Press Release of Quarterly Results by listed companies

PRESS RELEASE :  Press Release of Results donot have any prescribed regulations to be followed. It can be free style. It typically includes figures as well as some journalistic description and is drafted keeping in view, the overall messaging strategy highlighting the things which the company wants the market to take note.

Typical earnings announcement Press Release by IT services company

 Snapshot of Accenture Performance - Q4 & FY07

Financial Highlights Q4 & FY07*:

• Accenture reported a strong quarter and fiscal year. All operating groups and geographies recording their highest ever revenue with double digit growth (in USD terms), both on a quarterly and annual basis.
• Annual revenue on the lower side of guided range as performance of outsourcing was weaker compared to consulting. For Q4 FY07, consulting grew at 22% Y/Y to $3.1 billion while outsourcing revenue was up 16.9% Y/Y; total new bookings were at a record $4.9 billion.
• Achieved double digit EPS growth of 22% for FY 07; annual EPS at $ 1.97 which exceeded the guided range of $ 1.94 to $ 1.96.

 * Figures for FY 2006 reflects adjustments relating to the financial impact of resolution of contracts with the National Health Service (NHS) in England and related adjustments & tax benefits

Operating Highlights Q4 & FY07:

• Utilization in Q4 FY07 at 84% and for FY07 at 85%.
• DSO reduced to 31 days in fiscal '07 from 37 days in fiscal '06.
• Q4 revenue growth driven by consulting in EMEA and outsourcing in America; going forward management sees continued strength in consulting; Accenture plans to double its management consultants as demand surges in Europe and Asia.
• Despite an overall weaker performance from outsourcing it was strong in EMEA geographies; management concentrating on smaller contracts of shorter duration but average rate per contract is steady and renewal rate higher.
• Financial services business was driven by EMEA led by banking; in America capital markets and insurance delivered solid growth.
• Management informed that there was no impact from sub-prime on business as of date.
• Management sees a healthy US & global economy and continued investment in businesses by competition and clients; expected business from discretionary spending of clients at a single digit figure.
• 60,000 new hires in FY07, total employees at 170,000, a 21% growth over FY06; Accenture employs 71,000 people outside the U.S., including 35,000 in India and 11,000 in the Philippines. Hiring is accelerating in countries such as Brazil. Attrition stable at 18% for full year and quarter.
• Spending more than $250 million to expand technology and advisory services over the next 3 years.

Corporate Restructuring : Amalgamations,demerger ,Spinoff, Capital reduction - Companies Act and Income tax act implications

The Framework under companies Act

Chapter XV of the 2013 Act deals with "Compromises, Arrangements and Amalgamations." In this chapter, the Act consolidates the applicable provisions and related issues of compromises, arrangements and amalgamations; however, other provisions are also attracted at different stages of the process. Amalgamation means an amalgamation pursuant to the provisions of the Act. In an amalgamation the undertaking comprising of property, assets and liabilities, of one (or more) company are absorbed by and transferred either to an existing company or a new company. Simply put, the transferor integrates with the transferee and the former loses its entity and dissolves without winding-up. The 2013 Act creates a new regulator, the National Law Company Tribunal ("Tribunal") who, upon its constitution, will assume jurisdiction (the High Courts will no longer have any jurisdiction) of the court for sanctioning mergers. Once the Tribunal is constituted, expected to be formed sometime this year, and related rules finalized, the provisions under the 2013 Act would be implemented.

Before detailing the key changes under the new law, a brief overview of the existing process will be useful. Under the 1956 Act, companies which have reached a consensus to merge must prepare a "scheme" of amalgamation/merger ("Scheme"). The lenders (financial institutions or banks) of the transferor and the transferee must approve¹ the Scheme in-principle, followed by the subsequent approval of the respective Board of Directors of the merging entities. If the merging entities are listed companies, then the listing agreements executed with the stock-exchanges require the company to communicate price-sensitive information to the stock exchange immediately, to seek an approval from the capital market regulator, Securities and Exchange Board of India ("SEBI") simultaneous with the public notification. This essentially happens after the approval of the Board to the Scheme. The next step is to apply² to the High Court having jurisdiction over the registered office of the company seeking an order to convene shareholders and creditors meeting. Without getting into further details of the process, the key point is that any objector amongst the stakeholders can object to the Scheme in the court proceedings.

The element of preparing the Scheme has been retained under the 2013 Act. Unlike the 1956 Act, the new regime (a)recognizes cross border mergers, (b) sets out separate procedure for merger of small companies and those of holding with wholly-owned, (c) prescribes thresholds for objections, and (d) describes mandatory filings to ensure legal compliance.

