NHAI burdened users with heavy tolls: CAGMAHIM PRATAP SINGHThe HinduA toll booth in Varapuzha, Kerala. File photo

Provided undue benefits to private parties by fixing longer concession periodThe National Highway Authority of India (NHAI) burdened users with an extra Rs.28,361 crore

while providing undue benefits to private parties by fixing a longer concession period, the Comptroller and Auditor-General (CAG) has said in its audit report on the implementation of the National Highways project.

The CAG said the NHAI failed to fulfil the role assigned to it by the government and provided undue benefits to private parties — including Reliance Infrastructure, L&T and IRB infrastructure among others — to the tune of Rs. 2,928 crore.

The report, titled “Implementation of PPP projects in NHAI,” covered 94 projects under phases II, III, IV and V of the National Highways Development programme (NHDP) constituting 45.41 per cent of the total 207 BOT projects as on March 31, 2012.

Tabled in Parliament on Tuesday, the report notes that in the case of the Delhi-Agra NH project, awarded to Anil Ambani’s Reliance Infra, clause 31.3.1A, relating to withholding of toll collection in case of failure to achieve major milestones, was missing from the concession agreement.

“Toll revenue of Rs.303.62 crore was diverted by concessionaires in the Delhi-Agra and Pune-Satara projects as investments in Reliance mutual funds rather than being spent on construction work,” the report said.

The report said there would be an additional burden of Rs.30,247.60 crore on users due to levy of partial tolls on incomplete projects, non-realization of toll revenue from annuity projects due to delay in completion, and a longer concession period among other reasons.

The CAG also said the NHAI failed to achieve the 20 km a day target for widening and up-gradation of national highways during 2009-10 to 2012-13. “The NHAI’s best achievement was 17.81 km per day during 2011-12 which dropped to a mere 3.06 km per day during 2012 despite availability of sufficient funds,” the report said.

It said the NHAI did not appear to have adopted objective criteria to select highways for improvement and incurred a loss of Rs.856.8 crore due to change of scope in 23 projects.

CAG pulls up NHAI for implementation lapsesAds by Google

By: ENS Economic Bureau | New Delhi | Posted: December 24, 2014 2:12 am

The Comptroller and Auditor General, in a report released on Tuesday, has pulled up the National Highways Authority of

India (NHAI) saying that the agency had failed in properly implementing the public-private partnership (PPP)

model in the roads sector.

The auditor cited the lack of objective criteria in selecting projects, faulty accounting practices and extension of undue benefit

to private concessionaires in the report titled ‘Implementation of PPP projects in NHAI’. The audit was carried

out for 94 PPP projects awarded before March 2012 under NHDP Phases II-V. ]

The report said that undue benefits worth Rs 2,928.64 crore were extended to concessionaires and the road users would end

up bearing a burden of Rs 30,247.6 crore.

The report also pointed out that toll collections were shared with concessionaires in three six-laning projects when it should

have been withheld for missing construction milestones. In the case of the Delhi-Agra project which was being

executed by Reliance Infrastructure, the relevant clause for withholding the toll amount was altogether missing

from the concession agreements, the report said.

Additionally, toll revenues from the Delhi-Agra and Pune-Satara projects to the tune of Rs 303.62 crore were diverted as

investments into mutual funds.

Responding to the allegations, a Reliance Infrastructure spokesperson said, “The amounts invested in liquid mutual funds at

any given point were Rs 3-5 crore and not the inflated figures alleged in the CAG report, and the same do not

represent any ‘diversion’ of funds, as the mutual fund accounts were of the SPVs themselves. Deployment of

short-term liquidity in MFs was in the interest of the projects, as opposed to keeping funds idle in non-interest

bearing accounts,” the spokesperson said.

The CAG said that records related to selection or prioritisation of stretches taken up were not given by the highways ministry,

leading the auditor to comment that “no objective criteria was adopted by the ministry to select stretches…”

Vijay Chhibber, highways secretary said, “… if records on some issues have not been furnished … then it could just be a case

of faulty housekeeping on our part. But going forth, we are planning to put all details of a project in the public

domain right from the beginning.”

 Users of nine highways to pay Rs 28,096-cr extra toll: CAG

Report points to undue concessions to bidders in public-private partnership projects given till 2012, at public cost; scolds NHAI oversight

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Commuters on nine highways, including Delhi-Agra, Varanasi-Aurangabad and Pune-Satara, will have to pay a total of Rs 28,096 crore as extra toll.

This, says a critique of the Comptroller and Auditor General of India (CAG), was due to National Highways Authority of India (NHAI) fixing a longer concession period. Of these nine, two were awarded to Reliance Infrastructure (Delhi-Agra and Pune-Satara), one to Larsen & Toubro (Beawar-Pali-Pindwara) and one to IRB (Jaipur-Tonk-Deoli).

NHAI considered tollable traffic, not the total assessed volume. This resulted, says CAG, in fixing of a longer concession period, leading to the extra charges on commuters and congestion for toll payers.

These are part of its report on implementation of public-private partnership (PPP) projects in national highways. It audited 94 PPP projects, of 207 awarded till March 31, 2012.

  

Users on Varanasi-Aurangabad would have to pay an extra Rs 11,548 crore to Varanasi Aurangabad Tollway Pvt Ltd. Those using the Pune-Satara and Delhi-Agra stretches will pay an additional user fee of Rs 3,421 crore and Rs 753 crore, respectively, to PS Toll Road Pvt Ltd and DA Toll Road Pvt Ltd, both Reliance Infrastructure’s Special Purpose Vehicles (SPVs).

