GT - India watch issue 15 - Indian companies listed on the London Markets


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Grant Thornton’s quarterly India Watch, in association with the London Stock Exchange (LSE), is a valuable information source for anyone involved in UK/India business. India Watch tracks the performance of all Indian companies listed on the London Markets, while also giving an overview of Indian M&A activity and analysis of the Indian economy.

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GT - India watch issue 15 - Indian companies listed on the London Markets

  1. 1. India WatchIssue 15 January 2012 In association withWelcome to the Winter edition ofGrant Thornton’s India Watch, in associationwith the London Stock Exchange.In this issue we highlight that Indian SMEs the renewable sector in India, explaining whyoutperformed other small caps on the London private equity investment into Indian renewablemarkets in 2011, despite an overall muted companies increased five-fold in 2011.performance across all indices. Mergers and Lastly, Saurabh Mathur from Walkeracquisitions and private equity activity also Chandiok & Co, gives us an update on theremained robust throughout 2011 amidst the Companies Bill 2011 which was expected inongoing global economic woes, rising domestic the Winter session, but it is now expected to beinflation and interest rates, and the weakening of finally passed in March 2012.the rupee; there were a total of 961 deals with a If you would like to discuss any of the matterstotal value of US$51 billion in 2011. arising in this issue or how Grant Thornton’s We look back on India’s economy in 2011 as South Asia group can help you please contact me.we enter what will hopefully be a more promisingyear for many of the world’s economies. Our guest contributor, Gurpreet Gujral ofBrewin Dolphin outlines the state of play ofAnuj ChandePartner, Corporate Financeand Head of South Asia GroupGrant Thornton UK LLPT +44 (0)20 7728 2133E
  2. 2. India Watch - Issue 15 January 2012London stock markets stillattractive for Indian small caps,despite slowdownIndian SMEs outperformed other small caps on the Londonmarkets in 2011, despite an overall muted performance acrossall indices. Year-end figures suggest the UK capital is still astrong contender for Indian businesses seeking markets inwhich to raise finance.120110100 –– GT India Watch – ALL 90 –– FTSE 100 –– FTSE AIM ALL-SHARE 80 –– GT India Watch – smaller caps –– FTSE ASEAN 70 –– FTSE AIM 100 –– FTSE AIM UK 50 60 50 40 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11The Grant Thornton India Watch* Smaller The India Watch Smaller Caps Index seemsCaps Index fell by just 11.27% during the year, to have benefited from the general shift amongcompared with falls of 27.26% on the FTSE AIM investors towards emerging markets in the100, 25.75% on the FTSE AIM All-Share and hope that they would prove more resilient than21.22% on the FTSE AIM UK 50. developed markets. While the value of emerging Less risky large and mid-cap investments were markets investments may still have fallen,also affected as investors grew nervous about investors are hopeful that returns will bouncea number of factors including continued slow back faster than other investments when growtheconomic growth in the West and a spreading of finally recovers.the eurozone sovereign debt crisis. The FTSE 100 No real sector trends emerged from the year-fell 5.55% and the FTSE/ASEAN Index end figures for the India Watch Index. While thefell 7.37%. highest climb was in support services and the2
  3. 3. India Watch - Issue 15 January 2012biggest fall in travel and leisure, most sectors were Other major losers on the India Watch Indexrepresented among the winners and losers. in 2011 were real estate company Trinity Capital iEnergizer, a call centre operator and supplier and media group DQ Entertainment, which fellof outsourced back office processes, had a 69.23% and 67.32% respectively.sterling first full year on the London markets Trinity Capital, which is seeking to divestafter floating on the London Stock Exchange in its investments and return funds to investors,September 2010. It gained 53.95% during 2011, delivered a downbeat interim statement inthe year’s top climber on the India Watch Index. December. An economic slowdown in India wasIt was also one of the top three climbers in Q4 leading to a reduction in the pool of potential2011, gaining 17.20%. buyers for its investments, it said. A seven per Interim results for the six months ending 30 cent depreciation of the rupee against sterling hadSeptember 