The Changes to the process

1. Regulatory/Third party approvals: As shareholders' and creditors' consents are essential, the 1956 Act, therefore, contemplates issue of a notice to them. The 2013 Act requires service of the notice of the merger along with documents (such as copy of the Scheme and valuation report) not only upon the shareholders and creditors but also on various regulators including the Ministry of Corporate Affairs (through Regional Director, Registrar of Companies and Official Liquidator),⁴ Reserve Bank of India ("RBI") (where non-resident investors are involved), SEBI (only for listed companies), Competition Commission of India (where the prescribed fiscal thresholds are crossed and the proposed merger could have an adverse effect on competition), Stock Exchanges (only for listed companies), Income Tax authorities and other sector regulators or authorities which are likely to be affected by the merger.⁵ This ensures compliance of the Scheme with other regulatory requirements imposed on the merging entities. In fact, under the 1956 Act the courts have made mergers subject to approval of the regulators. The 2013 Act prescribes a 30 day time frame for the regulators to make representations, failing which the right would cease to exist. This is a positive step because in the 1956 Act no such time frame was provided leading to considerable delays in the court proceedings.
2. Approval of the Scheme through postal ballot⁶: The 1956 Act required presence of the shareholders and creditors in the physical meetings, either in person or by proxy, to cast vote for/against the Scheme. In the 2013 Act, the shareholders and creditors also have the option to cast vote through postal ballot while considering a Scheme. The 1956 Act did not allow this and the shareholders and creditors could only cast votes physically. This right will ensure wider participation of the shareholders and creditors, particularly for those who are scattered all over the country and who find it difficult to be either physically present or provide a proxy. Postal ballot, therefore, will offer them a greater flexibility to cast their votes.
3. Valuation Report: Though the 1956 Act is silent on disclosing the valuation report to the stakeholders, as a matter of transparency and good corporate governance, the listed companies used to make available the valuation report for inspection and also during the course of the meetings. Courts also required annexing of the valuation report to the application submitted before them. The 2013 Act now mandates annexing of the valuation report to the notices for the meetings to enable ready access to the shareholders and creditors⁷.
4. Objections⁸: A bane under the 1956 Act was that it permitted the individual shareholders and creditors to raise frivolous objections to arm-twist and unnecessarily harass the companies following the meetings. Such right to object to the Scheme would no longer be available to any and every person. Objections can be raised by shareholders holding 10% or more equity and creditors whose debt represent 5% or more of the total debt as per the last audited financial statements. By raising the bar, the new law aims to ensure that the frivolous objections/litigation can be avoided.
5. Accounting Standards⁹: As a matter of practice, frequently the Scheme provided for accounting treatment that would deviate from the prescribed accounting standards necessitating a note to this effect in the balance sheet of the company. This was frowned upon by the tax authorities. Consequently, in case of listed companies, the listing agreement was amended to provide that an auditor's certificate stating that the accounting treatment is in accordance with the accounting standards was required to be filed for seeking approval of the stock exchanges. The 2013 Act makes such prior certification from an auditor mandatory for both listed and unlisted companies.
6. Merger of a listed company into an unlisted one:¹⁰The 2013 Act specifically provides for the Tribunal's order to state that the merger of a listed company into an unlisted company will not ipso facto make the unlisted company listed. It will continue to be unlisted until the applicable listing regulations and SEBI guidelines in relation to allotment of shares to public shareholders are complied with. Further, in case the shareholders of the listed company decide to exit, the unlisted company would facilitate the exit with a pre-determined price formula which shall be within the price specified by SEBI regulations. The Indian securities law prescribes strict enforcement of listing requirements by companies intending to get listed. SEBI had, however, eased these requirements for listed companies proposing merger by granting them exemptions from complying with the initial public offering requirements¹¹ on a case-to-case basis. Recently SEBI had issued guidelines¹² stating that if the Scheme provides for listing of shares of an unlisted company without complying with the initial public offering requirements, then, upon court approval of the Scheme, the unlisted company has to file a specific application seeking such exemption from SEBI. Such an application has to be filed upon, inter-alia, allotment of equity shares to the holders of securities of the listed company.¹³ The changes under the 2013 Act are in line with SEBI requirements. The 1956 Act was silent on this aspect.

Fast Track Mergers for special cases

Apart from the aforesaid changes, the 2013 Act provides for separate provisions for cross border mergers, merger of two small companies and that of holding with wholly-owned subsidiaries. These are described briefly below.

1. Cross-border mergers: The 1956 Act permits cross-border mergers only where the transferor is a foreign company. In contrast, the 2013 Act permits in-principle mergers between an Indian and a foreign company located in a jurisdiction notified by the central government in periodic consultation with RBI. Such a merger would be subject to RBI approval and Scheme may provide payment in cash or depository receipts or both. The payment in cash or depository receipts would facilitate exit to the shareholders of the merging entity who do not want to be a part of the merged entity. These changes reflect the legislature's intent to facilitate cross-border business. The Income Tax Act presently grants tax exemptions on mergers if the transferee is an Indian company and does not recognize a situation where the transferee will be a foreign company, as contemplated under the 2013 Act. The introduction of cross-border mergers under the 2013 Act may, therefore, require corresponding changes in other laws, including foreign exchange and tax.
2. Merger of "small companies" and holding with wholly-owned subsidiaries: Unlike the 1956 Act under which merger of all companies, irrespective of nature and size requires court approval, the 2013 Act carves out a separate procedure for small companies and the holding and wholly-owned subsidiaries. Section 233 of the 2013 Act prescribes a simplified fast track procedure for their merger which requires consent of shareholders holding 90% in value and creditors representing 9/10th of debt in value as well as approval of the Scheme by the Regional Director, Ministry of Corporate Affairs in case no objections are received from the Official Liquidator and Registrar of Companies. Approval of the Tribunal is not required for such mergers. This could be good news for the merging entities who may not be required to (i) file documents required to be filed under the listing agreement, in the case of listed companies, (ii) give notice to various authorities, (iii) provide auditor's certificate of compliance with applicable accounting standards. However, if the Regional Director is of the opinion that the Scheme is not in the interest of the stakeholders, he may approach the Tribunal who could follow the merger procedure prescribed under the 2013 Act. This ability to transfer to the Tribunal has the potential to change fast-track to a normal merger and make such mergers less appealing.

