Your name: Varma Pranjal

Roll no: 13011114

Specialization: Finance

Course: Financial regulatory Framework

Academic Year: AY 2014-15

Name of the tutorial: Presentation on website report

A. REGULATORY FRAMEWORK FOR FDI:-

In India, FDI is considered as a development tool, which can help in achieving self-reliance in all

the sectors of the economy. India’s rich and diversified resources, its sound economic policy,

good market conditions and highly skilled human resources, make it a proper destination for

investment. Direct Investment across national borders is a distinct feature of international

economics, which has gained intense attention of all the countries of the world recently. FDI is

the process whereby resident of one country (the home country) acquire ownership of assets

for the purpose of controlling the production, distribution and other activities of a firm in

another country (the host country). FDI is now approved as an important driver of growth in the

country. Liberalization refers to relaxation of previous government restrictions usually in areas

of social and economic policies. Liberalization was introduced in1991 in India. The pre economic

liberalization period was challenge for the Indian economy to grow because there were many

constraints to overcome. Actually in the early1980s, Indian government adopted a liberal policy

towards FDI, especially in high technology areas and exports and it was then that FDI friendly

environment was created. In away eighties were the fore-runners of the liberalization policy of

1990s and so this period is termed as pre liberalization period in the study. The period after

1991 is termed as post liberalization period during which not only the quantum of FDI to India

escalated but the sector-wise composition of FDI also underwent incredible change. The post

liberalization period was very productive for the Indian economy to head with a swift pace.

Though the liberal policy position and strong economic fundamentals appear to have driven the

sharp rise in FDI flows in India over past one decade and continued their strength even during

the period of global economic crisis (2008-09 and2009-10), the subsequent moderation in

investment flows despite faster recovery from the crisis period appears somewhat inexplicable.

Survey of empirical literature and analysis seems to suggest that these divergent trends in FDI

flows could be the result of certain institutional factors that reduced the investors „sentiments

despite continued strength of economic fundamentals. Find. FDI is characterized as any form of

long-term investment that earns interest in an enterprise which functions outside the domestic

territory of the investor. In an era of globalization and liberalization, Foreign Direct

Investment(FDI) is a good source of flow of private foreign capital to the developing countries

as it adds to the domestic resources of the recipient country. Unlike borrowings from foreign

resources, which involves contractual obligation from the first day, direct foreign investments

does not involve any fixed charges and dividends, which would have to be paid only when the

firm earns profit. Consequently, FDI leads to increase in Profits, Gross Domestic Product (GDP),

Aggregate Employment and Foreign Trade of the recipient country.

FDI is an important tool in the economic development of the nation. Contribution of FDI

through financial resources, technology and innovative techniques raises overall productivity of

diverse sectors of economy. If properly navigated, it also acts as a catalyst for development of

sectors such as agriculture, manufacturing, service, SME and many more. Indian retail sector is

one of the most sought after sectors that carry great potential for attracting FDI. The sector is

rightly projected as sunrise sector of India. The growth of retail, especially in 21st century is

mind boggling and attracting the attention of retailers world over. With steady entry of top

global retailers such as Wal Mart, Tesco, Carrefour and many more in last couple of years

despite conservative approach of the government, the sector has

become more fascinating for research study. The recent decision of Indian government of

opening up the sector for FDI in single and multi brand retail has stirred up the heat with

intense agitation activities witnessed all over India. The whole issue needs dispassionate view

from all - intelligentsia, corporate world as well as from government so that Indian retail sector

benefits in its onward march of progress.

Foreign investment is investment in an enterprise by a Non-Resident irrespective of whether

this involves new equity capital or re-investment of earnings. Foreign investment is of two kinds

– (i) Foreign Direct Investment (FDI) and (ii) Foreign Portfolio Investment. FDI is defined under

Dictionary of Economics as ―Investment in a foreign country through the acquisition of a local

company or the establishment thereof an operation on a new site. It refers to capital inflow

from abroad. It is a form of long term international capital movement, made for the purpose of

productive activity and accompanied by the intention of managerial control or participation in

the management of foreign firm. International Monetary Fund (IMF) and Organization for

Economic Cooperation and Development(OECD) define FDI similarly as a category of cross

border investment made by a resident in one economy (the direct investor) with the objective

of establishing a lasting interest‘ in an enterprise (the direct investment enterprise) that is

resident in an economy other than that of the direct investor. Regulatory Framework for FDI in

India

Indian companies can receive FDI under two routes-

1. Automatic Route – It does not require prior approval either of Reserve Bank of India (RBI) or

government. It is allowed in all activities / sectors except where the provision of consolidated

FDI policy paragraphs ―Entry route for investment issued by government of India from time to

time is attracted.

2. Government Route –Government route means that investment in the capital of resident

entities by non-resident entities can be made only with the prior approval from FIPB, Ministry

of Finance or SIA, DIPP as the case may be. FDI in sectors, not covered under automatic route

requires prior approval of the government which is considered by Foreign Investment

Promotion Board (FIPB), Department of Economic Affairs, and Ministry of Finance. Following

sectors require prior approval of Government of India.

1. Sectors prohibited for FDI - retail trading, lottery business, atomic energy, gambling and

betting, business of chit fund, agriculture and plantation, nidhi companies, housing and real

estate business.

2. Activities that require industrial license

3. Proposals in which the foreign collaborator has existing financial / technical collaboration in

India in the same field.

4. Proposals for acquisition of shares in an existing Indian company in financial services and

where Securities Exchange Board of India (SEBI) regulation, 1977 is attracted.

5. All proposal falling outside notified sectoral policy in which FDI is not permitted.The Legal

basis

Foreign Direct Investment by non-resident in resident entities through transfer or issue of

security to person resident outside India is a ‗Capital account transaction and Government of

India and Reserve Bank of India regulate this under the FEMA, 1999 and its various regulations.

Keeping in view the current requirements, the Government from time to time comes up with

new regulations and amendments/changes in the existing ones through order/allied rules,

Press The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce &

Industry, Government of India makes policy pronouncements on FDI through Press Notes/ Press

Releases which are notified by the Reserve Bank of India as amendment to notification No.

FEMA 20/2000-RB dated May 3, 2000. These notifications take effect from the date of issue of

Press Notes/ Press Releases. The procedural instructions are issued by the Reserve Bank of

India vide Circulars. The regulatory framework over a period of time thus consists of Acts,

Regulations, Press Notes, Press Releases, Clarifications, etc. This circular consolidates into one

document all the prior policies/regulations on FDI which are contained in FEMA, 1999, RBI

Regulations under FEMA, 1999 and Press Notes/Press Releases/Clarifications issued by DIPP

and reflects the current policy framework‘ on FDI. It deals comprehensively with all aspects of

FDI Policy which are covered under the various Press Notes/Press Releases/ Clarifications issued

by DIPP.

Sector Specific Limits of Foreign Investment in India

Sector FDI Cap/Equity Entry Route Other Conditions

A. Agriculture

1. Floriculture, Horticulture,

Development of Seeds, Animal

Husbandry, Pasic culture

,Aquaculture, Cultivation of

vegetables & mushrooms and

services related to agro and

allied sectors

2. Tea sector, including

plantation (FDI is not allowed

in any other agricultural

sector /activity)

100%

100%

Automatic

FIPB

B. Industry

1. Mining covering exploration

and mining of diamond &

precious stones; Gold, silver

100%

Automatic

and

minerals.

2. Coal and lignite mining for

captive consumption by power

projects and iron & steel,

cement production.

3. Mining and mineral

separation of titanium bearing

minerals

100%

100%

Automatic

FIPB

C. Manufacturing

1. Alcohol-Distillation &

Brewing

2. Coffee & Rubber processing

& Warehousing

3. Defense production

4. Hazardous chemicals and

isocyanides

5. Industrial explosives -

Manufacture

6. Drugs and Pharmaceuticals

7. Power including generation

(except Atomic energy);

transmission, distribution and

100%

100%

26%

100%

100%

100%

100%

Automatic

Automatic

FIPB

Automatic

Automatic

Automatic

Automatic

power trading. (FDI is not

permitted for generation,

transmission & distribution of

electricity produced in atomic

power plant/atomic energy

since private investment in

this activity is prohibited and

reserved for public sector.)

D. Services

1. Civil aviation (Greenfield

projects and Existing projects)

2. Asset Reconstruction

companies

3. Banking (private) sector

4. NBFCs: underwriting,

portfolio management

services, investment advisory

services,

financial consultancy, stock

broking, asset management,

100%

49%

74% (FDI+FII).

FII not to

exceed49%

100%

Automatic

FIPB

Automatic

Automatic

s.t.minimum

capitalisation

norms

venture capital, custodian,

factoring, leasing and finance,

housing finance, forex broking

etc.

5. Broadcasting

a. FM Radio

b. Cable network;

c. Direct to home

d. Hardware facilities such as

up-linking, HUB.

e. Up-linking a news and

current affairs TV Channel

6. Commodity Exchanges

7. Insurance

8. Petroleum and natural gas

a. Refining

20%

49% (FDI+FII)

100%

49% (FDI+FII) (FDI

26,% FII

23%)

26%

FIPB

FIPB

Automatic

FIPB (for

PSUs).

9. Print Media

a. Publishing of newspaper

and periodicals dealing with

news

and current affairs

b. Publishing of scientific

magazines / speciality

journals/periodicals

10. Telecommunications

a. Basic and cellular, unified

access services, national

/international long-distance,

V-SAT, public mobile radio

trunked services (PMRTS),

global mobile personal

communication services

(GMPCS) and others.

49% (PSUs).

100% (Pvt.

Companies)

26%

100%

74% (including

FDI,FII,

NRI,

FCCBs,ADRs/GDRs,

convertible

Automatic

(Pvt.)

FIPB

FIPB

Automatic

up to 49%

and FIPB

beyond

49%.

Clearance

from IRDA

S.t.guidelines

by Ministry of

Information &

Broadcasting

preference

shares, etc.

Example:-

Capital controls against FDI in aviation: An example of bad governance in India

FDI in aviation was liberalised by the Reserve Bank of India on September 21, 2012 through a

change in the Foreign Exchange Management (Transfer or Issue of Security by a Person

Resident outside India) Regulations, 2000 (link). Following that change, private players began

putting together a number of complex transactions between Indian and foreign companies such

as Jet-Etihad, AirAsia-Tata, and Tata-Singapore Airlines.

On November 20, 2013, the Directorate General of Civil Aviation (DGCA) revised its ̀ Civil

Aviation Requirements' or "CAR" (CAR 4.1.5 to 4.1.16) to state that a domestic airline company

cannot enter into an agreement with a foreign investing entity (including foreign airlines) that

may give such foreign entity a right to control the management of the domestic operator ( link).

This change in regulations has major consequences for some of the transactions which are in

progress.

B. REGULATORY FRAMEWORK FOR FII:-

The foreign investment is necessary for all developing nation as well as developed nation but it

may differ from country to country. The developing economies are in a most need of these

foreign investments for boosting up the entire development of the nation in productivity of the

labour, machinery etc. The foreign investment or foreign capital helps to build up the foreign

exchange reserves needed to meet trade deficit or we can say that foreign investment provides

a channel through which developing countries gain access to foreign capital which is needed

most for the development of the nations in the area of industry, telecom, agriculture, IT etc.

The foreign investment also affects on the recipient country like it affects on its factor

productivity as well as affects on balance of payments. Foreign investment can come in two

forms: foreign direct investment and foreign institutional investment. Foreign direct investment

involves in direct production activities and in a long and medium term nature. As far as the FIIs

concern it is the short term nature and short term investments. FIIs invest in financial markets

such as money markets, stock markets and foreign exchange markets. Introduction to Foreign

Institutional Investors (FII’s)Since 1990-91, the Government of India embarked on liberalization

and economic reforms with a view of bringing about rapid and substantial economic growth

and move towards globalization of the economy. As a part of the reforms process, the

Government under its New Industrial Policy revamped its foreign investment policy recognizing

the growing importance of foreign direct investment as an instrument of technology transfer,

augmentation of foreign exchange reserves and globalization of the Indian economy.

Simultaneously, the Government, for the first time, permitted portfolio investments from

abroad by foreign institutional investors in the Indian capital market. The entry of FIIs seems to

be a follow up of the recommendation of the Narsimhan Committee Report on Financial

System. While recommending their entry, the Committee, however did not elaborate on the

objectives of the suggested policy. The committee only suggested that the capital market

should be gradually opened up to foreign portfolio investments. From September 14,1992 with

suitable restrictions, Foreign Institutional Investors were permitted to invest in all the securities

traded on the primary and secondary markets, including shares, debentures and warrants

issued by companies which were listed or were to be listed on the Stock Exchanges in India.

While presenting the Budget for 1992-93, the then Finance Minister Dr. Manmohan Singh had

announced a proposal to allow reputed foreign investors, such as Pension Funds etc., to invest

in Indian capital market Market design in India for foreign institutional investorsForeign

Institutional Investors means an institution established or incorporated outside India which

proposes to make investment in India in securities. A Working Group for Streamlining of the

Procedures relating to Foreign Institutional Investors, constituted in April, 2003, inter alia,

recommended streamlining of SEBI registration procedure, and suggested that dual approval

process of SEBI and RBI be changed to a single approval process of SEBI. This recommendation

was implemented in December 2003.Currently, entities eligible to invest under the FII route are

as follows:

As FII:

Overseas pension funds

mutual funds

investment trust

asset management company

nominee company

bank

institutional portfolio manager

university funds

Endowments

Foundations

Charitable trusts

Charitable societies ( a trustee or power of attorney holder incorporated or Established outside

India proposing to make proprietary investments or with no single investor holding more than

10 per cent of the shares or units of the fund.)

As Sub-accounts: The sub account is generally the underlying fund on whose behalf the FII

invests. The following entities are eligible to be registered as sub-accounts

Partnership firms

Private company

Public company

Pension fund

Investment trust

Individuals.

FIIs registered with SEBI fall under the following categories:

1. Regular FIIs- those who are required to invest not less than 70 % of their investment in

equity-related instruments and 30 % in non-equity instruments.

2. 100 % debt-fund FIIs- those who are permitted to invest only in debt instruments.

The Government guidelines for FII of 1992 allowed, inter-alia, entities such as asset

management companies, nominee companies and incorporated/institutional portfolio

managers or their power of attorney holders (providing discretionary and non-discretionary

portfolio management services) to be registered as Foreign Institutional Investors. While the

guidelines did not have a specific provision regarding clients, in the application form the details

of clients on whose behalf investments were being made were sought. While granting

registration to the FII, permission was also granted for making investments in the names of

such clients. Asset management companies/portfolio managers are basically in the business of

managing funds and investing them on behalf of their funds/clients. Hence, the intention of the

guidelines was to allow these categories of investors to invest funds in India on behalf of their

‘clients’. These ‘clients’ later came to be known as sub-accounts. The broad strategy consisted

of having a wide variety of clients, including individuals, intermediated through institutional

investors, who would be registered as FIIs in India. FIIs are eligible to purchase shares and

convertible debentures issued by Indian companies under the Portfolio Investment Scheme.

Registration Process of FIIs:

A FII is required to obtain a certificate by SEBI for dealing in securities. SEBI grants the

certificate SEBI by taking into account the following criteria:

i) The applicant's track record, professional competence, financial soundness, experience,

general reputation of fairness and integrity.

ii) Whether the applicant is regulated by an appropriate foreign regulatory authority.

iii) Whether the applicant has been granted permission under the provisions of the Foreign

Exchange Regulation Act, 1973 (46 of 1973) by the Reserve Bank of India for making

investments in India as a Foreign Institutional Investor.

iv) Whether the applicant is :-

a) An institution established or incorporated outside India as a pension fund, mutual fund,

investment trust, insurance company or reinsurance company.

(b) An International or Multilateral Organization or an agency thereof or a Foreign

Governmental Agency or a Foreign Central Bank

(c) an asset management company, investment manager or advisor, nominee company, bank

or institutional portfolio manager, established or incorporated outside India and proposing to

make investments in India on behalf of broad based funds and its proprietary funds in if any or

(d) university fund, endowments, foundations or charitable trusts or charitable societies.

v) Whether the grant of certificate to the applicant is in the interest of the development of the

securities market.

vi) Whether the applicant is a fit and proper person. The SEBIs initial registration is valid for a

period of three years from the date of its grant of renewal.

Sectors

Percentage

Share of

Foreign

institutional

March 07 March

08

March

09

March

10

September11

Banks 18.41 19.15 14.27 16.02 17.62 18.17

Engineering 11.45 10.63 7.34 8.28 9.36 9.30

Finance 18.18 17.44 13.01 16.53 23.35 19.20

FMCG 16.34 11.91 14.07 12.72 14.09 16.34 17.00

Information

Technology

14.53 16.00 12.44 11.68 21.16 17.07

Infrastructure 7.15 8.86 7.31 8.90 7.87 7.50

Manufacturing 9.57 9.46 7.28 8.79 9.41 9.60

Media &

Entertainment

15.20 11.71 11.42 7.06 10.97 11.63

Petrochemicals 5.83 4.73 4.77 6.08 6.52 6.49

Pharmaceuticals 11.17 10.69 7.88 8.78 10.19 10.13

Services 13.09 10.70 8.39 8.05 7.41 9.50

Telecommunication 11.17 9.12 6.85 8.64 8.44 8.46

Miscellaneous 8.19 9.30 8.39 8.10 13.65 13.37

Total stake of FIIs in

all the Sectors

10.78 10.62 8.40 9.58 10.32 10.45

Example:-

Historically, retailers have tried to exploit relationships with supplier. A great example was in

the 1970s, when Sears sought to dominate the household appliance market. Sears set very high

standards for quality; suppliers that did not meet these standards were dropped from the Sears

line. This could also be seen in case of Wal-Mart that places strict control on its suppliers. A

contract with a big retailer like Wal-Mart can make or break a small supplier. In retail industry

suppliers tend to have very little power.

