CA. Raju Menon

www.morisonmenon.com www.consultuae.com Pages - 24 Volume - 32 BUILDING BETTER BUSINESSES - GLOBALLY

Morison Menon News

January - March 2013

The year 2012 has been a challenging year for the businesses globally. The prospects of upswings

in the economies of the US and Europe in 2013, appears not so bright. In the case of oil rich GCC countries with crude oil prices maintaining above US$ 100 and increasing demand for natural gas, I do not expect any risk of economic downside and would expect positive trajectory for the economy

of the UAE in 2013. The investor confidence in Dubai is high as evident from the new projects that are taking off and we can expect Dubai to make rapid gains in 2013 based on its past investments in the infrastructure and more global and regional businesses increasing their presence in Dubai.

I am happy to announce that Morison Menon is a Bid Supporter for the Expo 2020 Dubai, which UAE is bidding to host under the theme ‘Connecting minds, Creating the future’. All our collaterals are endorsed with the Expo 2020 Dubai logo. We had also printed 30,000 corporate calendars with Expo 2020 Dubai as the theme.

The role of Dubai SME in fostering innovation and entrepreneurial development in Dubai has been phenomenal. The support of Dubai SME to budding entrepreneurs of Dubai through various programmes launched by it is the focus of our Guest Writer Abdul Baset Al Janahi, CEO of Dubai SME.

The new ISO standard 10668 on ‘brand valuation’ gives the requirements for monetary brand valuation measurement. The attempt by ISO to bring uniformity in brand valuation measurement is the thrust of the write-up by our expert Sathya on valuation.

The XBRL (eXtensible Business Reporting Language) in recent years has gained popularity and a pilot of XBRL has also been initiated in the UAE for publicly listed companies by the Emirates Securities & Commodities Authority. My colleague Thomas who is bullish on adoption of XBRL demystifies XBRL for our readers.

Cross border Merger and acquisition deals are growing at phenomenal pace globally. These M&A deals have their intrinsic risks. Our risk management and valuation specialist, Rajendran brings insight from his involvement in such deals, to highlight the risks associated with such deals.

For Morison Menon the year 2012 has been good, signing several new contracts and renewal of older contracts happening as usual. In terms of depth of our services to clients, our risk based audit platform has been well received by our clients and we expect many more clients taking benefit from our specialized risk based audit service in 2013.

I take this opportunity to wish all our readers a great year ahead in their business, professional and personal life.

EDITOR’S NOTEHIS HIGHNESS SHEIKH AHMED BIN SAEED AL MAKTOUM LAUNCHING THE ‘DOING BUSINESS IN DUBAI’ BOOK.

His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, Chairman and CEO of the Emirates Airline and Group, Chairman of Dubai Supreme Fiscal Committee with CA. Raju Menon, Chairman and Group Managing Partner, Morison Menon, and Sudhir Kumar, Partner & Head - Corporate Communications, Morison Menon Group, during the launch of the fifth edition of “Doing Business in Dubai” book 2013 edition compiled and published by Morison Menon Group.

2 IFRSS and XBRLBoth IFRSs and XBRL are intended to standardize financial reporting in order to promote transparency and to improve the quality and comparability of business information, therefore the two form a perfect partnership. The IASB XBRL Team is responsible for developing and maintaining the XBRL representation of the IFRSs, known as the IFRS Taxonomy. The IFRS Taxonomy is used around the world to facilitate the electronic use and exchange of financial data prepared in accordance with IFRSs.

The IASB’s XBRL activities includeTaxonomy development - for companies reporting in IFRS, • the Foundation publishes tags for each IFRS disclosure. These tags are organized and contained within the IFRS Taxonomy.

Support materials - the Foundation produces support • materials to facilitate use and understanding of the IFRS Taxonomy.

Translations - translations of the IFRS Taxonomy into key • languages are provided to support users of IFRSs and the IFRS Taxonomy whose primary language is not English.

Global outreach - the Foundation makes a concerted effort to • promote the use of XBRL in conjunction with IFRSs around the world. The Foundation also encourages co-operation and communication with users of the IFRS Taxonomy.

XBRL adoptIon In the U.a.e.XBRL is being piloted for publicly listed companies by the Emirates Securities & Commodities Authority (SCA). In 2013, it is expected to attract large Enterprises, Government Agencies from the UAE, GCC and other Middle East countries, along with a significant international representation. The United Arab Emirates has set up a provisional XBRL jurisdiction under the sponsorship of the Abu Dhabi Securities Exchange (ADX). This is the first XBRL jurisdiction to be set up in the Middle East. The step was approved by the XBRL International Steering Committee (ISC) in recognition of the UAE’s efforts and aims to advance XBRL. The forming of the jurisdiction will enable the UAE better to recruit local XBRL members and progress the use of the electronic language. The new jurisdiction expects to adopt the use of the XBRL technology based on IFRS taxonomy to support financial reporting in XBRL under international standards by UAE companies. The ADX has taken a leading role in supporting and setting up the jurisdiction. Other leading members include the Central Bank, the Securities and Commodities Authority, the Accountants and Auditors Association and major accounting firms.

