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The Drawing Account is a pivotal component within the financial framework of a business, offering a means to meticulously track and manage withdrawals made by its owners or partners for personal use. Functioning as a specialized ledger, it serves the fundamental purpose of segregating personal finances from business transactions, ensuring clarity and transparency in financial records. The Drawing Account serves as a repository for documenting any cash withdrawals, checks written for personal expenses, or transfers of business assets for personal use. By meticulously recording these transactions, businesses can effectively delineate between the capital invested in the business and the personal finances of its stakeholders. Furthermore, the Drawing Account is crucial in budgeting, tax compliance, and financial planning, empowering business owners to make informed decisions and maintain a robust financial standing. Thus, understanding the mechanics and significance of the Drawing Account is paramount for fostering economic stability and accountability within the business realm.

What is a Drawing Account?

A Drawing Account serves as a specialized financial record businesses use to monitor and track withdrawals made by owners or partners for personal purposes. It acts as a distinct ledger within the business’s accounting system, dedicated explicitly to documenting any cash withdrawals, checks issued for personal expenses, or transfers of business assets for personal use. By segregating these transactions from the general business operations, the Drawing Account ensures clarity and transparency in financial reporting, enabling stakeholders to differentiate between business expenses and personal withdrawals. This separation is crucial for maintaining accurate financial records, facilitating budgeting and financial planning, and ensuring compliance with tax regulations. In essence, the Drawing Account serves as a mechanism to manage personal finances within the broader context of business operations, providing a clear framework for tracking and accounting for personal withdrawals while maintaining the integrity of the business’s financial statements.

Importance of Drawing Accounts in Business

The Drawing Account is essential in business finance as it maintains transparency, accountability, and financial stability. By segregating personal withdrawals from business transactions, the Drawing Account ensures that owners or partners can accurately track and monitor their finances without conflating them with the company’s financial activities. This distinction is crucial for budgeting, financial planning, and tax compliance, as it enables stakeholders to delineate between business expenses and personal withdrawals. Additionally, the Drawing Account facilitates effective cash flow management by providing insights into the amount of capital withdrawn for personal use, allowing businesses to make informed decisions regarding their financial resources. Furthermore, by maintaining accurate records of personal withdrawals, the Drawing Account fosters trust and confidence among stakeholders, including investors, creditors, and regulatory authorities, thereby enhancing the overall credibility and integrity of the business. The Drawing Account is a cornerstone of sound financial management, empowering businesses to maintain financial clarity, adhere to regulatory requirements, and sustain long-term success.

Understanding the Mechanics of a Drawing Account

Definition and Purpose

The Drawing Account is a specialized financial instrument designed to track withdrawals made by business owners or partners for personal use. Its primary purpose is to segregate personal finances from business transactions, ensuring clarity and transparency in financial records.

How Drawing Accounts Work

When a business owner or partner withdraws funds for personal use, the corresponding amount is debited from the business’s cash or bank account and credited to the Drawing Account. This transaction reduces the owner’s equity or capital in the industry, reflecting the withdrawal of personal funds.

• Types of Transactions Recorded

Transactions recorded in a Drawing Account typically include cash withdrawals, checks written for personal expenses, or transfers of business assets for personal use. By meticulously documenting these transactions, businesses can accurately track and monitor the movement of individual funds within the broader context of business operations.

• Importance of Accurate Recording

Accurate recording of transactions in the Drawing Account is paramount for maintaining financial transparency and ensuring compliance with accounting principles and tax regulations. It allows stakeholders to differentiate between business expenses and personal withdrawals, facilitating budgeting, financial planning, and tax reporting.

• Reconciliation and Monitoring

Regular reconciliation and monitoring of the Drawing Account are essential to promptly identifying discrepancies, errors, or fraudulent activities. By comparing the recorded transactions with bank statements and other financial records, businesses can ensure the integrity and accuracy of their financial reporting.

• Impact on Financial Statements

The Drawing Account directly influences the business’s balance sheet and income statement. Withdrawals recorded in the Drawing Account reduce the owner’s equity, affecting the business’s financial position and profitability. Proper management of the Drawing Account is crucial for maintaining accurate financial statements and assessing the business’s overall economic health.

• Regulatory Compliance and Tax Implications

Business owners must adhere to regulations and tax laws governing Drawing Account transactions. Failure to do so can result in penalties, fines, or legal consequences. Consulting with a financial advisor or tax professional can help ensure compliance and mitigate risks associated with Drawing Account management.

Differences Between Drawing Account and Capital Account

The differences between a Drawing Account and a Capital Account lie in their respective functions and purposes within a business’s financial structure. A Drawing Account primarily records withdrawals made by owners or partners for personal use, essentially serving as a ledger for tracking personal expenses separate from the business’s operations. On the other hand, a Capital Account represents the owner’s or partner’s equity investment in the business, encompassing initial contributions, additional assets, and retained earnings. While both accounts affect the owner’s equity in the business, they serve distinct purposes: the Drawing Account tracks withdrawals for personal use, reducing the owner’s equity, whereas the Capital Account reflects the owner’s total investment and stake in the business. Therefore, while the Drawing Account focuses on personal finances and withdrawals, the Capital Account is integral for assessing the business’s overall financial position and ownership structure. Understanding these differences is crucial for accurate financial reporting, budgeting, and decision-making within the business.

How to Maintain a Drawing Account

Maintaining a Drawing Account requires establishing clear policies and procedures governing personal withdrawals. These guidelines outline the permissible uses of funds, withdrawal limits, and the process for recording transactions. By setting clear expectations, businesses can ensure consistency and compliance with financial management practices.

• Recording Transactions

Accurate recording of transactions is essential for maintaining the integrity of the Drawing Account. Each withdrawal for personal use should be meticulously documented, including the date, amount, purpose, and withdrawal method. This information enables businesses to track personal expenses and reconcile accounts effectively.

• Monitoring and Reconciliation

Regular monitoring and reconciliation of the Drawing Account are critical for promptly identifying discrepancies and errors. Businesses should compare the recorded transactions with bank statements and other financial records to ensure accuracy. Reconciling the Drawing Account monthly or quarterly helps maintain financial transparency and integrity.

• Establishing Controls

Internal controls are essential for safeguarding against fraud or misuse of funds in the Drawing Account. Businesses can establish procedures such as requiring dual authorization for large withdrawals, conducting periodic audits, and restricting access to authorized personnel only. These controls help mitigate risks and ensure the security of the Drawing Account.

• Educating Stakeholders

Educating business owners, partners, and employees about Drawing Account management is crucial for fostering accountability and compliance. Training programs or informational sessions can help stakeholders understand their roles and responsibilities regarding personal withdrawals and adherence to established policies.

• Leveraging Technology

Utilizing accounting software or financial management tools can streamline the process of maintaining a Drawing Account. These technologies automate transaction recording, facilitate reconciliation, and provide real-time insights into account activity. By leveraging technology, businesses can improve efficiency and accuracy in managing their Drawing Accounts.

Examples of Drawing Account Transactions

Examples of Drawing Account transactions encompass a range of financial activities where business owners or partners withdraw funds for personal use. These transactions are recorded in the Drawing Account to accurately track the movement of personal finances separate from business operations. Some common examples include:

1. Cash Withdrawals:Business owners or partners withdraw cash from the business’s bank account for personal expenses such as groceries, utility bills, or entertainment.
2. Checks Written for Personal Expenses:Owners or partners write checks from the business’s checking account to cover personal bills, including rent or mortgage payments, insurance premiums, or tuition fees.
3. Transfers of Business Assets for Personal Use:Business assets such as vehicles, equipment, or inventory may be transferred to owners or partners for personal use. The asset’s fair market value is recorded as a withdrawal from the business in the Drawing Account.
4. Reimbursem*nts for Personal Expenses:In some cases, owners or partners may use personal funds to cover business expenses and subsequently seek reimbursem*nt. These reimbursem*nts are recorded as withdrawals from the business in the Drawing Account.
5. Cash Payments to Owners or Partners:Business profits may be distributed to owners or partners through cash payments. These distributions are recorded as withdrawals from the business in the Drawing Account, reducing the owner’s equity.

Advantages of Maintaining a Drawing Account

Maintaining a Drawing Account offers several advantages for businesses and their stakeholders:

1. Financial Transparency:Separating personal withdrawals from business transactions enhances transparency in financial reporting. Owners and partners can easily track personal expenses, ensuring clarity of company financial records.
2. Budgeting and Planning:By tracking personal withdrawals separately, businesses can effectively budget and plan for personal and business finances. This separation allows for better management of cash flow and allocation of resources.
3. Tax Compliance:Maintaining accurate records of personal withdrawals facilitates tax compliance. Owners and partners can accurately report their taxable income, deductions, and credits, minimizing the risk of tax errors or audits.
4. Ownership Clarity:The Drawing Account helps clarify ownership interests in the business. By tracking personal withdrawals, owners and partners can determine their respective equity stakes and contributions to the company.
5. Accountability:A dedicated account for personal withdrawals promotes accountability among owners and partners. They are accountable for their expenses and can easily reconcile their withdrawals with their financial statements.
6. Financial Planning:Owners and partners can use the Drawing Account to assess their financial health and plan for future expenses or investments. This visibility into personal finances enables better financial planning and decision-making.

Disadvantages of Drawing Account

While there are several advantages to maintaining a Drawing Account, there are also some disadvantages that businesses should consider:

1. Risk of Overdrawing:Without proper monitoring, owners or partners may inadvertently overdraw from the business, leading to cash flow problems and financial instability. Overdrawing from the Drawing Account can strain the company’s finances and hinder its ability to meet operational expenses.
2. Complexity in Accounting:Managing Drawing Account transactions can add complexity to accounting processes, especially in partnerships with multiple owners. Keeping track of personal withdrawals alongside business transactions may require additional time and resources, increasing the risk of errors or discrepancies in financial records.
3. Tax Implications:Mishandling Drawing Account transactions can result in tax implications for owners or partners. Failure to accurately report personal withdrawals or distinguish them from business expenses can lead to tax errors, penalties, or audits by tax authorities.
4. Potential for Disputes:In partnerships, disagreements may arise regarding the allocation of personal withdrawals among owners or partners. Differences in spending habits or financial needs may lead to disputes over the distribution of profits and the management of the Drawing Account.
5. Confusion in Financial Analysis:Mixing personal withdrawals with business transactions can obscure the actual financial performance of the business. Economic analysis and decision-making may be compromised if personal expenses are not accurately accounted for or distinguished from business expenses.

Strategies for Managing Drawing Accounts Effectively

To manage Drawing Accounts effectively, businesses can implement the following strategies:

1. Set Clear Guidelines:Establish clear policies and procedures regarding personal withdrawals. Define permissible uses of funds, withdrawal limits, and the process for recording transactions. Clear guidelines help ensure consistency and compliance among owners or partners.
2. Regular Reconciliation:Conduct regular reconciliations of the Drawing Account to identify discrepancies and errors promptly. Compare recorded transactions with bank statements and other financial records to ensure accuracy and integrity.
3. Educate Owners:Educate owners or partners about the importance of proper Drawing Account management. Provide training on recording transactions accurately, adhering to established policies, and reconciling accounts effectively.
4. Establish Internal Controls:Implement internal controls to safeguard against fraud or misuse of funds. Require dual authorization for large withdrawals, conduct periodic audits, and restrict access to the Drawing Account to authorized personnel only.
5. Utilize Technology:Leverage accounting software or financial management tools to streamline Drawing Account management. These tools automate transaction recording, facilitate reconciliation, and provide real-time insights into account activity, improving efficiency and accuracy.
6. Monitor Activity:Regularly monitor activity in the Drawing Account to detect any unusual or unauthorized transactions. Monitor spending patterns and review transaction logs to ensure compliance with established policies and procedures.
7. Review and Adjust Policies:Periodically review and adjust Drawing Account policies and procedures to reflect changes in business operations or regulations. Solicit feedback from owners or partners to identify areas for improvement and make necessary adjustments accordingly.

Common Mistakes to Avoid with Drawing Accounts

Avoiding common mistakes is crucial for effectively managing Drawing Accounts. Here are some key pitfalls to steer clear of:

1. Mixing Personal and Business Expenses:One of the most significant errors is distinguishing between personal withdrawals and business expenses. Mixing these transactions can lead to inaccurate financial reporting and compliance issues.
2. Failure to Reconcile:Neglecting regular reconciliation of the Drawing Account can result in unnoticed errors or discrepancies. Disc discrepancies may go unresolved without proper oversight, potentially leading to financial inaccuracies.
3. Ignoring Tax Implications:Mishandling Drawing Account transactions can have tax implications. Failing to report personal withdrawals accurately or distinguish them from business expenses can result in tax errors, penalties, or audits.
4. Lack of Documentation:Inadequate documentation of Drawing Account transactions can lead to confusion and disputes. Please record transactions promptly and accurately to make tracking personal withdrawals and reconciling accounts easier.
5. Overdrawing:Careless withdrawals exceeding available funds in the Drawing Account can strain the business’s finances and disrupt cash flow. Overdrawing can lead to financial instability and difficulty meeting operational expenses.

Conclusion

In conclusion, effectively managing a Drawing Account is essential for maintaining financial transparency, accountability, and stability within a business. By implementing clear policies and procedures, accurately recording transactions, and regularly reconciling accounts, companies can ensure the integrity of their financial records and comply with regulatory requirements. Additionally, educating stakeholders about the importance of proper Drawing Account management and leveraging technology to streamline processes can enhance efficiency and accuracy. However, businesses must remain vigilant to avoid common pitfalls such as mixing personal and business expenses, neglecting reconciliation, ignoring tax implications, needing more documentation, and overdrawing. By avoiding these mistakes and following best practices, companies can maximize the benefits of the Drawing Account, including financial transparency, budgeting and planning, tax compliance, ownership clarity, accountability, and financial planning. Effective management of the Drawing Account contributes to the overall success and sustainability of the business.

Vineeta Singh – A woman for whom even sky is not the limit has shown the world what importance does beauty products have and how it boosts confidence among women who aspire for good looks and personality. Sugar Cosmetics which is one of the top cosmetic brands in India is founded by Vineeta Singh. Today Sugar Cosmetics is the choice for strong, independent women. The design is strong and quality is very high. Sugar cosmetics is committed in creating products that are perfect fit for every Indian skin tone throughout all seasons and throughout calendar. Let us understand Vineeta Singh and her success Journey in detail.

Vineeta Singh – Biography

Vineeta Singh Success story is full about her persistence and resilience. She was only 23 when she declined Rs 1 crore job offer from an investment bank just to start her entrepreneurial journey. Now she owns a brand $ 85.5 million in funding and Rs 500 crore annualized revenue. She is one of the most loved Judges in Shark Tank India show because of her leadership skills and consistent efforts to achieve success. While chasing terrifying goals, Vineeta Singh is motivated to create a successful empire doing what she is passionate about-building the best company for women to work at.

Early Life and Education of Vineeta Singh

Vineeta Singh was born in Delhi, India in 1991. She finished her schooling at the Delhi Public School, R.K. Puram in Delhi. Vineeta received her undergraduate degree in the course of Electrical Engineering from the Indian Institute of Technology Madras in 2005. Later she got herself into IIM Ahmedabad to pursue her MBA in 2007.

Vineeta Singh Net Worth and Investments

Vineeta Singh is a terrific example for aspiring female entrepreneurs. She has not only earned success for herself but she serves as an inspiration to many aspiring founders. She appears in Shark Tank India as Shark and has invested in the following few start-ups.

Vineeta Singh Family

• Vineeta Singh was born in the year 1983. She is 40 years old. She was born and raised in Delhi. Her mother holds a Ph.D. while her father Tej Singh is a biophysicist at the All India Institutes of Medical Sciences. Vineeta Singh met her husband Kaushik Mukherjee when she was pursuing MBA at IIM. The couple got married in 2011.
• Kaushik serves as the CEO of Sugar Cosmetics. This fact might surprise many readers. But Vineeta had a mind-set of a businesswoman from her childhood. As a child, she made a magazine together with her friend and sold the magazine from one door to another for Rs 3.

Vineeta Singh Career

• Vineeta Singh is the co-founder and CEO of Sugar and Fab Bag. FabBags is a grooming subscription service and was established in the year 2012. Her first summer job at Deutsche Bank was as a student in 2006. With her experience in banking and financial industry has earned her position of Director for Quetzal Verify Private Limited. She continued in that position for five years.
• Vineeta Singh founded Sugar after failing to launch two previous firms and turning down a job offer of “one crore” from a multinational investment company. Vineeta Singh founded her third start up Sugar Cosmetics with her husband Kaushik Mukherjee.
• In the year 2012 when sugar cosmetics was created, defeating a slew of national and global competitors to become India’s fastest growing cosmetics brand in just five years. The company has over 2500 locations in over 130 cities and generates more than Rs 100 crores as revenue through its sales.

