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Indo-Japan Trade and Investment Bulletin May 2013


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Indo- Japan Trade and Investment Bulletin Highlights:
• L&T – Sojitz Partner for Freight Corridor Deal
• Japan keen to cooperate with India in Nuclear-Energy Programs
• Bilateral Energy Cooperation between India and Japan
• Japanese Scholar awarded Padma Shri
• Bhansali Engineering forms a 50:50 Polymer JV with Nippon A&L
• Network18 sells Webchutney to Dentsu
• Sumitomo Rubber Industries to acquire Apollo Tyres’ South Africa Unit
• Mitsubishi-Hitachi Metals acquires Concast India Limited
• Panasonic boosts its Flat-Panel TV plans with New Plant in North-India
• Honda plans to open Company-Owned Stores in India
• Techpro looks East for Better Thermal Technology

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Indo-Japan Trade and Investment Bulletin May 2013

  1. 1. 2013Indo-Japan Trade & InvestmentBulletinMay IssueJapan Desk, Corporate Professionals
  2. 2. Indo-Japan Trade & Investment Highlights L&T – Sojitz Partner for Freight Corridor Deal Japan keen to cooperate with India in Nuclear-Energy Programs Bilateral Energy Cooperation between India and Japan Japanese Scholar awarded Padma Shri Bhansali Engineering forms a 50:50 Polymer JV with Nippon A&L Network18 sells Webchutney to Dentsu Sumitomo Rubber Industries to acquire Apollo Tyres’ South Africa Unit Mitsubishi-Hitachi Metals acquires Concast India Limited Panasonic boosts its Flat-Panel TV plans with New Plant in North-India Honda plans to open Company-Owned Stores in India Techpro looks East for Better Thermal TechnologyKnowledge Centre Stamp Duty on Share Certificates – A Question of JurisdictionINDEX
  3. 3. L&T – Sojitz Partner for Freight Corridor DealConsortium of India’s Larsen & Toubro (L&T) and Sojitz Corporation of Japan is likely to beawarded the contract of Rs. 6,700 crores (1 crore = 10 million) railways contract for the IndianRailway-owned Dedicated Freight Corridor Corporation (DFCC) project. The consortiumbetween L&T and Sojitz is said to have placed the lowest bid and won both the financial andtechnical contracts.The project work includes designing and construction of 640km twin-track line that will formpart of the western dedicated freight corridor (DFC). The track project, which is part of the1,483km western corridor proposed between Dadri (near Delhi) and Jawaharlal Nehru Port (nearMumbai), involves connecting Rewari in Haryana and Palanpur in Gujarat.Japan keen to cooperate with India in Nuclear-Energy ProgramsIndia and Japan have deepened the bilateral ties through co-operation in economic and defencematters. Both the countries have also reopened the nuclear cooperation talks that would benefitJapanese companies looking to sell nuclear reactors and technology to India. India and Japanhave been holding talks on nuclear-energy cooperation since the year 2010 but the accident atFukushima nuclear power plant in 2011 had paused the bilateral discussions on the subject.However, signing of atomic-power treaties with Turkey and UAE by Japanese Prime MinisterShinzo Abe has helped accelerate the process.Bilateral Energy Cooperation between India and JapanJapanese Prime Ministers Shinto Abe and his Indian counterpart Dr. ManmohanSingh highlighted the importance of strengthening bilateral energy cooperation between the twocountries as they appeared satisfied with the successful outcomes of the 5th and 6th India-JapanEnergy Dialogue. In a joint statement, both the countries emphasised on the need and benefits ofstrengthening energy cooperation including in areas of renewable energy, Clean CoalTechnologies (CCT), institutional issues as well as transmission and distribution system in powersector.Indo-Japan Trade & Investment Highlights
  4. 4. Both the leaders also praised cooperation between both the countries through the LNG Producer-Consumer Conference and welcomed the progress of a joint study on pricing of LNG. Indiaexpressed interest in cooperating with Japan in natural gas extraction from methane hydratedeposits under the sea.Japanese Scholar awarded Padma ShriPrime Minister Manmohan Singh, during his visit to Japan, gave Padma Shri award, the state’sfourth highest civilian recognition, to Japanese scholar Noburu Karashima for his contribution tothe field of literature and education. Mr. Karashima was unable to visit New Delhi in April to getthe award from the Mr. Pranab Mukherjee, President of India, due to health reasons. Mr.Karashima, fluent in Tamil and considered authority on medieval south Indian inscriptions, hasspent time in India as a research scholar on South Indian history and epigraphy at the Universityof Madras in Chennai.Bhansali Engineering forms a 50:50 Polymer JV with Nippon A&LBhansali Engineering Polymers Limited (BEPL) has entered into an equal JV with Japan’sNippon A&L Inc. to manufacture ABS polymer. Nippon’s specialised grades of ABS polymerare approved by the Japanese automobile manufacturers across the globe. The JV will provideBEPL access to intellectual property of Nippon, the technical assistance, recipes, compounds,sales support, R&D support, new application development for manufacturing ABS and otherresins.Currently, the annual demand for ABS polymer in India is estimated at 150,000 tonne androughly 25% of the total demand is met through imports (mostly from Japan). The JV targets tosatisfy 50% of the import demand locally by locally making available high quality ABS at costeffective price to the automotive sector.Network18 sells Webchutney to DentsuJapanese ad powerhouse Dentsu has entered into an agreement with Capital18, venture capitalarm of Network18, to acquire its stake in digital ad and consulting agency Webchutney.Capital18 has a majority stake in the company and the divestment of stake is likely to generate areturn of over 300%.Network18 holds a total of 70% stake in the company through Capital18 and Capital18 Fincap.Post-acquisition, Webchutney will become part of the Dentsu India group of companies.