XBRL adoptIon In IndIaThe Corporate Affairs Ministry under the Government of India, has made it mandatory to make filings in XBRL. XBRL is expected to bring in more transparency when it comes to furnishing of financial statements by the companies. XBRL reporting format would be applicable for all listed companies, entities having paid up capital of INR 50 million and above and firms with turnover of INR 1000 million and more. However, banking, insurance, power companies and NBFCs are exempt for XBRL Filing.

To conclude XBRL offers major benefits at all stages of business reporting and analysis. The benefits are seen in automation, cost saving, faster, more reliable and more accurate handling of data, improved analysis and in better quality of information and decision-making. XBRL enables producers and consumers of financial data to switch resources away from costly manual processes, typically

Demystifying XBRL

XBRL (eXtensible Business Reporting Language) is a freely available, open, and

global standard for exchanging business information published by XBRL International Inc., a non profit consortium comprising over 600 plus leading companies worldwide. XBRL allows the expression of semantic meaning commonly required in business and financial reporting. In XBRL, mark-up tags are used to make business information computer-readable and consumable.

XBRL which has gained popularity in recent years is a “network innovation” which requires concerted action from a number of different stakeholders for wider adoption. For this reason, its development has been, and continues to be, facilitated through the voluntary and collaborative efforts of key stakeholders — currently driven principally by local government and regulatory agencies, the most notable of which is US Securities and Exchange Commission (SEC) which mandates regulatory filings in XBRL format. Early users of XBRL included regulators such as the U.S. Federal Deposit Insurance Corporation and the Committee of European Banking Supervisors (CEBS).

XBRL communications are defined by metadata set out in taxonomies, which capture the definition of individual reporting concepts as well as the relationships between concepts and other semantic meaning. Instead of treating financial information as a block of text, XBRL provides a computer-readable tag to identify each individual item of data. By attaching identifying tags to individual pieces of data, a business reporting document becomes “intelligent” data, allowing the exchange of business reporting data by encoding the information in a meaningful way.

ReLevance oF XBRL In the cURRent RepoRtIng FRame woRk For the past many years, momentum has been building towards a fundamental shift in business reporting with the aim to simplify and standardize reporting, both financial and non-financial. The adoption of XBRL which provides the framework to support the effective exchange of documents and data across applications, platforms and the internet would continue to accelerate. As adoption increases, data will be more easily consumable and more widely available.

CA. Thomas C ThomasPartner, Morison Menon Chartered Accountants

3involving time-consuming comparison, assembly and re-entry of data. They are able to concentrate effort on analysis, aided by software which can validate and manipulate XBRL information. Those who stand to benefit include all who collect business data, including governments, regulators, economic agencies, stock exchanges, financial information companies and the like, and those who produce or use it, including accountants, auditors,

company managers, financial analysts, investors and creditors.

XBRL is reinventing how we transmit and use data in business. XBRL is not just for SEC companies: Small businesses and practitioners alike could soon be using XBRL to submit information to bankers, the IRS, and other agencies.

Morison Menon has successfully completed and published the fifth edition of the ‘Doing Business in Dubai’ book in January 2013. 30,000 copies are printed and the book is circulated complimentary to Government Departments, Senior bankers, Diplomats, Trade Missions, Lawyers, Business Councils etc. The book will also be circulated to investors and exhibitors in all local, regional and international exhibitions. The book is well endorsed and has all the updated information on doing business in Dubai. This book helps the business community at large in getting required information about Doing Business in Dubai also helps us in our mission of “Building Better Businesses Globally”.

Morison Menon’s sincere thanks goes to His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, Chairman and CEO of the Emirates Airline and Group, Chairman of Dubai Supreme Fiscal Committee and the team of His Highness Office, His Excellency Mohammed Ibrahim Al Shaibani, Director General of His Highness The Ruler’s Court-Dubai, Executive Director & CEO – Investment Corporation of Dubai and His Excellency Office team and His Excellency Sami Al Qamzi, Director General of Dubai Department of Economic Development and the DED team for the support and patronage offered to Morison Menon during the publication of this book.

Morison Menon take this opportunity to thank AXA, DMCC-JLT, DU, Dubai Airport Free Zone Authority, Dubai FDI, Dubai Investments Park, Dubai World Trade Center, First Gulf Bank, Fujairah Free Zone, Jebel Ali Free Zone Authority, Kizad, Malabar Gold & Diamonds, Masdar, RAKIA, and World Wide Auctioneers for their outstanding support for this unique initiative.