SPIN OFF

Taxability of gains arising on slump sale 

Section 50B provides the mechanism for computation of capital gains arising on slump sale. On a plain reading of the Section, some basic points which arise are :

1. S. 50B reads as ‘Special provision for computation of capital gains in case of slump sale’. Since slump sale is governed by a ‘special provision’, this Section overrides all other provisions of the Act.

2. Capital gains arising on transfer of an undertaking are deemed to be long-term capital gains. However, if the undertaking is ‘owned and held’ for not more than 36 months immediately before the date of transfer, gains shall be treated as short-term capital gains. 

3. Taxability arises in the year of transfer of the undertaking. The undertaking will be deemed to be transferred on execution of the agreement and registration thereof coupled with the handing over of possession of the undertaking to the transferee. However, if the year of the agreement of the undertaking and registration thereof and the year of its possession fall in two different previous years, then the previous year in which the possession of the undertaking is handed over to the transferee will be considered as the year of transfer.

4. Capital gains arising on slump sale are calculated as the difference between sale consideration and the net worth of the undertaking. Net worth is deemed to be the cost of acquisition and cost of improvement for S. 48 and S. 49 of the Act.

5. As per S. 50B, no indexation benefit is available on cost of acquisition, i.e., net worth.

Policy : Foreign trade promotion schemes, STPI, SEZ

IMPORTER EXPORTER CODE (IEC)

Update on FTP

1. India lost the case against United States of America (USA) in World Trade Organisation (WTO).

2. USA alleged that India is violating the provisions of Subsidies and Countervailing Measurers Agreement (SCM) by giving export rewards to its exporters in form of various schemes.

3. India needs to withdraw all the export schemes where it is rewarding the exporters through various schemes like Merchandise Export from India Scheme, Export Promotion Capital Goods, Special Economic Zone, Duty Free Imports for Exporters, EOU/BTP/EHTP Schemes etc.

4. SCM doesn’t permit the countries to give rewards to exporters where the per capita income is more than USD 1000 consecutively for three years. India has crossed this threshold in Year 2015. In 2017, the WTO notified that India’s GNI was $1,051 in 2013, $1,100 in 2014 and $1,178 in 2015.

5. However, India has filed an appeal against this decision with WTO appellate tribunal and the bench is not working due to lack of quorum.

6. It is pertinent to note that Service Export from India Scheme and Advance Authorisation Scheme has not been challenged by USA.

7. Indirect tax rebate schemes, drawbacks are allowed if these does not exceed to amount of such taxes actually levied on inputs that are consumed in the production of the exported product.

Then what is the fate of these export incentive schemes?

    Government of India has announced scheme of 

    Remission of Duties and Taxes on Exported Products (RoDTEP)

    to compensate the exporters.  It will allow reimbursement taxes and duties paid by them such as value added tax, coal cess, mandi tax, electricity duties and fuel used for transportation, which are not getting exempted or refunded under any other existing mechanism but are incurred in the process of manufacture or distribution of exported products. It seems to be India government is doing its own preparation before the decision of tribunal by giving cabinet approval to this scheme on 13th March, 2020.

    RoDTEP seems to be replacement of Merchandise Export from India Scheme (MEIS) that was found to violate the World Trade Organization Rules. However, picture will be clearer once the draft of scheme come into existence.

—  Covid -19 Impacts
Notification – 57/2015-20,
Public Notice No. -67/2015-20 and
Trade Notice No. 60/2019-20 (All dated – 31^st March, 2020)

—  FTP Validity extended to more one year i.e. 31^st March, 2021

—  RCMC validity extended from 31^st March, 2021 to 30^th September, 2020

—  SEIS for FY 2018-19 can be filed upto 31^st December, 2020

—  For SEIS for FY 2019-20 – Service Category and rate of scrips to be notified separately

—  SEIS for FY 2020-21 – Decision on continuation to be taken subsequently

Governing act of Foreign Trade Policy 2015-2020 is The Foreign Trade (Development and Regulation) Act, 1992.(Hereinafter Referred As ‘FTDRA, 1992’)

—  However, India has lost case against USA in WTO and the fate of all export incentive schemes are in danger. Fortunately, SEIS scheme has not been challenged by USA

—  Let us understand about the Service Export from India Scheme in Frequently Asked Questions (FAQ) format.

—  What is ‘Service’? (Para – 9.50)

—  “Service” Includes all tradable services covered under General Agreement on Trade in Services (GATS) and earning Free Foreign Exchange

—  The GATS define services in four ‘modes’ of supply: cross-border trade, consumption abroad, commercial presence, and presence of natural persons.

—  Who is a ‘Service Provider’ Under Foreign Trade Policy 2015-20?

As per Para 9.51 of FTP, Service Provider means a person providing:

      (i)            Mode1- Cross border trade - Supply of a ‘service’ from India to any other country e.g. BPO/KPO/ITES services, consultancy etc.

    (ii)            Mode 2- Consumption abroad - Supply of a ‘service’ from India to service consumer(s) of any other country e.g.: tourism, educational services, medical treatment etc.

   (iii)             Mode 3 – Commercial Presence - Supply of a ‘service’ from India through commercial presence in any other countrye.g.: banking, hotel etc.

  (iv)            Mode 4- Presence of natural persons - Supply of a ‘service’ from India through the presence of natural persons in any other country like doctor, nurse, IT engineer etc. functioning as a consultant, employee, from one country to another. 

—  SEIS benefit is available for Mode 1 and Mode 2 only.

—  SEIS benefit is not available for Mode 3 and Mode 4.

Reward Rates:

—  As per Appendix 3D of Foreign Trade Policy 2015 - 20, reward rates for various services are as follows: -

—  What are the eligibility criteria for claiming rewards under SEIS?

