Grant Thornton’s quarterly India Watch, in association with the London Stock Exchange (LSE), is a valuable information source for anyone involved in UK/India business. India Watch tracks the performance of all Indian companies listed on the London Markets, while also giving an overview of Indian M&A activity and analysis of the Indian economy.

1. India Watch
Issue 15 January 2012 In association with
Welcome to the Winter edition of
Grant Thornton’s India Watch, in association
with the London Stock Exchange.
In this issue we highlight that Indian SMEs the renewable sector in India, explaining why
outperformed other small caps on the London private equity investment into Indian renewable
markets in 2011, despite an overall muted companies increased five-fold in 2011.
performance across all indices. Mergers and Lastly, Saurabh Mathur from Walker
acquisitions and private equity activity also Chandiok & Co, gives us an update on the
remained robust throughout 2011 amidst the Companies Bill 2011 which was expected in
ongoing global economic woes, rising domestic the Winter session, but it is now expected to be
inflation and interest rates, and the weakening of finally passed in March 2012.
the rupee; there were a total of 961 deals with a If you would like to discuss any of the matters
total value of US$51 billion in 2011. arising in this issue or how Grant Thornton’s
We look back on India’s economy in 2011 as South Asia group can help you please contact me.
we enter what will hopefully be a more promising
year for many of the world’s economies.
Our guest contributor, Gurpreet Gujral of
Brewin Dolphin outlines the state of play of
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 15 January 2012
London stock markets still
attractive for Indian small caps,
despite slowdown
Indian SMEs outperformed other small caps on the London
markets in 2011, despite an overall muted performance across
all indices. Year-end figures suggest the UK capital is still a
strong contender for Indian businesses seeking markets in
which to raise finance.
120
110
100
–– GT India Watch – ALL
90
–– FTSE 100
–– FTSE AIM ALL-SHARE
80 –– GT India Watch – smaller caps
–– FTSE ASEAN
70 –– FTSE AIM 100
–– FTSE AIM UK 50
60
50
40
Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11
The Grant Thornton India Watch* Smaller The India Watch Smaller Caps Index seems
Caps Index fell by just 11.27% during the year, to have benefited from the general shift among
compared with falls of 27.26% on the FTSE AIM investors towards emerging markets in the
100, 25.75% on the FTSE AIM All-Share and hope that they would prove more resilient than
21.22% on the FTSE AIM UK 50. developed markets. While the value of emerging
Less risky large and mid-cap investments were markets investments may still have fallen,
also affected as investors grew nervous about investors are hopeful that returns will bounce
a number of factors including continued slow back faster than other investments when growth
economic growth in the West and a spreading of finally recovers.
the eurozone sovereign debt crisis. The FTSE 100 No real sector trends emerged from the year-
fell 5.55% and the FTSE/ASEAN Index end figures for the India Watch Index. While the
fell 7.37%. highest climb was in support services and the
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3. India Watch - Issue 15 January 2012
biggest fall in travel and leisure, most sectors were Other major losers on the India Watch Index
represented among the winners and losers. in 2011 were real estate company Trinity Capital
iEnergizer, a call centre operator and supplier and media group DQ Entertainment, which fell
of outsourced back office processes, had a 69.23% and 67.32% respectively.
sterling first full year on the London markets Trinity Capital, which is seeking to divest
after floating on the London Stock Exchange in its investments and return funds to investors,
September 2010. It gained 53.95% during 2011, delivered a downbeat interim statement in
the year’s top climber on the India Watch Index. December. An economic slowdown in India was
It was also one of the top three climbers in Q4 leading to a reduction in the pool of potential
2011, gaining 17.20%. buyers for its investments, it said. A seven per
Interim results for the six months ending 30 cent depreciation of the rupee against sterling had
September 2011, released last month (December also led to an 11% decline in the £71.9 million
2011), showed iEnergizer’s revenue up 33.6% value of its portfolio.
on the year to US$30.5 million and profit after DQ Entertainment’s share price fell steadily
tax up 32.6% to US$9.5 million. Non-executive through 2011 from around 132 pence at the
chairman of the board Sara Latham said the beginning of the year to around 41.5 pence in
increase was down to organic top-line growth and early January 2012. The animation group has been
tight control of operating margins. struggling to bring widening net losses
Investors have so far been happy with under control.
