Corporate digest magazine august, 2017 by venture care

WHY STARTING A BUSINESS AS

CONSEQUENCES FOR NOT COMPLYING

CHALLENGES AND THE WAYS OUT

PRIVATE LIMITED COMPANY

WITH ANNUAL FILING WITH THE

FOR BUSINESS VALUATION MODELS

IS NOT A GOOD IDEA

REGISTRAR OF COMPANIES

- (Special Story)

- (Legal & Compliances)

- (Finance)

Venture Care

Digest

Strategy | Finance | Digital | Legal

MAGAZINE

THE SMARTEST WAY TO STARTING AN ONLINE BUSINESS IN INDIA - (Strategy)

August 2017 INR 150/www.venture-care.com

Index

Index 3

Editorial Special Story WHY STARTING A BUSINESS AS PRIVATE LIMITED COMPANY

4

IS NOT A GOOD IDEA

Legal & Compliance CONSEQUENCES FOR NOT COMPLYING WITH ANNUAL FILING WITH THE

6

REGISTRAR OF COMPANIES EMPLOYEE STOCK OPTIONS (ESOPS ) – BENEFICIAL TO EMPLOYER AS WELL

11

AS EMPLOYEE GUIDE ON FAST TRACK EXIT SCHEME- ALL YOU NEED TO KNOW

13

PROFESSIONAL GUIDE ON APPOINTMENT OF FIRST AUDITOR

18

Finance CHALLENGES AND THE WAYS OUT FOR BUSINESS VALUATION MODELS

20

Indian Funding Update INDIAN STARTUP FUNDING AND INVESTMENT CHART [JULY 2017]

23

Strategy THE SMARTEST WAY TO STARTING AN ONLINE BUSINESS IN INDIA

27

8 STEP PROCESS FOR NEW PRODUCT DEVELOPMENT

29

HOW TO SETUP A FOREIGN COMPANY BUSINESS IN INDIA

31 34

WHY SHOULD YOU DO THE FEASIBILITY ANALYSIS BEFORE KICKING-OFF A BUSINESS IDEA

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Editorial

A

gentleman used to walk every day in a park. He saw that a beggar used to come every day and sit in front of the gate of park keeping a bowl on a box.

One day, the gentleman asked the beggar that what is inside the box. The beggar did not reply. The very next day the person asked the same. The beggar, getting irritated, re p l i e d t h a t h e h ad fo u n d t h e b ox somewhere along the road side and he did not have any idea that what was inside. The gentleman suggested him to open the box and check. The beggar said there must not be anything inside. The person insisted. The beggar opened the box. There were gold and diamond.

Moral of this “we don't believe in our gold and diamond which are hidden within us�. We need to explore. Youth of India must recognize this fact.

Prashant Kumar

Editor

Indian population also should know their potential and leave heard following mind set.

Jumping on the same boat may be good but innovation is required at every place.

August 2017 edition of magazine is dedicated to legal aspects of business with some strategic inputs.

Giving a legal structure to business is required. But which structure is best. You will understand that what are the pros and cons of being private limited company. Many companies especially start-up companies are sometimes careless in filing with ROC which has severe repercussions. Company wants to reward their employees. The article discusses that how it is beneficial for companies and employees both. The legal article contains that how an unmanageable company can be closed without HC procedure. It a fast track exit scheme. You will enjoy reading that who can become the first auditor of the company and what is the procedure. Whenever there is transaction there is need for valuation. There are many valuation models adopted by the valuer but each valuation model has some challenges. The article discusses those challenges and the way out to overcome.

Happy Reading...

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Special Story

WHY STARTING A BUSINESS AS PRIVATE LIMITED COMPANY IS NOT A GOOD IDEA

Private Limited Company is an ideal Business entity for a majority of medium and large sized business, as it offers advantages from Liability protection to easy transferability.

However operating...

Private Limited Company is an ideal Business entity for a majority of medium and large sized

Limit on Maximum number of Shareholders:

Here is the list –

To incorporate a private limited company, a minimum of two shareholders are required. A minimum of two shareholders and a maximum of up to 200 shareholders are allowed in a private limited company. The shareholders could be natural persons or companies, including foreign companies. There is no such limit on a maximum number of shareholder/ members in case of proprietorship concern.

Expensive Incorporation:

Minimum Capital Requirement:

Private Company registration costs more than LLP or proprietorship. More documentation required for incorporation of Private Company.

To incorporate Private Limited Company minimum Rs. 1 Lacs and for Limited Company minimum Rs.5 Lac's capital is required. So it is not suitable for small enterprises which are not capable of investing more money to start the business.

business, as it offers advantages from Liability protection to easy transferability. However operating as Private Limited Company is not ideal for Micro or small enterprises. Following are limitation associated with

Private Company which makes it

inappropriate for many businesses.

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August 2017

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Special Story Compliance Formalities: A private Company requires more compliances post incorporation. All companies are required to hold Board Meeting, Annual General Meeting, get the accounts audited, maintain statutorily. In addition to this, a Company would also have to maintain compliance with tax and labor laws, which are applicable irrespective of the type of business entity MCA & Stock Exchanges' Compliances & Penalty: The company has to file Annual Return and Annual Report (XBRL format wherever applicable) yearly with MCA. Listed Company has to do quarterly compliance with Stock exchanges within stipulated time period. But if documents are not filed within stipulated time then there shall be huge penalty levied by ROC and Stock Exchanges.

Personal Liability.

The Company has unlimited liability. Members of the Company enjoy limited liability. However, in following cases personal liability of directors and members would also arise: When in any act or contract the name of Company has been misdescribed, those who have actually done the act or made the contract shall be personally liable for it.

When in course of winding up of a Company, any business of the Company has been carried out to defraud the creditors, persons who are knowingly parties to such conduct shall be personally liable for the debts of the Company

Division of ownership: A major disadvantage of the private limited company is that it requires a minimum Two directors and shareholders. So any single person cannot start a private Limited company. Hence any major decision to be taken by a Company would always require the consent of two persons.

Winding up of Company: The procedure for winding up of a Company can be complicated, time-consuming and costly when compared to an unregistered partnership firm.

Hence, it's important to register a Company only when the promoters are serious about using the Company to operate a business.

Conclusion:It is better to incorporate LLP / proprietorship for the small scale of Business, where there is no need for more funds to run a business.

t box below en m m co e th in te ri w e as e If you have any query plewith VC SmartStart package om Venture Car art way Start your business in a sm

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Legal & Compliance

CONSEQUENCES FOR NOT COMPLYING WITH ANNUAL FILING WITH THE REGISTRAR OF COMPANIES

In this guide we are going to touch the following topics: Introduction to Annual Filing Timelines for Annual Filing Estimated Normal and Additional Government Fees for small Companies Consequences of...

IN THIS GUIDE WE ARE GOING TO TOUCH THE FOLLOWING TOPICS: Introduction to Annual Filing Timelines for Annual Filing Estimated Normal and Additional Government Fees for small Companies Consequences of not complying with annual filing When a company obtains the status of a Defaulting Company Procedure to be adopted for getting the status of an active company and making the company fully compliant Benefits of converting a company into an active company www.Venture-Care.com/Magazine

August 2017

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Legal & Compliance INTRODUCTION TO ANNUAL FILING:

Director's Report – It is the Director explaining company's affairs about various matters affecting Any Company incorporated in India whether it is a shareholders interest along with replies to subsidiary of the foreign company, joint venture qualifications raised by the Statutory Auditor in its entity and others under the Companies Act, all are Report required to file few forms in an electronic mode with the concerned Registrar of Companies (ROC).

MGT – 7: PURPOSE: WHAT ARE THE E-FORMS FILED WITH ROC EVERY YEAR?: AOC – 4: PURPOSE : To file with Registrar of Companies the following documents: Financials of the company – Balance Sheet, Profit and Loss account, Cash flow statement, it's respective schedules Auditor's Report – It is the view of Statutory Auditor on the financial position of the company and its affairs.

Accounting Policies – These are the accounting treatment given by the company while preparing accounts and financial statements Notes to accounts – These are other financial disclosures required to be given by companies which are not separately reflected in Balance Sheet and Profit and Loss account and it's scheduled

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To disclose Registrar of Companies the following information List of Directors including executive and non-executive List of Shareholders Change in Directors during the financial year Change in Shareholding pattern during the financial year Dates of Meetings of Board, Committees and Shareholders held during the year Total share capital Authorised, Issued, Subscribed, called up and Paid up Total amount of Debentures, Deposits, Loans, secured or unsecured as on financial year end date ADT – 1 PURPOSE: For Intimation of Appointment of Statutory Auditor to ROC

August Augest 2017

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Legal & Compliance TIMELINES FOR ANNUAL FILING: As per newly introduced provisions of Companies Act 2013, every company shall close its financial st year on 31 March of each year (except some exceptions for first the financial year).

It is to be noted that all the timelines of Annual filing depend upon the end of financial year.

Sr. No.

Name of Event

Maximum time limit

The last date by which event has to be completed in any case

1

Hold Annual General Meeting

Within 6 Months of end of financial year

30 day of September every year

Filing of Form ADT 1

Within 15 days of Annual General Meeting

Within 15 days of Annual General Meeting

Filing of Form AOC 4

Within 30 days of Annual General Meeting

29th day of October every year

Filing of Form MGT 7

Within 60 days of Annual General Meeting

29th day of November every year

2 3 4

th

ESTIMATED NORMAL AND ADDITIONAL GOVERNMENT FEES FOR SMALL COMPANIES: The Normal Government fees perform applicable to companies depends upon its Authorized The Additional filing fees depends upon two factors, namely, Normal filing fees and the time period of delay in filing forms Additional fee rules for period of delay

All forms

Up to 30 days

2 times of normal fees

More than 30 days and up to 60 days

4 times of normal fees

More than 60 days and up to 90 days

6 times of normal fees

More than 90 days and up to 180 days

10 times of normal fees

More than 180 days

12 times of normal fees

The estimated government fees perform are given in details in the table below: Sr. No

Authorized capital

NORMALFiling Fees MAXIMUM ADDITIONAL (Amount in Rupees) Filing Fees (12 Times of Normal Filing Fees)

Total Filing Fees Perform (Amount in Rupees) for all annual filing forms

(Amount in Rupees)

1

Less than 1,00,000 1,00,000 to

2

4,99,999 5,00,000 to

3

24,99,999 25,00,000 to

4 5

99,99,999 1,00,00,000 or more

Total filing FEES PER YEAR if not filed within timelines (Amount in Rupees) (AOC – 4, MGT -7, ADT – 1)

Total filing FEES PER YEAR if filed within time (Amount in Rupees) (AOC – 4, MGT -7, ADT – 1)

200

2400

2600

7800

600

300

3600

3900

11700

900

400

4800

5200

15600

1200

500

6000

6500

19500

1500

600

7200

7800

23600

1800

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Legal & Compliance CONSEQUENCES OF NOT COMPLYING WITH ANNUAL FILING: Description of Events

Consequences of not complying with event

Holding Annual General Meeting

Company and every officer of the company (including DIRECTOR) shall punishable with fine – Upto Rs. 1,00,000/- Penalty in case of Continuing Default – Rs. 5000/- per day

Filing of Form MGT 7

1. Company shall be punishable with fine – Not less than Rs. 50,000/- which may extend to Rs. 5,00,000/2. Every officer (including Director) – – Fine: Not less than Rs. 50,000/- which may extend to Rs. 5,00,000/- OR – imprisonment for a term which may extend to six months OR – Both

Filing of Form AOC 4

All the directors – Fine: Not less than Rs. 50,000/- which may extend to Rs. 5,00,000/- OR – imprisonment for a term which may extend to One Year OR – Both

WHEN A COMPANY OBTAINS A STATUS OF A

CONSEQUENCES FOR DIRECTOR:

DEFAULTING COMPANY:

Unable to sign e-form of any company: Many times situation arises while filing e-form by a company which is not a defaulting company, that a message pops-up that the Director is not eligible to sign the e-form as the signing director is also a director of defaulting company. In such a situation, such a director is required to complete annual filing of that defaulting company and then he becomes eligible to sign e-form of any other company.

Disqualified to become a Director in any other company: If a company does not file its financials (AOC – 4) or Annual Return (MGT – 7), every director of such company is disqualified to be a director in any other company.

Companies Act Does not define Defaulting Company.

However, if a company does not comply with annual filing for a period of 3 years or more, the Registrar of Companiesmay change its status to “Defaulting company” or “Defunct Company”.

CONSEQUENCES FOR COMPANY: The company cannot file any e-form except Annual filing forms, forms for appointment of Director, Forms for Application to Registrar of companies, etc.

It means that company cannot execute any activity such as a change in Name, Change in registered office, Issue or allotment of shares, etc.

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Legal & Compliance CONSEQUENCES FOR PROFESSIONALS:

BENEFITS WITH REFERENCE TO OTHER THAN

Company Secretaries and Chartered Accountants of this company cannot certify forms of any company.

LEGAL CONSEQUENCES: Helpful in creating a good public image While drafting Board's Report, Companies include some additional information in it which may include:

Procedure to be adopted for getting the status of an active company and making the company fully compliant Preparation of forms AOC 4, MGT 7 and ADT 1 of the company and uploading it on the website of MCA.(For documents required and government fees for filing the above forms details are given in the previous slide) Application to the Registrar of Companies to change the status of the company to Active.

Companies include Management Discussion which serves as a medium of vital information to the public. the company through this, communicates various future plans and running projects, future prospects, strengths of the company, steps taken or to be taken by the company to overcome its weaknesses and various other information which creates a good image in mind of public, government and regulatory authorities.

Transparency: If a company follows all legal provisions of the Act in an ethical manner, it means, it maintains transparency among public and creates an image of the ethical company in minds of public, regulatory and government.

As these documents are filed with Government Authorities and certified by professionals, it seems to public documents can create more confidence t than any other document even if it is circulated in public through any other expensive medium. Therefore it is a cheap way to communicate information to the public while gaining more confidence.

If you have any query or question please comment in the comment box below or Contact us. We would love to help you.