Morison Menon has successfully completed and published the fifth edition of the ‘Doing Business in Abu Dhabi’ book in January 2013. 30,000 copies are printed and the book is circulated complimentary to Government Departments, Senior bankers, Diplomats, Trade Missions, Lawyers, Business Councils etc. The book will also be circulated to investors and exhibitors in all local, regional and international exhibitions. The book is well endorsed and has all the updated information on doing business in Abu Dhabi. This book helps the business community at large in getting required information about Doing Business in Abu Dhabi also helps us in our mission of “Building Better Businesses Globally”.

Morison Menon’s sincere thanks goes to His Excellency Nasser Ahmed Alsowaidi, Chairman-Abu Dhabi Department of Economic Development and His Excellency Mohamed Thani Murshed Al Rumaithi, Chairman of UAE Federation of Chambers of Commerce and Industry and Chairman of Abu Dhabi Chamber of Commerce and Industry for the support and patronage offered to Morison Menon during the publication of this book.

Morison Menon takes this opportunity to thank DMCC-JLT, DU, First Gulf Bank, General Holding Corporation, Jumeirah at Etihad, Kizad, Masdar and Zones Corp for the outstanding support for this unique initiative.

DoingDubaibusiness in

2013 eDition

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Doingabu DHabibusiness in

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If any investor, organization or Business Council needs copies of the ‘Doing Business in Abu Dhabi’ book, they may contact Jonalyn at +971 4 3366990 or jon@morisonmenon.com

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emerging markets and markets where the business has never operated earlier. However, not to pursue these deals is bigger strategic risk of losing an opportunity for growth.

M&A activity in the large corporate segment is normally well structured and deals are made with the involvement of many professional advisors both from the buyer’s and the seller’s side. In the case of SME segment Buy/Sell deals do occur, more often than not through relationships and trust, with little or probably no emphasis on adequate due diligence.

The nature of risks associated with a deal, varies significantly in a cross border M&A vis-à-vis a domestic M&A; therefore, the approach to be adopted from the commencement to the completion also varies.  the appRoach – a RISk management appRoachUsing the classical Enterprise risk management approach, of creating a risk matrix, to deal with risks in a cross border M&A, helps organizations to identify all significant risks associated with such a deal and develop risk mitigation plans. Deal breakers or triggers for deal strategy also emerge consequently by using such an approach.

Using this approach need not be restricted to only cross border M&As, but it gains significance in more complex M&As typically in cross-border deals.

An illustration of typical Risk Framework developed for a 100% acquisition of an entity in Saudi Arabia, by an entity based in UAE is provided in Table 1. This risk framework captures only the major cross border deal risks which are expected to be encountered in such a deal and does not capture other generic legal, financial and business risks associated with M&As.

the dILemmaThere is a better market in a neighbouring country. How do I expand into that market? Should I expand by setting up a “Greenfield” project or should I identify a strategic partner or acquisition target? How do I manage the cross-border business?

Economic recovery in many segments in the region is leading to SMEs in the UAE looking for growth opportunities in the neighbouring countries, with specific attention of many businesses in Qatar and Saudi Arabia, in particular.

While scouting for opportunities to grow, SME business owners are exposed to cross-border M&A deal opportunities and many a time the business owners often grapple to find the right answers that aid them to take an informed decision. Most SME businesses think of cross-border deals as risky, true - there are short-term risks with moving into any new market, particularly

Cross Border Mergers and Acquisitions – A Risk Management Approach

M&A deals in the SME sector are challenging, but they can bring in great benefits to the

sector by creating entities which are stronger and more capable. But deals need to be made right to avoid post M&A pitfalls. This article explores difficulties and pitfalls faced in SME M&A deals. We share the knowledge gained through our experience in advising buyers and sellers in such deals and in analyzing some post-deal situations. This article illustrates a few major risk elements associated with cross border M&A deals in the region and mitigation actions for the same.

CA. K.R. RajendranSenior ConsultantMorison (UAE) Consulting

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SUmmaRyThere is no fixed formula or procedure for ensuring that a cross border M&A deal is done right. One of the critical steps involves fine tuning and customizing the due diligence scope and valuation approach to meet the cross border requirements. Ensuring the retention of key people and relocation of right people is more critical in a cross border deal due to the complex nature of the deal.

Cross Border Mergers and Acquisitions – A Risk Management Approach

Risk Area Risks Involved Probability Impact Rating Actions to Mitigate RiskRegulatory Restrictive Foreign investment

rules and ownership restrictionsLow High Medium Plan the final ownership structure well before signing an

LOI with the target entity and seek reliable legal opinion

Regulatory Delay in the ownership transfer High High High Plan the transfer process and obtain buy-in from the sellerAppoint reliable consultants / advisors in the new country to help in the transfer

Operational Business stoppages due to the acquisition process

Medium High Medium Decide the acquisition cut-off date well in advance and ensure that all critical hand-over and transition items are well planned; including operational cash flows, transition management structure, intimation to customers, suppliers and employees, and others as applicable

Risk Area Risks Involved Probability Impact Rating Actions to Mitigate RiskRegulatory Unable to adhere to foreign worker

Immigration rules and localization requirements

Medium High High Ensure adequate coverage of this aspect during the due diligence process

Regulatory Unpredictability / stability of the economic law making institutions, which may affect business continuity and profitability

Medium Medium Medium Ensure adequate coverage of this aspect during the due diligence process

Regulatory Difficulty in deal with regulatory authorities for operational requirements

Medium Medium Medium Ensure continuity of employees currently handling these matters and ensure coverage of the same during the due diligence process

Operational Cross – cultural differences High Medium High Identify trusted employees who can fit into the working conditions in the new country for relocationEnsure retention of key people in the target entity

Operational Inability to manage a day to day operations of a cross border business

Medium Medium Medium Establish a management and reporting framework before commencement.