Vineeta Singh Story of Sugar Cosmetics

• In the year 2010 Vineeta and Kaushik start their first business, a fashion e-commerce company but fails due to lack of funding and experience. In the year 2011 they started their second business a consulting firm , but that too failed due to lack of clients.
• In the year 2012 they decided to start cosmetics Brand Company and founded Sugar Cosmetics. They bootstrapped the business with their own savings and took a loan from Vineeta’s father. In the year 2013, Sugar Cosmetics launched its first product line, a range of crayon lipsticks which was hit with customers and the company started to gain traction. Sugar started achieving profitability.
• But the company still faced many challenges such as competing with the already established brands. In the year 2015, Sugar Cosmetics raised its first round of funding from a group of Angel Investors. The company used its funds for expanding its product line and marketing efforts. In the year 2016 Sugar Cosmetics partnered with Nykka and Amazon to sell its products.
• The company also launched its e-commerce platform. In the year 2017, Sugar Cosmetics raised its second round of funding from a group of venture capitals. In the year 2018, the company launched its first offline store in Mumbai. The company expanded its product line to include skincare and haircare products. In the year 2019, its third round of funding from a group of private equity investors.
• The company used the funds to expand,, marketing efforts and launched new product lines. In the year 2020, Sugar Cosmetics became one of the popular cosmetic brand among Indian Millennials. The Company also launched its first International store in Dubai.
• Sugar Cosmetics raised its fourth round of funding from a group of global investors. In the year 2022, Sugar Cosmetics becomes one of the leading cosmetic company in Asia and its first flagship store in New Delhi.

Sugar Cosmetics – Name, Tagline and Logo

• The company began its journey as an online supplier of Natural, Paraben free cosmetics. Due to the extraordinary black and white colour combination the visual identity of an Indian cosmetic business is beautiful and refined while also seeming bold and confident.
• The company’s logo is made up of a wordmark with an emblem on left side which serves as the brand signifier and appears on all of the company cosmetics. The Slogan of the Company says “Rule The World, One Look At A Time!!!”

Sugar Cosmetics – Business Model

Sugar Cosmetics Operates as Direct to Consumer(D2C) Business Model. It uses Omni channel approach for running its business. By using this strategy Sugar cosmetics takes advantage of other e-commerce market places such as Amazon and Nykaa to increase its accessibility and reach. The brand emphasizes its global presence through a variety of revenue streams, including both domestic sales in India and international export sales.

Sugar Cosmetics’ business model using these nine building blocks.

1. Customer Segments

• Sugar Cosmetics identified a significant gap in the market for high-quality, affordable, and cruelty-free makeup products catering to young, urban women. Their primary target audience consists of millennials and Gen Z consumers who are conscious of their product choices, and are likely to prioritize ethical and environmentally friendly products.
• By focusing on this customer segment, Sugar Cosmetics has positioned itself as a brand that understands and caters to the unique preferences of its target market.

1. Value Propositions

• Sugar Cosmetics’ value proposition revolves around offering high-quality makeup products that are affordable, cruelty-free, and vegan. The brand emphasizes innovation, using customer feedback to continually improve and expand its product offerings.
• In addition, Sugar Cosmetics is committed to staying on top of the latest beauty trends, ensuring that its customers have access to the most up-to-date makeup options.

Some of the key value propositions that set Sugar Cosmetics apart from competitors include:

• Cruelty-free and vegan products
• Affordable pricing
• High-quality, long-lasting makeup
• On-trend product offerings
• A comprehensive range of makeup products

Channels

Sugar Cosmetics utilizes a multi-channel approach to reach its customers. The brand’s products are available through various channels, including:

• Online: Sugar Cosmetics’ official website, as well as popular e-commerce platforms such as Amazon, Nykaa, and Myntra.
• Offline: The brand has also established a presence in brick-and-mortar stores, partnering with retailers like Lifestyle, Shoppers Stop, and Health & Glow. They also operate their own exclusive kiosks in shopping malls.
• This omni-channel approach allows Sugar Cosmetics to be accessible to a wide range of customers, catering to their varying shopping preferences and ensuring that their products are easily available to their target market.

Customer Relationships

• Sugar Cosmetics has built strong customer relationships through effective communication, customer support, and community engagement. The brand uses social media platforms such as Instagram, Facebook, and YouTube to share product information, beauty tips, and tutorials. This helps them establish a connection with their audience and keep them engaged with the brand.
• Customer support is another crucial aspect of building customer relationships. Sugar Cosmetics ensures that their customers receive prompt and helpful support through email, phone, and social media channels.
• They also offer a loyalty program called “Sugar Circle,” which allows customers to earn reward points on purchases and redeem them for discounts and exclusive offers.

Revenue Streams

• Sugar Cosmetics’ primary revenue stream comes from the sale of its makeup products, both online and offline. The company generates revenue through its official website, as well as through partnerships with e-commerce platforms and brick-and-mortar retailers. In addition, the brand’s exclusive kiosks also contribute to its overall revenue.

Key Resources

• Sugar Cosmetics’ key resources include its product development team, supply chain, and marketing efforts. The company relies on a strong product development team to create innovative, high-quality makeup products that meet the needs of its target audience.
• The supply chain, which involves sourcing cruelty-free and vegan ingredients and manufacturing the products, is another critical resource for the brand.
• Additionally, the company’s marketing efforts play a significant role in building brand awareness and driving sales. Sugar Cosmetics invests in digital marketing, social media campaigns, and influencer partnerships to reach its target audience and promote its products effectively.

Key Activities

Some of the key activities carried out by Sugar Cosmetics include:

• Product development: Designing and creating innovative, high-quality makeup products that cater to the needs of their target audience.
• Marketing: Implementing marketing strategies to build brand awareness, engage with customers, and drive sales.
• Supply chain management: Managing the sourcing, production, and distribution of products to ensure the highest quality and ethical standards.
• Customer support: Providing prompt and helpful support to customers through various channels to address their concerns and queries.
• Continuous improvement: Using customer feedback and market research to identify areas for improvement and expansion, ensuring that the brand stays relevant and competitive.

Key Partnerships

Sugar Cosmetics has established key partnerships to help them grow and expand their business. Some of their key partners include:

• E-commerce platforms: The brand has partnered with popular e-commerce platforms such as Amazon, Nykaa, and Myntra to increase product visibility and sales.
• Retailers: Sugar Cosmetics has formed partnerships with retail stores like Lifestyle, Shoppers Stop, and Health & Glow to make their products more accessible to customers.
• Influencers: Collaborating with beauty influencers and bloggers has played a significant role in promoting the brand and its products to a wider audience.
• Manufacturers and suppliers: Ensuring that they work with ethical manufacturers and suppliers who share the brand’s commitment to cruelty-free and vegan products.

Cost Structure

• Sugar Cosmetics’ cost structure includes expenses related to product development, manufacturing, marketing, and distribution. The company invests in research and development to create innovative products and ensure they meet the highest quality standards.
• Manufacturing costs include sourcing cruelty-free and vegan ingredients, as well as production expenses. Marketing and distribution costs involve promoting the brand and its products and delivering them to customers through various channels.
• Sugar Cosmetics has successfully disrupted the beauty industry with its unique business model that prioritizes innovation, accessibility, and ethical production. By using Alexander Osterwalder’s Business Model Canvas, we can see how the brand has strategically aligned its resources, activities, and partnerships to deliver a compelling value proposition to its target customer segment.
• The company’s focus on cruelty-free, vegan, and affordable products has resonated with its audience, contributing to its rapid growth and expansion.
• As Sugar Cosmetics continues to evolve, it is crucial for the brand to remain agile and adaptable, anticipating market trends and customer preferences. By staying true to its core values and leveraging the Business Model Canvas framework, Sugar Cosmetics can maintain its competitive edge and continue to make a significant impact in the beauty industry.

Sugar Cosmetics – Revenue Model

• The Sugar Cosmetics operating income climbed by 22% during the course of the same fiscal year, rising from Rs 103.71 crore to Rs 126.36 crore. Domestic sales which accounted for 93.1% of the company’s sales and increased by 34.1% from 87.7 crore to Rs 117.61 crores during FY21 were in charge of the company’s overall collections.
• However Sugar Cosmetics export by 45.4% as a result of the pandemic related travel and freight interruptions that the company experienced.
• The crew was able to obtain eyeliner and a kohl pencil from a German manufacturer despite having limited budget. The ‘ Made in Germany’ emblem gave customers peace of mind and helped SUGAR launch successfully. SUGAR at that time decided differently and created a matte version because it thought its customers would prefer a product they could use every day. This turned out to be successful. Throughout pandemic SUGAR Cosmetics built few new brand owned retail locations, prioritising hygiene and safety for its customers. The company is concentrating on growing its mobile app which has more than 1M app installations is less than a year, in order to boost its direct to consumer channels.

Sugar Cosmetics – Challenges Faced

• Unlike, its brand name the road for Sugar was not sweet initially. Juggling between new motherhood and her entrepreneurial dream Vineeta led to a hectic schedule. Business and entrepreneurship generally perceived as male domain hindered Vineeta to source funds.
• Once she met an investor who refused to talk to her since he wanted to have the business talk with a ‘man’. There were several sleepless nights when one hand had office files and the other held a new-born baby. Like every other retail or e-commerce brand, Sugar Cosmetics too faced the problem of managing the credit cycle since it is the key to keeping the working capital cycle to a bare minimum to ensure efficient capital use and rotation.
• They had set up a separate unit that monitored the credit cycle daily to manage finances efficiently. These struggles were part of the venture’s success that rose to become the best lipstick brand. It took 5 years for Sugar Cosmetics to build a team of 1500 of which 75 percent constitute women

Sugar Cosmetics – Funding and Investors

Sugar Cosmetics – Mergers and Acquisitions

The brand is set to venture into new categories, with an imminent entry into the hair care segment following its acquisition ofENN Beauty. Additionally, Singh shares the company’s vision of filing for anIPOby2024 or 2025

Sugar Cosmetics – Products and Launch

The “FAB BAG”

• Kaushik Mukherjee and Vineeta Singh founded the cosmetic subscription service “FAB BAG” in 2012, offering a monthly surprise beauty box for Rs 599. Each box contained a curated mix of five products from the categories of cosmetics, bath and body, skincare, haircare, and fragrances, predominantly featuring new and lesser-known brands sourced internationally.
• The FAB BAG concept provided the team with valuable insights, creating an environment to discern and understand their target market. SUGAR, a brand associated with FAB BAG, aimed to establish itself as a premium brand. The company’s growth strategy relied on enticing mass consumers to upgrade while simultaneously encouraging luxury clients to explore more cost-effective options.

Premium Products

• Despite operating on a constrained budget, the team at SUGAR strategically acquired their initial products—an eyeliner and a kohl pencil—from a reputable German producer. The ‘Made in Germany’ label instilled confidence in customers, contributing to a successful launch for SUGAR.
• During a time when glossy eyeliners dominated the market, SUGAR opted to introduce a matte version, anticipating that their clientele would prefer a product suitable for everyday use. This eyeliner marked the beginning of several successful product launches for
• Recognizing the influential role of Instagram in beauty industry marketing, SUGAR leveraged popular trends such as ‘unwrapping videos’ and ‘before and after’ makeovers to enhance brand awareness.
• The brand’s approach to Instagram influencers is well-balanced, with notable instances like featuring Anmol Rodriguez, an acid attack survivor, in one of their impactful videos. Presently, SUGAR boasts an impressive following of over 5 million on Instagram, surpassing competitors like Color bar.

Unique Packaging

• SUGAR initially embraced a fully digital strategy, entrusting design partner opposite with the mission of crafting attention-grabbing packaging. Opposite opted for a distinctive graphic approach, utilizing low-poly drawings to set SUGAR apart from the prevailing minimal and predominantly black design trend in the industry.
• In August 2023, SUGAR Cosmetics introduced ‘Sugar Play, ‘an innovative makeup range specifically tailored for pre-teens and teens. This pioneering line combines vibrant colors with formulas curated for sensitive, youthful skin.

E-commerce Expansion: Shopify and Mobile App

• In 2015, SUGAR embraced e-commerce by launching a Shopify store, a platform it still actively operates. The company further expanded its digital presence with a successful app release in November 2019, garnering over 1 million downloads and an impressive 5-star rating on both Android and iOS. Social advertisem*nts remain a key focus for SUGAR’s online customer acquisition strategy.

Sugar Cosmetics – Partnerships

Strategic Collaborations: Amazon Prime Exclusive Kit

• In August 2023, coinciding with the highly anticipated second season of “Made in Heaven” on Amazon Prime, SUGAR Cosmetics proudly introduces the exclusive “SUGAR x Made in Heaven” cosmetics kit through a strategic partnership, offering customers a unique beauty experience.

Media Synergy: OMP India Partnership

• InJuly 2023, SUGAR Cosmetics entered into a collaboration withOMP India, entrusting the Mumbai-based agency with the comprehensive management of its media strategy. This partnership signifies a strategic move towards enhancing the cosmetic brand’s media presence and outreach.

Celebrity Alliance: Kareena Kapoor Khan Investment

• Renowned Bollywood icon Kareena Kapoor Khan has not only invested an undisclosed amount in Quench Botanics but also joined forces with Vineeta Singh and Kaushik Mukherjee, co-founders of Sugar Cosmetics.
• Becoming a co-owner of this new venture, Khan’s alliance aims to leverage Singh and Mukherjee’s expertise in the beauty e-commerce sector for the scaling of the emergingKorean skincare brand.

Sugar Cosmetics – Advertisem*nts and Social Media Campaigns

• In the#ShukarHainSUGARHain campaign, the story unfolds with Ranveer Singh nervously introducing his girlfriend Tamannaah Bhatia to his family. Tamannaah gives Ranveer a peck right before the family opens the door, capturing a touching and realistic moment in relationships.
• This endearing story deftly highlights SUGAR’s dedication to long-lasting, smudge-proof cosmetics while also fitting in with the brand’s USP of transfer-proof lipsticks. The advertisem*nt successfully draws in viewers on an emotional level while emphasizing how long-lasting SUGAR’s makeup is.

Sugar Cosmetics – Competitors

The top ten rivals in SUGAR Cosmetics’competitive groupcan be listed as:

Sugar Cosmetics – Future Plans

Global Expansion and Offline Presence

• SUGAR Cosmetics has successfully ventured beyond India, establishing a physical presence in Russia and an online footprint in the United States. The brand, founded in 2015, is committed to amplifying its offline standalone locations, aiming to surpass its existing 100 outlets.
• Recognizing that95%of trading in India still occursoffline,SUGAR Cosmeticsstrategically plans to leverage this market trend. The brand aims to expand and enhance its retail base, emphasizing improvedretail marketing and visual merchandising experiences.

Resilient Expansion Amidst Challenges

• During the pandemic, SUGAR Cosmetics prioritized safety and sanitation, opening five new brand-owned retail stores. The brand’s resilience is evident in its strategic focus on strengthening direct-to-consumer (D2C) channels, particularly by expanding its mobile app, which has garnered over 1 million installations in under a year

Vineeta Singh Shark Tank India

• Vineeta Singh became a household name after her appearances on Shark Tank India. She joined the show in Season 1 and continued to appear in Seasons 2 and 3. Apart from being a smart investor on the show, Vineeta gained attention for her resemblance to “Raju ki Maa” from the popular movie 3 Idiots. This led to many memes spreading on social media, which initially saddened Vineeta, but she later took it supportively.
• She also won hearts with her humor and playful mimicry of other sharks at different events. Throughout the show, Vineeta made several strategic investments, further enhancing her reputation as a savvy entrepreneur

Vineeta Singh Personal and Professional Achievements

• Established in 2015, SUGAR Cosmetics has risen as one of India’s leading cosmetic brands. Despite facing numerous challenges along the way, the brand has continuously evolved to achieve its current success.
• Vineeta’s unwavering dedication, resilience, and hard work have propelled her to become a successful female entrepreneur, earning her recognition through various awards. In addition to her entrepreneurial pursuits, Vineeta is also a sports enthusiast. She has actively participated in several marathons, securing medals for her accomplishments in the sporting arena.