iEnergizer’s performance and, in December, the Last year may have ended under par but many
company raised £7.14 million through a placing market watchers are surprisingly upbeat about
of 3 million new ordinary shares. The extra funds what 2012 holds in store for equities. While
are likely to be used, in part, for acquisitions after performance in the first half of the year will
CEO and founder Anil Aggarwal said such a deal continue to be volatile, many predict an eventual
was needed to take the company to the next level. resolution of the Eurozone crisis. There are also
Other full-year climbers on the India Watch hopes that control over inflation in China will * The India Watch Index
Index include Alpha Tiger Property Trust give all emerging economies an added boost. consists of 31 Indian
companies listed on AIM or
(18.75%) and EIH (18.18%), an Isle of Man- The India Watch Index will benefit from both the Main Market (excluding
based financial services company that offers developments. Year-end figures in 2012 should GDRs). We only consider
companies to be Indian if
investors access to a diversified Indian private offer more reason for good cheer. they are domiciled in India
equity portfolio. and/or foreign companies
holding Indian assets or
The year ended on a low for hotel and Investment companies
restaurants group India Hospitality Corporation with Indian promoters. The
index has been created via
(IHC), which fell over 12 months by 88.21% – Datastream, a Thomson
the index’s biggest loser. Against the backdrop Reuters product and is
weighted by Market Value.
of a flat year for India’s hospitality sector, IHC Anuj Chande To avoid distortion of index
has continued to make losses albeit a significant Partner, Corporate Finance trends, the two largest
and Head of South Asia Group market cap entities, Essar
reduction of 51.9% on the year, indicating a move Grant Thornton UK LLP
Energy and Vedanta
Resource, are excluded.
in the right direction, led by an experienced and T +44 (0)20 7728 2133 ** Data sourced from
ambitious management team. E anuj.j.chande@uk.gt.com Thomson Reuters.
3

4. India Watch - Issue 15 January 2012
India MA and PE 2011:
Resilience amidst odds
Amidst the ongoing global economic woes, rising domestic inflation
and interest rates, the weakening rupee and a volatile Sensex,
2011* has contributed to robust Indian deal numbers. Mergers
Acquisitions (MA) and Private Equity (PE) in India clocked up
961 deals with a total value of to US$51 billion in 2011 compared to
971 deals amounting to US$62 billion in 2010.
Deal summary Volume Value (US$ billion)
Year to date 2009 2010 2011* 2009 2010 2011*
Inbound 74 91 132 3.9 9 26.9
Outbound 82 198 132 1.4 22.5 10.4
Cross border 156 289 264 5 31 37
Domestic 174 373 342 6.7 18.3 5
Total ma 330 662 606 12 50 42
PE 206 253 347 3.4 6.2 7.7
QIP 54 56 8 8.6 6.2 0.9
Grand total 590 971 961 24 62.2 50.9
*Jan – Dec 9, 2011
Half yearly trend: While deal activity during weakening rupee is making outbound acquisitions
H1’2011 echoed that of H1’2010, H2’2011 has more expensive. This could also be a contributing
seen relatively lower activity, reflecting fears over factor for the downward trend in outbound deals.
the economic dynamics of the European region. Having said that, the fundamentals of outbound
Nevertheless, deal volumes remained robust MA have remained intact as Indian acquirers
throughout the year. Importantly, the average continue to view outside markets strategic to
size of deals where value was disclosed remained their global growth plans, as witnessed in deals
the same at approximately US$190 million. such as Mundra Port acquiring Abbot Point
Port, GVK Power’s acquisition of Hancock
MA - Inbound bucks the trend: A notable trend coal mines, Aditya Birla Groups’ acquisition of
reversal was observed in cross border MA with Columbian Chemicals and Genpact’s acquisition
focus shifting from outbound to inbound. Six of Headstrong, to name a few. Domestic deal
out of the nine billion-dollar deals in 2011* were activity was relatively lower as compared to
inbound, primarily owing to premium valuations 2010 mainly due to a continuing focus on
received by Indian targets. The backdrop of mergers and restructuring, despite volumes
stagnating economic activity in the west and the remaining buoyant.