Charge on R-InfraCAG also said toll revenue of Rs 303.6 crore was diverted by the concessionaires (Reliance Infra) in the Delhi-Agra and Pune-Satara projects as investment in Reliance Mutual Fund, rather than being spent on construction work. Asked to comment, an R-Infra spokesperson said, “The allegations are completely baseless and devoid of any facts. We have not violated any law or concession agreements. All investments and expenses are made in full compliance of the agreements signed with NHAI and lenders. The amounts invested in liquid mutual funds at any given point of time were Rs  3-5 crore and not the inflated figures alleged in the CAG report, and the same do not represent  any diversion of funds, as the mutual fund accounts were of the SPVs themselves.”

Deployment of short-term liquidity in MFs was in the interest of the projects, as opposed to keeping funds idle in non-interest bearing accounts. The projects got delayed as NHAI could not provide the requisite clearances on time, and there is no question of any default by the SPVs, added R-Infra.

NHAI taken to taskThe report said NHAI failed to achieve its target of 20 kilometres a day for widening and upgradation of national highways during 2009-10 to 2012-13. The best was 17.81 kilometres a day during 2011-12. This came down to 3.06 kilometres a day during 2012, despite sufficient funds.

The report also raised concern on differences in the total project cost (TPC) worked out by the concessionaires and NHAI.

In 85 of 94 projects, the TPC worked out by the concessionaire was 0.32 per cent to 223 per cent higher.

It was highest in project Bharuch-Surat BOT II (awarded to IDAA Infra Pvt Ltd), where according to the agreement the cost was around Rs  492 crore, while according to common loan agreement it was around Rs 1588.91 crore. In the project Jaipur Tonk-Deoli

awarded to IRB-MRM, the TPC calculated by concessionare was Rs 1733 crore, while the agreement was around Rs  792 crore.

The ministry of road and highways admitted there are substantial differences between the TPC as concessionares worked out their own project cost based on market rates.

The lowest price difference was in the Aurang-Saraipalli project along then Odisha border, of Rs  4 crore. In 25 projects, the difference in cost was over 50 per cent.

The higher TPC worked out by concessionares allowed them to avail of a higher amount of borrowed funds and in case of termination because of a default by NHAI, the latter is liable to pay the concessionaire an amount equal to 90 per cent of debt due and payable.

The PPP model represents a chronic ailment of failure. During MS Mamat's tenure as RLY. Minister, so many projects were declared for implementation under PPP model but nothing remarkable could be noted. The CAG rightly pointed out that CAG has stated that though one of the objectives of the PPP mode of execution was to reduce dependency on Government finances, the same could not be achieved completely. the spilling over burden is ultimately shifted to public at large. The CAG report calls for revisiting PPP model. I feel that infrastructures projects should be taken up by the Central Govt itself, and financing should emanate from Financial development Banks, which need to be strengthened by amending banking policy and as well the commercial bank should take it up with govt guarantee with easing out BASEL 111 noms according to our national priority.

8) A recent audit report by the CAG on implementation of public-private partnership (PPP) projects in national highways has revealed some disturbing facts about governance in such projects and putting at disadvantage the end consumers. Critically examine with examples the lacunae in implementation of PPP projects and policies related to it.

BY INSIGHTS · DECEMBER 24, 2014Topic:   Investment models;   Infrastructure: Roads

8) A recent audit report by the CAG on implementation of public-private partnership (PPP) projects in national highways has revealed some disturbing facts about governance in such projects and putting at disadvantage the end consumers. Critically examine with examples the lacunae in implementation of PPP projects and policies related to it. (200 Words)

Business Standard Abhishek AwasthiAudit report submitted by CAG on appellate account. That is difference between sanctioned amount

and expenditure by gov authorities which is much high. In General, PPP model used to overcome burden on Gov authotity and hike the productivity. CAG reported differences is 200 times that of agreement cost in some project is one of them. It directly indicates the lack of governance of NHAI in PPP projects.

Issues in PPP projects–– Issues are not confined up to highways projects, Delhi airport(Terminal 3) is an example of lacunae in governance where partner company imposed development charge that was not part of agreement.-Profit from these charges not being shared with gov authorities. Loss in profit revenue.– It is a part of strategy to show less amount and get the work first , later issued extra fund for completion of project. Gov authorities always grant raised funds.

Effects-– Loss of profit and time duration increased to get back expense done by gov.– Extra burden on gov accounts, it has to cut short extra amount from other development projects.-Shows lack of foresight of gov authorities which signed the agreement.

Need to do-– Due to limitation of CAG, it is not able to play role as Comptroller like Britain where requirement of any extra expense first come before the CAG approval. Need to push the role of Comptroller.– If expense increased then 50% should bear by partner company.– Money Related issues in PPP directly come before the Supreme Court. Fix some 4 to 5 months time limit for judgment. Because money involve in construction is huge and if trial would go long way that will loss of interest of gov that would counted to be in millions.

In addition, before granting extra money first check where and why it is causing extra money.Cross verify previous work in parallel and show strict nature after violation of agreement

Friends pls review..o ashwin kumar pGood one Awasthi jio suganyaNSvaluable points . keep it up. clear perception.o write to succeedNeed to do- was the best part of the Answer. Abhishek AwasthiThanks ..Ashwin , Suganya, wts…:)..frns can u pls suggest .headings like Effects and Need to do are

correct. any suggestion ?o kummys.Good one, out of the box thinking in articulating enhanced CAG roll.o http://www.facebook.com/sanjeet.dwivedi Sanjeet Dwivedigood one sir ji RushnafPPP in highway projects began with NHDP Phase III. The two models of PPP adopted in India for the

development of National Highways are BOT (Toll) and BOT (Annuity). To attract private participation, the government took steps such as i) Declaring road sector as an industry, ii) 100% FDI approval, iii) 100% tax exemption for 10 years etc.

