difficulties & challenges 38th national convention of company secretaries 1 vimal kejriwal/a...
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Difficulties & Challenges38th National Convention of Company Secretaries
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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
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Contents :-
KEC International Ltd.
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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.
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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
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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
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Five Stages of International Evolution
4. Global Global BU structure
5. “Glocal” Global Matrix Structure
STRATEGY STRUCTURE
Regions
BUs
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Difficulties and challenges
Language
Culture
Compliance
Security & Safety
Skilled Manpower
Execution related
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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
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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
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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