Personal Achievements

Lessons to Learn From Vineeta Singh

• Two failed ventures have not stopped Vineeta from starting SUGAR cosmetics as her third venture. Vineeta`s entrepreneurial journey is a motivational story that can motivate anyone to get up and work. She always believed in herself, which eventually led her to where she is now, running one of thebiggest cosmetic brands in India.
• Vineeta has been featured on the cover of various business magazines. She was on the cover ofForbes as the Most Powerful Women in Business.In 2020 Vineeta Singh was named one of thetop 100 mindful women in the worldby The Economic Times 40 Under Forty.

Ronnie Screwvala – Biography

• Ronnie Screwvala full name Rohintan Soli Screwvala is an Indian Entrepreneur and film producer. He co-founded upGrad which is an online education in the higher education and specialization sector.
• Apart from this he Ronnie pioneered cable television, built a Media and Entertainment Conglomerate (UTV Software Communications) that partnered with News Corp, 20^th Century Fox, The Walt Disney Company and Bloomberg.
• From 2013 onwards, he and his wife scaled their Non-Profitthe Swades Foundationwhose goal is to work with a million people in rural India.
• He also built a Sports company (U Sports) spanningFootball/E SportsandKabaddi,re-entered the media content space to build a creative content company in Movies and Digital Content (RSVP), authored a Book titledDream with Your Eyes Openand through his investment companyUnilazer Ventureshe has been a significantprivate equityinvestor in Indian start-ups with early stage investment and significant minority stakes.

Early Life and Education of Ronnie Screwvala

• Ronnie Screwvala was born and brought up in Mumbai, India.He belongs to the Parsi family. His father worked as an executive in the firm of British J L Morrison and Smith& Nephew.
• Ronnie completed his schooling and then started college at Cathedral John Coonon School and Sydenham College in Mumbai.
• During his schooling life, Screwvala showed a keen interest in theatres. He also started playing in some professional plays conducted in the Bombay Theatre as a hobby. Some of the notable roles had been played by Ronnie Screwvala in Death of a Salesman and Othello by Shakespeare.

Ronnie Screwvala Struggle Story: Cable Guy to Media Giant

• Ronnie Screwvala began as an entrepreneur, initially as a toothbrush manufacturing company. His first foray into entertainment industry was in the year 1981.
• In this year he pioneered cable TV in India and this was a significant move at a time when the country had only one terrestrial channel i.e. Doordarshan. In 1990, Screwvala founded UTV Software Communications which made him leading media Conglomerate.

Ronnie Screwvala – UTV Group

• In 1990 he co-founded UTV along with his wife ZarinaScrewvala and DevenKhoteand become first independent production house in Indian Entertainment industry. Initially UTV started producing advertisem*nts and corporate films and soon started producing quiz shows and short films for Doordarshan. He is a self-made man and an iconic figure in the networking media industry.
• Soon UTV started producing shows for broader audiences, it is credited for first reality show in India named SaanpSeedi and first daily soap opera Shanti in Indian television. His channel UTV featured Japanese animated shows and other regional language shows.
• He has launched many other television channels such as UTV Bindass, UTV Action, UTV World Movies, UTV Movies, etc. In 2007, his company also undertook making of gaming software and content. He has co-produced movies like ‘I Think I Love My Wife’, ‘The Happening’ and ‘The Namesake’. These made huge success.

Ronnie Screwvala – Life as an Entrepreneur

• Ronnie Screwvala’s childhood was at Grant Road, next to Novelty Cinema, also he belonged to lower-middle-class—they weren’t wealthy, but they had what they needed. They lived in an apartment situated on the first floor of the five-storey Arsiwalla building, nearly a century old and in constant need of repair.
• It had one long corridor with three rooms that held his brother, parents, two aunts and grandparents. The apartment’s sleeping area was indistinguishable from its other rooms. He lived there until the age of sixteen, privileged enough to go to a school where most of his classmates came in cars while he waited forty-five minutes for the B.E.S.T. bus to arrive.
• Instead of undermining his confidence, his childhood instilled in him the philosophies and ways of thinking that stuck with him later when opportunities kicked into warp speed. Risk was a word he knew, but couldn’t define. He was keen to observe adults who traded goods on the street every day, shouting offers back-and-forth. Ideas washed over me like the July monsoons.
• That ecosystem spurred his first entrepreneurial experience. All the local kids from the building got together and hung a drop curtain, and, with handbills, invited audiences for the four play-cum-concerts they put on in the evenings, rotating the performances in our various living areas. He enjoyed bonding with his friends, and their parents were thrilled to have their kids doing something productive. Everybody in the building paid to watch us. And at the age of ten, he earned his first round of money.
• Those first shows led to other projects, each a little more complex than the last. His family’s small veranda overlooked the cinema—at that time one of the city’s top movie halls. Because no one had television then, red-carpet premieres were a huge spectacle.
• Bollywood advertised its films by gathering everyone for twice-a-month events and waiting for the stars to come out. Newspapers did the rest, splashing flashy front- page photos of the industry’s most glamourous personalities—Amitabh Bachchan, Jitendra, Rajesh Khanna, Sharmila Tagore, Helen, Nutan, Manoj Kumar, Waheeda Rehman and a host of others.
• The roads around their apartment were chock-a-block for every premiere, and their veranda was the ideal vantage point for anyone who wanted to see the glory of Bollywood. Realizing that there was a market for the balcony seats, he sold tickets to people who wanted to gawk and point at their favourite stars and snap pictures they’d proudly show their family and friends.
• He was tempted to make more money by offering snacks. His grandparents frowned upon food service, the first setback in his entrepreneurial career as a ten-year-old. Still, his parents humoured him and were pleased by his ambition—even if they drew the line at fifteen strange people on their veranda. These moments shaped his entrepreneurial spirit.

Unilazer Ventures

• Unilazer Ventures is a Mumbai-based private equity and venture capital firm founded in the year 1991 and specialized in early- and late-stage investments. Unilazer Ventures is a uniquely positioned Investor with deep experience in the fast growing Indian Consumer, Services and High Impact Sectors.
• The Venture is interested in any business that is part of the India Consumption Story which can build Brand and Scale, as well as high Impact Sectors like Agriculture, Health Care, Micro Finance and Education. Unilazer is promoted by First Generation Entrepreneur – Ronnie Screwvala.

RSVP Movies

• RSVP is a production house that has set itself up to be a tight unit of driven professionals that seek to make entertaining and substantive movies and digital content. RSVP Moviesis an Indianfilm productionand distribution company established byRonnie Screwvalain 2017.
• In 2017, Ronnie Screwvala entered the entertainment business with RSVP after his exit from UTV Motion Pictures and produced Love per Square Foot which was digitally released on Netflix in 2018. With a focus on content-driven cinema, RSVP Films has delivered hits like “Uri: The Surgical Strike,” “Sonchiriya,” and “Kedarnath.” Screwvala’s keen eye for talent and storytelling, coupled with his passion for cinema, has earned RSVP Films a reputation for delivering high-quality and socially relevant films that resonate with audiences.

U Sports

• After owning the Kabaddi franchise U-Mumba, in the first edition of the Pro Kabaddi League, Ronnie Screwvala owned U Sports, which is the sport division arm of Unilazer Ventures, has now forayed into another sports playground- football.
• The company owned by Screwvala has launched a football training and academic programme ‘U-Dream’, to help develop Indian football players who are promising enough to place India on the professional football circuit. With collaborative guidance of Bundesliga, U Sports has partnered with TSG 1889 Hoffenheim for the first edition of U-Dream football.
• The programme plans to encourage participation from talented football players of 13 or 14 years of age, in the first year where the focus is to transform young talent into a pro-team of Under-17 footballers. However, the search will widen to Under-13, Under-15 and Under-17 categories from the year 2016 onwards.
• According to U Sports CEO Supratik Sen with over 20,000 football players across the globe earning more than $ 1 million a year, suggests that there are very few careers as exceptional as a professional footballers.

upGrad

• upGrad – started in 2015, is a pioneer in the online education revolution, focused on powering career success for a global workforce of over 1.3 billion.
• It is one of the few Integrated Life Long Learning Tech Companies in the world, spanning the college learner to the working professional from the age group of 18 to 55+ years and across undergrad courses, campus & job-linked programs, studying abroad, short form to executive programs to Degrees, Master’s and Doctoral, with a learner base of over 3 million across 100+ countries and over 300 university partners and robust enterprise business with a client base of 1000 companies worldwide.
• As the founder of upGrad, he has revolutionized online learning in India, empowering thousands of learners to upskill and thrive in the digital age.

The Swades Foundation

• The Swades Foundation aims to bring positive changes in the way of life in rural villages by implementing projects on education, water & sanitation, health & nutrition and economic development.
• It believes in partnering with the villages to make them independent and then encouraging the community to chart out its own path of development. Ronnie Screwvala and his wife Zarina Screwvala non-profit, Swades Foundation, has been providing grassroots interventions related to education, skilling, health care, water security and livelihoods to the people

Ronnie Screwvala Net Worth and Investments

• Ronnie Screwvala’s net worth stands at a staggering $1.55 billion, making him the richest man in the Indian film industry and a beacon of inspiration for entrepreneurs and dreamers alike. His legacy is one of ambition, resilience, and innovation, and his impact on Indian cinema and entrepreneurship will be felt for generations to come.

Ronnie Screwvala Family

• Screwvala is married toZarina Mehta, is his second wife. Zarina has been a co-founder in the media company UTV they founded, and now is the co-Trustee of their Philanthropic foundation-The Swades Foundation. They live inBreach Candy, South Mumbai.
• His first wife,Manjula Nanavatiand Screwvala have one daughter,Trishya Screwvala.

Ronnie Screwvala Personal and Professional Achievements

Ronnie Screwvala’s achievements include:

• Named on Esquire’s List of the 75 Most Influential People of the 21st Century.
• Ranked 78 among the 100 most influential people in the world on the Time 100 (2009).
• Listed among 25 Asia’s Most Powerful by Fortune Magazine.
• Titled the Jack Warner of India by Newsweek.
• Featured at cover page of Forbes magazine (Oct 2020 edition).
• Nominated for BAFTA Award for Best Non-English Film for Rang De Basanti.
• Won Best Popular Film Providing Wholesome Entertainment at National Film Awards (2007) for Rang De Basanti.
• Won Best Film by Film fare Awards (2007, 2009, and 2013) and IIFA Awards (2007, 2009, and 2013) for various films.

Ronnie Screwvala – Investments besides UTV

The latest to join the list of investments from Screwvala is the celebrity fan engagement portal TrueFan. The six-month-old start-up founded by Nimish Goel, Nevaid Aggarwal, and Devender Bindal has raised $4.3 million in seed funding by investors like Ronnie Screwvala, Mayfield India, and Saama Capital. Ronnie Screwvalahas invested in8rounds.Their most recent investment was inWithout(Angel Round)on Feb 20, 2024

• Some notable companies in their investment portfolio includeLenskart,TrueFanandLido
• Their investments are primarily in Consumer, Retail and 6 more sectors
• Their investment portfolio includes companies in India and United Kingdom

Ronnie Screwvala – Shark Tank India

• Ronnie Screwvala joined the panel of sharks for Season 3 of Shark Tank India. Screwvala brings his wealth of experience and insights to the illustrious panel ofSharks.
• RonnieScrewvalahas completed the powerhouse panel of Shark Tank India Season 3, which includesAman Gupta(Co-Founder and CMO of boAt), Amit Jain (CEO and Co-founder of CarDekho Group, InsuranceDekho.com), Anupam Mittal (Founder and CEO of Shaadi.com – People Group), Namita Thapar (Executive Director of Emcure Pharmaceuticals LTD),Vineeta Singh(Co-Founder and CEO of SUGAR Cosmetics), Peyush Bansal (Co-founder and CEO of Lenskart.com).
• It also includes Ritesh Agarwal (Founder and CEO of OYO Rooms), Deepinder Goyal (Founder and CEO of Zomato), Azhar Iqubal (Co-Founder and CEO of Inshorts),Radhika Gupta(MD & CEO of Edelweiss Mutual Fund), and Varun Dua (Founder and CEO of ACKO).

Lessons from Ronnie Screwvala’s Journey

1. Embrace failure: “Failure is just a temporary pause, not the end.”
2. Stay curious: “Be curious, ask questions, and never stop learning.”
3. Adapt to change: “Change is the only constant. Adapt or perish.”
4. Focus on the long term: “Short-term gains should never compromise long-term vision.”
5. Build relationships: “Networking and relationship building are key to business success.”
6. Empower your team: “A strong, motivated team can move mountains.”
7. Be innovative: “Innovation is the lifeblood of business.”
8. Be persistent: “Persistence pays off, no matter how long it takes.”
9. Keep your ego in check: “Ego can be your worst enemy or your best ally.”
10. Stay humble: “Success is temporary, humility is forever.”

Conclusion

Ronnie Screwvala’s bold stance is a reminder that success is not just about accumulating wealth but also about using that wealth to drive positive change and make a meaningful impact. As he continues to push the boundaries of what’s possible, Ronnie Screwvala’s legacy will remain a testament to the power of ambition, innovation, and relentless pursuit of excellence.

SpiceJet promoter Ajay Singh has submitted a bid – with Busy Bee Airways Pvt Ltd – to acquire the troubled Go First carrier. Under the terms of the offer, SpiceJet will be the operating partner for the new airline, and will provide staff, services, and industry expertise. The airline will hope to leverage established infrastructure and operational capabilities to achieve significant revenue expansion.

About Spice Jet

• The SpiceJet brand was born in 2004, but its air operator’s certificate (AOC) dates back to 1993 when an air taxi company owned by SK Modi partnered with the German flag carrier Lufthansa, which was keen to capitalize on India’s recently liberalized aviation industry.
• Together, they created MG Express, which went on to operate passenger and cargo services under the name ModiLuft. ModiLuft took to the skies in May 1993, flying a Boeing 737-200 on lease from the German airline, and as India’s first major joint venture, expectations were high.
• However, rifts between the two owners over the airline’s finances ultimately caused ModiLuft to cease operations in 1996. The AOC, however, remained dormant.

SpiceJet’s early years

• In 2004, the entrepreneur Ajay Singh drew up plans to create SpiceJet, one of India’s first low-cost carriers. Instead of following the lengthy processes from scratch, Singh found a much quicker way to get his airline off the ground and purchased ModiLuft’s AOC, renaming the carrier SpiceJet.
• SpiceJet’s first flight departed from New Delhi (DEL) to Mumbai (BOM) on May 24th, 2005, using a leased Boeing 737-800. The airline’s choice of aircraft set it apart from its fellow low-cost competitors, IndiGo and GoAir (later known as Go First), both of which opted for the Airbus A320 family.
• SpiceJet operated its 737-800s with a maximum capacity of 189 passengers in an all-economy class configuration. This gave the airline a significant cost advantage over the likes of Air India and Jet Airways, and by 2008, SpiceJet had grown to become one of India’s five largest carriers.
• In 2010, SpiceJet ordered a further 30 737-800s and 15 DHC Q400s to support its ambitious expansion plans. However, as a result of operating in a highly competitive market while facing rising oil prices, the airline began to rack up losses in 2012. By 2014, SpiceJet was just days away from bankruptcy.
• Yet by 2015, SpiceJet’s recovery was well underway, boosted by the presence of Ajay Singh. As Managing Director, Singh helped to guide the airline through troubled times and back into profit. In 2017, SpiceJet sealed its commitment to the 737 MAX with an order for 100 examples of the type. However, only 13 were delivered before the aircraft was grounded in 2019.

On Going Recovery

• In a post-pandemic world, SpiceJet is rebuilding itself again, much like it did back in 2015. While its market share has decreased, it is performing much stronger financially and recentlyposted a $24.5 million profitfor Q1 2023, benefiting from increased passenger demand.
• Today, SpiceJet operates 58 aircraft, including eight Boeing 737-700s, 14 737-800s, nine 737 MAX 8s, three 737-900ERs, and 24 DHC 8-Q400s. Back in 2021, there were reports of the airline planning to take on two 777s from Boeing as compensation for the delays in the 737 MAX deliveries, although this did not come to fruition.
• SpiceJet has an outstanding order for 129 737 MAX 8s, which will help the airline reclaim its stake in the rapidly changing and highly competitive Indian aviation market.​​​​​​ The carrier has also expanded its international route network, which today includes Dubai (DXB), Bangkok (BKK), and Jeddah (JED).