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5. India Watch - Issue 15 January 2012
Top MA deals 2011
Acquirer Target Sector % Stake US$ million
Vedanta Plc Cairn India Oil Gas 59% 8,670**
British Petroleum Reliance Industries Oil Gas 30% 7,200
Vodafone Group Plc Vodafone Essar Telecom N.A. 5,000
Mundra Port SEZ Ltd (Adani Group) Abbot Point Port Shipping Ports 100% 1,957
GVK Power Infrastructure Hancock Group-coal mines, port /rail project Mining 79% 1,260
iGate Corporation Apax Partners Patni Computer Systems IT ITES 83% 1,209
**Multiple transactions
MA sector focus: The energy and telecom limits. The beginning of 2011 was witness to the
sectors have seen good amount of traction, notification of merger control provisions by the
accounting for over 50% of the total MA deal Competition Commission of India (CCI) and
value in 2011*. Other leading sectors in 2011* other government regulations on sector specific
and their contribution to total deal values were MAs such as inbound acquisition of drugs and
IT and ITES (8%), pharma, shipping and ports, pharma companies requiring approvals. Though
mining and automotive (approximately 5% each). we are yet to perceive any tangible effect on the
However, few sectors saw a sharp decline in deal deal activity as a result of these policies, it could
values, such as telecom (down 61%) and pharma result in increasing timelines for completing
(down 67%), mainly owing to a drying up of an acquisition. Also, the current flux in public
large value deals, but the volumes continued to markets, low trading multiples and increased costs
remain steady in these sectors. of finance could be major causes of buyer-seller
mismatch in price expectations, thereby resulting
MA outlook: We can expect consolidation in prolonged deal closures.
in the telecom space in 2012, with sector
regulator TRAI proposing an increase in the PE Deals – Volume uptrend, drying up of large
combined market share caps and spectrum caps value deals: Private Equity investments in India
of merged entities. Also, the pharma sector is showed significant activity in 2011* with a 23%
expected to see heightened MA activity due increase in deal values over 2010. The resurgence
to the impending patent cliff in the US (the could possibly be attributed to sluggish IPO
patent protection for many big-selling drugs is QIP activity coupled with a cautious return in
expected to expire in the next few years which confidence levels which were seen lacking in 2009
will lead to opportunities for other generic drug and the first half of 2010. There have been 347 PE
companies), and the increasing attractiveness deals in 2011* totaling a value of US$ 7.7 billion
of India as a low cost RD destination. Other with no large deals announced.
sectors to look out for in 2012 would be aviation
and retail where the government is looking at
opening up the Foreign Direct Investment (FDI)
5

6. India Watch - Issue 15 January 2012
Top PE deals 2011
Investor Investee Sector Stake US$ million
Bain Capital, Government of Singapore Hero Investment Automotive 30% 848
Apollo Global Management Welspun Corp Manufacturing N.A. 284
Texas Pacific Group Shriram Capital Financial Services 15% 257
Macquarie SBI Infrastructure
GMR Airports Infrastructure N.A. 200
Investments
Standard Chartered PE(Mauritius),
JM Financial-Old Lane India Corporate
GMR Airports Infrastructure N.A. 200
Opportunities Fund, NYLIM Jacob
Ballas India Fund
Goldman Sachs ReNew Wind Power Power Energy N.A. 200
Blackstone Embassy Property Developments Real Estate 37% 200
PE sector insight: PE investments are back in for deal closures. Since PE is still not seen widely With special
the real estate and infrastructure space with the as a preferred funding source, it may take some thanks for their
sector garnering close to US$1.7 billion of PE years for the Indian market to see much bigger contribution to
funding in 2011*. It is interesting to note that deal sizes as the norm. Exit opportunities can be Ankita Arora
the real estate and infrastructure investments expected in the pharma, healthcare and biotech and Sowmya
that took place in 2010 were primarily in the and real estate sectors in 2012; one of the possible Ravikumar of the
commercial and residential space, whereas 2011* reasons for these results could be the heightened Grant Thornton
attracted investments in large infrastructure PE investments that these sectors saw in 2007- India Dealtracker
projects such as airports, roads and highways. 2008, and the investment cycles coming to an end team.
Other major sectors driving PE activity were in 2012.
automotive (US$1 billion), power and energy Overall, 2011 emerged fairly resilient in
(US$ 892 million), banking and financial services terms of deal appetite, despite challenging
(US$ 816 million) and, IT and ITES circumstances. However, stabilisation of
(US$ 783 million). economic factors is critical for deals to continue
the momentum going forward, and it will be
Second coming of e-commerce: The year also interesting to see how 2012 unfolds.
witnessed e-commerce firms raising over US$300
million of investment from both PE funds and
venture capital firms. Few of these companies
received premium valuations with overall firm
valuation upwards of US$ 250 million implying
EV/Sales multiples ranging between 10x and 15x.
