Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: VAT Audit :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: due date for vat payment :: ACCOUNTING STANDARD :: form 3cd :: articles on VAT and GST in India :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: cpt :: TDS
News Headlines »
 How To File Income Tax Returns In Three Steps By March 31, 2018
 10 things about income tax every taxpayer should know
 What to do if your TDS is not deposited with the government
 What if you forget to verify your Income Tax return?
 TDS on rent and other tax tasks to complete before March 31
 5 income tax changes which will come into effect from April 1, 2018
 Why you shouldn't be a last-minute tax filer
 How to calculate income tax for this assessment year on Moneycontrol
 6 Tax notices you may get and how to cope with them Income Tax Notice
 Deadline to pay advance tax ends tomorrow: Here is a step-by-step guide
  Central Goods and Services Tax (Second Amendment) Rules, 2018

Firms will have to build size
February, 22nd 2007

Last week, a global Big Four accounting firm, PricewaterhouseCoopers (PwC), took over the tax practice unit of India-based RSM Pvt. Ltd. for an undisclosed sum. With a combined staff strength of more than 4,000, the merged entity is `the largest tax advisory in India,' one learns.

M&A (merger and acquisition) in business is not new to India, though deals in accounting profession are not so frequent. Does the profession need M&A, closer home? Perhaps, yes, says Mr V. Pattabhi Ram, a Chennai-based chartered accountant. "With Indian business going global, size and branding have become crucial. Accounting firms realise that the quickest way to growth is the M&A route. If a firm that is strong in tax practice merges with one that is strong in audit practice there would be the natural expansion in revenue (synergy gains) arising out of cross-selling audit and tax practice to the client. Today clients are happy seeking top class service from a single window. With growing size you tend to beat down the competition," he reasons.

Excerpts from the interview:

What are the pros and cons of mergers? What can go wrong?

It is doubtful whether the mergers that are happening in India are mergers in the real sense. With each entity not dissolving its individual identity, they look more like marriages of convenience. Perhaps this is required because in India the audit firms are driven more by people and individuals and less by process.

The big firms are, perhaps, exceptions. Clients tend to be comfortable with specific partners rather than with any partner. Often the client walks away when a partner elects to walk away. In most organisations `partner' becomes more of a designation than a feeling of ownership that it once entailed. From the client's perspective the global alliance ups the fees without there necessarily being a significant value addition to the client.

What are the niceties in the M&A wave in the accounting profession?

In many cases the M&A doesn't involve one firm legally gobbling up another. Yet for all external purposes they are one firm. For instance, today PwC is the public face of Lovelock and Lewes with those who work for Lovelock and Lewes being simply understood as belonging to PwC.

This has some historical reasons. Such as, that a firm in India cannot have more than 20 partners. A partner cannot sign more than 20 statutory audits. As a firm grows in size two things happen. One, it will have to offer a great career path if it has to attract the best talent. Partnership is an important carrot. The statutory limitation of 20 partners acts as a dampener. Two, the number of audits that the firm picks increases. The statutory limitation of 20 audits per partner comes in the way. There is, therefore, a natural need to float more firms. Little wonder then that we have Price Waterhouse, Price Waterhouse & Co, Price Waterhouse & Co, Bangalore all owing allegiance to PwC. You also have A F Fergusson & Co as well as A F Fergusson and Associates. And finally, S R Batliboi & Co as also S R Batliboi & Associates.

A second nicety is in terms of one accounting firm having different partnerships and being headquartered in different parts of the country. You thus have a Brahmayya & Co headquartered in Chennai with one set of partners, another in Vijayawada with another set of partners. The same is the case with Deloitte, Haskins & Sells (DHS) and with C C Choksi & Co. This gives operational flexibility with a shared brand name.

Whether audit firms should merge or form an informal network of firms are questions that accounting firms are currently seized with. While one could endlessly debate on it, one thing is certain. Size is going to count. Firms will have to build size either directly through partnerships or indirectly through networking. If they don't they will go the dinosaur way, dead.

Do we have a ranking of the big firms in India?

A first of its kind research report made out in March 2006 by Prime Academy, Chennai, ranked audit firms on five key parameters, namely: size of the firm (number of partners); number of audits; turnover of the company audited; turnover of the audit firm; and geographical spread of the firm.

And came out with the following finding:

1. A F Ferguson & Co (DHS)

2. Deloitte, Haskins & Sells (DHS)

3. S B Billimoria & Co (DHS)

4. S R Batliboi & Co (E&Y)

5. B S R & Co (KPMG)

6. Price Waterhouse & Co (PwC)

7. Lodha & Co

8. Lovelock & Lewes (PwC)

9. Price Waterhouse (PwC)

10. S R Batliboi & Associates (E&Y)

Nine of the 10 firms making the grade owe allegiance to one or the other of what the world calls the Big Four. Grabbing the 1st, 2nd and 4th ranks are firms that have an arrangement with the Deloitte banner. Taking the 3rd and 10th slots are firms that are better known in India by the name of their global affiliates, Ernst &and Young (E&Y). Ranks 5, 8 and 9 have gone to the global topper, the PwC group. Ranked 7th is BSR & Co, the Indian arm of the global firm KPMG.

D. Murali

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - We Bring IT. Offshore software outsourcing company. We use Global Delivery Model (GDM) and believe in Follow The Sun principle

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions