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India Japan Trade and Investment Monthly Bulletin
 

India Japan Trade and Investment Monthly Bulletin

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Indo-Japan Trade and Investment Bulletine by Japan Desk of Corporate Professionals, ...

Indo-Japan Trade and Investment Bulletine by Japan Desk of Corporate Professionals,
Kose Corporation Enters into its First Overseas JV with Elder Pharma
India’s Rollatainers Limited forms a 50:50 JV with Japan’s Toyo Machine
L&T to exit from JV with Komatsu
Japan’s Isuzu Motors Ltd to set up an LCV manufacturing plant in India
India-Japanese Hospital in Bangalore to Start Functioning from July
Kalyani Appointed Head of India-Japan Business Leader's Forum
Mitsubishi Electric Planning for Elevator Production in India
Japan's Kyosan Electric opens up in India
Jamna Auto may Sell its Stake in the NHK Springs JV
Pune Farmer and Japan’s NEC Corporation Join Hands to Produce High-Value
Strawberry
India’s Reliance Group enters the Top 2 Gaming Markets in the World
Tata Metaliks Ends its Collaboration with Japanese Kubota and Metal One
Mitsubishi Partners with Neuland Laboratories in an API Deal
India and Japan Cooperate to Ensure Freedom of Navigation on the High Seas
Japan Grants an Aid of USD 2.32 Billion to India
Knowledge Centre : Impact of the Companies Bill, 2012 on the Foreign Companies having a Place of Business in India

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    India Japan Trade and Investment Monthly Bulletin India Japan Trade and Investment Monthly Bulletin Document Transcript

    • Indo-Japan Trade & InvestmentBulletinMarch IssueJapan Desk, Corporate Professionals 2013
    • INDEXIndo-Japan Trade & Investment Highlights Kose Corporation Enters into its First Overseas JV with Elder Pharma India’s Rollatainers Limited forms a 50:50 JV with Japan’s Toyo Machine L&T to exit from JV with Komatsu Japan’s Isuzu Motors Ltd to set up an LCV manufacturing plant in India India-Japanese Hospital in Bangalore to Start Functioning from July Kalyani Appointed Head of India-Japan Business Leaders Forum Mitsubishi Electric Planning for Elevator Production in India Japans Kyosan Electric opens up in India Jamna Auto may Sell its Stake in the NHK Springs JV Pune Farmer and Japan’s NEC Corporation Join Hands to Produce High-Value Strawberry India’s Reliance Group enters the Top 2 Gaming Markets in the World Tata Metaliks Ends its Collaboration with Japanese Kubota and Metal One Mitsubishi Partners with Neuland Laboratories in an API Deal India and Japan Cooperate to Ensure Freedom of Navigation on the High Seas Japan Grants an Aid of USD 2.32 Billion to IndiaKnowledge Centre Impact of the Companies Bill, 2012 on the Foreign Companies having a Place of Business in India
    • Indo-Japan Trade & Investment HighlightsKose Corporation Enters into its First Overseas JV with Elder PharmaMumbai based Elder Pharma and Kose Corporation of Japan have entered into a JV tomanufacture and sell cosmetics in India. Kose will hold 60% stake and rest of 40% will be heldby Elder in the JV Company provisionally named as Kose Elder (India) Private Limited.While Elder has experience of running subsidiaries abroad, it is their first joint venture in India.Kose, on the other hand, has entered new markets only through exports from Japan and the jointventure with Elder is its first such venture abroad.The new company is likely to be operational in 2014 is likely to sell entire range of Koseproducts in India by relying on Elder’s knowledge of local markets and strong distribution andsupply chain.Nomura Securities acted as the financial advisor to Elder on the deal with Kose.India’s Rollatainers Limited forms a 50:50 JV with Japan’s Toyo MachineIndian packaging solutions provider Rollatainers Limited has entered into a 50:50 JV withJapan’s Toyo through which these companies shall develop, design, assemble and manufacturepackaging machinery and spare parts and engage in marketing, selling and servicing theirproducts. The JV which shall be retail food, agricultural processing and pharmaceuticalindustries will have a management services agreement with Rollatainers and a Technical servicesagreement with Toyo Machine.L&T to exit from JV with KomatsuIn a decision to better focus on its engineering and construction business and reducing relianceon its non-core activities, Larsen and Toubro is currently in negotiations with Japan’s Komatsuto sell of its 50% stake in its JV L&T Komatsu manufacturing hydraulic equipment. The deal ishoped to be valued at INR 600-700 Crores.
