A Business Enterprise

7/29/2019 A Business Enterprise

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A business enterprise is an economic institution engaged in the production and/or distribution of goods and

services in order to earn profits and acquire wealth. The scope of a business is very wide. It includes a large

number of activities which may be classified into two broad categories i.e. Industry and Commerce. Production

of goods is the domain of 'Industry' and distribution comes under 'Commerce'. Every entrepreneur aims at

starting a business and building it into a successful enterprise. The term 'entrepreneur' means to undertake

and pursue opportunities and to fulfill needs and wants of people through innovation. He/she innovates and

combines resources in the form of men, materials and money and brings them together to make the business

venture profitable. He/she is prepared to take risk and face challenges. Thus, innovation and risks are the two

basic elements of a good entrepreneurship. The whole process of starting a business begins with writing a

business plan. A good business plan is the key to setting up a successful business. Once a plan is prepared, the

entrepreneur faces various challenges while implementing the plan.

TheCommissionerates or Directorates of Industriesare the nodal agencies in different States which assist

and guide new entrepreneurs in starting up an industrial unit in the concerned State. They provide an

interface between industry and other agencies for industry inputs and enable the entrepreneur to get

different industrial approvals and clearances from various departments at a single point-Single Window. They

sanction incentives to eligible industrial undertakings and create a transparent and automatic system of

allotment of scarce raw materials to industrial units. Hence, a new entrepreneur must approach the

concerned commissionerate while setting up a business firm.

Creating a Business Plan

Every new venture should have a business plan. A business plan is the formal written expression of the

entrepreneurial vision, describing the strategy and operations of the proposed venture. The business plan also

goes by other names, depending on its intended audience. Presented to a banker, it may be called a "loan

proposal." A venture capital group might call it the "venture plan" or "investment prospectus."

The advantages of writing a business plan far outweigh the costs. The purpose of the plan is to enable the top

executives of the firm to think about their business in a comprehensive way, to communicate their objectives

to individuals who may have a stake in the firm's future, to have a basis for making decisions, and to facilitatethe planning process.

Entrepreneurs should undertake the task of preparing the business plan personally. Although outsiders -

consultants, accountants, and lawyers - should be tapped for their advice and expertise, the promoter or the

initial top management team should be responsible for the writing. Personally drafting the plan will enable the

entrepreneurs to think through all aspects of the proposed business and ensure that they are familiar with all

the details, for they will have to make decisions about the new venture and be responsible for those decisions.

Moreover, investors expect the founders to be involved in and knowledgeable about the proposed enterprise.
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The Benefits of Business Planning

The business plan can personally benefit the entrepreneurial team. Founding a new business can be

enormously fulfilling and exhilarating, but it is also an anxiety-ridden and tense experience. Usually a great deal

of money is at stake, and the consequences of poor decisions can affect many people for a long time. In

developing and writing a business plan, the entrepreneurial team reduces these anxieties and tensions by

confronting them in advance. By projecting the risks of the new venture into the future, the team comes to

grips with potential negative outcomes and the possibility of failure. The knowledge that comes from this

experience can reduce the fear of being taken by surprise by problems that could have been foreseen and

provided for at the very outset.

Every Business Plan must have:

Cover Page

Every Business Plan should have a cover page, which includes:

The Company's name, address, telephone, fax, e-mail and website address, if any.

The name and designation of the contact person - who should be one of the top executives of theenterprise and one who is familiar with and was part of the team that formulated the business plan and

will be able to answer any queries relating to the business plan.

Names of organizations from where funding is being sought.

The Company's logo - every company being established should have a logo in place, which could be animage, design or picture representing the company's ideology pictographically.

Table of Contents

Once the cover page has been made, a formal table of contents must be written for easy navigation to the rest

of the plan, by numbering each section.

Executive Summary

The executive summary is the most important part of a business plan, especially to the investors. Most

investors do not go beyond the executive summary, as they have too many plans to read. So make sure that

your executive summary is able of conveying clearly and succinctly exactly what you want your investors to

read.

The summary should include:
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Kind of Business - a brief description of the industry your firm is focusing on.

Profile of the company's management - listing the names of top executives and their qualifications andindustry experience.

Financial requirements - briefly state how much finance is required. Also make sure you indicate thedegree of flexibility you are willing to show in case the investor suggests any changes in your plan. This

will allow the investor to consider your plan with few changes rather than rejecting your plan outright

due to rigidity on your part.

Budget allocations - the financial section of the business plan should be able to explain how you will beusing the finance.

Objectives - The business plan should present in a well defined format the short term and long term objectives

of the new business venture.

The objectives can be broadly divided into quantitative and qualitative objectives.

Market Analysis - The business plan should be able to convince the investor that the entrepreneur understands

the prevailing competitive environment and is able to prove that his/her product/service is a niche product or

service with substantial prospects for growth and capable of attaining a competitive position in the market.

Environmental Influences - Demonstrate your knowledge and competence by evaluating the impact of the

environmental influences such as political, economic, technological, socio-demographic and ecological factorsthat affect your area of business.

Development and Production

Detail the stages of development and production of your product/service, spelling out how time and money wil

be allocated at each stage.

Resource Requirement

Analyse the type of resources required at each stage of production such as financial, human, physical,

technological, etc.

Quality - Discuss the quality control measures to be put into place by your firm to ensure the quality of theproduct/service.

Marketing - Once again underscore the market potential for your product by describing your product's

exclusivity, describe how it will exploit your competitors weaknesses.

Identify the target market which should be substantiated by a thorough market research.

Once the target market has been identified, focus on the communication strategy including advertising,
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branding, packaging etc. Like always list the costs involved for each segment of marketing.

Sales Forecast - Sales forecast is primarily dependent on three factors - size of the market, fraction of the

market you will be able to capture as a result of your marketing strategy and the pricing strategy.

Financial Plans - A new venture must show projected profit and loss statements and cash flow statements.

Human Resources - Make an organisation chart with details of key executives and profiles of individuals likely

to be hired.

Form of Business - Describe the legal form of your business - whether it is a sole proprietorship or a

partnership, public limited co. etc.

Critical Risks - As a legal and moral obligation, the entrepreneur must, in the business plan, envision risks the

investor would be undertaking in case he makes a choice to invest in your business. This will protect you from

civil and criminal liability.

Conclusion - Briefly once again point out the highlights and key features of your business plan.

Also mention the time schedules against each stage of your venture. Along with your business plan make sure

to support your document with flow charts, photographs, market surveys, sample brochures, advertisements,

tax returns, resumes of board members, letters of recommendations etc. All this should form a part of

appendixes.

Format and Presentation

Physical Appearance - The document should not look too ornate or too plain. The document should have a

neat business feel to it. It must look professional and not shabby. Ideally it should be a neatly typed document

which is spiral bound. The pages should be crisp with wide margins and easy to read size and style of font.

Graphs and photographs should be of high quality.

Writing and Editing

t is extremely important that the business plan is well written in crisp and easy to comprehend language, is to

the point and does not contain irrelevant information.

