Penalties below the statutory minimum: to be or not to be?

In January 2014 the Constitutional Court of the RF (CC) has begun the consideration of complaints from small business about the proportionality of penalties for administrative violations. Nine companies at once have lodged a complaint for overwhelming penalties under different articles. As a reminder, small business representatives come out with the claim for infliction of penalties below the statutory minimum not for the first time yet, referring to the disparity in incurred penalties.

The judgment in the case of Maslyanskii grain reception center from Tyumen inspires hopes in small business representatives for successful settlement of this question. In January 2013 the company was fined 300 000 RUB for late reporting on its activity to the Federal Antimonopoly Service. The claimant mentioned that penalties do not take into account the company size. Then the CC agreed with the claimant and held the related norm of the Code of administrative violations (KoAP) as unconstitutional.

Now, inspired by the success of their colleagues, other nine small business representatives refer to the absence of the differentiation of penalties in the legislation. They are of the opinion that the company size should be taken into account as the differentia by the determination of the amount of penalties.

The judge Aleksandr Kotov noted, that the penalty of 300 000 RUB, statistically, makes up about 30% of the average annual financial result of small business enterprises, which means that such penalty could bring them to bankruptcy. At the same time the judge is of the opinion that penalty relief is permissible until it does not lead to legal nihilism. The main purpose of the hardening of penalties is the prevention of law violations, and an excessive remission could cause negligence to the law. He suggests to settle this problem by providing in the current legislation for the indicators of property status and financial standing of legal persons, which would give occasion to the reduction of the size of sanctions, as well as by determining of threshold values of possible reduction.

There is all significant information about companies gathered at a professional level in the specialized Information and analytical system Globas-i® developed by the Information Agency Credinform; the data are presented in a user-friendly style, in online mode. Promptness and information actuality are secured by the constant support of experts, the analysis of the financial standing of enterprises can be made by yourselves, using the System tools, or you can get a foretaste of the solvency margin of an enterprise in the form of the Solvency index Globas-i – comprehensive assessment of company’s activity. This information will help determine, how critical may be a penalty or a court proceeding for your business partner.

Ranking on net profit of companies, carrying out postal and courier activities

Information agency Credinform prepared a ranking of Russian enterprises, carrying out postal and courier activities.

The companies with highest volume of revenue were selected for this ranking according to data from the Statistical Register for the latest available period (for the year 2012). These enterprises were ranked by decrease in net profit.

Net profit is undistributed profit (uncovered loss) of the current year, which remains at company's disposal after formation of payroll fund and payment of taxes, contributions, obligatory payments to the budget, overhead organizations and banks. It represents the overall financial result.

Net profit comparison of comparable on turnover companies, working in the same industry, can show, how efficiently does an enterprise operate.

Net profit and volume of revenue of the largest organizations, carrying out postal and courier activities (TOP-10)
Name Region Turnover, in mln RUB, for 2012 Net profit, in mln RUB, for 2012 Solvency index GLOBAS-i®
1 POCHTA ROSSII FGUP INN: 7724261610 Moscow 128 958,4 812,9 208 (high)
2 Distributsionny tsentr Bertelsman LLC INN: 7604039395 Yaroslavl region 1 027,2 216,5 214 (high)
3 SPSR-EKSPRESS LLC INN: 7715356456 Moscow 3 296,8 212,7 191 (the highest)
4 FREIT LINK JSC INN: 7728142525 Moscow 4 409,1 49,7 264 (high)
5 DHL EKSPRESS LLC INN: 7713727881 Moscow 430,8 49,4 238 (high)
6 EMS Garantpost LLC INN: 7724069257 Moscow 652,6 31,3 199 (the highest)
7 O-Kurer LLC INN: 7715392567 Moscow 722,7 8,8 267 (high)
8 KurerServisEkspress LLC INN: 7723606727 Moscow 546,7 6,5 341 (satisfactory)
9 EkspressDostavka 77 LLC INN: 7706757074 Moscow 684,8 6,2 289 (high)
10 KURER-SERVIS LLC INN: 7722274003 Moscow 515,4 1,3 315 (satisfactory)

 Picture. Decrease in sum of net profit of the largest on turnover organizations, carrying out postal and courier activities (TOP-10)

Picture. Decrease in sum of net profit of the largest on turnover organizations, carrying out postal and courier activities (TOP-10)

Cumulative turnover of the first TOP-10 largest on turnover organizations, carrying out postal and courier activities, following the results of the latest available financial statement for the year 2012, reached 141 244,5 mln RUB, went up by 9,8% in comparison with the year 2011. Industry leaders accumulate 95,2% of sales revenue of companies from the TOP-100 list, by that 86,9% of the turnover of TOP-100 is accounted for by only a single FGUP «POCHTA ROSSII». Current sales revenue growth can be characterized as stably-moderate.

In spite of the appearing of the great number of private courier companies in recent times, the monopoly of the Russian Post has been remaining practically unbreakable since Soviet period. From time to time the question about the reform of the monopolist, which is opened at different government levels, should be gone into with the greatest possible accuracy; privatization, dividing into parts of the enterprise can lead to rapid price appreciation for provided services, and it’s not a fact that to decrease in delivery time of correspondence and cargos, mostly for what they scold our national postal operator. It is necessary to improve the logistics. Because today for a letter sent, for example, from Yakutsk reaches Petropavlovsk-Kamchatsky, it is forwarded to the sort facility located in Moscow. The absurdity of the situation leads to artificial increased time of delivery.

The Russian Post is the leader in the sum of net profit, however, if comparing its net profit and net profit of the second on turnover company of TOP-10, then the result will be clearly against the monopolist. High expenses: amortization, support of basic funds, expenditures for staff and logistics etc. lead to, that by a massive turnover the enterprise shows rather small net profit.

Practically all participants of TOP-10 are registered in Moscow, that’s no wonder –traditionally the transportation flows of the great country lock in the capital and it’s the problem not only of postal companies.

Taken as a whole, according to the independent estimation of solvency of companies, developed by the Agency Credinform, all market leaders, except KurerServisEkspress LLC and KURER-SERVIS LLC, have a high and the highest solvency indexes GLOBAS-i®. It means for investors, that the organizations can pay off their debts in time and fully, while risk of default is minimal or low. With the development of internet trading and online stores the demand for postal and courier services will keep steadily growing, that will lead to increased competition between market players.