📚 Practical 1: Formation of a Company in India (In-depth Notes)

1. Introduction to Company & Its Objects

What is a Company?

A company is an artificial person created by law, having an independent legal existence. It is

governed by the Companies Act, 2013 and registered with the Ministry of Corporate Affairs (MCA).

Characteristics of a Company:

 Separate Legal Entity: The company is distinct from its members.

 Limited Liability: Members' liabilities are limited to unpaid share capital.

 Perpetual Succession: Continues to exist despite death/exit of members.

 Common Seal: Official signature of the company (now optional).

 Transferability of Shares: In Public Companies, shares can be freely transferred.

 Capacity to Sue and Be Sued: A company can enter into contracts and litigations.

Objectives of a Company (As per MOA – Clause III)

1. Main Object:

o Describes the core activity for which the company is formed.

o Restricts company’s activities outside the scope.

2. Ancillary or Incidental Objects:

o Activities supporting the main object.

o E.g., marketing, acquiring assets, raising funds.

3. Other Objects:

o Optional; any activity the company may pursue in the future.

o Requires special resolution + ROC approval to alter.

📝 Important: A company cannot undertake any business not mentioned in its MOA unless it amends
the document.

2. Process of Company Formation in India

A. Pre-Incorporation Phase

1. Decide the Type of Company

Company Type Suitable For Key Features

Private Limited Startups/SMEs Min 2, Max 200 members

Public Limited Large businesses Min 7 members, can raise capital publicly

One Person Company Solo entrepreneurs 1 director & 1 nominee

Company Type Suitable For Key Features

LLP Professionals Partnership with limited liability

Section 8 Company NGOs Charitable/non-profit objectives

2. Obtain Digital Signature Certificate (DSC)

 Required for filing MCA forms online.

 Issued by Certifying Authorities like eMudhra, NSDL, etc.

 Valid for 1-2 years.

3. Obtain Director Identification Number (DIN)

 Unique 8-digit number allotted by MCA to directors.

 Can be obtained while filing SPICe+ form.

4. Name Approval via SPICe+ (Part A)

 Apply for name through SPICe+ Part A or RUN (Reserve Unique Name).

 Guidelines:

o Should not be identical/similar to existing companies.

o Must comply with Rule 8 of the Companies (Incorporation) Rules, 2014.

o Trademark check advisable.

B. Incorporation Phase

1. Draft MOA & AOA

 MOA (INC-33): Constitution of the company.

 AOA (INC-34): Internal rules of governance.

o Both are e-forms now: e-MOA & e-AOA.

2. File SPICe+ (Part B) Form

A comprehensive e-form that includes:

 Incorporation

 DIN application

 PAN & TAN

 GSTIN (optional)

 EPFO, ESIC, Profession Tax (if applicable)

 Bank Account opening

Attachments Required:

 Passport-sized photos of directors

  PAN & Aadhaar

 Utility Bill + NOC + Rent Agreement for Registered Office

 Consent to Act as Director (DIR-2)

 Declaration by Professional (INC-8)

 MOA and AOA

3. Issue of Certificate of Incorporation (COI)

Once documents are verified:

 COI is issued by ROC

 Contains CIN, PAN, and TAN

 Legally authorizes commencement of business (for private companies)

📌 Public Companies also require a Certificate of Commencement of Business (COB) under Section
10A.

3. Business Licenses Required in India

Based on the type of business, several additional licenses may be required:

License Applicability Authority

PAN/TAN All companies Income Tax Department

Turnover > ₹40/₹20 lakh or interstate

GST Registration GST Department
sales

Shops & Establishment

Commercial spaces Local Municipal Body
License

Professional Tax Salary paid employees State Govt. (E.g., Maharashtra)

ESIC/EPFO >10 employees (ESI) / >20 (PF) Ministry of Labour

Food Safety & Standards

FSSAI License Food-related business
Authority

Import Export Code (IEC) International trade DGFT

Trade License Specific industries Local Municipal Corporation

Environmental Clearances Manufacturing, mining, etc. Pollution Control Board

NBFC License Financial companies RBI

Stock/Mutual Fund
Investment services SEBI
Businesses

Insurance Business Selling insurance IRDAI

4. Process of Registration on MCA

MCA21 Portal Registration:

The SPICe+ form includes the following integrated services:

Part A – Name Approval

Part B – Incorporation Form:

Includes:

 DIN allotment

 Mandatory Statutory Registrations (PAN, TAN, etc.)

