Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of
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Emerging OpportunitiesMove into a higher gear
Atul MittalDirector, Deloitte Touche Tohmatsu Pvt . Ltd.
December 3, 2011
India Growth Story
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©2011 Deloitte Touche Tohmatsu India Private Limited
Key industries will continue to grow
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India Inc.Acquisitions in 2008: 196Value of acquisition: USD 13.1 billionAcquisitions in 2009: 82Value of acquisition: USD 1.4 billionAcquisitions in 2010: 198Value of acquisition: USD 22.5 billion
InfrastructureWorld leading Infrastructure sector11th plan (2007-2012): USD 520billion12th plan (2012-2017): USD 1trillion
Flying HighPassengers in 2005: 32millionPassengers in 2010: 57millionEst. Passengers in 2015: 108million
Patiala PegWorld’s largest whisky market 2006 est. sales: 80million cases2009 est. sales: 119million cases.2010 est. sales: 131million cases.
Mobile TelecomActual connections till 2006: 125millionConnections at Oct 2010: 707million
Emerging Economy3rd largest economy by 2025400 million consumer classBillions being invested in infrastructure
©2011 Deloitte Touche Tohmatsu India Private Limited
A day in the life of India
Refrigerators12,602
Televisions33,972
Beer8.6 million (bottles)
Jeans72,329
Air Tickets95,890
Watches125,000
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©2011 Deloitte Touche Tohmatsu India Private Limited
A day in the life of India
Gold1,918 kg
Movie Tickets10.9 million
Soft Drinks19.6 million (bottles)
Cars3,880
Two Wheelers35,264
Washing Machines4,274
Water5.7 million (bottles)
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©2011 Deloitte Touche Tohmatsu India Private Limited
But paradoxes will remain
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©2011 Deloitte Touche Tohmatsu India Private Limited
Why You….
©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
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©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
Advisory
Advisory services to all service lines on issues related to:
•Corporate and Allied Laws •Competition Law•Exchange Control Regulations•FCRA•Employment and Industrial Laws •Environmental Laws•ESOP, ESPS, Sweat Equity, RSUs etc.•FDI Policy •IPRs•Sectoral Regulations•SEBI and Capital Market Regulations•Stamp Duty Laws•Setting up entity in India viz. Companies, LLPs, Trust, Partnerships etc.•Setting up of Industries in India, initial permissions and registrations and complete hand holdings•M&A and Transaction related services
Advisory
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©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
Advisory
Structuring Cross-Border Transactions/ Investments:
•Based on FDI Policy, Exchange Control & Applicable Sectoral Regulations •Government Interface•Structuring the investments/ transactions•Financial Model Review•Joint Venture Support •Documentation Support
Advisory
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©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
Obtaining specific approvals and clarifications, as may be required, from regulators to establish / expand business presence in India:
• Competition Commission of India• Department of Industrial Policy and Promotion• Department of Scientific and Industrial Research• Foreign Investment Promotion Board• Ministry of Finance• Ministry of Commerce and Industry• Ministry of Corporate Affairs• Ministry of Home Affairs• Reserve Bank of India• Registrar of Companies • Registrar of LLP• Regional Director • Securities and Exchange Board of India• Stock Exchanges
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©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
• Approvals for recognition and approval of in house R&D unit from DSIR under section 35(2AB) of Income Tax Act, 1961
• Registrations under Industrial Park Scheme from CBDT
• Approvals from CBDT relating to tax exemption under section 10(6C) of the Income Tax Act, 1961
• Representing before the Reserve Bank of India, SEBI and Regional Director for compounding of contraventions
• Registration of STPI from Director STPI• Approval from Development Commissioner for
establishing SEZ units• Many more….
