Big Win for Big 4: ‘Govt Au­dit’ Gives a Thumbs up to MNCs

Be­ing part of MNC net­work does not mean firms are con­trolled by for­eign en­ti­ties, says MCA panel

The Economic Times - - Front Page - Sachin.Dave@ times­

Mum­bai: The gov­ern­ment should con­tinue to al­low multi­na­tional au­dit firms to op­er­ate in the coun­try, said a min­istry of cor­po­rate af­fairs panel re­port, a find­ing that should come as a re­lief for in­ter­na­tional net­works, in­clud­ing the big four — Deloitte, PwC, EY and KPMG.

Be­ing part of a multi­na­tional net­work and shar­ing global costs does not mean these firms are con­trolled or owned by in­ter­na­tional en­ti­ties, said the com­mit­tee of ex­perts in a 200-page re­port, which ET has seen. The ex­er­cise fol­lowed com­plaints by In­dian firms to the gov­ern­ment that for­eign ones were ap­par­ently flout­ing norms and gain­ing un­due ad­van­tage. The fight be­tween multi­na­tional au­dit­ing firms (MAFs) and In­dian au­dit­ing firms (IAFs) in­ten­si­fied two years back in the wake of au­dit ro­ta­tion man­dated by the Com­pa­nies Act 2013 that took ef­fect on April 1, 2017. This led to sev­eral IAFs los­ing clients to multi­na­tional com­peti­tors. For­eign firms are not al­lowed in au­dit­ing, but MAFs op­er­ate through net­work firms that do not use the multi­na­tional’s brand name. MAFs have come un­der scru­tiny as some got en­tan­gled in con­tro­ver­sies such as those in­volv­ing fraud-ac­cused jew­eller Ni­rav Modi or In­fra­struc­ture Leas­ing & Fi­nan­cial Ser­vices (IL&FS).

If this turns out to be the case, it will be the first quar­ter ever of higher on­line sales vol­ume than off­line sales.

CMR has also es­ti­mated that to­tal smart­phone sales dur­ing the quar­ter would be 36 mil­lion units, mark­ing a 16% in­crease year-on-year.

Coun­ter­point Re­search’s Jain said Oc­to­ber was a record month for smart­phone sales, with on­line sales ac­count­ing for 42% of the to­tal vol­ume.

“There have been more of­fers avail­able in the on­line chan­nel, even as hand­set play­ers were ag­gres­sive with on­li­ne­ex­clu­sive launches,” she said.

Last year, the fes­tive sea­son fell in the third quar­ter of the year, but this time the fes­tive sea­son be­gan in Oc­to­ber.

Jain said that in brick-and-mor­tar stores, fes­tive of­fers would con­tinue even post-Di­wali.

This fes­tive sea­son, more users are look­ing for an up­grade and are mov­ing to the higher price band. Jain said the ₹ 10,000-15,000 smart­phone cat­e­gory would ac­count for 30-35% of the over­all sales dur­ing the on­go­ing quar­ter, driven by a faster re­place­ment cy­cle.

IDC’s Joshi said a strong on­line ex­clu­sive port­fo­lio driven by brands such as Xiaomi, Honor, Realme, Asus and One­Plus has re­sulted in a huge spurt in on­line sales. “E-com­merce has re­ally trans­formed the shop­ping ex­pe­ri­ence with its fo­cus now on con­sumer con­ve­nience and af­ford­abil­ity,” she said.

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