New Delhi, March 12 In a wake-up call for companies which haven't yet invested in creating control and governance systems for their worldwide entities, a global survey has brought out that only half of the Indian companies are confident that all their global entities are compliant with local regulations or are adding value to the group.
The survey conducted by TMF Group, which provides administrative support services for international business expansion, has said that there was a need for Indian companies to get a firmer grip on their international operations as less than a fifth (19%) evaluate their global entities on an annual basis to check if they are all adding value and operationally efficient.
The survey polled over 1,700 senior decision-makers with entity management responsibilities across seven countries India, the UK, USA, Brazil, China, Singapore and France to get a better understanding of some of the complexities facing multinational companies.
According to it, companies with their headquarters based in Brazil and China have the best track records, but only marginally, with 28% saying they carry out checks across their organisation each year.
On an average, 20% of the Indian companies carry out evaluations every 2-3 years (compared with a global average of 18%), 14% every 5 years (14% globally) and a worrying 9% said they believe they have never done a global entities audit (8% globally).
Companies in the US and Singapore have the worst record in that regard, with 12% in each saying they have never carried out an audit.
Perhaps unsurprisingly given the irregular approach taken by so many, only half of the Indian participants in the survey (50%) said they were either 'very' or 'reasonably' confident of being fully compliant with local laws and regulations across all entities, leaving many at risk of potential fines and reputation damage. Chinese multinationals were the most confident at 55% compared with 48% globally.
Of the 263 Indian companies that took part in the research, 61% said they have more than 20 legal entities across different countries and jurisdictions, with 14% saying they have more than 100 (compared with 51% and 8% globally respectively).
"International expansion can bring lucrative rewards for Indian businesses with opportunities in market growth and diversification," said Shagun Kumar, Managing Director for South East Asia, including India, at TMF Group.
"But keeping on top of all your entities, particularly in an increasingly complex global market where legislations change frequently, plays an important part in delivering on that success."
( With inputs from IANS )