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Emerging Opportunities Move into a higher gear Atul Mittal Director, Deloitte Touche Tohmatsu Pvt . Ltd. December 3, 2011

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Page 1: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

Emerging OpportunitiesMove into a higher gear

Atul MittalDirector, Deloitte Touche Tohmatsu Pvt . Ltd.

December 3, 2011

Page 2: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

India Growth Story

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Page 3: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Key industries will continue to grow

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India Inc.Acquisitions in 2008: 196Value of acquisition: USD 13.1 billionAcquisitions in 2009: 82Value of acquisition: USD 1.4 billionAcquisitions in 2010: 198Value of acquisition: USD 22.5 billion

InfrastructureWorld leading Infrastructure sector11th plan (2007-2012): USD 520billion12th plan (2012-2017): USD 1trillion

Flying HighPassengers in 2005: 32millionPassengers in 2010: 57millionEst. Passengers in 2015: 108million

Patiala PegWorld’s largest whisky market 2006 est. sales: 80million cases2009 est. sales: 119million cases.2010 est. sales: 131million cases.

Mobile TelecomActual connections till 2006: 125millionConnections at Oct 2010: 707million

Emerging Economy3rd largest economy by 2025400 million consumer classBillions being invested in infrastructure

Page 4: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

A day in the life of India

Refrigerators12,602

Televisions33,972

Beer8.6 million (bottles)

Jeans72,329

Air Tickets95,890

Watches125,000

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Page 5: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

A day in the life of India

Gold1,918 kg

Movie Tickets10.9 million

Soft Drinks19.6 million (bottles)

Cars3,880

Two Wheelers35,264

Washing Machines4,274

Water5.7 million (bottles)

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Page 6: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

But paradoxes will remain

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Page 7: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Why You….

Page 8: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

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Page 9: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

Advisory

Advisory services to all service lines on issues related to:

•Corporate and Allied Laws •Competition Law•Exchange Control Regulations•FCRA•Employment and Industrial Laws •Environmental Laws•ESOP, ESPS, Sweat Equity, RSUs etc.•FDI Policy •IPRs•Sectoral Regulations•SEBI and Capital Market Regulations•Stamp Duty Laws•Setting up entity in India viz. Companies, LLPs, Trust, Partnerships etc.•Setting up of Industries in India, initial permissions and registrations and complete hand holdings•M&A and Transaction related services

Advisory

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Page 10: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

Advisory

Structuring Cross-Border Transactions/ Investments:

•Based on FDI Policy, Exchange Control & Applicable Sectoral Regulations •Government Interface•Structuring the investments/ transactions•Financial Model Review•Joint Venture Support •Documentation Support

Advisory

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Page 11: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

Obtaining specific approvals and clarifications, as may be required, from regulators to establish / expand business presence in India:

• Competition Commission of India• Department of Industrial Policy and Promotion• Department of Scientific and Industrial Research• Foreign Investment Promotion Board• Ministry of Finance• Ministry of Commerce and Industry• Ministry of Corporate Affairs• Ministry of Home Affairs• Reserve Bank of India• Registrar of Companies • Registrar of LLP• Regional Director • Securities and Exchange Board of India• Stock Exchanges

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Page 12: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

• Approvals for recognition and approval of in house R&D unit from DSIR under section 35(2AB) of Income Tax Act, 1961

• Registrations under Industrial Park Scheme from CBDT

• Approvals from CBDT relating to tax exemption under section 10(6C) of the Income Tax Act, 1961

• Representing before the Reserve Bank of India, SEBI and Regional Director for compounding of contraventions

• Registration of STPI from Director STPI• Approval from Development Commissioner for

establishing SEZ units• Many more….

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Page 13: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Your Services

Compliance

Undertaking intricate compliance prescribed by regulations made under the provisions of :

• Corporate and allied Laws• Competition Law• Compliance Manual and SOPs• Exchange Control Regulations• Employment & Industrial Laws• IPRs• Legal and Regulatory Health Checks • NBFCs, CICs• Trusts, Partnership, Society, FCRA• SEBI and Capital Market Regulations

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Page 14: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Compliance………Why India is Important

• High Corruption Perception Index (CPI) as per Transparency International latest survey results - India CPI score 3.3 for 2010 as compared to CPI 3.4 for 2009

• Recent history of corruption or fraud cases (CWG scam, IPL scam, 2G Spectrum scam) involving joint venture companies

• CBI initiative to punish passive bribery (payer of the bribes) under the Prevention of Corruption Act (PCA), cover companies involving in corrupt activities e.g. Dow Chemicals

• Lack of strict enforcement of laws and regulations

• Increased foreign direct investment in recent years and major investments in infrastructure development

• Large private sector consisting family owned business with lack of effective governance

• Culture with prevalence of gifts and hospitality

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Page 15: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Compliance with Applicable Laws

• Income Tax Act• The Customs Act• The Foreign

Trade Policy• The Central

Excise Act• The Service Tax

Laws• The Central

Sales Tax Act• The UP Value

Added Tax Act• The Entry Tax

laws

• The Employee Provident Fund & Miscellaneous Provisions Act

• Employee State Insurance Act

• The Payment of Gratuity Act

• The Minimum Wages Act

• The Payment of Wages Act

• Payment of Bonus Act

• Shop & Establishment Act

• Companies Act• LLP Act• FEMA• Competition Act• IDRA

• Foreign Corrupt Practices Act

• Prevention of Corruption Act

Page 16: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Approach & Methodology

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Overview

• Understand the business, nature of operations, geographical presence and applicable laws and regulations

• Understand existing key controls/process-es for compliance

• Perform sample checks

• Identify instances of non-compliances

• Recommend procedures

• Review existing compliance structure

• Recommend global best practices including advice on internal escalation protocols

Understand Evaluate Compliance

Best Practices

Incorporate the

learnings

• Assist to identify the priority areas based on various factors e.g. govt. touch points, consequences etc.

• Classification of priority areas into High, Medium and Low

Assess Priority

Page 17: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2011 Deloitte Touche Tohmatsu India Private Limited

Why the compliance risks matter

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consequences of non-

compliances

Loss of investor confidence and reduction of shareholder value

Loss of reputation and other bad press

Prosecution and imprisonment

Risk of ban on business

Penalties and fines

Page 18: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2010 Deloitte Touche Tohmatsu India Private Limited

Business Restructuring

Capital Restructuring Acquisition Family

Settlement

• Buy back of shares• Buy back through

scheme of arrangement• Capital reduction• Preferential issue of

shares• Variation of

shareholders rights• Differential right shares

• Acquisition of Indian Company by foreign Company/another Indian Company

• Stock acquisition• Business acquisition -

Asset purchase vs slump purchase

• Cash deal vs share swap or a combination of both

• Joint ventures

• Scheme of arrangement

• Merger / demerger / hive off

• Share swaps

• Amalgamation• Demerger• Slump sale• Slump sale –Court

process• Asset sale/ Itemized

sale

M&A Deal – A Snapshot

Deloitte TargetBuyer

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Page 19: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2010 Deloitte Touche Tohmatsu India Private Limited

Developing Broad level

regulatory strategy

based on transaction

objectiveObjective

Value Chain

How Deloitte Can Help

Identifying alternative structures

Pre-Deal Advisory Due Diligence

High level understanding of potential &

regulatory issues

Identifying opportunities

connected with the

transaction

Analysis of target’s level of regulatory compliances

Assessing Impact of adjustment & cost of

regulatory non compliances to purchase price

Purchase agreement Considerations

Detailed regulatory review & analysis of:

Various compliances

Dispute and Litigations

Risk Cost analysis

Transaction Structuring

Optimizing tax opportunities giving due

consideration to the transaction cost

Innovative investment structures

Innovative financial structures

Purchase price allocation

Managing future compliance costs

JV structuring and agreement review

Exit strategies

Implementing the selected

strategy

End-to-end assistance in a section 391-394

arrangement including supporting lawyer during

Court process

Post Deal Advisory

Obtaining regulatory approvals from various

Government bodies such as FIPB, RBI, etc.

Assistance in post deal compliance

requirements (eg. Intimations to

various authorities

Ensure post deal integration

Your range of services

Risk mitigation strategy including assistance in

seeking requisite Government approvals

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Page 20: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

Thank You

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ATUL MITTAL

Director

Tax & Regulatory Services

Deloitte

email: [email protected]

Tel: +91 (124) 46792828,

Mobile: +91 9810065744

Page 21: Regulatory Services – Telecom Capability Statement€¢ Recent history of corruption or fraud cases (CWG scam, IPL scam, ... Assessing Impact of

©2010 Deloitte Touche Tohmatsu India Private Limited

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.

This material and the information contained herein prepared by Deloitte Touche Tohmatsu India Private Limited (DTTIPL) is intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). None of DTTIPL, Deloitte ToucheTohmatsu Limited, its member firms, or their related entities (collectively, the “Deloitte Network”) is, by means of this material, rendering professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser.

No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this material.

©2011 Deloitte Touche Tohmatsu India Private Limited. Member of Deloitte Touche Tohmatsu Limited

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