About Go First

• The Go First budget airline`s owners — the Wadia Group — filed voluntary insolvency resolution proceedings before the National Company Law Tribunal (NCLT) sending shockwaves through the entire airline industry.
• Go First was plagued by a peculiar problem — the purported failure of the jet engine manufacturer, Pratt & Whitney, USA, to supply engines/spares for its aircraft that grounded nearly 40 percent of the fleet for several months before it was compelled to totally suspend operations from the first week of May 2023.
• While the DGCA slapped a show-cause notice on the carrier for its abrupt actions that created havoc with thousands of flyers, Civil Aviation Minister Jyotiraditya Scindia seemed sympathetic to Go First grappling with the engine problems. While assuring that the government was helping out as best as possible, Scindia also called upon Go First to make alternative travel arrangements for its flyers to avoid inconveniencing them.
• According to Go First the application under the IBC came after the “ever-increasing number of failing engines supplied by PW” which led to the grounding of around 25 of its 61-strong Airbus A-320neo aircraft, or almost 40 percent of its fleet by April 30, 2023. Go First said in a statement that the groundings due to faulty PW engines increased from 7 percent of its fleet in December 2019 to 31 percent in December 2020 and 50 percent in December 2022, and blamed PW for giving assurances but failing to meet them.
• In view of this, the beleaguered carrier suffered a whopping loss of nearly Rs 10,800 crore and even demanded Rs 8000 crore as compensation from the PW which could help Go First to meet its financial commitments/obligations. Besides, Go First had also coughed up Rs 5,657 crore to its lessors in the past couple of years comprising Rs 1,600 crore as lease rent for the non-operational grounded aircraft.
• Go First was also hampered by the PW reportedly not honoring the March 2023 award of the Emergency Arbitrator in Singapore to immediately provide the airline with at least 10 serviceable spare leased engines by April 2023 and 10 more per month till December 2023 to enable the carrier to resume full operations, financial rehab and survival.
• An aviation official said that after the NCLT processes the Go First application, it could appoint an interim Resolution Professional to take over and re-start operations, adding that a similar exercise in 2019 with another grounded private carrier failed to take-off.
• Though Go First`s promoters have pumped in around Rs 3,200 crore in the past three years, coming to a total investment of nearly Rs 6,500 crore, plus support from the government`s emergency credit line guarantee, all this failed to help as the airline kept incurring 100 percent of its operational costs and with a total loss of Rs 10,800 crores, it `succumbed`.
• In the NCLT plea, the 17-year-old airline which operated over 32 flights to 29 domestic and 10 international destinations, has sought several interim directions including restraining the lessors from taking back their aircraft, any adverse action by the DGCA, suppliers of essential goods-services, etc.
• Since launching low key operations in November 2005 as `GoAir`, Go First gradually climbed up to become the fifth largest private carrier, consistently profitable and expanding till the PW `engine troubles` started from December 2020, hitting its operations and forcing it to ground in May 2023.

Joint offer By SpiceJet and Busy Bee Airways

• Bankrupt carrier Go First, which is undergoing the corporate insolvency resolution process (CIRP), has received two bids—a joint offer by SpiceJet’s chairman and managing director Ajay Singh and little-known entity Busy Bee Airways, and the other by United Arab Emirates-based aviation company Sky One.
• Singh submitted the bid with Busy Bee Airways in his personal capacity and SpiceJet’s role, if the bid is successful, would be that of an operating partner, which would entail providing essential staff, services, and industry expertise. According to Registrar of Companies records, Busy Bee Airways is a Delhi-based company that was incorporated in 2017. The records show that the company currently has two directors, both of whom were appointed on December 25, around a week after SpiceJet expressed interest in bidding for Go First.

Impact on the aviation sector

• If Ajay Singh buys Go First with its bidding partner, it will be good news for flyers. With the grounding of Go First, SpiceJet’s financial challenges and teething troubles of Akasa Air which started last year, India’s aviation was consolidating with two top groups InterGlobe Aviation, which owns IndiGo airline, and the Tata Group which owns Air India, AirAsia India and Air India Express in addition to a 51 percent stake in Vistara.
• As smaller airlines struggle to stay afloat, nearly 90% of market share is controlled by just two entities. IndiGo has close to 62% market share while the Tata Group’s share totals to nearly 25%. Akasa Air has a 4.2% share while SpiceJet has close to 5%. Go First, before it was grounded, had a market share of more than 6%.
• IndiGo, the country’s largest airline, was the biggest beneficiary of Go First’s bankruptcy last May, an ET Intelligence Group report had pointed out in January. Between April and September 2023, the market share of IndiGo increased to 63.4% from 57.5%, Since then, however, its share fell by 160 basis points in November to 61.8%, according to the latest data published by the Directorate General of Civil Aviation (DGCA). During the period, SpiceJet’s share increased to 6.2% from 4.4% while that of Tata Group’s airlines including Air India, Air Asia and Vistara remained more or less stable at 26.5%.
• The report said intense competition is expected to make it difficult for InterGlobe Aviation, the owner of IndiGo, to gain market share in the medium term. Factors such as fund crunch, delays in delivery of planes and relatively weak balance sheets of rivals contributed to InterGlobe’s performance.
• SpiceJet, which was in dire need of funds, infused ₹2,250 crore in the middle of December through the issuance of warrants on a preferential basis. Besides, Akasa Air has resolved the issue of the shortage of pilots. In addition, the domestic aviation sector is in expansion mode and may add 150 aircraft over the next 12 months. That will be the highest capacity addition in the past four years. If Ajay Singh of SpiceJet buys Go First and creates synergies between the two airlines, it will increase competitive intensity further, which is sorely needed as an emerging duopoly in India is seen to be unfavorable to flyers in terms of fares, services and punctuality, just as a growing number of flyers need more healthy airlines.

Who is actually liable to pay GST?? The Online delivery Platform or its Delivery Agent?? Zomato has raised these questions as it receives Rs 400 crore notice for not paying GST.

• In a stock exchange filing on December 27^th 2023, Zomato said that they received a show cause notice from the Director General of GST Intelligence, Pune Zonal Unit as to why an alleged tax liability of Rs 401.7 crore along with interest and penalty for the period from October 29,2019 to March 2022.
• Zomato has received this notice under section 74(1) of the Central Goods and Services Tax Act, 2017. Zomato however asserted that it is not liable to pay the amount as delivery charges are collected by it on behalf of the delivery partners.

Why Zomato Got such Notice???

• DGGI has taken on the matter is “Food delivery is a service, so Zomato is liable to pay GST on service at 18% rate.” On the other hand, industry is of a view that Zomato is a platform, and they hire gig workers on a per delivery basis and Zomato is just collecting these fees as a total amount which gets paid to the gig worker.
• These gig workers are providing the service thus, it is on them to pay GST. But, since each gig worker is below the ₹20 Lakh threshold they are exempt from GST.” Simply put, as of now, food delivery platforms have to pay 5% GST on their food orders and not the restaurants.
• In addition to the food bill, they collect certain charges for delivery, which is passed onto the gig workers. The contention is that delivery is a service provided directly by service delivery personnel to the customer and the platform is not required to collect GST on the same. In most cases, these delivery personnel would be below the GST threshold and hence not required to pay GST.
• The GST authorities are contending that food delivery platforms are required to pay GST on these charges. Experts say that the real question, therefore, is whether this service is by the platform or by the delivery personnel directly.

Zomato ‘s Response

• In response, Zomato said that it is not liable to pay any tax since the “delivery charges” are collected by the company on behalf of the delivery partners. Additionally, the delivery partners have also provided service to the customers and not the company. “This is also supported by opinions from our external legal and tax advisors,” Zomato said in an exchange filing, adding that it will file an appropriate response to the notice.
• However, the company has highlighted that no order of any kind has been passed against the company and they have made this disclosure just as a matter of caution given the amount of tax in question. Zomato believes that it has a strong case on merit.

How GST Notice is Impacting the Food Delivery Agents ??

• The saga of delivery fees, a perennial point of contention for Swiggy and Zomato, has been a tale marked by disputes and controversies. Zomato, in a strategic move, introducedZomato Gold, a loyalty program designed to offset delivery fees through a monthly subscription. Swiggy responded in kind withSwiggy One, adopting a similar approach.
• While both platforms charge an average of INR 40 for deliveries, the actual cost incurred is INR 60. The platforms absorb this additional INR 20, a fact often overlooked in the fee debate. Notably, Zomato and Swiggy jointly process a staggering 1.8 to 2 million daily orders across the country.
• The looming spectre of new GST implications threatens to disrupt their financial equilibrium. Adding complexity, both platforms recently introduced a platform fee, ranging from INR 2 to INR 5 per order. Unlike previous models, this fee applies universally, impacting all customers regardless of subscription status.

The Road Ahead –Taxation on GST Needs More Clarity

• Time and again, it has been observed that tax authorities are known to plug loopholes even when they are legal. When it is an open-and-shut case, it gets trickier for companies. If Zomato and Swiggy are indeed delivery companies that charge delivery fees, they have to be seen as service companies that are bound to pay service tax on the charges.
• But the problem is that food is a complex business. Raw materials do not cost as much in making a cooked item as other incidental costs involved in packaging, managing restaurant premises and maintaining a labour force.
• Being venture capital-funded companies usually means that the likes of Zomato and Swiggy cannot think of themselves as just glorified courier companies. So they get into partnerships and promotional work in complex business models that take their work into a fuzzy zone.
• Trying to convert some of that fuzziness into profit-sharing opportunities while also being a delivery company is putting them under dilemma. As it turns out, tax authorities may be slow to understand it all, but when they come down on an industry, they do so pretty hard.
• As a perceptive research paper said: “Swiggy’s revenue is based on three major streams- Advertising, Commission, and delivery fees whereas the three key pillars that drive Zomato’s revenue are Food Delivery, Dining Out, and Hyperpure.
• To some extent, food delivery companies that run websites that have content and logistical muscle can add the apples of commission revenues with the oranges of service fees. However, in a cut-throat business where competition is intense but profit margins are high, there is a roller-coaster approach to promotions, technology, and partnerships. Zomato’s early honeymoon with big restaurants as a dine-in demand provider ran into hiccups when high-end restaurants found the platform not as palatable as their gourmet food.
• Perhaps it is time for venture capitalists and entrepreneurs to realise that complicated business models can boomerang while simple business models may not be alluring to investors. You have to strike a balance somewhere.

Uber Technologies has sold its stake of 7.78% stake in Zomato in a bulk deal in which two institutional buyers Fidelity and ICICI Prudential Life Insurance brought the stakes.

Cab Aggregator –UBER TECHNOLOGIES

• Uber Technologies is 12 years old and was founded by Garrett Camp, a computer programmer and co-founder of Stumbleupon. Today the company has presence over 67 countries.
• Uber Technologies was launched in India in the year 2013, since then it has served millions of riders and drivers. The car aggregator chose Bangalore as the first city to roll out its services.
• Uber had said that in fast developing countries, like India, there’s a gap due to underdeveloped traffic infrastructure, which we think we can address.
• Furthermore, the option of being able to driven around in a luxury car in Indian cities, by top class drivers, amidst the traffic and its hectic nature is quite an attractive proposition for Indians.
• Uber Technologies invested around $ 247 million into India out of which major investment was into Uber Eats.
• Uber Eats entered the Indian market in 2017 and scaled business to 41 cities with over 65,000 riders who deliver food from 26,000 restaurant partners.
• But India’s hyper-competitive delivery market, funded by steep discounts and low value orders, has been a drag on the company’s financials.
• Uber Eats, as an app, was first piloted in 2014 in Los Angeles. Interestingly, Uber’s entry into food delivery in India in January 2017 came at a time when homegrown food startups, barring a few, were cash starved and were forced to put expansion on hold.
• In the year 2020, Zomato the online food delivery and restaurant Aggregator announced that it has acquired Uber Eats business in India. The deal said Uber will get a 9.99% ownership in Zomato.
• Uber Eats in India got discontinued and operations and direct restaurants, delivery partners, and users of the Uber Eats apps moved to the Zomato platform.
• The move was aimed at cutting losses at the ride hailing company’s food delivery business in India that has been a drag on the company’s earnings.

Zomato –The Online Food and Restaurant Aggregator

• Zomato is an Indian multinational restaurant aggregator and food delivery company founded by Deepinder Goyal and Pankaj Chaddah in 2008.
• Zomato provides information, menus and user-reviews of restaurants as well as food delivery options from partner restaurants in select cities.
• Zomato was founded as FoodieBay in 2008 . The founders renamed the company Zomato in 2010 as they were unsure if they would “just stick to food” and also to avoid a potential naming conflict with
• Alibaba’s Ant Financial-backed online food delivery and restaurant discovery platform Zomato had acquired Uber Eats, the food delivery business of ride-hailing giant Uber India for around $350 million in an all-stock deal. The deal gave Uber 9.99% stake in Zomato. But Zomato failed to absorb Uber Eats employees.

Uber sells its stake in Zomato

• Uber’s initial investment in Zomato was over $60 million. That amount was invested by Uber co-founder and CEO Travis Kalanick, who also serves as the managing director of the firm and chairman of its India unit.
• The investment was valued at $200 million, making it one of the largest investments by a US-based tech startup in India.
• Uber now has planned to sell a big block of shares in its Indian business – about 7.8% – representing around 29.8 million shares at a valuation of $274 million, or Rs 1,920 crore approximately. Zomato is currently valued at $1.4 billion and the sale would see it increase its market cap to $2 billion.
• The deal values Zomato between $1.6-$1.7 billion, including the proportionate deal value of its remaining primary investor Info Edge, which owns 20% in the company. Zomato’s filing with Sebi also shows that it will use about $75 million to fund its food ordering platform Zomato Order and at least another $75 million towards other expenses mainly towards international expansion.
• Zomato is still making losses but the company says that it will be profitable by next year. We already know that Zomato has been able to cut down its losses from Rs 871 crore in FY17 to Rs 614 crore in FY18. However, the company needs to continue its efforts if it wants to become profitable by next year.
• Zomato has seen a lot of progress in terms of its financials and that has helped it gain a lot of love in the stock market.
• Since Zomato was first listed on the NSE, it has not seen too much success in terms of its financial performance. In fact, it has only been able to see its losses increasing every year. One of the primary reasons behind this is that Zomato has been trying to cut down costs while improving its offerings.

Peyush Bansal – Biography

Peyush Bansal- The Visionary man who founded Lenskart to transform the way people see and experience the World. Since the beginning of the Company, Lenskart has defied expectations on how people engage with eyewear. Yes Lenskart is all about eyewear and eye care. Peyush Bansal and His company visions for a world where eyewear helps you Do More, Be More. He focused for disrupt in eye wear industry and today Lenskart is one of Biggest Eyewear Brand in India. Let us understand his journey in detail.

Early Life and Education of Peyush Bansal

• Peyush Bansal studied at Don Bosco School, Delhi. After completing his schooling, he prepared for IIT but didn’t get through it. Peyush then decided to study engineering at a foreign university and after so much hard work and effort, he finally got admission to McGill University, Canada.
• Later he got admission into Bachelor of Engineering Honors in Electrical- IT, Control and Automation. From 2002 to 2006 he completed his bachelor’s degree there. While doing their studies he used to work as a part-time receptionist where we developed his interest in computers and coding.
• After completing his studies at McGill University, he started his career as a Program Manager in a popular Tech Giant- Microsoft, USA. He worked there for nearly one year from January 2007 to December 2007. He also completed (MPEFB- Management) from IIM, Bangalore.
• Peyush left his job and in 2008 he moved to India. Despite not having a business idea and experience, he decided to start a new business with a small capital that he had earned from his previous job. In December 2007 he started a company basically an online portal (SearchMyCampus.com) to solve the various issues of college students such as housing, coaching, jobs, transportation, books, etc. After this, he with his friends founded Valyoo Technologies Pvt. Limited which is now known as Lenskart.

Peyush Bansal Net Worth and Investments

• Through dedication and expertise, he has become a beacon of motivation for budding entrepreneurs. As of 2024, Lenskart founder Peyush Bansal’s net worth is estimated to stay approximately Rs. 600 crores.
• Peyush Bansal lives a luxurious life with many luxury cars, as he has a BMW, Mercedes, Audi, and Land Rover. Furthermore, he has also invested in an employee engagement platform at Feedo and dailyobjects.com, a lifestyle brand.
• Peyush Bansal has made numerous investments in companies likePush Sports,Yes Madam, andJewel box (Accessories)within the Educational and Training Services (B2C), Services (B2C Non-Financial), and Accessories industries. Peyush Bansal’s latest investment was on 19-Feb-2024 inPush Sports, a company within the Educational and Training Services (B2C) industry.