    • Japan’s Isuzu Motors Ltd to set up an LCV manufacturing plant in IndiaJapanese auto maker Isuzu Motors Ltd plans to set up a light commercial vehicle (LCV)manufacturing plant in Andhra Pradesh through its Indian subsidiary Isuzu Motors India Pvt.Ltd. The plant which is estimated to cost INR 1500 Crores (INR 15 billion) will be able toproduce 120,000 units at peak capacity annually. This plant shall be one of the only 2 overseasLCV producing units that the Japanese company will have, currently the only one being inThailand.India-Japanese Hospital in Bangalore to Start Functioning from JulyIn a Joint Venture, Kirloskar Systems, Secom Medical Systems Co Ltd and Japan’s ToyotaTsusho shall be opening up the functioning of Sakra World hospital at Bellandur in July. Thehospital shall harmonize the Japanese medical systems and practices with Indian manpower, thusbringing together the best of both worlds to bring quality healthcare. With primary focus onneurosurgery, orthopedics and cardiology, the 300 bed hospital will emphasize on emergencyand shall also house 60 ICU beds. Coming up at a cost of INR 220 Crores, the management hasensured compliance with the standards of the National Accreditation Board for Hospitals andHealthcare Providers (NABH) and Joint Commission International (JCI) at the design levelsitself.Kalyani appointed Head of India-Japan Business Leaders ForumBharat Forge Limited’s Chairman & MD Mr. Baba Kalyani has been appointed as the Chairmanof the India-Japan Business Leader’s Forum (IJBLF). The 15 member forum aims to steer thebusiness developments between the two countries and also to bring fore of the respectivegovernments any roadblocks are faced for doing businesses. It shall also aim at strengthening thebusiness processes and explore newer opportunities for both economies.Mitsubishi Electric Planning for Elevator Production in IndiaJapan’s Mitsubishi Electric is contemplating to set up a production base in India which it shall dothrough its joint venture Mitsubishi Elevator ETA India Pvt. Ltd. The plan which has been incontemplation has been delaying because the Company was focusing itself on China. Throughthe Joint Venture, Mitsubishi will be able to concentrate on the Indian elevator market which isexpected to grow at a rate of 8-10 percent.
    • Japans Kyosan Electric Opens up in IndiaJapanese railway and road signaling system manufacturing company, Kyosan ElectricManufacturing, has opened its first India office in Delhi to increase its presence in India’srailway network.The Company shall be a part of the country’s railway expansion plan by providing safetysignaling system for high speed railways and special corridors that have been proposed. According to the Company, because of its products, Indians will be able to look forward toimproved traffic safety and reliability.Jamna Auto may Sell its Stake in the NHK Springs JVJamna Auto, the largest manufacturer of Tapered Leaf and Parabolic Springs for CVs in India, isplanning to sell its stake in NHK Springs India Ltd. The Company is a Joint Venture between 3entities; Jamna Auto (5.39%), NHK Springs Co. (95.3%) and Metal One Corporation (1.08%),the latter two being Japanese entities. In this JV, which manufactures automotive suspensioncomponents for passenger cars and utility vehicles, Jamna Auto shall sell its stake to NHKSpring Co.Pune Farmer and Japan’s NEC Corporation Join Hands to Produce High-ValueStrawberryFarmers from Katar Khadak village in Mulshi Tehsil of Pune district and Japan’s NECCorporation have collaborated to produce high value strawberry which shall be marketed tointernational travelers through luxury hotels. After the successful pilot project that was launchedin September 2012 to market strawberries in the local market, the initiative was officiallylaunched on 25th March 2013.India’s Reliance Group enters the Top 2 Gaming Markets in the WorldThe Anil Ambani Group of Reliance Companies has fully acquired a Japanese mobile gamedistribution company Funnel Japan and has acquired a majority stake in Bluesom Inc, a Koreabased gaming development and publishing company. This acquisition has taken place through aspecially incorporated Reliance Big Entertainment Japan Company and marks the foray ofReliance in the world’s largest and second largest gaming markets. Through the JapaneseCompany, Reliance shall soon target the Chinese and the Taiwan markets as well.Tata Metaliks Ends its Collaboration with Japanese Kubota and Metal OneTata Metaliks has terminated its JV agreement with Japan’s Kubota Corporation and Metal OneCorporation executed on July 20, 2007 in order to integrate its ductile pipe business with theCompany itself. The Joint Venture Company Tata Metaliks Kubota Pipes Limited was buying