2011, released last month (December also led to an 11% decline in the £71.9 million2011), showed iEnergizer’s revenue up 33.6% value of its portfolio.on the year to US$30.5 million and profit after DQ Entertainment’s share price fell steadilytax up 32.6% to US$9.5 million. Non-executive through 2011 from around 132 pence at thechairman of the board Sara Latham said the beginning of the year to around 41.5 pence inincrease was down to organic top-line growth and early January 2012. The animation group has beentight control of operating margins. struggling to bring widening net losses Investors have so far been happy with under control.iEnergizer’s performance and, in December, the Last year may have ended under par but manycompany raised £7.14 million through a placing market watchers are surprisingly upbeat aboutof 3 million new ordinary shares. The extra funds what 2012 holds in store for equities. Whileare likely to be used, in part, for acquisitions after performance in the first half of the year willCEO and founder Anil Aggarwal said such a deal continue to be volatile, many predict an eventualwas needed to take the company to the next level. resolution of the Eurozone crisis. There are also Other full-year climbers on the India Watch hopes that control over inflation in China will * The India Watch IndexIndex include Alpha Tiger Property Trust give all emerging economies an added boost. consists of 31 Indian companies listed on AIM or(18.75%) and EIH (18.18%), an Isle of Man- The India Watch Index will benefit from both the Main Market (excludingbased financial services company that offers developments. Year-end figures in 2012 should GDRs). We only consider companies to be Indian ifinvestors access to a diversified Indian private offer more reason for good cheer. they are domiciled in Indiaequity portfolio. and/or foreign companies holding Indian assets or The year ended on a low for hotel and Investment companiesrestaurants group India Hospitality Corporation with Indian promoters. The index has been created via(IHC), which fell over 12 months by 88.21% – Datastream, a Thomsonthe index’s biggest loser. Against the backdrop Reuters product and is weighted by Market Value.of a flat year for India’s hospitality sector, IHC Anuj Chande To avoid distortion of indexhas continued to make losses albeit a significant Partner, Corporate Finance trends, the two largest and Head of South Asia Group market cap entities, Essarreduction of 51.9% on the year, indicating a move Grant Thornton UK LLP Energy and Vedanta Resource, are the right direction, led by an experienced and T +44 (0)20 7728 2133 ** Data sourced fromambitious management team. E Thomson Reuters. 3
  4. 4. India Watch - Issue 15 January 2012India MA and PE 2011:Resilience amidst oddsAmidst the ongoing global economic woes, rising domestic inflationand interest rates, the weakening rupee and a volatile Sensex,2011* has contributed to robust Indian deal numbers. Mergers Acquisitions (MA) and Private Equity (PE) in India clocked up961 deals with a total value of to US$51 billion in 2011 compared to971 deals amounting to US$62 billion in 2010.Deal summary Volume Value (US$ billion) Year to date 2009 2010 2011* 2009 2010 2011* Inbound 74 91 132 3.9 9 26.9 Outbound 82 198 132 1.4 22.5 10.4 Cross border 156 289 264 5 31 37 Domestic 174 373 342 6.7 18.3 5 Total ma 330 662 606 12 50 42 PE 206 253 347 3.4 6.2 7.7 QIP 54 56 8 8.6 6.2 0.9Grand total 590 971 961 24 62.2 50.9*Jan – Dec 9, 2011Half yearly trend: While deal activity during weakening rupee is making outbound acquisitionsH1’2011 echoed that of H1’2010, H2’2011 has more expensive. This could also be a contributingseen relatively lower activity, reflecting fears over factor for the downward trend in outbound deals.the economic dynamics of the European region. Having said that, the fundamentals of outboundNevertheless, deal volumes remained robust MA have remained intact as Indian acquirersthroughout the year. Importantly, the average continue to view outside markets strategic tosize of deals where value was disclosed remained their global growth plans, as witnessed in dealsthe same at approximately US$190 million. such as Mundra Port acquiring Abbot Point Port, GVK Power’s acquisition of HancockMA - Inbound bucks the trend: A notable trend coal mines, Aditya Birla Groups’ acquisition ofreversal was observed in cross border MA with Columbian Chemicals and Genpact’s acquisitionfocus shifting from outbound to inbound. Six of Headstrong, to name a few. Domestic dealout of the nine billion-dollar deals in 2011* were activity was relatively lower as compared toinbound, primarily owing to premium valuations 2010 mainly due to a continuing focus onreceived by Indian targets. The backdrop of mergers and restructuring, despite volumesstagnating economic activity in the west and the remaining buoyant.4
