In Touch Mcci March 2012

Vol.25 No11 February 2012

In this issue 4 President’s message 4 Chamber’s Activities • Programme on Bridging Skill Gap for Improving

Employability of Technical workforce • Talk by Mr David Willey, Deputy ViceChancellor, Bournemouth University, UK on Corporate Social Responsibility: Its Importance for Industry and Education • India Corporate & Investor Meet • Water Expo 2012 • Programme on Vodafone Path breaking case – Policy v/s Jurisprudence • Training Programme on Team Building • Visit of Western Australian Parliamentary Delegation • The India-UK Economic Partnership – Address

by Mr Jeremy Browne, MP, Minister of State for Foreign Affairs, UK • Programme on Business Process Management –The True Differentiator • Indo-US Partnership in Port & Maritime Sector • Discussion meeting on Tamilnadu VAT Act • MCCI-MMA Video Discussion on “Can you Help me”?

UK India Partnership – T Shivaraman, Vice-President, MCCI, handing over the Coffee Table Book to Jeremy Browne, UK Minister of State for Foreign Affairs.

4 General Committee 4 SPOT LIGHT

National Water Policy 4 4 4 4 Indo-US Partnership in Port & Maritime Sector – G K Vasan, Hon’ble Minister for Shipping addressing the gathering.

Policy Watch Representations MCCI’s suggestions on Companies Bill Reduction in the sensitive list for the Least Developed countries under SAFTA Agreement

4 Economic Review

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PRESIDENT’S MESSAGE

Union Budget 2012 – Cruel or Kind?

Dear members Another Budget has come and gone!

The Union Budget this year had a complex background. The global economic crisis was deepening and India was very much impacted by it.

Domestically, rising inflation, high interest rates, dwindling investments and a plunging IIP, completed the gloomy picture. On the political front, there were elections in five States, with the next General Elections not too far away. Hence there was a lot of pre- budget speculation on whether the Government would attempt a ‘reformist“ budget or play safe. As always, the media hype leading up to Budget day reached a crescendo, followed by the inevitable paralysis by analysis, over the days following the budget! It never ceases to amaze me that people expect the Finance Minister to wave a magic wand and right every wrong. As I had previously written, the toughest job in this country is undoubtedly his and with the compulsions of coalition politics added on, it must be one of the toughest jobs in the world!

Let us begin with the headline numbers. The revised fiscal deficit for 2011-12 stands at 5.9% of GDP and is pegged at 5.1% for 2012-2013.

However, the revenue estimates appear to be slightly ambitious, given the recent track record of the Government. While the across the board increase in excise duty to a peak of 12% and the increase in service tax rates along with widening the tax net will certainly boost revenues, this has to be weighed against the possible slowdown in several sectors of the economy. Again, it remains to be seen whether these statements of intention will actually translate into action.

Other much talked about reforms like GST, New Companies Bill, DTC etc., have not got off the ground.

Neither is there any indication of specific time lines as to when they will see the light of day.

The Union budget this year could not have been a path breaking one, given the various political and economic compulsions. But there were some expectations of measures to boost investor confidence and to propel growth. Sadly, the preoccupation with augmenting revenues and achieving a lower fiscal deficit seem to have over shadowed the growth measures. We do indeed live in taxing The relaxation in rules and the reduc- times! tion of withholding tax on External Commercial Borrowings to 5% for Best wishes sectors such as power, airlines, ports, etc., enhanced thrust to infrastructure development and extending the viability gap funding to increased categories, the weighted deduction for R&D, incen- T T Srinivasaraghavan tivising Skill Development initiatives President with additional funds allocation, the deepening of bond market, and introduction of advance pricing mechanism to reduce transfer pricing disputes, are to be welcomed.

TDS on capital gains for immovable property transactions, tax on share premium received by companies in excess of market value of shares, MAT for all forms of business etc., are some of the ambiguous proposals which could throw open lot of challenges for compliance and lead to litigation.

GAAR is fine only if the process is fair and transparent. Otherwise it could end up in undue harassment. Retrospective amendments to address Vodafone like situations, bringing domestic related party transactions under the ambit of transfer pricing are clearly retrograde steps.

CHAMBER’S ACTIVITIES 4th February 2012:

courses with accreditation in future.

Development Centre.

Programme on Bridging Skill Gap for Improving Employability of Technical Workforce:

This was followed by a presentation by Mr

Mr P M Belliappa, Mentor, ABS Chennai,

Ravi Kannan, Consultant who touched on

referred to the rapid changes in technology

impact of skill deficit in Engineers, gaps in

and various other sectors in the 21st century

knowledge which has an impact on industry,

and said both the business professionals and

poor problem solving capability, etc. He

the youth are compelled to keep pace and if

said empowering the diploma holders who

they do not, they will be left behind.

Chennai is fast emerging as the hub for manufacturing industry. However, of late, the industry has been experiencing acute shortage of skilled work force. Members of the Chamber had identified the need for bridging the skill gap of technical work

are involved with the process will be more beneficial. He spoke about why people are important and said these days the demand is for people with multiple skills.

force as a pre-requisite for faster economic

Mr D K Pradhan, COO of the Centre made

growth of industry and society. As part of

a presentation on low cost automation.

its 175th year celebrations, the Chamber had

The objective was to understand the basic

launched the project for setting up a Centre

concepts of Industrial Automation techniques,

for Vocational Training & Skill Development

maintenance and trouble shooting.

with the support of its members.

Other presentations were by Bashgo

The Chamber thought it appropriate to

Maintenance Services, ONWARD Technology

have brainstorming session with the major

and College of Innovation and Industry Skills,

stakeholders in the skill development initiative.

Western Australia.

This programme aimed at bringing together the industry and the academic institutions to develop various modules for technical professionals to meet the requirement of the manufacturing sector.

There was a brain storming session during which the participants, in groups, came up with specific ideas for bridging the knowledge gap.

Secretary General of the Chamber briefly

6th February 2012:

described the activities of the Chamber and

is Sustainable Development. Two major

Talk by Mr David Willey, Deputy Vice-Chancellor, Bournemouth University, UK on Corporate Social Responsibility: Its Importance for Industry and Education:

initiatives (a) setting up of a Vocational Training

The Chamber in association with Association

Committees. The purpose of this programme was to seek the opinion of the participants as to how the Chamber can move forward.

She said the overall theme for this year

and Skill Development Centre and (b) Launch of a Sustainable Chennai Forum which deals with Energy, water, Waste Management and Transport – were taken up.

She said the aim of MCCI’s Skill Development Centre is to train youth in specific skills that are required by the industry thus aiding development of industry and the region.

Our immediate focus would be short term courses and customized programmes while the Chamber would be looking for long term 4

the centre of Education, Music, Dance, Culture and Politics!.

Addressing the gathering, Mr David Willey said that CSR covers the relationship between the corporations and societies with which they interact and often involves trade-offs between competing issues, particularly profit and addressing broader stakeholder and global concerns.

He said CSR is a commitment to improve community well being through discretionary business practices and contributions of corporate resources.

While there is no universal definition of corporate social responsibility, it generally refers to transparent business practices that are based on ethical values, compliance with

Welcoming the participants, Mrs K Saraswathi,

the expertise it has through its various Expert

He welcomed Mr David Willey to Chennai,

of British Scholars, Chennai (ABS) organized this meet in the Conference Room of the Chamber.

legal requirements and respect for people, communities and the environment.

The four prevailing drivers were : • Moral obligation • Sustainability • Licence to operate and • Reputation He referred to the 3 “P”s – People, Planet and Profit and said corporates should follow fair and beneficial business practices towards labour, community; not use child labour

Mr T Shivaraman, Vice-President of the

knowingly; pay fair salaries to its workers,

Chamber briefed the speaker and those

provide safe working environment, good

present about the Chamber’s activities.

working conditions for employees and

He made a special mention of the recently

contribute to its community e.g. health

concluded Logistics Course at the MOP

care and education. Coming to Planet he

Vaishnav College as also the initiatives

said corporates should follow sustainable

of the Chamber in establishing a Skill environmental practices; carefully manage

CHAMBER’S ACTIVITIES consumption of energy and non-renewables;

and the Madras Chamber was one of the co-

Sessions namely (a) CSR (b) Corporate

reduction in manufacturing waste; and treat

organisers of the event.

Governance (c) Investor related Issues and

toxic chemicals in a safe and legal manner.

Addressing the gathering the Union Minister

On profits he said, it should not be limited

for Corporate Affairs said that the Companies

to the internal profit made by a company or

Bill was on the last mile stage and would

organization but it is the economic benefit

be passed during the budget session. The

enjoyed by the host society; it will have

Bill had been referred to the Parliamentary

lasting economic impact on its environment.

Standing Committee on Finance, which was

He then briefly touched upon the activities of Bournemouth University and said at BU

expected to finalise the content in a couple of meetings.

(d) New Initiatives – Companies Bill 2011 and Amendments to Schedule VI of XBRL. Mr T T Srinivasaraghavan, President of the Chamber chaired the session on Corporate Governance.

