SPECIAL FOCUS INSIDE The Economics of Apartheid and Mandela’s Struggle for Freedom theMANAGEMENT
ACCOUNTANTTHE JOURNAL FOR CMAs JANUARY 2014 VOL 49 NO. 1 `100
STRATEGIC COST MANAGEMENT IN BANKING AND INSURANCE MA ranks Indian banks on Cost Efficiency
The Institute of Cost Accountants of India (Statutory body under an Act of Parliament) www.icmai.in FIRST RESEARCH ICAI-CMA – JAICO FINANCE & ACCOUNTING SERIES PUBLICATION FROM THE CAPITAL MARKETS ICAI-CMA – JAICO INITIATIVE IN INDIA Amal Krishna Dey & Pankaj Kumar Roy J-2104 ₹695 520p ISBN 978-81-8495-232-2
THE EMERGENCE OF THE INDIAN CAPITAL MARKET as an attractive avenue for international investors has been an important financial story of recent times. The entry of world players has revolutionized Indian capital markets, largely for the better. But problems of understanding the management systems and behaviour of the capital market scientifically are vastly ignored by general investors and good times for investors may not last long without proper and scientific vision.
This book has been written keeping the above mentioned aspects and the basic subject matter of capital markets in mind. The book provides a comprehensive idea about the role and functioning of the capital market in India and will be a great help to students of business management, economics, business journalism and cost & management accountants in understanding the scientific parameters of the capital market mechanism in India.
Market CONTENTS 6. Laws and Regulations Affecting the Capital Market 1. Capital Markets and Stock Exchanges and their History 7. Role of Income Tax Laws in the Capital Market 2. Different Instruments of the Indian Capital Market 8. Role of Derivatives, Futures and Options 3. Investment, Trading and Transactions in Share Scrips 9. Computer Screen Based Trading 4. Movements of Share Prices 10. Security of Investors 5. Role of Different Financial Institutions in the Capital Appendix: Investment Terminology Glossary
For further information about the book, please mail at [email protected]
The Institute of Cost Accountants of India JAICO PUBLISHING HOUSE The Institute of Cost Accountants PRESIDENT CMA Suresh Chandra Mohanty [email protected] of India VICE PRESIDENT CMA Dr A S Durga Prasad [email protected] COUNCIL MEMBERS CMA Amit Anand Apte, CMA Aruna Vilas Soman, CMA D L S Sreshti, CMA Hari Krishan Goel, CMA M Gopalakrishnan, CMA Manas THE INSTITUTE OF COST ACCOUNTANTS OF INDIA (erstwhile Kumar Thakur, CMA Dr P V S Jagan Mohan Rao, The Institute of Cost and Works Accountants of India) was first established in 1944 CMA Pramodkumar Vithaldasji Bhattad, CMA Rakesh Singh, CMA Sanjay Gupta, as a registered company under the Companies Act with the objects of promoting, CMA Dr Sanjiban Bandyopadhyaya, CMA S R Bhargave, regulating and developing the profession of Cost Accountancy. CMA T C A Srinivasa Prasad GOVERNMENT NOMINEES On 28 May 1959, the Institute was established by a special Act of Parliament, name- Suresh Pal, Nandana Munshi, Ashish Kumar, G. Sreekumar, K. Govindaraj ly, the Cost and Works Accountants Act 1959 as a statutory professional body for Secretary (Acting) CMA Kaushik Banerjee the regulation of the profession of cost and management accountancy. [email protected] Senior Director (Studies) It has since been continuously contributing to the growth of the industrial and CMA R N Pal economic climate of the country. [email protected] Director (Administration & Internal Control) The Institute of Cost Accountants of India is the only recognised statutory profes- CMA Arnab Chakraborty [email protected] sional organisation and licensing body in India specialising exclusively in Cost and Director (Professional Development) CMA J K Budhiraja Management Accountancy. [email protected] Director (Examinations) CMA Amitava Das [email protected] Director (CAT), (Training & Placement) CMA L Gurumurthy [email protected] MISSION STATEMENT Director (Finance) CMA S R Saha [email protected] The CMA Professionals would ethically drive Director (Administration–Delhi Office enterprises globally by creating value to stakeholders & Public Relations) CMA S C Gupta in the socio-economic context through competencies [email protected] Director (Research & Journal) drawn from the integration of strategy, management CMA Dr Debaprosanna Nandy [email protected] and accounting. Director (Advanced Studies) CMA Dr P S S Murthy [email protected] Director (Technical) CMA A S Bagchi [email protected] VISION STATEMENT Director (Technical) CMA Dr S K Gupta [email protected] The Institute of Cost Accountants of India would be Director (Discipline) and the preferred source of resources and professionals Joint Director (Membership) CMA Rajendra Bose [email protected] for the financial leadership of enterprises globally. Editorial Office CMA Bhawan, 4th Floor, 84, Harish Mukherjee Road, Kolkata-700 025 Tel: +91 33 2454-0086/0087/0184 Fax: +91 33 2454-0063 Headquarters CMA Bhawan, 12, Sudder Street Kolkata 700 016 IDEALS THE INSTITUTE STANDS FOR Tel: +91 33 2252-1031/34/35 Fax: +91 33 2252-7993/1026 • to develop the Cost and Management Accountancy profession Delhi Office • to develop the body of members and properly equip them for functions CMA Bhawan, 3, Institutional Area Lodi Road, New Delhi-110003 • to ensure sound professional ethics Tel: +91 11 24622156, 24618645 • to keep abreast of new developments Fax: +91 11 4358-3642 WEBSITE Behind every successful business decision, there is always a CMA www.icmai.in January 2014 Inside COVER STORY STRATEGIC COST MANAGEMENT IN BANKING & INSURANCE
JANUARY 2014 VOL 49 NO. 1 `100
The Management Accountant, official organ of The Institute of Cost Accountants of India, established in 1944 (founder member of IFAC, SAFA and CAPA)
EDITOR CMA Dr. Debaprosanna Nandy [email protected]
PRINTER & PUBLISHER CMA S C Mohanty President, The Institute of Cost Accountants of India 12 Sudder Street Kolkata 700 016 STRATEGIC COST and printed at Hooghly Printing Co Ltd MANAGEMENT IN THE (a Government of India Enterprise) BANKING SECTOR EDITORIAL OFFICE 20 CMA Bhawan, 4th Floor, 84, Harish DWELLING UPON THE NEW CAPITAL ADEQUACY FRAMEWORK IN THE INDIAN CONTEXT Mukherjee Road, Kolkata-700 025 Tel: +91 33 2454-0086/0087/0184 Fax: +91 33 2454-0063 The Institute of Cost Accountants of India is the owner of all the written and visual contents in this journal. Permission is neccessary to re-use any content and graphics for any purpose.
DISCLAIMER A comparative Strategic Cost The views expressed by the authors are personal and do 26 assessment of 34 Management In not necessarily represent management of Non- the Life Insurance the views of the Institute Performing Advances industry: and therefore should not be (NPAs) in India and A Comparative attributed to it. China Study
4 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in 6 COVER STORY From the The Financial Performance Business process Editor’s desk of Select Commercial Banks re-engineering in 40 in India Using the CAMEL 46 insurance industry and 7 Approach its cost implications President’s communique Non-performing Strategic cost assets: nightmare for management in the 55 banks ? 63 Insurance sector 10 Letters to the Editor SPECIAL ARTICLE INTERVIEW Relevance and Utility of NPA a double-edged sword 11 12 Cost and Management 78 for banks, says CMD of Indian ICAI-CMA Accounting In the Overseas Bank snapshots present Socio-Economic Risk and Project Management scenario 80 in the Banking Sector – an 18 interview with Adesh Jain Economy updates SPECIAL FOCUS RISK MANAGEMENT The Economics of Use of COBIT 5 business 90 65 Apartheid and Mandela’s 84 framework for risk BOOK REVIEW Struggle for Freedom management
100 TAXATION SURVEY INSTITUTE NEWS Stirring the Pot: Year-end The Management Accountant 70 changes in the Central 87 Study on India’s Cost 106 Excise Valuation Rules Efficient Banks 2013 CMA DOSSIER Tax-free Salaries 74 ON THE SIDE 107 Quotations TAX TITBITS MEMBERSHIP LIST 76 105 on CMAs
The Management Accountant technical data Advertisement rates Rs. US $ Periodicity: Monthly Language: English Back Cover 50,000 2,500 Inside Cover 35,000 2,000 Overall Size: - 26.5cm x 19.5cm Screens: up to 130 Ordy. Full Page 20,000 1,500 Ordy. Half Page 12,000 1,250 Subscription Ordy. Qrtr. Page 7,500 750 Inland: `1,000 p.a. or `100 for a single copy The Institute reserves the right to refuse any matter of Overseas: US$150 for airmail or US$100 for surface mail advertisement detrimental to the interests of the Institute. The Concessional subscription rates for registered students of the decision of the Editor in this regard will be final. For any query, Institute: `300 p.a. or `30 for a single copy mail to [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 5 FROM THE EDITOR’S DESK
Greetings! • Strategically allocate resources with accurate profitability and cost information Strategic Cost Management is the application of cost man- • Managing aggressive cost reduction initiatives agement techniques in order to continuously identify and • Developing and continuing sustainable cost analyze cost drivers to lower costs and maximize total val- management programmes ue. An effective Strategic Cost Management programme • Ensuring competitive advantage can not only lower costs of an organization but also cre- • Effective utilization of resources ate a strategic competitive advantage. It also provides a • Strategic decision making framework for decision making, enables measurement Presently, banks have to fight on two areas, viz. speedy of progress, provides a guideline for objective assessment recovery of bank dues from the existing NPAs on the one etc. Strategic Cost Management is hand and arresting further slippage very crucial for an organization to in standard loans on the other. For maintain its sustainability and prof- these purposes, the NPA portfolio itability. needs to be analyzed to determine In this difficult economic the reasons for loan default both environment, there is great urgency to due to external and internal factors. reduce costs and improve efficiency. External factors, over which the But cutting indiscriminately or bank may not have much control, too deeply may severely hamper include economic slowdown, low the ability to grow revenues when industrial growth, debt crisis in the economic outlook improves. euro zone and a global meltdown, Strategic Cost Management helps rupee depreciation, high lending financial services companies like rates, etc. However, internal factors, bank and insurance to measure such as inadequate result oriented profitability more accurately and in recovery efforts and weak credit richer detail in two key ways: it helps monitoring system in the banks capture and update cost information have also contributed towards the across multiple dimensions, and it present high level of NPAs. extends cost modeling to include Corporate Debt Restructuring the customer dimension in cost is another important area to be and profitability analysis. It works in the following ways to addressed properly. It is basically a mechanism by way of enhance profitability and efficiency: which company endeavors to reorganize its outstanding • Find out various avenues to minimize cost obligations. Debt restructuring should aim to transform • Using a smart combination of tactical cost reductions, and reduce debt in a timely manner to restore solvency, proactive cost governance and strategic cost reduce leverage, and restore credit to viable firms, as management initiatives to achieve high performance well as to improve the capacity to provide financial efficiency intermediation. • Minimize staff related costs This issue has a quite a good number of articles and • Reduce the operating cost by optimizing the operating interviews by distinguished experts and authors on model ‘Strategic Cost Management in Banking and Insurance’, • Rationalize the product portfolio so that it offers the cover story theme of this issue. A new section, ‘Letters standardized components and reusable product features to the Editor’ that started a few issues ago, continues. We to the customers look forward to constructive feedback from our readers • Adopting cost governance on the articles and overall development of the journal • Adopting Cost management benchmarking and under this section. Please send your mails at editor@ planning icmai.in. We thank all contributors for this important • Classify the cost drivers so that bank or insurance issue and hope our readers enjoy the articles. company can take efficient investment decision Wish you all a very happy New Year.
6 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in PRESIDENT’S COMMUNIQUE
Need to create wider awareness on the relevance of Cost Accounting, Cost Management and Cost Audit
Chairperson-CBEC, Chairperson-Competition Commis- sion of India, Chairman-SEBI, Chairman-Tariff Commis- sion and DGAD (Ministry of Commerce & Industry) etc. who have been using cost data / information for various activities mandated by statute or their respective Acts. I sincerely urge for your active support in creating wider awareness on the relevance of Cost Accounting, Cost Man- agement, authenticity of Cost Information for Policy Deci- sions and Cost Audit in the interest of the Industry, Regula- tors, Government and for overall public interest. Friends, you are kindly aware that new opportunities have been provided in the New Companies Act, 2013 such as CMA Suresh Chandra Mohanty signing declaration for incorporation of Company, appoint- President, The Institute of Cost Accountants of India ment as Internal Auditor, as Administrator, as Company Liq- uidator, as Professional Assistant to Company Liquidator, as No matter how dark things seem to be or actually are, raise your Technical Member of the Tribunal, as Legal Representative, sights higher and see the brighter possibilities for they are always to appear before Tribunal for examination of Promoters & there for you to reach. – Norman Vincent Peale Directors and to certify the Scheme of Merger and Amal- gamation of Companies etc. The Institute has been working continuously to develop different standards and technical materials besides creating awareness on the Cost and Man- ISH all of you, your family and friends a great agement Accounting Profession in association with the in- start to 2014. The New Year will bring its own dustry bodies and Government departments. I am sure that successes and challenges and if our direction is CMAs will grab the new opportunities to contribute to the W clear and vision is focused we will achieve our growth of the Indian Economy and to ensure equity with objectives and create a better sustainable world for the next their professional services. and future generations. I sincerely believe that it is the time to consolidate our At the outset, I express my sincere gratitude to all of you for effort with professional maturity to overcome the critical the cooperation, support and guidance extended to submit situation so that we could win the race. the suggestions with justifications on the Draft Companies (Cost Records & Cost Audit) Rules, 2013 and for mobiliz- New initiatives in 2014 ing support of VIPs and stakeholders in favor of the existing In order to provide comprehensive inputs to resource per- provisions. The representations on restoration of existing sons for conducting training programs for members in 2014, Cost Accounting Records and Cost Audit Report Rules, the Institute has finalized time bound Action Plans which 2013 has been sent to Hon’ble Prime Minister, Hon’ble include preparing Action Plan for CMA Vision 2030 with Finance Minister, Hon’ble Minister, Ministry of Corpo- guidance and support from the National Advisory Board, rate Affairs and also to regulators like Chairperson-CBDT, Working module for Centre of Excellence, Reading mate-
www.icmai.in DECEMBER 2013 THE MANAGEMENT ACCOUNTANT 7 PRESIDENT’S COMMUNIQUE
rial for Internal Audit, Systems Audit, Indirect Taxes, Direct taxes, Companies Act 2013, Cost Accounting Standards & Cost Audit and Assurance Standards, Relevance & Utility of Cost & Management Accounting in Banking and Finan- cial Sector, CGPA module for ICLS and Navy Officials, Training to existing Students, Training to newly passed out TO PROVIDE COMPREHENSIVE Students and Technical Guides on Business Valuation, Risk based Internal Audit, Risk Management, Strategic Cost INPUTS TO RESOURCE Management and Sector-wise Guidelines on Risk Manage- PERSONS FOR CONDUCTING ment & Internal Audit and Reading material for Diplomas in Business Valuation, Internal Audit and System Audit. TRAINING PROGRAMMES Various Directorates of the Institute have been assigned the above tasks, which have to be completed in a time FOR MEMBERS IN 2014, THE bound manner. I sincerely hope that once accomplished, the INSTITUTE HAS FINALIZED above will result in very effective reference material for the members, students, resource persons and other stakeholders. TIME-BOUND ACTION PLANS
Session on the Companies Act 2013 I was invited by the Cuttack Branch of EIRC of ICAI to chair the session on the Companies Act 2013 during their Examination Directorate annual conference. I shared my views on the Companies The Intermediate and Final Examinations for December Act 2013 with the delegates and said that the Government 2013 term were successfully conducted from 10th to 17th has put new company law in place with best intentions and December 2013 at 115 examination centers including 3 it is now up to the professionals to demonstrate their com- overseas centers and a new center at Andaman Islands. This mitments through smooth implementation of the provisions year the Foundation examinations were successfully held of the Companies Act. One of the major challenges that in online mode on 28th & 29th December 2013 for the the Act poses is the absence of transition provisions. As pro- first time. I congratulate the examination directorate for this fessionals, we need to understand the responsibility in the achievement. I wish the examinees to come successful in wake of globalization, liberalization and privatization sweep- their endeavour and become a part of the CMA fraternity. ing the corporate world to come up to the expectations of not only the corporate sector but also the entire society. Technical Directorate Exposure Draft on Cost Statement for Determination of NFCG programme Cost of Goods has been hosted on the website for com- I got an opportunity to attend the Conference on Corporate ments. Exposure Draft of the format of Reconciliation Governance on 12th & 13th December 2013 at Chennai, Statement relevant for CAS - 4 (Annexure 1AR) has been organized by National Foundation for Corporate Govern- hosted on website for comments. A Letter has also been sent ance (NFCG) to promote good Corporate -Governance to all the Excise Commissioners for their valuable sugges- Practices, to foster business growth, encourage investment, tions/comments on this Exposure Draft. The Institute has innovation and entrepreneurship. Mr. Sachin Pilot, Hon’ble also hosted on the website, the Exposure Draft of Cost Ac- Minister for Corporate Affairs was the Chief Guest at the counting Standards on Royalty and Technical Know-how Conference. Fee (CAS-20) and Quality Control (CAS- 21) for com- ments of the Stakeholders and general public. The comments PHD Chamber of Commerce on both these drafts will be taken up for discussions during I was invited to the inaugural session of the Presentation the next meeting of the CASB. I request all the members to of PHD Chamber Annual Awards at New Delhi on 20th give their valuable comments / suggestions on these drafts. December 2013 by the PHD Chamber of Commerce and Industry. Shri Kamal Nath, Hon’ble Minister of Urban De- Membership Department velopment, Government of India presented the awards as As you all are aware that the membership fee for FY 2013- Chief Guest. 14 became due on 1stApril 2013 and the last date for pay- To apprise all the members about the activities / initia- ment of the same has already expired on 30th September. tives undertaken by the Departments/ Directorates of the However, even after three months, membership fee pay- Institute, I now present a brief summary of the activities. ments for FY 2013-14 is outstanding in respect of some of
8 THE MANAGEMENT ACCOUNTANT DECEMBER 2013 www.icmai.in our colleagues. I take this opportunity to urge the esteemed al Councils and Chapters organized many programs, sem- members to make payment of their membership fees at the inars and discussions for the members on the contempo- earliest to help the Institute to retain their name in the Reg- rary subjects such as Draft Companies (Cost Records And ister of members. Cost Audit) Rules, 2013, TDS-Services, NSDL & Income I am happy to share with you that during the month, Tax, Indian Rupee and Indian Ethos, Service Tax Voluntary 436 members have been admitted to the Associateship, 80 Compliance Encouragement Scheme 2013, Internal Con- members have been admitted to the Fellowship of the In- trol and Introduction to COSO, Emerging Issues in Direct stitute. Also, 11 members of IMA, USA and 04 members of and Indirect Taxation, Rupee Devaluation and so on. Dur- IPA Australia have been admitted to the Associateship of the ing the month a webinar was organized for members on Institute and 1 member of IPA, Australia to the Fellowship “Understanding Financial Derivatives”. of the Institute. ICWAI MARF Programs CAT Directorate The programs on ‘Service Tax- Issues and Problems’ and I am pleased to share with you that the CAT under Kerala ‘Finance for Junior Finance and Accounts Officers & ASAP has progressed well and the second phase of admis- Non-Executives (F&A)’ organized at Jodhpur during 03- sion under this module has crossed 2500 nos. It is a matter 06 December, 2013, were attended by Senior, Middle and of pride that few more State Governments have expressed Junior level Officers from different organizations. The pro- their willingness to adopt CAT Course as part of their Skill grams on ‘Emerging Issues in Direct and Indirect Taxation’ Development Initiatives. and ‘Risk Based Internal Audit for Effective Management Control’ were held at Shirdi during 17-20 December, 2013 Training Department and was attended by Senior level and Middle level Officers Training Directorate has successfully completed ICMAT 100 from different organizations. The programme on ‘Manage- hours module for the students who could not either undergo ment of Taxation’ for Power Transmission Corporation of Training or having experience to become eligible for De- Uttarakhand Limited was organized during 09-14 Decem- cember2013 final examination. The registration for second ber, 2013 at Dehradun in two batches of 25 Officers each. batch of ICMAT has already been started. I am happy to inform that your Institute has developed an On-Line Plat- 55th National Cost Convention form enabling the students to register their training/practical The revised brochure of the 55th National Cost Conven- experience on-line. This will, I am sure, go a long way in tion (NCC-2014) of the Institute has been uploaded on the facilitating a seamless process of registration to the students. Institute’s website and sent to all concerned for extending necessary support and adequate participation. I request all of Directorate of Advanced Studies you to visit Bhubaneswar, the land of Lord Jagannath, during The Viva Voce examination was conducted for the partici- 23rd and 24th February 2014 to participate in the conven- pants of the Business Valuation and Corporate Restructuring tion in large numbers so as to make this national event of programme. The Diploma in Management Accountancy ex- the Institute a grand success and to showcase the strength of amination was conducted, for the first time for December, CMA profession to the world. 2013 term by the Directorate of Advanced Studies. Several initiatives by the Tax Research Department of the The Institute signed MOU with ISACA and the course institute are on the card for proper recognition of the pro- on Systems Audit is launched. The duration of the course is fession and to create better opportunities for our members. 12 months and there will be 240 hours of learning through I wish all the members, their families and friends a very distance mode. The details are hosted on the institute’s web- happening 2014. I convey my best wishes on the occasion site. I would sincerely look forward for a good number of of Id-e-Milad, Guru Govind Singh Jayanti, Makar Sankran- enrolments so as to enable the Institute to move to the con- ti, Pongal, Lohri, Netaji Subhas Chandra Bose Jayanti and cerned Regulator(s ) for recognition of the Course. Republic Day. I am also pleased to inform you that we will be signing With warm regards, MOU with Institute of Internal Auditors shortly and am quite confident that this will benefit the members to grab new opportunity created under the Companies Act, 2013. The details are being hosted on the website shortly.
CPD Programs CMA Suresh Chandra Mohanty I am pleased to inform that during the month, the Region- 1st January 2014
www.icmai.in DECEMBER 2013 THE MANAGEMENT ACCOUNTANT 9 LETTER TO THE EDITOR Unquestionably, The Man- THE INSTITUTE OF COST ACCOUNTANTS OF INDIA agement Account is a proud (STATUTORY BODY UNDER AN ACT OF PARLIAMENT) symbol in the field of re- CLARIFICATION search, academic and profes- sion. Being a regular reader, Ref. No: BOS/01-12/13-14 Dated: Kolkata, 18th December,2013 I think that several issues of Clarification on applicability of Companies Act,2013 for CMA Examinations the magazine can be regard- ed as a valuable resource in In continuation with the earlier clarification reference no.BOS/01-08/13-14, which was already hosted in the website on 26th August,2013. various fields. The planning and design of all the articles It is further clarified for general information that the provisions of “The Companies Act,2013” indicate a resolute commit- shall not be applicable for the CMA Intermediate and Final Course Examinations for June,2014 term of Examination. ment to quality. The questions and answers are bonus points Regarding applicability of the Companies Act,2013, for/from December 2014 CMA Examination, to our knowledge bank. In necessary communication would be intimated in due course. fact, each issue of the journal All concerned are hereby requested to make a proper and wide publicity to meet the concern of can be regarded as valuable stakeholders on this stated subject. enrichment. I am hopeful This issues with an approval of the competent authority. about its further. My appre- CMA Chiranjib Das ciation goes out to the full Secretary to the Board of Studies Committee squad of the editorial team for their brilliant efforts to achieve new heights of edito- rial excellence. I request you to include the following: • Notes and data on India’s economy. • Important business events in the country as well as around the world. • Annual financial indicators of the top 500 companies in India. Dr. Basanta Khamrui, Chandannagar
Attention Members You are requested to kindly verify and update your journal mailing address through the online membership system and/or contact the membership department for correcting the same. This would help you in receiving the journals regularly. Please visit the Instute’s website at www.icmai.in for details
10 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in ICAI-CMA SNAPSHOTS
1
2 3 1. CMA S.C. Mohanty, President of the Institute felicitating CMA Kulamani Biswal, Director (Finance) at NTPC on December 9, 2013 at New Delhi 2. Release of the Knowledge Study Series by joint collaboration of the Institute and Assocham at SMEs Excellence Award 2013 held on December 6, 2013 in New Delhi. Among the dignitaries on the dais present were Shri K.H Muniyappa, Hon’ble Minister of State (I/C) for MSME, Government of India, CMA S.C. Mohanty President of Institute, Shri P.K. Jain, Chairman, National Council for SMEs, Assocham, Shri N.K Maini, Deputy Managing Director, Small Industries Development Bank of India, Shri Manguirish Pai Raiker, Co-Chairman, National Council for SMEs, Assocham and other eminent dignitaries 4 3. CMA S.C Mohanty, President of the Institute and Shri PK Jain, Chairman, National Council for SMEs, Assocham at the seminar on ‘SMEs - The Growth Drivers of the Economy’ held on December 6, 2013 in New Delhi 4.CMA S.C Mohanty, President of the Institute delivering his speech at the seminar on ‘SMEs - The Growth Drivers of the Economy’ held on December 6, 2013 in New Delhi 5.CMA Kaushik Banerjee, Secretary (Acting) and CMA R.N Pal, Sr. Director (Studies) of the Institute welcoming Prof. E Balagurusamy, former Vice Chancellor, Anna University, Chennai, and former member, Union Public Service Commission, New Delhi and of Planning Commission, Tamil Nadu during his 5 visit to the Institute.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 11 SPECIAL ARTICLE
RELEVANCE AND UTILITY OF COST AND MANAGEMENT ACCOUNTING IN THE PRESENT SOCIO-ECONOMIC SCENARIO
Management accounting now plays bigger roles in organizations. Management accountant not only play the role of internal analyst and consultant, but participate in top level decision making
No management can succeed and multinational companies. and pressure to get informa- unless it is very cost conscious… Formulating the right strategy tion almost on real time basis, As Cost Accountants, you have is inevitable in order to estab- Management accounting now a wide field... Cost Accountancy lish competitive advantage. As a plays bigger roles in organiza- is not audit as such, nor is it strategist, the management ac- tions. Management accountant ordinary accountancy that is countant is critically involved in not only play the role of inter- looking into what money is spent deciding and negotiating appro- nal analyst and consultant, but and how it is spent. The job of the priate strategic moves and also participate in top level decision Cost Accountant is to see from the helping managers determine making. CMA Suresh very beginning how the enterprise their most important customers, Management accounting Chandra Mohanty President, The has been planned… Cost competitors, substitute products continues to focus on value Institute of Cost Accountants should be associated in the market, core competence, creation through effective use Accountants of with and should have a full share adequacy of resources to sup- of resources. In other words, India in the planning of enterprises from port a strategy and the like. In a management accountants play the very beginning – Shri Morarji bid to strengthen their strategic an important role in preserving Desai, former Prime Minister of role, management accountants and adding value to the organ- India concentrate their time and ef- ization by managing resources, fort on strategic management activities and people to fulfill accounting. the organizations’ objectives. he global business en- With the pressure of glo- Effective rules for maintain- vironment is character- balization, which has increased ing cost accounting records Tized by intense com- the intensity of competition, and cost audit encourage use of petition from domestic players advancement of technology technology and scientific tools
12 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in like quantitative techniques, techni- nancial accounting and financial audit from the current status to the top end cal/ benchmarked standards, integrat- have neither designed for looking into position of the global competitiveness ed software, etc and help preparing internal transactions within an enter- index in a short/ medium time span. realistic budgets based on such tools. prise for build-up and justification of Considering the maturity levels of cost Thereby, it helps identifying wasteful income-expenditure nor have reasons and management accounting in Indi- expenditure, underutilized resources, for doing so unlike in cost accounting an economy, caused by the legacy of other inefficiencies and frauds. Such and cost audit. protected environment, we have a long outcomes are not expected from tradi- way to traverse without the luxury of tional accounting and financial audits, Relevance of Cost Audit in India time. We do not have the luxury of a which are essentially concerned with The Cost Accounting Record Rules long learning curve for this to hap- recognition and audit of contractual and Report Rules (CARR and pen and need to work out the strat- and statutory transactions for the en- CART) were introduced in the back- egies including policy interventions, tity (company) as a whole. As such, the drop of the misuse of national resourc- which will position cost and manage- purpose of financial accounting and es and the intimidation of market forc- ment accounting as a soft architecture financial audit are quite different from es in the 1970s and 1980s. But these towards building national competi- cost audit and they focus on reporting rules were used by the policy makers tiveness. Mere collection of financial company’s financial state of affairs, pri- mainly as interventionist policies. information for financial reporting is marily to shareholders and creditors. In the recent past, the country has not sufficient but the same should be On the other hand, cost accounting & experienced suffering of public inter- supplemented with a Costing system cost audit are meant for internal use of est due to weak corporate governance, drawing from the same data and prop- those who are in charge of governance adversely affecting trust and confi- er analyses helping the management to in assessing productivity of resources, dence of investors and stakeholders. make right decisions. emerging opportunities and risks. Fi- The Indian economy has to migrate In India, regulatory mechanism is
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 13 SPECIAL ARTICLE
being strengthened for each and every evasion. The Income Tax authorities half-yearly or quarterly audit or lim- sector. Availability of detailed cost data have made it mandatory to file Cost ited review in case of listed compa- is a pre-requisite for the effective func- Audit Report along with Tax Audit nies as they would be a real meas- tioning of any regulator. Today, more Report. Further, with the introduc- ure of performance as compared to than 80% of international trade disputes tion of Revised Schedule VI, cost satisfaction of compliance by mere relate to transfer pricing which in-turn audit report is the only source of annual reporting. It was further requires cost data to determine the authentic quantitative data of pro- recommended as a part of external arms’ length price. Benchmarking and duction and sales, which is essential financial reporting to appropriately assessment of competitiveness for differ- to safeguard the revenue. The cost consider in circulation of selected ent industries requires cost data. Com- accounting records and audit there- information to the shareholders of petition Commission has been con- of also ensures a structured and sys- the company, containing cost trends, tinuously seeking cost data for many tematic inventory valuation. key performance indicators, risk sectors. Cost information plays a critical • The information derived from cost assessment or key risk indicators, role in transfer pricing, predatory pric- records and cost audit reports main- CSR details, trends or factors like ing, fixation of margin of dumping for tained under existing statutes facili- external economic conditions and the purpose of levying anti-dumping tates Corporates, Bankers, Financial internal efficiency, etc., as part of duty, free trade agreement, consumer Institutions and Regulators etc. in the management analysis section of protection, revival of sick companies deciding matters related to risk as- the annual report to meet with the and corporate governance. sessment and efficient risk manage- overall objectives of good corporate Cost audit provides a reasonable as- ment as the parameters prescribed governance. surance that the organization’s cost ac- extensively cover relevant informa- • Further, making proper reference to counting records are so maintained as tion for managerial decision-mak- Cost Audit Reports and Cost Ac- to give a true and fair view of the cost ing to ensure performance and gov- counting Records, as per existing of each product or activity. Therefore, ernance. provisions, shall even strengthen the cost audits can be used to the benefit • Authenticated cost information de- risk-evaluation tool for banks and of management, Board, consumers and rived from Cost records and Cost financial institutions while deciding shareholders by Audit Reports even facilitates the upon grant of loans and advances to • Helping to identify weaknesses in Tariff Commission in making tech- corporates, thereby ameliorating the cost accounting systems, nical evaluation, based on cost & degree of risk from being NPAs. • Ensuring data integrity and financial analysis, which provides • The Government is entering into • Helping to drive down costs by de- study-based inputs for informed de- Free Trade Agreements (FTA) with tecting wastage and inefficiencies. cision making by Government. The various countries. To choose prod- • Helping the company management emphasis of the Tariff Commission ucts under FTA, basic cost data is to improve its performance, produc- studies is enhancing the competi- required. In India, regulatory mech- tivity, competitiveness and govern- tiveness of the domestic manufac- anism is being strengthened for ance mechanism. turers focusing on areas delineated each and every sector. Availability of It is a tool to protect the interests of in the National Manufacturing Pol- detailed cost data is a pre-requisite investors with timely information on icy. for the effective functioning of any wastage and optimum utilization of • The information derived from cost regulator. Today, more than 80% of scare resources. accounting records and cost audit international trade disputes relate • Cost audit is a potent tool for de- reports facilitates in making effective to transfer pricing which in-turn tecting and preventing frauds and study unit-wise, product-wise, pro- requires cost data to determine the is essential to support the functions cess-wise and forms a tool for ena- arms’ length price. Bench-marking of the Serious Fraud Investigation bling informed decision making and and assessment of competitiveness Office (SFIO), which has been analysing the data/information from for different industries requires cost strengthened by incorporating new inter-alia competitiveness perspec- data. provisions in the Companies Act tive of the studied Product/Sector/ • The cost accounting records and 2013. Industry/ Organisation. cost audit report shall facilitate both • Both the Central Excise Author- • SEBI has also recommended for the assessee and the DGAD to arrive ities and Income Tax Authorities mandatory maintenance of cost at a fair estimation, to determine the use cost audit reports extensively in records and cost audit with a sug- nature of injury and dumping of Tax assessment and to minimise tax gestion to be conducted for even margin. There can be proper ref-
14 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in erence made in the following issues ing Principles enable CCI to identi- trade agreement, consumer protec- also to bring about par for making fy cases of unfair trade practices. tion, revival of sick companies and comparison. • Cost Audit (Assurance) mechanism corporate governance. is a potent tool for detecting and • It is an instrument for continuous Benefits of maintaining preventing fraud, and therefore es- improvement and helps in evaluat- Cost Records sential to support the activities of the ing corporate performance and its The following are the benefits that Serious Fraud Investigation Office economic / operational efficiency. the Country derives from the mainte- (SFIO), which has been strength- • It provides information for valida- nance of cost records and use of cost ened by incorporating new provi- tion of financial statements and pre- information / data: sions in the Companies Act 2013. vents inventory manipulation. • Cost Management and Cost Assur- • Both the Central Excise Authorities • Maintenance of proper cost records ance leads to improvement of the and Income Tax Authorities use cost is also essential for fulfilling the ob- productivity of all the resources, audit reports extensively to ensure jectives laid down under National resulting in optimum utilisation of avoidance of tax evasion. The In- Voluntary Guidelines (NVG) for resources and minimization of wast- come Tax authorities have made it economic, environmental and social ages. mandatory to file Cost Audit Re- responsibilities of business as the in- • Costing system is required for stra- port along with Tax Audit Report formation provided by the cost re- tegic planning and decision making from the year 2012-13. cords is compatible with the infor- as it provides timely warning signals • Cost Assurance mechanism protects mation requirements under NVG. thus enabling management to take the interests of the investors through • In order to make the Indian econ- appropriate decisions for sustained focus on waste minimization, and omy competitive and also to over- growth. optimum utilization of scarce re- come the current account deficit, • Effective management of Cost leads sources. the productivity and efficiency of to price reduction in a reasonably • It leads to better corporate govern- the various sectors of the economy competitive environment and thus, ance and value creation by focusing viz industry, services and agriculture benefits consumers by bridging the on efficient use of resources and etc needs to be improved. This re- wide gap between Cost and Price. thus enable Indian enterprises to quires continuous monitoring of • Supports inclusive growth as cost effectively compete in the dynamic their performance based on relevant management help companies to market environment. cost information. provide goods and services at a price • With changing social landscape and • Reliable Cost Accounting data and that is affordable by marginal con- growing income levels, demanding Cost Assurance are essential for early sumers in the rural, semi-urban areas customers and enhanced public identification of industrial sickness. and the common man. awareness, Cost Audit can be a pow- • The Institute has set out the fol- • Helps in detection / identification erful tool to ensure inclusive growth. lowing major objectives for the year and thus to plug the leakages of di- • Cost information is vital for provid- 2013-14 in line with the above areas: rect and indirect taxes. ing the necessary inputs for making • To strengthen the cost competitive- • During the last decade Indian bank- various Government plans so that ness of Indian Industry by inculcat- ing sector has written off huge the productivity and efficiency of ing cost management focus through amounts as Non-Performing Assets. resource utilization is kept in focus. propagating best practices in cost This was mainly due to lack of effec- • Product/ activity wise cost details management and cost accounting. tive and timely monitoring. Costing are highly useful to the Independ- • To provide low-cost accounting system provides relevant data for ap- ent Directors to effectively and effi- services to firms operating in the praisal and continuous monitoring ciently discharge their duties as en- MSME sector and voluntary or- of borrowers account and thus helps visaged in the Companies Bill. ganisations by building accounting the banks to prevent NPAs. • The cost of maintaining cost records capabilities at the school level across • The Competition Commission is negligible compared to the enor- the country and by creating a cadre of India (CCI) ensures and guards mous benefits to the companies and of accounting technicians. against unfair trade practices, the nation. • Extending the reach across the ac- non-injurious price, price under • It plays a critical role in transfer pric- counting value chain by rolling out cutting and predatory pricing. Rel- ing, predatory pricing, fixation of the Accounting Technician Certifi- evant cost records maintained as per margin of dumping for the purpose cation Programme. Generally Accepted Cost Account- of levying anti-dumping duty, free • Initiate projects for issuing industry
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 15 SPECIAL ARTICLE
specific technical guidance on risk Notes on various aspects of Cost management, internal audit and cost and Management Accounting & management accounting. THE CHANGING • Encourage Non-Members and • Organize chain seminars across the ROLE OF ICON awardees to write articles on country on Internal Audit, Indirect the services that CMAs can offer to Taxation, CAS, CAAS, risk manage- MANAGEMENT the government and Industry ment and Corporate Governance. • Organize seminars on niche are- • Actively participate in Faculty De- ACCOUNTING IS as – Internal Audit, Sustainability velopment Programme to improve IN SYNC WITH Reporting, Enterprise Risk Man- the quality of teaching, robust train- agement, Cost Optimization, Fraud ing mechanism with special focus THE CHANGING Detection, Integrated Reporting on soft skills at the college, university MARKET – identify dates/venue/faculty/par- and CMA support centers. ticipants • Collaborate with the Government, ENVIRONMENT The Internal Audit Guidance industry and academic institutions Notes for the sectors like, Phar- to undertake studies, research and AND GOVERNANCE maceutical Industry, Stock Brokers innovation in the core sectors of the STRUCTURE and Depository Participants, Service Indian economy. Industry, Telecomunication Industry, Power Industry, Mining and Metal- Key actions chalked out under lurgy Industry, Construction Industry, CMA - Vision 2030 SIDBI – to provide Cost Manage- Plantation Industry, Process Industry, • Identify key areas where CMAs ment & efficiency improvement Downstream – Oil Sector, Upstream – can add value for society and coun- support to the MSMEs Oil Sector, Intellectual Property Indus- try-create a niche through effective try, Non-Banking Finance Companies advocacy Government (NBFC), Sugar Industry, Manufactur- • Identify value proposition for stake- • Identify ministries/departments and ing Industry, Engineering Industry are holders make presentation to various Gov- being developed by the Institute. • List out suggested action plans ernment Ministries/Departments to The changing role of Management • Prioritize action show case the need and capability accounting is in sync with the chang- • Identify what needs to be done over of the ICAI to carry out Cost, Ef- ing market environment and govern- the next 6 months ficiency and Performance studies & ance structure. From only providing • Identify who will do what Research, and how CMAs can assist information for the purpose of inter- in evaluating/monitoring of Gov- nal business activity, it has already Industry ernment Schemes. moved towards creating value de- • Prepare a presentation for the Banks manded by customer and other stake- to highlight skills set possessed by Students holders. Moreover, Cost & Manage- CMAs and how that can be gain- • Prepare a presentation for School/ ment Accountants now a days have fully utilized in the Banking Sector College level students to create more responsibilities than before as a • Identify target banks and make pres- awareness about CMA career result of decentralization and delega- entation • Identify schools/colleges and make tion of authority. Precisely, the role of • Organize seminars on niche ar- presentation management accountant is now shift- eas-Internal Audit, Sustainability • Focus on imparting soft skills train- ed from “works accountant” or “infor- Reporting, Enterprise Risk Man- ing to the students mation-provider” to a strategist. Con- agement, Cost Optimization, Fraud • Focus on and extend reach of CMA sequently, management accountant Detection, Integrated Reporting Centers should have adequate training and – identify dates/venue/faculty/par- should be equipped with the required ticipants Members skills in order to become significant • Develop a Consultancy Division • Prepare a profile of the mem- decision maker, strategic planner and within ICAI – Position as consul- bers-age, qualifications, experience market analyst and make value addi- tancy provider to the Government • Involve senior CMAs and Acad- tion for a sustainable world. and Industry emicians in Developing Techni- • Engage with MSME Chamber and cal Guides, Standards, & Guidance [email protected]
16 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in theMANAGEMENT
ACCOUNTANTTHE JOURNAL FOR CMAs ISSN 0972-3528
PAPERS INVITED Cover stories on the topics given below are invited for The Management Accountant for the four forthcoming months.
Issue months Themes Subtopics • Microeconomics of power sector • Cost viability • Tariff mechanism February 2014 Economics of the Power Sector • Subsidy mechanism • Funding of power infrastructure • PPP Model • Ownership of Infrastructure • Freight transport and containerization • Multimodal transport operation March 2014 Strategic Cost Management in Transport and Logistics • Cost efficiency • Transport costing • Transport economics and forecasting • PPP Model • Performance Management System • Regulatory aspects of education in India and abroad • Public vs. Private Education system April 2014 Cost Management in the Education sector • Cost effectiveness as a strategic priority • Equity of access to quality education • Pricing Mechanism • Governance and Management • Global perspective • Strategic price setting • Relative price indicators and benchmarking • Competitive pricing May 2014 Price and Cost Competitiveness • Turning cost cutting into cost competitiveness • Cost efficiency • Competitive cost reduction and sustainable growth • Cost competitive index • Case studies
The above subtopics are only suggestive and hence the articles may not be limited to them only. Articles on the above topics are invited from readers and authors along with scanned copies of their recent passport-size photograph and scanned copy of declaration stating that the articles are their own original and have not been considered for publication anywhere else. Please send your articles by e-mail to [email protected] by the 1st of the previous month.
Directorate of Research, Innovation & Journal The Institute of Cost Accountants of India (Statutory body under an Act of Parliament) CMA Bhawan, 4th Floor, 84 Harish Mukherjee Road, Kolkata - 700 025, India Board: +91-33- 2454 0086 / 87 / 0184, Tel-Fax: +91-33- 2454 0063 www.icmai.in ECONOMY UPDATES
Banking in the computation of total income of the Agreement (CECA) between India and • Revision of General Credit Card (GCC) assessment year relevant to a previous year Singapore vide Notification No. 50/2013- Scheme vide circular RPCD.MSME & NFS. beginning on or after the 1st day of April, Cus (Dec 16, 2013) BC.No.61/06.02.31/2013-14 (RBI/2013- 2013 on account of investment in eligible • Seeks to revoke the imposition of anti- 14/389) (Dec 2, 2013) securities under sub-section (1) of section dumping duty on import of Polypropylene, • Interest rate ceiling prescribed vide circular 80CCG of the Income-tax Act, 1961(43 of originating in or exported from Oman vide RPCD.CO.RRB.BC.No.22/03.05.33/2013-14 1961). The objective of the Scheme is to Notification 32/2013 – Cus (ADD) Dec( 2, dated August 19, 2013 will remain encourage investment of savings of small 2013) unchanged till January 31, 2014 - RPCD. investors in the domestic capital market. CO.RRB/RCB.BC.NO. 63 /03.05.33/2013-14 • Issue of Intimation under section 143(1) of Central Excise (RBI/2013-14/391) (Dec 2, 2013) Income Tax Act, 1961 beyond time – Order • Extension of warehousing and acceptance • RRBs - Periodicity of payment of interest -Instruction No.18/2013 (Dec 17, 2013) of LUT in place of Bank Guarantee for export on Rupee Savings/Term Depos - RPCD. • Clarification regarding applicability of warehousing for Status Holder Manufacturer CO.RRB.BC.NO. 62 /03.05.33/2013-14 provisions of section 40(a)(ia) with regard to Exporter - Circular 976/10/2013 (Dec 12, (RBI/2013-14/393) (Dec 2, 2013) amount not deductible in computing income 2013) • Charges levied by banks for sending chargeable under head ‘profits and gains SMS alerts - UBD.CO.BPD. (PCB).Cir. of business or profession’ on conflicting Service Tax No.42/12.05.001/2013-14 (RBI/2013- interpretations by judicial authorities - • Clarifications on Service Tax Voluntary 14/403) (Dec 6, 2013) Circular No. 10/dv/2013 (Dec 16, 2013) Compliance Encouragement Scheme vide Instruction issued in F. No. B1/19/2013- Income Tax Provident Fund TRU (Pt.) (Dec 11, 2013) (For details visit: • Central Board of Direct Taxes hereby makes • EPFO ask firms to file PF claims well in http://www.servicetax.gov.in/st-circulars- Income –tax (19th Amendment) Rules, 2013 time: EPFO to Field Staff (Source: PTI, Dec home.htm) to amend the Income-tax Rules, 1962 – 15, 2013) Notification 96 Dec( 23, 2013) • India allows greater flexibility for pension SEBI • Deferred Tax Liability for amounts transferred fund investments (Source: Reuters, Dec • Rationalization of Periodic Call Auction for to Special Reserve from the year ending 4, 2013) Illiquid Scrips - vide CIR/MRD/DP/38/2013 March 31, 2014 onwards should be • Many brokers and intermediaries are hard (Dec 19, 2013) charged to the Profit and Loss Account selling bank bonds to provident funds (PFs), • Declaration and Undertaking regarding PCC, of that year vide Circular BOD. No.BP. stoking concern about the credit risk of these MCV or equivalent structure by FIIs – vide BC.77/21.04.018/2013-14 (RBI/2013- securities following the rating downgrades of Notification CIR/IMD/FIIC/21/ 2013 Dec( 14/412), dated: December 20, 2013. If the mid-size public sector banks in the last two 19, 2013) expenditure due to the creation of DTL on months (Source: ET Bureau, Dec 5, 2013) • Deposit Requirements for members of the Special Reserve as at March 31, 2013 has Debt Segment - CIR/MRD/DRMNP/37/2013 not been fully charged to the Profit and Loss Customs (Dec 19, 2013) account, banks may adjust the same directly • Amendment of Notification no. 12/2012- • Establishment of Connectivity with both from Reserves. The amount so adjusted may Cus, dated 17.3.2012 to increase the depositories NSDL and CDSL – Companies be appropriately disclosed in the Notes to non-advalorem rate of BCD on natural rubber eligible for shifting from Trade for Trade Accounts of the financial statements for the from Rs 20/kg to Rs 30 /kg vide Notification Settlement (TFTS) to Normal Rolling financial year 2013-14. No. 51/2013 (Dec 20, 2013) Settlement - CIR/MRD/DP/ 36 /2013 (Dec • As per Notification: 94, dated: 18/12/2013 • Amendment of Notification no. 10/2008- 16, 2013) Central Government hereby makes the Cystoms, dated 15th January, 2008 so as • Exchange Traded Cash Settled Interest Rate following scheme called Rajiv Gandhi to further deepen the tariff concessions Futures (IRF) on 10-Year Government of Equity Savings Scheme, 2013. This in respect of goods covered under the India Security – CIR/MRD/DRMNP/35/2013 scheme shall apply for claiming deduction Comprehensive Economic Cooperation (Dec 5, 2013)
18 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in • Simplification of demat account opening of lending / re-lending to the infrastructure • Filing of R.10 block of Form 1 for 2009-10, process - CIR/MIRSD/12/2013 (Dec 4, sector; and for keeping in fixed deposits with 2010-11, 2011-12 and 2012-13 and for 2nd 2013) banks in India pending utilization by them for quarter return of 2013-14 – extension of • Illustrative format of Statement of Assets & permissible end-uses. period thereof – Circular - VAT - Delhi - No. Liabilities in SEBI (ICDR) Regulations, 2009 • Amendment of the existing policy on issue of 29/2013-14 (Dec 12, 2013) - CIR/CFD/DIL/15/2013 (Dec 3, 2013) (For shares by unlisted Indian Companies under details visit: http://www.sebi.gov.in/sebiweb/ FCCB/ADR/GDR, pursuant to the Foreign Companies Law home/list/1/7/0/0/Circulars) Currency Convertible Bonds and Ordinary Clarification with regard to applicability of shares (Through Depository Receipt section 182(3) of the Companies Act, 2013vide Foreign Trade Policy Mechanism) (Amendment) Scheme, 2013- Circular No. 19/2013 (Dec 10, 2013). • As per Notification No. 58 (RE-2013)/2009- FEMA - No. Press Note No. 7 (2013 Series) 2014 dated: 18 December, 2013 Foreign (Dec 3, 2013 - FDI GUIDELINES) Indian Economy Trade Policy has been amended to include • External Commercial Borrowings (ECB) • Passengers flying into India will have to fill in Limited Liability Partnerships (LLPs) in the by Holding Companies / Core Investment a new customs form on their arrival from the definition of “Group Company”. Neither Companies for the project use in Special New Year while the need to fill immigration partnership nor proprietorship firm would Purpose Vehicles (SPVs) – Circular - FEMA form for returning Indians is being done come within the ambit of definition of a - No. 78 (Dec 3, 2013) away with (Source: PTI, Dec 22, 2013) “Group Company”. • RBI kept key rates unchanged to push • As per Notification No 59 (RE-2013)/2009- Value Added Tax growth, says Montek Singh Ahluwalia 2014, dated 19 December, 2013 export • Renotify Bank of Maharashtra located (Source: PTI, Dec 18, 2013) of onion for the item description at serial in National Capital Territory of Delhi as • A pick-up in retail inflation to its fastest pace number 51 & 52 of Schedule 2 of ITC (HS) appropriate Government Treasury for the on record will likely force Reserve Bank of Classification of Export & Import Items purpose of deposit of Value Added Tax dues India chief Raghuram Rajan to raise interest shall be permitted subject to a Minimum - F.7 (400)/Policy/VAT/2011/PF/1107-1120 - rates for a third time, crimping growth Export Price (MEP) of US$ 350 per Metric dated 20-12-2013 - Delhi Value Added Tax prospect Source: (Reuters, Dec 13, 2013) Ton F.O.B. • As per Notification No.F.3(393)/Policy/ • Retail inflation jumps to 9-month high • Relaxations in policy for export of Wood VAT/2013/1086-1096 dated: 19/12/2013, at 11.24 pct in November (Source: The Charcoal to Bhutan vide Notification No. 60 the department of Trade and Taxes has made Financial Express, December 26, 2013) (RE- 2013)/2009-2014 (Dec 23, 2013) it mandatory w.e.f. 1st fortnight of January, • Telecom operators owe government a huge • Procedure for export of Value Added 2014, that details of programes/ functions to amount of Rs 17,980.77 crore in licence fee products of Red Sanders wood by be organized in Banquet Halls/ Farm Houses/ and spectrum charges, but the outstandings Government of Andhra Pradesh - Public Marriage or party halls, Hotels, Open Ground are under litigations (Source: PTI, Dec 11, Notice No. 42 (RE-2013)/2009-2014 (Dec etc where food and/or liquor items are served 2013) 3, 2013) and cost of booking exceeds Rs 1 Lakh per • Indian 2014 gold imports seen at half usual function is to be submitted through return in levels (Source: Reuters, Dec 7, 2013) Foreign Exchange Form BE-2 at least 3 days before the start of • Private sector output drops for fifth Management Act fortnight. successive month: HSBC (Source: PTI, Dec • As per Circular No. 81 A.P. (DIR Series)- • Certain procedures need to be followed by 4, 2013) RBI/2013-14/416, dated: December 24, 2013 Special Auditor for conducting Special Audit • State oil firms now sourcing all dollars from it has been decided to permit such resident under Section 58A of the DVAT Act, 2004 market: RBI (Source: Reuters, Dec 2, 2013) entities / companies in India, authorized by vide Circular VAT - Delhi - No. F/V Audit/ (For further details on these issues, the Government of India, to issue tax-free, Spl. Audit/2012/4231-39 (Dec 19, 2013). please visit the Institute’s website: secured, redeemable, non-convertible bonds For more details please visit: http://www. www.icmai.in for the complete CMA in Rupees to persons resident outside India charteredonline.in/2013/12/procedure-to-be- E-Bulletin, Jan 2014, Vol 2, No. 1, at to use such borrowed funds for the purpose followed-by-special.html ‘Research and Publications’ section.)