Present issues in project implementation:1. Delays in project awards: In 2011-12, only half of target kilometres planned were awarded.

2. Delays in project execution: The average delay per project is found to be 22 months, due to land acquisition issues, procurement delay etc.3. Construction issues: The daily target of 20kms for widening/upgrading of highways is never met.4. Dispute resolution: Litigation cases in NHDP projects have risen due to land, approval issues etc.5. Tax Issues: While compensation is provided in case of change in law, it does not protect the project company from increase of rates in direct taxes.6. Need for a Regulator: An independent regulatory authority is needed for the Road and Highways sector, as the current arrangement at Centre and State (NHDA, PWDs) result in conflict.7. Clearance issues: PPP projects face issues relating to delays in receiving environmental, forest or wild life clearances8. Toll Issues: Leakages in toll collections because of presence of alternate routes.

To overcome these challenges the Government must ensure faster procurement of all statutory clearances, introduce closed system of tolling and e-Toll Collection, and prioritise disputes based on involved amounts etc.

o ashwin kumar pExample is missing buddy,content is nice.o Thakshu…!Very nice answer even though you missed the factual information as question demanded. aseemThere is a growing trend that the Public Private Partnership model holds key to development of

infrastructure of the country. However, there is the flip side of the coin which shows that there are certain policy/regulation gaps which are exploited by the private partners:

– Major part of revenue diverted to investment projects like Mutual funds rather in construction activities. They are being defended under special purpose vehicles– Substantial delay in the requisite clearances on time by government authorities result in added burden of toll on the consumers due to increased time frame under private firms in operate clause– Inflated total project cost is noticed due to which higher loan can be availed and in case of termination due to default, the authorities have to pay 90% debt– There are issue related to transparency in bidding because of no set guidelines, parameters and process– Overestimation of potential demand for services, leads to overpricing of services by private sector

There is a need to lay detailed bidding guidelines for more transparency, arrest the financial incapacities of firms which are not able to participate and more accountability on the private firm needs to be established in order to arrest these policy inadequacies.

o saiperfect Praveen

For the development of road infrastructure of world standard govt started several projects under PPP mode.NHAI(national highways authority of india) started to build the infrastructure uder NHDP(national highway development program).

NHAI took several policy initiatives to implement these projects which are as follows:1)allowing 100 % FDI in the sector.2)NHAI can provide capital grants to the Special Purpose Vehicles(SPV).3)NHAI can participate with upto 30 % capital to SPV in order to develop the road project.4)Allowed private firms to collect the toll for a specific time period to cover its cost of implementation.with these policy initiative and some other initiatives govt attracted domestic as well as foreign investors to invest.but recently the audit report of CAG related to road infrastructure has shown some discrepancies in the implementation of these projects.Sometimes there are disputes regarding land clearances and tax collections.It has been seen that the project are slow in implementation and funds are misappropriated. For example it is expected that the funds collected through toll will be utilized in the construction purpose but the private firm involves in corrupt practice,it illegally invest in some other companies and the funds doesn’t utilize for public benefits and then public need to pay more tolls for the construction purpose.

Govt should take some strict actions and make sure these PPP models work in favour of public so that our road infrastructure can be developed.

han yes .. I think the initiatives taken by nhai is nt rqrd here u can directly mention the lacunae Praveenohh ok…i ws jst mentioned it to remember later so tht can mention in some other as well..:)o SidThe question asked for those govt policies or interventions which will check the lacunae in the

Policy implementation , thus bringing transparency & makin it more accountable. Praveeni considered the que was asking about the gaps existing in the road ifrastructure project…anyways

will work on general PPP PPP has been widely adopted as a investment model for infrastructure projects in India. However,

implementation of such projects has not been satisfactory. Following are the flaws:-longer concession periods granted indirectly favoring private contractors. Eg. in road projects in

collaboration with NHAI-diversion of funds earned from toll into other avenues like mutual funds-delays in clearances granted by NHAI leading to cost escalation and as a result, higher levies on consumers-inflated project costs by concessionaires to avail higher profits and credit access-lack of mechanism to resolve outstanding disputes between the project partners i.e. govt and concessionaire, leading to exit of private parties Eg. Delhi Airport Metro Line, in which Reliance had to exit, citing lack of daily footfall.

It is high time that structural flaws are resolved in contract phase itself. Proper risk assessment, realistic estimates of revenues along with clear delineation of obligations of project partners is necessary. A speedy and cost-effective mechanism to sort out disputes in ongoing projects has to be devised. Most of all, an element of trust needs to be added to

concessionaire agreement in place of suspicion with which public entities view privatesector.

RanjithDue to the lack of funds for infrastructure development public private partnership was introduced

but recently CAG has find faults with PPP agreements causing burden on end user.REASONS:a) Risk sharing: During market failure or any crisis there is no renegotiation of

contracts or compensation from the part of government where private players exitlike airport express line of Delhi metro

b) Operational delay: PPP projects struck in various clearances related to land acquisitionand environmental clearances escalating the costs of operation at later stages.

c) Assessment: Over or under assessment in toll revenues or inefficient planningended up in giving extra concession that are not in contracts like roadprojects.

d) Quality monitoring: Performance monitoring is needed to ensure the good servicedelivery and compensating the user if it is not at a satisfactory level.

