India Japan Trade and Investment Bulletin, April 2013

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India Japan (Indo-Japan) Trade and Investment Monthly NewsLetter, Japan to Import more Textiles from India, Honda Cars India to launch 5 new Diesel Models, Impact of the Companies Bill, 2012 on the Foreign Companies having a Place of Business in India, Class Action Suits: Finally an effective weapon in the hands of the Stakeholders

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India Japan Trade and Investment Bulletin, April 2013

  1. 1. 2013Indo-Japan Trade & InvestmentBulletinApril IssueJapan Desk, Corporate Professionals
  2. 2. Indo-Japan Trade & Investment HighlightsDenso Corporation to Delist its Shares in IndiaRuchi Soya to Partner with Kagome to launch Tomato Products in IndiaNissan to launch the Datsun brand in IndiaJapan‟s Emperor and Empress to visit IndiaJapan to Import more Textiles from IndiaGems London merges with Japan‟s ImacbcJapanese Air Conditioner (AC) makers gaining a strong stance in IndiaHonda Cars India to launch 5 new Diesel ModelsNikon Corporation expecting growing revenue from IndiaPanasonic and Sony working to win greater share in the Indian Electronics MarketTochu and Toyota Tsusho contending to invest in LNG terminal in GujaratKomatsu to exit from its JV with L&TYamaha to invest INR 1500 Crores for a Manufacturing facility in ChennaiNHK Springs coming up with its Second Plant in IndiaNippon Investment & Finance raises its stake in Welspun CorpTata Elxsi and AISB partner to incubate Tech Start-upsIndia to support Japanese Candidate to the post of President, ADBKnowledge CentreImpact of the Companies Bill, 2012 on the Foreign Companies having a Place ofBusiness in IndiaINDEX
  3. 3. Denso Corporation to Delist its Shares in IndiaDenso India announced that it has approved the proposal received from its parent DensoCorporation, Japan to voluntarily delist its equity shares from the stock exchanges. The JapaneseCorporation which currently holds 47.93% shares in Denso India and is listed on Bombay StockExchange, the Madras Stock Exchange and the Delhi Stock Exchange, has proposed to acquire26.54% stake held by the public shareholders of the company. The stock of the company hit theupper circuit level of 5% after the announcement.Ruchi Soya to Partner with Kagome to launch Tomato Products in IndiaRuchi Soya Industries is partnering with Kagome Co, the leading Japanese tomato productscompany, and Mitsui to form a joint venture to manufacture tomato products in India. Throughthe joint venture in which Ruchi Soya will have a 40% stake, it aims to launch high qualitytomato puree, sauces, ketchup and other world class products in India. To be christened as RuchiKagome, the venture will work closely with Indian farmers to educate local tomato producers &setting up local support centers to handhold farming community in India.Nissan to launch the Datsun brand in IndiaNissan, the Japanese car maker will be launching its Datsun brand in India in July 2013 byunveiling the much awaited hatchback, the first car to bear the Datsun Brand after a gap of 30years. The car will however be commercially launched in India only in the first quarter of 2014.The car will be produced at the Renault Nissan Alliance plant near Chennai and Nissan shallmake every effort to make the car competitive and locally relevant.Japan’s Emperor and Empress to visit IndiaTo celebrate the 60thanniversary of the diplomatic ties between India and the Land of the risingsun, Japan‟s Emperor Akihito and Empress Michiko will be visiting India around the autumn.Akihito, who visited India once when he was crown prince, shall be the first Japanese EmperorIndo-Japan Trade & Investment Highlights
  4. 4. to visit India. The Indian Prime Minister Manmohan Singh will also visit Japan in the nearfuture.Japan to Import more Textiles from IndiaJapan which is the third largest importer of textiles in the world wishes to increase its share ofimports from India from 0.9 to 3 percent. This comes in the light of the comprehensive economicpartnership agreement which offers duty free imports on textiles imported from India. Chinesetextiles which form 80% of Japan‟s textile imports face an import duty of 10 to 11 percent,which makes it clear that the Japanese retailers would want to focus on Indian products instead.Gems London merges with Japan’s ImacbcGems London in which the Indian Gitanjali Gems holds 30 percent stakes through its HongKong based wholly owned subsidiary Aston Luxury Group, has merged with Tokyo basedcompany Imacbc. After the merger, Imacbc shall now be a completely integrated unit sourcingraw material from Thailand and China, overseeing manufacturing in China and retailing inJapan. The Company shall sell through the TV Channel, Gems TV which has been owned byGems London; and also expand its existing retail network in Japan.Japanese