(ADR) American depositary receipt:-

Definition:-

A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one

share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S.

dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to

reduce administration and duty costs that would otherwise be levied on each transaction. This

is an excellent way to buy shares in a foreign company while realizing any dividends and capital

gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the

underlying shares in another country. For example, dividend payments in euros would be

converted to U.S. dollars, net of conversion expenses and foreign taxes and in accordance with

the deposit agreement. ADRs are listed on either the NYSE, AMEX or Nasdaq as well as OTC.

ADRs are one type of depositary receipt (DR), which are any negotiable securities that

represent securities of companies that are foreign to the market on which the DR trades. DRs

enable domestic investors to buy securities of foreign companies without the accompanying

risks or inconveniences of cross-border and cross-currency transactions.

Each ADR is issued by a domestic custodian bank when the underlying shares are deposited in a

foreign depositary bank, usually by a broker who has purchased the shares in the open market

local to the foreign company. An ADR can represent a fraction of a share, a single share, or

multiple shares of a foreign security. The holder of a DR has the right to obtain the underlying

foreign security that the DR represents, but investors usually find it more convenient to own

the DR. The price of a DR generally tracks the price of the foreign security in its home market,

adjusted for the ratio of DRs to foreign company shares. In the case of companies domiciled in

the United Kingdom, creation of ADRs attracts a 1.5% stamp duty reserve tax (SDRT) charge by

the UK government. Depositary banks have various responsibilities to DR holders and to the

issuing foreign company the DR represents.

1. Programmes:-

When a company establishes an ADR program, it must decide what exactly it wants out of the

program, and how much time, effort, and other resources they are willing to commit. For this

reason, there are different types of programs, or facilities, that a company can choose.

2. Unsponsored :-

Unsponsored shares trade on the over-the-counter (OTC) market. These shares are issued in

accordance with market demand, and the foreign company has no formal agreement with a

depositary bank. Unsponsored ADRs are often issued by more than one depositary bank. Each

depositary services only the ADRs it has issued.

As a result of an SEC rule change effective October 2008, hundreds of new ADRs have been

issued, both sponsored and unsponsored. The majority of these were unsponsored Level I

ADRs, and now approximately half of all ADR programs in existence are unsponsored.

A) Sponsored level 1 :-

Level 1 depositary receipts are the lowest level of sponsored ADRs that can be issued. When a

company issues sponsored ADRs, it has one designated depositary who also acts as its transfer

agent.

A majority of American depositary receipt programs currently trading are issued through a

Level 1 program. This is the most convenient way for a foreign company to have its equity

traded in the United States.

Level 1 shares can only be traded on the OTC market and the company has minimal reporting

requirements with the U.S. Securities and Exchange Commission (SEC). The company is not

required to issue quarterly or annual reports in compliance with U.S. GAAP. However, the

company must have a security listed on one or more stock exchange in a foreign jurisdiction

and must publish in English on its website its annual report in the form required by the laws of

the country of incorporation, organization or domicile.

Companies with shares trading under a Level 1 program may decide to upgrade their program

to a Level 2 or Level 3 program for better exposure in the United States markets.

B) Sponsored Level II ADRs ("Listing" facility)

Level 2 depositary receipt programs are more complicated for a foreign company. When a

foreign company wants to set up a Level 2 program, it must file a registration statement with

the U.S. SEC and is under SEC regulation. In addition, the company is required to file a Form 20-

F annually. Form 20-F is the basic equivalent of an annual report (Form 10-K) for a U.S.

company. In their filings, the company is required to follow U.S. GAAP standards or IFRS as

published by the IASB.

The advantage that the company has by upgrading their program to Level 2 is that the shares

can be listed on a U.S. stock exchange. These exchanges include the New York Stock

Exchange (NYSE), NASDAQ, and the American Stock Exchange (AMEX).

While listed on these exchanges, the company must meet the exchange’s listing requirements.

If it fails to do so, it may be delisted and forced to downgrade its ADR program.

C) Sponsored Level iii :-

A Level 3 American Depositary Receipt program is the highest level a foreign company can

sponsor. Because of this distinction, the company is required to adhere to stricter rules that are

similar to those followed by U.S. companies.

Setting up a Level 3 program means that the foreign company is not only taking steps to permit

shares from its home market to be deposited into an ADR program and traded in the U.S.; it is

actually issuing shares to raise capital. In accordance with this offering, the company is required

to file a Form F-1, which is the format for an Offering Prospectus for the shares. They also must

file a Form 20-F annually and must adhere to U.S. GAAP standards or IFRS as published by the

IASB. In addition, any material information given to shareholders in the home market, must be

filed with the SEC through Form 6K.

Foreign companies with Level 3 programs will often issue materials that are more informative

and are more accommodating to their U.S. shareholders because they rely on them for capital.

Overall, foreign companies with a Level 3 program set up are the easiest on which to find

information. Examples include the British telecommunications company Vodafone(VOD), the

Brazilian oil company Petrobras (PBR), and the Chinese technology company China Information

Technology, Inc. (CNIT).

3. Restricted Programs:-

Foreign companies that want their stock to be limited to being traded by only certain

individuals may set up a restricted program. There are two SEC rules that allow this type of

issuance of shares in the U.S.: Rule 144-A and Regulation S. ADR programs operating under one

of these 2 rules make up approximately 30% of all issued ADRs.

4. Privately placed:-

Some foreign companies will set up an ADR program under SEC Rule 144A. This provision makes

the issuance of shares a private placement. Shares of companies registered under Rule 144-A

are restricted stock and may only be issued to or traded by qualified institutional buyers (QIBs).

US public shareholders are generally not permitted to invest in these ADR programs, and most

are held exclusively through the Depository Trust & Clearing Corporation, so there is often very

little information on these companies.

Characteristics include:

1. It is a secured security

2. A fixed rate of interest is paid

3. Can be converted into multiple shares

5. Offshore (SEC Regulation S) ADRs:-

The other way to restrict the trading of depositary shares to US public investors is to issue them

under the terms of SEC Regulation S. This regulation means that the shares are not, and will not

be registered with any United States securities regulation authority.

Regulation S shares cannot be held or traded by any “U.S. person” as defined by SEC Regulation

S rules. The shares are registered and issued to offshore, non-US residents.

Regulation S ADRs can be merged into a Level 1 program after the restriction period has

expired, and the foreign issuer elects to do this.

6. Sourcing:-

One can either source new ADRs by depositing the corresponding domestic shares of the

company with the depositary bank that administers the ADR program or, instead, one can

obtain existing ADRs in the secondary market. The latter can be achieved either by purchasing

the ADRs on a US stock exchange or via purchasing the underlying domestic shares of the

company on their primary exchange and then swapping them for ADRs; these swaps are

called crossbook swaps and on many occasions account for the bulk of ADR secondary trading.

This is especially true in the case of trading in ADRs of UK companies where creation of new

ADRs attracts a 1.5% stamp duty reserve tax (SDRT) charge by the UK government; sourcing

existing ADRs in the secondary market (either via crossbook swaps or on exchange) instead is

not subject to SDRT.

7. Termination:-

Most ADR programs are subject to possible termination. Termination of the ADR agreement will

result in cancellation of all the depositary receipts, and a subsequent delisting from all

exchanges where they trade. The termination can be at the discretion of the foreign issuer or

the depositary bank, but is typically at the request of the issuer. There may be a number of

reasons why ADRs terminate, but in most cases the foreign issuer is undergoing some type

of reorganization or merger.

Owners of ADRs are typically notified in writing at least thirty days prior to a termination. Once

notified, an owner can surrender their ADRs and take delivery of the foreign securities

represented by the Receipt, or do nothing. If an ADR holder elects to take possession of the

underlying foreign shares, there is no guarantee the shares will trade on any US exchange. The

holder of the foreign shares would have to find a broker who has trading authority in the

foreign market where those shares trade. If the owner continues to hold the ADR past the

effective date of termination, the depositary bank will continue to hold the foreign deposited

securities and collect dividends, but will cease distributions to ADR owners.

Usually up to one year after the effective date of the termination, the depositary bank will

liquidate and allocate the proceeds to those respective clients. Many US brokerages can

continue to hold foreign stock, but may lack the ability to trade it overseas.

(GDRs) Global Depositary Receipts:-

A Global depository receipt (GDR) also known as International depository receipt (IDR), is a

certificate issued by a depository bank, which purchases shares of foreign companies and

deposits it on the account. They are the global equivalent of the original American Depository

Receipts (ADR) on which they are based. GDRs represent ownership of an underlying number

of shares of a foreign company and are commonly used to invest in companies from developing

or emerging markets by investors in developed markets.

Prices of global depositary receipt are based on the values of related shares, but they are

traded and settled independently of the underlying share. Typically 1 GDR is equal to 10

underlying shares, but any ratio can be used. It is a negotiable instrument which is

denominated in some freely convertible currency.[1] GDRs enables a company (issuer) to access

investors in capital markets outside of its home country.

Several international banks issue GDRs, such as JPMorgan Chase, Citigroup, Deutsche Bank, The

Bank of New York Mellon. GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg

Stock Exchange and in the London Stock Exchange, where they are traded on the International

Order Book (IOB).

Characteristic:-

1. it is an unsecured security

2. it may be converted into number of shares

3. interest and redemption price is public in foreign agency

4. it is listed and traded in the stock exchange

usage:-

If for example an Indian Company which has issued ADRs in the American market wishes to

further extend it to other developed and advanced countries such as Europe, then they can sell

these ADRs to the public of Europe and the same would be named as GDR.

(ECB) external commercial borrowing :-

An external commercial borrowing (ECB) is an instrument used in India to facilitate the access

to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs

include commercial bank loans, buyers' credit, suppliers' credit, securitised instruments such

as floating rate notes and fixed rate bonds etc., credit from official export credit agencies and

commercial borrowings from the private sector window of multilateral financial

Institutions such as International Finance Corporation (Washington), ADB, AFIC, CDC, etc. ECBs

cannot be used for investment in stock market or speculation in real estate. The DEA

(Department of Economic Affairs), Ministry of Finance, Government of India along with Reserve

Bank of India, monitors and regulates ECB guidelines and policies. For infrastructure and

greenfield projects, funding up to 50% (through ECB) is allowed. In telecom sector too, up to

50% funding through ECBs is allowed. Recently Government of India has increased limits on RBI

to up to $40[1] billions and allowed borrowings in Chinese currency yuan.

Borrowers can use 25 per cent of the ECB to repay rupee debt and the remaining 75 per cent

should be used for new projects. A borrower can not refinance its existing rupee loan through

ECB. The money raised through ECB is cheaper given near-zero interest rates in the US and

Europe, Indian companies can repay their existing expensive loans from that.

(FEMA)Foreign Exchange Management Act,1999:-

The Foreign Exchange Management Act, 1999 (FEMA) is an Act of the Parliament of India "to

consolidate and amend the law relating to foreign exchange with the objective of facilitating

external trade and payments and for promoting the orderly development and maintenance of

foreign exchange market in India". It was passed in the winter session of Parliament in 1999,

replacing the Foreign Exchange Regulation Act (FERA). This act seeks to make offenses related

to foreign exchange civil offenses. It extends to the whole of India.,[1] replacing FERA, which had

become incompatible with the pro-liberalization policies of the Government of India. It enabled

a new foreign exchange management regime consistent with the emerging framework of

the World Trade Organization (WTO). It also paved way to Prevention of Money Laundering

Act 2002, which was effected from 1 July 2005.

Unlike other laws where everything is permitted unless specifically prohibited, under this

act everything was prohibited unless specifically permitted. Hence the tenor and tone of the Act

was very drastic. It required imprisonment even for minor offences. Under FERA a person was

presumed guilty unless he proved himself innocent, whereas under other laws a person is

presumed innocent unless he is proven guilty.

Switch for FERA:-

FERA, in place since 1975, did not succeed in restricting activities such as the expansion

of transnational corporations (TNCs). The concessions made to FERA in 1991-1993 showed that

FERA was on the verge of becoming redundant.[3] After the amendment of FERA in 1993, it was

decided that the act would become the FEMA. This was done in order to relax the controls on

foreign exchange in India, as a result of economic liberalization. FEMA served to make

transactions for external trade (exports and imports) easier – transactions involving current

account for external trade no longer required RBI’s permission. The deals in Foreign Exchange

were to be ‘managed’ instead of ‘regulated’. The switch to FEMA shows the change on the part

of the government in terms of foreign capital.[4]

Need for management:-

The buying and selling of foreign currency and other debt instruments by businesses,

individuals and governments happens in the foreign exchange market. Apart from being very

competitive, this market is also the largest and most liquid market in the world as well as

in India.[5] It constantly undergoes changes and innovations, which can either be beneficial to a

country or expose them to greater risks. The management of foreign exchange market becomes

necessary in order to mitigate and avoid the risks. Central banks would work towards an orderly

functioning of the transactions which can also develop their foreign exchange market. [6]

Whether under FERA or FEMA’s control, the need for the management of foreign exchange is

important. It is necessary to keep adequate amount of foreign exc from Import Substitution to

Export Promotion.

Main feature:-

Activities such as payments made to any person outside India or receipts from them, along

with the deals in foreign exchange and foreign security is restricted. It is FEMA that gives

the central government the power to impose the restrictions.

Restrictions are imposed on residents of India who carry out transactions in foreign

exchange, foreign security or who own or hold immovable property abroad.

Without general or specific permission of the MA restricts the transactions involving foreign

exchange or foreign security and payments from outside the country to India – the

transactions should be made only through an authorized person.

Deals in foreign exchange under the current account by an authorized person can be

restricted by the Central Government, based on public interest.

Although selling or drawing of foreign exchange is done through an authorized person, the

RBI is empowered by this Act to subject the capital account transactions to a number of

restrictions.

Residents of India will be permitted to carry out transactions in foreign exchange, foreign

security or to own or hold immovable property abroad if the currency, security or property

was owned or acquired when he/she was living outside India, or when it was inherited by

him/her from someone living outside India.

Exporters are needed to furnish their export details to RBI. To ensure that the transactions

are carried out properly, RBI may ask the exporters to comply to its necessary

requirements.

B) (FMC) Forward Markets Commission:-.

1. Name of the organization and logo:- Forward Markets Commission:-.

2. Year of establishment:- 1953

3. Website:- www.fmc.gov.in

4. All about FMC in brief:

The Forward Markets Commission (FMC) is the chief regulator of commodity futures

markets in India. As of July 2014 for the year 2014-15, it regulated Rs 17 trillion[1] worth

of commodity trades in India. It is headquartered in Mumbai and this financial

regulatoryagency is overseen by the Ministry of Finance.

Commission:-

Established in 1953 under the provisions of the Forward Contracts (Regulation) Act, 1952, it

consists of not less than two but not exceeding four members appointed by the Central

Government, out of them one being nominated by the Central Government to be the Chairman

of the Commission. Currently Commission comprises three members among whom Shri Ramesh

Abhishek, IAS is the Chairman, Dr. M. Mathisekaran, IES and Shri Nagendraa Parakh are the

Members of the Commission. Currently, the Commission allowscommodity trading in 22

exchanges in India, of which 6 are national.

Chairman of FMC

Mr. Ramesh Abhishek is the Chairman of commodities regulator FMC. He is an IAS Officer of

1982 Batch (Bihar Cadre) and was appointed on 24 September 2012 as the Chairman of

Forward Market Commission. Mr. Abhishek, an alumnus of the Harvard Kennedy School, holds

post graduate degrees in public administration and international relations.

Members of FMC

1. Dr M.Mathisekaran

Dr M.Mathisekaran belongs to 1981 batch Indian Economic Service. He has Post Graduate

Degree in Economics from Madurai Kamraj University, M.Sc (National Development Project

Planning) from University of Bradford, UK and Ph.D from University of Madras.

Before joining IES, he had worked as Assistant Professor of Economics from 1978 to 1981.After

joining IES, he has worked in various capacities in different organizations of the Government of

India. He had worked in the Programme Evaluation Organization of Planning Commission in the

regional offices at Hyderabad, Mumbai and Chennai. He had also worked as Chief Vigilance

Officer in the Tuticorin Port Trust and General Manager (Vigilance) in Food Corporation of India.

He was on deputation with Tamil Nadu Government from 8.11.2008 to 30.5.2011.

Before joining as Member, Forward Markets Commission he has worked as Economic

Adviser,FMC from 12.12.2007 to 31.10.2008 and 31.5.2011 to 15.12.2011,As Director,FMC from

9.10.1990 to 5.6.1991 and as Deputy Dirtector,FMC from 27.6.1998 to 15.11.1989.

2. Shri. Nagendra Parakh

Shri. Nagendra Parakh is a rank holder Chartered Accountant (CA) and Company Secretary (CS)

by professional Qualifications. He qualified CA and CS in 1985-86.

Before joining FMC in July 2013, Shri. Parakh was working as Chief General Manager at SEBI,

During his career with SEBI since 1994, He was associated in various reforms in the Indian

Securities market like on-line trading, demeterialisation, rolling settlement etc. He was key

person behind introduction of the Equity Derivatives Market and T+2 rolling settlements in

Indian securities Markets. He was SEBI nominee director on the board of Bangalore Stock

Exchange, Cochin Stock Exchange, Derivative segment of National Stock Exchange and

Derivative segment of The Stock Exchange Mumbai. Besides he has represented SEBI in various

committees set up by Reserve bank of India, Ministry of Finance and Govt. of India. He was also

a member representing India on the Standing committee II of the IOSCO.

Nagendra Parakh carries with him varied regulatory experiences of Indian and global Securities

market.