Financial Cost differences in operating in the new country

High Medium High Ensure that the valuation workings takes in to account the envisaged cost differences

Financial Banking facility stoppages due to change in ownership

High Medium High Ensure thorough review of all existing banking facilities, continuity of the same post acquisition and its impact on the business, as part of the due diligence and make appropriate workings in the valuation estimate

Taxation Differences in taxation regimes and liabilities emerging on this account

High Low Medium Ensure adequate coverage of this aspect during the due diligence process

dURIng acqUISItIon

aFteR acqUISItIon

M&A deals in the SME sector can bring in great benefits for the sector by creating entities which are stronger and competitive. The deals however need to be structured correctly to avoid post M&A pitfalls.

Seeking professional assistance throughout the entire process is definitely worth considering as it will go a long way in avoiding awkward and business-stopping situations, in the future.

moRe accoLadeS to RaJU menon

vision Foundation gujarat, India has awarded the “nRI visionary award” to Raju menon, chairman and managing partner of morison menon group. the award has been conferred to Raju menon for raising the prestige of Indian professionals globally and specially in the middle east. the award was handed over to Raju Menon at a glittering ceremony held on 23rd november 2012 at Tagore Hall, Ahmedabad in Gujarat. Vision Foundation based out of gujarat the land of mahatma gandhi does exemplary social work amongst less fortunate people across India.

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The International Organization for Standards (ISO) released a new

standard in the year 2010 which gives the requirements for monetary brand value measurement. The standard can be used for valuation of brand for strategic planning, accounting, legal transaction, MIS, etc. Prior to the release of the new standard by ISO, the valuation of any brand was always questionable as the valuation outcome depended on the specialist choosing the methodology for the valuation.

Brand could be a name, sign, symbol, logo and design or a combination of one or more of these to identify goods, services or entities. Brand is one of the most valuable but least understood valuable assets of any entity. ISO’s attempt through ISO 10668 to provide a consistent, reliable approach to brand valuation considering the financial, behavioral and legal aspects is a welcome step that has to a great extent filled the vacuum of estimating the monetary brand value.

The standard requires the monetary brand valuation process to be transparent involving disclosure and quantification of valuation inputs, assumption and risks and carrying out a sensitivity analysis of the brand value to the main parameters used in the valuation models.

The standard defines monetary brand value as the economic benefit conferred by a brand over its expected useful economic life. The standard suggests three approaches for brand valuation. One or combination of above approaches can be adopted to compute the brand value which may be dictated by the purpose of valuation, value concept and characteristics of the brand being valued.

APPLYING THE BRANDVALUATION STANDARD - ISO 10668

Brand Value

Cost

Income

Market

SathyaHead - Strategy & IT ConsultingIPIX Consulting Pvt. Ltd., India

7Income appRoach Under the income approach firstly the expected after tax cash flow attributable to the asset over the remaining useful economic life of the brand is estimated. The cash flows are then converted to the present value through discounting with appropriate discount rate.

For determining the cash flows the standard prescribes six methods

and one may choose one or more of the methods specified to arrive at the cash flows. Under the income approach the risks that are not reflected in the future cash flows are considered under discount rate. The discount rate used for discounting future cash flows attributable to the brand shall be derived from the discount rate used for discounting of cash flows generated by the business as a whole.

The useful economic life of the brand shall consider the general trends for brands in the industry in which the brand is used. The valuation shall be only for the forecast period that is same as the remaining useful life of the brand. It may be noted that in some cases the brand may have indefinite useful economic life.

The cash flows under the income approach shall be calculated on the after tax basis. When valuing the brand, the effective tax savings through depreciation shall be considered. Under the income method, the period beyond forecast shall be valued using a long term expected growth rate.

maRket appRoachIn the market approach brand value is measured based on what other purchasers in the market have paid for assets that can be considered reasonably similar to those being valued. In this method price paid for reasonably comparable brands shall be collected, and adjustments shall be made to compensate for differences between those assets and brand under analysis. For selected comparables, multiples shall be computed based on acquisition price. Those multiples shall then be applied to the aggregates of the subject brand. Under market approach the brands considered shall have similar characteristics to the brand subject to valuation.

coSt appRoach In this method the value of brand is based on cost invested in building the brand, or its replacement or reproduction cost. In the

cost approach a comparison shall be done between past expenditure and the awareness of brand generated by such expenditure.

vaLUatIon InpUtSThe valuation inputs shall consider market and financial data, behavioural aspects and legal aspects.

market and Financial aspectsThe market in which the brand operates an analytical review of the current and predicted market volumes, margins and channels shall be estimated. The findings of such market review shall be inputted in the valuation. The valuation will also incorporate review inputs from key financials.

