JOINT VENTURES, CONCEPT OF JOINT VENTURES, HISTORY OF JOINT VENTURES, TOP JOINT VENTURES COMPANIES IN INDIA, REASONS OF JOINT VENTURES, BENEFITS OF JOINT VENTURES, TYPES OF JOINT VENTURES, etc.

1. Joint Ventures
CHARAK RAY
libra.charak@gmail.com

2. JOINT VENTURES
Concept of Joint Venture
This is a legal concept found between many companies in India. India
ranked as the world’s sixth largest economy by Gross Domestic Product
(GDP) in 2017 and has the world’s third highest Purchasing Power Parity,
according to statistics compiled by the World Bank and various other
agencies. The Make In India initiative has attractive massive Foreign
Direct Investments (FDI) and Foreign Institutional Investments (FIIs) into
India since 2014. Additionally, India is also one of the largest consumerist
markets in the world.
What This Means? These figures indicate that doing business in India is
worthwhile for any foreign company. While this country is home to
subsidiaries of several Multinational Companies), a growing number of
companies are now envisaging interest in opening Joint Ventures or JVC
in India.
This means, companies tie-up with other partners to launch a company.
Usually, a JV involves synergizing technical expertise from one company
and utilizing physical, manpower and other resources of the local partner
to create a profitable enterprise.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

3. JOINT VENTURES
History of JVC in India
Joint Ventures in India is not a new phenomenon. They began during
British colonial rule of the Indian subcontinent. Post-1947, some foreign
companies withdrew their holdings and sold stakes to Indian partners.
However, since the 1960s, several new JVs have emerged in India,
especially in very vital sectors.
While some companies are JVs between Indian and foreign partners,
others are excellent examples of Indian firms combining forces with
international majors to launch world-class enterprises that offer products
and services within and outside this country.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

4. JOINT VENTURES
Top JV Companies in India
1. Hindustan Aeronautics Ltd
Hindustan Aeronautics Limited is India’s aerospace and defence
company with headquarters in Bangalore, Karnataka. HAL is one
the ‘Navratna’ companies of India, meaning, it is one of the
drivers of this country’s economy while being of vital service to
nation.
HAL has the highest number of JVs in India. They include JVs for
making fixed wing fighter and civilian aircraft, aircraft engines,
helicopters, defence systems and aerostructures and myriad other
aerospace and aeronautics related products.
HAL has JVs with Rosoboronexport, Aviazapchast and Mikoyan-
Gurevich (MiG) of Russia, British Aerospace and Rolls Royce
Holdings Ltd of UK, Elbit Systems, Israel, Merlin-Hawk and
Edgewood Ventures of the USA, Snecma of France, Canadian
Aerospace as well as Indian firms Tata Technologies, Infotech
Enterprises, Samtel Group and ICICI Bank, among others. These
projects are worth billions of US Dollars and serve defence needs
India and partner countries.

5. JOINT VENTURES
Top JV Companies in India
2. Vistara
Indian Joint Venture with a foreign company. Vistara is the brand name
of Tata SIA Airlines Ltd, a JV between India’s corporate giant Tata Sons
and Singapore Airlines (SIA).
Tata Sons holds 51 percent stake while SIA controls the remaining 49
percent in the airline.
Vistara is one the most successful joint ventures company in India and is
estimated to hold about four to five percent share of India’s domestic
aviation market.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

6. JOINT VENTURES
Top JV Companies in India
3. Tata Global Beverages
Tata Global Beverages, a division of Tata Sons has several JVs in India that
produce Fast Moving Consumer Goods. These include:
NourishCo Beverages Ltd: With PepsiCo of USA to produce Himalayan
brand of spring water tapped from sources in Himalaya range, Tata Gluco
Plus energy drink and Tata Water Plus, bottled drinking water fortified
with Zinc and Copper.
Tata Starbucks Pvt.Ltd: With Starbucks Corporation, USA which runs a
chain of Starbucks brand coffee shops across India.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

7. JOINT VENTURES
Top JV Companies in India
4. BrahMos Aerospace
BrahMos Aerospace made history in 2001 when it tested the world’s
fastest cruise missile capable of flying at supersonic speeds of Mach-2.8
to Mach-3.
The name BrahMos is derived from names of Brahmaputra river of India
and Russia’s capital, Moscow.
It is a JV between India’s Defense Research and Development
Organization (DRDO) and Russia’s NOP Mashinostoryenia.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

8. JOINT VENTURES
Top JV Companies in India
5. Bharti-AXA General Insurance Co Ltd
Bharti AXA General Insurance Co Ltd is a JV between India’s leading
business group Bharti Enterprises and insurance major from France,
AXA.
Bharti AXA offers a comprehensive range of insurance products ranging
from vehicle, health, travel, home and education, among others. Bharti-
AXA General Insurance is among the pioneers of JV in India’s insurance
sector.
Excerpts: https://thingsinindia.in/joint-venture-companies-in-india/

9. JOINT VENTURES
Meaning: A joint venture is the
pooling of resources and expertise
by two or more businesses, to
achieve a particular goal by
sharing the risks and rewards
involved in it. When two
businesses agree to join together
for a common purpose and
benefit, it gives rise to joint venture.
Such companies/ organisations may belong to private sector,
government sector or a foreign country. In India, there are no
separate laws for the joint ventures between the companies
and the provisions of the Companies Act, 2013 are applicable.