REFORMS:a) Recent introduction of 3P institutions to deal with grievances has to include

renegotiating terms on uncertain situations.b) Reducing the delays in clearance process by transparent procedures fixing clear

time period.c) Fixing accountability on lack of quality delivery with better integration of policies

to support the projects undertaken.These issues have to be sorted out for better cooperation in PPP projects in infrastructure

development for improving economic growtho pkkvery well written !! ShiuliIndia’s stupendous economic growth since the liberalization of the economy has established itself

as a potential economic superpower. However, to maintain the momentum India needs investment of upto $1 trillion in infrastructure spending with half of that expected to come from private capital through PPP models. Although, such partnerships have seen successes, there have been several shortcomings.

Bureaucratic red-tape, slow decision making and various procedural delays have prevented seamless project deliverance. The tussle between the Airports Authority of India and the private consortium involved in the construction of the Chennai airport, the mistaken traffic projections in the Vadodara-Halol toll project, the shutting down of the Delhi Airport Metro Express for 6 months etc. are all examples of cases where the government’s inconsistent decision-making has caused delays in project-completion and affected the end-users.

Private players have also been responsible as sometimes, over-ambitious bidders, after bagging a deal develop cold-feet when the projects feasibility becomes doubtful. Often incorrect break-even projections prompt private contractors to increase the prices of their services

whose burden invariably falls on the common man. The recent case of two-fold increase in the Reliance Mumbai metro fares is a case in point.

However, the problem is not with the PPP model’s dynamics, as it has been hugely successful in countries like USA and China, but with the political and economic scenario of India. Corruption and power-struggle between the government and private players have made numerous PPP projects unviable. The recent push for good governance by the PM is a progressive step towards greater success for this model.

o suganyaNSactually ur point of answer and conclusion is good one i will accept it is related to question. in

business std they said the corruption of private firms actually i was confused about that news that’s why i am asking fnd sry.

ShiuliI relied on other sources in addition to the given link.. and i’ve tried to give a balanced answer

where both both the parties are responsible for the model’s failure and not the model itself.. Thanks for the review..

o Rockyits good but in question they asked for PPP problem on National highway so you should focus on NH

problem and what could be the solution for this… Shiulii think the question wants an overview of all PPP related issues.. most of the answers here aren’t

limited to NHs..o http://www.facebook.com/sanjeet.dwivedi Sanjeet Dwivedibalanced one Shiulithanks Sanjeet.. Shiulithanks Sanjeet..o nebulau should write about CAG part also suggest some reform there Like agility from part Shiuliyes i missed out on the CAG part since i didnt read the article.. agility..?? CheisthaPublic Private Partnership has become a buzz word in the Development strategy adopted by

developing countries, since it is expected to balance welfare and economics. However, the implementation of PPPs face certains challenges as below:

1. Flexibility: In a constant power competition between the state and the private player, the flexibility of operations is lost.2. Timeline conflict: Government goals are long term and start yielding results after a long period whereas private firms aim at covering their costs at the earliest.3. Focus of the partners may vary4. Funding priorities of the Government vastly differs from that of a profit earning private entity5. Accountability: As representatives of the people, the Government assumes a greater responsibility than the private entity whereas power are expected to be shared equally.

This power-accountability dichotomy causes conflicts.6. Communication gaps7. Absence of a well defined regulatory framework8. Lack of infrastructural capabilities and capacity building for smooth and coordinated functional

Some of the major policy measures that have been taken to enhance the effectiveness of PPPs in India are as following:1. National PPP Policy2. National PPP appraisal committee3. Setting up of a PPP toolkit, available publically4. Digitizing and automating processes of bidding, funding, record keeping, etc5. Making funding available from multiple sources

It is expected that with such measures, PPP will be able ti generate the expected results in the development process of the country

o saiexplain in the form of example CheisthaYeah, I realized after submitting. Will be more careful of the question going fwd. Thanks!  Danish8) A recent audit report by the CAG on implementation of public-private partnership (PPP) projects

in national highways has revealed some disturbing facts about governance in such projects and putting at disadvantage the end consumers. Critically examine with examples the lacunae in implementation of PPP projects and policies related to it. (200 Words)

The PPP in national highways was mooted by the government of India for the comprehensive development of the quality roads in the country, though the idea was novel but results that recent CAG report suggests are not convincing, there are certain lacunae associated with PPP projects :-

1) The cost of the projects is taken from the pubic through tolls this means that a sign of double taxation. Also , tenure for collecting tolls are given for longer periods viz. 15 years etc. making life difficult for commuters.

2) The total amount agreed to be collected between Govt unit and Investor firm is notches higher than the total project cost. e.g :- In case of NHAI projects , CAG has found out that toll amount agreed was almost 50% higher than the TPC.

3) The time limit prescribed for the project is seldom achieved.e.g. Work has even not started on the Varanasi- Aurangabad highway.

4) Revenue collected by the Investor firms as tolls is being diverted to other business as investment, whereas they were meant for the refuelling the funds in next projects or in pending projects.e.g. CAG has found out Reliance Infra to be diverting money in MFs.

There is a dire need for stricter agreements especially penalties on violation of agreed terms. This all will be possible only when government and bureaucracy exhibit stronger will towards development goals.

Bhanu

Ans.: The recent report of CAG showed the flip side ofthe PPP models. It clearly shows that all PPP projects needs if not regulationthen regular audits. As the 100 percent PPP model, the NHAI awarded severalprojects to different private companies and among them were RelianceInfrastructure, Larsen & Turbo, IRB, etc. In these projects NHAI gives thecontract to the private companies along with concession period. In this period theprivate companies can charge toll from vehicles plying on the road, thus reimbursingthe investment that was done on the project. In the recent audit of nearly 94projects rolled out after 2008, it was found that in many projects like VaranasiAurangabad Toll way Private Limited, Delhi-Agra stretch, etc. the concessionperiod was over estimated thus allowing more funds to be collected by the contractor.In some the estimates were nearly double. The government should do regularaudit of the amount collected as well as the total traffic flow in the stretchin regular interval once the project completes. This should be followed by adjustmentof the concession period. Thus the end-users who are at the losing end willhave to pay less.