7th-9th February 2012:

Water Expo 2012:

sustainable development is about ensuring a

Hailing the National Competition policy

better quality of life for everyone, now and for

as a game changer, he termed it as the

The Indian Water Works Association (IWWA) is

generations to come.

second most important reform measure after

a voluntary body of professionals concerned

liberalization that aimed for inclusive growth.

and connected with water supply for

In countries such as the US where such

Municipal, Industrial, agricultural uses and

competition laws existed, crude petroleum

treatment and disposal of waste water. IWWA

prices had halved and inflation effectively

focuses basically on the entire ‘water cycle’

reined in and the same would happen India.

encompassing the environmental, social,

He ended his address with the final thought “Not everything that can be counted counts, and not everything that counts can be counted”.

The programme was attended by some students as well and there was lively discussion.

He further said that the competition policy would dismantle anti-competition

Water Today’s Water Expo 2012 which is

mechanisms, check price manipulation and

South East Asia’s largest event on Waste

ensure free movement of goods.

Water & Wastewater management, was

7th February 2012:

According to the Minister, a National

India Corporate & Investor Meet :

Governance Policy was also in the pipeline

The Ministry of Corporate Affairs, Government of India started the initiative of bringing national focus on the role and contribution of the corporate sector in India’s social and economic development through the India Corporate and Investor Meet in December

February 2012.

The Expo was inaugurated by Mr D

sector. Another proposal under review was

Jayakumar, Hon’ble Speaker of the Tamilnadu

for the constitution of commercial benches in

Legislative Assembly. Our Chamber was one

21 High courts.

of the supporters of this event and on behalf

The recent Supreme Court order cancelling 122 licences of GSM operators will not have any bearing on foreign direct investment inflows to the telecom or any other sector.

This year, the Ministry of Corporate Affairs

He expected foreign investment to improve

6th to 11th February under the caption

held at the Chennai Trade Centre from 7-9th

to check fraudulent practices in the corporate

2009.

organized a week long programme from

institutional and financing issues.

as auctions in telecom ensured transparency that would benefit the country and the

“India Corporate and Investor Meet” in

consumer.

major cities and the programme at Chennai

Asserting that as a member of the Empowered

was inaugurated on the 7th February. His

Group of Ministers, he had argued for the

Excellency the Governor of Tamilnadu was

auction route instead of a first-come-first

the Chief Guest while the Hon’ble Minister for

served policy in the allocation of spectrum, Dr

Corporate Affairs, Dr M Veerappa Moily was

Moily said though there could be a temporary

the Guest of Honour.

set back (following the order cancelling the

The programme was jointly organized by

licences) he expected the affected operators

the Ministry of Corporate Affairs and the

to participate in the auctions.

Institute of Chartered Accountants of India

After the inaugural, there were four Technical

of the Sustainable Chennai Forum of the Chamber, a stall was put up at the Expo which was visited by a large number of people.

Believe in yourself and trust your own wisdom rather than being swayed by the opinions of others.

Jonathan Lockwood Huie

5

CHAMBER’S ACTIVITIES

10th February 2012:

executive are not helping anybody. Only

Programme on Vodafone Path breaking case – Policy v/s Jurisprudence:

the judiciary can. Ultimately, judgements are

l P leases customers who like working with good teams

To discuss the recent judgement of the Supreme Court in the case of Vodafone,

normally philosophy driven.

There was an interesting debate after which the meeting concluded with a vote of thanks by the Secretary General.

wherein the Government was asked to refund Rs.11000 crores to the company, and

especially the ability to respond to change

l P romotes the sense of achievement, equity and camaraderie, essential for a motivated work place l W hen managed properly, team work is a better way to work

11th February 2012:

Selflessness: Being able to work in a team shows

Quality Inn Sabari.

Training Programme on Team Building:

Mr Sriram Seshadri, Chairman of the

The Chamber organized a tailor-made team

Chamber’s Expert Committee on Direct Taxes,

building event for the executives of its

in his welcome remarks said that Vodafone’s

member companies.

is one of the largest cases in India. There are

Equus Technology & HR Consultancy

is a more “hands-on” concept and tends to

Services provided the faculty. The objective

help people to learn by relating with others.

was – through discussion, brain storming,

Also being able to distribute the workload

game play, role play and goal setting, the

can pay off in a big way. A task can be

The issue basically relates to taxability of

programme will help sort out problems, put

accomplished faster and more efficiently if it

transfer of shares – whether the Indian

forward new ideas, plan the future, look at

is distributed evenly among group members.

Government has the right to tax, is there

the team’s purpose, vision and mission and

It doesn’t mean everybody doing the same

withholding tax obligation, etc. He

learn more about each other as people.

thing or every body being able to do each

wondered whether this decision will live past

Organisations that survive the twenty first

other’s jobs. It’s more a means to a synergistic

century will undoubtedly be characterized by

way of working.

team work.

Healthy competition:

Teamwork has become an important part of

Teamwork

our working and life culture today. Individuals,

competition. It is human nature wanting to

organisations and businesses have come to

be the best at something.

its ramifications from the tax and legal angle, the Chamber organized this meet at Hotel

tax issues as well as legal issues arising out of this case and therefore it is important to analyse both these.

16th March, the budget day and whether it is retrospective or prospective.

One of the major issues in terms of understanding this ruling itself arose because of the two judgements being passed. That itself has thrown up several questions. He hoped Mr N Venkataraman, Senior Advocate, Supreme Court, would throw some light on

the realization that when using effective team work, more things are accomplished.

these questions.

Why is Teamwork important? Mr Saba Rama

Mr Venkataraman said one cannot have

following eight good reasons:

a holding company and a subsidiary in one country. The treaty is nothing but a contract between two countries. When FDI investments come via the Mauritius route, it has a protection. According to Supreme Court, certainty is important. Investors have come, invested their money, the country is progressing. The whole judgement discusses about the genuineness of the Hongkong shares he said.

He further said today the legislature or the

6

Rathnam, a Trainer and Mentor, gave the l C reates synergy – where the sum is greater than the parts l S upports a more empowered way of working, removing constraints which may prevent someone doing their job properly

selflessness and determination. There are many benefits to using team work in the work place. Fast learning is one benefit, because people tend to learn at a faster rate when working with other people. Team work

also

promotes

healthy

Creative enhancement: Teamwork enhances creativity. Working in a team we have others to suggest different concepts. This can bring new and innovative ideas to the organization. These benefits show exactly how important team work can be in the workplace.

The trainer stressed that each player must be dedicated to the whole team and be willing to act unselfishly. When challenges arise (as

l P romotes flatter and leaner structures, with less hierarchy

they always do) the team needs to have the

l E ncourages multi-disciplinary work where teams cut across organizational divides

deal with them in a constructive and positive

l F osters flexibility and responsiveness,

T.E.A.M. – Together Everyone Achieves More

resources, accountability and commitment to manner.

CHAMBER’S ACTIVITIES

14th February 2012

have started to impart training in some select

Visit of Western Australian Parliamentary Delegation:

trades including soft skills.

A high level Parliamentarian delegation from Western Australia led by Hon’ble Grant Woodhams, MLA, Member for Moore and Speaker of the Legislative Assembly of Western Australia, National Party of Australia visited the Chamber and had an interaction meeting with the MCCI members.

The other members of the delegation were:

Hon’ble Grant Woodhams addressed on India-Australia Trade, Business and Investment Prospects. He said trade between India and Australia is likely to be doubled in the next five years. Indian IT companies in Australia are doing very well. Knowledge is very welcome in WA as there is access to global technologies.

they can assist the mining industry in India.

He invited members to “Look East” for furthering their business.

On this occasion, a LETTER OF INTENT between the Madras Ch amber of Commerce & Industry (MCCI) and Australian Vocational Training and Employment Group Pvt.Ltd. (AVTEG) was signed. Under this LOI, both MCCI and AVTEG intend to work together to share knowledge and contacts related to the

Australian companies are constantly looking

planning and conduct of joint Skill Training

for harnessing new initiatives. There are

Programmes to be offered at the Centre

l M s Janine Freeman, MLA, Member for

opportunities in Education, faculty exchange,

established by the MCCI and also to work

Research and Development, etc. WA has

collaboratively to support the developments

world class expertise in mining as well and

from time to time.

Nollamara, Labour Party

l M r Anthony Simpson, MLA, Member for

Darling Range, Liberal Party

l M r Andrew Waddell, MLA, Member for

Forrestfield, Labour Party

l M rs Kirsten Robinson, Dy. Clerk of the

Legislative Assembly of Western Australia

They were accompanied by : l M r. David Holly – Consul-General,

Govt. of Australia

l M r. Michael Carter – Consul Commercial,

Govt. of Australia

l M r. Peter Forby – Regional Director,

Govt. of Western Australia

Mr T Shivaraman, Vice-President of the Chamber in his welcome remarks said MCCI is one of the oldest Chambers in the country founded in 1836. Though our jurisdiction is Southern India, we focus more on Tamilnadu.

Tamilnadu is industrially active. It is a leader in automobiles, auto component industry, active in IT/ITES, health care, renewable energy, wind energy etc. Tamilnadu is also one of the most literate States in India.

He said during our 175th year which just concluded, we have been focusing on a couple of things – one is sustainability and therefore have formed la Sustainable Chennai Forum. The second one is the Vocational and Skill Development Centre which we 7

CHAMBER’S ACTIVITIES

14th February 2012:

trade relations or technical collaborations.

The India-UK Economic Partnership – Address by Mr Jeremy Browne, MP Minister of State for Foreign Affairs, UK:

He said the bilateral trade between the two

On the occasion of the visit of Mr Jeremy Browne, MP, UK Minister of State for Foreign Affairs, the Madras Chamber and British Deputy High Commission, Chennai, jointly organized a meeting at the Sheraton Park Hotel. Mr T Shivaraman, Vice-President of the Chamber presided.