Behavioural aspects The key financial parameters and valuation assumption shall be adjusted based on behavioural aspects of the brand. Under the income approach the behavioral aspect of the brand is necessary to estimate the monetary proportion attributable to the brand, and to assess the risk connected with the brand when determining the discount rate.

When applying the market approach, an analysis of the behavioural aspects is required to determine the appropriate multiples. If applying the cost approach, an analysis of the behavioural aspects is necessary to determine the cost of building similar brand of comparable value.

The brand valuation shall also include an assessment of the brand situation in the market, including brand value drivers. An analysis of the brand strength shall also be performed to estimate future sales volume, revenues and potential risks. The brand evaluation shall also include the brands relevance in specific market and sector.

Legal aspectsThe legal aspects as part of brand valuation shall include an assessment of each legal right that protects the brand, the legal owner of each of the legal rights of the brand and legal parameters that have beneficial or adverse effect on the value of the brand. The brand valuation exercise shall also be covered with respect to local laws that govern such transactions.

The value determined in brand valuation exercise shall be attributable only to the owner of legal rights of the brand. The legal ownership rights shall be ascertained using the appropriate regional and national laws.

RepoRtIng ReqUIRementS oF BRand BeIng vaLUedThe standard specifies reporting requirements for the brand being valued. The report shall specify the details about the appraiser, purpose of valuation, the identity of the subject brand, brand related assets valued, basis of the value, result of monetary brand valuation, data sources used, financial, behavioural and legal analysis, key assumptions, sensitivity analysis, limitations, valuation and value date.

To conclude, the standard on brand valuation is a welcome initiative from ISO. The attempt by ISO should definitely help in streamlining the process of brand valuation and bring uniformity in the brand valuation exercise. However, it may be useful to include a few illustrations on the brand valuation as annexure which would be useful for beginners in the brand valuation.

Price premium Volume premium

Income split

Multi-period excess earning Incremental

cash �ow

Royalty reliefCash�ow

determination methods

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1. WHAT is THe oVerAll Vision And objecTiVe of dUBaI Sme?Dubai SME’s vision is to make Dubai the hub for innovative SMEs to start, grow, expand and exit their business. It plays 2 key roles: Entrepreneurship development and SME development. Under entrepreneurship development, Dubai SME provides a range of services to help budding entrepreneurs understand what it means to be an entrepreneur and enable them develop and grow. The services include debt financing for their start-up, access to government procurement, training and development. For established SMEs, our role is to provide platforms for learning and networking. A key initiative in this regard is Dubai SME100, a performance development ranking of SMEs. The initiative aims to spur and enable SMEs to grow bigger and better. We provide a development platform covering investment, corporate governance, internationalisation and human capital development to all interested SMEs in the ranking.

2. WHen WAs dubAi sMe esTAblisHed And HoW HAs It evoLved oveR tIme?Dubai SME was established in 2002, with the mandate to develop local entrepreneurship, and eventually small and medium enterprises. Over the years, Dubai SME has gained a reputation for helping potential entrepreneurs start their business journey and creating local success stories. In 2008, the establishment’s mandate was expanded to include the wider SME sector based on the official definition of SMEs. The definition is based on turnover and employment size. With this, we are now able to estimate the size of the sector to be 75,000 SMEs comprising 95 % of the enterprise population in Dubai. The sector contributes 42% of the workforce and 40% of GDP in Dubai. With a wider mandate, Dubai SME is now the sole agency supporting SMEs based in Dubai. Over the next few years, more SME initiatives will be unveiled.

Email: Amira.ElSakhawi@sme.aeTel: +971 4 3613031

Abdul Baset Al JanahiCEO, Dubai SME

Guest Article3. WHAT Are THe MAjor iniTiATiVes oF dUBaI Sme In the LaSt coUpLe oF yeaRS to encoURage and SUppoRt Uae natIonaL entRepReneURS?In the last couple of years, our focus was to understand the SME sector, and reach out to as many firms as possible. We launched Dubai SME100 as a platform to engage willing and able SMEs to understand growth potential and development. Earlier in 2012, we announced the first batch of Dubai SME 100 companies. One of our key initiatives is to promote corporate governance through helping SMEs execute practical steps to enhance their corporate well –being and transparency. Another initiative is SME Connect, which lists and identifies service providers for SMEs to use in their operations and development.