History:-

From 2013 september 09, the commission is overseen by the Department of Economic

Affairs, Ministry of Finance. Since futures traded in India are traditionally on food commodities,

earlier it was overseen by Ministry of Consumer Affairs, Food and Public Distribution (India).[2]

Development of the Industry:-

India has a long history of trading commodities and considered the pioneer in some forms of

derivatives trading. The first derivative market was set up in 1875 in Mumbai, where cotton

futures was traded. This was followed by establishment of futures markets in edible oilseeds

complex, raw jute and jute goods and bullion. This became an active industry with volumes

reported to be large.

However, in 1935 a law was passed allowing the government to in part restrict and directly

control food production (Defence of India Act, 1935). This included the ability to restrict or ban

the trading in derivatives on those food commodities. Post independence, in the 1950s, India

continued to struggle with feeding its population and the government increasingly restricting

trading in food commodities. Just at the time the FMC was established, the government felt

that derivative markets increased speculation which led to increased costs and price

instabilities. And in 1953 finally prohibited options and futures trading altogether.[3]

The industry was pushed underground and the prohibition meant that development and

expansion came to a halt. In the 1970 as futures and options markets began to develop in the

rest of the world, Indian derivatives markets were left behind. The apprehensions about the

role of speculation, particularly in the conditions of scarcity, prompted the Government to

continue the prohibition well into the 1980s.

The result of the period of prohibition left India with a large number of small and isolated

regional futures markets. The futures markets were dispersed and fragmented, with separate

trading communities in different regions with little contact with one another. The exchanges

had not yet embrace modern technology or modern business practices.

5. Functions of the regulator:

The functions of the Forward Markets Commission are as follows:

To advise the Central Government in respect of the recognition or the withdrawal of

recognition from any association or in respect of any other matter arising out of the

administration of the Forward Contracts (Regulation) Act 1952.

To keep forward markets under observation and to take such action in relation to them, as

it may consider necessary, in exercise of the powers assigned to it by or under the Act.

To collect and whenever the Commission thinks it necessary, to publish information

regarding the trading conditions in respect of goods to which any of the provisions of the

act is made applicable, including information regarding supply, demand and prices, and to

submit to the Central Government, periodical reports on the working of forward markets

relating to such goods;

To make recommendations generally with a view to improving the organization and

working of forward markets;

To undertake the inspection of the accounts and other documents of any recognized

association or registered association or any member of such association whenever it

considers it necessary.

It allows futures trading in 23 Fibers and Manufacturers, 15 spices, 44 edible oils, 6 pulses, 4

energy products, single vegetable, 20 metal futures, 33 others Futures.

6. Do’s and Don’ts of investing in commodities market:-

7. Regulatory framework:-

1. Objectives:

To ensure that markets efficiently perform the twin

economic functions of :

Price discovery

Price Risk management

To maintain market integrity and financial integrity across the market, the Exchanges

and the Intermediaries (brokers, warehouses, assayers) etc.

2. Maintaining Financial Integrity:-

a) Capital Adequacy of Exchanges and Intermediaries.

b) Payment of Adequate Margins by Intermediaries.

3. Maintaining Market Integrity:-

a) Effective Surveillance and Monitoring

b) Audit of Exchanges and Intermediaries.

4. Ensuring alignment of Future and Spot prices:-

a) Threat of Delivery

b) Final Settlement based on correct spot prices

5. Investor Protection:-

a) Fair and even handed conduct of the Exchanges.

b) Protection against unscrupulous Intermediaries

6. Fairness and Transparency in Trading, Clearing and Settlement Process:-

a) Demutualized Set up of the Exchanges.

b) Electronic Trading

c) Corporate Governance in the Exchanges.

Act 1952:-

1. Constitution of India lists futures market and stock market in the Union List and the Central

Government is given the power to legislate.

a) Spot market is regulated by the States.

2. Forward Contract (Regulation) Act 1952 enacted.

D) Non –Banking Financial Company(NBFC):-

1. Name of the regulator with logo:

Non-Banking Financial Company

2. Website: www.nbfc.rbi.org.in

3. All about NBFCs in brief:

The financial sector in any economy consists of several intermediaries. Apart from banking

entities, there are investment intermediaries (such as mutual funds, hedge funds, pension

funds, and so on), risk transfer entities (such as insurance companies), information and analysis

providers (such as rating agencies, financial advisers, etc), investment banks, portfolio

managers and so on.

All such entities that offer financial services other than banking, may be broadly called non-

banking financial institutions. What is banking? Banking is commonly understood to mean

taking of deposits withdrawable on demand or notice - that is, banks can hold people's deposits

and promise to pay them on demand. There are variety of other entities that may accept

deposits - hence, acceptance of deposits is not the essence of banking.

In India, the term "non-banking financial companies" acquires a new meaning, and a huge

significance. The meaning of the term is such entities which are not banks, and yet carry lending

activities almost at par with banks. They may also accept deposits - however, these deposits are

term deposits and not call deposits.

The significance of non-banking financial companies in India lies in the massive capabilities of

NBFCs - short of acceptance of call deposits and remittance function, NBFCs can virtually do

everything that a bank can. Compared to this disability, the ease of entry and lightness of

regulation applicable to NBFCs makes it a tremendous focus of interest, particularly for foreign

investors wanting to enter India's financial sector.

For instance, it is possible to hold 100% foreign ownership of NBFCs, while in case of banks,

there are serious caps.

It is possible to either start an NBFC or buy one of the 17000-odd companies many of which are

formed for sale. On the other hand, getting a banking license requires a real penance.

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act,

1956 engaged in the business of loans and advances, acquisition of

shares/stocks/bonds/debentures/securities issued by Government or local authority or other

marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business

but does not include any institution whose principal business is that of agriculture activity,

industrial activity, purchase or sale of any goods (other than securities) or providing any

services and sale/purchase/construction of immovable property.

A non-banking institution which is a company and has principal business of receiving deposits

under any scheme or arrangement in one lump sum or in installments by way of contributions

or in any other manner, is also a non-banking financial company (Residuary non-banking

company).

Non-bank financial companies are financial institutions that provide banking services without

meeting the legal definition of a bank, i.e. one that does not hold a banking license. These

institutions typically are restricted from taking deposits from the public depending on the

jurisdiction. Nonetheless, operations of these institutions are often still covered under a

countries banking regulations.

The specific banking products that can be offered by NBFCs depends on the jurisdiction, and

may include services such as loans and credit facilities, savings products, investments

and money transfer services. In some jurisdictions, such as New Zealand, any company can

engage in banking business, except they are not allowed to use the word bank in their name. A

company can only call itself a bank if it is a registered as such with the nation's central bank.

Services provided:-

NBFCs offer most sorts of banking services, such as loans and credit facilities, private education

funding, retirement planning, trading in money markets, underwriting stocks and shares,

TFCs(Term Finance Certificate) and other obligations. These institutions also provide wealth

management such as managing portfolios of stocks and shares, discounting services e.g.

discounting of instruments and advice on merger and acquisition activities. The number of non-

banking financial companies has expanded greatly in the last several years as venture capital

companies, retail and industrial companies have entered the lending business. Non-bank

institutions also frequently support investments in property and prepare feasibility, market or

industry studies for companies.

However they are typically not allowed to take deposits from the general public and have to

find other means of funding their operations such as issuing debt instruments.

Regulations:-

For European NCs the Payment Services Directive (PSD) is a regulatory initiative from the

European Commission to regulate payment services and payment service providers throughout

the European Union (EU) and Eurofff Economic Area (EEA). The PSD describes which type of

organisations can provide payment services in Europe (credit institutions (i.e. banks) and

certain authorities (e.g. Central Banks, government bodies), Electronic Money Institutions

(EMI), and also creates the new category of Payment Institutions). Organisations that are not

credit institutions or EMI, can apply for an authorisation as Payment Institution in any EU

country of their URL choice (where they are established) and then passport their payment

services into other Member States across the EU.

4.Categories of NBFCs:

NBFCs are categorized

a) in terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs,

b) non deposit taking NBFCs by their size into systemically important and other non-deposit

holding companies (NBFC-NDSI and NBFC-ND)

c) by the kind of activity they conduct. Within this broad categorization the different types of

NBFCs are as follows:

i. Asset Finance Company(AFC) : An AFC is a company which is a financial institution

carrying on as its principal business the financing of physical assets supporting

productive/economic activity, such as automobiles, tractors, lathe machines, generator

sets, earth moving and material handling equipments, moving on own power and

general purpose industrial machines. Principal business for this purpose is defined as

aggregate of financing real/physical assets supporting economic activity and income

arising therefrom is not less than 60% of its total assets and total income respectively.

ii. Investment Company (IC) : IC means any company which is a financial institution

carrying on as its principal business the acquisition of securities,

iii. Loan Company (LC): LC means any company which is a financial institution carrying on

as its principal business the providing of finance whether by making loans or advances

or otherwise for any activity other than its own but does not include an Asset Finance

Company.

iv. Infrastructure Finance Company (IFC): IFC is a non-banking finance company a) which

deploys at least 75 per cent of its total assets in infrastructure loans, b) has a minimum

Net Owned Funds of Rs. 300 crore, c) has a minimum credit rating of ‘A ‘or equivalent d)

and a CRAR of 15%.

v. Systemically Important Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC

carrying on the business of acquisition of shares and securities which satisfies the

following conditions:-

vi. (a) it holds not less than 90% of its Total Assets in the form of investment in equity

shares, preference shares, debt or loans in group companies;

(b) its investments in the equity shares (including instruments compulsorily convertible

into equity shares within a period not exceeding 10 years from the date of issue) in

group companies constitutes not less than 60% of its Total Assets;

(c) it does not trade in its investments in shares, debt or loans in group companies

except through block sale for the purpose of dilution or disinvestment;

(d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f)

of the RBI act, 1934 except investment in bank deposits, money market instruments,

government securities, loans to and investments in debt issuances of group companies

or guarantees issued on behalf of group companies.

(e) Its asset size is Rs 100 crore or above and

(f) It accepts public funds

vi. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC) : IDF-NBFC is a

company registered as NBFC to facilitate the flow of long term debt into infrastructure

projects. IDF-NBFC raise resources through issue of Rupee or Dollar denominated bonds of

minimum 5 year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-

NBFCs.

vii. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI): NBFC-MFI is a

non-deposit taking NBFC having not less than 85%of its assets in the nature of qualifying

assets which satisfy the following criteria:

viii. a. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not

exceeding Rs. 60,000 or urban and semi-urban household income not exceeding Rs.

1,20,000;

b. loan amount does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in subsequent

cycles;

c.total indebtedness of the borrower does not exceed Rs. 50,000;

d. tenure of the loan not to be less than 24 months for loan amount in excess of Rs. 15,000

with prepayment without penalty;

e. loan to be extended without collateral;

f. aggregate amount of loans, given for income generation, is not less than 75 per cent of

the total loans given by the MFIs;

g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the

borrower

ix. Non-Banking Financial Company – Factors (NBFC-Factors): NBFC-Factor is a non-deposit

taking NBFC engaged in the principal business of factoring. The financial assets in the

factoring business should constitute at least 75 percent of its total assets and its income

derived from factoring business should not be less than 75 percent of its gross income.

5. What are the requirements for registration with RBI?

A company incorporated under the Companies Act, 1956 and desirous of commencing business

of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should

comply with the following:

i. it should be a company registered under Section 3 of the companies Act, 1954

ii. It should have a minimum net owned fund of Rs 200 lakh. (The minimum net owned fund

(NOF) required for specialized NBFCs like NBFC-MFIs, NBFC-Factors, CICs is indicated separately

in the FAQs on specialized NBFCs)

5. Residuary NBFCs:

They structure a part of Non-Banking Financial Company however their working is

diverse from the normal Nifco Residuary Non-Banking Company is a class

of NBFCS whose chief business is accepting of stores, under any plan or arrangement.

The stores appropriated don't include venture, asset financing, or credits. These

organizations are instructed to uphold speculations as per directions of RBI,

notwithstanding fluid possessions. The working of these companies is unique in relation

to those of organization enrollment as far as strategy for activation of stores and

necessity of arrangement of depositors’ funds. Sahara Mutual Fund was the first RNBC

began in India. The exercises of different Nifco are at present controlled by RBI. For this

reason, Nifco are essentially separated into two classes viz., those tolerant open stores

and those not tolerating open stores.

6. Detail report on any 5 NBFCs in India:

1. Futura:-

Futura’ today is truly a ‘Complete Polyester Company’, covering the entire range of

Polyesters from PET through PBT, PTT, PEN, PTN and PBN! The `Futura’ brand is

synonymous with products for the future: Speciality Polyesters for high end application.

Futura works with Global Companies such as Pepsi, Coke, GE Plastics, Shell Chemicals,

Faerchplast-Denmark, Associated Packaging Technologies - USA. Committed to Global

Quality Systems : ISO 9001:2000 Certification for the production facilities of Fibres,

Polymers and Preforms ; Committed to Environment, Health and Safety : ISO

14001:1996 for the PET Recycling facilities. $140 Million Sales in Fiscal Year 2006-07

including Exports of $ 71 Million

2. Tulsi Capital Market Limited:-

Tulsi Capital Market Limited is a Public Company incorporated on 28 July 1993. It is

classified as Indian Non-Government Company and is registered at Registrar of

Companies, Bangalore. Its authorized share capital is Rs. 110,000,000 and its paid up

capitalisRs.46,575,000. Tulsi Capital Market Limited's Annual General Meeting (AGM)

was last held on 30 September 2013 and as per records from Ministry of Corporate

Affairs (MCA), its balance sheet was last filed on 31 March 2013.

3. VIJI Finance Limited:-

The Leader in Financial Services Viji Finance LTD. brings deep industry experience,

innovative service offerings and next generation global delivery to serve the financial

services industry. VIJI Finance Ltd. is in the business of providing financial services to its

customers engaged in Infrastructural Development and construction, with a focus on

Infrastructure, Housing, and Equity, Vehicle Finance sectors in India. Viji Finance Ltd. has

played a fundamental role in financing projects, funded through long-term investment

instruments. Viji Finance Ltd. also provides customized financial solutions for Major

Groups. Viji Finance Ltd. formerly known as Panjon Finance Ltd. is a non-banking

company incorporated at 12 October 1994; the name changed of the company was

effective from 12 September 2012. The Company's principle activity is to provide

financial and investment services. The Company is mainly doing Finance Business. There

is stiff competition among major NBFCs in finance sector, but due to long history and

good background, the customers give preference to the Company. It is a Non-Banking

Finance Company (NBFC) registered at Reserve Bank of India, Department of Non-

Banking Supervision, Bhopal Office. Its Registration Number is B-03.00080.

4. TCI Finance Ltd:-

CI Finance was incorporated on November 29, 1973, as a public limited company in the

name and style of 'Bhoruka Finance' at Bombay. The name of the company was changed

to TCI Finance with effect from November 20, 1992. The Registrar of Companies,

Maharashtra, has issued a fresh certificate of incorporation consequent upon the name

change on 20th November, 1992.The registered office of the company is located at 1-7-

293, MG Road, Secunderabad, Andhra Pradesh-500003. The company’s principal activity

is to provide non-banking financial services. Its products include hire purchase, leasing

and inter corporate loans.

5. About Yama Finance Limited:

Yama Finance Limited was registered on 25 November, 1993. Yama Finance Limited's Corporate

Identification Number (CIN) is L65910DL1993PLC191032, Registeration Number is 191032. Their

registered address on file is B-6/5, Local Shopping Centers afdarjung Enclave, New Delhi -

110029, Delhi, India. Yama Finance Limited currently have 3 Active Directors /

Partners: Poonam Sharma, Ravi Sharma, Narender Mukharaiya, and there are no other Active

Directors / Partners in the company except these 3 officials. Yama Finance Limited is currently

in Active Status.

D. Companies Act, 2013:-

1. Name of the regulator with logo:

Companies Act, 2013

2. Website: www.companiesact.in

2. Private and Public Company with 5 examples each:

Private companies:-

With an Annual GDP growth rate of 7-8 percent India is the one of the fastest growing

economies in the world. This stable annual GDP growth rate that India is witnessing is mostly

due to the rise of the major private sector companies in the country.

Private sector companies play a very important role in the Indian economy. Over the last 15

years or so the major Private companies in India have contributed more than significantly to the

growth of the Indian economy. After the liberalization policies in the 1990's India started

receiving huge amounts of foreign direct investment (FDI) which was one of the most important

reasons behind the success of the private companies in the country. Prior to this the Indian

economy was ruled mostly by the public sector enterprises which were known for their strict

rules and regulations and bureaucratization.

The liberalization policies proved to be a boon for the Indian economy. The economy witnessed

huge amounts of foreign funds and along with it came in cutting edge technology and new

ideas which started changing the functioning of India business. Slowly and steadily more and

more private sector companies started coming up and establishing themselves in this part of

the globe.

Since the 1990's most of the Foreign Direct Investment that India received was in favor of the

private sector. The total amount of investment increased from 56 percent in the first five years

of the decade to almost 71 percent in the other five years of 1990. This became the investment

trend and is continuing till today. Investments in private sector generally cover sectors like

transport, manufacturing, infrastructure, financial services, social services, agriculture,

telecommunication and Information technology. However the present investment trends show

that sectors like pharmaceutical, contract research semiconductor, biotechnology and product

research and development are also gaining immense importance.

The Major Private companies of India prioritized customer's need and speedy service, which

further fueled competition amongst same industry players. This healthy competition has

benefited the end consumers, since the cost of service or products has come down

substantially. B grade companies are also offering lucrative and competitively priced products

or service, whose quality is at par with 'A' grade companies.

Over the last few years the country has witnessed a sea change in its economy and this is

mostly due to some of the finest private sector BPOs, software companies, private banks and

financial companies. India's manufacturing sector is also flooded with a number of private

Indian companies that dominate the Indian industry and have also made a mark in the global

forefront. The manufacturing companies in the country encompass sectors such as chemicals,

textiles, petrochemical products, automobile, agri-foods, telecommunication equipment, and

computer hardware.

