Difficulties & Challenges 38th National Convention of Company Secretaries

1. Difficulties & Challenges38th 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

2. 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

3. 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.

4. Subsidiary, JV, Associates & Branch Offices Africa Algeria Cameroon Egypt Ethiopia Ghana Kenya Libya Mali Mozambique Nigeria South Africa Tunisia Zambia Middle East Kuwait Oman Saudi Arabia UAE Central Asia Afghanistan Georgia Kazakhstan Tajikistan South Asia Bangladesh Bhutan Malaysia Others Lebanon Philippines USA

5. Presence most part of world

6. Five Stages of International Evolution STRATEGY STRUCTURE • Domestic Export Department(functional department) • International International Division (S.B.U.) • Multinational Global CEO Structure

7. Five Stages of International Evolution STRATEGY STRUCTURE 4. Global Global BU structure 5. “Glocal” Global Matrix Structure

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. CS Function/Work/Job In India • Company Secretary As Principal/Senior officer of management • 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 • Management Appointment • Management Remuneration • Act as bridge between management BOD, Govt, Shareholder etc. • CS Authorized to sign Annual Return of the Co. • In Firm as Consultant/Advisor • Legal Matter • Can write Public Offer Document • Handle matter related to Project Finance, Compliance etc. • Corporate development planners

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. 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 country to country) for the above purposes

19. 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….

20. 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”

21. Thank You