Peyush Bansal Family

• Peyush Bansal was born on 26^th April 1985 to Mr..Bal Kishan Bansal and Kiran Bansal. He is married to Nimisha Bansal.
• Peyush has one elder brother and one sister. Peyush and Nimisha has one son.

Peyush Bansal Lenskart India: How It All Began?

• After completing early education, Peyush moved to Canada for further studies from where he completed his engineering degree. After this Peyush did his first job at Microsoft, the world’s biggest company. Peyush used to get package of lakhs at Microsoft. But he was not happy with the work as he wanted to start his own business and he thought to come back to India in the year 2007.
• He launched SearchMyCampus as the first vocational service in 2007. He then went on to find a series of companies including John Jarcobs, Equivalence and Lenskart under which he set up the Lenskart Vision Fund which is a Lenskart Plus Company. In the year 2010, Peyush Bansal founded Lenskart with Sumeet Kapathi and Amit Choudhary. First the Company sold only contact lenses.
• But later on it also started selling sunglasses and eye glasses. Today it has more than 5000 frames and glasses in their portfolio as well as more than 46 different types of high quality lenses and now the company has reached a new heights of success. Today Lenskart has more than 1550 outlets across India. Adopting a franchisee model business. Peyush expanded Lenskart to every region of the country and today he also provides an eye check-up facility.

Business Model of Lenskart

Lenskart operates through a uniquebusiness modelthat has helped it become one of the largest eyewear retailers in India. Here’s a closer look at Lenskart’s business model:

Strategic Partnerships

• Lenskart has developed strategic partnerships with several key players in the eyewear industry. It has collaborated with manufacturers to source high-quality frames and lenses at affordable prices. The company has also partnered with lens manufacturers to develop its own lenses, which it sells under its brand name.
• Additionally, Lenskart has partnered with technology providers to create a seamless online shopping experience for its customers. It has also partnered with brick-and-mortar stores to expand its reach and provide customers with a personalized in-store experience.

Revenue Generation

• Lenskart generates revenue through several streams. Its primary source of revenue is the sale of eyewear products, including frames, lenses, sunglasses, and contact lenses. The company has a wide range of products, catering to customers of all ages and needs.
• Lenskart also generates revenue through its subscription-based services. It offers a subscription service called Lenskart Gold, which provides customers with exclusive benefits, such as free eye tests, free home eye check-ups, and discounts on eyewear products.

Cost Structure

• Lenskart’s cost structure is based on several factors, including the cost of goods sold, marketing and advertising expenses, and technology expenses. The company has a vertically integrated supply chain that helps it keep its costs low. It sources its products directly from manufacturers, eliminating the need for middlemen and reducing costs.
• Lenskart invests heavily in marketing and advertising to increase brand awareness and attract new customers. It uses a combination of traditional and digital marketing channels to reach its target audience.
• Finally, the company incurs technology expenses to develop and maintain its online platform. It has invested in advanced technologies to provide customers with a seamless online shopping experience and personalized recommendations.

Customer Segments in Lenskart’s Business Model

Lenskart’s customer segments can be broadly classified into the following categories:

• Budget-conscious consumers: Lenskart caters to customers who are looking for affordable and value-for-money eyewear solutions. This segment comprises individuals who are price-sensitive and are looking for affordable eyeglasses, sunglasses, and contact lenses without compromising on quality.
• Fashion-conscious consumers: Lenskart also targets customers who are fashion-conscious and seek eyewear that reflects their style and personality. This segment comprises individuals who are willing to spend more on designer eyewear and are looking for a wide range of trendy and fashionable eyewear options.
• Individuals with vision problems: Lenskart also caters to customers who have vision problems and require prescription eyewear. This segment includes individuals who require corrective glasses or contact lenses for near-sightedness, farsightedness, or astigmatism.
• Tech-savvy customers: Lenskart also targets tech-savvy customers who prefer to shop online and use digital channels to browse and purchase eyewear products. This segment comprises individuals who are comfortable using online platforms to browse, select, and purchase eyewear products.

Value Propositions in Lenskart’s Business Model

• Wide range of products: The Company offers a wide range of eyewear products, including prescription glasses, sunglasses, contact lenses, and eye care accessories. Customers can choose from a large selection of styles, materials, and colours.
• Affordable pricing: Lenskart offers affordable pricing on its products, making eyewear accessible to a wider audience. The company often runs promotions and discounts, making it an attractive option for cost-conscious customers.
• Convenience: Lenskart offers a convenient shopping experience to its customers. Customers can shop online or in-store, and can even book a home eye check-up service through the company’s website. This makes it easy for customers to get the eyewear they need without having to leave their homes.
• Personalization: Lenskart offers a personalized shopping experience to its customers. The company uses a virtual try-on feature on its website, allowing customers to see how different frames will look on their face. Lenskart also has trained optometrists in its stores who can help customers find the perfect pair of glasses.
• Quality: Lenskart offers high-quality products that are made with durable materials. The company also offers a 14-day return policy, allowing customers to return products if they are not satisfied with their purchase.

Lenskart Funding and Valuation

The largest shareholders of Lenskart include ADIA, Soft-Bank Vision, Kedaara Capital, TR Capita, Alpha Wave Global, Premji Invest, etc. Let’s look at the recent shareholding structure of Lenskart-

The majority of the stakes are owned by Softbank i.e. 20.1% followed by Premji Invest (11.1%) and ADIA (10%).

Fundings so far & Valuation

Lenskart signed a definitive agreement withADIAfor a 10% stake in the company. ADIA invested a massive amount in Lenskart through SWF i.e. Gulf Sovereign Wealth Fund. Let’s look at the latest funding rounds of Lenskart-

Competition Analysis: What Makes Lenskart Stand Out?

1. Integrated Model: Lenskart controls its supply chain, including manufacturing and assembly units. This gives them an edge in ensuring quality control, quicker delivery, and inventory management.
2. Hybrid Retail Strategy: Lenskart’s combination of online and offline stores allows them to cater to a wide range of customers. While the online platform provides convenience, the physical stores offer a touch-and-feel experience, credibility, and immediate service.
3. Technological Innovation: The Company has been at the forefront of using technology to enhance the customer experience. Features like the virtual 3D try-on technology set them apart from many traditional eyewear retailers.
4. Diverse Product Range: Lenskart offers various styles, categories, and price points, ensuring that different customer segments can find products to their liking.
5. Home Services: Their home eye check-up service offers unmatched convenience, helping them stand out in a crowded market and cater to those hesitant or unable to visit physical stores.
6. Private Label Advantage: By creating its private-label brands, Lenskart ensures higher margins and can offer competitive prices. This also allows them better control over product design and innovation.
7. Aggressive Marketing: Lenskart’s branding and marketing campaigns have been prominent, making them one of the top-of-mind brands in the eyewear sector in India.
8. Customer-Centric Initiatives: From easy returns to warranties on products, Lenskart has always focused on building trust and ensuring customer satisfaction.

Peyush Bansal in Shark Tank

• Peyush Bansal, who is arguably the most-admired shark on the show, would have not accepted the show’s offer. When he was first made the offer, he wanted to turn it down. But his wife, Nidhi, insisted that it was a great opportunity.
• And then when they went on their vacation to Maldives. Peyush watched back-to-back episodes on the television in his room while facing some of the most pristine waters one can. He did the same at other engagements as well. Despite him enjoying the show, he wasn’t sure.
• Like most entrepreneurs he was hard-pressed for time, and the show needed lots of it. It’s funny that even when he shot the first time, he wasn’t sure. That’s why he hadn’t signed the show’s contract. Then the lights went on. The shoot and the start-up founders’ energy inspired him. Then, there was no looking back.

Peyush Bansal Personal and Professional Achievements

• He is the recipient of the Red Herring Top 100 Asia Award 2012 for his venture Valyoo Technologies and was awarded ‘Emerging Entrepreneur of the year’ in the Indian e-tail Awards 2012.
• He received the ‘India TV Yuva Awards in 2015.
• Economic Times recognized Peyush Bansal under India’s Hottest Business Leaders under 40. He was also listed in Fortune India’s Best 40 under 40 entrepreneurs in 2019.

5 Companies Launched by Peyush Bansal before Lenskart’s Success

1. SearchMyCampus.com

• Peyush Bansal started SearchMyCampus.com in December 2007 with ₹25,00,000 from the basem*nt of his parent’s house. It was an online portal that helped college students to easily solve common issues faced by them likejobs, housing, coaching, books, transportation, etc. He worked on SearchMyCampus for 2 years.
• Peyush Bansal founded Valyoo Technologies in 2008. Valyoo Technologies is the parent company of Lenskart.

2. Flyrr

• Peyush Bansal started Flyrr in June 2009. It was an online store that sold spectacles, sunglasses and contact lenses. The same idea as Lenskart but concentrated on the US market.
• Peyush faced some problems, which made him realize that in order to run a business smoothly, both operations and delivery had to be controlled by him and his team. He decided to replicate the same model in India, and hence Lenskart was born in November 2010.

3. Watchkart.com

• With Lenskart on track, Peyush Bansal launched another niche venture in May 2011 called Watchkart. Watchkart sold branded watches and catered to a lot of brands like Emporio Armani, Tommy Hilfiger, Fossil, etc.

4. Bagskart

• In August 2011, Peyush Bansal launched Bagskart. Bagskart was another of Peyush Bansal’s niche portals under Valyoo Technologies. BagsKart sold different varieties of handbags.

5. JewelsKart

• With three niche verticals, Lenskart, Watchkart, and Bagskart, already in place, Peyush Bansal started another vertical, Jewelskart. As the name would suggest, JewelsKart sold jewellery of different kinds.
• With a growth of 200%, Lenskart was performing better than all its sister verticals by 2014. Because of low traction and financial losses, Peyush Bansal shut down Watchkart, Bagskart, and Jewelskart in 2015. This helped him focus on Lenskart better and make it the brand it is today.

Lessons to Learn from Peyush Bansal

• Peyush believed firmly in his vision of bringing technology driven eye care to everyone. After doing his Electrical Engineering from Canada, he worked for Microsoft, but in 2007 he left the job to come back to India. He did MBA from IIM Bangalore and founded Lenskart in 2010. It takes guts to leave a well-paid job to pursue your passion.
• Peyush is humble. Not to generalize but people who have studied abroad usually would be more humble as they experience the same in foreign lands, unlike people who have studied in India who would be more boastful of their tags and can be rude as well. In India it is common that’s why we like Ashneer. However, Peyush retained his humbleness after coming back to India as well.
• He respects people and he would like to invest or take a bet on people rather than businesses. He invested in Jugaadu Kamlesh.
• He also believe in Social causes. He invested in Gold life anti suicide rods. He is highly technology centric since he worked at Microsoft in past. He believe that technology can help solve many of the today’s issues. He also has shown the same through his Unicorn Company “Lenskart”..
• He has a purpose to bring eye care to every Indian. He is driven by that purpose. Lastly but not the least, Peyush shows that one don’t need to be cunning or utmost selfish to succeed in business, one can still be successful in business with clear purpose or goal, conviction in that goal and then with the help of technology and automation can produce world class product. Rather than cutting his competition, he has made his product a world class with constant innovation with no competition which can match him. I am not aware of anyone who is competition to Lenskart.

Nepal and India have signed Power Projects Deals named West Seti Hydropower Project and Seti River Hydropower Project after China withdrew from the projects.

Before we begin Lets Understand Nepal and India Relations

• Nepal and India enjoy excellent bilateral ties.
• Founded on the age-old connection of history, culture, tradition and religion, these relations are close, comprehensive and multidimensional and are pronounced more in political, social, cultural, religious and economic engagements with each other.
• India has been a key development partner of Nepal. The latter received strong support and solidarity from the people and Government of India in advancing its home-grown peace process as well as in the process of writing the Constitution through the elected Constituent Assembly.
• The Government of India has also been substantially supporting Nepal’s reconstruction efforts. Water resource is considered as the backbone of Nepali economy. The issue of water resources has always been getting due prominence in the agenda of bilateral cooperation between Nepal and India for a long time.
• The partnership with India in the areas of trade and transit is a matter of utmost importance to Nepal. India is Nepal’s largest trading partner. India has provided transit facility to Nepal for the third country trade. Both public and private sectors of India have invested in Nepal. The trade statistics reveals phenomenal increase in the volume of bilateral trade over the years between the two countries.

Nepal and China Relations

• The relations between Nepal and the People’s Republic of China are age old and deep rooted. Nepal-China relations have always remained friendly and cordial.
• The historic and multi-faceted bilateral relations between the two countries have evolved since the days of Nepali monk and scholar Buddhabhadra.
• Both countries have a long tradition of exchanging high-level visits on a regular basis which have been contributing to strengthening and consolidating bilateral ties.
• Both countries have been utilizing the bilateral, regional and multilateral forums to hold meetings between the leaders in order to maintain regular contacts and share views on the issues of mutual interests.
• Chinese assistance to Nepal falls into three categories: Grants, interest free loans and concessional loans. The Chinese financial and technical assistance to Nepal has greatly contributed to Nepal’s development efforts in the areas of infrastructure building, industrialization process, human resources development, health, education, water resources. China is the second largest trading partner of Nepal.

Why China Withdrew from the Power Projects

• Initially, the 750MW West Seti was proposed by West Seti Hydro Limited, a storage scheme designed to generate and export large quantities of energy to India.
• However, in March 2019, during the Nepal Investment Summit, the government bundled the West Seti and SR-6 as a joint storage scheme and showcased them at the summit. The projects were among eight hydro schemes showcased at the summit.
• But they received no attention from potential investors. The NHPC Limited, an Indian government hydropower board under India’s Ministry of Power, had submitted a proposal in May to develop the projects.
• The estimated cost of the two projects, according to the Investment Board, is $ 2.4 billion . The West Seti project, first envisioned some six decades ago, is located on the Seti River in far-western Nepal.
• The proposed dam site is located 82 kilometers upstream of the confluence of the Seti and Karnali rivers, forming part of the Ganges basin.
• The project was originally designed as export-oriented with 90 percent of the power intended to be sold to India. However, the project, whose cost was estimated at Rs120 billion at that time, failed to go into construction.
• The cash-strapped project got a boost when China National Machinery and Equipment Import and Export Corporation (CMEC) decided to invest in it.
• The CMEC even signed an agreeement duringthe then prime minister Madhav Kumar Nepal’s China visit in 2009.
• At that time, CMEC President Jia Zhiqiang and West Seti Hydro director Himalaya Pandey signed a memorandum of understanding in Beijing. The Chinese firm had decided to invest Rs. 15 billion in the project.
• However, the CMEC later opted out of the project saying that Nepal lacked an investment-friendly environment.
• Another important shareholder in the company, the Asian Development Bank, also did not show interest citing a lack of public acceptance of the project and the absence of good governance.
• The project received yet another jolt when the main promoter of the company, Snowy Mountain, stopped sending funds for office operations in August 2010. The government revoked the licence of West Seti Hydro on July 27, 2011.

Nepal choses India for Power Projects

• Investment Board Nepal with India’s state-owned NHPC Limited to develop the two projects—West Seti and Seti River (SR6)—joint storage projects totaling 1200MW.
• The 750MW West Seti and 450MW SR6 projects are spread over four districts—Bajhang, Doti, Dadeldhura and Achham in far-western Nepal.
• The agreement was signed following Nepal Prime Minister Sher Bahadur Deuba’s decision to expand power sector partnership between the two nations.
• The two countries agreed to explore opportunities for expanding and further strengthening mutually beneficial bilateral cooperation in the power sector including joint development of power generation projects in Nepal, development of cross-border transmission infrastructure, bi-directional power trade with appropriate access to electricity markets in both countries based on mutual benefits.
• The challenge lies in the maximum use of natural resources, which has not been possible for Nepal due to certain constraints. . In this scenario, provisions such as bilateral partnerships, especially with economically more viable neighbors such as India, can act as catalysts for Nepal to improve its hydropower setup.
• Nepal’s enormous water wealth and huge hydropower potential may be the answer to India’s ever-increasing requirement for energy. Nepal and India must realize the sensitivity of each other’s positions in South Asia and not overemphasize the trade of electricity.
• This will also help Nepal shed its image of a “buffer” between India and China and replace it with a more credible identity of a crucial supplier of hydroelectric power.

