2013

Indo-Japan Trade & Investment

Bulletin April Issue

Japan Desk, Corporate Professionals

Indo-Japan Trade & Investment Highlights

Denso Corporation to Delist its Shares in India

Ruchi Soya to Partner with Kagome to launch Tomato Products in India

Nissan to launch the Datsun brand in India

Japan‟s Emperor and Empress to visit India

Japan to Import more Textiles from India

Gems London merges with Japan‟s Imacbc

Japanese Air Conditioner (AC) makers gaining a strong stance in India

Honda Cars India to launch 5 new Diesel Models

Nikon Corporation expecting growing revenue from India

Panasonic and Sony working to win greater share in the Indian Electronics Market

Tochu and Toyota Tsusho contending to invest in LNG terminal in Gujarat

Komatsu to exit from its JV with L&T

Yamaha to invest INR 1500 Crores for a Manufacturing facility in Chennai

NHK Springs coming up with its Second Plant in India

Nippon Investment & Finance raises its stake in Welspun Corp

Tata Elxsi and AISB partner to incubate Tech Start-ups

India to support Japanese Candidate to the post of President, ADB

Knowledge Centre

Impact of the Companies Bill, 2012 on the Foreign Companies having a Place of

Business in India

INDEX

Denso Corporation to Delist its Shares in India

Denso India announced that it has approved the proposal received from its parent Denso

Corporation, Japan to voluntarily delist its equity shares from the stock exchanges. The Japanese

Corporation which currently holds 47.93% shares in Denso India and is listed on Bombay Stock

Exchange, the Madras Stock Exchange and the Delhi Stock Exchange, has proposed to acquire

26.54% stake held by the public shareholders of the company. The stock of the company hit the

upper circuit level of 5% after the announcement.

Ruchi Soya to Partner with Kagome to launch Tomato Products in India

Ruchi Soya Industries is partnering with Kagome Co, the leading Japanese tomato products

company, and Mitsui to form a joint venture to manufacture tomato products in India. Through

the joint venture in which Ruchi Soya will have a 40% stake, it aims to launch high quality

tomato puree, sauces, ketchup and other world class products in India. To be christened as Ruchi

Kagome, the venture will work closely with Indian farmers to educate local tomato producers &

setting up local support centers to handhold farming community in India.

Nissan to launch the Datsun brand in India

Nissan, the Japanese car maker will be launching its Datsun brand in India in July 2013 by

unveiling the much awaited hatchback, the first car to bear the Datsun Brand after a gap of 30

years. The car will however be commercially launched in India only in the first quarter of 2014.

The car will be produced at the Renault Nissan Alliance plant near Chennai and Nissan shall

make every effort to make the car competitive and locally relevant.

Japan’s Emperor and Empress to visit India

To celebrate the 60th

anniversary of the diplomatic ties between India and the Land of the rising

sun, Japan‟s Emperor Akihito and Empress Michiko will be visiting India around the autumn.

Akihito, who visited India once when he was crown prince, shall be the first Japanese Emperor

Indo-Japan Trade & Investment Highlights

to visit India. The Indian Prime Minister Manmohan Singh will also visit Japan in the near

future.

Japan to Import more Textiles from India

Japan which is the third largest importer of textiles in the world wishes to increase its share of

imports from India from 0.9 to 3 percent. This comes in the light of the comprehensive economic

partnership agreement which offers duty free imports on textiles imported from India. Chinese

textiles which form 80% of Japan‟s textile imports face an import duty of 10 to 11 percent,

which makes it clear that the Japanese retailers would want to focus on Indian products instead.

Gems London merges with Japan’s Imacbc

Gems London in which the Indian Gitanjali Gems holds 30 percent stakes through its Hong

Kong based wholly owned subsidiary Aston Luxury Group, has merged with Tokyo based

company Imacbc. After the merger, Imacbc shall now be a completely integrated unit sourcing

raw material from Thailand and China, overseeing manufacturing in China and retailing in

Japan. The Company shall sell through the TV Channel, Gems TV which has been owned by

Gems London; and also expand its existing retail network in Japan.

