With India emerging as a favourite destination for foreign direct investment, and with multinational companies looking for joint ventures and acquisition of Indian companies, a whole new category of business activity has opened up in India: risk management and transaction advisory firms.
"The increasing globalisation of Indian business has resulted in a lot of foreign companies looking to set up joint ventures or partnering with Indian firms. These companies would like to assured about risks involved in doing business in India, like the socio-economic factors, and so on. They would also like a comprehensive check on their potential partners’ track record," says Ashish Sonal, country manager, India, for Hill & Associates, a security and risk management firm, which set up a base in India in 1998. Companies turn to risk management and transaction advisory specialists to get detailed information about potential partners in India. "We were asked to check the track record of several banks with whom a US bank had correspondent relationships in India. Our client was the acquiring bank, and wanted to satisfy itself about the financial hygiene of each and every correspondent bank in India," says the head of a risk management firm.
Apart from background checks, risk management firms also whet the background of the principals involved in a transaction. "The checking works both ways, with Indian companies, some of whom have been expanding quite aggressively abroad, buying companies or entering into joint ventures," says a partner at the transaction advisory services of KPMG, a large consulting firm.
Adds Mr Sonal, who served in the Indian Army and saw action in Sri Lanka and Kargil and now heads the 120-member Hill & Associates team, "Globalisation has brought in a huge demand for risk management services, and due diligence is only a part of this exercise. We are often asked by clients to prepare a vulnerability and impact report for a particular industry, like, for example, mining, which has a host of socio-economic factors attached."
While firms like Hill & Associates offer a full-spectrum of risk management services, other companies specialise in background checks. "We are often asked to check out the hygiene of companies," says the head of a Mumbai-based risk management firm.
"The increasing globalisation of Indian business has resulted in a lot of foreign companies looking to set up joint ventures or partnering with Indian firms. These companies would like to assured about risks involved in doing business in India, like the socio-economic factors, and so on. They would also like a comprehensive check on their potential partners’ track record," says Ashish Sonal, country manager, India, for Hill & Associates, a security and risk management firm, which set up a base in India in 1998. Companies turn to risk management and transaction advisory specialists to get detailed information about potential partners in India. "We were asked to check the track record of several banks with whom a US bank had correspondent relationships in India. Our client was the acquiring bank, and wanted to satisfy itself about the financial hygiene of each and every correspondent bank in India," says the head of a risk management firm.
Apart from background checks, risk management firms also whet the background of the principals involved in a transaction. "The checking works both ways, with Indian companies, some of whom have been expanding quite aggressively abroad, buying companies or entering into joint ventures," says a partner at the transaction advisory services of KPMG, a large consulting firm.
Adds Mr Sonal, who served in the Indian Army and saw action in Sri Lanka and Kargil and now heads the 120-member Hill & Associates team, "Globalisation has brought in a huge demand for risk management services, and due diligence is only a part of this exercise. We are often asked by clients to prepare a vulnerability and impact report for a particular industry, like, for example, mining, which has a host of socio-economic factors attached."
While firms like Hill & Associates offer a full-spectrum of risk management services, other companies specialise in background checks. "We are often asked to check out the hygiene of companies," says the head of a Mumbai-based risk management firm.