Compliance and Issues under Legal Metrology Act 2009
Applicability: The Legal Metrology Acts & Rules is applicable
to the following people:
Persons Engaged
in
-
Manufacturing
-
Retail or Wholesale
dealing
-
Repairing of any
weight or measure
-
Manufacturing,
Importing and/or Packaging any item.
-
Persons who are using any weight or measure in any transaction or
Industrial Production or Protection.
Rules made under the Act:
1.
The Legal
Metrology (Packaged Commodities) Rules, 2011
2.
The Legal
Metrology (General) Rules, 2011
3.
The Legal
Metrology (National Standards) Rules, 2011
4.
The Legal
Metrology (Numeration) Rules, 2011
5.
The Legal
Metrology (Approval of Models) Rules, 2011
6.
The Indian
Institute of Legal Metrology Rules, 2011
7.
The Legal
Metrology (Government Approved Test Centre) Rules, 2013
Objective of the Act and Rules:
To protect the consumer’s interest by making the
originator (manufacturer, packer or importer) of the packaged commodities/
standard weights and measures, accountable for such products manufactured,
packed or imported by them, which are meant for consumption by the general
public.
Compliance under the Act:
1.
Maximum Retail Price (MRP):
a. The commodities to have the Maximum Retail Price
(MRP) printed on the packages along with the words “inclusive of all
taxes”.
Eg.MRP: Rs. 1999/- (inclusive of all taxes).
b. MRP once printed cannot be increased.
c. Certain items may be packed to offer any free quantity provided
it is included in the standard size and the MRP is reduced proportionately.
d. As per the Packaged
Commodity Rules, the net content shall not be disclosed if the commodities are
given free of cost.
2.
Principal display panel: Total area
of the pack where all the mandatory requirements are specified in one place, on
one side of the pack.
a.
No
separate sticker should be affixed;
b.
No
over writing
3.
Statutory Declarations on Products: The following
mandatory declarations shall be made on the packages either at the factory
level or at manufacturing level (depot of the factory).
a.
The name and address of the manufacturer or packer
or importer.
b.
The common or generic name of the commodity.
c.
The net quantity of the content.
d.
Month and year of manufacturer or packing or
import.
e.
Retail sale price: MRP (including all taxes)
f.
Size/dimension of the commodity when relevant.
g.
Name, address and telephone no. of the Consumer
complaint Cell.
h.
Marking "GM" for genetically modified
food items.
Note: The provisions of Legal Metrology Act are not
applicable for the commodities meant for Industrial Use.
4.
Re-stickering: Re-stickering is not permissible. Packers are not permitted to affix
individual stickers or labels on the package for altering or making
declarations.
Exemption:
However for reducing the MRP, a sticker with
revised lower MRP (inclusive of all taxes) may be affixed and the same shall
not cover the MRP declaration made by the manufacturer or the packer, on the
label of the package.
5.
Import of Products:
a. To ensure that proper registration is obtained for
importing the products.
b. The pre-packed commodities to carry the specific
declarations on their labels as specified in the import policy.
c. The importer has to comply with all the necessary
declaratory compliances before selling, distributing, delivering, displaying or
storing the imported goods.
6.
Double stamping
A weight or measure or
product manufactured in one state and sold or transferred to another state will
require double verification and stamping - both at the end of manufacturing
state and at the end of user state.
Non Compliance of the Act:
Penalties:
a. There are stringent penal consequences in case of
violation of the act and rules.
b. The initial offences are compoundable, while the
subsequent offences may lead to criminal prosecution of the officers in default
of the Company.
Challenges
a. There is a lack of practical procedures available
for revision of the Maximum Retail Price (MRP) of the products.
b. There is a lack of procedure with regard to the
treatment of imported goods on par with the domestically manufactured goods
(Even at the point of import). This lack would render the Packaged Commodity
Rules highly impractical, ambiguous and prone to litigation.
c. The Packaged Commodity rules alone have more than
30 mandatory compliances required to be adhered to by the retailers, apart from
various other compliances in the subsequent rules.
d. It is very difficult to explain the concerned
officers when the goods are meant for wholesale, industrial or institutional
consumption. The labelling requirements shall not be applicable if the goods
are not meant for retail sale. Therefore, the industry is forced to approach
the courts to give relief from the ambiguity and inflexibility of legal
metrology and labelling law regime in the country.
e. Import:
a. The exporter located in a foreign territory would
be unaware of the Indian labelling laws therefore such goods are always prone
to inadvertent non-compliance.
b. Similarly when the transactions are not linear (ie.
