Current changes in provisions of debentures & shares

Hi students there are current changes in  debentures & shares :

Requirements of creation of debenture redemption reserve under companies Act 2013

Category of companies	Amount of debenture redemption reserve to be maintained
All India financial institutions regulated by RBI & banking companies.	No DRR is required for both public as well as privately placed debentures.
Other financial institutions within the meaning of section 4A.	25 % of the value of debenture issued through public issue. No DRR is required for privately placed debentures.
Non banking financial companies (NBFC) registered with RBI under section 45-IA of the RBI(Amendment ) Act 1997	25 % of the value of debenture issued through public issue. No DRR is required for privately placed debentures.
Other companies including manufacturing & infrastructure companies .	25 % of the value of debenture issued through public issue. 25 % of the value of debenture issued through private placement by listed and unlisted companies.

Rules regarding debenture redemption fund investment :

In addition to imposing the condition of creation of a DRR by every company for every issue of debentures; whether public or privately placed, the Circular 2013 further requires every such company to park, on or before 30^th day of April each year, a sum of at least 15% of the amount of its debentures, maturing during the year ending on the 31^st day of March next following, in any one or more of the following methods:

1. in deposits with any scheduled bank, free from charge or lien;
2. in unencumbered securities of the Central Government or of any state government;
3. in unencumbered securities mentioned in clauses (a) to (d) & (ee) of Section 20 of the Indian Trusts Act, 1882;
4. in unencumbered bonds issued by any other company which is notified under clause (f) of Section 20 of the Indian Trusts Act, 1882.

The money so parked can be utilized only for the purpose of repayment of debentures maturing during the year. The amount remaining deposited/ invested shall not at any time fall below 15% of the amount of debentures maturing during that year ending 31^stMarch.

The unclear language of Circular 2013 mandates not only every company; whether listed or unlisted, private or public, to create a DRR for their issues; whether public or private, listed or unlisted, it also imposes a stringent condition of parking a sum equal to 15% of the value of debentures maturing during the year separately in the beginning of the year itself.

Important of financial statement analysis:

1.       Holding Of Share
Shareholders are the owners of the company. Time and again, they may have to take decisions whether they have to continue with the holdings of the company's share or sell them out. The financial statement analysis is important as it provides meaningful information to the shareholders in taking such decisions.
2. Decisions and Plans
The management of the company is responsible for taking decisions and formulating plans and policies for the future. They, therefore, always need to evaluate its performance and effectiveness of their action to realise the company's goal in the past. For that purpose, financial statement analysis is important to the company's management.
3. Extension of Credit
The creditors are the providers of loan capital to the company. Therefore they may have to take decisions as to whether they have to extend their loans to the company and demand for higher interest rates. The financial statement analysis provides important information to them for their purpose.

4. Investment Decision
The prospective investors are those who have surplus capital to invest in some profitable opportunities. Therefore, they often have to decide whether to invest their capital in the company's share. The financial statement analysis is important to them because they can obtain useful information for their investment decision making purpose.

Meaning of share:

 Section 2(84) of the Companies Act, 2013 (hereinafter referred to as Act) “share” means a share in the share capital of a company and includes stock. It represents the interest of a shareholder in the company, measured for the purposes of liability and dividend. It attaches various rights and liabilities.

 Categories of Share Capital

 Share capital of the company can also be sub divided into following categories-

Authorized Capital– As per section 2(8) of Companies Act, 2013 “authorized capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;
Means Authorized or Nominal Capital is that amount of Capital upto which Company can issue its capital.

Issued Capital– As per section 2(50) of the Companies Act,2013″issued capital” means such capital as the company issues from time to time for subscription;
In simple words issued capital is that part of capital which have been issued for subscription.

Subscribed Capital- Section 2(86) of the Companies Act,2013 defines Subscribed Capital as such part of capital which is for the time being subscribed by the members of the Company. Means it is that part of issued capital which has been subscribed.