  5. 5. India Watch - Issue 15 January 2012Top MA deals 2011 Acquirer Target Sector % Stake US$ million Vedanta Plc Cairn India Oil Gas 59% 8,670** British Petroleum Reliance Industries Oil Gas 30% 7,200 Vodafone Group Plc Vodafone Essar Telecom N.A. 5,000 Mundra Port SEZ Ltd (Adani Group) Abbot Point Port Shipping Ports 100% 1,957 GVK Power Infrastructure Hancock Group-coal mines, port /rail project Mining 79% 1,260 iGate Corporation Apax Partners Patni Computer Systems IT ITES 83% 1,209**Multiple transactionsMA sector focus: The energy and telecom limits. The beginning of 2011 was witness to thesectors have seen good amount of traction, notification of merger control provisions by theaccounting for over 50% of the total MA deal Competition Commission of India (CCI) andvalue in 2011*. Other leading sectors in 2011* other government regulations on sector specificand their contribution to total deal values were MAs such as inbound acquisition of drugs andIT and ITES (8%), pharma, shipping and ports, pharma companies requiring approvals. Thoughmining and automotive (approximately 5% each). we are yet to perceive any tangible effect on theHowever, few sectors saw a sharp decline in deal deal activity as a result of these policies, it couldvalues, such as telecom (down 61%) and pharma result in increasing timelines for completing(down 67%), mainly owing to a drying up of an acquisition. Also, the current flux in publiclarge value deals, but the volumes continued to markets, low trading multiples and increased costsremain steady in these sectors. of finance could be major causes of buyer-seller mismatch in price expectations, thereby resultingMA outlook: We can expect consolidation in prolonged deal the telecom space in 2012, with sectorregulator TRAI proposing an increase in the PE Deals – Volume uptrend, drying up of largecombined market share caps and spectrum caps value deals: Private Equity investments in Indiaof merged entities. Also, the pharma sector is showed significant activity in 2011* with a 23%expected to see heightened MA activity due increase in deal values over 2010. The resurgenceto the impending patent cliff in the US (the could possibly be attributed to sluggish IPO patent protection for many big-selling drugs is QIP activity coupled with a cautious return inexpected to expire in the next few years which confidence levels which were seen lacking in 2009will lead to opportunities for other generic drug and the first half of 2010. There have been 347 PEcompanies), and the increasing attractiveness deals in 2011* totaling a value of US$ 7.7 billionof India as a low cost RD destination. Other with no large deals announced.sectors to look out for in 2012 would be aviationand retail where the government is looking atopening up the Foreign Direct Investment (FDI) 5
  6. 6. India Watch - Issue 15 January 2012Top PE deals 2011Investor Investee Sector Stake US$ millionBain Capital, Government of Singapore Hero Investment Automotive 30% 848Apollo Global Management Welspun Corp Manufacturing N.A. 284Texas Pacific Group Shriram Capital Financial Services 15% 257Macquarie SBI Infrastructure GMR Airports Infrastructure N.A. 200InvestmentsStandard Chartered PE(Mauritius),JM Financial-Old Lane India Corporate GMR Airports Infrastructure N.A. 200Opportunities Fund, NYLIM JacobBallas India FundGoldman Sachs ReNew Wind Power Power Energy N.A. 200Blackstone Embassy Property Developments Real Estate 37% 200PE sector insight: PE investments are back in for deal closures. Since PE is still not seen widely With specialthe real estate and infrastructure space with the as a preferred funding source, it may take some thanks for theirsector garnering close to US$1.7 billion of PE years for the Indian market to see much bigger contribution tofunding in 2011*. It is interesting to note that deal sizes as the norm. Exit opportunities can be Ankita Arorathe real estate and infrastructure investments expected in the pharma, healthcare and biotech and Sowmyathat took place in 2010 were primarily in the and real estate sectors in 2012; one of the possible Ravikumar of thecommercial and residential space, whereas 2011* reasons for these results could be the heightened Grant Thorntonattracted investments in large infrastructure PE investments that these sectors saw in 2007- India Dealtrackerprojects such as airports, roads and highways. 