Goods passed on to many buyers through high sea sale agreement) there is very
little scope for complying with the labelling laws.
c. Inorder to comply with the legal metrology if the
importer opts to label the imported products in the customs bonded warehouse
then the escalated cost shall naturally spread to the end consumer and be
indirectly prejudicial to their interest. Thus defeating the whole purpose of the act and the rules.
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Private Equity Investment
Meaning:
Private equity is a form of equity investment into private companies that are not quoted on a
stock exchange. It can be through both domestic and international route.
The following are the different ways through which a Private Equity Investment can take place.
Leveraged buyout
This, refers to a strategy of making equity investments as part of a transaction in which a company, business unit or business assets is acquired from the current shareholders typically with the use of
financial leverage.
Benefits to the investor
(1) the investor itself only needs to provide a fraction of the capital for the acquisition, and
(2) the returns to the investor will be enhanced (as long as the return on assets exceeds the cost of the debt)
Growth capital
It, refers to equity investments, most often minority investments, in relatively mature companies that are looking for capital to expand or restructure operations, enter into a new market or finance a major acquisition without a change of control of the business
Mezzanine capital
It refers to the sub-ordinate debts or the preferred equity securities that often represent the most junior portion of a company's capital structure that is senior to the company's common equity.
Venture capital
Investment made in the equity of a company for particular venture is called a venture capital. Ie. for the purpose of starting up a company, development of the company , or for the expansion of a business or for any other like manner.
Steps involved in Private Equity:
- Identifying the need and purpose of PE
- Understanding the institutional investor’s interest in the deal
- Analyzing the risk involved.
- Carrying on a complete Due diligence
- Formulating and executing the legal documents.
- Exit
Important documents:
- Investment agreement
- Articles of association
- Service agreements
- Acquisition
- Finance related agreements
Arbitration Clause:
- The arbitration clause should be in the interest of the Company.
- It should clearly state the place of arbitration, the law that would be applicable and the process of selection of the arbitrator.
- Appeal - ability of the Final award.
- Method to be adopted in case of international transactions
- When an arbitration clause is available the parties to the contract have to approach an arbitrator initially and not the civil court, however there are exemptions to it.
Arbitration can be an effective means of dispute resolution, and may sometimes be preferable to litigation, but parties to a potential dispute should consider its benefits and limitations before agreeing to resolve their dispute through arbitration.
Exit:
The following are the methods through which the exit of the private equity can take place.
Successful exit:
o listing on a recognised stock exchange; (IPO)
o sale of New co to a trade purchaser; or
o Merger
o Going in for restructuring, or issue of special dividends or redemption rights.
Unsuccessful exit:
o the insolvency and winding-up of Newco;
o the sale of the investor's shareholdings to management or to Newco on a purchase of own shares, often for a low price; or
o a restructuring and transfer of equity to the bank(s) or mezzanine lenders who then try to sell the business.
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Micro Small and Medium Enterprise (MSME)
As per the MSME (Micro, Small and Medium Enterprise) Act 2006 which has replaced the SSI Act manufacturing/ service enterprise can be considered to be a MSME if it fulfills the following criteria of investment in plant and machinery/ Equipments:
Manufacturing enterprises:
engaged in the manufacture or production of goods
pertaining to any industry specified in the first schedule to the Industries
(Development and Regulation) Act, 1951, shall be considered to be either a
Micro, Small or Medium enterprise depending on the investment in plant and machinery, as below:.
- Micro
Enterprises - where the
investment in plant and machinery does not exceed Rs.25 lakh.
- Small
Enterprises - where the investment in plant and machinery is
more than Rs.25 lakh but does not
exceed Rs. 5 crore
- Medium
Enterprises - where the investment in plant and machinery is more
than Rs. 5 crore but does not exceed Rs. 10 crore.
Service enterprises:
engaged in rendering or providing
services, shall be considered to be either a Micro, Small or Medium enterprise
depending on the investment in equipments,
as below:.
-
Micro
Enterprises - where the
investment in equipment does not exceed Rs.10 lakh.