Paid up Capital– Section 2(64) of the Companies Act, 2013 provides “paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;

Definition of Company:

Section 2(20) of the 2013 Act defines the term “company” to mean “a company incorporated under the Companies Act 2013 or any previous company law.” Accordingly, a company, which is incorporated under the relevant legislation of a foreign country, will not qualify as a “company” under the 2013 Act The proviso to section 2(71) states that “a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act.”

Definition of Private Company:

Section 2(87) defines the terms “subsidiary” in relation to any other company. The sub-section states that for the purposes of such definition, the expression company includes “body corporate”

Definition of company limited by shares:

As per section 2(22) of companies Act 2013  “company limited by shares” means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

Definition of company limited by guarantee:

As per section 2(21) of companies Act 2013 “company limited by guarantee” means a company having the liability of its

members limited by the memorandum to such amount as the members may respectively

undertake to contribute to the assets of the company in the event of its being wound

up;

Definition of unlimited liability company:

As per section 2(92) of companies Act 2013 “unlimited company” means a company not having any limit on the liability

of its members;

Types  of share capital :

Equity Share Capital Section 43 of the Act provides that the share capital of a company limited by shares shall be of two kinds:

(a)    equity share capital— (i) with voting rights; or SHARE CAPITAL AND DEBENTURES 1 2 Share Capital and Debentures (ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and (b) preference share capital: ‘‘Equity share capital’’,

(b)   With reference to any company limited by shares, means all share capital which is not preference share capital. As per section 43 (a) equity share capital may be divided on the basis of voting rights and differential rights(DVR) as to dividend, voting rights or otherwise according to the rules

Preference Share Capital:  The other type of share capital is the “Preference share capital”. According to section 55 of the Act, a company limited by shares cannot issue any preference shares which are irredeemable. However a company limited by shares may, if so authorized by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue.

Section 52 (2) of companies Act 2013 Application of premiums received on issue of shares:

1. Transfer a sum equal to the aggregate premium amount as received to "securities premium account"; 2. The provisions relating to reduction of share capital of a company (under companies act) shall be applicable as if the securities premium account was the paid-up share capital of the company; 

3. The company may use the securities premium account for the following purposes.

Bonus shares: Paying up unissued equity shares of the company to be issued to members of the company as fully paid bonus shares; or

Writing off: Writing off expenses / commission paid / discount allowed on any issue of equity share capital or Writing off the preliminary expenses of the company.

Providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company;

Buy-back: Purchasing its own shares / other securities (under section 68).

Section 53 of companies Act 2013 issue of shares at discount:

Prohibition on issue of shares at discount.

1.     Except as provided in section 54, a company shall not issue shares at a discount.

2.     Any share issued by a company at a discounted price shall be void.

3.     Where a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

Minimum Subscription:

The Securities and Exchange Board of India (Sebi) has prescribed a minimum subscription requirement for public issues of debt securities of 75 per cent of the offer, below which no allotment of debt securities should be made.

The issuer of equity share capital is at present required to make a declaration about the refund of the issue, if the minimum subscription of 90 per cent of the issue size is not received. However, for public issue of non-convertible debentures (NCDs), no such requirement is specified under Companies Act, 1956.

Further, existing SEBI ILDS Regulations (Regulation 12 of SEBI Issue and Listing of Debt Securities Regulations, 2008), allows the issuer to decide the amount of minimum subscription, which it seeks to raise from public through issue of NCDs and disclose the same in the offer document.

Companies Act, 2013 and (draft) Rules made under it also do not specify the quantum of minimum subscription needed in case of public issues (both for equity and debt), but only requires disclosure of the same in the offer document.

Current changes in syllabus class 12

Hi students there are current changes in  debentures & shares :

Requirements of creation of debenture redemption reserve under companies Act 2013

Category of companies	Amount of debenture redemption reserve to be maintained
All India financial institutions regulated by RBI & banking companies.	No DRR is required for both public as well as privately placed debentures.
Other financial institutions within the meaning of section 4A.	25 % of the value of debenture issued through public issue. No DRR is required for privately placed debentures.
Non banking financial companies (NBFC) registered with RBI under section 45-IA of the RBI(Amendment ) Act 1997	25 % of the value of debenture issued through public issue. No DRR is required for privately placed debentures.
Other companies including manufacturing & infrastructure companies .	25 % of the value of debenture issued through public issue. 25 % of the value of debenture issued through private placement by listed and unlisted companies.