What is Bill of Exchange

The Bill of Exchange, a fundamental instrument in trade and finance, is a pivotal document facilitating secure and efficient transactions. Rooted in a rich historical backdrop, bills of exchange have evolved to become an indispensable component of global commerce. At its core, a bill of exchange is a written order from one party, known as the drawer, to another, the drawee, instructing the drawee to pay a specified sum of money to a third party, the payee, either immediately or at a predetermined future date. This financial instrument has proven adaptable across diverse sectors and industries, playing a crucial role in domestic and international trade. The intricate web of relationships among the parties involved, including the responsibilities of the drawer, drawee, and payee, adds complexity that contributes to the robustness and reliability of the bill of exchange. As we delve deeper into the nuances of bills of exchange, it becomes evident that this instrument has historical significance and remains a cornerstone in contemporary financial landscapes, fostering economic relationships and facilitating the smooth flow of capital across borders.

Parties Involved in a Bill of Exchange

1. The Drawer: Initiating the Transaction

The first key player in a bill of exchange transaction is the drawer. This party, often the seller or creditor, initiates the process by creating the bill. The drawer specifies the amount, payment terms, and details of the drawee and payee. This step sets the wheels in motion for the financial transaction.

2. The Drawee: Obligation to Make Payment

The drawee is the party upon whom the bill is drawn and obligated to make the specified payment. Typically, the buyer or debtor, the drawee, must either accept or reject the bill. Acceptance signifies the drawee’s commitment to fulfill the financial obligation outlined in the bill.

3. The Payee: Receiving the Funds

The payee, often the seller or creditor, is the beneficiary of the bill of exchange. This party receives the funds from the drawee as stipulated in the document. The payee’s role is crucial in completing the transaction, as they are the ultimate payment recipient.

Roles and Responsibilities of Each Party

The interplay among these parties forms the foundation of a bill of exchange. The drawer initiates, the drawee commits to payment, and the payee receives the financial benefit. Understanding the roles and responsibilities of each party is essential for a seamless and transparent transaction. The synergy between the drawer, drawee, and payee ensures the efficacy and reliability of the bill of exchange as a financial instrument in various commercial transactions.

Types of Bills of Exchange

1. Promissory Notes: A Personal Commitment

A promissory note is a bill of exchange where the drawer, acting as the debtor, makes an unconditional promise to pay a specified sum of money to the payee. Unlike other types, it involves only the drawer and the payee. This form is commonly used in personal loans and financial arrangements requiring a straightforward commitment.

2. Sight Drafts: Immediate Payment Demand

Sight drafts demand immediate payment upon presentation to the drawee. The drawee has no grace period and must fulfill the obligation instantly. This type of bill of exchange is ideal for transactions where swift payment is essential, providing security for the payee.

3. Time Drafts: Deferred Payment Arrangements

In contrast to sight drafts, time drafts allow for a deferred payment arrangement. The drawee commits to paying the specified sum at a future date, giving flexibility to both parties. This type is commonly used in trade scenarios where a delay in payment is acceptable and a structured timeline is established.

Diversifying Financial Transactions

Understanding the nuances of each type of bill of exchange is crucial for businesses and individuals engaged in financial transactions. Whether opting for the simplicity of a promissory note, the immediacy of a sight draft, or the flexibility of a time draft, choosing the right type of bill of exchange enhances the efficacy and appropriateness of the financial instrument for the specific context.

Critical Elements of a Bill of Exchange

1. Amount and Currency: Defining Financial Terms

One of the fundamental elements of a bill of exchange is the precise specification of the amount involved. The document explicitly states the exact sum of money that the drawee is obligated to pay to the payee. Additionally, the currency in which the transaction will occur is mentioned, ensuring precision and avoiding any ambiguity regarding the financial terms.

2. Date of Maturity: Establishing a Timeline

The maturity date is critical, indicating the deadline by which the drawee must pay. This date is agreed upon during the bill’s creation and serves as a timeline for the completion of the financial transaction. Clarity on the maturity date is essential for both the drawer and the drawee to adhere to the agreed-upon terms.

3. Acceptance and Endorsem*nt: Confirmation and Transfer

The concept of acceptance is vital in bills of exchange. Once the drawee agrees to the terms outlined in the bill, they formally accept the document, signifying their commitment to fulfilling the financial obligation. Endorsem*nt, on the other hand, allows the payee to transfer the rights of the bill to another party, providing flexibility in its negotiation and circulation.

Crafting a Secure and Transparent Document

These fundamental elements collectively contribute to the intricacy and reliability of a bill of exchange. Crafting a document with precise amounts, clear timelines, and formal acceptance ensures that the financial transaction is secure and transparent. The inclusion of these elements not only establishes a robust foundation for the bill but fosters trust among the parties involved in the exchange.

Advantages of Bills of Exchange

1. Facilitates Trade Across Borders

One of the primary advantages of bills of exchange is their ability to facilitate international trade. As a negotiable instrument, bills of exchange provide a secure method for businesses to engage in cross-border transactions. The precise terms and obligations outlined in the document contribute to a smoother and more transparent exchange of goods and services, fostering global economic relationships.

2. Provides Financial Flexibility

Bills of exchange offer financial flexibility to both parties involved in a transaction. For the drawer, it provides the flexibility to receive payment at a future date, allowing for strategic financial planning. Simultaneously, for the drawee, especially in the case of time drafts, it offers the flexibility of deferred payment, aligning with cash flow and budget considerations.

3. Enhances creditworthiness

Engaging in transactions through bills of exchange can enhance the creditworthiness of businesses. The formal commitment and acceptance in the process instill confidence among trading partners, establishing a reliable reputation. This opens up opportunities for more favorable credit terms and strengthens business relationships.

4. Mitigates Risks of Non-Payment

Bills of exchange provide a level of security by mitigating non-payment risks. The acceptance process ensures that the drawee commits to making the specified payment, reducing the likelihood of default. Additionally, using financial instruments like letters of credit alongside bills of exchange further enhances risk mitigation strategies.

5. Streamlines Financial Transactions

The structured nature of bills of exchange streamlines financial transactions, reducing uncertainties and disputes. With clearly defined amounts, maturity dates, and acceptance procedures, the potential for misunderstandings is minimized. This efficiency benefits businesses by saving time and resources while ensuring a reliable and standardized financial transaction method.

Harnessing the Full Potential

In conclusion, the advantages of bills of exchange extend beyond mere financial transactions. Their role in fostering international trade, providing financial flexibility, enhancing creditworthiness, mitigating risks, and streamlining transactions showcase their versatility. Businesses that harness the full potential of bills of exchange stand to benefit from a robust and reliable financial instrument that transcends geographical boundaries and contributes to the growth of a globalized economy.

How Bills of Exchange Work

1. Creation of the Bill: Initiating the Transaction

The process begins with creating the bill of exchange by the drawer, typically the seller or creditor. The drawer drafts the document, specifying the amount, payment terms, and details of the drawee and payee. This formal document acts as an order from the drawer to the drawee, instructing the latter to make a specified payment to the payee.

2. Presentation to the Drawee: Acceptance or Rejection

Once the bill is created, it is presented to the drawee, usually the buyer or debtor. The drawee has the option to either accept or reject the bill. Acceptance involves the formal commitment to fulfilling the financial obligation outlined in the bill. Rejection, on the other hand, signifies the drawee’s unwillingness to honor the terms of the document.

3. Endorsem*nt and Negotiation: Transfer of Rights

Upon receiving the bill, the payee has the option to endorse it, thereby transferring the rights of the bill to another party. This endorsem*nt allows for the negotiation and circulation of the bill within the commercial ecosystem. Endorsed bills can be used as a form of payment, providing flexibility in financial transactions.

4. Payment at Maturity: Fulfilling the Obligation

As per the bill’s terms, the drawee is obligated to make the specified payment immediately (in the case of sight drafts) or at a predetermined future date (in the case of time drafts). Upon reaching maturity, the drawee fulfills the financial obligation outlined in the bill and completes the transaction.

5. Importance in International Trade: Ensuring Secure Transactions

Bills of exchange play a crucial role in international trade, where secure and efficient financial transactions are paramount. The structured process, from creation to payment, ensures a transparent and standardized method for businesses engaged in cross-border trade. Using bills of exchange contributes to the reliability and security of financial transactions, fostering trust between trading partners.

Navigating the Financial Landscape

They understand how bills of exchange work, which is essential for businesses engaged in financial transactions. The formalities involved, including acceptance, endorsem*nt, and payment, contribute to a secure and efficient trade method. Navigating the economic landscape with bills of exchange requires adherence to established procedures and a clear understanding of the roles and responsibilities of the parties involved, ensuring a seamless and reliable financial transaction process.

Risk and Mitigation in Bill of Exchange Transactions

Engaging in bill of exchange transactions presents certain inherent risks that businesses must navigate strategically. Understanding these risks and implementing effective mitigation strategies is crucial for ensuring the smooth execution of financial agreements.

1. Non-Payment Risks: Diligence is Key

A significant risk associated with bills of exchange is the potential for non-payment by the drawee. To mitigate this risk, businesses must conduct thorough due diligence on their trading partners. Assessing the financial stability and creditworthiness of the drawee before entering into a transaction adds a layer of security, reducing the likelihood of non-payment.

2. Use of Letters of Credit: Enhancing Security

To further enhance security, businesses can complement bills of exchange with letters of credit. Credit letters act as a financial institution’s guarantee that the payment will be made, even if the drawee defaults. This additional layer of assurance mitigates the risk of non-payment and provides a safety net for businesses engaged in international trade.

3. Escrow Services: Ensuring Fair Transactions

Employing escrow services is another effective strategy to mitigate risks in the bill of exchange transactions. Using a neutral third party to hold funds until the specified conditions are met, the drawer and drawee gain assurance that the transaction will be completed fairly. Escrow services provide trust and transparency, reducing the risk of disputes.

4. Clear Contractual Terms: Minimizing Ambiguity

Ambiguity in the contractual terms of a bill of exchange can lead to misunderstandings and disputes. Mitigating this risk involves ensuring the document is meticulously crafted, with unambiguous language regarding the amount, payment terms, and other essential details. Clarity in the terms helps prevent disputes and ensures a smooth transaction process.

5. Regulatory Compliance: Adhering to Standards

Adherence to legal and regulatory standards is paramount in mitigating risks associated with a bill of exchange transactions. Understanding and complying with the Uniform Commercial Code (UCC) in domestic transactions and international rules and standards in global trade provides a solid legal framework. Businesses should stay informed about any regulation changes to navigate potential risks effectively.

Strategic Risk Management

In conclusion, while the bill of exchange transactions offers numerous advantages, strategic risk management is imperative. Businesses must proactively address the risks of non-payment, contractual ambiguities, and regulatory compliance to ensure the success of their financial transactions. By incorporating due diligence, complementary financial instruments, and clear contractual terms, businesses can effectively mitigate risks and harness the benefits of bills of exchange in their trade and economic activities.

Conclusion

In conclusion, the bill of exchange is a robust and versatile financial instrument that has transcended historical contexts to become an integral part of modern trade and commerce. With its structured process from creation to payment, this negotiable instrument plays a pivotal role in facilitating domestic and international transactions. The advantages of bills of exchange, including their ability to foster trade, provide financial flexibility, enhance creditworthiness, and streamline transactions, showcase their adaptability to diverse economic landscapes. However, businesses must navigate potential risks associated with non-payment, contractual Ambiguity, and regulatory compliance. Companies can harness the full potential of bills of exchange by implementing diligent risk mitigation strategies, such as due diligence, complementary financial instruments, and adherence to legal standards. As technology advances, the future of bills of exchange may evolve further by adopting electronic formats and blockchain technology. Nevertheless, their timeless relevance in facilitating secure and efficient financial transactions underscores their enduring importance in the dynamic global economy. Businesses that adeptly leverage the benefits of bills of exchange position themselves for success in the complex and interconnected world of trade and finance.

Varun Dua – Biography

• Varun Dua- Founder and CEO of ACKO General Insurance Company is India’s first Digital Insurance Company. Well there are so many insurance companies in India but what made ACKO stand out and how Varun Dua managed to build up successful brand in such a short period of time, Let us understand the success journey in detail.

Varun Dua – Early Life and Education

• Varun Dua was born on 25^th February 1981. He was born in Delhi but currently he is staying in Mumbai. His father’s name is Chander Mohan Dua. Varun Dua has more than ten years of experience in Insurance sector. He was in charge of marketing analytical for direct business accession and technology for effective customer service.
• He completed his bachelor’s degree from University of Mumbai and pursued a Master’s Degree at MICA, Ahmedabad which is a prestigious business school in India. Varun’s academic excellence laid the groundwork for his future.
• He worked as a trainee at Leo Burnett Advertising for less than a year after graduating. He subsequently went on to work for TATA AIG Life Insurance and Franklin Templeton Investments as a marketing manager.
• Varun founded ACKO Insurance as he had the complete knowledge about the insurance products and digital medium was the best option for him as there was hassle free paperwork with best results. His previous records were very good so he managed to raise $ 30 million from investors for the ACKO project.

Varun Dua Net Worth and Investments

Varun Dua with the help of his knowledge raised $30 million for his Acko Insurance Company. Currently Acko Insurance company net worth is estimated around $ 1 Billion. Varun Duahas invested in9rounds.Their most recent investment was inTohands(Angel Round)on Mar 01, 2024

• Some notable companies in their investment portfolio includeDezerv,KuveraandBNC
• Their investments are primarily inRetail, Consumerand 10 moresectors

Varun Dua Family

Varun Dua Father’s name is Chander Mohan Dua. His mother’s name is Rashmi Dua. His wife name is Sapna Rana.

Varun Dua – Acko

• ACKO insurance was started with the motto –“Insurance made easy: Zero Commission. Zero Paperwork”. To make the concept eye catching the company started the campaign with the phrase “Full Paisa Wasool”.
• Acko Insurance provides complete value and has removed retail costs which are the factors that the competitors relied on. ACKO’s digital only approach and variety of customer friendly programs have helped ACKO to get over 4.5 crore customers.
• Acko provides excellent customer service and thus they are able to gain clients confidence. ACKO is a Mumbai based unicorn. ACKO Provides General Insurance as well as Life Insurance.

Varun Dua – Challenges Faced

ACKO Faced a basic challenge in his insurance journey that was trust. Because there are many insurance companies and false claims and premium settlement failures was the biggest drawback and ACKO faced lack of trust in the initial stage. And that’s why Varun tried his level best to provide all comfort to his customers to make insurance a simple and easy process.

Varun Dua Personal and Professional Achievements

• Through its promising business outline and revenue streams, Acko has been able to bag an aggregate funding of $458 million over 6 consecutive rounds of funding.
• The latest round offundingvalued at $255 million was led by General Atlantic andMultiples Alternate Asset Management Private Limitedand resulted in the start-up being valued at a whopping $1.1 billion thereby acclaiming the status of a unicorn.
• Since its inception in 2018, the digital insurance app has proclaimed numerous achievements. In June 2019, the start-up bagged the ‘Golden Peaco*ck Innovative Product Award’ for its contextual micro insurance product.
• Moreover, the company was felicitated with the ‘Most Innovative Insurer Category in Non-Life Segment’ at the FICCI Insurance Industry Awards 2020. The most recent accomplishment of the insurtech start-up includes the award of ‘Best Insutech Company’ at the BW Festival of Fintech received in February 2021.
• Ever since the company laid down its foundation stones, it has observed an upward trajectory ofgrowthand revenue. Starting from the year 2019 when the company administered a premium of Rs. 41.56 crores to becoming a unicorn at a valuation of $1.1 billion post a funding round, the company has exhibited its strong presence in the market.
• The insurance start-up has experienced a 120% growth in sales of insurance policies for automobiles in FY 22 along with a 3.5 time growth in its consumer base since previous year.
• The website currently observes customer traffic of 4 million which is a 161% increase since the last year. Furthermore, the platform has also collaborated with prominent industry players like Urban Company, Ola, Amazon, Bajaj Finance and more to diversify its portfolio.
• While the start-up has come a long way since inception, it is yet far away from reaching its mission and objective.
• Looking ahead, the company intends to scale up its product offerings in the future. Moreover, the company would also consider foraying into the health insurance domain as well as add more employees to its pre-existing team.

Varun Dua – Investments besides Acko

As an angel investor, Varun Dua invests personal money into promising companies, typically in exchange for equity. Varun Dua has made numerous investments in companies likeByBuy,Vaaree, andDezervwithin the Business/Productivity Software, Specialty Retail, and Financial Services industries. Varun Dua’s latest investment was on 01-Mar-2024 inByBuy, a company within the Business/Productivity Software industry.

