Business Finance

Q.1.What is Business Finance?

Business finance is a term that encompasses a wide range of activities and disciplines
revolving around the management of money and other valuable assets. Business finance
programs in universities familiarize students with accounting methodologies, investing
strategies and effective debt management. Small business owners must have a solid
understanding of the principles of finance to keep their companies profitable.
Business finance refers to money and credit employed in business. It involves procurement
and utilization of funds so that business firms may be able to carry out their operations
effectively and efficiently. The following characteristics of business finance will make its
meaning clearer:(i) Business finance includes all types of funds used in business.
(ii) Business finance is needed in all types of organisations large orSmall, manufacturing or
trading.
(iii) The amount of business finance differs from one business firm toanother depending upon
its nature and size. It also varies fromtime to time.
(iv) Business finance involves estimation of funds. It is concernedwith raising funds from
different sources as well as investment offunds for different purposes.

Q.2 What is Capital Structure?

Capital structure describes how a corporation finances its assets. This structure is usually a
combination of several sources of senior debt, mezzanine debt and equity. Wise companies
use the right combination of senior debt, mezzanine debt and equity to keep their true cost of
capital as low as possible. Depending on how complex the structure, there may in fact be
dozens of financing sources included, drawing on funds from a variety of entities in order to
generate the complete financing package. Capital structure is what describes the relationship
of these financing sources as they appear on the corporations balance sheet.

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Capital structure refers to a companys outstanding debt and equity. It allows a firm to
understand what kind of funding the company uses to finance its overall activities and
growth. In other words, it shows the proportions of senior debt, subordinated debt and equity
(common or preferred) in the funding. The purpose of capital structure is to provide an
overview of the level of the companys risk. As a rule of thumb, the higher the proportion of
debt financing a company has, the higher its exposure to risk will be.
Capital structure is commonly known as the debt-to-equity ratio.
A companys capital structure points out how its assets are financed. When a company
finances its operations by opening up or increasing capital to an investor (preferred shares,
common shares, or retained earnings), it avoids debt risk, thus reducing the potential that it
will go bankrupt. Moreover, the owner may choose debt funding and maintain control over
the company, increasing returns on the operations.

Debt takes the form of a corporate bond issue, long-term loan, or short-term debt. The latter
directly impacts the working capital. Having said that, a company that is 70% debt-financed
and 30% equity-financed has a debt-to-equity ratio of 70%; this is the leverage. It is very
important for a company to manage its debt and equity financing because a favorable ratio
will be attractive to potential investors in the business.

Q3.Sources of Capital
The following are the major sources of funding for entrepreneurs:
1. Personal finances
2. Friends and family
3. Angel Investors
4. Debt financing
5. Equity financing
6. Customer financing

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7. Governmentsponsored programs
Personal Finances
People start companies at different points in their lives. Some entrepreneurs start companies
during the early stages of their career. A majority of entrepreneurs start companies at later
stages in their lives and these entrepreneurs often have personal assets that they could use to
finance their ideas. It is important for entrepreneurs to invest their personal savings in their
business ideas as it indicates that the entrepreneur is confident about his or her own idea,
thereby encouraging other investors to look at the idea more seriously. After all, who would
want to invest in a company wherein the founder does not want to bet on the idea?
Additionally, entrepreneurs who do not put their personal savings into the venture can find it
hard to raise money from friends and family. Entrepreneurs should think thoroughly before
investing their personal finances. If the business idea is not feasible, the entrepreneur loses
everything.
Friends and Family
Friends and family are important sources for financing startups since they would like to see
the entrepreneur succeed. Such loans can be obtained quickly as this type of financing is
based more on personal relationships than on financial analysis. However, friends and
relatives who provide business loans sometime feel that they have the right to offer
suggestions concerning the management of the business. Their suggestions might be
orthogonal to the entrepreneurs strategy and might create fissures in the relationships. It is
important to minimize the chance of damaging important personal relationships. Therefore,
entrepreneurs should plan on repaying such loans as soon as possible even if the business
idea fails, thereby ensuring that relationships are maintained.
Angel Investors
A large number of individuals invest in a variety of entrepreneurial ventures. They are
affluent people such as successful entrepreneurs, lawyers, physicians, etc. who have moderate
to significant business experience. This type of financing is called as informal capital because
these individuals do not make such investments in established market places. Such investors
are called business angels. They represent the oldest and the largest segment of the U.S.

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venture capital industry. On average, a typical angel investor invests more than $200,000 a
year. Angels frequently put their mind share in a companys strategy and assist entrepreneurs
in taking their companies forward. Although angel investment is easier to acquire than some
of the more formal types of financing, angels can sometimes be very demanding.
Entrepreneurs should therefore define their relationships with the angels before finalizing the
terms of the agreement. It is imperative to emphasize that any angel investor would be
skeptical to fund a company, wherein the founders do want not invest their personal savings.
Debt Financing
Entrepreneurs can also raise capital from banks through the debt financing route. Although
some angels provide debt capital, commercial banks are the primary providers of debt capital
to small companies. Bankers tend to make business loans through lines of credit, term loans
and mortgages. A line of credit loan is the largest amount of money that the borrower can
obtain from the bank at any one time. An entrepreneur must work with a bank in advance to
obtain a line of credit before the company needs the money because if banks do not know the
specifics of their investment, they will refuse credit. Attempts to obtain line-of-credit loan
instantaneously are generally ineffective. In addition to the line-of-credit load, banks issue
five to ten year term loans that are generally used to finance equipment. Since the economic
benefits of investing in equipment extend beyond a single year, banks are generally open to
lending money to buy equipment that generate revenues, which match the interest to be
received from such a loan. Finally, entrepreneurs can also obtain a mortgage to provide
funding. Mortgages are loans for which certain items of inventory or other properties serve as
collateral. Debt financing has its own set of advantages and disadvantages. Although debt
financing increases the potential for higher rates of return on investment (ROI) and allows
entrepreneurs to retain much of the board control, it also puts entrepreneurs at greater risk.
Irrespective of the startups outcome, banks make sure that they will get their investment
back along with interests. To accomplish this, banks structure their agreements accordingly.
Equity Financing
As opposed to debt financing, equity financing transfers the risk from the entrepreneur to the
investors, but has its own set of drawbacks. Equity financing is when entrepreneurs can raise
money only through selling common or preferred stock to investors. This implies that an

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entrepreneur gives up some of his or her voting rights to investors. Although most angels
offer equity financing, institutional venture capitals make the biggest equity financing
investments. Institutional venture capital firms usually manage large funds - anywhere from
$25 million to $1 billion - and invest in high growth companies. When a VC firm invests in a
company, the firm generally takes a seat in the board of directors. VCs assist the
entrepreneurs in taking the companies forward. The very same VCs do not mind firing
everyone, including the founders and shutting down the company if they determine that it is
economical. In addition, raising venture capital is generally a long shot. Venture capitalists
will not even look into a business plan unless the company meets some of firms criteria.
Customer financing
At times, large corporations or potential customers finance the entrepreneur through debt or
equity routes. Large corporations provide financial and technical assistance to smaller
businesses because as larger corporations downsize their operations for tactical reasons, it
becomes important that their suppliers, frequently small firms, stay healthy. Examples of
large corporations that have historically invested in smaller firms include giants such as
JCPenny, Ford Motors, Motorola, Micron, and Cisco.
Governmentsponsored programs
Several government programs provide financing to small businesses. The federal government
has a long history of helping new businesses get started, primarily through the following
federal programs:

Small Business Administration (SBA)

Small Business Investment Companies (SBIC)
Small Business innovative Research (SBIR)
Small Business Technology Transfer (STTR)

Recently, Congress has voted to increase the size and scope of the above programs. Apart
from the federally sponsored programs, state and local government are also becoming
increasingly active in financing new businesses. The nature of financing varies, but each
program is generally geared to augment other sources of funding. Although it is possible to
raise money with low interest rates and equity through this route, entrepreneurs must have the
patience to go through the time-consuming government bureaucratic processes.

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Q4.Factors Affecting the Capital Structure.

Under the capital structure, decision the proportion of long-term sources of capital is
determined. Most favourable proportion determines the optimum capital structure. That
happens to be the need of the company because EPS happens to be the maximum on it. Some
of the chief factors affecting the choice of the capital structure are the following:
(1) Cash Flow Position:
While making a choice of the capital structure the future cash flow position should be kept in
mind. Debt capital should be used only if the cash flow position is really good because a lot
of cash is needed in order to make payment of interest and refund of capital.
(2) Interest Coverage Ratio-ICR:
With the help of this ratio an effort is made to find out how many times the EBIT is available
to the payment of interest. The capacity of the company to use debt capital will be in direct
proportion to this ratio.
It is possible that in spite of better ICR the cash flow position of the company may be weak.
Therefore, this ratio is not a proper or appropriate measure of the capacity of the company to
pay interest. It is equally important to take into consideration the cash flow position.
(3) Debt Service Coverage Ratio-DSCR:
This ratio removes the weakness of ICR. This shows the cash flow position of the company.
This ratio tells us about the cash payments to be made (e.g., preference dividend, interest and
debt capital repayment) and the amount of cash available. Better ratio means the better
capacity of the company for debt payment. Consequently, more debt can be utilised in the
capital structure.

(4) Return on Investment-ROI:

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The greater return on investment of a company increases its capacity to utilise more debt
capital.
(5) Cost of Debt:
The capacity of a company to take debt depends on the cost of debt. In case the rate of
interest on the debt capital is less, more debt capital can be utilised and vice versa.
(6) Tax Rate:
The rate of tax affects the cost of debt. If the rate of tax is high, the cost of debt decreases.
The reason is the deduction of interest on the debt capital from the profits considering it a
part of expenses and a saving in taxes.
For example, suppose a company takes a loan of 0ppp 100 and the rate of interest on this debt
is 10% and the rate of tax is 30%. By deducting 10/- from the EBIT a saving of in tax will
take place (If 10 on account of interest are not deducted, a tax of @ 30% shall have to be
paid).
(9) Risk Consideration: There are two types of risks in business:
(i) Operating Risk or Business Risk:
This refers to the risk of inability to discharge permanent operating costs (e.g., rent of the
building, payment of salary, insurance installment, etc),
(ii) Financial Risk:
This refers to the risk of inability to pay fixed financial payments (e.g., payment of interest,
preference dividend, return of the debt capital, etc.) as promised by the company.
The total risk of business depends on both these types of risks. If the operating risk in
business is less, the financial risk can be faced which means that more debt capital can be
utilised. On the contrary, if the operating risk is high, the financial risk likely occurring after
the greater use of debt capital should be avoided.

(10) Flexibility:

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According to this principle, capital structure should be fairly flexible. Flexibility means that,
if need be, amount of capital in the business could be increased or decreased easily. Reducing
the amount of capital in business is possible only in case of debt capital or preference share
capital.
If at any given time company has more capital than as necessary then both the abovementioned capitals can be repaid. On the other hand, repayment of equity share capital is not
possible by the company during its lifetime. Thus, from the viewpoint of flexibility to issue
debt capital and preference share capital is the best.
(11) Control:
According to this factor, at the time of preparing capital structure, it should be ensured that
the control of the existing shareholders (owners) over the affairs of the company is not
adversely affected.
If funds are raised by issuing equity shares, then the number of companys shareholders will
increase and it directly affects the control of existing shareholders. In other words, now the
number of owners (shareholders) controlling the company increases.
This situation will not be acceptable to the existing shareholders. On the contrary, when funds
are raised through debt capital, there is no effect on the control of the company because the
debenture holders have no control over the affairs of the company. Thus, for those who
support this principle debt capital is the best.
(12) Regulatory Framework:
Capital structure is also influenced by government regulations. For instance, banking
companies can raise funds by issuing share capital alone, not any other kind of security.
Similarly, it is compulsory for other companies to maintain a given debt-equity ratio while
raising funds.
Different ideal debt-equity ratios such as 2:1; 4:1; 6:1 have been determined for different
industries. The public issue of shares and debentures has to be made under SEBI guidelines.

(13) Stock Market Conditions:

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Stock market conditions refer to upward or downward trends in capital market. Both these
conditions have their influence on the selection of sources of finance. When the market is
dull, investors are mostly afraid of investing in the share capital due to high risk.
On the contrary, when conditions in the capital market are cheerful, they treat investment in
the share capital as the best choice to reap profits. Companies should, therefore, make
selection of capital sources keeping in view the conditions prevailing in the capital market.
(14) Capital Structure of Other Companies:
Capital structure is influenced by the industry to which a company is related. All companies
related to a given industry produce almost similar products, their costs of production are
similar, they depend on identical technology, they have similar profitability, and hence the
pattern of their capital structure is almost similar.
Because of this fact, there are different debt- equity ratios prevalent in different industries.
Hence, at the time of raising funds a company must take into consideration debt-equity ratio
prevalent in the related industry.

Q5. Factors Influencing Capital Structure.