Air Conditioner (AC) makers gaining a strong stance in IndiaThe Japanese air conditioner manufacturer, number one in the global market, Daikin plans toincrease its share in the Indian AC market from the current 12% to 20% in 2015 and aims to doso by setting up dealers in all Indian cities which have a population of at least 100,000. TheCompany has also launched products targeting all segments to tap a larger market share. Notonly Daikin, other Japanese AC makers like Panasonic and Hitachi, have also gained momentumin the Indian market. Panasonic, which is comparatively new in this segment in India, has beengrowing at a rate of 80-100% in the split AC segment.Honda Cars India to launch 5 new Diesel ModelsThe Honda Cars India Limited (HCIL) plans to launch 5 new models in the diesel segment in anattempt to garner an appreciable market share in the country that is rapidly „dieselising‟. HCILhas steadily started moving into Tier I and Tier II markets and shall continue to do so byexpanding its dealership across various cities. What more, the company has announced an
  5. 5. investment of INR 2500 Crores1(approx. $460 million) in a plant in the Alwar district ofRajasthan to increase its plant capacity from 1.2 lakh2units to 2.4 lakh units by the end of theyear.Nikon Corporation expecting growing revenue from IndiaJapanese camera giant Nikon Corporation is expecting India to contribute to its global revenue tothe extent of 5% within the next 3 years on account of the growing demand here. The whollyowned Indian subsidiary of the company „Nikon India Private Limited‟ is expected to clock asales revenue of more than INR 1050 Crores for the period 2012-13, showing a growth of 40%from the previous fiscal. The company currently enjoys a 55% market share in the digital SLRcameras and 27% in the compact cameras.Panasonic and Sony working to win greater share in the Indian Electronics MarketThe strategies of the Japanese electronics giants like Panasonic and Sony to overtake their SouthKorean rivals in India seem to be working. Owing to the rapidly expanding middle class in thecountry, the LCD TV sales have become eleven fold since 2007 and the sales for other electronicdurables like refrigerators, washing machines and air conditioners have doubled during the sameperiod. Panasonic has focused on developing products specifically for local demands whereasSony has focused on training shop workers as per the needs of the Indian retail market.Tochu and Toyota Tsusho contending to invest in LNG terminal in GujaratThe GSPC LNG terminal at Mundra, Gujarat, has found prospective investors in Japan‟s Tochuand Toyota Tsusho who have been contending to invest in the said terminal for a 25% stake. TheGSPC LNG is a JV between GSPC and Adani Group with the former holding 50% stake in theMundra project, the latter holding 12.5%. The remaining share shall be allotted to a new strategicinvestor.Komatsu to exit from its JV with L&TThe Japan mining equipment maker Komatsu will exit from its equal Joint Venture with Indianpartner Larsen & Toubro (L&T) named “L&T Komatsu” by selling its stake to L&T. L&T1(1 crore = 10 million)2(one lakh = 100,000)
  6. 6. would continue to fulfill the Indian market requirements till Komatsu sets up its ownmanufacturing facilities in India. Where L&T will continue its manufacture of the constructionequipment and hydraulic components, Komatsu will be responsible for production of Komatsuequipment.Yamaha to invest INR 1500 Crores for a Manufacturing facility in ChennaiJapan‟s Yamaha shall soon make India the base for manufacturing low-cost motorcycles for theglobal market and has planned to invest INR 1500 Crores on a manufacturing facility at Chennaiwhich will also house the company‟s second R&D centre. The company plans to establish astrong foothold in the mass volume segment by bringing a new range of low cost products anddoubling the sales by 2015.NHK Springs coming up with its Second Plant in IndiaNHK Springs India Ltd has started construction of their 2nd plant in India at Sri City, whichshall come with an investment of INR 300 Crores, lay spread over 18 Acres and manufacturecoil springs and stabilizer bars for the automobile industry. The Japan based company is presentin 11 countries and its clientele includes Toyota, Nissan and Ford.Nippon Investment & Finance raises its stake in Welspun CorpThe Japanese Private Equity unit of Daiwa Finance Company Limited, Nippon Investment andFinance Company has raised its stake in Welspun Corp to 2.1% from the earlier 1.55% bybuying 13.9 lakh shares in a block deal worth INR 7.83 Crores. Welspun Corp, a part of theWelspun Group, offers solutions in line pipes with a capacity to manufacture Longitudinal,Spiral and HFERW / HFI pipes, coating, bending and double jointing facilities, thereby giving a360 degree pipe solution to its customers.Tata Elxsi and AISB partner to incubate Tech Start-upsTata Elxsi and AISB Holding Private Limited have partnered to provide incubation and greatermarket access to technology start ups in Asia. Tata Elxsi runs incub@TE, an incubation centreprogram to support entrepreneurs whereas Singapore‟s AISB promotes business collaborationsand investments in South East Asia, Japan and India with special focus on SMEs and
