1. In association with
ISSUE 16 APRIL 2012
India Watch
Welcome to the Spring edition of Grant
Thornton’s India Watch, in association with the
London Stock Exchange
In this issue we highlight that Grant Thornton Our overview of the Indian economy this
India Watch Smaller Caps Index outperformed all quarter shows that it is proving difficult for
major indices between January and March 2012, the Indian government to support and develop
closing at 24% up. It appears market watchers the economic potential of the country. The
were right to be optimistic. recent state elections have now further dented
The first quarter 2012 witnessed M&A deal the Government’s ability to push through
activity of US$18 billion, in line with activity the economic reforms required. In addition,
levels seen during the corresponding periods the recent Indian Budget 2012 has, in many
in 2010 and 2011. However, the focus in Q1 economists’ views, failed to implement suitable
2012 was domestic deals, particularly internal measures to encourage foreign investment and
restructuring and mergers. Private Equity has also sustainable economic growth.
continued to witness sustained momentum with Our guest contributors, Saket Somani and
US$2 billion worth of deals in Q1 2012 led by Sumir Bhardwaj, Partners at Churchgate Partners,
Healthcare, IT ITES, Banking and Real Estate. outline the elements of a successful investor
relations programme. Indian corporates more
than ever need to proactively attract and maintain
the attention of increasingly selective global fund
managers in order to attract public capital.
Lastly, Nidhi Gupta, tax manager at Walker,
Chandiok & Co, gives us an update on the India
Budget 2012 and the headline tax proposals that
the Indian government announced in March.
If you would like to discuss any of the matters
arising in this issue or how Grant Thornton’s
South Asia group can help you please contact me.
Anuj Chande
Partner, Corporate Finance
and Head of South Asia Group
Grant Thornton UK LLP
T +44 (0)20 7728 2133
E anuj.j.chande@uk.gt.com

2. India Watch - Issue 16 April 2012
The turning tide for
Indian smaller caps?
It appears market watchers were right to be
optimistic. Having fallen 11.27% during 2011,
the Grant Thornton India Watch Smaller Caps
Index outperformed all major indices between
January and March 2012, closing at 24% up
ahead of the previous quarter compared to the
FTSE 100’s 4% rise.
130
120
110
100 –– GT India Watch – ALL
90
–– FTSE 100
–– FTSE AIM ALL-SHARE
80
–– GT India Watch – smaller caps
70 –– FTSE ASEAN
–– FTSE AIM 100
60
–– FTSE AIM UK 50
50
40
30
Dec 11 Jan 12 Feb 12 Mar 12
Source: Thomson Datastream
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3. India Watch Issue
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In a very strong turnaround for Q1 2012, the improved performance among Indian small caps. * The India Watch Index
consists of 31 Indian
India Watch Smaller Caps Index was up 12 points Against a backdrop of small signs of recovery in companies listed on AIM or
on FTSE AIM UK 50 Index and ahead of global the US, some steadying of Europe’s eurozone the Main Market (excluding
GDRs). We only consider
small cap indices (FTSE AIM All-Share Index crisis, and the Indian government’s efforts to companies to be Indian if
and FTSE AIM 100 Index). This gain suggests reduce interest rates and stabilise inflation, Indian they are domiciled in India
and/or foreign companies
investor appetite for Indian SMEs remains strong. SMEs should remain an attractive option for holding Indian assets or
Investment companies
Many of the leading performers in Q1 2012 investors in Q2 and beyond.
with Indian promoters. The
are in the agriculture and energy sectors. Nandan index has been created via
Datastream, a Thomson
Cleantec is a case in point. The rapid growth of Reuters product and is
the India-based biofuel producer is reflected in its weighted by Market Value.
