Over the last 2 decade this industry has seen double digit growth in all its offerings. The global space is more automated today than ever before, which has led to many players foray in this space possessing a lot of compliance and business risk.
The Suppliers network in this industry had suffered bankruptcy due to long credit periods, poor quality products which has resulted in many OEM’s recalls and also thus seems guilty in regulatory and statutory compliance.
A lot of OEM’s have defaulted in regulatory and statutory compliance. The quality of products supplied by its suppliers has resulted in recalls. Long credit period and debt driven environment has resulted in supplier failure leading to insolvency/bankruptcy.
Our clients in this segment use us to monitor their suppliers who are conducting business activities with its competitors to understand their actions which might possess business or reputational risk in the future.
It interrogates the conduct of the automobile players and brings a lot of reputational risk to the entity, thus a comprehensive solution of ongoing compliance management/monitoring of the third parties has become the need of the hour to minimize reputational risk and maximize.
Entities in the distribution set up of these automobile manufacturers are heavily driven by sales centric culture which results in neglecting compliance, regulatory and statutory responsibilities. The default in such responsibility are been monitored which helps our clients collect triggers aiding in quality decision making.
CLIENT – One of the leading automobile player in India
QUERY – Our client in the automobile domain wanted to evaluate compliance health of its suppliers and distributors. The client wanted to keep a tab on non-compliant business partners who might possess compliance and long term business risk. Also the distributor entities were listed in MCA defaulters for not filing its compliance’s regularly and it grabbed our client’s attention through media articles.
SOLUTION – Post intimating their business partners, we took charge of connecting with the suppliers and distributors requested them for last 1 year of regulatory and compliance filling and ran a secondary check to help ensure the information is legitimate and are in line with our client’s requisition. The annual monitoring became a quarterly monitoring exercise which helped client look at compliance and operational threats more closely.
FINDING – More than 26% of business owners had litigation against filed in for civil, criminal litigation. We found more than 54% of the entities defaulted on basic compliances(VAT, CST, ITR, ESIC, EPF, Insurance, fire & safety, process orientation along with policies & standards).
RESULT – These helped our client convert non-compliant third parties to compliant and help ensure all required and listed compliance were followed by them on an ongoing basis. Also this activity helped increase stakeholder confidence for the entity.