Summary

The essential elements of the plan are generally recognized. The preliminary sections set the stage for the

reader. Make the first impression professional, concise, and informative because the reader may spend only a

few minutes reviewing each plan. The major sections of the business plan describe the new venture's strategy,

operations, marketing, management, financial plan, and ownership structure. These sections need to be as

detailed as possible and internally consistent. The concluding sections provide details on timing, schedules andmilestones, and a summary. The appendix contains reference material for documentation.

Each plan must be well written and organized, and it must anticipate the many questions that the reader will

have about the business. No plan, however, can answer all questions that may arise. It is important, therefore,

that entrepreneurs be familiar with all the details so they can respond to potential unanswered questions and

critiques.
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Making a Product Choice

After choosing the form of the business organisation the next start up problem is the choice of the particular

product or service to be manufactured by the firm. It is an important decision because rest of the challenges

of setting up a business are based on the type of the product the firm wants to produce. This decision can be

taken through a comparative analysis of the several products or services that the firm can provide. The

analysis involves assessing the size and structure of the market for the products; determining the future

demand pattern for each of them; comparing their competitive positions in the market; graphing the life cycleof each product; finding the shelf life of each product. The ease of availability of raw materials, technology for

production as well as the manpower are other important determinants. Government policies and regulations

can also help the entrepreneur in taking the decision. Central Government and the State Governments

provide incentives for manufacture of certain products by small scale units. The most important promotional

measure being the reservation of several products for exclusive manufacture by small scale industries.

Large/Medium units can, however, manufacture such reserved items provided they undertake to export 50%

or more of their production. Also, there are some agencies and organisations which provide entrepreneurs

with the necessary information required in making a product choice. The Commissionerates or Directorates of

industries of different States provide guidance to the entrepreneurs with respect to the particular State. An

entrepreneur can also study the industry clusters of India to get an idea about the type of products best suitedfor production in particular areas.

Choosing a Product

Since making a choice of the right product is a difficult decision for an entrepreneur, there are many

organizations and Institutes existing at both the Central and State level which can help him/her obtain an idea

about the products and services that can be produced. List of some of the important organisations are :-

District Industry Centres

These were set up with a view to provide all sorts of assistance to the entrepreneurs under the single roof for

the healthy growth of industry sector. These are set up by different States. Like :-

District Industries Centre, Puri

District Industries Centre, Muzaffarnagar

Technical Consultancy Organizations

All India Financial Institutions in collaboration with state level financial/development institutions and

commercial banks established a network of Technical Consultancy Organisations (TCOs) to cater to the

consultancy needs of the small and medium industries and new entrepreneurs. At present, there are 17 TCOs

operating in various states.

Industrial & Technical Consultancy Organisation of Tamil Nadu Ltd. (ITCOT)

Haryana-Delhi Industrial Consultants Ltd. (HARDICON)


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Andhra Pradesh Industrial and Technical Consultancy Organization Limited (APITCO)

List of Entrepreneurship Development Institutes

Entrepreneurship Development Institute of India, Ahmedabad

An acknowledged national resource institution, EDI is committed to entrepreneurship education, training and

research. The institute strives to provide innovative training techniques, competent faculty support,

consultancy and quality teaching & training material. EDI has been spearheading entrepreneurship movement

throughout the nation with a belief that entrepreneurs need not necessarily be born, but can be developed

through well-conceived and well-directed activities.

Industrial Resource Locator in Kerala

The Industrial Resource Locator is essentially a database of resources available for industrial activity in Kerala.

This facility also provides a host of supports and information for use by potential invest

Small Industry Service Institutes(SISI)

The entrepreneurs are assisted in many areas :- Identification/Selection of products of manufacture; selection

of appropriate technology; manufacturing process and technique; selection of suitable plant & machinery;

market potential Information. These are set up by different States. Like:-

Small Industry Service Institutes, Goa

Small Industry Service Institutes, Kolkata

Small Industry Service Institutes, Jaipur

Industrial Extensions Bureaus (These exist in several states) They are known by such names as iNDEXTb, UdyogMitra, Udyog Sahayak and so on).

iNDEXTb in Gujarat

Udyog Mitra

It offers general guidance to entrepreneurs seeking to set up industries, in respect of various rules and

regulations, policy matters, approvals and clearances which have to be necessarily compiled with at several

stages during the progress of a project.

Udyog Sahayak

To help entrepreneurs establish their enterprises in Punjab, a special cell called Udyog Sahayak has been set

up in the State Industries Department. Officers in Udyog Sahayak advise and assist entrepreneurs in

completing all the paper work. Udyog Sahayak ensures that all the formalities regarding setting up of a unit

are cleared as quickly as possible.


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Khadi and Village Industries Commission, New Delhi

The KVIC is charged with the planning, promotion, organisation and implementation of programs for the

development of Khadi and other village industries in the rural areas in coordination with other agencies

engaged in rural development wherever necessary. Its functions also comprise building up of a reserve of raw

materials and implements for supply to producers, creation of common service facilities for processing of raw

materials as semi-finished goods and provisions of facilities for marketing of KVI products apart from

organisation of training of artisans engaged in these industries and encouragement of co-operative efforts

amongst them.

State Government (Directorate/Commissionerate of Industries)

Commissioner of Industries, Government of Andhra Pradesh

Commissioner of Industries, Government of NCT of Delhi

Director of Industries, Government of Himachal Pradesh

Director of Industries & Commerce, Government of Jammu & Kashmir

Director of Industries & Commerce, Government of Karnataka

Directorate of Industries & Commerce, Government of Kerala

Development Commissioner (Industries), Government of Maharashtra

Director of Industries & Commerce, Government of Manipur

Director of Industries, Government of Odisha

Director of Industries & Commerce, Government of Tamil Nadu

Director of Industries & Commerce, Government of Tripura

Director of Industries, Administration of U. T. of Chandigarh

Director of Industries, Government of Pondicherry

Setting Up Infrastructure

A new business enterprise after deciding upon the location of the industry, needs to set up the basic

infrastructural facilities for commencing its operations. It includes, purchasing the land for the construction of

the industry. The site must be well connected to the nearest transport network i.e. rail, road or port. Besides,

the availability of the basic amenities like, water, power supply is equally essential. Also, setting up of a good

telecom facility for the industry is necessary for the growth and expansion of the business.

The State Government offers incentives like land and building tax concessions, providing land at cheaper rates


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through the State Government Agencies to new and existing entrepreneurs. It also offers concessions in water

tariff, power subsidy, subsidy on generating sets, transport subsidy, incentive for pollution control and quality

equipment depending on the location, size of investment and category of the industry.

After all these requirements are met the commercial production of the product can commence.

Once the location for the setting up of the industry is finalised, the entrepreneur shall approach the concerned

authority (Municipality, Public Works Department) for acquisition of the plot of land.

Before construction of the factory or industry, whether small, medium or large, approval of plant layout and

machinery drawings has to be obtained from the concerned authorities. It is only once these approvals are

obtained that the structures may be raised according to the plan.