2008, and the investment cycles coming to an end team. Other major sectors driving PE activity were in 2012.automotive (US$1 billion), power and energy Overall, 2011 emerged fairly resilient in(US$ 892 million), banking and financial services terms of deal appetite, despite challenging(US$ 816 million) and, IT and ITES circumstances. However, stabilisation of(US$ 783 million). economic factors is critical for deals to continue the momentum going forward, and it will beSecond coming of e-commerce: The year also interesting to see how 2012 unfolds.witnessed e-commerce firms raising over US$300million of investment from both PE funds andventure capital firms. Few of these companiesreceived premium valuations with overall firmvaluation upwards of US$ 250 million implyingEV/Sales multiples ranging between 10x and 15x.One possible reason for stretched valuationscould be that the investors expect e-commercein India to replicate the e-commerce successstory in developed countries. The second comingof e-commerce in India is backed by strong Karthik Balisagarfundamentals such as critical mass of internet Valuations Manager and Assistantusers, broadband penetration and 3G growth, Head of Valuations South Asia Group Grant Thornton UK LLPrising middle class, improved payment gateways T +44 (0)20 7865 2475and logistics, etc, though there is significant scope E improve these parameters.PE Outlook: PE investment in India faces highentry valuations driven by a high proportion offamily owned business in India tending to waitfor higher bidders and exercising extreme cautionbefore dilution. This generally translates intolonger negotiations and consequently longer time6
  7. 7. India Watch - Issue 15 January 2012Indian economy –Uncertain timesAs we enter what will hopefully be a more promising year ineconomic terms for many of the world’s economies, let us take thisopportunity to take a look back at the year just passed.2011 was somewhat of an annus horribilis, with major stock exchanges went into relative free-fall.natural disasters in Japan and New Zealand, The National Stock Exchange’s 50 stock index,political uprisings across North Africa, riots in Nifty, declined nearly 23% over 2011 making itsome of the UK’s major cities and what could still one of the worst performing stock exchanges inbe, an economic time-bomb in the form of the the world. The Bombay Stock Exchange’s SensexEuro-zone debt crisis. All these factors, and many index also suffered significantly, seeing a fall ofothers, led to the continued economic uncertainty nearly 22% over the year.seen in both 2009 and 2010, and India, like many Furthermore, a record low rupee addedother emerging markets was not immune to the to India’s economic headache. In December,global economic turmoil. the rupee reached a record low, down around India’s economy continued to suffer from 20% against the dollar since August – makinga number of economic factors (as discussed in it the worst performing Asian currency inprevious editions) such as a lack of growth, the last quarter. To make matters even worse,inflation, a weak currency and, most importantly, C.Rangarajan, chairman of the Prime Minister’spoor political direction. As a result, the country’s Economic Advisory Council, said that that there 7
  8. 8. India Watch - Issue 15 January 2012was little policymakers could do to counter the Minister Singh is halfway through his second termrupees’ decline. The rupee’s weakness, which has in office and is under continued pressure to revivebeen driven primarily by weakening economic a strong legislative agenda to help restore anddata, has pushed up the price of imported goods, lend direction to the country and its economy.adding further fuel to India’s on-going battle However, with major corruption allegationswith inflation. still unresolved, it looks unlikely that the Inflation itself has remained around the nine economic reforms required will come to fruition.per cent mark despite 13 interest rate rises in less Furthermore, with at least five regional electionsthan a year and a half. However, in December, due in the coming year, economic pressures lookIndia’s inflation slowed to its lowest level in to be just one of many which Prime Ministertwelve months, leading to a pause in interest rate Singh and his government will face in 2012.rises. Food inflation rates, a key driver of overall What this will mean in real terms for India andinflation, levelled off to around 6.5% from the its economy is unknown and any prediction herestart of the year, the lowest level in over three would be fruitless but