 Optional Registrations (GSTIN, ESIC, EPFO)

Required e-Forms:

 SPICe+ (INC-32): Main incorporation form

 AGILE-PRO-S: GST, EPFO, ESIC, Profession Tax, bank account

 INC-9: Declaration by subscribers

 INC-33: MOA (Electronic)

 INC-34: AOA (Electronic)

MCA Auto-generates PAN & TAN through NSDL integration.

5. Filing Returns – Post Incorporation Compliance

A. ROC (Registrar of Companies) Compliance

Form Purpose Due Date

AOC-4 Financial Statements Within 30 days of AGM

MGT-7 Annual Return (details of shares, board) Within 60 days of AGM

DIR-3 KYC KYC of directors 30th Sept every year

INC-20A Declaration of Commencement (public co.) Within 180 days of incorporation

B. Taxation Compliance

 Income Tax Return (ITR-6): Annual, due by 31st October (audited) or 30th September.

 TDS Returns: Quarterly, if TDS deducted.

 Advance Tax: If tax liability > ₹10,000/year.

C. GST Compliance (If Registered)

Return Frequency Contents

GSTR-1 Monthly/Quarterly Details of outward supplies

GSTR-3B Monthly Summary return with payment

Return Frequency Contents

GSTR-9 Annually Annual GST return

D. Labour Law Compliance (If Employees Hired)

 PF (EPFO) Returns – Monthly deposit & filing (ECR)

 ESIC Returns – Monthly payment & compliance

 Gratuity/Bonus Laws – Applicable based on employee count & tenure

E. Secretarial Compliance

 Conduct Board Meetings (minimum 4/year)

 Hold AGM (Annually for all except OPC)

 Maintain Statutory Registers:

o Register of Members

o Register of Directors

o Register of Charges

 File event-based forms (DIR-12, INC-22, etc.)

Practical 2: National Productivity Council (NPC) - In-Depth Notes

1. Introduction to National Productivity Council (NPC):

The National Productivity Council (NPC) is an autonomous, tripartite, non-profit organization under
the administrative control of the Department for Promotion of Industry and Internal Trade (DPIIT),
Ministry of Commerce and Industry, Government of India. It was established in 1958 with the
objective of stimulating and promoting productivity across all sectors of the Indian economy. The
NPC functions as a catalyst for productivity enhancement by providing consultancy, training, and
applied research services.

It also serves as the Indian representative of the Asian Productivity Organization (APO), a Tokyo-
based intergovernmental organization that promotes productivity in the Asia-Pacific region.

Key Features:

 Headquartered in New Delhi

 Functions on a no-profit, no-loss basis

 Multidisciplinary in approach (covers sectors like agriculture, manufacturing, services, etc.)

 Core areas include productivity promotion, energy audits, quality control, HR development,
and environmental management

2. Objectives of the NPC:

The core objectives of NPC are:

1. To promote awareness of productivity as an essential tool for competitiveness and growth

2. To assist organizations in improving productivity and profitability through efficiency

improvement techniques

3. To provide training and capacity building programs in modern management practices

4. To conduct research in productivity techniques applicable to Indian economic conditions

5. To foster international cooperation in the field of productivity with other APO member
countries

6. To contribute to national development by supporting government policies aimed at

sustainable and inclusive growth

NPC also aims to align its goals with national campaigns like "Make in India," "Digital India," and "Skill
India."

3. Meaning of Productivity:

Productivity refers to the efficiency with which resources (inputs) are converted into outputs. It is a
fundamental measure of economic performance that compares the quantity of goods and services
produced (output) with the quantity of inputs used to produce them.