Once a suitable industrial plot for the unit is secured, the next task is construction of the building. It involves : -

Architectural design of the building : that of finding a suitable architect to design the outlay of area andfactory.

Design of factory building has to be in consonance with the type of industry. Have an appropriate plant layout. If you are setting business at home, plan the area, which is to be

used as your production centre or office, judiciously. You may like to take help of a professional to

ensure that the area is utilized optimally.

An architect's estimate of building construction is essential for loan applications. Further, architect'scertificate for money spent on building is needed for disbursement of loans.

Appointment of engineers and contractors Supervision of the construction work

The State Government offers incentives like land and building tax concessions to new and existing

entrepreneurs.

For more details visit our Section on 'Investment Opportunities and Incentives'

Getting Utility Connections (Water and Power)

Among the utilities, of prime importance are power and water. Other utilities that might be required are

steam, compressed air, fuel. Assess your requirement of such utilities, make arrangement to get these and

ascertain the cost of consuming these.

Power Supply

Find out the power supply requirement of the industry. Locate the nearest substation from where you will get power supply. Also find out the power tariff rate

and the duration for which required supply will be available. Power connections are generally of either

LT (Low Tension) or HT (High tension) type. If connected load is up to 75 HP, LT connection is provided.

For connected loads of 130 HP or higher only HT connection is provided.
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A formal application needs to be made in a specific form to the concernedState Electricity Boards. Anelectrical inspector is deputed for evaluation of application to factory site, after which the load is

sanctioned. In areas of power shortage, it is advisable to augment the power supply with a captive

generating set.

After obtaining the power feasibility and sanction certificate, the power supply may be given to theindustry.

Water Supply

Find out the water requirement of the industry. Check out what is the best possible source of the required water supply i.e. river, canal, tube well and

how far is it from your land.

Check the quality of water (PH, hardness) and does it meet you specific requirements. Rate/ water charges applicable as well as the common storage facility. Find out who is the operating authority (Public Works Department, Estate-Corporation, Municipality)

of the area.

Water connection is obtained by applying in advance in formal forms.The State Governments of different States offers a number of incentives and concessions like water tariff,

power subsidy, subsidy on generating sets, etc. to new entrepreneurs.

For more details visit our Section on 'Investment Opportunities and Incentives'

Getting a Telephone and Internet connection

Telecommunications is well recognised as the means for accelerating the economic growth in all the regions ofa nation, including the remote and inaccessible areas in the country. In the present age of information

technology, internet has become a medium for accessing information on any topic you can imagine, like for

buying products and services i.e. for business purposes at the click of a mouse or a key. Hence these have

become the basic infrastructure requirements for a business organisation. Internet provides tremendous

opportunities to students, researchers and professionals for getting information on matters related to

academic and professional topics. For business firms, trade,commerce and industry it is an indispensable tool

for growth and prosperity. For the provision of telecom and internet services in the country, two public sector

undertakings, Mahanagar Telephone Nigam Limited ( MTNL) and Bharat Sanchar Nigam Limited (BSNL) have

been set up. They provide telecom and internet facilities to whole of the country and form a part of modern

global network. They provide access to countries around the world for transporting information in the form of

voice, data or video.

Mahanagar Telephone Nigam Limited ( MTNL)

Mahanagar Telephone Nigam Limited (MTNL)was set up by the Government of India to upgrade the quality

of telecom services, expand the telecom network, introduce new services and to raise revenue for telecom

development needs of India. It is entrusted with the management, control and operations of telecom

services(excluding public telegraph service) in the metropolitan limits of Mumbai ( including Kalyan, New

Mumbai and Thane) and Delhi. It provides a host of services that include, fixed telephone service, Global

System for Mobile Communications (GSM) based Mobile Service, Code Division Multiple Access (CDMA) based
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Wireless in Local Loop, Internet Broadband on Asymmetric Digital Subscriber Line 2+ (ADSL2 +) technology and

Leased Line service.

A new business organisation can obtain a telephone connection under the following different categories :-

Non-Own Your Telephone (OYT) General : Open to all Non - Own Your Telephone (OYT) Special : Medical Professionals, Press Public Instructions. Small Scale

Industries, Eminent Persons, Govt. Schools and Colleges, Blind Persons, Gallantry Award Winners inthree services, War Windows, Disabled Soldiers, Hajj committee, Advocates having minimum 5 years

standing at the Bar, income tax assessee for past 2 years and Judicial Officers of all the courts.

Non - Own Your Telephone (OYT)-SS : Foreign Missions, Embassies, UN Organization, MP's, MLA's,Municipal Councilors, Distinguished Persons, Senior Retired Officers of Central of Central and State

Governments, Director Generals of Government, Research Council, Directors of National Laboratories,

Vice Chancellors of Universities (on retirement, retired Mahanagar Telephone Nigam Limited ( MTNL)

/Dot Employees.

Own Your Telephone (OYT) General : Open to all Own Your Telephone (OYT) Special : Govt. Department, Public Sector Undertaking, Statutory Bodies,

Senior Retired officers Of PSU/Stationary Bodies, Foreign Exchange Earners, Liquefied Petroleum Gas

(LPG) Distributors, Cinema Halls Private Hotels, Private Schools and Colleges, Advocates representing

Central Govt./ State Govt. Local Bodies, Legal Aid Committees and Judicial Officers of all the courts and

tribunals and all application under non - Own Your Telephone (OYT) special.

Tatkal : Open to all. Non - Own Your Telephone (OYT) -SWS : Freedom Fighters and window of freedom fighters. Non - Own Your Telephone (OYT) - SE (Mahanagar Telephone Nigam Limited ( MTNL)/DOT) : Serving

employees of Mahanagar Telephone Nigam Limited ( MTNL)/Dot

The application for a new telephone connection can be made at the Customer Service Centre (SCC) of the

particular area on a prescribed application form (available for Rs. 10/-) along with the registration fee in the

form of DD/Pay order / Crossed Cheques in favour of Mahanagar Telephone Nigam Limited ( MTNL), Delhi.

MTNL's Internet Service is a pathbreaking achievement bringing the world closer with the state-of-the-art

technology and that too without any congestion. Through its Internet you can enter the world of technological

marvel at affordable rates. Mahanagar Telephone Nigam Limited ( MTNL) is presently offering a wide

spectrum of Internet related services from Dial up Internet access to broadband internet access servicesinDelhiandMumbai. These include :-

Prepaid Internet access service Post paid Internet Express CLI service Free web to mobile for Mahanagar Telephone Nigam Limited ( MTNL) Global System for Mobile

Communications (GSM) Mobile subscribers
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Internet Telephony Service Bill payment services Website hosting service Web server hosting service Internet service via leased Lines Phone connection for Internet Use

Bharat Sanchar Nigam Limited (BSNL)

BSNLis the largest Public Sector Undertaking of India which operates the telecom services all over the country

except Mumbai and Delhi. It is providing a number of telecom services including, Internet Services, Leased

Line Circuits, Telegraph Services, Intelligent Network (IN) and Integrated Services Digital Network (ISDN) in

addition to basic telephone services, cellular mobile service and WLL service.