Rules regarding debenture redemption fund investment :

In addition to imposing the condition of creation of a DRR by every company for every issue of debentures; whether public or privately placed, the Circular 2013 further requires every such company to park, on or before 30^th day of April each year, a sum of at least 15% of the amount of its debentures, maturing during the year ending on the 31^st day of March next following, in any one or more of the following methods:

1. in deposits with any scheduled bank, free from charge or lien;
2. in unencumbered securities of the Central Government or of any state government;
3. in unencumbered securities mentioned in clauses (a) to (d) & (ee) of Section 20 of the Indian Trusts Act, 1882;
4. in unencumbered bonds issued by any other company which is notified under clause (f) of Section 20 of the Indian Trusts Act, 1882.

The money so parked can be utilized only for the purpose of repayment of debentures maturing during the year. The amount remaining deposited/ invested shall not at any time fall below 15% of the amount of debentures maturing during that year ending 31^stMarch.

The unclear language of Circular 2013 mandates not only every company; whether listed or unlisted, private or public, to create a DRR for their issues; whether public or private, listed or unlisted, it also imposes a stringent condition of parking a sum equal to 15% of the value of debentures maturing during the year separately in the beginning of the year itself.

Important of financial statement analysis:

1.       Holding Of Share
Shareholders are the owners of the company. Time and again, they may have to take decisions whether they have to continue with the holdings of the company's share or sell them out. The financial statement analysis is important as it provides meaningful information to the shareholders in taking such decisions.
2. Decisions and Plans
The management of the company is responsible for taking decisions and formulating plans and policies for the future. They, therefore, always need to evaluate its performance and effectiveness of their action to realise the company's goal in the past. For that purpose, financial statement analysis is important to the company's management.
3. Extension of Credit
The creditors are the providers of loan capital to the company. Therefore they may have to take decisions as to whether they have to extend their loans to the company and demand for higher interest rates. The financial statement analysis provides important information to them for their purpose.

4. Investment Decision
The prospective investors are those who have surplus capital to invest in some profitable opportunities. Therefore, they often have to decide whether to invest their capital in the company's share. The financial statement analysis is important to them because they can obtain useful information for their investment decision making purpose.

Meaning of share:

 Section 2(84) of the Companies Act, 2013 (hereinafter referred to as Act) “share” means a share in the share capital of a company and includes stock. It represents the interest of a shareholder in the company, measured for the purposes of liability and dividend. It attaches various rights and liabilities.

 Categories of Share Capital

 Share capital of the company can also be sub divided into following categories-

Authorized Capital– As per section 2(8) of Companies Act, 2013 “authorized capital” or “nominal capital” means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of the company;
Means Authorized or Nominal Capital is that amount of Capital upto which Company can issue its capital.

Issued Capital– As per section 2(50) of the Companies Act,2013″issued capital” means such capital as the company issues from time to time for subscription;
In simple words issued capital is that part of capital which have been issued for subscription.

Subscribed Capital- Section 2(86) of the Companies Act,2013 defines Subscribed Capital as such part of capital which is for the time being subscribed by the members of the Company. Means it is that part of issued capital which has been subscribed.

Paid up Capital– Section 2(64) of the Companies Act, 2013 provides “paid-up share capital” or “share capital paid-up” means such aggregate amount of money credited as paid-up as is equivalent to the amount received as paid up in respect of shares issued and also includes any amount credited as paid-up in respect of shares of the company, but does not include any other amount received in respect of such shares, by whatever name called;

Definition of Company:

Section 2(20) of the 2013 Act defines the term “company” to mean “a company incorporated under the Companies Act 2013 or any previous company law.” Accordingly, a company, which is incorporated under the relevant legislation of a foreign country, will not qualify as a “company” under the 2013 Act The proviso to section 2(71) states that “a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act.”