BENEFITS OF MAKING THE COMPANY ACTIVE: BENEFITS WITH REFERENCE TO LEGAL CONSEQUENCES: Avoid legal consequences of penalty, imprisonment to Directors and other officers in default (could not understand this sentence) Directors of company becomes bee eligible to sign e-forms of any other company and does not become disqualified to become director in any other company It serves as a notice to public of any information required to be given by the company under any act It may serve as a proof or evidence in the court of law

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Legal & Compliance

EMPLOYEE STOCK OPTIONS (ESOPS ) – BENEFICIAL TO EMPLOYER AS WELL AS EMPLOYEE Employee Stock Options (ESOPs)ESOPs (Employee Stock Option Schemes) are programmes proposed with the basic interest of both, employers and employees. The company providing the scheme gives the employees an...

Legal & Compliance Employee Stock Options (ESOPs)ESOPs (Employee Stock Option Schemes) are programmes proposed

Benefits of ESOP plans

with the basic interest of both, employers and employees. The company providing the scheme gives the employees an incentive in the form of ownership interest, while the employer is able to retain a high quality employee it would not otherwise be able to afford. By providing stock options, either at a particular rate fixed by the company or through various schemes designed by the board of directors, ESOPs are issued for mutual benefits and are considered the most practical means of motivating and retaining an employee.

ESOPs are issued in the form of direct stock, bonuses or through profit-sharing plans, and only the employer has the right to decide who can avail of the options. However, ESOPs are just options, which can be purchased at a certain price before a certain date or not. There are certain norms and rules set by the Company Rules Act, 2014 for granting of ESOPs to employees.

Essential terms in ESOP While the broad definition of an ESOP may be clear, its finer details can be pretty hard to understand. Let's go through them, one by one, to understand them better. Grant: This is the process through which the employee is offered the share.

Grant price and grant date are the price at which the shares are offered and the date on which it is made available. Before granting the shares, the company gives an option to the employee to either purchase it or leave the option. Vesting period: The specific time the employee must wait to exercise the ESOP options is the vesting period. The employees can wait until the vesting period to convey to the employers their decision about buying the stocks (ESOP) offered. Once the vesting period is over, and if the employees decide to purchase the shares, they need to remit the exact amount demanded for the shares to purchase them.

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Owner's perspective: Although employee retention, motivation and awarding hard work are all the benefits that comes out of ESOP for an employer, there are various other notable advantages too, especially for startups. With ESOP options, one can avoid cash compensations as a reward, thereby saving on the immediate outflow of cash. For startups especially, when they are on the verge of expanding, or beginning their operations on a larger scale, awarding employees in the form of stock options will work out to be a feasible method than cash rewards. ESOPs are given as a motivation to the employees. Since the employees will be benefitted in turn, when the share prices increase, it will be an incentive enough for the workers to put in their 100%.

Similarly, ESOPs can also help you attract the best talent in the market.

Employee's perspective: Employees have the benefit of acquiring shares at a nominal rate, and also selling it (after a suitable tenure set by the employees) and gaining the profit. If, for instance, the share prices shoot up, as it is bound to happen when a company grows over the years, a good deal of profit is gained by selling the shares. Certain companies set ESOPs as a separate entity other than the salary options, and hence, it adds on to the benefits you receive as an employer. ESOPs are a part of an employee's salary, and hence, are taxable income, exercised as per the rules.

Hence, ESOPs are both beneficial options to an employer as well as an employee. However, it is crucial to understand the terms and conditions pertaining to ESOPs and also to understand that granting ESOP itself does not signify enormous cash benefits. The share price on the say you sell them (after a cliff period) and also any other conditions, all needs to be checked before exercising the option or as for employers, before providing them to the workers.

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Legal & Compliance

GUIDE ON FAST TRACK EXIT SCHEMEALL YOU NEED TO KNOW In this guide, we are going to touch the following topics- Introduction for Fast Track Exit Scheme Who shall opt for Fast Track Exit Scheme Consequences of not opting...

In this guide, we are going to touch the following topicsIntroduction for Fast Track Exit Scheme Who shall opt for Fast Track Exit Scheme

INTRODUCTION OF FAST TRACK EXIT SCHEME: It is a fast process to close a company without adopting a lengthy procedure for company closure by passing a special resolution,

Consequences of not opting for FAST TRACK EXIT

applying to high court, appointment of

SCHEME

liquidator and so on which may take not

Which company is ineligible for filing under Fast

less than six months and also it is a very

Track Exit Scheme

expensive process which is not affordable to

Which Company is eligible for filing under Fast

small companies and sick companies. The

Track Exit Scheme

Ministry has issued Guidelines for Fast Track

Procedure to be FOLLOWED FOR FAST TRACK EXIT Exit Mode to give the opportunity to the defunct companies to get their names struck SCHEME off from the register under section 560 of the

Companies Act, 1956.

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Legal & Compliance As no separate procedure is given by newly

CONSEQUENCES OF NOT OPTING FOR FAST

introduced Companies Act, 2013 and the circular

TRACK EXIT SCHEME:

issued in the year 2011 under Companies Act, 1956

The above type of companies (given in the last slide) which does not choose Fast Track E x i t S c h e m e , c o u ld s u f fe r fo l lo w i n g consequences:

is still in force for the closure of the company.

THE MOST IMPORTANT BENEFITS OF FAST TRACK EXIT SCHEME ARE AS BELOW: The inoperative Companies which are not generating any revenue nor complying with its annual filing, have got a new option to close company without paying huge additional fees.

It is a short process in which company can be closed without huge documentation.

It is a time-saving WHO SHALL OPT FOR FAST TRACK EXIT SCHEME: The small companies which are Inoperative Not complying with any annual or other filings with Registrar of Companies Operating in loss and lost hope of making profit The company does not have any object or continue with it Shall apply to Registrar of Companies for the closure of the company.

There is a very strong possibility that, for the companies which are inoperative and not carrying on any mandatory annual compliances under Companies Act, 2013, could receive notice from Registrar of Companies, under which jurisdiction the Registered office of the company falls, for not complying with annual filing.

In such a situation, Directors of the company shall have to appear before the court and explain the reason for non-filing of documents with Registrar of companies. After that, the company will have to complete their annual filing and other compliances and present a proof of such filing to the court. On noncomplying with the directions of the court, directors may have to suffer huge penalties, imprisonment, etc.

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Legal & Compliance PROCEDURE TO BE FOLLOWED FOR FAST TRACK EXIT SCHEME: The Company shall file an application in prescribed form FTE online with the Registrar of with fees of Rs. 5000/ATTACHMENTS: In affidavit which should be sworn by each of the existing director(s) of the company before a First Class Judicial Magistrate or Executive Magistrate or Oath Commissioner or Notary, to the effect that the company has not carried on any business since incorporation or that the company did some business for a period up to a date (which should be specified) and then discontinued its operations, as the case may be; Indemnity Bond, duly notarized to be given by every director individually or collectively, to the effect that any losses, claim and liabilities on the company, will be met in full by every director individually or collectively, even after the name

In case, the applicant name is not available in the database of directors maintained by the Ministry, the application shall be accompanied by certificate from a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in

of the company is struck off the Register of

whole time practice along with their membership

Companies;

number, certifying that the applicants are the Statement of Account duly certified by CA in

present directors of the company. In such cases, the applicants shall not be asked to file Form-

practice or auditor of the company.

32 and Form DIN-3.

