Mumbai/Bengaluru/New Delhi: It is a question that must be asked. What is the meaning of MCA21? And what in the world do the numbers 2 and 1 stand for?

Good question. MCA stands for ministry of corporate affairs. In 2002, the MCA (then known as the Ministry of Company Affairs) decided that something must be done about companies operating in India—in a way to service them, regulate them and so on.

So, MCA conceptualized an e-governance plan, one that would reflect India’s goals for the 21st century, and decided to create a website that would automate the process of registering a company, make things simple, uploading documents, downloading documents, pay and view.

Hence 21, for the 21st century. And so the portal MCA21.

To quote from the mission statement: “Rather than compelling the business community to physically travel to MCA offices, MCA services are available at the place of their choice, be it their homes or offices."

Fourteen years and counting into the 21st century vision of the MCA, it will be fair to say that the portal sucks. The website is broken. It is a pain to use. It was bad enough before, a maze really, where a lay user would experience anxiety, frustration and utter bewilderment. But then, what’s bad must only get worse. Which is what seems to have happened after the task of running the website moved to Infosys Ltd from Tata Consultancy Services Ltd (TCS), and more recently, after the former debuted a new version of the website.

@SDIROAR @suchetadalal I have cross checked with Secretary Corporate Affairs. As service provider Infosys has let down the country — Amitabh Kant (@amitabhk87) April 22, 2016

‘It is a joke’

The founder of a start-up says he has gone through hell the past month. He requested not to be named because he doesn’t want to get into any trouble with the government.

“So I was trying to get a loan sanctioned from a bank," he says. “For that I wanted to get my authorized capital in order. We have filed the documents, paid the fees but it has been a month and it hasn’t been approved. All the paperwork is done but... nothing. I was short on cash and couldn’t take a simple loan.

“And that’s not all. We have filed changes to our equity stock options scheme. That’s also stuck. Not approved yet. It is a joke. My company secretary is going to the MCA office every day. He keeps saying I’m in a queue, it will get done. Really, what sort of Make In India is this? And who’s going to be responsible for this? The government? Infosys?"

The founder isn’t alone.

There are several business folk who are facing issues with the MCA21. Vineet Chaudhary, a practising company secretary in New Delhi, says that a lot of corporate decisions have been put on hold.

View Full Image The website has only gotten worse after the task of running it moved to Infosys from TCS. Photo: Hemant Mishra/Mint

“MCA is a general authority for all companies, so small companies, big companies, all are equally affected," he said. “For example, forms for filing older annual returns are not on the portal right now. So older defaults are continuing, those companies can’t file balance sheets even if they want to. Some corporate transactions are such that they need immediate filing on the portal, your return of allotment, or your banker might need it, or certificate for satisfaction of charge to produce in the bank loan, those things aren’t happening as quickly."

Chaudhary also questioned the timing of the move. The new version of the website went live in late March, just before the end of the accounting year for most Indian companies.

Another company secretary, who works for a large real estate company in New Delhi and requested not to be named, said that he has been facing similar issues: Frequent changes in versions of e-forms; outages of the portal leading to repeated attempts to file e-form(s); no reasons/details of defect given for e-form(s) marked for re-submission.

Not surprisingly, the issue attracted the attention of Amitabh Kant, chief executive officer of NITI Aayog. Responding to complaints of users on Twitter, Kant, who is usually outspoken, said, in a series of tweets: “as a service provider Infosys has let down the country. It appears that the service provider Infosys is the culprit".

All of which brings us to a simple question—where did Infosys bungle?

‘We expect the situation to come back to normal in the next few weeks’

MCA21 v2, or version 2, is not a complex project for Infosys: the Bengaluru-based technology firm works with aircraft manufacturers such as Boeing to test the stability of a flight’s wheel when it lands on tarmac. Also, almost all outsourcing projects have issues, and IT services firms try to resolve it at the earliest.

However in this spat between New Delhi and India’s second largest software manufacturer, what is most appalling is the callousness shown by Infosys, said equity analysts. Equally embarrassing is the fact that the company is in the midst of laying down the infrastructure for the government’s ambitious ₹ 1,380 crore project to build and maintain the technology network crucial for implementing the proposed goods and services tax (GST) system across the country for five years.

The government first mandated TCS to help run the MCA website on a platform called IBM WebSphere. System integrators, usually Indian IT firms, often pay a licence fee to use the platforms of IBM or SAP, on which they write a new line of code to customize it for a particular project. In subsequent years, MCA wanted a couple more things from the IT services firm and hence it extended the scope of work when the project came up for rebidding in 2012. The new project was dubbed MCA21 v2, or version 2. Infosys outbid TCS by quoting ₹ 40 crore lower to win the project.

Right from the beginning, Infosys found itself facing issues, resulting in the then United Progressive Alliance government asking TCS to step back in and help Infosys with the transition.