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 19 COVER STORY
STRATEGIC COST MANAGEMENT IN THE BANKING SECTOR The Capital Adequacy framework prescribed by the Basel Committee for Banking Supervision aims at strengthening the shock absorbing capabilities of the banks. But it also enhances the cost of capital, impacts the interest rates and acts as a check on business expansion. It would therefore be appropriate to dwell upon the new Capital Adequacy framework in the Indian context
20 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in specific context of introduction of banks are commercial organisations, prudential accounting norms. The it is expected that their operations are prudential accounting norms included carried out profitably. To achieve this the following: end, the lending operations should be (i) Capital Adequacy Ratio so undertaken that the interest earned (ii) Asset Classification on loans and advances carries a healthy (iii) Income Recognition spread over the interest payable on de- (iv) Provisioning norms posits. The efficient use of funds and All these norms had a significant the efficiency of operations also signif- bearing on the allocation of the sourc- icantly impact the profitability of the es of the bank and the resultant cost of banks. Since money lending is a risky such resources. It also had an impact business, it is likely that some portion on earnings of the bank on one hand of loans and advances given by the and a charge on profit in the form of banks to its constituents will become provision for impaired loan assets on bad and doubtful of recovery. the other. Though the beginning of Against this background, it becomes the implementation of these norms imperative for the banks to undertake was quite mild, Reserve Bank of In- a cost-benefit analysis of their activi- dia over the years has been making ties, people, processes, products, infra- these norms more and more stringent. structure etc., to help determine the Introduction and implementation of areas which are profitable and the areas Basel-III Norms of Capital Adequacy which are less profitable or unprof- and the proposed framework for revi- itable. However the concept of cost talizing distressed assets of the banking management in banking sector in In- institutions deserve a special mention dia has not assumed the required level in this regard. of significance for obvious reasons that It is broadly understood that the the country having a large population health of the banking sector is closely with lower banking coverage, the fo- integrated to the health of the econo- cus continues to bring the unbanked my. The economy is traditionally sub- population into the banking fold. It jected to the boom and recessionary led to the social banking continuing to cycles at infrequent intervals. During occupy a place of prominence as the the period of boom in the economy, sector is predominantly owned and the business of banking becomes rela- controlled by the Government. India tively safer, profitable and robust. Con- being a member of G-20 has sub- versely, during the period of recession, scribed to Capital Adequacy frame- the business of banking undergoes work prescribed by Basel Committee stress with soaring impaired assets and for Banking Supervision. The Capital reduced profitability. It is during the Adequacy framework aims at strength- J D Sharma recessionary period the capital of the ening the shock absorbing capabilities President, Indian Overseas Bank Officers’ Association bank also comes under stress which of the banks. But it also enhances the may even lead to failure of banking cost of capital, impacts the interest Joint General Secretary, All India Bank Officers’ Confederation institutions which are not adequately rates and acts as a check on business capitalized. Like any other business, expansion. It would therefore be ap- Director, Indian Overseas Bank the capital carries a cost in banking propriate to dwell upon the new Cap- sector too. ital Adequacy framework in the Indian The core business of banks is to ac- context. he introduction of the rec- cept the deposits for the purpose of ommendations of the Nar- lending. The deposits being the re- Basel-III T asimham Committee in the sources carry a cost, while the lending The US Financial Crisis 2008 had year 1992 was a watershed in the In- constitutes the assets of the banks and shaken the financial system world over. dian banking industry. It was in the hence a source of income. Since the It was triggered by sub-prime lending
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 21 COVER STORY
which was being considered as a risk ed their economy with that of US in ods of stress. Introduction of coun- return trade-off. But the crisis, which the wake of globalization. The study ter-cyclical buffer and capital conser- witnessed the collapse of global finan- of emerging economies and many de- vation buffer is considered as a macro cial powerhouses and giants, exposed veloped economies reveals that those prudential aspect in view of US Finan- the hollowness of their perceived fi- countries which had earlier expe- cial Crisis. It is intended to protect the nancial strength. The financial crisis rienced the financial crisis either on banking sector from stress during the led to rethinking on the part of G-10 account of currency crisis or on ac- period of excessive credit growth. The and to bring in more stringent frame- count of debt crisis had put better in- intentions of regulatory authorities in work for enhanced Regulatory Capi- stitutional and regulatory framework introducing Basel-III framework of tal in the form of Basel-III norms. in place to guard against the similar Capital Adequacy are pious. But the It would be appropriate to have a look crisis. That was the major reason for acid test of the adequacy and effec- at the shortcomings of Basel-II Accord many emerging economies including tiveness of Basel-III framework would before analyzing the cost implication India not getting severe hit of US fi- depend on the magnitude of any fu- of implementation of Basel-III frame- nancial crisis. The impact of the crisis ture financial crisis erupting in major work. in India was limited to the real sector economies that have got deeper inte- and in the process some loan accounts gration with emerging economies and Shortcomings of Basel-II of the affected firms turned impaired the success of the mother country of • Core capital was inadequate to thereby causing indirect concern for the crisis in exporting the crisis to oth- withstand the huge losses arising out the banks. It has cost implications for er integrated economies. The strength of financial crisis. the banks in India as the impaired as- of the real sector lies in its adaptability • The counter-cyclicality aspect of sets do carry cost. to diversify to new markets which in risk was ignored. The capital re- country like India happen to be within quirement is pro-cyclical. When the Basel-II framework had three mutually re- with huge potential as the size of the economy is at boom and asset prices inforcing pillars as under: middle class grows. soar, the counter party risk associat- Pillar-1: Minimum capital require- ed with the borrowers is on decline ment as prescribed by Basel Commit- Basel-III also addresses the following: and capital requirement is lower. tee for Banking Supervision (BCBS). (a) Pro-cyclical amplifications of But the reverse is true in the event Pilla-2: Provision of supervisory re- risks over time. of recession. view of Capital Adequacy. (b) Seeks to raise quantity and quality • Basel-II failed to factor the serious Pillar-3: Market discipline of Basel-II of capital to enhance bank’s abili- aspect that recessionary tendencies Capital Adequacy Framework through ty to absorb losses. will result in higher NPA and raise public disclosures. (c) Increases the risk coverage of the the requirement of capital of the Basel-III framework continues to be capital framework. banks thus restraining their lending based on the above three pillars of Ba- (d) Introduces leverage ratio to serve capacity. sel-II framework. Basel-III is a global as a backstop to risk based capital The financial crisis of 2008 erupted regulatory framework for making the measures. on account of unregulated and un- banks more resilient during the peri- (e) Raising the standard for supervi- bridled expansion of financial assets like securitization of mortgage loans. Transitional Arrangement for implementation of Basel-III (01.04.2013 to 31.03.2018) Trading in such financial assets with- 1st 31st 31st 31st 31st 31st out proper regulation was the major Minimum Capital Ratios April March March March March March cause of the bubble burst in the finan- 2013 2014 2015 2016 2017 2018 cial sector which was led by the failure Minimum Common Equity Capital 4.50 5.00 5.50 5.50 5.50 5.50 of banking institutions. The core cap- (CEC) – Tier I ital of the banks can play a reasonable Capital Conservation Buffer (CCB) - - 0.625 1.25 1.875 2.50 role in absorbing the normal business losses. But to expect the core capital Minimum CEC Tier I + CCB 4.50 5.00 6.125 6.75 7.375 8.00 to absorb phenomenal business losses Additional Tier I Capital 1.50 1.50 1.50 1.50 1.50 1.50 caused by reckless banking was un- Minimum Tier I 6.00 6.50 7.00 7.00 7.00 7.00 wise on the part of regulatory author- Minimum Total Capital 9.00 9.00 9.00 9.00 9.00 9.00 ities in United States and many other countries which had deeply integrat- Minimum Total Capital + CCB 9.00 9.00 9.625 10.25 10.875 11.50
22 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in sory review process. Total Capital Ratio (CRAR)= 2) Share Premium (f) Attempts to address the system 3) Statutory Reserves wide risk arising out of stress Eligible Total Capital 4) Capital Reserves market conditions. Credit Risk RWA+ Market Risk RWA+ 5) Other disclosed Free Reserves While the Basel-III norms have Operational Risk RWA 6) Balance in Profit & Loss Account maintained the requirement of mini- 7) Current year’s profit on quarterly mum total capital at 9% of risk weight- There are three distinct options to basis after factoring provisions for ed assets value, the provision of capital compute capital requirement for each NPAs conservation buffer and counter-cy- of the risk namely Credit Risk, Opera- clical buffer would take the mini- tional Risk and Market Risk as under: Additional Tier I Capital mum total capital plus buffer capital to 1) Perpetual Non-cumulative Prefer- 11.50% at the end of 31st March 2018 Credit Risk ence shares (PNCPS) in a phased manner. The transaction- The types of approaches to compute 2) Stock surplus (share premium) al arrangement for implementation of capital requirement for credit risk are 3) Debt capital instruments Basel-III norms in India is given here- (a) The Standardised approach 4) Any other type of instruments as under: (b) Foundation Internal Rating Based notified by RBI from time to time approach (Less: Regulatory adjustments/ deduc- The components of Tier I & Tier II capital (c) Advanced Internal Rating Based tions) are given below: approach (i) Tier I capital (Going concern Tier II capital) Operational Risk 1) General Provision and Loss Re- (a) Common Equity Capital The types of approaches to compute serves = 5.5% capital requirement for operational 2) Debt Capital Instruments issued by (b) Additional Tier I Capital risk are banks = 1.5% (a) The Standardised approach 3) Preferential Share Capital (b) Basic Indicator approach 4) Stock Surplus on Tier II instruments Total Tier I Capital = 7.0% (c) Advanced Measurement approach 5) Revaluation Reserve discounted at (ii) Tier II (gone concern capital) 55% = 2.0% Market Risk Minimum Regulatory Capital The types of approaches to compute Pressure on return on equity = 9.0% capital requirement for market risk are Raising capital from market will push Total capital conservation buffer (a) The Standardised Duration ap- the interest rate up and in turn the = 2.5% proach cost of capital will also increase. The Minimum Total Capital Ratio (b) The Standardised Maturity ap- return on equity in this process will (CRAR) =11.5% proach come down. To compensate for their Additional Tier I capital will not (c) Internal Model approach loss on return on equity, the banks may reckon if Capital Conservation Buffer Reserve Bank of India aims to es- increase their lending rates. This will and Common Equity Capital is not at tablish consistency and harmony with adversely affect the effective demand a minimum of 8% of Risk Weighted international standards by adopting for loans thereby reducing the inter- Assets Value (RWA). Standardised Approach for credit risk, est income of the banks. The banks Basic Indicator Approach for opera- in India have to look for raising share Computation of capital under tional risk and Standardised Duration capital through Medium Term Note Basel-III norms: Approach for market risk. The Cap- (MTN) and Global Depository Re- Common Equity = ital Adequacy Framework is expected ceipts (GDR) at cost effective rates Common Equity Capital (Tier I) to be complied with at consolidated to contain the cost of capital. As per (group) level and stand-alone (solo) the study conducted by Mckinsey, Ba- Credit Risk RWA+ Market Risk RWA+ Operational Risk RWA level. sel-III implementation would reduce return on equity for the average bank Tier I Capital Ratio = Elements of Common by about 4% points in Europe and Eligible Tier I Capital Equity Capital about 3% in the US provided other Credit Risk RWA+ Market Risk RWA+ Tier I factors remain the same. Similar im- Operational Risk RWA 1) Paid up Equity pact on banks in India is also expected.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 23 COVER STORY
Thus Basel-III norms’ cost implica- June Quarter 2013. The rate of Reg- borrowers. Such a situation offers a tions for the banks operating in India ulatory provision required to be made huge potential to carry out a detailed and its impact need to be studied to at the rates mentioned above clearly research in this field and evolve more determine the precise effect. shows that the NPAs are a huge drain realistic model of interest computation on the profits and profitability of the and recovery of NPAs. Non-Performing Assets (NPA) banks. It therefore assumes greater sig- management nificance to endeavor to minimize the New framework to revitalize Definition: A loan asset is defined as size of NPAs to lower the amount of distressed assets: ‘Non Performing’ if any instalment or provisioning being charged to profits The Reserve bank of India has put a interest remains unpaid for 90 days or and eventually post higher Net Profit. discussion paper on ‘Framework For more in case of loans; the account re- The NPAs can be contained by – Revitalizing Distressed Assets in the mains in excess for 90 days or more a) Preventing slippages Economy’ in public domain. The after being classified as out of order in b) Recovering the critical overdue discussion paper is prompted by the case of cash credit accounts and an in- component in a loan account increasing NPAs and restructured ac- stalment or interest remaining unpaid c) Rescheduling the loan instalments counts in the wake of slow down of the for one crop season in case of crop d) Restructuring the credit facilities Indian economy. Since the financially loan not exceeding one year. e) Recovering through One Time distressed assets produce less than eco- Settlement (OTS) nomically possible income for the bank NPAs are categorized as: f) Recovering through Out of Court and they also deteriorate quickly in val- a) Sub-standard: Settlement (OCS) ue, it becomes a costly proposition for if it remains NPA upto 12 months; g) Referring to CDR/BIFR the banking institutions to carry such b) Doubtful: The banks also end up losing sub- distressed assets in their portfolio. RBI if it remains NPA from 12 months to stantial amount on account of frauds is of the view that the system needs to 36 months; committed by the customers and also ensure early recognition of financial c) Loss asset: employees. There are several frauds distress in their borrowal accounts and if it remains NPA beyond 36 months which are related to misuse of technol- takes prompt initiatives to resolve it so or is so certified by the internal/ ex- ogy, credit/debit card etc., coming un- that the lenders and investors have the ternal/statutory auditors. der the definition of cyber crime. The advantage of fair and early recovery. The banks are required to make amount involved in such frauds vis-à-vis New Governor of RBI had indicated provision as per Regulatory guidelines the number of frauds is significantly low that improving the system’s ability to as under: whereas the amount involved in frauds deal with corporate distress and finan- relating to loans & advances, more par- cial institution’s distress by strengthen- Standard Assets - 0.25% ticularly mortgage related frauds is quite ing real and financial restructuring as Sub-standard assets - 10.00% large in spite of the number of frauds well as debt recovery should be treated Doubtful Assets - being significantly lower. The amount as one of the five pillars on which RBI D1 - 20% to the extent of security involved in frauds is straight away clas- intends building developmental meas- shortfall sified as ‘Loss Asset’ which entails 100% ures for improving the financial system D2 - 30% to the extent of security provision if the amount so classified is for the next few quarters. shortfall not written off. Banks in India have got a system of D3 - 100% to the extent of se- The NPAs resulting into a regulato- identifying the borrowal accounts un- curity shortfall ry charge on profit of the bank carry der “WATCH CATEGORY” if the Loss Assets - 100% if not already writ- costs. It is generally factored in com- interest is not serviced or the monthly ten off. putation of rate of interest charged instalments are not paid for 2 months. Restructured Accounts - 2.75% (to be on loans & advances. But such fac- RBI now proposes to streamline the raised to 5% from 1st April 2015) toring the cost of NPA in interest rate concept of Watch Category accounts The non performing assets are called is based on the past experience and by introducing a scientific method- Gross NPA to the extent of book out- cannot be construed as scientific or ology of identifying the accounts as standing and the NPA net of provision accurate computation. It is therefore “Special Mention Accounts (SMAs)” is called Net NPA. an under-recovery in the form of in- on the basis of not only the financial The Gross NPA of banking sys- terest charged. It can also be construed criteria of non recovery but also on tem in India is of the order of about as cross-subsidization where the good the strength of non financial signals Rs.1.76 lakh crore as at the end of borrowers covertly subsidize the bad of incipient stress. Apart from this, it
24 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in is also proposed to set up a Central The bankers would need to strength- Depository of Information on Large THERE IS NEED en not only their training establish- Credits (CRILC) and make it man- TO SEEK THE ments but also the credit culture in datory for the banks to furnish credit the banks. The banking institutions information on all the borrowal ac- INTERVENTION are essential financial intermediaries counts where aggregate fund based in their own right and hence there and non fund based exposure is Rs.50 OF THE CENTRAL should be little scope for subcon- million & above. RBI also proposes tracting this function by allowing en- formation of Joint Lenders’ Forum VIGILANCE gagement of financial consultants to (JLF) with an objective of formulating COMMISSION mediate between the potential bor- a joint corrective action plan for early rowers and the banks. Such engage- resolution of stress in the account. The (CVC) TO EVOLVE ments increase the cost of borrow- lender with the highest exposure will ings for the firms and have certain be convener of JLF. The focus of JLF A BETTER impact both financial and psycholog- will be on early regularization of the ical that often determines their in- account which will include the bor- DISCIPLINARY tentions. Such an unhealthy practice rowers bringing in additional money PROCEEDING also brings about an undesirable or getting an investor to help turna- change in the attitude of the borrow- round the company without changing MECHANISM ers towards the bankers and also the the terms of lending arrangements. repayments. It therefore leads to wil- The restructuring may be resorted to ful default and eventual classification only if the account is prima facie vi- of borrowal accounts as NPAs adding able and the borrower is not a wilful extra cost to the banks. RBI also defaulter. An account can be referred needs to address this malady and en- to CDR Cell only after conducting a for borrowers who do not cooperate force it strictly. Such a measure must preliminary viability study. with lenders in resolution. precede recruitment, on-boarding, The early measures detailed in the (v) More liberal regulatory treatment skilling and re-skilling and adequate preceding para will entitle the lend- of asset sales – pool of competent credit experts. ing banks for certain incentives in the a) Lenders can spread loss on sale The officers representing the lending form of leniency in loan provisioning over two years provided loss is institutions must conduct themselves while the defaulters not adhering to fully disclosed. as lenders having right to demand the the measures will be penalized. The b) Takeout financing / refinanc- money lent to a firm back as per the broad proposals of RBI in this regard ing possible over a longer peri- terms of lending arrangements in- are furnished below: od and will not be construed as stead of expressing their miseries and restructuring. helplessness before the borrowers and (i) Early formation of a lenders’ com- c) Leveraged buyouts will be al- seeking his patronage in terms of part mittee with timelines to agree to a lowed for specialized entities for payments to avoid disciplinary action plan for resolution. acquisition of ‘stressed compa- for the accounts turning distressed. (ii) Incentives for lenders to agree col- nies’. There is need to seek intervention of lectively and quickly to a plan – better d) Steps to enable better function- the Central Vigilance Commission regulatory treatment of stress assets if a ing of Asset Reconstruction (CVC) to evolve a better disciplinary resolution plan is underway, accelerat- Companies mooted. proceeding mechanism which gives ed provisioning if no agreement can be e) Sector-specific Companies/ strength and confidence to the hon- reached. Private equity firms encouraged est officers of the banks and bring (iii) Improvement in current restruc- to play active role in stressed as- down the element of fear in their turing process: Independent evaluation sets market. minds on this count. It will also en- of large value restructurings mandated, The success of the proposed meas- hance the efficacy of the measures with a focus on viable plans and a fair ures will greatly depend on the qual- being proposed by RBI to deal with sharing of losses (and future possible ity of credit appraisal while granting the problem of distressed assets of the upside) between promoters and credi- the loans and also the quality of cred- banks. tors. it investigation carried out at the (iv) More expensive future borrowing time of entertaining the proposal. [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 25 COVER STORY
Dr. Goutam Bhowmik Faculty, University of Gour Banga, Malda
anagement of NPAs as an integral part of bank- M ing sector reforms has as- sumed greater significance in view of the recent financial crisis. Different countries have adopted different ap- proaches to deal with the problem. In this paper an attempt has been made to compare the broad policies and measures that have been adopted to deal with the NPAs in two emerging economic powers of the Asia – India and China.
Introduction The last two decades witnessed a lot of instability in the banking sector all over the world. This was not confined to A COMPARATIVE ASSESSMENT OF MANAGEMENT OF NON- PERFORMING ADVANCES (NPAs) IN INDIA AND CHINA Given that the two economies have many similarities such as a gigantic public sector banking system, directed lending programme, government intervention in credit allocation, and the pressure of an enormous population, the author attempts to compare the broad policies and measures that have been adopted to deal with the NPAs in the two countries
26 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in of NPAs, however, is ominous both for the viability of operation and existence of the bank concerned for more than one reasons. As Andrew Crockett, the then General Manager of Bank for In- ternational Settlement (BIS) observed “Initially, NPLs may not seem to have serious negative effects. Banks remain liquid, and depositors retain their con- fidence in the system. Over time, how- ever, the size of the problem grows, es- pecially if banks are allowed to accrue interest on their NPLs. Eventually, the efficiency of the banking system is comprehensively undermined as the task of making new loans to produc- tive enterprises takes second place to juggling a portfolio of bad loans whose collectivity is very low. The fiscal cost of clearing up the banking system can become so large as to be itself an obsta- cle to needed action” (BIS, 1999). That is why the occurrence of NPAs over and above the minimum acceptable limit (internationally, 2 – 4 percent of advances) is considered unhealthy for the banking system and overall econ- omy all over the world. And countries with high level of NPAs, therefore, have to devise appropriate policies to deal with the NPAs on an urgent basis. the transitional economies alone. Even The countries, inherently different the developed countries like Japan and ‘INITIALLY, NPLS MAY in terms of the nature and composi- Sweden and developing countries of NOT SEEM TO HAVE tion of their banking systems, quite Latin America and South East Asia suf- SERIOUS NEGATIVE naturally responded in different ways fered a lot from such crises (Dell’Aric- to deal with the problem (Mukher- cia et al., 2005). Several studies [Beat- EFFECTS... HOWEVER, jee, 2003). It is in this context, that tie et.al (1995), Jackson (1996), Olson THE SIZE OF THE the present paper attempts to com- and Lou (2001), etc.] indicate that the pare the broad policies and measures occurrence of Non-Performing Ad- PROBLEM GROWS, that have been adopted to deal with vances (NPAs)1 was by far the most ESPECIALLY IF BANKS the NPAs in two emerging economic common cause of such crises. As such, ARE ALLOWED TO powers of the Asia – India and China. several countries like China, India, Given that the two economies have Malaysia, Thailand, Japan, etc. have in- ACCRUE INTEREST many similarities such as, a gigantic corporated prudential regulation and ON THEIR NPLS. public sector banking system, direct- NPA management as an integral part ed lending programme, government of their banking sector reforms which EVENTUALLY, THE intervention in credit allocation, they embarked on during 1990s. EFFICIENCY OF THE pressure of enormous population, As banks deal with lending of fund, BANKING SYSTEM IS there is an inherent possibility of some UNDERMINED’ 1NPAs are also known as Non-Performing Loans or in of their lending decisions would turn short, NPLs. Throughout the paper, the term NPA is bad or doubtful. The staggering level used to denote bad and doubtful loan of banks.
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cautious approach with respect to is called a Non-Performing Advance banking sector was confined within capital account liberalisation and (NPA). the institutional restructuring meas- gradual transformation from the This ‘specified period of time’, how- ures in the form of establishment of a planned economic regimes to free ever, differs widely from one country two-tier banking system comprising market based economy, such com- to another and even in different time of a central bank and four specialised parison will point out the effective- periods within the same country. This banks owned by the Central Govern- ness or otherwise of the NPA man- acts as an obstacle in having a univer- ment. By the end of 1994, the Gov- agement policy of our country. Such sally accepted definition of NPA. Asian ernment completed the process and comparison is also helpful in depict- Development Bank (ADB), however, immediately embarked on the second ing the relative status of our banking is of the view that the accepted in- wave of financial reforms. system with respect to NPAs. ternational standard for classification At the very beginning, commercial of loans as non-performing is 90 days lending was separated from the policy Methodology of the study or more overdue (www.adb.org). This lending with a view to facilitate better The present study is both descriptive view is supported by many developed performance measurement of banks. and analytical in nature. It aims at de- and developing country through their As a result, the Commercial Bank Law, scribing the development of policies practices. Thus, three months time 1995, gave rise to a de-facto two-tier and measures, over the years, with re- period or 90 days norm may be con- commercial banking system that con- spect to management of NPAs both in sidered to be prudent enough to re- sists of: India and China in a systematic and flect the actual gravity of the problem. (i) Commercial banks that are sub- coherent manner so as to facilitate the Therefore, an advance becomes NPA ject to prudential regulations and are comparison between the countries. if interest and/ or installment of prin- supervised by Peoples Bank of China The study also analyses the resultant cipal have not been paid over three (PBC) and progress in the reduction of NPAs in months or 90 days from the due date (ii) Three policy lending banks which India and China over a period of 1998- specified in the loan agreement. are not subject to this law and whose 2010. The data are collected from sec- operations are guided by individual ondary sources, mostly from Annual Management of NPAs in China charters (IMF, 1996). Reports of RBI and China Banking China started reforming its economy Thus, a broad framework of Chinese Regulatory Commission (CBRC). as early as in 1979. In the initial phase banking system emerged, which is pre- (1979 – 1994), the reforms in the sented in Figure 1. Meaning of NPA In simple terms, what we call ‘bad and doubtful debts’ in trading and manu- State Council facturing concern is known as NPAs in case of a banking institution with the only difference that in the later People’s Bank of China (PBC) case advances granted as per contract become bad or doubtful rather than the usual debts arising out of sales in case of the former. From banking Policy Lending State Owned Other Foreign point of view, a contract of lending Bank Commercial Banks Commercial Banks generally includes a binding regarding (SOCBs) Banks the payment of interest and principal by the borrower. If any one of them is not performed duly, then the advance • Agriculture • Agriculture Bank of Joint Stock City should be termed as NPA. More spe- Development Bank of Chaina (ADBC) Commercial Bank cifically, if the interest and/or install- Chaina (ADBC) • Bank of China (BOC) Bank ment of principal have remained over- • Export Import Bank of • China Construction 2 (JSCBs) due for a ‘specified period of time’, it China (EIBC) Bank (CCB) • China Development • Industrial and Bank (CDB) Commercial Bank of 2Overdue means an amount due but has not been China (ICBC) paid on the due date fixed by the bank.
28 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in During this 2nd phase the authori- Table 1: Splitting of NPAs from the SOCBs through AMCs ties became more concerned about the Good Bank (After Respective AMCs (Bad Modus operandi increasing level of NPAs in the Chinese separation of NPA) banks with NPA) banks particularly in the major com- Bank of China (BOC) China Orient mercial banks comprising of SOCBs The AMCs acquire 20% of gross loan book Agriculture Bank of and JSCBs which dominate the bank- China Great Wall consist of NPAs mainly advanced before China (ABC) 1995 and which were overdue for more than ing sector both in terms of deposit Industrial and mobilisation and allocation of credit. one year by the end of 1998 through outright Commercial Bank of China Huarong purchase at original face value. Thus, the Principally, China adopted ‘centralised China (ICBC) responsibility for resolving the bad loans had China Construction process of resolving NPAs’ through As- China Cinda been passed to the respective AMCs set Management Companies (AMCs)3 Bank (CCB) along with some supplementary meas- Idea Source: Jain, V. (2007) ures. We will now discuss them in the following sub-sections. ment introduced auction based market um sized banks in the country. Establishment of Asset Management mechanism. Foreign participation is • Mergers of distressed banks are Companies (AMCs) allowed to boost up the market for explored to consolidate the bank- The Chinese authorities felt that the the sale of NPAs. It also cut the direct ing structure and thereby enable separation of the historical NPAs relationship between the SOCBs and the merged entity to deal with the from the ongoing operation of the their respective AMCs by allowing the problem of NPAs more efficiently. banks would be more appropriate to AMCs to acquire NPAs of any com- In this regard, more than 2000 Ur- deal with the NPAs. Accordingly, the mercial bank and financial institutions. ban Credit Cooperatives (UCCs) Central Government established four were merged into 88 City Banks AMCs in 1999 – one for each SOCB Supplementary Measures during 1995-98 (Shirai, 2002). to acquire NPAs of the respective Apart from the above centralised ap- • Government introduced conversion SOCBs (as shown in Table 1). This proach, there are other supplementary of debt into equity of State Owned so-called split between the good bank measures that have been undertaken Enterprises (SOEs) to keep them (one with performing loans) and the by the government to facilitate the ef- out of bankruptcy. During 1999, bad bank (essentially, the AMCs with fective resolution of NPAs. These in- when the first lot of NPAs was NPAs) was done with a view to clear clude the followings: transferred to AMCs, 580 SOEs had the balance sheet of the banks in one • The new five category loan clas- converted their debt into AMC held hand and to provide a focused ap- sification system based on risk as- equity. This enabled them to avoid proach to NPA resolution on the sessment was first introduced in interest payment in one hand and other. The ultimate loss incurred by the year 1998 in major branches of bought time to repurchase those the AMCs in resolving these NPAs is SOCBs and was formally applied to AMC held equity within the ten expected to be covered by the Central all banks from 2002 in accordance years time period. Government. with a guidelines issued in Decem- • Closure of insolvent financial insti- These AMCs remain under the su- ber 2001. This new system replaced tution is considered as the last resort pervision of PBC and financed by the the old system under which loan to deal with the problem of NPAs. Ministry of Finance (MOF) and PBC. assets were classified under four cat- The banking system in China, how- Together, they acquired US$ 170 bil- egories based on payment status of ever, face some difficulties in imple- lion of NPAs in 1999, which enabled the borrowers (Lardy, 1999). menting the prudential regulations the four SOCBs to reduce NPAs by • Recapitalisation of distressed banks because few banks have taken up the 10 percentage points from 35% to 25% by the government and the foreign new guidelines issued by the PBC and (Shirai, 2002 and NPL Asia, 2006). players was explored as a strategy to as a result, there exists difference in Subsequently, SOCBs transferred deal with the problem. Accordingly, the NPA estimates of government and RMB 1252 billion worth of NPAs in the government in 1998 injected Y that of independent agencies like Fitch the year 2002 and RMB 456 billion 270 billion in capital to the SOCBs Ratings, Standard and Poor, etc. (Jain, by ICBC in the year 2005 (Okazaki, through the issuance of bonds. The 2007). International Finance Corporation In order to facilitate the disposal off (IFC) also invested funds in the eq- 3AMC is also known as Asset Reconstruction NPAs acquired by the AMCs, Govern- uities of non-state small and medi- Company (ARC).
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 29 COVER STORY
2007). The system of loan classification suffers from the judgment bias and Broad NPA Management lack of information provided by the Framework in India borrowers to assess the risk of lending. On the other hand, slow recovery rate of AMCs acts as a stumbling block for the effective resolution of NPAs. It is estimated that about US$ 200 billion Prudential Norms NPA Resolution worth of NPAs are still on the books of the AMCs (Okazaki, 2007).
Management of NPAs in India • Asset Classification In India, the problem of NPAs was first • Income Recognition Recovery Preventive highlighted by the Narasimham Com- • Provisioning Norm Measures Measures mittee (1991). The committee placed emphasis on adoption of prudential norm relating to income recognition, asset classification and provisioning RBI suggested minimum provisioning empowering the same in adjudicat- and suggested some measures to deal norm for different categories of assets ing cases of loan compromise in a with them. The second Narasimham including standard advances. All these speedier and effective way. Committee (1998) suggested more measures are strongly enforced so as to • The promulgation of Securitisation comprehensive reforms on this area. make the accounting and disclosure of and Reconstruction of Financial Subsequently, the Verma Committee NPAs more effective and transparent. Assets and Enforcement of Securi- (1999), formed with the objective to ty Interest Act (SARFAESI), 2002 deal with weak Public Sector Banks Recovery Measures is the most drastic step towards the (PSBs), recommended the setting up Recovery measures are applicable for strengthening of the recovery rights of Asset Reconstruction Companies the existing NPAs which are hard to of the lenders without stepping (ARCs). The CII Report (1999), rep- be revived. These measures can be into the court of law known for its resenting the view of the Indian cor- grouped under two heads – Regu- lengthy, cumbersome and time-con- porate sector, also endorsed the Verma latory measures and Non-regulatory suming procedure. Committee recommendation. In line measures. Over the years, efforts have • Establishment of Asset Reconstruc- with the recommendations of these been made to strengthen the regulato- tion Company of India Ltd. (AR- committees, a number of measures ry measures. These are: CIL) in the year 2003 provides lend- have been taken to deal with the NPAs • Formation of a fast track judicial sys- ers with the opportunity to transfer in Indian banking system. As a result, tem in the form of Debt Recovery their NPAs to ARCIL and thereby a broad framework has emerged, the Tribunals (DRTs) and Debt Recov- focused their attention to their core components of which are presented in ery Appellate Tribunals (DRATs) activities. Figure 2. under the Recovery of Debts due to • Making Civil Courts more effective Banks and Financial Institutions Act, to deal with the bank specific cases. Prudential Norms 1993 and its subsequent amend- The non-regulatory measures, on RBI issued Master Circular on Pru- ments. the other hand, combined both con- dential Norm in 1998 and revised the • Establishment of Corporate Debt ventional measures (e.g., continuous same time and again so as to make Restructuring (CDR) mechanism follow up in the form of sending the norm more stringent and close in the year 2001 with the objective periodical reminders, properly coor- to international standard. Accordingly, to ensure timely and transparent dinated visits to the borrower prem- banks are to identify and report NPA mechanism for restructuring of cor- ises, etc.) and innovative practices on the basis of objective criteria (peri- porate debts of viable entities facing like organising recovery camps dur- od of overdue) under three categories problems, outside the purview of ing harvest seasons (for agricultural - Sub-Standard, Doubtful and Loss as- BIFR, DRT and other legal pro- loans), lien and set off, loan compro- sets. Banks are restrained to account for ceedings, for the benefit of all con- mise schemes, hiring of professional income on those advances which are cerned. agencies to recover loans, redesign- categoriesed as NPAs. Along with this, • Establishment of Lok–Adalats and ing of unpaid loan installments in
30 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in case of genuine difficulties of the pects of NPA management – the ob- es over the period 1998 -2007. borrowers, etc. jective identification and provisioning But there is a difference. NPA ratio of NPAs. In this context, it is worth of SCBs5 in India declines because of Preventive Measures mentioning that Indian asset classi- recovery, write off and credit surge in The Reserve Bank of India (RBI) fication norms are tighter than the India. Recovery performance of the with active support of the banks has international best practices in certain SCBs (last column of table 5.1) has developed a balanced NPA preven- regards (Report on Trend and Progress been improving as the time progresses. tive mechanism. Important preventive of Banking in India, 1998-99). Merger In case of China, however, the major strategies can be summarised as under: of distressed bank with a healthy bank reduction in the year 1999, 2002, 2004 • Establishment of the Credit Infor- to avoid huge social cost involved in and 2005 were largely because of the mation Bureau of India Limited liquidating the distressed bank is also transfer of NPAs from major commer- (CIBIL) in the year 2001 provides explored in extreme cases. For exam- cial banks to the AMCs. the much needed institutional ple, the merger of Global Trust Bank The noteworthy difference in the mechanism for sharing credit infor- with the Oriental Bank of Commerce reduction of NPAs between the coun- mation on existing and prospective in 2004 tries is that in case of India, whatev- borrowers. Thus, it helps in averting Indian banks also face some diffi- er reduction has been done so far is credit to less credit worthy custom- culties in resolving NPAs. The DRTs, mostly by the banks themselves by ers at the initial stage of credit as- Lok-Adalats and civil courts have been using multiple channels as discussed in sessment. failed to bring about the improved section 5. Although transfer of NPAs • Publication of list of willful de- changes in the recovery of NPAs. The to ARCIL is available as a medium to faulters4 and prohibition in raising political interference in lending de- clear the balance sheet of banks since finance from money and capital cisions of banks and the loan-waiver 2003, the route is in developing stage markets. schemes of the Government affect ad- and hence very few NPAs have been • Identification of early warning sig- versely the loan repayment culture of transferred to it. Whereas, China relay nals and taking Prompt Corrective the country and thereby hamper the heavily on the centralised disposal of Action (PCA) is being developed as prevention of NPAs. Inspite of hav- NPAs through the AMCs and starting a supervisory tool. The system was ing a stringent provisioning norm, the from 1999 several rounds of transfer put in place in the year 2003. banks in India failed to achieve full of NPAs have been made. Detailed • Introduction of Risk-Based Super- provisioning against NPAs. disclosure regarding the progress of vision (RBS) in the year 2003-04. disposal of NPAs by the AMCs is not • Induction of professional acumen to Comparative assessment of available. China Banking Regulatory the credit appraisal system to arrest reduction of NPAs in India and Commission (CBRC), however, dis- the occurrence of NPAs at the in- China closes data on the disposal of NPAs itial stage. As both the countries strengthened that were transferred in the year 1999. • Up gradation of credit monitoring the NPA resolution measures from Even in that case, the average percent- and follow up mechanism. 1998 onwards, the level of NPAs age of cash recovery is less than 20% • Flexibility on the part of the banks started to decline. From the table 6.1, as at the end of 2006 (CBRC, 2006). to redesign recovery pattern. it is found that the level of NPAs in Moreover, a large portion of the trans- Apart from the above, the RBI has terms of percentage of total advances ferred NPAs remain indisposed. As of taken a gradual but steady approach to is much lower in India as compared to December 2005, AMCs still bear ap- align its prudential norms to interna- China from 1998 to 2007. For exam- proximately 40% of the 1999 transfer tional best practices in one hand and ple, in the year 1998, 35% of Chinese on the other, has compelled banks to loan portfolio was bad as compared to adopt the prudential norms relating 14.4% in case of India. The ratio then 4Willful Default broadly covers deliberate non- to income recognition, asset classifica- declined continuously and reached payment of dues despite adequate cash flow tion and provisioning along with strict 6.5% and 2.5% respectively in the and good net worth, siphoning off of funds to the detriment of the defaulting unit, assets financed have disclosure norms attached with them. year 2007. Therefore, the gravity of either not being purchased or have been sold and The adoption of these internationally the problem is not that much alarm- proceed misutilised, misrepresentation /falsification of records and disposal /removal of securities aligned norms helped Indian banks ing in India as compared to China. without bank’s knowledge. to achieve transparency in account- Both the countries, however, showed 5SCBs stand for Schedule Commercial Banks in India ing and disclosure of NPAs. It has also steady progress in the reduction of and represent nearly the whole banking system in taken care of the other two vital as- NPAs as a percentage of total advanc- India.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 31 COVER STORY
loans in their balance sheet (NPL Asia, Table 2: Movement of NPA Ratio, Provision Coverage Ratio of India and China 2006). Fitch Rating 2006 put the esti- mate around US$ 200 billion. Year % of NPAs on Total Loans Provision Coverage Ratio Recovery of NPAs in Another dimension of management China India China India India (Rs. of NPAs is to build healthy provisions Crore) for impaired loans. Starting from 1998 35 14.4 NA NA NA 1993 to 2002, the commercial banks 9716 of China were required to make bad 1999 28.5 14.7 NA NA loan provisions of 0.6 percent of out- (cumulative) standing loans at the beginning of the 2000 22.4 12.7 NA NA 2256 corresponding year. Thereafter, the ra- 2001 29.8 11.4 NA NA 4436 tio was allowed to rise by 0.1% every 2002 23.2 10.4 6.9 43.39 11180 year until it reached 1%. After the is- suance of comprehensive guidelines 2003 17.9 8.8 19.7 46.94 5714 on provisioning of loan losses in the 2004 13.2 7.2 14.2 56.64 4039 year 2002, the provisioning practic- 2005 8.9 5.2 24.8 60.3 6072 es improved a lot (as shown in Table 2006 7.5 3.3 34.3 58.93 8971 6.1). Because of the improved provi- sioning norm, the provision coverage 2007 6.1 2.5 41.4 56.1 7318 ratio of major commercial banks of 2008 2.4 2.3 116.6 52.6 10459 China increased from a mere 6.9% in 2009 1.6 2.25 153.2 52.1 7426 the year 2002 to 34.3% at the end of 2010 1.1 2.39 217.7 51.5 7514 2006. There from it started to increase sharply and reached 217.7% at the Source: 1. IMF, Global Financial Stability Report, April 2004 & Shirai, 2002 2. RBI, Annual Report 2001-02 end of 2010 because of the strength- 3. RBI, Report on Trend and Progress of Banking in India, 2004-05 – 2009-10. ening of provisioning practices by 4. CBRC, CBRC Annual Report, 2006 and 2010 the CBRC by allowing the Chinese banking sector to dynamically adjust- ing the provisioning requirements in level of 51.5%. Therefore, on provi- that while China adopted the first way line with the cyclical economic de- sioning ground, the Chinese banking along with some additional measures velopments, as well as the difference system has performed much better to deal with the problem, India com- of banks in terms of quality of loan way and the level of provisions for bined the two approaches. Therefore, portfolio and profitability. Specifically, impaired loans in China is better than India offered a more comprehensive banks are required to draw a higher the international standard. Whereas and flexible framework with a wide level of provisions during the eco- the India’s provision coverage ratio range of options for the lenders to take nomic upturn, and a relatively lower is not compatible with international care of the NPA menace. RBI has a level of provisions during the eco- standard, wherein provision coverage balanced approach that facilitates the nomic downturn (CBRC Annual ratio is often as high as 140% (Report prevention of NPAs in one hand and Report, 2010). on Trend and Progress of Banking in strengthening the recovery power of India, on the other hand, has been India, 2001-02). the lenders on the other through a following a stringent provisioning range of regulatory and non-regulato- norm since 1993 and as a result, its Concluding observations ry measures. As a result, India achieved provision coverage ratio is much bet- Internationally, there are two broad a steady progress in the resolution of ter than that of China in the initial policies regarding NPA management, NPAs as compared to China during years (up to 2006). The data of pro- both having their respective pros and 1998 to 2007. vision coverage ratio, however, was cons. One is the centralised approach Post 2007 China, however, sur- available from 2002. As per the data through AMCs or ARCs and the oth- passed India both in terms of re- shown in Table 6.1, the coverage ra- er is the decentralised creditor-led ap- duction of NPAs and building of tio of Indian banks increased from proach which includes loan loss provi- healthy provisioning in line with 43.39% in 2002 to 58.93% in the year sioning, write off and recovery actions international standard. But various 2006. From 2007 onwards, the cov- by the lending institution itself. The agencies have expressed doubts over erage ratio decreased and reached the above discussion clearly points out the level of compliance with the
32 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in INDIA HAS BEEN FOLLOWING A STRINGENT PROVISIONING NORM SINCE 1993 AND AS A RESULT, ITS PROVISION COVERAGE RATIO IS MUCH BETTER THAN THAT OF CHINA (UP TO 2006)
regulations by the Chinese banks. for International Settlements, Basel. 11. Mukherjee, P. (2003), “Dealing with The assessment of performance of 2. Beattie, V., Casson, P., Dale, R., Mc- NPAs: Lessons from International centralised market driven recovery Kenzie, G., Sutcliffe, C. and Turner, Experiences”, Money & Finance, process becomes difficult because of M. (1995), Banks and Bad Debts: January – March. the non-transparent accounting and Accounting for Losses in International 12. Okazaki, K. (2007), “Banking Sys- disclosure practices followed by the Banking, Wiley, Chichester. tem Reform in China: The Challenges AMCs. Nevertheless, the regulato- 3. Campbell, A. (2007), “Bank Insol- of Moving Toward a Market Oriented ry framework and enforcement of vency and the Problem of Non-Per- Economy”, Occasional Paper, Nation- norms are two important areas that forming Loans”, Journal of Banking al Security Research Division (www. offer lot of scope for improvement in Regulation, Vol.9, No.1, Novemeber. rand.org), Pittsburgh. both the countries. In case of India, 4. China Banking Regulatory Commis- 13. Olson, G.N. and Lou, J. (2001), the provisioning practices need to be sion (2006, 2010), Annual Report China’s Troubled Bank Loans: strengthening either by encouraging 2006 and 2010, Workout and Prevention, Kluwer Law banks to make provisions in excess 5. Dell’Ariccia, G., Detragiache, E. and International, London. of the minimum provision suggest- Rajan, R. (2005), “The Real Effect 14. Price Waterhouse Corporation. (2006), ed by the RBI or by increasing the of Banking Crises”, Working Paper, NPL Asia, Issue 7, May. minimum level in order to achieve No. WP/05/63, International Mone- 15. Ranjan, R. and Dhal, S. C. (2003), international standard. tary Fund, Washington, DC. “Non-Performing Loans and Terms The Chinese model, however, offers 6. International Monetary Fund (2004), of Credit of Public Sector Banks in two valuable lessons for Indian bank- Global Financial Stability Report, India: An Empirical Assessment”, ing system. Those lessons stem from Washington, DC. April. RBI Occasional Papers, Vol. 24, No. the separation of policy lending from 7. Jackson, P. (1996), Deposit Protection 3, Winter. commercial lending for better perfor- and Bank Failures in the United 16. RBI. (2002), Annual Report 2001- mance measurement and enforcement Kingdom, Bank of England, London. 02, Mumbai. of responsibility and accountability on 8. Jain, V. (2007), Non-Performing 17. RBI., Report on Trend and Progress the part of banks and opening up the Assets in Commercial Banks, Regal of Banking in India, Various Issues, foreign participation in developing Publication, New Delhi. Mumbai. market mechanism for the disposal of 9. Lardy, N. R. (1999), When will Chi- 18. Shirai, S. (2002), Banking Sector NPAs.. na’s Financial System Meet China’s Reforms in India and China: Does Needs? Conference on Policy Reforms India’s Experience Offer Lessons for References in China, Stanford University. China’s Future Reform Agenda? 1. Bank for International Settlements 10. Matouasek, R., Sergi, B.S. (2005), Discussion Paper No.2, Japan Bank (1999) “Strengthening the Bank- “Management of Non-Performing for nternational Co-operation (JIBC), ing System in China: Issues and Loans in Eastern Europe”, Journal of March. Experience”, Bank for International East – West Business, Vol.11, No.1-2, Settlements Policy Paper No. 7. Bank August. [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 33 COVER STORY
STRATEGIC COST MANAGEMENT IN THE LIFE INSURANCE INDUSTRY: A COMPARATIVE STUDY
The author discovers that private insurers have procured market share by increasing the management expenses in general and operating expenses in particular. LIC, on the other hand, has shown its economical and efficient nature
n the present epoch of volatile the current life insurance market has changes in business environment become competitive and the market I organisations confront complex- share of LIC of India has been grad- ities in managing the business affairs. ually dipping down. In order to tackle such challenges or- ganisation endeavour to apply new- Objectives of the study er, better and effective approaches • To review the conceptual frame- viz. total quality management, em- work of strategic cost management. Furquan Uddin ployee involvement and empower- • To examine the commission ex- Ph.D. Scholar, BHU, ment, business process reengineer- penses and its ratios of life insurers. Varanasi ing, continuous improvement and • To analyse the operating expenses others. These philosophies need or- and its ratios of life insurers. ganization to be responsive, nimble • To assess the market share of life in- and flexible in profitably catering surers. value-added products and services to customers at competitive pric- Methodology es. Therefore, organizations are now The study is exploratory in nature, searching several tools to cope with thus, focuses on the different issues of the environmental changes. Amongst, strategic cost management. It is a com- strategic cost management is one of parative study of public and private life the approaches used by the organisa- insurers in relevance of strategic cost tions to gain competitive edge over management which has been discussed the rivals. Life insurance industry is in the life insurance industry. The sec- not the exception as concerned to ondary data have been extracted from external changes. The first decade of IRDA Annual Reports and literatures the 21st century witnessed so many have been used from reputed texts. changes such as setting of a regula- The period of the study covers from tory body i.e. IRDA and entry of 2005-06 to 2011-12. Further, the data private and foreign players. Therefore, have been analysed through percent-
34 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in age, ratio and average, and presented and sustain a strategic competitive ad- with participation during R&D and through tables. vantage through long term anticipa- design stages of the product. tion and formation of costs level, costs Another strategy Guru Porter Conceptual framework of structure and costs behavior pattern (1998) contributed significantly in Strategic Cost Management for products, processes, and resources. the area of strategic cost manage- Strategic cost management, like other To serve this purpose, strategic cost ment. He revealed that a firm has philosophies and approaches, is un- management must cater different in- three options (generic strategies viz. derstood in various ways in literature. formation to managers. Strategic cost cost leadership, differentiation, and Cooper and Slagmulder (1998) argued management also considers products, focus) in order to attain sustainable that strategic cost management is “the processes, and resources as creative competitive advantage. The first one application of cost management tech- objects to achieve strategic competi- is strongly concerned with the stra- niques so that they simultaneously im- tive advantage. Unlike traditional cost tegic cost management; therefore, he prove the strategic position of a firm management, strategic cost manage- advocates the application of strategic and reduce costs.” In other words, they ment is a proactive approach. They cost analysis. During the process of lay stress on three elements such as further lay stress on the determination strategic cost analysis a firm has to application of cost management tech- and analyses of long term cost deter- identify its value chain which can be niques, reducing cost and improving minants (economies of scale, experi- referred as the linked set of activities the strategic position of a firm. Fur- ence etc.) and their impact on costs all the way from raw material sourc- thermore, Cooper (1995) reveals that level, cost structure and cost behavior es to the ultimate end-use products strategic cost management needs to pattern. At last, in order to avoid the delivered to the final consumers. The entail all aspects of production and de- costs early in the product life cycle, value chain consists of five funda- livering the product; the supply of pur- strategic cost management should start mental activities along with a num- chased parts; the design of products and manufacturing of these products. Thus, strategic cost management should be innate to each stage of a product’s life Strategic Cost Management cycle. According to Welfle and Keltyka Framework (2000) strategic cost management is a field of study that holds exciting pos- The concept sibilities for accountants. They further Philosophy - Attitude - Set of techniques state that strategic cost management assists in improving the strategic po- sition of an organisation along with The concerns and objectives reducing cost. In order to improve Cost - Revenue - Productivity - Customer value - Strategic position strategic cost position, an organization must compete in terms of cost, quality, The pillars customer service, flexibility and cost reduction efforts. Shank and Govin- Key concepts darajan (1993) define strategic cost Cost drivers - Value chain management as “the managerial use of cost information explicitly directed at one or more of the four stages of The objects strategic management: (1) formulating Resources - Processes - Products strategies (2) communicating those strategies throughout the organisation The activities & analysis fields (3) developing and carrying out tactics Cost behavior - Cost structure - Cost level to implement the strategies, and (4) Key support factors developing and implementing controls The guiding principles to monitor the success of objectives.” The instruments According to Hovarth and Brokem- ABC/ABM - TC - LCC - BM per (1998), strategic cost management has emerged as a key element to attain
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 35 COVER STORY
Table 1 Commission Expenses of Life Insurers (Rs. In Crore) Life Insurance Commission Expenses of LIC of India Commission Expenses of Private Life Insurers Industry Years First Year Renewal First Year Renewal Total Premium Total Premium Total Premium Premium Premium Premium 2005-06 3630.33 3469.85 7100.19 1362.91 180.19 1543.10 8643.29 2006-07 5203.75 3969.82 9173.58 2802.69 306.96 3109.65 12283.24 2007-08 4963.81 4650.89 9614.69 4511.15 578.46 5089.61 14704.30 2008-09 4783.72 5271.37 10055.09 4597.11 880.78 5477.89 15532.98 2009-10 6626.85 5505.71 12132.56 4911.64 1030.42 5942.06 18074.62 2010-11 7391.25 5956.04 13347.29 3849.75 1132.28 4982.03 18329.32 2011-12 7986.53 6076.53 14063.06 3337.44 1120.62 4458.05 18521.11 Source: Annual Reports of IRDA (Various Issues)
ber of support activities. The former drivers. It is the management’s skill drivers or by reconfiguring the value one encompasses inbound logistics, and success to cope with cost driv- chain. The latter includes the deter- operations, outbound logistics, mar- ers in an efficient and effective man- mination of value chain areas having keting and sales, and services while ner. In addition, an organization has competitive advantage. It is indispen- the latter entails firm’s infrastructure, to recognize the value chain and sable that the cost reduction perfor- human resource management, tech- cost structure of rivals to know the mance of both the organization and nology and procurement. In the val- relative competitiveness. Porter rec- its’ primary rivals is continuously ue chain, costs and assets are assigned ommend that organizations should monitored if competitive advantage to each activity. The cost behavior utilize this information to identify is to be sustained. pattern of each activity depends on opportunities for cost reduction, ei- In his study Hinterhuber (1997) causal factors that are known as cost ther by improving curb of the cost implied that cost management is “a necessary course of action which ac- quires strategic significance the more it increases the number of options for discovering new opportunities The current market of the life or investing new markets. Strategic cost management tends to be an in- insurance industry is complex and tegrated, proactive part of strategic management aimed at satisfying all competitive. As a result, attaining key stakeholders.” Furthermore, he concluded after an interview with competitive advantage is of paramount executives of European compa- nies that strategic cost management significance... Controlling costs and should be a part of the strategy of businesses in order to attain a radical improving strategic market position are and long term enhancement in the value of the company. Strategic cost the primary concerns of strategic cost management needs the assistance and support of employees, top manage- management ment and information technology to ensure effective and timely commu- nication and proper implementation.
36 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in According to McIlhattan (1992), mation are vital for the success of an expenses entail commission and any strategic cost management is the organization. Moreover, in the cur- amounts of capitalised expenses. Thus, skillful handling or directing of costs. rent dynamic business environment, a comparative figure of expenses of Horngren (2000) pointed out that cost, value, and revenue are the sig- LIC and private insurers has been dis- cost management is not practiced in nificant forces that play crucial role in cussed. Management expenses of the isolation, but a part of general man- the success of an organization. Final- corporate giant LIC has been contin- agement strategies. They, define stra- ly, the strategic cost management is ued within the allowable limits. Alter- tegic cost management as the set of a philosophy, an attitude and a set of nate channels of distribution like ban- actions that managers take to satisfy techniques that contribute in shaping cassurance, direct marketing, internet customers while continuously reduc- the future of the company. and telemarketing have reduced costs ing and curbing costs. Sakauri (1992) and enable insurers besides accessing a speaks of a cost down mentality as a Data analysis and finding broader customer base. On-line sale of synonym for cost management. Kato The current market of life insurance policy has also contributed in cutting (1993) added that in today’s ever industry is complex and competitive. the costs. The following analyses pres- changing environment, pursuing As a result, attaining competitive ad- ent the commission expenses, operat- every possible cost reduction oppor- vantage is of paramount significance. ing expenses and market share of the tunity is surely a good strategy, but An appropriate set of tools or strategies life insurers. warns that it is essential to avoid re- may serve the purpose. Controlling Table 1 shows the commission duction costs without regard for the costs and improving strategic market expenses of the life insurers’ viz. LIC quality functions, and characteristics position are the primary concerns of of India and private life insurers. It is of the product from the customers’ strategic cost management. In life in- evident that total commission of the perspective. surance industry, costs encompass the industry has been increased by more Thus, it is obvious that strategic management expenses which are fur- than double times during the period cost management has a wider focus; it ther segregated into commission ex- under consideration. In respect of first involves the continuation reduction penses to individual agents and other year premium, LIC recorded com- of costs and curbing of costs, man- intermediaries and operating expenses mission expenses from Rs. 3630.33 agement’s use of cost information such as employee salary and welfare crore in 2005-06 to Rs. 7986.53 for decision-making. Most of the benefits, training expenses, and ad- crore in the year 2011-12 while pri- authors have emphasised on the cost vertisement and publicity expenses. vate insurers accounted more times reduction along with the increas- However, there is a prescribed lim- than LIC from Rs.1362.91 crore and ing revenue through the application it in regard to management expenses to Rs. 3337.44 crore for the same of strategic cost management. Cost for the life insurers under the Section periods. Further, it is surprisingly to management knowledge and infor- 40 B of the Insurance Act, 1938. Such know that LIC’s commission for re-
Table 2 Commission Expenses Ratios of Life Insurers (In Percent) Life Insurance Years Commission Expenses Ratio of LIC of India Commission Expenses Ratio of Private Life Insurers Industry Ratio First Year Renewal First Year Renewal Total Premium Total Premium Total Premium Premium Premium Premium 2005-06 12.73 5.57 7.82 13.27 3.74 10.23 8.16 2006-07 9.26 5.54 7.17 14.45 3.48 11.02 7.87 2007-08 8.27 5.17 6.42 13.38 3.24 9.87 7.30 2008-09 8.99 5.06 6.39 13.59 2.87 8.49 7.00 2009-10 9.27 4.81 6.52 12.80 2.51 7.48 6.81 2010-11 8.49 5.11 6.56 9.77 2.32 5.65 6.28 2011-12 9.76 5.02 6.93 10.40 2.15 5.30 6.45 Note: Commission expenses ratio is the ratio between commission expenses and the premium underwritten by life insurers. Source: Annual Reports of IRDA (Various Issues)
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 37 COVER STORY
Table 3
Operating Expenses and Operating Expenses Ratios of Life Insurance Industry
Operating Expenses Operating Expenses Ratios Years LIC Private Industry Total LIC Private Industry Total
2005-06 6041.56 3569.48 9611.04 6.65 23.66 9.07
2006-07 7085.84 6500.01 13585.85 5.54 23.01 8.70
2007-08 8309.32 12032.46 20341.78 5.55 23.34 10.10
2008-09 9064.29 16763.03 25827.32 5.76 25.99 11.65
2009-10 12245.82 16561.11 28806.93 6.58 20.86 10.85
2010-11 16980.28 15962.02 32942.30 8.35 18.10 11.30
2011-12 14914.40 14760.19 29674.59 7.35 17.53 10.34
Note: Operating expenses ratio is the ratio between operating expenses and the premium underwritten by the life insurers. Source: Annual Reports of IRDA (Various Issues).
Table 4
Market Share of Life Insurers
Years Market Share of LIC (In percent) Market Share of Private Life Insurers (In percent)
First Year Premium Renewal Premium Total Premium First Year Premium Renewal Premium Total Premium
2005-06 73.52 92.82 85.75 26.48 7.18 14.25
2006-07 74.35 89.03 81.92 25.65 10.97 18.08
2007-08 64.02 83.42 74.39 35.98 16.58 25.61
2008-09 60.89 77.43 70.92 39.11 22.57 29.08
2009-10 65.08 73.64 70.10 34.92 26.36 29.90
2010-11 68.84 70.48 69.77 31.16 29.52 30.23
2011-12 71.85 69.91 70.68 28.15 30.09 29.32
Source: Annual Reports of IRDA (Various Issues)
newal premium has been enhanced mission than LIC to motivate the premium respectively whereas the by less than double times whereas intermediaries for the selling of the private insurers’ commissions have private insurers jumped by more than policies. been near to 13 percent, 3 percent six times. The total premium com- Table 2 presents the commission and 11 percent in the said categories. mission expenses of LIC have been expenses ratio of the life insurers. It Except 2010-11 and 2011-12, LIC moved by two times while private reveals that LIC’s commission ratio has been economical in commission players booked three times approxi- has been almost 10 percent, 5 percent payments than private players. Its mately. It is thus, obvious that private and 7 percent in the first year premi- commission ratio has also been low insurers have distributed more com- um, renewal year premium, and total than industry at most of the times.
38 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in ECONOMIES OF SCALE, WIDER DISTRIBUTION NETWORK, TRUST LEVEL, EXPERIENCE IN THE INDUSTRY, ETC. ARE THE MAJOR REASONS FOR LIC’S RESULTS AND LEADERSHIP
The operating expenses its’ ra- the LIC within past years. of Technology, Egypt tios have been shown through the 2. Cooper, R. and Slagmulder, R. Table 3 on next page. It is clear from Concluding remarks (1998a): Strategic Cost Management: the table that LIC is more efficient From the above analyses it is evident What is Strategic Cost Management? than private insurers in managing that private insurers have procured Management Accounting, Jan. Vol. 79 the operating expenses. LIC’s operat- market share by increasing the man- No. 7, pp.14-16 ing expenses have been increased by agement expenses in general and op- 3. Welfle, B. and Keltyka, P. (2000): more than two times while private erating expenses in particular. LIC has Global Competition: The New Chal- players recorded more than four times showed its economical and efficient lenge for Management Accountants, The enhancement in operating expenses. nature. Economies of scale, wider dis- Ohio CPA Journal, January-March LIC’s operating expense ratio has been tribution network, trust level, experi- 2000, pp.30-36 nagement? Manage- less than industry while private insur- ence in the industry, and government’s ment Accounting, Jan. Vol. 79 No. 7, ers suffered more than industry ratios. guarantee etc. are the major reasons for pp.14-16 Thus, it is obvious that private insurers the LIC’s results and leadership. Despite 4. Shank, J. and Govindarajan, V. (1993): are spending too excessively on op- the fact, its’ market share has been erod- Strategic Cost Management: The New eration activities. In contrast, LIC has ed over the years. The private insurers Tool for Competitive Advantage. The maintained its operating expenses in a have attained progress in their business Free Press, New York significant manner. operations by using smart marketing, 5. Horvath, P., Gleich, R. and Schmidt, Table 4 throws light on the mar- innovative products, and strategic mar- S. (1998b): Linking Target Costing to ket share of the life insurers. It is ap- ket operations. Peter F. Drucker also ABC at a U.S. Automotive Supplier. parent that private players showed an advocates effectiveness rather than ef- Journal of Cost Management, Vol.12, impressive growth in market share over ficiency. As private players incurred No.2, March/April 1998, pp.16-24 the years. The market share of private much management expenses but also 6. Porter, M. (1998a): Competitive sector was 14.25 percent in total pre- gained market acceptance. Therefore, Advantage: Creating and Sustaining mium in the year 2005-06 which en- the importance of strategic cost man- Superior Performance: With a New hanced to 29.32 percent in 2011-12 agement gets enhanced which empha- Introduction. The Free Press, New York while LIC’s market share fell down sizes on improving the strategic market 7. Porter, M. (1998b): Competitive to 70.68 percent from 85.75 percent position along with curbing the costs. Strategy: Techniques for Analyzing In- in the same category and periods. In LIC should ponder about the declin- dustries and Competitors: With a New term of renewal premium private play- ing market share besides the manage- Introduction. The Free Press, New York ers’ market share jumped by four times ment expenses. 8. Hinterhuber, H. H. (1997): Strategic i.e. from 7.18 percent to 30.09 percent cost management: Preliminary Lessons while LIC faced loss of market share References form European Companies. Internation- from 92.82 percent to 69.91 percent. 1. Ibrahim Abd El Mageed Ali El al journal Technology Management, The first year premium market share Kelety Geboren.(2006): Towards a special Issue on Strategic Cost Manage- has been 70:30 ratios in LIC and pri- conceptual framework for strategic cost ment, Vol.13, No.1, pp.1-14 vate sector. It is clear that private in- management- The concept, objectives, surers have snatched market share from and instruments, Chemnitz University [email protected]
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THE FINANCIAL PERFORMANCE OF SELECT COMMERCIAL BANKS IN INDIA USING THE CAMEL APPROACH
The study analyses the relative performance of sample banks based on capital adequacy, asset quality, management efficiency, earnings quality and liquidity and provides a rankings under each parameter
he Indian banking a long back in 1960s when concern. As a result of which sector has witnessed the nationalization of banks a new legislation was imple- T a colossal transforma- was initiated. Again the 1990s mented and this came to be tion in the last two decades. forms a major transitory pe- known as Securitisation and Thus, this paper attempts to riod for the Indian banking Reconstruction of Financial gauge the relative financial sector. The recommendations Assets and Enforcement of performance of ten select of Narasimham Committee-I Security Interest Act, 2002. commercial banks (incorporat- (1991) report and Narasim- Moreover, the Basel Accord Indrani Ghosh ing five public sector and five ham Committee- II (1998) issued by the Basel Commit- Faculty, Shree private sector banks) in India report were implemented tee on Banking Supervision Agrasain College, during the period 1998-1999 to recover the dark areas in (BCBS) first in 1988 (i.e Basel Howrah to 2012-2013. The CAMEL banking sector and raise its I) also started giving the bank- approach has been used for the potential to great heights. The ing sector a fine shape. Further purpose of such study. This ap- Narasimham Committee- I refinements were brought proach takes into consideration conducted a study on the into this accord and Basel II five aspects – Capital adequacy, structure, organization, func- was published in 2004. It took Asset quality, Management effi- tions and procedures of the into consideration market risk ciency, Earnings quality and Li- financial system and suggested and operational risk which quidity. The relative position of measures for improving their were neglected in Basel I. All the sample banks under each of productivity and efficiency. these made the Indian bank- the five aspects has been ascer- Mounting Non-Performing ing sector quite robust and Dr. Debdas Rakshit tained and eventually a com- Assets (NPAs) mostly arising thus the banks survived the Professor, University posite ranking has been arrived from priority sector lending 2008 financial crisis relatively of Burdwan, Burdwan at by taking into consideration was one of its major issues of unscathed. Presently the Ba- all the five aspects as a whole. studies. Narasimham Com- sel III, a refinement over the mittee- II was mainly entitled previous one is ready to be Introduction to make a review of the bank- implemented. This paper tries The Indian banking sector ing sector reforms initiated in to gauge the financial perfor- forms the backbone of the 1992. Besides that it also fo- mance of Indian public sector Indian economy. This sector cused on the size of banks and and private banks in the mi- became an important area capital adequacy ratio. NPAs lieu of these new vistas in the of concern for the economy were also matter of serious Indian banking sector using
40 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in PRESIDENT’S COMMUNIQUE
CAMEL approach. condition of financial institutions. losses. The ratios under this parameter Accordingly, the “Uniform Finan- basically act as an indicator of bank Objectives cial Institutions Rating System” was leverage. The following ratios have From the above discussion it is very established by the Federal Financial been used: transparent that the period starting Institutions Examination Council in Capital adequacy ratio (It is a meas- from 1990s till date is very relevant the US. Here, the acronym “CAM- ure of the bank’s core capital expressed for the Indian banking sector. Thus, ELS” stands for Capital adequacy (C), as a percentage of its risk-weighted as- this paper tries to make a review of the Asset quality Management efficiency sets), Advance to Asset ratio and Gov- financial performance of the banking (M), Earnings Quality (E), Liquidi- ernment Securities to Total Investment sector during such late 1990s till date. ty (L) and Sensitivity to market risk ratio. (S). In 1995, RBI set up a committee The ranking under these sub-pa- The objectives of this study are as follows: under the chairmanship of S. Pad- rameters and the capital adequacy i. To study the relative performance of manabhan and this recommended parameter as a whole has been shown sample banks during the period under the “CAMELS” model based on the in Table 1 in the annexure. In the study based on the sub-parameters un- lines of the international model. In overall ranking under capital adequa- der each parameter (Capital adequacy, this acronym C, A, M, E, L stands the cy, IndusInd Bank has occupied the Asset quality, Management efficien- same as that represented in the inter- first position, followed by Corpora- cy, Earnings quality and Liquidity) of national model. Only “S” stands for tion Bank and Bank of India and Axis CAMEL approach. Systems and controls. Bank Ltd. has been outperformed by ii. To gauge the relative performance In this study, C, A, M, E and L all the other banks and thus occupies of each sample bank by providing (i.e CAMEL model) has been con- the last rank. ranks under each parameter based on sidered. The Banks are not rated as sub-parameter ranking. such, in fact the relative position of Asset Quality iii. To apply a composite ranking tech- the sample banks have been detected Under this parameter a study is made nique to trace the overall relative posi- by the method of ranking. At first the on the quality of assets. Some assets tion of each sample bank banks are ranked under each sub-pa- may not be income-generating ones rameter (i.e each ratio) based on the i.e there may be some Non-Perform- Database and methodology average of that particular ratio during ing Assets (NPAs) in the asset mix of The study encompasses ten banks the study period of 15 years (1998- the banks. Assets also include invest- selected randomly – including five 1999 to 2012-2013). Average of the ments, income from which does not banks from the public sector and the ranks of the sub-parameters are com- form the core income of banks. Thus other five from the private sector. The puted and based on that group ranks the following ratios have been used sample banks for this study are State of each of the five parameters are as- to determine asset quality: Bank of India, Bank of Baroda, Bank signed. Eventually a composite rank- Net NPAs to Net Advances, Net of India, Union Bank and Corpora- ing is done based on all the five pa- NPAs to Total Assets and Total Invest- tion from the public sector and Axis rameters taken together. This shows ments to Total Assets. Bank Ltd., ICICI Bank Ltd., HDFC the overall relative position or rank Table 2 represents the ranking un- Bank Ltd., IndusInd Bank, ING Vy- of each bank. der this parameter. Corporation Bank sya Bank Ltd. from the private sec- tops the list followed by HDFC Bank tor. The period covered in this study Analysis and interpretation Ltd and the third rank is held jointly is 15 years ranging from 1998-1999 The CAMEL model has been used by Bank of Baroda and ICICI bank to 2012-2013. Data required for this to find out the relative position of the Ltd. State Bank of India ranks the last. purpose has been obtained from the banks in terms of their financial per- Capitaline - 2000 Database Package. formance. It is basically a ratio-based Management Efficiency CAMEL (Capital adequacy, As- model in which ratios are classified This parameter is very much im- set quality, Management efficien- under each parameter. The following portant for any institution. With the cy, Earnings quality and Liquidity) ratios have been considered for this advent of globalization and rising approach has been applied to track study: awareness among the shareholders, the relative financial performance the role of management in banking of the sample banks. The CAMELS Capital Adequacy sector becomes utmost essential. The approach was first developed in the It represents whether the bank has following ratios are used to gauge the US for measurement of financial enough capital to absorb unexpected efficiency of management:
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Return on Net Worth, Business per em- Bank Ltd. respectively. Axis Bank Ltd. sample banks. ployee and Profit per employee. occupies the 10th position. • Earnings quality of the HDFC The ranking under this parameter is Bank Ltd. is the best. depicted in Table 3 in the annexure. Composite ranking • Bank of Baroda is the best one in Axis Bank Ltd. occupies the first po- The composite ranking is based on terms of Liquidity. sition, followed by HDFC Bank Ltd. the average of the ranks obtained un- This study is confined only to de- There is a tie in the third position der each of the parameters – Capital termination of the relative position which is occupied by Corporation adequacy, Asset quality, Management of the banks. Detailed analysis of Bank, ICICI Bank Ltd. and IndusInd efficiency, Earnings quality and Li- the financial soundness of individu- Bank. Bank of Baroda lies at the end quidity. al bank is beyond the scope of this of the list. Table 6 in the annexure shows paper. the details of this composite rank- Earnings quality ing. HDFC Bank Ltd. tops in the list. References It helps in gauging the profitability of Next position is jointly held by Cor- 1. Pillai, Manoj (2009), “Financial the banks and thus predicting its sus- poration Bank and IndusInd Bank Restructuring of Non-Performing Assets tainability and competitive advantage with a ranking of 2.5. Then comes of Indian Banks: An Analysis”, The over its rivals. It is also very prudent ICICI Bank Ltd., Bank of Baroda, Management Accountant, vol. 44, no. 10, to know the composition of such Axis Bank Ltd. and Union Bank in pp. 789-793. earnings of the banks i.e what is the the series in the order of their rank- 2. Vohra, P.S. (2011), “Financial Effi- composition of the operating income ing. State Bank of India and Bank ciency of Commercial Banks: A Compar- and the non-operating income. The of India with a joint ranking of 8.5 ative of Public and Private Banks in India following ratios have been incorpo- follows the banks mentioned before. in the Post-global Recession Era”, The rated in this study: ING Vysysa Bank Ltd. occupies the International Journal’s Research Journal of Operating Profit to Average Work- last position. Social Science & Management, vol.1, no. ing Fund, Return on Assets and Prof- 4, pp.57-70. it After Tax (PAT) growth rate. Conclusion 3. Reddy, K. Shriharsha (2012), “Rel- HDFC Bank Ltd. holds the first The CAMEL approach is a very ative Performance of Commercial Banks position and the 2nd and 3rd posi- comprehensive tool for assessing the in India Using CAMEL Approach”, tions are occupied by the private financial performance of the banks. International Journal of Multidisciplinary banks – Axis Bank Ltd. and ICICI It focuses on all the aspects relating Research, Vol.2, Issue 3, Pp. 38-58. Bank Ltd. respectively. State Bank of to financial performance. This study 4. Prasad, K.V.N and Reddy, D. India is found at the end of the list. depicts the financial performance of Maheshwara (2012), “Evaluating The detailed ranking is shown in Ta- the sample banks during 1998-99 to Performance of Nationalized Banks and ble 4 in the annexure. 2012-13. HDFC Bank Ltd. has been SBI Group through CAMEL Model”, found to be the best bank among all Academicia: An International Multidis- Liquidity the sample banks, based on its over- ciplinary Research Journal, vol.2 issue 3, It is the prime function of banks to all performance, according to this pp. 32-39. accept deposits from their clients and study. Moreover, it is also the winner 5. Report on Trend and Progress of Bank- pay that back on maturity or on de- of “Best Private Sector Bank” award ing in India 2006-07 to 2011-12, www. mand. Thus, banks should possess the given by Dun & Bradstreet – Pola- rbi.org.in ability to meet their obligations. Such ris Financial Technology Banking 6. http://en.wikipedia.org/wiki/Nar- ability is nothing but liquidity. The Award 2013 [http://www.hdfcbank. asimham_Committee_on_Banking_Sec- ratios for measuring such liquidity com/htdocs/aboutus/awards/dnb- tor_Reforms_(1998) are stated below: awards-2013.html]. The best per- 7. Kumar, Ashish and Kumar, Sunil Liquid assets to Total deposits, Liq- formers in each group as per this (2012), “A Study of Efficiency of Public uid assets to Demand deposits and study are as follows: Sector Banks in India”, IJMRS’s Government Securities to Total assets. • IndusInd Bank is the best one in International Journal of Management Table 5 in the annexure shows terms of Capital adequacy. Sciences, vol.01, issue 02, pp.102-108. the ranking under Liquidity. Bank • Corporation Bank tops the list in of Baroda occupies the 1st position. case of Asset quality ranking. The 2nd and 3rd positions are held • Management efficiency of Axis [email protected] by State Bank of India and ICICI Bank Ltd. is the best among all the [email protected]
42 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in PRESIDENT’S COMMUNIQUE
ANNEXURE
Table 1: Capital Adequacy Ranking G-sec to total investment Banks Capital Adequacy Ratio (%) Advance to Asset Ratio (%) Group Rank Ratio (%) Average Rank Average Rank Average Rank Average Rank
State Bank of 12.42 7 49.61 8 79.83 1 5.33 5.5 India
Bank of Baroda 12.72 5 52.77 6 74.48 5 5.33 5.5 Bank of India 11.69 9 57.41 1 75.83 3 4.33 3 Union Bank 11.93 8 55.02 2 74.86 4 4.67 4 Corporation 14.38 1 53.16 4 73.88 6 3.67 2 Bank Axis Bank Ltd. 12.44 6 49.67 7 61.25 10 7.67 10 ICICI Bank Ltd. 14.12 2 48.78 9 61.97 9 6.67 7 HDFC Bank 13.37 3 45.46 10 64.74 8 7 8 Ltd. IndusInd Bank 12.83 4 53.84 3 79.04 2 3 1 ING Vysya 11.64 10 52.80 5 73.15 7 7.33 9 Bank Ltd. Source: Data generated
Table 2: Asset Quality Ranking Total Investment/ Banks Net NPA / Net Advance (%) Net NPA/ Total Asset (%) Group Rank Total Asset (%) Average Rank Average Rank Average Rank Average Rank State Bank of 3.34 9 1.46 7 32.92 8 8 10 India Bank of Baroda 2.57 5 1.20 5 29.07 3 4.33 3.5 Bank of India 3.36 10 1.79 10 27.12 1 7 8 Union Bank 3.24 8 1.55 9 30.83 5 7.33 9 Corporation 1.15 2 0.57 3 31.76 6 3.67 1 Bank Axis Bank Ltd. 1.78 3 0.85 4 34.55 9 5.33 5.5 ICICI Bank Ltd. 2.08 4 0.52 2 32.71 7 4.33 3.5 HDFC Bank 0.38 1 0.16 1 37.75 10 4 2 Ltd. IndusInd Bank 2.93 6 1.49 8 28.63 2 5.33 5.5 ING Vysya 3.16 7 1.42 6 29.30 4 5.67 7 Bank Ltd. Source: Data generated
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Table 3: Management Efficiency Ranking Banks RONW (%) Business/ Employee (Rs. Cr) Profit/ Employee (Rs. Cr) Group Rank Average Rank Average Rank Average Rank Average Rank State Bank of 16.21 7 3.94 10 0.03 8.5 8.5 8 India Bank of 16.38 6 6.28 6 0.04 6.5 18.5 10 Baroda Bank of India 17.66 5 6.06 7 0.03 8.5 6.83 7 Union Bank 20.75 2 5.31 8 0.04 6.5 5.5 6 Corporation 18.71 4 7.72 4 0.06 5 4.33 4 Bank Axis Bank 21.70 1 10.60 2 0.09 2 1.67 1 Ltd. ICICI Bank 13.78 9 8.46 3 0.10 1 4.33 4 Ltd. HDFC Bank 19.72 3 6.91 5 0.08 3 3.67 2 Ltd. IndusInd 15.24 8 11.17 1 0.07 4 4.33 4 Bank ING Vysya 10.02 10 4.16 9 0.02 10 9.67 9 Bank Ltd. Source: Data generated
Table 4: Earnings Quality Ranking Operating Profit/ Average Banks PAT (growth rate %) Return on Assets (%) Group Rank Working Fund (%) Average Rank Average Rank Average Rank Average Rank State Bank of 19.32 9 2.01 8 0.83 8 8.33 10 India Bank of 21.74 7 2.09 7 0.95 5 6.33 6 Baroda Bank of India 27.63 6 1.94 9 0.79 9 8 9 Union Bank 21.56 8 2.10 6 0.90 7 7 7.5 Corporation 16.39 10 2.67 3 1.36 2 5 5 Bank Axis Bank 47.85 3 2.69 2 1.27 3 2.67 2 Ltd. ICICI Bank 52.89 2 2.35 5 1.16 4 3.67 3 Ltd. HDFC Bank 36.92 5 3.04 1 1.56 1 2.33 1 Ltd. IndusInd 41.43 4 2.48 4 0.91 6 4.67 4 Bank ING Vysya 58.13 1 1.61 10 0.59 10 7 7.5 Bank Ltd. Source: Data generated
44 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in Table 5: Liquidity Ranking (based on all the parameters taken together) Liquid Assets/ Total Liquid Assets/ Demand Banks G-sec/ Total Assets (%) Group Rank Deposits (%) Deposits (%) Average Rank Average Rank Average Rank Average Rank State Bank of 15.81 3 101.41 6 26.44 1 3.33 2 India Bank of 16.15 2 182.52 1 21.33 6 3 1 Baroda Bank of India 13.35 9 164.38 3 20.32 9 7 8.5 Union Bank 11.25 10 100.84 7 22.86 4 7 8.5 Corporation 13.60 8 99.72 8 23.32 3 6.33 6.5 Bank Axis Bank Ltd. 14.26 5 91.67 9 21.02 8 7.33 10 ICICI Bank 18.71 1 167.01 2 20.06 10 4.33 3 Ltd. HDFC Bank 14.69 4 58.75 10 23.41 2 5.33 5 Ltd. IndusInd Bank 13.70 6 128.58 4 22.60 5 5 4 ING Vysya 13.65 7 120.11 5 21.28 7 6.33 6.5 Bank Ltd. Source: Data generated
Table 6: Composite Ranking (based on all the parameters taken together)
Capital Management Earnings Average of Composite Banks Asset Quality Liquidity Adequacy Efficiency Quality Ranks Rank
State Bank of 5.5 10 8 10 2 7.1 8.5 India
Bank of Baroda 5.5 3.5 10 6 1 5.2 5
Bank of India 3 8 7 9 8.5 7.1 8.5
Union Bank 4 9 6 7.5 8.5 7 7
Corporation 2 1 4 5 6.5 3.7 2.5 Bank
Axis Bank Ltd. 10 5.5 1 2 10 5.7 6
ICICI Bank Ltd. 7 3.5 4 3 3 4.1 4
HDFC Bank Ltd. 8 2 2 1 5 3.6 1
IndusInd Bank 1 5.5 4 4 4 3.7 2.5
ING Vysya Bank 9 7 9 7.5 6.5 7.8 10 Ltd.
Source: Data generated
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BUSINESS PROCESS RE-ENGINEERING IN INSURANCE INDUSTRY AND ITS COST IMPLICATIONS
In the intensely competitive insurance market, differentiation through innovative technologies like BPR is an important and effective way of strategic cost management to maintain or increase market share and profitability
Perspective strategic cost optimization skills to Most of the challenges faced by Indi- develop a strong value proposition. an insurance companiesare low market The mission of the BPR project in an penetration, increasing competition, insurance company irrespective of its slackening product demand, tight credit mission and business objective is to re- controls,deregulation of the insurance duce operating expenses, increase the sector, the collapse in the global econ- number of policies captured and un- omy and volatile investor confidence. derwritten per day, increase the num- At the same time in order to capitalize ber of claims assessed per day and re- Dr. Mahasweta the market’s high-growth potential, duce fraudulent claims. Bhattacharya Assistant Professor, these companies have emphasized on The concept of Business Process Santipur College, cost management to balance their ef- Reengineering came into being in the Nadia forts to drive revenue growth with early 1990s when western companies attention to cost controls in order to realized why the Japanese used the ensure healthy profits. An effective cost concept of JIT (Just in Time) princi- management can only be possible with ples for manufacturing which intro- the improvement of efficiencies across duced a product oriented factory lay- the enterprise,from fixed cost manage- out. This concept helped the Japanese ment to human resources deployment companies to get remarkable benefits and their accompanying monitoring improving co-ordination of the rate mechanisms. Business Process Re-en- of workflow and reducing work-in- gineering (BPR) helps Indian insurers process. After that in early 1990s, many to address these issuesand to enhance companies of the United States of
46 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in America introduced business process to make process orientation a strategic nology in the business. In BPR, infor- re-engineering programmes to im- tool and a core competence of the or- mation technology is generally con- prove their performance and they got ganization. BPR concentrates on core sidered as playing a role as enabler of success. Thereafter BPR became a vast business processes, and uses the specific new forms of organizing and collabo- global business movement. During the techniques within the JIT and TQM rating, rather than supporting existing following years, a fast growing number toolboxes as enablers, while broaden- business functions. The people/hu- of publications, books as well as jour- ing the process vision.” man resources dimension deals with nal articles, was dedicated to BPR, and Besides, Von Bormann, Armistead aspects such as education, training, many consulting firms embarked on and Rowland, Michael Hammer, Clel- motivation and reward systems. The this trend and developed BPR meth- land Johnson, Dr. Chris Bondalso defined concept of business processes- inter- ods. BPR in their ways. However, according related activities aiming at creating a to Du Plessis BPR is defined as “BPR value added output to a customer - Conceptual issues is the fundamental analysis and radical is the basic underlying idea of BPR. Business process reengineering is also re-design of every process and activ- These processes are characterized by known as Business Process Redesign, ity pertaining to a business - business a number of attributes: Process own- Business Transformation, or Business practices, management systems, job ership, customer focus, value-adding, Process Change Management. Differ- definitions, organizational structures and cross-functionality. ent definitions are available. Following and beliefs and behaviour. The goal is The most important characteristics are the definitions provided in notable dramatic performance improvements of BPR are as follows: publications in the world: to meet contemporary requirements – 1. BPR changes the beliefs and be- Hammer and Champy (1993) define and IT is seen as a key enabler in this haviours of employees to place sig- BPR as “... the fundamental rethink- process” (Du Plessis, 1994:39-42). nificant emphasis on the importance ing and radical redesign of business If we summarise the above defini- of customer service. Profitability will processes to achieve dramatic im- tions, we found six key elements of only improve once customers are sat- provements in critical contemporary BPR- isfied with the service levels. BPR also measures of performance, such as cost, - Radical Change points out that- customers do not in- quality, service, and speed.” - Change in orientation (beliefs and clude only the traditional customers, Thomas H. Davenport (1993), anoth- behaviours) but every person dealing with a certain er well-known BPR theorist, uses the - Re-design the business processes aspect within the business. term process innovation, which he says - Change the organizational structure 2. BPR converts departments into “encompasses the envisioning of new - Technological improvements, and processes where work is performed by work strategies, the actual process de- - Improvement of customer service teams. The principle of involving staff sign activity, and the implementation and reduction of costs, which im- in a process instead of a single task will of the change in all its complex tech- ply the development of new perfor- result in staff being interested in the nological, human, and organizational mance measurement systems. end-result, which involves customer dimensions”.Additionally, Davenport BPR derives its existence from satisfaction which means that employ- points out the major difference be- different disciplines and four major ees will perform complex jobs with- tween BPR and other approaches to areas can be identified as being sub- in simple processes. Working in teams organization development (OD), espe- jected to change in BPR. These are significantly improves communication cially the continuous improvement or Strategy,Organization,Technology, within the organisation; TQM movement, when he states “To- and People. Business strategy is the 3. BPR strongly recommends that day firms must seek not fractional, but primary driver of BPR initiatives teams are structured in such a way that multiplicative, levels of improvement and when the business strategy is there will only be one customer con- “10x rather than 10%.” changed through BPR, consequently tact to ensure quality customer service Finally, Johansson et al. (1993) pro- other three dimensions are bound to and facilitate easy interface with the vide a description of BPR relative to change. The organization dimension business. other process-oriented views, such as reflects the structural elements of the 4. BPR changes the organisational Total Quality Management (TQM) company, such as hierarchical levels, structure into one where titles are un- and Just-in-time (JIT), and state “Busi- the composition of organizational important and where non-value added ness Process Reengineering, although units, and the distribution of work be- tasks, which are normally performed a close relative, seeks radical rather than tween them. Technology is concerned by middle management, are eliminat- merely continuous improvement. It with the use of computer systems and ed. Processes owners are leading the escalates the efforts of JIT and TQM other forms of communication tech- teams within each process to ensure
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effective co-operation of team mem- consulting clients. bers and BPR in insurance business 5. BPR changes the remuneration The main areas of BPR in Insurance structure by evaluating staff members field relates to: on the performance indicators par- A. Underwriting Solutions; ticular to their job within the team B. Business Intelligence and Data as well as the overall performance of Analytics; the team. In order to evaluate these C. Claims Processing Solutions; performance indicators, management D. Re-insurance Solutions; systems that provide this information E. Insurance Work-flow Interface is critical to the success of BPR. Solutions.
The insurance Modus operandi of BPR A) Underwriting Solutions industry is Although the names and steps being The insurance industry is tackling is- used differ slightly between the dif- sues like automating the underwrit- tackling issues ferent methodologies, they share the ing process, better analysis of risk and like automating same basic principles and elements. improved decision making during this the underwriting Simplified diagram of using a business de-tariffed regime. At this juncture process approach are shown in the box of a tariff-free regime, insurers have process, better below: developed world-class solutions that analysis of risk and Also within the management con- encompass data capture, risk analysis sulting industry, a significant number and management and decision-sup- improved decision of methodological approaches have port abilities. The BPR Process may making during this been developed. A set of short pa- help in the underwriting area of the de-tariffed regime. pers, outlining and comparing some insurers to: of them can be found here, followed 1. Maintenance and Support of legacy At this juncture of by some guidelines for the compa- systems and applications a tariff-free regime, nies considering contracting a con- 2. Migration from proprietary systems insurers have sultancy for a BPR initiative which to open platforms involves Overview; framing the 3. New application development developed world- requirements; various facets of re- 4. Customization of standard software class solutions processing; guidelines for changes / packages that encompass comparison; and guidelines for BPR 5. Modernization of legacy applica- data capture, risk analysis and A. Visualize new processes D. Process redesign management and 1.Secure management support 1.Develop alternative process scenarios 2.Identify reengineering opportunities 2.Develop new process design decision-support 3.Identify enabling technologies 3.Design HR architecture abilities 4.Align with corporate strategy 4.Select IT platform 5.Develop overall blueprint and gather feedback B. Initiating change E. Reconstruction 1.Set up reengineering team 1.Develop/install IT solution 2.Outline performance goals 2.Establish process changes C. Process diagnosis F. Process monitoring 1.Describe existing processes 1.Performance measurement, including 2.Uncover pathologies in existing processes time, quality, cost, IT performance 2.Link to continuous improvement 3.Loop-back to diagnosis
48 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in tions through development of E-com- organizations. Now, it is considered combine a deep understanding of the merce and Web based applications as a major enabler for new forms of insurance industry as well, have tech- In India, various BPR Consultants working and collaborating within an nology skills. This business process have their team of domain and tech- organization and across organizational re-engineering in the areas of claim nical experts who are focused on pro- borders. settlement ensures that the company viding the best possible solution to the In the mid-1990s, especially work- stays current with the latest happen- various organizers (customer) in their flow management systems were con- ings in the industry and thus provides need. BPR Experts are delivering the sidered as a significant contributor the best possible services to their cus- following important benefits to the in- to improved process efficiency. Also tomers. surance companies: ERP (Enterprise Resource Planning) Following are the benefits gained 1.Increased revenues over the years; vendors, such as SAP, positioned their from various business processes re-en- 2.Improved decision support; solutions as vehicles for business pro- gineering application in claims man- 3.Increased profitability. cess redesign and improvement. agement in the global market: 4.Increased efficiencies at least by The concept of data warehousing 1. Reduced transactional costs by 20% at lowered costs. engagements has delivered valuable around 35%; benefits to the insurers in the follow- 2. Increased end customer satisfaction ; B) Business Intelligence ing ways: 3. Improved efficiencies of settlement and Data Analytics 1. Improved efficiency in data pro- by almost 40%, etc. The Insurance industry handles huge cessing by almost 20% volumes of data. Therefore, solutions 2. Reduced transaction processing D) Re-insurance Solutions are required to organize and integrate costs by up to around 30% Reinsurance processing is paper-in- data across the enterprise. Data ana- 3. Improved decision making leading tensive, and settlement of claims is lytics help the insurance customer to to increased profits by approxi- prolonged and expensive. Business provide better service to their custom- mately 12% process re-engineering like electronic ers. The process of Business Process standards for claims filing has helped Engineering implemented through C) Claims Processing Solutions streamlining the process. However, efficient consultants help the spread Most critical function of an insurance there are many opportunities for tech- of knowledge and expertise to help business is claims processing. BPR and nology to improve performance fur- insurance companies with their data its associated technology can play a sig- ther. Business Process Re-engineering warehousing needs. The desired objec- nificant role in improving efficiencies experts understand the complexities tives can be achieved through BPR in in claims processing. This, in turn, leads in reinsurance. The professional out- the following areas: to improved financial performance. sourced experts have team of consult- 1. Data Modelling The Business Process Re-Engineer- ants with deep knowledge of reinsur- 2. Data Mining ing is proficient at addressing the chal- ance and experience in facultative and 3. Data Transformation lenges involved in handling multiple non-facultative reinsurance. Further, 4. Data Scrubbing and Cleansing channels for exchange information, they have an expert technology team 5. Population of Data Warehouses different formats of data and complex helping deliver the best solution to 6. Migration of data across platforms decision making process. In the area their customers. 7. Develop Decision Support Appli- of claims processing,following are the The services in the field of re-insur- cations areas where the concept of Business ance which are offered by BPR are as 8. Development of Intelligent User Process Re-engineering applications follows: Interface is possible: 1. Custom Application Development The use of information technology 1. Custom Application Development 2. Migration of Legacy applications (IT) is considered as a major contrib- 2. Migration of legacy applications 3. Modernization of legacy applica- uting factor to obtain the achievable 3. Modernization of legacy applica- tions benefits of BPR fully. Traditionally IT tions 4. Maintenance and support of legacy has been used to support the existing 4. Maintenance and Support of legacy applications business functions, i.e. it was used for applications 5. Web enabling of applications increasing organizational efficiency, 5. Porting and Re-hosting 6. Documenting existing applications but it plays a role as enabler of new 6. Documenting existing applications The following benefits are brought organizational forms, and patterns of In India a good number of compa- about to the customers by the imple- collaboration within and between nies with their team of experts, who mentation of business process:
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ALTHOUGH BUSINESS FUNCTIONS ARE PERFORMED IN PROCESSES, IT IS IMPORTANT THAT THE FUNCTIONS WITHIN EACH PROCESS ARE ALSO CONTROLLED AND MONITORED
1. Engineering in Re-insurance iv. Decrease losses due to delays and include: 2. Improving efficiency through auto- inefficiencies in business processes Direct sales by using the Internet mation of processes v. Improve profitability Direct sales by telephone 3. Improved performance of business Business process reengineering is Indirect sales by using brokers processes a management approach aiming at Potential policyholders as well as 4. Reduced costs of processing by as improvements by means of elevat- current policyholders who wish to much as 40% ing efficiency and effectiveness of the update their personal or policy infor- processes that exist within and across mation will use the same processes in E) Insurance Work-flow theorganization. To improve business order to capture information. The fol- Interface Solutions process through employee orientation lowing figure explains the most im- The experts in this field have the es- organisation may initiate: portant process flows within an insur- sential knowledge and experience i. 360 degree Performance evalua- ance business. The first section explains in providing workflow solutions to tion; the new business and premium collec- leaders in the insurance industry. They ii. Creation of self-introspection tion process, while the second section have addressed the entire life-cycle of forum; explains the claim process (see flow chart processes while providing workflow iii. Re-inventing Study circle. on opposte page) solutions. The BPR Experts have ex- Following are the basic structure on tensive experience in working with how processes, support functions and B. Defining processes and its File Network flow systems and have teams should be put together in order relationship with functions developed: to apply BPR principles in an insur- Defining processes is one of the most i. Document Centre ance company: difficult and critical success factors in ii. Image Requester A. The overall process flow within the the execution stage of the BPR pro- iii. Management Information systems business ject. When processes are defined, the based on File Nets Visual Workflow B. Identifying processes and how BPR team should consider all aspects Solution support functions can be integrated in terms of: iv. Systems using Business Process within these processes • BPR principles Manager C. Re-engineering each process and • Practicality v. Document Management and Re- setting up teams to function within • Team size and number of employees trieval System the processes and • Skill availability automation At the time of claim processing in D. The corporate structure and per- • Customer segmentation the insurance industry effective work- formance evaluation The newly defined processes can flow management solutions help: change the total structure of the cur- i. Reduce transactional costs A. The overall process flow rent back-office in the non-life in- ii. Adhere to regulatory needs An Insurer wishes to make use of three surance industry. The processes are iii. Lessen risks of bottlenecks different distribution channels, which defined in terms of the customer seg-
50 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in Quotation/Policy Policyholder document
Internet Telephone Broker Direct Sales
Capture information
Underwriting process
Premium collection
Calculate broker Investment of funds Reinsurance commission
Undefined period
Refund/ Replacement goods
Policyholder
Internet Telephone Broker Log claims
Capture information
Assess claim
Claim payment/ denial
Claim from Disinvest funds Reinsurer Purchase replacement goods
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mentation, which will be the different Depending on the size of the com- writing profits. Management expens- geographical areas in India. pany the following functions could be es and commission are also included allocated to more than one or to all in the calculation of it, which can be C. Defining teams within the processes processes: controlled by the team members. The team members will be select- 1. Product development It is recommended that a detailed ed from various functions (former 2. HR function and analysis of each employee’s job de- departments) and grouped together 3. Training coordinator scription is done and that a percentage to operate in terms of a process. It is of his/her compensation is based on possible that, certain functions will be D. Corporate structure of the business specific skills requirements and perfor- performed by the IT systems and that Although business functions are per- mance. This should be compared with the involvement of team members is formed in processes, it is important employees performing the same func- limited.It is recommended that teams that the functions within each process tions in other processes, e.g. be grouped together in workstations are also controlled and monitored. This • Number of claims logged and com- in an open-plan area. This principle is especially necessary where functions pleted per day by the claims clerk in improves communication between dif- require special skills. The senior man- each process should be compared ferent team members as well as differ- agement team should also function as • Long outstanding debtors according ent teams. a team, which should include a CEO to age analysis of debtors, should be There will be three different access and team members from each function compared, etc. points to the process: and process within the business. The performance of the team 1. A potential customer or existing should also be measured in terms of policyholder enters via the internet E. Performance evaluation service levels and performance in 2. A potential customer or existing of processes and team members terms of objectives set out in the func- policyholder phones the company Performance evaluation should be tional strategy. A limited proportion of 3. A potential customer or existing measured in terms of employees’ own the remuneration of team members policyholder contacts a broker who performance due to the specific skills should also be based on the financial enters the process. required in certain functions as well as performance of team, which should be It is recommended that the broker the importance of each team member. based on underwriting results. It is im- should enter the process via the in- However, a portion of the compensa- portant that these performance meas- ternet. However, if it is impossible, the tion should also be measured in terms ures be identified as early as possible broker should phone the company. As of the performance of the team to en- to ensure that they are incorporated in products are fairly simple and standard, sure the team operates successfully as the IT systems. it should be possible to automate the a team.It is necessary to consider the majority of underwriting and claim performance indicators that should Cases of BPR application assessment tasks by programming the determine the compensation of em- BPR, if implemented properly, can rules into the IT applications. Broker ployees. Traditionally, performance has give huge returns. Therefore, despite commission and reinsurance (both been evaluated in terms of profit. several criticisms, a huge number of new business and claims) could also Underwriting profits will also be firms, which were striving for renewed be automated.Each process should in- directly influenced by the risks related competitiveness, which they had lost clude the following team members: to the region which will have a nega- due to the market entrance of foreign 1. Process owner(the CEO) tive impact on the underwriting results competitors, their inability to satisfy 2. New business clerk responsible for of the process. It would, therefore, be customer needs, and their insufficient direct sales unfair to measure the performance of cost structure quickly adopted this 3. New business clerk responsible for the teams only in terms of underwrit- idea. broker sales (if necessary) ing profits. However, it is important For insurance companies, the con- 4. Reinsurance clerk that individual members operate as a stant challenge is to maintain profit- 5. Claims clerk for direct sales team and that the rest of the team pro- ability and market share in a rapid- 6. Claims clerk for claims logged by vide the team member responsible for ly changing business environment, broker (if necessary) product development and risk anal- manifested by increased competition 7. Purchase of replacement goods ysis with regular feedback regarding in the market place and the changes 8. Financial analysts (if necessary) customer requirements, trends, fraud, to insurance products required by the 9. Debtors collection clerk and profit/losses etc. To a limited extent, market. In order to meet these chal- 10. Marketing clerk the team is still responsible for under- lenges, insurance companies world-
52 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in wide have decided to re-engineer Business Process through Enterprise as insurance business is concerned, it their existing Underwriting Process Architecture Solution for Insurance provides following positive effects on both life and non-life. The main (EASI) in the year 2009-10. Exten- cost management: objectives are to reduce the cost of sive SystemRequirement Study(SRS) • Helps to reduce capital expenditure underwriting, to speed up the un- has been conducted for several appli- by reducing the need to invest in the derwriting process and provide cus- cations simultaneously, which include assets required to perform a service tomers with a better service, and to Core Insurance, Portal, Master Data internally target key distribution channels such Management,Document Manage- • Organises information and docu- as large brokerages. ment System, Identity Management, ments with electronic document Hibernian in Ireland achieved their Financial Application, Customer Re- management systems and processes, Business Process Re-engineering ob- lationship Management, Human Re- for example transition to electronic jectives in two stages. Stage 1 involved source Management and Data Ware- invoicing redesigning the New Business System, house Application. Based on SRS, an • Minimise document loss and infor- which is used to process new life insur- integrated solution is being designed mation leakage ance proposals, while the more recent and developed by the system integra- • Help the business to focus on what Stage 2 involved increasing the level of tor,viz. HCL(Technologies) Pvt. Ltd. is does best, while outsourcing some automatic underwriting carried out by The company is obtaining the assis- processes to specialist providers the original New Business System. In tance of BPR consultant, viz. Pricewa- • Improve operational efficiency and 1990 Mutual Benefit Life (MBL) was terhouse Coopers for conducting the customer service levels losing to innovative competition. They User Acceptance Test. • Mitigate risk by improving compli- noticed that they offered an inferior The BPR exercise, which was initi- ance to legal standards customer on boarding experience and ated in another Indian insurance com- • More efficient and comprehensive it cost those more to deliver it. They pany, New India Assurance Company premium accounting in comparison adopted BPR. Now they are delivered Limited in September 2007, to reor- to the previous application; at a lower operating cost than their ient the company to meet the chal- • Monitor process flow and measure peers’. MSIG Mingtai is one of the lenges of competition and customer process performance, since the new five major non-life insurers in Taiwan. expectations, has reached the stabilisa- applications will become part of the In 2009, Mingtai launched a Business tion stage as of March 2010. The ini- workflow management system; Process Reengineering (BPR) project. tiatives are showing good results, and • Improve Cash Management System The company had encountered struc- our organisation has steadily crossed (CMS) and investments process for tural transformation in the industry, the milestone of Rs.6000 crore (In- driving higher returns, reduction in including increased competition and dian business only) in spite of massive float, streamlined process and better new types of products. In addition, rate reduction after de-tariffing and vendor negotiation/ management government regulations had been severe competition in all fronts. For • Positive impact on customer servic- changing every year and sometimes the re-engineering exercise, a prior- ing, premium accretion and profit- every quarter. To overcome these diffi- itized roadmap was developed by the ability. Simultaneously, implementa- cult circumstances, Mingtai decided to New Energy (BPR) team, consist- tion of the redesigned performance review the structure of its operations. ing of initiatives in three waves, with management system with incentive Croatian Institute for Health Insur- a tight monitoring programme. A structure is expected to translate ance, the state-owned health insurance brief account of the targets and results into highly motivated work force, institution in Republic of Croatia es- achieved under each initiative is given with improved productivity. tablished cost-effective and more ef- hereunder. • Reducing payouts and decreasing ficient set of business processes across Private insurer in India, Cholaman- backlog of TP claims since Motor the whole organization, by redesign- dalam MS General Insurance also Third Party (TP) claims manage- ing, reorganizing and reengineering of adopted BPR programme through ment process will be redesigned; all existing business processes. In South Designing, Developing and imple- • Improve health insurance profita- Africa insurance industry implement- menting workflow solutions across the bility through hospital relationships ed BPR to ensure a flexible, dynamic, organization. and improved TPA performance. industry in 2001. In India National Insurance Com- Cost implications of BPR Conclusion pany Limited launched of the am- BPR is most important components In the intensely competitive insur- bitious IT enabled Re-engineered of strategic cost management. So far ance market, differentiation through
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 53 COVER STORY
innovative technologies like BPR is Intelligence, Pp 164 1994, How to make reengineering really an important and effective way of stra- 3. Davenport, Thomas (1993), work. The tegic cost management to maintain `Process Innovation: Reengineering work McKinsey Quarterly, No. 2, Pp. 107- or increase market share and profita- through information technology’. Harvard 128. bility. Insurers can achieve numerous Business School Press, Boston. Pp. 57 – 8. Hammer M. and Champy J. qualitative and quantitative advantages 80. (1993). Reengineering the Corporation. across the value chain by implement- 4. Earl M.J, Sampler J.L and Short A manifesto for Business Revolution ing BPR. The ‘Controlled Migration’ J.E. (1995). `Strategies for Business Harper Business. (London: Nicholas approach helps insurers’ lower risks Process Reengineering Evidence from field Brealy). and overcome the challenges of a BPR studies’. Journal of Management Informa- 9. J Watkins (1994), `Business Process implementation for core processes so tion System 12 (1).Pp.31 – 36. re-design in the UK Retail Financial insurers can reap the benefits of a suc- 5. Groover V., Jeong S.R., Keitinger, Services Sector, Business Change and cessful business process management. W.J and Jeng J.T.C. (1995). `The Imple- re-engineering’. The journal of corporate mentation of Business Process Reengineer- transformation, Volume 1, Number 4, Pp. Reference ing’. Journal of Management Information 38-48 1. Adeyemi, Sidikat, Aremu, Mukaila System 12(1): Pp.109 – 144. 10. Larsen, M. A. and Myers, M. D., Ayanda (2008).`Impact Assessment 6. Gunasekaran, A. and Nath, B. N., 1999, When success turn into failure: a of Business Process Reengineering on 1997, The role of advanced information package-driven business process reengi- Organisational Performance’. European technology in business process reengineer- neering project in the Financial services Journal of Social Sciences – Volume 7, ing. International Journal of Production industry. Journal of Strategic Information Number 1, Nigeria.Pp.115-124 Economics, 50(2,3). Systems, 8. Pp.395-417. 2. D Harvey (1994), `Re-engineering. Pp. 91-104. 11. Mohammad Reza Banan. `How is The Critical Success Factors’. Business 7. Hall, G., Rosenthal, J. and Wade, J., E-Insurance in Developing Countries?’ Georgian Electronic Scientific Journal: Computer Science and Telecommuni- cations 2009 No.5 (22) Islamic Azad University (Arsanjan Branch), Iran. Pp.116-135 12. Maureen W., William W.C, Wan C.L and Vand (2005). Business Process BPR, if implemented properly, can Reengineering Analysis, and Recommen- dations, Planning Review, November. Pp. give huge returns. Therefore, despite 22. 13. P J Mac Arthur, R L Crosslin and several criticisms, a huge number J R Warren (1994),`A Strategy for Eval- uating Alternative Information System of firms, which were striving for designs for Business Process re-engineer- ing’, International Journal of Information renewed competitiveness, which they Management, Volume 14, Number 4, Pp 237-251 had lost due to the market entrance 14. S J Childe, R S Maull and J Bennett (1994), `Frameworks for Under- of foreign competitors, their inability standing Business Process Re-engineer- ing’. International Journal of Production to satisfy customer needs, and their Management, Volume 14, No. 12 15. Stoddard D.B. and Jarvenpea S.L. insufficient cost structure quickly (1995). Business Process Redesign Tactics for Managing Radical Change. Journal of adopted this idea Management Information System 12(1). Pp.61 – 107.