In his welcome remarks, Mr Shivaraman said that the Madras Chamber is the oldest Chamber in Southern India and was started in 1836. When I say 1836, naturally we began our journey as a British Chamber and that way, we definitely have to admit

countries is growing. India is the UK's 15th largest export market. In 2010, UK/India bilateral trade was worth around £13.8 billion. The volume of bilateral trade in goods

He said his government firmly believes that Innovation is the key to growth and the creative, dynamic model that he has seen here is the model that will sustain economic development and prosperity for the long term.

between India and the UK in 2004 was £4.5

He further said India is ambitious, its people

billion. The aim is to double bilateral trade

are aspirational. India demands the best

with India in another five years. The Queen’s

in the world. UK has much to offer that is

speech on 25th May 2010 mentioned about

world class and that India needs on its path to

the desire of an ‘enhanced partnership’ with

become an economic super power.

India.

He referred to India’s ambitious plan to

There are lot of high level delegations and

train 500 million people by 2020, which is

visits happening in the past confirming the

a significant challenge set by India. He said

above. He said Mr Browne was also in Delhi

UK has an outstanding reputation for both

a few months back and he expressed his

higher and vocational education. Four of the

happiness that he chose to visit Chennai and

world’s top ten universities are British.

address this elite audience on a very timely subject.

He said UK welcomes Indian students to British Universities with open arms. Of the

that our linkages with the UK are stronger. It

Today the businesses across the globe

400,000 foreign students in the UK, 40,000

is interesting to know from the history that

are undergoing tremendous challenges.

are from India and British Universities are keen

the first Indian President to the Chamber

There are opportunities as well. Economic

to partner with Indian institutions to deliver

came only in the year 1965. The Chamber

partnerships between countries would help

courses in India.

had been an integral part of the industrial

to leverage the strengths of different players

and infrastructural development of the State

and could lead to a win- win situation.

over the years and continues to be so even in this modern era. It is the strong value base of the Chamber and the adaptability to the changing times and even at times, staying ahead of time, made the Chamber sustain and succeed in the last many years.

We had celebrated our 175th anniversary in 2011 and now moving on towards our

Madras Chamber has always been proactive and committed to foster such partnerships among industries and commerce. He said the Chamber would be very happy to work with the BDHC and do our bit to strengthen the economic partnership between Tamil Nadu particularly and the UK.

UK has been a staunch advocate of EU Free Trade agreements including that with India which he hoped to see concluded this year.

Mr Jeremy said UK’s interest is not just economic. India is a major power and they want to see that it is properly represented on the international stage. They have been forthright in their support for a permanent seat for India on the UN Security Council.

bicentenary. The recent initiatives of the

Thanking the Chamber for the opportunity

Chamber in setting up a Vocational and Skill

given to him to address its members, Mr

Development Centre and the launch of the

Jeremy Browne said it is a great honour to

Sustainable Chennai Forum are testimonies of

be here during which time he would like to

our staying tuned to the current demands of

make the case for an enhanced partnership

the industry and economy.

between the UK and India.

Our linkages with the UK still continue,

He said South India, Tamilnadu and Chennai

different types of English language courses

may be from a different platform and in fact

are the furnace that drives India’s economic

to improve efficiency and productivity in the

on a much stronger business note now.

engine. There are many models of growth.

corporate sector.

The Chamber has the cream of industrial

He said he was struck by the extent to which

members who contribute to the majority of

development has been based on innovation,

the investment in the State. Many of them

free-thinking and entrepreneurial spirit. These

carry closer business ties with the UK - be it

are attributes that India shares with the UK.

8

Giving a snapshot of UK’s presence in Chennai he said, British Council’s Project English in Tamilnadu is one of the largest programmes anywhere in India. British Council’s Teaching Centre in Chennai has trained over 15,000 students and professionals. It offers 10

In respect of Healthcare, University of Southampton is working with MV Hospital for Diabetes in research and commercialization of

CHAMBER’S ACTIVITIES

technology while Imperial College is working

modify business processes is a source of

in his address said if any organization

with Diabetes Research Centre in diabetes

competitive advantage. The importance

needs process management, they need to

prevention.

of process management is even stronger in

contact a management consultant. Process

industries where knowledge and human

management is nothing but the way you

interactions play a bigger role than ‘products’

conduct your business, after you decide on

that tend to be similar, such as in financial

your strategy, product, etc.

Other sectors where UK’s presence could be felt was in Climate Change and Energy, Automotive/advanced manufacturing,

engineering

infrastructure,

and Inward

investors, financial services, technology and Defence.

There was an interesting Q&A session during

services. BPM requires rigour, boundaryless thinking, collaborative culture, change

Process changes and process improvements

management and executive sponsorship.

help us with standing operating procedures.

BPM is a discipline of modeling, executing,

how do you define a process and (2) what do

tracking, evaluating and modifying business

Two things which are of importance is that (a) you want to gain out of it.

which Mr Browne answered the queries of

processes, in response to the unique

the participants.

circumstances and characteristics of the

He also said that there should be a monitoring

In his Vote of Thanks, Mr Mike Nithavrianakis,

organization.

mechanism in place to make best use of BPM.

British Deputy High Commissioner thanked

The programme was supported by Cordys,

the Minister for visiting Chennai and said it

a new generation technology platform

showed the priority of the British government

company set up by Jan Baan, who had earlier

Mr Narendra Shukla, Vice-President & Director of Cordys Asia, then addressed on BPM. He also spoke about SAP/ERP and said a platform should have the ability to integrate all the applications together. It should also be the platform to give the facility to be able to use the application that one wants. He extensively spoke about the flagship product of Cordys namely Business Operations Platform which combines in one unified stack, three capabilities – Rapid Application Development, Application Integration and Business Process Management. He said Cordys is a market leader in India in this domain with l4 banks, 8 insurance companies and four of the larger conglomerates in India as customers.

to further the partnership that already exists. created Baan, a leading ERP of its time.

He also thanked the Chamber for partnering with BDHC in organizing the event and said MCCI will be an important element in forging this partnership. Already, BDHC was working with MCCI in the project “Sustainable Chennai”.

Welcoming the gathering, Mr Clynton Almeida,

Chairman

of

MCCI’s

Expert

Committee on IT/ITES said that the history of BPM is long and rich. Business process has been an intrinsic aspect of our daily living and has been in existence from time immemorial.

Many civilisations, many wars were fraught

16th February 2012

Programme on Business Process Management – The True Differentiator: The Chamber organized an exclusive session on Business Process Management – The True

using business process management.

He said a Business process or business method is a collection of related structured activities or tasks that produce a specific service or product for a particular customer or customers. Today it is becoming more and more important for organisations to be able

Differentiator at Hotel GRT Grand Convention

to:

Centre.

l E valuate and benchmark their overall

BPM is a holistic management approach

operational efficiency against

focused on aligning all aspects of an

defined KPI’s

organization with the needs of customers. It

l Increase process accuracy and

promotes business effectiveness and efficiency

while striving for innovation, flexibility and

l Have better control and visibility across

integration with technology. BPM enables

organizations to be more efficient, more

l A dapt to changing business

effective and more capable of change than

environment thus leading to better

a functionally focused, traditional hierarchical

profits, customer satisfaction and overall

management approach.

organisational growth.

In a business environment where change

Mr

is endemic, the ability to flexibly and rapidly

Management Consulting, KPMG Services,

Mr. Malli J Sivakumar, Co-chairman of the

optimization of resources processes

Narayanan

Ramaswamy,

Mr Rommal Fernando, General Manager – IT, Mahindra & Mahindra gave the user’s perspective and said his company has been using the applications for the last 18 months and they were quite satisfied with the products.

Chamber’s IT/ITES Committee in his vote of thanks said that this is an important and timely topic for discussion and to understand.

He thanked Mr Naren Shukla for giving an idea of what Cordys does. He also thanked Cordys for coming forward to sponsor the event.

The programme which was attended by

Partner-

about 80 persons, was followed by cocktails and dinner.

9

CHAMBER’S ACTIVITIES 21st February 2012:

He further said India is on the rise, its economy

towards achieving the objectives contained

Indo-US Partnership in Port & Maritime Sector:

has opened up and its middle class is

in the Maritime agenda.

A US Port Mission was in Chennai on 21st

any other large country over the next 20 -25

February and the Chamber in association

years. But this growth also poses challenges.

with US Commercial Service, Chennai

Unfortunately India’s infrastructure isn’t

organized a meeting at Hotel Raintree, Anna

keeping pace with its growth and because of

Salai. The delegation was led by Mr Francisco

this, commercial relations between India and

Sanchez, Under Secretary of Commerce for

US are hindered by this reality.

International Trade, US Government.

booming. And in the long term, according to Morgan Stanley – India will grow faster than

He further observed that one of the obstacles holding them back is the insufficient

Government of India, was the Chief Guest.

infrastructure along the coastline. Indian ports

Welcoming the gathering, Mr T Shivaraman,

have experienced growing traffic in recent

Chamber for the benefit of the US delegates.

a major supplier of efficient and cost effective manpower. India trains and educates more than 3,000 marine engineers every year on an average. There is adequate scope for the Indian and American maritime training institutions to work in close collaboration to produce quality maritime human resource.

