Thursday, September 10, 2009

Entering Indian Market

The last decade has seen India encouraging foreign direct investment (FDI) in almost all sectors including manufacturing, insurance, telecom, software, trading etc. This has lead to many international giants setting up operations in India, or entering into joint ventures with many Indian companies. It has become easier for international companies to trade in India as foreign exchange controls have been relaxed. Indian companies have also been allowed to raise money / funds from international markets and also invest abroad. Trade tariff levels have also been reduced for facilitating trade.

International companies can set up business operations in India by forming a new company, through wholly owned subsidiaries or joint ventures.

Private Limited Company
According to Section 3(1)(iii) a Private Company is one which
· Has a minimum paid-up capital of one lakh rupees.
· Restricts the right to transfer its shares (any restriction that enables the directors to maintain minimum limit of two members and the maximum limit of 50 members, shall serve the purpose).
Limits the number of its members to 50. This number does not include employees of the company and the ex-employees of the company who are still members of the company.
Prohibits the subscription of shares or debentures from general public.
Prohibits any invitation or acceptance of deposits from any person except its members, directors or their relatives.

Public Limited Company
According to Section 3(1)(iv), a Public Limited Company is a one which:
Is not a private company.
Has a minimum paid-up capital of Rs five lakhs.
Is a private company which is a subsidiary of a public company.
A public company cannot have less than seven members. There is no restriction with regard to the maximum number of persons who can acquire the shares or debentures of a public company.
The shares and debentures may be quoted in stock exchange and are freely transferable.

Opening a branch office
· Foreign companies engaged in manufacturing and trading activities abroad are allowed to set up Branch Offices in India after prior approval from Reserve Bank of India (RBI) for the following purposes:
· Export/Import of goods
· Rendering professional or consultancy services
· Carrying out research work, in which the parent company is engaged.
· Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
· Representing the parent company in India and acting as buying/selling agents in India.
· Rendering services in Information Technology and development of software in India.
· Rendering technical support to the products supplied by the parent/group companies.

Foreign airline/shipping Company
· Branch Offices established with the approval of RBI, may remit outside India profit of the branch, net of applicable Indian taxes and subject to RBI guidelines .
Opening a project office
· Foreign companies planning to execute specific projects in India can set up a temporary project/site office in India for carrying out activities only relating to that project. The Government of India has now granted general permission to foreign entities to establish project offices subject to specified conditions.

Opening a liaison/representative office
· A Liaison Office could be established with prior approval of Reserve Bank of India (RBI). The role of Liaison Office is limited to collection of information, promotion of exports/imports and facilitate technical/financial collaborations. Liaison office cannot undertake any commercial activity directly or indirectly.

Tuesday, September 8, 2009

Dont Confuse Value with Profit: Tom Peters

For a guru of excellence, 2009 is hair shirt year for Tom Peters. "I had the chance and I remained silent – I could have screamed a lot louder than I did," says the co-author of the best-selling 'In Search of Excellence' and a dozen more. "What was going on around us was a level of wretched excess which in hindsight, one can say, 'I should have been blowing whistles'."

This criticism of unfettered capitalism seems particularly pointed coming from a man regarded as one of the world's leading business thinkers – and a prescient one at that. In his book on leadership published in 2005, he wrote: "We fall back, in these crazy and chaotic times on the command-and-control model of leadership, a model that no longer accords with how dynamic leaders actually operate." He has also written many times that we live in an age where businesses confuse 'value' with 'profit'.

We are all to blame....
Is he being too harsh with himself for not speaking out against the greed of the Big Money Corp? "In a court of law I can trot out the right words to be declared 'Not Guilty' but I find myself, and my fellow 'gurus' must share some of the blame, as must the business schools. Though we can't be held responsible for man's greed gene which has been evolving for tens of thousands of years, those of us who have pulpits should speak out." In these turbulent times, Peters thinks it ever more important to hammer home the fundamentals of business, that never change. This, he says, is despite the revolution in networking communications. "The five-year-olds who are growing up with social networking tools as second nature may change the whole business game in 20-25 years. At 66, I am definitely an old 'old guy' but these days you are an old guy at 25!"

Servant leadership
Being in his seventh decade has not stopped Peters thinking new thoughts. Many of these came out of an invitation to be the keynote speaker at the commemoration on the life and work of Peter Drucker a few years back. "One of the many things I came across was Greenleaf's book on Servant Leadership which I had first seen 25 years ago but hadn't really taken on board. In the situation we are now facing, the notion of an organisation which exists only to serve and a leader who exists only to serve those in that organisation is a damned good starting point. I use that fundamental idea around which to weave my current presentations."
Blanchard's notion of corporate worth extends far beyond stark profit and asset value. "Leadership should take into account the needs and concerns of everyone in the business and not just think that profit is a worthwhile goal," he says. Indeed, he has often suggested that profit should be viewed as the reward that organisations receive for being a good corporate citizen in the community.

Peters, the realist, recognises that many successful business leaders haven't yet got the point about their true servant role. He describes - in an unprintable way - the nature of those who abandon their organisations in these times, lured by promises of fat golden hellos and seven-figure bonus packages. "Leadership is a sacred trust – that is not extreme language. Leadership should be seen as an honour – you have an astonishing responsibility to those in your care." When he sees leaders abandon that trust – by quitting, retiring or making large-scale redundancies, Peters feels that they have failed in their duty.

Leading through the recession
These are times, he says, to try the souls of businesses. "To state the obvious, one's mettle is tested in difficult times. But I want to avoid like the plague that motivational speaker's nostrum: 'This is a time of great opportunity – get on your feet!' There is a strong bullshit part of this but I do believe you can treat this recession as one to be gotten through and one in which you can dig deep and think about the people to whom you are responsible. It is a chance to inaugurate a period of significant renewal. It is bloody immoral if you don't."

Peters calculates that few leaders under the age of 50 will have experienced a tough recession like this one. Despite this, he is optimistic that change will come - "I find that people are more open now to new thinking in running business," - and he feels that acceptance of the new regulatory regime agreed at the recent G20 summit is a key indicator of this sea change in the way we operate the capitalist system.

So who are the businesses and leaders who we should be using as role models? Are there any out there we should be watching? "There are indeed, but you and I have probably never heard of them. They are the guys leading small organisations who are getting through this crisis. They get up in the morning, go to their hardware store, restaurant or brokerage, help their clients, serve their community and help those seven people who work for them.

"Richard Branson and Jack Welch may have a lot to teach us, but there are an enormous number of effective and humane [he emphasises this word] leaders operating small organisations. 99% of them never make it to your website or the pages of my books."