- Small
Enterprises - where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2
crore
-
Medium
Enterprises - where the investment in equipment is more than Rs. 2
crore but does not exceed Rs. 5 crore.
Registration:
Even if a
company falls under MSME, it is at the discretion of the company to get itself
registered as MSME or not.
Advantages and Disadvantage
Sr No
|
Advantages
|
Dis-advantages
|
1
|
To avail
of some benefits, incentives or support given either by the Central or State
Govt. Eg.
- Credit prescription (Priority sector
lending), differential rates of
interest etc
- Excise Exemption Scheme -
Exemption under Direct Tax Laws.
- Statutory support such as
reservation and the Interest on Delayed Payments Act.
(It is to be noted that the Banking Laws, Excise Law and
the Direct Taxes Law have incorporated the word MSME in their exemption
notifications. Though in many cases they may define it differently. However,
generally the registration certificate issued by the registering authority is
seen as proof of being MSME)
|
Ambiguities in reverse charge mechanism will hurt MSMEs'
(applicable to Service Industry), like any other service industry. (No
specific exemption provided )
Reverse Charge
Mechanism:
Generally,
it is the service provider that is liable to pay service tax to the Central
Government. However, the Government can also notify the service recipient as
the entity liable to pay service tax. This is popularly known as the Reverse
Charge Mechanism.
|
2
|
States/UTs have their own package of facilities and
incentives for small scale they are as follows:
- development of industrial estates,
tax subsidies, power tariff subsidies, capital investment subsidies and other
support.
Both the Centre and the State, whether under law or
otherwise, target their incentives and support packages generally to units
registered with them.
|
MSME can
not invest more than 10 Crore
|
3
|
Credit Guarantee Fund Scheme for
Micro and Small Enterprises
The
Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE) was
launched by the Government of India to make available collateral-free credit
to the micro and small enterprise sector. Both the existing and the new
enterprises are eligible to be covered under the scheme.
|
|
4
|
Establishment of Trust:
The Ministry of Micro, Small and Medium Enterprises and
Small Industries Development Bank of India (SIDBI), established a Trust named
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to
implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.
The scheme was formally launched on August 30, 2000 and is operational with
effect from 1st January 2000.
|
|
5
|
Prompt payment for Goods Supplied
/ Services provided
All
businesses are required to disclose the amounts due for more than such period
to MSMEs in their financials and it is part of most Bank/ financing
documentation. This has been done with
a view to ensure that the precious Working Capital of such small
businesses does not get blocked with larger industries/ businesses
|
Investments:
- An industrial
undertaking which is an MSME, i.e., a company with interests in industry can
invest upto 24% equity in a MSME unit.
-
If such investment in another industrial undertaking in form of equity exceeds
24%, the industrial unit loses its MSME status.
Ceasing to be a MSME:
Manufacturing enterprise:
When the investment in the plant and
machinery exceeds more than Rs. 10 Crores it shall cease to be a MSME and all
the privileges and advantages ceases accordingly.
Service enterprise:
When the investment in the equipment
exceeds more than Rs. 5 Crores it shall cease to be a MSME and all the
privileges and advantages ceases accordingly.
Conclusion
Even though many privileges are
envisaged in the Act, in practice most Banks are reluctant to extend loans to
such Micro/ Small / Medium enterprises. Due this factor and the ever increasing
clamour for FDI, in every sector, this breed of small scale industries, is
becoming more endangered, and one tends to fear it may become obsolete like the
original SSI Act, to be replaced only by the MNCs and conglomerates of the
world.
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FDI IN RETAIL IS IT BENEFICIAL TO INDIA
Prime
Minister Manmohan Singh projects FDI in retail as a boon for the
agricultural sector. Unfortunately, if you examine the realities, it
will spell a death knell for farming. It will be the beginning of an end
for Indian farmers.
It
has happened in the United States. Ever since big retail - dominated by
multi-brand retailers like Wal-Mart - entered the market, farmers have
disappeared, and poverty has increased. So has hunger.
Today,
not more than 700,000 farmers remain on the farm in America. Poverty
has grown, and hunger has broken past 14-years record.
In
Europe, despite the dominance of the big retail, every minute one
farmer quits agriculture. This is because farmer's income across US/EU
is on a downslide.