  5. 5. Sumitomo Rubber Industries to acquire Apollo Tyres’ South Africa UnitSumitomo is all set to acquire Apollo Tyres’ South African, subsidiary of Indian Tyres majorApollo Tyres, business along with a passenger car tyre plant to Sumitomo Rubber Industries. In adeal valued $60 million (about Rs340 crore), Sumitomo will also acquire Ladysmith Tyre plantand Dunlop Brand rights in Africa.The deal, however, does not include the Durban plant of Apollo which manufactures truck andbus radial tyres and off highway tyres that are used in the mining and construction industries.Sumitomo will get a manufacturing location on the African continent and control over theDunlop brand. Apollo holds the right to sell Dunlop brand in 32 African countries.Mitsubishi-Hitachi Metals acquires Concast India LimitedMitsubishi-Hitachi Metals Machinery, Inc. has concluded an agreement with Concast IndiaLimited (CIL), a supplier of casting machines to acquire controlling stake in the company. Themove is targeted at increasing footprints in Indian metal making machinery market. The deal willalso enable the Japanese company to access markets in Middle East and Africa.Established in 1973, Mumbai headquarters company CIL currently employs around 200 workersand has built a strong reputation for billets and rounds. The company exports to clients around 30countries on the globe including Middle-East, Africa and South-East Asia.Panasonic boosts its Flat-Panel TV plans with New Plant in North-IndiaJapan’s number 2 flat-panel TV manufacturer may be struggling in the international market tomake its television business profitable, is building capacity in India through a new factory nearDelhi to fuel sales growth and meet local regulatory requirements. The Osaka based companyalso plans to start manufacturing semiconductors in India as the local market, which at present isworth $8 billion, is rapidly expanding at a rate of 7%-8% PA.Honda plans to open Company-Owned Stores in IndiaHonda Motorcycle & Scooter India (HMSI), the Indian subsidiary of Japanese automobile majorHonda Motor Company, is planning to open company owned retail outlets to sell its entire rangeof products under one roof. The Company has applied to the Foreign Investment PromotionBoard (FIPB) for approval to set-up 100% owned retail outlets in India. The government hadrecently opened up the much debated retail sector for foreign investment; foreign investors havebeen allowed to invest upto 100% in single-brand retail sector after obtaining prior approval
  6. 6. from FIPB. Honda, upon approval, will be the first foreign auto company in India to ownexclusive stores in the country.Techpro looks East for Better Thermal TechnologyTecpro Systems Ltd has been in talks with Mitsubishi Heavy Industries Mechatronics SystemsLtd. to acquire technology to manufacture electro-static precipitators (ESPs) for thermal powerprojects. The Chennai headquartered company is said to have formalised the understanding withMitsubishi by entering into an agreement.Techpro plans to manufacture ESPs at the new plant it is building at Sri City near Chennai.Given the size of the thermal power market in India, the tie-up with Mitsubishi is supposed tohave the potential of business of INR 500 Crores a year. Moreover, the ESPs manufactured withMitsubishi technology will be smaller in size and more efficient in reducing running cost.