54 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in NON-PERFORMING ASSETS: NIGHTMARE FOR BANKS ?
In absolute terms, the Gross NPA has increased from Rs. 70,063 crore in 2008-09 to Rs. 1,93,194 crore, a jump of about 175% in 4 years. This is alarming and there is no way that one can even try to ignore that
he area that is of par- overdue for a period of excess of the sanctioned limit amount importance to more than 90 days in re- / drawing power and in cases Tthe bank management spect of a Term Loan. where although the outstand- today is the worsening qual- (ii) The account remains ‘out ing balance in the principal ity of assets, which primarily of order’ for a period of operating account is less than consist of advances. The de- more than 90 days, in re- the sanctioned limit / drawing terioration in quality of assets spect of an Overdraft / power, but there are no cred- has become a matter of grave Cash Credit. its continuously for 90 days or CMA Sankar concern and a prolonged dull (iii) The bill remains overdue credits are not enough to cover Majumdar economy is not also helping for a period of more than the interest debited during the Practicing Cost Accountant, things either. That portion of 90 days in the case of bills same period. Guwahati the advances, which is quali- purchased and discounted. The NPA norms for agri- tatively bad and does not earn (iv) Any amount to be re- cultural advances is a little bit any revenue for the bank, is ceived remains overdue different and with effect from termed as NPA (non-perform- for a period of more than September 30, 2004 the fol- ing assets) and management of 90 days in respect of other lowing revised norms are ap- the same has become the call accounts. plicable to all direct agricultur- of the day. Overdue means any amount al advances : due to the bank under any a) A loan granted for short Definition of NPA credit facility which has not duration crops will be treated As per RBI, with effect from been paid by the due date. as NPA, if the installment of March 31, 2004, a non-per- In respect of Cash Cred- principal or interest thereon forming asset shall be a loan or it or Overdraft, an account remains overdue for two crop an advance where: should be treated as ‘out of seasons. (i) Interest and / or install- order’ if the outstanding bal- b) A loan granted for long ment of principal remain ance remains continuously in duration crops will be treated
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 55 COVER STORY
as NPA, if the installment of principal as sub-standard, with the added char- came into being leading to mar- or interest thereon remains overdue acteristic that the weaknesses make ginal improvement. for one crop season. collection or liquidation in full, on • Lack of entrepreneurship and Here, ‘long duration’ crops would the basis of currently known facts, knowledge on the part of borrow- be crops with crop season longer conditions and values, highly ques- ers about proper use of funds cou- than one year and crops, which are tionable and improbable. pled with absence of proper guid- not so would be treated as short du- Loss Assets - A loss asset is one ance by the lending institution. ration crops. The season for each where loss has been identified by the • Occasional connivance between crop, which means the period up to bank or internal or external audi- borrower and loan granting au- harvesting of the crops raised, would tors or by the Reserve Bank of India thority further supplemented by be as determined by the State Level inspection but the amount has not improper discharge of responsibil- Bankers’ Committee in each state. been written off, wholly or partly. In ities by lawyer in respect of scruti- other words, such an asset is consid- ny of title of properties, valuer in Asset Classification ered un-collectible and of such little respect of proper valuation of the As per RBI guidelines, Banks clas- value that its continuance as a bank- mortgaged assets and even auditors sify their assets into following broad able asset is not warranted although by being very casual and mechani- groups : there may be some salvage or recov- cal in their approach. Standard Assets - Standard Asset ery value. • General economic slump and is one which does not disclose any sometimes doldrums in specific problems and which does not carry Main reasons of NPA sectors making pre-determined more than normal risk attached to The following, inter alia, are some amount of repayments an uphill the business. Such an asset is not an the reasons for a loan becoming NPA task. NPA. • Target oriented approach of ad- • Loan mela etc. organized by Gov- Any asset other than standard asset vancing loans resulting in poor ernment where politics gets the is NPA and is classified under the quality of lending where fulfilling better of economy and in the bar- following three groups : a certain value quota is a priority gain to obtain a share of govern- Sub-standard Assets – With effect rather than providing quality ad- ment fund as deposits, banks some- from March 31, 2005 as asset would vances. This is particularly appli- times succumb to the pressure of be classified as sub- standard if it re- cable in case of Govt. sponsored government agencies in advancing mained NPA for a period less than loans and more pertinent for rural loans which are effectively chari- or equal to 12 months. In such cases, branches. ties. the current net worth of the bor- • Wilful default in payment of loan • Diversion of funds by the borrower rowers / guarantors or the current taking advantage of ineffective rel- remaining unnoticed by the lend- market value of the security charged evant legislation and slow pace of ing institution either advertently or is not enough to ensure recovery of litigation process. However, with due to lack of understanding. the dues to the banks in full. In other the introduction of SARFAESI • Delay in disbursement of loan of words, such assets will have well de- (Securitisation and Reconstruc- various phases in project imple- fined credit weaknesses that jeopard- tion of Financial Assets and En- mentation throwing the same off ize the liquidation of the debt and are forcement of Security Interest) track, thereby increasing project characterised by the distinct possibil- Act, 2002 which empowers the implementation cost. ity that the banks will sustain some banks and financial institutions to • Political pressure for restructuring loss, if deficiencies are not corrected. auction the mortgaged assets to a loan as well as waiver of the same. Doubtful Assets - With effect from recover their NPA without the in- • Comfort of some of the lending March 31, 2005, an asset is required tervention of courts, the scenario authorities in collateral securities to be classified as doubtful, if it has become a little better. which does not enthuse them to has remained NPA for more than • Ineffective, inadequate and in- have a proper monitoring of the 12 months. For Tier I banks, the competent supervision owing to end use of a loan. 12-month period of classification of shortage of qualified manpower as • Lack of proper payment culture a substandard asset in doubtful cate- well as absence of structured mon- mainly in Priority Sector Advanc- gory is effective from April 1, 2009. A itoring mechanisms. Subsequently es where there are numerous in- loan classified as doubtful has all the the concept of centralized as well stances of loan waiver by the po- weaknesses inherent as that classified as specialized loan advancing hub litical establishment of the day. The
56 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in PSU BANKS HAVE FARED VERY POORLY COMPARED TO PRIVATE BANKS JUSTIFYING THE CONTENTIONS OF GOVERNMENT SPONSORED ADVANCES FORCED ON THEM
borrowers expect their loan to be • Shrinkage in funds available for which would keep a track on end waived off and the banks also do further advance resulting in less- use of fund and conduct periodical not feel the necessity to follow a er projects being financed conse- physical monitoring of the pro- particular segment of advances quently generating less employ- gress of the project and should be vigorously with the hope that one ment. capable to pre-empting the poten- day or other they would have the • Lowering of NIM forces the banks tial danger in serviceability of an advances reimbursed by the Gov- to reduce interest on deposit where advance. ernment. depositors get a lower return forc- • Fixation of realistic repayment • Lack of networking among the ing some of them to look at vola- schedules in a manner that the banks where one particular bank tile capital market. periodical payments are not a hin- is not aware of the default history • NPAs affect the Asset Liability drance to the smooth flow of fi- of a particular borrower with other Management (ALM) system of the nancial operations of a unit and is banks. bank and may result into liquidity not a burden. For this, the Debt problem sometimes. Service Coverage Ratio (DSCR) Detrimental impact needs to be put under microscope The important detrimental effects of Measures for management of while financing a project. NPA are – NPA and prevention of slippage • Use of database of Credit Informa- • Negative impact on Net Interest These measures may be divided into tion Bureau of India Limited (CI- Margin (NIM) since a portion of two types – preventive and curative. BIL) to have a fair idea about the advances does not fetch any return credit worthiness of the prospec- and consequently profitability gets Preventive measures tive borrower. a hit. Interest on NPAs can not be • Reformulation of the credit ap- • Constant training and updation accrued, it is to be accounted for praisal techniques/systems need to of the knowledge base of the staff on cash basis. take place. There should be special- specialized in advance processing • Capital adequacy ratio is worsened ized and dedicated credit process- and monitoring need to be organ- necessitating infusion of additional ing cell which should be equipped ized. capital. with persons having knowledge • Close monitoring of the SMA • Negative impact on the credibili- in project appraisal and should be (special mention account) list ty of the institution which hits the aware of risk assessment and man- which represents potential NPAs. banks in the private sector more agement techniques. • Shun the practice of deferring the than the PSUs. • Dedicated monitoring department identification of an NPA. Technol-
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 57 COVER STORY
ogy can assume big role in proper the 1990s in reports widely known of 17.04.2012 that the asset quali- determination of classification of as the Narasimham Committee-I ty of banks is one of the most im- NPA. More often than not, it had (1991) report and the Narasimham portant indicators of their financial been the experience that under Committee-II (1998) Report. These health and also reflects the efficacy manual systems, the determination recommendations are believed to of banks’ credit risk management of a loan as NPA is postponed to have helped minimising the impact and the recovery environment. The the sweet will of the management. of global financial crisis starting in RBI opined that it is important that Sweeping the problem under the 2007. The 1998 report blamed poor the signs of distress in all stressed ac- carpet was a common practice credit decisions, behest-lending and counts are detected early and those across the board. However, with cyclical economic factors among which are viable are also extended the introduction of Core Banking, other reasons (in addition to ‘prior- restructuring facilities expeditious- this problem could be eliminated ity sector lending’) for the buildup ly to preserve their economic value. to a great extent. of the non-performing assets of the The Central Bank proposed that to • Pro-active internal inspection sys- banks to uncomfortably high levels. improve the banks’ ability to manage tem as well as external auditing The Committee recommended cre- their non-performing assets (NPAs) where the earliest signs of distress ation of Asset Reconstruction Funds and restructured accounts in an effec- are identified and necessary actions or Asset Reconstruction Companies tive manner and considering that al- initiated. to take over the bad debts of banks, most all branches of banks have been allowing them to start on a clean- fully computerised, they should : Curative measures slate. The option of recapitalization • put in place a robust mechanism for • To file a suit with appropriate au- through budgetary provisions was early detection of signs of distress, thority in applicable cases or re- ruled out. Overall the committee and measures, including prompt sorting to facilities available under wanted a proper system to identify restructuring in the case of all vi- the SARFAESI Act as soon as pos- and classify NPAs, with NPAs to be able accounts wherever required, sible without unwarranted delay. brought down to 3% by 2002 from with a view to preserving the eco- The procedural formalities in some about 15% in 1998 and for an in- nomic value of such accounts; and banks in filing a suit or initiating dependent loan review mechanism • have proper system generated action under SARFAESI is too for improved management of loan segment–wise data on their NPA lengthy. portfolios. The committee’s recom- accounts, write-offs, compromise • To counsel the borrower, under- mendations led to introduction of settlements, recovery and restruc- standing the nature of default – a new legislation which was subse- tured accounts. whether willful or not and initiate quently implemented as SARFAESI However, RBI in their circular processes for either compromise Act, 2002. dated 14.09.2012, has observed that settlement or one time settlement existing MIS on the early warning if found to be the best alternative Present scenario systems of asset quality, needs im- under the circumstances. The recommendations of the Nar- provement. They advised the banks • To restructure the debts of viable asimham Committee bore fruit in to review their existing IT and MIS units giving them some elbow the sense that as on 31.03.2009, the framework and put in place a robust room to be again on projected level of Gross NPA was only 2.31% MIS mechanism for early detection track. for all commercial scheduled banks of signs of distress at individual ac- and was well below the committee’s count level as well as at segment level. Narasimham Committee benchmark of 3% for 2002. The The concern of the RBI as artic- report 1998 present level of Gross NPA seems ulated in their above circulars is very The Ministry of Finance set up var- to be a fairytale if one compares the much relevant as would be evident ious committees for analysing India’s same with the level of 1993-94 when from the data enclosed that the growth banking sector and recommending the Gross NPA ratio was about 25%. of NPA has been phenomenal in the legislation and regulations to make However, the level of 2008-09 seems last 3-4 years. The table would show it more effective, competitive and to be gradually worsening since then that the Gross NPA ratio of all sched- efficient. Two such expert Commit- and over the years, the Gross NPA uled commercial banks went up from tees were set up under the chair- ratio showed an increasing trend. 2.31% as on 31.03.2009 to 3.23% as manship of M. Narasimham. They This has forced the RBI to state in on 31.03.2013. In absolute terms, submitted their recommendations in their Monetary Policy Statement the Gross NPA has increased from
58 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in Rs. 70,063 crore in 2008-09 to Rs. 1,93,194 crore, a jump of about 175% TABLE1: INDIA VIS-À-VIS SOME DEVELOPED AND BRICS COUNTRIES in 4 years. This is alarming and there is NPA comparative study (in Rs lakh) no way that one can even try to ignore Countries Gross NPA Ratio that. The PSU banks have fared very 2009 2010 2011 2012 poorly in this respect as compared to private banks again justifying the above BRAZIL 4.2% 3.1% 3.5% 3.6% contentions of government sponsored RUSSIA 9.5% 8.2% 6.6% 6.7% advances forced on them. FEDERATION As per Annual Report of RBI for INDIA 2.3% 2.5% 2.4% 2.9% 2012-13, the ratio of gross NPA to CHINA 1.6% 1.1% 1.0% 0.9% gross advances for scheduled com- SOUTH AFRICA 5.9% 5.8% 4.7% 4.6% mercial banks increased markedly, from 2.36 per cent in March 2011 USA 5.4% 4.9% 4.1% 3.9% to 3.92 per cent in June 2013. Public UK 3.5% 4.0% 4.0% N.A. sector banks account for a dispropor- FRANCE 4.2% 4.3% 4.3% N.A. tionate share of this increase, with the new private sector banks managing AUSTRALIA 2.0% 2.2% 2.0% 1.9% to lower their NPA ratio in this diffi- JAPAN 1.6% 2.5% 2.4% N.A. cult climate. The amount of restruc- tured advances has been considerable Table2: Category of assets Amount of provisioning during this period. For the system 15% of outstanding amount without making as a whole, restructured standard as- Sub - Standard (secured) any allowance for ECGC cover and securities sets as a percentage of gross advances available more than doubled, from 2.6 per cent 25% of outstanding amount without making in December 2010 to 6.1 per cent in Sub – Standard (unsecured) any allowance for ECGC cover and securities June 2013. The slippage ratio, which available captures fresh NPAs, increased from Doubtful Assets (secured) - upto 1 year 25% 2.1 per cent in March 2011 to 3.1 Doubtful Assets (secured) - more than 1 year per cent in September 2012, but de- 40% and upto 3 years in doubtful category clined subsequently to 2.8 per cent in March 2013. Macro stress tests sug- Doubtful Assets (secured)-more than 3 years 100% gest that under a severe stress scenario Doubtful Assets (unsecured) 100% the gross NPA ratio may rise to 4.4 100% net of ECGC/DICGCI/CGTSI claim Loss Assets per cent by March 2014. received and government guarantee However, a lot of analysts doubt these declared figures of NPA. They RTI is resorted to in this respect. rate. are of the opinion that the CEOs of As per reports published in Business However, there may be some good banks suppress actual figures to ex- Standard beta, speaking about NPAs news at this point in time. In a recent hibit rosy picture before RBI and of banks to PTI in April 2013, RBI news item in The Telegraph, it was re- Ministry of Finance. In their opinion, Deputy Governor Mr. K.C. Chakra- ported that the asset quality of banks suppressed reporting starts from field barty attributed a majority of them is unlikely to deteriorate further and level under guidance from top level to poor administration and risk man- analysts feel that the growth in bad officials and at the time of compila- agement practices of lenders and loans is set to decline because of fo- tion and audit, various tactics are used went to the extent of terming it as cus on recoveries and up gradation to get the data certified. Now that ‘non-performing administration’. He although in absolute terms the figure banks have adopted CBS technology, added that lending rates would have may increase. the RBI is constrained under public been far lower if banks had got their From Table1, it seems that India pressure to insist system generated NPAs down and stated that, if NPAs does not fare too bad. figure for NPA from all government would have been 1%, banks’ lending banks. They are also eager to know rates would have been 4% lower with Provisioning norms what would be the actual figure if the same inflation, and same repo The banks are required to make pro-
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Table3 bona fide. Taking into cognizance, the rising Particulars 2008-09 2009-10 2010-11 2011-12 2012-13 cases of corporate debt restructuring Net NPA ratio 1.05% 1.12% 0.97% 1.28% 1.68% (CDR) in the current round of eco- nomic gloom, Dy. Governor of RBI Table4 said in the same interview that there is nothing bad with the method “if PSU BANKS PRIVATE BANKS CDR can give life to the borrow- State Bank of India 2.10% HDFC Bank 0.20% er”. He added that “if the banks do an appraisal, re-appraisal and they are Punjab National Bank 2.35% ICICI Bank 0.77% happy that the unit can come out Oriental Bank of 2.27% Axis Bank 0.36% then only restructure. Otherwise, it Commerce is better for the account to die”. Ac- Union Bank of India 1.61% Yes Bank 0.01% cording to him, “CDR is not a con- cern; CDR converted into an NPA is Canara Bank 2.18% IndusInd Bank 0.31% a concern”.
visions against non-performing assets ing assets (NPAs), at 70% which was Wilful defaulters, big corporates to provide a cushion at the times of increased to 70% after the Lehman The problem of NPA is prominent loans becoming and unrealizable crisis in 2008 and was applicable till not in case of individual borrowers as well as to reflect a logical profit September, 2011. While almost all but with large corporates and institu- which is not inflated. The general private banks have higher PCR, ma- tional lending. It is more pronounced provisioning norms for NPA is given jority of the state-run lenders could because of the fact that there are a lot in Table2. not meet this deadline. of willful defaulters among them. After the provision is made, the The RBI has floated a discussion The borrowers who have defaulted figure of Gross NPA less such provi- paper to explore having dynamic on loan repayment to banks despite sions is called the net NPA and when provisioning which requires banks to having adequate cash flows and a it is compared with net advances, the keep aside money during good times healthy net worth are willful default- Net NPA ratio is calculated. for a rainy day, rather than providing ers. The ones who have not utilised Net NPA ratio of all scheduled after an account has gone bad. the funds borrowed for specific pur- commercial banks over the last five poses and diverted those for other years are are given in Table3. Corporate Debt Restructuring purposes have also been categorised Net NPA ratio of some PSUs as As per RBI, the objective of the Cor- as willful defaulters by the Reserve compared to some Private Banks as porate Debt Restructuring (CDR) Bank of India (RBI). on 31.03.2013 (Table4). framework is to ensure timely and An article published in Business The figures speak for themselves. transparent mechanism for restruc- Standard beta in April 2013 reports Like alleged suppression of NPA as turing the corporate debts of viable that Government-owned banks have stated in foregoing paragraphs, inad- entities facing problems, outside the started cracking the whip on willful equate provisioning is also an ill that purview of BIFR, DRT and other le- defaulters, with the finance ministry is believed to be widely prevalent. In gal proceedings, for the benefit of all asking them to recover dues from April 2013, RBI Deputy Governor concerned. In particular, the frame- the top 50 defaulters as the first step. K.C. Chakrabarty, in an interview work will aim at preserving viable Banks have been asked to furnish the with PTI, has come down heavily on corporates that are affected by cer- information of the top-50 immedi- banks showing higher profits without tain internal and external factors and ately. The finance ministry has asked providing adequately for bad loans, minimize the losses to the creditors chief executives of public-sector and said if need be, the central bank and other stakeholders through an banks to take approval of their boards may hike provision coverage ratio orderly and coordinated restructur- and begin proceedings for penal (PCR) levels. ing programme. measures. The ministry has also asked The RBI had done away with its However, more often than not, banks to lodge formal complaints earlier requirement of forcing banks CDR as an instrument has been fid- against the auditors of the borrowers to maintain the PCR, or the ratio dled with and in all the cases the pur- with the Institute of Chartered Ac- of provision to gross non-perform- pose of doing that was not necessarily countants of India, if they find the
60 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in auditors were negligent or deficient amounted to 43,965 crore of the nation. With the introduction in conducting the duty. The ministry • Recovery percentage improved to of core banking, it has become eas- has also mandated banks not to pro- 81.18% ier to analyse the advance accounts vide any additional facility to these • Percentage of Gross NPA to to- at any level, but to form an opinion companies and to bar their promot- tal loans outstanding increased about the adequacy of the loan doc- ers for five years from availing of in- marginally at 3.75% (3.72% as on uments and to visit the unit to have a stitutional financing for floating new 31.03.2010) firsthand idea about its performance ventures. The move has come within • At Net level, NPA percentage and financial health, one will have to days of Finance Minister P Chidam- increased to 2.05% (1.8%as on be at the micro level. baram’s comments on the corporate 31.03.2010). The author’s practical experience sector’s willful defaulters. He had said There has been an improvement suggests that it would probably be after a meeting with chiefs of pub- in the recovery percentage over the an impractical idea to expect Stat- lic-sector banks last week: “We can- years from 80.09% as on 30 June utory Auditors play a proactive role not have an affluent promoter and a 2009 to 81.18% as on 30 June 2010. in either identifying or preventing sick company.” The aggregate overdues, however, in- a potential NPA. By the nature it- It has also come to light that in the creased by Rs. 933 crore to Rs. 9,805 self, the statutory audit of the banks case of some corporates, the amount crore as on 30 June 2010. is a post mortem and the maximum of debt outstanding is even more than The Gross NPA of RRBs which that an Auditor can do is to report if the market capitalization. In a televi- was Rs. 3,085 crore as on 31.03.2010 any NPA has been left unreported, sion programme, it was revealed that ( i.e. 3.72%) has increased to Rs. which just helps providing a true and there is a renowned corporate house 3,712 crore as on 31.03.2011 (i.e. fair picture but neither the NPA has whose debt of Rs. 40,859 crore is 3.75%). The Net NPA of RRBs been prevented nor it has been a fresh higher than its market capitalization which was Rs. 1,423 crore as on identification. The software of most of Rs. 23,784 crore. Two other re- 31.03.2010 ( i.e. 1.8%) has increased banks is designed in such a way that puted companies also were named in to Rs. 1,941 crore as on 31.03.2011 it treats an advance as an NPA only the programme and in their cases the (i.e. 2.05%). The data revealed that 15 when it is flagged or marked – it may debt and market capitalization are Rs. RRBs had gross NPA percentage of so happen that an advance despite be- 1,339 crore and 805 crore and Rs. less than 2%, while 45 RRBs were ing NPA may be left unmarked and 23,650 crore and Rs. 22,309 crore having gross NPA percentage above also may miss the scrutiny of the au- respectively. the national average (3.75%) as on 31 ditors because the Statutory Auditors, There may be certain situation March 2011. in most of the cases, do not have the where the huge quantum of advance time, doggedness and sometimes the given to a corporate entity has gone Role of Inspectors, Auditors and inclination to insist that a proper pic- bad and to tackle such a situation the Cost Accountants ture of NPA should emerge out. Any debts are even converted into equity. In the present scenario, it has become NPA which has been left out or any Although it reduces the NPA, it does all the more important for RBI’s advance which has not been proper- not generate any revenue straightway mandatory inspection to act as an ly categorized needs to be reported for the lending institution. effective deterrent for banks so that through a statement known as Mem- banks cannot flout applicable pru- orandum of Changes (MOC) which Regional Rural Banks’ (RRB) dential norms by resorting to lower is addressed to the Central Statuto- performance and NPA provisioning for NPAs. ry Auditors by the Branch Auditors. In the consolidated review of per- The basic role in preventing NPA Those who have conducted statutory formance of RRBs as on 31.03.2011 is to be proactively played by the audit of a bank branch would agree published by Department of Finan- banks’ own Inspection team. They are that the MOC is like a taboo for the cial Services, Ministry of Finance, in a position to devote enough time Branch Manager, most of them can go the following important information to assess the initial signs of stress and to any extent in resisting it tooth and came to light : also know the in and out of their own nail. The Statutory Auditors, being • The loans outstanding stood at organisation. Inspectors advertent- human beings, more often than not, 98,917 crore ly overlooking a potential NPA and succumbs to the stubbornness and • Number of profit making RRBs sweeping it under the carpet are do- in some case non-cooperation of the stood at 75 out of 82 RRBs ing a gross injustice not only to their branch management. The Auditors • Loans issued under agriculture institution but also to the economy have hardly any time to go through
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numerous pages of the advance state- ditors by public sector banks from it to happen provide a great service ment and analyse the payment records the empanelled list of audit firms, to the economy. To put the project of borrowers, although they should deviating from the erstwhile prac- on track through proper guidance do that for at least the big borrowers. tice of appointing bank auditors by a and restructuring, also adds immense The branch management even resorts committee consisting of members of value to the economy. When an ad- to various tactics not to provide the the banking division of the Ministry vance becomes NPA, it is basical- auditors with the details of potential of Finance, RBI and CAG is intend- ly a legal process to recover and in NPAs which are generally reflected ed for ensuring level playing field the process the project, in all likeli- through a statement called SMA (Spe- among all Indian banks in respect of hood, faces inevitable death. In case cial Mention Accounts). In most of appointment of the auditors. a borrower is not a wilful defaulter, the cases, the audit at branch level, for Impartially speaking, the profession- the bank is duty bound to provide it all practical purposes, becomes a mere als who can really add value in this enough guidance to put it back on ritual. The Auditors at the branch lev- aspect are the Cost Accountants. At track and at times of stress should also el, apart from the normal reporting, the first instance, it would be the Cost provide enough support to make it is required to submit an addition- Accountants along with may be an viable again through restructuring or al report termed as Long Form Au- Engineer, who will be in a better posi- whatever processes they can apply. dit Report (LFAR) where there are tion to understand the detailed project Undoubtedly, the banks, in present enough scopes to do a system audit of report as well as the techno economic scenario have a vital role to play in the sanctioning, documentation, dis- viability study of a project and form making the economy a robust one. bursement and follow up of advances. an opinion whether the project is a In doing so, first step will be to pre- It has immense scope to report about viable one or everything is so called vent a loan from turning bad, even advances which are NPA or potential hunky dory. When the project is being if it turns bad, best efforts should be NPA as well as providing concrete implemented, he would be the person there to bring the project on track suggestions to improve the situation. who can supervise its progress and pre- and make it viable. If they fail to do But in reality, branch auditors hardly empt whether there would be any cost so, it will be a long drawn litigation give the importance to the report that and time overrun. During the project’s process to recover their money. They it deserves. commercial operation, he would be may be successful in doing so, but in In some of the cases, even if an ad- the person to analyse the QIS data, the process the project may face a vance is marked as NPA, it may be stock valuation reports and find loop- pre-mature death and thereby shat- done so in a deferred manner. As per holes, if any. He can undertake stock tering the dreams and aspirations of prudential norms, when an advance audit and find if the cash credit bor- all it stakeholders. The banks are ex- is marked as NPA, banks should stop rowing is sufficiently covered by net pected to be propeller of growth in charging further interest and the un- current assets. Subsequently cost data the overall progress of the economy realized portion of interest should or a cost audit would also be help- and not become a mere collection also be reversed. A deferment in de- ful to the management to compare it agency for bad loans. claring NPA helps the bank in charg- with the projections and see where ing interest for the deferred period the project’s product or service cost Acknowledgments / References and thus inflates the profit. stands vis-à-vis its competitors. Thus 1. Various circulars/publications/reports In an article in Business Standard the earliest sign of stress in the project, of Reserve Bank of India beta of April 15, 2013 issue, Mr. K P if any, would be pre-empted, properly 2. Various newspaper reports Shashidharan, DG, CAG office, New addressed and the project can again be 3. Mounting NPAs in Indian Com- Delhi had written that as banks are put on track. The banks may consider mercial Bank – Dr. Mohan Kumar, allowed to choose its auditors from whether on these grounds they may Govind Singh, IJTBM 2012 the empanelled audit firms, the reg- like to appoint Cost Accountants in 4. data.worldbank.org ulatory body of audit firms, the In- the specialised advance cell or like to 5. Thought paper by Infosys, 2012. stitute of Chartered Accountants of outsource the services to professional 6. Wikipedia India has expressed its concern about Cost Accountants’ firms. 7. Various new reports and articles possible conflict of interest and di- published in Business Standard Beta. lution of independence of auditors, Prevention is better than cure 8. CMA Beni Madhab Das, which is of course a sad refection of The old proverb ‘prevention is better Guwahati the professionalism of auditors. The than cure’ fits the bill perfectly here. change in the policy of choosing au- Pre-empting an NPA and preventing [email protected]
62 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in STRATEGIC COST MANAGEMENT IN THE INSURANCE SECTOR While cost control has been there for a long time, what has changed is the strategic focus that it has gained in insurance companies where the focus is the long-term impact
Mr Srinivasan Iyengar Chief Operating Officer, Reliance Life Insurance Co Ltd
he insurance industry market changes. The industry lenge has been the entering of is a dynamic and yet also has a unique challenge of many companies within a short T very challenging one. having a long gestation period period of the industry opening The dynamism is mainly on for break-even and the direct up. The major shift in custom- account of the various changes co-relation between length of er purchase pattern over the this industry has seen, primarily policy being inforce and prof- last decade and proactive meas- on account of regulatory and itability. In India, another chal- ures from the regulator has also
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 63 PRESIDENT’SCOVER COMMUNIQUESTORY
changed the way the insurance busi- formed the industry. This has also led ness started & evolved over these few LOOKING AT to companies offering self service plat- years. Naturally the focus for compa- END TO END form to the customers on “e” platform. nies is cost control so as to keep the The result has been lower premium for operating costs under a leash & drive PROCESS AND ITS the customers and better profitability profitability. RATIONALIZATION/ and customer retention. Increasingly While cost control has been there call center queries are being shifted to for a long time, what has changed, is SIMPLIFICATION IS IVR and web which offers lower cost the strategic focus that it has gained in A KEY STRATEGIC of providing service. It is therefore not insurance companies. While tradition- a surprise with increasingly, such ser- al cost control revolves around items COST MANAGEMENT vice options being offered creating a like procurement, flat organizational EXERCISE WHICH win-win situation for all. structure, etc, the focus of strategic cost The other areas of strategic cost control is the long-term impact. Stra- ENABLES ONE TO management which is making a major tegic cost control focuses on areas like impact are business process outsourcing enterprise wide process reengineering, LOOK BEYOND A and application management outsourc- new business model leveraging on FUNCTIONAL SILO ing. Rather than reduce the facilities or current setup, outsourcing, etc. systems, outsourcing them to large Some organizations take the pure RESULTING IN BETTER players can get the cost benefit and yet cost management route to deliver AND SUSTAINED enable to provide these facilities to its short-term gains, which may look as internal and external customers. the best solution to tide over a situ- BENEFITS Another interesting area is the shift ation or give immediate relief. More of sales remuneration from fixed to often than not, pure cost reduction in variable cost structure. This, while the form of expense reduction impacts providing lower per transaction/ac- organizations more than its pre-cost tivity costs, also enables a better skew reduction status. A simple example is ables the company to drive enterprise of remuneration towards performers where organization embarks on major wide technology integration resulting in the organization. This also enables employee reduction measures upon into better profits and ability to service the company to cushion itself against a a encountering an adverse external scale. Looking at end to end process seasonal drop of business to a large ex- environment/lower business volume. and its rationalization/simplification is tent as the fixed cost of running busi- Often, in such initiatives, the service a key strategic cost management exer- ness is relatively lower. However, one capability is ignored (which is so very cise which enables one to look beyond has to be careful a 100% variable mod- crucial in service industry like insur- a functional silo resulting in better and el is more a myth and therefore needs a ance) which in-turn leads to lower sustained benefits. right balance of implementation. capability to service existing customers Strategic cost management also ena- The objective is not to state that thus further impacting new sales. The bles one to bring unique models/pro- organization should not resort to cyclical reaction soon causes much cesses into practice which is not avail- short term initiatives at all as business higher negative impact and at the same able in traditional cost management dynamics do require some of these to time, takes the organization a much methods. Unique models like enter- be done. However it is critical that longer time to get back to its position. prise level outsourcing, shared services the leadership team of the company Strategic cost management, on the for technology, self service model for ensures that the primary focus is to other hand, enables organization to customer service is something that has achieve long term gains and enable plan and position itself for much high- been bringing about a decisive change them to latch on the next wave to er levels of efficiency and profitability. in the way efficiencies are looked at take the organization to the higher The primary focus here is long term. and delivered. A shining example in levels of efficiency, profitability and One of the most common example, insurance industry has been the launch leadership. that successful companies have adopt- and popularization of e-sales for both (The comments/views in the article, are ed, is focus on technology implemen- life and non-life products. Here sales & the Author’s Personal Views, and do not tation. While in the immediate run, it service models based on unique differ- reflect the views of the organization.) results in the need for investment on a entiators and yet relying on the same technology solution or capability, it en- backend service mechanism has trans- [email protected]
64 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in SPECIAL FOCUS
I HAVE CHERISHED THE IDEAL OF A DEMOCRATIC AND FREE SOCIETY IN WHICH ALL PERSONS LIVE TOGETHER IN HARMONY AND WITH EQUAL OPPORTUNITIES. IT IS AN IDEAL WHICH I HOPE TO LIVE FOR AND TO ACHIEVE. BUT IF NEEDS BE, IT IS AN IDEAL FOR WHICH I AM PREPARED TO DIE.
NELSON MANDELA THE ECONOMICS OF APARTHEID AND MANDELA’S STRUGGLE FOR FREEDOM
The white n the year 1893 when Mr. M. K. governance in Gandhi was thrown out of the I first class compartment in the Pie- South Africa clearly termaritzburg station of Kwazulu-Na- tal province of South Africa on his way underestimated to Pretoria, Mr. Nelson Mandela had the social and not been born. That both these per- sonalities became household names economic costs of Dr Saibal Kar within the next five decades in their Centre for Studies respective tirades to stop oppression racial segregation in Social Sciences, against the natives of their countries Calcutta and was not a mere accident of nature. As despite already Institute for the in most cases of tyranny veiled under celebrated pieces Study of Labor (IZA), Bonn, the practices of limited democracy, it on the economics of Germany was the outcome of the persistence of a ruler who would not quit, as much as discrimination the persistence of the resistance groups
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in various forms, which prolonged A view of Cape Town now where in the 1970s the struggles to almost never-ending in District Six, a former inner-city residential squabbles spilling over generations. area of the city, over 60,000 of its inhabitants Despite the outwardly similar charac- were forcibly removed by the apartheid regime and the area made whites-only teristics of the struggle towards inde- pendence and equality, South Africa, renamed the Republic of South Africa in 1961, had (unlike India, or worse, to redress ideals in the form of seek- Zimbabwe) long gained independence ing guerilla training in Algeria and from the United Kingdom following staging sabotages. That he was not the the Statute of Westminster in 1931. It one who would seek retaliation after was no longer under the dominion the African National Congress as- status entered into in the year 1910 sumed absolute power, was ruled out by the South Africa Act of the British with his clear message on co-existence Parliament. However, South Africa’s that stirred the world even during the problems were not merely with the Rivonia Trial of 1962 (the epilogue). passage towards independence from a This article argues that the white foreign ruler, but of the racial segre- governance in South Africa clearly un- gation initiated by the minority (20%) derestimated the social and econom- white rulers in the form of the Na- ic costs of racial segregation despite tives’ Location Act, the Pass Laws and already celebrated pieces on the eco- the Natives’ Land Act that continued nomics of discrimination, of which the to jeopardize the society and econ- color or ethnicity-based discrimina- omy of South Africa for the next six tion is a major component. The rein- decades. It was not until 1993 that stating of non-discriminatory practices the racial segregation was completely in South Africa via the transfer of gov- abolished from the country and the ernance to the African National Con- first universal election was held in gress has unambiguously conferred 1994 with transfer of power and pol- economic benefits in a relatively short icies and the government in all nine time compared to the long regime of provinces containing the historic cities segregation, such that, South Africa has of Cape Town, Durban, Pretoria, Port turned itself into a major player in the Elizabeth and Johannesburg also as the global economy alongside, Brazil, Chi- though admittedly it makes only a few major centers of economic activities. na, India and Russia. The reason be- practitioners of it rich, unconditional- This was principally an outcome of hind such turnaround should be clear ly. This is inherent in the definition of the determination and persistence of when one looks carefully into the loss- economic discrimination. Madiba Rolihlahla Mandela and his es that the economics of discrimina- An enormous literature, starting comrades, such as, Oliver Tambo. The tion generates for itself. When Madiba with Gary Becker’s 1957 book “The transition with successful negotiation passed away on December 5, 2013, he Economics of Discrimination”, ex- between Nelson Mandela and F. W. de finally left behind a country that he plores the economics of discrimina- Clarke happened shortly after Nelson cherished for all through his life. The tion. The treatment of discrimination Mandela was released from the Rob- accomplishments of Mr. Mandela or in economics can be divided into two ben Island after 27 years of life im- of his American contemporary Dr. classes: competitive and collective. prisonment following the well known Martin Luther King Jr. rising against Competitive analysis of discrimination Rivonia Trial of 1962, in which he the vices of discrimination along ra- studies individual maximizing behav- and seven associates were implicated cial lines or any other form are the ior that may factor in discrimination for sabotage, violent conspiracy and strongest testimonials of the bad eco- in several fronts, including, access to treason. Mandela had by then stopped nomic and societal understanding that resources. In collective models, groups believing in non-violence, simply be- often shrouds the minds of the pow- act collectively against each other. Al- cause the repeated massacres of un- erful. The economics of Apartheid, as most all economic accounts have fo- armed, peaceful black protestors by much as the sociology and politics of cused on analysis of competitive be- the white government had forced him it, are mere accounts of global losses al- havior, which can further be divided
66 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in into taste-based and statistical modes Xhosa-Thembu, which Mandela be- are usually self-defeating in purpose. of discrimination. However, first, we longed to as a royal descendant; the Like Prof. Gary Becker, another Nobel need to define discrimination. For Zulu; the Bantu, etc.) in South Africa Laureate in economics, Prof. George our purposes, discrimination is when comprising of 80% of the population Akerlof too believes that if an employ- members of a minority are treated was no more than 7% of the total land er mired in taste-based discrimination differently (less favorably) than mem- resources. This is one way of looking uses the average quality of a given race bers of a majority group with iden- at the extremely unequal distribution to predict the quality of individuals of tical productive characteristics. In a of income that results from imposed that race, then discrimination is evi- complete turnaround to this defini- discrimination and consequent so- dently harmful. It is easy to see that if a tion, the members of a majority group cio-economic exclusion. Other forms racial yardstick is used as an indicator of (the black South Africans, but minor- of exclusion included restricting the individual productivity, it will destroy ity in the governance) were actually passage and activity of ethnic Africans all incentive for self-improvement for discriminated against by a minority into fairly limited quarters, leaving the that race, since all individuals of the (white South Africans, or the ethnic industry and agriculture entirely under race are judged the same and there- Europeans) group that held access and the control of the white rulers. Does fore paid the same wage regardless of rights to exploit all resources in South it at all raise the economic gains from individual merit. In this way prejudice Africa including the minerals and the creating an artificial divide along color may produce a lower level equilibrium agricultural land. At the height of the or ethnic lines? The answer is clearly trap: if a race is deemed by prejudice to racial segregation, the land ownership no, since there are strong counterar- be unqualified, no incentive is given to among the several tribes (such as the guments that the imposed restrictions become qualified, and the prophecy is
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self-fulfilling. The long history of the ination totally fails to internalize. The be summoned at the beck and call of caste-based discrimination in India is recent murders of white landowners the industrialists. By the time the land- an example of how a large population in Zimbabwe are fallout of what could less labor moves out of their demesne was restricted to low productivity jobs; happen if the economy of a country, they are at the mercy of the industri- barred from self-improvement and that has practiced racial segregation al producers for survival. Similarly, by partaking of any activity that would for a long time, hits the abyss. Nel- reducing the land area at the disposal be deemed valuable for the society son Mandela had seen these problems of the Africans the scope for white ag- and economy, simply owing to some way ahead of the rulers and continu- riculture increased and the supply of strange mandates of the ‘ strategically ally urged for a mutual and peaceful African labor that was essential to the derived’ and ‘re-interpreted’ Hindu re- co-existence in the same manner as an maintenance of the European standard ligious texts. Once again, but for Ma- accomplished social planner mindful of living in southern Africa could be hatma Gandhi and soon thereafter Dr. of the negative externalities associat- increased in the white economy. Land B. R. Ambedkar, the social segregation ed with socially pervasive discrimina- alienation took place in South Africa of the ‘untouchables’ in India would tion would consider upholding above both during the period of agricultur- have persisted long enough to cast a everything else. In terms of keeping al expansion by the Boers up to the deeper shadow on the Indian econo- the contentious groups together and discoveries of diamonds in 1867 and my and society. It needs to be admitted still marching ahead in search of pros- gold in 1886, and during the ensuing that the caste and religion based di- perity, Nelson Mandela actually per- expansion of the “modern” sector of vides are still very potent in India, eas- formed much better than Mr. Gandhi the economy up to World War I when ily capable of turning themselves into who accepted the religion-based par- the demand for unskilled mining labor major socio-economic catastrophes. tition of India at the time of the inde- increased drastically. In Zimbabwe, the Although, such racial divides are often pendence. The stakes were never lower sequence that followed was somewhat deployed by cunning and yet ill-ed- for South Africa if one recounts the different. Land was at first alienated ucated politicians in the country, the intensity of the racial crisis. not for use in white agriculture, but severity of these tensions have been re- It is generally felt that the econom- as a means of ensuring a large enough markably subdued for quite some time ic account of the apartheid would be number of whites to assist in the search now – thanks to the economic success incomplete unless one makes room for a second Witwatersrand in Zimba- in major parts of this vast country that for any distinction between an earlier bwe. Subsequently, however, when it followed the liberalization of the Indi- period in the history of southern Af- was clear that no second Rand would an economy and bureaucracy. rica when the main (or only) white be found, the expansion of white ag- For the whites in South Africa, the economic activity was agriculture and riculture became one of the prime opposite happened: the white minor- animal husbandry and the subsequent interests of the white settlers and this ity by the strength of intimidation development of gold mining and in- expansion took place along the same and their colonial superiority reserved dustry, where the techniques of pro- lines as those already tried in South everything for themselves. Albeit jobs duction differed considerably from the Africa. The article by Mats Lundhal were guaranteed in the industry; that early white agriculture. With respect to expands and refines a similar economic they did not have to bear the burden the first point, it has been shown (Mats analysis by Richard Porter of the Uni- of economic downturns; that land was Lundahl, American Economic Re- versity of Michigan (published in the made easily available to them; etc; pros- view, 1982) how the Boer expansion American Economic Review, 1978). perity for the handful did not come for in South Africa and the subsequent Note that, while USA unlike now did free. All of these are expected to create white intrusion in Zimbabwe were not jump into military intervention in a huge problem with incentive com- both founded upon land alienation a foreign country trying to stop ‘possi- patible actions among the economical- from the Africans by the whites. It was ble’ civil war, its intellectual circle had ly endowed population, which in the the land alienation policy – the estab- been long denouncing such practic- long run would have anyway made lishment of African reserves – which es through clear mandates in flagship the policy of apartheid unsustainable. created what was later interpreted as and highly revered outlets such as the However, such tyranny would have an “unlimited” supply of labor in the American Economic Review. The also by then drained out the produc- sense of Arthur Lewis. Arthur Lewis South African government was not to tive capabilities of the black majority described how the expansion of in- yield so easily of course. leaving South Africa into much bigger dustry slowly engulfs the agricultural In terms of the rural-urban migra- economic and social conundrum that production and frees labor from land tion and economic growth in develop- an individual practitioner of discrim- to be stationed as a reserve army to ing countries, it is often assumed, as in
68 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in Richard Porter (1978) that labor yields ganizations. Historically these wage ciencies involved will generate an ero- a constant returns to scale (meaning rates have not been unrelated to the sion of the racial discrimination. Al- one unit increase in input raises output productivity of white labor. The case beit it has been frequently argued in by the same amount always) output of South African mining is illustrative. South Africa (and anywhere such dis- since land does not constitute a bind- In 1911, the Mines and Works Regu- crimination reaches a critical degree), ing constraint on production in the re- lation Act laid down the principle of there is little evidence that it has. The serves sector. Thus if natives populate the color bar in mining and reserved bigger costs associated with racial seg- the reserve, there will always be unused jobs in the sector for whites. Never- regation in a ‘strategically conscious’ land which may be put into produc- theless, the mine owners did their best world would stem from the costs of tion to ensure a constant standard of to substitute Africans for Europeans, international sanctions. The costs of living in the reserves. Lundahl argues since black laborers were willing to internal insurgencies, that almost any that this runs contrary to the observed work for lower wages than whites. It country currently has sustained expe- historical pattern. As the African pop- was not until after a series of strikes or- rience with, are also extremely costly ulation grew, dependence on a smaller ganized by the white trade unions and and as Jagdish Bhagwati would have land resource created pressure on liv- the so-called Rand Rebellion that the put it are, “directly unproductive ac- ing standards. Diminishing returns to white miners managed to vote out of tivities”. The interplay between the labor were reinforced by increasingly power the government which refused economic, the political, and the psy- denied access to the complementa- to give legal sanction to the color bar. chological aspects of sanctions must ry production factor – with falling After 1924, a number of laws ensured add to such rising bills for a govern- per capita incomes, over-grazing, and white-worker domination in the labor ment that wishes to use it as an instru- erosion in the reserves as unavoidable market. The significant point about the ment of governance. In terms of num- outcomes. historical development of the South bers, South Africa seems everywhere The discrimination also manifested African labor market had been the fact to save $2 billion per year (1993 pric- itself readily into its treatment of white that white wages were endogenous- es) in reduced costs with the ending of and black wages. In a historical per- ly determined within a framework apartheid. The savings of this nature spective, the point made above with where restrictions on the supply of were accounted for by various catego- regard to land alienation assumes some black labor played a central role. ries including: (a) the end of the oil importance. The clue to the supply of Many of these points are also suc- boycott; (b) the post-apartheid divi- African labor in the white economy, as cinctly discussed in the Economics of dend resulting from the elimination of well as to unskilled wages in the white Apartheid, a book by Stephen R. the costs the apartheid system has sector, is to be found in the alternative Lewis Jr. written in 1990. It describes placed on South Africa; (c) the remov- that was available for the Africans: that the development of the South African al of international sanctions (including of remaining in the African part of the economy from its modern origins, the oil boycott) which takes care of economy, that is, in the reserves. A pol- with the discovery of gold and dia- the poor trade balance; (d) possible re- icy that dictates a wage rate which falls monds over 1867-87, to its complex ductions in defense and internal secu- short of what the Africans can obtain state of race-based factor-market mis- rity spending; and (e) the reversal of by staying in the reserves would never allocations and inequalities a century divestments and capital outflows that have been successful, nor would it be later. Lewis’ discussion of the econom- followed the height of apartheid in the necessary to offer a wage much high- ic slow down in South African during country. The full reversals would also er than what could be earned there. the decade of the 1980s implied that not be without its standard costs for an Migration from the reserves into the the internal contradictions of the fac- economy, including creation of pres- white sectors was limited by means tor-market inefficiencies were an im- sure groups, black unions, etc. Never- of pass laws so that unskilled wages in portant cause, that “the South African theless, it would be so for a free coun- white agriculture and industry are de- economy is too far advanced to be try where people are at least equal in termined by the marginal productivi- able to sustain apartheid” (p. 133). We the eye of the law. The removal of the ty of labor in these sectors, and by the too have argued above that the racial color-based distortion of the South amount of African labor permitted to segregation leading to economic African economy was undoubtedly an migrate from the reserve problems does not automatically cor- achievement for which Nelson Man- Turning to the wage rates of white rect itself. Richard Porter in a later dela shall remain immortal through- workers, these were determined via review also pointed out that this “evo- out the history of mankind. a process of collective bargaining be- lutionary hypothesis” is built on the tween trade unions and employer or- belief that the microeconomic ineffi- [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 69 TAXATION
STIRRING THE POT: YEAR-END CHANGES IN THE CENTRAL EXCISE VALUATION RULES The Rules have been blind-sided and will cut across the board. While getting at vitiated sales to related persons is a legitimate objective, the new Rules may unwittingly add to margin pressures for the affected manufacturers
Ravindran Pranatharthy Advocate, Indirect taxes & IPRs
t was really believed since July 2000 that ity and certainty. The advantage of adopting trans- the introduction of transaction value in the action value was further boosted by eliminating I Central Excise Valuation System put paid to a bench-mark requirement of comparing similar long-running uncertainties in determining the prices of the same goods when sold to other un- central excise assessable value of excisable goods. related buyers. The new statutory provision man- Despite the wide berth given to the meaning of dated that transaction value would apply to each transaction value in the central excise valuation removal of excisable goods. The relative success of provisions, the concept was marked by some clar- the new transaction valuation system was best ex-
70 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in emplified by the fact that the extent al understanding of transaction value be related to each other. of disputes in excise valuation declined hitherto held. The Court imparted a • The price charged should be the substantially in the period since July new meaning to the concept of ‘sole sole consideration for the sale. 2000. The tranquil scene on the trans- consideration’ which is one of the re- The Supreme Court dealing with action value front was recently unset- quirements of transaction value. The below-cost prices charged by Fiat In- tled by the unexpected but landmark statutory requirements for the accept- dia as a market penetration strategy verdict of the Hon’ble Supreme Court ance of transaction value have been as ruled that the price in such circum- of India vide Commissioner of Central follows: stances cannot be treated as having Excise, Mumbai vs M/s. Fiat India Pvt • Transaction value applies to each re- been the sole consideration for sale Ltd {2012 - (283) ELT 161}. A de- moval of the excisable goods. of the cars made by Fiat India. Ac- tailed analysis of this important Apex • The excisable goods should be sold cording to the Court, the price was Court judgment can be seen in the by the assessee. vitiated by the market penetration ‘Management Accountant’ issue dated • For delivery at the time and place consideration which resulted in the December, 2012. The decision in the of removal. company selling the cars below-cost. Fiat India case shook the convention- • The assessee and buyer should not The Court went on to rule that the
5. How will valuation be For captive consumption in one’s own factory, valuation would be done as per rule 8 of the Valuation Rules i.e. done in cases of captive the assessable value will be 115% of the “cost of production” of the goods. consumption (i.e consumed If the same goods are partly sold by the assessee and partly consumed captively, the goods sold would be within the same factory) assessed on the basis of “transaction value” [provided they meet the conditions of sec.4(1)(a)] and the goods including transfer to a sister captively consumed would be valued as per Rule 8 of the Valuation Rules. This is because, as per new section unit or another factory 4, transaction value has to be determined for each removal. of the same company/ Where goods are transferred to a sister unit or another unit of the same company valuation will be done as per firm for further use in the the proviso to rule 9. manufacture of goods?
12 How will valuation be There is no specific rule covering such a contingency. Transaction value in respect of sales to unrelated buyers done when goods are sold cannot be adopted for sales to related buyers since as per section 4(1) transaction value is to be determined partly to related persons for each removal. For sales to unrelated buyers valuation will be done as per section 4(1)(a) and for sale of the and partly to independent same goods to related buyers recourse will have to be taken to the residuary rule 11 read with rule 9 (or 10). buyers? Rule 9 cannot be applied in such cases directly since it covers only those cases where all the sales are to be related to buyers only. 14 How will valuation be done Where inputs or capital goods, on which credit has been taken, are removed as such on sale, there should be when inputs or capital no problem in ascertaining the transaction value by application of sec.4(1)(a) or the Valuation Rules. [provided goods, on which CENVAT tariff values have not been fixed for the inputs or they are not assessed under Section 4A on the basis of MRP] credit has been taken, are There may be cases where the inputs or capital goods are removed as such to a sister unit of the assessee removed as such from the or to another factory of the same company and where no sale is involved. It may be noticed that sub rule (1C) factory, under the erstwhile of Rule 57AB of the erstwhile Central Excise Rules, 1944 and Rule3(4) of the Cenvat Credit Rules, 2001( now sub rule (1C) of rule 57AB 2002), talk of determination of value for “such goods” and not the “said goods”. Thus, if the assessee partly of the Central Excise Rules, sells the inputs to independent buyers and partly transfers to its sister units, the transaction value of “such 1944, or under rule 3(4) of goods” would be available in the form of the transaction value of inputs sold to an unrelated buyer (if the sale the Cenvat Credit Rules, price to the unrelated buyer varies over a period of time, the value nearest to the time of removal should be 2001 or 2002? adopted). Problems will, however, arise where the assessee does not sell the inputs/capital goods to any independent buyer and the only removal of such input/capital goods, outside the factory, is in the nature of transfer to a sister unit. In such a case proviso to rule 9 will apply and provisions of rule 8 of the valuation rules would have to be invoked. However, this would require determination of the ‘cost of production or manufacture’, which would not be possible since the said inputs/capital goods have been received by the assessee from outside and have not been produced or manufactured in his factory. Recourse will, therefore, have to be taken to the residuary rule 11 of the valuation rules and the value determined using reasonable means consistent with the principles and general provisions of the valuation rules and sub-section (1) of sec.4 of the Act. In that case it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT credit was taken by the assessee in the first place. In respect of capital goods adequate depreciation may be given as per the rates fixed in letter F.No.495/16/93 –Cus VI dated 26.5.93, issued on the Customs side.
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Central Excise Assessable Value can- 1.7.2002. The relevant portions of the the sub-clauses (ii, (iii) or (iv) of clause (b) not, in effect, be less than the cost circular dated 1.7.2002 are extracted of sub-section (3) of section 4 of the Act, of production. The Fiat judgment here as follows: the value of such goods shall be the normal has created some uncertainty in the Some of the leading case laws ac- transaction value” shall be substituted. central excise valuation and has a cepting the adoption of available pric- 4. In the said rules, in rule 10, for the words diminishing effect on the scope of es of the same goods substantially sold “When the assessee so arranges that the ex- commercial freedom of choice in to independent buyers in this connec- cisable goods are not sold by him except to setting the transaction value even to tion are as follows: or through an inter-connected undertaking, unrelated buyers. Virtually every ma- A. CCE, Delhi Vs Kanam Foam In- the value of goods shall be determined in jor industry has been affected since dustries – (2004) 170 ELT 237 (Tri- the following manner, namely:- “the words there would be cross-subsidization of bunal) “Where whole or part of the excisable goods products in many cases. Apart from B. Plus Cosmetics Pvt Ltd Vs CCE – are sold by the assessee to or through an in- the objective of market penetration (2002) 143 ELT A268(SC) ter-connected undertaking, the value of such to create demand for new products C. Goodyear South Asia Tyre Pvt goods shall be determined in the following and services, it is normal for manu- Ltd Vs CCE – 2005 (189) ELT 304 manner, namely:-” shall be substituted”. facturers or even traders (and service (Cestat) providers included) to clear unpopu- The CBEC rationale for the statutory lar or slow-moving items by offering Statutory changes made with changes: to sell them at attractively low pric- effect from 1st December, 2013 The CBEC has issued a circular es which could often be below their In an obvious push for greater revenue No.975/09/2013-CX dated 25th cost of manufacture. Even public collections in situations governed by November, 2013 on these statutory sector undertakings engaged in prod- Valuation Rules 8, 9 & 10, the depart- changes to rules 8, 9 & 10 of Cen- uct cost subsidization could be affect- ment has amended the relevant rules tral Excise Valuation Rules. Accord- ed by the Fiat India case. The central by Notification No.14/2013-Central ing to the circular, the changes were excise department has been quick to Excise (N.T) dated 22.11.2013. The inspired by para 70 of the Supreme seize the advantage by asking asses- relevant portion of the notification is Court judgment in the Fiat case to sees to furnish data where products as follows: the effect that Central Excise Valuation have been sold below cost, in order to “2. In the Central Excise Valuation (De- Rules are not required to be followed issue additional duty demands. termination of Price of Excisable Goods) sequentially (unlike Customs Valua- The Central Excise Valuation Rules Rules, 2000 (hereinafter referred to as the tion Rules). However, the intention will apply when even if one of the said rules), for rule 8, the following rule to garner additional revenue through ingredients or requirements of the shall be substituted, namely:- the statutory modifications is the clear transaction value is absent. Then “8. Where whole or part of the excisable objective behind the changes. The the transaction value for central ex- goods are not sold by the assessee but are relevant portions of the CBEC circular cise purposes has to be determined used for consumption by him or on his be- are extracted as follows: in line with the methods stipulated half in the production or manufacture of “Section 4 – Valuation of excisa- in the Valuation Rules. Even though other articles, the value of such goods that ble goods for purposes of charging of Section 4 of the Central Excise Act are consumed shall be one hundred and ten duty of excise – (1) Where under this stipulated that transaction value would per cent of the cost of production or manu- Act, the duty of excise is chargeable apply on each removal of the goods, facture of such goods.” on any excisable goods with reference in reality, in regard to instances of cap- 3. In the said rules, in rule 9, for the words to their value, then, on each removal tive consumption under Rule 8 of the “when the assessee so arranges that the of the goods, such value shall Central Excise Valuation Rules, 2000 excisable goods are not sold by an asses- 2) Rules 8, 9 and 10 of the Central Ex- and instances of sales to or through see except to or through a person who is cise Valuation Rules, 2000 dealing with related persons/inter-connected un- related in the manner specified in any of determination of assessable value in case dertakings under Rules 9 & 10, the the sub-clauses (ii), (iii) or (iv) of clause (b) of captive consumption and sale to related comparative price of the same goods of sub-section (3) of section 4 of the Act, person have been amended vide notification when sold to unrelated buyers has the value of the goods shall be the normal No.14/2013 – Central Excise (N.T.) been widely adopted as established transaction value”, the words “where whole dated 22.11.2013 to clearly state that through the ratio of well-established or part of the excisable goods are sold by these rules apply irrespective of whether the case laws as well as by CBEC’s cir- the assessee to or through a person who is whole or a part of the clearances of man- cular No.643/34/2002-CX dated related in the manner specified in any of ufactured goods are covered by the circum-
72 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in THE AMENDMENTS PREPARE THE GROUND FOR REVENUE ACTION BY AIMING AT GETTING OVER THE OBSTACLES POSED BY THE ESTABLISHED CASE LAWS
stances given in these rules. Each clearance this circular shall apply with effect from 1st Rule 8, the cost of production plus is required to be assessed according to section December, 2013”. 10% would become the governing 4(1)(a) or the relevant rule dealing with the norm for fixing the assessable value. circumstances of clearance of the goods, as the What the amendments have in Cost Accountants would now have case may be. store for the manufacturers considerable assignments on this ac- 3) For example, if an assessee clears his The Central Excise Department has count. goods in such a way that first removal of thus far been unable to deploy the goods is to an independent buyers, some Rules 9 & 10 to the extent that the Conclusion goods are captively consumed, second re- assessees make sales both to related The manifest reason behind the moval is to such a related person who is and unrelated buyers. The Tribunal changes in the Rules is to soak in ad- covered under rule 9 and third removal is to has consistently held that Rules 9 & ditional revenue by targeting sales to a person who is covered under rule 10, then 1o do not apply where the assessee or through related persons/intercon- the first removal should be assessed under sells the same goods both to related nected undertakings. The amend- section 4(1)(a), captively consumed goods and unrelated buyers. The Rules were ments prepare the ground for revenue should be assessed under rule 8, second re- held to apply only when the entire action by aiming at getting over the moval should be assessed under rule 9 and goods were sold to or through related obstacles posed by the established case third removal should be assessed under rule persons/inter-connected undertak- laws. The changes will impact genuine 10 of these rules. It may be noted that ings. If the amended Rules are used, common pricing of goods to all buy- Central Excise Valuation (Determination the re-sale prices of related parties/ ers, whether related or unrelated. The of Price of Excisable Goods) Rules, 2000 inter-connected undertakings would Rules have been blind-sided and will are not required to be followed sequentially. become the benchmark for central cut across the board. While getting at Each of these rules provides for arriving at excise valuation and if there were no vitiated sales to related persons is a le- the assessable value of goods under different such re-sale, then 110% of the cost gitimate objective, the new Rules may contingencies as noted by Hon’ble Supreme of production as per Rule 8 would unwittingly add to margin pressures Court at paragraph 70 in case of Commis- become the norm. CAS-4 certifica- for the affected manufacturers. Cou- sioner of Central Excise, Mumbai vs M/s. tion would be in greater need hence- pled with the significant impact un- FIAT India Pvt Ltd [2012 (283) ELT forth. In the days to come, the Cen- leashed by the Fiat India case, this 161 or 2012-TIOL-58-SC-CX]. tral Excise department is certain to double whammy on the Central Ex- 4. Serial No.5, 12 and 14 of the Circular issue additional duty demands where cise Valuation front may just add its No.643/34/2002-CX dated 1.7.2002 the existing assessable value adopted contribution to the inflationary ex- are deleted in view of the amendments in by the assessee is less than the value pectations in the economy. Inflation the Central Excise Valuation (Determina- determined as per the methods stipu- worsened by negative tax changes is tion of Price of Excisable Goods) Rules, lated in amended Rules 8, 9 & 10 of an area that has not been adequately 2000, as these amendments address the the Central Excise Valuation Rules. recognized in this country. issues on which these clarifications were In the case of excise duty becoming issued. The amended rules and accordingly payable on situations governed by [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 73 TAXATION TAX-FREE SALARIES The new Company Law provides an opportunity for negotiating remuneration between the company and the employee taking into account the tax implications for both. It will be interesting to watch how the law develops in this regard
significant change has been made with bar on payment of tax-free remuneration? Obvi- regard to remuneration to managerial ously it was felt that the Indian companies must A personnel in the Companies Act, 2013. be able to attract the best talent from all over the Section 200 of the Companies Act, 1956 barred globe. Experts should not be daunted from ac- payment of tax-free remuneration. No company cepting employment in the Indian corporate sec- shall pay to any employee, whether in his capacity tor because of tax considerations. The eminent as such or otherwise, remuneration free of any tax, management guru Peter Drucker had stipulated T C A Ramanujam or otherwise calculated by reference to, or varying that the maximum remuneration to any officer of Chief Commissioner with, any tax payable by him, or the rate or stand- any company should not be more than 30 times of Income Tax (retd.), Advocate High Court, ard rate of any such tax or the amount thereof. In the remuneration payable to the lowest of the Madras the notes on clauses 299 of the Company Law Bill company staff. This is an advice ignored com- of 1956, it was clarified that the intention behind pletely in actual practice. Remuneration received this bar on tax-free remuneration was that the ac- by the likes of Ambanis, Marans etc., can be sky tual amount paid should be made known to the high. The new Act requires that there should be a shareholders and other persons concerned. This board resolution containing terms and conditions was on the model of Section 189 of the English of appointment including remuneration. This Companies Act, 1948. The Cohen Committee in stipulation was not to be found in the Act of 1956. England pointed out that payment of tax-free re- Every listed company shall henceforth disclose in muneration created a class of persons who are im- the board’s report the ratio of remuneration of T C A Sangeetha mune from any future increase in taxation. Such each director to the median employee’s remuner- Masters in Law a practice has the effect of making it difficult for ation and such other details as may be prescribed. shareholders to assess the burden imposed on the Schedule V of the Act of 2013 disqualifies from company by its salaries and wages Bill (Report: appointment to the position of managing direc- Para 88). tor or whole time director or manager any person There was an exception to Section 200 of the convicted of an offence under the Prevention of Companies Act, 1956. This is to be found in Sec- Money-Laundering Act, 2002. This was not a tion 10 (6) (vii) (a) (ii) of the Income-tax Act, disqualification under Schedule XIII of the 1956 1951. In the case of a foreign technician specified Act. The age limit under the new law permits any in that Section and employed by a company, the major person even below the age of 25 years to tax on his income chargeable under the head ‘Sal- be appointed as manager or director. This will re- aries’ may be paid by the company for a period quire a special resolution. Thus, the minimum age of 60 months following the expiry of a tax-free limit is 21 years. Unlike Schedule XIII of the Act period of 36 months from the date of his arrival of 1956 which caped remuneration at Rs.48 lakhs in India. per annum, Schedule V of the 2013 Act provides Why did the Companies Act, 2013 remove the for removable of remuneration cap on the basis
74 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in THE FACT THAT TAX-FREE REMUNERATION IS NOW PERMITTED UNDER THE NEW COMPANY LAW SHOULD NOT BLIND US TO THE REALITY OF THE INCOME TAX LAW
of the quantum of effective capital; CIT 237 ITR 112). Section 195A of Drilling Inc. The High Court had the limits can be doubled by passing a the Income Tax Act, 1961 provides for held that the tax paid by the employer Special Resolution. Schedule V plac- grossing up the tax. This will mean tax is no doubt a perquisite which can be es a limit on remuneration at 2.5% of on tax. considered non monetary in nature. current relevant profit in certain situa- Thus, instead of adding the tax paid tions. Section III of Part II of Schedule Multiple tax gross-up by the employer to the employee’s in- V has special provisions for newly in- Section 10 lists incomes not included come on a multiple gross-up basis, a corporated companies for 7 years after in total income. In the case of an em- single stage tax gross-up may be done. incorporation. In these cases and also ployee, being an individual deriving Instead of applying a multiple gross- in the cases sick companies, remuner- income in the nature of perquisite, up, the employer can pay tax on the ation in excess of limits in Section II not provided for by way of mone- employee’s behalf on the value of the of part II can be paid without Central tary payment, within the meaning non-monetary perquisite on a single Government’s prior approval. This was of Section 17(2), the tax on such in- stage gross-up basis. Applying the rate not the case under Schedule XIII of come can be exempted at the option of 30% on an income of Rs.100/- , the Act of 1956. of the Employer, despite Section 200 the multiple stage gross up will mean of the Companies Act. The question a tax of Rs.43/-. Under the single Tax implications was raised recently whether tax paid stage gross-up, the tax will be Rs.39/- The fact that tax-free remuneration is by the employer can be considered a . There can be a tax saving of Rs.4/- now permitted under the new Com- ‘perquisite’ at all and if so, it can be for the employer. There is a caveat pany Law should not blind us to the considered ‘non monetary perquisite’ to be entered here. Revenue has not reality of the income tax law. Section eligible for exemption under Section accepted the contention that tax paid 17 (2) (iv) defines the term ‘perqui- 10 (10CC) of the law. Despite the by the employer will fall in the defi- sites’ as including any sum paid by the bar on payment of tax-free remuner- nition of ‘non monetary perquisite’. employer in respect of any obligation ation under the Act of 1956, Section Litigation is pending in several High which, but for such payment, would 10, (10CC) of the Income Tax Act, Courts with the Uttarakhand High have been payable by the assessee. 1961 provided for exemption of tax Court deciding the matter in favour Lord Atkinson said in North British on ‘non monetary perquisites’ actual- of the taxpayer. Railway Company vs. Scott, 8 TC 332 ly paid by the employer on behalf of (HL) that the sum paid by the employ- the employee in the case of the As- Conclusion er to satisfy the debt which the em- sessment of the Employee. However, The new Company Law provides an ployee owes to the Revenue remains tax paid by the employer claimed as opportunity for negotiating remunera- part of the profits derived from the exemption under Section 10 (10CC) tion between the company and the employment. Where the salary is paid is not deductable as business expend- employee taking into account the tax tax-free, the employee has to include iture from the employer’s income. implications for both. It will be inter- in his total income the gross salary i.e. The Uttarakhand High Court has esting to watch how the law develops the aggregate of the net salary received rendered a useful Ruling on this sub- in this regard. plus the amount of tax paid on his be- ject recently in Director of Income half by the employer (see Takenaka vs. Tax vs. Sedco Forex International [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 75 TAXATION TAX TITBITS
S. Rajaratnam Advocate and Tax Consultant, Chennai
NO RIGHT TO INTEREST ON INTEREST – A SET BACK
ssessees right not only to right decision came up for review before context of inordinate delay of more A to interest, but also right to in- the Supreme Court at the instance of than a decade in the grant of interest, terest on interest, where there is a delay revenue in a group of cases in CIT v. so that it was treated as one on facts in payment of interest on refund under Gujarat Fluoro Chemicals [2013] 358 of the case. It has held, that interest on section 244A was recognised by the ITR 291 (SC). The Supreme Court refund has to accord strictly with the Supreme Court in Sandvik Asia Ltd. v. has now understood Sandvik Asia Ltd.’s provisions of section 244A, which does CIT [2006] 280 ITR 643 (SC). This case (supra) as one rendered in the not provide for interest on interest.
STAY OF PENALTY PROCEEDINGS PENDING APPEAL – IT IS A LEGAL RIGHT
he law provides for stay of pen- Industrial Pvt. Ltd. [2013] 358 ITR out by the Supreme Court in ITO T alty proceedings pending the 410 (Guj) allowed the petition in a v. M.K. Mohammed Kunhi [1969] outcome of appeal against additions matter, where the merits were pending 71 ITR 815 (SC) in the context of in the assessment in respect of which before the Tribunal with a direction to stay of disputed demand. The High penalty proceedings are initiated. It is, the Appellate Tribunal to give an early Court further pointed out, that when however, not uncommon for the au- hearing and directions to all the par- the law allows stay of penalty pro- thorities to deny such stay and levy ties concerned to ensure participation ceedings and extends the time limit penalty. In one such case, where the in such hearing. This would be a bet- for completion of penalty proceed- assessee filed a writ petition against ter solution, since any levy of penalty ings by six more months after the the proceedings undertaken after re- in a matter where the outcome of the outcome of the dispute on merits, jection of the petition for deferment appeal would have been favourable there is absolutely no justification for of penalty proceedings till appeal, the to the taxpayer may render the appeal declining stay of penalty proceedings High Court in Asst. CIT v. GE India itself nugatory in such cases as pointed pending appeal.
PENALTY IN MATTERS OF SURRENDERED INCOME
here had been conflicting views which are surrendered by the asses- able, since the decisions in such cases T from the Supreme Court itself see during the course of assessment. has to depend upon the facts and the in respect of penalties on additions But these decisions are not irreconcil- circumstances in which the income is
76 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in surrendered. The Supreme Court it- ment” etc., where the surrender of In view of the complexities in our self has stated the law on the subject in income is after the concealment hav- law and for avoiding litigation, there Union of India v. Dharamendra Textile ing been established. In the particu- is need for a provision in the statute to Processors [2008] 306 ITR 277 (SC) lar facts of the case, the concealment encourage admission at whatever stage and CIT v. Atul Mohan Bindal [2009] was inferred from materials gathered by way of concessional penalty as had 317 ITR 1 (SC). The Supreme Court during a survey ten months prior to been provided for post-search cases. in Mak Data P. Ltd. v. CIT [2013] 358 the date on which the assessee filed An alternative solution is to substitute ITR 593 (SC) referred to these cases its return. If the assessee wanted to penalty by an additional tax at 50% of pointed out that the Assessing Officer avoid penalty, all it had to do was to the tax on addition as prevailing un- should not be carried away by the plea voluntarily disclose the income in the der sales tax law in some States and of the assessee by the expressions like return filed by it. After all, it is the as suggested in the draft Amendment “voluntary disclosure”, “buy peace”, duty of the assessee to file the correct Bill, 1987 but dropped when the Bill “avoid litigation”, “amicable settle- return. became law.
EXEMPTION FOR STATE ORGANISATIONS FOR CARRYING OUT PUBLIC ACTIVITIES
here is no reason why State in- ernment for standardisation and certi- capacity as an instrument of the State. T stitutions carrying out public fication of quality standards with the It was entitled to exemption under duties of charitable character should primary and predominant object of section 10(23C)(iv) as decided in writ not be spared liability as is available ensuring public benefit in Bureau of petitions against refusal of approval for all trusts and institutions under Indian Standards v. Director General under the section. It follows that such section 11 of the Act. Many State of Income-tax (Exemptions) [2013] institutions would qualify for exemp- institutions do enjoy such exemp- 358 ITR 78 (Del). The High Court tion under section 11 as well. This tion, but for a drastic amendment to in this case pointed out, that merely case illustrates the damage done by the the definition of charitable purpose charging fees for its services would drastic amendment to section 2(15) under section 2(15) effective from not tantamount to business. The in- targeting those trusts and institutions A.Y.2009-2010 taking away right to stitution was enforcing standards for with the object of general public util- exemption for those with the object public benefit coupled with investi- ity. The amendment is also possibly of general public utility, if they have gation and enforcement of law with unconstitutional. The writ petitions any activity of business nature as by the charges having been prescribed challenging the constitutionality of charging of fees for carrying out their with no intent to carry on trade or the amendment had been admitted by objects. One such institution affected commercial activity. The High Court the Madras High Court in W.P Nos. by the amendment according to the found that charging of licence and 2012 and 2013 and W.P.Nos. 2035 and Assessing Officer was a regulatory certification fees could only be treated 2036 dated 30.1.2012 with no coun- authority set up by the Central Gov- as part of regulatory functions in its ter as yet filed.
NO TDS FOR SERVICE TAX
here payments were made by tion by not considering the service ered by these provisions, so as to re- WUrban Development Depart- tax as part of payment liable for tax quire inclusion of service tax. This ment of Government of Rajasthan deduction at source. The High Court is a welcome decision. This judge- to technical and project consultants in CIT v. Rajasthan Urban Infra- ment would spare not only liability and others with deduction of tax at structure Development Project for deduction of tax from service tax source on the amounts paid under [2013] 359 ITR 385 (Raj) found component but also spare the conse- section 194I and 194J without in- that the words “any sum paid” under quent compliance requirements ex- cluding service tax reimbursed to the these provisions cannot possibly in- pected by the authorities administer- service providers under the agree- clude service tax which is to be treat- ing service tax. ments with them, the question arose ed as contractually payable and not as whether there was any short deduc- part of the payment for items cov- [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 77 INTERVIEW
M. Narendra Chairman and Managing Director Indian Overseas Bank NPA a double-edged sword for banks, says CMD of Indian Overseas Bank
Q & A
Are ‘big tickets’ advances the cause of NPAs? slipping to NPA. Not necessarily. If we consider the amount involved as these Big Ticket Advances are with Loan outstanding of Rs. 1 Crore and above, even a few What role concurrent auditors / internal inspectors can play in NPA accounts slipping into NPA category will have have an impact on NPA level of management? the Bank. In terms of number of accounts Big Ticket NPA is less than 1% . Concurrent Auditors / Internal Inspectors have a major role to play in NPA Slippages have been taking place in all sectors in small and big accounts. management. Identification of issues / problems in the early stages at the While the amount involved is more in the big ticket accounts, the number of time of releasing the advance or immediately after the release will enable accounts that slip to NPA in small value accounts is very much higher, though the branch to rectify / solve the issues in the early stages and thus prevent the total amount involved is lower in these accounts. slippages. Auditors / Inspectors should also be involved / made responsible for rectification of deficiencies. If yes, what are the remedial measures? Banks are closely following up these accounts for recovery by resorting to What, according to you, is the involvement of your staff (clerical, SARFAESI action, filing suits, declaring the borrowers as willful defaulters managers, top management)? and also filing cases with CBI in case of fraud. The top 50 NPA accounts of Business decisions at times do go wrong. There are Accountability Policies the bank are personally monitored by CMD, EDs and GMs / Credit Verticals. formulated by banks. All cases will be investigated by the Banks and in case In genuine and eligible cases, where the borrower requires hand holding, deliberate malafide intentions are proved suitable actions will be initiated we are restructuring the advances / referring the cases to CDR, to help the against the concerned in line with the Policy of the Bank. borrowers to come out of their problems/mismatch in cash flows. The top 30 accounts of the banks are being individually reviewed by the What is the composition of NPA in your bank? Ministry at regular intervals. The weekly recovery information is also being % to Domestic NPA sent to the Ministry for their information. A Board level Committee has also been formed where the top 50 accounts of the bank are reviewed individually a) Agriculture 15.49% by the Government Nominee Director through Video Conference. b) Industry 55.14%
Why do accounts slip to NPA? c) Services 23.78% Accounts slip to NPA due to various reasons. The present economic d) Personal 5.59% downturn has affected the business sector to a very great extent. Besides, the economic scenario, delay in realization of receivables, devolvement How does NPA affect the banking sector as well as the Indian of LCs, delay in implementation of infrastructure projects due to delays in economy? getting Government Approvals have been the major factors for accounts NPA is a double edged sword for the Banks. Not only the asset stops
78 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in earning for the Bank, but also has to be provided for in the books of • The Infrastructure sector (Road and power), textiles, Iron and Steel the Bank as per extant guidelines. It undermines the capital accruals sector have lions share in banks’ restructuring book. and thereby restricts the lending capacity of the Banks (Banks have • In the case of Rs. 2,72,000 crores of loans before CDR cell by to maintain Capital in relation to RWA as per Basel Norms). High NPA September 2013, around a sixth is loans to infrastructure sectors like causes Slowdown in the economy and higher cost of funds. High level roads, power and another fifth is to the steel sector. of NPA is the root cause of the global financial crisis and the world is • Several projects are held up when the government’s policy changes or still trying to recover from the after effects of the crisis. The banking the government does not put in its own share of capital due to fiscal system has shown moderate rise in instability due to increase in NPA. restraints. Mining laws and environment clearance, litigations, power In fact, the global economic crisis that began in 2008-09 was triggered by the financial crisis in the banking sector with increase in NPA. Many cuts etc are the other factors which affect the recovery performance Banks failed. NPA, therefore, affects the stability of the banking sector in Restructured advances. and leads to reduced profits on account of increased provisions, which • It is expected that one fifth of all recast loans are likely to go bad this has a detrimental impact on the profitability of the banks. Higher NPAs year, as compared to 15% till last year. have also led to reduced credit as it causes poor recycling of funds and • As regards our Bank, The percentage slippage from Restructured erosion of profits in banks. portfolio was around 4-5% and it is below the level in peer banks. An efficient banking system is a prerequisite for economic growth. During the current year the slippage from Restructured accounts in our Increased NPA level leads to sluggish growth in the economy. High NPAs bank will be around 6-7%. lower the bank’s credit rating and credibility and also its ability to raise fresh capital. Banks are to maintain reasonable Capital Adequacy Ratio Is there any role of Cost & Management Accountants in (CAR) to keep the problem within limits and to maintain the stability of helping the banking sector to check this problem? Please suggest not only the Banking System but the economy as a whole. how CMAs can offer their expertise in this area. The Cost Accountant can play a major role in helping the banking What are the concerns of RBI relating to NPA management? sector to check the problem faced by them with regard to effective RBI has been highly concerned of the growing NPA and the resultant NPA management. instability in the Banking System. Though the Central Bank has spoken 1. Pre Sanction Level with concern on the rising NPAs, RBI Chief had pointed out that the • Professional advice on proper appraisal of the advance. –TEV study situation is not alarming. RBI has, however, instructed all Banks to - Overall Industry level performance. improve NPA management for improved recovery and reduction in NPA • Specific Industry Study. levels. • Market Report, checking expertise and integrity of the borrower. What percentage of NPAs is recovered through One Time • If it is a new unit – issues relating to Break Even level, assessing Settlement, Restructuring of advances, court cases? contribution per unit – buy or manufacturing decisions. a) Percentage of NPA recovered through One Time Settlement - 0.39% • If it is an existing unit – issues relating to capacity utilisation/ b) Percentage of NPA recovered through Court Cases - 1.10% cost control measures taken by the unit and profitability of various divisions/centres. How does the government monitor the NPA management by • Cost effectiveness/ profitability of future plans of unit for expanding banks? its business/diversification of its business. The top 30 accounts of the banks are being individually reviewed by the Ministry at regular intervals. The weekly recovery information is also 2. Post Sanction Level being sent to the Ministry for their information. A Board level Committee • Monitoring of the advance has also been formed where the top 50 accounts of the bank are • End use of Bank funds/periodical progress report of projects reviewed individually by the Government Nominee Director. • Regular unit visits - movement of stocks, checking of obsolete stocks and cycle period of the production – from raw material to How much of the Restructured Assets can go bad? end product – industry analysis/comparison. GNPAs Ratio and Restructured Standard Advances Ratio (PSBs) in % • Verifying the Book debts/assessing quality of Book Debts and S. PSBs March March June Sept Dec March details of long standing debtors- the reasons therefor and measures No. 2011 2012 2012 2012 2012 2013 to be taken for recovery. I GNPA Ratio 2.32 3.17 3.57 4.02 4.18 3.78 II Restructured 4.24 5.74 6.67 7.34 7.41 7.07 3. Monitoring of the stressed accounts Standard • The reasons for slippage of the account into NPA – deficiency Advances in appraisal and monitoring of the account, historical study of Ratio accounts turning into NPA, portfolio analysis/stress testing. III TOTAL: 6.56 8.91 10.24 11.36 11.59 10.85 • Effectiveness of monitoring the account through various statements GNPA like ERI, Watch category accounts and Special watch category Ratio and accounts – help the bank to take remedial measures either for Restructured reviving the unit or for timely exit. Standard • Training of operating level staff in detecting incipient sickness/ Advances understanding alert signals.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 79 INTERVIEW
Adesh Jain Honorary President, PMA, India, former Independent Director of NTPC Ltd., Honorary Chairman of China Project Management Committee Risk and Project Management in the Banking Sector – an interview with Adesh Jain
Q & A
What are the main challenges & concerns of which will go beyond the traditional financial risk con- ERM in banks? siderations. ERM is a risk-based approach to managing an enter- As you know, bank deals with the future and future is prise. It integrates concepts of nothing but risky as well as uncertain. ERM is the back- • Strategic planning, bone of the financial banking and insurance companies. • Operations management, Unfortunately, quite often, banks confine themselves to • Performance management financial risks. The risks associated in lending money as a • and Internal governance and control. part of project of a customer is not done so scientifically So Banks will have to take a more holistic view con- that it often could have a good probability of becoming sidering Risks at different level of the organization a non performing asset.
80 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in How does Enterprise Risk Management differ from risks in accordance with well-defined policies, proce- traditional risk management in the financial sector? dures and practices. Bank risk managers should have full Traditional risk management in Financial sectors are more appreciation of the essentials of project and programme concerned with risks at operational levels. Such as, management including portfolio management. Bank • Credit risk or the risk of default, that is that a borrower will Risk Officers should be certified project managers as fail to repay the principal borrowed and/or the interest on well based on demonstrating the competency based as- the amount borrowed sessments. International project Management Association • Liquidity risk (IPMA) is the only federal structure based organization • Interest rate risk.The risk of changing interest rates and the comprising of 57 countries from all the continents that effect this has on the bank’s margin between the borrowing have 4 levels of project management certification with and lending rate heavy emphasis on risk management. China has 43% of • Market risk. The loss in the value of a portfolio of trading the total certified project managers of the globe as it has assets placed heavy emphasis on competency based qualifica- ERM on the other hand looks at many other aspects. tions. Such as, what is the risk involved if a bank’s customer data- base is lost due to system malfunction? It looks at the ‘whole’ What is the role of the treasury and insurance in an and builds part by part. It compels professionals to be on the ERM environment? ground floor and at the Balcony at the same time. The treasury department or the corporate treasurer has responsibility for managing financial risk. Treasury is con- Do you think the process of implementing ERM cerned with the relationship between the business and its is the same for every financial company or does it financial stakeholders, which include shareholders, lenders vary from firm to firm? and taxation authorities. There are three levels of Strategic and Business Risks: Insurance involves protection against hazards by taking a) Macro Level (Strategic): threats originating from geopo- out an insurance policy against an uncertain event. The pre- litical and macroeconomic environment in which all busi- mium cost will be influenced by the extent of risk man- nesses operate e.g. Global economic recession agement carried out by the insured in order to prevent or b) Sector Level (Strategic and Business): Changes in the mitigate risks from eventuating such as fire prevention pre- sector specific business environment e.g. Govt policy on cautions Financial Sectors c) Operational level (Business): Risks which affect day-to- What role could professionals like Cost and day operational and project performance of the organiza- Management Accountants play to develop sound tion ERM environment in your organization? The category of business risk are unique to the environ- Cost overruns in project implementation is a major risk in ment of a particular organization. Business risks will vary successful project implementation. Cost management pro- between organizations within an industry and between var- fessionals can provide valuable inputs in terms cost estima- ious industries ERM implementation will vary from Firm tion and cost control of a project. CMAs are very important to Firm at Business or operational levels. in contributing to ERM. Cost related risks are very high in There are some models like COSO or ISO which could financial sector. CMA should also able to promote certifica- be taken as a standard and within it, we could evolve specific tion in cost engineering etc. to a sector. This is quite innovative to do so. How effective has the Internal Auditors been in Can you give an example of effective ERM applied implementing ERM in banks? in practice at various banks? It depends on the internal control and governance policies Almost all Banks have some form of risk management in set forth by the Board of Directors and the top manage- place. Annual Report of various Banks mention their risk ment. Internal auditors, most likely will have the task of management activities. For example, in October 1999, the investigating the fraud and should review the adequacy of risk management function in ICICI Bank was reorgan- internal controls. ized and integrated into a distinct and independent Risk The core internal auditing roles that relate to ERM are: Management Department. The Risk Management De- • Giving assurance on risk management processes. partment works in close association with the business • Giving assurance that risks are correctly evaluated. units to implement various risk management strategies • Evaluating risk management processes. and identifies, assesses, monitors and manages all major • Evaluating the reporting of key risks.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 81 INTERVIEW
For Nation’s prosperity, project mindset is MUST. Project mindset in simple terms implies the ‘holistic’ thinking and planning First and then speedy implementation of its ‘parts’ to make the whole. Upfront planning is most necessary to be done based on realism in giving time and cost estimates keeping in view the necessary buffers for the risks associ- ated. In today’s context, there is no room for time and cost overruns. Mere one day delay of 600 MW Power Plant can be 10 crores. If you want to see the impact on the total economy including indirect benefit to industry to have well IN MY VIEW, THE ROLE deserved energy, it could be 3 to 4 times i.e. the total loss OF GOVERNMENT IS TO could be of the magnitude of 30 to 40 crores just by delay- ing a power plant of 600 MW. If you go even a step further CREATE FRIENDLY POLICIES in computing the impact on the ‘happiness factor’ i.e. having IMPROVING THE CONFIDENCE one day of extra light in the midst of darkness in the rural areas, it could be significant. We the professionals have no LEVEL OF THE INVESTORS. reason what so ever to accept delays. The delays can only be acceptable if the force majeure conditions apply. We got INVESTORS MUST BE to have ‘fire in the belly’ to complete projects. Our lack of REASONABLY ENSURED TO due diligence at the project appraisal and planning stage and over optimism of overcoming all the hurdles etc. give rise GET HIS REASONABLE ROI to demoralization and tardy progress of projects in India. We have some successful stories and should able to replicate AND THAT CAN HAPPEN IF with simplified processes of approvals and good planning THE PROJECT IS COMPLETED and risk management templates and mindset. WITHIN THE STIPULATED TIME How different is project financing from traditional corporate lending? AND COST BUDGETS Corporate Lending could be for day-to day operations for working capital and cash requirement. Operations are fun- damentally less risky as future is not too uncertain. Project Financing is much more risky due to the points mentioned above. In undertaking projects and in particular, the infrastructure and capital intensive, project financing is the backbone. • Reviewing the management of key risks. Unfortunately, Auditors often do not have as much as Post the global financial crisis, how do you see the necessary the exposure the finer aspects of project risk man- project financing market in India, especially during agement as well as ERM concepts at a broad level. They an economic downturn? should also be certified in project management. I think current economic downturn is more linked with political uncertainty prevailing in the country at the mo- In the advanced countries, banks have been rolling ment. Ups and downs are always there in an economy. out project management around cost efficiencies India fundamentally needs lot of investment in devel- and risk management, how far do you think the oping infrastructure and hence project financing is a practice has been advanced in India ? must. However, one has to make sure successful imple- Indian Banks also do proper feasibility studies and due dili- mentation of these projects within specified Time and gence before project financing. But project implementation Cost by applying modern project and risk management in India is very complicated and risky due to various ex- techniques. ternal factors such as Political, Social, Legal environment in I once again lay emphasis on certification of risk manag- which we work. Projects often are over budget and behind ers and project managers with the world renowned IPMA 4 schedule.So the initial cost estimation often does not work. Level Certification. Unfortunately, today professionals have India needs to develop as a country the project mindset. not understood the main difference in exam based certifi-
82 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in cation which some organizations in USA promote heavily the concept of Private Public Partnerships (PPP) to competency assessment based qualifications in which you featured in India in this regard? do need to demonstrate the competencies in three distinct The union government has estimated an investment of more domains i.e. Technical, Behavioral and Contextual covering than $300 billion in the infrastructure in the 10th plan. The 46 elements. Exam based certification is like obtaining the major infrastructure development projects in Maharashtra drivers license where competencies assessment based quali- (more than 50%) are based on the PPP model. In the 2000s, fications is demonstrating the skills in driving in multi lane other states such Karnataka, Madhya Pradesh, Gujarat, Tamil and multimode highway systems. There is lot of difference Nadu also adopted this model. between the two. Exam based certification is just a base to Sector-wise, the road projects account for about 53.4% build on. of the total projects in numbers, and 46% in terms of value. Ports come in the second place and account for 8% of the The government has recognized the importance of total projects (21% of the total value). Other sectors includ- infrastructure development as prerequisite catalyst ing power, irrigation, telecommunication, water supply, and of growth, what sort of support does it give banks airports have gained momentum through the PPP model. to enhance project financing? Government support should come by way of remov- Recently at the opening of the 21st Global ing bureaucratic hurdles in regulatory clearance, resolving Symposium with the theme of ‘Linking project land acquisition issues etc. mindset to nation’s prosperity’, Dr. Verrappa Moily If these external factors can be controlled more projects addressed you as the ‘Bhisma Pitamah’ of project will be successful and therefore the risks will be mitigated. management. You are also the Honorary Chairman In my view, the role of government is to create friend- of China Project Management Committee besides ly policies improving the confidence level of the investors. Government of Turkey released postal stamp in Investors must be reasonably ensured to get his reasonable 2010 for your contribution to project management, RoI and that can happen if the project is completed within what suggestions you have for us in India! the stipulated time and cost budgets. Delays make the pro- I am a good student and always ready to acquire more jects go for six and all the financial calculations go haywire. knowledge to be applied in real life situations. Thank you for PPP can only work if we have trust all around amongst all your recognizing some of my achievements. I am clear that the players. Each player must have its share of profit making India’s progress in general in management of projects is far which is appropriate and reasonable for their efforts below the potential we have in terms of achieving excel- lence. We have some successful stories but those are excep- Project financing involves complex & challenging tions and cannot be the rule of the profession. We must look transaction, especially in these days of economic at the big picture first and we can do so if the functional silos downturn, there is more chance of the assets going are demolished. The big picture is not by owned by a party bad, how do you thing professionals like the Cost & or a group but owned by the majority of the stakeholders. It Management Accountants contribute and help you is the big picture which needs to paint gradually with qual- in his regard? ity built into it at every stroke of the brush. We must under- Cost Management and Project Management professionals stand clearly that delaying decisions could be due to lack of can complement each other in terms proper financial fea- boldness or belief or could be partly impacted by politics. In sibility analysis, Cost estimation and budgeting of a project. any case, decision deficit would not able to create the future In a way, cost management is one of the three legs of pro- which we all want to have. Risk management is the key. ject management stool. Cost estimation itself is a big science. Future is unknown and we must be prepared to go wrong In India, as a whole, we lack certified cost engineers. in our decisions inspite of taking all the factors in account. We need to build self confidence in stating where we went Growth remains contingent on upgrades & wrong and for what reasons. Learning from our mistakes development to facilities across power, roads, rail, could be the most beneficial asset entry in our balance sheet ports & social infrastructure, do you see project of ‘Corporate Competiveness‘. We must be transparent to financing a huge area of the business in future? our actions and in our thoughts. We must replace the last Absolutely. No doubt about it. element of hidden agenda with transparency. Intellectual In- tegrity is the Ultimate in building effective teams and that is In most of the developed countries, project what we need more of that in India to be a role model for financing has been carried out under the other countries and to serve our own huge number of governments private finance initiative, how has stakeholders with smiles on their faces.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 83 PRESIDENT’SRISK MANAGEMENTCOMMUNIQUE
USE OF COBIT 5 BUSINESS FRAMEWORK FOR RISK MANAGEMENT
ISACA (Information Systems Audit Control Association) International has launched a Business oriented framework called as COBIT 5 framework. This is master of all and forms an umbrella framework over all other frameworks such as VAL IT, RISK IT, Governance of Enterprise IT and the like. S. V. Sunder Krishnan Chairman – ISACA India COBIT 5 provides a comprehensive framework that Task Force and Advisor – assists enterprises to achieve their goals and deliver ISACA Mumbai chapter Mr Krishnan is also the value through effective governance and management Chief Risk Officer of Reliance Life Insurance of enterprise IT.
The framework has two perspectives
Risk Management Risk Function Perspective COBIT 5 Enablers Perspective
Processes Organisational Culture Ethies The risk Structures and Behaviour The risk function management perspective Risk perspective Risk Function Management describes how Perspective Principles, Policies and Frameworks Perspective looks at to build and core risk sustain a risk governance function in Information Service, People and risk the enterprise Infrastructure Skills and management by using and Applications Competencies processes the COBIT 5 and risk enablers scenarios. This perspective describes how The framework has specific inputs for: risk can be mitigated by a. IT experts - COBIT 5 framework - dealing into various IT processes, structures, using COBIT 5 technologies and Organisation Chart. enablers b. Risk Managers / Regulators - COBIT 5 for Risk c. Governance specialists / Government and Regulators - COBIT 5 for GRC d. Assurance Specialists (Auditors and Certifying bodies) - COBIT 5 for Assurance
84 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in The framework lays down the following seven enabling auspices a. Principles, Policies and Frameworks f . Services, Infrastructure and Applications b. Processes g. Peoples, Skills and Competencies c. Organizational Structures ISACA has also provided a mapping document to enable d. Culture, Ethics and Behaviour enterprises that have already implemented other frameworks e. Information like COSO, GRC, ISO 32001 to easily adopt COBIT 5.
