We often come across the question of how the Indian branch of a European group or company should be optimally managed. Apparently there is a great need for information here. At this point you might also think about the good old saying: "Trust is good, control is better!"
Leadership and control in India
In order to achieve long-term economic success on the subcontinent, we advise you to manage your Indian entity very closely. What might prove counterproductive in other parts of the world is usually highly recommended in India. Indian employees are used to being closely managed; they do not directly perceive this as a restriction on their personal development opportunities. This is certainly not perceived as a nuisance or even a disadvantage, as most European employees would probably perceive and interpret it. Quite the opposite: Indians expect leadership and guidance from their superiors.
You should definitely avoid your Indian branch becoming a “one-man show” for your Indian General Manager/CEO. You can achieve this, for example, by ensuring that your European headquarters has direct access to your Indian organization. It is not enough for the European managing directors to travel to India as board directors twice a year, take part in a board meeting and then have a nice dinner with the Indian company management. So you will never see behind the thick Indian curtains.
In order to be able to really influence the fortunes of the Indian branch, the management and all employees who are tasked with co-managing and controlling the Indian sub-areas or processes need reliable information. The real challenge lies in collecting reliable data and regularly reporting this information!
Auditing & Statutory Audits
In the best case scenario, you have good, professional auditors (“Chartered Accountants” as “Statutory Auditors”) on site who will diligently check your Indian financial statements as part of a so-called “Statutory Audit”. Please make the effort to get to know your examiners personally in advance and make it clear what you expect from them. Personal contact – especially with European management – is extremely important here.
You can assume that India is a relatively exam-intensive country. The “Companies Act, 2013” and the Indian tax legislation form the legal basis and the framework for a proper accounting and audit. Unfortunately, we have found that in India you often cannot expect the quality from an audit that you know from Europe or America. There are several reasons for this, which we cannot go into further here. However, especially against this background, we advise you to choose your local auditing company very carefully!
Use internal audits for yourself and your interests
In addition, in India, under certain circumstances, an additional so-called “internal audit” must be carried out by qualified external experts at least once a year. These could be your statutory auditors, other auditors, controllers or other experts. Here you have more freedom in implementation and design. In any case, we recommend that you do not see this additional “internal inventory” as an annoying and unnecessary “coercive measure”, but rather, on the contrary, that you use it in your own interests or in the interests of your European parent company.
Our tool box on the topic “Business Risk Assessment” helps you identify potential problem areas in your branches and take concrete measures. In this way, we empower you to actively manage your Indian business and reduce business risks to an absolute minimum.
Start with our India self-test and use this checklist to identify typical risks in your India business within a few minutes.
