Centre takes on the rest of the accumulation in the fund.

The interest rate at which the fund lends to the government is now 8.8%. It was 9.5% until August 2016. To compare, the government borrows through its benchmark 10-year bonds from the market at 6.4-6.5%. Last year, the Centre borrowed `50,890 crore from NSSF. This year, it already borrowed `1,07,209 crore up to December, according to the government's accountant. The budget expects the final number at the end of this fiscal year to be `90,376 crore and a little over Rs 1 lakh crore next year. The budget says it uses this money to pare down market borrowings. Consequently, the interest cost of the Centre would go up from 33.9% to 34.5% of net revenue receipts. It would also add to the fiscal deficit in 201718, Union budget documents show.

The NSSF rate cut in August was followed by a cut in small savings rate in September. In the coming months, if interest rate pressure builds, the government could cut both the NSSF rates as well as savings rates, both administered by the finance ministry. The small savings rate comes up for review in March.

The 2018 Budget is likely to be the last full budget of the Modi government as 2019 is an election year. With economic growth certain to slow down this year and revival in the next remaining a hope, the achhe din promised by the prime minister may take some time to arrive.

Source: Economic Times

Rs 3,700 Crore Noida Fake Like Scam: How Lakhs Lost Their Money

A 26-year-old BTech graduate tricked more than 6 lakh people into giving him their money through a Ponzi scheme that promised big returns for hitting 'likes' online. In a little over a year, Anubhav Mittal's Social Trade perpetrated a fraud of Rs 3,700 crore.

The scheme operated through a maze of dubious URLs (online links) sent to phones of subscribers that they were asked to click. Cheekily, these would sometimes be links to Facebook or Twitter profiles of other subscribers. A fake server was set up where these links would terminate.

The scam surfaced with the arrest of Mittal and his two aides — 40-year-old Shridhar Prasad, an MBA, and 25-year-old Mahesh Dayal, who served as tech support — from an office in Noida's Sector 63 on Thursday.

A Screenshot of the website.

At Rs 3,700 scam, it's turning out into one of India's biggest online scams. Noida Police have charged a company called Ablaze Info Solutions with duping tens of thousands of gullible subscribers by adding them into a money-chain like business model

The modus operandi was this: People were made to pay to get a subscription and then made to click 'like' on false links for handsome returns. They were also incentivised to add more members as subscribers. As it happens in any Ponzi scheme the ones at the top made a bit of money. The ones at the middle and bottom lost a bit of their 'investments.'

Uttar Pradesh Special Task Force which unearthed the scam said seven lakh people were swindled. The company's website that it used to attract people is still accessible at socialtrade.biz.

Here, according to the UP police, was how it operated.

How were so many lured?

The company's business model was to earn while at home. All one had to do was to pay money for the membership and earn by clicking on the links. There were many members who had not only got membership for themselves but for the entire family. "I am going to my wife's home in Chandigarh on Sunday. I had got everyone from my in-laws side enrolled in this company. Now everyone's money is at stake and my reputation too," said a consultant who works in Sector 63, Noida.

Many college students and job seekers had enrolled in the company to earn some quick money. Shikha, an engineering graduate even deferred joining a company because of the scheme. "It is embarrassing to ask for money from home. For the last three months I was earning money from this company. Suddenly I got to know through the media that it's a fraud company," she said.

A large number of housewives too were members of the company. On condition of anonymity one of them, who had come to enquire about the company in Noida, said she was earning money through its click system. "This was my savings which my husband was unaware of. I did not know it was a fraud. I got money till January," she said.

How it worked

Socialtrade.biz was launched in 2015 by Ablaze Info Solutions. The social media trading had four kinds of membership - Rs 5,700, Rs 11,500, Rs 2,8750, Rs 57,500. On the basis of which kind of membership you paid for, your username id was generated.

Each member had to add two more members. And that was how the chain built.

Members had to deposit the amount in company's the account. On the basis of the membership, users were given number of clicks in a particular day. The company would in return pay Rs 5 for per click.

For people opting for a membership of Rs 5,700, only 25 'likes' were allowed in a day which meant that person would earn Rs 125 per day. Similarly, for membership of Rs 11,500, 50 'likes' were allowed, for Rs 28,750, 75 'likes' and for Rs 57500, 125 'likes' were allowed.

The company's revenue model was such that the ad company would give Rs 6 to the company for each like out of which Rs 5 will be given to the member and Re 1 will go the company.

Investigation:

Police had received several complaints about this company. During the investigation they found that their business model was faulty. When a member logged in on their page, the ad URL sent to them was incorrect. Sometimes the members would be clicking on the same URL without realising.

The company also kept changing its name online, from socialtrade.biz to freehub.com, intmaart.com, frenzzup.com and 3w.com. This also created suspicion among investigators. The company had changed its name to throw enforcement agencies of its trail. The plan, according to the investigators, was to show loss in the coming two months.

While the company was showing TDS, the balance sheet was completely faulty, said a senior police officer.

The company's server was taken on rent in Ghaziabad. A senior police officer said around one lakh people have complained of non payment by the company. 

The STF team that raided the office found 250 passports, purportedly of some high performers and employees of the fraudsters, who were to be rewarded with a trip to Australia.

The investigation also led police to Rs 520 crore deposited in 12 accounts of the company registered in Canara Bank, Kotak Mahindra Bank, Yes Bank and Axis Bank. The officials are investigating the company's balance sheet, investors' information, and bank accounts to which money was transferred.

Source : http://www.news18.com/

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