Board resolution showing authorization for filing The company shall disclose pending litigations

the form.

if any, involving the company while applying In case, the application in Form FTE, is not being

under FTE.

digitally signed by any of the director or Manager or Secretary, a physical copy of the Form duly filled in, shall be signed manually by a director authorized by the Board of Directors of the company and shall be attached with the application Form at the time of its filing electronically;

If the pending prosecutions are only for non-filing of Annual Returns and Balance Sheet such application may be accepted provided the applicants have already filed the compounding application. However, steps for final strike of the name of the company will be taken only after disposal of compounding application by the competent authority.

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Legal & Compliance

WHICH COMPANY IS INELIGIBLE FOR FILING UNDER

WHICH COMPANY IS ELIGIBLE TO APPLY UNDER

FTE SCHEME:

FAST TRACK EXIT SCHEME:

Listed companies;

Company having NIL assets and liabilities

Companies that have been de-listed due to non-

Company inoperative since the date of

compliance of Listing Agreement or any other

Incorporation or 1 Year or more

statutory Laws,

The has closed down its bank account.

Companies registered under section 25 of the

PROCEDURE TO BE ADOPTED BY REGISTRAR OF

Companies Act, 1956 or section 8 of Companies

COMPANIES IN THIS MATTER:

Act, 2013

The Registrar of Companies, on receipt of the

Vanishing companies; Companies where inspection or investigation is pending or any proceedings are pending in the court Companies against which prosecution for a noncompoundable offense is pending in court; Companies accepted public deposits which are either outstanding or the company is in default in repayment of the same;

application, shall examine the same and if found in order, shall give a notice to the company under section 560(3) of the Companies Act, 1956 by email to its e-mail address intimated in the Form, giving thirty days time, stating that unless cause is shown to the contrary, its name be struck off from the Register and the company will be dissolved;

Company having secured loan; Company having management dispute;

The Registrar of companies shall put the

Company in respect of which filing of documents

name of applicant(s) and date of making the

have been stayed by court or Company Law

application(s) under fast track exit mode, on

Board (CLB) or Central Government or any other

daily basis, on the MCA por tal

competent authority;

http://www.mca.gov.in/, giving thirty days

The company having dues towards income tax or

time for raising an objection, if any, by the

sales tax or central excise or banks and financial

stakeholders to the concerned Registrar;

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Legal & Compliance In case of company(s) like Non-Banking Financial

The Registrar of Companies immediately after passing of time given in sub-part (a) to © of this Para and on being satisfied that the case is otherwise in order, shall strike its name off the Register and shall send a notice under sub-section (5) of section 560 of the Companies Act, 1956 for publication in the Official Gazette and the applicant company shall stand dissolved from the date of publication of the notice in the Official Gazette

Company(s), Collective Investment Management Company(s) which are regulated by other Regulator(s) namely RBI, SEBI, the Registrar of Companies, at the end of every week, shall send intimation of such companies availing fast track exit mode during that period to the concerned Regulator(s) and also an intimation in respect of all companies availing fast track exit mode during that period to the office of the Income Tax Department giving thirty days time for their objection, if any; EXPLANATION:

se query plea r o n io t s e ve any qu ent “ If you ha the comm in t n e m m in the co ve to comment e would lo .W s u t c a t or Con box below ” help you.

“Non-Banking Financial Company” means a company as defined in clause (f) of section 45-I of the Reserve Bank of India Act, 1934 “Collective Investment Management ” means the company as defined in clause (h) of sub-regulation of 2 of Securities and Exchange Board of India (Collective Investment Companies) Regulations, 1999

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Legal & Compliance

PROFESSIONAL GUIDE ON APPOINTMENT OF FIRST AUDITOR

INTRODUCTION Individual or audit firm can become the first auditor To the company according to the companies act 2013.No other person can be appointed as an auditor of the...

INTRODUCTION Individual or audit firm can become the first auditor To the company according to the companies act 2013.No other person can be appointed as an auditor of the company. The first auditor of the company should be a Chartered accountant.

After annual general meeting within 30 days, a financial statement along with the auditor's report shall file with the register of companies.

Each tax filing needs a comprehensive report from the auditor, in every financial year a private limited company is required to submit its audit,

Chartered accountant firm's registration number must be there in the company's resolution for the appointment of the first auditor. Till the conclusion of the first annual general meeting, he first auditor shall hold office. The company needs to convey an extraordinary general meeting by issuing a notice to all the members in writing, in case board of directors failed to appoint the first auditor within 30 days of incorporation. Such members within 90 days from the date of failure to appoint shall appoint the first auditor in the extraordinary general meeting.

reports duly assessed and checked by an auditor as well as the other requirements Sections 139 to 148 of the companies Act 2013 gives a complete and detailed summary of the role of an auditor. www.Venture-Care.com/Magazine

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Legal & Compliance APPOINTMENT OF FIRST AUDITOR

PROCEDURE

Within 30 days of Incorporation, the first auditor of the company shall be appointed by the Board. An EGM shall be called within 90 days to appoint the first auditor In the case of Board's failure to appoint the first auditor as per Section 139(6). The 90 days time limit starts from Incorporation of the company rather than the expiry of 30 days(i.e. failure of Board) however, the law is silent regarding from when this time limit of 90 days be reckoned.

1. Convey the message to the proposed auditor as regard to the intention of appointing him/it as auditor whether he/ it is eligible and not disqualified to be appointed as auditor of the company.

2. Obtain consent & certificate from auditor.

3. Obtain recommendation of the audit committee if it is required to be constituted.

Tenure: – Till conclusion of the 1st annual general

4. Call Board meeting.

meeting.

5. At the first board meeting approve the

Remuneration: –Remuneration of the first

appointment of auditor.

auditor can be decided by the Board As per

6. Intimate the auditor and file with ROC form

proviso to section 142(1) of company law.

ADT-1(to be attached in form GNL-2 as per MCA

st

Appointment of 1 auditor require obtaining written consent, certificate and filing of form ADT-1.

circular 09/2014 dated 25th April 2014) within 15 days.

Section 139(6) governed the appointment of f i r s t a u d i t o r, n o n - o b s t a n t e c l a u s e [notwithstanding anything contained in sub-section (1)] and it is sub-section (1) require obtaining consent & certificate from auditor and filing of form ADT-1 with ROC. Interpretation of “notwithstanding anything contained .”: – the non-obstante clause is used to avoid the operation and effect of all contrary provisions as per Supreme Court view. Thus, the no-obstinate clause will prevail In case any departure between a non-obstante clause and other provisions.

Since Section 139(6) does not speak anything contrary to Section 139(1) as far as obtaining of consent, certificate and filing of a form are concerned. Thus, it can be interpreted that ADT-1 should be filed with ROC for first auditor appointment.

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ST

APPOINTMENT OF AUDITOR AT 1 AGM Every company shall appoint an individual or a firm as an auditor of the company in its 1st annual general meeting who shall hold office from the conclusion of that meeting, till the conclusion of its sixth annual general meeting as per Section 139(1) of the Act. Tenure subject to ratification: – At every AGM the tenure of 5 consecutive years is subject to ratification by shareholders Remuneration: – Remuneration of the auditor of a company shall be fixed in its general meeting as per section 142(1) of the Act or in such manner as may be determined therein.