Though
FDI in retail trade is restricted till recent announcement, but the
Government of India has a more liberal policy towards wholesale trade,
franchising, and commission agents’ services, thus preparing the ground
for FDI in retail as well. Foreign retailers have already started
operations in India through various routes:
(i) joint ventures where the Indian firm is an export house;
(ii) franchising (eg. Kentucky Fried Chicken, Nike);
(iii) sourcing of supplies from small-scale sector;
(iv) ‘cash and carry’ operations (Giant in Hyderabad, Metro in Bangalore);
(v) non-store formats – direct marketing (Amway).
Large international retailers of home furnishing and apparels such as Pottery Barn, The Gap and Ralph Lauren have made India one of their major sourcing hubs. Up to 100 per cent FDI is allowed in ‘cash and carry’ operations. The Great Wholesaling Club Ltd is one such example. In February 2002, the world’s largest retailer, Wal-Mart, opened a global sourcing office in Bangalore. In November 2006, it announced its entry under a joint venture with the Indian corporation Bharti. For the time being, Bharti is to own the chain of front-end retail stores, while the two firms will have an equal share in a firm that will engage in wholesale, logistics, supply chain and sourcing activities. This is seen as a preliminary step by Wal-Mart pending the removal of all restrictions on FDI in retail trade.
The reasons given by the Government for allowing FDI in retail:
Why
is the government so keen in inviting FDI in the retail sector? Let us
look at some arguments made by the Government for allowing FDI:
(i) “Only a few global firms possess proprietary expertise in retail trade. They would not transfer their expertise to local firms unless they were allowed to operate in the domestic market.”
Reality:
In the literature on retail, we could not trace the existence of any
cutting edge proprietary expertise – either technical or managerial.
(ii) “The government needs FDI to meet its foreign exchange requirements.”
Reality:
Because of large capital inflows, the Government of India is today
burdened with huge and growing foreign exchange reserves. By April 13,
2007, the foreign exchange reserves had swollen to $203 billion. The
argument for FDI in retail to attract foreign exchange is not tenable.
(iii) “Only global retailers can satisfy the rising and varied demands of Indian consumers.”
Reality:
It has yet to be shown which product or service is being offered by
foreign retail firms is unavailable at present to Indian consumers, or
cannot be provided without FDI. Moreover, the alleged benefits of
‘consumer choice’ are being inflated. Indeed, the availability of
excessively wide choice makes it so complex and time-consuming for the
consumer to decide that it leads to stronger loyalty to particular
brands.
At one side Government is giving reason for allowing FDI in retail that it will improve supply chain management and avoid the wastage of food because lack of cold storage as the global firms have expertise in supply chain management and they will establish cold storage in India, but why Government cannot establish more cold storage or improve supply chain management. This is only because they are indulging in more politics than our Country.
Despite the destruction of farming globally by the supermarkets, the Ministry for Commerce and Industry is gung-ho about the virtues of foreign direct investment in multi-brand retailing, which means allowing the big players like Wal-Mart and Tesco to swamp the Indian market.
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INDIAN GOLD MARKETS
- fear of inflation
- the fear that most of the commercial bonds or other paper documents may lose their intrinsic value.
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“The
story of gold has a deeper message, one that has none of the
transitory qualities of what we choose to use as money. Seen in this
broader sense, the story of gold has no ending.” _ Peter Bernstein in The Power of Gold
When
compared in world level India is considered to be as the largest
consumer of Gold. Until 1990, Gold Control Act, huge quantity of gold
was entering into India either through legal or illegal means. The
private holders used to hold around 10 tola bars of gold which would be
converted into jewellery during family functions. Investment in 22
carat gold still beats the security markets and it still remains the
favoured mode of investment. This attitude of the people has paved way
for the banks to bring in the Gold Deposit Scheme, and even sale of gold
through Banks.
As
per the report of the World Gold Council in November 2011, it is
observed that on a yearly basis the increase of demand for gold in India
is around 15% despite the increase in the value by around 46% and the
highest gold price close during the year was at INR. 90421.97/oz on
November 30, 2011.
The World Gold Council reports:
“In the longer term, we are confident that India’s favorable
demographic trends, the growing affluent middle class and declining age
profile, should ensure a buoyant consumption growth.”
India
produces only 0.5% of its annual gold consumption and the remaining is
imported. The import of gold is roughly around 700 Tons per annum.