  7. 7. Entrepreneurs. For the portfolio companies, the partnership will bring access to capital, SouthEast Asian and Japanese markets, and complementary capabilities.India to support Japanese Candidate to the post of President, ADBIndian Finance Minister P. Chidambaram attended a conference hosted by the Japan NationalPress Club where he told that India shall be supporting the former Japanese Vice FinanceMinister for International Affairs Takehiko Nakao for the post of the President of the AsianDevelopment Bank. The post fell vacant after resignation of Haruhiko Kuroda who left to join asthe Governor of the Bank of Japan.
  8. 8. Class Action Suits: Finally an effective weapon in the hands of the Stakeholders- A concept novel in the Companies Bill3A Class Action or a Class Suit means a lawsuit that allows a large number of people with acommon interest in a matter to sue or be sued as a group. The concept which was well prevalentin various developed countries of USA, UK and Singapore has had no existence in India till date.A provision relating to class suits in the legal veins of an economy gives certain edge to thestakeholders for the retrenchment of their rights.Salient Features of Class Action SuitsThe Bill provides that a suit under this clause pertaining to Class Suits may be filed by membersor depositors or any class of them, if they are of the opinion that the management or conduct ofthe affairs of the company are being conducted in a manner prejudicial to the interest of thecompany, its members or depositors.However, the Bill explicitly provides for the requisite number of members empowered to fileclass action as follows:In the case of a company having a share capital, more than one hundred members of the company or; such percentage of the total number of its members as may be prescribed,or any member or members holding more than such percentage of the issued share capital ofthe company as may be prescribed.This would be subject to the condition that the applicant or applicants has or have paid allcalls and other sums due on his or their shares;In the case of a company not having a share capital, more than one-fifth of the total numberof its members.3This article is written by Ms. Shipra Wadhwa of Corporate Professionals, Advisors and Advocates and was first published in Lex Witness(December, 2012)Knowledge CenterWhichever is lesser
  9. 9. The requisite numbers of depositors empowered to file class action should be: More than onehundred in number or more than such percentage of the total number of depositors as may beprescribed, whichever is less, or any depositor or depositors to whom the company owes suchpercentage of total deposits of the company as may be prescribed.The Companies Bill provides that a Class Action Suit may be filed to the Tribunal seeking ordersagainst a Company in the following matters:-Restraining from committing an act which is ultra vires the Articles or Memorandum of theCompany;Restraining from committing breach of any provision of the company‟s Memorandum orArticles;Declaring a resolution altering the Memorandum or Articles of a company as void if theresolution was passed by suppression of material facts or obtained by mis-statement to themembers or depositors;Restraining the company and its Directors from acting on such resolution;Restraining from doing an act which is contrary to the provisions as provided in the Bill orany other law for the time being in force;Restraining from taking action contrary to any resolution passed by the members;Claiming damages or compensation or demanding any other suitable action from oragainst—- the company or its directors for any fraudulent, unlawful or wrongful act or omission orconduct or any likely act or omission or conduct on its or their part;- the auditor including audit firm of the company for any improper or misleading statementof particulars made in his audit report;- any expert or advisor or consultant or any other person for any incorrect or misleadingstatement made to the company.Further, the Bill provides that the Tribunal shall, while admitting a class action suit, take intoaccount that All similar applications prevalent in any jurisdiction have been consolidated into asingle application and a lead applicant is appointed amongst themClass Action Suit vis-à-vis Suit for Oppression and MismanagementSection 397 and 398 of the Companies Act, 1956, as is prevalent on date, deals with the filing ofpetition before the Hon‟ble Company Law Board in the cases of oppression and mismanagement.One major practical difference between the concepts of oppression and mismanagement and thatof class suits is that the latter also allows depositors to take an action against the companywhereas no such provision is there in the former. Also noteworthy is that, in the case of suit foroppression and mismanagement, where action can be taken only against the company and its
