IKEA will source from MSMEs where feasible
NRETAILTHERAPYN
NIVEDITAMOOKERJI & SURAJEET DAS GUPTA
New Delhi, 10 October
Replying to queries by the Department of Industrial Policy & Promotion
(DIPP), Swedish furniture major IKEA has said it would source from
micro, small and medium enterprises (MSMEs) "where it is feasible".
Last month, the government had tweaked the single-brand retail policy,
saying 30 per cent sourcing from the MSME sector was preferable, not
"mandatory".
The company would "source (products, components, material for exports
and domestic sales, etc) 30 per cent of the value of goods purchased
(excluding all taxes and duties) for its retail activities in India,
from India, preferably from MSMEs, village and cottage industries,
artisans and craftsmen, in all sectors relevant to IKEA, where it is
feasible", it stated.
It added for the India market, Inter IKEA System, the owner of the
IKEA brand, had already signed a franchisee agreement with group
company Ingka Holding Overseas. This, the company said, was a
departure from its standard global practice, as franchisee agreements
were signed only after establishing a territory penetration plan for
that country. The exception showed the company's commitment to the
India market, IKEA told the government in its reply. Now, its proposal
would be taken up by the Foreign Investment Promotion Board (FIPB).
After IKEA had, in an application on June 22, mentioned setting up a
'Swedish food market', DIPP had sought clarity on the matter. IKEA
clarified while the food market was not its primary business activity,
it was linked and incidental to the company's retail store business.
Swedish food markets at its retail stores are part of IKEA's global
concept, it stated.
Swedish food markets are located close to the exits of IKEA retail
stores across the world. These sell Swedish meatballs, chocolates,
packages of gravy, Scandinavian biscuits and crackers, salmon, soft
drinks, etc. All these products are sold under the IKEA brand.
Elaborating on its 'flexible payment options', IKEA said it might
offer customers the option of paying for products on an interest-free,
deferred payment basis. This, too, was part of the company's business
and sales policy, it stated.
On its initiative to collect and purchase old furniture, IKEA said the
facility was only for customers who no longer needed their old
furniture. Such old furniture is collected and/or purchased by the
IKEA group. These are either donated to needy families through
charitable organisations or given to third-party small businesses on
an "as-is-where-is" basis, the company stated.
It added the publication activity it mentioned in its proposal
referred to catalogues, brochures, guides, manuals and pamphlets.
IKEA plans to set up 25 stores in India, and increase the store count
on the basis of market development. In the first stage, it plans to
invest ^600 million, and an additional ^900 million at a later stage.
Signs franchisee agreement with group company Ingka Holding Overseas
IKEA may offer customers the option of paying for products on an
interest-free, deferred payment basis PHOTO:
PM talks tough on corporate failure to curb bribery
Says exaggerating corruption will dent India's reputation
BS REPORTER New Delhi, 10 October
Prime Minister Manmohan Singh today said the Prevention of Corruption
Act should be tweaked, considering the economic development in the
country and the new challenges faced by anti-corruption agencies.
However, only afew state governments have responded to a draft
amendment circulated by the Centre outlining changes in the law.
Speaking at a conference organised by the Central Bureau of
Investigation (CBI) on economic development and the role of
anti-corruption agencies, Singh said though economic liberalisation
had unleashed new energies, for anti-corruption agencies, detecting
economic crime had become more difficult.
He said while good training and competence were essential, CBI, as
well as other anti-corruption agencies, shouldn't shy away from
engaging professionals with expertise, who could assist them in
conducting an impartial enquiry in complex cases. "Also, institutions
established with special focus on economic offences should perhaps be
more broadbased. These need not be confined to people with policing
backgrounds. An open mind in this regard could help impart credibility
to our investigations," he said.
Direct bank transfers of scholarships, pension, and other non-cash
subsidies to about 200 million people through the Aadhaar platform had
led to a decline in corruption, he added.