Basic Formula: Productivity=OutputInput\text{Productivity} = \frac{\text{Output}}{\text{Input}}

Types of Productivity:

1. Labor Productivity = Output / Labor hours

 2. Capital Productivity = Output / Capital employed

3. Material Productivity = Output / Material consumed

4. Energy Productivity = Output / Energy used

5. Total Factor Productivity (TFP) = Output / (Labor + Capital + Other Inputs)

Example: If a company produces 500 units using 250 labor hours:

Labor Productivity=500 units250 hours=2 units/hour\text{Labor Productivity} = \frac{500 \
text{ units}}{250 \text{ hours}} = 2 \text{ units/hour}

4. Importance of Productivity:

Productivity is critical at all levels—individual, organizational, and national. Higher productivity leads
to economic development, better standard of living, and increased global competitiveness.

A. At the National Level:

 Accelerates economic growth and GDP

 Enhances global competitiveness

 Helps manage inflation by improving supply

 Increases employment opportunities

B. At the Organizational Level:

 Lowers costs of production

 Improves profit margins

 Enhances product and service quality

 Boosts customer satisfaction

C. At the Individual Level:

 Increases wages and incentives

 Reduces work stress through better methods

 Encourages skill development

In essence, productivity improvements can lead to sustainable development and social progress.

5. Measuring Productivity:

Why Measure Productivity?

 To evaluate performance

 To identify inefficiencies

 For benchmarking against best practices

  For strategic decision-making

Steps to Measure Productivity:

1. Define the output (e.g., units produced, services delivered)

2. Identify relevant inputs (e.g., labor hours, capital, materials)

3. Choose a timeframe (e.g., monthly, quarterly)

4. Use appropriate productivity ratios

Example: If a factory produces goods worth Rs. 5,00,000 using 1000 labor hours:
Labor Productivity=5,00,0001000=Rs.500 per labor hour\text{Labor Productivity} = \frac{5,00,000}
{1000} = Rs. 500 \text{ per labor hour}

Common Measures:

Type Formula Application

Labor Productivity Output / Labor hours Workforce efficiency

Capital Productivity Output / Capital invested ROI and asset utilization

Material Productivity Output / Material consumed Resource optimization

Energy Productivity Output / Energy used Energy management

TFP Output / (All combined inputs) Holistic productivity analysis

6. Functions of National Productivity Council (NPC):

1. Consultancy Services: NPC offers productivity improvement consultancy in areas such as:

 Lean Manufacturing

 Six Sigma

 Quality Management (ISO standards)

 Business Process Reengineering

 Energy Efficiency and Audits

 Environment Management (EMS)

2. Training & Capacity Building: Organizes workshops, short-term and long-term training programs
on:

 Industrial Engineering

 Human Resource Development

 Performance Management Systems

 Digital Productivity Tools

 Productivity Measurement Techniques

3. Applied Research: Conducts productivity-related studies for:

 Government policymaking

 Sectoral competitiveness

 Regional productivity comparisons

4. Awareness Generation:

 Observes National Productivity Week (February 12–18)

 Publishes productivity journals, newsletters, and research reports

 Promotes best practices and success stories

5. International Collaboration:

 Coordinates with Asian Productivity Organization (APO)

 Organizes study missions, exchange programs, and international seminars

 Facilitates knowledge sharing with global productivity institutions

6. Sectoral Interventions: NPC has worked across diverse sectors:

 Agriculture: Crop productivity, water management

 Manufacturing: Process optimization, quality control

 Services: Public administration, education, healthcare

 Energy: Industrial energy efficiency, renewable energy audits

7. Policy Support: Provides technical input for:

 Industrial and SME policies

 Skill development programs

 Sustainable development and green productivity initiatives

Conclusion:

The National Productivity Council plays a vital role in India’s economic development by enabling
efficient use of resources, promoting best practices, and building institutional capacities. With a
focus on innovation, collaboration, and sustainability, NPC continues to be a pivotal institution in
achieving inclusive and productivity-led growth.

Understanding the meaning, importance, and measurement of productivity, along with NPC’s multi-
dimensional efforts, can help students and professionals contribute meaningfully to the productivity
movement in India.

Practical 3: Interface Between Business & Government, Society & Natural Environment
1. Introduction: Understanding the Interface

Businesses do not operate in isolation. They function within a broader ecosystem that includes the
government, society, and the natural environment. The interaction between these entities is known
as the interface, and it plays a vital role in shaping business policies, strategies, and responsibilities.