August Augest 2017

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2

Finance

CHALLENGES AND THE WAYS OUT FOR

BUSINESS VALUATION MODELS

Generally, there are four popular valuation models: Discounted Cash flow (DCF) model Relative valuation model, and Asset base valuation model Earning Capitalization model Let's start with DCF model. For...

Generally, there are four popular valuation models: 1. Discounted Cash flow (DCF) model 2. Relative valuation model, and 3. Asset base valuation model 4. Earning Capitalization model

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Let's start with DCF model.

For raising equity or other finance from any other sources, valuer uses this model. Valuer heavily relies upon the expected future cash flows as communicated by the management. But the valuer should reduce the future expected cash flows because the management may be biased (it has to raise funds). These cash flows are estimated for a certain time period, say 3-5 years.

After that, these cash flows are discounted at a wellestimated discount rate. Cash flows may be Free Cashflow to Firm (FCFF) or Free Cash Flow to Equity (FCFE). Of course, this valuation model is used as a going concern.

August 2017

20

Finance The way out....

Where are the loopholes?

Expected future cash flows are prone to

It is better to choose the very close similar

change due to various factors such as

business which operates in the same market and

competitors' strategy, technological changes,

has very similar product.

brand dilution, change in management

Choose more than one similar business and if

strategy etc.

possible compare the business with the industry

How to fix up the discount rate? It is also

average.

subject to change over years. Also, there are

Adjust the price/value of the similar business

many factors which affect the discount rate

upward or downward

and these factors are unpredictable.

The way out....

Do sensitivity analysis by changing the cash flows and the discount rate.

Value your business frequently whenever there is the change in external or internal situations.

Now, let's have a look at relative valuation model: This model is used to value a business in relation to similar business. Earnings and/or cash flows of the business undervaluation is compared with those of the similar business and with the help of the given price of the similar business, the price of the business undervaluation is estimated.

The difficulty is that: Whether the similar business operates in the same products, markets Whether the similar business uses the same technology Whether the similar business is as old as this business Whether price/value of the chosen similar business is unbiased etc.

www.Venture-Care.com/Magazine 21

3rd comes Asset Valuation model Many people believe that this valuation cannot be used for going concern businesses. Partially true.

This model can be used for those businesses also but there must be significant productive assets. It includes R&D, IP, TM etc also.

The difficulty is that how the productive assets can be valued and what is the expected life of those assets The way out is that asset valuer should value those assets at expected market value and asset value and the expected life of the assets should undergo sensitivity analysis.

August Augest 2017

www.Venture-Care.com/Magazine

2

Finance The last popular model is Earning Capitalization model: Under this method, Equity earning is capitalized at a certain rate. This model assumes that the present earning shall remain fixed forever.

The loopholes: This model does not consider growth in the business.

The rate at which earning is capitalized is prone to change

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The way out: Consider the average earnings for last 3-5 years.

Calculate the average growth in earnings for last 3-5 years and estimate it for next 1st future year and then capitalize it.

Do sensitivity for earning, growth rate and the discount rate.

To conclude, no valuation model is full proof. To value any business, valuation models in combination should be used

August 2017

22

Indian Funding Updates

Indian Startup Funding And Investment Chart

July 2017

Indian Funding Updates

Sr. No. 1

Date (dd/mm/yyyy)

01/07/2017

Startup Name

Industry/ Vertical

Billion Loans

Consumer Internet

Sub-Vertical

City / Location

Peer to Peer Lending

Bangalore

Investors' Name Reliance

Investment Amount Type (in USD) Seed Funding

1,000,000

Private Equity

2,600,000

Corporate

platform

Advisory Services Ltd

2

03/07/2017

Ecolibriumenergy

Technology

Energy management

Ahmedabad Infuse Ventures, JLL

solutions provider

3

04/07/2017

Droom

eCommerce

Online marketplace for

Gurgaon

Asset Management (Asia) Ltd, Digital Garage Inc

Private Equity

20,000,000

Bangalore

Kalaari Capital, Nexus India Capital Advisors

Private Equity

8,500,000

Noida

International Finance

Private Equity

12,000,000

automobiles

4

05/07/2017

Jumbotail

eCommerce

online marketplace for food and grocery

5

05/07/2017

Moglix

eCommerce

B2B marketplace for

Corporation,

Industrial products

Rocketship, Accel Partners, Jungle Ventures, Shailesh Rao, Venture Highway

6

05/07/2017

Timesaverz

Consumer Internet

Hyperlocal home services provider

Mumbai

BCCL

Private Equity

1,000,000

7

06/07/2017

MyCity4Kids

Consumer Internet

parenting blog and kids'

Gurgaon

N/A

Seed Funding

N/A

Blume Ventures,

Seed Funding

N/A

Seed Funding

1,000,000

8

06/07/2017

Minjar

Technology

events discovery platform Cloud Solutions Provider

Bangalore

Contrarian Capital India Partners, Emergent Ventures India, Pallav Nadhani, Ashish Gupta, Sharad Sharma, Sirion Labs

9

07/07/2017

Clip App

Consumer Internet

Digital Media Video

Bangalore

India Quotient, Shunwei Capital

platform

10

07/07/2017

Upwardly.in

Consumer Internet

MF investment platform

Bangalore

Sreeram Iyer, Suvo Sarkar, Anita Gupta, Likemind Ventures

Seed Funding

N/A

11

10/07/2017

Autorox.co

Technology

Workshop Management

Hyderabad

Mitsui & Co.

Private Equity

3,000,000

Dunamis

Private Equity

2,250,000

Seed Funding

464,000

Seed Funding

N/A

Private Equity

18,500,000

Software Platform

12 13

11/07/2017

11/07/2017

Fagobo

Flickstree

Consumer Internet

Salon & Spa Aggregation

Consumer Internet

Video Content Discovery

Pune

Ventures Pte Ltd

& Discovery platform

Mumbai

Venture Catalysts, Sourav Ganguly,

Platform

Ankit Aditya, Moksh Sports Ventures

14

11/07/2017

Consumer Internet

Design Cafe

Online Interior Design

Bangalore

Fireside Ventures, Apurva Salarpuria,

platform

Sidharth Pansari, Sprout Capital

15

12/07/2017

Innovity

Technology

Digital payments solutions

Bangalore

SBI-FMO Fund, essemer Venture Partners, Catamaran Ventures

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August 2017

24

Indian Funding Updates

Sr. No. 16

Date (dd/mm/yyyy)

