Tamil Nadu set to settle Rs 2,900-crore tax dispute with Nissan Motor

Tamil Nadu is set to settle the Rs 2,900-crore tax dispute with Japanese automaker NissanMotor in the next few months.
The development comes two months after the state revived Nokia’s mobile-manufacturing facility, once the world’s largest, which it closed down in 2014 owing to a Rs 21,000-crore tax dispute. Salcomp, Foxconn, and other companies have acquired the 210-acre facility in parcels.

The agreement with Nissan has got the Cabinet’s nod, said sources, adding it would be signed soon.
After taking office three years ago, Chief Minister K Palaniswami said his government would work on sorting out issues with both Nokia and Nissan, two high-profile tax cases.
While the state government will continue to offer the incentives as promised, Nissan will give up its claims on input tax credit, said sources.
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A Nissan spokesperson said: “We are committed to working with the Government of India. Nissan is proud to play a role in the ‘Make in India’ effort and we have created over 40,000 jobs in India, directly and indirectly, and contributed to the economic growth of Tamil Nadu, where we have invested around $1 billion.”
Nissan, along with its French partner Renault, had set up a car-manufacturing facility at Oragadam, near Chennai in 2008, to cater to domestic and export markets.
Almost five years ago, the dispute led to the state government stopping refunds to Nissan and the company took the state to court, according to reports. The state has offered tax sops to investors, including investment promotion subsidy (IPS) and VAT (value-added tax) refunds. While the government was ready to give the subsidies to the carmaker, it refused to acknowledge the VAT dues Nissan claimed.
It was in the second half of 2017 that the company took the matter to international arbitration.
The tussle led Renault Nissan Automotive India to say it would hold off its plans to invest Rs 5,000 crore in the facility.
The Industries Department of Tamil Nadu had then alleged the companies had changed their business models after signing the MoU, enabling them to avail of the Rs 5,125 crore eligible incentives to them much before completing 21 years as stipulated in the deal. According to the conditions, the company can avail of a benefit of up to 115 per cent of the eligible investment, which is around Rs 5,125 crore, in around 21 years.
Two marketing firms — Nissan Motor India and Renault India — were floated to sell cars manufactured by the consortium to these two firms, thus taking advantage of the 14.5 per cent VAT to all cars.
Normally cars sold in the state attract a VAT of 14.5 per cent, while those sold in other states pay 2 per cent. There is zero duty on exported cars.
However, it alleged that the manufacturing company charged the 14.5 per cent VAT and sold all cars to their group companies and thus the entire tax became eligible for refund.
“On the one side, Renault Nissan Automotive India got refunds of entire taxes collected and paid by the manufacturing company which included the Input Value Added Tax on their purchases without adjustments under the conditions of the MoU executed. On the other, the same amount was claimed as Input Tax Credit (ITC) by the marketing companies ...,” said the department in a counter affidavit with the Madras High Court earlier.

Nissan Motor picks Makoto Uchida as CEO, Ashwani Gupta as COO: Report

The board of Nissan Motor Co has picked Senior Vice President Makoto Uchida as its next chief executive and Ashwani Gupta as its chief operating officer, two sources said on Tuesday, following a board meeting of the scandal-hit automaker.
Directors at Nissan, including those from top shareholder Renault SA, voted unanimously in favour of the two executives, one of the sources said. Both of the sources spoke on condition of anonymity.

No one was immediately available for comment at Nissan. The automaker was due to hold a news conference at 1130 GMT.
The decision, earlier reported by the Nikkei newspaper, comes after months of turmoil at Japan's second-largest automaker following the downfall of former Chairman Carlos Ghosn last year and the departure of former CEO Hiroto Saikawa last month.
Ghosn is awaiting trial in Tokyo on financial misconduct charges that he denies.
Saikawa was forced to step down after he admitted to being improperly overpaid.
The internal strife also has implications for Nissan's often difficult relationship with Renault
Uchida was not seen as one of the frontrunners in the race to be the next chief executive, Reuters has reported.
The India-born Gupta is currently COO of alliance junior partner Mitsubishi Motors Corp.

Nissan's plan to slash jobs worldwide could see 1,700 Indians out of work

Japanese automajor Nissan has decided to cut its production amid a slowdown in the car sales and decline in profit, in a move that could result in over 12,000 job losses globally, including 1,700 in India.
During a media conference in Japan on Thursday, Nissan said that it is implementing strategic reforms to build an operational base in order to ensure consistent and sustainable profitability over the medium term.