4. what IS the deFInItIon oF “Sme” aS peR dUBaI Sme?Dubai SME uses an internationally-recognised protocol for SME definition that is also adapted to the Dubai economic structure. It is based on turnover and employment size. The thresholds are defined by micro, small and medium superimposed by trading, manufacturing and services sectors. The thresholds are as follows:

Trading Manufacturing ServicesEmployees Turnover

Micro < = 9 & <= AED 9 mn

< = 35 & <= AED 50 mn

< = 75 & <= AED 250 mn

< = 20 & <= AED 10 mn

< = 100 & <= AED 100 mn

< = 250 & <= AED 250 mn

< = 20 & <= AED 3 mn

< = 100 & <= AED 25 mn

< = 250 & <= AED 150 mn

Small

Medium

Employees Turnover Employees Turnover

DUBAI SME l l l l l l

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5.doeS dUBaI Sme SUppoRt non-Uae natIonaL SmeS too?For Dubai SME, the ultimate objective is to sustain Dubai’s entrepreneurial legacy through qualifying UAE nationals as future business leaders and strengthening the SME sector and its capabilities to be the chief engine of economic development in Dubai. All SMEs and entrepreneurs in Dubai have benefit from this sector focus of Dubai SME.

6. how aRe yoU BRIngIng vaRIoUS StakehoLdeRS In the maRket to SUppoRt SmeS In dUBaI?We have various platforms to do this. For example, we have the SME100 platform where ranked SMEs can access a growth ecosystem, gain development knowledge and be part of an enabling network. For service providers, we have SME

connect which lists consultants that are “SME-friendly” and “SME – sensitive” in key areas such as operations, legal, auditing and financial management.

7. IS FUndIng aLSo paRt oF yoUR SUppoRt InItIatIveS?Debt funding for wholly locally owned start-ups based on a credit guarantee model is offered based on an entrepreneur-execution-evaluation model. Evaluation also covers the potential of the entrepreneur to develop the business based on passion and commitment to understand customer needs, and the fundamentals of financial management covering budgeting and cash-flow management. Dubai SME works with a network of banks to administer the scheme. Loan quantum is up to AED 3 million, for which the entrepreneur must also show financial commitment by way of partially financing the cost of the project.

8. what aRe the cRIteRIa FoR appLIcatIon and SeLectIon oF an Sme FoR FUndIng?

The business must be owned and managed by the local 1. entrepreneurThere must be cost sharing in the start-up costs, between the 2. bank and the entrepreneurs’ own fundsThe entrepreneur must agree to employ an accountant to 3. manage the financials of the businessesThe entrepreneur must show full commitment to execute the 4. business

9. how do yoU monItoR them SUBSeqUentLy?Dubai SME has put in place a project monitoring process where regular reporting is made by the entrepreneur to update progress based on the milestones set upfront by Dubai SME, and agreed by the entrepreneur.

10. HoW is corporATe GoVernAnce iniTiATed in Sme’S?Dubai SME uses a diagnostic tool kit for corporate governance for SMEs as a means to help them understand their current standing, identify gaps and take practical steps to execute the basics of corporate governance. Dubai SME has also launched a code of corporate governance for SMEs and a guide book for execution. So far we are account managing a group of SME 100 companies which have taken steps to execute corporate governance. Our role is to provide advisory and connections to knowledge resources and expertise to these SMEs. Finally, we have also launched a corporate governance SME casebook to help SMEs understand how other SMEs have done it. Hopefully, this will inspire other SMEs to follow suit.

11. is THere Any MAjor iniTiATiVes pLanned By dUBaI Sme In the neXt one – two yeaRS?Yes, many are in the pipeline and getting ready to be implemented. Some initiatives include a Dubai SME100 advisory network, an SME annual report contest, investment capability development, SME HRD and SME innovation.

DUBAI SME l l l l l l

10 ROUND UPCORPORATE

Sudhir Kumar with Chanda Kochhar, Managing Director and CEO of ICICI Bank Limited during the Chief Minister’s lunch meeting on the inauguration day of Vibrant Gujarat 2013 at the Mahatma Mandir, Gandhi Nagar, Gujarat, India.

CA. Saju Augustine, Paul Wan, Chairman Morison International Asia Pacifc, Director Morison International and Managing Partner - Paul Wan and Co. Singapore, Victor Sekese Chief Executive of SizweNtsalubaGobodo, South Africa, CA. Raju Menon and CA. Girija Menon, during MI Conference in Sydney, Australia.

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MI Delegates attending a Work shop on Audit with CA. Girija Menon during the MI Conference, Sydney, Australia.

CA. Saju Augustine training Senior Auditors of Morison Menon Chartered Accountants on International Financial Reporting Standards (IFRS) at the India Club, Dubai.

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CA. Raju Menon and Sudhir Kumar, with Oommen Chandy, Honorable Chief Minister of Kerala during the Pravasi Bharathiya Divas 2013 at the Le Meridien, Kochi, Kerala, India.