To avoid distortion of index
share price: up from 60p in October 2011 to 98p trends, the two largest
at the end of March 2012. And Nandan is forecast market cap entities, Essar
Anuj Chande Energy and Vedanta
to grow by at least 25% a year until 2014-15 due Partner, Corporate Finance Resource, are excluded.
to strong demand for its high-yielding variety of and Head of South Asia Group ** Data sourced from
Thomson Reuters.
oilseeds. Grant Thornton UK LLP
T +44 (0)20 7728 2133
Other energy companies dominating the
E anuj.j.chande@uk.gt.com
top spots include Oilex, Indus Gas and Mytrah
Energy, which gained 47.06%, 46.85% and
23.66% respectively. The petroleum and natural
gas industry in India has attracted foreign direct
investment worth US$3,332.78 million between
April 2000 and December 2011, according to
data from the Department of Industrial Policy
and Promotion. The industry saw a further
investment of US$196 million between April 2011
and the start of 2012, according to the India Brand
Equity Foundation.
The first quarter of 2012 wasn’t so kind to
West Pioneer Properties. Its delayed reaction
to tightening of monetary policy in 2011 meant
it performed poorly in Q1. But the company’s
efforts to position the Kalyan mall, near Mumbai,
as a leading leisure destination should bolster
its fortunes. The Indian real estate industry as a
whole should see its prospects improve, thanks to
policies to counter the inflationary issues that led
to its decline.
Even for companies suffering poor results,
the news is positive compared to 2011, signalling
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4. India Watch - Issue 16 April 2012
Domestic deal activity bucks
the trend - Overall deal
momentum sustained
The quarter witnessed M&A deal activity of US$18 billion, in line with activity
levels seen during the corresponding period in 2010 and 2011. However, the
focus in Q1 2012 was domestic deals, particularly internal restructuring and
mergers comprising approximately US$13 billion of the total M&A deal value.
The focus on mergers and internal restructuring activities, a trend which gained
prominence in 2011, appears to have intensified in 2012 driven by Vedanta
Group restructuring, estimated to be worth over US$12 billion.
Deal summary: January – March 2012
Q1 Deal Summary Volume Value (US$ billion)
Year 2010 2011 2012 2010 2011 2012
Inbound 23 26 36 1.12 13.75 1.26
Outbound 46 34 26 13.26 1.73 0.69
Cross Border 69 60 62 14.39 15.47 1.96
Domestic & Internal Restructuring 119 82 115 3.05 2.40 16.32
M&A 188 142 177 17.44 17.87 18.27
PE 59 75 118 1.56 2.61 2.01
QIP 9 2 2 0.87 0.53 0.1
Grand Total 256 219 297 19.87 21.01 20.35
It may be too early to conclude a trend based border deals in the past, i.e. Bharti Airtel – Zain
on Q1 2012 cross border activity but deal worth US$10.7 billion in Q1 2010 and BP –
values have significantly declined in the quarter Reliance Petroleum worth US$7.2 billion and
when compared to earlier years. While Indian Vodafone Group Plc – Vodafone Essar worth
companies trade at a premium to their developed US$5 billion in Q1 2011, and we expect more big
market counterparts on the basis of multiples ticket deals in the coming quarters. However,
and valuation ratios, the combination of India’s outbound acquisitions will be approached
growth story and a weakened currency means cautiously, given the prevailing debt crisis in
that India still remains to be a favoured deal Europe and recent proposals outlined in the
destination. Indian 2012 Budget (see article Indian Budget
Indian companies may view European 2012: round up).
businesses as potential targets at relatively low
valuations in order to gain access to advanced
technology and markets; we have seen large cross
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Top M&A deals: Q1 2012
Acquirer Target Sector US$ Million
Sesa Goa Ltd Sterlite Industries Mining 11,927.80
Tech Mahindra Satyam Computer Services IT & ITeS 1,400.00
Piramal Healthcare Vodafone Essar Telecom 618.00
Sesa Sterlite - To be formed Vedanta Aluminium Metals & Ores 473.00
TV18 Broadcast Eenadu Television Network Media, Entertainment & Publishing 395.00
Watson Pharmaceuticals Ascent Pharmahealth Pharma, Healthcare & Biotech 393.00
Sesa Sterlite - To be formed The Madras Aluminium Company Power & Energy 363.00
Binani Industries 3B - fibreglass Co Manufacturing 360.00
Nippon Life Insurance Reliance Capital Asset Management Banking & Financial Services 290.00
Sky City Foundation STel Pvt Ltd Telecom 174.50
M&A sector focus
Top M&A sectors: January – March 2012
A wide range of sectors have contributed to M&A
activity in Q1 2012, led by Mining and IT &ITES
followed by Telecom, Pharma, Metals and Media
& Entertainment.
The Vedanta internal restructuring deal in the
mining sector constituted 65% of M&A values
for the quarter. Other top sectors in terms of
deal value were IT ITES and Pharma which
also witnessed steady volumes, in line with
corresponding periods in past years.
Telecom witnessed a sharp decline in deal value
in the quarter with less than a billion dollars’
worth of deals, when compared to US$ 5 billion
in Q1 2011 and over US$13 billion in Q1 2010.
Mining [65%] However, this is a sector that is set to enter a
consolidation phase post the easing of M&A
IT & ITeS [9%] norms in the telecom sector allowing merged
Telecom [4%] entities to have a market share of up to 60%. The
recent ruling issued by the Supreme Court for
Pharmaceuticals, the cancellation of 122 2G licences has affected a
Healthcare & Biotech [4%] few foreign players such as Telenor, Sistema and
Etisalat.
Metals & Ores [3%] M&A activity in retail and civil aviation sectors
Others [15%] remain muted with the Budget not providing
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6. India Watch - Issue 16 April 2012
Top PE deals: Q1 2012
Investor Investee Sector US$ million
Accel Partners & Tiger Global Flipkart Online Services IT & ITeS 150.00
Temasek Godrej Consumer FMCG, Food & Beverages 137.00
General Atlantic LLC Fourcee Infrastructure Equipments Logistics 125.00
Olympus Capital DM Healthcare Pharma, Healthcare & Biotech 100.00
Government of Singapore Investment Vasan Healthcare Pharma, Healthcare & Biotech 100.00
Morgan Stanley Real Estate Sheth Developer’s Mumbai project Real Estate 90.00
Providence Equity, Macquarie Bank Hathway Cable & Datacom Media, Entertainment & Publishing 72.00
Airro Mauritius Nandi Infrastructure Corridor Infrastructure Management 65.00
3i India Supreme Infrastructure Infrastructure Management 61.00
Warburg Pincus AU Financiers Banking & Financial Services 50.00
NYLIM Jacob Ballas Religare Finvest Banking & Financial Services 40.00
Fidelity Growth Partners Aptuit Laurus Pharma, Healthcare & Biotech 40.00
clarity on FDI in these sectors adding to the woes hands of SEBI registered PE/VC companies With special
of investors. or funds, thereby aligning with the true intent thanks for their
Q1 2012 witnessed sustained momentum of pass though status for the PE/VC funds/ contribution to
in overall M&A deal making, however, the companies. At present, only investments in nine Ankita Arora
remaining part of the year will largely depend on specified sectors are eligible for tax exemptions. and Sowmya
the aforementioned regulatory implications. The removal of the sector restrictions will foster Ravikumar of the
the creation of a more robust domestic venture Grant Thornton
PE capital and private equity industry as most funds India Dealtracker
Private Equity has continued to witness sustained that invest in India operate as foreign investors team.
momentum with US$2 billion worth of deals in from tax-friendly, offshore locations such as
Q1 2012 led by Healthcare, IT ITES, Banking Mauritius or the Cayman Islands.
and Real Estate sectors. The quarter saw Morgan The quarter witnessed negligible activity on
Stanley Real Estate Investment (MSREI), the IPO and QIP front, a continuation of the
investing US$90 million in a realty project after trend seen in 2011. It remains to be seen how deal
more than four years out of the Indian market. activity in the rest of the year will trend, given
continued uncertainty in the European economy,
PE Exits impact of tax regulations introduced in the Budget
We can expect a surge of exits likely in the coming and lack of clarity on the FDI and regulatory
years as funds raised post 2005 reach the end of front. Nevertheless, we believe increased domestic
their investment cycles, thus creating enormous activity and sustained PE momentum augurs well
pressure for exits for this invested capital, for overall deal activity for the rest of the year.
if investors are to maintain or increase their
allocations to India. Considering the fact that the
volatile stock markets are not expected to aid exits
through IPOs, secondary PE deals could become
one of the favoured transaction routes.
The quarter saw PE major Warburg Pincus
exiting from Kotak Mahindra Bank Ltd, garnering
over US$0.6 billion marking the largest exit by
Warburg Pincus after they exited Bharti Airtel, by
encashing US$1.8 billion on their original US$290
million investment in 1999.
Karthik Balisagar
In what we consider a major boost for the Valuations Manager and Assistant
India PE/VC space, the Union Budget 2012-13 Head of Valuations South Asia Group
Grant Thornton UK LLP
has proposed positive initiatives such as 100 per
T +44 (0)20 7865 2475
cent tax exemption on income from exits in the E karthik.balisagar@uk.gt.com
6

7. India Watch - Issue 16 April 2012
Indian economy –
Prospects for slower growth
Headlines in both the UK and India have been dominated by their
respective budgets in the last few weeks and, while much has been
written in the UK about George’s Osborne’s address to parliament
and the subsequent meetings with the Treasury Committee, we
should take this opportunity to look at how Asia’s third largest
economy has fared and reacted to its own budget.
On 16 March, India’s finance minister, Pranab
Mukherjee, announced India’s latest budget and
has faced increasing criticism for delivering what
had been widely considered a weak and, in some
cases, a failed budget. In many economists’ views,
Mr Mukherjee failed to address the level of India’s
public spending as well as failed to implement
suitable measures to encourage foreign investment
and sustainable economic growth.
Mr Mukherjee forecast a fiscal deficit of 5.9
per cent of GDP in the financial year to the end As an example of this, and while appreciating
of March against a previous target of 4.6 per cent. that it is rather biased to pick on a single policy
He also predicted that the deficit would fall to 5.1 in particular, it is difficult to see any real benefit
per cent of GDP for the year ending March 2013. in respect to the introduction of a retrospective
While the budget didn’t contain any major tax on offshore transactions involving India assets
surprises or grand reforms, it also didn’t shut – a move clearly made with Vodafone in mind.
down the increasing number of doubters in The policy is surely only going to deter external
respect to India’s economic growth outlook by investment into India further. It is policies
putting forward a brave plan to revitalise growth like these, however, which are symptomatic
in the country and encourage much needed of the current government and their priorities
foreign investment. concerning economic reform.
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8. India Watch Issue
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As noted in the Financial Times, the weak go into the details in this economic update, there
economic data received from the manufacturing were comments from the political opposition
and mining sectors (two of India’s largest sectors) party which said that the irregularities could
over the last few months has accelerated the shift eclipse the 2G telecom licence scandal which has
of India’s economy to lower growth. India now been at the forefront of political and economic
faces the possibility of a worse performance in debate in India for over a year and a half.
this current fiscal year in terms of growth than it It is, therefore, clear to see that there continues
did in the fiscal year of the global financial crisis. to be substantial and persistent governance issues
To further highlight India’s economic within Indian politics. The number and scale of
mismanagement, the country’s economic growth the political scandals which have come out of
rate dropped to 6.1 per cent in the quarter ended India in a relatively short space of time is totally
31 December 2011. Whilst it should be noted that, unacceptable for an economy which is now very
a growth rate of 6.1 per cent is still significantly much in need of external finance and investment.
more impressive than some of the more developed What’s more, whilst there will always be a long
economies in the West, it is India’s slowest rate in list of countries, companies and individuals
three years. Unfortunately, the recent economic looking to increase their exposure to the Indian
and political reforms have just not been able to economy, the risk level might just have increased
support and develop the economic potential of a little too far for some.
the country.
The recent state elections have now further
dented the Government’s ability to push
through the economic reforms required. Out
Anuj Chande
of the five state polls in early March, Congress
Partner, Corporate Finance
secured a victory in the politically insignificant and Head of South Asia Group
state of Manipur only, while in India’s most Grant Thornton UK LLP
populous state, Uttar Pradesh (c. 200m), the T +44 (0)20 7728 2133
E anuj.j.chande@uk.gt.com
party floundered in fourth place. With more state
elections to come and a general election in 2014,
things are not looking particularly good for the
current Government. Furthermore, and to make
matters worse, the Indian government’s troubles
over recent months have not just revolved around
the economy or the run up to state elections.
There were fresh attacks following a leaked draft
report by the state auditor which warned of
US$20 billion of state losses on the sale of Indian
coal assets.
According to the Times of India, the 110
page report said that the losses were incurred by
allocating coal blocks between 2004 and 2009
outside of an auction process. While we won’t
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9. India Watch - Issue 16 April 2012
An investor relations
program: realising your full
valuation potential
Despite the strong recent flows of Foreign At Churchgate Partners we believe there are 4
Institutional Investors (FII) capital into the building blocks for a successful IR program:
Indian equity markets, Indian corporates more
than ever need to proactively attract and maintain 1 Communication materials: Deliver best in
the attention of increasingly selective global class communication materials that truly reflect
fund managers. This applies equally to Indian the investment case and equity story of the
companies listed in London. Leaving investors company.
to identify the future outperformers in each A quarterly earnings release needs to be
industry sector, without management having geared towards the financial markets and
the opportunity to best present their specific not the press (which is a separate release).
investment case, has direct value implications. Explaining the ‘story’ for the quarter is
These potentially include having to issue equity critical: what mix of pricing and volumes have
at relatively unattractive valuations for ongoing driven revenues, why operating margins may
deleveraging, financing future growth plans have changed, updates on expansion plans,
and meeting upcoming minimum free float commentary on the economic environment
requirements. Ultimately a successful investor and a soft view on the performance outlook to
relations (IR) programme should achieve guide the research analysts’ thought process
an appropriate trading valuation based on a (without financial guidance). This quarterly
continuous and open communication with the earnings release then weaves into the earnings
financial markets. Shareholders recognise the presentations, introduction scripts for investor
appointment of an international IR adviser as part conference calls, corporate presentations and
of management’s ongoing commitment to bridge eventually shapes the management discussion
any market valuation discount. and analysis (MD&A) and Directors
For a CEO to internally prioritise an IR value Report for the annual report. Detail, focus
maximisation program, dedicated corporate and consistency across all communication
resources are a pre-requisite. As CFO’s have platforms (and captured on the IR website tab)
limited time that can be allocated to this role, an are essential. Although the application of social
external IR adviser provides a head of IR not only media for IR programs and online reputation
with operating leverage but ‘fresh’ perspectives management is evolving, it needs to be an
based on international best practices. A quarterly integrated part of the plan.
results press release and attending non deal
investor conferences regularly, whilst helpful, are 2 Research analyst engagement: Drive
far from a differentiated strategy. Furthermore, dialogue with a select group of research
public relations should not be confused with analysts who have recognised industry
investor relations. expertise and are backed by a strong equity
sales force.
Meeting with research analysts on a regular
basis, and ideally in a one on one setting,
to update them on business developments
9

10. India Watch - Issue 16 April 2012
is key to building sell side support. It also engagements in say Singapore, Hong Kong,
helps research analysts in cases where they London, Frankfurt or New York.
are either too bullish or too bearish in their
forecasts. This is particularly important during 4. Market perception study: Proactively
difficult and volatile times, where visibility collecting feedback through a structured
on management’s strategy and operational process on a regular basis provides context
focus is essential for their ongoing dialogue from which to refine and enhance an IR
with their institutional investor clients. Any program.
sense of lack of management commitment to Analysing how the market (buy and
a regular relationship is likely to be hindrance sell side) perceives the company, allows
to the publication of any initiation research management to more actively manage
note or may result in an unnecessary rating research analyst and investor relationships.
downgrade. Limited research coverage is often Benchmarking communication materials and
viewed as a ‘red flag’ by investors. Although key financial/operating metrics with global
a comprehensive research report is the ideal peers identifies areas where financial disclosure
outcome from such a relationship, this can and transparency may be improved. A well-
often take longer than expected due to the constructed market perception study allows
current resource pressures at brokerage firms. management and IR teams to better understand
A management meeting note or a sales force market views and be more effective in their
briefing may also be effective alternatives to time allocation to IR. An experienced IR
explore in addition to a full research report. adviser should be able to provide insights on
the market’s perception of areas including:
3. Global investor access: Access to and strategy, operational strengths and weaknesses,
feedback from leading global EM and sector- financial performance, management and
focused investors, India dedicated funds and IR effectiveness. Soliciting this feedback is
portfolio managers to HNI’s. viewed extremely positively by the financial
Market capitalisation and average daily community.
trading volumes are key criteria which often
limit what type of investor a company can Overall, IR success is measured by a number
attract. It is not uncommon for the largest of different metrics. In addition to how the
global funds to be restricted from investing company trades on a valuation multiple basis,
in companies with trading volumes less than the development of a diverse long-term investor
$5 million per day. As a result of the dramatic base, an appropriate mix of FII and domestic
growth in investor appetite for the emerging investors, the number of analysts actively
markets in recent years, there is a wide and covering the stock, a base of shareholders who
growing selection of funds which are able to are supportive of management’s strategy and
invest in mid/small cap Indian stocks with reduced share price volatility are all indicators
attractive rerating potential. Actively soliciting of positive results. To successfully attract public
and tracking feedback from previous investor capital and achieve some of these goals requires a
meetings and conference calls attendees enables combination of management commitment and the
a company to widen and strengthen its investor implementation of a specifically designed
relationships. Whilst preparing for investor IR program.
conferences, corporates should work more
closely with their IR adviser in selecting those
Saket Somani
investors they would like the host brokerage
Partner
firm to specifically target. Churchgate Partners
Working with an international adviser saket@churchgatepartnersindia.com
also enables the promoter, CEO or CFO to
Sumir Bhardwaj
meet with global investors at short notice
Partner
should they have time in between businesses Churchgate Partners
sumir@churchgatepartners.com
10

11. Indi
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India Budget 2012: Round-up
The ruling Indian government presented the budget proposals for the
financial year (FY) 2012-2013 before the lower house of the Indian
Parliament on March 16th. The Direct Tax Code (DTC) was planned
to substitute the existing Indian Income Tax Act, however, this has
been deferred, with the Finance Minister re-affirming enactment of
DTC at the earliest opportunity.
The government announced certain significant of a sort of ‘look through’ provision would be
direct tax proposals which were part of DTC in accelerated, given that the Indian tax department
the 2012 Budget. These proposals lay emphasis lost one of the biggest tax litigation cases witnessed
on anti-avoidance measures, addressing money anywhere in the world, however, what was not
laundering issues and tracing the source of expected, was the retrospective operation of this
funds in circulation. The budget proposals will provision. The retrospective amendment has, once
transcend into statute sometime in May 2012 again stirred up the debate on consistency in tax
after Parliamentary discussion and the Indian policy amongst industry, tax professionals and
President’s assent. even political circles.
Below, we summarise the headline tax proposals
along with the possible impact on offshore merger Codification of General Anti-Avoidance
and acquisition transactions, foreign trade and Rules (GAAR)
foreign investments into India. GAAR has been legislated as a doctrine of
‘substance over form’ to check aggressive tax
Taxation of cross-border deals with planning through use of sophisticated structures.
