INDEXIndo-Japan Trade & Investment Highlights India and Japan to Set-Up Information and Communication Technology Working Group to Boost Bilateral Trade Suntory Explores Acquisition Route to Tap Indian Liquor Market Japan Keen to Help India Achieve its Target of Eightfold Expansion in Solar-Power Output Nissan Pushes Aggressively to Double Sales in India Japanese Giant YKK AP Buys Aluminium Extrusions Business of Bhoruka Aluminium Japan Seeks Relaxation of Banking Norms for Foreign Banks Operating in India Nissan to Set up a 1,700 Crore Plant on the Outskirts of Chennai Japan’s All Nippon Airways to be the Next Gateway Carrier Japanese Financial and Retail Chain 7-Eleven is Considering Entering the Indian White Label ATM Space Japanese Auto-Component Makers to Enter India through Set-Up in Tamil Nadu Japan’s KYB Corporation acquires 50% stake in Conmat System Private Limited Japanese Manga for IndiaKnowledge Centre Corporate Social Responsibility
Indo-Japan Trade & Investment HighlightsIndia and Japan to Set-Up Information and Communication Technology Working Groupto Boost Bilateral TradeIndia and Japan have agreed to set up working group of Information and CommunicationTechnology (ICT) in order to provide a boost to the bilateral trade between the two nations.Indian Telecom and IT Minister Mr. Kapil Sibal put forward the proposal during his visit toJapan to encourage Japanese investment in ICT Sector in India.A Joint Working Group between Ministry of Economy Trade and Industry (METI) of Japan andDepartment of Electronics and Information Technology (DEITY) of India will be set up. TheWorking Group is likely to submit their report in three months time.India will also be forming a special Japan desk to focus on Industrial and bilateral relationsbetween the two nations in the areas of ICT and to facilitate the collaboration and coordinationbetween companies from both the countries.Suntory Explores Acquisition Route to Tap Indian Liquor MarketJapanese Liquor major, Suntory Liquors Ltd. is said to be in talks with John Distilleries (JDL) topick-up stake to enter Indian liquor market. JDL is said to be in the process of raising funds inorder to fund their expansion plans in India and abroad.Suntory has been exploring its options in India to set-up presence in the lucrative Indianalcoholic drinks market and may have found its local partner in JDL. Suntory had announced itsIndia entry by acquisition of controlling stake in Narang Connect to tap the non-alcoholic drinksmarket in India last year.Japan Keen to Help India Achieve its Target of Eightfold Expansion in Solar-PowerOutputJapanese companies are looking at exploiting the opportunities in the clean energy market inIndia as Indian Government has offered a range of tax benefits to encourage increasedinvestment. India has set a target of 9,000 megawatts of grid-connected solar plants by 2017,which is more than eight times the current capacity.
Nissan Pushes Aggressively to Double Sales in IndiaJapanese auto major Nissan has set out an aggressive strategy for India to push its sale volume todouble by next year. Nissan expects to close the current year with sale of 50,000 cars and has amarket share of 1.6%. The company is optimistic about pushing aggressively in the Indianmarket to gain a share of 10% by 2017. Nissan’s plant in Tamil Nadu has a capacity ofmanufacturing 500,000 units a year that it operates jointly with Renault. With an estimateproduction of 300,000 units this year, company exports most of the manufactured units to othercountries.Japanese Giant YKK AP Buys Aluminium Extrusions Business of Bhoruka AluminiumYKK AP has bought the unit of Bhoruka Aluminium Ltd. (BAL), India’s second largestcommercial extrusions firm, in a slump sale. This has come in the wake of BAL’s efforts to paydebts after it became a Non Performing Asset for its lender State Bank of India. YKK Group, asignificant player in the global aluminium products will shell out Rs. 120 Crores to buy out theunit.Japan Seeks Relaxation of Banking Norms for Foreign Banks Operating in IndiaJapan has formally approached the Finance Ministry and the Reserve Bank of India looking forrelaxation in guidelines for its banks operating in India. The Japanese banks Mizuho CorporateBank Ltd. and The Bank of Tokyo- Mitsubishi UFJ Ltd have branches in India, while SumitomoMitsui Banking Corp has a representative office in India. The present norms require the foreignbanks to first open branches in non-metro cities and then shift to urban centers apart fromallocating 32% of their lending to the priority sector consisting of Agriculture, Small scaleIndustries, Export Credit, Education loans, etc.The relaxation sought will target its dwindling profit margins as their main clientele consists oflarge corporate entities and not businesses engaged in rural activities.Nissan to Set up a 1,700 Crore Plant on the Outskirts of ChennaiJapanese automaker Nissan plans to set up a factory producing the Datsun range of low costsmall cars, most likely near the Renault- Nissan factory at Oragadam. This is in an effort torevive the company’s brand which has the potential to contribute to half of its sales.