Definition of Private Company:

Section 2(87) defines the terms “subsidiary” in relation to any other company. The sub-section states that for the purposes of such definition, the expression company includes “body corporate”

Definition of company limited by shares:

As per section 2(22) of companies Act 2013  “company limited by shares” means a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them;

Definition of company limited by guarantee:

As per section 2(21) of companies Act 2013 “company limited by guarantee” means a company having the liability of its

members limited by the memorandum to such amount as the members may respectively

undertake to contribute to the assets of the company in the event of its being wound

up;

Definition of unlimited liability company:

As per section 2(92) of companies Act 2013 “unlimited company” means a company not having any limit on the liability

of its members;

Types  of share capital :

Equity Share Capital Section 43 of the Act provides that the share capital of a company limited by shares shall be of two kinds:

(a)    equity share capital— (i) with voting rights; or SHARE CAPITAL AND DEBENTURES 1 2 Share Capital and Debentures (ii) with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed; and (b) preference share capital: ‘‘Equity share capital’’,

(b)   With reference to any company limited by shares, means all share capital which is not preference share capital. As per section 43 (a) equity share capital may be divided on the basis of voting rights and differential rights(DVR) as to dividend, voting rights or otherwise according to the rules

Preference Share Capital:  The other type of share capital is the “Preference share capital”. According to section 55 of the Act, a company limited by shares cannot issue any preference shares which are irredeemable. However a company limited by shares may, if so authorized by its articles, issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue.

Section 52 (2) of companies Act 2013 Application of premiums received on issue of shares:

1. Transfer a sum equal to the aggregate premium amount as received to "securities premium account"; 2. The provisions relating to reduction of share capital of a company (under companies act) shall be applicable as if the securities premium account was the paid-up share capital of the company;

3. The company may use the securities premium account for the following purposes.

Bonus shares: Paying up unissued equity shares of the company to be issued to members of the company as fully paid bonus shares; or

Writing off: Writing off expenses / commission paid / discount allowed on any issue of equity share capital or Writing off the preliminary expenses of the company.

Providing for the premium payable on the redemption of any redeemable preference shares or of any debentures of the company;

Buy-back: Purchasing its own shares / other securities (under section 68).

Section 53 of companies Act 2013 issue of shares at discount:

Prohibition on issue of shares at discount.

1.     Except as provided in section 54, a company shall not issue shares at a discount.

2.     Any share issued by a company at a discounted price shall be void.

3.     Where a company contravenes the provisions of this section, the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees and every officer who is in default shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees, or with both.

Minimum Subscription:

The Securities and Exchange Board of India (Sebi) has prescribed a minimum subscription requirement for public issues of debt securities of 75 per cent of the offer, below which no allotment of debt securities should be made.

The issuer of equity share capital is at present required to make a declaration about the refund of the issue, if the minimum subscription of 90 per cent of the issue size is not received. However, for public issue of non-convertible debentures (NCDs), no such requirement is specified under Companies Act, 1956.

Further, existing SEBI ILDS Regulations (Regulation 12 of SEBI Issue and Listing of Debt Securities Regulations, 2008), allows the issuer to decide the amount of minimum subscription, which it seeks to raise from public through issue of NCDs and disclose the same in the offer document.

Companies Act, 2013 and (draft) Rules made under it also do not specify the quantum of minimum subscription needed in case of public issues (both for equity and debt), but only requires disclosure of the same in the offer document.

New Project guidelines

The Board has introduced Project Work in Accounting for Class-XII in the Optional Part B :

'Financial Statement Analysis'. It is expected that the Project Work will help the students in

developing the skills to comprehend, analyse and interpret accounting data of the business

firms and make it meaningful for taking business decisions.

Project Work

Duration: 1 Hour 30 Minutes Marks: 20

Unit-1 Project file 4 Marks — As per requirement (given below)

Unit-2 Written Test 12 Marks — One hour

Unit-3 Viva Voce 4 Marks — As per requirement (given below)

Objectives

 To enable a student to complete the accounting process in real life business situations and

apply the tools of analysis as per the syllabus for a comprehensive project.

 To develop the competence of reading accounting data from quarterly or half yearly or

annual reports of business firms and interpreting the information on the basis of given

guidelines to present the desirable information in required format in the Project File for

Specific Projects.

Guidelines

During the academic session the students will work on at least three types of projects out of

which one will be of Comprehensive nature. The comprehensive project will involve the

students from the initial stage of accounting to the preparation and analysis of financial

statements. The data provided or the Project Statement will be as close to the real life situations as possible. The project statement should cover all important aspects like investments, financing, operating, adjustments to final accounts, etc. in a condensed form. The situations given in these problems will require a student to derive meaningful conclusion for taking decisions for the purposes of investment, expansion, financing, etc.

Two projects will be of specific nature using at least one tool of analysis in each. The data for these will be drawn mainly from quarterly or half yearly or annual reports of corporate sector.

Students will analyze the information given in the financial statements as follows :

a) Performance of Segments keeping in mind their three parameters Revenue, Net Profit and Capital Employed of companies on quarterly or half yearly or annual basis. This is widely published and reported by the companies. It can be picked up either from the newspapers or from the websites of the companies.

b) Comparison of Revenue, Net Profit and Earning Per Share (EPS) on quarterly or half yearly or annual basis with the help of comparative or common size statements.

The Projects given in these guidelines are on sample areas of business activities like Segment Reporting, etc. The teachers and students are free to explore more such areas of business activities for specific projects.

There are four tools of analysis given in the syllabus for the analysis of Financial Statements,

namely (i) Comparative Statement, (ii) Common Size Statements, (iii) Ratios and (iv) Cash Flow Statement. Any one or more of these tools are to be used to derive conclusions. No project is to be prepared on the tools, but these tools are to be used to achieve the object of the project. For instance, there will not be any project on the 'Ratios' as such, but ratios will be used in the development of the project to reach a conclusion.

Scope

For the purpose of Project Work, the following ratios will be included :

Liquidity Ratios : Current Ratio, Liquidity Ratio.

Solvency Ratios : Debt to Equity; Total Assets to Debt, Proprietary Ratio.

Activity Ratios : Inventory Turnover, Debtors Turnover, Payable Turnover, Working

Capital Turnover, Fixed Assets Turnover, Current Assets Turnover.

Profitability Ratio : Gross Profit Ratio, Operating Ratio, Net Profit Ratio, Return on

Investment, Earning Per Share – Price Earnings Ratio.

A few projects have been given in detail at the end of the guidelines for practice. The student is expected to analyze the facts, and present the information in a meaningful manner for interpretation. Teachers are expected to discuss these problems thoroughly with the students and encourage them to come out with solutions. They are also expected to collect the quarterly or half yearly or annual Segment reports and Revenue and Net Profit reports of companies from newspapers or from the websites of the companies and formulate their own problems for project work.

                                      UNIT-1: PROJECT FILE

Students will prepare a Project File to record their work related to the problems attempted by them in the following format :

1. First page of the file should describe title of work, identity of student, school, and the

teacher concerned.

2. Index to indicate columns for title of work, page no., date, teacher's remarks and

signature.

3. The format for Project Work will be :

 Statement of the problem/Name of the Project

 Objectives

 Period of Study

 Source Material

 Tools of Analysis used

 Processing and Tabulation of data

 Diagrammatic/graphic presentation- pie-diagrammes, bar diagrammes and graphs.

 Derivations, Interpretation and Conclusion.

 Assumptions (if any)

Project File should be neatly handwritten and presentable with page numbers. Each step of the

solution needs to be highlighted. Conclusions drawn should be placed in boxes at the end.

