The Ecobizz Newsletter
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IBS HYDERABAD
THE TEAM
FROM THE EDITOR
Published by Club Ecobizz, IBS Hyderabad Editor In Chief Mr. Abhishek Sharma E-mail:abhishekchill@yahoo.co.in
Chief Advisor Mr. Abhishek Sharma E-mail:abhishekchill@yahoo.co.in Designed and conceived by Mr. Siddharth Padhiary E-mail: sidpadhiary@gmail.com
Editors Message
Proof Read by Mr. Abhishek Sharma E-mail: abhishekchill@yahoo.co.in
Editorial team Mr. Abhishek Sharma Mr.Vivek Parekh
Contributions Team Ecobizz
Amidst the eventful schedules and vibrant happenings of IBS Hyderabad, Club Ecobizz is proud to come up with the October 2015 issue of its ever old, yet still young magazine, ‘THE FO-CUS’. Read on to find out the cover story on “Volkswagen : Emissions scandal”. The story is about how Volkswagen Cars were severly exceeding the allowed levels of Nitrogen Oxide. As always, we are open for feedback and suggestions. We also take the opportunity to thank our readers and cherish their continued association with ‘FOCUS’ . Here’s hoping that you have an augmented reading. Warm Regards The Editorial Team
Copyright Regulation This material has been reproduced and communicated to you by or on behalf of Club Ecobizz, IBS Hyderabad pursuant to part VA of the Copyrights Act 1968 (The Act). The material in this communication may be subject to copyright under the Act. Any further copying or communication of this material by you may be subject of copyright or performer’s protection under the Act.
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CONTENT
WHERE ECONOMY MEETS BUSINESS
04 Digital Governance - Vivek Parekh
10 International Poverty Line
- Shreya Modi
COVER STORY 14 Volkswagen emissions scandal - Tausif Nawaz
20 Goods and Services Tax in India-
- Khoj Team
24 Who wants to be a -millionaire - Zain Kanjee
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GST will create a single, unified Indian market to make the Economy stronger October 2015
DIGITAL DIGITAL GOVERNANCE GOVERNANCE
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Digital India is going to transform India on a scale that is perhaps,unmatched in human history.
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DIGITAL ERA IN FORMATIO N, NE WS AN D S U P P OR T Minimum Government,Maximum governance that’s PM Modi’s Mantra.-
DIGITAL PUSH Digital India Initiative-The way forward.
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i n i m u m G ove r n m e n t , Maximum governance that’s PM Modi’s mantra. Providing access to internet is one of PM Modi’s pet projects. The good news is that our Central government has realised the potential and have taken upon themselves to fast track India’s progress and the route they have chosen is digital. We are heading for digital revolution which will minimise human intervention thus making the administrative process more transparentgovernance initiatives gives the citizens equal access to government and make the process more inclusive. Digital India is going to transform India on a scale that is perhaps, unmatched in human history. In this digital age, we
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have an opportunity to transform lives of people in ways that was difficult to imagine just a couple of decades ago. It will help the government to focus on delivering key e-governance services to citizens which will give a boost to electronic manufacturing in the country. With this Digital India campaign focus is on e-governance which will help the government to be more accountable to their citizens. Other major area of focus will be promotion of manufacture of electronic hardware and exports from India. In his recent visit to Silicon Valley, Prime Minister Narendra Modi spoke about his ambitious Digital India initiative which will help the government to turn into paperless transactions. His plans
to set up digital locker for every citizen to share documents across departments and how he wants to connect 1.25 billion citizens to be digitally connected. Describing his government steps towards broad connectivity. It will fundamentally transform the way our nation will work. Digital Governance can help to improve the ease of doing initiative taken by Government which will benefit local as well as international investors who are interested in investing in India. Digital India vision is trying to connect remote areas via high speed internet services to digitally empower people but it has to deal with multiple issues. Real value of digital means work flow becomes automated. It will be a difficult task for the government
Vivek Parekh Batch of 2017
”Digital India vision is trying to connect remote areas via high speed internet services to digitally empower people.”