    • the raw material at market price and its net realization had decreased by almost 20 percent due tothe industry conditions.Mitsubishi Partners with Neuland Laboratories in an API DealThe Japanese company Mitsubishi, continuing with its pharmaceutical business expansion spree,has planned to partner with the Active Pharmaceutical Ingredient (API) production companyNeuland Laboratories in Hyderabad, India. The deal shall take place between the IndianCompany and Mitsubishi’s Tokyo based unit, API Corporation. The partnership will help theJapanese entity to expand its API production base in India while allowing the Indian partner tostrengthen its presence in the Japanese market.India and Japan Cooperate to Ensure Freedom of Navigation on the High SeasDuring the Seventh Annual India Japan Strategic Dialogue co-chaired by Indian External AffairsMinister Salman Khurshid and his Japanese counterpart Fumio Kishida, India assured Japan thatit stands by the country to ensure freedom of navigation on the high seas. This came with anunderstanding that both the countries, being importers of large amounts of oil and gas, need tocooperate to ensure the security of the global commons including freedom of navigation on thehigh seas.This is being achieved through regular meetings and decision making during detailed dialoguesheld pursuant to the bilateral Joint Declaration on Security Cooperation and an Action Plan toAdvance Security Cooperation.Japan Grants an Aid of USD 2.32 Billion to IndiaAfter the two countries have agreed to promote their bilateral strategic and global partnershipespecially in economic and security areas, Japan has granted an aid of USD 2.32 Billion to Indiato extend a hand in the nation’s infrastructure building. Apart from this the nation has alsogranted India a loan of USD 753.17 Million for the subway project in Mumbai, India’s financialcapital. This came in the meeting of Japanese Foreign Minister with India’s External AffairsMinister Salman Khurshid in which India and Japan also signed the notes for the OfficialDevelopment Assistance Loan Package for Financial year 2012.
    • Knowledge Center IMPACT OF THE COMPANIES BILL, 2012 ON THE FOREIGN COMPANIES HAVING A PLACE OF BUSINESS IN INDIAThe much awaited Companies Bill 2012 was passed by the Lok Sabha (Lower House ofParliament) on December 18, 2012, proposing to replace the 56-year-old Companies Act, 1956once the approval of Rajya Sabha (Upper House of Parliament). The economic scenario globallyhas undergone major transformation and structural changes and promulgation of the new bill is astep towards globalization and is a successful attempt to meet the changing environment andliberalization. The proposed Act is progressive and futuristic duly envisaging the technologicaland legal developments. The new law aims to: To revise and modify the Companies Act, 1956 in consonance with the changes in the national and international economy. To bring about compactness by deleting the provisions that had become redundant over time and by regrouping the scattered provisions relating to specific subjects To re-write various provisions of the Act to enable easy interpretation; and To delink the procedural aspects from the substantive law and provide greater flexibility in rule making to enable adaptation to the changing economic and technical environment To inculcate the culture of Corporate Governance in the Indian Inc.With these objectives the new law will bring various changes for the Businesses, Promoters,Stakeholders, Creditors, Directors, the Law enforcers and the Society at a large. Differentsections of the corporate world may have some effect in their own way with this proposed newlaw. This Note will highlight the impact of the Companies Bill 2012 on Foreign Companieshaving a place of business in India.Entry strategy for Foreign Investors in IndiaAny Foreign Entity planning to set up business in India may Establish itself as an Indian Company having a Separate Legal Identity
    • Retain the status of a Foreign Company by opening: o Liaison Office/Representative Office o Project Office o Branch OfficeSet up as an Indian CompanyA foreign company can commence operations in India by incorporating a company under theCompanies Act, 1956 through Joint Ventures Wholly Owned SubsidiariesForeign Investment in Joint Ventures can be made up to 100% depending on the requirementsof the investor, subject to equity caps in respect of the area of activities under the Foreign DirectInvestment (FDI) policy.A joint venture may be incorporated in the form of a Private Company or a Public Company.However, in case of forming a joint venture in India as per the Companies Act, 1956, if the statusof the foreign equity partner which if incorporated in India would be a Public Company and he/itis holding less than 100% of paid up capital of the new joint venture company, such companyshall be deemed as Public Company even if it is registered as a Private Company in India.Modification as Compared to Companies Act, 1956: Under the Companies Bill no suchrestriction has been provided; which means whatever be the status or structure of the ForeignEquity Partner, if being incorporated in India, is, the new incorporated joint venture companymay maintain its status as Private or Public Company depending on the form of registration inIndia.Secondly foreign companies can set up wholly-owned subsidiary companies in sectors where100% foreign direct investment is permitted under the FDI policy.In both the cases, whether a joint venture entity or as a wholly owned subsidiary, theincorporated company would be registered as an Indian company and have to comply with all theprovisions of the Indian Company Law.Set up as a Foreign CompanyThe Foreign Companies can also set up their operations in India through
    • Liaison Office/Representative Office Project Office Branch OfficeIn such cases, the Foreign Company does not have to comply with all the provisions of theIndian Company Law and, instead, the law has specified separate provisions which areapplicable to such Foreign Company.Definition of Foreign Company:New Ambit of Foreign Companies: The Bill has redefined the term Foreign Company. Foreign Company under Companies Act Foreign Company as per Companies Bill 1956 – Section 591 2012 – Clause 2(42) Company Incorporated outside India and Company or body Corporate incorporate having a place of Business in India outside India having a place of business in India whether by itself or through an agent, physically or through electronic mode. Conducts any business in India in any mannerModification as Compared to Companies Act 1956: The ambit of Foreign Companies has beenproposed to extend in order to cover all companies or body corporates that have place of businessin India by itself or through an agent, operating physically in India or through electronic mode.To enlarge the scope further the Ministry has proposed to cover the companies/body-corporateconducting any business in India in any manner. The definition has been broadened to includeevery Company having business in India through any mode.From the onset, proposed Clause 2 (42) in the Companies Bill, 2012 has the potential to affect alarge number of Foreign Companies that may be present through electronic mode. The proposedclause is likely to have a special effect on the websites that are accessible from India and suchcompanies may be required to establish a permanent place of work in India, in order to continueto operate in the country. Currently, there are a number of foreign based websites that operatedirectly or indirectly in India and may be said to have a place of business in India throughelectronic mode such as Amazon.com, Rakuten.com etc., where customers located in India canpurchase products and get the shipment in India. Moreover, ebooks, softwares, or subscription toe-magazines, dailies or other members only websites could be purchased online at many websitesthat need no physical shipment to India. Further, by some stretch of imagination, one could alsoforesee transactions conducted through debit and credit cards of foreign banks may also besubject to the applicability of the provisions of the new Companies Bill, 2012.