—  Services rendered should fall under the definition of “Service” of “Foreign Trade Policy

—  Service Provider should have minimum Net free Foreign Exchange Earnings of US$ 15,000 and individual service providers and sole proprietorship US $ 10,000 in year of rendering service

—  Service provider must have active IEC Code at the time of rendering of services

—  Who are not eligible for claiming rewards under SEIS?

As per Para 3.09 of FTP, SEIS benefit is not allowed if the Foreign exchange remittances/sources of earnings in form of

—  Other than those earned for rendering of notified Services would not be counted for entitlement.

—  any other inflow of foreign exchange, unrelated to rendering of services, etc.

—  Export turnover relating to services of units operating under EOU / EHTP / STPI / BTP Schemes or supplies of services made to such units.

—  Related to Financial Service Sector – Foreign remittance earned through

—  Export Proceeds Realization of Clients

—  Issuance of Foreign Equity through ADRs/GDSRs or other similar instruments

—  Issuance of Foreign Currency Bonds

—  Raising all type of Foreign Currency Loans

—  Sale of Securities and other Financial Instruments

—  Other receivables not connected with services rendered by financial institutions

—  Equity or debt participation.

—  Receipts of repayment of loans.

—  Donations.

—  Earned through contract/regular employment abroad (e.g. labour remittances)

—  Export of goods

—  Clubbing of turnover of services rendered by SEZ / EOU/ EHTP/ STPI/BTP units with turnover of DTA Service Providers

—  Payments for services received from EEFC Account;       

—  Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying from any foreign country X to any foreign country Y routes not touching India at all

—  Service providers in Telecom Sector

—  How to calculate Foreign Exchange Earnings (FEE)?
*Net Foreign Exchange Earnings = Gross Earnings of Foreign Exchange – Total Expenses/Payment/Remittances of Foreign Exchange by the IEC holder, relating to service sector in the Financial Year           

What is the effective date of scheme?

    The Rewards under MEIS/SEIS shall be admissible for exports made/services rendered on or after the date of notification of this policy.

—  What is the last date of filing of application for Duty Scrips ?

—  For SEIS, the last date for filing application shall be 12 months from the end of relevant Financial year of claim period.

—  However, if you are late – Than don’t worry – DGFT is very much liberal, they will give you incentive with a late filing cut. Incentive will be given as per below table: -

—  SEIS claim cannot be filed beyond 31^stMarch 2022 for the FY 2018-19. In nutshell, a person can file claim within 3 years of end of financial year.

—  For example if a Service Provider applied for SEIS within 6 months of expiry of due date, he will get 98% of the eligible claim but if applied with a more delay than the claim amount will get reduced to 95% to 90% depends upon when he has applied.

—  Let us understand by an example – For the FY 2018-19, due date for filing application for reward under SEIS scheme is 31^stMarch 2020

—  If claim is filed after 31^stMarch 2020 but before 30^thSeptember 2020 – He is eligible for 98% of rewards.

—  If claim is filed between 1^stOctober 2020 to 31^stMarch 2021 – He is eligible for 95% of rewards

—  If claim is filed between 1^stApril 2021 to 31^stMarch 2022 – He is eligible for 90% of rewards

Government Proposal in 2020 and going forward

• Proposal to discontinue SEIS as it has not helped India in "increase shipments positively".
•  Proposal to discontinue this SEIS in its current form. There is view that it has not helped us to increase our exports positively,
• He said that industry has to get out of the mind set of subsidies as they are detrimental to India's long-term interests.
• Only 2200 Companies take that take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy," he said.
• The minister wondered that if those big companies do not get this subsidy, will they stop providing those services.
• He suggested that the subsidy can be used to promote sectors like tourism."...tourism...has huge untapped potential... which are the areas where we need targeted support for a defined time frame to get better value addition," he added.

Where SEIS Scrip Can be Used?
In payment of taxes like customs duties, excise duties, service tax on the procurement of services, exchange duties and other.

Scrips cannot be utilized for payment of GST.

Scrips are transferable.

There is no GST on sale of scrips.

   What is the validity of the Scrips?

   These credit Scrips are valid for a term of 24 months from the date of its issuance.(Public Notice No. 33/2015-2020 dated 23.10.2017)

    Issuing hard copy of physical duty credits scrips had been discontinued w.e.f. 10.04.2019 and made it online for easy of doing business as per Trade Notice No.03/2015-2020 dated 03.04.2019

—  What are the points to be Ponder?

—  Directorate General Foreign Trade (DGFT) Headquarter randomly select 10% of cases through computer system for each Regional Authority (RA) where scrips have already been issued, under each scheme.

—  Documents to be maintained for the period of three years from the issuance of scrips as Regional Authority may ask for original proof of landing certificate, annexures attached to the application form or any other document.

—  Government views on SEIS –
Commerce Minister Piyush Goyal Proposes to discontinue export incentives for services exports under SEIS in present form

• Proposal to discontinue SEIS as it has not helped India in "increase shipments positively".
•  Proposal to discontinue this SEIS in its current form. There is view that it has not helped us to increase our exports positively,
• He said that industry has to get out of the mind set of subsidies as they are detrimental to India's long-term interests.
• Only 2200 Companies take that take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy," he said.
• The minister wondered that if those big companies do not get this subsidy, will they stop providing those services.
• He suggested that the subsidy can be used to promote sectors like tourism."...tourism...has huge untapped potential... which are the areas where we need targeted support for a defined time frame to get better value addition," he added.

