India has become an increasingly attractive destination for doing business. Foreign direct investment has been on the rise with a growing number of international businesses looking at establishing operations here. However, the risks associated with venturing into a new territory with a complex accounting, tax and regulatory environment are many. A multitude of languages and vast cultural differences within the country itself add to the difficulties and costs of doing business in India.
Whether you are looking to expand your existing operations in the country or planning to set up in India, we provide a one-stop solution and handhold our clients through the intricacies of the process. Besides our competence in accounting and tax, our strength lies in the ability to be your business and commercial adviser and managing your entire entry plan for India as a comprehensive project. We work with you right from the conceptualisation phase to being your implementation partner in greenfield business set-ups, acquisitions and joint ventures.
We can assist you with all that needs to be done while entering India right from market research, validating your business plan, selecting the correct form of entity, structuring your investment, providing regulatory and tax advisory, scouting for a location and acquiring land, hiring the right people to getting you in touch with the right vendors, monitoring them as well as identifying potential joint venture or acquisition opportunities for your inorganic growth. Once your business is set up, we can even take care of your book-keeping, payroll, management reporting, company secretarial and compliance requirements. With years of experience in India, we can add value to your expansion plan by looking after these functions while you focus on your business.
Based on your company size, your needs may differ – we customise our services to your requirements. We can help you at any stage of your entry plan. As your partner, we will be responsible for your tasks just like a trustee. We will share our local knowledge with you and design a package of services that is relevant specifically to your business. Our experience and practical and commercial understanding of India equip us to help you successfully establish operations in India. Through our services, we provide your business with tremendous support and care. We are here to think for you and act for you.
Market Research and Strategy
We help create an efficient market entry strategy for India, helping you reduce costs by preventing mistakes from the very start of your expansion plan.
We undertake specific B2B (business-to-business) market research assignments for our clients across industry sectors. Our cross-functional teams study the business and regulatory scenario to give you a clear understanding of the market size, business models, competitive landscape and regulatory requirements. Thereafter, we provide a customised entry strategy depending on market opportunities and your organisational needs. We leverage our extensive knowledge of India to offer solutions on supply chain, pricing structures, purchase processes/buying behaviour and go-to market strategies for our clients.
Our market research examines factors that would affect your plan, including:
- Market structure and size
- Growth rate (historical and projected)
- Available product/service offerings
- Key customers and customer segmentation
- Market trends – drivers and challenges
- Regulatory and tax aspects
- Competition mapping
We have successfully completed extensive market research assignments for companies across sectors, including pharmaceutical packaging, building materials, glass manufacturing, waste water treatment and aluminium tubing.
Following market research, we evaluate all feasible India-entry options and recommend the most appropriate mode of entry and business model. Based on our value-chain analysis and evaluation, we select the best possible alternatives to ensure you choose a strategy that best suits your company. We then recommend a pa business model and tax-efficient value chain,arget market, and mode of entry/expansion.
We provide end-to-end support to companies establishing a greenfield set-up in India. Our offerings include but are not limited to:
- Location Planning: Identify and evaluate potential locations across India for setting up the proposed unit – manufacturing facility, office space, etc. by conducting a thorough evaluation based on multiple parameters.
- Land/Facility Scouting: We help you identify suitable options in a given city or locality for office space, empty land, warehouse or factory shed based on your specific requirements.
- Land Allotment: We provide end-to-end support in getting land from government agencies. This includes preparing all the required documentation and regular follow-ups with government agencies for smooth and prompt completion of the process.
- Procurement of Necessary Approvals: A company is required to procure a host of approvals and registrations following land allotment. We help you in procuring all the necessary approvals in order to reduce the time between land acquisition and the start of commercial activities.
- Project Management Support: SKP’s project management support includes vendor identification, liaising with various stakeholders, project monitoring and reporting in order to ensure the project is completed successfully and on time.
We have helped establish several greenfield set-ups across all major Indian states. Our structured and proactive approach helps clients ensure smooth and timely completion of the project.
Our team identifies key processes where your company can increase efficiencies – lower cost and decrease the time taken – within the process. Inefficiencies could be caused by internal or external changes such as changes in regulatory policies or technological developments.
We identify and understand critical aspects of each process from a business and consumer point of view. Critical associated business processes are also considered. We then prioritise key processes on the basis of their nature and potential to improve, followed by an analysis of the process, which identifies gaps between the ‘as is’ process and the ‘real process’. The process is then redesigned and improvements are implemented accordingly. Finally, we monitor the performance of the new processes to ensure their smooth functioning in line with organisational requirements.
Business Plan Services
A business plan can provide a reliable planning framework for your business from an overall strategy perspective to detailed operational matters. It can help you explain and illustrate your vision for your business, and help persuade others – investors, lenders, employees, etc. – to help you achieve that vision.
At SKP, we first seek to understand the dynamics of your business and then, with an aim to add real value and aid decision-making, we offer solutions by validating or developing your business plan.