    • The proposed provision under Clause 2 (42) of the Companies Bill, 2012 leaves many questionsunanswered. It is vague and has the potential to cover a number of Foreign Companies that donot have a permanent place of business in India, at least until the rules under the Companies Bill,2012 are notified. It would be interesting to see how and what effect this contentious provisionhas on the foreign companies, once the rules are notified.Application of Companies Bill, 2012 to Foreign Companies: Clause 379Every foreign company (as per the definition above) having a place of business in India has tocomply with the provisions specified for these companies (mentioned below in this article).Besides this a foreign company having a place of business in India and also where 50% or moreof the paid-up capital (whether equity or preference) of a foreign company is held by one ormore citizens of India or/and one or more companies or bodies corporates incorporated in Indiawhether singly or in aggregate, such company in addition to compliance of the provisionsspecified herewith, such other provisions of the Companies Bill 2012 as may be prescribed byway of rules.Modification as Compared to Companies Act 1956: No modification, the same provision of theCompanies Act, 1956 has been continued under the Companies Bill 2012.Compliances for Foreign CompanyDocuments etc., to be delivered to Registrar by foreign companies: Clause 380Every foreign company is required to submit these documents to the Registrar for registration,within 30 days of the establishment of its place of business in India:  Certified copy of the charter, statutes or memorandum and articles, of the company or other instrument constituting or defining the constitution of the company and, if the instrument is not in the English language, a certified translation thereof in the English language;  Full address of the registered or principal office of the company  List of the directors and secretary of the company containing such particulars as may be prescribed  Name and address or the names and addresses of one or more persons resident in India authorised to accept on behalf of the company service of process and any notices or other documents required to be served on the company  Full address of the office of the company in India which is deemed to be its principal place of business in India
    •  Particulars of opening and closing of a place of business in India on earlier occasion or occasions  Declaration that none of the directors of the company or the authorized representative in India has ever been convicted or debarred from formation of companies and management in India or abroad.  Other Documents as may be prescribed later on.In case of any alteration in the aforesaid documents the foreign company is require to submit areturn containing the particulars of alteration as per the prescribed format with the Registrar ofCompanies, within 30 days of any such alteration.Accounts of Foreign Companies:The foreign companies in each calendar year are required to make out a balance sheet and profit& loss account as per the prescribed format and shall also annex the documents as may beprescribed by way of rules with the balance sheet and profit & loss account. All these documentsshall be filed with Registrar of Companies along with a copy of list of all the places wherebusiness has been established in India as on the date of the balance Sheet.If any of such documents is not in English language, a certified translation of these documents inEnglish language shall be attached.Display of Name of Foreign Companies:Every foreign company is required to exhibit outside its every office or place of business inIndia, and in all business letters, bill heads and letter paper, and in all notices, and other officialpublications, the name of the company and the country where it is incorporated. The nameshall be in legible letters of English language and also in the local language of the state wheresuch office is situated.Besides the name and the country of incorporation the company is also required to mention thefact that the liability of the company is limited if it is so.Service on Foreign CompanyAny process, notice, or other document required to be served on a foreign company shall beaddressed to the person whose name and address have been delivered to the Registrar and sent bypost or by electronic mode. The documents on foreign company as per the Companies Bill 2012may now also be served by electronic mode.
    • Punishment for Contravention:In case if foreign company has contravened any of these provisions it shall be punishable withminimum fine of Rs. 1 lakh (100,000) but which may extend to Rs. 3 lakh (300,000) and in caseof a continuing offence with an additional fine which may extend to Rs. 50,000 for every dayduring which the default continues.Besides this every officer of the Company who is in default shall be punishable withimprisonment of maximum 6 months or fine which shall not be less than Rs. 25,000 but whichmay extend to Rs. 1 lakh or with both.Modification as Compared to Companies Act 1956: Currently under the Companies Act 1956where in case of default the company and every officer or agent of the company who is in defaultshall be punishable with fine which may extend to Rs. 10,000 and in case of continuing offence,with an additional fine which may extend to Rs. 1,000 for every day during the default continues.
    • CONTACT USPANKAJ SINGLA MUMBAI:Japan Desk, Corporate Professionals Mastermind- I, Royal Palms Estate, Aarey Colony, Goregaon East, Mumbai -400065DELHI (Head Office)D-28, South Extension Part - I, New Tel: +91 9820079664Delhi – 110049 Fax: +91 9810037390 Email: info@indiacp.comTel: +91-11-40622200Dir: +91-11-40622293Fax: +91-11-40622201 FARIDABAD (DELHI NCR): 565, Sector-7B, Faridabad, Haryana-121006Mob:+91-99715-08320Email: pankaj@indiacp.com Tel: +91 129 4061130 Fax: +91 129 2241017 Email: info@indiacp.com Bedford (UK) 2-4 Mill Street, Bedford MK40 3HD U.K. Tel: +44 (0) 2030063240 Fax: +44 (0) 2030063241 Email: info@indiacp.comDISCLAIMER: The entire contents of this document have been developed on the basis of relevant statutory provisions and asper the information available at the time of the preparation. Though the author has made utmost efforts to provide authenticinformation however, the material contained in this document does not constitute/substitute professional advice that may berequired before acting on any matter. The document has been produced only for the informational purposes; the author and thefirm expressly disclaim all and any liability to any person who has read this document, or otherwise, in respect of anything, andof consequences of anything done, or omitted to be done by any such person in reliance upon the contents of this document.