Foreign trade policy for 2015-2020 

The government has unveiled its foreign trade policy (FTP) for five years from 2015 to 2020 on 1st april 2015.

 Unveiling the policy, Commerce Minister Nirmala Sitharaman said the new policy would boost exports and create jobs while supporting the Centre’s 'Make In India' and 'Digital India' programmes. “Export obligation under the export promotion capital goods scheme will be reduced by 25% to promote domestic manufacturing."

FTP would focus on defence, pharma, environment-friendly products and value-added exports, she said, adding: “The govt will continue to incentivise units located in special economic zones... With a focus on employment-creating sectors, the government will promote e-commerce."

Later in a series of tweets, Sitharaman said the latest FTP was introducing two new schemes — "Merchandise Exports from India Scheme (MEIS) and "Services Exports from India Scheme (SEIS). Under MEIS, a higher level of support would be provided to processed and packaged agricultural and food items. And, agricultural and village industry products would be supported across the globe at the rates of 3% and 5%.

ERP and other IT Solutions for finance function - handy tools as well as Strategic assets

Why Enterprise Resource Planning also called ERP is required?

To answer this, let’s examine this typical business scenario

·         Sales Team approaches the Inventory department to check for availability of the product.

·         In case the product is out of stock ,the sales team approaches the Production Planning Department to manufacture the product.The Production planning Team checks with inventory department for availability of raw material

·         If raw material is not available with inventory , the Production Planning team buys the raw material from the Vendors then Production Planning forwards the raw materials to the Shop Floor Execution for actual production.

·         Once ready , the Shop Floor Team forwards the goods to the Sales Team , who in turn deliver it to the client. The Sales Team updates the Finance with revenue generated by sale of product

·         Production planning Team update the finance with payments to be made to different vendors for raw materials.All departments approach the HR for any Human Resource related issue.

·         That is a typical business process of in a manufacturing company

·         Some Key Inferences one could derive from the scenario would be.

·         A typical Enterprise has many Departments or Business Units.

·         These Departments or  Business Units continuously communicate and exchange data with each other.

·         The success of any organization lies in effective communication, and data exchange, within these departments ,as well as associated Third Party such as Vendors, Outsourcers ,and Customers.

·         Based on the manner in which communication and data exchanged is managed

Lets look at Decentralized system  without ERP. In a company with Decentralized System of Data Management  - Data is maintained locally at the  individual departments; Departments do not have access to information or data of other Departments

·         To identify problems arising due to decentralized Enterprise management system lets look at the same business process again.

·         The Customer approaches the sales team for a product, but this time around he needs the product, on an urgent basis

·         The Sales Team do not have real-time information access to the products inventory.

·         So they approach the Inventory department to check the availability of the product.

·         This process takes time and customer chooses another vendor

·         Loss of Revenue and Customer Dissatisfaction.

·         Now , suppose the product is out of stock and the  Sales Team approaches the Production Planning team to manufacture the product for future use.

·         Production Planning Team checks the availability of the raw materials required.

·         Raw Material Information is separately stored by Production Planning as well as Inventory Department.

·         Thus Data  Maintenance Cost (in this case Raw Material) goes up.

·         A particular raw material required to manufacture the product is available in the inventory ,but as per the database of the production planning team, the raw material is out of stock.

·         So , they go ahead and buy the raw material. Thus, material as well inventory cost goes up.

·         Once the  raw material is available ,the shop floor department suddenly realize they are short of workers

·         They approach the HR , who in turn hire  temporary employees at higher than market rates. Thus LABOR Cost Increases.

·         The production planning department fails to update the finance department on the materials they have purchased.

·         The finance department defaults the payment deadline set by the vendor causing the company loss of its repute and even inviting a possible legal action.

·         This is just a few of many a problems with decentralized systems.

What is the best ERP ?

There are a number of ERP systems on the market today, so how do you know which one is right for you?

The ERP system market today is dominated by three platforms: Oracle E-Business Suite, Microsoft Dynamics, and SAP.

Oracle E-Business Suite

Oracle E-Business Suite has the ability to integrate several different modules seamlessly into one system for ease of use. Oracle E-Business Suite also allows you to automate many of the processes so that manual data entry is no longer required. This not only increases efficiency, but eliminates errors and ensures data is not lost.

One of the primary disadvantages for the Oracle E-Business Suite is that it can be less user-friendly than some other platforms—particularly for small businesses.

Microsoft Dynamics

Microsoft Dynamics, as the name implies, is built on Microsoft infrastructure and syncs seamlessly with other Windows business applications—allowing for an easy transfer of information across all systems.

Microsoft Dynamics syncs with other Windows applications, making the sharing and transfer of information simple. It provides exceptional collaboration features, allowing different parts of the company to share information effortlessly. Since it is built on Windows infrastructure, implementing Microsoft Dynamics takes considerably less time than other systems. It has the shortest implementation time of the top three systems.

SAP

SAP holds the largest market share in the ERP solutions industry. In 2012, SAP actually controlled approximately 25 percent of the market. Oracle followed with 13 percent and Microsoft Dynamics with 5 percent.

Although SAP is a very large company, they do not exclusively work with major commercial enterprises. They actually have a product that is very small business friendly, with thousands of customers that employ less than 1,000 people.

Their software is very intuitive and provides a number of business intelligence features including dashboards, report writing, and data storage.

SAP Disadvantages

For those that are unfamiliar with SAP, it can take a while to pick up compared to Oracle and Microsoft Dynamics, but once the basics are learned, it is an easy system to use.