let us hope suitable actionsyears. Nevertheless, with an underperforming can be taken to drive India forward.currency and a slowing economy, thegovernment’s timing from which it expectsinflation rates to start easing on a continuing basismight need to be revisited. In respect to India’s slowing economy, TheReserve Bank of India has again revised itseconomic growth rate lower. In its most recent Anuj Chanderevision, is said that it expects the country’s Partner, Corporate Financeeconomy to expand 7.5% in the year ending and Head of South Asia GroupMarch 31 2012 – down 0.4% from its forecast Grant Thornton UK LLPearlier in the year. BNP Paribas also cut their T +44 (0)20 7728 2133 E 2011-2012 GDP forecast to 6.5%, in theirlatest economic report, down from its earlierprojection of over seven per cent. The bank citedsliding capital expenditure and the country’sexposure to European Banks for its rate cut. However, while India’s economy has someexposure to European Banks, its main problemscome from within. In the second quarter ofIndia’s financial year, the country’s economygrew by only 6.9%, the lowest level in over twoyears. While healthy monsoons have boostedagricultural output, the weakness of the country’smining and manufacturing sectors has broughtoverall growth rates down significantly. So, what is next for India’s economy? Prime8
  9. 9. India Watch - Issue 15 January 2012Indian renewables– The state of playAnyone that has travelled to India is likely to have experienced apower outage at some point during their stay. This is not uncommongiven that the country operates at a peak energy shortage of 12%.Moreover, its per capita consumption of power is amongst the lowestof the BRIC nations, and below the world average (some 300 millionIndian citizens still have no direct access to electricity).Power in India is therefore a commodity in These issues are two of the key drivers for thedemand. A bottleneck in the value chain is the rise of renewable independent power producerssupply of fuel – coal being the dominant fuel (IPPs). Private investment into the sector hassource. Despite having the third-largest hard been encouraged by the government throughcoal reserve in the world (after the United States preferential power-purchase agreements and theand China) the quality is relatively poor due to introduction of a Renewable Energy Certificateits low sulphur and high ash content. Supply is market. As a result many projects (at the momentalso constrained to a small number of inefficient mainly hydro, biomass and wind) are generatingstate-owned companies; India’s Ministry of Coal leveraged IRRs in the late teens.estimate that the demand-supply gap will increase Such returns have attracted domestic andto 106MT in 2012 from 74MT in 2011. international institutional capital. Over theThere is now a growing import market of coal last year private equity investment into Indianfrom Indonesia. renewable companies increased five-fold from US$100 million to US$522 million. This takes 9
  10. 10. India Watch - Issue 15 January 2012the total private equity investment to over US$1 valuations, particularly during flight tobillion since 2006. Indian IPPs on London’s AIM quality have also been successful in raising capital, These factors, in the backdrop of politicalin 2010 we estimate £120 million was raised unrest due to the recent corruption scandals,which grew to nearly £190 million in 2011. We may still be in-play during the early part of 2012.expect this to continue to grow as we estimate the However a strong catalyst for improvementcapacity for renewable energy in India is some in stock valuations is through commissioning69GW. This does not include solar assets, which assets. For example a typical wind asset shouldis only recently begun to attract investment as a generate over US$200,000 in EBITDA per MWresult of the recent state and national auctions. once in operation; a decent sized wind site could It is natural to assume the sector is a defensive therefore make a dramatic difference to theplay given that government reforms in the financials of a small-cap stock. We are thereforerenewable and wider power market should most bullish on those stocks with a managementprotect IPPs from global and national economic team that has a strong track record, and a fullyheadwinds. However over the last 12 months funded pipeline of assets which are expected tothe value of pure-play public Indian renewable be commissioned in the short term. Such stockscompanies (listed in London and in Bombay) has have mitigated risk profiles given financialfallen by 22% on average. This has performed closure is complete (a significant hurdle for anyin line with the overall market (the BSE Sensex infrastructure related company), and also offerfalling by 23% over the same period). good upside as the market typically does not price We believe one of the reasons for this could be in pipeline projects.due to the increases in debt financing costs causedfrom inflationary pressures. The Indian centralbank has increased interest rates 13 times overthe past two years; taking it from 5% in 2009 to8.5% in 2011. Despite the central bank decidingto not raise rates last month, and some early signsof easing inflationary pressure, we believe it is stillunclear if rates will fall in the short term. Another reason for the fall in valuationscould also be due to a lack of well-establishedcompanies in the sector. We estimate there areonly six pure-play renewable energy generatorsin India that are listed. Only three of whichhave a market capitalisation of over £100m, andfive have a combined installed capacity of lessthan 800MW. Such small/mid-cap stocks often Gurpreet Gujral Director, Research – Cleantechhave poor liquidity which typically obscures Brewin Dolphin E
  11. 11. India Watch - Issue 15 January 2012Companies Bill 2011 – the changingface of Company Law in IndiaA new Companies Act to amend the more than 50-year oldCompanies Act, 1956, is expected to be finally cleared in the Budgetsession in March 2012.The proposed Bill gives the central government affairs are being carried out in a mannersignificant additional power by way of delegated prejudicial to the interests of the company,legislation, as a result of which numerous members or depositors.additional provisions can be prescribed through The financial year of all companies has beenrules that the government can notify from time mandated to end on 31 March and onlyto time. companies which are holding/subsidiary of a The Bill has changes ranging from foreign entity can have a different financial yearincorporation, fundraising and corporate with prior approval.governance through to mergers, auditor rotationand independence requirements. Mergers regime Mergers between holding companies and theirIncorporation, funding and investor protection wholly owned subsidiaries or between two orThe Companies Bill, while simplifying certain more small companies (as defined in the Bill) norequirements for incorporation, has introduced longer require court/tribunal approval. Companiesnew concepts of ‘One Person Companies’ and registered in India and those incorporated in‘Small Companies’ that enjoy relaxation in norms foreign jurisdictions can also merge subject to rulesrelating to reporting requirements, board meetings as may be prescribed by the central government inand other procedural compliances. Private consultation with the Reserve Bank of India.companies can now also be incorporated with up If a listed company merges with an unlistedto 200 members, which is higher than the limit of company, the transferee company has been given50 in the existing Act. the option to remain unlisted with a payment of For private companies, a review of the cash to shareholders of the listed company.fundraising activities through private placement Finally, in a bid to eliminate unnecessaryintroduced stricter norms; offer documents with litigation that may occur due to dissentingrelevant details are required to be filed with shareholders or creditors, only persons holdingregulators, subject to the number of persons to at least 10% of the share capital or 5% of thewhom the offer is made or the investment size. total outstanding debt have the right to object For public fundraising, the information to the scheme of arrangement. However, torequired to be disclosed in the prospectus has prevent financial re-engineering through a schemebeen increased. Investor-friendly norms have been of arrangement, specific provisions have beenintroduced, eg if money remains unutiliased, a made for the scheme to comply with accountingspecial resolution (2/3rd majority) is to be passed standards and for the report of an expert valuer tofor change in the company’s object clause, as well be disclosed to the other requirements of advertisement and exitopportunity to dissenting shareholders. Similarly, Corporate governanceany variation in the terms of contract referred to in Public companies are now required to havethe prospectus or object invite restrictions on the independent directors. While the directive on theuse of money raised. number of independent directors on the board ‘Class action suits’ make their debut in the does not differ too significantly from what wasBill, where any class of members or depositors, in provided in Clause 49 of the Listing Agreement ofspecified numbers, can initiate proceedings against Stock Exchanges in India, the Bill has also codifiedthe company if they are of the opinion that the duties of such directors and has placed restrictions 11