Indian assets GAAR, as the language suggests, is proposed
The DTC contains a provision for the taxation of to ring-fence round trip financing, transactions
indirect share transfers outside India where at least lacking commercial substance or having malafide
50% of the value of underlying assets located in intention. These rules would apply regardless of
India are owned by the transferor of the shares. treaty provisions. GAAR will be invoked after
The budget proposals have incorporated a examination at two levels – Commissioner level
similar provision albeit in a more sweeping way. and Approving Panel’s level.
The proposal seeks to tax transactions involving The Finance Minister has assured that GAAR
the transfer of offshore companies’ shares between will only be triggered where legal structures have
one non-resident of India and another where the been superimposed to camouflage improper
companies’ shares derived their value substantially motive and genuine overseas investors should not
from assets located in India. These proposals lead worry. Yet, stringency in GAAR could impact
to taxation in the country of operation (i.e. India) bone-fide business structures and lead to arbitrary
treating it as a country of source. application since the onus to prove genuineness is
It was widely anticipated that the introduction on the taxpayer.
11

12. Introduction of Advance Pricing up to 5 per cent of the transaction price available
Agreements (APA) to the taxpayer. The 2012 Budget has proposed to
Policymakers introduced APA in the 2012 Budget restrict this tolerance limit to a maximum of
to deal with the increasing litigation relating to 3 per cent of the transaction price from
transfer pricing (TP) adjustments and to provide FY 2012-13. We may witness a notification with
certainty to multinationals involved in transactions industry specific tolerance limits not exceeding
with their related parties. 3 per cent of the transaction price. This proposal
APA is an agreement between a taxpayer indicates the intention of tightening the available
and a tax administrator on an appropriate TP benefit to the taxpayer and moving towards a more
methodology for a set of transactions. stringent TP regime.
Although the detailed rules and guidelines The business community needs to watch
for application will follow in due course, the the developments closely once these proposals
introduction of APA, meets the long-standing translate into a law. It should actively engage
demand of multinational enterprises with in a dialogue with the government to present
footprints in India. APAs are expected to alleviate businesses’ point of view so that there is an
disputes between taxpayers and the Indian tax effective and efficient implementation of the
department in respect of foreign transactions new tax laws.
attracting TP regulations.
Calculation of arm’s length price (ALP):
Revision of tolerance limit
Indian TP regulations follow an arithmetic mean as
Nidhi Gupta
opposed to an interquartile range used by various
Manager, Tax & Regulatory services
jurisdictions worldwide to calculate ALP, where Walker, Chandiok & Co
there is more than one ALP. There is, however, a T +01 11 42787050
safe harbour in the form of permissible variance E Nidhi.Gupta@in.gt.com
About us
Grant Thornton UK LLP established a dedicated South Asia Group
in 1991 to serve Asian owned businesses in the UK as well as
those investing into and from the Indian subcontinent. We are
proud to be one of the first UK accountancy firms to focus on this
region.
We are widely recognised as one of the leading international firms
advising on India-related matters and have been in involved in every IPO
involving an Indian company on AIM, with the exception of the real estate
sector.
For those clients requiring advice in both the UK and India we offer a
seamless service building on the already strong and close relationship
© 2012 Grant Thornton UK LLP. All rights reserved. between Grant Thornton UK LLP and Grant Thornton India.
‘Grant Thornton’ means Grant Thornton UK LLP, a limited
liability partnership. International and emerging markets blog
Grant Thornton is a member firm of Grant Thornton International Ltd As part of our commitment to remaining at the forefront of changes
(Grant Thornton International). References to ‘Grant Thornton’ are to the and developments in regards to UK-India relationship we will be using
brand under which the Grant Thornton member firms operate and refer this space to post original thought leadership and research relevant to
to one or more member firms, as the context requires. Grant Thornton
the industry. The idea is to encourage discussion around these issues
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Services are delivered independently by member firms, which are not
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This publication has been prepared only as a guide.
No responsibility can be accepted by us for loss occasioned
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any material in this publication. www.grant-thornton.co.uk/sectors/emerging_markets/south_asia
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