Given below is a typical Risk Management Structure of an Insurance Company Risk Management Structure
Operational Risk Market & Credit Risk IT Risk & BCP Insurance Risk
1. Risk Investigation Mid Office - Investments 1. BCP monitoring & 1. ALM monitoring and 2. Risk Projects • Market Risk MIS coordination. co-ordination 3. KRI Dashboard • Limit Monitoring 2. DR fllow-ups 2. Insurance Risk measures 4. Risk Mate / Automation • Voice call tracking 3. IT risk review & 3. Strategic Risk 5. MIS and Reporting • Personal Trading coordination • Credit Review 4. IT Risk Assessments 1. Risk Review • Investments concurrent 5. CAATs 2. Continuous Monitoring audit coordination 3.Risk Assessments 4. Risk & Control Self Assessment 5. Risk based intermal Both Reputation and Financial impact of each risk is managed audit co-ordination 6. BCM audit monitoring
Given below are the building blocks of an Enterprise Risk Management System Risk Management - The Building Block Governance: Establishment of policies and the definition Strategy / Design Implementation Mitigation of the framework to implement these policies Governance Identification Measurement Monitoring Mitigation Identification: Stipulation and documentation of risk exposure along process and • Committees Process Mapping • Improve Processes project lines • Regulatory Reporting • Improve IT Controls • Quality Assurance of GRC Self Assessment • Enhance Technology/BCP Measurement: Qualification Processes and quantification of risk and • Enhance Business loss in financial value and • Consistency across Group Capture of Losses Controls quality • Group Risks • Project Quality Assurance • Group Audit Key Risk Indicators • Project Readiness Monitoring: Identification Assessment & traning tracking and control of risk • Independent Review and Audit Control Governance, Risk & events and resolution thereof • Legal & Compliance framework Compliance (GRC) Framework – People, Mitigation: Proactive • Asset Libility Management Process & Technology management of risk exposure
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 85 PRESIDENT’SRISK MANAGEMENTCOMMUNIQUE
Maturity path of aligning IT security and risk Appendix B includes detailed descriptions for each enabler management to business risk management listed in section 2A. COBIT 5 framework provides a golden opportunity for d. How does Risk Related to COBIT 5 Principles? Business - IT professionals to evolve and mature in large Risk is defined as the potential of enterprise objectives not Organizations to the main business stream. With a help of being achieved or as any opportunity that can enhance en- applications such as IT GRC and / or smart work flow terprise objectives. Maintaining an optimal risk level is one applications COBIT 5 could be easily implemented to of the three components of the overall value creation ob- reap the benefits. The Board of the above enterprises would jectives of an enterprise, which in turn is supported by the now be in a position to deep dive into the world of IT Risk five COBIT 5 principles. Management and IT Security with the help of business e. What are the key aspects from Risk Management friendly IT risk dashboards. in practice? Key components of practical risk management are the risk Simple Risk Management Questions answered by scenarios. In section 2B, risk scenarios and all related topics COBIT 5 (where to find guidance) are explained. a. What is Risk? f. Are there any practical examples on Risk Scenar- Section 1 of COBIT 5 Framework defines risk, and de- ios and how to address them? scribes briefly how the COBIT 5 principles can be applied Yes. Section 2B, chapter 4 contains a comprehensive list of to risk management-specific needs. example IT-related risk scenarios. The section also contains b. How do the COBIT 5 enablers relate to some practical advice on how to best use these example providing risk management? scenarios. In appendix D, a set of detailed examples is given In general, two perspectives on how to use COBIT 5 in a on how risk scenarios from each category can be mitigated risk context can be identified: by using a combination of COBIT 5 enablers. • The risk function perspective g. How does COBIT 5 for risk help me in Describes what is needed in an enterprise to build and sus- responding to Risk? tain efficient and effective core risk governance and man- COBIT 5 for Risk makes the link between risk scenarios agement activities and an appropriate response. If the response of choice is “mitigate”, COBIT 5 contains a wealth of ‘controls’—en- • The risk management perspective ablers in COBIT 5 terminology—that can be put in place Describes how the core risk management process of iden- to respond to the risk. Appendix D contains a comprehen- tifying, analyzing and responding to risk, can be assisted by sive set of examples on how that can be done in practice. the COBIT 5 enablers These perspectives are introduced in section 1.3.1. h. Does COBIT 5 align with Risk Management c. How do I set up an efficient Risk Function? Standards? What is the Risk Function perspective? Yes. A detailed comparison, in the form of a mapping or qualitative description, is included in section 3. Section 2A provides guidance on what is needed to set up and maintain an effective and efficient risk function. It does These are the standards discussed in this section: ISO so by listing and briefly describing the COBIT 5 enablers 31000, ISO/EC 27005, COSO, ERM and ISO Guide 73. required, e.g., processes, organisational structures, culture, (please refer to www.isaca.org for further guidance on various risk ethics and behaviour. Putting these enablers in place will analysis methods) result in a performance risk function adding value for the enterprise. [email protected]
Notification It is hereby notified vide Notification Nos. 18-CWR (3604-3634)/2013 dated 25th October 2013, 18-CWR (3635-3674)/2013 dated 28th October 2013, 18-CWR (3675-3694)/2013 dated 29th October 2013, 18-CWR (3695-3714)/2013 dated 7th November 2013, 18-CWR (3715-3736)/2013 dated 11th November, 18-CWR 2013 (3737-3754)/2013 dated 13th November 2013, 18-CWR (3755 – 3804)/2013 dated 15th November 2013, 18-CWR (3805 – 3838)/2013, 18-CWR (3839 – 3871)/ 2013 dated 19th November 2013, 18-CWR (3872 – 3906)/2013 dated 20th November 2013, 18-CWR (3907 – 3955)/2013 dated 21st November 2013, 18-CWR (3956 – 4004) dated 22nd November 2013, 18-CWR (4005 – 4050)/2013 dated 25th November 2013 and 18-CWR (4051 – 4083) dated 26th November 2013 in pursuance of Regulation 18 of the Cost and Works Accountants Regulations, 1959 that in exercise of the powers conferred by Regulation 17 of the said Regulations, the Council of the Institute of Cost Accountants of India has restored to the Register of Members, the names of members, details of which are uploaded on the Institute’s website www.icmai.in
86 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in SURVEY
THE MANAGEMENT ACCOUNTANT STUDY ON INDIA’S COST EFFICIENT BANKS 2013
26 public sector banks and 20 private sector banks in India operating in 2011-12 and 2012-13 were selected for the study
he present research study makes an effort to • Frontier defines the (observed) efficient trade-off among rank Indian domestic commercial banks on the inputs and outputs within a set of DMUs. basis of cost efficiency. Cost efficiency may be • Relative distance to the frontier defines efficiency. achieved when a firm finds a combination of in- • DMUs on the frontier are efficient and DMUs off the Tputs that is processed to produce the desired outputs at the frontier are inefficient. minimum cost. It may be defined as the ratio of minimum • Nearest point on frontier defines an efficient hypothetical costs to actual costs for a given output vector computed by DMU of the inefficient DMUs. measuring the distance of its observed (cost) point from an idealised cost frontier (Sinha et al, 2013).We measure cost Strengths of DEA model efficiency of each of the select Indian public and private • DEA produces a single score for each unit rather than sector banks for the year 2011-12 and 2012-13 using a very population average, which makes the comparison easy. popular and relevant methodology of “Data Envelopment DMUs are directly compared against a peer or combi- Analysis (DEA)” technique. nation of peers. • Its main strength lies in its ability to handle multiple in- Methodology in detail puts and outputs situation effectively i.e. to capture the Data Envelopment Analysis (DEA) multidimensional nature (of inputs/outputs) in the pro- DEA is a linear programming based technique for meas- duction process which is the prevalent characteristics of uring relative efficiencies of a homogenous set of decision many units under evaluation. making units (DMUs) in the presence of multiple input and • It places no restrictions on the functional form of the pro- output factors. DEA technique was inroduced by Charnes et duction relationship. That is it doesn’t require an assump- al, in the year 1978 in the operation research. tion of a functional form relating inputs to outputs. • DEA modelling allows the analyst to select inputs and DEA at a glance outputs in accordance with a managerial focus. • DEA constructs an efficient frontier by yielding a piece- • Furthermore, the technique works with variables of dif- wise linear production surface i.e., identifying best prac- ferent units (units invariance) without the need for tice DMU(s) from the identical inputs and outputs data standardization. There is as such no limit to the number set available from the DMUs under evaluation. of inputs and outputs. This is not possible through tradi- • Frontier defines multiple inputs and multiple outputs tional ratio analysis. productivity • There is no requirement for any a priori views or in-
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Box 1 Input Variables Output Variables 1. Fixed Assets as Physical Capital 1. Interest Income 2. Number of employees as Labour 2. Non-interest Income 3. Loanable Fund (Deposits + Borrowings) Prices of Inputs: 1. Price of Physical Capital = (Rent, taxes, lighting + Printing and Stationary + Depreciation on Bank’s property + Repairs and maintenance + Insurance) / Fixed Assets 2. Price of Labour = Payment to and provisions for employees / No. of Employees 3. Price of Loanable Fund = (Interest on deposit + Interest on Borrowing) / Loanable Fund
Table1:Cost-based Efficiency Scores and Ranking of Public Sector Table2: Cost-based Efficiency Scores and Ranking of Private Sector Banks Banks SL No Banks 2013 2012 Sl No Banks 2013 2012 Score Rank Score Rank Score Rank Score Rank 1 Punjab National Bank 1 1 0.999 3 1 HDFC Bank 1 1 1 1 2 State Bank of India 1 2 1 2 2 Axis Bank 1 2 1 2 3 Bank of Baroda 0.998 3 1 1 3 Jammu & Kashmir Bank 0.985 3 0.985 3 4 State Bank of Bikaner & 0.983 4 0.971 6 4 Tamilnad Mercantile Bank 0.946 4 0.925 6 Jaipur 5 ICICI Bank 0.944 5 0.913 8 5 UCO Bank 0.975 5 0.931 17 6 Nainital Bank 0.932 6 0.97 4 6 State Bank of Hyderabad 0.974 6 0.959 9 7 Kotak Mahindra Bank 0.926 7 0.917 7 7 State Bank of Mysore 0.973 7 0.933 16 8 Bank of India 0.971 8 0.938 13 8 Federal Bank 0.893 8 0.942 5 9 Syndicate Bank 0.967 9 0.965 8 9 IndusInd Bank 0.891 9 0.894 10 10 Union Bank of India 0.965 10 0.957 10 10 City Union Bank 0.881 10 0.896 9 11 Andhra Bank 0.964 11 0.986 5 11 Yes Bank 0.878 11 0.871 13 12 Bank of Maharashtra 0.962 12 0.936 14 12 Karur Vysya Bank 0.87 12 0.886 11 13 Indian Bank 0.956 13 0.998 4 13 South Indian Bank 0.869 13 0.867 14 14 Dena Bank 0.953 14 0.955 11 14 ING Vysya Bank 0.838 14 0.815 17 15 United Bank of India 0.949 15 0.95 12 15 Karnataka Bank 0.829 15 0.819 16 16 Oriental Bank of Commerce 0.946 16 0.929 18 16 Ratnakar Bank 0.816 16 0.879 12 17 IDBI Bank Ltd. 0.942 17 0.896 24 17 Development Credit Bank 0.815 17 0.791 18 18 Allahabad Bank 0.936 18 0.97 7 18 Lakshmi Vilas Bank 0.813 18 0.831 15 19 Corporation Bank 0.934 19 0.923 19 19 Catholic Syrian Bank 0.771 19 0.775 19 20 State Bank of Patiala 0.925 20 0.936 15 20 Dhanlaxmi Bank 0.742 20 0.685 20 21 Indian Overseas Bank 0.916 21 0.911 20
22 State Bank of Travancore 0.914 22 0.908 21 formation regarding the assessment of the efficiency of 23 Canara Bank 0.905 23 0.9 22 DMUs. The weights for outputs and inputs are obtained 24 Central Bank of India 0.9 24 0.884 25 by calculating the DEA models, rather than being given 25 Punjab and Sind Bank 0.893 25 0.858 26 artificially. • Another advantage of DEA that attracts analysts and man- 26 Vijaya Bank 0.89 26 0.898 23 agement is its ability to identify the potential improve-
88 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in EFFICIENCIES WERE ESTIMATED CONSIDERING TWO SEPARATE SAMPLES OF PUBLIC AND PRIVATE BANKS FOR GIVING MORE EMPHASIS ON THE CRITERIA OF HOMOGENEITY CONDITION
ment for inefficient units by providing both the sources How the banks are ranked and the amount of inefficiency. Estimated cost efficiency scores clearly distingush the • One could not only arrive at a conclusion about the tech- select banks into two groups viz. Efficient banks hav- nology efficiency, but also calculate the economic effi- ing score equal to 1 and inefficienct banks having score ciency, allocative efficiency and pure technology efficien- less than 1. It is not a problem for ranking of inefficient cy, which makes it possible to conduct a comprehensive banks as because of their different scores. For ranking evaluation and should be regarded as a comprehensive of efficient ones we follow their frequency count in re- assessment index of achievements. frence set.The DMUs (here banks) which provide the best practice of input utilization form a reference set Selection of Input and Output Variables of the inefficient one/ ones are called “Peer DMUs”. The most challenging task to the researchers for estimating Magnitude of frequency in reference sets measures the efficiency of banks through DEA methodology is to select extent of robustness of efficient banks relative to other appropriate and relevant inputs and outputs. The choice efficient banks. In other words, higher the frequency the of inputs and outputs largely affects the derived efficiency more robust it is. Here, efficiency scores are measured us- level. In the context of banking efficiency measurement, ing the new cost efficiency approach suggested by Tone there are mainly two approaches to deal with this problem: (2002). Production Approach and Intermediation Approach. The main difference between these two approaches is the use of References deposit as input or output. Berger and Humphrey (1997) 1. Banker, R. D., Charnes, A., & Cooper, W. W. (1984), ‘Some suggested that intermediation approach is best suited for models for estimating technical and scale inefficiencies in data en- analyzing bank level efficiency where production approach velopment analysis’, Management Science, 30(9), 1078-1092. for branch level efficiency. Hence, the present study adopts 2. Charnes, Cooper and Rhodes, ‘Measuring the efficiency of de- Intermediation Approach for selecting input and output cision making units’, European Journal of Operational Research, variables for estimating bank level cost efficiency. 12 (1978), 429-444. All the variables are measured in values (rupees in mil- 3. Farrell M.J. (1957), ‘The measurement of productive efficien- lions) except Number of Employees in actual number. cy’, J.R. Statis. Soc. Series A 120, 253-281. 4. Tone, K. (2002), ‘A strange case of the cost and allocative effi- Sample banks ciencies in DEA’, Journal of the Operational Research Society, The present study selects 26 public sector banks and 20 53, 1225-1231. private sector banks in India operating in 2011-12 and 5. Tone, K and B K Sahoo, 2005, ‘Evaluating Cost Efficiency 2012-13. Efficiencies are estimated considering two sep- and Returns to Scale in the Life Insurance Corporation of India arate samples of public and private banks for giving more Using Data Envelopment Analysis’, Socio-Economic Planning emphasis on the criteria of homogeneity condition. Sciences, 39, 261-285. 6. Sinha, R P and B Chatterjee, ‘Are Indian Life Insurance Data source Companies Cost Efficient?’, Accessed on 27/12/2013, All the data are annual and secondary in nature. Annual Available at http://www.igidr.ac.in/conf/oldmoney/mfc-11/ bank level data are obtained from the published annual Sinha_Rampratap.pdf accounts (Balance Sheet and P&L Account) in Annual Reports of the individual banks, collected mainly from The research study was conducted by Dr. Debaprosanna Nandy, the ‘Statistical Tables relating to Banks in India’ and ‘Re- Director (Research & Journal), The Institute of Cost Accountants of port on Trend and Progress of Banks in India’ available India, Dr. Manas Kr. Baidya, Malda College, Malda and the Research on the official website of Reserve Bank of India (http:// team of the Institute. rbi.org.in). [email protected]; [email protected]
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 89 BOOK REVIEW
Well written with international financing exposure in diversified areas
In Part-II, the author has put forward the current events of the foreign exchange related issues in global perspective like reserves, theories, rates projection, cur- rency options and futures, SWAP, and financial deriva- tives markets. In Part-III, the author deals with various aspects of for- eign exchange risk exposure, information system, and ex- change rate projection both techniques and management. In Part-IV, the author explores and explains the policy of international trade financing, money market in global perspective, Eurocurrency market, international banking and its reforms. In Part-V, the author has discussed the strategic areas of foreign investment portfolio agreements and its capital International Financial Management flows in India, economics and politics of MNCs, multi- (Text and Cases) By V. K. Vhalla (ISBN 81-219-4291-8) national capital budgeting and policy objectives of SWFs S. Chand Publishing, New Delhi 1st Edn. (2014) in Indian perspective. Pages 1073, Price Rs.800 In Part-VI, the author has presented us in a nutshell in the most fascinating manner a lucid analysis of changing pattern of global corporate long term financing, cost of he financial globalisation is a vehicle for econom- capital and capital structure, changing IFRS and finan- ic growth and development. The globe’s finan- cial risk analysis and management. The author also covers Tcial markets and capital markets have practised a special topics such as tax policy and debt financing both remarkable augment in globalisation in recent past. The global tax neutrality and national welfare perspectives. speediest increase has been qualified by advance econ- Finally, the book also incorporates glossary of impor- omies, but emerging markets and developing countries tant terms, a complete bibliography and suggested read- have also become more financially incorporated world- ings highlights the efforts undertaken in compiling this wide. The new millennium is likely to pose new chal- magnum composition. lenges for the international financial managers as the de- Hope this valued edition which is intended for the un- mand for investment capital for the new entrants into the der graduate and post graduate students of Business Ad- international market economy is growing. ministration and Business Economics including profes- This book is the first all-inclusive prized edition and sional courses will benefit even researchers, scholars, well written text book with international financing ex- faculties and executives in corporate houses all over the posure in diversified areas in international business both country and abroad. at macro and micro level. The volume is divided into 41 Chapters under 6 Parts with a rational approach. The Dr. Parimal Kr. Sen, Associate Professor (WBES) book discusses the various aspects of international finan- Goenka College of Commerce & Business Administration, Kolkata cial management with text and the problems and also [email protected] incorporates some case studies for better understanding of the concept. Notice In Part-I, the author has placed an overview and dis- CD of List of Members, 2013 will be made available for sale to the cussed in detail about international financial and monito- Members at a price of Rs.100/- per copy. Members interested to ry system, global liquidity, financial globalisation includ- procure the same may remit Rs.100/- by Demand Draft in favour of “The Institute of Cost Accountants of India”, payable at Kolkata, ing financial crisis and the various aspects of international addressed to the Secretary, The Institute of Cost Accountants of India. economic linkages.
90 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in
THE INSTITUTE OF COST ACCOUNTANTS OF INDIA (STATUTORY BODY UNDER AN ACT OF PARLIAMENT) Brochure of IS Audit and Control
The Vision These domains are divided into major topic areas, and subtopics are CMAs are preferred finance professionals who provide the financial provided within each topic area, along with the number of contact hours leadership in enterprises across the globe. needed to adequately cover the topic, which total 250 hours. The Domains One of the objectives of the institute is “To develop the professional body are: of members and equip them fully to discharge their functions and fulfil the • The Process of auditing information systems objectives of the Institute in the context of providing financial leadership of • Governance and management of IT enterprises globally.” • Information systems acquisition, development and implementation • Information systems operations, maintenance and support The Institute constantly endeavours to enable its members upgrade their • Protection of information assets competencies and skills to provide management accountancy services to commercial and not-for-profit enterprises to enable them to adequately Benefits to Members: The ISACA model curriculum entitles the programme address new challenges in a dynamic environment in which they operate. to be posted on the ISACA web site, and graduates of the programme shall qualify for one year of work experience toward the CISA certification. ICAI IS Audit and Control members would be entitled to two years of further credit. Therefore, of the The Programme total requirement of five years of work experience in the IS Audit Domain, This is a Certification programme of the Institute. The Programme adopts the members successfully undergoing this course would need only two more curriculum of ISACA and seeks their help in choosing the right faculty and years of relevant experience. The course curriculum would give them the examiners. ISACA (Information Systems Audit and Control Association) – required technical impetus and exposure to successfully complete the is an international professional association focused on IS Audit, IS Security, remaining two years of training requirement. IT Governance and IT Risk Management. It is envisioned that the contact hours would typically be in some type of classroom, but the model is designed so that the contact could be Raison d’être of the Programme: Post liberalization, India has chosen the accomplished through other education delivery methods, including distance path of market-driven economy. The way of doing business has undergone learning programs. a paradigm change, thanks to the technological changes, and constantly changing the customers’ aspirations, geographical boundaries, and regulatory environment. Duration One Year The Revolution in the realm of computing has brought in its wake, speed, flexibility and mobility. Along with the Risk of losing, stealing, and Pedagogy manipulating the precious data has increased by many times.In the days Self learning mode in the form of periodical contact sessions and web of click and portal, the emphasis is on online transactions, divorcing in a based learning through webinars large way, the pen and paper mode. These developments no doubt have susceptibilities and it is a constant challenge for an Auditor to overcome Scheme of Evaluation: and ensure protection of the business interests of the Auditor and the client. Since the course requires a dedicated and disciplined approach, the The above revolution has posed serious challenges to Accountants and evaluation is being carried on periodically and topic wise. The IT tools Audit professionals. Today’s business enterprises are totally automated will be used. Weekly test are being contemplated as part of continuous with very few manual dependencies. Processes and controls are in-built evaluation in modern technologies and therefore need to be reviewed with a fresh perspective by using latest tools and techniques. Examination With duration of six months, examinations will be conducted twice in a The Programme aims to build capabilities among the members of the year. Examinations will be conducted by the Examination Department of Institute to take those challenges and to handle challenges in auditing in an the Institute. IT environment using IT tools. The Pattern of Examination ISACA The Question Paper will be Objective with multiple choice questions. ISACA, is a non-profit global association that was formed, and continues to exist today, to meet the unique and diverse technology needs of the The Eligibility Criteria continually developing IT field. In an industry in which change is constant, Only members of the Institute are eligible for registration for the programme. ISACA has moved with agility and speed to bridge the needs of the international business community and the IT control community Registration Process Registration will be online and the link will be provided to applicants. For The Curriculum registrations please visit the Institute’s web site www.icmai.in The Institute has adopted the ISACA Model curriculum for IS audit and control (3rd edition). Fee Rs.20,000 (Twenty thousand rupees only). The fee does not include The topics covered by the model are grouped into five content domains. examination fee and the cost of course material, if any.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 99 INSTITUTE NEWS
Eastern India Regional Council The Region had organised members’ meet on November 30, 2013 & December 7, 2013 to discuss issues related to CMA profession. It had also organised a member’s programme on Project Finance & Appraisal. Mr Manoj Parida & Shri Debasish Chatterjee deliberated on various issues of project financing and the criteria have to be fulfilled for sanction of a project. The region had participated in career fair entitled ‘Career for you’ organised by M.C. Kejriwal Vidyapeeth, Liluah. A team comprising of CMA P.K. Sikdar with other officials of the region visited the fair to share the relevance of cost as a subject and the prospects of career option of CMA to the students. On December 9, 2013 organised a career counselling programme at Barrackpore Rastraguru Surendranath College where CMA Bibekananda Mukhopadhya & CMA Chiranjib Das shared the prospect of CMA Profession to the students.
he Chapter had organized a panel discussion on draft Cuttack-Bhubaneswar Chapter of Cost Accountants TCompanies Cost Records and Cost Audit Rules, 2013 on November 24, 2013. CMA S.C. Mohanty, President of the Institute addressed the gathering on the occasion. He highlighted in detail the changes made in the draft Compa- nies Cost Records and Cost Audit Rules, 2013 issued by the Ministry of Corporate Affairs and sought suggestions from the Practicing Cost Accountants and other members pres- ent in the panel discussion. CMA C.K. Biswal, Chairman, coaching committee, CMA S.B. Samal, Chairman, PD, were among the dignitaries who also addressed the occasion. The practicing cost accountants, members and managing com- mittee members had made a detailed discussion and also expressed their dissatisfaction on the changes made in the draft Companies Cost Records and Cost Audit Rules, 2013 and would intimate their valuable suggestions/views and re- action to the Ministry of Corporate Affairs for the benefit and betterment of both the profession and professionals. Southern India Regional Council Hyderabad Chapter of Cost Accountants
he Chapter organized a seminar on the New Com- Tpanies Act 2013 and Draft Rules on October 4, 2013. The programme held throughout the day aimed at initiating the basic understanding of the new act. It also highlighted all important changes relating to provisions and made detailed analysis on selected subjects impor- tant to finance professionals. Dr. CMA A.S Durga Prasad, Vice President of the Institute delivered the inaugural ad- dress and Shri V.M.V Nawal Kishore, Director, office of the Principal Director of Commercial Audit & Ex-officio member of Audit Board, Hyderabad was the chief guest of the seminar. The Chapter organized an industrial trip on October 19, 2013 to Usha International Limited, Hy- derabad, a Siddharth Shriram Group company, which is
100 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in one of India’s leading consumer durable manufacturing & were attended by several practicing cost accountants who marketing companies. Member and Faculty at the chapter, delivered their valuable lectures on various topics. On CMA Chandra Sekhar coordinated the trip. Since Usha November 16, 2013, CMA N. Krishnan delivered a brief International has an enviable distribution network spread speech on CAS - 4, i.e. Cost of Production for Captive across the length and breadth of the country, the students Consumption which according to him is one of the re- were fortunate to get an overview of the same. On the munerative areas for Cost and Management Accountants. same day, the Chapter organized a programme on ‘Suc- On November 23, 2013 a career counseling programme cess Story of Hyderabad Metro Rail Project’ which was was conducted by the Chapter at Indian Institute of Man- facilitated by CMA D Surya Prakasam, General Manag- agement & Commerce, Kairtabad where CMA A. Vijay er (F&A), Hyderabad Metro Rail Ltd and also Manag- Kiran, Secretary & Chairman-Coaching Administra- ing Committee member of the Chapter. A workshop on tion briefly explained about the institutes’ courses to the ‘Case Analysis and Case Writing for Executives’ was held on October 27, 2013. Prof. K.V. Achalapathi, Department students. An emergency meeting was conducted by the of Commerce, Osmania University and Asst. Prof. Dr. A. Chapter on November 24, 2013 for all the practitioners Patrik were the speakers of the workshop. On 22nd, 28th where it has been elaborated on new Draft Rules on Cost & 29th of October, 2013 the Chapter organized several Accounting and Cost Audit Rules 2013 notified by the interactive sessions to collect the suggestions and com- Ministry of Corporate Affairs since it drastically reduced ments on 1st, 2nd & 3rd tranche of Draft Rules under the scope for cost audit and cost compliance. CMA D.L.S. the Companies Act, 2013 by CMA Dr. P.V.S. Jagan Mo- Sreshti, Central Council Member of the Institute presid- han Rao, Central Council Member, of the Institute. These ed over the meeting. The Vice President of the Institute, various investor awareness programmes were conducted CMA Dr. A.S. Durga Prasad had discussed with the action by the Chapters in different institutes and colleges on dif- plan members were advised to send their feedback on the ferent dates of November and December, 2013, which new rules in large numbers.
Coimbatore Chapter of Cost Accountants
PDP meeting on ‘Entrepreneuri- Aal Success’ was conducted on No- vember 8, 2013 by the chapter. Dr. G. Loganathan, proprietor, the Imperial Tex- tiles Buying House, Tirupur shared his valuable experiences with the members of the chapter. On November 14, 2013, the Chairman of the Coimbatore Chap- ter had arranged a meeting for students, addressed by the Central Council Mem- ber of the Institute, CMA Dr. P.V.S. Jagan Mohan Rao at the chapter hall, where a brief on Companies Act 2013, had been discussed. All the students participated en- thusiastically and found the meeting very useful. CS. M.R. Thiagarajan, practicing Company Secretary gave a brief lecture on Companies Act, 2013 covering im- portant changes of the Act. A members’ meet was also organized by the chapter to discuss on latest draft on Cost Account- ing Records and Cost Audit Rules on November 26, 2013. A detailed discussion had been made and it was decided to meet industries to get support and suggestions.
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 101 INSTITUTE NEWS
Mysore chapter of Cost Accountants n November 17, 2013, the chapter arranged a semi- Onar on Impact of Indirect Taxation on Manufactur- ing Industries. The seminar was inaugurated by Mr. Pradeep Swaminathan, Director Finance, BEML Ltd, and presided over by CMA P. Raju Iyer, Chairman, SIRC. The session was handled by resource persons, Mr. K. Bhaskar, Director, Indirect Tax and Mrs. Rashmi Somasekhara, Manager, Indi- rect Tax, from M/s Deloitte, Bangalore, where they made a detailed discussion on the Service Tax issues. More than 60 participants attended the workshop where in an open forum of participants interacted with the resource persons. CMA T.L. Sangameswaran, Chairman of the chapter welcomed the gathering while CMA Purushothaman expressed the vote of thanks.
Trivandrum Chapter of Cost Accountants
n November 24, 2013, a Professional Development sided over the meeting and he mentioned that sharing of OProgramme had been conducted by the chapter. National Wealth to, the least and last of the society is the The topic was on Financial Inclusions and the guest basic principle valued in Financial Inclusions and CMAs speaker was Mr. Lazar Thomas Mani, Associate Professor, have dominant role in achieving this social obligation. The Department of Commerce, St. Albert’s college, Eranaku- programme was very lively and many students participat- lam. CMA Joseph Louis, Chairman of the chapter pre- ed in the session.
Visakhaptnam Chapter of Cost Accountants
he chapter organised a seminar on Soft Skills Tfor students on December 8, 2013. CMA Tanakala Harinarayana, secretary of the chapter welcomed the students and invited dignitaries on the dais. CMA Prakash Uppalapati, chairman of the Chapter addressed the students and informed them the importance of soft skills in their day to day professional life. Chief Guest Sri K.V. Raju, Executive Director (Operations) Hospira Health Care India Pvt. Limited, while addressing the stu- dents informed them of the requirement of pro- fessional cost accountants in the industry. He said the cost accountants’ services are very much re- quired by all the industries, where with their an- alytical skills they can involve in decision making process. Dr. Chitra Krishnan, associate professor in Andhra University, college of engineering en- lightened the students on the requirement of soft skills for their growth in the profession. CMA Ch. Sundara Murthy, chairman, Coaching Adminis- tration Committee of the chapter proposed vote of thanks at the end.
102 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in Western India Regional Council
and other chapter members briefed the members about the Nagpur Chapter of Cost Accountants Draft Rules & appealed to the members to protest against the same. A press conference was called by the chapter in which Chairman CMA R. K. Deodhar did the briefing to the press reporters about the Draft Rules & explained as to how these Rules were not in the interest of the professionals & the society at large.
he chapter organised a workshop on Service Tax at its Tpremises recently, for its members. The chairman of the chapter, CMA N.P. Viswanathan, working as Chief Manager (F) with Western Coalfields Ltd., a subsidiary of Coal In- dia Ltd. and looking after its Corporate Indirect Taxation Cell, was the facilitator who took the members through his slide show of the passage of the Service Tax from its evo- lution to the latest voluntary compliance encouragement scheme, explaining with illustration various provisions of Pimpri-Chinchwad-Akurdi Chapter the Tax. Members in large numbers attended the workshop of Cost Accountants and made it very lively by raising relevant queries which were deftly replied to by the speaker. The workshop was prominently attended by Dr. Shreehari Chava, CMA P.V. Bhattad, Central Council Member of the Institute, CMA G.R. Paliwal, Regional Council Member, CMA Shriram Mahankaliwar, Vice-Chairman, CMA Vivek Chawan, Sec- retary and other members of the Managing Committee of the chapter.
Nasik Ojhar Chapter of Cost Accountants
he chapter had taken lots of initiatives in protesting the TDraft Rules for Cost Records & Cost Audit issued by Ministry of Company Affairs and had conducted meetings of students and members regarding protest against Draft Rules for Cost Records and Cost Audit. Several meetings were organized by the chapter on different dates of No- vember & December raising a concern on the issue and to he chapter organized a seminar on Emerging op- find probable solutions out of it. Chairman of the chapter, Tportunities to CMAs as per Companies Act 2013 CMA R.K. Deodhar, Vice Chairman CMA S.W. Parnerkar, on November 27, 2013. CMA Laxman Pawar, Chair-
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man of the chapter presided over the function and gave a brief background of the Companies Act 2013. The guest speaker was CMA Rakesh Singh, Immediate Past President of the Institute, who deliberated a speech regarding the opportunities available to CMAs as per the Act. CMA B M Sharma, Past President of the In- stitute gracing the occasion requested the members of the chapter to give positive feedback to MCA regarding draft rules.
Bhopal Chapter of Cost Accountants
good interaction with the facilitator. A practioners’ meet was held on November 15, 2013 and it was addressed by CMA Sanjay Bhargave, CMA Amit Apte, Central Coun- cil Members and CMA Neeraj Joshi, Regional Council Member. A total of 21 members attended the meet when various subjects of mutual interest were discussed. On No- vember 25, 2013, a members’ meet to discuss the draft Cost Audit Rules by MCA was organized by the chapter, which was attended by 61 members. The members actively voiced there objections and suggestions on the draft rules. Subse- quently, a dharna was organized on November 27, 2013 by WIRC in protest to draft Cost Audit rules.
he chapter organized a seminar on Professional Op- Tportunities and Challenges for Cost Accountants SPECIAL HONOUR in Madhya Pradesh, on October 27, 2013. The seminar Congratulations to Prof. Bhabatosh was inaugurated by Chief Guest, CMA Ashish P. Thatte, Banerjee, a fellow member of the Chairman, WIRC, who highlighted the professional av- Institute of Cost Accountants of India and enues available before the Cost Accountants and the in- President, IAA Foundation and former ternal & external threats thereto. He also briefed on the Professor of Commerce and Dean of highlights of the Draft Rules under Companies Act 2013. Commerce and Management, University There were two sessions held in the seminar. CMA S. M. of Calcutta, on receiving the ‘Eminent Ramanathan, chairman of the chapter delivered the wel- Teacher’ award from the University of come address and CMA Biswabandhu Mohapatra, secre- Calcutta at its Annual Convocation on 29 November 2013 for tary of the chapter briefed about the academic activities his outstanding contribution to teaching and research for over of the chapter. two decades. He had also served the Institute as Director of Research during 1984-85. Pune Chapter of Cost Accountants
he chapter organized a CEP programme on ‘Enhanc- Quality articles invited Ting the vision- imperatives for Management Account- We invite quality articles and case studies from members ant of the Modern Era’, with special reference to the hap- in the industry with relevance to Cost and Management penings in global finance, on November 9, 2013. It was Accountancy, Finance, Management, and Taxation for conducted by Mr. S. Kalidas, a finance and forex expert, publication in the journal. Articles accompanied by colour who provided a very lucid perspective of the same. The photographs of the author can be sent to: [email protected] programme was attended by twelve members who had
104 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in ON THE SIDE
many companies which have them. Sooner or later competition will oblige those who still lag behind to follow suit – NEVILLE N. WADIA, Industrialist Cost Accounting is a specialised off-shoot of general accounting… You are best fitted to advise the managements on the most effective way of obtaining the maximum production at the minimum cost… The scope for skilled Cost Accountants is unlimited in Quotations on our developing economy – D. SANJIVAYYA, former Union Minister for Industry, former Minister of Labour and Employment. The I.C.W.A. is performing a very useful task CMAs in training a body of men for discharging a highly specialised and important work in the field of industry and commerce… In this matter of economic utilisation of resources the Cost Accountants play a very vital role – A. K. ROY, former Comptroller & Auditor General of India It is hardly necessary for me to emphasise the importance of this profession… The Cost Accountant keeps a vigilant eye over the various processes… it is he who finishes Yesterday’s book-keepers had been converted by the essential data required by managements… Institute into members of the management team of for assessing the utilization of man-power and machinery today… The Cost Accountant has an important role to – NITYANAND KANUNGO, former Union Minister for play in the cause of the nation… The Govt. should extend Commerce, former Governor of Gujarat, former Governor of Bihar reasonable patronage to the I.C.W.A of India because it The profession of Cost Accountancy is without doubt one was very important for putting the national economy on a of the most valuable contributions to the cause of industrial sound footing – JAGJIVAN RAM, former Minister for Food, development made by modern methods of training… Agriculture, Commodity Development & Co-operation, Former Cost Accountant is a friend, philosopher and guide of the Minister of Communications and Transport, Former Minister of management. – MORARJI DESAI, former Prime Minister of Defence India The Cost Accountant has a positive role… To my mind, In respect of corporate bodies, while financial accounting therefore, a Cost Accountant has a superior place. I do not deals mainly with Company Law, Income Tax and allied want to be gheraoed by non-cost accountants. But to my matters, the Cost Accountant is primarily concerned \mind the Cost Accountant has a superior place than the with basic problems of industry such as Cost Control, ordinary Accountant or Auditor as far as the promotion management and production control, price fixation etc. of economic development is concerned – DR. V. K. R. From the stand-point of entrepreneurs an accountant V. RAO, former Planning Adviser Food Department, former should yield ready information for decision making – R. N. Union Cabinet Minister for Transport and Shipping, former Union SINGH DEO, former Chief Minister of Odisha Cabinet Minister for Education & Youth Services, former Director, Institute for Social and Economic Change, Bangalore, former The purpose of Cost Accounting is again not a historical National Professor, Government of India research; it is an intelligent analysis… a technical analysis, of the reasons for the high costs, of pointing out where waste The ability of Cost Accounting Departments to reveal the occurs, where economies are possible, and not merely from true state of affairs and to guide management in the right financial accounts to find out what the costs are – A. K. direction has been adequately illustrated in the results of ROY, former Comptroller & Auditor of General
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 105 CMA DOSSIER
A directory of some research papers on Cost Competitiveness that appeared in various journals/periodicals/magazines across the world is presented below for the reference of CMA DOSSIER readers. The articles are available at the link provided next to them.