  10. 10. statutory appointees, the Bill allows that a class suit can be filed even against an expert oradvisor or consultant or any other person for any incorrect or misleading statement to thecompany and also against an auditor for any improper or misleading particulars.Besides theses, class action suit can be filed against the management or directors of company forrestricting them to do one or more particular action, however petition u/s 397 & 398 is filedagainst management for various instances of past mismanagement and praying not to indulge infuture mismanagement of functions of company.Impact of ChangeHere I discuss the impact this particular provision relating to class action suits will have on thestakeholders: As far as stakeholders are concerned, the provision seems to definitely be anadvantageous one to this segment. While earlier the only recourse available to the shareholdersof a company was that of filing of a petition for oppression and mismanagement, now classaction suit gives the stakeholder an additional right and several more grounds to fight for theirrights on any abuse of powers by the company, its management or for that matter even theauditors and consultants.The deposit holders who earlier had no other alternative than to file civil suit, are also nowenabled to take action against any wrongful acts of the company or other specified persons,which means that they may find themselves in more secured territory now.Including auditors and consultants of a company within the ambit of class action suit, besides thecompany and management, has provided additional empowerment to the stakeholders to take acall against such persons including the company for the specified list of wrongful acts whichmay be conducted by them. Another impact of this will be that experts, advisors and auditors of acompany will now act more carefully and diligently before advising anything to the companyand its management.Needless to say, this provision is likely to encourage faster action and speedy disposal of matterscalling immediate attention and it is a good provision for combining all similar applications filedanywhere against the specified person for stated misconduct.The provision to enable stakeholders to claim damages from the company or its directors andother specified person with reference to the expenses of class suit is also a positive andencouraging move for stakeholders. Higher penalties and mandatory imprisonment, if provedwrong would act as a deterrent to any fraudulent, unlawful or wrongful act or for any improperor misleading statement through.
  11. 11. ConclusionThe lack of enablement of Class Action suits in India was largely felt in the recent past when thecountry was jolted by some corporate scams, mincing the trust, confidence and sentiments of thestakeholders. At that time need for provisions which could protect the interests of and fight forthe rights of innocent stakeholders by empowering them was felt. The enactment of theCompanies Bill will thus open vistas of recourse options for the stakeholders of the company.DISCLAIMER: The entire content of this document has been developed on the basis of relevant statutoryprovisions and as per the information available at the time of the preparation. Though the author has made utmostefforts to provide authentic information, however, the material contained in this document does notconstitute/substitute professional advice that may be required before acting on any matter. The document has beenproduced only for the informational purposes; the author and the firm expressly disclaim all and any liability to anyperson who has read this document, or otherwise, in respect of anything, and of consequences of anything done, oromitted to be done by any such person in reliance upon the contents of this document.
  12. 12. CONTACT USPANKAJ SINGLAJapan Desk, Corporate ProfessionalsDELHI (Head Office)D-28, South Extension Part - I, NewDelhi – 110049Tel: +91-11-40622200Dir: +91-11-40622293Fax: +91-11-40622201Mob:+91-99715-08320Email: pankaj@indiacp.comMUMBAI:Mastermind- I, Royal Palms Estate, Aarey Colony,Goregaon East, Mumbai -400065Tel: +91 9820079664Fax: +91 9810037390Email: info@indiacp.comFARIDABAD (DELHI NCR):565, Sector-7B, Faridabad, Haryana-121006Tel: +91 129 4061130Fax: +91 129 2241017Email: info@indiacp.comBedford (UK)2-4 Mill Street, Bedford MK40 3HD U.K.Tel: +44 (0) 2030063240Fax: +44 (0) 2030063241Email: info@indiacp.com

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