Although prices can vary depending on the features you need, SAP tends to be more expensive than its competitors—which may make it a less than ideal solution for small to medium sized businesses with limited IT budgets.

OPEN ERP

Odoo, previously known as OpenERP, is an open-source Business Application Suite software actively programmed, supported, and organized by OpenERP s.a. Odoo is similar to many open source projects where customized programming, support, and other services are provided by an active global community and partner network. The community is comprised of more than 1,500 active members and has contributed more than 3000 modules to the ongoing enrichment of Odoo. The network of certified partners, established in more than 100 countries, deploys the solution locally. The software, with more than 1,500 downloads a day, is one of the most frequently installed business suites worldwide. 

All Odoo Apps such as Odoo CRM, Odoo Sales, Odoo Accounting, Odoo WMS (Warehouse Management), Odoo HR, Odoo Project Mgmt, Odoo Events, Odoo Marketing, etc. are integrated to each other. 

Odoo is an open source alternative to many softwares. It can be used in any retailer with its POS (Point Of Sales), and in any website with its CMS ( website builder) synschronized with the e-Commerce App. In the enterprise resource planning software field; Odoo is an alternative to SAP ERP, Oracle E-Business Suite, Microsoft Dynamics, Netsuite, Adempiere, Compiere, OFBiz, Openbravo, and others. 

Odoo has offices in Belgium, US, Luxembourg, India and Hong Kong.

Implementing the right ERP solution

Today, there are many ERP options available in the market. Selecting or making the right choice of ERP Solution for your business is one of the crucial business decisions. While many companies feel that any software or ERP will work and their organizations will simply adapt to the functionality of the software. The right ERP can propel your company forward while the wrong decision may potentially be catastrophic. This article will delineate key steps in the ERP selection process.  Thus, the decision shouldn’t be taken lightly or made with incomplete information. 

1. Selection of Committee:

This is first and most important step of Selecting the Right ERP System. Members of this committee should be decision makers in the organization representing all relevant departments.

· While electing the committee leader, most of the companies makes mistake that they select IT professionals only.  ERP solution is the Business decision and not an IT decision.  IT plays only support role in this process. Committee Leader must have a deep knowledge and understanding of your business and the Industry, and should have the authority to bring about change.

· Members of the committee need to understand the importance of the ERP selection process and make the required time commitment towards this.

· Final decision maker, who is going to sign the contract, should be part of committee. Selecting an ERP is a big decision for any company, it’s important to have the final decision maker involved as much as possible in extensive meeting discussions.

2. Conduct a Process Review and Analysed your Business Needs:

While selecting right ERP solution “Business Needs” is playing very important role and not what “You Want”. Wants are only important at the very end of the process if you have uncovered several potential products that meet your Business Needs.

Firstly define and document your current business process also highlight the pain/strength point. Also include the processes should look like in the future (”to-be” state) and the corresponding business requirements. These processes and requirements should eventually help while software demonstration.

Many company neglects to involve end-users’ requirement and eventually lead to the failure of the project. End-user must be involved in the project at the beginning of the project until the end.

3.  Evaluate the Technical Fit.

It is very important to understand how a potential ERP solution will align with your current infrastructure. Also, consider the availability of support technical resources in the organisation.

4. Local or Cloud

One more important consideration is whether to install locally or go with a cloud-based system. Both have its own advantages, a local installation will generally have a higher upfront const, but lower ongoing maintenance fees.  On the other hand, a cloud-based install, has much lower upfront costs, but higher maintenance fees. It is important to select the right option as per the business requirement.

5. Customization

Many companies are in niche industries not easily served by off-the-shelf software. You need an ERP system that is designed from the ground up to allow in-house customization and configuration to serve you a better result. Some ERP systems, such as Dynamics NAV, are specifically designed to allow easy extensibility and customization.

6. Integration

If your business relies on specific software, such as Microsoft Office/Outlook or any other software, picking an ERP system that integrates with your existing software can save you both time and money.

7.  Reporting

You need to be evaluating the reporting needs depending on business processes to decide the potential ERP solution.

Below are the important factors to consider when choosing the right system.

-   Which trends are going to monitor over next five years?

-   What kind of information, do you need to retrieve?

-   What type of analytics do you need to access?

 8.      User Training

ERP systems involve big change for people, and the system will not do you anything good if people do not understand how to use it effectively. Therefore, spending time on money on training, change business processes (if required), etc. is crucial to any ERP project. Without adequate training to end user, it is very risky to rollout the new ERP system.

ERP industry giants SAP and Oracle have both recently rolled out their latest business solution platform implementations in HANA and R12, respectively. These technologies were both built to serve the higher purpose of increasing the productivity and profitability for clients using them. As with any new technology, the long-term viability of these platforms will be judged on their ability to boost an enterprises’ bottom line.

Multiple factors get thrown into the equation when determining the value of implementing any new technology. First and foremost, is the ROI (return on investment) worth the change? Undoubtedly there are costs involved with the initial implementation and ongoing maintenance once the new technology is up and running, but at the end of the day, streamlining HR, Finance, and other back-end processes is needed to maximize efficiency and increase company profits.

So let’s take a look at the early returns from both HANA and R12.

The new rollout from SAP, HANA, is essentially a brand new design from previous platforms offered by the company. From the outset SAP has been touting HANA as the platform of speed. The in-memory platform gives users exactly what they want, the potential of real-time analytics while not having the requirement for redundancy of data because of its unique architectural setup (HANA was built to run as a single operating database instead of multiple databases).

