Wednesday, May 30, 2012
“Indian acquirers are at a disadvantageous position unlike their foreign counterparts due to the absence of a level playing field, as banks in India are not providing finances whereas the foreign banks are facilitating their domestic companies,” said Mr P.K. Bindlish, chief general manager, Securities Exchange Board of India (SEBI) at an ASSOCHAM event held here in New Delhi today.
“There is a need to strengthen the entire process of mergers and acquisitions (M&As) in the domestic scenario as the restrictive lending standards imposed by the apex bank on acquisition and debt financing has lead to creation of an uneven playing field for acquirers in India as compared to the overseas acquirers which are capital-rich and can leverage their balance-sheets without any such restrictions,” said Mr Bindlish while addressing an ASSOCHAM National Conference on ‘New Dimensions in M&A Regulatory Framework.’
“The new Companies Bill is likely to be taken up in the upcoming session of the parliament,” said Mr R.P.N. Singh, minister of state for corporate affairs while responding to a query on status of the new Companies Bill which will give a much-needed fillip to the cause of corporate social responsibility (CSR) and corporate governance by replacing the Companies Act 1956.
“The new Companies Bill is back with the Parliamentary Standing Committee on Finance as the committee wanted to discuss certain issues and suggestions of the stakeholders and it is likely to be introduced in the next parliament session,” said Mr Singh while addressing the audience at an event organized by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“M&As are a significant business tool in the current scenario and the government is committed to lend its support to the industry while ensuring a proper regulatory framework,” said the state minister for corporate affairs while releasing an ASSOCHAM-Grant Thornton study titled ‘New Dimensions in M&A regulatory framework.’
“We need to strategically utilize the international M&A deals to invest the surplus funds generated through trade with other countries and counter Chinese supremacy in this regard,” said Mr Singh. “Corporate restructuring through M&As has increased substantially and is likely to spur in the future and resulting in rise of export revenue contributions.”
“Globalisation has brought huge benefits to Indian corporates and entrepreneurs as Indian companies are leading the way in overseas acquisitions thereby making the domestic market an attractive destination for foreign investors,” said the minister. “We need to look at certain innovative models while focusing on better strategic assets in sectors like energy, mining, natural resources and others to fight the global economic crises which impacted M&As in India during the last year.”
“For this we need to ensure while that our regulatory framework is of international standards and I feel Competition Commission of India (CCI) and SEBI are doing a commendable job in this regard,” said Mr Singh. “For instance, the CCI has now amended the combination regulations for corporates from making filings for combinations which are unlikely to raise adverse competition concerns, to reduce their compliance requirements, make filings simpler and move towards certainity in the application of the Act and the Regulations.”
The minister also stressed upon restructuring the aspect of overseas acquisitions while calling for reinforcement of confidence amid industry leaders and working with regulators and policy makers to help iron out any miscommunications arising in the way of UPA model of inclusive growth for all stakeholders.
Others who spoke during the conference included: Mr Pavan Kumar Vijay, chairman, ASSOCHAM National Council for M&A; Mr Munesh Khanna, senior partner M&A, Grant Thornton India LLP; Mr D.K. Aggarwal, chairman & MD, SMC Investments & Advisors Ltd. And Mr D.S. Rawat, secretary general, ASSOCHAM.
Source: Assocham Release