1. Reliance Industries:-

Reliance Industries Limited (RIL) is an Indian conglomerate holding company headquartered

in Mumbai, Maharashtra, India. The company operates in five major segments: exploration and

production, refining and marketing, petrochemicals, retail and telecommunications.

The group is present in many business sectors across India including petrochemicals,

construction, communications, energy, health care, science and technology, natural resources,

retail, textiles, and logistics.

RIL is the second-largest publicly traded company in India by market capitalization and is the

second largest company in India by revenue after the state-run Indian Oil Corporation The

company is ranked No. 99 on the Fortune Global 500 list of the world's biggest corporations, as

of 2013. RIL contributes approximately 14% of India's total exports.

2. Tata Consultancy Services

Tata Consultancy Services Limited (TCS) is an Indian multinational information technology (IT)

service, consulting and business solutions company headquartered

in Mumbai, Maharashtra. TCS operates in 46 countries. It is a subsidiary of the Tata Group and

is listed on the Bombay Stock Exchange and the National Stock Exchange of India. TCS is the

largest Indian company by market capitalization and is the largest India-based IT services

company by 2013 revenues. TCS is now placed among the ‘Big 4’ most valuable IT services

brands worldwide. In 2013, TCS is ranked 40th overall in the Forbes World's Most Innovative

Companies ranking, making it both the highest-ranked IT services company and the top Indian

company. It is the world's 10th largest IT services provider, measured by revenues

3. Bharti Airtel:-

Bharti Airtel Limited, commonly known as Airtel, is an Indian

multinational telecommunications services company headquartered inNew Delhi, India.

It operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel has

a GSM network in all countries in which it operates, providing 2G, 3G and 4G services

depending upon the country of operation. Airtel is the world's third largest mobile

telecommunications company by subscribers, with over 275 million subscribers across

20 countries as of July 2013.[6] It is the largest cellular service provider in India, with

192.22 million subscribers as of August 2013.[7] Airtel is the Second largest Asia-Pacific

mobile operator by subscriber base, behind China Mobile.

Airtel is the largest provider of mobile telephony and second largest provider of fixed

telephony in India, and is also a provider ofbroadband and subscription

television services. It offers its telecom services under the "airtel" brand, and is headed

by Sunil Bharti Mittal. Bharti Airtel is the first Indian telecom service provider to

achieve Cisco Gold Certification.[8] It also acts as a carrier for national and international

long distance communication services. The company has a submarine cable landing

station at Chennai, which connects the submarine cable connecting Chennai and

Singapore.

Bharti Airtel added 5.10 lakh subscribers to take its base to 20.97 crore at the end of

July,2014. Its market share in India is highest with a value of 28.41%.

Airtel is credited with pioneering the business strategy of outsourcing all of its business

operations except marketing, sales and finance and building the 'minutes factory' model

of low cost and high volumes. The strategy has since been copied by several

operators.[9] Its network—base stations, microwave links, etc.—is maintained

by Ericsson and Nokia Siemens Network[10] whereas IT support is provided

by IBM,[11] and transmission towers are maintained by another company (Bharti Infratel

Ltd. in India).[12] Ericsson agreed for the first time to be paid by the minute for

installation and maintenance of their equipment rather than being paid up front, which

allowed Airtel to provide low call rates of 1/minute (US$0.02/minute).

4.Wipro:-

Wipro Limited (Western India Products Limited[1]) is an Indian multinational IT

Consulting and System Integrationservices company headquartered in Bangalore,

Karnataka.[4][5] As of March 2014, the company has 146,000 employees servicing over 900 large

enterprise & Fortune 1000 corporations with a presence in 61 countries. On 31 March 2014,

its market capitalisation was approximately 1.27 trillion ($20.8 billion), making it one of India's

largest publicly traded company and seventh largest IT services firm globally.

To focus on core IT Business, it demerged its non-IT businesses into a separate company named

Wipro Enterprises Limited with effect from 31 March 2013 The demerged company offers

consumer care, lighting, healthcare and infrastructure engineering and contributed to approx.

10% of the revenues of Wipro Limited in previous financial yearRecently Wipro has also

identified Brazil, Canada & Australia as rapidly growing markets globally and has committed to

strengthen the presence in the respective countries over the next 3 years.

5.Infosys:-

Infosys Ltd (formerly Infosys Technologies) is an Indian multinational corporation that

provides business consulting, information technology, software

engineering and outsourcing services. It is headquartered in Bangalore, Karnataka. Infosys is

the third-largest India-based IT services company by 2014 revenues,[4] and the fifth largest

employer of H-1B visa professionals in the United States in FY 2013.[5] On 31 March 2014,

its market capitalisation was 188,510 crores ($31.11 billion), making it India's fifth largest

publicly traded company. Its Q2 profit for FY14/15 rose to Rs. 3,096 Crore

PUBLIC COMPANIES:-

1. Hindustan Machine Tools Limited:-

HMT Limited, formerly Hindustan Machine Tools Limited, is a state-owned

manufacturing company under the Ministry of Heavy Industries and Public

Enterprises in India.[1] The company manufactures tractors, watches under its watch

division and industrial machines and tools mainly under its Praga division[2] It has a work

force of 2,806 with manufacturing units located

at Bangalore, Pinjore, Kalamassery, Hyderabad and Ajmer

2. Powergrid Corporation of India Limited :-

The Power Grid Corporation of India Limited (POWERGRID),

(NSE: POWERGRID, BSE: 532898) is an Indian state-ownedelectric utilities company

headquartered in Gurgaon, India. POWERGRID transmits about 50% of the total power

generated in India on its transmission network. Its subsidiary company, Power System

Operation Corporation Limited (POSOCO) handles power management for Power Grid.

POWERGRID also operates a telecom business under the name POWERTEL

3. Bharat Heavy Electricals Limited:-

Bharat Heavy Electricals Limited (BHEL) owned by Government of India, is a power plant

equipment manufacturer and operates as an engineering and manufacturing company

based in New Delhi, India. Established in 1964, BHEL is India's largest engineering and

manufacturing company of its kind. The company has been earning profits continuously

since 1971-72 and paying dividends uninterruptedly since 1976-77.

4. Oil India Limited:-

Oil India Limited (OIL) is the second largest hydrocarbon exploration & production (E&P)

Indian public sector company and operational headquarters in Duliajan, Assam, India

under the administrative control of the Ministry of Petroleum and Natural Gas of

the Government of India. However, Company's Corporate office located inNoida in New-

Delhi-NCR region. OIL is engaged in the business of exploration, development and

production ofcrude oil and natural gas, transportation of crude oil and production

of liquid petroleum gas. The story of Oil India Limited (OIL) traces and symbolises the

development and growth of the Indian petroleum industry. From the discovery of crude

oil in the far east of India at Digboi, Assam in 1889 to its present status as a fully

integrated upstream petroleum company, OIL has come far, crossing many milestones.

The Company presently produces over 3.6-3.8 MMTPA (million tonnes per annum) of

crude oil, over 7 MMSCMD of Natural Gas and over 50,000 Tonnes of LPG annually.

Most of this emanates from its traditionally rich oil and gas fields concentrated in the

Northeastern part of India and contribute around 80% of total Oil&Gas produced in the

region. The search for newer avenues has seen OIL spreading out its operations in

onshore / offshore Orissa and Andaman, Cauvery offshore, Tamil Nadu, Arabian Sea,

deserts of Rajasthan, onshore Andhra Pradesh, riverbeds ofBrahmaputra and logistically

difficult hilly terrains of the Indian state Mizoram and Arunachal Pradesh. In Rajasthan,

OIL discovered gas in 1988, heavy oil / bitumen in 1991 and started production of gas in

1996. The company has accumulated over a hundred years of experience in the field of

oil and gas production, since the discovery of Digboi oilfield in 1889. It is possibly the

only company to do so. From well completion to wellbore servicing, installation,

operation and maintenance of modern surface handling facilities, the company has the

skill and expertise to manage the entire range of operations required for onshore oil and

gas production.

The company has over 100,000 square kilometres of license areas for oil and gas

exploration. It has emerged as a consistently profitable International company and

present

in Libya,Gabon, Nigeria, Sudan, Venezuela, Mozambique, Yemen, Iran, Bangladesh and

USA. OIL has recently emerged in the offshore giant gas-field project of Mozambique

and also made discovery of oil & gas in Gabon as an Operator and Libya as non-

operator. OIL acquired Shale oil asset in USA during 2012.

In recent years, OIL has stepped up E & P activities significantly in the North-East India.

OIL has set up the NEF (North East Frontier) project to intensify its exploration activities

in the frontier areas in North East, which are logistically very difficult and geologically

complex. Presently, exploration activities are in progress along the Trust Belt areas of

Arunachal, Assam including Mizoram. The Company operates a crude oil pipeline in the

North East for transportation of crude oil produced by both OIL and ONGCL in the region

to feed Numaligarh, Guwahati, Bongaigaon and Barauni refineries and a branch line to

feed Digboi refinery.

5. Indian Airlines:-

Indian, formerly Indian Airlines (Indian Airlines Limited from 1993 and Indian Airlines

Corporation from 1953 to 1993) was a major Indian airline based in Delhi and focused

primarily on domestic routes, along with several international services to neighbouring

countries in Asia. It was state-owned, and was administered by the Ministry of Civil

Aviation. It was one of the two flag carriers of India, the other being Air India. The airline

officially merged into Air India on 27 February 2011.

On 7 December 2005, the airline was rebranded as Indian for advertising purposes as a

part of a program to revamp its image in preparation for an initial public

offering (IPO).[1] The airline operated closely with Air India, India's national

carrier. Alliance Air, a fully owned subsidiary of Indian, was renamed Air India

Regional.[2]

In 2007, the Government of India announced that Indian would be merged into Air

India. As part of the merger process, a new company called the National Aviation

Company of India Limited (now called Air India Limited) was established, into which

both Air India (along with Air India Express) and Indian (along with Alliance Air) would be

merged. Once the merger was completed, the airline - called Air India - would continue

to be headquartered in Mumbai and would have a fleet of over 130 aircraft.

3. MOA (Memorandum of Association):

Memorandum of association is the charter of the company and defines the scope of its

activities. An article of association of the company is a document which regulates the internal

management of the company.

Memorandum of association defines the relation of the company with the rights of the

members of the company interest and also establishes the relationship of the company with

the members.

As per Section 2(56) of the Companies Act,2013 “memorandum” means the memorandum of

association of a company as originally framed or as altered from time to time in pursuance of

any previous company law or of this Act.

Section 4 of the Companies Act,2013 deals with MOA. The Memorandum of a company shall

contain the following;

1. Name Clause:

The name of the company with the last word “Limited” in the case of a public

limited company, or the last words “Private Limited” in the case of a private

limited company

2. Situation Clause:

The State in which the registered office of the company is to be situated.

3.Object Clause:-

The objects for which the company is proposed to be incorporated and any

matter considered necessary in furtherance thereof.

4.Liability Clause:

The liability of members of the company, whether limited or unlimited, and also state,—

(i) in the case of a company limited by shares- liability of its members is limited to the amount

unpaid, if any, on the shares held by them; and

(ii) in the case of a company limited by guarantee-the amount up to which each member

undertakes to contribute—

(A) to the assets of the company in the event of its being wound-up while he is a member or

within one year after he ceases to be a member, for payment of the debts and liabilities of the

company or of such debts and liabilities as may have been contracted before he ceases to be a

member,as the case may be; and

(B) to the costs, charges and expenses of winding-up and for adjustment of the rights of the

contributories among themselves;

5.Capital Clause:

(i) the amount of share capital with which the company is to be

registered and the division thereof into shares of a fixed amount and

the number of shares which the subscribers to the memorandum

agree to subscribe which shall not be less than one share; and

(ii) (ii) the number of shares each subscriber to the memorandum

intends to take, indicated opposite his name;

(iii) In the case of One Person Company, the name of the person who, in

the event of death of the subscriber, shall become the member of the

company.

Identical/undesirable names;

The name stated in the memorandum shall not—

(a) be identical with or resemble too nearly to the name of an existing company registered

under this Act or any previous company law; or

(b) be such that its use by the company—

(i) will constitute an offence under any law for the time being in force; or

(ii) is undesirable in the opinion of the Central Government

A company shall not be registered with a name which contains—

(a) any word or expression which is likely to give the impression that the company is in any way

connected with, or having the patronage of, the Central Government, any State Government, or

any local authority, corporation or body constituted by the Central Government or any State

Government under any law for the time being in force; or

(b) such word or expression, as prescribed in the Companies (Incorporation) Rules, 2014.

unless the previous approval of the Central Government has been obtained for the use of any

such word or expression.

Reservation of name:-

A person may make an application in Form No. INC.1 along with the fee as provided in

the Companies (Registration offices and fees) Rules, 2014 to the registrar for the reservation

of a name set out in the application as-

(a) the name of the proposed company; or

(b) the name to which the company proposes to change its name

The Registrar may, on the basis of information and documents furnished along with the

application, reserve the name for a period of sixty days from the date of the application.

Penalty:

If the company has not been incorporated, the reserved name shall be cancelled and the person

making application shall be liable to a penalty which may extend to Rs.1,00,000/-

Action:

If the company has been incorporated, the Registrar may, after giving the company an

opportunity of being heard—

either direct the company to change its name within a period of three months, after passing

an ordinary resolution;

take action for striking off the name of the company from the register of companies; or

make a petition for winding up of the company.

Form of Memorandum:

The memorandum of a company shall be in respective forms as outlined below

S.No Table Form

1

Table A

MOA of a company limited by shares

2 Table B MOA of a company limited by guarantee and not having share capital

3 Table C MOA of a company limited by guarantee and having share capital

4 Table D MOA of an unlimited company and not having share capital

5 Table E MOA of an unlimited company and having share capital

Any provision in the memorandum or articles, in the case of a company limited by guarantee

and not having a share capital, purporting to give any person a right to participate in the

divisible profits of the company otherwise than as a member, shall be void

MOA- CA2013 Vs CA1956:

S.No CA,2013 CA,1956

1

It requires classification of objects as

1. Objects for which the company is

proposed to be incorporated and

2. Any other matter considered necessary in

furtherance thereof.

The objects of the company should be

classified in the memorandum as

1. main objects

2. Incidental or ancillary objects

3. Other objects

2

It requires that the memorandum shall

state liability of members of the company

whether unlimited or limited

The unlimited companies were not

required to state in the memorandum that

liability of the members of the company is

unlimited.

3

A company shall not be registered with a

name which contains any word or

expression which is likely to give the

impression that the company is in any way

connected with, or having the patronage

of, the Central Government, any State

Government, or any local authority,

There is no such provision

corporation or body

4

It incorporates the procedural aspects of

application for availability of name of

proposed company or proposed new name

for existing company

There is no such provision

5

It provides that the MOA of a company

shall be in respective forms specified in

Tables A,B,C,D,E of Schedule I of the 2013

Act as may be applicable to the company.

It does not allow the memorandum to be

in a form as near to the applicable Forms in

Schedule I as the circumstances admit

It provides that the MOA of a company

shall be in a such one of the forms in Table

B,C,D,E of Schedule I of the 1956 Act as

may be applicable to the case or in a Form

as near thereto as the circumstances

admit.

4. Share Capital:

5. Accounts and Audit:

The Ministry has taken a big step by notifying 183 major sections of Companies Act, 2013 w.e.f.

01.04.2014 out of which the provisions relating to Audit & Auditors is of utmost importance for

all the Chartered professionals out there. This article contains the key amendments bought into

effect in relation to audit and auditors and the way forward.

Chapter X –Audit & auditors ranging from Sections 139 to 148 of the Companies Act, 2013 (the

‘Act’) alongwith Companies (Audit and Auditors) Rules, 2014( the ‘Rules’) have been notified &

they shall come into force on the 1st day of April, 2014.

Below is the summary of all the sections within the ambit of this Chapter alongwith the

corresponding section form Companies Act, 1956:

Companies

Act,

2013(New

Act)

Companies

Act, 1956(Old

Act)

Section Title

139 224, 224A,

619

Appointment of Auditors

140 225 Removal, Resignation of auditor and giving

of special notice.

141 226 Eligibility, qualifications and disqualifications

of auditors.

142 224(8) Remuneration of auditors.

143 227, 228,

263A

Powers and duties of auditors and auditing

standards.

144 Nil Auditor not to render certain services.

145 229, 230 Auditors to sign audit reports, etc. (similar)

146 231 Auditors to attend general meeting.(similar)

147 232, 233, Punishment for contravention.

233A

148 233B Central Government to specify audit of

items of cost in respect of certain

companies. (Cost Audit)

Note: Sub-section 5 & proviso to sub-section 4 of Section 140 of Companies Act, 2013 has not

been yet notified & Proviso to sub-section (3) of Section 225 of Companies Act, 1956 still

remains in effect.

KEY CHANGES :

1) The term of auditor holding the office in a company is increased to 5 years subject to

ratification at every AGM as compared to one year in the previous act.

2) Mandatory rotation of auditors in case of listed companies, certain unlisted companies &

certain private companies after 5 years.

3) No. of audits per individual/partner reduced to twenty including private limited

companies.

4) LLP is eligible to be appointed as an auditor

5) A firm/LLP can partner with non-CA’s and still be appointed as auditor.

6) Automatic re-appointment of retiring auditor in case of other companies where no

resolution is passed in AGM

7) Certain services named in Section 144 which an auditor cannot provide to its auditee

8) Compliances in relation to appointment, resignation of auditor have increased and

changed significantly.

9) Acts of Relative is included within the ambit of disqualification of an auditor

10) Limits for disqualification in case of holding of security, indebtness to a company or

providing guarantee to a company have increased.