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as they have been working in a particular way and suddenly they will be working in completely different environment. They have to understand the advantages that digital will bring in running the government. Many techno legal experts are of the view that E-governance has failed to materialise barring a few initatives.There is no doubt that E-governance has helped tremendously ,however we need much more in E-governance space and there are numerous other services like quality healthcare, education etc. where we have to gain lot of things. Recently Telecom Minister Ravi Shankar Prasad has launched a mobile app in Bihar to aid digital literacy. Even search engine giant Google has entered into a MOU with the government of Haryana to promote digital literacy Congress ruled Karnataka is also working hard for the Digital India initiative, the state government is planning to roll out 376 government services under e-district programme. It will cover services pertaining to the revenue department, motor vehicles department, education, police, forest, industries,
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Backward Classes department and registration of vehicles and land, among other things.Kerela government is also gearing up to declare itself as the first digital state in the country. Through this you can make out that all state government are seriously working hard to support Digital India initiative. Microsoft and Google were some of the technology giants that have pledged their support to Digital India initiative. Google Company plans to launch WIFI Hotspots at 500 Indian railway stations. Microsoft also announced that they will join others to enable broadband internet using television white space technology. They have planned to take this technology to 5, 00,000 villages in India. We need to recognise that a digital India could not be built without bridging the digital divide and also must ensure that technology is accessible, affordable and adds value.
�Recently Telecom Minister Ravi Shankar Prasad has launched a mobile app in Bihar to aid digital literacy-.�
October 2015
WATER ECONOMY
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UNPRIVILEGED LINE
An economist is an expert who will kno w tomorrow why the things he predicted yesterday didn’t happen today. The Ecobizz Newsletter
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IBS HYDERABAD IN F ORMAT I ON , N E WS A N D S UPPOR T
INTERNATIONAL POVERTY LINE How can we end this extreme poverty?
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Shreya Modi Batch of 2017
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This is the best story in the world today – the projections show us that we are the first generation in human history that can end extreme poverty,’’ said Jim Yong Kim, president of the World Bank Group. “This new forecast of poverty falling into the single digits should give us new momentum and help us focus even more clearly on the most effective strategies to end extreme poverty.” ince 1979 and more recently since the World Development Report 1990, World Bank has been trying to assess the extent of extreme poverty across the world. How? The idea was to set a demanding line which would reflect the standards of absolute poverty
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when measured with the national income of poor countries and unearthing the real level of wellbeing in all countries by converting the lines to a common currency by using purchasing power parity (PPP) exchange rates. PPP exchange rates came into picture to ensure that the same quantity of goods and services are priced equivalently across countries so that it is only fair to compare. After converting it was found that for six of the poorest countries the value of national poverty line was around one dollar per day per person. This led to the introduction of the dollar-a-day international poverty line created by Ravallion et al. Although the requirement is
October 2015