National Highways builders get longer toll period, users to pay Rs 28,096 crore more: CAGPTI Dec 23, 2014, 05.44PM IST

NEW DELHI: Putting NHAI in the dock for favouring private players, CAG today said Reliance Infra, L&T, IRB and other companies have been unduly allowed to collect over Rs 28,000 crore as additional toll on nine major nationalhighways including the Delhi-Agra stretch.

Road users will have to suffer this "extra burden" due to NHAI fixing longer concession periods for private operators to collect toll.

Besides, the special purpose vehicle created by Anil Ambani-led group's Reliance Infra was found to have diverted a part of the toll funds to invest in Reliance's own mutual fund.

The CAG in its report submitted in Parliament today said NHAI also gave undue benefits to Reliance Infra SPV for six-laning of a National Highway project as an important clause was 'deleted' from the agreement. The company termed the allegations as "baseless and devoid of any facts".

The CAG audit report on 'Implementation of Public Private Partnership (PPP) Projects In National Highways Authority Of India (NHAI)' said toll amount of Rs 902.89 crore collected in three six-laning projects was released prematurely to developers despite failing to meet milestones.

In Delhi-Agra project, an important clause in 6-laning concession agreements for withholding the toll collection in case of failure to achieve milestones was deleted.

"By the end of August 2013, concessionaire (R-Infra SPV) had collected toll amounting to Rs 120 crore and utilised an amount of Rs 78.32 crore in investment in liquid funds," the report said.

Reliance Infra had formed an SPV in the name of DA Toll Road Private Ltd to collect toll from October 16, 2012.

A RInfra spokesperson, however, said: "The allegations made in the CAG report are completely baseless and devoid of any facts. We have not violated any law/concession agreements. All investments and expenses are made in full compliance of the agreements signed with NHAI and lenders."

The amounts invested in liquid mutual funds at any given point of time were Rs. 3 to 5 crore, and not the inflated figures alleged in the CAG report, and the same do not represent any "diversion" of funds, as the MF accounts were of the SPVs themselves, he added.

An L&T spokesperson refused to comment, while no comments could be sought from IRB Infrastructure.

How a two-year-old firm is hitting a daily turnover of Rs 4,000 crore todayNishanth Vasudevan, ET Bureau Sep 16, 2014, 02.55PM IST

Tags: RKSV

(Shrinivas Viswanath, and…)

If the lives of start-up founders are about sweat, blood and tears, no one told the trio at Mumbai-based discount broking firm RKSV.

"To be honest, we have had a considerably smooth ride," says Raghu Kumar, one of the three promoters, briefly describing in a matter-of-fact tone their two-year journey as entrepreneurs. He means it.

Rather, he prefers to let the numbers speak. Within two years of starting operations and largely operating in a dull market, RKSV is now clocking daily turnover of Rs 4,000 crore.That's about 1.3 per cent of total turnover of NSE, in a business where even the leaders are at 5-6 per cent. For the US-bred trio — Raghu, brother Ravi and their friend Shrinivas Viswanath — it was a move by the Indian capital market regulator to allow algorithmic trading that encouraged them to dip their toes in Indian waters.

And when the Securities and Exchange Board of India allowed the direct market access (DMA) facility in April 2008, which gives investors direct access to a stock exchange's trading system, they decided to put in both their feet.

Prior to 2009, their only connection with India was the occasional visit to meet relatives. "DMA was the reason we came to India. We saw a lot of opportunities and wanted to explore them," says Raghu, a University of Illinois graduate in actuarial science and finance.

The concept of algorithmic, or high frequency, trading was not alien to them. Before coming to India, the brothers were active in the US foreign exchange markets between 2006 and 2008.

But, in October 2008, they had to wind up after the global financial markets imploded; trading opportunities had dried up, liquidity had shrunk and spreads had widened enough. By then, however, they made a killing of about $2 million, giving them the self-belief — and the capital — to explore other business ideas.

Against The TideIn 2009, Raghu and Ravi, along with Viswanath, a computer engineer in New York, shifted base to India. Although the Indian markets were alien to them, funding a venture was never a problem.

Raghu and Ravi spent the first two years trading with their own money, which helped them gauge the pulse of the market here. Meanwhile, they secured a membership to the Bombay Stock Exchange, which had slashed its fees significantly to rope in more members.

After making good money in the two years in proprietary trading, they saw stockbroking as a natural progression. But to set up shop in India, at the time they did, was a contrarian call.

Disappointed by the previous government's tardy attitude towards business and economic policies, business confidence in India had hit its nadir. Foreign investors were wary and several nonresident Indians (NRIs) were returning to countries where they held passports. The broking industry was bleeding too. While competition in institutional broking business was fierce, retail investors had deserted the markets.

But there was still a segment of market participants that was underserved: traders, for whom high brokerage costs was making it difficult to make money. "We realised there were many traders who did not have cheaper options to trade," says Kumar. "What shocked us was the number of branches that retail brokerages had, which is not the case in the US."

It did not take too much time for RKSV's business to pick up as its relatively-older rival Zerodha had taken the plunge by then. Although there was little that RKSV could do to hold an edge in terms of technology, it managed to attract clients by launching the 'unlimited trading model', where traders can transact for as many times at a fixed cost.