Sudhir Kumar with H.E Mohammed Al Gergawi, Minister of State for Cabinet Affairs and Chairman of the Executive Office of H.H Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and the Ruler of Dubai, during the Summit Opening Ceremony of the 3rd Annual Global Entrepreneurship Summit at the Dubai World Trade Centre.

CA. Raju Menon and CA. Saju Augustine, Partner Morison Menon, Sharjah along with the representatives of Australian Trade Commission during the MI Conference in Sydney, Australia.

CA. Raju Menon and Sudhir Kumar with Vayalar Ravi, Honorable Union Minister of India for Overseas Indian Affairs during the Pravasi Bharathiya Divas 2013 at the Le Meridien, Kochi, Kerala, India.

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CA. Parthasarathy is a fellow member of the Institute of Chartered Accountants of

India with over 9 years of professional experience in practice in India and 18 years of extensive experience in practice & in industry in the Middle East.

Before joining Morison Menon in 2005, he was the Group Financial Controller for a major business group with diversified business interests in Oman. He currently functions as the Group General Manager of Morison Menon.

Partha has proven leadership and managerial skills and maintains a great rapport with the clients. He has expertise in auditing, incorporation, taxation, etc as a practicing Chartered Accountant, and also in the field of Finance, Accounting and Administration. His excellence in client management and relationship building is highly lauded by many clients.

Apart from his professional interests, Parthasarathy is popular in social circles and is an active member of the theatre, with his acting and directing interests in dramas.

He is married to Sushama and has two daughters Shilpa and Shwetha.

Partners and Management of Morison Menon are extremely happy to elevate Parthasarathy as partner of Morison Menon Chartered Accountants and wish him all success in his new position.

CA. ParthasarathyPartner, Morison Menon Chartered Accountants

doUBLe wIn FoR moRISon InteRnatIonaL (mI)

Morison International (MI) won two out of the thirteen awards at the Inaugural ‘International Accounting Bulletin’ Awards held in London. MI picked up the awards for “Association of the Year” and “Rising Star Association”. The awards, sponsored by Aon Insurers, attracted over 100 nominations from all over the world and the awards were presented at a live award event. The double win is a great achievement for MI and a testament to MI’s success over the past 12 months.

CA. Thomas C. Thomas, a fellow member of the Institute of Chartered Accountants

of India holds two Bachelors degrees from the University of Calicut in India – in Law with specialization in International Law and in Mathematics with specialization in Statistics. He has over 27 years of extensive experience in audit, assurance and related services including 16 years with one of the Big 4, Dubai, prior to joining Morison Menon.

Thomas joined as a Senior Audit Manager during 2008 with Morison Menon. His experience spans assurance services and financial advisory and his specialized sector of involvement is premier banking and financial institutions, insurance, retail, construction, and manufacturing organizations. His expertise in the International Financial Reporting Standards (IFRS) and International Auditing Standards (ISA) empowered him to lead the audit team professionally. He is also the team leader in our Middle East technical advisory committee with respect to the audit and IFRS issues.

A professional with in-depth knowledge and experience having strong analytical skills with ability to lead and motivate team/individuals are the deciding factors to elevate Thomas as partner of Morison Menon Chartered Accountants.

Partners and Management of Morison Menon group wish him great success in his new position.

CA. Thomas C ThomasPartner, Morison Menon Chartered Accountants

new partners to morison menon chartered accountants, dubai

12

DIRECTORY

The information conveyed in the newsletter are the individual opinions of the respective authors and is not the combined opinion of Morison Menon Group.

DISCLAIMER

morison menonchartered accountantsdubai :204 Tower-A, Gulf Towers,Oud MethaP.O. Box: 55535, Dubai, UAETel: +971 4 336 69 90, Fax: +971 4 336 69 92dubai@morisonmenon.comabu dhabi :204 Sohail Bin H R Al Mazrooi Bldg.Salam Street, P.O. Box: 31616Abu Dhabi, UAETel: +971 2 677 27 27, Fax: +971 2 677 37 37abudhabi@morisonmenon.com

Jebel ali :Office No. 140, LOB -16P.O. Box: 61136, Jebel Ali, Dubai, UAETel: +971 4 887 17 27, Fax: +971 4 881 32 29jebelali@morisonmenon.com

Sharjah :203, Liberty Al Soor BuildingAl Mena Road, P.O. Box: 5199Sharjah, UAETel: +971 6 575 88 99, Fax: +971 6 575 88 96sharjah@morisonmenon.comRas al khaimah :P.O. Box: 28981, G-18Ras Al Khaimah Free Trade Zone, UAETel: +971 7 204 64 00,Fax: +971 7 204 64 01rak@morisonmenon.com

Layout and Design: IPIX Solutions Pvt. Ltd, www.ipixsolutions.comA group entity of Morison Menon

morison menon consulting wLL41 Euro Tower, Seef, ManamaKingdom of BahrainTel: +973 1 755 52 45,Fax: +973 1 755 52 46bahrain@morisonmenon.com