sensible, it does have a troublesome implication. PPP exchange rates are produced by International Comparison Program (ICP), an independent consortium which periodically revises its estimates – reflecting both changes in relative price levels across countries and methodological changes. Therefore, whenever PPP is revised the line changes. In 1991, the dollar-a-dayline used 1985 estimates of PPP. Since 2008, the last update, 1.25 US dollars had been used as the global line according to the new sets of PPP in 2005. As of October 2015, the new global line will be updated to 1.90 US dollars per day due to revision of PPPs in 2011. Now, once the consumption distribution and income was compared to the new international poverty line, global poverty was re-estimated, and projected that just 702 million (9.6%) are living in extreme poverty according to World Bank projections released on October 4, 2015, which is still a lot but much less than 902 million (12.8%) people who lived under this line in 2012,
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giving fresh evidence that a quartercentury-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030. In April 2013, nine months after Kim became president of the World Bank Group Kim said that these reductions and further reductions in poverty rates would come from growth that generates sufficient incomeearning opportunities; investing in people’s development potential through improving the coverage and quality of education, health, sanitation, and protecting the poor and vulnerable against sudden risks of unemployment, hunger, illness, drought and other calamities. These measures, he said, would also greatly boost shared prosperity, improving the welfare of the least well-off in every country. He cautioned, however, that with slowing global economic growth, and with many of the world’s remaining poor people living in fragile and conflict-affected states, and the considerable depth and breadth of remaining poverty, the goal to end extreme poverty
remains a highly ambitious target. Though the poverty has reduced globally but it still remains intense in East Asia and Pacific, South Asia, and Sub-Saharan Africa. For the last few decades these 3 regions prevailed about 95% of the total poverty in the world. Yet, the composition of poverty across these three regions has shifted dramatically. In 1990, half of the global poor lived in East Asia, whereas some 15 percent lived in in Sub-Saharan Africa; by 2015 forecasts, this is almost exactly reversed: SubSaharan Africa accounts for half of the global poor, with some 12 percent living in East Asia. The growing concentration of global poverty in Sub-Saharan Africa is of great concern. Poverty is declining in all regions but it is becoming deeper and more entrenched in countries that are either conflict ridden or overly dependent on commodity exports. Thus, the regular updating of international poverty line is important to understand the real changes in the poverty of the world. The revision in the international poverty line would be once the Commission
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C 14
E V O
S R October 2015
VOLKSWAGEN EMISSION SCANDAL
T S
Y R O
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VOLKSWAGEN EMISSION SCANDAL
V Tausif Nawaz Batch of 2017
olkswagen (VW) pronounced as “folkswagen “is a German car manufacturer headquartered at Wolfsburg, Germany. Volkswagen is the holding company of Volkswagen Group which is a large international corporation in charge of multiple car and truck brands, including Audi, SEAT, Lamborghini, Bentley, Bugatti, Scania, and Škoda. Volkswagen Group, as a unit, is currently Europe’s largest automaker and it has a market share of 20 percent. Volkswagen means “people’s car” in German and its international slogan is “Das Auto” which means –“The car”. Recently VW was in the media regarding
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the emission scandal which began on 18th September, 2015 when the US Environmental Protection agency (EPA) issued a notice of violation of the Clean Air Act to German Auto maker VW group. The Company had intentionally programmed their model year 2009 through 2015 turbocharged direct injection (TDI) diesel engine so that US standards of Nitrogen Oxides (NOx) emissions were met only during laboratory emission testing. NOx emissions during the driving were camouflaged up to 40 times. This programming seems to be a cheating device is expected to be installed in 11 million cars worldwide and 482000 cars in USA particularly including VW_ manufactured Audi A3, Jettta, Beetle, Golf and Passat. October 2015
A Feminist is anyone who recognises the equality and full humanity of women and men.
According to the CEO of VW,Company had broken the trust of the customers and the public. .�
The cheat device was able to sense when emission testing was in progress based on the position of the steering wheel, vehicle speed, duration of engines operation and barometric pressure. After picking up the above said inputs, software went into a type of test mode when the front wheels of the car were on the dynamometer. This has allowed the emission controls to run during the official testing but used to emit 10 to 40 times the NOx while on road and finally the allegations made by the EPA had to be conceded by the VW. EPA engineers who discovered the cheat device to pass emission tests said they originally wanted to test Mercedes and BMW vehicles but could not check due to their high rental costs. They had used VW Passat and VW Jettta without knowing that these cars were fitted with cheat device to help them pass emission test. Testers had spent The Ecobizz Newsletter
a month driving the cars around California with specialist monitoring equipment and results showed them vehicles pumping out as much as 40 times the allowed levels of Nitrogen Oxide. Due to this VW became the target of regulatory investigations in many countries and its stock prices plunged immediately after the news has spread. Reaction of VW: According to the Martin Winterkorn, the CEO of VW, Company had broken the trust of the customers and the public. As a result he had to relinquish his job after his position became untenable after he lost the support from key shareholders and the new position has been filled by former boss of Porsche, Matthias Mueller. The new leadership has to win back the lost trust for the Volkswagen Group by leaving no stone unturned and moreover an internal inquiry has
already been ordered.VW automaker has decided to call all the cars found with cheating device in the month of January by setting aside ₏6.5bn to cover the costs and the fine which is going to be imposed by the EPA could be to around $18 bn. There is a speculation that legal action could be taken by US justice dep’t by launching a criminal probe and the same suit could be followed by consumers and shareholders. Widespread Probe: This probe could be launched in many other countries like UK, Italy, France, South Korea, and Canada and of course Germany. Many stakeholders are questioning the legitimacy of the emissions testing. Out of total 11 million cars affected, 2.8 million cars are in Germany itself which entails to re-calling and refitting costly cars. Europe being the biggest market for VW, their sales has plunged by 30% since the scandal has broken out.
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INF ORMAT I ON , N E WS A N D S U P POR T In 2014, US regulator had raised the concerns regarding the emissions levels but these were dismissed by the company as “technical issues” and “unexpected “conditions. It seems as if axe is going to fall on senior management who have had approved the fitting of the cheating devices. Implications California’s Air Resources board is looking into other manufacturer’s testing results. While many firms like Ford, BMW, and Renault are saying that they did not use any cheat device and fully comply with the norms being laid down. The industry acknowledges that the current testing method is obsolete and is seeking an agreement from the European Commission for a new emissions test that embraces new testing technologies and is more powerful of on-road conditions Revamping testing rules Environmental crusaders have long argued that emission rules are being flouted. “Diesel cars in Europe operate with worse technology on an average than the US,” said Jos Dings, from the pressure group Transport & Environment. “Our latest report demonstrated that almost 90% of diesel vehicles didn’t meet emission limits when they drive on the road. We are talking millions of vehicles.” Car analysts at the financial research firm Bernstein agree that European standards are not as strict as those in the US. However, the analysts said in a report that there was, therefore, “less need to cheat”. So, if other European carmakers’ results are suspect, Bernstein says the “consequences are likely to be a change in the test cycle rather than legal action and fines”.
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Heavy blow to diesel market Diesel sales were already plummeting and the VW scandal has worsened the scenario. These revelations are likely to lead to a sharp fall in demand for diesel engine cars and in Europe this impact could be much more significant which could lead to a large tranche of the market switching to petrol engines down the line.
In 2014,US regulator had raised the concerns regarding the emissions levels but they were dismissed by the company as “technical issues”.
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Your time is limited, so don’t waste it living someone else’s life. Dont be trapped by dogma- which is living with the results of other people’s thinking. October 2015
GST GAME CHANGER
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Team Khoj Batch of 2017
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IN F ORMATIO N, NE WS AN D S U P P OR T
GOODS AND SERVICES TAX IN INDIA Implications on Indian Economy
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OODS AND SERVICES TAX IN INDIA CURRENT INDIRECT TAX STRUCTURE Currently, the Indian indirect tax structure is very complex. There are number of taxes charged by the Central Government the State Government. Central Government levies 12.5% excise duty ( tax to be paid on manufacturing goods in India), 2% central sales tax on inter-state sale of goods, custom duty on imports, 14% service tax ( tax to be paid on services ). Likewise, State Government levies VAT on intra-state sale of goods, luxury tax, entertainment tax etc. In addition, under VAT each state levies different taxes for different goods. There is no uniformity in the taxation policy. Most importantly, the major drawback of the present indirect system is “ CASCADING EFFECT” ( tax on tax), which leads to the higher cost of the product. Excessive taxation, unavailability of set off credit across taxes and uncertain tax laws has added to the woes of the taxpayers. In such situation evading taxes seems to be a better and easier option. Hence, it is not surprising that the huge amount of tax evasion takes place every year. So as to bring out transparency in the system and address all the flaws The Ecobizz Newsletter
of the present indirect tax structure the concept of GST was introduced. GST: BACKGROUND The idea of GST dates back to 2000, the time when the NDA government was ruling the country. Under the leadership of Dr. Asim Dasgupta, Chairman, Empowered Committee of State Finance Ministers, West Bengal the government set up a committee to start a discussion on GST model. On February, 2007, during the central budget announcement 2007-08, Palaniappan Chidambaram , the Union Finance Minister said that GST would be implemented from April 1, 2010, and the empowered Committee would work on designing a roadmap for introduction of GST. Since then the implementation of GST has been delayed. GST IN INDIA GST is likely to subsume all the indirect taxes into a single tax. Keeping in mind the Federal System of India the Government has proposed for Dual GST system. It has three components• Central GST: regulated by centre • State GST : regulated by state • IGST (Integrated GST): levied on inter-state trade and regulated and collected by Centre. It is expected to be 1%
GST is an improvement over existing VAT principle. Tax is to be paid only on the value added. The GST paid on the purchase of goods and services can be claimed for setoff on GST payable on the supply of Goods and services. Full input tax credit would be provided for the Central GST and State GST. (EXHIBIT 1) IMPACT OF GST IN INDIAN ECONOMY The implementation of GST would benefit Indian economy in myriad ways. Firstly, there would be a harmonized tax structure. It is also expected to bring transparency and keep a check on tax evasion which would lead to increase in tax revenue for the government. The government can utilize this revenue for the growth and development of the economy . Hence, it is expected that the GDP of our country grows by .9-1.5%.Moreover, GST would also increase the ease of doing business in India. GST is also an important tool for making “ Make in India” a success as current tax structure is impeding foreign investors to invest in India. Thus, GST is in interest of manufacturers, foreign investors, consumers and the government. CURRENT UPDATE Currently,GST Bill ( 122nd Amendment Bill) has been passed in Lok Sabha. It is yet to be passed in Rajya Sabha. Modifications has been made to the Bill. The Government was supposed to implement GST by 1 April, 2016, but it seems highly unlikely as opposition is not in favour of GST and the Bill is stalled in Rajya Sabha.It is a challenge for Modi
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HYDERABADI FOOD
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VIRTUAL STOCK MARKET The Ecobizz Newsletter
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IN FORMATIO N, NE WS AN D S U P P OR T
WHO WANTS TO BE A MILLIONAIRE: Changing your fortunes
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hat would it take for you to be a millionaire in the stock market? Is it ample of knowledge about the market for which you have been doing rigorous research from the internet, reading the analyst’s or companies report or just through word of mouth? One has to give sufficient amount of time studying the market trend whether it’s bullish or bearish, when is the right time to invest and in what to invest. We have market pundits who will give you ample of gyaan but still you will hesitate in investing your hard earned money. There are different types of people who would take risk and they are aggressive risk taker (very high risk taker), moderately aggressive risk taker (high risk taker), moderate risk taker (average risk taker), moderately conservative risk taker (low risk taker), conservative risk taker (very low risk taker). So which type of risk taker are you? What if someone gives you one crore? What would you do with that money? Well if you are smart enough you would probably invest in stock market or in gold or in property market, which ever will give you maximum return. Let us come to the virtual scenario of stock market called as “MONEYBHAI” The Ecobizz Newsletter
which gives you virtual money of one crore to invest as per the current market situation. This is not all, you get ranked and there are followers who you can follow and vice versa, or make a league among your friends giving it a name and enjoy. Sometimes there are prizes to be won for highest gainers during the day, highest gainers for the week, forth nightly and monthly winners. These prizes are real but it depends on the website promotions. Let’s get through the rules and regulation of this virtual trading game. This game can be used as a trading and investment challenge or training tool. One needs to register on the website i.e. www.moneybhai.com. Once the registration is done, trading can begin right away. With this virtual money, investor can practically invest in stocks, bonds, commodities, mutual funds and fixed deposits. If one is not satisfied with his performance, one can always reset the portfolio amount back to 1 crore. Through moneybhai game you can also interact with other traders using the website for trading simulation game or educative and learning purposes. Rules of the virtual trading game are quite simple to follow. The major rules are listed below.
Zain Kanjee Batch of 2017
There are different types of people who would take risk and they are aggressive ,moderately and conservative risk taker.
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Use of 1 Crore to buy sell shares on NSE/BSE, short selling is not permitted in stocks in cash segment, brokerage of 0.5% is charged, trading starts from 9:15 am to 3:30 pm. Which is usually the actual time of market, exchange determined rules of splits/ bonus will be followed, trading in penny stocks is banned, and limit is set to min of Rs. 5, intraday trades will be squared off by end of day, for intraday there will be a brokerage fee of 0.10% charged, no STT (securities transaction tax). These are few of the rules of investing in stocks. While rules for mutual funds vary a little and are as follows. Minimum investment of Rs. 5000 is required, orders should be placed before 3 pm, orders placed before 3 Pm will be filled at end of day’s NAV, orders placed after 3 Pm will be filled at end of next day’s NAV, while selling a fund exit charge of 0.5% will be levied. These rules are quite basic even when you are investing the real money. The reason for this is to make you understand how much are you actually earning after deducting the brokerage fee and all. This is not all, you can also invest in fixed deposits and see how much will you get as per the current marker rate. Here are also few rules that needs to be followed. Minimum investment of Rs. 1000 is required. Interest earned on deposits depend on tenure, for 0 – 6 days nil interest, for 7 – 30 days 5%, above 30 days 7%, Interest is added to cash balance after investment in FD gets matured. One can actually relate this to the real scenario how much will one earn. The rates can be changed as per what the current market rate is. One may invest in bonds of a company where certain guidelines need to be followed and they are .You can use all your Rs 1 crore virtual cash to buy and sell bonds listed on the BSE and NSE, you can either place orders at the current market price (Market order) or specify a price to
transact (Limit Order), orders placed can either be Good Till Day (GTD - where the order remains in the system only till the end of the trading day) or Good Till Cancelled (GTC where it remains till you cancel it), a GTC order if it is not executed within 5 trading days will get cancelled, trading is available from 9:15 AM to 3:30 PM that is the actual market time. Orders placed after 3:30 PM will remain in the pending orders and will get executed when trading starts in the next session. All buy and sell transactions cannot exceed the actual volumes in the market, brokerage of 0.50% is charged on all transactions, here also no STT is charged. Interest paid out to the bond holders by the companies will not get added to your cash/net worth, unless your earlier transaction in a bond is executed you will not be allowed to place a fresh order in the same bond. This is all for virtual trading and understanding how the stock market works. For an amateur this is the right place to understand but my piece of advice on becoming a millionaire is how well you plan about paying your tax, start planning for your retirement now but this may depend person to person, get yourself insured general or medical, prepare yourself well for contingencies, avoid credit card debts, start investing at an early age and start saving and last but not the least don’t forget charity.
October 2015
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Dear Readers, We believe you appreciate the transformation of ‘The Focus’. Your praise and encouragement has always been a source of motivation for us. Therefore, in case you have any comments or suggestions for improvement please leave them in the COMMENTS section our website www. ecobizz.weebly.com. We at EcoBizz will be more than happy to incorporate your suggestions. For keeping in pace with latest developments, discussion forums and online events follow us on Facebook at https://www.facebook.com/eb.focus. Regards, Team Ecobizz
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