"The company is moving quickly to optimise cost structures and manufacturing operations, while also enhancing brand value, steadily refreshing its line-up and achieving consistent growth globally, including in the US," the company said.
In order to improve its overall utilisation rate, Nissan said it will reduce global production capacity by 10 per cent by the end of financial year 2022. In line with production optimisation, the company will trim headcount roughly by 12,500. Furthermore, the company will reduce the size of its product line-up by at least 10 per cent by the end of financial year 2022 to improve product competitiveness by focusing investment on global core models and strategic regional models.
The management said that across eight locations, including Indonesia and Spain, the above actions were implemented which led to reduction of around 6,400 heads. Furthermore, in the upcoming two financial years, FY21 and FY22, the company is likely to extend it to additional six sties/ locations and may truncate 6,100 jobs. The company said that it may stop production and reduce capacity.
While Nissan India officials were not available for comment, media reports stated that around 1,700 jobs are at stake in India. However, "the management did not receive any official communication so far related to job cuts," Union representatives at the company's manufacturing facility at Oragadam, near Chennai said.
The facility in Chennai is an alliance plant. Nissan's Datsun and Redi Go are being manufactured in the facility. Production of Renault Triber and the sub-4 meter car is also underway in the alliance plant. It is not sure whether the job cuts would be at the floor level or at the executive level in the likes of sales and marketing or in the alliance factory.
For the past nine months, every Saturday vehicle production would cease as part of process modification, so that the engineers work on the shopfloor, while other services would operate normally. Although the factory did three shifts during 2012-13, it moved to two shifts recently. Last year, there was a Voluntary Separation Scheme, but hardly 50 people opted for it.
Nissan's Indian operation saw the worst drop in retail volume among 16 geographies. Retail volume dropped by 42.2 per cent during the first quarter of fiscal 2019 to 6,221 units from 10,764.
Nissan Motor India has reported a 49.30 per cent year-on-year (YoY) decline in net profit to Rs 61.9 crore in the previous financial year 2018 on account of sinking domestic sales and drop in exports owing to few model launches and poor product recognition. Net profit in the previous financial year stood at Rs 122.1 crore.
Revenue from operations during FY18 (April-March) fell 21.67 per cent YoY to Rs 7,437.3 crore from Rs 9,495.4 crore in the earlier financial year, according to a media report.

Carlos Ghosn's trial to be delayed possibly until next year: Media reports

Former Nissan chief Carlos Ghosn's trial, which was expected to begin in September, will be delayed, local media said Saturday, hinting that it may not start this year.
The 65-year-old tycoon, currently on bail, is preparing for his trial on four charges of financial misconduct ranging from concealing part of his salary from shareholders to syphoning off Nissan funds for his personal use.

The Tokyo District Court had proposed to start his trial in September during its pre-trial meetings with his defence lawyers and prosecutors, news reports said, quoting unnamed sources.
But the court told the lawyers and prosecutors on Friday that it had retracted the plan without proposing a new time frame, Kyodo News said, adding that the move could mean the trial will not start this year.
The court also decided not to separate the trial for Ghosn, his close aide Greg Kelly and Nissan -- all indicted on the charge of violating the financial instruments law by underreporting Ghosn's compensation, according to Kyodo.
His lawyers have so far demanded he be tried separately from Nissan and have voiced fears he will not receive a fair trial.
The Sankei Shimbun also said prosecutors gave up filing an appeal to the Supreme Court against his bail, a move to erasing a chance of his return to jail unless he is arrested again on fresh charges.
Immediate confirmation of the news reports was not available.
On Thursday, Ghosn exited his Tokyo detention centre after accepting bail of USD 4.5 million under strict conditions, including restrictions on seeing his wife.
His case has captivated Japan and the business community with its multiple twists and turns, as well as shone a spotlight on the Japanese justice system which critics say is overly harsh.
Ghosn denies all the charges, with a spokesperson for the executive saying on Monday he would "vigorously defend himself against these baseless accusations and fully expects to be vindicated".
In a statement hours after his release, Ghosn said: "No person should ever be indefinitely held in solitary confinement for the purpose of being forced into making a confession."
The dramatic case has thrown international attention onto the Japanese justice system, derided by critics as "hostage justice" as it allows prolonged detention and relies heavily on suspects' confessions.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Governance poor at Nissan, says committee set up to study Ghosn scandal

A special committee set up by Nissan Motor Co to examine the root cause of alleged financial misconduct by ousted chairman Carlos Ghosn said it appeared that the Japanese carmaker suffered from poor governance procedures, including director compensation.
Ghosn has been charged with three counts of financial misconduct and has been detained in Tokyo since his arrest on November 19. Ghosn denies the charges against him, which include understating his salary for a total of eight years and temporarily transferring personal financial losses to Nissan's books.