Varun Dua – Shark Tank India

Varun Dua joined the panel of Shark Tank India. He is hosting the show along with other sharks . Varun Dua presence brings financial resources but also invaluable entrepreneurial experience and insights to the show. By mentoring and investing in aspiring entrepreneurs Varun Dua helps to create more jobs, and contribute to the economic growth. Through this show he is shaping the future of Indian Start-ups.

Conclusion

Thus Varun Dua being a middle class person born in Mumbai , dreamt to bring in change in the existing insurance business just by his innovative thoughts. He faced lots of challenges for achieving his goal but he was determined and persistent to overcome all the difficulties. He is a true example of a person who saw a gap in the existing insurance industry and took opportunity and changed it in to a successful business with his entrepreneurial skills.

What is EFTA??

• As we mentioned in the beginning it is the intergovernmental organisation of Iceland, Liechtenstein, Norway and Switzerland. EFTA was founded by the Stockholm Convention in 1960. Relations with the EEC, later the European Community (EC) and the European Union (EU), have been at the core of EFTA activities from the beginning. Since the beginning of the 1990s,
• EFTA has actively pursued trade relations with third countries in and beyond Europe. The four EFTA States are open, developed economies with trade figures that are substantially higher than might be expected from a total of less than 14 million people.

India Europe Relations

• India is EFTA’s fifth-largest trading partner after the EU, the United States, the UK and China, with total two-way trade of $25bn in 2023. Formed in 1960 as a counterweight to the EU, the EFTA has signed about 30 trade agreements with some 40 countries and territories outside the EU

India-EFTA Trade and Economic Partnership Agreement

• India-European Free Trade Association signed a Trade and Economic Partnership Agreement (TEPA) The Union Cabinet chaired by the Hon’ble Prime Minister has approved signing of the TEPA with EFTA States. EFTA is an inter-governmental organization set up in 1960 for the promotion of free trade and economic integration for the benefit of its four Member States.
• TEPA is a modern and ambitious Trade Agreement. For the first time, India is signing FTA with four developed nations – an important economic bloc in Europe. For the first time in history of FTAs, binding commitment of $100 bn investmentand 1 million direct jobs in the next 15 years has been given. The agreement will give a boost to Make in India and provide opportunities to young & talented workforce.
• The FTA will provide a window to Indian exporters to access large European and global markets. On 10^thMarch 2024. The agreement comprises of 14 chapters with main focus on market access related to goods, rules of origin, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, investment promotion, market access on services, intellectual property rights, trade and sustainable development and other legal and horizontal provisions.
• EFTA is an important regional group, with several growing opportunities for enhancing international trade in goods and services. EFTA is one important economic block out of the three (other two – EU &UK) in Europe. Among EFTA countries, Switzerland is the largest trading partner of India followed by Norway.

The highlights of the agreement are:

• EFTA has committed to promote investments with the aim to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments. The investments do not cover foreign portfolio investment.
• For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs.
• EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).
• India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exportsof which more than 80% import is Gold. The effective duty on Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food etc. have been taken while extending offers.Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list.
• India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
• TEPA would stimulate our services exports in sectors of our key strength / interest such as IT services, business services, personal, cultural, sporting and recreational services, other education services, audio-visual services etc.
• Services offers from EFTA include better access through digital delivery of Services (Mode 1), commercial presence (Mode 3) and improved commitments and certainty for entry and temporary stay of key personnel (Mode 4).
• TEPA has provisions for Mutual Recognition Agreements in Professional Services like nursing, chartered accountants, architects etc.
• Commitments related to Intellectual Property Rights in TEPA are at TRIPS level. The IPR chapter with Switzerland, which has high standard for IPR, shows our robust IPR regime. India’s interests in generic medicines and concerns related to ever greening of patents have been fully addressed.
• India signals its commitment to Sustainable development, inclusive growth, social development and environmental protection
• Fosters transparency, efficiency, simplification, harmonization and consistency of trade procedures
• TEPA will empower our exporter’s access to specialized inputs and create conducive trade and investment environment. This would boost exports of Indian made goods as well as provide opportunities for services sector to access more markets.
• TEPA provides an opportunity to integrate into EU markets. Over 40% of Switzerland’s global services exports are to the EU. Indian companies can look to Switzerland as a base for extending its market reach to EU.
• TEPA will give impetus to “Make in India” and Atmanirbhar Bharat by encouraging domestic manufacturing in sectors such as Infrastructure and Connectivity, Manufacturing, Machinery, Pharmaceuticals, Chemicals, Food Processing, Transport and Logistics, Banking and Financial Services and Insurance.
• TEPA would accelerate creation of large number of direct jobs for India’s young aspirational workforce in next 15 years in India, including better facilities for vocational and technical training. TEPA also facilitates technology collaboration and access to world leading technologies in precision engineering, health sciences, renewable energy, Innovation and R&D.

Trade in Goods

Industrial Products and Fish

• With the entry into force of the Agreement, the EFTA States will commit to maintaining the elimination of all customs duties on imports of industrial products, as well as fish and other marine products, originating in India. Reciprocally, India will reduce and eliminate customs duties on a significant share of industrial products originating in and currently exported from an EFTA State.
• The Agreement will lead to elimination of duties on most industrial goods currently exported to India by EFTA companies, such as for example pharmaceutical products, machinery, watches, fertilizers, medicines, chemical products, minerals, as well as fish.

Agricultural Products

• For agricultural products, the individual EFTA States (Switzerland and Liechtenstein together due to customs union) and India have provided improved market access based on specific trade interests and respective sensitivities related to domestic production.
• The Agreement provides for meaningful tariff concessions on both basic and processed agricultural products.
• he Agreement will improve market access of existing agricultural imports into India from the EFTA States, as well as of Indian imports into the EFTA States, while respecting the agricultural policies and sensitivities on both sides.

Rules of Origin

• The rules of origin are largely based on EFTAs model. The provisions allow for bilateral cumulation between the Parties and the use of EUR.1 certificates as well as for self-declaration of origin under certain conditions for EFTA exporters.
• The agreement preserves the traditional list of insufficient operations which do not confer origin, accounting segregation may apply to fungible materials, and the direct transport provisions stipulates activities that may be undertaken for originating products in third countries.
• The product-specific rules are relatively detailed, often with a value-added criterion as an optional rule provided for in parts of many EFTA.

Trade Facilitation

• The EFTA States and India aim to further facilitate trade between them by providing for expedited procedures and transparent rules for trade in goods and related services. The Agreement incorporates and builds on the WTO Agreement on Trade Facilitation and includes provisions that are in line with relevant international standards and agreements.

Trade Remedies

• The Parties agree to the applicability of the WTO Agreement on Subsidies and Countervailing duties and establish additional notification and consultation requirements. The Parties address the application of anti-dumping measures and provide that a Party may exclude originating products from global safeguard measures if such products do not cause or threaten to cause serious injury, in accordance with WTO rules and practice.
• Finally, the Agreement provides for the possibility of taking bilateral safeguard measures when a Party faces possible economic injury caused by increases in preferential imports of goods as a consequence of liberalizing trade under the Agreement.

Technical Barriers to Trade and Sanitary and Phytosanitary Measures

• The EFTA States and India agreed to reduce technical and sanitary hurdles for goods traded between them, building on the WTO Agreements on SPS and TBT. The SPS and TBT chapters in the Agreement affirm the EFTA States’ and India’s WTO obligations.
• The provisions establish stronger consultation mechanisms including the exchange of contact points, reinforce transparency requirements and information exchange.
• The Agreement also contains provisions allowing for possible harmonization between EFTA and India with future agreements between a third party and India in these fields, if EFTA has agreed to similar treatment with that third party.

Trade in Services

• India and the EFTA States have negotiated a comprehensive Chapter on Trade in Services, supplemented by Annexes on Financial Services, Telecommunication Services, Maritime Personnel, Recognition of Professional Qualifications, and Movement of Natural Persons. EFTA.
• Besides incorporating and affirming GATS practices, the Chapter includes disciplines aiming to ensure the sustained competitiveness of EFTAs’ services suppliers in India, and to extend the FTA’s benefits to permanent residents. Provisions in the different Annexes seek to guarantee a level playing field regarding regulatory and information transparency, licensing, and other application procedures in the relevant sectors or domains.
• Following the GATS approach, schedules of commitments covering all four modes of supply include improved market access for several services (business, telecommunications, and environmental, insurance and banking, maritime transport) and a horizontal commitment for different categories under Mode 4.

Investment Promotion and Cooperation

• EFTA and India included an innovative investment promotion and cooperation chapter in the agreement. This chapter, rooted in a spirit of cooperation, sets ambitious objectives in terms of investment and job creation in India. It draws upon historical trends and prospective economic forecasts, as well as the expected spillovers of the Agreement.
• To realize these shared objectives, the Parties pledge to promote investment and cultivate a favorable climate investment in India, while identifying various avenues of collaboration to facilitate the attainment of these shared objectives.
• The chapter foresees a regular review by a specially appointed sub-committee and provides for a three-stage consultation procedure which can be invoked by India if the defined target has not been reached after 15 years.
• If, after the consultation period, India is still of the opinion that the EFTA states have not fulfilled their obligations, India may, after a further grace period of three years, suspend concessions. The suspension of concessions needs to be proportionate and temporary.

Intellectual Property

• The Agreement includes comprehensive provisions on the protection, acquisition and maintenance as well as on the enforcement of IPR, including border measures.
• It namely covers copyrights, trademarks, patents, plant varieties, undisclosed information, industrial designs, geographical indications, as well as indications of source, country names, and state emblems. Substantive obligations in key international IPR instruments are referenced, notably the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), and the Parties undertake to give due consideration to ratify or accede to further key IPR EFTA 5 agreements.
• The Agreement also includes the principles of national treatment and MFN. These provisions are complemented with dedicated articles on the TRIPS Agreement and Public Health, genetic resources and co-operation.

Government Procurement

• The Chapter establishes contact points between the Parties to enhance the mutual understanding of their government procurement regimes and agreements as well as a commitment to review the chapter within 3 years from entry into force of the Agreement to examine the possibility of developing and deepening their cooperation under the Agreement.

Competition

• In the Competition Chapter, the Parties recognize that anti-competitive business practices, i.e., agreements and concerted practices between undertakings as well as abuses of a dominant market position, in so far as they may affect trade between the Parties, are incompatible with the proper functioning of the Agreement.
• The Agreement provides for the Parties’ cooperation in dealing with the anti-competitive practices outlined, as well as a consultation mechanism in the framework of the Joint Committee.

Trade and Sustainable Development

• In the Chapter on trade and sustainable development, the parties agree to promote international trade in a manner that contributes to sustainable development and to integrate this objective in their trade relationship.
• The parties are committed to not derogate from or fail to effectively enforce their respective environmental and labour laws. They agree to incorporate a gender perspective in international trade and reaffirm their commitment to implement any international agreements pertaining to gender equality and nondiscrimination which they have ratified.
• In the area of labour, the parties undertake a commitment to respect, promote and realize the fundamental principles and rights at work embodied in the fundamental ILO Conventions. Furthermore, they reaffirm their commitment to effectively implement in their laws and practices the ratified ILO Conventions and to make efforts towards ratifying fundamental ILO Conventions they have not yet ratified.
• Regarding the environment, the Parties reaffirm their commitment to implement the multilateral environmental agreements to which they are a party, while the same commitment regarding EFTA the UNFCCC and the Paris Agreement is foreseen in a specific article on trade and climate change.
• These commitments are complemented with provisions on cooperation on various topics relevant to this chapter. The Parties establish a sub-committee on sustainability to monitor and review the implementation of the commitments in the chapter.
• An article on consultations gives the parties the right to request consultations to address any matter under the chapter. The commitments of this chapter are not subject to dispute settlement provisions in the dispute settlement chapter.

Horizontal Provisions, Institutional Provisions and Dispute Settlement

• The chapter on institutional provisions establishes a Joint Committee, comprising representatives of each Party, to supervise and administer the Agreement and to oversee its further development. The Joint Committee shall normally meet every two years.
• It may modify identified annexes, appendices and articles of the Agreement. The chapter on dispute settlement sets out the rules and procedures applying with respect to the avoidance or settlement of disputes that may arise between the Parties concerning the interpretation or application of the Agreement.
• If a dispute may not be resolved under the consultation mechanism, the complaining party may request the establishment of an arbitration panel composed of three arbitrators. A Party, which is not a party to the dispute, may participate in the consultations and/or arbitration procedure.
• Hearings are open to the public and the panel report shall be published unless the parties to the dispute decide otherwise.
• At any stage of the consultation or arbitration procedure, the parties to the dispute may have recourse to conciliation, good offices, or mediation to find an amicable solution of the dispute.

What Is A Demat Account?

Demat accounts, also mentioned as dematerialized accounts, were first introduced in India in 1996, and thus the Indian stock market has never looked back since. Following the introduction of demat accounts, our country has seen a gentle increase within the number of companies listed and investors participating available exchanges like the BSE and NSE.

A Demat account is similar to that of a bank account. The only difference is that Demat holds securities, which might be in the form of shares, bonds, or debentures, instead of physical certificates.

As an investor, one must open a Demat account with a Depository Participant in order to purchase and sell securities on the Indian stock market (DP).

The Advantages Of Having A Demat Account

• Your shares and securities are safely stored;
• Transaction costs are much lower than in the physical segment since stamp duty is not required.
• Fast and convenient for electronic settlements
• Less paperwork in the event of a securities transfer
• Risks connected with physical certificates, such as theft, non-delivery, and fraudulent certificates, are eliminated.
• Sell any number of shares you want—even one.

Types Of Demat Account

In India, there are three types of demat accounts available.

• For investors based in India, a standard demat account.
• Non-resident Indians can have a repatriable demat account (NRIs). Funds can be sent internationally using this demat account, but it must be linked to an NRE bank account.
• The non-repatriable demat account is the third type of demat account. NRIs utilise it as well, although they are unable to move funds abroad using this demat account. An NRO bank account must be linked to this type of demat account.

What To Keep In Mind Before Opening An Account?

Before you open a demat account with a broker, be sure to look into the following:

• Whether you’re working with a cheap broker or a full-service brokerage business
• Brokerage costs, annual maintenance fees, transaction fees, and other demat account fees.
• Broker credentials – whether the broker or the DP is registered with SEBI.
• Look into any pending cases or complaints against the broker or brokerage firm.
• See if demat and trading account offer value-added services like research, insights, and analytics.

How To Select a Demat Partner

A reputable service brokerage firm is great if you are seeking for a seamless and secure approach to deal in shares.

Finding the appropriate broking firm takes some research and planning for first-time investors.

Essential Questions to Research on:

Looking for the answers to above questions? Unable to find the right broker fitting all the above requirements?

Don’t worry your research for the right broker ends here we are here just click on the link below to open your free DEMAT account today.

Open a free DEMAT Account with us in just 5 mins!!!

Opening A Demat Account Online

• Fill out and submit the account opening form provided by your brokerage firm, together with your KYC information (date of birth, PAN card, email address, and bank account).
• A DP-Investor agreement will be included in the DP’s KYC form. This document lays out the rules and regulations, as well as investor rights and responsibilities. You must read the tiny print carefully.
• The company will usually email you an OTP to your registered phone number. Your Demat account information is delivered to your registered email address.
• Many companies will request in-person verification (IVP), which may be accomplished by visiting a branch or having a DP representative come to your location.
• Once your documents have been confirmed, you will be given a demat number.

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How A Demat Account Works

• It is impossible to participate in the financial markets without a demat account.
• A demat account is just a location to store or maintain electronic or dematerialized shares or securities and does not hold any cash.
• When you sell securities such as shares or derivatives and get money in lieu of the sale, the question of moving money from the demat account to the bank account arises. In most cases, brokerages provide demat and trading account in one package.
• The proceeds of the sale are sent to the associated trading account automatically. Money can be readily transferred from the trading account to the registered bank account once it has been deposited.
• Having a Demat Account is of paramount importance if you want to hold shares or securities, and start trading in stock markets. All you need to do is open a Demat Account with a trusted partner and stay ahead in the journey of stock trading.

In India taxation is divided in to two types Direct Tax and Indirect Tax. Taxes in India are levied by Central Government and State Government by virtue of powers conferred to them by Constitution of India. But do you know that all incomes are not taxable??? To know about such incomes where no tax is levied let us understand few concepts in detail.

What are Tax Free Income?

