BDO International sells 10% JV stake to Indian partner Haribhakti
MUMBAI:
BDO International, the $6-billion Belgium-based audit and accounting
firm, will call off its four-year joint venture BDO India with
Haribhakti Consulting by selling its 10% stake to its Indian partner, a
senior company officials said.
"We have decided to purchase BDOs
10% stake at the cost they invested to purchase the stake in 2008,"
Shailesh Haribhakti chairman Haribhakti Consulting said in a telephonic
interview from Indonesia.
BDO, which takes the name from three
of its founding members Binder Hamlyn from United Kingdom, Dijker and Co
of Holland and Germany's Otte and Co, offers risk and advisory
services, tax, regulatory and global knowledge services in 138 countries
with 55,000 employees.
The foreign firm teamed up with
six-decade-old Haribhakti in 2008 and later inducted the joint venture
BDO India into its worldwide network. "Unfortunately we are unable to
respond at this time due to the holidays," BDO International
spokesperson said in a email response.
Institute of Chartered
Accountants of India ( ICAI), a statutory panel to regulate Indian
chartered accountants, does not allow foreign auditors to own stake in
Indian chartered accounting firms. But, foreign investments are allowed
in consulting firms like BDO's investment in BDO India., where Shailesh
Haribhakti is the chairman. He is also the partner of the auditing firm -
Haribhakti & Co.
"This is managed by forming a private
limited company where foreign firm is having equity stake," says Vinod
Ambavat, partner at Ambavat Jain and Associates LLP, a chartered
accountant. ""The referral on audit work is managed by keeping the stake
of foreign partner little higher in private limited companies," he
added.
The split is the second for the Belgium firm after it
broke off in 2008 with Kolkatta-based Lodha and Co owned by late RS
Lodha.
Indian consultants team up with foreign partners as it
gives them an exposure to a pool of international clients and receive
higher fees for their services including entry strategies to India,
advise on Indian tax laws and to find partners.
"The fees
received from foreign clients are normally higher than the referral fee
paid to global partners," says a senior partner at a global audit and
consulting firm. Referral fees are money paid to global partners for
bringing in their clients work to the venture.
"That is the
reason why Indian accounting firms look for alliance with international
firms." the senior partner quoted earlier said. He cannot be quoted as
firm does not allow partners to speak on rivals.