Mr G K Vasan, Hon’ble Minister for Shipping,

Vice-President, MCCI gave a brief about the

He further said India has positioned itself as

years he said but while activity has increased, capacity has not. And this means congestion

He also expressed concern about the instances of piracy off the coast of Somalia and the efforts of the Ministry of Shipping and the Ministry of External Affairs along with Indian Navy and other agencies to secure the release of Indian maritime personnel.

He said the Chamber was fully involved in the

at ports, costly delays and lost opportunities.

early stages of infrastructure development. It

He said US wants to be a part of India’s

has had significant responsibility in the early

economic

development of the Port, the railways and the

companies

posts and telegraph. The port and maritime

the mission are specialised port-related

sector have been a major interest for the

equipment suppliers and service providers.

Chamber given its historical linkages. He said

They offer products and services that would

the Chamber recently concluded a detailed

greatly enhance India’s coastal infrastructure.

study on development of ports in Tamilnadu.

They have done great work in America and

He hoped that the interaction would pave

US and India have always been close and

all over the world building communities and

the way for greater cooperation in the years

generating economic activity and they can do

to come between our two countries, in the

the same here in partnership with the Indian

maritime sector.

business and people to people contacts have always been very strong even when political

development. who

are

The

12

US

represented

in

In today’s globalised environment, shipping is a truly global activity where ships are built in one country, owned in another, registered in a third, managed in yet another, manned by crew from different countries and carry cargo and passengers between various destinations.

and diplomatic ties have been not so great. public and private sector.

Mr J Krishnan, Chairman, Logistics Committee

He said the Seminar would give the guests

The Inaugural address was delivered by Shri

of the Chamber, in his vote of thanks said

an overview of the current developments in

G K Vasan, Hon’ble Minister of Shipping,

MCCI is appreciative of the concern and care

Port & Maritime sector besides building B2B

Government of India.

the Minister has for our Chamber and for

contacts between US and Indian players in this sector.

He said for any development, particularly in the Port Sector, international collaborations

The keynote address was given by Mr

and partnerships are absolutely essential as

Francisco Sanchez, Under Secretary of

Ports are the major vehicles to promote exim

Commerce for International Trade, US

trade between different nations across the

Government. He said he was leading the

globe.

first ever ports and maritime trade mission to India and he is joined by 12 US companies who produce some of the world’s best products and services in this field. He said in Chennai and across South India, they have seen the great progress that has occurred as well as they have seen the great potential of the area. And they have seen its great needs – particularly with regard to infrastructure.

10

He said Ports undoubtedly play an important role in the economic development. Apprising the delegates of the recent developments in the ports and shipping sector in India, he said last January the Government launched the Maritime Agenda 2020, a vision document

spelling out Government of India’s policies for the development of maritime sector. He thanked the Minister for his good offices in eliminating the Chennai Trade Recovery, a point brought to his notice when he had addressed the Chamber in December last.

He said the strength of the nation depends on its economy and the strength of the economy depends on the business. And Mr Sanchez is here to strengthen the business between the two nations and let this be a small step for a long partnership.

for the development for the maritime sector

After Coffee Break, the Mission members

over a period of ten years. He said the

introduced themselves and explained the

Ministry of Shipping is working relentlessly

areas of their interest.

CHAMBER’S ACTIVITIES This was followed by presentations by the

It handles low volume high value cargo.

following:

He explained the investment opportunities in mechanised bulk cargo terminal, in Ship Repair Yard, in Hotelling, etc.

Mr Atulya Misra, IAS Chairman, Chennai Port Trust: Mr Misra gave the performance highlights of the Chennai port during 2010-11 during which there was a record throughput of

technical areas

l Focused attention on policy reforms,

infrastructure needs, coastal and

inland waterway optimization, and

hinterland development.

Mr G V L Satya Kumar

He also underlined the need for maritime

Deputy Chairman,

security in view of the constant piracy threats.

Visakhapatnam Port Trust:

The programme concluded with networking

61.46 MT, an increase of 0.66% over 2009-

The Visakhapatnam Port handles mainly iron

10. He gave the financial performance of the

ore, coking coal, crude and POL products.

port and also explained the development

Other items handled are fertiliser and raw

activities like RoRo cum multipurpose

materials, steel products and pig iron. 28th February 2012:

berth and multilevel car parking facilities,

Mr Satya Kumar detailed the infrastructure

development of barge jetty, deepening of Dr

development

Ambedkar Dock Basin, Channel, Proposed 8

which were:

lane gate project, rail and road connectivity projects, etc. He also gave brief details of cruise tourism through Chennai Port .

Mr S Velumani

programmes

at

VPT

l D eepening of channels

lunch.

Discussion meeting on Tamilnadu VAT Act: The Chamber organised a Discussion Meeting on Tamilnadu Value Added Tax at

l D evelopment of additional berths with

Hotel Savera. Mr Sunil Paliwal, IAS., Secretary,

Commercial Taxes & Registration Department,

mechanized facilities

l M echanisation of existing berths

Government of Tamilnadu was the Chief Guest.

Chairman & Managing Director,

l U pgradation of existing berths

Ennore Port Ltd.

l I mprovement of rail/road connectivity;

President, Mr T T Srinivasaraghavan said

Mr Velumani said Ennore Port was developed

that the Chamber is in its 176th year and

for receiving coal for Thermal Power stations

l I mprovement of logistics facilities

of TNEB. It is the first major port incorporated as a company under the Companies Act. It is run on Landlord Model. EPL as Port authority invests and develops common infrastructure

and

utilities. The cargo handling facilities are developed and operated through Public

it is interesting to note that virtually since its inception in the 18th century, the key

He said the Maritime agenda envisages

focus area had been taxation. The Chamber

Visakhapatnam Port for development as a

has been involved and working with

“Hub Port”.

Governments of the day in bringing about transparency and implementability of taxes.

such as dredging of harbor and channel/Rail and Road connectivity as well as common

Welcoming Mr Paliwal and the delegates,

Commodore S Shekhar Regional Director, National Maritime

Taxation is an important part of our agenda every year.

Foundation, Chennai Chapter

Most importantly the Chamber has always

projects which are under finalization. He said

Commodore Shekhar made a presentation

Ennore Port is an Environment Friendly Port.

on The Maritime Sector –India’s Strategic

the important duties of the corporate citizen.

Private Partnership. He also explained the

Ennore Port was accorded with “Mini Ratna

Interests.

been of the view that paying taxes is one of The Chamber has always advocated that paying taxes is the bounden duty of all the

Category-I” PSU status in 2009 because of

He said India’s national interests were

corporates.

its continued profit making performance.

Security, Economic Prosperity and Global role.

He also gave details of the projects under

He described India’s maritime interests – the

He also said that there were several occasions

finalisation.

need for a strategic road map as follows:

Mr Paul Antony, IAS

l E volution of an integrated ocean

caused hardship not only to our members but

Chairman, Cochin Port Trust:

to the business community as well. Larger

Giving the highlights and the future plans

l Strengthening of the Indian Navy as well

of Cochin Port, Mr Paul Antony said Cochin

Port is amongst the 13 major ports in India.

oriented national security policy

as the Mercantile marine

l C ooperation and collaboration in marine

when the Chamber had to take a view that some of the policies and procedures have

issues need to be brought to the attention of the Government he felt.

GST has been on the radar now. All of us

11

CHAMBER’S ACTIVITIES are eagerly awaiting for the unveiling of GST as it will benefit all the stakeholders and it will do away with multiplicity of taxes. We understand there are political compulsions but we do hope that GST will see the light of the day sooner than later. There are many issues which require attention, and probably a better understanding of what the practical difficulties are.

One such issue is the ‘C’Form – Tamilnadu has a problem where inter-State transactions are concerned.

He said the delegates are eager to listen to the Secretary, Commercial Taxes, to know about the thinking of the government, what is the roadmap for GST, how they can facilitate greater compliance with tax laws in the State, etc. The Chamber, as it has done for the past 175 years, will extend its wholehearted support to the Government machinery to have a just and equitable tax regime.

Mr P R Sudhakar, Chairman of the Chamber’s Expert Committee on VAT, dealt with a few important issues namely – Input tax credit, Amendment to Section 19 – sub-section 4, TDS provisions in respect of SEZ developers, works contract composition scheme etc.

Mr Sunil Paliwal, addressing the gathering said having taken over as Secretary, Commercial Taxes Department only recently, he has been trying to understand the issues in all the tax laws and would address them one by one.

The Chamber had submitted to him the points received from members and he said a few of them were valid points and he would consider them. Further he indicated that the Hon’ble Chief Minister has given permission to computerize the Commercial Taxes Department at a cost of Rs 230 crores.

The process would be completed in the next 14 months.

State’s own tax rates.

On GST he said, as of now, there is no unanimity between the thinking of the States and the Centre on many critical aspects – like the negative list of services. He said a very good iT infrastructure is required before GST is implemented. For establishing IT infrastructure, at least one year is required.

Appreciating the openness of the Secretary, CT, the President said that he was one of the finest examples of transparency where a senor officer of the Government is willing to listen.

He said there are administrative or ground level issues, there are difficulties and these could certainly be brought to the notice of his officers. As a Chamber, we are committed to a culture of compliance. Whenever there are little road blocks, it is our duty to bring to his notice.

Proposing the vote of thanks, Mr P R Subramaniyan said about 60-70 percent of the revenue of the State comes from the members of our Chamber. He said when the Government plans to go on-line for issue of ‘C’ Forms, the CT Department could use the Chamber ‘s platform for launching the same.

He also pointed out that business has been moving up to other States because of ITC issues in Tamilnadu. He thanked the Secretary, CT for his fair views and said the delegates were inspired by his address.

Later the sessions were dealt with by the speakers as follows:Mr P R Sudhakar: - Input Tax Credit Scheme & Procedure - ITC on Inputs/Capital Goods/consumables – Peculiarities of TN VAT Act

about 70 delegates ended with lunch.

28th February 2012:

MCCI-MMA Video Discussion on “Can you Help me”?

The topic for the monthly video discussion was Can you Help Me? The facilitator was Mr M.Alagiri. Though the video dealt with more on the sales side, there were takeaways for everyone.

The highlights of the video were: l G reet the customer – maintain friendly rapport with the customer l Discover the wants and needs of the customer l Ask relevant questions based on facts and figures l Find out what the customer needs to know l Listen carefully l E xplain the benefits and features to the customer – it is of personal significance to them l Close the sale The basic points to be considered: l E very customer is different – same benefits may not suit all customers l H elp customers make the right decision l E nsure that you know your

own products/services extremely well.

Provide more data to the customer.

- ITC Reversal mechanism/stock transfer l Customer will appreciate special sale etc under T N VAT Act and suggestions for offers simplification l D o not argue with the clients

Regarding ‘C’ Forms, in the Government’s policy note last year, it has been indicated that the Government will issue ’C’ Forms online. Mr P R Subramaniyan: This requires some amendment to the rule.

He hoped that in the next 2-3 months, this - Works contract – computation of VAT liability issues & concerns – suggestions for procedure should go online. simplification – composition scheme - T D S On taxes, he said the Commercial Taxes scheme and procedures and issues of concern Department is the major contributor to the 12

The programme which was attended by

l People will respect your honesty l U nderstand your competitors He said “Features tell – Benefits sell”.

After a brief Q&A Session, the programme concluded.

GENERAL COMMITTEE 15th February 2012:

should be approached to be the Chief Guest.

The Committee held its monthly meeting on The Committee noted the number of 15th February during which it was apprised programmes organized by the Chamber of the initiatives of the Skill Development during the month and also noted the

still a few companies who had not remitted the subscription. A final decision will be taken about their continuity during the March meeting.

Centre. The Committee also decided to forthcoming programmes mainly the Union The Committee admitted Reva Phoenix approach corporates for suitable support for Budget telecast on 16th March and the Post Engineers & Consultants India Pvt.Ltd., Union Budget workshop on 17th March. and Amman TRY Sponge Power (P) Ltd. as

the development of this Centre.

Discussing about the forthcoming AGM in June, the Committee felt that the Minister

The Committee suggested that the format of members. the workshop be slightly changed .

for Commerce & Industry, Mr Anand Sharma The Committee also noted that there were

The Chamber extends a warm welcome to the following new members: u

Reva Phoenix Engineers & Consultants India Pvt.Ltd., Chennai Reva Chennai u

Amman TRY Sponge Power (P) Ltd., Nellore

Directory of Members 2011 Published in September 2011, the Directory contains useful information about member companies of the Chamber, numbering more than 450.

Also contains information on Trade Promotion Councils, Chambers of Commerce, Consular Representations in Chennai, etc.

Price Rs. 750/- per copy. Order your copy today.

Contact: Jessie Edwards,Deputy Secretary, MCCI Ph: 24349871/24349720 email: jessie.edwards@madraschamber.in

Advertisement Tariff: Back cover (4 colour) -

Rs 5000 per insertion

Inside front/inside Back cover (4 colour) -

Rs 4500 per insertion

Full page (inside) 2 colour -

Rs 3000 per insertion

Half page (inside) 2 colour -

Rs 2000 per insertion

Place your advertisements in the Bulletin which reaches the creamy layer of the corporate.

Contact: Jessie Edwards @ jessie.edwards@madraschamber.in

13

REPRESENTATIONS

16th February 2012

Thiru Ramesh Kumar Khanna, IAS., Principal Secretary to Government Energy Department Government of Tamilnadu Fort St George Chennai 600009.

Dear Sir We refer to the recent power situation and shortage of power, which is very adversely affecting the industry, consumers and generators. While we do appreciate the difficulties faced by Tamilnadu Electricity Board due to low generation from its various stations at present – which, as we understand, is expected to continue for the next 3-4 months – these intermittent disruptions in power supply are causing all stakeholders serious concern.

To partly address the problems we would suggest the following: l F

rom the current system of erratic and irregular shutdowns in supplies, it is better to increase the power cut from the existing levels to a reasonable higher percentage depending on the estimated availability as indicated by TNEB for a period of 2-3 months and ensure uninterrupted planned supply of power to all industries (without resorting to load shedding) except during peak hours l I ndustry can be informed of the same with an option to purchase power from other producers on open access (intra-State) basis and can draw power from them under third-party arrangements l A s in the past, TNEB can permit drawals based on maximum demand and quota restrictions. This will enable the industry to plan their operations better and the generators to meet their demand in line with their ability to supply.

Presently the industry despite buying power from third parties is not able to draw power during load shedding hours. This severely affects the industry both in terms of cost and timely availability of power. l T he power supply situation can be reviewed periodically and the percentage cut or restrictions can be modified depending on the position prevalent during that time.

We would request your support in considering our suggestions to remedy the situation urgently.

We would also like to request for an appointment with you to meet in person and explain our concerns as early as possible.

Thanking you Yours faithfully Sd/...

T T Srinivasaraghavan President cc: Hon’ble Thiru Natham R Viswanathan Minister for Electricity Government of Tamilnadu cc: Thiru Debendranath Sarangi, IAS., Chief Secretary to Government

14

Government of Tamilnadu

Workshop on Bridging the Skill and Knowledge Gap for Improving Employability of Technical Work Force

A view of the meeting.

Talk by David Willey, Deputy Vice-Chancellor, Bournemouth University, UK

Presentation by David Willey being watched by the audience.

Water Expo

Visitors at MCCI stall.

Programme on Vodafone Path Breaking case – Policy Vs. Jurisprudence

Sriram Seshadri addressing the gathering

N Venkataraman addressing

15

Training Programme on Team Building.

Saba Rama Rathnam, Trainer conducting the session.

Meeting with Western Australian Parliamentary Delegation

A view of the meeting

Signing of Letter of Intent between MCCI and AVTEG.

UK India Partnership – Address by Mr Jeremy Browne, UK Minister of State for Foreign Affairs

Jeremy Browne addressing the gathering

16

Seated l to r :K Saraswathi, T Shivaraman, Jeremy Browne and Mike Nithavrianakis

Discussion Meeting on Tamil Nadu Value Added Tax Act

Seated l to r: K Saraswathi, P R Sudhakar, Sunil Paliwal, T T Srinivasaraghavan and P R Subramaniyan

Programme on Business Process Management – The True Differentiator

Clynton Almeida welcoming the gathering

Malli J. Sivakumar at the mike

Narendra Shukla, Cordys, addressing

17

Indo-US Partnership in Port & Maritime Sector

T Shivaraman delivering the welcome address

A view of the meeting – seated are Chairmen of some of the major ports in India and Delegation Members

Francisco Sanchez, Under Secretary for International Trade, US Government addressing – Seated l to r: G K Vasan, T Shivaraman and J Krishnan

T Shivaraman presenting a memento to G K Vasan

MCCI & MMA Video Discussion on “Can You Help Me”

G. Alagiri, trainer, conducting the video discussion

18

REPRESENTATIONS Suggestions sent by the Chamber on the Companies Bill 2011 The Chamber would like to compliment and thank the Ministry of Corporate Affairs for their initiative in re-defining the Companies Act by prescribing Companies Bill 2011. Our observations / recommendations on certain important aspects of the Companies Bill 2011 are as under: CHAPTER III - PROSPECTUS AND ALLOTMENT OF SECURITIES In view of Clause 23, it appears that a private company cannot issue bonus shares as Clause 23 by necessary implication forbids private companies from making bonus or rights issues, though Clause 63 dealing with issue of bonus shares does not prohibit private companies from issuing bonus shares. Private companies should be permitted to issue bonus shares as they would have constraints in utilization of the reserves in the absence of such a provision. There needs to be a clarification issued for Clause 23 and be made applicable to all companies.

CHAPTER V - ACCEPTANCE OF DEPOSITS BY COMPANIES Under Clause 73, Companies can get deposits from their shareholders. The Clause prevents Companies except banks, NBFC’s, notified companies and public companies having net worth or turnover, as prescribed, from accepting deposits. It is recommended that Clause 73 should be amended to allow Public companies to accept deposits.

The Clause also prescribes that the deposits accepted prior to the commencement of the Act, shall be repaid within one year from the commencement of the Act or from the date on which payments are due, whichever is earlier. This should be amended and companies should be allowed to repay on maturity as foreclosure of any investment without pre-closure conditions will be against the contractual obligation of the companies. It will affect severely cash flow and business prospects.

CHAPTER VII - MANAGEMENT AND ADMINISTRATION Under Clause 93, Every listed company shall file a return in the prescribed form with the Registrar with respect to change in the number of shares held by promoters and top ten shareholders of such company, within fifteen days of such change.