The eligibility for different categories are:-

Own Your Telephone (OYT) Special Scheme :- Government Departments. Public Undertakings and Joint Sector undertakings (Government interest more than 50%) Statutory bodies, local bodies. Retired Officials and other officials on voluntary retirement after 20 years of service of Public

undertaking and Joint Sector undertaking whose basic pay (for one year prior to retirement is

not less than Rs. per month This facility is also available to the spouse of an officer after his/herdeath.

Liquefied Petroleum Gas (LPG) Distributors Private Hotels, Cinema Halls and Recognized schools and colleges Other applicants entitled to register under NOYT-Special category. Job oriented Industries

Foreign exchange earners up to 5 lines based on exchange earned like manufacturers ofexportable goods, individual and organization earning foreign exchange through services, non

resident Indian and Foreign nationals of Indian origin repatriating to India if they surrender

foreign exchange of a sum as fixed by the government, to the Reserve Bank of India or any

other Nationalized bank authorized for the purpose.

NOYT Special Category Scheme :- Doctors holding recognised degree or Diploma in any approved system of medicine or surgery.,
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qualified nurses and registered midwives, Dentists, Psychiatrists, ayurvedic and Homeopathic

Doctors, Naturopaths and Physiotherapists if they have a Degree or Diploma in the respective

field at National or state level. All should be registered in the State or Central councils.

Occupational Therapists registered with a national or state level body or holding a degree ordiploma certificate awarded at the National or state level.

Newspapers, Journals and magazines registered with the Registrar of newspapers, registerednews agencies, accredited press correspondents and press photographers.

Public Institutions (run by Public funds and for the benefit of public), government colleges andschools, recognized universities, political parties recognized by Election Commission.

Registered Trade unions (recognized by Management of Members more than 2000 ? one at theregistered office and another at the residence of any office-bearer).

Small Scale Industries-only permanent connection for permanent SSI. Factory should be withinthe territorial jurisdiction of the Telephone System where telephone is required.

Eminent persons of National or International recognition. Legal Aid Committees. Social Organisations and Missions, orphanages, Leper Houses, Public Hospitals. Institute for

blind and Physically handicapped

Registered co-operative societies (other than those for sale of commodities) and registeredhouse building societies

Family Planning Association of India and Branch offices. Sports and Cultural organizations Gallantry award winners in the three services/ war-widows/ disabled soldiers. Hajj committees of states. Blind persons Central schools.

The prescribed telephone connection application forms are available at the the offices of the concerned

GM/TDM/TDE or the Customer Relations Centers in different cities or the same can be downloaded from their

website.

A serial number called registration number will be allotted against each application and it is given serially, in

the order of the date of payment of registration fees. Separate registration numbers are maintained for each

exchange under different categories viz Own Your Telephone (OYT) Special category, Own Your Telephone

(OYT) General category, NON-Own Your Telephone (OYT) General category and NON-Own Your Telephone


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(OYT) Special category. The particulars of waiting list for new telephones, Telex lines and miscellaneous

circuits, accessories to telephones, shifts of telephones and for National Subscriber Dialling /International

Subscriber Trunk Dialling (NSD/ISD) barring facility, can be had at the Customer Relations Centres functioning

at the concerned area offices.

In our endeavour to improve Customer friendly telecom services, application forms for New Regular

Telephone Connection, Temporary Telephone Connection, Shifting of Telephones and Add-on Facilities have

been simplified. Theseforms can be downloaded and used.

BSNL provides internet service under the brand name of "Sancharnet ". Sancharnet provides free all India

roaming and enables it's users to access their accounts, using the same access code (172233) and user ID from

any where in the country. In order to make internet available through out the length and breadth of the

country Internet Dhabas are being commissioned at all the Block Headquarters. BSNL has also started Direct

Internet Access Services (DIASandAccount free internet access (CLI based)facility in few select cities.

Others

As the sector is open to private investment, there are a number of private players providing telecom including

internet services in the country. For example:-

Reliance Infocomm offers a complete range of telecom services, covering mobile and fixed linetelephony including broadband, national and international long distance services, data services and a

wide range of value added services and applications.

Bharti Enterprises has successfully focused its strategy on telecom including internet connectivity.From the creation of 'Airtel', one of India's finest brands, to becoming the largest manufacturer and

exporter of world class telecom terminals under its 'Beetel' brand, Bharti has created a significant

position for itself in the global telecommunications sector.

Vodafone Essar Limitedis a global provider of telecommunications services.Naming and Registering a Business

In India, incorporation of a company is governed by the Companies Act 1956. It is the most important piece of

legislation that empowers the Central Government to regulate the formation, financing, functioning and

winding up of companies. It applies to whole of India and to all types of companies, whether registered under

this Act or an earlier Act. But it does not apply to universities, co-operative societies, unincorporated trading,

scientific and other societies.

The Act is administered by the Central Government through the Ministry of Corporate Affairs and the Officesof Registrar of Companies, Official Liquidators , Public Trustee, Company Law Board, Director of Inspection,

etc. The Registrar of Companies (ROC) controls the task of incorporation of new companies and the

administration of running companies.

The Official Liquidators who are attached to the various High Courts functioning in the country are also under

the overall administrative control of the Ministry. The set-up at the Headquarters includes the Company Law

Board, a quasi-judicial body, having the principal Bench at New Delhi, an additional principal bench for
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Southern Region at Chennai and four Regional Benches located at New Delhi, Mumbai, Kolkata and Chennai.

The organisation at the Headquarters also includes two Directors of Inspection and Investigation with a

complement of staff, an Economic Adviser for Research and Statistics and other Officials providing expertise

on legal, accounting, economic and statistical matters.

The four Regional Directors, who are in charge of the respective regions, comprising a number of States and

Union Territories, interalia, supervise the working of the Offices of Registrars of Companies and the Official

Liquidators working in their regions. They also maintain liaison with the respective State Governments and theCentral Government in matters relating to the administration of the Companies Act, 1956.

Registrar of Companies (ROCs) appointed under Section 609 of the Companies Act, covering various States and

Union Territories, are vested with the primary duty of registering companies floated in the respective States

and the Union Territories and ensuring that such companies comply with the statutory requirements under

the Act. Their offices function as registry of records relating to the companies registered with them.

For registration and incorporation of a company, an application has to be filed with Registrar of companies.

Application for registration of a company accompanied by the selected names, Memorandum of Association

and Articles of Association and other necessary documents is to be filed with the Registrar of companies of the

State in which the company is proposed to be incorporated.

Under the Companies Act, an entrepreneur can form two types of companies, namely a private company or a

public company.

A Private Company is one, the articles whereof contains the following restrictions:-

Restricts the minimum paid up share capital to such an amount as may be prescribed but which shall not be

less than rupees one lakh;

Restricts the rights of members to transfer its shares, if any;

Limits the number of its members to fifty excluding the past or present employees of the company who are

members of the company;

Prohibits any invitation to the public to subscribe for any shares or debentures of the company;

Does not invite or accept any deposits from persons other than its members, directors or their relatives

Also, the minimum number of members in a private company is two and such a company must have the words

'Pvt Ltd' as the last part of its name.