11) Business relationship with a company is bought within the ambit of disqualification of an

auditor

12) As per Section 143 (2), an auditor is required to make a report to the members on the

accounts examined by him and on every financial statement which are required by or under this

Act to be laid in GM report shall after taking into account the provisions of this Act, the

accounting and auditing standards and matters which are required to be included in the audit

report

a. Balance Sheet

b. Profit & Loss Account

c. Cash Flow Statement

d. A statement of changes in equity if applicable

e. Other Statements as prescribed

Note : CFS is not mandatory in case of One Person Company, Small Company & Dormant

Company.

Small Company means a company other than public company of which Paid up share capital

does not exceed Rs. 50 lakh or such prescribed amount & T/o of which as per its last P & L A/c

does not exceed 2 crores or such amount as prescribed. These do not include holding or

subsidiary company.

13) As per 143(9) of the company’s act 2013, every auditor shall comply with the auditing

standards.

14) Fraud Reporting to CG has been introduced and provisions regarding this are required to be

followed by auditor immediately within the specified time.

SECTION 139 – Appointment of auditors:

1) Appointment of Auditors other than First:

A company shall, at the 1st AGM, appoint an individual or an audit firm (always includes LLP) as

an auditor who shall hold office from the conclusion of that meeting till the conclusion of its

6th AGM and thereafter till the conclusion of every 6th AGM.

Appointment of First Auditors:

However, the first Auditors of a company are to be appointed always by the BOD within 30 days

of registration of company and in case of failure to do so, the members shall be informed who

shall within 90 days at an EGM appoint such auditor and such auditor shall hold office till

conclusion of 1st AGM.

2) Ratification at every AGM :

Company shall place the matter relating to such appointment for ratification by members at

every AGM.

Note : If the appointment is not ratified, the rules prescribe that the Board of Directors shall

appoint another individual or firm as its auditor or auditors after following the procedure laid

down in this behalf under the Act.

3) Compliance before appointment by company/auditor:

Before the appointment, a company shall obtain from the auditor–

a. Written consent of the auditor to such appointment

b. Certificate that

(a) auditor is eligible for appointment and is not disqualified for appointment under the Act,

the Chartered Accountants Act, 1949 and the rules or regulations made there under;

(b) the proposed appointment is as per the term provided under the Act;

(c) the proposed appointment is within the limits laid down by or under the authority of the

Act;

(d) the list of proceedings against the auditor or audit firm or any partner of the audit firm

pending with respect to professional matters of conduct, as disclosed in the certificate, is true

and correct.

4) Compliance after Appointment by Company:

A Company shall inform the auditor of his appointment & is to file a notice of appointment with

ROC within 15 days of the meeting in which auditor is appointed. (Form No. ADT – 1)

Note : Earlier auditor used to file Form 23B and inform ROC, now the company is to inform ROC,

so in a way they shifted the burden to inform on Company.

5) Mandatory Rotation of Auditors in case of Listed Companies & Certain classes of

Companies :

All Listed companies and Companies prescribed by CG shall not appoint or re-appoint–

o an individual – for more than one term of 5 consecutive years

o an audit firm – for more than two terms of 5 consecutive years

Classes of Company prescribed by CG under the Rules :

(a) all unlisted public companies having paid up share capital of rupees ten crore or more;

(b) all private limited companies having paid up share capital of rupees twenty croreor more;

(c) all companies having paid up share capital of below threshold limit mentioned in (a) & (b)

above, but having public borrowings from financial institutions, banks or public

deposits of rupees fifty crores or more.

Cooling Period:

An individual or audit firm as the case may be who/which has completed the abovementioned

terms shall not be eligible for re-appointment as auditor in the same company for 5 years from

the completion of such term

Common Partners Restriction:

As on the date of appointment, no audit firm having a common partner/s to the other audit

firm, whose tenure has expired in a company immediately preceding the F.Y., shall be

appointed as auditor of the same company for a period of 5 years.

Transition Period :

Every company required to comply as above, existing on or before the commencement of this

Act, shall comply with the above requirements within 3 years from 01.04.2014.

Rights of shareholders/ auditor unharmed :

Nothing contained above with respect to rotation shall prejudice the right of the company to

remove an auditor or the right of the auditor to resign from such office of the company.

Provisions in Rules regarding rotation :

- The period for which the individual/firm has held office as auditor prior to the commencement

of the Act shall be taken into account for calculating the period of 5 or 10 years, as the case

may be.

- The incoming auditor/audit firm shall not be eligible if such auditor/audit firm is associated

with the outgoing auditor/audit firm under the same network of audit firms.

Here, “same network” includes the firms operating or functioning, hitherto or in future, under

the same brand name, trade name or common control.

For the purpose of rotation of auditors,-

(a) a break in the term for a continuous period of five years shall be considered as fulfilling the

requirement of rotation;

(b) if a partner, who is in charge of an audit firm and also certifies the financial statements of

the company, retires from the said firm and joins another firm of chartered accountants, such

other firm shall also be ineligible to be appointed for a period of five years.

Illustration explaining rotation in case of audit firm :

Number of consecutive

years for which an audit

firm has been

functioning as auditor in

the same company [in

the first AGM held after

the commencement of

provisions of section

139(2)]

Maximum number of

consecutive years for

which the firm may be

appointed in the same

company (including

transitional period)

Aggregate period

which the firm would

complete in the same

company in view of

column I and II

I II III

10 years (or more than

10 years)

3 years 13 years or more

9 years 3 years 12 years

8 years 3 years 11 years

7 years 3 years 10 years

6 years 4 years 10 years

And so on

6) Reappointment in case of other than listed companies possible:

A retiring auditor is eligible for reappointment at an AGM, if

a) He is not disqualified for re-appointment

b) He has not given notice in writing of unwillingness to be re-appointed

c) SR passed at a meeting that some other auditor is to be appointed or expressly

providing that he shall not be re-appointed (Read special notice requirement in Section 140)

Where at any AGM, no auditor is appointed or re-appointed, the existing auditor shall continue

to be the auditor of the company.

7) Additional rights provided to Shareholders :

Subject to the provisions of this Act, members of a company may resolve to provide that -

o In the audit firm appointed by it, the auditing partner and his team shall be rotated at such

intervals as may be resolved by members; or

o The audit shall be conducted by more than one auditor.

8) Casual Vacancy (CV):

o CV caused because of resignation : By BOD within 30 days but the same should be approved

by the company within 3 months of recommendation and shall hold office till conclusion of

next AGM

o CV caused because of other reasons (disqualifications as per 141) : By BOD within 30 days,

No approval

9) Where a company is required to constitute an Audit Committee u/s 177, all

appointments, including the filling of a CV of an auditor shall be made after taking into account

the recommendations of such committee.

Section 140 : Removal, Resignation of auditor and giving of special notice

o The auditor appointed u/s 139 may be removed from his office before the expiry of his

term only by way previous approval of CG and a special resolution of the company to be

passed in a general meeting within 60 days of receipt of approval of CG. However, before

such step, the auditor shall be given a reasonable opportunity of being

heard. Theapplication to CG has to be made within 30 days of passing the board

resolution.(Form No. ADT- 2 along with fees).

Here, a long-term relationship is built for 5 years, since removal before 5 years would be

considered as removal before the expiry of his term. And for removal before the expiry of an

auditor’s term requires strict formalities to be followed.

o Compliance by auditor after resignation : The auditor who has resigned from the company

shall file within a period of 30 days from the date of resignation, a statement in the

prescribed form with the company and the ROC, indicating the reasons and other facts as

may be relevant. (Form No. ADT-3)

Punishment if auditor doesn’t comply : Fine of Rs. 50,000 to Rs. 5,00,000

o Special Notice : Special notice shall be required for a resolution at an annual general

meeting appointing as auditor a person other than a retiring auditor, or providing expressly

that a retiring auditor shall not be re-appointed, except in case of mandatory rotation in case

of listed companies. Other provisions w.r.t special notice are similar to the old Act.

Section 141 : Eligibility, Qualifications & Disqualifications

Eligibility:

a) Individual : Only if is a CA holding certificate of Practice as per Section 2(17) of the

Companies Act,2013.

b) Audit Firm/LLP : Majority of partners who are CA are practicing in India, apptd in Firm

name. Only the partner’s who are CA’s are authorised to act as auditors and sign.

Note : Thus, it seems Firm/LLP can contain partner’s who are Non-CA’s. The introduction of LLP

as an auditor and ability of a firm/LLP to operate with partners who are not Chartered

Accountants is a welcome change and in line with international practices. This will also result

in multi-disciplinary firms providing vide range of services.

Disqualifications : The following persons shall not be eligible for appointment as auditors of a

company or shall vacate the office after appointment :—

Disqualifications similar to old act :

(a) a body corporate other than a LLP

(b) an officer or employee of the company;

(c) a person who is a partner, or who is in the employment, of an officer or employee of the

company;

Disqualifications amended and its limits :

(d) a person who, or his relative or partner—

(i) is holding any security of or interest in the company or its subsidiary, or of itsholding or

associate company or a subsidiary of such holding company:

Provided that the relative may hold security or interest in the company of face value not

exceeding 1000 rupees or such sum as may be prescribed; (Prescribed sum is Rs. 1 lakh)

(ii) is indebted to the company, or its subsidiary, or its holding or associate company or a

subsidiary of such holding company, in excess of such amount as may be

prescribed; (Prescribed sum is Rs. 5 lakh)

(iii) has given a guarantee or provided any security in connection with the indebtedness of any

third person to the company, or its subsidiary, or its holding or associate company or a

subsidiary of such holding company, for such amount as may be prescribed;(Prescribed sum is

Rs. 1 lakh)

NEWLY ADDED disqualifications provided in the ACT:

(e) a person or a firm who, whether directly or indirectly, has business relationshipwith

the company, or its subsidiary, or its holding or associate company or subsidiary of such

holding company or associate company of such nature as may be prescribed;

The rules define the “business relationship” as any transaction entered into for a commercial

purpose, except –

(i) commercial transactions which are in the nature of professional services permitted

to be rendered by an auditor or audit firm under the Act and the Chartered Accountants Act,

1949 and the rules or the regulations made under those Acts;

(ii) commercial transactions which are in the ordinary course of business of the

company at arm’s length price – like sale of products or services to the auditor, as customer,

in the ordinary course of business, by companies engaged in the business of

telecommunications, airlines, hospitals, hotels and such other similar businesses.

(f) a person whose relative is a director or is in the employment of the company as adirector or

key managerial personnel;

(g) a person who is in full time employment elsewhere

or

a person or a partner of a firm holding appointment as its auditor, if such persons orpartner is

at the date of such appointment or reappointment holding appointment as auditor of more

than 20 companies;

(h) a person who has been convicted by a court of an offence involving fraud and a period of

ten years has not elapsed from the date of such conviction;

(i) any person whose subsidiary or associate company or any other form of entity,

isengaged as on the date of appointment in consulting and specialised servicesas providedin

section 144.

Note :

BUSINESS RELATIONSHIP IS AN INCLUSIVE TERM WHICH IS OPEN TO VIDE INTERPRETRATIONS

THOUGH THE EXCEPTIONS ARE PROVIDED BUT THE EXCEPTIONS ARE LIMTED TO CERTAIN

COMMERICAL TRANSACTION OF CERTAIN INDUSTRIES

LIMITS FOR AN INDIVIDUAL/PARTNER REDUCED TO TWENTY :

The 1956 Act and the Institute of Chartered Accountants of India (‘ICAI’) restrict the number of

companies in which a person/ firm can be appointed as auditor. An individual cannot be

appointed as auditor for more than 30 companies. Further, an individual cannot be appointed

as auditor for more than 20 public companies and of which not more than 10 companies should

have a paid up share capital of more than Rs 25 lakh. In case of a firm, such ceiling is

determined for every partner of the firm. This limits specifically excluded private companies.

However, the ICAI had notified that an auditor could accept 30 audits including private

companies.

But the Companies Act, 2013 simply restricts the number of audits to 20 companies for an

individual/ partner. It does not provide any restrictions based on nature/ size of the

companies. Thus, this limit is further reduced.

Note : For the audits taken up by auditor for F.Y. 2013-14, the limits won’t be applicable since

the appointment for the same was made before 01.04.2014.

Section 144 – New Insertion : AUDITOR NOT TO RENDER CERTAIN SERVICES :

In Old Act, there was no provision as to rendering of non-audit services to an audit client. It was

determined by applying the Code of Ethics and the Guidance Note on Independence of Auditors

issued by the ICAI. But the New Act contains specific provisions that prohibit auditors of a

company to render non-audit services to an audit client directly or indirectly or its holding

company or subsidiary company.

Prohibited services include:

• Accounting and book keeping services;

• Internal audit;

• Design and implementation of any financial information system;

• Actuarial services;

• Investment advisory services;

• Investment banking services;

• rendering of outsourced financial services; and

• Management services.

Here, the Act has provided a transition period 1 year meaning an auditor who has already been

performing any non-audit services shall comply with this section till 31.03.2015.

Directly or Indirectly Defined :

Auditor – Individual : His Relative, Any other person connected/associated with such individual,

entity in which such individual has significant influence or control or whose

name/trademark/brand is used by such individual.

Auditor – Audit Firm : All partners, parent/subsidiary/Associate Entity or entity in which

firm/partner has significant influence or whose name/trademark/brand is used by such

firm/partners.

Comments :

This section will significantly damage the ability of an audit-firm/individual to provide most non-

audit services. The requirements appear to be quite onerous and indeed would appear to

prohibit an audit firm from providing a wide range of services, even when those are non-

material.

Section 142 : Remuneration of auditors

First Auditor : Board

Other : GM

As per the old Act, any sums paid by the company in respect of the auditors’ expensesshall be

deemed to be included in the expression “remuneration”. But as per the new act, the

remuneration in addition to the fee payable to an auditor, include the expenses, if any,

incurred by the auditor in connection with the audit of the company and any facility extended

to him but does not include any remuneration paid to him for any other service rendered by

him at the request of the company.

This means, the board is free to decide the remuneration for other services provided by auditor

provided they don’t come within Section 144.

Section 147 : Penalty

Penalty w.r.t to contravention of Section 139 to 146 :

Company : Rs. 25,000 to Rs. 5,00,000

Officer in Default : Rs. 10,000 to Rs. 1,00,000 or imprisonment upto 1 year or both

Auditor (Sec 139, 143, 144, 145) : Rs.25000 to Rs. 5,00,000

6. Winding up:

A company is a juristic person that comes into existence by way of incorporation and

can be dissolved by undertaking a winding-up process as per the provisions of the

Companies Act, 2013 (“New Act”). The winding up process is the last stage in the life of

a company, wherein its existence is dissolved and all its assets are used to satisfy the

creditors and shareholders.

Reasons for Winding Up

The reasons for compulsory winding up under the Companies Act, 1956 (Old Act) and

the New Act remain same, except that the following grounds stand deleted as reasons

for compulsory winding up under the New Act:

a. Suspension of the business for one year from the date of incorporation or suspension

of business for a whole year; or

b. Reduction in number of members of a company below two (in case of a private

company) and seven (in case of a public company).

However, a new ground has been added for compulsory winding up under the New Act.

On the application by the Registrar or any other person authorised by the Central

Government by way of notification under the New Act, if the Tribunal is of the opinion

that the affairs of the company have been carried out in a fraudulent manner or

unlawful purpose or any person concerned or involved in the management or affairs of

the company has acted in a fraudulent manner or misfeasance or misconduct, that it i s

better to wind up the company.

Winding Up Process

Chapter XX, Part-I of the New Act deals with the compulsory winding up process. The

petition for compulsory winding up can be presented to the appropriate authority by:

a. The company; or

b. The creditors (contingent/ prospective creditors1/creditors); or

c. Any contributory or contributories; or

d. All or any person specified in (a) (b) (c) together; or

e. By the Central or the State government2; or

f. By the Registrar or any person authorised by the Central government for that

purpose.

Filing of Winding up Petition

The draft rules provide that a winding up petition (‘Petition’) is to be filed under section

272 of the New Act in the prescribed form no 1, 2 or 3, whichever is applicable and is to

be submitted in three sets.

Statement of Affairs of the Company

If the company files the Petition, it shall be accompanied with the statement of affairs

(‘Statement’) in Form No. 4 read with section 272(5) of the New Act. The Petition shall

state the facts up to a specific date, which shall not be the date more than fifteen days

prior to the date of making of the Statement. A Chartered Accountant in practice shall

duly certify this Statement. The fee for filing the Petition shall be submitted as

prescribed in Annexure-B of the draft rules.

Advertisement of the Petition

Subject to the directions of the Tribunal, the petition shall be advertised in not less than

fourteen days before the date fixed for hearing in one daily newspaper in English

language and one daily newspaper in the principal regional language circulating in the

State or union territory where the registered office of company is situated. The

advertisement needs to be carried out in Form No 6. The previous requirement of

publication in the official gazette of the State or union territory mentioned in Company

Court Rules (1959), has been done away with under the New Act.

Final Order and its Content

The Tribunal after hearing the Petition has the power to dismiss it, with or without cost,

or to make an interim order, as it thinks fit, or can appoint the provisional liquidator of

the company till the passing of the winding up order. An order for winding up of a

company will be in Form 11 and contains the footnote prescribing the following duties:

a. To submit the complete and audited book of accounts up to the date of order;

b. To attend the company liquidator at the required time and place with all information;

c. To surrender the assets3 of the company and documents related to it, including those

documents from which the benefit from the assets accrues.

Winding up or liquidation is not a legal exercise only to satisfy the debts of creditors, but

also signifies loss of brand value that the company enjoyed in its entire history. There is

not much of a difference in the manner in which the two legislations deal with the

process of liquidation, except that the New Act has somewhat simplified the process.

The draft rules pertaining to the winding up of a company are yet to be released by the

Ministry of Corporate Affairs. Winding-up of every company is food for thought to

others in the field to understand what went wrong in governing a company.