Business Plan Validation
In order to validate your ideas and strategies and mould them into a viable business plan, SKP can refine your existing business plan as follows:
- Challenge the current assumptions
- Identify the gaps in planning
- Conduct independent research and analysis to corroborate the assumptions and fill the planning gaps
Business Plan Development
Going beyond validation, we can support you in developing your own business plan as follows:
- Understand your business
- Assist you in focusing on your goals
- Prepare a comprehensive business plan to get you there
Our consultants will actively interact with you to understand your business model and goals to create a basic business plan framework. We would consider internal factors such as cost and revenue drivers, product-/service-wise profitability, working capital requirements, staffing requirements, capacity constraints, capital expenditure requirements, etc. Alongside, we would also identify competitive, economic, social, technological, regulatory, environmental and political factors that could impact the success of your business. Following our detailed research and analysis of these internal and external factors, the basic framework will be developed into a comprehensive business plan.
Apart from day-to-day operations, businesses have to deal with many business situations that bring their own sets of challenges and require different execution skills. These could include greenfield set-ups, restructuring, business expansion, mergers & acquisitions, post-merger integration, ERP implementation, process optimisation, winding up/downsizing, and other organisational changes.
The risks associated with these situations are diverse and, at times, exponentially larger than routine operations. Such projects require cross-functional teams, consultants and even different companies on either side of the transaction to collaborate. These stakeholders would have their own agendas, priorities and action plans. The success of such transactions depends on the coordination across teams for identifying, escalating and resolving issues while ensuring there is timely and proper communication. Quick, coherent, and unbiased on-ground reporting to bring out relevant issues and enable informed decision-making from the top management is critical. An efficient solution is to have an experienced, multidisciplinary Project Management team with the experience of resolving issues common to such situations.
Our dedicated team of experts at SKP has experience in managing a variety of large transactions/projects. We understand the issues and risks associated with these situations and know how to mitigate them. We have the relevant experience for every step of the lifecycle and have developed tools and templates to ensure optimal execution of the project. We are also supported by an experienced multidisciplinary team of consultants and experts who provide their perspective on the varied tax, legal, operational, financial, and strategic aspects.
Being well-versed with the various facets of project management, we can provide step-by-step assistance throughout the transaction, right from strategising to executing and closing the transaction. Our strategic tasks include creating a roadmap, execution plan, budget, and timeline while execution-related tasks include monitoring, tracking, reporting, identifying and communicating risks and issues, and interacting with consultants. If the need arises, we are prepared to fill any gaps in terms of consulting or execution at any point in time during the project.
Our project management experience spans across sectors including fast-moving consumer goods (FMCG), wealth management and mining, among others, for business situations such as greenfield set-ups, mergers & acquisitions, post-merger integration and winding up.
Pre-Investment Regulatory Advisory
We have a thorough understanding of India’s complex regulatory regime and compliance requirements and can help your company address its regulatory needs. We offer advisory services on foreign direct investment regulations, company law, direct and indirect taxation, and help you stay compliant. Besides keeping you informed on the changing scenario, we can also take care of your exchange control regulatory requirements, capital structuring, foreign trade policy matters, compliance with labour, employment, and factory regulations, and other industry-specific regulations.
Selecting the right form of entity is crucial for any investor as this has serious implications on the rights, growth potential, tax implications and legal/financial liabilities. We can assist you in evaluating and establishing the type of entity that would best suit your need ranging from a Wholly Owned Subsidiary, Liaison Office (LO), Branch Office (BO), Project Office (PO) or Limited Liability Partnership (LLP).
Business registrations differ by territory, industry and type of operation. We assist our clients by obtaining all the necessary registrations within clear timeframes. The registrations are categorised according to the functions of the proposed business establishment such as service establishments, trading entities, and manufacturing entities. Manufacturing entities must also comply with labour registrations. Your organisation may also have to obtain registrations specific to the type of activity to be performed or the industry, including drugs, cosmetics, packaging, financial institutions, etc.
Our relationship with our clients does not stop here – we continue to assist companies with their ongoing compliance requirements, thus allowing them to focus on their core business.
We can help you identify relevant incentives that the Central and State governments offer, pertaining to location, investment size, industry and operations. Government schemes are typically categorised as investment promotion schemes, sector-specific schemes targeted at developing specific industries, and export promotion schemes. With these incentives, you could reduce your cost of operations and free up cash flows.
At SKP, we have a thorough understanding of India’s complex regulatory regime and compliance requirements and offer advisory services on:
- Foreign direct investment regulations
- Company law
- Direct taxation, including jurisdiction analysis
- Indirect taxation
- Exchange control regulations
- Capital structuring
- Foreign trade policy
- Labour and employment regulations
- Factory regulations
- Industry-specific regulations
SKP’s holistic approach to Transaction Advisory comes from a thorough understanding of individual activities and knowledge of how the integration of these activities affects the success of a transaction.
While investors would like to have complete and accurate information to make critical decisions, such information is not readily available and is often difficult to evaluate. The success of a deal may hinge on the ability to discover and analyse the missing pieces.