12/07/2017

Startup Name

Industry/ Vertical

Sub-Vertical

City / Location

Investors' Name

Vdeliver

Logistics

Door Step Delivery

Hyderabad

Corvus Ventures,

Investment Amount Type (in USD) Private Equity

N/A

Seed Funding

N/A

Seed Funding

N/A

Seed Funding

540,000

Private Equity

1,700,000

Seed Funding

2,000,000

Private Equity

4,000,000

Private Equity

N/A

Seed Funding

N/A

Xelpmoc

Seed Funding

N/A

Kae Capital

Seed Funding

N/A

ain Capital

Private Equity

10,000,000

MAPE Advisory

platform

Group

17

12/07/2017

Bott.mer

Technology

Chatbot creation tool

Bangalore

500 Startups, Purvi Capital, Rajan Anandan, Abhishek Gupta

18

12/07/2017

Arcatron

Technology

Next Gen Mobility device

Pune

19

14/07/2017

Quickspec

Technology

Construction site operations

Indian Angel Network

manufacturer

Bangalore

Brigade Innovations LLP, TV Mohandas

and analytics platform

Pai, Suhail Rahman, Bobby Reddy, M George

20

14/07/2017

Chumbak

eCommerce

Designer consumer

Bangalore

21

17/07/2017

Increff

Technology

Sales Solutions for

Blacksoil Capital Pvt. Ltd

products Marketplace Bangalore

Sequoia Capital, Grey Orange,

Fashion Brands

Rajesh Ramaiah, Anshuman Das, Rishi Das

22

17/07/2017

Vayana

Technology

Enterprise Banking

Pune

IDG Ventures India Advisors,

Solutions

Jungle Ventures

23

18/07/2017

Mobiquest

Technology

Mobile Services &

Noida

One97 Communication

Solutions

Ltd

24

18/07/2017

Ambee

Consumer Internet

Ambulance

Hyderabad

Uber Technologies Inc, Amaya Capital

Aggregation Services

LLP

25

18/07/2017

Ideal Insurance

Consumer

Online Insurance

Internet

platform

26

18/07/2017

Hypernova Interactive

Technology

27

19/07/2017

Rentomojo

Kolkata

Mobile games creator

Bangalore

Consumer

Consumer Leasing

Bangalore

Internet

Platform

Ventures, Renaud Laplanche

28 29

19/07/2017

19/07/2017

AirCTO

Playablo

Consumer

AI powered recruitment

Internet

platform

Technology

Gamified Learning App

Bangalore

Francesco Cara

Seed Funding

N/A

Bangalore

ABI-Showatech

Seed Funding

600,000

Seed Funding

700,000

Seed Funding

200,000

(India) Ltd

30

20/07/2017

Trupay

Technology

Online payments

Gurgaon

31

20/07/2017

Brick2wall

eCommerce

Online Marketplace for Construction Material

Kae Capital, M&S Partners,

platform Gurgaon

Subramani Somasundaram, Sundeep Sahni, Mayank Mittal & Others

25www.Venture-Care.com/Magazine

August Augest 2017

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2

Indian Funding Updates

Sr. No. 32

Date (dd/mm/yyyy)

21/07/2017

Startup Name

Industry/ Vertical

Sub-Vertical

City / Location

Investors' Name

Fablestreet

eCommerce

Women Work wear

New Delhi

Harmeet Bajaj,

Investment Amount Type (in USD) Seed Funding

N/A

Seed Funding

N/A

Seed Funding

N/A

Private Equity

1,200,000

Pameela P,

etailer

Fusiontech Ventures & Others

33

21/07/2017

Monsoon Fintech

Technology

Machine Learning

New Delhi

Sunil Kalra, Aditya Singh,

Access platform

Rishi Srivastava, Rajan Anandan

34

21/07/2017

Monkey Box

Consumer

Healthy Food Delivery

Internet

Platform

Bangalore

Blume Ventures, NB Ventures, Nspira

35

25/07/2017

Noticeboard

Consumer

Mobile-first Enterprise

Internet

communication

Bangalore

Stellaris Venture Partners

platform

36

25/07/2017

Byju’s

Consumer

Mobile Learning App

Bangalore

Tencent Holdings

Private Equity

35,000,000

Co-Working Space

New Delhi

Yuvraj Singh

Seed Funding

N/A

New Delhi

Goldman Sachs

Private Equity

25,000,000

Bangalore

Indian Angel

Seed Funding

200,000

Internet

37 38 39

26/07/2017

26/07/2017

26/07/2017

Creator’s Gurukul

Others

Fab Hotels

Consumer

Budget hotels brand &

Internet

Aggregator Platform

Consumer

Assisted Learning

Internet

Startup

ThinkerBell

Provider

Network, Anand Mahindra

40

27/07/2017

1mg

41

28/07/2017

Jhakaas

42

28/07/2017

BigStylist

eCommerce

Consumer

28/07/2017

Gympic.com

Gurgaon

HBM Healthcare Investments, Maverick Capital Ventures, Sequoia India, Omidyar Network and Kae Capital

Private Equity

15,000,000

App-based Aggregator of

Mumbai

Amen Dhyllon

Seed Funding

N/A

Mumbai

Info Edge (India)

Seed Funding

1,250,000

Seed Funding

N/A

Internet

Offline Businesses

Consumer

Beauty Services

Internet

43

Online Pharmacy

Consumer Internet

Ltd

Marketplace online marketplace for discovering fitness

Bangalore

RoundGlass Partners

centres

Source- www.track.in

www.Venture-Care.com/Magazine

August 2017

26

Strategy

THE SMARTEST WAY TO STARTING AN ONLINE BUSINESS IN INDIA Don't try and build a business until you read this – Just imagine what it would be like to build an attractive business that avoided all of the...

Don't try and build a business until you read thisJust imagine what it would be like to build an attractive business that avoided all of the risks that cause 90% of new businesses to fail.

What would it be like to avoid all the frustrations, disappointment, and public humiliation of trying to build a business around an idea that was highly valued in your mind but no one else would pay for it?

27www.Venture-Care.com/Magazine

Note 1: Economics always teaches us to match a supply with the demand.

Note 2: Good businesses fill a need in the marketplace.

Note 3: Great businesses solve painful problems in the marketplace.

Most entrepreneurs fail to find the real demand before they start and many of them think that they create the demand which rarely works.

August Augest 2017

www.Venture-Care.com/Magazine

2

Strategy Do you know how hard it is to try and convince someone they want or need something when in reality, they don't? Even if it's “cool”? This is where many businesses fail.

They fail to provide a product that their market REALLY REALLY WANTS and NEEDS! So this question may arise for you: “How do I know what my customers really really want?”

Follow these 6 phases to starting a business th

successfully? At the 6 phase your business will be a super hit, here are the phases

5.Build and Develop the Product Out source the development of your software with the Pre-Sales money to A+ developers so you can live the lifestyle you desire.

6.SCALE! Release And Launch to 1000/month and then go beyond!

Do you want an insider's lesson? Follow the 6 part process above and train your mind to see opportunity and you will find it everywhere.

And then...

1.Tune Your Mind set Find BIG opportunities to start profitable

Take action.

companies from scratch

Take action.

Take action.

2.Idea Extraction Find & Select Profitable Ideas Even When

Keep going and don't stop until you win.

You Have Nothing

“Nothing in this world can take the place of

3.Sketch The Solution In front Of Your

persistence. Talent will not. Nothing is more

Potential Customers Show your solution up front to build trust and rapport with customers.

common than unsuccessful men with talent.

Genius will not. Unrewarded genius is almost a proverb. Education will not. The world is full of

4.Pre-Selling Get your customers to fund the development

educated derelicts. Persistence and determination

of your software so you have ZERO RISK.

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alone are omnipotent.”

— Calvin Coolidge

August 2017

28

Strategy

8 STEP PROCESS FOR NEW PRODUCT DEVELOPMENT Have you ever thought about how a few organizations figure out how to market whole product offerings effortlessly while others still struggle to trump up the interest? Building up...