  12. 12. on remuneration, eg Independent Directors cannot for listed or other prescribed companies every 5be given any ESOPs. or 10 years depending on whether the auditor is Directors cannot exceed two five-year terms an individual or a firm, respectively. There is aand are required to have a cooling off period of cooling off period of five years after completionthree years before they can be re-appointed. In of such a term during which the auditor cannotaddition, independent directors have to declare be re-appointed. To circumvent the possibility ofthat they comply with the criteria as set in the Act. appointment of an entity related to the auditorOn the anvil is the establishment of a data bank of whose term has expired, the Bill provides thatindependent directors. no such audit firm which has a common partner Provisions related to board meetings and their or partners to the retiring audit firm, shall bepowers, and appointment and remuneration of appointed as auditor of the same company for amanagerial personnel have also undergone changes. period of five years.Secretarial standards, as issued by the Institute An auditor of the company is also prohibitedof Chartered Company Secretaries (ICSI) and from providing, directly or indirectly, a numberapproved by the central government, are required of specified non-audit services to the company, itsto be adhered to, with every listed company also holding company, subsidiaries, fellow subsidiariesrequired to annex to its board report, a secretarial or associate companies.audit report. In the wake of recent accounting scams, duty Information disclosed in Annual Returns has been cast on the auditor, to immediately reportsubmitted to the Registrar of Companies and in to the central government any offence involvingboard reports accompanying financial statements fraud which is being or has been committed againsthas been increased. the company by officers or employees. In conclusion, while there are many changes, theAuditor’s rotation and independence requirements Companies Bill should bring stronger legislation,Proposals similar to those being considered by the greater transparency and better investor protection;European Commission to change audit regulation, how many of such changes finally make it to thewhich include audit firm rotation and the Act enacted by the Parliament remains to be seen.requirement for large audit firms to separate audit Saurabh Mathurand non-audit activities, have also found resonance Manager, Assurancein the new Bill. Walker Chandiok Co The proposed changes include auditor rotation India About us Grant Thornton UK LLP established a dedicated South Asia Group in 1991 to serve Asian owned businesses in the UK as well as those investing into and from the Indian subcontinent. We are proud to be one of the first UK accountancy firms to focus on this region. We are widely recognised as one of the leading international firms advising on India-related matters and have been in involved in every IPO involving an Indian company on AIM, with the exception of the real estate sector. For those clients requiring advice in both the UK and India we offer a seamless service building on the already strong and close relationship between Grant Thornton UK LLP and Grant Thornton India. International and emerging markets blog© 2012 Grant Thornton UK LLP. All rights reserved. As part of our commitment to remaining at the forefront of changes‘Grant Thornton’ means Grant Thornton UK LLP, and developments in regards to UK-India relationship we will be usinga limited liability partnership. this space to post original thought leadership and research relevant toGrant Thornton UK LLP is a member firm within the industry. The idea is to encourage discussion around these issuesGrant Thornton International Ltd (‘Grant Thornton International’).Grant Thornton International and the member firms are not and to open up new areas and debate.a worldwide partnership. Services are delivered by the memberfirms independently. To participate:This publication has been prepared only as a guide. responsibility can be accepted by us for loss occasionedto any person acting or refraining from acting as a result of More information about our South Asia Group can be found at:any material in this publication.