Japanese Air Conditioner (AC) makers gaining a strong stance in India

The Japanese air conditioner manufacturer, number one in the global market, Daikin plans to

increase its share in the Indian AC market from the current 12% to 20% in 2015 and aims to do

so by setting up dealers in all Indian cities which have a population of at least 100,000. The

Company has also launched products targeting all segments to tap a larger market share. Not

only Daikin, other Japanese AC makers like Panasonic and Hitachi, have also gained momentum

in the Indian market. Panasonic, which is comparatively new in this segment in India, has been

growing at a rate of 80-100% in the split AC segment.

Honda Cars India to launch 5 new Diesel Models

The Honda Cars India Limited (HCIL) plans to launch 5 new models in the diesel segment in an

attempt to garner an appreciable market share in the country that is rapidly „dieselising‟. HCIL

has steadily started moving into Tier I and Tier II markets and shall continue to do so by

expanding its dealership across various cities. What more, the company has announced an

investment of INR 2500 Crores1 (approx. $460 million) in a plant in the Alwar district of

Rajasthan to increase its plant capacity from 1.2 lakh2 units to 2.4 lakh units by the end of the

year.

Nikon Corporation expecting growing revenue from India

Japanese camera giant Nikon Corporation is expecting India to contribute to its global revenue to

the extent of 5% within the next 3 years on account of the growing demand here. The wholly

owned Indian subsidiary of the company „Nikon India Private Limited‟ is expected to clock a

sales revenue of more than INR 1050 Crores for the period 2012-13, showing a growth of 40%

from the previous fiscal. The company currently enjoys a 55% market share in the digital SLR

cameras and 27% in the compact cameras.

Panasonic and Sony working to win greater share in the Indian Electronics Market

The strategies of the Japanese electronics giants like Panasonic and Sony to overtake their South

Korean rivals in India seem to be working. Owing to the rapidly expanding middle class in the

country, the LCD TV sales have become eleven fold since 2007 and the sales for other electronic

durables like refrigerators, washing machines and air conditioners have doubled during the same

period. Panasonic has focused on developing products specifically for local demands whereas

Sony has focused on training shop workers as per the needs of the Indian retail market.

Tochu and Toyota Tsusho contending to invest in LNG terminal in Gujarat

The GSPC LNG terminal at Mundra, Gujarat, has found prospective investors in Japan‟s Tochu

and Toyota Tsusho who have been contending to invest in the said terminal for a 25% stake. The

GSPC LNG is a JV between GSPC and Adani Group with the former holding 50% stake in the

Mundra project, the latter holding 12.5%. The remaining share shall be allotted to a new strategic

investor.

Komatsu to exit from its JV with L&T

The Japan mining equipment maker Komatsu will exit from its equal Joint Venture with Indian

partner Larsen & Toubro (L&T) named “L&T Komatsu” by selling its stake to L&T. L&T

1 (1 crore = 10 million)

2 (one lakh = 100,000)

would continue to fulfill the Indian market requirements till Komatsu sets up its own

manufacturing facilities in India. Where L&T will continue its manufacture of the construction

equipment and hydraulic components, Komatsu will be responsible for production of Komatsu

equipment.

Yamaha to invest INR 1500 Crores for a Manufacturing facility in Chennai

Japan‟s Yamaha shall soon make India the base for manufacturing low-cost motorcycles for the

global market and has planned to invest INR 1500 Crores on a manufacturing facility at Chennai

which will also house the company‟s second R&D centre. The company plans to establish a

strong foothold in the mass volume segment by bringing a new range of low cost products and

doubling the sales by 2015.

NHK Springs coming up with its Second Plant in India

NHK Springs India Ltd has started construction of their 2nd plant in India at Sri City, which

shall come with an investment of INR 300 Crores, lay spread over 18 Acres and manufacture

coil springs and stabilizer bars for the automobile industry. The Japan based company is present

in 11 countries and its clientele includes Toyota, Nissan and Ford.

Nippon Investment & Finance raises its stake in Welspun Corp

The Japanese Private Equity unit of Daiwa Finance Company Limited, Nippon Investment and

Finance Company has raised its stake in Welspun Corp to 2.1% from the earlier 1.55% by

buying 13.9 lakh shares in a block deal worth INR 7.83 Crores. Welspun Corp, a part of the

Welspun Group, offers solutions in line pipes with a capacity to manufacture Longitudinal,

Spiral and HFERW / HFI pipes, coating, bending and double jointing facilities, thereby giving a

360 degree pipe solution to its customers.

Tata Elxsi and AISB partner to incubate Tech Start-ups

Tata Elxsi and AISB Holding Private Limited have partnered to provide incubation and greater

market access to technology start ups in Asia. Tata Elxsi runs incub@TE, an incubation centre

program to support entrepreneurs whereas Singapore‟s AISB promotes business collaborations

and investments in South East Asia, Japan and India with special focus on SMEs and

Entrepreneurs. For the portfolio companies, the partnership will bring access to capital, South

East Asian and Japanese markets, and complementary capabilities.

India to support Japanese Candidate to the post of President, ADB

Indian Finance Minister P. Chidambaram attended a conference hosted by the Japan National

Press Club where he told that India shall be supporting the former Japanese Vice Finance

Minister for International Affairs Takehiko Nakao for the post of the President of the Asian

Development Bank. The post fell vacant after resignation of Haruhiko Kuroda who left to join as

the Governor of the Bank of Japan.

Class Action Suits: Finally an effective weapon in the hands of the Stakeholders

- A concept novel in the Companies Bill3

A Class Action or a Class Suit means a lawsuit that allows a large number of people with a

common interest in a matter to sue or be sued as a group. The concept which was well prevalent

in various developed countries of USA, UK and Singapore has had no existence in India till date.

A provision relating to class suits in the legal veins of an economy gives certain edge to the

stakeholders for the retrenchment of their rights.

Salient Features of Class Action Suits

The Bill provides that a suit under this clause pertaining to Class Suits may be filed by members

or depositors or any class of them, if they are of the opinion that the management or conduct of

the affairs of the company are being conducted in a manner prejudicial to the interest of the

company, its members or depositors.

However, the Bill explicitly provides for the requisite number of members empowered to file

class action as follows:

In the case of a company having a share capital, more than

one hundred members of the company or;

such percentage of the total number of its members as may be prescribed,

or

any member or members holding more than such percentage of the issued share capital of

the company as may be prescribed.

This would be subject to the condition that the applicant or applicants has or have paid all

calls and other sums due on his or their shares;

In the case of a company not having a share capital, more than one-fifth of the total number

of its members.

3 This article is written by Ms. Shipra Wadhwa of Corporate Professionals, Advisors and Advocates and was first published in Lex Witness

(December, 2012)

Knowledge Center

Whichever is lesser

The requisite numbers of depositors empowered to file class action should be: More than one

hundred in number or more than such percentage of the total number of depositors as may be

prescribed, whichever is less, or any depositor or depositors to whom the company owes such

percentage of total deposits of the company as may be prescribed.

The Companies Bill provides that a Class Action Suit may be filed to the Tribunal seeking orders

against a Company in the following matters:-

Restraining from committing an act which is ultra vires the Articles or Memorandum of the

Company;

Restraining from committing breach of any provision of the company‟s Memorandum or

Articles;

Declaring a resolution altering the Memorandum or Articles of a company as void if the

resolution was passed by suppression of material facts or obtained by mis-statement to the

members or depositors;

Restraining the company and its Directors from acting on such resolution;

Restraining from doing an act which is contrary to the provisions as provided in the Bill or

any other law for the time being in force;

Restraining from taking action contrary to any resolution passed by the members;

Claiming damages or compensation or demanding any other suitable action from or

against—

- the company or its directors for any fraudulent, unlawful or wrongful act or omission or

conduct or any likely act or omission or conduct on its or their part;

- the auditor including audit firm of the company for any improper or misleading statement

of particulars made in his audit report;

- any expert or advisor or consultant or any other person for any incorrect or misleading

statement made to the company.

Further, the Bill provides that the Tribunal shall, while admitting a class action suit, take into

account that All similar applications prevalent in any jurisdiction have been consolidated into a

single application and a lead applicant is appointed amongst them

Class Action Suit vis-à-vis Suit for Oppression and Mismanagement

Section 397 and 398 of the Companies Act, 1956, as is prevalent on date, deals with the filing of

petition before the Hon‟ble Company Law Board in the cases of oppression and mismanagement.

One major practical difference between the concepts of oppression and mismanagement and that

of class suits is that the latter also allows depositors to take an action against the company

whereas no such provision is there in the former. Also noteworthy is that, in the case of suit for

oppression and mismanagement, where action can be taken only against the company and its

statutory appointees, the Bill allows that a class suit can be filed even against an expert or

advisor or consultant or any other person for any incorrect or misleading statement to the

company and also against an auditor for any improper or misleading particulars.

Besides theses, class action suit can be filed against the management or directors of company for

restricting them to do one or more particular action, however petition u/s 397 & 398 is filed

against management for various instances of past mismanagement and praying not to indulge in

future mismanagement of functions of company.

Impact of Change

Here I discuss the impact this particular provision relating to class action suits will have on the

stakeholders: As far as stakeholders are concerned, the provision seems to definitely be an

advantageous one to this segment. While earlier the only recourse available to the shareholders

of a company was that of filing of a petition for oppression and mismanagement, now class

action suit gives the stakeholder an additional right and several more grounds to fight for their

rights on any abuse of powers by the company, its management or for that matter even the

auditors and consultants.

The deposit holders who earlier had no other alternative than to file civil suit, are also now

enabled to take action against any wrongful acts of the company or other specified persons,

which means that they may find themselves in more secured territory now.

Including auditors and consultants of a company within the ambit of class action suit, besides the

company and management, has provided additional empowerment to the stakeholders to take a

call against such persons including the company for the specified list of wrongful acts which

may be conducted by them. Another impact of this will be that experts, advisors and auditors of a

company will now act more carefully and diligently before advising anything to the company

and its management.

Needless to say, this provision is likely to encourage faster action and speedy disposal of matters

calling immediate attention and it is a good provision for combining all similar applications filed

anywhere against the specified person for stated misconduct.

The provision to enable stakeholders to claim damages from the company or its directors and

other specified person with reference to the expenses of class suit is also a positive and

encouraging move for stakeholders. Higher penalties and mandatory imprisonment, if proved

wrong would act as a deterrent to any fraudulent, unlawful or wrongful act or for any improper

or misleading statement through.

Conclusion

The lack of enablement of Class Action suits in India was largely felt in the recent past when the

country was jolted by some corporate scams, mincing the trust, confidence and sentiments of the

stakeholders. At that time need for provisions which could protect the interests of and fight for

the rights of innocent stakeholders by empowering them was felt. The enactment of the

Companies Bill will thus open vistas of recourse options for the stakeholders of the company.

DISCLAIMER: The entire content of this document has been developed on the basis of relevant statutory

provisions and as per the information available at the time of the preparation. Though the author has made utmost

efforts to provide authentic information, however, the material contained in this document does not

constitute/substitute professional advice that may be required before acting on any matter. The document has been

produced only for the informational purposes; the author and the firm expressly disclaim all and any liability to any

person who has read this document, or otherwise, in respect of anything, and of consequences of anything done, or

omitted to be done by any such person in reliance upon the contents of this document.

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