Archive for October 27th, 2017

PSUs devote over Rs121 crore of CSR funds towards ‘Statue of Unity’

October 27, 2017

Interesting news:

India’s leading public sector oil companies contributed over Rs121 crore towards the construction of the ‘Statue of Unity’ (SOU)—a gigantic statue of Sardar Vallabhbhai Patel in Gujarat—as part of their corporate social responsibility (CSR) spend during the fiscal year 2017.

According to their annual reports, the country’s four public sector oil companies – Oil and Natural Gas Corp. (ONGC), Hindustan Petroleum Corp. Ltd (HPCL), Indian Oil Corp. Ltd (IOCL) and Oil India Ltd (OIL)—recorded contributions towards the SOU project as part of their CSR activity in FY17.

ONGC reported a contribution of Rs 50 crore; OIL and HPCL of Rs 25 crore each; and IOCL donated Rs21.83 crore.

These contributions resulted in three-fold jump in CSR spends by the top 100 National Stock Exchange-listed firms by market capitalization in FY17 under National Heritage initiatives as compared to the previous fiscal year.

As per data analysed Goodera (previously NextGen), a CSR and sustainability management platform, the reports of 92 companies were available until 18 September. The data shows a total of Rs 155.78 crore was spent on national heritage initiatives in FY17, compared to Rs 46.51 crore in FY16.

“The reason for a spike is increased investment by PSUs, which have spent 70% of the Rs 156 crore. Government policies have created an enabling environment for this sector, as in the case of Statue of Unity project. PSUs happened to be the first movers, wherein three organizations – Indian Oil Corporation, ONGC and Hindustan Petroleum, have together contributed over Rs 98 crore for the Statue of Unity project, which is two thirds the total spend in the heritage sector,” said Richa Bajpai, Founder and Co-CEO, Goodera.

This was opposed earlier but then contribution towards National Heritage was included in CSR:

The CSR spends on SOU was criticised as a “violation of the intention” of the CSR law & Companies Act of 2013 by Amita Joseph, Director Business Community Foundation (BCF), a civil society organization working on promoting responsible business practice

“This is taxpayer money, and both public sectors (companies) and governments need to be accountable,” she said, describing the case as one of “misplaced priorities” in a country that is in desperate need of better education, healthcare, basic amenities, safety and public infrastructure.

Bhaskar Chatterjee, former Director General and CEO of the think tank Indian Institute of Corporate Affairs (IICA) said the national heritage category was introduced into the CSR rules in order to bring businesses within the development ambit, and allow them to work for national development programmes.

“It is one of the few items which do not relate to the poorest of the poor, but the idea was to see how the corporate sector could contribute to the preservation of our cultural heritage.”

It is so important to read the fine print of such rules here. The Governments continues to find innovative ways to get funds from PSUs….

 

 

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How to and not to nudge in organisations…

October 27, 2017

Prf Francesco Gino of HBS has two pieces. One on how to nudge and  other on how not to nudge using example from Uber. She also links to this older NYT piece which shows how Uber messed up while nudging.

Peering into Korean society with sociological imagination

October 27, 2017

There is an interesting book on understanding Korean (South of course!) society. There is a discussion of the book here:

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Internal capital markets in times of crisis: the benefit of group affiliation in Italy

October 27, 2017

First research says raising capital frm internal sources like parent firms. group firms etc is bad and  firms should raise capital only from external sources. Then comes a crisis and it says internal capital markets are fine.

Raffaele Santioni, Fabio Schiantarelli and Philip E. Strahan look at Italian case:

Italy’s economic and banking systems have been under stress in the wake of the global financial crisis and the euro crisis. Our results suggest that firms in business groups have been more likely to survive in this challenging environment than unaffiliated firms. Better performance stems from access to an internal capital market, and the survival value of groups increases, inter alia, with group-wide cash flow.

We show that actual internal capital transfers increase during the crisis, and these transfers move funds from cash-rich to cash-poor firms and also to those with more favourable investment opportunities. The ability to borrow externally provides the internal capital market with additional funds, but sharing external capital becomes less important during a crisis. Our overall results highlight the benefits of internal capital markets when external capital markets are tight or distressed.

 

After Axis Bank, comes Yes Bank woes…(The hype that only Public Sector Banks are villains is so wrong…)

October 27, 2017

Amidst Nationalised Banks recapitalisation, the so called efficient and well run private banks show they are no different. This reminds me of a conversation I had with friends a year back that how all this image of private banks is just a mirage. They said in public sector banks one knows the true picture  but private sector banks just hide most stuff amidst the glamour. I was told wait & watch and be prepared to be shocked!

Indeed that is happening.

Andy Mukherjee after ripping Axis Bank, writes another one on Yes Bank:

Oh no, Yes Bank. You don’t get to spin a yarn about the wonderful quarter you’ve had.

You don’t get to fill page after page of your earnings presentation with arrows pointing up, up and up. The bragging about how you are the world’s second-most-social brand (whatever that means) can also wait.

There’s only one question for you to answer. Actually, make that two.

First, how does Yes Bank Ltd. even begin to justify that the regulator, the Reserve Bank of India, found nonperforming assets to have been four times as large on March 31 than was then acknowledged in audited results?

 Second, how did the management credit committee, packed with such stalwarts as the managing director, the chief risk officer, the risk heads, business heads and product heads (and tasked to review among other things stressed accounts) allow an extra $1 billion of them to masquerade as standard assets? The last full year of profit was inflated as much as 44 percent by that means.
….
Where Yes deserves full marks is for confidence. Managing Director Rana Kapoor is willing to let the provision coverage ratio at Yes drop to 43 percent, from 60 percent a quarter ago. Evidently, he’s expecting recoveries.
🙂
Governance or lack of it has become such an important issue…

Why is Austria not influenced by the Austrian School of Economics?

October 27, 2017

I am forgetting the name but someone did tell me this: That the famous Austrian school is perhaps least famous in Austria itself.

In this piece,  Mohammad J. Malayeri and Bill Wirtz look at recent evidence. They wonder why is Austria so un-Austrian?

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