Currently, RKSV has about 20,000 clients. They are serviced by about 50 employees from its office in Mumbai's emerging financial services hub, Bandra-Kurla Complex. Raghu said the firm is looking to double its client base to about 40,000 in 2014-15. That's not bad for a two-year-old, first-generation firm.

STARTED: 2012 (retail trading)FOUNDERS: Raghu Kumar, Ravi Kumar, Shrinivas ViswanathCLIENTS: 20,000DAILY TRADING TURNOVER: Rs 4,000 croreREVENUES: Not disclosedEMPLOYEES: 50

Reliance Infra got undue benefits from NHAI, says CAGPress Trust of India  |  New Delhi  

December 23, 2014 Last Updated at 20:40 IST

In a strong criticism of NHAI giving undue benefits toReliance Infra for six-laning of a national highway, CAG todaysaid the company diverted toll money to a Reliance mutual fund and an important clause in the concession agreement was deleted. 

Reliance Infra has formed a special purpose vehicle in the name of DA Toll Road Private Ltd for six-laning of Delhi-Agra highway in 2010 and began collecting toll from October 16, 2012. 

"In this project, clause available in other six-laning CA's (Concession Agreement's) for withholding the toll collection in case of failure to achieve milestones, was deleted from the agreement. 

"By the end of August 2013, the concessionaire had collected toll amounting to Rs 120 crore and utilised an amount of Rs 78.32 crore in investment in liquid funds," it said. 

CAG tabled its audit report on 'Implementation of Public Private Partnership (PPP) Projects In National HighwaysAuthority Of India (NHAI)' in the Parliament today. 

Pulling up the the road sector regulator, CAG said its action to fix toll collection day even though environment clearance as well as no-objection from the Pollution Control Board was pending 'premature'. 

In a reaction to the report, Reliance Infra in a statement said: "The allegations made in

the CAG report are completely baseless and devoid of any facts. We have not violated any law/concession agreements. All investments and expenses are made in full compliance of the agreements signed with NHAI and lenders. 

As per the concession agreement clause, the toll collected from the day of default to achieve the milestones should be withheld in an escrow account and transfer of funds from such account should only be used for project related works. 

A part of the toll collected was invested in Reliance liquid funds during October 16, 2012 to February 21, 2013 and April 1, 2013 to May 31, 2013. 

"Concessionaire collected toll of Rs 120 crore till end of August 2013 and has been utilising the same for its ancillary objects rather than focusing of project construction," said the report. 

Reliance Infra said the amounts invested in liquid mutual funds at any given point of time were Rs 3 to 5 crore, and not the inflated figures alleged in the CAG report. 

It does not represent any "diversion" of funds, as the MF accounts were of the SPVs themselves, the company added.

Reliance Infra got undue benefits from NHAI: CAGPTI    New Delhi   Last Updated: December 24, 2014  | 11:30 IST

In a strong criticism of NHAI giving undue benefits toReliance Infra for six-laning of a national highway, CAG said on Tuesday the company diverted toll money to a Reliance mutual fund and an important clause in the concession agreement was deleted.

Reliance Infra has formed a special purpose vehicle in the name of DA Toll Road Private Ltd for six-laning of Delhi-Agra highway in 2010 and began collecting toll from October 16, 2012.

"In this project, clause available in other six-laning CA's (Concession Agreement's) for withholding the toll collection in case of failure to achieve milestones, was deleted from the agreement.

"By the end of August 2013, the concessionaire had collected toll amounting to Rs 120 crore and utilised an amount of Rs 78.32 crore in investment in liquid funds," it said.

CAG tabled its audit report on 'Implementation of Public Private Partnership (PPP) Projects In National Highways Authority Of India (NHAI)' in the Parliament.

Pulling up the the road sector regulator, CAG said its action to fix toll collection day even though environment clearance as well as no-objection from the Pollution Control Board was pending 'premature'.

In a reaction to the report, Reliance Infra in a statement said: "The allegations made in the CAG report are completely baseless and devoid of any facts. We have not violated any law/concession agreements. All investments and expenses are made in full compliance of the agreements signed with NHAI and lenders."

As per the concession agreement clause, the toll collected from the day of default to achieve the milestones should be withheld in an escrow account and transfer of funds from such account should only be used for project related works.

A part of the toll collected was invested in Reliance liquid funds during October 16, 2012 to February 21, 2013 and April 1, 2013 to May 31, 2013.

"Concessionaire collected toll of Rs 120 crore till end of August 2013 and has been utilising the same for its ancillary objects rather than focusing of project construction," said the report.

Reliance Infra said the amounts invested in liquid mutual funds at any given point of time were Rs 3 to 5 crore, and not the inflated figures alleged in the CAG report.

It does not represent any "diversion" of funds, as the MF accounts were of the SPVs themselves, the company added

NHAI LARGESSE TAKING ‘TOLL’ ON ROAD USERSWednesday, 24 December 2014 | PNS | New DelhiRoad users of nine highways have to bear the extra burden of `28,096 crore as toll thanks

to National Highways Authority of India’s largesse to major developers by giving higher concession period. Comptroller and Auditor General (CAG), in its latest report, revealed that developers like Reliance Infra and Larsen and Toubro have ‘unduly’ benefited due to NHAI’s flawed policies.

Out of these nine NHs, Reliance Infra got Delhi-Agra and Pune-Satara contracts, while L&T, IRB and Varanasi-Aurangabad Tollway Pvt Ltd (Soma Isolux) were the other beneficiaries. “While fixing the concession period, NHAI considered only tollable traffic instead of total volume of traffic, which is carrying capacity of the road. This resulted in fixing longer concession periods which put extra burden on road users,” said the CAG report on Implementation of Public Private Partnership Projects in National Highways Authority of India placed in Parliament on December 23, 2014.