This will cause undue hardship to the companies as the fifteen days prescribed for filing the return is too short a time and companies might end up reporting too frequently. Can this be made a periodic filing, say a quarterly or annual filing by the companies?

Also whether the period of determination of top ten shareholders should be based on year end holding has not been clearly specified.

CHAPTER IX - ACCOUNTS OF COMPANIES Under Clause 129(3), where a company has one or more subsidiaries, it shall, in addition to financial statements provided under subsection (2), prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub-section (2). Also, the clause prescribes that for the purposes of this sub-section, the word “subsidiary” shall include associate company and joint venture. The term Joint Venture is however not defined. This requirement will result in voluminous disclosures and industry is pleased to live with the disclosures presently prescribed in Section 212 of the Companies Act, 1956 or the term Joint Venture as defined

by Accounting Standards.

Clause 138 - Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a Chartered Accountant or a Cost Accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The word “such other professional” is very vague and not defined.

CHAPTER X - AUDIT AND AUDITORS As per the proviso to Clause 139(2), every company, existing on or before the commencement of this Act which is required to comply with provisions of this sub-section, shall comply with the requirements of this sub-section within three years from the date of commencement of this Act. There is thus retrospective consideration of the clause, which should be amended to make it prospective.

Clause 142(1), does not specifically mention the persons responsible for fixing the remuneration of the auditors. The Clause may be amended to provide that in the case of First Auditors, the Board may fix the remuneration while appointing them. In other cases, the remuneration can be fixed at general meeting or by the Board if AGM specifically authorizes.

19

REPRESENTATIONS CHAPTER XII – MEETINGS OF BOARD AND ITS POWERS Under Clause 179, Principal Officer needs to be defined. Also, under Clause 179(3)(c), the power to delegate may also be extended for “issue of debentures” at least in so far as the debentures issued by NBFCs are concerned – for NBFCs timely borrowings cannot wait the convening of Board Meetings.

While Section 372A of the Companies Act, 1956 regulated inter-alia only inter-corporate loans/ guarantees, the proposed Clause 186(2) covers any loan to any persons/ body corporates. Our suggestion is to restore the status quo and free the loans to individuals from the rigours of this clause.

The exemption provided vide Clause 186(11)(a) to banking companies, insurance companies and housing finance companies may also be extended in a direct way to NBFCs registered with and regulated by RBI.

General: The Companies Bill 2011 generally does not specify the clauses which are not applicable to private companies. Exemptions to private companies should be explicitly stated to avoid any confusion.

The shareholders are bestowed with certain rights as given below, which restrict the rights of the professionals to hold offices in their professional capacity and are not in the spirit of the current Act in place and may be amended: l U nder Clause 141(3), the members of a company may, by ordinary resolution, specify the number of

companies beyond which the auditor or audit firm of a company shall not become auditor

l U nder Clause 165 (2), the members of a company may, by special resolution, specify any lesser number of

companies in which a director of the company may act as directors

l The definition of NBFC should be made more clear Under the Companies Act 1956, private limited companies enjoyed significant privileges vis-a-vis loans and investments, board and general meeting related compliances etc. The Bill seeks to take away a host of such privileges and brings the private companies significantly on par with public companies which appear to be a step in retrograde.

Types of companies now include ‘One Person Companies’ (OPC) (i.e. companies with only one person as member). The OPC shall for the purpose of the Bill is considered as a Private Company. The Bill seems to allow non- residents to set up OPCs in India. However, the provision dealing with succession creates ambiguities where the single member is a foreign corporation body.

Commencement of business can be initiated only after filing of declarations by the directors as to the receipt of subscription money, identification of the registered office of the company (by way of lease deed, etc.). Subscription money should be brought in within 180 days from the incorporation of the Company. The Registered Office shall have to be identified within 15 days of incorporation. At the inception stage, a Company will be grappled with many issues and insistence of 15 days may prove to be demanding.

The Bill introduces the constitution of a Corporate Social Responsibility (CSR) Committee, for companies with specified limits of net-worth/ turnover/net profits. Such companies should spend at least 2% of the average net-profits of 3 years on CSR activities, and if not explain the reasons for the same in the Director’s Report. We suggest that the net profit criteria be enhanced.

The Bill proposes a physical residence of 182 days during the preceding calendar year for at least one of the directors on the Board of the company at all points of time. This seems to be highly restrictive for subsidiaries of multinational companies who will now be required to specifically appoint a resident (satisfying the 182 days criteria) on the Board of the company.

The Bill specifically provides that the time lag between two successive Board meetings shall not exceed 120 days. Further, the first Board meeting is required to be held within 30 days of incorporation of the company. These restrictions may be limited to public companies.

The Bill provides that no loan can be given to any person or other body corporate at a rate less than the bank rate prescribed by the Reserve Bank of India. This restriction may be limited to public companies.

20

POLICY WATCH Anand Sharma welcomes Pakistan’s transition from positive list to negative list regime for trade with India:

Reduction in the Sensitive List for the Least Developed Countries under the South Asian Free Trade Area Agreement.

The announcement and the details have

India has welcomed the decision of the

During the XVII SAARC Summit held in

dated 9th November 2011 has also been

Government of Pakistan to transition from a

Addu City, Maldives from November 10-11,

marked for publication in the Gazette of

Positive List Regime to a small Negative List for

2011, Prime Minister Mr. Manmohan Singh

India. The same have been circulated to

trade with India. This development reaffirms

announced the following:

SAARC Member States through the SAARC

the commitment of both Governments for trade normalization as per the roadmap drawn during the visit of Pakistan Commerce Minister from 26th September to 2nd October, 2011. There is reiteration of commitment that the negative list will be phased out by the end of this year. This will mark a dramatic shift in the lines that can be traded as now almost 90% items can be traded with Pakistan as opposed to 17% earlier.

India Pakistan trade set to take off in a big way:

In the major trade liberalization effort, the Government of India has issued a notification to reduce the Sensitive List for the Least Developed Countries under the South Asian

been circulated through official channels.

Ministry of Commerce has sent the list of 25 tariff lines that remain under India’s sensitive lists for Least Developed Countries (LDCs).

Customs Notification No. 99/2011- Customs

Secretariat. However, the details may not have percolated to the main stake-holders, namely, the business community, manufacturers and relevant officials in the SAARC Member States.

Free Trade Area Agreement (SAFTA) from

It has therefore been decided to organize trade

480 tariff lines to just 25 tariff lines. Zero

promotion events, initially in Afghanistan and

basic customs duty access will be given Bangladesh and perhaps later in Bhutan and Nepal to promote opportunities arising to all items removed with immediate effect.

This India’s

announcement approach

is

in

towards

line

with SAARC

marked by pro-active and asymmetrical constructive contributions, in order to

The economic and trade engagement

speed up overall economic development

between India and Pakistan is ready to take

in the region.

from Prime Minister’s announcement to facilitate further trade between India and these countries. Inputs from respective Indian Missions have also been sought.

The list of 25 tariff lines appears below

off in a big way notwithstanding the decision of the Pakistan cabinet to defer the pruning of the “negative list”. The popular sentiment in Pakistan is for opening up of borders to promote peace.

An overwhelming majority of the chambers of commerce of various cities and townships have conveyed to the Pakistan Government that it is time to put in place a liberal trade regime which is backed not only by the trading community but also by the people and corporate houses.

The Chambers of Commerce in Lahore and Karachi are pushing for pruning of the negative list in the areas where there is no disagreement/differences. Their viewpoint is that at least a beginning should be made and the rest will follow.

21

SPOT LIGHT

Draft National Water Policy (2012) Released for Comments

In pursuance of the strategies identified

river rather than restricting it to only

in National Water Mission Document as

minimum flow requirement. It states

emphasized.

well as deliberations in National Water

that the ecological needs of the river

benchmarks for water uses for different

Board, Ministry of Water Resources had

should be determined recognizing that

purposes, i.e., water footprints and

initiated the process of reviewing the

river flows are characterized by low or

water auditing should be developed

National Water Policy, 2002. Accordingly,

no flows, small floods (freshets), large

to ensure efficient use of water. Project

the Drafting Committee on National

floods and flow variability and should

financing has been suggested as a tool

Water Policy has evolved the draft

accommodate

to incentivize efficient and economic

policy after taking into consideration

A portion of river flows should be

recommendations

various

kept aside to meet ecological needs

stakeholders. The salient features of Draft

ensuring that the proportional low and

National Water Policy (NWP, 2012) are:

high flow releases correspond in time

of

1. Even while recognizing that the States

needs.

closely to the natural flow regime.

have the right to frame suitable policies,

4. The draft NWP, 2012 recognizes the need

laws and regulations on water, the

to adapt to climate change scenario in

draft NWP, 2012 lays emphasis on the

planning and implementation of water

need for a national water framework

resources projects. Coping strategies

law, comprehensive legislation for

for designing and management of

optimum development of inter-State

water resources structures and review

rivers and river valleys, public trust

of acceptability criteria has been

doctrine, amendment of the Indian

emphasized.

Easements Act, 1882, etc.

2. Basic minimum quantity for essential

5. Need

and

enhancing

approaches water

towards

availability

have

use

efficiency

has

A

to

system

been evolve

use of water.

8. Provision of setting up of Water Regulatory Authority and adequate water pricing to incentivise recycle and re-use has been specified.