A Public Company, as defined in the Companies Act, has the following features:-

Its shares are freely transferable;

There is no ceiling on its membership;

It can invite general public to subscribe to its shares;


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It has a minimum paid up capital of Rs. 5 lakhs or such higher paid up capital as may be prescribed;

It is a private company which is a subsidiary of a public company.

Also, the minimum number of members in a public company is seven and such a company must have the word

'Ltd' as last part of its name.

Procedures for Registration of a Business

List of offices of Registrar of Companies

Registration Forms

FAQs by Ministry of Corporate Affairs

Guidelines by the Ministry of Corporate Affairs

Instruction kit for filling eForms

For more details visit our Section on 'Legal Aspects'

Choosing a Form of Business Organisation

A business enterprise can be owned and organized in several forms. Each form of organization has its own

merits and demerits. The ultimate choice of the form of business depends upon the balancing of the

advantages and disadvantages of the various forms of business. The right choice of the form of the business is

very crucial because it determines the power, control, risk and responsibility of the entrepreneur as well as

the division of profits and losses. Being a long term commitment, the choice of the form of business should be

made after considerable thought and deliberation.

The choice of the form of business is governed by several interrelated and interdependent factors :-

The nature of business is the most important factor. Businesses providing direct services like tailors,restaurants and professional services like doctors, lawyers are generally organised as proprietary

concerns. While, businesses requiring pooling of skills and funds like accounting firms are better

organised as partnerships. Manufacturing organisations of large size are more commonly set up as

private and public companies.

Scale of operations i.e. volume of business ( large, medium, small) and size of the market area (local,national, international) served are the key factors. Large scale enterprises catering to national and

international markets can be organised more successfully as private or public companies. Small and

medium scale firms are generally set up as partnerships and proprietorship. Similarly, where the areaof operations is wide spread (national or international), company ownership is appropriate. But if the

area of operations is confined to a particular locality, partnership or proprietorship will be a more

suitable choice.

The degree of control desired by the owner(s). A person who desires direct control of business, prefersproprietorship, because a company involves separation of ownership and management.


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Amount of capital required for the establishment and operation of a business. A partnership may beconverted into a company when it grows beyond the capacity and resources of a few persons.

The volume of risks and liabilities as well as the willingness of the owners to bear it, is also animportant consideration.

Comparative tax liability.

Sole Proprietorship

A sole proprietorship is the oldest and the most common form of business. It is a one-man organisation where

a single individual owns, manages and controls the business. Its main features are :-

Ease of formation is its most important feature because it is not required to go through elaborate legalformalities. No agreement is to be made and registration of the firm is also not essential. However, the

owner may be required to obtain a license specific to the line of business from the local administration

The capital required by the organisation is supplied wholly by the owner himself and he dependslargely on his own savings and profits of his business.

Owner has a complete control over all the aspects of his business and it is he who takes all thedecisions though he may engage the services of a few others to carry out the day-to-day activities.

Owner alone enjoys the benefits or profits of the business and he alone bears the losses. The firm has no legal existence separate from its owner. The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm. Lack of continuity i.e. the existence of a sole proprietorship business is dependent on the life of the

proprietor and illness, death etc. of the owner brings an end to the business. The continuity of business

operation is therefore uncertain.

Advantages

Ease of formation Maximum incentive for work Secrecy of business Quick decisions and flexibility of operations

Disadvantages

Limited capital Limited managerial ability Limited life Unlimited liability

Hence, this form of organisation is suitable for the businesses which involve moderate risk, small financial

resources, capital requirement is small and risk involvement is not heavy like automobile repair shops, small

bakery shops, tailoring, etc. It accounts for the largest number of business concerns in India.

Private Limited Company
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A private limited company is a voluntary association of not less than two and not more than fifty members,

whose liability is limited, the transfer of whose shares is limited to its members and who is not allowed to

invite the general public to subscribe to its shares or debentures. Its main features are :-

It has an independent legal existence.The Indian Companies Act,1956 contains the provisionsregarding the legal formalities for setting up of a private limited company. Registrars of Companies

(ROC) appointed under the Companies Act covering the various States and Union Territories are vested

with the primary duty of registering companies floated in the respective states and the Union

Territories.

It is relatively less cumbersome to organise and operate it as it has been exempted from manyregulations and restrictions to which a public limited company is subjected to. Some of them are :-

it need not file a prospectus with the Registrar. it need not obtain the Certificate for Commencement of business. it need not hold the statutory general meeting nor need it file the statutory report. restrictions placed on the directors of the public limited company do not apply to its directors.

The liability of its members is limited.

The shares allotted to it's members are also not freely transferable between them. These companiesare not allowed to invite public to subscribe to its shares and debentures.

It enjoys continuity of existence i.e. it continues to exist even if all its members die or desert it.Hence, a private company is preferred by those who wish to take the advantage of limited liability but at the

same time desire to keep control over the business within a limited circle and maintain the privacy of their

business.

Advantages

Continuity of existence Limited liability Less legal restrictions

Disadvantages

Shares are not freely transferable

Not allowed to invite public to subscribe to its shares Scope for promotional frauds Undemocratic control

Partnership is defined as a relation between two or more persons who have agreed to share the profits of a

business carried on by all of them or any of them acting for all. The owners of a partnership business are

individually known as the "partners" and collectively as a "firm". Its main features are :-

A partnership is easy to form as no cumbersome legal formalities are involved. Its registration is alsonot essential. However, if the firm is not registered, it will be deprived of certain legal benefits. The

Registrar of Firms is responsible for registering partnership firms.
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The minimum number of partners must be two, while the maximum number can be 10 in case ofbanking business and 20 in all other types of business.

The firm has no separate legal existence of its own i.e., the firm and the partners are one and the samein the eyes of law.

In the absence of any agreement to the contrary, all partners have a right to participate in the activitiesof the business.

Ownership of property usually carries with it the right of management. Every partner, therefore, has aright to share in the management of the business firm.

Liability of the partners is unlimited. Legally, the partners are said to be jointly and severally liable forthe liabilities of the firm. This means that if the assets and property of the firm is insufficient to meet

the debts of the firm, the creditors can recover their loans from the personal property of the individual

partners.

Restrictions are there on the transfer of interest i.e. none of the partners can transfer his interest inthe firm to any person(except to the existing partners) without the unanimous consent of all other

partners.

The firm has a limited span of life i.e. legally, the firm must be dissolved on the retirement, lunacy,bankruptcy, or death of any partner.

