Difficulties & Challenges
38th National Convention of Company Secretaries
Vimal Kejriwal/A Bhattacharya
Vimal Kejriwal
Executive Director KEC International Ltd.
Member of Institute of Company Secretary of India
Chartered Accountant (All Indian 8th Rank Holder )
An Alumnus of Kellogg School of management
Anubrata Bhattacharya
Chief Executive
Distribution & Design Service
BE (Hons), MBA
1
Contents :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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KEC International Ltd.
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.
3
Subsidiary, JV, Associates & Branch Offices
Africa
Algeria
Ghana
Mozambique
Zambia
Cameroon
Kenya
Nigeria
Egypt
Libya
South Africa
Ethiopia
Mali
Tunisia
Middle East
Kuwait
Oman
Saudi Arabia
UAE
Central Asia
Afghanistan
Georgia
Kazakhstan
Tajikistan
South Asia
Bangladesh
Bhutan
Malaysia
Others
Lebanon
Philippines
USA
4
Presence most part of world
1.
2.
3.
4.
5.
6.
7.
8.
Afghanistan
Algeria
Argentina
Australia
Bangladesh
Bhutan
Brazil
Cameroon
9.
10.
11.
12.
13.
14.
15.
16.
Canada
Chad
DRC
Egypt
Ethiopia
Georgia
Ghana
India
17.
18.
19.
20.
21.
22.
23.
24.
Indonesia
Iran
Iraq
Jordan
Kenya
Kazakhstan
Kuwait
Laos
25.
26.
27.
28.
29.
30.
31.
32.
Lebanon
Libya
Malaysia
Mali
Mozambique
Namibia
Nepal
New Zealand
33.
34.
35.
36.
37.
38.
39.
40.
Nigeria
Oman
Philippines
Peru
Saudi Arabia
Sri Lanka
Sudan
Syria
41.
42.
43.
44.
45.
46.
47.
Tajikistan
Thailand
Tunisia
UAE
USA
Vietnam
Zambia
5
Five Stages of International Evolution
STRATEGY
1. Domestic
2. International
STRUCTURE
Export Department(functional department)
International Division (S.B.U.)
Middle
East
Domestic
CEO
EU/CIS
International
ASIA
America
3. Multinational
Global CEO Structure
CEO
Middle
East
EU/CIS
ASIA
America
6
Five Stages of International Evolution
STRATEGY
4. Global
STRUCTURE
Global BU structure
CEO
BU 1
5. “Glocal”
BU 2
BU 3
Global Matrix Structure
Regions
BUs
7
Difficulties and challenges
Language
Culture
Compliance
Security & Safety
Skilled Manpower
Execution related
8
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
9
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
10
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
Custom duty
Port handling charges for different items
VAT
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
11
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
12
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
13
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
14
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
15
CS Function/Work/Job In India
Company Secretary As Principal/Senior officer of management
In Company as Employee/Officer
Management Appointment
Management Advisor to company in
Management Remuneration
Legal & Regulator matters
If company goes to public than
management of IPO, QIP, Debt etc.
Act as bridge between management
BOD, Govt, Shareholder etc.
CS Authorized to sign Annual
Business and Financial Mater
Return of the Co.
Inter-Corporate Investment & Loan
In Firm as Consultant/Advisor
Responsibility related to BOD
meeting
Formulating long and short term
corporate policies
Matter related to various law
Legal Matter
Can write Public Offer Document
Handle matter related to Project
Finance, Compliance etc.
Corporate development planners
16
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.
17
CS role in Project execution
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
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country to country) for the above purposes
CS role in Project execution
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….
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CS role in Project execution
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”
20
Thank You
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