F. MFIs and Cooperatives

Micro-Finance Institutions and cooperatives:-

1.Regulatory framework of MFIs and cooperatives:-

A) Highlights of the Legal Structure and Judicial System. Except for susu collectors, susu clubs,

ROSCAs and ASCAs, MFIs in Ghana are required to establish legal entity. Banks and NBFIs (which

include rural banks and S&L companies) are required to be incorporated entities under the

Companies Act. Credit unions have legal status and identity through registration under the

Cooperative Societies Act as well as the requirements of the NBFI Law. NGOs, including those

with microcredit orientation, have legal status through establishment under the provisions of

the Law on Trusts and Charitable Institutions and the required registration with the Ministry of

Employment and Social Welfare.

B) Ghana’s legal structure and judicial system needs to be further modernized and upgraded (i)

to facilitate creation/registration/execution of lender’s security interes ts on pledged collateral,

(ii) eliminate duplicate/multiple pledging of collateral, and (iii) facilitate introduction of

securitized financial instruments that can benefit microfinance development through better

connection and linkages to formal sector institutions and financial markets. These modernizing

improvements will be beneficial not just to the development of sustainable microfinance, but

for the formal financial sector as well. As the experience of other countries (e.g., Romania) has

demonstrated, reforming the legal and regulatory frameworks for financial transactions

secured with movable assets has a substantial favorable impact on expanding access to markets

for rural credit and microfinance.10 For Ghana, such reforms would need to be accompanied by

a significant reduction in government programs that can crowd out sustainable microfinance by

private sector institutions.

C) Highlights of the Regulatory Framework. In Ghana, a tiered structure of institutions and

graduated regulation for microfinance existed even before the Government gave formal

recognition to microfinance in 1999 and through new BOG regulations pertaining specifically to

microfinance. 11 The newly-adopted formal policies on microfinance and the adoption of a

regulatory framework specific to microfinance activities had parallel co-existence with an

existing credit-quota system for agricultural credit and SME finance. The regulatory (and tax)

preferences enjoyed by rural banks and credit unions in combination with the operation of a

graduated/tiered system have made it possible for NGO MFIs to transform into licensed

institutions. This has been an indispensable element for substantially expanding the ability of

MFIs to mobilize financial resources beyond traditional grants and donations.

D) However, the remaining traditions of the former credit quota system can be detrimental to

microfinance, and further policy clarification on this aspect is indis pensable. The BOG continues

to coordinate closely with GHAMFIN and with the Ghana Credit Union Association (CUA) to

develop regulatory standards that can help promote institutional growth of the microfinance

industry, and is seriously considering ways to simplify prudential standards/guidelines. A

further development that bears watching is the establishment of a Government-sponsored and

supported apex institution for rural banks. The experience elsewhere has shown that

government-promoted apex organizations pose a significant risk of distorting the allocation of

scarce financial resources and competing unfairly against private MFIs because of access to

subsidized resources, thereby retarding the development of truly sustainable microfinance.

E) However, the remaining traditions of the former credit quota system can be detrimental to

microfinance, and further policy clarification on this aspect is indispensable. The BOG continues

to coordinate closely with GHAMFIN and with the Ghana Credit Union Association (CUA) to

develop regulatory standards that can help promote institutional growth of the microfinance

industry, and is seriously considering ways to simplify prudential standards/guidelines. A

further development that bears watching is the establishment of a Government-sponsored and

supported apex institution for rural banks. The experience elsewhere has shown that

government-promoted apex organizations pose a significant risk of distorting the allocation of

scarce financial resources and competing unfairly against private MFIs because of access to

subsidized resources, thereby retarding the development of truly sustainable microfinance.

2. All about MFIs:-

Microfinance institutions, or MFIs, come in all shapes and sizes. They can differ in scale,

experience, legal statute, strategy and budget. What lies at the heart of the microfinance

system is the issue of reliability. Reliability determines how smoothly an MFI operates.

First of all, microcredit cannot exist without microfinance institutions. These organizations

provide hard-to-find financial services to local individuals and groups. MFIs aim to promote

economic activity among low-income earners, for whom access to official banking services is

impossible or nearly so.

An MFI's reach can vary tremendously. One institution could serve a hundred clients while

another MFI, such as Grameen Bank or BRAC, could serve six million.

MFIs are organized in such a way that they provide quality viable long-term services. Generally

speaking, an MFI is made up of a head office and a number of credit agencies. The agencies are

located in different parts of the region in question. Their credit agents carefully select each and

every client and take charge of loan approvals, loan reimbursements, savings management, and

other services. As they understand how to create economic activity, they act as business

advisors and provide precious counsel to borrowers.

An MFI can fall into different legal categories depending on the country in which the institution

is based. An MFI could be an NGO, a credit cooperative or a non-bank financial institution; its

particular statute would dictate what kind of funding it receives. An NGO is not allowed to

accept borrowers' savings and must be financially supported by various subsidies and bank

loans. Meanwhile, a credit cooperative relies heavily on client savings. As for the non-bank

financial institution, this organization may take some savings deposits but it is mostly financed

by shareholders.

An MFI is characterized as having dual objectives—they are both social and financial. The

former aim means that the MFI contributes to development and fights against poverty. The

latter objective stresses that the MFI must remain profitable enough to continue operating1.

This balance is not always easy to achieve. Each MFI's strategy, whether it is more community-

centered or more economic, will determine operating decisions.

The viability of a microfinance institution is based on several factors: compatibility with the

environment, strong on-field knowledge, clear governance, and financial health. In terms of

financial stability, an MFI must be in no hurry. A promising MFI needs to make it through an

average of five years before finding a steady working rhythm. This could take even longer in a

rural environment with a low-density population. To be sustainable, an MFI must keep a

balanced budget, all while growing to meet the needs of an expanding clientele.

Which MFIs can be counted on? Anne-Sophie Perrachon, Operations Director at Microworld,

says, "We use clear and objective criteria: solid financial history, good performance in terms of

social benefits, and transparency."

Although these demands seem simple, few MFIs actually meet these expectations2. As

microfinance continues its rigorous development, the number of trustworthy microfinance

institutions will, and must, go on the rise.

1 Le guide de la microfinance. Microcrédit et épargne pour le development.

2 A growing number of MFIs around the world are sharing their financial information and other

performance-related data to international organizations. The largest databank can be found

at MIX atwww.mixmarket.org

vii. Financial Inclusion:-

Financial inclusion or inclusive financing is the delivery of financial services at affordable

costs to sections of disadvantaged and low-income segments of society, in contrast to

financial exclusion where those services are not available or affordable. An estimated

2.5 billion working-age adults globally have no access to the types of formal financial

services delivered by regulated financial institutions. For example in Sub-Saharan Africa

only 24% of adults have a bank account even though Africa's formal financial sector has

grown in recent years.[1] It is argued that as banking services are in the nature of public

good; the availability of banking and payment services to the entire population without

discrimination is the prime objective of financial inclusion public policy.

Goals of Financial inclusion:-

The term "financial inclusion" has gained importance since the early 2000s, a result of findings

about financial exclusion and its direct correlation to poverty. The United Nations defines the

goals[2] of financial inclusion as follows:

access at a reasonable cost for all households to a full range of financial services, including

savings or deposit services, payment and transfer services, credit and insurance;

sound and safe institutions governed by clear regulation and industry performance

standards;

financial and institutional sustainability, to ensure continuity and certainty of investment;

and

competition to ensure choice and affordability for clients.

Former United Nations Secretary-General Kofi Annan, on 29 December 2003, said: ”The stark

reality is that most poor people in the world still lack access to sustainable financial services,

whether it is savings, credit or insurance. The great challenge before us is to address the

constraints that exclude people from full participation in the financial sector. Together, we can

and must build inclusive financial sectors that help people improve their lives.” More

recently, Alliance for Financial Inclusion (AFI) Executive Director Alfred Hannig highlighted on 24

April 2013 progress in financial inclusion during the IMF-World Bank 2013 Spring Meetings:

"Financial inclusion is no longer a fringe subject. It is now recognized as an important part of

the mainstream thinking on economic development based on country leadership

3. Detail report on any 5 MFIs in India:-

1. BASIX-Bhartiya Samruddhi Finance Limited (BSFL):-

Bhartiya Samruddhi Finance Limited (BSFL)1 is a flagship company of Hyderabad-based BASIX

Group of institutions established in 1996. BSFL, founded as a Non-Banking Finance Company

(NBFC), facilitates financial inclusion of low-income and poor groups by offering reasonable

lines of credit along with savings facilities based on the principles of operational efficiency,

financial viability and sustainable social value. Although begun on a credit-based approach to

financial inclusion, BSFL shifted its operational paradigm to that of livelihood facilitator to meet

more effectively the needs of its customers. In its current strategy, operational since 2003, BSFL

offers livelihood related products and services through the strategic concept of ‘Livelihood

Triad’ that comprises livelihood financial services (credit, savings, and insurance), agricultural

and business development services and institutional development services for low-income and

poor groups in rural and urban areas across multiple sectors of the economy. In its service

verticals, BSFL lays stress upon leveraging new technologies and uses innovative risk mitigation

products, such as insurance products, catering to the vulnerabilities of its customers and their

economic budgets. One of its key areas of expertise, acquired from a portfolio of innovations

built over 14 years, lies in its practice of strategic interventions to enhance the economic

productivity and to reduce costs for its customers engaged in various subsectors of the

economy. innovative risk mitigation products, such as insurance products, catering to the

vulnerabilities of its customers and their economic budgets. One of its key areas of expertise,

acquired from a portfolio of innovations built over 14 years, lies in its practice of strategic

interventions to enhance the economic productivity and to reduce costs for its customers

engaged in various subsectors of the economy. Its future strategy and growth lies in expanding

its presence across rural and urban spaces. At present, BSFL has a customer base of

approximately one million with 90% concentrated in rural areas and it plans to expand its base

to 10 million by 2014 covering both urban and rural areas

2. Grama Vidiyal:-

Grama Vidiyal is a microfinance institution, operating in the Tamil Nadu area of South India.

Since 1993, Grama Vidiyal, in partnership with Activists for Social Alternatives (ASA), has

provided small loans to women without access to formal credit and who typically have daily

incomes of less than INR 80 (USD 2) per day. Grama Vidiyal’s loans outstanding currently

exceed Rs.1.157 billion (USD 28.93 million) among its 263,002 women members. Grama Vidiyal

is ranked the #4 Microfinance institution in the developing world and the leading microfinance

institution in India in the "2007 MIX Global 100 : Rankings of Microfinance Institutions -

Composite Ranking".

Grama Vidiyal’s parent organisation, Activists for Social Alternatives (ASA) is a public charitable

trust founded in 1986 by S. Devaraj, the Chairman and Managing Director. ASA initially

concentrated in working with the exploited and deprived to motivate them through education,

training, networking, and advocacy. Grama Vidiyal was originally established in 1993 as

the microfinance branch of ASA. In April 1997, Grama Vidiyal officially came into existence

when it registered as a separate charitable trust distinct from ASA.

In 2007, Grama Vidiyal transformed from a charitable trust to a regulated Non-Bank Financial

Company (NBFC). Its status as an NBFC brings Grama Vidiyal under the purview of government

regulation but will permit the firm to take on larger amounts of equity capital. Grama Vidiyal

expects continued rapid growth, reaching more than two million clients by expanding to other

states of India with an excess of Rs.15 billion (USD 400,000,000) in loans outstanding by 2012

3. Sanghamithra Rural Financial Services:-

Sanghamithra Rural Financial Services (SRFS) is a Section 25 Not for Profit company based in

Bangalore. It was established in 1995, but became fully operational from February 2000. The

company was promoted by MYRADA (Mysore Rehabilitation and Development Agency), a

leading NGO in Karnataka with the core objective of reaching out to the unreached poor where

the poor cannot access credit from formal financial institutions at affordable rate of interest

and at right time. August 31 2012, SRFS had 1.2 lakh active members across 22 districts of

Karnataka, Tamil Nadu, Andhra Pradesh (AP) and Maharashtra. As in August 2012, about 75% of

the portfolio was in Karnataka, 24.6% in Tamil Nadu and remaining in districts of AP and

Maharashtra. Significant share of SRFS’s entire portfolio comprises of the SHG loan product

extended for income generating purposes to poor women (their other product, Housing loan

product and water & sanitation loans constitute a small share in the portfolio). The company’s

30+ delinquency level for the overall portfolio of SRFS was 2.06% as on August 31, 2012. As

mentioned, SRFS is a not for profit organization, which was started with funds from MYRADA.

Being a section 25 company, the company need not have any equity on its books. Post its

commencement of operations, they have received funds and grants from many individuals and

entities focused on social development.In the first six months of the current financial year, SRFS

reported a provisional net profit of Rs. 1.6 crore on a provisional total income of Rs. 8.8 crore.

During 2011-12, the company reported a net profit of Rs. 1.5 crore on a total income of Rs. 14.8

crore.

ICRA has reaffirmed the [ICRA]BB (pronounced ICRA double B) rating to the Rs. 100.00 crore

long term bank loans of Sanghamithra Rural Financial Services (SRFS or the Company)†. The

outlook on the long term rating is stable. The rating continues to factor in SRFS’s currently

moderate scale of operations, geographically concentrated portfolio and, limited ability to raise

funds owing to its size and nature (being a section 25 company). The company’s microfinance

activities continue to be regionally concentrated notwithstanding the initiatives taken to

diversify, which exposes the company to competitive and political risks. The microfinance loans

extended by the company are unsecured in nature and are largely to customers with an

average credit profile. This coupled with SRFS’s significant reliance on outsourced group

formation for disbursements and, limited loan monitoring post disbursements exposes the

company to considerable credit risks. The rating takes cognisance of the initiatives taken by the

company for improving its internal systems and controls, including branch connectivity,

monitoring and audit processes in the recent past, however the same is still evolving in nature

and the benefits of the above are expected to accrue going forward. The rating however takes

note of the strong potential in the microfinance business in India going forward, SRFS’s track

record in microfinance business and its established franchise in Karnataka. The company has

been able secure grants and, funds at reasonable rates in the past; however SRFS has limited

fund sources in comparison to other microfinance companies for growth going forward. ICRA

takes note of the conservative business growth model of the company in the past. Considering

the company’s plan to have a conservative growth model going forward also, ICRA expects SRFS

to maintain a favourable liquidity profile. SRFS’s gearing stood at 5.2 times as on September 30,

2012 (6.1 as on March 31, 2012). SRFS’s 90+ delinquency rate‡of 1.55% as on March 31, 2012,

witnessed an improvement over 3.00% as on December 31, 2011, supported to an extent by

write-offs. The asset quality of the company however moderately deteriorated in the current

year to 90+ delinquency rate being at 1.76% in August 2012. The company’s favourable cost of

funds, low cost of operations and exemption from income tax (a section 25 company) supports

its overall profitability indicators. SFRS’s profitability in 2011-12 was impacted by a part

provision made (Rs 0.40 crore) towards a service tax demand and in the reduction in the spread

on account of an increase in the cost of funds. ICRA takes note of the incremental contingent

liability of about Rs. 3.3 crore towards the service tax demand on its books.

4. Village Financial Services:-

a. In 1978, West Bengal was affected by a devastating flood. Group of concerned

youths pledged to help the disadvantaged people in society. In 1982 Village Welfare

Society (VWS) registered as a grant based not–for-profit organization. In 1996, VWS

starts microfinance activities.

b. This led to the setting up of “Village Micro Credit Services”, a Section 25 not-for-

profit company established to undertake the microfinance activities in 2004.

c. Village Micro Credit Services chose to work specifically on the issue of micro-finance

as it is recognized world over as the ideal approach to address the issue of all round

development of society – economic, social, political and cultural.

d. The need to transform into a Non-Banking Financial Company (NBFC) entity was

highly felt.

e. The group finally acquired a Kolkata based existing NBFC called Spencer Vinimay Pvt

Ltd The acquisition took place on January, 2006.

f. In due course of time, the NBFC was renamed as “Village Financial Services Private

Limited “(VFSPL), is a non deposit taking NBFC, regulated by RBI is engaged in

microfinance activities. The company was reclassified by the RBI as “NBFC-MFI” on

27/09/2013.

Village Financial Services Private Limited (V.F.S) is the 1st Micro Finance Company in Eastern

Region with Non Banking Financial Company status (N.B.F.C) registered by Reserve Bank of

India (RBI). We are the 1st ISO certified Micro Finance Company in India. Village Financial

Services Private Limited has started Micro Finance Operations in the financial year 2005-2006.

Micro Finance program of V.F.S has grown & has touched the lives of many thousands of poor

families by providing them credit for income generating activities & helping them to become

economically self sufficient, sensitizing women about empowerment issues and bringing about

a qualitative change in them and their families related to standard of living & their own status

in the society.

Products:-

General Criteria:

Only women borrowers are eligible

The member must be a member of a JLG

The loan will be used for any Income Generating Activity only

Household Annual income of the borrower should not exceed Rs. 60,000/- in rural area

and it should not exceed Rs. 1,20,000/- in non-rural area

Loan should not exceed Rs. 35,000/- in the first cycle

Total indebtedness of the borrower should not exceed Rs. 50,000/-

Other terms and conditions will be applicable as per RBI regulations & guidelines

Name of Product Briddhi Loan Samriddhi Loan

Clientele (group,

individual) JLG group JLG group

Purpose

Income generating

activities Income generating activities

Age limit 18-55 years 18-55 years

Loan Size

Rs. 4,000/- to Rs.

15,000/-

Rs. 16,000/- to Rs. 50,000/- (multiple of Rs.

2,000/-)

Loan tenure 12 months 24 onths

5. Community Development Centre:-

CDC is a not for Profit Social Service Organization established in 1994. It was duly registered as a

Trust under the Indian Trust Act of 1882. CDC has its registered office on the Periyakulam-

Batlagundu Main Road nearGhat Road at Genguvarpatti Village. Being aware of the fact that

the development of Women is the development of the family and at large the development of

the community, Programmes are planned and implemented for the economical development of

rural women. Development Programmes are decided by the Programme Planning Team at the

Head Office on the basis of village level survey taken by the staff of CDC.The basic unit for the

implementation of development programmes is the Self Help Group(SHG). Over the years many

such programmes were taken up and these have caused sustainable development among the

poor rural women of our programme area.

Vision:

Enabling the rural poor to become self-reliant, skillful and resourceful and thereby making

their economic development sustainable.

Mission:

Leading rural people, particularly women towards economic development by empowering

them and thereby encouraging their participation in the Nation Building Process.

Objectives:

To Build Awareness and motivational Initiatives regarding Women rights.

To Emphasis and develop the knowledge and skills of the marginalized people

particularly women.

To ensure the livelihood of deprived community through the right based approach.

To improve the health status of the disadvantaged.

To create an environment for children towards their over all development.

To carry out advocacy and lobbying.

To take initiative for networking with like-minded organizations.

To provide financial assistance to rural women at their door steps.

To work for the betterment of the poor women to enable them achieve equal rights in

the society.

To develop ways and means to increase their income through skill building,

Entrepreneurship development programmes etc.,

About CDC

CDC is a Non-Government Organization with no religious or political affiliation. It was started

by Mr. P.Pandian in 1994 with an ambitious plan to improve the economic and social status of

rural women in Periyakulam Block of the present Theni district. Since then the activities, scope

and geographical coverage of the organization have grown. CDC is a testimony of growing

confidence and acceptance of its services among its beneficiaries(all women) since 1994.

The organization has been registered U/S 12A of the Indian Income Tax Act and has been

granted exemption certificates under Section 80G of the Income Tax Act 1961. We have been

permitted to accept foreign contributions by the Department of Home Affairs, Government of

India. Our FCRA number being 075940363.

The founder Mr. P. Pandian with his concern for the fellowbeings and passion to serve for the

development of the underpriviledged established CDC in 1994 in order to bring hope and

positive changes in their lives through his efforts. His wife Mrs.P.Ol ivaRani who was then in

Government Service resigned her job and joined him. Their association with eminent persons

such as Dr. G.Pankajam who later became the Vice-Chancellor of Gandhigram Rural University

prompted them to register the organization as a Social Service organization and became

operational. CDC was registered as a Voluntary Public Charitable Trust on 23-3-1994 under

Indian Trust Act 1882 and its registration number being 318/94.

The organization has been registered U/S 12A of the Indian Income Tax Act and has been

granted exemption certificates under Section 80G of the Income Tax Act 1961. We have been

permitted to accept foreign contributions by the Department of Home Affairs, Government of

India. Our FCRA number being 075940363.

Encouraged by the positive results of their activities at grass -root level Community

Development Centre began building what we today refer to as CDC.

CDC inspires possibilities, creates opportunities and builds connections through community.

Our work connects people with one another, provides access to resources many could not

afford on their own, offers training and learning opportunities including technical assistance.

Profile of Trustees

Mrs.P.OlivaRani

- Managing Trustee

Mrs.P.OlivaRani is a graduate in Science from Madurai Kamaraj University and also has secured

graduation in Education.She was associated with TamilNadu Integrated Nutrition Project (TINP)

and has vast Experience in Rural Development by associating with ASSEFA, for more than one

decade, in Education Projects.

Mr.P.Pandian,

- Founder and Trustee

Mr.P.Pandian is a post graduate in Political Science from the Madurai Kamaraj University. He

has also specialized in Rural Science and Community Development from Gandhigram Rural

University. He was associating with various development organizations such as ASSEFA, IRDT

and Peace Trust for more than two decades. By virtue of his association withthese NGOs, He

has a good working knowledge of planning and implementation of development Programmes.

Mr.M.Jesudasan,

- Trustee

Mr.M.Jesudasan is the Former Regional Director, Reserve Bank of India and Former Chairman

of Tamilnadu Mercantile Bank Ltd., He is a B.A graduate. He also holds C.A.I.I.B. degree. He has

35 years of banking experience. He joined Reserve Bank of India, as Junior Officer, in 1966. He

held the position of General Manager and Chief General Manager in RBI.He has vast experience

in banking industry and specialized in Credit Appraisal, Internal banking, Human Resources,

Management Development etc.

Dr. M.Rajiakodi,

- Trustee

Dr. M.Rajiakodi, is the Professor and Head of the department of Rural Development Science

and Post Graduate Department of Social Work in P.M. Thevar College, Usilampatti. He holds a

Doctorate Degree in Rural Development and has more than two decades of teaching

experience at Postgraduate level. He is a resource person in Rural Development and has

Presented papers on Various Topics in different Seminars and Conferences. He has authored

many books on Rural Development. “Computer Application and Rural Development” is his

recent publication.

Team:

CDC has a work force of 150 men and women for our staff. These men and women have both

qualification and dedication. They are trained in such a way that they take the activities and

messages to the grass root level. Many are living in the villages of our programme area

We have formed a core team to suggest the board of matters connected with Staff training,

Staff welfare, Promotion etc., They are free to suggest ways and means of the promotion of the

activites of the organization. The following are the Members of our Core Team:

1. Mrs. P. Olivarani, General Manager ( Development ).

2. Mr. P.Senthil Prabhu, General Manager ( Human Resource ).

3. Mrs. S.Shanmuga Priya, Assistant General Manager (MIS).

4. Mr. B. Udhayakumar, Finance Officer.

5. Mr. T. Manikandan, Regional Manager.

Child Rights Programmes

CDC has formed Village Level Education Committees to facilitate the care of school going

children and dropouts. CDC helps in getting and in the distribution of free books, scholarships

and free bus passes. Free hostels are made available by the education committee for the

poorest of the poor students from the Government, private institutions. CDC has attained 2

child labour free villages, It takes maximum efforts to minimize the rate of school drop-outs.

The children, who have laboured had to improve the economic status of their families in rural

area, have been liberated with the help of CRY International. CDC provides awareness

programme on the importance of child education through cultural programmes such as street

plays, folk songs and puppet shows. It also conducts enrolment campaign for school children

every year.

Environmental Conservation

As the villages in the foot hill beds are dependent on the hills that supply them food and fodder

they are educated in the conservation of bio-diversity i.e. environment. CDC actively

participates in the National Environmental Awareness Campaigns. It frequently conducts

camps, workshops and seminars on environmental awareness.

a) Sustainable Eco -Technology

In an attempt to apply eco - friendly sustainable technology, smokeless Chulas and soak pits

have been constructed.

b) Wasteland Development

To carry out wasteland development a nursery of 96,000 seedlings of diversified economically

and ecologically important species have been raised and they have been planted in the

degraded areas by involving the entire community in the plantation programme. Seedlings have

been distributed to small and marginal farmers for greening the environment with the help of

NAEB, Government of India, at New Delhi. At present, CDC collaborates with the TamilNadu

comprehensive wasteland programme at Mayiladumparai Block of Theni District. CDC is

involved in the Afforestation projects in villages of Theni, Madurai and Dindigul Districts in

collobration with the State Forest Department, Govt. of Tamilnadu.

Rural Folk Arts Development

CDC encourages the rural folk artists to develop their traditional folk songs, drama and dances.

The rural youth are motivated to popularize the cultural folk arts.

EXTERNAL ACTIVITIES

Health:

We fully agree with the proverb 'Health is Wealth' and work towards health for all. We

coordinate with the government health department and help them introduce health

programmes into the villages. Polio plus scheme was thoroughly followed and all the children

below five years at our villages were given polio drops with the dedicated support of our staff

to the government staff. Our women staff coordinate with the Village Health Nurse in helping

the women on Antenatal care and post natal care.

We have good contact with Aravind Eye Hospitals at Theni and convened free Eye Camps at

different locations to help elders to restore eye sight by fixing Intra Ocular Lens. We helped 124

physically challenged persons to get organized into a Federation. Our staff helped 25 of them to

get identity card from the District Rehabilitation Office to enjoy the government helps. We also

organized camps to create awareness on Female Infanticide and Family Planning.

Animal Rights:

In order to secure animal rights, SABINA FUND, USA supports NGOs who propagate MEAT OUT

concept. We coordinate with them and encourage pure vegetarianism in our villages. We

celebrate WORLD ANIMALS DAY on 2nd October every year shouting slogans such as "SAVE

ANIMALS and BE VEGETARIAN". MEAT OUT day was celebrated on 20th March 2004. Special

lectures were delivered by veteran Gandhian Leaders to stop slaughter animals and to be

vegetarians. Street plays were enacted by youths to explain stopping cruelty to animals. A

procession with placards and banners on Meat Out concept was organized with the

participation of more than 2000 persons.

Peace Making:

As a member of the Gandhian Institution PARTNER COUNCIL INDIA based at New Delhi our staff

along with SHGs leaders attend periodical seminars and workshops on PEACE and SOLIDARITY.

Peace to All concepts is being spread out through these programs, which we implement and

monitor through two of our staff.

New Initiatives:

CDC has entered into the new area of land rights for women.

4. Detail report on any 5 Cooperatives in India:-

1. AMUL:-

Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat, India.[2] The

word amul (अमूल) is derived from the Sanskritword amulya (अमूल्य), meaning priceless.[3] The

co-operative was initially referred to as Anand Milk Federation Union Limited hence the name

AMUL.

Formed in 1946, it is a brand managed by a cooperative body, the Gujarat Co-operative Milk

Marketing Federation Ltd. (GCMMF), which today is jointly owned by 3 million milk producers

in Gujarat.[4]

Amul spurred India's White Revolution, which made the country the world's largest producer of

milk and milk products.[5] In the process Amul became the largest food brand in India and has

ventured into markets overseas.

Dr Verghese Kurien, founder-chairman of the GCMMF for more than 30 years (1973–2006), is

credited with the success of Amul.[6]

History

Amul the co-operative registered on 1 December 1946 as a response to the exploitation of

marginal milk producers by traders or agents of the only existing dairy, the Polson dairy, in the

small city distances to deliver milk, which often went sour in summer, to Polson. The prices of

milk were arbitrarily determined. Moreover, the government had given monopoly rights to

Polson to collect milk from mikka and supply it to Bombay city.[7][8]

Angered by the unfair trade practices, the farmers of Kaira approached Sardar Vallabhbhai

Patel under the leadership of local farmer leader Tribhuvandas K. Patel. He advised them to

form a cooperative and supply milk directly to the Bombay Milk Scheme instead of Polson (who

did the same but gave them low prices).[9] He sent Morarji Desai to organise the farmers. In

1946, the milk farmers of the area went on a strike which led to the setting up of the

cooperative to collect and process milk.[8] Milk collection was decentralized, as most producers

were marginal farmers who could deliver, at most, 1–2 litres of milk per day. Cooperatives were

formed for each village, too.[10]

The cooperative was further developed and managed by Dr.Verghese Kurien with H.M. Dalaya.

Dalaya's innovation of making skim milk powder from buffalo milk (for the first time in the

world) and a little later, with Kurien's help, making it on a commercial scale, [11] led to the first

modern dairy of the cooperative at Anand, which would compete against established players in

the market.

The trio's (T. K. Patel, Kurien and Dalaya's) success at the cooperative's dairy soon spread to

Anand's neighbourhood in Gujarat. Within a short span, five unions in other districts –

Mehsana, Banaskantha, Baroda, Sabarkantha and Surat – were set up.[8] To combine forces and

expand the market while saving on advertising and avoid competing against each other, the

GCMMF, an apex marketing body of these district cooperatives, was set up in 1973. The Kaira

Union, which had the brand name Amul with it since 1955, transferred it to GCMMF.[12]

In 1999, it was awarded the "Best of all" Rajiv Gandhi National Quality Award.[13]

Adding to the success, Dr. Madan Mohan Kashyap (faculty Agricultural and Engineering

Department, Punjab Agricultural University Ludhiana), Dr. Bondurant (visiting faculty) and Dr

Feryll (former student of Dr Verghese Kurien), visited the Amul factory in Gujarat as a research

team headed by Dr. Bheemsen. Shivdayal Pathak (ex-director of the Sardar Patel Renewable

Energy Research Institute) in the 1960s. A milk pasteurization system at the Research Centre of

Punjab Agricultural University (PAU) Ludhiana was then formed under the guidance of Kashyap.

About GCMMF

The GCMMF is the largest food products marketing organisation of India. It is the apex

organisation of the dairy cooperatives of Gujarat. It is the exclusive marketing organisation for

products under the brand name of Amul and Sagar.[14] Over the last five and a half decades,

dairy cooperatives in Gujarat have created an economic network that links more than

3.1 million village milk products with millions of consumers in India.[citation needed] The daily milk

procurement of GCMMF is around 13 million liters per day. It collects milk from about 16914

village milk cooperative societies, 17 member unions and 24 districts covering about 3.18

million milk producer members. More than 70% of the members are small or marginal farmers

and landless laborers including a sizeable population of tribal folk and people belonging to the

scheduled castes.[14]

The three-tier "Amul Model"

The Amul Model is a three-tier cooperative structure. This structure consists of a dairy

cooperative society at the village level affiliated to a milk union at the district level which in

turn is federated into a milk federation at the state level. Milk collection is done at the village

dairy society, milk procurement and processing at the District Milk Union and milk and milk

products marketing at the state milk federation. The structure was evolved at Amul in Gujarat

and thereafter replicated all over the country under the Operation Flood programmer. It is

known as the 'Amul Model' or 'Anand Pattern' of dairy cooperatives.

The main functions of the VDCS are:

Collection of surplus milk from the producers of the village and payment based on quality

and quantity,

Providing support services to the members like veterinary first aid, artificial insemination

services, cattle-feed sales, mineral mixture sales, fodder and fodder seed sales, conducting

training on animal husbandry and dairying,

Selling liquid milk for local consumers of the village,

Supplying milk to the District Milk Union.

State Cooperative Milk Federation (Federation)

The main functions of the federation are as follows:

Marketing of milk and milk products processed/manufactured by Milk Unions,

Establish a distribution network for marketing of milk and milk products,

Arranging transportation of milk and milk products from the Milk Unions to the market,

Creating and maintaining a brand for marketing of milk & milk products,

Providing support services to the Milk Unions and members like technical inputs,

management support and advisory services,

Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions,

Establish feeder-balancing dairy plants for processing the surplus milk of the Milk Unions,

Arranging for common purchase of raw materials used in manufacture/packaging of milk

products,

Decide on the prices of milk and milk products to be paid to Milk Unions,

Decide on the products to be manufactured at Milk Unions and capacity required for the

same.

Conduct long-term milk production, procurement and processing as well as marketing

planning.

Arranging finance for the Milk Unions and providing them technical know-how.

Designing and providing training in cooperative development and technical and marketing

functions.

Conflict resolution and keeping the entire structure intact.

Today, there are around 176 cooperative dairy unions formed by 125,000 dairy cooperative

societies, having a total membership of around 13 million farmers on the same pattern, who

are processing and marketing milk and milk products profitably, be it Amul in Gujarat or Verka

in Punjab, Vijaya in Andhra Pradesh, Milma in Kerala, Gokul in Maharashtra, Saras in Rajasthan

or a Nandini in Karnataka. This process has created more than 190 dairy processing plants

spread all over India with large investments by these farmers' institutions. These cooperatives

today collect approximately 23 million kg of milk per day and pay an aggregate amount of more

than Rs. 125 billion to the milk producers in a year.[citation needed]

Impact of the "Amul Model”

The effects of Operation Flood Programme are appraised by the World Bank in an evaluation

report. It has been proved that an investment of Rs. 20 billion over 20 years under Operation

Flood in the 1970s and 80s has contributed in increase of India’s milk production by 40 million

metric tonnes (MMT), i.e., from about 20 MMT pre-Operation Flood to more than 60 MMT at

the end of Operation Flood.

Thus, an incremental return of Rs. 400 billion annually have been generated by an investment

of Rs. 20 billion over 20 years. India’s milk production continues to increase and now stands at

90 MMT(as of 2012). Despite this fourfold increase in production, there has not been a drop in

the prices of milk during the period while production has continued to grow.

Due to this movement, the country’s milk production tripled between the years 1971 and 1996.

Similarly, the per capita milk consumption doubled from 111 gm per day in 1973 to 222 gm per

day in 2000.

The Amul brand

GCMMF (AMUL) has the largest distribution network for any FMCG company. It has nearly 50

sales offices spread all over the country, more than 5000 wholesale dealers and more than

700000 retailers.

Amul became the world's largest vegetarian cheese[15] and the largest pouched-milk brand.

AMUL is also the largest exporter of dairy products in the country. AMUL is available today in

over 40 countries of the world. AMUL is exporting a wide variety of products which include

whole and skimmed milk powder, cottage cheese (Paneer), UHT milk, clarified butter (Ghee)

and indigenous sweets.

The major markets are USA, West Indies, and countries in Africa, the Gulf Region,

and SAARC neighbours, Singapore, The Philippines, Thailand, Japan and China, and others such

as Mauritius, Australia, Hong Kong and a few South African countries. Its bid to enter the

Japanese market in 1994 did not succeed, but it plans to venture again.[16]

In September 2007, Amul emerged as the leading Indian brand according to a survey by

Synovate to find out Asia's top 1000 Brands.[17]

In 2013, Amul was named the Most Trusted brand in the Food and Beverages sector in The

Brand Trust Report, published by Trust Research Advisory,[18] where as in the 2014 edition

of The Brand Trust Report,[19] Amul is ranked 7th in the list of India's Most Trusted Food and

Beverages brands.

Products

Amul's product range includes milk powders, milk, butter, ghee, cheese, Masti

Dahi, Yoghurt, Buttermilk, chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns,

flavoured milk, basundi, Amul Pro brand and others. Amul PRO is a recently launched brown

beverage just like bournevita and horlicks offering whey protein, DHA and essential nutrients.