UNIT-2: WRITTEN TEST

 To give them exposure to analyse the financial statements of business firms and help them

derive meaningful information and conclusions therefrom.

 To know how effectively the students can derive conclusions and express them.

Guidelines for Teachers

Teachers will discuss with students the sample questions for this test and develop question

papers for the purpose in their house examinations. Some sample questions are given in this

booklet.

Guidelines for Examiners

Students will be given 2 application-oriented problems of 6 marks each covering the tools for

analysis of financial statements. The question paper will be set in consultation with the school

teacher. No question similar to the question given in the 3 hour question paper of the Board,

should be asked here. Only such questions, relating to financial statements of companies should

be asked which encourage thinking on practical lines. A question bank is given in this booklet

for reference. The external examiner will discuss with the internal examiner all the projects

completed during the year and set the questions accordingly. On the day of the examination

both should come prepared with at least 10 questions each. Both the internal and external

examiners must agree on the nature and scope of questions asked. It must be ensured that

multiple sets of papers are prepared. Marks will be awarded on the steps taken, data identified & solution arrived .

                                                         PROJECT NO. 1

                                                  PROJECT STATEMENT  

M/s Sunil Computers

Rahul and Manoj are two brothers. Rahul was interested in computers and often found time to work on computer. Due to his keen interest in computers and its applications made him to take up computer software subject for his degree course. On the other hand Manoj's core interest was in sitting at his father's shop nearby at market place selling electrical appliances after college hours.

Their father Mr. Sunil was happy that Manoj showed interest in his business, but was so

worried about the brothers drifting apart after college due to varied interests. Mr. Sunil decided that this is the time for him to intervene and make decisions for them. He felt that the interest of his two sons be put together and they could start a flourishing business of their own – Sunil Computers.

The boom in the Information Technology (IT) Industry made him find ways to satisfy his sons'dreams.

Finally he decided to start a computer business for both his sons. He asked Manoj, commerce graduate to draw up a proposal for the same.

Manoj came out with the following:

The area they lived in and run shop consisted of middle income group families and many of

them did not possess computers at home.

Their shop could be used to provide the following services :

 Computer classes for various age groups.

 Computer using facilities on payment per hourly basis and printing of documents from

computers.

 Internet access facilities at the prevailing market rates by entering into contract with the

Videsh Sanchar Nigam Limited (VSNL).

 Computer game corner for children.

The shop they had in the market place was a single story building. 

On 1  April, 2014, Rahul and Manoj borrowed ` 1,75,000/- each from their father and introduced it as their capital in the firm. They brought in capital as follows : ` 10,000/- each in cash ` 1,65,000/- each by cheque.

They constructed first floor of the building owned by their father spending ` 1,00,000. They put up their proposal to the bank and managed to get the bank loan of ` 3,00,000.

                                                SPECIFIC PROJECTS

Segments are (i) The products of a company like Alto, Dezire and Gypsy of Maruti. (ii) The

area of operation of a company like Consumer Care Business, Food Business and Personal Care Business of Dabur and Passenger transport, Goods transport of a Transport Company. (iii) The Geographical areas served by a service company like Northern Railway, Eastern Railway and Western Railway, etc. of Indian Railways.

It is mandatory for companies to report the progress of each segment as per AS-17 issued by

the Council of The Institute of Chartered Accountants of India since April 1, 2001. It ensures

full disclosure about the revenue from each segment, the profit from each segment and the

amount of capital allocated to each segment. These reports are on quarterly, half yearly and

annual basis. Thus, every segment gets full attention of the management and the shareholders

also come to know the financial position of each segment. It is, required for true and fair

disclosure as well.

Two specific projects on Performance of Segments are presented here :

i) On segments of Prakash Industries Ltd. and

ii) On segments of Dabur India Ltd.

Segment reporting is only one area of business reports. The students should explore more such areas from the company reports for relevant specific projects. For the sake of practice and exercise the students should visit the company's websites and check the quarterly reports for segment performance. This will be the source material for the projects.