Businesses can utilize different types of capital in order to expand or sustain their current
operations. Depending on the type of company, some businesses may take on more debt,
while others may look for asset-based capital with lower amounts of debt. In any case, all
companies need to find a balance between debt and asset capital for an optimal structure.
Here are some factors that may influence capital structure decisions:
Size
A companys size will greatly impact its capital structure. A small start-up company may not
want to take on substantial debt capital in its initial stages. An owner may also reject asset
capital from investors to retain control over his or her company. Furthermore, a small
business owner may be closely linked to the credit rating of the company. Larger corporations
will likely have more access to credit and capital opportunities, and will opt to implement
those into their capital structure.

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Growth
Firms that are growing quickly are more likely to take on debt capital and will borrow money
faster. More established and mature companies will typically seek out less debt capital than
newer and smaller businesses.
Market conditions
Fluctuating market conditions affect capital structure. Tight credit conditions following the
recession created a challenging environment for businesses to borrow money and grow.
Fortunately, lenders have become more lenient. Opportunities have opened up for companies
to borrow money and increase their debt capital, leading to a shift in capital structures.
Management
Business owners and company management are ultimately responsible for decisions
regarding capital structure. More aggressive managers will borrow more money to grow the
business, while conservative owners will rein in spending for higher profits. While most
businesses want to find a balance, management styles can sway capital structure to either end
of the spectrum.
Industry
In highly competitive industries, it may be harder for companies to find financing, as new
companies may carry a higher risk. These companies will then be less reliant upon debt
capital.
Business risk
If a company does not have a record of stable earnings, its risk of failure increases. If a
company has an unstable capital structure with high amounts of debt, it is also more likely to
end up in bankruptcy. These are both examples of high risk companies. Business risk and
optimal debt capital have an inverse relationship, as companies will still be responsible for
repaying their debt obligations when profits are down.
Some of the major factors influencing capital structure are as follows:
1. Financial Leverage or Trading on Equity:

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The word equity denotes the ownership of the company. Trading on equity means taking
advantage of equity share capital to borrowed funds on reasonable basis. It refers to the
additional profits that equity shares earn because of funds raised by issuing other forms of
securities, viz., preference shares and debentures.
It is based on the premise that if the rate of interest on borrowed capital and the rate of
dividend on preference capital are lower than the general rate of companys earnings, the
equity shareholders will get advantage in the form of additional profits. Thus, by adopting a
judicious mix of long-term loans (debentures) and preference shares with equity shares,
return on equity shares can be maximized.
Trading on equity is possible under the following conditions:
(i) The rate of companys earnings is higher than the rate of interest on debentures and the
rate of dividend on preference shares.
(ii) The companys earnings are stable and regular to afford payment of interest on
debentures.
(iii) The company has sufficient assets which can be used as security to raise borrowed funds.
2. Expected Cash Flows:
Debentures and preference shares are often redeemable, i.e., they are to be paid back after
their maturity. The expected cash flows over the years must be sufficient to meet the interest
liability on debentures every year and also to return the maturity amount at the end of the
term of debentures. Thus, debentures are not suitable for those companies which are likely to
have irregular cash flows in future.
3. Stability of Sales:
Stability of sales turnover enhances the companys ability to pay interest on debentures. If
sales are rising, the company can use more of debt capital as it would be in a position to pay
interest. But if sales are unstable or declining, it would not be advisable to employ additional
debt capital.
4. Control over the Company:

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The control of a company is entrusted to the Board of Directors elected by the equity
shareholders. If the board of directors and shareholders of a company wish to retain control
over the company in their hands, they may not allow to issue further equity shares to the
public. In such a case, more funds can be raised by issuing preference shares and debentures.
5. Flexibility of Financial Structure:
A good financial structure should be flexible enough to have scope for expansion or
contraction of capitalisation whenever the need arises. In order to bring flexibility, those
securities should be issued which can be paid off after a number of years.
Equity shares cannot be paid off during the life time of a company. But redeemable
preference shares and debentures can be paid off whenever the company feels necessary.
They provide elasticity in the financial plan.
6. Cost of Floating the Capital:
Cost of raising finance by tapping various sources of finance should be estimated carefully to
decide which of the alternatives is the cheapest. Prevailing rate of interest, rate of return
expected by the prospective investors, and administrative expenses are the various factors
which affect the cost of financing.
Generally, cost of financing by issuing debentures and preference shares for a reputed
company is low. It is also essential to consider the floatation costs involved in the issue of
shares and debentures, such as printing of prospectus, advertisement, etc.
7. Period of Financing:
When funds are required for permanent investment in a company, equity share capital is
preferred. But when funds are required to finance expansion programme and the management
of the company feels that it will be able to redeem the funds within the life-time of the
company, it may issue redeemable preference shares and debentures.
8. Market Conditions:
The conditions prevailing in the capital market influence the determination of the securities to
be issued. For instance, during depression, people do not like to take risk and so are not
interested in equity shares. But during boom, investors are ready to take risk and invest in

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equity shares. Therefore, debentures and preference shares which carry a fixed rate of return
may be marketed more easily during the periods of low activity.
9. Types of Investors:
The capital structure is influenced by the likings of the potential investors. Therefore,
securities of different kinds and varying denominations are issued to meet the requirements of
the prospective investors. Equity shares are issued to attract the people who can take the risk
of investment in the company. Debentures and preference shares are issued to attract those
people who prefer safety of investment and certainty of return on investment.
10. Legal Requirements:
The structure of capital of a company is also influenced by the statutory requirements. For
instance, banking companies have been prohibited by the Banking Regulation Act to issue
any type of securities except equity shares.

Q6. Entrepreneurship Development Programmes(EDPs)

EDP is a programme meant to develop entrepreneurial abilities among the people. In other
words, it refers to inculcation, development, and polishing of entrepreneurial skills into a
person needed to establish and successfully run his / her enterprise. Thus, the concept of
entrepreneurship development programme involves equipping a person with the required
skills and knowledge needed for starting and running the enterprise.
The main purpose of such entrepreneurship development programme is to widen the base of
entrepreneurship by development achievement motivation and entrepreneurial skills among
the less privileged sections of the society.
According to N. P. Singh (1985), Entrepreneurship Development Programme is designed to
help an individual in strengthening his entrepreneurial motive and in acquiring skills and
capabilities necessary for playing his entrepreneurial role effectively. It is necessary to
promote this understanding of motives and their impact on entrepreneurial values and
behaviour for this purpose. Now, we can easily define EDP as a planned effort to identify,

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inculcate, develop, and polish the capabilities and skills as the prerequisites of a person to
become and behave as an entrepreneur.
The main objectives of an entrepreneurial development programme are:
1. To identify and train the potential entrepreneurs in the region;
2. To develop necessary knowledge and skills among the participants in EDPSs.
3. To impart basis managerial knowledge and understanding;
4. To provide post-training assistance;
5. To develop and strengthen entrepreneurial quality and motivation;
6. To analyze the environmental issues related to the proposed project;
7. To help in selecting the right type of project and products;
8. To formulate the effective and profitable project;
9. To enlarge the supply of entrepreneurs for rapid industrial development;
10. To develop small and medium enterprises sector which is necessary for employment
generation and wider dispersal of industrial ownership;
11. To industrialize rural and backward regions;
12. To provide gainful self-employment to educated young men and women;
13. To diversity the source of entrepreneurship;
14. To know the pros and cons of being an entrepreneur.
15. To provide knowledge and information about the source of help, incentives and subsidies
available from government to set up the project;
16. To impart information about the process, procedure and rules and regulations for setting
up a new projects.

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Therefore, entrepreneurial development programmes have become imperative for exploiting

vast untapped human skills and to channelize them into accelerating industrialization.
EDPs face a lot of problems which make them unsuccessful and ineffective. The qualitative
evaluation of EDPs become meaningless unless the problems of EDPs are removed.
Following suggestions are recommended to make the EDPs successful and effective:
Practical ways to enhance the Entrepreneurial Development Programme
i. There should be a clear-cut policy at the national level:
Government should formulate a clear cut policy at the national level to promote and sponsor
EDPs so that the growth and development of entrepreneurship will not suffer on any cost.
The various supporting agencies like banks and financial institutions must be encouraged to
promote entrepreneurship.
ii. Designing of viable projects:
The organisers should develop and design such projects which are feasible in terms of
available resources and market potential. All arrangement should be made so that they can
able to get updated and modern facilities required for the viable project for making EDPs
successful.
iii. Model based EDPs:
Model based EDPs should be discouraged because a particular model of training which is
very successful in one area may be a failure in another area. Therefore, sponsoring agencies
promoting EDPs should undertake in-depth study of the demand pattern and availability of
resources before establishing their own enterprise.
iv. Specific course of action to be followed:
The agencies engaged in EDPs must be very clear about the specific course of action to be
followed. Course contents must be standardised, accountability must be fixed and feed back
system should be introduced for further improvement.

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v. Selecting the right type of trainees:

While selecting trainees for EDPs, the various agencies and institutions should adopt inform
principles and procedures. Trainees should be selected after proper screening and assets.
Applicants lacking requisite aptitude and commitment should be discouraged. Educated
employed youth and persons having traditional background in the chosen activity should e
given more preference for EDPs training.
vi. Training of Trainers:
Trainers must be adequately trained by experts so that they can be able to inculcate the right
type of training to the trainees. They can be able to meet all queries of the trainees about the
latest development of the project. The trainers therefore, must be very competent, committed
and qualified up to the expectations of the trainees.
vii. Conducive Environment:
All effort should be made to create a conducive environment in the backward and under
developed areas for the conduct of successful EDPs. Entrepreneurs should be assisted in
converting their dream into reality through proper training and conducive environment. It
makes the trainer-motivator's role effective.
viii. Providing adequate infrastructural facilities:
Success of EDPs rest on the infrastructural facilities available in the particular region where
they are undertaken. Therefore, before undertaking any EDP, the agencies must be assured of
sufficient infrastructural facilities in the area. Plans and programs should design on the basis
of such available infrastructures.
ix. Duration of EDPs:
The duration for conducting an EDP should be increased to six months so that the trainees
must be adequately trained and gained sufficient knowledge about the project. There should
not be any short-cuts for successful EDPs.

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Q7. Various Organisations providing EDP

Entrepreneurship has been considered the backbone of economic development. It has been
well established that the level of economic growth of a region to a large extent, depends on
the level of entrepreneurial activities in the region. The myth that entrepreneurs are born, no
more holds good, rather it is well recognised now that the entrepreneurs can be created and
nurtured through appropriate interventions in the form of entrepreneurship development
programmes.
Entrepreneurship development and training is, thus, one of the key elements for development
of micro and small enterprises (MSEs), particularly, the first generation entrepreneurs. To
undertake this task on regular basis, the Ministry has set up three national-level
Entrepreneurship Development Institutes (EDIs). These are, the National Institute for Micro,
Small and Medium Enterprises (NI-MSME), Hyderabad; the Indian Institute of
Entrepreneurship (IIE), Guwahati and the National Institute for Entrepreneurship and Small
Business Development (NIESBUD), Noida. Further, the Ministry has been implementing (in
addition to the schemes of MSME-DO) an important scheme, namely, Scheme for Assistance
for Strengthening of Training Infrastructure of Existing and New Entrepreneurship
Development Institutes (EDIs). The main objectives of the scheme are (i) promoting
entrepreneurship for creating self-employment through enterprise creation; (ii) facilitating
creation of training infrastructure; and (iii) supporting research on entrepreneurship related
issues.

Schemes:
SCHEME

FOR

INFRASTRUCTURE

ASSISTANCE
OF

FOR

EXISTING

STRENGTHENING
AND

NEW

OF

TRAINING

ENTREPRENEURSHIP

DEVELOPMENT INSTITUTES (EDIs)

The scheme envisages providing financial assistance to State-level existing/ proposed

institutions meant for supporting entrepreneurship development and selfemployment
activities. Under this scheme, grant is given for setting up of new entrepreneurship
development institutions (EDIs) and also for up-gradation and modernisation of

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existing EDIs in the country. Under the scheme, a matching grant of 50 per cent,
subject to a ceiling of Rs.100 lakh, is provided for building, equipment, training aids
etc., the balance being contributed by the State/Union Territory Governments and
other agencies. The financial assistance provided under this scheme is only catalytic
and supportive to the contribution and efforts of State/Union Territory Governments
and other agencies. Under no circumstances grant funds provided under the scheme

can be used to meet the recurring expenditure of the institute.

The institutions/organisations seeking assistance under this scheme should be
registered as not-for-profit organisation with entrepreneurship development as its
main objective, should possess a clear title of the land required for setting up of the
proposed/ existing institution, have a separate bank account in a scheduled bank in
which all receipts/funds received by the institute should be credited and payments

made on the basis of authorisation by the Governing Council of the institute.

All the proposals under this scheme are required to be recommended by and routed
through the concerned State/UT Government.

NATIONAL INSTITUTE FOR MICRO, SMALL AND MEDIUM ENTERPRISES

(NI-MSME), HYDERABAD
NI-MSME, formerly known as National Institute of Small Industry Extension Training
(NISIET), was set up in 1960 at New Delhi as a Department of Central Government
under the Ministry of Commerce and Industry and was initially known as Central
Industrial Extension Training Institute (CIETI). Subsequently, in 1962, it was shifted to
Hyderabad and converted into an autonomous society. In 1984, the Institute was renamed
as National Institute of Small Industry Extension Training (NISIET). After enactment of
the MSMED Act, 2006, the Institute has been renamed as National Institute for Micro,
Small and Medium Enterprises (NI-MSME), w.e.f. 11th April 2007. The Institute has
benefited not only the Indian micro, small and medium enterprises (MSMEs) but also
those in other developing countries through a plethora of activities and thus helped in
promoting self-employment and enterprise development. The Institute is constantly
evolving in accordance with the changing times, modifying its focus with the emerging
needs of MSMEs and providing solutions in the form of consultancy, training, research,
and education. NI-MSMEs programmes are designed to have universal relevance for
successfully training the entrepreneurs to face challenges and emerging competition in the

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era of globalisation. 7.3.2 The academic activities of the Institute are organized through
centres of excellence focusing on specific needs of the MSMEs. The Academic Council
of the Institute is the central coordinating body for benchmarking, formulation and
evaluation of academic activities and programmes.
INDIAN INSTITUTE OF ENTREPRENEURSHIP (IIE), GUWAHATI

The Indian Institute of Entrepreneurship (IIE) was set up at Guwahati in 1993. It

took over NI-MSMEs NER Centre w.e.f. 1st April, 1994. The Institute is
completing 14th year of its operation on 31st March 2008. During this period, the
Institute has expanded its activities to a great extent covering all facets of MSME
activities. Since its establishment and up to March 2007, the Institute has
organized 1167 training programmes / workshops / seminars / meets with a
cumulative participation of 38524 persons. The Institute has obtained ISO-90012000 certification from the Bureau of Indian Standards. The Institute has
expanded its canvas of activities not only in terms of geographical coverage but
also in terms of diversification into various related areas of the activities
pertaining to socio-economic development. The Institute regularly organises
training programmes and undertakes research and consultancy services in the field

of promotion of MSMEs and entrepreneurship.

The Institute has set up two training centres, one at its premises in Guwahati and
the other at Aizawl, in collaboration with Directorate of Industries, Government of
Mizoram, for gemstone processing. For hosiery &woolen garment manufacturing,
95 Annual Report 2007-2008 two centres were set up in Sikkim and Arunachal
Pradesh, in collaboration with the Khadi and Village Industries Boards of
respective State Governments. The project, which is the first of its kind in North
East, imparts skill development training to prospective entrepreneurs and artisans
along with incubation facilities and technical support/ guidance for market
linkages.

NATIONAL

INSTITUTE

FOR

ENTREPRENEURSHIP

AND

SMALL

BUSINESS D E V E L O P M E N T (NIESBUD), NOIDA

Page 19 of 36

The National Institute for Entrepreneurship & Small Business Development

(NIESBUD), NOIDA was set up in 1983 as an apex institution in the field of
entrepreneurship development to promote, support and sustain entrepreneurship and
small business through training, education, research and consultancy services. The
major activities of the Institute include evolving model syllabi for training various
target groups; providing effective training strategies, methodology, manuals and tools;
facilitating and supporting Central/State Governments and other agencies in executing
programs of entrepreneurship and small business development; maximizing benefits
and accelerating the process of entrepreneurship development; and conducting
programs for motivators, trainers and entrepreneurs. The Institute helps other
Entrepreneurship Development Institutions in various ways, such as developing
syllabi in entrepreneurship for different target groups, training of faculty, developing
training aids etc.

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PART 2: CHALLENGES & RECENT TRENDS

Q1. Various challenges faced by entrepreneur in India
Family Challenges: Convincing to opt for business over job is easy is not an easy task for an
individual. The first thing compared is Will you make more money in business of your
choice or as a successor of family business. This is where it becomes almost impossible to
convince that you can generate more cash with your passion than doing what your Dad is
doing.
Social Challenges: Family challenges are always at the top because that is what matter the
most but at times social challenges also are very important. Let us say you and your friend
graduated at the same time. You opted for entrepreneurship and your friend opted for a job.
He now has a flat, car and what not because he could easily get those with a bank loan but
you still have nothing to show off and this is where challenge comes.
Technological Challenges: Indian education system lags too much from the Job industry as a
whole but then it lags even more when it comes to online entrepreneurship. What technology
would be ideal and how to use that technology effectively?
Financial Challenges: (Difficulty in borrowing fund): Financial challenges are a lot different
in India especially for online entrepreneurs. When you are starting out as an entrepreneur you
dont opt for venture funding but try to go with funding from small to medium business
people. Many such non technical business people dont understand the online business
models as a whole and so getting an initial business funding from them becomes challenging.
The other option you can think of is loan but bank loan is not at all an option in India for new
online entrepreneurs.

Q2. Problems of women entrepreneur in India

1. Gender Inequality: India is a male dominated traditional society where women are not
supposed to be equal to men folk. They are treated as subordinate to husbands and men,
physically weak and lesser confident to be able to shoulder the responsibility of entrepreneur.

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2. Lack of education: Women in India are lagging far behind in the field of education. Most
of the women (around sixty per cent of total women) are illiterate. Those who are educated
are provided either less or inadequate education than their male counterpart partly due to
early marriage, partly due to son's higher education and partly due to poverty. Due to lack of
proper education, women entrepreneurs remain in dark about the development of new
technology, new methods of production, marketing and other governmental support which
will encourage them to flourish.
3. Problem of finance: Women entrepreneurs suffer a lot in raising and meeting the financial
needs of the business. Bankers, creditors and financial institutions are not coming forward to
provide financial assistance to women borrowers on the ground of their less creditworthiness
and more chances of failure.
4. Skepticism of Financial Institution: Financial Institutions and bankers are skeptical
about the entrepreneurial abilities of women. These institutions consider women loans as
higher risk than men.
5. Obsolescence of technology & resulting increase in cost of production: Several factors
including inefficient management contribute to the high cost of production which stands as a
stumbling block before women entrepreneurs. Women entrepreneurs face technology
obsolescence due to non-adoption or slow adoption to changing technology which is a major
factor of high cost of production.
6. Low risk-bearing capacity: Women in India are by nature weak, shy and mild. They
cannot bear the amount of risk which is essential for running an enterprise. Lack of
education, training and financial support from outsides also reduce their ability to bear the
risk involved in an enterprises.
7. Lack of entrepreneurial aptitude: Lack of entrepreneurial aptitude is a matter of concern
for women entrepreneurs. They have no entrepreneurial bent of mind. Even after attending
various training programs on entrepreneur ship they fail to tide over the risks and troubles
that may come up in an organizational working.
8. Limited managerial ability: Women entrepreneurs are not efficient in managerial
functions like planning, organizing, controlling, coordinating, motivating etc. of an

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enterprise. Therefore, less and limited managerial ability of women has become a problem for
them to run the enterprise successfully.
9. Legal formalities: Fulfilling the legal formalities required for running an enterprise
becomes an uphill task on the part of an women entrepreneur because of the prevalence of
corrupt practices in government offices and procedural delays for various licenses, electricity,
water and shed allotments. In such situations women entrepreneurs find it hard to concentrate
on the smooth working of the enterprise.
10. Lack of self confidence: Women entrepreneurs because of their inherent nature, lack
self-confidence which is essentially a motivating factor in running an enterprise successfully.
They have to strive hard to strike a balance between managing a family and managing an
enterprise.
Q3. Opportunities for rural entrepreneur.
Rural entrepreneurs have a number of opportunities in several areas. Some of the
opportunities are as follows:
a. Manufactured items:
Some of the product categories are well established in rural areas which include:

Means of transportation- bicycles, scooters, and motor cycles.

Entertainment goods such as radios and TV sets.

Agriculture related goods such as agricultural machinery, fertilizers, pesticides, etc.

Beverages such as packed tea etc.

b. Tourism sector:
Some of the rural areas provide a rich source of tourist attraction, especially waterfalls,
wildlife and so on. Therefore there is a good scope for entrepreneurs in rural areas in respect
of restaurants, transport operations and so on.

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c. Raw materials industry:

Rural areas provide a good source of raw materials such as mineral ores, limestone and so on.
Therefore rural entrepreneurs can setup industries, such as mining, drilling etc. they can also
provide services such as transportation for transporting the raw materials from the sites to the
places of manufacturing.
d. Food processing industry:
Rural areas produce a number of food crops. Villagers also collect forest produce such as
honey. Therefore, rural entrepreneurs can setup food processing industries such as making
jam, honey , tomato ketchup, fruit juices etc.
e. Herbal products:
Rural areas provide a rich source of herbs. With the help of herbal research, rural
entrepreneurs can produce a number of health related herbal products. Now a days ayurvedic
and homeopathic medicines have become popular not only in India but also in western
countries.
f. Micro units:
Small entrepreneurs can setup small units such as carpentry works, small engineering works,
etc. central and state government provides a lot of incentives and support to setup selfemployment projects in rural areas.
g. Rural development projects:
The government takes various rural development activities such as construction of roads,
housing, water supply, irrigation projects, rural electrification etc. the rural entrepreneurs can
take sub contracts from the government to undertake rural development activities.

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h. Dairy business:
i. Rural entrepreneurs have a good scope in dairy business. India is the largest producer of milk
in the world. Dairy products such as packed milk, ice-creams and other milk based products
have a good demand in the urban markets.
Q4. Future of entrepreneurship in India
In India, business was traditionally considered to be the domain of scholarly challenged
individuals or the result of natural inheritance within business communities. Gradually, the
appetite for risk and the acceptance of failure increased, but only recently have alternate
professions and the idea of "following ones dream" gained approval. In particular,
entrepreneurship caught the fancy of the Indian middle class after the economy was
liberalized. The economic reforms introduced in 1991 reduced the bureaucratic controls,
promoted private enterprise, and lowered the barriers to creating new businesses. Coupled
with the emergence of knowledge economy, the demand for skilled employees greatly
increased and a trend emerged toward technology entrepreneurship in the services sector,
which is less capital-intensive than traditional industries.
Indeed, the future of entrepreneurship in India lies in the services sector, and the Government
of India is providing support to encourage this trend. However, there are as many challenges
as there are opportunities, as will be discussed below.
Traditionally, government programs, and support from the banking and finance industry, were
largely focused and aligned to the manufacturing sector with its strong product focus.
Industry associations such as the Confederation of Indian Industry (CII), the Federation of
Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of
Commerce and Industry of India (ASSOCHAM) have existed since the pre-independence era
and lobby the government for policy initiatives that favour traditional businesses and
industries. With the information technology sector emerging as a rapidly growing segment of
Indian industry the National Association of Software and Services Companies (NASSCOM)
was formed in 1988 as the industry association for information technology industry.

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In 2000, the National Science & Technology Entrepreneurship Development Board

(NSTEDB) under the aegis of the Department of Science and Technology (DST)
launched the Technology Business Incubation (TBI) program, which is geared towards
supporting entrepreneurship in emerging technology areas such as information and
communications technology, manufacturing, biotechnology, nanotechnology, and agricultural
technology. This program was an extension of the Science & Technology Entrepreneurs' Park
program, which was initiated in 1985 by the NSTEDB in academic institutions and research
labs of excellence with an objective of promoting self-employment for young science and
technology graduates. The NSTEDB identified 120 technology business incubators in
different technology areas within India (NSTEDB, 2009). Of these, 53 were promoted by the
NSTEDB, 40 were software technology parks promoted by the Ministry of Information and
Communication Technology, and the remaining 30 were promoted by other government
departments, banks, financial institutions, or private companies.
Recently, India is considered to be amongst the three top investment destinations. According
to a report released by Evalueserve research, over 44 U.S. based VC firms are now seeking to
invest heavily in start-ups and early-stage companies in India. Reports from Price water
house Coppers predict that between 2010 and 2024, 2219 multinational companies will
emerge from India.
In conclusion, with a consistently growing local market for indigenous products, supported
by a reasonably efficient and transparent legal system, I believe India could potentially
emerge as one of the top 3 world economies in the world by 2020. This articles concludes
with these lines from The Mystery of Capital by Hernando de Soto.
People in developing countries are not pitiful beggars, are not helplessly trapped in
obsolete ways and are not uncritical prisoners of dysfunctional cultures. In fact, he says and
I can vouch from my experience that the developing world is teeming with entrepreneurs who
possess an astonishing ability to wring a profit out of practically nothing.

Q5. Intellectual property.

Page 26 of 36

Intellectual Property Rights are legal rights, which result from intellectual activity in
industrial, scientific, literary & artistic fields. These rights Safeguard creators and other
producers of intellectual goods & services by granting them certain time-limited rights to
control their use. Protected IP rights like other property can be a matter of trade, which can be
owned, sold or bought. These are intangible and non exhausted consumption.
TYPES/TOOLs OF IPRs: a. Patents. b. Trademarks. c. Copyrights and related rights. d.
Geographical Indications. e. Industrial Designs. f. Trade Secrets. g. Layout Design for
Integrated Circuits. h. Protection of New Plant Variety.

a. Patent
A patent is an exclusive right granted for an invention, which is a product or a process that
provides a new way of doing something, or offers a new technical solution to a problem. It
provides protection for the invention to the owner of the patent. The protection is granted for
a limited period, i.e 20 years. Patent protection means that the invention cannot be
commercially made, used, distributed or sold without the patent owner's consent. A patent
owner has the right to decide who may - or may not - use the patented invention for the
period in which the invention is protected. The patent owner may give permission to, or
license, other parties to use the invention on mutually agreed terms. The owner may also sell
the right to the invention to someone else, who will then become the new owner of the patent.
Once a patent expires, the protection ends, and an invention enters the public domain, that is,
2 the owner no longer holds exclusive rights to the invention, which becomes available to
commercial exploitation by others.
b. Trademarks:
A trademark is a distinctive sign that identifies certain goods or services as those produced or
provided by a specific person or enterprise. It may be one or a combination of words, letters,
and numerals. They may consist of drawings, symbols, three- dimensional signs such as the
shape and packaging of goods, audible signs such as music or vocal sounds, fragrances, or
colours used as distinguishing features. It provides protection to the owner of the mark by
ensuring the exclusive right to use it to identify goods or services, or to authorize another to

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use it in return for payment. It helps consumers identify and purchase a product or service
because its nature and quality, indicated by its unique trademark, meets their needs.
Registration of trademark is prima facie proof of its ownership giving statutory right to the
proprietor. Trademark rights may be held in perpetuity. The initial term of registration is for
10 years; thereafter it may be renewed from time to time.
c. Copyrights and related rights:
Copyright is a legal term describing rights given to creators for their literary and artistic
works. The kinds of works covered by copyright include: literary works such as novels,
poems, plays, reference works, newspapers and computer programs; databases; films, musical
compositions, and choreography; artistic works such as 3 paintings, drawings, photographs
and sculpture; architecture; and advertisements, maps and technical drawings. Copyright
subsists in a work by virtue of creation; hence its not mandatory to register. However,
registering a copyright provides evidence that copyright subsists in the work & creator is the
owner of the work.
d. Geographical Indications (GI):
GI are signs used on goods that have a specific geographical origin and possess qualities or a
reputation that are due to that place of origin. Agricultural products typically have qualities
that derive from their place of production and are influenced by specific local factors, such as
climate and soil. They may also highlight specific qualities of a product, which are due to
human factors that can be found in the place of origin of the products, such as specific
manufacturing skills and traditions. A geographical indication points to a specific place or
region of production that determines the characteristic qualities of the product that originates
therein. It is important that the product derives its qualities and reputation from that place.
Place of origin may be a village or town, a region or a country. It is an exclusive right given
to a particular community hence the benefits of its registration are shared by the all members
of the community. Recently the GIs of goods like Chanderi Sarees, Kullu Shawls, Wet
Grinders etc have been registered. Keeping in view the large diversity of traditional products
spread all over the country, the registration under GI will be very important in future growth
of the tribes / communities / skilled artisans associated in developing such products.

Page 28 of 36

CHAPTER 3: MANAGING A NEW ENTERPRISE

Introduction: Manali Bike Rentals was established in 2014, I have started this company just
out of the hobby for riding & when I rode from Manali to Leh-Ladakh I realized that there are
very few competitors in the segment and existent people are not much aware about the hidden
potential in the business. Manali to Leh is hilly region and required bikes like Royal Enfield
350cc and 500cc and the similar ones. We provide A to Z assistance to our customers from
the moment they drop enquiry mail till they return from their tour and thanks to my always
supporting and hardworking staff who checks each and every things minutely so that none of
the customer face any problem throughout the journey.
Bike Rentals Manali Is a Motorbike rental Company. With over 40 bikes none older than 2
years, we have one of the best well maintained motorbikes you can find anywhere in Manali.
We have Motorbikes Such as Royal Enfield Thunderbirds. Classic 350/500, Desert Strom's ,
Bullet 500, Electra, Thunderbird 50's, Ktm Dukes and Soon Bringing in The FIRST
HARLEY DAVIDSON IN HIMACHAL PRADESH ! Yup... We are excited about it. We also
Conduct Motorbike tours to Leh and Spiti Valley. Do Get in Touch with us for all your biking
Need. Thanks all Ride safe and ride hard.
Vision: Manali Bike Rental is established to make riding a heavenly experience for all the
enthusiasts who loves exploring Manali to Leh on bike we make it a lifetime experience for
our customers.
Mission:Our mission is to build and maintain a fleet of Royal Enfield's and its variants for
our clients who are looking for hassle-free rentals for their road trips to be 2 nd best and
having none above us in the segment by providing top class facilities and assistance to our
customers.
Our Core Value
We are a bunch of adventure travelers ourselves and we understand the joys of bike
expeditions. We believe in providing the best-in-class services for our clients who are looking
to explore destinations in India via Royal Enfields.
Our Products and Services
We render services that help motorcycle enthusiasts, adventure holiday travelers and
destination explorers to travel and explore locations via the road medium. We offer different
variants of Royal Enfield for rent, to accompany you on your journey.

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Our Specialisation
We provide showroom condition Royal Enfields which are available for customers to rent for
short trips, weekend getaways or longer road expeditions. We also plan customized trips to
meet your specific needs.
Our services are for those who want to discover and explore. Our customers are people who
look to challenge themselves- doing things they might have not done in the past, who seek
travel experiences that are out of the ordinary, who want to experience and explore places and
not just visit it. The sporty, adventurous explorer who constantly seeks challenges is our kind
of traveler- one who connects with us and our brand.
Why Choose Us?
We personally discusses motorcycle and tour needs of every single customer. This personal
touch of an expert makes us a unique company run by a motorcyclist for motorcyclists. You
will also be pleasantly surprised at the speed of our response and how good our service is.
Some more reasons among others why people choose us....

"Government Licensed company": One of Indias' only Private Limited companies

with government License to rent motorcycles.

"Tax Invoice": We pay service tax hence you get a Tax Invoice for the service.
"Long Experience": Over two decades of experience with thousands and thousands of

satisfied customers from all over the world.

"Fantastic Service:" Our motto has always been great motorcycles and great service.
"One way rentals:" take a motorcycle from almost anywhere to anywhere in India.
"New Motorcycles": We buy new and sell in 5 years. You can choose Fresh 2014
stocks! Royal Enfield 5 speed left shift 500cc Classic EFI bikes. Harley Davidson

Bikes. Honda New Bikes.

"Online Reservations": India's only Rental company where you can select, reserve and

pay online.
"Online Self-care": Login to pay online, upload passport/Visa/DL scans, extend dates
or simply pick some extras.

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Our Fleet
A Royal Enfield is above comparison. There is none other like it. We provide all its variants
to give you a flavour of the best available. We apologize for the dilemma that we are putting
you through. To choose one from four amazing variants is not easy.
Our selection of Royal Enfield comes in the following variants:

The
new
Bullet 500 is essentially the motorcycle
with the timeless iconic handcrafted
design of the legendary Bullet now
powered with a solid 500 cc Unit
Construction Engine with Twin spark
ignition for better combustion, superior power delivery and improved fuel economy. Now
technologically equipped with modern advances in engineering this motorcycle still
maintains its impeccable lineage it has withheld for decades altogether. The iconic Bullet is
now available in an all new shade of Forest Green with the same aristocratic livery pin
striping now in a silver finish symbolic of automotive royalty.

The all
new Royal Enfield Thunderbird now
with a powerful 500 cc engine, a 20
liter tank, digital meter console, LED
tail lamps and in three striking shades
of black gives a new definition to
Highway cruising.
Perhaps one of the most anticipated
models from the Royal Enfield stable, Thunderbird 500 is poised to enhance the pleasure of
leisure motorcycling amongst the touring enthusiasts. Coming from Royal Enfield this
motorcycle with its distinctive "black" styling, this motorcycle is all set to make a distinct
statement on the roads.

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Armed with a potent fuel injected 500cc engine and clothed

in a disarmingly appealing post war styling, this promises to be the most coveted Royal
Enfield in history.
For those who want it all- the power, the fuel efficiency, the reliability and the simple, yet
gorgeous styling. This classic turns heads, not because it wants to but because it can't help it.
You will appreciate the beat not just for the music it creates but also for the muted feeling of
strength and power that it signifies.

you with
Enfield

The Classic Desert Storm comes to

"sand" paint scheme reminiscent of the war era, a time when Royal
motorcycles proved their capabilities and battle worthiness by
impeccable service to soldiers in the harsh conditions of the
desert.

Donning a younger look with styling cues one would

expect only from a genuine Royal Enfield: single
cylinder air-cooled pushrod engine, 1950s style
nacelle and toolboxes, traditional paint scheme and
buffed engine components, this motorcycle is all set to
bring you the pleasures of modern motorcycling while reflecting the aura of eternal classic
styling.

All our tours

We understand your needs and design the trips best suited to your convenience. We wish we
could list down all, but to give you a flavor as to what we offer a few handful itineraries are
as mentioned below

Ladakh Expedition (amateur rider) 8N / 9D

Ladakh Expedition (experienced rider) 12N / 13D

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Ladakh Expedition (professional rider) 14N / 15D

Terms & Conditions

1. The driver should have valid driving license and should be at least 21 years old.
2. All rates excludes fuel.
3. A refundable deposit of 3000 to 18000 is required along with photo id proof of the
driver.
4. Bike comes with third party insurance. Any damage done within the period of the bike
is to be borne by the Hirer, unless if its any problem with engine.
5. The rented bike shall be return back to our main office in Manali in the same
condition in which it was hired.
6. If you want to drop bike in some other location please look at out One way deals.
7. MINIMUM RENTAL PERIOD FOR LEH IS 7 DAYS FOR ONE WAY DEALS AND
9 DAYS FOR ROUND TRIPS.
8. The hirer shall use the bike entirely at his own risk and agrees that we will not accept
any responsibility or be held accountable for any loss, injury, theft or death as a result
of, or leading from the hire of any of the bikes by any person.
9. Bikes are supposed to be returned the same day before 8 pm if rented for 1 day.
10. The driver must always wear a helmet.
11. To book the bike 40% of the amount is required. The rest of the amount is to be paid
at the time when you collect the bike.
12. If the motorbike is returned before stipulated time, then the amount would be charged
for the same number of days agreed upon in the contract.
13. The hirers signature of the rental agreement will indicate: that our terms and
conditions of business are understood and accepted by the hirer. That the bike being
hired is safe to use and in good working conditions.

Page 33 of 36

Sources of Funds:
Capital is the life blood for any business and to start the business we required it as well and
being the sole proprietor I have invest everything from my personal savings and no loan from
any bank or person is taken to keep business free from debt.
Sources of Funds.
Owners Fund

(In Rupees)
25,00,000

Fixed Capital:
We dont require much of fixed capital in business due to nature of business.
Working Capital:
As its the first year of business we are keeping aside
Startup requirement:
1. We have purchased brand new 8 bikes out of which 6 will be given to customer on
rent and 2 will be used as back up vehicle.
2. Garage has been set up with the team of 7 experienced mechanics.
3. Website has been launched for promotional activities.
4. Tie up with travel agents of Manali.
5. License has been obtained from HP government to run business.
6. We have also tie ups with transporter supplying goods to Leh-Ladakh.

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Financial Statements:
Income & Expenditure Account as on 31-3-2015 (estimated)
Income:

Amount
Rs.

Revenue

12,00,000

Total

12,00,000

Expenses:
Rent paid (10,000 x 12)
Insurance
Advertising expenses
Salary to staff
Fuel
Stationery expenses
Electricity charges (1,000 x 12)
Telephone charges (1,500 x 12)
Travelling & transportation
News paper & magazine (250 x 12)
Water Charges (250 x 12)

1,20,000
24,000
25,000
5,82,000
40,000
5,000
12,000
18,000
56,000
3,000
3,000

Total
Profit
Capital Account As on 31-3-2015( estimated)

(8,88,000)
3,12,000

Particulars
Drawings

Rs.
1,20,000

Profit B/f

Particulars

Rs.
3,12,000

Balance c/f
Total

1,92,000
3,12,000

Total

3,12,000

Balance sheet as on 31-3-2015 (Estimated)

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in

Particulars

Amount
Rs.

Assets
Current Assets
Cash
Prepaid Expenses
Total Current Asset

8000
7000
15,000

Fixed Assets
Bike
Furniture & Fixtures

15,00,000
50,000

Tools & Machinery

Total Net Fixed Assets
Total assets

40,000
15,90,000
16,05,000

Liabilities
Current liabilities
Accounts Payable
Other Payables
Total Liabilities
Total Capital
Total Liabilities

10,000
2,000
12,000
1,92,000
2,04,000

Owners Equity
Total Liabilities & Owners Equity

14,01,000
16,05,000

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in