A partnership is formed by an agreement, which may be either written or oral. When the written agreement is

duly stamped and registered, it is known as "Partnership Deed". Ordinarily, the rights, duties and liabilities of

partners are laid down in the deed. But in the case where the deed does not specify the rights and obligations,

the provisions of theTHE INDIAN PARTNERSHIP ACT, 1932 will apply. The deed, generally contains the

following particulars:-

Name of the firm. Nature of the business to be carried out. Names of the partners. The town and the place where business will be carried on. The amount of capital to be contributed by each partner. Loans and advances by partners and the interest payable on them. The amount of drawings by each partner and the rate of interest allowed thereon. Duties and powers of each partner. Any other terms and conditions to run the business.

Advantages

Ease of formation
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Greater capital and credit resources Better judgement and more managerial abilities

Disadvantages

Absence of ultimate authority Liability for the actions of other partners Limited life Unlimited liability

Partnership is an appropriate form of ownership for medium sized business involving limited capital. This may

include small scale industries, wholesale and retail trade; small service concerns like transport agencies, real

estate brokers; professional firms like charted accountants, doctors' clinic, attorney or law firms etc.

Co-operatives

Co-operative organisation is a society which has as its objectives the promotion of the interests of its members

in accordance with the principles of cooperation. It is a voluntary association of ten or more members residing

or working in the same locality, who join together on the basis of equality for the fulfillment of their economic

or business interest. The basic feature which differentiates the co-operatives from other forms of business

ownership is that its primary motive is service to the members rather than making profits.

There are different types of cooperatives like consumer co-operatives, producer's co-operatives, marketing co

operatives, housing co-operatives, credit co-operatives, farming co-operatives etc. The aim of all such co-

operatives is to promote the welfare of their members. Its main features are :-

It is a voluntary organisation as a member is free to leave the society and withdraw his capital at anytime, after giving a notice.

The minimum number of members is 10, but there is no limit to the maximum number of members.However, the members must be residing or working in the same locality.

Registration of a co-operative enterprise is compulsory. A co-operative society may be registered withthe Registrar of Co-operatives Societies.

After registration a co-operative enterprise becomes a body corporate independent of its members i.e.a separate legal entity.

It is subject to the provisions of theCo-operative Societies Act, 1912 or State Co-operative SocietiesActs. It has to submit annual reports and accounts to the Registrar of Societies.

The liability of every member is limited to the extent of his capital contribution. The shares of co-operative society cannot be transferred but can be returned to the society in case a

member wants to withdraw his membership.
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Being a separate legal entity a co-operative enjoys continuity of existence which is not affected bydeath, insolvency, retirement, etc. of the members.

Advantages

Greater amount of capital Reasonable price, good quality or better service Better conditions of service to employees Continuity of existence Limited liability

Disadvantages

Inability to collect sufficient capital Inability to provide efficient managerial services Organisational limitation

A public limited company is a voluntary association of members which is incorporated and, therefore has a

separate legal existence and the liability of whose members is limited. Its main features are :-

The company has a separate legal existence apart from its members who compose it. Its formation, working and its winding up, in fact, all its activities are strictly governed by laws, rules

and regulations.The Indian Companies Act, 1956contains the provisions regarding the legal formalities

for setting up of a public limited company. Registrars of Companies (ROC) appointed under the

Companies Act covering the various States and Union Territories are vested with the primary duty ofregistering companies floated in the respective states and the Union Territories.

A company must have a minimum of seven members but there is no limit as regards the maximumnumber.

The company collects its capital by the sale of its shares and those who buy the shares are called themembers. The amount so collected is called the share capital.

The shares of a company are freely transferable and that too without the prior consent of othershareholders or without subsequent notice to the company.

The liability of a member of a company is limited to the face value of the shares he owns. Once he haspaid the whole of the face value, he has no obligation to contribute anything to pay off the creditors of

the company.

The shareholders of a company do not have the right to participate in the day-to-day management ofthe business of a company. This ensures separation of ownership from management. The power of

decision making in a company is vested in the Board of Directors, and all policy decisions are taken at

the Board level by the majority rule. This ensures a unity of direction in management.

As a company is an independent legal person, its existence is not affected by the death, retirement or
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insolvency of any of its shareholders.

Advantages

Continuity of existence Larger amount of capital Unity of direction Efficient management Limited liability

Disadvantages

Scope for promotional frauds Undemocratic control Scope for directors for personal profit Subjected to strict regulations

Joint Hindu Family Business

Joint Hindu Family Business is a distinct type of organisation which is unique to India. Even within India its

existence is restricted to only certain parts of the country. In this form of business ownership, all members of a

Hindu undivided family do business jointly under the control of the head of the family who is known as the

'Karta'. The members of the family are known as 'Co-parceners'. Thus, the Joint Hindu Family firm is a business

owned by co-parceners of a Hindu undivided estate. Its main features are :-

It comes into existence by the operation of Hindu law and not out of contract. The rights and liabilitiesof co-parceners are determined by the general rules of the Hindu law.

The membership of this form of business is the result of status arising from the birth in the family andits legality is not affected by the minority. Originally, only three successive generations in the male line

( grandfather, father and son) constituted the membership of this organisation. By the Hindu

Succession Act, a female relative of a deceased member or a male relative of such a female member

was made eligible for a share in the interest of the related member ( called co-parcener) at the time of

his death. There is no legal limit to the maximum number of members.

Registration is unnecessary, but the rights of its members to sue third parties for claims of debtremains unaffected.

It is managed generally by the Karta. He has the authority to obtain loans against the family property orin other ways. Other members have no right of management nor to contract loans binding on the joint-

family property.

The manager or the Karta has the last word in the formulation of all policies and in their execution. Hehas unquestioned authority in the conduct of the family business.

The Karta has unlimited liability while the liability of the other members is limited to the value of theirindividual interests in the joint family.


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The firm enjoys continuity of operations as its existence is not subject to the death or insolvency of aco-parcener or even of the Karta himself. Thus, it has a perpetual life like the public limited company.

Advantages

Ease of formation Continuity of operations

Disadvantages

Confined to Joint Hindu families Relatively limited capital Limited managerial talents Unlimited liability of the Karta

Limited Liability Partnership (LLP)

Limited Liability Partnership (LLP)is a new corporate structure that combines the flexibility of a partnership

and the advantages of limited liability of a company at a low compliance cost. In other words, it is an

alternative corporate business vehicle that provides the benefits of limited liability of a company, but allows

its members the flexibility of organising their internal management on the basis of a mutually arrived

agreement, as is the case in a partnership firm.

Owing to flexibility in its structure and operation, it would be useful for small and medium enterprises, in

general, and for the enterprises in services sector, in particular. Internationally, LLPs are the preferred vehicleof business, particularly for service industry or for activities involving professionals.

LLP is governed by the provisions of theLimited Liability Partnership Act 2008, the salient features of which

are as follows: -

The LLP shall be a body corporate and a legal entity separate from its partners. Any two or morepersons, associated for carrying on a lawful business with a view to profit, may by subscribing their

names to an incorporation document and filing the same with the Registrar, form a Limited Liability

Partnership. The LLP will have perpetual succession.

The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall begoverned by an agreement between partners or between the LLP and the partners subject to the

provisions of the LLP Act 2008 . The act provides flexibility to devise the agreement as per their choice.