Changes were envisaged in the Prevention of Corruption Act to arrive
at an unambiguous definition of 'corruption', Singh said. "Experience
has shown, in the majority of cases, it is difficult to tackle
consensual bribery and the supplier of the bribe goes scot-free by
taking recourse to the provisions of the Act.
This would be taken care of in the proposed amendments. Experience has
also shown big-ticket corruption is mostly related to operations by
large commercial entities. It is, therefore, also proposed to include
corporate failure to prevent bribery as a new offence on the supply
side. We are also examining how the Act can be amended to protect
honest public servants more effectively," he said.
A reality check on the progress of the amendment to the Act, however,
suggests the progress is slow. Changes in the draft Indian Penal Code
(Amendments) Bill, 2011, including those on graft/bribe by an
individual, firm, society, trust, association of individuals and
companies (incorporated or otherwise) involved in any economic,
financial or commercial activity were circulated to states and Union
territories for comments. However, these haven't been endorsed by
state governments yet.
There is no legal provision to check bribe in the private sector.
According to the draft Bill, whoever in the course of economic,
financial or commercial activity promises, offers or gives, directly
or indirectly, any gratification, in any capacity, for a private
sector entity, for himself or another person, would be punishable.
In an oblique comment on the controversy over revelations about the
real estate links of Robert Vadra, son-inlaw of Congress President
Sonia Gandhi, Singh warned India's reputation would be sullied by "the
mindless atmosphere of negativity and pessimism that is sought to be
created over the issue of corruption".
"We need to ensure even while the corrupt are relentlessly pursued and
brought to book, the innocent are not harassed. The importance of
making a distinction between bonafide mistakes and colorable exercise
of power in investigation of corruption cases cannot be
overemphasised," he said.
PM Manmohan Singh with CBI Director A P Singh at the inauguration of
the 19th Conference of CBI and State AntiCorruption Bureau, in New
Delhi on Wednesday. PHOTO: PTI
"We need to ensure even while the corrupt are relentlessly pursued and
brought to book, the innocent are not harassed"
Minority shareholders getteeth in Companies Bill
TANIAKISHORE JALEEL
Very soon, you, a small shareholder, might be able to take on company
managements. The class action suit, a handy weapon for small investors
seeking relief from errant corporations, will soon be available in
India. Last Thursday, the Cabinet cleared a long-pending piece of
legislation that will, if passed by Parliament, revamp the Companies
Act of 1956.
The class action suit is a powerful tool, says Shriram Subramanian,
promoter, Ingovern Research Services, a proxy advisory and corporate
governance firm. "Just like how people file for Right to Information
(RTI), shareholders should use the class action suit route in case
they feel there is some wrongdoing in the company in which they hold
shares," says Subramanian.
Small investors who at present are not able to get compensation in
cases of fraud due to the absence of any such law will be able to
fight for justice with such suits. This suit is brought by one party
on behalf of a group of individuals to file for claims against erring
companies in a court.
For example, three years after the Satyam fraud, Indian investors are
yet to get any meaningful compensation in the ~8,000-crore fraud
committed by the promoters of Satyam Computer Services. But some of
their American counterparts, who owned American Depositary Receipts
(ADR), have made the company agree to pay $125 million (~625 crore) in
settlement due to a strong classaction framework in the US.
According to the Companies Bill, depositors or any investor group can
act on behalf of the shareholders and use the class action suit route.
To file the suit, a group of 100 shareholders need to combine. one of
the points that could impact shareholders. There are such proposals in
the Bill that a shareholder should be aware of.
"A company desirous of changing its object clause will be required to
provide an exit to the dissenting shareholders if it business.
"Though it will not stop the company from diversifying, it will allow
the minority shareholder to exit in case he is unsure of this kind of
abusiness move. Investors will not only have a right to object to
amajor proposal, but also exit the company," says a Mumbaibased
corporate lawyer.
According to reports, at least than 100 companies in recent years have
changed their object clause. For example, Raymond changed their object
clause to include real estate in their business.
--
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CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
http://www.csarengarajan.blogspot.com
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