One possible reason for stretched valuations
could be that the investors expect e-commerce
in India to replicate the e-commerce success
story in developed countries. The second coming
of e-commerce in India is backed by strong
Karthik Balisagar
fundamentals such as critical mass of internet Valuations Manager and Assistant
users, broadband penetration and 3G growth, Head of Valuations South Asia Group
Grant Thornton UK LLP
rising middle class, improved payment gateways
T +44 (0)20 7865 2475
and logistics, etc, though there is significant scope E karthik.balisagar@uk.gt.com
to improve these parameters.
PE Outlook: PE investment in India faces high
entry valuations driven by a high proportion of
family owned business in India tending to wait
for higher bidders and exercising extreme caution
before dilution. This generally translates into
longer negotiations and consequently longer time
6

7. India Watch - Issue 15 January 2012
Indian economy –
Uncertain times
As we enter what will hopefully be a more promising year in
economic terms for many of the world’s economies, let us take this
opportunity to take a look back at the year just passed.
2011 was somewhat of an annus horribilis, with major stock exchanges went into relative free-fall.
natural disasters in Japan and New Zealand, The National Stock Exchange’s 50 stock index,
political uprisings across North Africa, riots in Nifty, declined nearly 23% over 2011 making it
some of the UK’s major cities and what could still one of the worst performing stock exchanges in
be, an economic time-bomb in the form of the the world. The Bombay Stock Exchange’s Sensex
Euro-zone debt crisis. All these factors, and many index also suffered significantly, seeing a fall of
others, led to the continued economic uncertainty nearly 22% over the year.
seen in both 2009 and 2010, and India, like many Furthermore, a record low rupee added
other emerging markets was not immune to the to India’s economic headache. In December,
global economic turmoil. the rupee reached a record low, down around
India’s economy continued to suffer from 20% against the dollar since August – making
a number of economic factors (as discussed in it the worst performing Asian currency in
previous editions) such as a lack of growth, the last quarter. To make matters even worse,
inflation, a weak currency and, most importantly, C.Rangarajan, chairman of the Prime Minister’s
poor political direction. As a result, the country’s Economic Advisory Council, said that that there
7

8. India Watch - Issue 15 January 2012
was little policymakers could do to counter the Minister Singh is halfway through his second term
rupees’ decline. The rupee’s weakness, which has in office and is under continued pressure to revive
been driven primarily by weakening economic a strong legislative agenda to help restore and
data, has pushed up the price of imported goods, lend direction to the country and its economy.
adding further fuel to India’s on-going battle However, with major corruption allegations
with inflation. still unresolved, it looks unlikely that the
Inflation itself has remained around the nine economic reforms required will come to fruition.
per cent mark despite 13 interest rate rises in less Furthermore, with at least five regional elections
than a year and a half. However, in December, due in the coming year, economic pressures look
India’s inflation slowed to its lowest level in to be just one of many which Prime Minister
twelve months, leading to a pause in interest rate Singh and his government will face in 2012.
rises. Food inflation rates, a key driver of overall What this will mean in real terms for India and
inflation, levelled off to around 6.5% from the its economy is unknown and any prediction here
start of the year, the lowest level in over three would be fruitless but let us hope suitable actions
years. Nevertheless, with an underperforming can be taken to drive India forward.
currency and a slowing economy, the
government’s timing from which it expects
inflation rates to start easing on a continuing basis
might need to be revisited.
In respect to India’s slowing economy, The
Reserve Bank of India has again revised its
economic growth rate lower. In its most recent
Anuj Chande
revision, is said that it expects the country’s
Partner, Corporate Finance
economy to expand 7.5% in the year ending and Head of South Asia Group
March 31 2012 – down 0.4% from its forecast Grant Thornton UK LLP
earlier in the year. BNP Paribas also cut their T +44 (0)20 7728 2133
E anuj.j.chande@uk.gt.com
India 2011-2012 GDP forecast to 6.5%, in their
latest economic report, down from its earlier
projection of over seven per cent. The bank cited
sliding capital expenditure and the country’s
exposure to European Banks for its rate cut.
However, while India’s economy has some
exposure to European Banks, its main problems
come from within. In the second quarter of
India’s financial year, the country’s economy
grew by only 6.9%, the lowest level in over two
years. While healthy monsoons have boosted
agricultural output, the weakness of the country’s
mining and manufacturing sectors has brought
overall growth rates down significantly.