Market condition: When compared to the previous year the percentage of sale of gold in quantity has gone down due to increase in the prices, however this has not affected the profits of the players in the gold market as the people still try to buy gold with all the amount that they possess
History of gold during inflation: In1970’s
gold was valued as per the gold standards. The inflation during 1970’s
was up 306% and the value of the gold was officialy $35 an ounce.
Despite the increase in inflation the gold which was priced at $850 per
ounce in 1980 had dropped down to $300 in 2001 losing 65% of its value.
On a study it is observed that inflation does not necessarily
translate into higher gold prices.
Demand for Gold:
Despite the risk of fall in Gold prices it still has its market due to:
- fear of inflation
- the fear that most of the commercial bonds or other paper documents may lose their intrinsic value.
- Looking
at the history it is observed that despite the fall of its prices on a
temporary basis it is believed that the prices of Gold would continue
to increase.
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Responsibilities of the Directors: Hon'ble SC has held as below, over ruling a decision by the hon Delhi HC..
A director of a
firm cannot be held liable for the wrongs committed by his company
unless it is proved that he was involved in the irregularities, the
Supreme Court has held. This court has repeatedly held that in case of a
director, complaint should specifically spell out how and in what
manner the director was in charge of or was responsible to the accused
company for conduct of its business and mere bald statement that he or
she was in-charge of and was responsible to the company for conduct of
its business is not sufficient, a bench of justices P Sathasivam and
Jasti Chelameswar said. The court passed the order while quashing
criminal proceedings against a former director of Apparel Export
Promotion Council in a cheque bounce case. The bench also held that a
former director cannot be prosecuted in a case of bouncing of a cheque
if it has been issued by the company after he ceased to be on its board
member. The court set aside the Delhi High Court order which had
dismissed the plea of the director for quashing the criminal
proceedings. The counsel for the petitioner had pleaded that the
director had ceased to be part of the company on the date when the
cheque was issued by the firm and that the appelant could not be held
liable for it getting dishonoured. We are unable to accept the reasoning
of the high court and we are satisfied that the appellant has made out
a case for quashing the criminal proceedings, the bench said, adding
that it was established that the petitioner had resigned from the
company as a director in 1998 while the cheque had been issued by it in
2004.
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Maruti
to merge Suzuki Powertrain; Suzuki to up stake to 56.2%
Maruti Suzuki on Tuesday said its Japanese parent Suzuki Motor Corporation's stake in the company will go up to 56.2% following merger of Suzuki Powertrain with India's largest car maker. "The Board of Directors of Maruti Suzuki India (MSI) today approved a proposal to merge Suzuki Powertrain India Ltd.
(SPIL) with MSI," the company said in a statement.
SPIL, which supplies diesel engines and transmissions to MSI, is a subsidiary of Suzuki Motor Corporation (SMC).
SMC holds a 70% stake in SPIL, while the rest is held by MSI, it added.
"Consequent to the merger, SMC's holding in MSI will go up from 54.2% to 56.2%. MSI proposes to make a fresh issue of 13.17 million shares to SMC in lieu of SMC's 70% holding in SPIL," MSI said.The domestic car market leader said there will be no cash outflow from MSI as the merger is proposed to be effected through a share swap agreement.
As per the understanding, the swap ratio has been fixed at 1:70, which means SMC will receive one share of MSI of Rs. 5 each for every 70 shares of Rs. 10 each it holds in SPIL.
"It is expected that the necessary regulatory approvals and legal requirements for the merger may be completed by end December 2012. Once the merger is approved, the books of accounts of SPIL will be merged with MSI with effect from April 1, 2012," the company said.
"There are no plans to reduce jobs, following this merger," it added.
Reacting to the announcement, the shares of MSI were trading 1.14 % up at Rs. 1,121.90 apiece on the BSE in the afternoon.
With completion of this merger, MSI will bring its entire diesel engine capacity under a single management control.
"All key initiatives to strengthen the business, including sourcing, localisation, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSI management," the company said.
MSI further said the proposed merger will also benefit the combined entity through synergies in areas like finance, capital structuring, administration and consequent reduction of transaction costs
http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/maruti-suzuki-to-merge-suzuki-powertrain-suzuki-to-up-stake-to-56-2/articleshow/14055297.cms