Along with increased speed, HANA offers users a bevy of other valuable features. These include, but are not limited to; increased functionality, less coding, and overall lower cost of ownership for the platform. For more tech-specific information on SAP HANA, visit their website here.

How has HANA been accepted by the tech and business community? According to SAP documentation, HANA has approximately 2,000 customers globally. Another advantage of this system is that applications from the HANA platform are adaptable, meaning certain elements can run on other platforms. That being said, their goal is turning as many of those current users and customers into fully vested users of the entire SAP Business Suite.

If speed is the name of the game, Oracle won’t yield market share quietly to SAP HANA. Not to be outdone, Oracle has recently announced their own “in-memory” option that will run analytical and transactional applications faster and will be available through their 12c database (TimesTen software has previously had in-memory capabilities as well).

R12 also offers Oracle users a long list of upgraded features and capabilities over previous releases (11i). Benefits of using this upgrade have been shown to increase platform stability, security, and overall performance of the entire EBS. All of that is one thing to tout, but Oracle also stresses the upgrade because R12 runs on the same stack as Fusion Applications (Fusion Middleware). According to Oracle, the Fusion Middleware platform is designed for the enterprise and the cloud and enables the ability to create and run agile, intelligent business applications while maximizing IT efficiency through full utilization of modern hardware and software architectures.

So which is better and are the new releases worth the upgrade? That’s a question of preference as the two platforms are considerably different in terms of architecture, software, hardware, and overall cost. To answer the “are they worth it?” question... any new technology will hold significant improvements over previous models aimed at simplifying and streamlining the way business is run in today’s environment.

FINANCE FUNCTION FAILING TO FULLY EXPLOIT TECHNOLOGY

Chief Financial Officers (CFOs) and the finance organisations they lead have yet to fully exploit emerging technologies to better support the business, says a new report from ACCA (the Association of Chartered Certified Accountants). 

The report, Is finance function technology delivering on its promise?, which gauged in-depth views from finance executives across a spectrum of businesses, including Shell, Aviva, Kimberly-Clark, Deloitte, Accenture and others, suggests the finance organisation is not using technology to its full potential and, in turn, could be missing out on bringing more value to the enterprise. 

Jamie Lyon, Head of Corporate Sector at ACCA, said: 'The problem is not necessarily that technology isn’t available, but there are many reasons why finance has not yet reached tech nirvana. The reality is for most finance functions the technology landscape is still complex and fragmented with multiple ERP, continuing work-arounds and bolt on applications. But this report suggests there are bigger issues too. It is about behaviours, vision and culture in the finance function to go that step further and really push for technological change.'

He adds: 'Of course it isn’t true to say that finance technology has been standing still for the past 10 years. Leading companies have deployed technology to improve finance service delivery to the business, but the primary focus has really been around cost, efficiency and quality in transactional finance, and driving standardisation and improving controls. 

'However, concepts such as self-service finance, or eliminating the need for people in transactional finance processes through greater technology deployment, continue to prove elusive. We’d also question whether there is a greater opportunity for business process outsourcers to bring more finance technology innovation to bear.'

The report suggests the real opportunity CFOs have is to champion the adoption of transformative technology and predictive capability tools to support decision making. However, for all the aspirations that finance may have around the value and insight agenda, this remains a work in progress for most. 

Deborah Kops, principal at Sourcing Change and co-author of the report, said: 'Finance can, through technology, eliminate its preoccupation with processes. Harnessing technologies that mine data for patterns means the function can become a game changer for business. Finance leaders have tended to rely on their technology colleagues rather than members of their own teams to plan their technology ‘roadmaps’. 

'The Chief Information Officer’s team is either consumed with implementing the latest version of ERP, or with identifying and installing the newest customer-facing social and mobile technology that isn’t really touching finance. This means the technology needs for finance get little attention when it could transform the function for the better. 

'We should also acknowledge that the application of technology has the potential to change further what a finance career means. If technology increasingly automates transactional finance and is also able to mine insights at the same time, it will change what it means to be a finance professional as well as the capabilities needed.'

Source : accaglobal.com

BIG DATA

Dealing with the data : 

Challenges faced by today’s businesses is around identifying the information that is valuable and turning it into ways that any stakeholder, whether business user or data analyst, can use it to maximize productivity.

 The various data related terms are as below:

Data analysis

Data analysis is the process of studying and summarizing data with the intent to extract useful information and develop conclusions. Data analysis is closely related to data mining, but data mining tends to focus on larger data sets with less emphasis on making inference, and often uses data that was originally collected for a different purpose. In statistical applications, some people divide data analysis into descriptive statistics, exploratory data analysis, and inferential statistics (or confirmatory data analysis), where the EDA focuses on discovering new features in the data, and CDA on confirming or falsifying existing hypotheses.

Data governance

Data governance encompasses the people, processes and technology required to create a consistent, enterprise view of an organisation's data in order to:

·         Decrease the risk of regulatory fines

·         Designate accountability for information quality

·         Improve data security

·         Increase consistency & confidence in decision making

·         Maximize the income generation potential of data

Data management

Data management comprises all the academic disciplines related to managing data as a valuable resource. The official definition provided by DAMA is that "Data Resource Management is the development and execution of architectures, policies, practices, and procedures that properly manage the full data lifecycle needs of an enterprise." This definition is fairly broad and encompasses a number of professions that may not have direct technical contact with lower-level aspects of data management, such as relational database management.

Data mining

Data mining is the process of sorting through large amounts of data and picking out relevant information. It is usually used by business intelligence organizations, and financial analysts, but is increasingly being used in the sciences to extract information from the enormous data sets generated by modern experimental and observational methods.