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©2011 Deloitte Touche Tohmatsu India Private Limited
Your Services
Compliance
Undertaking intricate compliance prescribed by regulations made under the provisions of :
• Corporate and allied Laws• Competition Law• Compliance Manual and SOPs• Exchange Control Regulations• Employment & Industrial Laws• IPRs• Legal and Regulatory Health Checks • NBFCs, CICs• Trusts, Partnership, Society, FCRA• SEBI and Capital Market Regulations
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©2011 Deloitte Touche Tohmatsu India Private Limited
Compliance………Why India is Important
• High Corruption Perception Index (CPI) as per Transparency International latest survey results - India CPI score 3.3 for 2010 as compared to CPI 3.4 for 2009
• Recent history of corruption or fraud cases (CWG scam, IPL scam, 2G Spectrum scam) involving joint venture companies
• CBI initiative to punish passive bribery (payer of the bribes) under the Prevention of Corruption Act (PCA), cover companies involving in corrupt activities e.g. Dow Chemicals
• Lack of strict enforcement of laws and regulations
• Increased foreign direct investment in recent years and major investments in infrastructure development
• Large private sector consisting family owned business with lack of effective governance
• Culture with prevalence of gifts and hospitality
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©2011 Deloitte Touche Tohmatsu India Private Limited
Compliance with Applicable Laws
• Income Tax Act• The Customs Act• The Foreign
Trade Policy• The Central
Excise Act• The Service Tax
Laws• The Central
Sales Tax Act• The UP Value
Added Tax Act• The Entry Tax
laws
• The Employee Provident Fund & Miscellaneous Provisions Act
• Employee State Insurance Act
• The Payment of Gratuity Act
• The Minimum Wages Act
• The Payment of Wages Act
• Payment of Bonus Act
• Shop & Establishment Act
• Companies Act• LLP Act• FEMA• Competition Act• IDRA
• Foreign Corrupt Practices Act
• Prevention of Corruption Act
©2011 Deloitte Touche Tohmatsu India Private Limited
Approach & Methodology
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Overview
• Understand the business, nature of operations, geographical presence and applicable laws and regulations
• Understand existing key controls/process-es for compliance
• Perform sample checks
• Identify instances of non-compliances
• Recommend procedures
• Review existing compliance structure
• Recommend global best practices including advice on internal escalation protocols
Understand Evaluate Compliance
Best Practices
Incorporate the
learnings
• Assist to identify the priority areas based on various factors e.g. govt. touch points, consequences etc.
• Classification of priority areas into High, Medium and Low
Assess Priority
©2011 Deloitte Touche Tohmatsu India Private Limited
Why the compliance risks matter
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consequences of non-
compliances
Loss of investor confidence and reduction of shareholder value
Loss of reputation and other bad press
Prosecution and imprisonment
Risk of ban on business
Penalties and fines
©2010 Deloitte Touche Tohmatsu India Private Limited
Business Restructuring
Capital Restructuring Acquisition Family
Settlement
• Buy back of shares• Buy back through
scheme of arrangement• Capital reduction• Preferential issue of
shares• Variation of
shareholders rights• Differential right shares
• Acquisition of Indian Company by foreign Company/another Indian Company
• Stock acquisition• Business acquisition -
Asset purchase vs slump purchase
• Cash deal vs share swap or a combination of both
• Joint ventures
• Scheme of arrangement
• Merger / demerger / hive off
• Share swaps
• Amalgamation• Demerger• Slump sale• Slump sale –Court
process• Asset sale/ Itemized
sale
M&A Deal – A Snapshot
Deloitte TargetBuyer
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©2010 Deloitte Touche Tohmatsu India Private Limited
Developing Broad level
regulatory strategy
based on transaction
objectiveObjective
Value Chain
How Deloitte Can Help
Identifying alternative structures
Pre-Deal Advisory Due Diligence
High level understanding of potential &
regulatory issues
Identifying opportunities
connected with the
transaction
Analysis of target’s level of regulatory compliances
Assessing Impact of adjustment & cost of
regulatory non compliances to purchase price
Purchase agreement Considerations
Detailed regulatory review & analysis of:
Various compliances
Dispute and Litigations
Risk Cost analysis
Transaction Structuring
Optimizing tax opportunities giving due
consideration to the transaction cost
Innovative investment structures
Innovative financial structures
Purchase price allocation
Managing future compliance costs
JV structuring and agreement review
Exit strategies
Implementing the selected
strategy
End-to-end assistance in a section 391-394
arrangement including supporting lawyer during
Court process
Post Deal Advisory
Obtaining regulatory approvals from various
Government bodies such as FIPB, RBI, etc.
Assistance in post deal compliance
requirements (eg. Intimations to
various authorities
Ensure post deal integration
Your range of services
Risk mitigation strategy including assistance in
seeking requisite Government approvals
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Thank You
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ATUL MITTAL
Director
Tax & Regulatory Services
Deloitte
email: atulmittal@deloitte.com
Tel: +91 (124) 46792828,
Mobile: +91 9810065744
©2010 Deloitte Touche Tohmatsu India Private Limited
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.
This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of DTTIPL, Deloitte ToucheTohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this material, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.
No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this material.
©2011 Deloitte Touche Tohmatsu India Private Limited. Member of Deloitte Touche Tohmatsu Limited
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