After the special committee's first meeting, former judge Seiichiro Nishioka, who co-chairs the committee, said the group plans to meet three or four times before issuing recommendations to Nissan's board on how to improve corporate governance.
The group comprising three Nissan external directors and four third-party members expects to make recommendations to Nissan's board in March on how to tighten its lax govenance and approval processes for matters including director compensation and chairman selection.
Nissan and partner Mitsubishi Motors have been conducting their own internal investigations into alleged wrongdoing by Ghosn.
On Friday both accused him of improperly receiving $9 million in compensation from a joint venture (JV) between the two automakers, raising the possibility that the former boss of the Nissan-Renault alliance could face a fresh charge of embezzlement.
Separate internal investigations have found evidence that a small group of people at both companies helped to carry out or approve transactions including secret compensation and payments on Ghosn's handful of residences, people with knowledge of the matter have told Reuters.

To protect evidence, Nissan seeks to block Ghosn's access to Rio apartment

Nissan said it was seeking to block former chairman Carlos Ghosn's access to an apartment in Rio de Janeiro, citing a risk that the executive, arrested and removed from his role for financial misconduct, may remove or destroy evidence.
Brazilian-born Ghosn has been detained in Tokyo since his November 19 arrest on suspicion of conspiring with former Nissan Representative Director Greg Kelly to understate his compensation by about half of the actual 10 billion yen ($88 million), over five years from 2010.

Tokyo authorities extended their detention until the maximum December 10 for the alleged crime.
ALSO READ: Why Carlos Ghosn may come out of this mess looking a lot better than Nissan
A Brazil court has granted Ghosn access to the property, owned by Nissan, in the Copacabana neighbourhood, but the company said in a statement on Sunday that it was now petitioning a higher court to reverse the decision.
"Nissan has been cooperating with authorities to investigate misconduct on the part of its former chairman, and is working to prevent the destruction of any potential evidence that could occur by allowing access to residences in question," a Nissan spokesman said.
ALSO READ: Carlos Ghosn to be indicted on Monday for financial misconduct: Nikkei
A person close to the Tokyo prosecutors' office told Reuters that Ghosn, Kelly and Nissan itself will be indicted as early as Monday.
"Nissan identified serious misconduct related to the reporting of Mr. Ghosn's compensation. The company has been providing information to the Japanese Public Prosecutors Office and has been fully cooperating with its investigation. We will continue to do so," the Nissan spokesman said.

Arrested Nissan ex-chairman Ghosn denies alleged financial breach: Report

Former Nissan chairman Carlos Ghosn, arrested last Monday on suspicion of financial misdoing, has denied the allegations against him, Japanese public broadcaster NHK said on Sunday.

Ghosn, who has not spoken publicly, has told investigators that he had no intention of under-reporting his remuneration on financial documents and has denied allegations against him, NHK said, without giving sources or further details.
Greg Kelly, a former Nissan executive arrested along with Ghosn on Monday, was quoted by NHK on Saturday as defending Ghosn's compensation, saying it was discussed with other officials and paid out appropriately.
ALSO READ: Dazzled by 'Superman' Carlos Ghosn, investors ignored lessons of history
Ghosn and Kelly were ousted by the automaker on Thursday and a source familiar with the matter said Nissan aims to nominate a new chairman within a month or two, hopefully before its next board meeting slated for around December 20.
Japanese prosecutors say Ghosn and Kelly conspired to understate Ghosn's remuneration by about half the 10 billion yen ($88 million) he earned at Nissan over five years from 2010.
The company has also cited other, multiple infractions.
ALSO READ: Carlos Ghosn's era is over, Nissan board removes him as chairman

Nissan eyes 5% market share in India by 2022, says Thomas Kuehl

On the backdrop of a slowdown in sales, Japanese auto major Nissan has pushed its timeline to achieve the goal of five per cent market share in India by two more years, from the earlier fixed 2020.
It achieved 1.6 per cent market share and ninth position among car makers in India recently.
Both Nissan and Datsun saw sales decline during FY18. The Datsun brand has been the focus of the car maker in the past four years. Together, the two brands clocked a local volume of 52,796 units.
In FY16, the figure stood at 39,389 units, compared with 47,474 units in FY15, while sales in FY17 picked up to 57,300 units, thanks to the Datsun brand.
In FY18, however, sales dropped to 52,796 units, according to numbers provided by SIAM (Society of Indian Automobile Manufacturers).
ALSO READ: Kerala govt gives approval to Nissan to set up a new tech facility
President of Nissan India Operations, Thomas Kuehl, who took charge last year, has said the plan is to reach five per cent by 2022.
The company had a launch cycle of one to two years for new products so far, while plans are to launch one in six months starting this festival season, he said. Earlier, the company management said its plans were to achieve the five per cent target by 2020.
“In the next 12-18 months, we will add another one per cent market share and will see the next big push coming after the Bharat VI implementation. We have more products to come and we will have a presence in segments where we are not there today,” said Kuehl.