It has been described as "the nontrivial extraction of implicit, previously unknown, and potentially useful information from data" and "the science of extracting useful information from large data sets or databases." In relation to enterprise resource planning, according to Monk (2006), data mining is "the statistical and logical analysis of large sets of transaction data, looking for patterns that can aid decision making".

Data transforms

Data transforms is the process of Automation and Transformation, of both real-time and offline data from one format to another. There are standards and protocols that provide the specifications and rules, and it usually occurs in the process pipeline of aggregation or consolidation or interoperability. The primary use cases are in integration systems organizations, and compliance personnels.

What is Big Data?

The basic idea behind the phrase 'Big Data' is that everything we do is increasingly leaving a digital trace (or data), which we (and others) can use and analyse. Big Data therefore refers to that data being collected and our ability to make use of it.

The big thing about Big Data is in the kind of data we can analyze. It used to be that data fit neatly into tables and spreadsheets, things like sales figures and wholesale prices and the number of customers that came through the door.Now data analysts can also look at “unstructured” data like photos, tweets, emails, voice recordings and sensor data to find patterns.

How is it used?

Most people have some idea that companies are using big data to better understand and target customers. Using big data, retailers can predict what products will sell, telecom companies can predict if and when a customer might switch carriers, and car insurance companies understand how well their customers actually drive.

It’s also used to optimize business processes. Retailers are able to optimize their stock levels based on what’s trending on social media, what people are searching for on the web, or even weather forecasts. Supply chains can be optimized so that delivery drivers use less gas and reach customers faster.

But big data goes way beyond shopping and consumerism. Big data analytics enable us to find new cures and better understand and predict the spread of diseases. Police forces use big data tools to catch criminals and even predict criminal activity and credit card companies use big data analytics it to detect fraudulent transactions. A number of cities are even using big data analytics with the aim of turning themselves into Smart Cities, where a bus would know to wait for a delayed train and where traffic signals predict traffic volumes and operate to minimize jams.

Receivables Management

High radius is a cloud-based integrated receivables software designed to automate manually-intensive tasks, streamline communication, and allow standardization of processes. The company's integrated receivables platform optimizes cash flow through automation of receivables and payments processes across credit, collections, cash application, deductions, electronic billing and payment processing, enabling customers to leverage machine learning for accurate decision making and future outcomes and allows suppliers to digitally connect with buyers, closing the loop from supplier receivable processes to buyer payable processes as well as to optimize cash flow, reducing days sales outstanding (DSO) and bad debt and increasing operational efficiency

Compliance Management

A lot of compliance management tools are available which put together all the required compliance's and the actual compliance particulars.

Secretarial Management

 Vendor Invoice Management

OpenText Vendor Invoice Management (VIM) works with SAP® ERP to streamline accounts payable (AP) operations. VIM optimizes and simplifies the process of receiving, managing and monitoring invoices for AP personnel and vendors.

 

Most companies strive to achieve a “no-touch” process, where the invoices go straight from validation to posting. However, one of the challenges to automate is the tax code assignment since this can’t be captured from the invoice. The available Automatic tax code determination for invoices solution developed by Deloitte Belgium enables you to:

·         Significantly reduce the time for retrieving the correct tax code.

·         Automating the tax code determination by handling possible scenarios.

·         Assigning tax code to all line items of your invoices with minimum human intervention.

Vendor invoice processing is more and more automated, but do you feel your tax process is robust enough? Deloitte helps you in building the necessary indirect tax controls.

·         Controlling that the invoice is legally compliant and allows you to route invoices depending on established business rules to appropriate user or group of users.

·         Taking all necessary elements to allocate a tax code to all line items.

Solution: indirect tax controls

·         By making use of the full potential of the possibilities in VIM, Deloitte has combined their Tax expertise with OpenText technology and developed a logic to include Indirect Tax controls within the AP process. Based on a combination of the data read from the supplier invoice during the scanning process, the master data and the transactional data, our logic will route the invoice to an exception flow in case certain legal requirements are not met.

·         If needed, new and custom checks can be developed to meet all business and tax requirements.

Solution: Automatic Tax Code Determination

·         The Automatic Tax Code Determination for invoices solution by Deloitte has the objective to assign a correct tax code to each line item of PO and non-PO invoices using master data and PO data (for PO invoices) similarly to other existing logics. The added benefit of Deloitte’s logic compared to traditional tax code determination available in SAP is that invoice data is also used in the determination logic. This means that data which is only known at time of invoice receipt is also taken into consideration (e.g.: the actual location where the supplier is delivering from).

·         In our logic there is a standard set of data elements to take into account during the determination process (e.g.: bill from, bill to, ship from, ship to, material, incoterms, etc.). This data set can be limited or extended with other elements dependent on the company’s needs.

·         In order to support companies from a global perspective, we also foresee integration with tax engines such as Vertex, ONESOURCE, etc.

 Robotic Process Automation

RPA is the automation of a wide range of administrative, back office or process-centric tasks, by using specific software algorithms that mimic the decisions and actions of humans.

RPA automates rule-based processes. Just think of it as a ‘robot’, or algorithmic software, mimicking key strokes a human might preform on a PC, to complete a repetitive task. For instance, with technologies already available today, you might program a robot within an Insurance Firm to assemble all the information required to process a claim for a customer. The robot would find the data, organize it, present it to the user — and even make a recommendation concerning the claim, if the process was strictly rule-based.

RPA is  different from RDA used in call centres