 

                           PROJECT ON SEGMENT ANALYSIS-I

 Analysis of Performance of each segment of Prakash Industries Limited with reference to

 1. Revenue,

 2. Profit and

 3. Capital employed

2. Objectives:

 To study whether the contribution of various segments of Prakash Industries Limited

with respect to (i) Revenue, and (ii) Profit, is justified ?

 To know as to which operation segment is performing best in terms of Net Profit and

Return on Investment.

3. Period Under Study:

 Financial Year ending 31

4. Tools of Analysis: 

st

 1. Common Size Statement and

 2. Ratios

5. Source Material: 

 March, 2007

 Newspaper cutting of Audited Financial Results of Prakash Industries Limited from the

Economic Times dated 2 nd  August, 2007 or the Website of the company.

6. Processing of Data :

I. Common Size Statement of Segment Wise Revenue

 Compare the Revenue from Operations of each segment of Prakash Industries with

TOTAL REVENUE for the year ended 31 March 2007.

 Use the formula =

Degree =  Revenue of the segment  X 100 / Total Revenue

Common size Statement Showing Inter-Segment Comparison of Revenue

For the year ended 31 March, 2007

Segment Power Steel PVC Pipes Others Total

Revenue (`) 12755 94901 6497.00 3079 117232

Percentage of Total Revenue (%) 10.88 80.95 5.54 2.63 100

Degrees for Pie Diagram 39.17° 291.43° 19.95° 9.45° 360°

Source: The Economic Times 2nd

 August, 2007

II. Common Size Statement of Segment Wise Profit

 Compare the PROFIT of each segment of Prakash Industries Limited with TOTAL

PROFIT for the year ended 31 March, 2007.

 Use the formula to calculate percentage and degrees for making pie diagram.

  Percentage =

  Degrees =

Pie Chart Representing Segment Revenue

291.43°

19.95°

9.45°

Profit of the segment

´

100

Total Profit

Profit of the segment

360

Total Profit

´

39.17°

Power

Steel PVC Pipes

Others

Commonsize Statement Showing Inter Segment Comparison of Profit

For the year ended 31 March, 2007

Segment Power Steel PVC Pipes Others Total

Profit (`) (in lakhs) 6506 7985 901 272 15664

BUSINESS ENVIRONMENT

1.

Mr. Prasanth Gupta is the owner and manager of a grocery store. He attended a management seminar. The topic was on globalization and impact of technology on business. He was shocked by many television ads and mailers to see different opportunities available on the internet for his expansion. To upgrade the technology in his business outside the city and he feels internet does not have any application to the retail industry. What should Mr. Prasanth do to avoid any negative impact of the changes in business environment? By adopting technological environment what values Mr. Prasanth can exhibit in his business?

1. Responsibility to use resources

Care for his customers

Adaptability

Commitment to serve the stakeholders in a better manner.

2. Decline in interest rates on housing loans declared by RBI. Name the component of business environment. What values we inculcated by this component of business environment?

Context: Economic environment Values:

Rising standard of   living.

Economic development.

Distribution of wealth.

Encouragement of middle class sections.

3. Alcohol beverages are prohibited to be advertised on media’. Which component of 

general environment prohibits advertise? What values are boosted by the government?

Welfare of the family/society, Protection, care for the society, Reduction of prevalent social evil

A biding the law.

4. The government restricted the use of LPG cylinders to only nine per family per year. Name the dimension of business environment highlighted in the above. Explain the dimension. What is the value hereby elicited by the government? Economic Environment

Encouraging the use of alternate resources.

Economically usage of commodities

Proper utilization of scarce resources

To be conscious to live within limited budget of available commodities

5. Demand for reservation in jobs for minorities’.

Identify the type of dimension of business environment. State the values promoted in the above case.

Social Environment Preferences to minority section

Improve their standard of living Being considerate Equality

6. Male CEO's are most preferred for all type of organization.

Don’t you think female?

Executive need to have a fair chance? If so give valuable suggestions.

(a) Women empowerment. Equality recognizing the talent.