In January 2006, Amul launched India's first sports drink, Stamina, which competes with Coca

Cola's Powerade and PepsiCo's Gatorade.

Amul offers mithaimate which competes with Milkmaid by Nestle by offering more fat at lower

price.

In August 2007, Amul introduced Kool Koko, a chocolate milk brand extending its product

offering in the milk products segment. Other Amul brands are Amul Kool, a low-calorie thirst

quenching drink; Masti Butter Milk; and Kool Cafe, ready to drink coffee.

Amul's icecreams are made from milk fat and thus are icecreams in real sense of the word,

while many brands in India sell frozen desserts made from vegetable fat.

Amul's sugar-free Pro-Biotic Ice-cream won The International Dairy Federation Marketing

Award for 2007

2. The Adarsh Housing Society:-

The Adarsh Housing Society is a posh, 31 storey building constructed on prime real estate

in Colaba, Mumbai, for the welfare of war widows and personnel of India’s Ministry of Defence.

Over a period of several years, politicians, bureaucrats and military officers allegedly conspired

to bend several rules concerning land ownership, zoning, floor space index and membership get

themselves flats allotted in this cooperative society at below-market rates The scam was

unearthed in November 2010 which forced the then Chief Minister of Maharashtra, Ashok

Chavan, to resignIn 2011, a report of the Comptroller and Auditor General of India (CAG) said,

"The episode of Adarsh Co-operative Housing Society reveals how a group of select officials,

placed in key posts, could subvert rules and regulations in order to grab prime government land

- a public property - for personal benefit.

In January 2011, the Maharashtra government set up a two-member judicial commission to

inquire into the matter. The commission was headed by retired High Court judge Justice J A

Patil, with N N Kumbhar acting as member secretary. After deposing 182 witnesses over 2

years, the commission submitted its final report in April 2013 to the Maharashtra government.

The report highlighted 25 illegal allotments, including 22 purchases made by proxy.[5] The

report also indicted four former chief ministers of Maharashtra: Ashok Chavan, Vilasrao

Deshmukh, Sushilkumar Shinde and Shivajirao Nilangekar Patil, 2 former urban development

ministers: Rajesh Tope and Sunil Tatkare and 12 top bureaucrats for various illegal acts. The

allottees included Devyani Khobragade.[6][7]

The Central Bureau of Investigation (CBI), the Income Tax Department and the Enforcement

Directorate (ED) are currently investigating allegations that three former chief ministers of

Maharashtra - Sushilkumar Shinde, Vilasrao Deshmukh and Ashok Chavan - were involved in the

scam.

Alleged violations

The Adarsh Society high-rise was constructed in the Colaba locality of Mumbai. This is

considered a sensitive coastal area by the Indian Defence forces and is the location of various

Indian defence establishments.[10] The society is also alleged to have violated Indian

environment ministry rules.[11]

The scam is notable for the fact that it was enacted over a period of ten years and required the

active involvement of successive officials in many crucial posts. Rules and regulations across

many departments and ministries, both at the Centre and the state of Maharashtra, were

flouted or bent to allow for the construction of the building. Some of the more blatant

transgressions included: obtaining a No Objection Certificate (NOC) from the Army towards

construction of the building in a sensitive zone, getting the Mumbai Metropolitan Region

Development Authority (MMRDA) development plan modified, and obtaining another NOC for

residential development in a Coastal Regulation Zone, often through manipulation of records

and misrepresentation of facts. Efforts by honest officers to bring this to the notice of top

officials were ignored.[12]

The issue was first raised in a newspaper report in 2003 but did not evoke any official

reaction.[13] In 2010, it was again raised by various newspapers and TV channels. Questions

were raised about the manner in which apartments in the building were allocated to

bureaucrats, politicians and army personnel who had nothing to do with the Kargil War and the

way in which clearances were obtained for the construction of the building of the Adarsh

Society.[14][15] It had led to the resignation of the then Chief Minister, Ashok Chavan.[16]Some of

the current allottees of the flats in the Adarsh co-operative society building have offered to

return their flats, denying allegations that they were allotted flats because they influenced or

helped, in some manner, the construction of the society by violating the rules. [17]

In an interview to The Hindu published on 26 March 2012, General VK Singh, the Chief of Army

Staff ascribed many of the attempts to malign him during his tenure to, amongst others, those

he described as "the Adarsh lobby", those directly connected to the scam, as well as those who

were affected by his efforts to rid the army of corruption.

3. Mother dairy:-

Mother Dairy, set up in 1974, is a wholly owned subsidiary of National Dairy Development

Board (NDDB) of India. Mother Dairy's range of products include the brands Mother Dairy (milk,

milk products, curd, ice cream, butter, dairy whitener etc), Dhara (range of edible oils) and Safal

(range of fresh fruits and vegetables, frozen vegetables, fruit juices).

Mother Dairy was set up under the Operation Flood Programme in Delhi. It later expanded

in Mumbai, Punjab and eastern India. Future plans include expansion to South India.

Mother Dairy Foods Processing Ltd, presently known as Mother Dairy Fruit & Vegetable Private

Limited, Patparganj,Delhi, with a present turnover of about $500 million was set up in 1974

under the Operation Flood Programme. It is now a subsidiary company of National Dairy

Development Board (NDDB). Mother Dairy Foods Processing Ltd offers the following products:

Mother Dairy markets dairy products like Liquid Milk, Ice Creams, Flavoured Milk, Dahi, Lassi,

Mishti Doi, Ghee, White Butter, Table Butter, Cheese, SMP, Dairy Whitener, UHT Milk, Dhara

range of edible oils and the Safal range of fresh Fruits & Vegetables, Frozen Vegetables and

Fruit Juices at a national level, through its sales and distribution networks, for marketing food

items. Mother Dairy milk (Bulk Vended Milk) is fortified with vitamin A @2000 IU per litre of

milk as a part of social accountability. This program was started with the Mother Dairy, Delhi,

since February 1980and there after Mother Dairy is continuing this program on their own as a

social responsibility without having any financial assistance from the Government as well as

since it is felt that BVM is generally consumed by the middle / lower middle / poor strata of the

society. It is also found that the dietary practices adopted by these classes are deficient in

Vitamin A. Mother Dairy sources significant part of its requirement of liquid milk from dairy

cooperatives. Similarly, Mother Dairy sources fruits and vegetables from farmers / growers

associations. Mother Dairy also contributes to the cause of oilseeds grower cooperatives that

manufacture/ pack the Dhara range of edible oils by undertaking to nationally market all Dhara

products. It is Mother Dairy’s constant endeavor to

(a) Ensure that milk producers and farmers regularly and continually receive market prices by

offering quality milk, milk products and other food products to consumers at competitive prices

and;

(b) Uphold institutional structures that empower milk producers and farmers through processes

that are equitable.

At Mother Dairy, processing of milk is controlled by process automation whereby state-of-the-

art microprocessor technology is adopted to integrate and completely automate all functions of

the milk processing areas to ensure high product quality/ reliability and safety. Mother Dairy is

an IS/ ISO-9002, IS-15000 HACCP and IS-14001 EMS certified organization. Moreover, its Quality

Assurance Laboratory is certified by National Accreditation Board for Testing and Calibration

Laboratory (NABL)-Department of Science and Technology, Government of India.

Mother Dairy markets approximately 2.8 million liters of milk daily in the markets of Delhi,

Mumbai, Saurashtra and Hyderabad. Mother Dairy Milk has a market share of 66% in the

branded sector in Delhi where it sells 2.3 million liters of milk daily and undertakes its

marketing operations through around 14,000 retail outlets and 845 exclusive outlets of Mother

Dairy.

The company’s derives significant competitive advantage from its unique distribution network

of bulk vending booths, retail outlets and mobile units. Mother Dairy ice creams launched in the

year 1995 have shown continuous growth over the years and today boasts of approximately

62% market share in Delhi and NCR. Mother Dairy also manufactures and markets a wide range

of dairy products that include Butter, Dahi, Ghee, Cheese, UHT Milk, Lass i & Flavored Milk and

most of these products are available across the country.

The company markets an array of fresh and frozen fruit and vegetable products under the

brand name SAFAL through a chain of 400+ own Fruit and Vegetable shops and more than

20,000 retail outlets in various parts of the country. Fresh produce from the producers is

handled at the Company’s modern distribution facility in Delhi with an annual capacity of

200,000 MT. An IQF facility with capacity of around 75 MT per day is also operational in Delhi. A

state-of-the-art fruit processing plant of fruit handling capacity of 120 MT per day, a 100

percent EOU, setup in 1996 at Mumbai supplies quality products in the international market.

With increasing demand another state-of-the-art fruit processing plant has been set up at

Bangalore with fruit handling capacity of around 250 MT per day.

Mother Dairy has over the last 3 decades, harnessed the power of farmer cooperatives to

deliver a range of delicious products and bring a smile on your face. In times to come, Mother

Dairy shall strive to remain one of India’s finest food companies.

Quality Standards:-

Mother Dairy is an IS/ ISO 9002, IS 15000 HACCP and IS 14001 EMS certified organization.

Mother Dairy, Delhi has been awarded ISO 9001:2000 (Quality Management Systems), HACCP,

2002 RvA (Food Safety Management Systems) and ISO 14001:2004 (Environmental

Management Systems) Certifications. Moreover, National Accreditation Board accredits its

Quality Assurance Laboratory as per ISO/IEC 17025:1999 for Testing and Calibration

Laboratories, Department of Science and Technology, Government of India.

4. Indian Coffee House:-

The India Coffee Houses were started by the Coffee Board in early 1940s, during British rule. In

the mid 1950s the Board closed down the Coffee Houses, due to a policy change. The thrown-

out workers then took over the branches, under the leadership of the communist leader A. K.

Gopalan and renamed the network as Indian Coffee House. The first Indian Coffee Workers Co-

Operative Society was founded in Bangalore on August 19, 1957. The first Indian Coffee House

was opened in New Delhi on October 27, 1957.[1] Gradually, the Indian Coffee House chain

expanded across the country.

Dates of the formation of the societies:

Place Date of formation

Bangalore August 19, 1957

Delhi October 29, 1957

Pondicherry January 31, 1958

Thrissur February 10, 1958

Lucknow February 02, 1958

Nagpur February 02, 1958

Jabalpur April 4, 1958

Mumbai (Bombay) July 3, 1958

Kolkata (Calcutta) September 13, 1958

Tellicherry July 8, 1958

Pune October 14, 1958

Later Bellary and Madras (Chennai) Societies were separated from their mother societies.

The movement marked its golden jubilee in the year 2007.

Management:-

There are 13 co-operative societies in the country to run the coffee houses. These societies are

governed by managing committees elected from the employees. There is also a federation of

the co-operative societies as the national umbrella organisation to lead these societies."[3].

Kerala:-

Kerala has the largest number of Indian Coffee Houses. Advocate T. K. Krishnan, a Communist

Leader of Thrissur and Nadakkal (N. S.) Parameswaran Pillai, or "Coffee House Pillai" the State

Secretary of the India Coffee Board Labour Union and a thrown-out employee of ICH were the

founders of ICHs in Kerala. The first Indian Coffee House of Kerala was started in Thrissur in

1958. It was also the fourth ICH in the country. It was inaugurated by A. K. Gopalan on March

8, 1958.

There is also an alternative history book about the ICH movement, in Malayalam, the regional

language of Kerala - Coffee Housinte Katha or History of Coffee House by Nadaakkal

Parameswaran Pillai. This is the only published written history of ICH movement in any

language. All details of the movement referred in this article is based on that book.

Kolkata:-

The Indian Coffee House has several branches in Kolkata, including the College

Street branch, Central Avenue branch, Medical College Kolkata branch and Jadavpur branch.

These are favourite hang-out places among the students and youth, although one can see

several old-timers frequenting the coffee houses on a regular basis.

Coffee House at College Street:-

The most famous Coffee House branch in Kolkata is the one at the College Street, also known as

the "Coffee House at College Street". It is situated opposite the Presidency College, Kolkata and

has been for a long time a regular hang out for students (and ex-students) of the Presidency

College, University of Calcutta, and other institutions in College Street.

The history of the Coffee House at College Street can be traced to Albert Hall, which was

founded in April 1876.[4] Later, the Coffee Board decided to start a coffee joint from the Albert

Hall in 1942. Notable citizens, including Rabindranath Tagore and Subhas Chandra Bose, were

frequent visitors to the place.[5] In 1947, the Central Government changed the name of the

place to "Coffee House".[6] The place became a meeting place for the poets, artistes, literati and

people from the world of art and culture. In 1958, the management decided to shut down the

Coffee House, but it was re-opened the same year, after professors of Presidency College and

Calcutta University rushed off a special petition to the government, to save the heritage place.

The prestige of the Coffee House increased with regular visitors such as Satyajit Ray, Manna

Dey, Amartya Sen, Mrinal Sen and Aparna Sen[6] The Coffee House is of historical significance

for being the rendezvous of innumerable versatile people, from its inception to date. Scholars,

editors, artists and writers like Jagadish Chandra Bose, Ritwik Ghatak, Narayan

Gangopadhyay, Sunil Gangopadhyay, Sanjeev Chattopadhyay, Samaresh Majumdar, Subhas

Mukhopadhyay and Shakti Chattopadhyay) have been just a few among the patrons of the

restaurant. Several literary magazines owe their origin to the inspiration from the adda sessions

at this coffee house.

Though popularly known as College Street Coffee house, this branch is actually on Bankim

Chatterjee Street. The coffee house is famous for its adda sessions, and as the breeding place of

several political and cultural personalities and movements. Many people come here just for the

sake of adda and just being a part of the long talking sessions. Several talented and illustrious

persons from different streams have been thronging this renowned adda for a long time.

In 2006, a huge financial crunch kept the co-operative society from undertaking renovation of

the coffee house. Though a few companies such as Asian Paints approached the society with

offers to renovate the restaurant, the offers were refused due to clash of norms and

conditions.[5]

Other places:-

The Indian Coffee House branch in Sector 17 of Chandigarh was opened in 1964 and remained

popular among professionals, journalists, doctors, bureaucrats, lawyers and senior officials. [7].

The branch originally operated in Sector 22, and was shifted to Sector 17 in 1971. The Coffee

House on the Punjab University campus is popular among students.

The Indian Coffee House branch in Dharamsala used to be a popular hang-out of intelligentsia

in the city. It was set up, after the district administration approached the Indian Coffee

Workers' Co-operative Society, Delhi in 1991. The society decided to close it down in 2006,

after losses ran over 35 lakh rupees.

5. Pratibha Mahila Sahakari Bank:-

Pratibha Mahila Sahakari Bank ( Pratibha Women Cooperative Bank ) is a cooperative

bank founded by Pratibha Patil in 1973 in Jalgaon in Maharashtra with the objective of

empowering women. Pratibha Patil is a senior leader of Indian National

Congress and President of India. Pratibha Patil was the founding chairperson of the bank

and later one of its directors along with many of her relatives. She is currently one of the

34 respondents in an ongoing case in the Aurangabad bench of the Bombay High

Court on the subject of mismanagement of the bank and misappropriation of funds.

o Reserve Bank of India (RBI), revoked the licence of the bank in 2003 after it was found

out that the bank had illegally waived interest on loans given to many of Pratibha Patil’s

family members .

Ministry of Finance on April 26, 2002, asked the RBI to inquire into allegations of fund

irregularities after receiving a number of complaints from the Cooperative Bank Employees

Union and small depositors of the bank.

In its 28-page inspection report noted that the bank had been declared “weak” since 1995 and

after the 2002 inspection was being classified as “sick.”

The report revealed:

The real or exchangeable value of the bank’s paid-up share capital and reserves stands

at minus Rs 197.67 lakh. Thus, the bank is not having adequate assets to meet its

liabilities. The bank does not comply with the RBI’s requirement of minimum share

capital.

The ratio of the net erosion to net owned funds of the bank is as high as 312.4% and the

erosion in the value of the bank’s assets has not only wiped out its owned funds but has

also affected the deposits to the extent of Rs 197.67 lakh, forming 26% of total deposits.

The gross NPAs of the bank amount to 65.8% of the total loans and advances.

The Board has not made any concerted effort to improve the bank’s financial position

and bring it out of the weak status.

The RBI further stated in the report: “Pratibha Patil is the founder member of the bank, who is a

politically influential personality. She has made all her relatives as directors of the bank and the

bank is being run as good as a family business. Because of the influence of respondent no 8

(Prathiba Patil) the bank has given various loans to the relatives and to a sugar factory of which

she is a director.”

“Her relatives have not paid back the loans. Most of the loans were given without security.

Most of the loans are closed”

Action :-

On February 25, 2003, RBI executive director P.B. Mathur signed the note revoking the bank’s

licence.

Depositors :-

Many depositors lost their life's saving.Many had made deposits in the bank as it was founded

by Pratibha

Complaints :-

As per complaints filed by the bank’s union leaders, as many as a dozen of Patil’s relatives were

granted loans . The list of relatives who received loans from her bank, meant for improving the

plight of Jalgaon people, women in particular, includes her brothers and nephews.

The loan waivers were given to direct relatives like Anjali Dilipsingh Patil (Pratibha Patil’s niece),

Kavita Aravind Patil (sister-in-law of Pratibha Patil) and Rajkaur Dilipsingh Patil (another sister-

in-law of Pratibha Patil). Besides, many others too who are still close to Patil, were given

benefits flouting banking norms.

The writ petition filed by the banks’ depositors in the High Court has made serious and more

direct allegations against the founder chairperson Pratibha Patil.

The former president of employees union has alleged that the bank collected Rs 4,556 from its

employees for the Kargil war victims but failed to deposit the amount in the national fund.

Dilip Singh Patil the elder brother of Pratibha Patil who was legal advisor for the bank took loan

from the bank and did not repay. Morever he had the bank's telephone set up at his home and

ran the bill of over Rs 20 lakhs talking to stockbrokers at Mumbai.