The Performance Audit covered 94 projects under the four phases of National Highways Development Programme (NHDP) constituting 45.41 per cent of total 207 Build-Operate-Transfer projects awarded as on 31.3.2012. “During these extended concession periods, the concessionaires would collect toll at least to the tune of `28,095.54 crore (NPV: `3,233.71 crore), while the roads would become congested for the toll paying users,” the report said.

The report also shows that the NHAI failed to start toll collection on some stretches forgoing `259 crore and also incurred `857 crore costs due to faulty project reports. The Government auditor made it clear that the Ministry of Road Transport and Highways accepted the “audit observation regarding incorrect adoption of tollable traffic instead of total traffic for determination of concession period.”

The CAG report said that the NHAI incurred a loss of Rs 856.80 crore on account of change of scope (design) in 23 projects, out of which Rs 662.53 crore was due to faulty Detailed Project Report or Feasibility Report.

The auditors blamed the NHAI for not adhering to basic accounting principles and accounting standards issued by the Institute of Chartered Accountants of India. Resultantly, Financial Statements did not depict overall correct profitability of NHAI.

It also said that the Ministry had set a target for widening and up gradation of National Highways (NH) at 20 km per day but NHAI’s achievement during 2009-10 to 2012-13 ranged between 3.06 km and 17.81 km per day only.

DISEQUILIBRIUM: Graft holds Government schemes hostage 

By Sandeep Bamzai

Published: 01:34 GMT, 28 December 2014 | Updated: 01:57 GMT, 28 December 2014

When you circle the wagons and decide to strike with pinpoint accuracy, you suddenly find that the target itself has turned to vapour. 

In a nation where corruption and cronyism appear to be coming out every pore, its odor all pervasive, big budget government schemes are riven with this distasteful practice. 

Slippages, leakages and ingenious ways of stealing a highway robbery have often been the bane of welfare schemes in India. 

While the much publicised Comptroller and Auditor General (CAG) tracks the rupee in its capacity as an adjunct of the Public Accounts Committee (PAC) of Parliament, the exercise is always post facto and extremely contentious as we now know. 

In a nation where corruption and cronyism appear to be coming out every pore, its odor all pervasive, big budget government schemes are riven with this distasteful practice

Figures bandied about as presumptive losses have seen governments fall, the hyperbole shaking the foundations of the executive. 

There may well be excessive chatter about the chasm that exists between subjectivity and objectivity, but what cannot be discounted is the fact that India’s government schemes are full of holes. 

One can argue that figures like Rs 176,000 crore and Rs 186,000 crore, were way over the top, but they were based on differing methodologies. 

Subsequent events like government conducted auctions and Supreme Court verdicts have proved that malafide and malfeasance existed. 

At the core of India’s planning apparatus are budgetary allocations, largesse showered on states, its people and what have you. 

These budgets have come attached with outcomes, without a tracking system which tells you where the rupee is placed on the food chain.

‘NH builders get longer toll period, users to pay 28K cr more’

— By PTI | Dec 23, 2014 05:36 pm

New Delhi: Users of nine highways, including Delhi-Agra stretch, will have to shell out Rs 28,096 crore as extra toll to Reliance Infra and L&T among other developers due to NHAI giving higher concession period, government auditor CAG said today.

Out of these nine NHs, Anil Ambani group firm Reliance Infra has been given two (Delhi-Agra) and Pune-Satara), while others include L&T, IRB and Varanasi-Aurangabad Tollway Pvt Ltd (Soma Isolux).

National Highways Authority of India (NHAI) also failed to start toll collection on some stretches forgoing Rs 259 crore and also incurred Rs 857 crore cost due to faulty project reports, Comptroller and Auditor General (CAG) said in its report on ‘Implementation of Public Private Partnership Projects in NHAI’, tabled in Parliament today.

“NHAI considered only tollable traffic instead of total assessed volume of traffic. This resulted in fixing of longer concession period which put an extra burden on road users. During these extended concession periods, the concessionaires would collect toll at least to the tune of Rs 28,095.54 crore (NPV: RS 3233.71 crore), while the roads would become congested for the toll paying users,” the report said.

The report said users on Varanasi-Aurangabad would have to pay Rs 11,547.75 crore to Varanasi Aurangabad Tollway Pvt Ltd, while those using Pune-Satara and Delhi-Agra stretches will require to pay additional user fee of Rs 3,421.08 crore and Rs 752.80 crore to PS Toll Road Pvt Ltd and DA Toll Road Pvt Ltd, both Reliance Infrastructure SPVs.

For Pune-Satara Road, the CAG said “Rs 3421.08 crore is the revenue projected during the 21st year to 24th year by the financial consultant at the time of financial evaluation of the project.”

On Delhi-Agra stretch, it remarked that “Basis of fixing concession period at 26 years by NHAI is not available … Considering toll revenue of at least Rs 188.20 crore per year from 23rd year to 26th year, the total extra burden on road users would be Rs 752.80 crore.” Likewise, extra buren on road users would be Rs 2,061 crore for Jaipur-Tonk-Deoli stretch, collected by IRB Jaipur Deoli Tollway, Rs 2,143 crore for Beawar-Pali-Pindwara stretch by L&T BPP Tollway and Rs 4,631 crore for Kiratpur-NerChowk by Kiratpur NerChowk Expressway respectively.