The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of thepartners being limited to their agreed contribution in the LLP which may be of tangible or intangible

nature or both tangible and intangible in nature. No partner would be liable on account of the

independent or un-authorized actions of other partners or their misconduct. The liabilities of the LLP

and partners who are found to have acted with intent to defraud creditors or for any fraudulent
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purpose shall be unlimited for all or any of the debts or other liabilities of the LLP.

Every LLP shall have at least two partners and shall also have at least two individuals as DesignatedPartners, of whom at least one shall be resident in India. The duties and obligations of Designated

Partners shall be as provided in the law.

The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of itsstate of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar

every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exemptedfrom this requirement by the Central Government.

The Central Government has powers to investigate the affairs of an LLP, if required, by appointment ofcompetent Inspector for the purpose.

The compromise or arrangement including merger and amalgamation of LLPs shall be in accordancewith the provisions of the LLP Act 2008.

A firm, private company or an unlisted public company is allowed to be converted into LLP inaccordance with the provisions of the Act. Upon such conversion, on and from the date of certificate of

registration issued by the Registrar in this regard, the effects of the conversion shall be such as arespecified in the LLP Act. On and from the date of registration specified in the certificate of registration,

all tangible (moveable or immoveable) and intangible property vested in the firm or the company, all

assets, interests, rights, privileges, liabilities, obligations relating to the firm or the company, and the

whole of the undertaking of the firm or the company, shall be transferred to and shall vest in the LLP

without further assurance, act or deed and the firm or the company, shall be deemed to be dissolved

and removed from the records of the Registrar of Firms or Registrar of Companies, as the case may be.

The winding up of the LLP may be either voluntary or by the Tribunal to be established under theCompanies Act, 1956. Till the Tribunal is established, the power in this regard has been given to the

High Court.

The LLP Act 2008 confers powers on the Central Government to apply provisions of the Companies Act,1956 as appropriate, by notification with such changes or modifications as deemed necessary.

However, such notifications shall be laid in draft before each House of Parliament for a total period of

30 days and shall be subject to any modification as may be approved by both Houses.

The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.

Pricing your Product

Fixing the right price for a product is the most difficult task as it affects the volume of sales of the product ofthe firm as well as the profits of the firm. Although non-price factors have become more important in recent

decades, price remains one of the important elements in determining the market share and profitability.

Prices are set by a firm by taking into consideration factors like costs, profit targets, competition and perceived

value of products. Taking into account the various factors, the steps generally followed in setting the price of a

product are :-

Setting the Pricing Objective of the Firm

It is the most important step as it varies from firm to firm. Setting a lower price may attract more customers

and thus fetch a larger market share for the firm's product. But charging a higher price might reflect a high

quality and prestige product.


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Determining the Demand for the Product

Demand for the product sets a ceiling price. Penetration pricing is used when the product has a highly elastic

demand and there is strong competition in the market. Under this policy, prices are fixed below the

competitive level in order to obtain a larger share of the market. Once your product is in demand or is

accepted in the market, the price of your product is increased. But when the demand for the product with

respect to price is more inelastic, higher prices are charged for the product. This policy is generally followed

during the initial stages of introduction of the new product.

Estimating the Costs and Profits

Costs set a floor price. Amount spent and return expected is the key factor in deciding the price. The various

costs involved in producing the product must be covered in pricing the product. On a long term basis also the

price must take into consideration the costs of doing business. This also includes sales forecast and profit

margin.

Determining the Competition for the Product

Competitors prices and the price of substitutes provide an orientation point. The number of competitors for

the product in the market as well as the policy followed by them is also an important factor. Competitive

pricing is used if the market is highly competitive and the product is not differentiated from that of the

competitor's.

Considering the Governmental Regulations

Government policies and incentives are also taken into account. Prices are also affected by various taxliabilities which a company and the product is subjected to. It includes, excise duty, sales tax and local taxes

like octroi.

Sales tax is levied on the sale of moveable goods in India at the rates which vary depending upon the type and

nature of goods and the State in which sale has taken place. The Central and State Government are both

empowered to impose sales tax. The Central Sales tax deals with transactions in the nature of inter-state sales

While the State sales tax deals with intra-state sales.

Octroi is a tax levied on the entry of goods into a municipality or any other specified jurisdiction for use,

consumption or sale. Goods in transit are exempted from it.

Selecting a Suitable Pricing Method/Policy

Right price for the product can be determined through pricing research and by adopting test-marketingtechniques. The various pricing methods are:-

Perceived value pricing:- in which a firm sets its price in relation to the value delivered and perceivedby the customer. Perceived value is made up of several elements like buyer's image of the product

performance, warranty, trustworthiness, esteem, etc. Each customer gives different weightage to

these elements. Some may be price buyers, others may be value buyers and still others may be loyal

buyers. If either the price is higher than the value perceived or the price is lower than the value

perceived, the company will not be able to make potential profits.

Value pricing:- in which companies develop brand loyalty for their product by charging a fairly low pricefor a high quality offering.

Going rate pricing:- is followed if it is difficult to ascertain the exact costs involved and the competitiveresponse. Hence, firms base their price on competitor's price by charging the same, more or less than

the major competitor.

Introducing a product at a premium price:- When a product is innovative and competition is low ornon-existent, this policy can be applied. Thus profits are optimised. But when competition arises prices

are lowered.

Ethical pricing: - Price is fixed keeping the welfare of the society in mind. For many life saving drugs,this particular policy is used. The product is sold at the lowest possible price with either a very

reasonable margin or no profit at all. Profit may be earned from other products.

Full Line pricing:- If you are selling a range of particular product for example pickles, then you price the


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product in a particular range, this way you may earn more profit in one flavour and less on the other.

But, you cannot sell only the one that gives you maximum profit, or else a customer may switch over to

another brand where he would be able to exercise an option for other flavours.

The Central and State Governments have passed certain legislations in order to control production, supply,

distribution as well as price of a number of commodities. The Essential Commodities Act,1955 is one such

important legislation. Under the Act, the State Governments/UT Administrations have issued various control

orders to regulate various aspects of trading in essential commodities such as foodgrains, edible oils, pulses,

kerosene and sugar etc. The Central Government regularly monitors the action taken by State

Governments/UT Administrations to implement the provisions of the Act.

The Government is empowered to enlist any class of commodity as essential commodity as well as regulate or

prohibit the production, supply, distribution, price and trade in any of these commodities for the following

purposes :-

Maintaining or increasing their supplies. Equitable distribution and availability at fair prices of the commodities concerned. Securing any essential commodity for the defence of India or the efficient conduct of military

operations.

The list of commodities declared as essential under theEssential Commodities Act, 1955is reviewed from

time to time in the light of changes in the economic situation and particularly with regard to their production

and supply. For example, keeping in view production and demand of some of the commodities, it was felt that

these could be removed from the list of essential commodities. Hence, with effect from 15.2.2002,

Government removed 11 classes of commodities in full and one in part from the list of commodities declared

as essential under the Essential Commodities Act, 1955. Similar efforts are underway to delete more

commodities from the purview of the Act in order to facilitate free trade and commerce, for which alternative

legal mechanism is being worked out for protection of consumers interest etc.