  7. 7. Stamp Duty on Share Certificates – A Question of Jurisdiction1This note discusses the issues which have risen due to receipt of notice from the Collector of Stamps, Delhi, bycompanies registered in the National Capital Territory of Delhi, for demand of stamp duty on the share certificatesissued by them as per the rates applicable in the National Capital Territory of Delhi.The basic issues amongst corporates as regards these notices are outlined below:1. Place of levy of stamp duty - Registered Office of the Company or where the Board Meeting for issue ofshares is held?2. Value on which stamp duty is to be charged and paid on issue of share certificates?Indian Stamp Act 1899 is the parent Act, which was enacted by the legislature as a fiscal statute,the principal object of which is to secure revenue of the government in form of stamp duty. TheConstitution of India gives powers to State Governments to enact laws or make amendments tothe Indian Stamp Act, 1899, for its application to their respective jurisdictions for the deeds,documents and instruments executed therein except for those on which the Union of India hasbeen authorized to levy and collect stamp duty.Place of levy of stamp dutyBy virtue of the constitutional powers, levy and collection of stamp duty on issue of sharecertificates falls within the sphere of state legislature and accordingly many state governmentsadopted the provisions of Indian Stamp Act, 1899 for its applicability in their region with orwithout any modification or amendments while others opted for enactment of separate statutegoverning the levy and collection of stamp duty in their jurisdiction.For instance, legislature of the National Capital Territory of Delhi and State of Haryana haveadopted the provisions of Indian Stamp Act, 1899 with modifications and amendments in the Actwhile the legislature of Uttar Pradesh earlier adopted the provisions of Indian Stamp Act, 1899,but in the year 2010, enacted their separate statues governing levy and collection of stamp dutyin its jurisdiction.1This article is written by Mr. Abhishek Bansal of Corporate Professionals, Advisors and Advocates and was first published on Mondaq.Knowledge Center
  8. 8. Hence, the levy and payment of stamp duty on issue of share certificates is governed by theprovisions of stamping laws as applicable to the respective state, where the instrument is firstexecuted, since the subject falls within the State List of the Constitution of India.However, the Collector of Stamps, Delhi has recently issued notices to over 20,000 companies inDelhi calling for stamp duty payment on share certificates issued by them, taking a view thatstamp duty is to be paid where the registered office of the Company is situated, creatingperplexity in the minds of corporate and legal professionals as to the real incidence of levy ofstamp duty on issue of share certificates. Therefore, all the companies having their registeredoffice in the National Capital Territory of Delhi and have not paid the duty on share certificatesto the Collector of Stamps, Government of Delhi should ensure due compliance of stamp law inorder to validate their instruments evidencing the rights and entitlements on the shares containedtherein either by making due payment or by taking up the matter with the authority, in case theduty is not leviable in Delhi.Value on which stamp duty is to be chargedAnother important issue with regard to stamp duty is the determination of the value on which thestamp duty to be levied i.e. whether it should be the face value or the consideration value whichmeans face value plus premium, if any, paid. The Indian Stamp Act in respect of issue of sharesin physical form provides for levy of duty on value of shares and where shares are issued indematerialized form, the duty shall be levied on the amount of securities issued.It is to be clarified that all the aforementioned issues shall be determinable in strict interpretationof the law governing the subject matter with due consideration of the facts of each case.For reference, rates of stamp duty in Delhi, Haryana and Punjab for a certificate or otherdocument evidencing the right or title of the holder thereof, or any other person, either to anyshares, scrip or stock in or of any incorporated company or other body corporate, or to becomeproprietor of shares, scrip or stock in or of any such company or body is mentioned below:Name ofthe StateArticle No. forsharecertificatesRate of stamp duty onissue of ShareCertificatesArticle No. forLetter ofAllotmentRate of stampduty on Letterof AllotmentNationalCapitalTerritory ofDelhiArticle 19 ofSchedule I-A ofIndian Stamp Act1899One Rupee for everyone thousand or a partthereof, of the value ofthe shares, scrip orstock.Article 36 ofSchedule I-A ofIndian StampAct 1899One Rupee
  9. 9. State ofHaryanaArticle 19 ofSchedule I-A ofIndian Stamp Act1899Forty Naye Paise Article 36 ofSchedule I-A ofIndian StampAct 1899Thirty NayePaiseState ofPunjabArticle 19 ofSchedule I-A ofIndian Stamp Act1899Ten Rupees Article 36 ofSchedule I-A ofIndian StampAct 1899Fifteen RupeesState ofUttarPradeshArticle 20 ofSchedule to UPStamp Act 2008One Rupee Article 37 ofSchedule to UPStamp Act 2008One RupeeDISCLAIMER: 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.
  10. 10. 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: