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 corporation’s balance sheet.

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Capital structure refers to a company’s 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 company’s 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 company’s 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. Government–sponsored 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 entrepreneur’s 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 company’s 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 startup’s 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 firm’s 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.

Government–sponsored 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

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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.

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.

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(4) Return on Investment-ROI:

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.

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(10) Flexibility:

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 above-

mentioned 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 company’s 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.

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(13) Stock Market Conditions:

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 company’s 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

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corporations will likely have more access to credit and capital opportunities, and will opt to

implement those into their capital structure.

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: 

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1. Financial Leverage or Trading on Equity:

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 company’s 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 company’s earnings is higher than the rate of interest on debentures and the

rate of dividend on preference shares.

(ii) The company’s 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 company’s 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 ASSISTANCE FOR STRENGTHENING OF TRAINING

INFRASTRUCTURE OF EXISTING AND NEW 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-MSME’s programmes are designed to have universal relevance for

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successfully training the entrepreneurs to face challenges and emerging competition in the

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-MSME’s 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-9001-

2000 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.

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NATIONAL INSTITUTE FOR ENTREPRENEURSHIP AND SMALL

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

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

don’t opt for venture funding but try to go with funding from small to medium business

people. Many such non technical business people don’t 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.

c. Raw materials industry:

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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 day’s 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 self-

employment 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.

h. Dairy business:

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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 one’s 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.

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

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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.

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.

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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

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.

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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 it’s 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.

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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 2nd 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 India’s' 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.

The Classic Desert Storm

comes to you with a "sand" paint scheme reminiscent of the war era, a time when Royal Enfield 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

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Ladakh Expedition (amateur rider) 8N / 9D Ladakh Expedition (experienced rider) 12N / 13D 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 it’s 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 hirer’s 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.

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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.

Fixed Capital:

We don’t require much of fixed capital in business due to nature of business.

Working Capital:

As it’s 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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Sources of Funds. (In Rupees)Owners Fund 25,00,000

Financial Statements:

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

Income: Amount in Rs.

Revenue 12,00,000

Total 12,00,000

Expenses:

Rent paid (10,000 x 12) 1,20,000

Insurance 24,000

Advertising expenses 25,000

Salary to staff 5,82,000

Fuel 40,000

Stationery expenses 5,000

Electricity charges (1,000 x 12) 12,000

Telephone charges (1,500 x 12) 18,000

Travelling & transportation 56,000

News paper & magazine (250 x 12) 3,000

Water Charges (250 x 12) 3,000

Total (8,88,000)

Profit 3,12,000

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

Particulars Rs. Particulars Rs.Drawings 1,20,000 Profit B/f 3,12,000

Balance c/f 1,92,000Total 3,12,000 Total 3,12,000

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

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Particulars Amount in Rs.

AssetsCurrent AssetsCash 8000Prepaid Expenses 7000Total Current Asset 15,000

Fixed AssetsBike 15,00,000Furniture & Fixtures 50,000

Tools & Machinery 40,000Total Net Fixed Assets 15,90,000Total assets 16,05,000

LiabilitiesCurrent liabilitiesAccounts Payable 10,000Other Payables 2,000Total Liabilities 12,000Total Capital 1,92,000Total Liabilities 2,04,000

Owners Equity 14,01,000Total Liabilities & Owners Equity 16,05,000

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