Japan’s All Nippon Airways to be the Next Gateway CarrierJapan’s ANA has made plans to become a gateway to US for Indian passengers i.e. US boundpassengers will now be able to reach their destination via the Japanese transit hub – Tokyo.Apart from daily flights from Delhi and Mumbai, the carrier plans to increase the capacity forMumbai by threefold. Not only this, it even plans to fly to Chennai four times a week and toBangalore thrice a week.Japanese Financial and Retail Chain 7-Eleven is Considering Entering the Indian WhiteLabel ATM SpaceWhite label ATMs are those Automatic Teller Machines which are set up, owned and operatedby Non Banking Companies. The sector has been opened up for Non-banking entities in India bythe apex bank to increase penetration of alternative payment channels in semi-urban and ruralareas.The Japanese Financial and retail chain player, 7-Eleven, plans to enter the country through itsJapanese banking unit “Seven Bank” which has an ATM business arm.Japanese Auto-Component Makers to Enter India through Set-Up in Tamil NaduA delegation of 46 Japanese MSMEs with more than 40 being from auto component sector areon a spree to explore investment opportunities in Tamil Nadu. This comes after large JapaneseAutomobile companies have taken the country by a storm. Tamil Nadu is home to over 300Japanese companies who would benefit from the entry of these Tier-2 component makers in thisIndian state.Japan’s KYB Corporation acquires 50% stake in Conmat System Private LimitedThe Japanese construction equipment manufacturer has acquired the stake in Conmat SystemsPrivate Limited for Rs. 100 Cr. KYB will have a representative on the Company’s Board whilethe existing management of Conmat will continue to operate. The Company’s name willhowever be changed to KYB- Conmat Private Limited.Over the next 3 years, Conmat, a company having its presence in various segments likeconstruction equipments, material handling equipments, storage solutions and Oil & Gaspipeline, plans to set up a new manufacturing unit and make an investment of Rs. 100 Crore.
Japanese Manga for IndiaAmerican Company Vertical Inc. announced its plans to launch Japanese Manga in the IndianMarket at the 3rd Annual Indian Comic Con held in New Delhi. Japanese Manga has beengaining popularity in India and is made available in the country by online book stores throughimports from other countries. The formal launch of Manga is likely to decrease the costsignificantly and will result in better knowledge about Japanese form of comic art in thesubcontinent.
Knowledge Center CORPORATE SOCIAL RESPONSIBILITYCorporate Social Responsibility is now accepted as a means to achieve sustainabledevelopment of an organization. Hence, it needs to be accepted as an organizational objective.The Companies Bill, 2012 will make Indian companies to consciously work towards thatobjective, as it requires a prescribed class of companies to spend a portion of their profits onCSR activities.Businesses can no longer limit themselves to using resources toengage in activities that increase their profits. They have to besocially responsible corporate citizens and also contribute tothe social good. Corporate Social Responsibility (CSR) isabout integrating economic, environmental and socialobjectives with a company’s operations and growth. Manyconsider CSR philanthropy, but that is a limited definition. Anorganization can accomplish sustainable development if CSRbecomes an integral part of its business process.CSR impacts almost every area of operations: governance and ethics; employee hiring, providingopportunity; stakeholders benefit sharing and energy usage and environment protection. TheCompanies Bill, 2012 intends to inculcate the philosophy of CSR among Indian companies.STIPULATIONS OF THE COMPANIES BILL, 2012 Every company with net worth of Rs 500 crore or more, or turnover of Rs 1,000 crore or more or a net profit of Rs 5 crore or more during any financial year to constitute a CSR Committee of the Board consisting of three or more directors, of which at least one director shall be an independent director The Board’s report to disclose the composition of the CSR Committee The main functions of the CSR Committee are to:
(a) Formulate and recommend to the board, a CSR policy indicating the activity or activitiesto be undertaken by the company as specified in Schedule VII of the Act;(b) Recommend the amount to be spent on these activities; and(c) Monitor the company’s CSR policy periodically.After the CSR Committee makes it recommendations, Board of the company shall approvethe CSR Policy and disclose contents of such policy in its report and also place it on thecompany’s website. Further, details about the policy developed and implemented by thecompany on CSR initiatives during the year to be included in the Board’s report every year.Board to ensure that the activities listed in the CSR Policy are undertaken by the companyBoard to ensure that at least 2% of average net profits of the company in the threeimmediately preceding financial years are spent in every financial year on such activity.Preference to be given to the local area and areas around the company operates for CSRspending.If a company fails to provide or spend such amount, Board to specify reasons in its reportfor that failureCompanies required to comply with CSR shall give additional Information by way of notesto the Statement of Profit and Loss about the aggregate expenditure on CSR activities.Schedule VII of the Companies Bill 2012 prescribes activities that may be included bycompanies in their CSR policies Eradicating extreme hunger and poverty; Promotion of education; Promoting gender equality and empowering women; Reducing child mortality and improving maternal health; Combating human immunodeficiency virus, acquired immune deficiency syndrome, malaria and other diseases; Ensuring environmental sustainability; Employment enhancing vocational skills; Social business projects; Contribution to the Prime Ministers National Relief Fund or any other fund set up by the central government or the state governments for socioeconomic development and
relief and funds for the welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women; and Other matters as may be prescribed.EXISTING ACT:There are no mandatory provisions in The Companies Act, 1956 on CSRIMPACT/ INDUSTRY RESPONSEWith CSR spending becoming mandatory for prescribed class of companies, there is bound to beincreased engagement of companies with social and development projects. So far, there wereonly voluntary guidelines for companies to follow. The rationale for CSR activity is that corporates earn their profit by exploiting different resources of the society, and so a portion of the benefit derived by them should be channelled for the betterment of society. Though compulsory CSR spending may seem burdensome for some class of companies, it will create of a sense of responsibility among corporates, especially when they see benefits in the long term. Children, women, uneducated, and unemployed would be among the beneficiaries as CSR activities may be focused on them. The intention of policy makers is quite clear - to report business community’s contribution for fulfilment of social, environmental and economic responsibilities. While contribution to the local community is a good objective, businesses should choose social, environmental and economic activities that contribute to society at large. CSR activities will also help improve the image of a company within the society as one that cares for the community. Significantly, there is no penalty for defaulting on CSR norms. Only an explanation is to be given by the board in its report for such non-compliance. So, it seems there is no real coercive factor. The Government has adopted a “Gandhi wad” with the provision - either contribute to society or inform to society why you are not contributing.Existing CSR Activities of some companies
Company Name Major CSR Initiatives ITC Ltd e-Choupal, social & farm forestry, watershed development, womens empowerment, livestock development, primary education Infosys Employees take up social causes like education, rural rehabilitation and inclusive growth. energy conservation, water sustainability, afforestation, waste management, awareness on carbon footprint Jubilant Work Basic healthcare facilities, supporting government rural primary Sciences education system, developing resource pool through vocational training programmes Reliance Health, education, infrastructure development (drinking water, Industries Ltd improving village infrastructure, construction of schools etc.), environment (effluent treatment, tree plantation, treatment of hazardous waste), relief and assistance in the event of a natural disaster, and miscellaneous activities such as contribution to other social development organizationsIllustration of Expected contribution for CSR after the CSR provisions come into force: No. Name of the companies Average Profits Proposed contribution in CSR (of the FY 2009- (2% of the Average 10, 2010-11, Profits) 2011-12) (Amount in Rs. (Amount in Rs. millions) millions) 1. GAIL (INDIA) 34,516.03 690.32 LIMITED 2. HINDUSTAN 23,998.00 479.96 UNILEVER LTD 3. Infosys 69,053.33 1,381.07 4. Larsen & Toubro Ltd 42,633.03 852.66 5. NTPC Ltd 90,181.73 1,803.63
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