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| Chennai: Every city has its share pot-holed
roads, but Chennai has got no roads, only pot-holes |
Down
south in sunny (it always is) Chennai, everyone is celebrating the
fact that the city isn't expected to get any rains till November.
The reason (for the celebration, not the rains in November) is the
state of the city's roads, if there are still things that can be
called that. Until recently, the problem was the composition of
the city's corporation. Mayor M.K. Stalin belongs to the DMK and
Deputy Mayor Karate Thiagarajan to rival AIADMK that rules the state.
For the past nine months, the two spent more time nixing each other's
plans than on trivial issues like the state of the city's roads.
A loan of Rs 15 crore from a state-owned financial institution didn't
come through because Stalin did not want to meet with the concerned
ministers (from AIADMK). With Stalin's recent exit, things should
improve but they probably won't. Word from the corporation is that
roadwork bids are still being called for. And the recommendations
of a committee appointed to suggest ways to improve the flow of
traffic—it prescribed 12 more flyovers—are likely to remain
that: overpasses were Stalin's idea and the AIADMK is bent on proving
that he pushed for flyovers from pecuniary, not welfare motivations.
Maybe if the absence of roads-there really aren't there—were
to affect investments, the state government would relent. After
all, it is its city, and its corporation now.
-Nitya Varadarajan
REPORTER'S
DIARY
Tirupur! Tirupur! Tirupur!
Each of its 600,000 residents
generates exports of Rs 75,000. But it is its garment exporters'
D-I-Y attitude that makes this town unique.
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| Waiting for WTO: Once quotas on export
volumes go, Tirupur's exporters hope to double their exports |
Mammon is the deity-of-choice
in Tirupur, a heaving town (area: 12 square kilometre; population:
600,000 of which 150,000 is floating), 52 kms east of Coimbatore.
Retail outlets display signs that say Om Labham-the closest translation
would be praise be to the greatness of profit.
Garment exports constitute Tirupur's lifeline.
Motorcycles zip around the town's narrow streets loaded with bales
of fabric that need to be stitched or dyed. The few export-reject
stores do brisk business, selling garments by the kilogramme. All
of Tirupur lives for the creation of wealth from fabric: Rs 4,500
crore from exports, Rs 1,000 crore from domestic sales, and Rs 365
crore from the sale of export rejects.
Tirupur's older residents claim the town's tryst
with garments started soon after it was founded, in the early seventies.
Some speak of the arrival of a mysterious Italian (sometime in the
mid-1980s) who suggested that the town focus on exports-an idea
that the town promptly adopted.
Today, buyers from 35 countries frequent Tirupur's
two business hotels. There aren't too many places in the world that
can deliver customised samples in under 12 hours, half-a-million
pieces in a matter of days.
There's no doubting Tirupur's competitiveness.
A Sakthivel, the President of the Tirupur Exporter's Association,
and the owner of a Rs 90-crore company, talks fondly of a future
when the World Trade Organisation's rule on the removal of quotas
will come into play (right now, there's a ceiling on the volume
of garments that can be exported to certain countries). ''Once it
goes, Tirupur will double its exports.'' That's no idle talk. Tirupur
Inc. has invested upwards of Rs 1,000 crore on modernisation; its
700 dyeing units use effluent management systems; AZO dyes are on
list of things banned at the town, as is child labour; and 40 exporters
have formed a consortium that will export under a common brand name.
If Tirupur does keep its tryst with the post-WTO
global market, though, it won't be exclusively on the strength of
any of these, but on the attitude of the tea.
The association runs the largest industrial
complex in town and invested Rs 4 crore in an internal container
depot in 1995. When the state electricity board dragged its feet
over the installation of some sub-stations citing the unavailability
of land, tea 'gifted' 10 acres to it. In 1997, it convinced the
National Institute of Fashion Technology to start a school NIFT-tea
Knitwear fashion Institute.
The association's newest cause is the New Tirupur
Area Development Corporation, a Rs 1,000-crore project towards which
it has contributed Rs 10 crore as equity. If all goes well, 18 months
from now, Tirupur will have piped water supply (water is currently
supplied through tankers), and a first-world-type drainage system.
It's happening, and they've done it themselves.
-Nitya Varadarajan
INC PLOT
Wanted: More Old
Fashioned Accountants
The US accounting scams are a
reminder that Corporate India may itself be sitting on a powder
keg that could go off at any moment.
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In India it is almost de rigueur to appoint
a ca to head a company's finance function, although there
is no law like the one that makes it compulsory for companies
of a certain size to hire qualified company secretaries.
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In
the US, as a recent study by a headhunting firm found, just 20 per
cent of the Chief Financial Officers (CFOs) at the Fortune 500 companies
were Certified Public Accountants (the US' equivalent of our Chartered
Accountants); 35 per cent were MBAs and just 5 per cent had both
the qualifications. The implication of that piece of statistic,
particularly, when CFOs at several top-drawer corporations are under
scrutiny is a pithy one: accountants are a dying breed. Indeed,
another survey in the US reveals that less than 1 per cent of high
school students today want to be CPAs compared to 4 per cent in
1990. The situation has become so piquant that the Institute of
Certified Public Accountants has launched a campaign urging students
to become CPAs much like the armed forces do to encourage young
people to enlist.
But what's more pertinent is that it is the
relative absence of bean-counting CPAs and the plentifulness of
MBAs as CFOs that is being blamed today for the accounting fiascos
that have rocked Corporate America. At companies like Enron, Xerox,
and WorldCom, where the worst accounting scandals have been revealed,
the men at the helm of their company's financial affairs have been
MBAs and not CPAs. And, it is argued, unlike CPAs, who are trained
to have a healthy respect for numbers, MBAs are more prone to creativity,
particularly when it comes to accounting.
It is unlikely that the Institute of Chartered
Accountant of India (ICAI) will launch a campaign similar to the
ICPA any time soon. For although the ca qualification in India may
have lost some of its sheen to the MBA, the number of candidates
who appear for ca exams (especially the entry-level ones) is still
burgeoning every year. It is unlikely too that you will find too
many Indian companies where the CFO or the head of finance is not
a ca. In India it is almost de rigueur to appoint a ca to head a
company's finance function, although there is no law like the one
that makes it compulsory for companies beyond a certain size to
hire qualified company secretaries. And it is not uncommon to find
even Indian CEOs who are qualified CAS and not MBAs.
But if you think that makes Indian companies
any less creative in accounting than their US peers it will be a
mistake. Although mis-statements amounting to the rupee equivalent
of billions of dollars are unlikely to surface in India (our companies
are obviously not yet in that league), creativity abounds as a leading
credit rating agency's division recently found. In its much-publicised
report analysing nearly 700 Indian companies' accounting statements,
a division of Crisil found 266 to have adopted measures that resulted
in significant variances between reported profits and the profit
figures arrived at by the agency. Among them were large companies
belonging to some of the best-known Indian business groups.
Crisil clarified that most of the ''adjustments''
were in accordance with the law, although they may violate the spirit
of the law. But such violations can cost investors dear. If a company
puffs up its bottomline, using accounting tweaks that aren't illegal
but yet are probably not fair, doesn't that tantamount to cheating
its investors? Corporate India may not have too many ''creative''
MBAs heading up finance departments, yet it probably isn't lacking
in the creativity department. True, the current crop of instances
listed out by Crisil's division may conform to India's Generally
Accepted Accounting Principles (GAAP), but then GAAP is only a set
of standards. There is plenty of room in GAAP for unscrupulous accountants
to distort figures. And that is patently unacceptable.
-Sanjoy Narayan
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