Difficulties & Challenges 38th National Convention of Company Secretaries 1 Vimal Kejriwal/A...

21
Difficulties & Challenges 38th National Convention of Company Secretaries 1 Vimal Kejriwal/A Bhattacharya Vimal Kejriwal Executive Director KEC International Ltd. Member of Institute of Company Secretary of India Chartered Accountant (All Indian 8 th Anubrata Bhattacharya Chief Executive Distribution & Design Service BE (Hons), MBA

Transcript of Difficulties & Challenges 38th National Convention of Company Secretaries 1 Vimal Kejriwal/A...

Difficulties & Challenges38th National Convention of Company Secretaries

1

Vimal Kejriwal/A Bhattacharya

Vimal KejriwalExecutive Director KEC International Ltd.Member of Institute of Company Secretary of IndiaChartered Accountant (All Indian 8th Rank Holder )An Alumnus of Kellogg School of management

Anubrata BhattacharyaChief ExecutiveDistribution & Design ServiceBE (Hons), MBA

KEC International Ltd. 3-5

Stages of International Evolution and required Org. Structure 6-7

Difficulties and challenges 8-14

Opportunity as Company Secretary 15-20

2

Contents :-

KEC International Ltd.

3

One of the Largest Company in transmission & distribution sector in the world

End to end presence in every aspect of power supply chain

Global footprint - client base spread over 46 countries

Currently executing projects in over 25 countries, with the help of

Subsidiary Joint Venture Associates Branch Office

Strong presence in India, Central Asia, South Asia, Africa, and Middle East,

FY 2010 Total Revenue close to Rs 4000 Crores,

Truly International - about 60% of its revenue out of export in last five year.

More than 1350 employees working in international locations.

Competing with more than 25 global players.

4

Subsidiary, JV, Associates & Branch Offices

AfricaAlgeria Cameroon Egypt EthiopiaGhana Kenya Libya MaliMozambique Nigeria South Africa TunisiaZambia

Middle EastKuwait Oman Saudi Arabia UAE

Central AsiaAfghanistan Georgia Kazakhstan Tajikistan

South AsiaBangladesh Bhutan Malaysia

OthersLebanon Philippines USA

1. Afghanistan2. Algeria 3. Argentina 4. Australia 5. Bangladesh6. Bhutan 7. Brazil8. Cameroon

9. Canada10. Chad11. DRC12. Egypt 13. Ethiopia14. Georgia15. Ghana16. India

17. Indonesia18. Iran19. Iraq20. Jordan 21. Kenya22. Kazakhstan23. Kuwait24. Laos

25. Lebanon26. Libya27. Malaysia28. Mali29. Mozambique30. Namibia 31. Nepal32. New Zealand

33. Nigeria 34. Oman35. Philippines36. Peru37. Saudi Arabia38. Sri Lanka 39. Sudan40. Syria

41. Tajikistan42. Thailand43. Tunisia44. UAE45. USA46. Vietnam47. Zambia

Presence most part of world

5

6

Five Stages of International Evolution

1. Domestic Export Department(functional department)

2. International International Division (S.B.U.)

3. Multinational Global CEO Structure

STRATEGY STRUCTURE

7

Five Stages of International Evolution

4. Global Global BU structure

5. “Glocal” Global Matrix Structure

STRATEGY STRUCTURE

Regions       

BUs                            

8

Difficulties and challenges

Language

Culture

Compliance

Security & Safety

Skilled Manpower

Execution related

9

Difficulties and challenges

Language

Language is a large problem and reduce our manpower efficiency:

Due to different language at different location, our people are not comfortable

in dealing with locals.

Dealing is restricted through translator etc.

This problem is more in French speaking countries and CIS countries.

Good possibility of landing into the legal problems due to lack of knowledge of

local language/rules and regulation.

Mitigation – Language translator and course

10

Difficulties and challenges

Culture

Culture is another difficulty which affects our manpower efficiency:

Food Habit – UAE & Africa

Temperature – Kazakhstan (-40.C), 268 Km access road in Saudi Arabia desert,

War-Torn Afghanistan

Religious conviction – In Saudi Arabia you are not allowed to eat drink during

Roza time

Mitigation– Adaptability

11

Difficulties and challenges

Compliance related

In a new country getting correct information is very critical. Since each country

have its own set of rules and regulation

Correct information on the taxation like

Income tax Double tax treaty Corporate tax

Withholding tax

Turnover tax Social security tax Sales tax VAT

Custom duty Port handling charges for different items

Currency fluctuations risk – some currency are very volatile

Important to ascertain the most effective way of establishing the

Local company Branch office Joint venture Consortium of Co.

Restriction of repatriation of the excess fund

Work permits

Correct information on labor law towards employment conditions.