Thelist of commoditiesdeclared essential under the Essential Commodities Act, 1955 (As on 15.12.2004):-

A. Declared under Clause (a) of Section 2 of the Act

1. Cattle fodder, including oil cakes and other concentrates.

2. Coal, including coke and other derivatives.

3. Component parts and accessories of automobiles.

4. Cotton and woollen textiles.

5. Drugs.

6. Foodstuffs, including edible oilseeds and oils.

7. Iron and Steel, including manufactured products of Iron & Steel.

8. Paper, including newsprint, paperboard and strawboard.

9 Petroleum and Petroleum products.

10 Raw Cotton, either ginned or unginned and cotton seed.

11. Raw Jute.B. Declared as essential through notifications under sub-clause (xi) of clause (a) of Section 2 of the Act

12. Jute textiles.

13. Fertilizer, whether inorganic, organic or mixed.

14. Yarn made wholly from cotton.

15. (i) seeds of food crops and seeds of fruits and vegetables, (ii) seeds of cattle fodder and (iii) jute seeds

The Act has been amended from time to time. TheEssential Commodities (Special Provisions) Act,

1981,makes certain special provisions by way of amendments to the Essential Commodities Act,1955, for a

temporary period for dealing more effectively with persons indulging in hoarding and black marketing of, and

profiteering in, essential commodities and with the evil of vicious inflationary prices and for matters
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connected therewith or incidental thereto.

Also, the Government has set up aPrice Monitoring Cell (PMC) in theDepartment of Consumer Affairs to

monitor and analyse price data and trends of availability of essential commodities. The Economic Adviser in

the Department of Consumer Affairs heads the cell and a Deputy Economic Adviser assisted by Assistant

Economic Advisers and Deputy Directors looks after the work of the cell. The fifteen essential commodities for

which the cell monitors the prices are Rice, Wheat, Atta, Gram Dal, Tur ( Arhar ) Dal, Sugar, Gur, Groundnut

Oil, Mustard Oil, Vanaspati,Tea, Milk, Potato,Onion and Salt.

Information on retail prices is received on daily basis from 18 centres of the country. Similarly, information on

wholesale prices is received from 37 centres of the country on weekly basis. Accordingly, the price monitoring

cell issues the following reports on daily and weekly basis:-

Retail Prices Daily Wholesale Prices Weekly

The objective of such price and distribution controls is:- promotion of equity or distributive justice; ensuring

the quality of goods and services; prevention of monopolistic, restrictive and unfair trade practices that are

hindering public interest; augmentation of the supply; ensuring availability of essential goods at reasonable

prices to the vulnerable sections in all areas; control of inflation and deflation; etc.

Once an entrepreneur has taken all the important decisions relating to starting a business, he/she has to take

into account the basic regulatory requirements which are to be followed for setting up the organisation. The

most important regulation is the Companies Act,1956, which regulates all the affairs of a company. It contains

provisions relating to the formation of a company, powers and responsibilities of the directors and managers,

raising of capital, holding company meetings, maintenance and audit of company accounts, powers of

inspection and investigation of company affairs, reconstruction and amalgamation of a company and even

winding up of a company. The Ministry of Corporate Affairs, earlier known as Department of Corporate Affairs

under Ministry of Finance, is primarily concerned with administration of this Act as well as other allied Acts

and rules & regulations framed there-under.

The next important regulation relates to environment. The environmental regulatory requirements envisage a

wide legislative framework covering every aspect of environment protection like air, water, noise, forest

conservation, wildlife protection, etc. Also, separate set of laws and rules for emission of hazardous wastes

have been enacted. The Ministry of Environment and Forests (MoEF), is the nodal agency for regulating al

such environmental aspects. It undertakes conservation & survey of flora, fauna, forests and wildlife;

prevention & control of pollution; afforestation & regeneration of degraded areas. Every industry has to abide

by all such guidelines and parameters for environmental protection because only this will ensure its

sustainable progress and growth.

Environmental Regulations

A good environment is a constitutional right of the Indian Citizens. Environmental Protection has been given

the constitutional status. Directive Principles of State Policy states that, it is the duty of the state to 'protect

and improve the environment and to safeguard the forests and wildlife of the country'. It imposes

Fundamental duty on every citizen 'to protect and improve the natural environment including forests, lakes,

rivers and wildlife'.
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In India, theMinistry of Environment and Forests (MoEF) is the apex administrative body for :- (i) regulating

and ensuring environmental protection; (ii) formulating the environmental policy framework in the country;

(iii) undertaking conservation & survey of flora, fauna, forests and wildlife; and (iv) planning, promotion, co-

ordination and overseeing the implementation of environmental and forestry programmes. The Ministry is

also the Nodal agency in the country for the United Nations Environment Programme (UNEP). The

organizational structure of the Ministry covers number ofDivisions, Directorate, Board,Subordinate

Offices,Autonomous Institutions, andPublic Sector Undertakingsto assist it in achieving all these objectives.

Besides, the responsibility for prevention and control of industrial pollution is primarily executed by

the Central Pollution Control Board (CPCB)at the Central Level, which is a statutory authority, attached to the

MoEF. The State Departments of Environment and State Pollution Control Boards are the designated agencies

to perform this function at the State Level.

Central Government has enacted several laws for Environmental Protection:-

The Environment (Protection) Act, 1986, is the umbrella legislation which authorizes the CentralGovernment to protect and improve environmental quality, control and reduce pollution from all

sources, and prohibit or restrict the setting and /or operation of any industrial facility onenvironmental grounds. According to the Act, the term "environment" includes water, air and land and

the inter- relationship which exists among and between water, air and land, and human beings, other

living creatures, plants, micro-organism and property. Under the Act, the Central Government shall

have the power to take all such measures as it deems necessary or expedient for the purpose of

protecting and improving the quality of environment and preventing, controlling and abating

environmental pollution.

Acts relating to Water Pollution, are comprehensive in their coverage, applying to streams, inlandwaters, subterranean waters, and seas or tidal waters. These acts also provide for a permit system or

consent' procedure to prevent and control water pollution. They generally prohibit disposal of

polluting matter in streams, wells and sewers or on land in excess of the standards established by the

state boards.

Acts relating to Air Pollution, are aimed at prevention, control and abatement of air pollution. Acts relating to Forest Conservation, provide for the conservation of forests and for matters

connected therewith or ancillary or incidental thereto.

Acts relating to Wildlife Protection, provide for the protection of wild animals, birds and plants and formatters connected therewith or ancillary or incidental thereto with a view to ensuring the ecological

and environmental security of the country.

Acts relating to Biological Diversity, provide for conservation of biological diversity, sustainable use ofits components as well as fair and equitable sharing of the benefits arising out of the use of biological

resources and knowledge associated with it.

Acts relating to Public Liability Insurance, provide for public liability insurance ( immediat

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