Skca morison chartered accountants LLc, qatar46 A, 3rd Floor,Al Emadi Business CentreC-Ring Road, Al Hilal WestP.O. Box: 32312, Doha - QatarTel: +974 4 467 02 99 / 982,Fax: +974 4 467 36 30doha@morisonqatar.comwww.morisonqatar.com

Sohila & kuriakose chartered accountants46 A, 3rd Floor,Al Emadi Business CentreC-Ring Road, Al Hilal WestP.O. Box: 32312, Doha - QatarTel: +974 4 467 02 99 / 982,Fax: +974 4 467 36 30doha@morisonqatar.comwww.morisonqatar.com

k.B. nambiar & associates,chartered accountantsBangalore, Karnataka, Indiainfo@morisonmenon.com

k.B. nambiar & associates,chartered accountantsMangalore, Karnataka, Indiavenugopal@morisonmenon.com

R menon & associateschartered accountantsDoor No. E-6 & E-7, IIIrd FloorThe Esplanade Bldg, Convent Jn.Market Rd, Kochi - 682 011,Kerala - IndiaTel & Fax: +91 484 4058812 (4 lines)

IpIX consulting pvt. Ltd.President Chamber, 102, Level 1, Hayes Road, Off Richmond Road, Bangalore,Karnataka - 560 025, info@morisonmenon.com

IpIX Bpo pvt. Ltd.207, ‘Neo Space’, KINFRAMalappuram Dist., Kerala, lndia - 673635Tel: +91 494 3018530, Fax: +91 494 3018540info@ipixbpo.com, www.ipixbpo.com

IpIX Solutions pvt. Ltd.205, ‘Neo Space’, KINFRAMalappuram Dist., Kerala,India - 673635Tel: +91 494 3018531,Fax: +91 494 3018540info@ipixsolutions.com,www.ipixsolutions.com

RSph and associateschartered accountantsNew Delhi, Gujarat: Ahmedabad,Vadodara, Anand, GandhinagarMadhya Pradesh: Indore, Ujjain,Maharashtra: Nashik

morison (Uae) consulting203 Tower-A, Gulf Towers,Oud MethaP.O. Box: 29672, Dubai, UAETel: +971 4 336 70 00,Fax: +971 4 337 25 25dubai@morisonmenon.com

morison menon corporate Services203 Tower-A, Gulf Towers,Oud MethaP.O Box: 55535, Dubai, UAETel: +971 4 336 70 00, Fax: +971 4 337 25 25

Zenologics Solutions LLc203 Tower-A, Gulf Towers,Oud MethaP.O. Box: 6837, Dubai, UAETel: +971 4 336 70 00,Fax: +971 4 337 25 25sales@zenologics.com,www.zenologics.commorison muscatchartered accountants L.L.cP.O. Box: 2123, Postal Code 112Ruwi, Sultanate of OmanTel: +968 2 479 93 34,Fax: +968 2 479 91 93info@morisonmuscat.comwww.morisonmuscat.com morison muscat corporate ServicesP.O. Box: 2123, Postal Code 112Ruwi, Sultanate of OmanTel: +968 2 479 93 34,Fax: +968 2 479 91 93

eXecUtIve RecRUItment LIcenSe In dUBaI (knowLedge vILLage)

Investors can now set up recruitment company in Knowledge Village, Dubai. Companies that specialize in attracting and sourcing talented individuals in leadership, executive or professional roles and delivering best practice retainer-based search on behalf of client organizations. It is further to be noted that activity of such companies shall be restricted to assist organizations in sourcing executive level talent for placement in key positions rather than supplying normal employees.

the companies must act within the following parameters:i. Assist client organizations in attracting, sourcing and selecting top level professional talents including screening and filtering applications.

ii. Conduct international searches and recruitment campaigns for upper-level professional candidates in a wide variety of industries and functional areas with a remuneration of not less than UAE Dirham ten thousand (Dhs. 10,000/-) per month.

iii. Apply appropriate assessment tests such as psychometric, behavioral and other personal assessment testing for a better understanding of a candidate’s personality style and competencies.

iv. Assist client organizations in structuring compensation and benefits packages, by serving as an intermediary between the client organization and the candidates.

v. The company shall not charge a fee from the applicants.

vi. The company shall provide with the authority a bank guarantee of AED 100,000 from a locally registered bank.

vii. The Shareholders/Director of the entity should possess minimum 3 years of experience in Human Resources / Executive Search field.

The entity to practice the activity may be registered as a foreign company branch or free zone limited liability company (FZ-LLC) as per the provision of the prevailing regulations.

Business & Business Regulations-Update

Partners and Senior Auditors of Morison Menon Chartered Accountants attending IFRS training at the India Club, Dubai.

Vibran

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IFRS T

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Sudhir Kumar with Adi Godrej, Chairman of Godrej Group and the President of the Confederation of Indian Industries-CII after a meeting during the Vibrant Gujarat 2013 at the Mahatma Mandir, Gandhi Nagar, Gujarat, India.