Mitigation– Collect local info/data in advance

12

Difficulties and challenges

Security & Safety

In many countries there is a high security risk involved (Afghanistan, Iraq,

Nigeria, Algeria, Lebanon)

Terrorist activity

Fundamentalist

Extremist activities/strife

Highly theft prone countries - Even the full container sometime vanish during

the transportation

Authority Involvement in theft - theft occurs at the port itself with the help of

relevant Authority (Nigeria, Ethiopia, Kenya)

Mitigation- Restricted working hours & provision for high security

13

Difficulties and challenges

Skilled Manpower

Extremely difficult to find and retain Skilled Manpower because:

Lack of practical training, since industry is unique

Difficult to mobilize people for the countries under high security risk. (Afghan )

Concern of family back home (Afghan, Nigeria, Iraq)

No social life at project sites particularly in African continents.

Family separation:- there are very few countries where Indian families are

comfortable.

People visit family only once in a year

Communication facility not adequate. (Libya, Cameroon, Mozambique,

Afghanistan)

Mitigation- Remuneration

14

Difficulties and challenges

Execution related

Lead time required for mobilization in a new country

Limited /non availability of local resources viz:-

competent sub contractors construction equipments skilled manpower

Non availability/shortages of construction materials like Cement, Steel etc.

Limited options for establishing office/ open store yard and camp

Some clients have limited experience

ROW/Way leave issues – almost in all the country

Project overrun cost:- due to the delay attributable to client

Strict health, safety and environment requirements

Delayed payment realizations even in funded Projects

Delay in Project closer, release of final payments, Bank guarantee

Mitigation– Project Management skills

15

CS Prospects In India

More focus on development in corporate sector.

Automatically translates into the involvement/legalities of various type.

And this falls under the purview of a COMPANY SECRETARY.

Companies seek advice from a person with a comprehensive/systematic

knowledge of all relevant laws, therefore COMPANY SECTORY

Employment potential in the corporate sector is very high.

Openings also available in government sectors

Option for the academically inclined also exist

A combination of experience and expertise can lead to top level positions like

Chairman,

Directors and

Managing Director, in reputed organizations

16

In Company as Employee/Officer

Management Advisor to company in

Legal & Regulator matters

If company goes to public than

management of IPO, QIP, Debt etc.

Business and Financial Mater

Inter-Corporate Investment &

Loan

Responsibility related to BOD

meeting

Formulating long and short term

corporate policies

Matter related to various law

Company Secretary As Principal/Senior officer of management

In Firm as Consultant/Advisor

Legal Matter

Can write Public Offer Document

Handle matter related to Project

Finance, Compliance etc.

Corporate development planners

Management Appointment

Management Remuneration

Act as bridge between management

BOD, Govt, Shareholder etc.

CS Authorized to sign Annual

Return of the Co.

CS Function/Work/Job In India

17

CS Prospects Abroad

Although Company Secretaries are in great demand in India,

In USA, UK and other western countries the profession or the professionals

do not find tailor made opportunities

(because the Company Secretary course is based on the Companies Act 1956)

A qualified Company Secretary may however find employment opportunities

similar to those available to Business Graduates in either USA, Australia,

UK or other European countries.

CS can get tailor made job also by doing similar course or Specialization

overseas.

Over and above there is tremendous Indirect opportunity through

globalization and economy liberalization by way of Indian corporate growth.

18

EPC - Engineering, Procuring and Construction (EPC) company, particularly having projects spread across various countries

Some countries require foreign company to have a branch office registered in their countries for execution of a project in their country, in which case:

Pass a resolution for opening of a Branch Office in overseas country in the name of the company (opening of a branch office abroad does not require any approval from the Reserve Bank of India)

Appoint a person as branch head and issue power of attorney in his favor to enable him to sign various applications with the appropriate authorities i.e. administrative authorities, tax authorities etc.

Pass a resolution for opening of a bank account in the name of the company

Provide various documents viz., list of directors, passport copies of directors, annual reports of the company etc. (requirement changes from country to country) for the above purposes

CS role in Project execution

19

In some countries the authorities would insist that there has to be a separate company incorporated as a joint venture with any local party (JV) or as a wholly owned subsidiary of a foreign company (WOS) for execution of a project in their country, in which case:

Pass a resolution under Section 372A of the Companies Act, 1956 for investing in the JV/WOS

Check whether the company falls within the ambit of Automatic Route defined under the Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004

If the company does not satisfy the criteria for Automatic Route, make an application to the Reserve Bank of India for specific approval to invest in JV/WOS

Investment in JV/WOS can be made only on receipt of approval from the Reserve Bank of India Cont….

CS role in Project execution

20

Cont….

If the company satisfies the criteria for Automatic Route, file form ODI (overseas direct investment) Part I along with certificate from Statutory Auditor with an Authorized Dealer of the Reserve Bank of India

Make remittance of the capital contribution simultaneously file ODI Part II with the same Authorized Dealer with whom Part I was filed

Receive UIN (Unique Identification Number) from the Reserve Bank of India

Only on receipt of UIN subsequent investments can be made

File Annual Performance Reports in ODI Part III within 60 days of close of the financial year of Joint Venture company

In the event of disinvestment in the JV/WOS file ODI Part IV within 30 days of disinvestment with the same Authorized Dealer”

CS role in Project execution

21

Thank You