Name of The Topic Author(s) Publication and date Link
Rewheel http://rewheel.fi/downloads/rewheel_ Christmas Price Hike In The Greek Rewheel Flash Report – December 2013 One Step Ahead flash_report_dec_2013_greek_ Protected Telecom Oligopoly December, 2013 protected_oligopoly_price_hike.pdf Agnès Bénassy Quéré Lecercledeseconomistes. http://www.lecercledeseconomistes.asso. Lost In Competitiveness Cercle & Des & Économistes Asso. Fr, December, 2013 fr/img/pdf/agne_s_be_nassy-que_re_.pdf Shipbuilding: Regulatory & Policy www.dsir.gov.in http://www.dsir.gov.in/reports/isr1/ D & B Benchmarking December, 2013 shipping/9_7.pdf http://economic-research.bnpparibas. Competitiveness, “A Dangerous Bnp Paribas Eco Week Thibault Mercier com/views/displaypublication. Obsession”? December 2013 aspx?type=document&idpdf=23326 Brendan Coates, Dougal China’s Prospects For Export-Driven East Asia Forum Economics, Politics And Public Horton And Lachlan http://cei.56.org.cn/doc/ Growth Policy In East Asia And The Pacific Mcnamee, Australian Treasury jjnk01/2013041119531.pdf March, 2013 A Team Of The Working Group On Econometric Competitiveness And External Occasional Paper Series No http://www.ecb.europa.eu/pub/pdf/ Modelling Of The European System Of Central Imbalances Within The Euro Area 139 / December 2012 scpops/ecbocp139.pdf Banks Compositional Effects on Productivity, Bruegel Policy Contribution https://www.econstor.eu/dspace/ Zsolt Darvas Labour Cost And Export Adjustments June 2012 bitstream/10419/72099/1/718151070.pdf Can Governments Reverse First-Mover Economics Bulletin http://www.accessecon.com/pubs/ Armando Jose Garcia Pires Advantages of Foreign Competitors? May, 2012 eb/2012/volume32/eb-12-v32-i2-p147.pdf The Cost Competitiveness of European Enterprise and Industry Industry In The Globalisation Era - http://edz.bib.uni-mannheim.de/daten/ Richard Lewney Jörg Claussen Graham Hay Directorate – General Empirical Evidence on the Basis of edz-h/gdb/12/2012_iperp_unit_labout_ Evripidis Kyriakou Günther Vieweg European Commission Relative Unit Labour Costs (ULC) at costs_en.pdf April, 2012 Sectoral Level Managing Global Financial Flows at Institute for Studies in The Cost of National Autonomy China Sunanda Sen Industrial Development March, http://58.68.105.147/pdf/wp1201.pdf and India 2012 Urban Persson and Sven Werner School of Applied Energy Volume 88, Heat Distribution and The Future http://www.sciencedirect.com/science/ Business And Engineering, Halmstad University, Issue 3, March 2011, Pages Competitiveness of District Heating article/pii/s0306261910003855 Po Box 823, Se-30118 Halmstad, Sweden 568–576 Francesco Bogliacinoa, Mario Piantac European Structural Change and Commission, Joint Research Center - Institute Engines of Growth. Innovation and Economic Dynamics Volume http://www.sciencedirect.com/science/ For Perspective Technological Studies, Sevilla, Productivity in Industry Groups 22, Issue 1, February 2011, article/pii/s0954349x10000780 Spain Universidad Eafit And Rise Group, Pages 41–53 Medellin, Colombia University Of Urbino, Italy Grant Allana, Michelle Gilmartina, Peter Mcgregora, Kim Swalesb Fraser Of Allander Levelised Costs of Wave and Institute, Department Of Economics, University Tidal Energy in The UK: Cost Energy Policy Volume 39, Of Strathclyde, Uk Department Of Economics, http://www.sciencedirect.com/science/ Competitiveness and the Importance Issue 1, January 2011, Pages University Of Strathclyde, Uk Francesco article/pii/s0301421510006440 of “Banded” Renewable Obligation 23–39 Bogliacinoa, Mario Piantab, Universidad Eafit Certificates And Rise-Group, Medellin, Colombia and University of Urbino, Italy Innovation and Employment: A Francesco Bogliacinoa, Mario Piantab Research Policy Volume 39, http://www.sciencedirect.com/science/ Reinvestigation Using Revised Pavitt Universidad EAFIT and RISE-group, Medellin, Issue 6, July 2010, Pages article/pii/s0048733310000739 Classes Colombia University of Urbino, Italy 799–809 Strategies for 2nd Generation Biofuels Göran Berndesa, Julia Hanssona, Andrea Biomass and Bioenergy in EU – Co-Firing to Stimulate Egeskoga, Filip Johnssonb Department of Volume 34, Issue 2, February Feedstock Supply Development http://www.sciencedirect.com/science/ Energy and Environment, Division of Energy 2010, Pages 227–236 A and Process Integration to Improve article/pii/s0961953409001494 Technology, Chalmers University of Technology, Roadmap for Biofuels in Energy Efficiency and Economic Se-412 96 Göteborg, Sweden Europe Competitiveness Macroeconomic and Territorial Policies Regional Science Policy & http://onlinelibrary.wiley.com/doi/10.1111/ for Regional Competitiveness: An EU Roberto Camagni, Roberta Capello Practice Volume 2, Issue 1, j.1757-7802.2010.01016.x/abstract Perspective Pages 1–19, June 2010 Chen-Lung Yanga, Shu-Ping Lina, Ya- Hui Chana, Chwen Sheub, Department International Journal of Mediated Effect of Environmental of Technology Management, Chung-Hua Production Economics Volume http://www.sciencedirect.com/science/ Management on Manufacturing University, Hsin-Chu 300, Taiwan Department 123, Issue 1, January 2010, article/pii/s0925527309002916 Competitiveness: An Empirical Study of Management, Kansas State University, Pages 210–220 Manhattan, KS 66506, USA
106 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in ADMISSION TO MEMBERSHIP
The Institute of Cost Accountants of India M/8463 M/13927 Advancement To Fellowship Mr Kamlesh Zavery, BCOM HONS,FCMA Mr Rajendra Kumar Sahu, MCOM,FCMA Proprietor Kamlesh Zavery 1/1a, Vansittart Row A G M (Fin) Office Hindustan Aeronautics Limited Mezzanine Floor Room No. 1 Avionics Division, Korwa, Balanagar Date of Advancement: 11th December KOLKATA 700001 HYDERABAD 500042 2013 M/9533 M/14053 Mr Rama Devi Ramachandran, Mr Vikas Jain, BCOM HONS,ACA,FCMA M/2177 BCOM,ACA,FCMA General Manager (Finance Controller) Ranbaxy Mr Satya Pal Singh, MA,FCMA Plot No. 1531 `J` Block, 14th Street Annanagar Laboratories Ltd Plot No 89,90 Sector 32 Gurgaon Proprietor S P Singh & Co. C-012, Raheja CHENNAI 600040 GURGAON 122002 Atlantis, Sector - 31 & 32 A, GURGAON 122001 M/9621 M/14449 Mr Jayan Balakrishnan Kodappully, Mr Girja Shanker Gupta, MSC,FCMA M/2916 BCOM,CMA(USA),FCMA Chief Manager Punjab National Bank Hazrat Ganj Mr Manabendra Nath Mukherjee, MCOM,FCMA Sr Financial Controller Al Jaber Group Finance Aashiana Colony, Proprietor M Mukherjee & Co. 155/d, A.j.c. Bose Dept. Po Box 47742 LUCKNOW 226001 Road, P.o. Entally, ABU DHABI 47742 KOLKATA 700014 M/15012 M/10713 Mr Rabindra Kumar Mohapatra, BA HONS,FCMA M/5637 Mr Asutosh Mahapatra, MCOM,LLB,FCMA Joint General Manager/ Finance IRCON Mr Arunachalam Velliangiri, Manager (Costing) Birla Corporation Ltd. Unit : INTERNATIONAL LTD C 4 District Centre Saket BCOM,MBA,FCA,FCS,FCMA Birla Jute Mills, 24 Parganas (South) NEW DELHI 110017 Deputy Managing Director Tamil Nadu Newsprint BIRLAPUR 743318 & Papers Limited 67, Mount Road, Guindy M/15100 CHENNAI 600032 M/11327 Mr Shiba Prasanna Mukherjee, BCOM HONS,FCMA Mr Reddy Sudhakar Chinnareddivari, Group Manager - Treasury And Commercial M/5940 MCOM,FCMA Emirates Technology Co. L L C Post Box 8391 Mr S Kalyanaraman, BCOM,FCMA Proprietor C S Reddy & Associates No. 198, Ist DUBAI 008391 General Manager Bank of Baroda Baroda Floor, 5th Cross, 4th Main, Srinivasnagar, Bsk Ist Corporate Centre C 26, G Block Bandra Kurla Stage Complex Bandra (East) M/15233 BANGALORE 560050 Mr Tejinder Pal Singh, BCOM,FCMA MUMBAI 400051 Chief Financial Manager Bank of Baroda M/11373 (Botswana) Ltd. A. K. D. House, Plot No. 1108, M/6136 Mr Sahab Narain, MCOM,MBA,FCMA Queens Road, The Main Mall, Mr Rajesh Kumar Khurana, BA,LLB,ACS,FCMA Director Finance National Film Development GABARONE 21559 Advocate 153, Pocket - D, Mayur Vihar Phase-II, Corporation Limited Discovery Of India Building DELHI 110091 Nehru Centre, Dr. A.b. Road Worli M/15352 MUMBAI 400018 Mr Sontl Sreeram, BCOM,MBA,FCMA M/6562 Chief Manager Hindustan Aeronautics Ltd Mr Devinder Kumar, BCOM HONS,ACS,FCMA M/11909 Avionics Division, Balanagar Flat No. 612, Green Heavens, Sail C G H S Ltd., Mr S Rajagopal, BCOM,LLB,FCA,FCS,FCMA HYDERABAD 500015 Plot No. 35, Sector 4, Dwarka Phase I, Bldg. 11, Flat 202, Mantri Residency, Opp. NEW DELHI 110078 Meenakshi Temple, Bannergatta Road, M/15564 BANGALORE 560076 Mr Ved Prakash Arya, BCOM,FCMA M/6643 Vice President - Finance & Accounts Tafe Motors Mr Dhyan Swaroop Kapoor, BCOM,LLB,FCMA M/12901 & Tractors Ltd Plot No. 1 Sector D Raisen Flat No. 209 Shantivan Apartments 2A/244A, Mr A S Anshuman, MCOM,LLB,FCA,FCS,FCMA MANDIDEEP 462046 Azad Nagar Partner A.S. ANSHUMAN AND CO No. 603, KANPUR 208002 Benston A Wing Shirley Rajan Road Bandra West M/16242 Mumba Mr Anju Tyagi, BCOM HONS,B. ED,FCMA M/6900 MUMBAI 400050 Regional Manager Gold Plus Glass Ind. G-192 Mr Udaykumar Dharmaraj Bhamerkar, Prashant Vihar, Rohini DELHI 110085 MCOM,FCMA M/13281 D G M Finance & Accounts Larsen & Toubro Ltd A Mr Achal Kumar Sinha, BCOM,FCMA M/16245 -9/ A-10, M I DC AGM(F&A) Specrtum Power Generation Ltd. 7th Mr Udaya Babu Kotu, MCOM,FCMA AHMEDNAGAR 414111 Floor, Corporate Buliding Ambience Mall Nh-8 Accounts Officer (Costing) Hinduja Foundries Gurgaon Limited B - 15, I D A, Uppal M/7324 GURGAON 1122001 HYDERABAD 500039 Mr Narendra Kumar Bhola, BCOM HONS,LLB,FCMA M/13539 M/16324 Regional Director O/o Regional Director (Ser) Mr Vallentyne Vivek Raj Sekhar, BCOM,FCMA Mr Pramod Jain, BCOM HONS,FCA,FCS,FCMA M/O Corporate Affairs 2nd Floor, Kendriya Sadan Chief Finance Officer Cipy Polyurethanes Pvt Ltd Partner Lunawat & Co A-2/132,prateek Sultan Bazar Sultan Bazar, Koti T-127 Midc Bhosari Pune Apartments, Paschim Vihar HYDERABAD 500195 PUNE 411026 NEW DELHI 110063
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M/16495 M/22112 M/24604 Mr T Thangarajan, MCOM,LLB,ACS,BL,FCMA Mr Atul Mendiratta, BCOM Mr Shripad Shankar Bedarkar, MCOM,FCMA Senior Lecturer In Commerce Virudhunagar HONS,ACA,ACMA,FCMA Cost Accountant Shripad Shankar Bedarkar S Vellaichamy Nadar Polytechnic College Addl Chief Manager ( F ) Wapcos Limited 76 - House No. 299 Dattawadi Near Mahadev Rosalpatti C, Sector -18, Institutional Area Mandir VIRUDHUNAGAR 626001 GURGAON 122015 PUNE 411030
M/16501 M/22165 M/24619 Mr Jayant Verma, BE,FCMA Mr Pankaj Kumar Singh, BA HONS,FCMA Mr Naveen Gupta, MCOM,MBA,FCMA Accounts & Administrative Officer Jharkhand Superintending Engineer U P Power Corpotaion Avp - Finance Ask Property Investment Advisors Tribal Development Society Madhu Bazar Old Ltd 14th Floor Shakti Bhawan Extension Pvt Ltd F - 704, Nisarg Heaven, Mahavirnagar, Messo Office LUCKNOW 226001 Kandivali - West, CHAIBASA 833201 MUMBAI 400067 M/17281 M/22453 M/24702 Mr R Sivaprakasam, BSC,FCMA Mr Pediredla Uma Gandhi, MCOM,MBA,BL, Mr Vinod M, MS,MBA,M.PHIL,FCMA Plot No. 5 A & 5 B II Main Road Garden Manager (Finance) Hindustan Shipyard Ltd Assistant Chief (Finance) Central Electricity Woodroof Nagar Zamin Pallavaram Gandhigram Scindia Regulatory Commission, Chanderlok Building CHENNAI 600117 VISAKHAPATNAM 530005 36 Janpath NEW DELHI 110001 M/18565 M/22592 Mr Anan Ram Sahasrabuddhe, BCOM,FCMA Mr Dhananjay Kumar, MCOM,FCMA M/24720 Proprietor A R Sahasrabudhee & Associates C/o. Lalit Kumar Sharma, Panchwati Colony, Mr Vivek Ahuja, BCOM HONS,MBA,FCMA G-15, Parvati Apts. Second Floor, Opp Purti Civil Lines, ( Near Veena Prakash Hospital ), BIJNOR 246701 D G M ( I T/ S A P) Sms India Private Limited, Super Bazar Near Aath Rasta Square Laxmi 286, Udyog Vihar, Phase-ii, Nagar M/22859 GURGAON 122016 NAGPUR 440022 Mr Vikram Gupta, BCOM HONS,MBA,FCMA Manager (Finance) Wapcos Limited 76- C, M/24763 M/18615 Sector 18 Institutional Area Mr Manjula Gutti, BSC,LLB,FCMA Mr Dinesh Mathew Joseph, GURGAON 122015 Proprietor Manjula & Associates Hig-36, Phase BSC,CMA(USA),FCMA Vi, Kphb Colony, J N T U (P O) Kukatpally, Sr. Accounts Manager FAST RENT A CAR 3rd M/22894 HYDERABAD 500085 Floor, Adnif Bldg Corniche Road Liwa Street Mr Sutapalli Padma Raju, MCOM,FCMA ABU DHABI 6365 Accounts Manager Bscpl Infrastructures Ltd Bsc M/24928 C&c Jv Dfcc Railway Project Muthani Mohania Mr Kuchibhotla Padmakar, MCOM,FCMA M/18909 Kaimur Head - Finance & Legal Wipro Unza Vietnam Mr S Arasu, BSC,MBA,FCMA BHABUA 821109 Co. Ltd No. 7, Street No. 4, Vietnam Singapore E-plot No 10 I-cross Street Teachers Colony Industrial Park, Thuan An Town Binh Duong Vettuvankenni M/23226 Province CHENNAI 600115 Mr Venu Madhav Kalluru, DANANG 000000 BCOM,FCA,CPA(USA),FCMA Principal Consultant Genpact India 3rd Floor M/19352 M/25019 Cyber Gateway Hitec City Mr Periyaswamy Manoharan, Mr Radheshyam Mishra, BSC SECUNDERABAD 500081 BCOM,MBA,FCMA HONS,LLB,FCMA Sr. Accounts Officer Bharat Heavy Electricals M/23345 Sr. Manager (F&a) RSB Transmissions (I) Ltd Ltd, Trichy No. 12 Muthalagu Pillai St. Near Mr Remesh Kumar Kumarapillai Savithriamma, 48,Royal Residency VIP Colony IRC Village Bazaar Fort Trichy620008 Tamil Nadu BSC,FCMA BHUBANESWAR 751015 TRICHY 620008 Accounts Officer Kerala Tourism Development Corporation Limited Corporate Office, Mascot M/25125 M/19459 Square Mr Sandeep Pathak, BCOM Mr Rajesh Manubhai Modi, BCOM,FCMA THIRUVANANTHAPURAM 695033 HONS,LLB,ACA,FCS,FCMA J G M Essar Heavy Engineering Services (Essar Company Secretary Avantha Power & Projects I Ltd) Rockwell Building B/h. Cng M/23921 Infrastructure Limited 7th Floor, Vatika City Point Pump27 Km Surat Hazira Road Hazira Mr Tapash Paul, BCOM,FCMA M G Road Gurgaon SURAT 394270 Proprietor Tapash Paul & Associates 66, Bidhan GURGAON 122002 Road, Post Office Building, 1st Floor, SILIGURI 734001 M/25352 M/20517 Mr Shankar Srikantiah Muguru, BE,FCMA Mr Sudhanshu Sekhar Dash, MCOM,FCMA M/23969 Sr. Director - Innovation & Technology Anand Sr. Manager (F& A) Oil India Limited Vigilance Mr Lokesh Bhatia, MCOM,FCMA Automotive Limited Old HO Building, Spicer Department. Oil India Limited Plot No 19, Sector Manager - Finance & IT Woodward India Pvt Ltd India Ltd 29th Milestore, Pune Nashik Highway 16A Film City 23 / 6, Mathura Road Ballabgarh Village Kuruli Taluka Khed NOIDA 201301 FARIDABAD 121004 PUNE 410501 M/24056 M/20873 M/25900 Mr Yogesh Kumar Malik, BCOM,FCMA Mr Pratap Kumar Sahoo, BCOM,LLB,FCMA Assistant Manager Simplex Infrastructures Ltd Mr Suresh Babu Tanguturi, BA,FCMA Chief Financial Officer BOP Pvt. Ltd 8th Floor, Flat No. 24028, IV Floor, 2nd Block, Attapur, MSX Tower 2 Alpha Commercial Belt 27, Shakespeare Sarani KOLKATA 754220 Hyderguda, Rajendra Nagar, GREATER NOIDA 201308 HYDERABAD 500048 M/24475 M/20946 Mr Uttam Das, BCOM,FCMA M/25911 Mr Dibyendu Sarkhel, BCOM HONS,FCMA Assistant Manager Finance & Accounts Ess Dee Mr Samir Kumar Ghosh, BCOM HONS,FCMA MANAGER (F & A) Steel Authority Of India Aluminium Ltd 1, Sagore Dutta Ghat Road Po Proprietor S.k. Ghosh & Associates Flat 1 B, Limited 19 / 2, Nehru Nagar, Bhilai, Dist - Durg, Kamarhati Ahana Apartment 20c/5, D. P. P. Road, Naktala, BHILAI 490020 KOLKATA 700058 KOLKATA 700047
108 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/26172 M/27123 C/35372 Mr Priya J, BA,MBA,CFA,FCMA Mr K G Karthikeyan, BCOM,FCMA Mr Zahir Abbas Tharadara, Door No. 6, Vanchinathan Street, Parvathi Branch Manager City Union Bank Ltd No. 58 BCOM,CMA(USA),ACMA Nagar, Old Perungalathur, Thilagarpuram Main Road Near L I C Of India Manger - Core Banking Projects Mashreq Bank CHENNAI 600063 AMBASAMUDRAM 627401 P J S C P. O. Box 1250 DUBAI
M/26455 M/27197 Mr Rahul Kanungo, MCOM,MBA,FCMA Mr Shivendra Kishore, MSC,MBA,FCMA The Institute of Cost Accountants of Manager - M I S J. K. Cement Ltd . Padam Chief Manager-finance The State Trading India Tower 19, D D A Community Center Oklhla , Corporation Of India Ltd. 6th Floor, H K House Admission to Associateship on the Phase-1 Behind Jivabhai Chambers Ashram Road basis of MoU with IMA, USA DELHI 110020 AHMEDABAD 380009 Date of Admission: 11th November M/27267 M/26540 2013 Mr Prem Kumar, BCOM HONS,FCMA Mr S V Raju, MCOM,FCMA Assistant Manager ( F &A) Teil Projects Limited Dy. General Manager (T R) B S N L O/o P G M C - 56/39 1st Floor Sector - 62 (T R) 6th Floor, Anna Road Telephone Exchange C/35373 NOIDA 201301 Buildngs, Dams Road Mr Dinesh Kumar Ayar, CHENNAI 600002 BCOM,CMA(USA),ACMA Accountant Saudi Kayan Petrochemical M/26640 M/27297 Company Post Box 10302 Jubail Industrial City Mr Madhur Prabhat Kaushik, MCOM,FCMA Mr Harnam Singh Rana, 31961 Sr. Officer Finance M/S. Petronet LNG Limited MBA,FCA,FCS,MBE,FCMA JUBAIL 31961 First Floor, World Trade Centre Babar Road, Asstt. General Manager Haryana State Industrial Barakhamba Lane And Infrastructure Development Corporation Ltd C/35374 DELHI 110001 C -13 & 14, Institutional Area Sector 6 Ms Jyoti Pradeep Wadhwana, PANCHKULA 134109 CMA(USA),ACMA M/26780 Accountant Hogan Lovello Middle East L L P Mr Surendra Kumar Mitharwal, FCMA M/27299 19th Floor, Al Fattan Currency Tower, D I F C, Asst Manager (F&A) Rastriya Ispat Nigam Mr Ganesh Gomu, MCOM,M PHIL,CMA DUBAI Limited Finance & Accounts Dept. Main USA,MBA,FCMA Administrative Bldg., Assistant Manager - Management Accounting VISAKHAPATNAM 530031 Imdaad Llc Jebel Ali The Institute of Cost Accountants of DUBAI 018220 India M/26856 Admission to Associateship on the Mr Ritesh Kumar Jain, MCOM,MBA,M.A., basis of MoU with IMA, USA M.Sc,FCMA The Institute of Cost Accountants of Assistant Manager (Finance) National India Date of Admission : 20th November Aluminium Company Limited Core 4 5th Floor, Admission to Associateship on the 2013 South Tower District Centre, Scope Minar Laxmi Basis of MoU with IMA, USA Nagar DELHI 110092 C/35379 Date of Admission : 30th September Mr Dinesh Sundar Suvarna, BCOM,CMA(USA),ACMA M/26927 2013 Finance Director My HD Media F2 LLC Boutique Mr S Balamurugan, MCOM,FCMA Office 6, P O Box 503050, Dubai Media City, Dy. Manager Bharat Electronics Limited Jalahalli C/35367 DUBAI 503050 BANGALORE 560013 Mr Aditya Arora, CMA(USA),MBA, MS,ACMA 1 Dell Way Roundrock C/35380 M/26987 ROUND ROCK 78664 Mr Parag Varshney, Mr C Dilip Kumar, BSC,FCMA BCOM,ACA,CMA(USA),ACMA C/35368 Manager (Accounts) Gammon India Limited Finance Manager Dusit Thani Hotel Al Muroor Mr Binu George Thomas, LIG - 19, C. G. Housing Board, Kurud - Road, P. O. Box 52799, MCOM,MBA,CMA(USA),ACMA Kailashnagar, Light Industrial Area, ABU DHABI NAGPUR 442101 Financial Controller Gulf Aviation Academy (GAA) P. O. Box 23773, Muharraq, C/35381 MANAMA 23773 M/26999 Mr A Mahadeva Somayaji, Mr K Venkata Rama Subba Reddy, BCOM,CMA(USA),MA (PUB ADMN),ACMA C/35369 BCOM,MBA,FCMA Deputy Manager OOCL UAE LLC Unit 605, The Mr Vin Jain, CMA(USA),ACMA Executive Director-finance Sravanthi Energy 38, Richbourne Court, M1T 1T6 Business Centre, Al Hamriya Area, Pvt Ltd SOV - 3/802, Vatika City, Golf Course TORONTO DUBAI Extension Road, Sector - 49, GURGAON 122018 C/35370 The Institute of Cost Accountants of Mr Manish Jayantilal Agarwal, India M/27021 BCOM,CMA(USA),ACMA Mr Francis Xavier Nelson Leo, Admission to Fellowship on the Basis Finance Manager Rivoli Group LLC 21st Floor, of MoU with IPA, Australia BCOM,MBA,FCMA Monarch Office Tower, Opp. Trade C, SZR, P.O. Proprietor F X Nelson Leo & Associates C-10/12 Box 121, Near Vishnov Devi Mandir Pimpri DUBAI Date of Admission: 11th November PUNE 411017 2013 C/35371 M/27107 Mr Arindam Dutta, CMA(USA),ACMA I/35375 Mr Pradyumna Pattnaik, BCOM HONS,FCMA Chief Accountant Tawoos Power & Mr He Zaizhong, MA,FIPA,FCMA Associate Manager - Finance Vedanta Telecommunications L L C P. O. Box 3089, State Government Minstry of Agriculture,P.R.China Aluminium Limited Lanjigarh District Kalahandi Bank Of India Building, 7th Floor, NO.56,Xisi Zhuanta Hutong XiCheng District BHAWANIPATNA 766027 MUSCAT 112 BEIJING 100810
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The Institute of Cost Accountants of M/35387 M/35399 India Mr Sankara Narayanan H, MCOM,MBA,ACMA Mr Prashant Arora, BBA,MBA,ACMA Admission to Associateship on the Assistant Manager(Finance) Indian Oil Assistant Account Manager Vedanta Realty Pvt Corporation Ltd Hazira Terminal Ichhapore P.O. basis of MoU with IPA, Australia Ltd 751, Sector - 9 A Kawas GURGAON 122001 SURAT 395010 Date of Admission: 11th November M/35400 2013 M/35388 Mr Sarma P S R V S, BCOM,ACA,ACMA Mr Jaikumaran Mani, MCOM,ACMA Flat No 208, Ravishankar Apartments D. No. I/35376 Sr.Officer Costing M/s. Hatsun Agro Product Ltd 5-2-122, Tirumalanagar, Meerpet Moulaali H B Mr Kaushikkumar Sharma, BCOM,MIPA,ACMA 1/20 A, Rajiv Gandhi Salai(omr) Karapakkam Colony Chief Accountant Tamani General Contracting CHENNAI 600097 HYDERABAD 500040 Est. 209, City Center, B - Block P. O. Box No. 43665 M/35389 M/35401 ABU DHABI Ms Minakshi Yaduvanshi, MCOM,ACMA Mr Kapil Kumar, BCOM,ACMA statistical Investigator FR - II DGS&D M/O Asst. Manager Modern Flour Mills Private I/35377 Commerce & Industry Department of Supply Limited B - 15, Lawrence Road, Mr Suresh Ranganatha Rao, Jeevantara Building 5, Parliament Street DELHI 110035 MCOM,MCA,MIPA,ACMA NEW DELHI 110001 B-7, Amarjyoti Apt Gulmohar Road, Sion M/35402 Chunabhatti M/35390 Mr Ravi Varma Pakalapati, BCOM,ACMA MUMBAI 400022 Mr Kannan R, MBA,ACMA Flat No. J - 602, Executive Park Giridhari, Plot No. 604, New No. 35 51st Street, 9th I/35378 Sector K K Nagar Near Kalimandir Peerancheru Rajendra Nagar Mr John Kurian, BA,MBA,MIPA,ACMA CHENNAI 600078 Mandal Operation Officer City Transport City Transport HYDERABAD 500008 Department Of Transport Karamah Depot Airport M/35391 RD Mr Binal Tarun Shah, ACMA M/35403 ABU DHABI 6365 Assistant Manager Omni Active Health Mr Mohit Barolia, BCOM,ACMA Technologies Ltd 605 / C, Bhagya Apt 60/115 Heera Path Mansarovar The Institute of Cost Accountants of Bhardawadi Road, Lane Opp To Navrang JAIPUR 302020 India Cinema Andheri West Admission to Associateship on the MUMBAI 400058 M/35404 Mr Harjit Garg, BCOM,FCA,ACS,ACMA basis of MoU with IPA, Australia M/35392 Accounts Officer Bharat Sanchar Nigam Limited Ms Neethu V P, BCOM,ACMA O/o. C G M T Plot - 2, Opp. Piccadely Sanchar Date of Admission: 5th December 2013 Assistant Manager (Finance & Accounts) Arya Sadan, Sector - 34 A Vaidya Sala Dist. Malappuram CHANDIGARH 160022 I/35382 KOTTAKKAL 676503 Mr Shoukut Hossain, BCOM,MIPA,FCPA,ACMA M/35405 Controller The Torgan Group 4950, Yonge M/35393 Mr Anshul Jain, BCOM,ACMA Street, Suite 1010, Mr Ayyappa Vijji, MCOM,ACMA Account Officer Madhya Pradesh Power TORONTO M2N6K1 Assistant Manager Dredging Corporation of Generating Company Limited O/o Additional India Limited Dredge House Port Area Director (F& A) M P P G C L Shakti Bhawan The Institute of Cost Accountants of VISAKHAPATNAM 530035 Rampur, Block No. 9 India JABALPUR 482008 M/35394 Admission to Associateship Ms Yasmeen Khatoon, BCOM,ACMA M/35406 House No. 931 Sector - 5 R. K. Puram Mr Ajay Budumnhalli Adisesha, BCOM,ACMA Date of Admission 11th December 2013 DELHI 110022 #1006 -1, Lakshmannagar, 8th Cross Hegganahalli Cross Near Shanimahatma M/35383 M/35395 Temple Viswaneedam Post, Sunkadakatte Mr Piyush Patel, ACMA Mr Tamoghna Sen, BCOM,ACMA BANGALORE 560091 Corporate Finance Accenture Services India 389 Senior Officer Emami Ltd 687, Anandapur E. 2A Main 16th Cross JP Nagar, 4 th Phase M. Bypass M/35407 BANGALORE 500078 KOLKATA 700107 Mr Dhruv Mahan Cairae, BCOM HONS,MBA,ACMA M/35396 M/35384 SAP Finance Consultants Capgemini India Pvt Mr Vikas Aggarwal, BCOM,ACMA Mr Avinash Sukhadeo Jadhav, BCOM,ACMA Ltd Plant - 2, Block - ‘C’, Godrej I T Park Godred Executive - Accounts & Costing Systemes Assistant Manager - Costing Future Consumer & Boyce Compound L B S Marg Vikhroli West Moteurs India Pvt Ltd Plot No. 244, Udyog Vihar MUMBAI 400079 Enterprises Ltd Future Retail Home Office 8th Phase - 1 Floor, Tower - C 247 Park Lbs Marg, Vikhroli GURGAON 122016 MUMBAI 400083 M/35408 M/35397 Mr Chandrakant Prabhakar Patil, MCOM,ACMA M/35385 Mr Sharad Kisan Bombale, MCOM,ACMA G/8 Jaihind Colony Nanepada Road Mulund Mr Manjunatha K Nagappa, BCOM,ACMA Assistant Manager Accounts Hindusthan East Sr. Accountant Haat Incinerators (I) Pvt. Ltd No. National Glass & Industries Ltd F-1, M I D C - MUMBAI 400081 35 B & C Jigani Industrial Area Malegaon Sinnar BANGALORE 560105 NASIK 422113 M/35409 MsIndra Bisht Indra Bisht, BCOM M/35386 M/35398 HONS,ACMA Mr Selva Martin R G, MCOM,ACMA Mr Venkatramanan Rajagopal, BBA,ACMA Director Nimbus Consulting Pvt Ltd C - 927, Financial Analyst Hewlett-Packard First Software Sr. Manager Hyundai Motor India Ltd Plot # 1 Upper First Floor Palam Extension Sector - 7, Park Porur Sipcot Industrial Estate Dwarka CHENNAI 600116 SRIPERUMBUDUR 600117 NEW DELHI 110045
110 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35410 M/35422 M/35434 Mr Kalyani Karna, BCOM, Mr Rekha Nandakumar Parapurath, Mr Badal Manaharbhai Doshi, MCOM,ACMA B -138 Street No. 7 East Vinod Nagar BCOM,ACMA Excecutives Costing & M I S Harsha Engineers DELHI 110091 Accountant Dubai Supply Authority P. O. Box Limited Sharkhrj - Bavla Road P. O. Changodar 8144 AHMEDABAD 382213 M/35411 DUBAI 000000 Mr Manmohan Singh Rawat, BCOM M/35435 HONS,ACMA M/35423 Mr Jeyabal V, BCOM,ACMA Assistant Manager Mahanagar Telephone Mr Vishal Kumar Chandeliya, MCOM,ACMA Finance Executive Wipro Ltd D1/1, T N H B Nigam Limited O/o. D G M (C S M S), 2nd House No-212 Zonal Market Sector-10 Colony South Sivan Koil Street Kodambakkam Floor City Telephone Exchange H. S. Somani BHILAI NAGAR 490006 CHENNAI 600024 Marg M/35436 MUMBAI 400001 M/35424 Mr Dipti Dubhashi, BCOM,ACMA Mr Arti Arora, BCOM,ACMA C-4 / 7, Sukumar Co-op Soc. Dayaldas Road M/35412 G-135, D T C Colony Near Shadipur Metro Vileparle (East) Mr Anita Gupta, BCOM,ACMA DELHI 110008 MUMBAI 400057 Manager (F & A) RSB Transmission (I) Ltd Plot No. 184 Industrial Area Belur M/35425 M/35437 DHARWAD 580011 Mr Arvind Kumar, BCOM,MBA,ACMA Mr Mukunthan A, BCOM,ACMA Accounts Officer MPPGCL O/o. The Senior Accountant Caterpillar India Private Limited Asia M/35413 Accounts Officer A T P S, M P P G C L Chachai Pacific Shared Services 3rd Floor R M Z Nxt Mr Brijesh Kumar Agrawal, BE,ACMA ANUPPUR 244221 Campus 1- A Whitefield Sr. Manager (mech) Rashtriya Ispat Nigam Ltd BANGALORE 560066 Wire Rod Mill Visakhapatnam Steel Plant M/35426 VISAKHAPATNAM 530031 Mr Arijit Sunil Pal, BCOM, M/35438 Quattro FPo Solutions Pvt Ltd 237, 1no. Mr Varun Mishra, MCOM,ACMA M/35414 Mohishila Colony Near Battala Bazar Asansol 512/267, 5th Lane Nishatganj Mr Nitin Kumar, BCOM,ACMA ASANSOL 713303 LUCKNOW 226006 C/o Shiv Prashad, Diwan Mohalla Ramjanki Chouraha Patna City M/35427 M/35439 PATNA 800008 Mr Dipankar Dutta, BCOM HONS,LLB,ACMA Mr Srikanth Jujjuvarapu, BCOM,ACMA Asst. Manager The Tata Power Company Ltd Associate Consultant Infosys M I G -2 A - 241, M/35415 Kalinga Nagar Industrial Compex Tata Steel Vuda Colony Vinayakanagar Pedagantyada Ms Malapaka Aparna, BCOM,ACMA Campus Duburi Jajpur Post Old Gajuwaka Accounts Officer GVK Power & Infrastructure JAJPUR ROAD 755026 VISAKHAPATNAM 530044 Limited G V K Gautami Power Limited I D A Peddapuram M/35428 M/35440 Ms Suchi Singh, MCOM,ACMA SAMALKOTA 533440 Mr Chandra Bala, MCOM,ACMA Q. No. 99, Type - 4, Sector - 5B B. H. E. L., Officer - Accounts N C C LimiteD Survey No: - Ranipur M/35416 64 Madhapur HARDWAR 249403 Mr Inder Singh Panwar, BCOM,ACMA HYDERABAD 500081 C/o. Shankarlal Panwar C/4, Juni Indore Police M/35441 Line M/35429 Mr Sonu Kumar Magon, BCOM,ACMA INDORE 452001 Mr Princee Bandhekar, BCOM, D G M - Finance & Accounts D L F Utilities Ltd. Assistant Manager South Eastern Coalfields 12th Floor, Gateway Tower R -Block, D L F M/35417 Limited S E C L Head Quarter Seepat Road Ph - 3 Mr Ajoy Kumar Sharma, BCOM,PMI,ACMA BILASPUR 495006 GURGAON 122002 1 A /405 A W H O Gurjinder Vihar GREATER NOIDA 201310 M/35430 M/35442 Mr Prasanna Kumar K C, BCOM,ACMA Mr Yogesh Malgonda Kadole, MCOM,ACMA M/35418 Asst. Manager - F&A Mann And Hummel Filter Taxation And Costing Incharge Bharat Electrical Mr Amit Pravin Ner, MCOM,ACMA Pvt Ltd Mann And Hummel Filter Pvt Ltd Plot Contractors And Mfg Pvt Ltd Plot J 78, Kupwad 2, Anuj Apartment Kalpana Nagar College Road No. 23/1, 11th Main Road 1st Stage, 3rd Phase M I D C Kupwad NASIK 422005 Peenya Industrial Area SANGLI 416436 BANGALORE 560058 M/35419 M/35443 Mr Machavolu Sai Kumar, BCOM,ACMA M/35431 Ms Neha Rani, BCOM,ACMA Financial Controller-India Element14 India Pvt Mr Parimal Kumar M M, BCOM,ACMA H -16 / 105 Tank Road Karol Bagh Ltd 15, 2nd Floor, Theme House Krishna Nagar Senior Executive - Finance Lm Wind Power DELHI 110005 Industrial Area Off Hosur Main Road Technologies (India) Pvt Ltd Rmz Infinity No. M/35444 BANGALORE 560029 302 Tower ‘B’, 3rd Floor Old Madra Road Mr Maheshkumar Jagannath Salian, Benniganahalli M/35420 BCOM,ACMA BANGALORE 560015 Manager Costing Parksons Packaging Ltd. Mr Domesh Kumar Sahu, MCOM,ACMA Indiabulls Finance Center, Tower No. 1, 701 & Cost Accountant Sanat Joshi & Associates Prem M/35432 702, 7th Floor Senapati Bapat Marg Elphinston Poorn Pt. Din Dayal Upadhyay Nagar Akash Mr Shrikant Mani, BSC HONS,ACMA Road (West) Gas Godown Road Gudiary, P. O. W. R.S. Chief Manager Finance ACC Limited Sco 40-41 MUMBAI 400013 Colony 2nd Floor, Sector 17 A RAIPUR 492008 CHANDIGARH 160017 M/35445 Mr Ashok Kumar, BCOM M/35421 M/35433 HONS,ACA,ACS,ACMA Mr Srinu Yerra, BCOM HONS,ACMA Mr Randhir Kumar, BCOM HONS,ACMA Finance Controller Amvensys Technologies Assistant Manager - Finance Tata Hitachi Executive - Costing Geoenpro Petroleum Private Limited 302, Innovative Manor 19th C Construction Machinery Company Limited Limited Express Trade Tower, 2nd Floor Sector Cross, 7th Main 3rd Floor, N S Palya B T M 2nd Jubilee Building 45, Museum Road -16 A, Film City Stage BANGALORE 560025 NOIDA 201301 BANGALORE 560076
www.icmai.in JANUARY 2014 THE MANAGEMENT ACCOUNTANT 111 MEMBERSHIP LIST
M/35446 M/35458 M/35470 Mr Hema Swaroop Deeti, BCOM,ACMA Mr Kalyani Sridharan, BCOM,ACA,ACMA Mr Vikash Chopra, BCOM HONS,ACMA Door No - 29-28-30 , Flat No - 303 / 1 Jayanthi Manager - Finance T R I L Infopark Limited Rajiv Junior Executive (Finance) West Bengal State Meduri Mansion Dasari Vari Street Suryaraopet Gandhi Salai (O M R) Taramani Electricity Distribution Company Ltd O/o. The VIJAYAWADA 520002 CHENNAI 600113 Divisional Manager (Habra Division) Boralia Road, Hizalpukuria Near Rupkotha Cinema Dist. M/35447 M/35459 24 Pgs North Mr Shivakumar Shetty, BCOM,LLB,ACS,ACMA Mr Preetham Pathi, MCOM,ACMA HABRA 743271 Senior Associate Consulatant Infosys Limited Company Secretary & Financial Analyst Soham SEZ Survey No. 41 (pt) 50 (pt) Pocharam M/35471 Renewable Energy India Private Limited No. Village Singapore Township PO Ghatkesar 137, 7th Floor H M G Ambassador Residency Mr Venkatagiri Vasudevan, BCOM,ACA,ACMA Mandal 1603, Queens Gate Hiranandani Estate Road HYDERABAD 500088 BANGALORE 560025 Ghodbunder Road THANE 400607 M/35460 M/35448 Mr Kalpataru Swain, BCOM,ACMA Mr Dipak Kumar Mohanty, BCOM,ACMA Assistant Manager - Fianance North Eastern M/35472 Accountant Pal Movers Pvt Ltd 96, Cuttack Electricity Supply Company Of Odisha Limited Mr Abhishek , BA,ACMA Road Jaleswar Electrical Division At / P.o. Station Flat No: 202, Site N. 17, 5th ‘A’ Cross, Shardamba Nagar Jalahalli Village BHUBANESWAR 751006 Bazar - Jaleswar BALASORE 756032 BANGALORE 560013 M/35449 M/35473 Mr Kamal Kishan, BCOM,MBA,ACMA M/35461 Mr Bharatkumar Maganbhai Patel, Executive-accounts And Finance Voith Paper Mr Kshitish Kumar Dash, BCOM HONS,ACMA Asst. Accounts Officer S R Breweries Pvt Ltd S - MCOM,ACMA Fabrics India Limited Plot No 113 / 114 A Sector 3/53, Phase - I I New Industrial Estate Jagatpur Chief Kada Darwaja Khajuri Mehalo Mehsana - 24 CUTTACK 754021 VISNAGAR 384315 FARIDABAD 121005 M/35462 M/35474 M/35450 Ms Amita Appasaheb Ghorpade, MCOM,ACMA Ms Kanika Gupta, BCOM,ACMA Mr Abhishek Sharma, BCOM,MBA,ACMA Business Analyst Wipro Technologies Plot No. Tax & Accounts Trainee Pankaj Goel & 28, Roop Nagar I I Near Mahesh Nagar Tonk 3i, M I D C, Phase - 2 Rajiv Gandhi Info Tech Consultants 356, Sector - 37 - Phatak Park Hinjewadi FARIDABAD 121003 JAIPUR 302015 PUNE 411057 M/35475 M/35451 M/35463 Mr Mithilesh Kumar, BTECH,ACMA Ms Bharti Gopichand Makhija, BCOM,ACMA Ms Monika Rani, MCOM,ACMA Dy. General Manager ( I A ) Durgapur Steel Accounts Executive Mieco Boards Pvt Ltd Plot Deputy Manager (Accounts) Venus Remedies Plant, S A I L Internal Audit Department Project No.46, Sector - 8 Office No.206-208 Trade Limited Corporate Office 51-52, Industrial Area, Building Ispat Bhavan Complex Phase - I Centre Building DURGAPUR 713203 GANDHIDHAM 370201 PANCHKULA 134113 M/35476 M/35464 M/35452 Mr Nitin Arora, BCOM HONS,ACMA Dr Sanjeev Kumar Bansal, Ms Jyotsna Uday Gudekar, MCOM,ACMA Accounts Officer B H E L - E D N Mysore Road MCOM,PHD,ACA,ACMA Sr. Officer Spicer India Limited 29, Milestone New Engineering Building (N E B ) 3rd Floor, Assistant Prof (commerce) Punjab Institute Of Pune - Nasik Highway Village - Kuruli Tal - Khed Finance Department Technology Near P M N College PUNE 410501 BANGALORE 560026 RAJPURA 140401
M/35453 M/35465 M/35477 Mr Gaurav Dipakkumar Raval, MCOM,ACMA Mr Rohini Palanisamy, MCOM,ACMA Mr Sandeep Mahadev Juvale, BCOM,ACMA ‘Jagdishvila’ Laxmiwadi Street No.9 Senior Team Leader Ford Business Services Business Development Manager Omnitech RAJKOT 360002 Center Pvt Ltd K C T Tech Park Kumaraguru InfoSolutions Ltd A - 13, Cross Road No.5 College Of Technology Campus Saravanampatti Kondivita Road, M I D C Andheri (E) M/35454 COIMBATORE 641035 MUMBAI 400093 Mr Mohit Sahni, MBA,ACMA F / E, 56, New Kavi Nagar M/35466 M/35478 Mr Subramaniam C, MCOM,FCS,ACMA GHAZIABAD 201002 Mr Preethi Varma C, BCOM,ACMA Company Secretary Shanthi Gears Limited 304 B-301 Sri Ram Swagruha Apartments, Srinidhi - A, Trichy Road Singanallur M/35455 Layout Vidyaranyapura Post Officd COIMBATORE 641005 BANGALORE 560097 Mr Narender Kambham, MCOM,ACMA Deputy Manager Bbharat Dynamics Limited M/35467 M/35479 Kanchanbagh Mr Sanjay Pandey, BCOM HONS,ACMA Mr Sirisha Ayygari, BCOM HONS,ACMA HYDERABAD 500058 Jr. Manager (Finance) Rites Ltd 56, C. R. Assistant Manager-finance Tata Advanced Avenue Systems Ltd. Apiic Aerospace Sez Plot No 1/a KOLKATA 700012 M/35456 Sy No: 656 Aditya Nagar, IbrahimpatnaM Ranga Mr Hardik Suresh Thakkar, BCOM,ACMA Reddy Dist M/35468 Sr. Executive Thermax Limited Energy House HYDERABAD 501510 D - 11, Block Plot No. - 38 & 39 M I D C, Mr Sujeet Kumar Sharma, MCOM,ACMA Chinchwad E-3 / 304 Vinay Khand - 3 Gomti Nagar LUCKNOW 226010 M/35480 PUNE 411019 Mr Deb Sankar Das, BCOM HONS,ACMA M/35469 Senior Associate Pricewaterhousecoopers M/35457 Mr Shekhar Bahrunani, BCOM,ACMA Service Delivery Center (Kolkata) South City Mr Chiranjeevi Talupula, BCOM,ACMA Executive (F & A) Larsen & Toubro Ltd Surat Pinnacle Plot No. X1-1, Block - E P, Sector - V D. No. 61-2-26, Ramalingeswar Nagar Hazira Road P. O. Bhatha Salt Lake VIJAYAWADA 520013 SURAT 394510 KOLKATA 700091
112 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35481 M/35494 M/35506 Mr Jiby Pathrose, BCOM HONS,ACMA Mr Mahesh Madras Gopalakrishnan, Mr Abhinandan Taparia, BCOM Assistant ( Accounts) State Bank Of India BCOM,ACA,ACMA HONS,ACA,ACMA Revenue Towers, 5th Floor Near Boat Jetty Sr. Officer - Finance Oman Air S . A . O . C . P. Plot No.47 Udhyog Nagar, Road No.10 2nd ERNAKULAM 682011 O. Box - 58, P C - 111 Phase Basni MUSCAT 000111 JODHPUR 342005 M/35482 Mr L Mohammed Shahid, BCOM,MBA,ACMA M/35495 M/35507 Mr Meena George, BSC HONS,ACMA Assistant Manager (F&A ) N T P C - B R B Mr Satvinder Singh, BCOM,MBA,ACMA C L Limited Jain Bungalow Dalmianagar Dist Cost Accountant Lakeshore Hospital & Research Centre Ltd N H - 47 By-pass Maradu 2448 C Mundi Complex Sector 70 - Rohtas MOHALI 160071 DEHRI 821305 Ernakulam KOCHI 682040 M/35508 M/35483 M/35496 Mr Muhammed Ramsheed K V, MCOM,ACMA Ms Komal Kathuria, BCOM,ACMA Mr Rahul Goyanka, BCOM HONS,ACMA Acountant Malabar Information Technology Co C/o. Satpal Kathuria House No. 247 Street - 5 C E - 189, Sector - I Near Telephone Exchange Operative Society Ltd Dinesh Software Park Old Jagat Pura Salt Lake Thana HOSHIARPUR 146001 KOLKATA 700064 KANNUR 670012 M/35484 M/35497 M/35509 Ms Aarti Arvind Mohite, MCOM,ACMA Mr Nirmal Agarwal, BCOM,MBA,ACMA Mr Rajendra Sonu Thakur, MCOM,ACMA Tf -D Shree Vinayak Flats Behind Nehru Senior Executive Jay Bharat Maruti Limited Plot Dy. Manager Accounts Suditi Industries Ltd Bhuvan Rajmahal Road Kirtistambh No. 5 Maruti Joint Venture Complex Udyog Vihar C-253/254, M I D C T T C Industrial Area Pawne VADODARA 390001 Phase 4 Village Turbhe GURGAON 122015 M/35485 NAVI MUMBAI 400705 Mr Shubhankar Shyamprasad Limaye, M/35498 BCOM,ACA,ACMA Mr Lalit Kumar, BCOM,ACMA M/35510 Aabha , Plot No.16 Siddhakala Co Op Hsg Soc H. No. - 264 Rangpuri P. O.- Mahipalpur Mr Salil Shripad Apte, BCOM,ACA,ACMA 134/2 Warje NEW DELHI 110037 Po Box 45753 Sharjah PUNE 411058 SARJAH 45753 M/35499 M/35486 Mr Vijayanandham Aruchamy, M/35511 Ms Shakambri Tiwari, BCOM,ACMA MCOM,ACA,ACMA Mr Sarat Babu Koganti, BCOM,ACA,ACMA S S 1/506, Sitapur Road Sector - A, Aliganj S/o K. Aruchamy 4/3 Reddiarur P O Pollachi 7-71/67, Maheswari Nagar, Street No.8, LUCKNOW 226022 COIMBATORE 642007 Habsiguda HYDERABAD 500007 M/35487 M/35500 Ms Pooja Shankar Agrawal, MCOM,ACMA Mr Solaiselvan Annamalai, BCOM,ACMA M/35512 40 / 11, Everest Colony 10th Block, Pari Salai New Extension Area, Behind Gandhi Ganj, Mr Chetendra Singh Shekhawat, Mogapair East Near Indore Bank, MCOM,MBA,ACMA CHENNAI 600037 CHHINDWARA 480002 Sr. Executive Vodafone Shared Service Ltd M/35501 Vodafone House Building - B Corporate Road M/35488 Mr Raj Kumar, BCOM HONS,ACMA Prahlad Nagar Mr Animesh , BCOM,ACMA Senior Officer Costing Voith Paper Fabrics AHMEDABAD 380007 Sector - 9 B, Street - 14 Qrt No. 817 India Ltd Plot No. 113 - 114A Sector - 24 Near BOKARO STEEL CITY 827009 Mujesar Railway Crossing M/35513 FARIDABAD 121005 Mr Maulik Sureshkumar Jasani, M/35489 MCOM,ACA,ACS,ACMA Mr Ajeet Dhiman, BCOM,ACMA M/35502 Dy. General Manager - Finance Cadila A - 346, Sector - 23 Sanjay Nagar Mr Shibu George, BCOM,ACMA GHAZIABAD 201002 Healthcare Limited Zydus Tower Opp. Iscon Accounts Executive Chakiat Agencies Pvt. Ltd Temple Satellite Cross Roads Satellite Subramanian Road P. O. Box 525 Willingdon AHMEDABAD 380015 M/35490 Island Mr Sharmila S Kamath, BCOM,ACMA COCHIN 682003 17-20-1462/89 F No, 1202 Greenwood M/35514 Mr Akash Hirubhai Patel, BCOM,LLB,ACMA Apartments S L Matias Road Flanir M/35503 MANGALORE 575001 Mr Anany Goel, BCOM HONS,ACA,ACMA D / 3 Jaylaxmi Duplex Soc. Opp. Saptgiri Anany Goel And Company 6, R D C Advocate Vibhag-1, Vishwamitri Road, M/35491 Chambers, 1st Floor Raj Nagar VADODARA 390011 Mr Bhushan Kumar, BCOM,ACA,ACMA GHAZIABAD 201002 Master Data (Commercial) Nigerian Breweries P M/35515 L C 1, Abebe Village Road 1 Ganmu M/35504 Mr Lalit Ramchandra Prajapati, LAGOS 000000 Mr Sanjeev Saha, BCOM,CMA BCOM,PHD,ACMA (CANADA),ACMA G/3, Parshwanath Shopping Centre Opp - M/35492 Treasurer North American Construction Group Padmavati Nagar Society Nikol Road Naroda Mr Deepak Ramdas Dhondi, BCOM,ACMA Zone - 3, Acheson Industrial Area Z - 53016, AHMEDABAD 382330 Management Staff C I P L A Ltd Plot No. 9 & Hwy 60 T 7 X 5 A 7 10 Pharma Zone, Phase - I I Sector - 3, S E Z ALBERTA 000000 M/35516 Indore Pithumpur Mr Vivekanand Pandurang Kamath, DHAR 454775 M/35505 Mr Wachist Shivajirao Jadhav, BCOM,ACMA BTECH,ACMA Divisional Director Mott Macdonald 703 ‘A’ M/35493 Finance Executive Deepak Novochem Tech Mr Kanhaiya Singh, BCOM,ACMA Ltd 305 - 307, 3rd Floor City Point 17 Boat Club Wing, Prism Tower Mind Space Goregaon 37, Mukta Ram Babu Street Road (West) KOLKATA 700007 PUNE 411001 MUMBAI 400062
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M/35517 M/35529 M/35541 Mr Srikanth P N, BCOM,ACMA Mr Nitesh Kumar Goyal, MCOM,ACA,ACMA Mr Subramaniam Bavanisankar, Manager- Audit Hindustan Petroleum Asst. Manager (F) Engineering Projects (I) Ltd BA,FCA,ACMA Corporation Limited No. 17 Jamshedji Tata Road 6th Floor, 6 A Bakhtawar Nariman Point Flat No.2 D, Coral Arch Apt No.3, East Mada Post Box No. 11041 MUMBAI 400021 Street Srinagar Colony Saidapet MUMBAI 400020 CHENNAI 600015 M/35530 M/35518 Mr Subhash Kumar Porwal, MCOM,ACMA M/35542 Mr Nikunj Ashokbhai Navadiya, BCOM,ACMA Managing Partner Raas Fashions Mezzanine Mr Rajnesh Kumar Pandey, BCOM 13, Jay Jadeshwar Society Behind Amruta Floor, 8 Bairagi Complex Pipli Bazaar, Near HONS,ACMA Mills Bapunagar Ratan Sev Business Analyst Wipro Technologies P - 241, AHMEDABAD 380024 INDORE 452010 Housing Complex Ghatotand HAZARIBAG 825314 M/35519 M/35531 Mr Mandar Prakash Teredesai, M/35543 Mr Nikhil Sharma, BCOM,ACMA MCOM,LLB,ACMA Mr Narendra Kumar, BCOM,ACMA B -27, Nand Puri Hawa Sadak, 22 Godam 42, ‘Aditya’, Rajlaxmi Soc., Near Mathura Nagri, Accounts Officer (F & A) National Fertilizers Old Padra Road, JAIPUR 302019 Limited Room No.17 Vinayak Bhawan Vijaipur VADODARA 390020 GUNA 473111 M/35532 M/35520 Mr Siva Kumar Doguparthy, BCOM,ACMA M/35544 Mr Omprakash Sarap, BCOM,ACS,ACMA 21-1-4, Alluri Sita Rama Raju Road Mr Udhayakumar N P, BE,ACMA H. No. 4-4-75 Gandhi Colony Mutyalampadu Satyanarayanapuram Asst Manager 8 G F-2, Marimuthu Street VIKARABAD 501101 VIJAYAWADA 520011 Ammapet SALEM 636003 M/35521 M/35533 Ms Ena Gupta, BCOM HONS,B. ED,ACMA Mr Sasidhar Reddy Muni Kamireddy, M/35545 Account Assistant Delhi Metro Rail Corporation BCOM,ACMA Mr Prashant Shriram Kale, MCOM,ACMA Ltd. Metro Bhawan Fire Brigade Lane Financial Analyst Cheers 201, B D R Towers Assistant Manager Inventoty Costing Krishidhan Barakhamba Road New Delhi Methodist Colony Kundhanbhagh Begumpet Seeds Pvt. Ltd. 7th Floor, Towar No.15 DELHI 110001 HYDERABAD 500016 Cybercity, Magarpatta Hadapsar PUNE 411013 M/35522 M/35534 Mr Kuntal Sengupta, BCOM HONS,ACMA M/35546 Manager - Audit & Taxation A. Banerjee & Mr Milan Bhagwanji Haria, BCOM,ACMA Director Trygghet Financial Services P Ltd Office Mr Praveen Kumar Singh, BCOM,ACMA Associates P. O. Barabahera Near Nabagram Asst. Supt. Finance Goa Shipyard Ltd Vaddem Electric Office Dist. Hooghly No.5 D, 1st Floor A - Wing, Sita Estate Aziz Baug, Chembur House KONNAGAR 712246 VASCO-DA-GAMA 403802 MUMBAI 400074 M/35523 M/35547 Mr Mohamed Syed Ibrahim, BCOM,ACMA M/35535 Mr Swapnil Bhonsle, BCOM,ACMA 4/127, Kambar Street Kurinji Nagar Reserve Mr R Raghunathan, BSC,ACA,ACMA M. I. G.1.226 H U D C O Dist. - Durg Line Post C-35, A G’s Colony V Street Nanganallur BHILAI 490009 MADURAI 625014 CHENNAI 600061 M/35548 M/35524 M/35536 Ms Salomi Shahbudin Jaria, BCOM,ACMA Mr Modh Rahul, MCOM,ACMA Mr Nirmalya Dutta, BCOM HONS,ACMA Associate R. Nanabhoy & Co. Flat No.4, Aliabad Cost Accountant N. D. Birla & Co. 9, Suyog 30 A, W. C. Banerjee Street Building Agahall, Nesbit Road Mazgoan Bunglows Akesan Road Ahmedabad Highway KOLKATA 700006 MUMBAI 400010 PALANPUR 385001 M/35537 M/35549 M/35525 Mr M Ariyala Shiva Kumar, BCOM,ACMA Mr Pankaj Ahuja, BCOM,ACMA Mr Baladandapani D, ACMA 12-1-1119 Old Mallepally L-1/ 97, Sector - G L D A Colony Kanpur Road Plot - 6, Flat - D Shanmugapriya Apartments LUCKNOW 226012 Mahalakshmi Nagar 12th Street Adambakkam HYDERABAD 500001 CHENNAI 600088 M/35538 M/35550 Ms Nidhi Mehta, BCOM,ACMA Mr Nidhi Gupta, MCOM,ACMA M/35526 A -128, Ground Floor Near Canara Bank Palam Management Industrial Trainee Bharat Mr N Suyambulingaraja, MCOM,ACMA Vihar Dynamics Limited A Govt Of India Enterprise Sr. Analyst Dell India Pvt Ltd M - 4, Sipcot GURGAON 122017 Industrial Park Sungurvarchattram - P. O. Ministry Of Defence Kanchanbagh Sriperumpudur Taluk HYDERABAD 500058 M/35551 KANCHIPURAM 602106 Mr Vivek Purushottam Inamdar, BCOM,ACMA M/35539 1445 Heron Way Chalfont M/35527 Mr Sagar Gudla, BCOM,ACMA PENNSYLVANIA 18914 Mr Rama Sanjay Kshirsagar, BCOM,ACMA Finance Executive H S B C H D P I (India) 12th Assistant Life Insurance Corporation L I C Of & 13th Floor S P Infocity, No.40 Dr. M G R Salai M/35552 India, 951 Branch 1109, Jeevanshree University Kandan Chavadi Mr Sneha Gaurav Badwe, MCOM,ACMA Road CHENNAI 600096 B. No.47, Mahaparv Kadambari Nagari Phase I PUNE 411016 I Pipeline Road, Savedi AHMEDNAGAR 414003 M/35528 M/35540 Mr Ashok Laxman Kundap, MCOM,ACMA Mr Amey Madhusudan Lele, BCOM,ACMA M/35553 Flat No.11, 3rd Floor Chaphekar Appartments Executive Globus Stores Pvt Ltd Rahejas Ms Krithiga Sethuprasath, BCOM,ACMA C T S No.509, Narayan Peth Rashtra Bhasha Corner Of Main Avenue V. P. Road Santacruz Accounts Officer Bharat Heavy Electricals Road (W) Limited 24 Building B H E L Thiruverumbur PUNE 411030 MUMBAI 400053 TRICHY 620014
114 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35554 M/35566 M/35578 Ms Meghana Ajit Neginhal, BCOM,ACMA Mr Priyadarshi Chatterjee, BCOM Mr Satish Kumar, MCOM,MBA,ACMA F. & C. Executive Voltas Limited Voltas House T HONS,ACMA Flat No- G 9/152, Sec-16 Third Floor Rohini B Kadam Marg Chinchpokli Manager - Accounts Braithwaite & Co Ltd 5, NEW DELHI 110085 MUMBAI 400033 Hide Road KOLKATA 700043 M/35579 M/35555 Mr Nishant Phadnis, MCOM,ACMA Mr Pradeep Dixit, BCOM,ACMA M/35567 9,Shefalee, Makarand Soceity, V. S.marg, Manager Operation Aman Malviya & Associates Mr Hrishikesh Vidyanand Phadke, Mahim (W) BCOM,FCA,ACMA B-12, Basement Murli Bhawan 10 A, Ashok MUMBAI 400016 17-142, Moreshwar Krupa C H S Veer Marg Hazaratganj Savarkar Marg Bhandup East M/35580 LUCKNOW 226001 MUMBAI 400042 Mr Vishal Ram Bijlani, MCOM,ACA,ACMA M/35556 M/35568 Senior Manager Vadinar Power Co. Ltd Essar Mr Sandip Ganpat Shewale, MCOM,ACMA Mr Shailesh Narsappa Mulki, Group Peninsula Techno Park Off Bandra Kurla At / Po - Landewadi ( Shewalemala) Tal - BCOM,ACA,ACMA Complex L B S Marg, Kurla (West) Ambegaon Director - Financial Markets Standard Chartered MUMBAI 400070 PUNE 410503 Bank Sct Tower Emaar Square DUBAI 999 M/35581 M/35557 Mr Saswat Tripathy, BCOM,ACMA Mr Arun Jain, BCOM,ACMA M/35569 Accounts Manager Subhanwesha Research & A - 43 , D L F Dilshad Extension - I I Sahibabad Mr Neeraj Sharma, BCOM,ACMA Education Pvt Ltd Plot No.15/1 I R C Village, 4th GHAZIABAD 201005 Sr. Executive Accounts Ranbaxy Laboratories Floor Nayapalli Limited Plot No. A - 41 Industrial Area, Phase - 8 BHUBANESWAR 751015 M/35558 A S A S Nagar Mr Raju Shankar Prasad Gupta, BCOM,ACMA MOHALI 160071 M/35582 Cost And Management Trainee Reliance Mr Shaik Nanne Babu, BCOM,ACMA Infrastructure Ltd. Reliance Energy Office Off M/35570 Door No.41-1/19-1 F F - 1, S. G. K. Towers Mr Meenakshi Vasisht, BCOM HONS,ACMA S V P Road, Devidas Lane Near Telephone Siripalli Khadar Valli Street Balaji Nagar, Asst. Manager - Accounts Maeda Corporation (I) Exchg. Krishnalanka Pvt Ltd 401, 402, 4th Floor D L F, South Court VIJAYAWADA 520013 MUMBAI 400092 Saket NEW DELHI 110017 M/35559 M/35583 Mr Sampath Kumar Ramesh Kumar, Mr Anil Kumar Sharma, BCA,ACMA M/35571 81, Vijay Bari, Path No. 3, Near Teen Dukan, BCOM,FCA,ACMA MrV Sampath Kumar V Sampath Kumar, Proprietor S. Ramesh Kumar & Associates New Sikar Road BCOM,ACMA No.37/4, Old No.89/4 Vasantham I I Main Road, JAIPUR 302039 Lala Pudur Attempathy - P. O. Chittur - Tk Alwarthiru Nagar Annexe PALAKKAD 678556 M/35560 CHENNAI 600087 Mr Prakash P, BBA,ACMA M/35572 M/35584 Sr. Cost Accountant Premier Spg & Wvg Mills Ms Bhuvaneswari S, MCOM,ACMA Mr Suresh Arumugam, MCOM,ACA,ACMA Pvt. Ltd. 1, Nava India Road, No.22/27 Vengappa Chetty Street Senior Associate (Finance) Cairn India Limited COIMBATORE 641028 VELLORE 632004 Vipul Plaza, 4th Floor Sun City, Sector - 54 GURGAON 122002 M/35561 M/35573 Mr Jai Prakash Jindal, BCOM,ACA,ACMA Ms Priya Raju Hingorani, BCOM,ACMA M/35585 F N 417, Shree Apartments Opp. Howrah Jute Chief Financial And Administrative Officer Nobel Resources Consultants Plot No. 195, F - 1, 1st. Mr Raju Gaddam, BCOM,ACMA Mills Block - B, 4th Floor P. O. Shibpur Floor Emerald House Sector - 1/ A, Opp. Hero H. No. 2-10-1384 Jyothinagar HOWRAH 711102 Honda Showroom KARIMNAGAR 505001 GANDHIDHAM 370201 M/35562 M/35586 Mr Baskar Sundaram, MCOM,ACMA M/35574 Mr Mukesh Kumar Singh, MCOM,ACMA Deputy General Manager - Finance & Accounts Mr Sanjay Mehra, BCOM Assistant Manager Horizon Hi -Tech Engicon M/s. Natural Products Export Corportion Ltd. HONS,LLB,FCS,ACMA Limited 45/1, Rafi Ahmad Kidwai Road No.6, 3rd Street Luz Avenue Mylapore Propritor A - 91, Sector - 36 New Golf Course KOLKATA 700016 CHENNAI 600004 Gautam Budh Nagar NOIDA 201301 M/35587 M/35563 Mr Devinder , BCOM,ACMA Ms Soni Rawat, BCOM,ACMA M/35575 Accounts Officer Constructions Industry Jr. Fiance Executive Rural Electrification Mr Meena Mahajan Ganguly, BCOM Development Council 801 ( 8th Floor ) Hemkunt Corporation Power Distribution Company HONS,ACMA Chambers 89 Nehru Place E A - 157 G - 8 Area Maya Enclave Limited 1016-1020 Devika Tower 10th Floor NEW DELHI 110019 Nehru Place NEW DELHI 110064 DELHI 110019 M/35576 M/35588 Mr Rajinder Singh, MCOM,MBA,ACMA Mr Karthick Manickam, BCOM,ACMA M/35564 Junior Officer S J V N Ltd C/o F & A Deptt. R H Deputy Officer Brakes India Limited Corporate Ms Ramya P, BCOM,ACMA E P , S J V N Ltd Jhakri , Teh : Rampur Bsr , Finance M T H Road Padi 236 R V Nagar Play Ground Street SHIMLA 172201 CHENNAI 600050 Kodungaiyur CHENNAI 600118 M/35577 M/35589 Mr Srinivas Setty Sunny, BBM,ACMA Mr Chandra Kumar S, MCOM,ACMA M/35565 Manager - General Accounting Flowserve India Finance Analyst Nokia India Private Limited Mr Devesh Kumar, BCOM,ACMA Controls Private Limited Plot No. 4, 1- A Road Nokia Telecom Sez, Phase - I I I A 1 S I P C O T 9718, Street Neem, Nawab Ganj Azad Market No. 8, E P I P Whitefield Industrial Park National Highway No. 4 DELHI 110006 BANGALORE 560066 SRIPERUMBUDUR 602105
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M/35590 M/35602 M/35614 Mr Dhanya S Prasad, BCOM,ACMA Mr Srikanta Kumar Pattanayak, Mr Aman Singh Kohli, BCOM HONS,ACMA Manager The South Indian Bank Ltd ‘S I B MCOM,LLB,ACA,ACS,ACMA B -55, Sangam Apartment Sector -9 Rohini Arcade’ # 61, Wheelers Road Cox Town Finance Controller Tolaram Group 44 Eric Moore DELHI 110085 BANGALORE 560005 Road Surulere LAGOS 01 M/35615 Ms Kiran Kumari, BCOM,ACMA M/35591 Assistant Accounts Sjvn Ltd Finance And Mr Lalit Kumar, MCOM,ACMA M/35603 Mr Talib Hussain Khan, MCOM,ACMA Accounts Deptt Rhep Sjvn Ltd Po Jhakri Tehsil Executive Parle Biscuits Pvt. Ltd. 36.8 -Km Delhi Rampur Shimla 147 A, Shanti Nagar A, Near Joshi Marg Rohtak Road Sankohol Distt: - Jhajjar RAMPUR 172201 BAHADURGARH 124507 Kalwar Road, Jhotwara JAIPUR 302012 M/35616 M/35592 Mr Naresh Mishra, BCOM HONS,ACMA Mr Anant Ambadas Bawkar, BSC,ACMA M/35604 Dy Manager ( Accounts) Uranium Corporation C/o. Shivaji Kundekar Near English - School Mr Amitabha Gangopadhyay, BCOM Of India Ltd At - Jaduguda Mines Po - Jaduguda Peth Wadgaon Tal - Hatkanagale HONS,ACMA Old Administrative Building KOLHAPUR 416112 Head - Commercial Esar Bulk Terminal (Salaya) SINGHBHUM 832102 Ltd C/o. Essar Oil Refinery Vill - Vadinar M/35593 JAMNAGAR 361305 M/35617 Mr Adavi Krishnam Raju, BCOM,ACS,ACMA Ms Amrutha Nair, BCOM,ACMA M/35605 Accounts Manager Larsen & Toubro Limited Officer Hindustan Unilever Ltd Uttara Building Mr Darshil Harishbhai Padharia, MCOM,ACMA P. O. Box No.979 Mount Poonamallee Road Plot No. 2, 6th Floor C. B. D., Belapur B-22 Parth Tenment Opp Central Warehouse Manapakkam NAVI MUMBAI 410614 Godown Isanpur Vatva Road Isanpur CHENNAI 600089 AHMEDABAD 382443 M/35594 M/35618 Mr A K Suresh, MCOM,ACMA M/35606 Mr Bimal Prasad Behera, BCOM HONS,ACMA General Manager Subash Printing Works Mr Sumit Chandsingh Khinchi, BCOM,ACMA Qr. No.- F/185, Unit -8 Near Express Colony Krishna T R A 126 Thekkummoodu Flat No.501 Shiv Apartment Near Jhulelal Po - Nayapalli Dist - Khordha BHUBANESWAR 751012 THIRUVANANTHAPURAM 695035 Temple ULHASNAGAR 421002 M/35595 M/35619 Ms Rati Saxena, MCOM,ACMA Ms Harsha Sistla, BCOM,ACMA M/35607 Flat - 806 B, D - Block Splendour Aparts, Modi Cost Executive Food Corporation Of India 16- Mr Sivagurunathan T, BCOM,FCA,ACMA Builders 20, Barakhambha Road Partner Madhu Balan & Associates #24, First HYDERABAD 500055 NEW DELHI 110001 Floor 8th Cross Street New Colony Chormpet CHENNAI 600044 M/35620 M/35596 Mr Kesava Babu Bitra, BCOM,ACA,ACMA Mr Nitin Kashiram Mahadik, BCOM,ACMA M/35608 28-1-89/2 Santhi Nagar 5th Road New Collector Compound Gate No. 7, Plot No. Mr Kalidas P S, BCOM ELURU 534007 65 Room No. 19 Malvani Malad West HONS,MBA,ACA,ACMA MUMBAI 400095 Senior Officer- Finance Oman Air S. A. O. C. M/35621 Muscat International Airport P. O. Box - 58 S E Mr Manjunatha M J, BCOM,ACMA M/35597 E B Lead Business Analyst # 624, 1st Floor, Mr Praduman Prasad, BCOM HONS,ACMA MUSCAT 111 16 A Main 21 B Cross, Boohbcs Layout C/o Lakshman Ganjhu Dak Banglow Road, Doddkallasandra 1st Stage Kanakapura Road BANGALORE 560062 Lobin Bagan, Road No -2 Opp. Bank Of Baroda M/35609 KHUNTI 835210 Mr P Vijaya Bhaskar, BCOM,ACMA Assistant Manager Renault Nissan Automotive M/35622 India Pvt Ltd Plot No.1, Sipcot Industrial Park Mr Ashish Khandelwal, BCOM,ACMA M/35598 Oragadam Post - Mattur Mohan Khandelwal Supela Market Anaj Line Mr G Muguntha Narayanan, BCOM,ACA,ACMA SRIPERUMBUDUR 602105 BHILAI 490023 Assistant Manager, Internal Audit Sundaram Clayton Limited T V S Motor Company Ltd M/35610 M/35623 Mr Rajiv Kumar Jha, BCOM HONS,ACMA HOSUR 635109 Mr Ravi Babu Pyla, MCOM,ACMA Block - C/b2, 3rd Floor Tolly Twin, Kabardanga Junior Accounts Officer O/o. General Manager, M/35599 More I T Project Circle, BSNL Osmania University KOLKATA 700104 Mr N J P Narayana, MCOM,ACMA Campus Jamai Osmanai Manager - Costing & MIS M/s.R. A. K. Ceramics HYDERABAD 500007 M/35624 India Pvt Ltd P B No. 11 I D A Peddapuram A D Mr Alok Kumar Mishra, BCOM,ACMA B Road M/35611 Manager Finance Victoria Foods Pvt. Ltd. B-32, SAMALKOT 533440 Mr Narendra Kumar, BCOM,MFM,ACMA Lawrence Road No.132/25, 2nd Floor 11th Main, 50ft Road NEW DELHI 110035 M/35600 Hanumanthnagar Mr Hardik Kalyanjibhai Ambaliya, BANGALORE 560019 M/35625 MCOM,ACA,ACS,ACMA Mr Srirangarajan Mandikal, MCOM,ACMA 6, Nava Thorala Near Chora M/35612 C C C Optr - A Bharat Electronics Ltd Post - RAJKOT 360003 Mr Tarak Nath Bhagat, BCOM,ACMA Jalahalli Accounts Manager M/s. Sarajit Food Products BANGALORE 560013 Pvt Ltd Bamunara Industrial Area Gopalpur M/35601 DURGAPUR 713212 M/35626 Mr Ravi Chandra V G, BCOM,ACMA Mr V Ranganathan, BCOM,ACMA Asst. Commercial Tax Officer Commercial Tax M/35613 Manager - Finance Cura Health Care Pvt. Ltd Office 2-149/2 T T D Plots , M R PallI New Balaji Mr Rambabu Manjula, BCOM,ACMA No. A - 32, Phase - I M E P Z - S E Z Tambaram Colony G - 2, Garudadri Towers Balaji Nagar Kukatpalli Kadaperi TIRUPATI 517502 HYDERABAD 500072 CHENNAI 600045
116 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35627 M/35639 M/35650 Mr Shanmugam Karthigeyan, MCOM,ACMA Mr Devendra Vijaykumar Kulkarni, Mr Sampat Natha Jare, MCOM,ACMA Officer (Finance) Indian Rare Earths Ltd Finance MCOM,ACMA General Manager Nova Consultancy 571/1 , Department Manavalakurichi Costing Executive Avians Innovations Office No.3, Dealing Chembers J.m. Road Near KANYAKUMARI 629252 Technology Pvt Ltd Gat No. 60/61 Near Sai Service Deccan Saptashitij Industries Dehu Moshi Road, PUNE 411004 M/35628 Chikhali Mr Adarsh Hegde, BCOM,ACA,ACMA PUNE 412114 M/35651 43 A, 1st Main, 2nd Cross C I L Layout Sanjay Mr Habeebulla P P, MCOM,ACMA Cherungottile House Puthukkode Post Nagar M/35640 Malappuram Ramanattukara Via BANGALORE 560094 Mr Rabin Mondal, MCOM,ACMA Asstt. Manager Hindustan Copper Limited Indian CALICUT 673633 Copper Complex Moubhandar East Singhbhum M/35629 M/35652 GHATSILA 832103 Mr Prasanta Kumar Sutar, BCOM,ACMA Mr Mudra Ravish Doshi, MCOM,ACMA N I P A International Pvt. Ltd. Plot No.412, 404, I Wing, western City Nr. L P Savani Phase - I I I Udyog Vihar M/35641 School Adajan - Pal GURGAON 122016 Ms Harsha Sahu, MCOM,B. ED,ACMA SURAT 395009 Asst. Officer (Accounts) Bharat Heavy M/35630 Electricals Ltd Block - 6 Western Wing, First M/35653 Mr Nikhil Arora, BCOM,ACMA Floor Piplani Mr Utsab Mitra, MCOM,ACMA Associate Consultant Yamaha Motor Solutions BHOPAL 462022 Sr. Consultant Adi Strategies India Pvt. Ltd Giga India 19/6 Mathura Road Space, Beta - 1 3rd Floor, Vimanagar FARIDABAD 121006 M/35642 PUNE 411014 Mr Bhawna Sharma Chandla, BCOM M/35631 HONS,ACMA M/35654 Mr Shailesh Sivadasan, BE,MBA,ACMA Assistant Manager Lanco Infratech Limited Plot Mr Snehansu Dutta, BCOM Tenament No: 775 Sector No: 27 No.404 & 405 Udyog Vihar, Phase - 3 HONS,ACA,ACS,ACMA GANDHINAGAR 382028 GURGAON 122016 Dy. Manager (Finance) C E S C Ltd C E S C House Chowringhee Square KOLKATA 700001 M/35632 M/35643 Mr Shan Thoppil Shajahan, BCOM,ACMA Mr G Udaya Sunder Wamsee, BSC M/35655 HONS,ACMA Assistant Manager Finance Sfo Technologies Pvt LtD Plot No.37 Cochin Special Economic Mr Jaimon Mathappan, BCOM,ACMA C/o Wardhan G H Flat No 306, Carnation A Senior Manager Manappuram Finance R K Homes, Bolarum Near Bolarum Railway ZonE Kakkanad KOCHI 682037 Limited Kombara House Attupuram Ayroor PO Station Ernakulam SECUNDERABAD 500010 M/35644 ALUVA 683579 Mr Vivek Sharma, MCOM,ACMA M/35633 M/35656 Assistant Manager Hindustan Copper Limited Mr Abdul Mubeen B, BBM,ACMA Mr Vikash Kumar Singh, BCOM HONS,ACMA Hindustan Copper Limited Admin Building Khetri Assistant Manager Bosch Limited Admin 411 - B Z - Block, Sector - 12 Gautam Buddh Copper Complex Khetri Nagar Building, 2nd Floor Automotive After Market Nagar JHUNJHUNU 333504 Hosur Road Adugodi NOIDA 201301 BANGALORE 560030 M/35645 M/35657 Mr Anantha Krishnan K S, BSC,ACMA M/35634 Mr Lijon Johny, BCOM,ACMA Head Finance & Accounts Strides Pharma Mr Amol Dattatray Sonawane, BCOM,ACMA Senior Manager Manappuram Finance Limited Cameroon B. P. 1834 416, Rue Dubois De Cherangadan House Kanakamala PO Thrissur Executive Pudumjee Pulp And Paper Mill Ltd Saligny (Bebey Elame) Thergoan Pimpri Chinchwad Dist. AKWA 000000 CHALAKUDY 680689 PUNE 411033 M/35646 M/35658 M/35635 Mr Atul Nivrutti Saindane, BCOM,ACMA Mr Krunal Bipinbhai Panchal, MCOM,ACMA Ms Goru Ramya, MCOM,ACMA 2, Radhaswami Apartment B/h Raighad Soc. Sr. Executive Costing Sahajanand Laser Executive Officer (Finance & Accounts) South Rajiv Nagar Technology Ltd E - 30, G. I. D. C. Electronic Asia Lpg Company Private Limited Varun NASHIK 422009 Estate, Sector - 26 Towers, V I Floor Kasturbamarg Siripuram GANDHINAGAR 382028 VISAKHAPATNAM 530003 M/35647 Mr Sumesh B, MCOM,ACMA M/35659 M/35636 Sr. Manager Manappuram Finance Limited Mr G Ramaprabu, BCOM,ACMA Manager Ford Business Services Centre Mr Ramachandran C S, BCOM,MBA,ACMA Sreenivas Mallika Thattayil P O Pathanamtitta 143, M. G. R. Road (North Veeranam Salai) Associate Vice President Barclays Shared PATHANAMTHITTA 691525 Service Center C - 6, Trishul Appartments Perungudi, 1 B - R M Z Millenia CHENNAI 600096 No.19, A. P. Arasu Street Ram Nagar Ambattur M/35648 CHENNAI 600053 Mr Nibin Mathew, BCOM,ACMA M/35660 Sr. Executive (Accounts & Costing) Patspin M/35637 Mr Surajit Bhagat, BCOM HONS,ACMA India Ltd. Palal Towers, 5th Floor M. G. Road Senior Officer (Mktg.- Pricing) Gail (I) Limited Mr Anil Kumar Kesireddy, BCOM,ACMA Ravipuram Gail Bhawan 16, Bhikaji Cama Place R. K. S/o K Bhaskara Rao Flat No. 1-6, Lekha Vihar ERNAKULAM 682016 Puram Apartments Opp. Head Post Office NEW DELHI 110066 TADEPALLIGUDEM 534101 M/35649 Mr Harsh Chauhan, BCOM,MBA,ACMA M/35661 M/35638 Finance Executive Bae Systems India Mr Kamakshi G, BCOM,ACS,ACMA Mr Saumya Ranjan Barik, BCOM,LLB,ACMA Services Pvt Ltd Hotel Le-meridien, 2nd Floor No. 8, 27th Cross Street Banu Nagar Pudur, Amaravati Appartment 1st Floor, Flat No. 1F Commercial Tower Raisina Road Ambattur KOLKATA 700041 NEW DELHI 110001 CHENNAI 600053
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M/35662 M/35674 M/35687 Ms Suggu Bhargavi, BCOM,ACMA Mr Bidroha Ratna Mahakul, BCOM,ACMA Mr Parveen Kumar, MCOM,FCA,ACMA Sr. Specialist Shell India Markets Private Limited At/po - Sathibankuda Via - Aradi P.s - Dhusuri Proprietor Parveen Madaan & Co. Shop No. 4 2nd Floor, Campus 4 A R M Z Millenia Business BHADRAK 756138 Near Vodafone Store Delhi Road Park 143, Dr. M G R Road Perungudi SONEPAT 131001 CHENNAI 600096 M/35675 Mr Praveen Kumar Pabba, MCOM,ACMA M/35688 M/35663 Assistant Manager Zenara Pharma Pvt Ltd Plot Mr Sanjeev Kumar, BCOM,ACMA Mr Prashant Raghunath Gaikwad, No.83/b&84&87-96 Pahse I I I, I D A Cherlapally H. No. H -19 E, Ground Floor Shakarpur BCOM,ACMA HYDERABAD 500051 DELHI 110092 Manager - Finance & Costing Uni Abex Alloy Products Ltd. Mullabaugh Swami Vivekanand M/35676 M/35689 Road Manpada Mr Nagender Saini, BCOM,ACMA Mr Rucha Rahul Shah, BCOM,ACMA THANE 400610 B-47 Najafgarh Park Dichaon Road Najafgarh Accounts & Taxation Manager Diligent DELHI 110043 M/35664 Engineering 83/2/3, Old N D A Road Shivne PUNE 411023 Mr Balla Appala Naidu, BCOM,ACMA M/35677 2 - 110, Madakapalem Parawada Mr S Sanjiv Kumar Prusty, BCOM,ACMA M/35690 VISAKHAPATNAM 531021 S/o: S Ashok Kumar Prusty Rangunibandha Mr Koil Kandadai Annan Ramanujan, Street, 2nd Lane 1st House, Berhampur(gm) BBA,FCA,ACMA M/35665 BERHAMPUR 760009 Mr Shekhar Srivastava, BSC HONS,ACMA Partner Gopalaiyer & Subramanian 11, Rajan Street T. Nagar Sr. Manager Finance Renault Nissan Automotive M/35678 India Pvt. Ltd. Plot No.1, Sipcot Industrial Park Mr Raghuram Lellapalli, BCOM CHENNAI 600017 Oragadam, Mattur (Post) Sriperumbudur HONS,MBA,ACMA KANCHEEPURAM 602105 16-2-836/31 Madhava Nagar Saidabad M/35691 HYDERABAD 500059 Mr Vadde Kishore Kumar, MCOM,ACMA M/35666 A G M - Finance & Accounts T N R Infra Projects Mr Barsha Kumari Baranwal, BCOM M/35679 Ltd 4th Floor, Ishwarya Nilayam Dwarakapuri HONS,ACMA Mr Sadhu Nagendra Kumar, BCOM,ACMA Colony Panjagutta Gulzar Bagh Krishna Nagar Ukhra Dist- Senior Manager - Accounts & Finance I V R C HYDERABAD 500082 Burdwan L Limited M I H I R , 8-2-350/5/ A/24/1- B & 2 UKHRA 713363 Road No. 2, Panchavati Colony Banjara Hills M/35692 HYDERABAD 500034 Mr Arnab Paul, BCOM HONS,ACMA M/35667 Vill: Dafarpur - Kultala Po: Dafarpur Ps: Domjur Mr Ajay Narendra Vyas, BCOM,FCA,ACMA M/35680 HOWRAH 711405 A - 7, Vineet Majithia Nagar S V Road Kandivali Mr Sijo P Baby, MCOM,ACMA (W) Pullolikkal Kolichal (Po) Rajapuram (Via) M/35693 MUMBAI 400067 KANHANGAD 671532 Mr Manish Navaratanlal Dangi, BBA,MBA,ACMA M/35668 M/35681 401, Matruchhaya Appartment Opp : Bapji Mr Venkata Vijay Bharat Kumar Sanka, Mr Janardhan Yellappa Gujaran, BCOM,ACMA BCOM,ACMA Bhakat Mandal Udhnagaam Chief Manager National Stock Exchange SURAT 394210 Sr. Officer A G I Glaspac (Ansbu Of H S I L ) Exchange Plaza Bandra Kurla Complex Bandra Glas Road Moti Nagar East M/35694 HYDERABAD 500018 MUMBAI 400051 Mr Monica Shripad Patil, BCOM,ACMA Flat No.29 Gold Kraft Society Vishrantwadi M/35669 M/35682 Mr Manoj Goyal, MCOM,FCS,ACMA Mr Jijo V Kuruvilla, BCOM,ACMA PUNE 411015 Bindu Darshan 172, Preconco Colony Sr. Associate Consultant Infosys Ltd. Hosur Annapurna Road Road Electronic City M/35695 INDORE 452009 BANGALORE 560100 Mr Sujata Ajit Gajendragaokar, BCOM,ACMA L I C Of India Admn. Officer 2nd Floor, Jeevan M/35670 M/35683 Prakash University Road, Opp : Hardikar Mr Nandini J, MCOM,ACMA Mr Raju Ghosh, MCOM,ACMA Hospital Shivajinagar Associate M/s. Pricewater House Coopers Pvt. C/o. Nabakumar Santra Vill + Post - Jhakra PUNE 411005 Ltd 6th Floor, Tower - D The Millenia, 1 & 2 Dist - Paschim Midnapur Murphy Road Ulsoor WEST MEDINIPUR 721201 M/35696 BANGALORE 560008 Mr Rohit Prasad, BCOM,ACMA M/35684 B. U. Controller T E Connectivity India (P) M/35671 Mr Natarajan Srinivasan, MCOM,ACMA Limited Gat No. 1122, 1129, 1140 Tal - Khandala Mr Ganesaraman Kalyanasundaram, Assistant Manager (C W A) The South Indian BE,ACMA Dist. Satara Bank Limited 10/74, 8 M R Building, Elampillai SHIRWAL 412801 A V P - Glbal E R P & India - IS [ 24 ] 7 Embassy Branch Kakkapallayam Main Road Opp. To Bus Golflinks Business Park Off Intermediate Ring Stand, Elampilli M/35697 Road SALEM 637502 BANGALORE 560071 Mr Suresh Chandra Lenka, BCOM,MBA,ACMA Finance Controller Delhi Cargo Service Center M/35685 M/35672 Mr Rakesh Dutta, BCOM,ACMA Private Limited Gate -6, Terminal -2, Indira Mr Pankaj Madhukar Pakhale, MCOM,ACMA Analyst Franklin Templeton Of India Pvt. Ltd Gandhi International AirporT Dwarka Dy Manager Raymond Ltd J K Gram Pokharan Dutta Lodge, Barabazar P. O. Chinsurah Dist - DELHI 110037 Road No. 1 Hooghly THANE 400606 CHINSURAH 712101 M/35698 Mr Malay Sinha, MCOM,ACMA M/35673 M/35686 Accounts Officer Bharat Heavy Electricals Mr Pranay Agarwal, BBA,ACMA Mr Jayasree Raghavan, BCOM,ACMA Limited Pser-dj-9/1 Sector -2 Karunamoyee, M. G. Oil Mill Mamra Market Sr. Executive Lucas T V S Limited Padi Saltlake DURGAPUR 713206 CHENNAI 600050 KOLKATA 700091
118 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35699 M/35712 M/35724 Mr Balakrishna Dava, BCOM,ACMA Mr Sanket Ratna Patel, MCOM,ACMA Ms Kumari Priyanka, BSC HONS,ACMA Accountant Sai Ram Logistics H. No. 4-2-428 2127, Mangal Murti Colony Behind Fr. Agnel Dy. Manager (F & A -Mktg) G A I L (India) Opp : Mamata Medical College Rotary Nagar School Nr. Vithal Mandir, Kamlakar Nagar Limited G A I L Bhawan, 3rd Floor 16, Bhikaiji KHAMMAM 507002 Ambernath West, Dist - Thane Cama Place Near Hayat Hotel AMBARNATH 421501 NEW DELHI 110066 M/35700 Ms Saras Chandrika Palabathuni Venkata, M/35713 M/35725 BCOM HONS,ACMA Mr Shashidhar Nookala, BCOM,ACMA Mr Sudheer Kabeer Mohammed, MCOM, Assistant Manager Dr. Reddys Laboratories Ltd Sr. Project Manager M/s. Infosys Ltd S E Z, Senior Cost Controller Jersey Architectural 8-2-337, Road No. 3 Banjara Hills Survey No. 50, Pocharam Village Singapore Solution (Qatar Kwik Span) Street No.5, Gate HYDERABAD 500034 Township Post Office Ghatkesar Mandal, Ranga No.41 Industrial Area Reddy Dist DOHA 7922 HYDERABAD 500088 M/35701 M/35726 Ms Manpreet Kaur Sohal, BCOM,ACMA M/35714 Ms Swati Anil Chandanapurkar, BCOM,ACMA Accounts Executive Universal Logistics Pvt. Ltd Mr Devarajan Vasudevan, Sr Executive Godrej Agrovet Ltd Godrej Office No. 1, 1st Floor Plot No. 316, Sector - 1 A BCOM,ACA,ACS,ACMA Industries Compound Gate No.2, Phirojshah GANDHIDHAM 370201 No 41/13 S N R Flats Singarachari Street Nagar Vikhroli East Triplicane MUMBAI 400079 M/35702 CHENNAI 600005 Mr Alex P Thomas, MCOM,ACA,ACMA M/35727 Pokkidiyil House Olessa - Post M/35715 Mr Sharad Tiwari, BCOM,ACMA KOTTAYAM 686014 Mr Ashish Kumar Gupta, BCOM HONS,ACMA R Z V / 1 B , Nanda Block Mahavir Enclave 11 / B, Shyama Prasad Mukherjee Road Palam M/35703 Bhowanipur NEW DELHI 110045 Mr Jimmy Joseph, MCOM,ACMA KOLKATA 700025 Asst. Manager Stock Holding Corpn. Of India M/35728 Ltd S H C I L., U T I Building Bank Cross Street M/35716 Mr Varun Bhatia, BCOM,ACS,ACMA Lane Opp : Old Custom House Fort Mr Nand Kishor Sah, BCOM,ACMA Junior Accounts Officer Bharat Sanchar Nigam MUMBAI 400023 31, Ratu Sarkar Lane 2nd Floor, Room No. 02 Limited Room No. - 211 Sanchar Sadan Plot No. KOLKATA 700073 - 2, Sector - 34 A M/35704 CHANDIGARH 160022 Mr Yogesh Vishwanath Shirude, MCOM,ACMA M/35717 Assistant Manager Emcure Pharmaceuticals Mr Aniruddha Kumar, BCOM,ACMA M/35729 Limited D -24, M. I. D. C., Kurkumbh Tal. Daund Junior Manager - Finance Rites Limited Metro Ms Prateeksha Khanna, BCOM,ACMA PUNE 413802 Railway Service Bldg., 2nd Floor 56, C. R. Customer Assistant State Bank Of India 12/224, Avenue Sabji Market Gwaltoli M/35705 KOLKATA 700012 KANPUR 208001 Mr Sachin Takkar, BCOM HONS,ACMA M/35718 M/35730 House No - 179 Gali No - 3 Govindpuri, Kalkaji Ms Selvi Nainar, BCOM,ACMA Mr Nand Kishor, BCOM HONS,ACMA NEW DELHI 110019 2, Annai Sathya Street Udayarpatti Building No. B - 7, 4th Floor Nirlon Kholedge TIRUNELVEELI 627001 Park Near Hub Mall, Gurgaon East M/35706 MUMBAI 400063 Mr Deepak Saini, BCOM,ACA,ACMA M/35719 House No. 108, Goverdhan Colony New Ms Sonal Ambalal Patel, MCOM,ACMA M/35731 Sanganer Road Sodala C/309, Leena Apartment 60 Feet Road Mr Asha Jyothi Charakana, BCOM,ACMA JAIPUR 302019 Bhayander (West) Thane Junior Manager Rites Limited Bhagwan Tower, MUMBAI 401101 Block - A Cuttack Road M/35707 BHUBANESWAR 751006 Mr Aravinth Balasubramaniam, M/35720 BCOM,MBA,ACMA Mr Pankaj Upendra Shroff, BCOM,MBA,ACMA M/35732 107, Power House Road General Manager - Accounts Sopariwala Mr Venkata Siva Kumar Guggilam, ERODE 638001 Exports Pvt. Ltd 21st Floor, Nirmal Nariman MCOM,ACMA Point D. No. 9-1-34/15/ A/60 Bapu Nagar Langur M/35708 MUMBAI 400021 House Mr Pankaj Kumar, BBA,ACMA HYDERABAD 500008 A -3, Raj Cottage, 1/18 Sector -5, Rajender M/35721 Nagar Sahibabad Mr Muralikrishna Cheruvu, M/35733 GHAZIABAD 201005 BCOM,ACA,ACS,ACMA Mr R Suresh, MCOM,MBA,ACMA Vice President Kotak Mahindra Old Mutual Life Assistant Manager - Accounts Pepsico India M/35709 Insurance Ltd 7th Floor, Kotak Infinity, Bldg. No. Holdings Pvt Ltd Sudha Centre New No.31, Old Mr Umapada Bhowmik, BCOM HONS,ACMA 21 Infinity Park, Off Western Express Highway No.19 Dr. Radhakrishnan Salai Mylapore Flat No. B - 3/13 Abhyudoy Co-op. Housing General A K Vaidya Marg Malad (E) CHENNAI 600004 Society Ltd E K T P - I V MUMBAI 400097 KOLKATA 700107 M/35734 M/35722 Mr Salman Farzi, BCOM,ACMA M/35710 Mr C H S V N Siva Krishna, BCOM,ACMA C/o Mehaboobha Jewellers No: 2, S S P Ms Deepti Sharma, BCOM HONS,ACMA Suvarchala Heights E 4, Road No 2, Sector 1, Towers Devaraja Mudali Street Park Town 212- B Munirka Village Lotus Land Mark, Ayodhya Nagar CHENNAI 600001 NEW DELHI 110067 VIJAYAWADA 520003 M/35735 M/35711 M/35723 Mr Subha V, BCOM,MBA,ACMA Mr Arshi Ismile, BCOM,ACMA Ms Teli Jigisha Bharatbhai, MCOM,ACMA Head - Enterprise Fraud And A M L Operations J-206, 2nd Floor, J -Extension Street No 6 A - 6, Ashoka Complex Near Janta Hospital Tata Consultancy Services Spencers Plaza Near Jain Mandir Laxmi Nagar Sardar Patel Road Anna Salai DELHI 110092 PATAN 384265 CHENNAI 600002
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M/35736 M/35748 M/35761 Mr Ganesh Karthikeyan Sankaranarayanan, Mr V A S Jaishankhar, BCOM,FCA,ACMA Ms Kinjal Manu Bhai Gajera, BBA,ACMA BCOM,ACMA Chartered Accountant Sri Kartik Balaji Flats Old B - 12, Swaminarayan Nagar B/h. Kalakunj Dy. Manager (Finance) I T C Ltd P S P Division No. 45, New No. 42 Nerkundram Pathai (W) Varachha Anrich Industrial Estate Bollaram Village Vadapalani SURAT 395006 Jinnaram Mandal CHENNAI 600026 MEDAK 502325 M/35762 M/35749 Mr Babu Manukuladithyan, BSC,MBA,ACMA M/35737 Ms Pranita Madhukar Deshmukh, Finance Manager Jacobsons Direct Marketing Ms Chanda Ghosh, BCOM HONS,ACMA MCOM,ACMA Services L LC P B No.6884 Karama Flat No. 212, Dakshinayan Apartment Plot No. Sr. Manager ( Finance) M O I L Limited M O I L DUBAI 6884 19, Sector - 4 Dwarka Bhavan A - 1, Katol Road NEW DELHI 110078 NAGPUR 440013 M/35763 M/35738 M/35750 Mr Vaibhav Uddhav Nikumbh, MCOM,ACMA Mr Nilesh Gupta, MCOM,LLB,ACS,MA,ACMA Mr Maruthappan Rathinavel, MCOM,ACMA Flat No 4 (2nd Floor) Raj Residency -A Narhari Company Secretary Silver Realties & J. K. V. A. Browsing Centre No.1 First Nagar ,Pathardi Shivar Pathardi Infrastructure Pvt. Ltd 112 - 113, Silver Sanchora Floor, Durga Complex Near M. V. M. College NASIK 422010 Castle 7 - 8, R N T Marg Thadicombu Road INDORE 452001 DINDIGUL 624001 M/35764 Mr Abhishek Halan, BCOM HONS,ACMA M/35739 M/35751 F E - 263, Sector - 3 Salt Lake City Mr Subrat Kumar Patel, BCOM,ACMA Mr Raja Dusmanta Barik, BCOM,ACMA KOLKATA 700091 Finance Manager Camel Fuels (T) Ltd Post Box C/o. Ramesh Chandra Barik At - Dipapal P. O. No.22786 Kushaleswar Dist. Keonjhar M/35765 DAR ES SALAAM 000000 ANANDAPUR 758025 Mr Ayan Paul, BCOM HONS,ACMA Hatiara Sitalatala (Near Harendra Bhavan) M/35740 M/35752 KOLKATA 700157 Ms Rajashri Anand Naik, BCOM,ACMA Mr Sandip Singh, MCOM,ACMA Management Staff Cipla Limited R. & D. Centre Anand Bhawan Flat No.402, 4th Floor 28, Goa M/35766 L. B. S. Road Vikhroli (West) Bagan Lane Mr Ashish Gupta, BCOM HONS,ACMA MUMBAI 400083 KOLKATA 700006 Rajendra Chattra Bhawan 34/ A, Ratu Sarkar M/35741 M/35753 Lane Mr Hari Kalubandi Venkatesan, Mr A V S R Prasad, BA,ACMA KOLKATA 700073 BCOM,ACA,ACMA Sangeeta Arcade Flat No.503 Prasoona Nagar, No.7, 1st Floor Nattu Subbarayan Street Chintal R R Dist M/35767 Mylapore SECUNDERABAD 500054 Mr Sachin Bhanudas Hanumante, CHENNAI 600004 BCOM,FCA,ACMA M/35754 Chartered Accountants B-1502, Vithika Dosti M/35742 Mr Deepak Kumar Das, BCOM,ACMA Vihar Complex, Vartaknagar Acharya Atre Marg Mr Arvind Kumar Tripathi, BSC,ACMA 5/234, West Putiary Off Pokhran Road No.1 Cost Accountant Cenzer Industries Limited Oval KOLKATA 700041 THANE 400606 House , Second Floor , Off: Nagindas Master Road Behind Bombay Stock Exchange M/35755 M/35768 MUMBAI 400001 Mr Narayan Sharma, BCOM HONS,ACMA Mr Ajay Singh Tomar, BCOM,ACMA 30, Sanatan Mistry Lane, 1st Floor Oriyapara House No. 123, Ward No. 2 Khidiya Pura, Nr. M/35743 HOWRAH 711106 Mr Rajesh R, BCOM,ACMA Ramdev Mandir Dist - Raisen MANDIDEEP 462046 Sr Officer Finance S F O Technologies Pvt Ltd M/35756 Plot - 2, C S E Z Kakkanad Mr Sandeep Kumar Bhakta, MCOM,ACMA M/35769 THRISSUR 682037 Vill - Raghunathpur Qtr. No. F B - 03 Dist. Hooghly Mr Ashalatha Kumari, BBA,BBM,ACMA M/35744 NAYASARAI 712513 C - C - C - O P `A` Bharat Electronics Ltd (A Mr Pichika Naresh Babu, BCOM,ACMA Govt Of India Enterprise Ministry Of Defence) Executive Commercial K S K Energy Ventures M/35757 Jalahalli Post Ltd 8-2-293/82/ A /431 A Road No. 22 Jubilee Ms Ankita Biswas, BCOM HONS,ACMA BANGALORE 560013 Hills Flat No.15 Ranee Annapurna Apartment HYDERABAD 500033 Tankapani Road M/35770 BHUBANESWAR 751014 Mr Balasubramanian Jayaraman, M/35745 BCOM,ACA,ACMA Mr Phani Kumar Ganapavarapu, M/35758 Head - Finance & Accounts Easun Reyrolle Ltd BCOM,ACA,ACMA Mr Sankar Basu, BCOM HONS,ACMA Plot No. 98, Sipcot Industrial Complex G M - Finance Zenara Pharma Pvt. Ltd 83 B / 1 B /9, S B S Colony P. O. - Korba Colliery HOSUR 635126 84, 87 - 96, Phase - IiI I D A - Cherlapally KORBA 495677 HYDERABAD 500051 M/35771 M/35759 Ms V N S Krishnaveni, BCOM HONS,ACMA M/35746 Mr Hariharan G, BCOM,ACA,ACMA Team Manager (Operations) Cognizant Ms Konkala Swathi, BCOM,ACMA Manager Finance La Maison Mondiale Po Box Management Industrial Trainee Bharat 111878 Technology Solutions India Pvt Ltd Phase - 3, D. Dynamics Ltd Kanchan Bagh DUBAI 600014 L. F. Building Gachibowli HYDERABAD 500058 HYDERABAD 500015 M/35760 M/35747 Ms Pallavi Sachdeva, BA M/35772 Mr Sunil Divakar Kulkarni, BCOM,ACMA HONS,ACA,ACS,ACMA Mr Bhaskar Banerjee, BCOM HONS,ACMA Assistan Manager-finance Tata Autocmp Gy Team Support Specialist Barclays Shared G M - Corporate Accounts Hindalco Industries Battries Limited Sanjay Nagar Lane No A-3 Services Pvt Ltd Unitech Infospace Plot No.2 Ltd 264-265, Vaswani Chambers 2nd Floor, Dr. Opp Akashwani Smashan Maruti Road Block - B, 8th Floor Sector - 62 A B Road Opp : Old Post Office Worli AURANGABAD 431001 NOIDA 201301 MUMBAI 400030
120 THE MANAGEMENT ACCOUNTANT JANUARY 2014 www.icmai.in M/35773 M/35785 M/35798 Mr Nandan Vasant Natu, BE,ACMA Mr Dhiresh Kochar, BCOM,ACMA Mr Laxmi Saxena, MCOM,FCS,ACMA Manager - Internal Audit M/s. Tata Motors Ltd C 12 / A, Balaram Bose 2nd Lane Mohini Mohan Assisstant Accounts Officer Rajasthan Rajya V B U , I - Block, Internal Audit Pimpri Road Vidhyut Prasaran Nigam Ltd. Near J V V N Ltd PUNE 411018 KOLKATA 700020 Sakatpura KOTA 324008 M/35774 M/35786 Mr Rohit Mohta, BCOM HONS,ACMA Mr Uday Kumar Jaiswal, BCOM,ACMA M/35799 26, P. K. Tagore Street Bal Sadan, 3rd Floor, C/o. Umesh Kumar Jaiswal At & P.o. Room No.3 Mr Aakash Gupta, BCOM,ACA,ACMA Rairangpur Bhootgali KOLKATA 700006 55, Shanti Nagar Ajmer Road RAIRANGPUR 757043 JAIPUR 302006 M/35787 M/35775 Mr Murari Lal Gupta, BCOM,ACMA M/35800 Mr Vaibhav Kumar Sultania, BCOM,ACMA 8, Triloki Nath Banerjee Lane Mr Srinivasan Krishnaswamy, 34 A, Ratu Sarkar Lane Rajendra Chhatra HOWRAH 711101 BCOM,ACA,ACMA Bhawan 1st Floor, Room No.19 V P - Business Development & Strategic KOLKATA 700073 M/35788 Planning Deyaar Development P J S C Deyaar Ms Priti Shaw, BCOM HONS,ACMA Barsha Building 6th Floor Po Box 30833 M/35776 I C W A I - Trainee Food Corporation Of India DUBAI 30833 Ms Aheli Mukherjee, BCOM HONS,ACMA Area Office Hooghly Bhudev Mukherjee Road Barabazar, Dist. Hooghly 58/3, Ballygunge Circular Road Saptaparni, F M/35801 CHINSURAH 712101 L - B - 73 Mr Satya Suresh Koppisetti, BCOM,ACMA KOLKATA 700019 M/35789 Assistant Manager - Finance & Costing Hetero Mr Saurav Tiwari, BCOM HONS,ACMA Labs Limited 22-110, I D A Jeedimetla M/35777 12, Uma Das Lane 2nd Floor HYDERABAD 500055 Mr Aravind Kumar, BCOM,ACMA KOLKATA 700016 Lead Consultant Computer Science Corporation M/35802 Mepz Alwarpet M/35790 Mr Shivlal Chandrashekhar Sharma, CHENNAI 600089 Mr Sk Atiur Rahaman, MCOM,ACMA BBA,ACMA Propritor Amaan Creation Dakghar - Jal Khura Syntel Ltd. Plot No. 89/d-2, Dham Chs Gorai M/35778 Road Mahesh Tala Dist. 24 Pgs(s) (1), Borivali (W) Ms K Priya, MCOM,ACMA KOLKATA 700141 MUMBAI 400091 T C / 2003, Wsra - 105 ‘Kousthubam’ M/35791 Thevarathucoil Compound West Fort M/35803 THIRUVANANTHAPURAM 695021 Mr Amitava Mukherjee, MCOM,ACMA Dy. Chief Accounts Officer / T A Govt. Of India Mr Ashwani Kathpalia, BCOM HONS,ACMA H 25 / 10 Ff Dlf Qe Phase 1 M/35779 Min. Of Rlys, Eastern Railway 6th Floor New GURGAON 122002 Mr Biplab Kumar Das, BCOM HONS,ACMA Koilaghat Building 14, Strand Road 121/ B, Roy Bahadur Road Behala KOLKATA 700001 M/35804 KOLKATA 700034 M/35792 Mr Ashish Kumar Agarwal, BCOM,ACMA Mr Sunder Subramanian, BCOM,ACMA 1908, Reghalia Heights Shipra Sun City M/35780 Executive Director Shriram Transport Finance Indirapuram Mr Gouda Srikanth, BCOM,ACMA Co. Ltd Wolkhardt Towers Level - 3, West Wing GHAZIABAD 201010 Senior Accounts Executive Sindhan Designs Pvt C - 2, G - Block Bandra - Kurla Complex Ltd 8-2-293/82/ J 3/564 Road No.12 Bangara MUMBAI 400051 M/35805 Hills Ms Shivanjali Ranesardesai, BE,ACMA HYDERABAD 500034 M/35793 Mr Ribin Paul, BCOM,MBA,ACMA Finance Executive Syngenta India Ltd Santa M/35781 P B R M Axis Bank Ltd Ernakulam Monica Works Corlim, Ilhas Mr Harish Chand, BCOM HONS,ACMA ERNAKULAM 682018 GOA 403110 Junior Accounts Officer Bharat Sanchar Nigam Limited C A Section B S N L Telephone M/35794 M/35806 Exchange Boundary Road , Lal Kurti Mr Meena Rohit Kukreti, MCOM,ACMA Mr Atla Audinarayana, BSC,ACMA MEERUT 250001 Exe. Cost Accountant Gufic Bioscience Ltd Old S/o. A. Subbaiah R. Y. Palem (Vi) Moggulluru Sanskar Jyot School Bldg. 2nd Floor, Above (Po) Podalakuru (Md) Bank Of Maharashtra S V Road Andheri (W) M/35782 NELLORE 524345 MUMBAI 400058 Mr Probir Shil, BCOM HONS,ACMA M/35807 Shil Bhaban Sagarbhanga Ghosh Market M/35795 Bidyasagar Abasan Mr Santosh Mandal, BCOM,MBA,ACMA Mr Hemant Kumar Guru, BCOM,ACMA DURGAPUR 713211 Non - Commission Officer Indian Air Force 24 E Vill - Gurubara P.o. Basariya Ps. Chauparan D, A F Stn Manauri HAZARIBAG 825406 M/35783 ALLAHABAD 212212 Mr Raja Sasi Kumar Kota, BCOM,ACMA M/35808 Accounts Officer Electronics Corporation Of M/35796 Mr Balakrishnan R, MCOM,ACMA India Ltd Central Accounts Administrative Mr Samir Dharmaji Jadhav, MCOM,ACMA Team Leader Scope International No. 1, Building E C I L - P.o. F/11, Kaveri Society Lodha Nagar Station Road Haddows Road Nungambakkam HYDERABAD 500062 Nallasopara (West) CHENNAI 600006 VIRAR 401203
M/35784 M/35797 M/35809 Mr Rahul Khanna, BCOM,ACMA Mr Krishna Kumar, BSC,ACMA Ms Anupma Gupta, MCOM,ACMA Assistant Executive Biolife Technologies 339, E . Head Of Finance Giant Fashions Co. Ltd P. O. Asstt. Director (E. T.) Gr. I I D C (M. S. M. E.) P. I. P. (H S I D C) Kundli Box 66985 Nirman Bhawan, 7th Floor Maulana Azad Road SONEPAT 131001 RIYADH 11586 NEW DELHI 110108
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M/35810 M/35813 M/35816 Mr Kanumuri Subhash Chandra, BCOM,ACMA Mr Sriramkumar Nagarajan, MS,ACA,ACMA Mr Sajeesh Kovilakath Parambil Sivasankaran, A V P - Finance A P A C Kantar I T P Floor Director - Enterprise Architecture G R E I F, I N BCOM,ACMA No.7, Orion Block The V, Plot No. 17 Software C 366, G R E I F Parkway Delaware, Ohio Cost Mgt. Accountant Al Mazrooei Craft Al Units Layout Madhapur DELAWARE 43015 Mazrooei Craft HYDERABAD 500081 DUBAI 000000 M/35814 M/35811 Mr Sujit Kumar Samantaray, BCOM M/35817 Mr Anshu Budhraja, BCOM HONS,MBE,ACMA HONS,MBA,ACMA Mr Raamkumar V G, BCOM,ACMA Sr. Manager Daiwa Capital Markets India Private C. F. O. Amway India Enterprise Pvt. Ltd Plot Plot No. 3 Shantinekatan Colony 3rd Street, Ltd 3rd North Avenue Maker Maxity, Bandra No. 84, Sector - 32 Kurla Complex Bandra - East Madambakkam GURGAON 122002 MUMBAI 400052 CHENNAI 600073
M/35812 M/35815 M/35818 Mr Sreeman Narayana Murthy Kandala, BCOM Mr Vineet Kumar Srivastava, MCOM,ACMA Mr Mohammad Hanif Shaikh, MCOM,M HONS,ACA,ACMA Manager - Accounts & Control Lafarge India PHIL,LLB, CFA,ACMA Assistant Vice President Genpact India 14-45, I Pvt. Ltd Vill - Chirya, Teh : Charkhi Dadri Dist - 339, Sugrabi - Bakhtavar Sinhagad ColonY D A Uppal Opp. N G R I Habsiguda Bhiwani Pimple - Gurav HYDERABAD 500007 BHIWANI 127022 PUNE 411061
CANCELLATION OF REGISTRATION UNDER REGULATION 25(1) OF CWA ACT, THE INSTITUTE OF COST 1959 REGISTRATION NUMBERS ACCOUNTANTS OF INDIA CANCELLED FOR JUNE-2014 TERM OF (STATUTORY BODY UNDER AN ACT OF PARLIAMENT) EXAMINATION UPTO ERS/007780 Ref. No: DOS/8/2013-14 Dated: 13th December, 2013 NRS/011516 (EXCEPT 10928-11000, Circular on Revised Cut-off dates for Admission to the CMA Foundation Course 11101-11150, 11161-11500) Pursuant to publication of The Gazette of India, Part III, Section 4, Ministry of Corporate Affairs, The Institute SRS/000001 - 026999,031001 - 031257 of Cost Accountants of India, notification CWR(2),2013 dated Kolkata, the 29th November,2013, to be WRS/015708 implemented from the date of their publication (dated 6th December,2013) in the official gazette. RSW/081159 RAF/005907 The following modification/amendment has been brought in /incorporated in the Cost and Works Accountants Regulations, 1959, in Regulation 20B, in clause (a), RE-REGISTRATION The students whose Registration Numbers (A) for the item (i), the following item shall be substituted, namely:- have been cancelled (inclusive of the “(i) he has been admitted to the Foundation Course under regulation 20A and has been enrolled for undergoing students registered upto 31st Dec-2006) postal or oral or e-learning tuition for at least one hundred and fifty days prior to the commencement of such as above but desire to take the Institute’s examination;”, Examination in June-2014 must apply (B) for item (iii), the following item shall be substituted, namely:- for DE-NOVO Registration and on being Registered DE-NOVO, Exemption from “(iii) he makes an application in the form approved by the Council, at least forty-five days prior to the individual subject(s) at Intermediate/Final commencement of the examination; Examination of the Institute secured under Provided that the Council may extend the said period for not more than ten days with such late fees as it thinks fit.” their former Registration, if any, will be Considering the date of holding CMA Foundation Course examination, in line with this revised regulation, the treated as per prevalent Rules. cut-off dates for admission to the “CMA Foundation Course” only, stands revised as follows: For DE-NOVO Registration, a candidate shall have to apply to Director of Studies Term of Examination Existing cut- Revised cut-off in prescribed Form (which can be off date date had either from the Institute’s H. Q. at Kolkata or from the concerned Regional For December term examination 31st May 30th June of Offices on payment of Rs.5/-) along (Example: If for December 2014 term of Examination, the existing of the same the same year with a remittance of Rs.2000/- only as cut-off date is 31st May 2014, which shall stand revised to 30th June, year Registration Fee through Demand Draft 2014) drawn in favour of THE INSTITUTE OF For June term examination 30th 31st December COST ACCOUNTANTS OF INDIA, payable (Example: If for June 2015 term of Examination, the existing November of of the previous at KOLKATA. cut-off date is 30th November,2014, which is now revised to 31st the previous year Wishing you a very Happy & Prosperous December,2014) year New Year Date: 19th December , 2013 This revised cut-off dates shall be effective for all admission to CMA Foundation Course for December, 2014 C. C. to All Regional Councils/Chapters term and onwards, until further notification to this effect. of ICAI This issues with an approval of the competent authority. CMA R.N.Pal R. N. PAL [Sr. Director (Directorate of Studies) and Secretary to the T&EF Committee] SR. DIRECTOR OF STUDIES
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