It is amazing that a Chartered Accountancy firm can do consulting work too. Makes no sense. When I did my CA with Sharp and Tannan, it was clear that S&T Associates could not do any work with the clients of S&T. This was 1984 and the world was perhaps far slower and satisfied than it is today.

Imagine I am a big public limited listed company. I am the owner (in India there are many sole-proprietor run companies even in the top 50 Indian corporate). I do need to take over a company belonging to my brother in law (not a relative in the companies act). I get my “statutory auditor” to do the valuation of the deal. My turnover? Rs. 2000 crores -very profitable – EBIDTA – Rs. 280 crores and PAT Rs. 90 crores – on a capital of Rs. 3 crores and PnL for the year Rs. 50 crores. Statutory auditor does the valuation collects his fees, and ….you know the story, right?

I go and acquire a completely unconnected company.

Take the case of Karvy. It started as a consultancy. It became a Registrar and Transfer agent. It does PMS. It sells mutual funds. It does money management. We nicely believe that it does not dip into its Aadhar database to do data mining.

We believe that there is no conflict of interest in allowing companies running a bank, a life insurance company, a credit rating company, a mutual fund,…..etc. etc..Is there a Regulator to regulate a consortium of financial services provider? It can be funded like Hdfc, Icici, Kotak, Sbi….and what have you. Do we have a regulator to regulate a non funded organisation like Karvy?

It is about data, and it is about money.

We think a Credit Rating company can do ‘advisory’? It can do ‘training’? It can sell ‘research reports’. Are we kidding ourselves that there is a Chinese Wall?

Are we not laying the foundation for a future scam?

Oh the Joys of dealing with a standalone company doing only ONE BUSINESS at least in India!

How many can you name?

I can name 3 – Franklin Templeton (I am ignoring their Venture capital business), Mirae, and Parag Parikh Mutual fund.

Can you name more?

  1. I have been realizing this recently. Every big company’s consultants, suppliers, sub-contractors and agents are from the family of promoters. Even the office leases are linked directly or indirectly to the kith & kin. It is not only in India but the same is the case in North America and Europe.

  2. Hello,
    It was a very nicely written article. I like to read it. It was totally informative and topic you covered here, I am totally agreed with you. I must say that I have learnt so many things from it.
    Thank you for sharing this article. Keep writing. Thank you so much.

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