We collaborate with you to understand the purpose of the transaction and recognise the best way to help your company grow. We provide an objective viewpoint while keeping your interests in mind. We would advise you during the initial evaluation and negotiations by discussing the transaction structure, negotiating financial terms, outlining preferable terms and suggesting counterproposal alternatives. Based on our understanding of the target’s business, your objectives for the acquisition and considering the prevailing regulatory environment, we would suggest possible options/structures for investment in the target. We shall highlight issues that may be of importance to you that arise from our understanding of the various issues governing a possible transaction.
We don’t work just as your advisers or consultants but more as your “Implementation Partners”. Our ultimate goal is the success of your business and its continued growth.
To know more, please visit our Transaction Advisory page.
The SKP team, led by Dr R Shyam Khemani and in collaboration with major law firms, can assist your company in navigating through case-specific reviews and filings before the Competition Commission of India (CCI). In order to get transactions properly evaluated and expeditiously approved, the SKP team works closely with our client’s legal representatives to prepare a ‘competition assessment’ brief that is filed with the CCI.
The competition assessment brief focuses on the following areas:
- Merger and acquisition transactions
- Prohibition of anti-competitive agreements (alleged cartels)
- Monopolistic behaviour (abuse of dominant market position) and various competitive business practices.
Our experience in competition analysis spans across industries, including energy/petro-industrial chemicals, information technology (IT), automotive vehicles and parts, cement, and professional sports, among others.
Mergers & Acquisitions
It is widely recognised that M&A transactions are an important mechanism for business expansion, industry/firm restructuring and market entry. The ‘combination provisions’ of the Competition Act, 2002 require M&A transactions above certain size thresholds (based on assets or turnover in or outside of India) to be reported for review and clearance by the CCI. A transaction may be void if it is likely to cause an ‘appreciable adverse effect’ on competition in the relevant market in India.
Employing the latest industrial organisation methods, we present credible analyses of the nature and degree of competition prevailing in the relevant market, the business rationale for the acquisition, and whether or not the proposed transaction will adversely affect or increase competition. The team has prepared several competition impact briefs, and all the M&A transactions we have worked on have been cleared by the CCI well within 30 days, saving our clients significant monies in bridge financing and other costs.
Prohibition of Anti-competitive Agreements
Under the Competition Act, agreements between enterprises that result in fixing of prices, restriction of production, supply, distribution, storage, acquisition or control of goods or provision of services that cause or are likely to cause an appreciable adverse effect on competition are strictly prohibited. The fines levied by the CCI in such cases can be financially significant – up to 10% of the enterprise’s average turnover of the previous three years.
Unless there is evidence of overt meetings by businesses to engage in prohibited agreements and related practices, it is difficult to prove cartelisation of markets. Nonetheless, it must be noted that circumstantial ‘evidence’ such as parallel or similar pricing can be construed as being an illegal agreement.
At SKP, we conduct rigorous economic analyses to assess whether or not the allegations with respect to cartelisation of markets are plausible and credible, and draw distinctions between competitive and anti-competitive business behaviour. In this context, we analyse price patterns and variations, levels and dynamic changes in sales or market shares, ‘facilitating devices’ such as published price lists and contracts, and other relevant factors to ascertain if there is an alleged prohibited business arrangement.
Monopolistic Behaviour and Other Business Practices
It is not illegal for an enterprise to be ‘dominant’ or account for a large share of the relevant market. Indeed, enterprises are often larger than their competitors because of being more efficient and supplying higher quality products and services at competitive prices. However, ‘abuse’ of one’s dominant market position such as charging discriminatory prices, exclusionary behaviour, tied selling, predatory pricing and the like can constitute violations of the law. At the same time, ‘dominant’ enterprises can also become targets of complaints of alleged anti-competitive business practices by those who cannot compete effectively in the market place, or by industrial customers seeking to extract more favourable terms/conditions of sale and/or lower prices.
Given our extensive industrial experience and analytical capabilities, the team has prepared briefs on the ‘competitive dynamics’ of the relevant market, and the pricing and other constraints confronted by the alleged ‘dominant’ firm; the choice of alternative products and services from competing enterprises and demand elasticity; the nature and extent of barriers to entry, and if such barriers are firm- or market-specific, economic and/or strategic, or primarily determined by government policies and regulations, etc.
SKP Investment Chronicle
For updates on the deal-making landscape in India, please click on the links below:
Nexia Global Insight Apr 2016: Make in India campaign boosts FDI inflows
Financier Worldwide: India’s New Year resolution: welcoming investments and de-cluttering taxation
Nexia Global Insight Jan 2016: India’s new FDI norms to boost investment
Saloni Jhaveri, Partner, Business Advisory, SKP, talks about the recent Insolvency and Bankruptcy Code that was passed by the Lok Sabha. The Code aims at consolidating various laws and agencies that currently govern bankruptcy laws in India. Overall, this initiative is expected to substantially increase the ease of doing business in India.