So, what is next for India’s economy? Prime
8

9. India Watch - Issue 15 January 2012
Indian renewables
– The state of play
Anyone that has travelled to India is likely to have experienced a
power outage at some point during their stay. This is not uncommon
given that the country operates at a peak energy shortage of 12%.
Moreover, its per capita consumption of power is amongst the lowest
of the BRIC nations, and below the world average (some 300 million
Indian citizens still have no direct access to electricity).
Power in India is therefore a commodity in These issues are two of the key drivers for the
demand. A bottleneck in the value chain is the rise of renewable independent power producers
supply of fuel – coal being the dominant fuel (IPPs). Private investment into the sector has
source. Despite having the third-largest hard been encouraged by the government through
coal reserve in the world (after the United States preferential power-purchase agreements and the
and China) the quality is relatively poor due to introduction of a Renewable Energy Certificate
its low sulphur and high ash content. Supply is market. As a result many projects (at the moment
also constrained to a small number of inefficient mainly hydro, biomass and wind) are generating
state-owned companies; India’s Ministry of Coal leveraged IRRs in the late teens.
estimate that the demand-supply gap will increase Such returns have attracted domestic and
to 106MT in 2012 from 74MT in 2011. international institutional capital. Over the
There is now a growing import market of coal last year private equity investment into Indian
from Indonesia. renewable companies increased five-fold from
US$100 million to US$522 million. This takes
9

10. India Watch - Issue 15 January 2012
the total private equity investment to over US$1 valuations, particularly during flight to
billion since 2006. Indian IPPs on London’s AIM quality periods.
market have also been successful in raising capital, These factors, in the backdrop of political
in 2010 we estimate £120 million was raised unrest due to the recent corruption scandals,
which grew to nearly £190 million in 2011. We may still be in-play during the early part of 2012.
expect this to continue to grow as we estimate the However a strong catalyst for improvement
capacity for renewable energy in India is some in stock valuations is through commissioning
69GW. This does not include solar assets, which assets. For example a typical wind asset should
is only recently begun to attract investment as a generate over US$200,000 in EBITDA per MW
result of the recent state and national auctions. once in operation; a decent sized wind site could
It is natural to assume the sector is a defensive therefore make a dramatic difference to the
play given that government reforms in the financials of a small-cap stock. We are therefore
renewable and wider power market should most bullish on those stocks with a management
protect IPPs from global and national economic team that has a strong track record, and a fully
headwinds. However over the last 12 months funded pipeline of assets which are expected to
the value of pure-play public Indian renewable be commissioned in the short term. Such stocks
companies (listed in London and in Bombay) has have mitigated risk profiles given financial
fallen by 22% on average. This has performed closure is complete (a significant hurdle for any
in line with the overall market (the BSE Sensex infrastructure related company), and also offer
falling by 23% over the same period). good upside as the market typically does not price
We believe one of the reasons for this could be in pipeline projects.
due to the increases in debt financing costs caused
from inflationary pressures. The Indian central
bank has increased interest rates 13 times over
the past two years; taking it from 5% in 2009 to
8.5% in 2011. Despite the central bank deciding
to not raise rates last month, and some early signs
of easing inflationary pressure, we believe it is still
unclear if rates will fall in the short term.
Another reason for the fall in valuations
could also be due to a lack of well-established
companies in the sector. We estimate there are
only six pure-play renewable energy generators
in India that are listed. Only three of which
have a market capitalisation of over £100m, and
five have a combined installed capacity of less
than 800MW. Such small/mid-cap stocks often Gurpreet Gujral
Director, Research – Cleantech
have poor liquidity which typically obscures Brewin Dolphin
E gurpreet.gujral@brewin.co.uk
10

11. India Watch - Issue 15 January 2012
Companies Bill 2011 – the changing
face of Company Law in India
A new Companies Act to amend the more than 50-year old
Companies Act, 1956, is expected to be finally cleared in the Budget
session in March 2012.