10. JOINT VENTURES
Reasons for Joint Ventures
• Business expansion • Sharing of control
• Development of new
products
• Strategic Alliance
• Moving into new markets particularly in another country
• Sharing of capital Sharing
of technology
• Sharing of human resources • Sharing of risks and
rewards

11. Benefits of Joint Ventures:
Increased resources and capacity
Access to new markets & distribution
network
Access to technology Innovation
Low cost of production
Establishment of brand name
Strengthening of relationships
JOINT VENTURES

12. Types of Joint Ventures:
JOINT VENTURES
Joint Venture
Equity Based
Company LLP Partnership
Contractual
Cooperation
Agreement /
Strategic Alliance

13. (A) Equity based Joint Venture
Meaning: Equity based joint venture is a distinct business entity
which is created and jointly owned by two or more parties.
Examples: Companies, partnership firms, trusts, limited liability
partnership firms, venture capita funds etc.
Features:
(a) Creation of new entity or one of the entity may join into the
ownership the other entity
(b) Based on memorandum of understanding to clear the terms &
conditions
(c) Shared ownership
(d) Shared management
(e) Shared responsibilities
(f) Shared profits and losses
JOINT VENTURES

14. (B) Contractual
1. Cooperation Agreement
In such kind of joint venture, a new jointly-owned entity is not
created, rather it is based on an agreement to work together.
example of such joint venture is franchise business.
Features:
(a) No sharing of ownership
(b) Two or more parties have a common intention – of running a
business venture
(c) Each party brings some inputs
(d) Both parties exercise some control on the business venture
(e) The relationship is not a transaction-to-transaction relationship
but has a character of relatively longer duration
JOINT VENTURES

15. 2. Strategic Alliance
It is an arrangement between two companies that have decided to share
resources to undertake a specific, mutually beneficial project.
For example, a company manufactures and distributes a product in the
United States and desires to sell it in other countries. Another company
wants to expand its product line with the type of product the first
company creates, and has a worldwide distribution channel. The two
companies establish an alliance to expand the distribution of the first
company’s product.
Partners may provide the strategic alliance with resources such as
products, distribution channels, manufacturing capability, project funding,
capital equipment, knowledge, expertise, or intellectual property. The
alliance is a cooperation or collaboration which aims for a synergy where
each partner hopes that the benefits from the alliance will be greater than
those from individual efforts.
JOINT VENTURES

16. Real life examples on Strategic Alliance
(a) NCR and Tata Consultancy Services Limited Enter into Strategic Alliance
https://www.businesswire.com/news/home/20180619005222/en/NCR-Tata-
Consultancy-Services-Limited-Enter-Strategic
(b) Volkswagen ticks up after forging ‘strategic alliance’ with Ford
https://www.ft.com/content/854ba002-745b-11e8-aa31-31da4279a601
(c) AT&T Announces Strategic Alliance with Brookfield Infrastructure to Offer
Colocation, Other Services
https://www.businesswire.com/news/home/20180621005176/en/ATT-Announces-
Strategic-Alliance-Brookfield-Infrastructure-Offer
JOINT VENTURES

17. CASE PROBLEM ON JOINT VENTURE
McDonald’s entered Indian market in 1993 as 100% subsidiary (McDonald’s India
Private Limited) which formed 50:50 joint venture with Vikram Bakshi of Cannaught
Plaza Restaurants Private Limited (CRPL) to manage North & East India and Amit Jatia
of Hardcastle Restaurants for West and South India. Indians wanted American taste
but it could not be a substitute for Indian food. The company found that India has a
large number of vegetarians. So, it had to came up with an idea to have separate menu
for vegetarian and non-vegetarian products.
(a) Identify and explain the limitation of international business faced by McDonald’s in
India.
(b) Explain other two limitations of international business.

18. Ans. (a) Cultural and lifestyle issues: Culture and lifestyle are the major problems
while conducting business in other countries. The exporters and investing companies
have to understand the culture of host countries before initiating international
business.
(b) Other limitations of international business
(i) Shortage of goods in exporting countries: When the traders and manufacturers
do/not find favourable market or government policies in their favour, they resort to
sell in other countries.
(ii) Rivalry among nations: There is intense competition between the companies to
sell their goods and services and disturbs international peace.
CASE PROBLEM ON JOINT VENTURE

19. THANK YOU…