In February 2013, a few months after it started work on the project, Infosys said:

“Transitioning a large application suite like MCA21 at the best of times is complex. Successful transition depends upon the current state and stability of the applications and the full cooperation of both service providers. We believe that we have fulfilled all our obligations as per the contract. We have been in constant touch with the Ministry and provided all information relevant to the architecture and functioning of the portal. Till date, Infosys has made no significant changes to the system, which continues to run in the old environment, which is managed by the incumbent vendor, Tata Communications.

“Any reports that imply that the instability in the MCA21 applications is on account of our negligence are misguided. We are working with the ministry to ensure that the system performs to its optimal level. We are very proud to be associated with this prestigious project and are committed to make this happen," it added in a statement dated 22 February 2013.

Still, it would appear that the initial problems, soon after Infosys took over, may have been on account of inadequate testing (where lines of code are tested to see how they work).

Those problems persisted.

Things got a little complicated when Infosys had to upgrade the current IBM WebSphere platform. Again, it seems to have not made enough checks with the different queries in the testing phase when it upgraded the current platform with an enterprise application platform, SAP, leading to a near-shut down of the portal.

So why is Infosys, a company which takes pride in helping its clients run their business more efficiently, taking so long to fix an issue, which engineers at the company characterize as “simple" and “a school boy’s job"?

Analysts have a ready explanation:

The India business accounts for just $247 million, or 2.6%, of the company’s $9.5 billion in revenue. Most Indian contracts are won by the company at a very low profit margin—sometimes even at a loss. Finally, the penalty clause for failing to keep up with the outcome is not significant.

“Most government projects are always given a kind of orphaned child treatment by the Indian IT firms because they know that firstly, it is not big and profitable to be focusing their energy," said the head of research at a domestic brokerage. “Above all, they (IT vendors) know that not many vendors would like to take the project. So they can actually continue with their attitude. No IT firm would have cared to respond like this to their large client, like BoFA (Bank of America Merrill Lynch) or Citigroup," added this person, who asked not to be identified.

Nonetheless, all the furore over social media at least made Infosys CEO Vishal Sikka look into this problem. A day after Kant vented his angst on Twitter, calling Infosys out, Sikka, who is based out of Palo Alto, got into a video conference call with C.N. Raghupathi, head of the India business, this paper learns. In the next few days, more updates were sought from Navin Budhiraja, head of technology at Infosys.

The company was finally forced to release a statement saying all problems would be resolved in coming weeks. However, the statement seemed to suggest that the system was working just fine.

“Subsequent to the New Companies Act, Infosys has upgraded the MCA21 system to run on the SAP platform, which went live on March 27, 2016," said an Infosys statement dated 25 April. “Post the go-live, as on April 22, over 1,183 Indian companies have been incorporated and 1,647 Limited Liability Partnerships have been registered on the system. In addition, since March 27, 2016, there have been more than 2 lakh filings. Looking at the data for the week gone by in 2015 during the same week, we have had an average of 8,013 filings per day (excluding the weekends) while the current average is around 9,759, an increase of more than 20%."

Infosys did not answer a detailed questionnaire mailed on Tuesday.

There is another company which worked with Infosys in the early part of the MCA21 contract. Dimension Data India Pvt. Ltd was outsourced infrastructure maintenance work by Infosys when it started work on MCA21 project. Dimension Data offered infrastructure management support services, including L0 (Level 0), L1 and L2 work. L0 support involves automated services to users without any customer support. These include basic work like password reset. L1 support helps users when they cannot address basic problems such as password reset. L2 support helps in resolving basic software installation or upgrades and also managing computer systems and servers. L3 support offers help when a server or data centre needs repair, or if there are any email or file transfer issues. According to people familiar with the matter, Infosys engineers only did the L3 work.

Infosys denies that Dimension carried out the L0, L1 and L2 work.

Dimension Data declined to comment for this piece, citing “client specific confidentiality engagements". However, in response to the Mint questionnaire, the company said: “We wish to categorically state that Dimension Data has no role to play whatsoever in the MCA21 website issues referred to by you."

People familiar with the development said that Dimension Data was outsourced work from Infosys for helping in the MCA21 version 1 of the project and the company was not working on version 2. In version 1, the company offered only L0, L1 and L2 support work in infrastructure maintenance and did not work with Infosys in any areas of software development.

An official at MCA who asked not to be identified said the ministry hopes to address all glitches by the end of May. He characterized the issues as “teething" trouble, and said the ministry has “been in touch with the highest levels of Infosys and Vishal Sikka has assured us that the issues will be sorted out".

On the timing of the rollout, the official said that the earlier website had outlived its course and needed an upgrade urgently. Infosys was supposed to roll out the new portal some 18 months ago. “We had to take a call, because the slot for filing annual return for companies is September-November," he said. “The further we go into this year, the more we lose."

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