Users will have to pay Rs 501 crore extra fee for Zhirakpur Parwanoo to Himalayan Expressway and Rs 1,641 crore on Sambalpur-Baragarh stretch to Sambalpur Baragarh Expressway, it said.

The government auditor made it clear that the Ministry of Road Transport and Higways accepted the “audit observation regarding incorrect adoption of tollable traffic instead of total traffic for determination of concession period.”

It also said that the Ministry had set a target for widening and up gradation of National Highways (NH) at 20 km per day but NHAI’s achievement during 2009-10 to 2012-13 ranged between 3.06 km and 17.81 km per day only.

NHAI Burdened Users with Heavy Tolls: CAG

December 27, 2014 By Pinky Leave a Comment

The Comptroller and Auditor-General (CAG) has said in its audit report on the implementation of the National Highways project :The National Highway Authority of

India (NHAI) burdened users with an extra Rs.28,361 crore while providing undue benefits to private parties by fixing a longer concession period

The CAG said the NHAI failed to fulfil the role assigned to it by the government and provided undue benefits to private parties

Private parties includes Reliance Infrastructure, L&T and IRB infrastructure among others

The undue benefit amounted to Rs. 2,928 crore. The report, titled “Implementation of PPP projects in NHAI,” covered 94 projects

under phases II, III, IV and V of the National Highways Development programme (NHDP)

National Highways Development programme  constituted 45.41 per cent of the total 207 BOT projects as on March 31, 2012.

Tabled in Parliament on 23.12.2014, the report notes that in the case of the Delhi-Agra NH project, awarded to Anil Ambani’s Reliance Infra, clause 31.3.1A, relating to withholding of toll collection in case of failure to achieve major milestones, was missing from the concession agreement.

The report stated:Toll revenue of Rs.303.62 crore was diverted by concessionaires in the Delhi-Agra and Pune-Satara projects as investments in Reliance mutual funds rather than being spent on construction work.

The report said there would be an additional burden of Rs.30,247.60 crore on users due to levy of partial tolls on incomplete projects, non-realization of toll revenue from annuity projects due to delay in completion, and a longer concession period among other reasons.

The CAG also said the NHAI failed to achieve the 20 km a day target for widening and up-gradation of national highways during 2009-10 to 2012-13.

The report said:The NHAI’s best achievement was 17.81 km per day during 2011-12 which dropped to a mere 3.06 km per day during 2012 despite availability of sufficient funds.

It said the NHAI did not appear to have adopted objective criteria to select highways for improvement

Report also stated that NHAI incurred a loss of Rs.856.8 crore due to change of scope in 23 projects.

National Highways builders get longer toll period, users to pay Rs 28,096 crore more

Posted Tue, 12/23/2014 - 19:13 by editor Users of nine highways, including Delhi-Agra stretch, will have to shell out

Rs 28,096 crore as extra toll to Reliance Infra and L&T among other developers due to NHAI giving higher concession period, government auditor CAG said. 

  Out of these nine NHs, Anil Ambani group firm Reliance Infra has been given two

(Delhi-Agra) and Pune-Satara), while others include L&T, IRB and Varanasi-Aurangabad Tollway Pvt Ltd (Soma Isolux) 

  National  Highways Authority of India (NHAI) also failed to start toll collection on

some stretches forgoing Rs 259 crore and also incurred Rs 857 crore cost due to faulty project reports, Comptroller and Auditor General (CAG) said in its report on 'Implementation of Public Private Partnership Projects in NHAI', tabled in Parliament today. 

  "NHAI considered only tollable traffic instead of total assessed volume of traffic.

This resulted in fixing of longer concession period which put an extra burden on road users. During these extended concession periods, the concessionaires would collect toll at least to the tune of Rs 28,095.54 crore (NPV: RS 3233.71 crore), while the roads would become congested for the toll paying users," the report said. 

  The report said users on Varanasi-Aurangabad would have to pay Rs 11,547.75

crore to Varanasi Aurangabad Tollway Pvt Ltd, while those using Pune-Satara and Delhi-Agra stretches will require to pay additional user fee of Rs 3,421.08 crore and Rs 752.80 crore to PS Toll Road Pvt Ltd and DA Toll Road Pvt Ltd, both Reliance Infrastructure SPVs. 

  For Pune-Satara Road, the CAG said "Rs 3421.08 crore is the revenue projected

during the 21st year to 24th year by the financial consultant at the time of financial evaluation of the project." 

  On Delhi-Agra stretch, it remarked that "Basis of fixing concession period at 26

years by NHAI is not available ... Considering toll revenue of at least Rs 188.20 crore per year from 23rd year to 26th year, the total extra burden on road users would be Rs 752.80 crore." 

  Likewise, extra buren on road users would be Rs 2,061 crore for Jaipur-Tonk-Deoli

stretch, collected by IRB Jaipur Deoli Tollway, Rs 2,143 crore for Beawar-Pali-Pindwara stretch by L&T BPP Tollway and Rs 4,631 crore for Kiratpur-NerChowk by Kiratpur NerChowk Expressway respectively. 

Users will have to pay Rs 501 crore extra fee for Zhirakpur Parwanoo to Himalayan Expressway and Rs 1,641 crore on Sambalpur-Baragarh stretch to Sambalpur Baragarh Expressway, it said. 

  The government auditor made it clear that the Ministry of Road Transport and

Higways accepted the "audit observation regarding incorrect adoption of tollable traffic instead of total traffic for determination of concession period." 

  It also said that the Ministry had set a target for widening and up gradation of

National Highways (NH) at 20 km per day but NHAI's achievement during 2009-10 to 2012-13 ranged between 3.06 km and 17.81 km per day only.