The proposed Bill gives the central government affairs are being carried out in a manner
significant additional power by way of delegated prejudicial to the interests of the company,
legislation, as a result of which numerous members or depositors.
additional provisions can be prescribed through The financial year of all companies has been
rules that the government can notify from time mandated to end on 31 March and only
to time. companies which are holding/subsidiary of a
The Bill has changes ranging from foreign entity can have a different financial year
incorporation, fundraising and corporate with prior approval.
governance through to mergers, auditor rotation
and independence requirements. Mergers regime
Mergers between holding companies and their
Incorporation, funding and investor protection wholly owned subsidiaries or between two or
The Companies Bill, while simplifying certain more small companies (as defined in the Bill) no
requirements for incorporation, has introduced longer require court/tribunal approval. Companies
new concepts of ‘One Person Companies’ and registered in India and those incorporated in
‘Small Companies’ that enjoy relaxation in norms foreign jurisdictions can also merge subject to rules
relating to reporting requirements, board meetings as may be prescribed by the central government in
and other procedural compliances. Private consultation with the Reserve Bank of India.
companies can now also be incorporated with up If a listed company merges with an unlisted
to 200 members, which is higher than the limit of company, the transferee company has been given
50 in the existing Act. the option to remain unlisted with a payment of
For private companies, a review of the cash to shareholders of the listed company.
fundraising activities through private placement Finally, in a bid to eliminate unnecessary
introduced stricter norms; offer documents with litigation that may occur due to dissenting
relevant details are required to be filed with shareholders or creditors, only persons holding
regulators, subject to the number of persons to at least 10% of the share capital or 5% of the
whom the offer is made or the investment size. total outstanding debt have the right to object
For public fundraising, the information to the scheme of arrangement. However, to
required to be disclosed in the prospectus has prevent financial re-engineering through a scheme
been increased. Investor-friendly norms have been of arrangement, specific provisions have been
introduced, eg if money remains unutiliased, a made for the scheme to comply with accounting
special resolution (2/3rd majority) is to be passed standards and for the report of an expert valuer to
for change in the company’s object clause, as well be disclosed to the shareholders.
as other requirements of advertisement and exit
opportunity to dissenting shareholders. Similarly, Corporate governance
any variation in the terms of contract referred to in Public companies are now required to have
the prospectus or object invite restrictions on the independent directors. While the directive on the
use of money raised. number of independent directors on the board
‘Class action suits’ make their debut in the does not differ too significantly from what was
Bill, where any class of members or depositors, in provided in Clause 49 of the Listing Agreement of
specified numbers, can initiate proceedings against Stock Exchanges in India, the Bill has also codified
the company if they are of the opinion that the duties of such directors and has placed restrictions
11

12. on remuneration, eg Independent Directors cannot for listed or other prescribed companies every 5
be given any ESOPs. or 10 years depending on whether the auditor is
Directors cannot exceed two five-year terms an individual or a firm, respectively. There is a
and are required to have a cooling off period of cooling off period of five years after completion
three years before they can be re-appointed. In of such a term during which the auditor cannot
addition, independent directors have to declare be re-appointed. To circumvent the possibility of
that they comply with the criteria as set in the Act. appointment of an entity related to the auditor
On the anvil is the establishment of a data bank of whose term has expired, the Bill provides that
independent directors. no such audit firm which has a common partner
Provisions related to board meetings and their or partners to the retiring audit firm, shall be
powers, and appointment and remuneration of appointed as auditor of the same company for a
managerial personnel have also undergone changes. period of five years.
Secretarial standards, as issued by the Institute An auditor of the company is also prohibited
of Chartered Company Secretaries (ICSI) and from providing, directly or indirectly, a number
approved by the central government, are required of specified non-audit services to the company, its
to be adhered to, with every listed company also holding company, subsidiaries, fellow subsidiaries
required to annex to its board report, a secretarial or associate companies.
audit report. In the wake of recent accounting scams, duty
Information disclosed in Annual Returns has been cast on the auditor, to immediately report
submitted to the Registrar of Companies and in to the central government any offence involving
board reports accompanying financial statements fraud which is being or has been committed against
has been increased. the company by officers or employees.
In conclusion, while there are many changes, the
Auditor’s rotation and independence requirements Companies Bill should bring stronger legislation,
Proposals similar to those being considered by the greater transparency and better investor protection;
European Commission to change audit regulation, how many of such changes finally make it to the
which include audit firm rotation and the Act enacted by the Parliament remains to be seen.
requirement for large audit firms to separate audit
Saurabh Mathur
and non-audit activities, have also found resonance
Manager, Assurance
in the new Bill. Walker Chandiok Co
The proposed changes include auditor rotation India
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
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We are widely recognised as one of the leading international firms
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For those clients requiring advice in both the UK and India we offer a
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