9. Water Users Associations should be given statutory powers to collect and retain a portion of water charges, manage the volumetric quantum of water allotted to them and maintain the

distribution

system

in

their

jurisdiction.

10.The draft NWP, 2012 proposes reversal of heavy under-pricing of electricity, which leads to wasteful use of both

health & hygiene and sustenance

been stipulated. Direct use of rainfall

of ecology has been defined as

and avoidance of inadvertent evapo-

pre-emptive need, which must be

transpiration have been proposed

11.The draft NWP, 2012 recognizes

ensured. Water has been recognized as

as the new additional strategies for

encroachment and diversion of water

economic good, over and above pre-

augmenting utilizable water resources.

bodies and emphasizes the need for

emptive need, for the first time, which would promote maximization of value of water and its conservation and efficient use.

3. The draft NWP, 2012 presents a holistic picture of ecological need of the 22 22

development

7. Water

6. Mapping of the aquifers to know the quantum and quality of ground water

electricity and water.

their

restoration

with

community

participation.

resources (replenishable as well as non-

12.The draft NWP, 2012 proposes setting

replenishable) in the country has been

aside a suitable percentage of the

proposed with provision of periodic

costs of infrastructure development,

updation.

which along with collected water

SPOT LIGHT

charges, may be utilized for repair

party States. A similar mechanism

resources sector should be recognized

and

for

should be established within each

and awarded. A Center for research in

construction of projects should have

State to amicably resolve differences

water policy should also be established

inbuilt provision for longer periods

in competing demands for water

to evolve policy directives for changing

of proper maintenance and handing

amongst different users of water, as

scenario of water resources.

over back the infrastructure in good

also between different parts of the

condition.

State.

maintenance.

Contract

24. It is necessary to give adequate grants to the States to update technology,

13.Pari-passu planning and execution

19.The “Service Provider” role of the

of all components of water resources

State should be gradually shifted

management practices, preparation of

projects have been proposed so

to that of a regulator of services

annual water balances and accounts

that intended benefits start accruing

and facilitator for strengthening the

for the site and basin, preparation of

immediately after completion and

institutions responsible for planning,

hydrologic balances for water systems,

there is no gap between potential

implementation and management of

and benchmarking and performance

created and potential utilized.

water resources. The water related

evaluation.

14. All water resources projects, including hydro power projects, should be planned to the extent feasible as multipurpose projects with provision of storage to derive maximum benefit

services should be transferred to community and / or private sector with appropriate “Public Private Partnership” model.

design

S.R. Hashim, former Member, Planning Commission and Chairman, Union Public Subhash

Chander, former Professor, IIT, Delhi; Shri

be

A.D. Mohile, former Chairman, Central

developed to collect and collate all data

Water Commission; and Shri S.C. Jain, an

on regular basis with regard to rainfall,

expert from an NGO was constituted for

river flows, area irrigated by crops and

drafting of the National Water Policy.

project benefitted families, who may bear part of the cost of resettlement and rehabilitation through adequate pricing.

preparedness for flood / drought with coping up mechanisms as an option.

Frequency based flood inundation maps should be prepared to evolve coping strategies.

by both surface and ground water and to publish water accounts on ten daily basis every year for each river basin with appropriate water budgets

between

stipulations

for

water supply in urban areas and in rural areas to bring equality between rural and urban people. draft

NWP,

hydrologic balances.

21.The

draft

negotiations

NWP, about

2012

proposes

sharing

and

management of water of international rivers on bilateral basis in consultative association with riparian States keeping

17.There is a need to remove the large

18.The

by source, utilizations for various uses

and water accounts based on the

16.The draft NWP, 2012 lays emphasis on

disparity

should

Prof.

for

share in the benefits comparable to

basin

Commission;

resources.

partners in progress and given a

river

and

from available topology and water

15. Project affected families to be made

each

planning

The Drafting Committee comprising of Dr.

Service

20.Appropriate institutional arrangements

practices,

2012

paramount the national interests.

22. All hydrological data other than those classified as secret on national security consideration should be in public domain. Setting up of a National Water

proposes

a forum at the national level to deliberate upon issues relating to water and evolve consensus, cooperation and reconciliation amongst

Informatics Center has been proposed.

23.Continuing research and advancement in technology should be promoted to

This Committee was supported by a team of officers from Ministry of Water Resources, Central Water Commission, Central Ground Water Board, National Rainfed Area Authority; National Institute of Hydrology and Planning Commission.

Considering

the

recommendations

and feedback received during various consultation meetings, the Drafting Committee identified basic concerns in water resources sector and adopted basic principles which should be followed to address those concerns, and accordingly, evolved draft policy recommendations.

The draft National Water Policy (2012) has also been put up on the website of Ministry of Water Resources http://wrmin. nic.in and arrangement is being made to facilitate posting of online comments/ suggestions.

address the issues in water sector in a scientific manner. Innovations in water 23 23

SPOT LIGHT

An overview of the Sector

As per 2011 census, Indian urban

responsible

policy

In rural areas the water supply is regulated

population is about 377 Million and is

frameworks and funding and monitoring

by Panchayati Raj Institutions under the

likely to reach about 598 Million in 2032.

schemes. Most of implementation work

State Departments of Rural Development,

The average annual growth rate of urban

is taken care of by state government and

while in urban area ULBs are responsible

population across various classes of the

Urban Local Bodies (ULBs). Some of the

for running and regulating water supply

cities will be about 2.5%. The minimum

active schemes of the central government

systems. Few states also have a state level

water

are:

regulatory body. Some of the examples of

consumption

requirement

of

an urban person is 140 litres per day.

With this assumption, the total water requirement by 2032 for the urban Urban Population (Million)

for

laying

down

l Jawaharlal Nehru National Urban

state level regulatory bodies:

Renewal Mission (JnNURM) responsible

1) The Maharashtra Water Resources

for funding infrastructure projects in 63

Regulatory Act, 2005; lists the powers,

Urban Water Consumption Requirement (Million litres per day)

Urban Waste Water Generated (Million litres per day)

Source: High power Expert Committee report on Indian Urban Infrastructure and Service (HPEC), Mar 2011

population of India will be about 77,475 Million Litres per Day (MLD), which is

selected cities of the country.

functions and duties of the Maharashtra Water Resources Regulatory Authority –

1.6 times the current water requirement.

l Urban Infrastructure Development

Around 80% consumed water will be

Scheme in Small and Medium Towns

l Determine, regulate and enforce

turned into waste water which needs to

(UIDSSMT) that will fund the infrastructure

the distribution of bulk water supply to

be treated. The figures below give the

projects in all the cities and towns that

various categories of use (agriculture,

growing urbanisation, potential demand

are not covered under JnNURM.

industries , power and drinking and

for water and the amount of waste water

The rest of the activities of project

that will be generated.

sanitation)

planning, operating and maintaining the

l Establish water tariffs with a view to

Institutional Framework for Urban Water Sector of India:

water supply systems and setting and

levy them on the users there by having a

collecting tariffs are carried out by the

self – sustainable management of service

state governments. It has the primary

delivery to the same.

In India, the central government is only

of water resources.

24 24

responsibility towards the use and control

l Review and clear water projects

SPOT LIGHT

which are meet the Integrated State Water Plan (ISWP which implies efficient use of both ground and surface water) 2) The Uttar Pradesh Water Management and Regulatory Act, 2008 gives the provision for the establishment of the Uttar Pradesh Water Management and Regulatory Commission. The commission will be responsible to regulate water

Reforms in the Policy Framework:

2002 also encourages private sector

The National Water Policy (both 1987

resources.

participation in various forms in planning, development and management of water

and 2002) has recognised water for drinking as the first priority to other water usage. It has emphasised on the need of modernisation and maintenance of existing water systems by encouraging

The Draft National Water Policy released early in 2012, apart from emphasising on the features of the past two policies, also has certain new features.

investments. It has also focused on the

l Water Framework Law: A need for

efficient use of the natural resource and

national legal framework to lay the

its provision in terms of improved quality.

general principles that could lead the

A brief outline of the role of the state and

The policy ensures that the water charges

framing of suitable law, regulations and

the central government across the value

are set in a way that it covers both annual

policies at the state level.

chain of the urban water sector is given in

operations and certain amount of the

the table below:

fixed costs of ULBs, while subsidising poor

resources, optimally allocating it for different purposes and fix water rates.

and under- privileged in a transparent manner.

The

National

Water

Policy

Sourcing & Transmission of Distribution, Storage & Urban Water Metering

l Regulatory

Authority:

Each

state

should have a water regulatory authority to set and regulate water tariffs, monitor

Sewerage Network & Operations

• Ministry of Water Resources, Government of India • Central Public Health Environmental & Engineering Organization (CPHEEO), Ministry of Urban Policy, Regulation & Standardisation

Development, Government of India

• Department of Water Resources (State Government) • State Level Water Regulatory Authorities (Eg: Maharashtra Water Resources Regulatory

Authority & Uttar Pradesh Water Management and Regulatory Commission

• Jawaharlal Nehru National Urban Renewal Mission (JnNURM) & Urban Infrastructure Funding

Development Scheme in Small & Medium Towns (UIDSSMT); Schemes under the Ministry of

Urban Development, Government of India

• Statutory Bodies of the State Government, such as the Infrastructure

Development Corporations. E.g.: Tamil Nadu Urban Finance & Infrastructure

Development Corporation

Capital Works

Public Health Engineering Department / Public Works Department (State Government)

Operations & Management/ Maintenance Works

State Level Specialist Agencies/

Specialist Municipal Undertaking

Metropolitan Level Specialist Agencies

Source: Government Websites & Athena Research 25 25

SPOT LIGHT

the operations, review performances and

The figure below illustrates the situation

suggest policy changes.

of a typical Indian urban city. The

l Water Charges: Should be cross subsidised

where

necessary

after

taking views from the beneficiaries. It is encouraged that the urban water supply system and sewerage system should be integrated and hence the water bills should include sewerage charges also.

unaccounted for water losses (UWL) contributes to on an average 70% of the total water produced. This is due to the deteriorating assets and poor maintenance for sourcing water, transmitting and distributing it. Leakages in the reservoirs, over head tanks and pipelines contribute to the physical losses

improve the operational efficiency.