Have you ever thought about how a few organizations figure out how to market whole product offerings effortlessly while others still struggle to trump up the interest? Building up a new product shouldn't feel like you're battling with the dark forces. There are some easier ways too. For that you need to build up a clear road map which will become an organized guide to your business a clear path to follow. New product development process includes the complete journey from generating the concept to launch the product into market. When you will set the means and tail it up to check, product development will turn into a more engaged and adaptable approach that can be adjusted for every single diverse kind of items and administrations. Process flow is covered in following 8 Steps:

29www.Venture-Care.com/Magazine

1. Idea Generation New product Development process starts with the Generating Idea or the Concept. According to experts, Coming up with fresh ideas has often been considered as one of the hardest phase of this whole process. In the beginning all ideas are good ideas up to certain extent, so it can come from many different directions. This is because experts often go for extensive research of industry and market trends before heading towards the next level.

2. Screening of Ideas Screening of ideas is a crucial stage in this process, as it needs to ensure that unsuitable ideas should get rejected as soon as possible. So how to differentiate between great concepts which will attract the buyers and ideas which will hamstring your campaign before it even begins? So this is done by making sure the profit potential of the product, checking things like expected customer class, size of the target market, market growth.

August Augest 2017

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2

Strategy

3. Developing and Testing of the Concept Now your idea has passed the screening test. This next phase is the part where companies start working on the concept. By surveying with the questions like “How do we get this to work?”, “Did you understand the concept..??” we can check the whether consumer has got enough in depth information about it so he can visualize it or not. Amid this stage, the association and the advertising division will resolve points of interest like the advantages of the item, showcasing standards, generation costs, and expected client reaction.

4. Business Analysis Once the concept has been

tested and finalized, company decision-makers will turn their attention to the numbers, by assessment of the profitability of the product.

Because if the production cost is too high for a potentially lucrative idea, then its better not to account it. So the analysis includes detailing of marketing strategy, highlighting the target 7. Commercialization This is the phase where the marketing campaign and the sales funnel market, product positioning and the marketing associated with the product start working mix which will be useful. It also includes together. At the point when the idea has been analysis of product demand, costs of full created and tried, ultimate conclusions should appraisal, competitor study and identification of break-even point. be made to move the item to its dispatch into the market. Valuing and promoting plans should 5. Product Development when a new product be concluded and the business groups and gets approval, it has sent to the technical and conveyance informed, so that the item and new product development department. They organization is prepared for the last stage. make a prototype model to check exact design, dimensions & specifications and suitable 8. Launching in the market. A detailed launch plan manufacturing processes. It also gives space for is very much essential for this stage where it can consumer testing, their feedback on about the run smoothly and make a maximum impact. This products look, feel and performance with their launch plan includes decisions regarding time quality tests. and place for launch to primary focused 6. Technical Aspects Whether you are selling a customer class. tech product or simple toy, the technical At last we should be with a specific end goal to aspects of the product need to be cross-verified ahead of time. This is the place things like learn from any errors made, a feedback of the specialized aides, plans, leave procedures, and market performance of the product which is monetary estimations are dealt with before the needed to assess the product. New product item is formally launched in the market. This development can be made much complex and procedure is required to approve the entire idea centered, with a higher probability of success, by and is utilized for further refinement of all following these steps. components.

www.Venture-Care.com/Magazine

August 2017

30

Strategy

HOW TO SETUP A FOREIGN COMPANY IN INDIA

How to Setup a Foreign Company Business in India Due to economic revolution and globalization, mostly companies in the world looking to expand their operations throughout the Globe. In...

How to Setup a Foreign Company Business in India[/caption] Due to economic revolution and globalization, mostly companies in the world looking to expand their operations throughout the Globe. In the recent past due to India Economy booms and Government also open doors to foreign nations company to invest in India, many foreign companies comes forward to setting up their business in India. Wholly owned Subsidiary is one of the business formation where a foreign entity can setup business in India. This blog helps in understanding about the Wholly owned subsidiary(WOS) Registration of foreign company in India

www.Venture-Care.com/Magazine 31

About WOS When an Entity which is incorporated outside India (i.e Foreign Country), makes 100% Foreign Direct Investment (FDI) as per Indian FDI policy, the Indian company incorporated for this purpose is said to be wholly owned subsidiary of that foreign entity. Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, if the conditions specified therein are complied with (specific high priority industries) or obtain an approval from the FIPB. This is the easy and best method for setup a foreign-based Company in India, where entire hold on the share capital of an Indian company is held by Foreign Based Entity.

August Augest 2017

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2

Strategy

Key Feature of WOS

Documents required for Registratio

WOS is regulated by Indian Companies Act,

/setup of Wholly Owned Subsidiary

2013 All types of Business Activities are permitted such as manufacturing, marketing, services

(WOS).

1. 3 Passport Size photograph.

2. PAN CARD (Not mandatory in case of Foreign

activity etc subject to FDI Norms.

Director).

Treated as Domestic Indian Company and

3. Passport (Mandatory for Foreign Director, Must

Indian Taxation apply and eligible for all

be in English Language and duly apostile).

exemptions and deduction as applies to

4. Address proof (Driving License, Voter ID,

Domestic Companies.

Passport, Aadhar Card).

Type of WOS

5. Any one of following (Bank Passbook, Credit

In India, there are two form of

Card Statement, Telephone Bill, Electricity Bill).

company incorporated

6. Proof of Registered office in India-Electricity

Private Limited

Bill, Leased deed or Rent Agreement.

7. If the proposed director is in a foreign country

Public Limited

then all the documents must be duly apostile by the home country & if a director is presently

Private Limited Company has following characteristics:

in India then such apostile is not required.

shareholders' right to transfer shares is restricted the number of shareholders is limited to 200; and an invitation to the public to subscribe for any shares or debentures is prohibited.

Minimum paid up capital is 1,00,000.

Minimum 2 Director and 2 shareholders, One will be Indian Resident Director.

Public Limited Company has following characteristics: It must have at least seven shareholders.

Minimum paid up capital must be 5,00,000 It must publish a prospectus or file a statement in lieu of a prospectus before it can start transacting business.

A public company is required to have at least three directors.

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August 2017

32

Strategy

Process required for registration/

Cost for Registering a Company in

setup of Wholly Owned Subsidiary

India The cost for registering a business in India is

(WOS) in India.

1. Obtaining (Director Identification Number) DIN for all Directors.

2. Obtaining Digital Signature for all the directors.

3. Filling Application for Name Reservation for the

relatively inexpensive. Registration of a company in India can also be completed within a few weeks, making India an easy place to start a business.

Post Incorporation Formalities

proposed Company.

4. Drafting Memorandum & Articles of Association.

Post registration of the company in India, the

5. Subscription to the Memorandum by the

Indian Director can help open a bank account

shareholders and appropriate person.

for the company in India. Once the bank

6. Submission of all the documents to the

account is opened, the Company must make

Concerned Registrar of Companies (ROC).

FDI reporting to the Reserve Bank of India. The

7. Receipt of Certificate of Incorporation from

procedure for reporting FDI inflow into the

the ROC.

company is simple and can be completed easily

8. Apply for PAN CARD and an opening of Bank Account.

Completing the FDI reporting would ensure that

9. Submission of Documents for FDI Compliance after Subscription of Share Capital.

www.Venture-Care.com/Magazine 33

by a legal or accounting professional in India. the business is in compliance with all regulations in India and ready to operate.

August Augest 2017

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2

Strategy

WHY SHOULD YOU DO THE FEASIBILITY ANALYSIS BEFORE KICKING-OFF A BUSINESS IDEA

As well said, “ you don't want to invest your money, your time and your effort on a project or business idea, which seems possible to fail or...

As well said, “ you don't want to invest your money, your time and your effort on a project or business idea, which seems possible to fail or not to success”.

Let's look at Wikipedia definition: “A feasibility study evaluates the project's potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions.”

What is a Feasibility Report?

The feasibility reportis an analysis or study or new business or product idea and covers the discussions, analysis, and study of the different aspects ( almost every aspect ) of the feasibility of a START-UP businesses.

A visibility report focus on the various aspects of the survivability of the start-up business such as product feasibility, financial feasibility, Market feasibility, Plant/Machinery feasibility, Manpower feasibility, location feasibility etc

Know the feasibility of your new Business or Product Idea, Talk with the Expert

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August 2017

34

Strategy

The three amazing benefits of having feasibility study or analysis: 1.Specific

.

Being focused and specific a feasibility study or analysis starts with a single question — asking whether the idea, event or action is a viable solution — and force you to focus solely on that question to the exclusion of everything else, drilling down to explore possible outcomes.

A feasibility analysis is different than the business plan. A feasibility study is an investigative tool that might cause you to discount an idea, whereas a business plan is a call to action.

Generally, feasibility analysis is used as a predecessor to creating a business plan.

2.The Big Picture Feasibility study or analysis force you consider the big picture first and then think of a top-down approach. In this way, one or two general starter questions lead to a host of additional, more detailed questions that become increasingly narrower in focus as you get closer to reaching an ultimate answer. For example, asking whether anyone will buy your new-and-improved product and whether it will generate a profit creates additional questions that force you to consider customer need and possible competition, and to identify risks that you may face.

3.Alternative Solutions Feasibility study or analysis offer you the chance to “get it right” before committing time, money and business resources to an idea that may not work in the way you originally planned, causing you to invest even more in correcting flaws, removing limitations, and then simply try again. Feasibility studies may also open your eyes to new possibilities, opportunities, and solutions you might never have otherwise considered. There are no right or wrong answers to the questions you ask, but an answer you don't necessarily want or expect can create new profit potential.

Here is how Venture Care Team analyze the feasibility of a new business idea The Usability and inclusion of a feasibility report: Feasibility studies do not dive into, in-depth long-term financial projections. In basic terms, investor or start-up owner should have a foresight if he will make or lose money during this project. The investor decides to proceed or not, considering the outcomes of the feasibility study.

Accordingly, a successful feasibility study should do a basic break-even analysis to see how much money would be necessary to meet the operating expenses of the business idea.

You must also describe the followings:–Your product and its benefits, – Your target market, and – Cost along with break-even and profit points.

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August Augest 2017

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Strategy

So, there are two main elements to take into consideration: 1. Cost = Money + Time + Effort 2. Value expected to be delivered by business idea

That being said, a feasibility study dives into four major areas:

Depending on the nature of your business idea, technology and equipment may become one of the biggest cost element. So you need to decide on technology and equipment needed. On the other hand, you should consider the date when you will obtain those since they will directly affect your start-up timeline.

Financial Analysis: As a final step, you should analyze ke financial parameters as following:

1. Market Analysis 2. Organizational Setup 3. Technical Issues 4. Financial Analysis As the first step of a feasibility study, the market analysis should be done in order to have an idea about supply & demand balance of your product or service.

Market Analysis: Units to be Sold: How many units do you project to sell each month?

Supply Projection: What is the projected supply in your area of the products or services needed for your project?

Identification of Target Market and Target Customer: What are your target market and target customer? How many are they, your potential customers?

Competition Analysis: What competition exists in this market? Can you establish a market niche which will enable you to compete effectively with others providing this product or service?

Location: Is the location of your proposed business or project likely to affect its success? If so, is the identified site the most appropriate one available?

Organizational Setup: As the next step to market analysis, right organizational structure and organizational qualifications to manage the business should be determined. People to be on board, in management and other positions should be carefully thought and assigned. In this step, in order to illustrate your organizational structure on an org chart, as a quick and simple solution, use an.

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Technical Issues:

Variable Costs: These are the costs incurred in starting up a new business, including COGS Fixed Costs: Here you will define Opex and Capex Logistics & Inventory Sales Projections and Target Realization Reporting: This is your monthly sales amount projection.

Sales Channels: You should define how much of sales will be distributed on which channel and sell out prices for each channel Pricing: Considering competition, the most appropriate price positioning for your product or service should be determined.

Profit and Loss Statement Report: This is for finding the break even point for the proposed business, considering the costs and revenue generated As a conclusion, your feasibility study should give a clear idea whether your business idea deserves investment or not. If you want to ease your feasibility study process, using ready-to-use Feasibility Study Kit for Start-ups which include all above will be a smart solution for you.

August 2017

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More Ideas for Your Business WHAT WE DO Since 2010, We are helping businesses and enterprises to Plan, start & Grow Business and Close or Exit from a Business.

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Contact Us Head Office (India)

Branch office (Netherlands)

Venture Care Ajinkytara, Kalaniketan, Sur. No. 29, Kalanagar Near Rajshri Shahu Bank.

Dhankawadi. Pune 43

Venture Care JonkerFransstraat 46, 3031 AV Rotterdam, (NL) Phone: +31 614 575 275

www.venture-care.com

020 65363633

Note: Venture Care is a Brand of S&F Advisory Private Limited.

It’s not how many ideas you have.

It’s how many you make happen.

It’s your idea or venturecare’s, We make it happen to Plan, Launch and Grow your business. See how at www.venture-care.com

ask@venture-care.com

About Venture Care:Venture Care is India's 1st of its kind online Business Solution Company which helps to Plan, Launch, Manage and Grow Businesses. Find More about us at www.venture-care.com

WHAT WE DO Since 2010, Venture Care (a S&F Advisory Brand) is helping businesses and enterprises to Plan a Business, start a business, run a business, Grow a Business and Close or Exit from a Business.

We at Venture Care generate ideas, spark actions and quantify time-bound results by providing tailored, practical and affordable solutions for the growth of your company. Venture-Care is dedicated to turning good ideas into measurable change Our team of Chartered Accountants, Business planner, Technocrats, Strategist, Marketers, Senior Bankers, Company Secretaries, Tax Experts and other professionals enables us to help and guide you to flourish your business aspirations.

Head Office (India) Venture Care

17 Ajinkytara, Kalaniketan Society s.no. 29, Kalanagar Near Rajrshi Shahu & Janta Bank.

Dhankawadi Pune 43. ask@venture-care.com

Branch office (Netherlands) Venture Care JonkerFransstraat 46, 3031 AV Rotterdam, (NL) Phone: +31 614 575 275

020 65363633

www.Venture-Care.com/Magazine