This interface determines how businesses adapt to regulations, societal needs, and environmental
concerns, ensuring that they are not only profit-driven but also socially responsible and sustainable.

2. The Role of Business in Society

Modern businesses have moved beyond just profit-making. Today, their role encompasses a wide
range of responsibilities:

A. Economic Role:

 Creation of jobs

 Contribution to GDP

 Innovation and technological advancement

 Boosting exports and trade

B. Social Role:

 Providing quality goods and services

 Supporting community welfare through CSR (Corporate Social Responsibility)

 Promoting ethical labor practices and employee well-being

 Empowering marginalized groups

C. Environmental Role:

 Minimizing pollution and emissions

 Efficient use of natural resources

 Investing in green technologies

 Maintaining biodiversity and sustainability

A business that contributes positively to society earns greater trust, brand loyalty, and long-term
success.

3. Importance of Business Strategy

A business strategy is a plan of action designed to achieve specific goals, compete effectively, and
fulfill responsibilities to stakeholders.

Key Importance:

1. Direction and Vision: Defines where the business wants to go.

 2. Competitive Edge: Helps stand out in the market.

3. Stakeholder Alignment: Ensures objectives are aligned with investor, customer, and
employee expectations.

4. Risk Management: Anticipates threats and allocates resources accordingly.

5. Sustainability and Growth: Promotes long-term growth and responsible practices.

A good strategy considers not only market trends but also socio-political, legal, and environmental
realities.

4. Involving States in Business Strategy

In India, states play a key role in regulating and supporting businesses within their jurisdiction.
Collaborating with state governments can greatly benefit a business.

How States are Involved:

 Industrial Policies: Offer incentives, subsidies, and infrastructure support.

 Ease of Doing Business: States are ranked based on business-friendliness.

 Regulatory Approvals: State governments issue environmental, factory, and labor law
clearances.

 Skill Development: Collaborations for training local youth through government programs.

 Public-Private Partnerships (PPP): States involve businesses in infrastructure, education, and

health initiatives.

Benefits of Involvement:

 Faster regulatory clearances

 Stronger local presence and community support

 Better compliance with state laws

5. Term of Business License

A business license is a legal authorization that allows a business to operate within a specific
jurisdiction. These are issued by local, state, or national authorities depending on the type of
business.

Types of Business Licenses in India:

 Trade License (Municipal level)

 FSSAI License (for food businesses)

 Factory License (for manufacturing units)

 Shops and Establishments Act License

  Environmental Clearances

 Import Export Code (IEC)

Validity / Term:

 Most licenses are issued for 1 to 5 years.

 Renewal depends on compliance and documentation.

Renewal Requirements:

 Submission of updated documents

 Fee payment

 Compliance with new laws/regulations

Consequences of Expiry:

 Fines and penalties

 Business closure or suspension

 Legal action

6. Duties and Skills Related to Business Licensing

Duties Involved:

1. Documentation: Prepare accurate and complete paperwork.

2. Compliance: Ensure business adheres to all legal norms.

3. Monitoring: Track license renewal dates and legal updates.

4. Communication: Liaise with government departments.

5. Audit Readiness: Maintain records for inspection.

Essential Skills:

 Regulatory Knowledge: Understand applicable laws and regulations.

 Attention to Detail: Avoid errors in paperwork.

 Time Management: Ensure timely application and renewals.

 Legal Awareness: Stay updated with policy changes.

 Coordination Skills: Work with departments like HR, Admin, and Finance to fulfill licensing
requirements.

Conclusion:

The interface between business, government, society, and the environment is becoming more
prominent with increasing focus on sustainability, transparency, and accountability. Businesses
must balance their goals with societal and environmental well-being. A robust business strategy that
includes state involvement and regulatory compliance not only ensures legality but also builds a solid
reputation and public trust.

By understanding their duties and developing necessary skills, businesses can smoothly navigate the
licensing process and maintain continuous operations while being responsible corporate citizens.