These

reforms

in

the

infrastructure

require benchmarking as an important mechanism for introducing accountability of the services. In 2008, the Ministry of Urban Development laid the indicators in Water Supply and Sewerage by conducting a study of the current performance in 28 pilot cities.

l Public – Private Partnerships (PPPs):

of water. This accompanied by unbilled

The graphs below show the average

Appropriate use of PPP models by

connections such as public stand posts,

performance levels of the Class IA

transferring water related services to a

hand pumps and tube wells make up

and Class IB cities in 2007 for a few

private developer and/or the community.

the non – revenue water for the city. indicators. The metropolitan cities have

Source: Policy Documents & Athena Research

Challenges in Service Delivery:

Of the total revenue water, only 4%

90.3% coverage of water supply to its

is metered and the average collection

population compared to only 78% in the

Inadequate capacity to source water,

efficiency of any ULB is 20%. The factors

class IB cities. However, there are certain

poor quality of drinking water and lack

that contribute to the poor performance

class IB cities such as Chandigarh and

of infrastructure to make it available to

of the ULBs are poor monitoring system

Nashik which have 100% and 92.6%

the entire urban population; are some of

for UWL and NRW, illegal connections,

coverage respectively.

the bottlenecks faced by the cities. With

unwillingness of the government to levy charges. The poor collection efficiency

In terms of the frequency of water supply,

growing urban population and expansion of the cities, it is becoming challenging

is responsible for the low cost recovery

for the Urban Local Bodies (ULBs) to meet

and thereby increasing the dependence

the rising demand for water.

on state, central and multilateral agency funds to rehabilitate the system and

26 26

none of the cities meet the benchmark requirement. A number of cities such as Bangalore, Chennai, Nagpur and Mumbai provide on an average 4 to 5 hours of water per day. The water consumed per

SPOT LIGHT

Source: Administrative Staff College of India 2010 day per capita in Mumbai is 191 litres,

of 147, 158 and 139 litres per capita per

followed by Ahmadabad with 171 litres. day. The number of metered connections Cities like Varanasi, Vijayawada and

is highest in Bangalore, being 95.5% of

Jabalpur also have water consumption

the total connections. But, on an average

the percentage of metered connection in these cities is only 24.5%.

Source: Ministry of Urban Development, GoI & ADB, 2007 Service Level Benchmarking and Data Book of Water Utilities in India, 2007

27 27

SPOT LIGHT

The other indicators for service level benchmarking in the water supply and sewerage sector are: Indicator

National Benchmark

Coverage of Water Supply Connections

100%

Per Capita Water Supply

140 lpcd

Extent of Metered Connections

100%

Extent of Non – Revenue water

20%

Continuity of Water Supply

24 Hours

Quality of Water Supply

100%

Efficiency in Redressal of Customer Complaints

80%

Cost Recovery in Water Supply Services

100%

Efficiency in Collection of Water Supply related Charges Coverage of Sewerage Network Adequacy of Sewerage Treatment Capacity

90% 100% 100%

Quality of Sewerage Treatment

100%

Efficiency in Collection of Sewage Charges

90%

Source: Ministry of Urban Development, Service Level Benchmarking Databook: Improving Service Outcomes, 2008-09

(Background paper presented by Athena Infonomics at the National Conference on Potential and Strategies for Public Private Partnerships in the urban water sector held on 20th March 2012.)

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ECONOMIC REVIEW Contents 1. Macroeconomy

1.1 RBI Reduces the CRR 1.2 Foreign Tourist Arrivals and Foreign Exchange Earnings in February 2012 1.3 Railway Revenue Earnings up by 10.17 per cent during April 2011- February 2012

2. Corporate Sector

2.1 Indirect Tax Revenue Collections during April, 2011- February, 2012

1. Macroeconomy 1.1 RBI Announces Reduction in the CRR Reduction in the cash reserve ratio (CRR) of scheduled banks by 75 basis points from 5.5 per cent to 4.75 per cent of their net demand and time liabilities (NDTL) effective the fortnight beginning March 10, 2012.

This reduction will inject around 480 billion of primary liquidity into the banking system.

In order to mitigate tight liquidity conditions, the cash reserve ratio was reduced by 50 basis points in the Third Quarter Review (TQR) of January 2012, injecting primary liquidity of 315 billion into the banking system.

Despite these measures, the liquidity deficit has remained large on account of both structural and frictional factors.

Further, the liquidity deficit is expected to increase significantly during the second week of March due to advance tax outflows and the usual frontloading of cash balances by banks with the Reserve Bank.

Thus, the overall deficit in the system persists above the comfort level of the Reserve Bank.

1.2 Foreign Tourist Arrivals and Foreign Exchange Earnings in February 2012

Month of February, 2012 was 6.77 lakh as compared to FTAs of 6.36 lakh during the month of February, 2011 and 5.52 lakh in February, 2010. There has been a growth of 6.6% in February 2012 over February 2011 as compared to a growth of 15.1% registered in February 2011 over February 2010.

FTAs during the period January-February 2012 were 13.59 lakh with a growth of 7.9% as compared to the FTAs of 12.59 lakh with a growth of 12.4% during January-February 2011 over the corresponding period of 2010.

Foreign Exchange Earnings (FEE) during the month of February 2012 were Rs. 8502 crore as compared to Rs. 7653 crore in February 2011 and Rs 6646 crore in February 2010. The growth rate in FEE in rupee terms in February 2012 over February 2011 were 11.1.% as compared to 15.2.% in February 2011 over February 2010.

FEE from tourism in rupee terms during January-February 2012 were 17125 crore with a growth of 27.5% as compared to the FEE of 13430 crore with a growth of 9.7% during January-February 2011 over the corresponding period of 2010.

FEE in US$ terms during the month of February 2012 were US$ 1729 million as compared to FEE of US$ 1684 million during the month of February 2011 and US$ 1434 million in February 2010.

1.3 Railway Revenue Earnings up by 10.17 per cent during April 2011- February 2012 The total approximate earnings of Indian Railways during 1st April 2011 – 29th February, 2012 were Rs. 92985.50 crore compared to Rs. 84402.34 crore during the same period last financial year, registering an increase of 10.17 per cent.

The total goods earnings have gone up from Rs. 56394.23 crore during 1st April 2010 – 28th February, 2011 to Rs. 62171.49 crore during 1st April 2011 – 29th February, 2012, showing an increase of 10.24 per cent.

The total passenger revenue earnings during the first eleven months of the financial year 2011-12 were Rs. 25858.14 crore compared to Rs. 23600.35 crore during the same period last fiscal, registering an increase of 9.57 per cent.

The revenue earnings from other coaching amounted to Rs. 2580.32 crore during April 2011- February 2012 compared to Rs. 2294.71 crore during the same period last financial year, showing an increase of 12.45 per cent.

The total approximate number of passengers booked during April 2011-February 2012 was 7586.82 million compared to 7210.94 million during the same period last financial year, showing an increase of 5.21 per cent.

Foreign Tourist Arrivals (FTAs) during the 29

ECONOMIC REVIEW 2. Corporate Sector

Overall indirect tax collections during the period April, 2011 to February, 2012 rose to Rs 3,48,702 Crore. Last year the indirect tax collections during the period were to the tune of Rs 28,705 Crore.

2.1 Indirect Tax Revenue Collections during April, 2011- February, 2012 Indirect tax revenue collections during the month of February, 2012 rose to Rs. 31,469 Crore, an increase of 9.6 percent over the corresponding period of last financial year.

Table 1 Indirect tax revenue collections (Rs. crore)

Head

For February

% Growth over previous year

April-February

2010-11

2011-12

2010-11

2011-12

Customs

11,479

12,151

5.9%

121,588

136,214

12.0%

Central Excise

12,038

12,196

1.3%

122,315

129,926

6.2%

Service Tax

5,188

7,122

37.3%

60,309

82,562

36.9%

Total

28,705

31,469

9.6%

304,212

The overall growth in indirect tax revenue collection during the month of February, 2012 is around 9.6% which is 2.4% higher than last month position. Further, the progressive growth during AprilFebruary of current fiscal year has shown 14.6% over the corresponding period of

last financial year.

In this regard the growth in Central Excise revenue for February, 2012 is 1.3% and the overall growth in Central Excise Revenue upto February, 2012 is 6.2% showing a positive trend.

% Cumulative Growth over previous year April to Feb.

348,702

14.6%

The Service Tax revenue continues to be buoyant and has shown 37.3% growth during February, 2012. The Customs growth has been 5.9% during the month of February, 2012, though the growth upto February, 2012 has been 12.0%.

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