Practical 4: Business Alliance and Growth Strategies

1. Introduction: Business Alliance and Growth Strategies

In today’s competitive world, businesses constantly seek ways to expand, gain competitive
advantage, and increase profitability. One of the most effective ways to achieve growth is through
business alliances, including mergers, acquisitions, and franchising. These strategic collaborations
allow companies to leverage each other’s strengths, enter new markets, and reduce operational
costs.

2. Explain the Term: Merger

A merger is the combination of two or more companies into a single entity, with the aim of achieving
synergy, expanding operations, and improving market share. In a merger, the companies agree to
unite and often operate under a new name.

Key Features:

 Mutual agreement between companies

 Assets and liabilities are consolidated

 Common goal of value creation

Example: The merger of Vodafone India and Idea Cellular to form Vodafone Idea Ltd.

3. Forms of Merger

There are several types of mergers based on the nature of the companies involved:

A. Horizontal Merger

 Between two companies in the same industry

 Objective: Increase market share and reduce competition

 Example: Two automobile manufacturers merging

B. Vertical Merger

 Between companies at different stages of the supply chain

 Objective: Enhance supply chain efficiency

 Example: A tire manufacturer merging with a car company

C. Conglomerate Merger

 Between companies in unrelated businesses

 Objective: Diversification

 Example: A textile company merging with a food processing company

D. Market Extension Merger

 Between companies selling the same products in different markets

 Objective: Market expansion

E. Product Extension Merger

 Between companies selling related products in the same market

  Objective: Product diversification

4. Process of Merger & Acquisition

Mergers and acquisitions (M&A) follow a structured process involving planning, negotiation, and
integration. Below are the key steps:

Step 1: Strategy Development

 Identify growth goals and target sectors

 Evaluate internal strengths and synergies

Step 2: Target Identification

 Shortlist potential merger/acquisition candidates

 Conduct preliminary due diligence

Step 3: Valuation & Negotiation

 Financial analysis and company valuation

 Drafting of non-disclosure and offer agreements

Step 4: Due Diligence

 Legal, financial, tax, and operational review

 Assess potential risks and liabilities

Step 5: Regulatory Approvals

 Obtain clearances from regulatory bodies (SEBI, CCI, etc.)

 Shareholder approvals

Step 6: Deal Closure

 Signing final agreements

 Payment structure and transfer of ownership

Step 7: Integration

 Align business operations, culture, and systems

 Restructure teams and roles

5. Objectives of Mergers & Acquisitions

M&A deals are undertaken with a variety of strategic objectives in mind:

1. Growth and Expansion: Entering new markets, product lines, or customer segments

2. Synergy Creation: Combining operations to achieve cost reduction or increased revenue

3. Market Power: Eliminating competition and increasing pricing control

4. Diversification: Reducing risk by entering unrelated businesses

5. Tax Benefits: Utilizing accumulated losses or tax shelters

6. Talent Acquisition: Gaining access to skilled professionals and management

7. Brand Value Enhancement: Acquiring a company with strong brand equity

6. Types of Franchising

Franchising is a growth model in which a business (franchisor) allows another party (franchisee) to
use its brand, processes, and intellectual property in exchange for a fee.

Types of Franchising:

A. Product Franchising

 Franchisee sells the franchisor’s products

 Example: Automobile dealerships (e.g., Maruti Suzuki dealers)

B. Manufacturing Franchising

 Franchisee manufactures the products using franchisor’s formula or process

 Example: Beverage bottling plants (e.g., Coca-Cola bottlers)

C. Business Format Franchising

 Franchisee adopts the entire business model, including branding, systems, and support

 Example: McDonald's, Domino’s Pizza

D. Investment Franchising

 Franchisee invests capital and hires management, but franchisor handles operations

 Often used in hospitality and large-scale businesses

E. Job Franchising

 Low-cost, home-based franchise model where the franchisee performs the job/service
themselves

 Example: Courier services, cleaning services

Conclusion

Strategic business alliances such as mergers, acquisitions, and franchising are powerful tools for
companies to expand, innovate, and remain competitive. Understanding the types, processes, and
objectives behind these strategies equips businesses to make informed decisions that drive
sustainable growth.