Tax Free Income is the income received that is not subject to income tax. These are tax exempted. Income may also be any property or services you receive apart from money. The tax free status of these goods, investments, and income may incentivize individuals and business entities to increase spending or investing. Every person with taxable income in India expects his tax to be saved. The following are the list of incomes that are tax free in India.

• Money Received From Insurance

Any amount which a policy holder or a nominee gets from the insurance company is tax free in India. These amount includes bonus amount too. This applies to certain insurance and its provisions defined under Section 10(10D). However, exemption would not be available if the premium payable for any of the years during the term of the policy exceeds 15% of “actual capital sum assured” i.e., “minimum capital sum assured” under the policy on the happening of the insured event at any time during the term of the policy. Under section 80C premium paid to the extent of 15% of “actual capital sum assured” is exempt from tax. This is with respect to policies issued on or after 01.04.2013.

• Agriculture Income

Agriculture income is completely free from Income tax under section 10(1) of the Income Tax Act. Agriculture Income refers to:

• The production, processing, and distribution of agricultural products like wheat, rice, pulses, fruits, vegetables, spices, etc.
• Rent received from properties used for agriculture.
• The income generated by the sale or buying of agricultural land

• Components of Salary received from the employer

Salary is one of the primary motivating factors for any employee. It is the remuneration the employee receives for their work. Employees expect the company to pay the amount mutually agreed upon when they start working for the company. Components in Salary that are fully non-taxable or tax exempt are as follows:

• Medical Insurance Premium

If the premium for medical insurance for the employee or his family members is borne by the company it is treated as tax free perquisite in the hands of the employee.

• Phone and Internet Bills

Reimbursem*nt of telephone and internet bills is tax exempt. But there is no set limit and it is set at the company’s discretion. Employees need to provide bills to claim the tax benefit.

• Meal Coupons

Meal coupons like Sodexo are a popular tax saving perquisite offered by most employers in Indian Payroll Processing. These are tax-exempt, for a limit set at Rs.50 per meal. Assuming 22 working days and two meals per day during office hours, an amount of Rs.2200 per month is tax-free in the hands of the employee.

• Books, Periodicals, Newspapers and Journals

Books, Journals and Periodicals which employees use to further their skills are also a tax free perk that can be offered by the employer. But the actual bills should be submitted. Here also the limit is set as per employer’s discretion.

• Gadgets

Tablets, Laptops, computers provided by the company are considered as tax free perks.

• Recreational and Medical Facilities’

If the company provides Medical facilities such as doctor checkups then they are tax free. Similarly memberships to sports or health clubs or facilities provided by workplace are also fully exempt from income tax.

• Gifts in Kind

Gifts in Kind up to maximum Rs 5000 per year are not taxable in the hands of the employee.

• Receipts from Hindu Undivided Family

An individual who is member of a Hindu Undivided Family is not required to pay income tax on any receipts they receive. The HUF however has a separate income tax assessment and payment.

• Share from Partnership Firm or LLP

If an individual is a partner of a firm, the profit shares the person owns in the total firm, income is exempted from the income tax, under section 10(2). Other sources of income of the partner or LLP or partnership firm receives including interest or remuneration are taxable.

• Gratuity

Gratuity is a benefit given by the employer to employees. Recently the Central government increased the maximum limit of gratuity. Now it is tax exempt up to Rs 20 lakhs from the previous ceiling of Rs 10 lakhs, which comes under Section 10(10) of the Income Tax Act. The exemption limit of Rs 20 lakh would be applicable to employees in the event of retirement or death or resignation or disablement on or after 29 March 2018.

1. Retirement gratuity received under the Pension Code or Regulations applicable to members of the Defence Service is fully exempt from
2. Employees of Central Government/ Members of Civil Services/ local authority employees: Any death cum retirement gratuity is fully exempt from tax under section 10(10) (i).
3. Other employees:

Covered by the Payment of Gratuity Act, 1972

Any death-cum-retirement gratuity is exempt from tax to the extent of least of the following:

• 20,00,000
• Gratuity actually received
• 15 days’ salary based on last drawn salary for each completed year of service or part thereof in excess of 6 months

Note:Salary for this purpose means basic salary and dearness allowance. No. of days in a month for this purpose, shall be taken as 26.

Not covered by the Payment of Gratuity Act, 1972

Any death cum retirement gratuity received by an employee on his retirement or his becoming incapacitated prior to such retirement or on his termination or any gratuity received by his widow, children or dependents on his death is exempt from tax to the extent of least of the following:

• 20,00,000
• Gratuity actually received
• Half month’s salary (based on last 10 months’ average salary immediately preceding the month of retirement or death) for each completed year of service.

• Earnings from Public Provident Fund

PPF is one of the investment options under the EEE Category, so the investment amount interest and maturity amount are tax free. In Section 10 of Income Tax Act, the interest income you get from the PPF is exempt from Income Tax. Any amount you get from the maturity of PPF is also tax-free, provided the contributions were made for 5 consecutive years.

• Gifts from Friends and Family

For gifts no tax needs to be paid, including property, vehicles and Jewellery. However if you get these gifts from someone other than relative, the exemption limit is Rs 50000/- There is an exception to this rule when you get a gift for marriage, it becomes fully tax free, regardless of whether it is from a relative or friend.

• Income from Awards or Scholarships

As per Section 10(17A) when the government, be it state or central, awards a monetary payment to you, you do not need to pay tax on it. This includes cash prize received along with state honours like the Bharat Ratna. If a person is awarded a scholarship for education from the government or even through non-government institutes, it is tax free.

• Returns received from share or Equity MF

If you have invested in shares or equity mutual funds, then returns of Rs 1 lakh on selling them are tax free, This return is calculated under Long Term Capital Gain (LTCG). However returns above this amount attract LTCG tax.

Joint venture (JV)

When commercial enterprise combines their resources to gain a tactical and strategic advantage in the market by contract, then it is known as a joint venture (JV). Companies often enter into a joint venture to pursue specific projects. The JV may be a new project with similar products or services, or it may involve creating an entirely new firm with different core business activities.

A contract between companies is signed to kick off a JV between all concerned parties. The profit and loss from the venture are shared by the participants.

Types of joint ventures

There are two major types of joint venture that two or more companies might participate in. These joint ventures might affect one particular product or an entire product or service line.

• Personnel-based joint venture

This type of partnership covers both the people themselves and the expertise they bring to the table. Several staff members from companies X and Y are placed on a project.

• Equipment-based joint venture

This type of venture involves technology or machinery. For example, company X lacks the manufacturing technology to produce its new Displays line. It partners with company Y, which has the necessary equipment but lacks Glass. The advantages of a joint venture agreement in this example are clear: the collaboration allows company to create its desired innovation without an outlay of capital, while company Y gains a percentage of profits without incurring development costs.

Joint venture examples

HAL has JVs with Rosoboronexport, Aviazapchast and Mikoyan-Gurevich (MiG) of Russia, British Aerospace and Rolls Royce Holdings Ltd of UK, Elbit Systems, Israel, Merlin-Hawk and Edgewood Ventures of the USA, Snecma of France,

Some other examples;

Vistara + Singapore Airlines

PNB + Metlife

Starbucks +Tata

What are the risks of joint ventures?

No business venture comes without risk. The main risk of a joint venture is that when something goes wrong, both parties are held accountable, rather than only the party who was at fault. While most businesses entering joint venture agreements are limited liability companies (small businesses), each participant is equally responsible for legal claims arising from the joint venture, regardless of its level of involvement (or profit) from the venture.

So are joint ventures 50:50? Not necessarily. Each party retains ownership of their property, and depending on the terms of the joint venture contract, you and your partners may contribute resources unevenly. This can lead to problems if the profit-sharing arrangement doesn’t adequately compensate one side or the other.

How do taxes work in a joint venture?

What is a joint venture from a tax perspective? In India a JV is assessed in the status of an AOP (association of persons). If the venture operates as a separate business entity, it will pay income taxes just like any other type of business. In the agreement, the parties involved specify how they will split profits and losses and how they will pay any taxes that are due.

Advantages of joint ventures-

1. Shared expenses (more resources) – each party shares a common pool of resources, which can bring down costs on an overall basis.

2. Shared investment (cost saving) – each party in the venture contributes a certain amount of initial capital to the project, depending upon the terms of the partnership arrangement, thus alleviating some of the financial burden placed on each company.

3. Barriers to competition – one of the reasons for forming a joint venture is also to avoid competition and pricing pressure. Through collaboration with other companies, businesses can sometimes effectively erect barriers for competitors that make it difficult for them to penetrate the marketplace.

4. Technical expertise and know-how – each party to the business often brings specialized expertise and knowledge, which helps make the joint venture strong enough to move aggressively in a specified direction.

Sachin Bansal –The founder of “Flipkart” and “Navi Group” is a true entrepreneur who has a vision to find solutions to problems and also he has set an example that if one is determined to do something big nothing can stop them. But to do so he himself faced lot of problems and difficulties. As said Success may not be as excited as you thought. It is a package not just only shinning part. So is the story of Mr. Sanjay Bansal. Let us have a look at his Success Story in detail

Who is Mr. Sachin Bansal??

Sachin Bansal is an Indian Entrepreneur known as Flipkart Founder. He and his co-founder Binny Bansal started an online book store in the year 2007 named Flipkart with an initial capital of ₹4,00,000. They started their initial operation in Koramangala Bangalore. Sachin Bansal was born in Chandigarh on 5^th August 1981. His father is a businessman and mother is a homemaker.

Early Life and Education of Mr. Sanjay Bansal

• Sachin Bansal had completed his schooling from Saint Anne’s Convent School. He was a scholar and scored well in his exams. He was a propitious student and his family believed in providing good education. He worked very hard for JEE preparation and went on to stand 49 in All India JEE rankings. Later he got into Indian Institute of Technology, Delhi. At one point in time, he wanted to be a professional gamer. Sachin Bansal soon graduated from computer science engineering and became a software engineer.

Career

• After completing engineering from IIT, Delhi; Sachin started working for Techspan Company. Bansal served there for few months until he got an opportunity to work at Amazon India as a Senior Software Engineer.
• At Amazon, he learnt the dynamics of e-commerce. Later, his friend Binny Bansal also started working in the same team. Within the timespan of around 6 months, both of them decided to quit their job to discover the possibilities of e-commerce in India.

The Flipkart Story

• In 2007, Sachin and Binny first thought of creating a comparison search engine. At that time, they saw a huge gap in the e-commerce sector in India and quit their job at Amazon Web Services to establish their e-commerce site, Flipkart.
• Initially, they set up their venture with an investment of Rs 400,000 and Flipkart started its journey by selling books. Because at that time it was not easy to find vendors of electronics, fashion, or household items in India. Even book vendors could not completely put their trust in an Internet-based service like Flipkart in the beginning.
• At that time Sachin Bansal took charge as the CEO of the company. In 2008, the company started operating with an office in a two-room apartment in Bangalore and gained popularity among book readers.
• Flipkart’s popularity began to catch the eye of investors and in 2009, the company was able to secure a capital of $1 million capital investment from an investment firm, Accel Partners. At that time, the company had a staff of over 150, and a total of three offices across India.
• At the end of that year, they were able to sell books worth a total of Rs 40 million. Although Indian consumers at that time did not feel comfortable shopping online, Flipkart was able to gain the trust of customers by providing 24/7 customer support. In 2010, Tiger Global invested $10 million in Flipkart, and the company acquired the Bangalore-based social book discovery service “WeRead“. After the popularity of book sales picked up, Flipkart started selling mobiles under the electronics category.
• As the company did not achieve the desired success in it, they implemented cash on the delivery system for the first time in India. As a result, the company was able to gain the trust of consumers and Flipkart’s sales growth continued to grow.
• At the beginning of Fiscal Year 2011, their revenue stood at Rs 750 million, and in the same year, they acquired a digital content platform,Mime360. Flipkart, in the same year, officially registered their company since at that time the regulations did not allow 100% Foreign Direct Investment (FDI) to an online retail company providing multi-brand goods and services.

Walmart Enters as the New Owner

• Everything was going well for Flipkart, but in 2016, Sachin Bansal was forced out of the position of CEO by the investors because of some poor decisions made in the past, making Binny Bansal the new CEO. Sachin was not happy about this as he was also forced out of the operations.
• In 2018, Walmart offered Flipkart to buy their majority stake. Sachin felt that this deal would be good for them because it will help them grow Flipkart more.
• Sachin wanted to work in Flipkart, he had bigger plans. He felt he would be able to give an exit to some of his investors and would also be able to buy back some of his stakes in Flipkart so that he can take up the position of CEO again as Binny didn’t want to be the CEO. But the deal backfired.
• Investors were not happy with Sachin’s terms. At one point, Sachin even refused to sign the deal. But the deal happened, and as a part of it, only one co-founder could be working with Flipkart after the Walmart acquisition, so they chose Binny.
• Sachin had to quit Flipkart and sell all his shares to Walmart. Initially, Walmart was only going to acquire 55%, but after this, Walmart bought a 77% stake in Flipkart for $16 billion in 2018.
• Sachin exited Flipkart as a Billionaire but he wasn’t happy as his dream was to grow Flipkart and make it a $100 billion company.
• 6 months later, Binny Bansal also left the company after an allegation of serious personal misconduct was made against him, which he strongly denied.
• Sachin took a break for some time and bounced back in 2019. He founded BACQ acquisitions Pvt. Ltd. with one of his batch mates Ankit Agrawal from IIT Delhi. Ankit had the experience of working in the banking sector. He previously worked at Deutsche Bank and Bank of America. They invested in startups that they believed in through BACQ
• Sachin had big plans. They rebranded BACQ as Navi; the Hindi word for New. They wanted to make Navi a full-fledged fintech company, and instead of focusing on just one thing, they wished to provide a wide range of products and services.
• What was unique about them is that, unlike any other fintech startup, they focused on adding value to their customers through their offerings. They hoped customers would come of their own volition.

What does Navi Technologies Do??

• It offers a comprehensive suite of financial services solutions under the Navi brand including personal loans, home loans, general insurance and mutual funds in a digital-first manner.
• The personal loan business was launched in April 2020 and it extends instant personal loans of up to Rs 20 lakh with tenors of up to 84 months through an entirely digital Navi App-only process.
• Since its launch and up to December 31, 2021, the company disbursed 4.81 lakh personal loans totalling Rs 2,246.31 crore. As of December 31, 2021, its personal loans business had an AUM of Rs 1,418.7 crore.
• The home loan business was launched in February 2021 and as of December 31, 2021, the company had disbursed 604 home loans across eight cities in India with an average ticket size of Rs 38.6 lakh. The AUM of the home loan business was pegged at Rs 177.71 crore as on December 31, 2021.
• Navi Technologies launched its general insurance business through the acquisition of DHFL General Insurance in February 2020. During the nine months ended December 31, 2021, its gross written premium (GWP) was Rs 66.76 crore, of which Rs 6.33 crore was from the retail health insurance segment.
• It issued a total of 2.21 lakh insurance policies during that period of which 27,800 were retail health insurance policies. Share of retail health insurance policies rose to 15.70 per cent during the quarter ended December 31, 2021 from 4.14 per cent during the quarter ended June 30, 2021.
• Navi Technologies commenced its asset management business through the acquisition of Essel Asset Management Company in February 2021. Its first passive fund – Navi Nifty 50 Index Fund – launched in July 2021 had an AUM of Rs 167.32 crore as on December 31, 2021. Since the launch of the business, it has filed for 17 new passive funds with the Securities and Exchange Board of India (SEBI).
• Lastly, the company offers microfinance loans through its subsidiary, Chaitanya India Fin Credit Private Limited, which was acquired in March 2020. As on December 31, 2021, its microfinance business had a closing AUM of Rs 1,808.9 crore.
• Meanwhile, the company had also applied for a universal banking license with the RBI, which will enable it to offer a wider range of financial products and services.
• Navi Technologies currently operates as a holding company with 10 subsidiaries, but its flagship has been Navi Finserv since the group introduced digital personal loans in June 2020. While Navi Finserv primarily focuses on loan products such as personal, vehicle and home loans, CRIDS (rebranded as Chaitanya India Fin Credit) is also registered as an NBFC with the RBI and specializes in microfinance.

Disaster Hits Bansal Again

• Navi became a full-fledged NBFC and showed growth in revenue as well. From a revenue of ₹199 crores with a loss of ₹8.07 crore in FY20, their revenue went to ₹779 crores with a profit of ₹71.2 crores in FY21.
• They were profitable, and Navi was planning for itsIPO to raise capital. This time Sachin didn’t simply opt for raising funds through a VC instead, he chose to launch the IPO because he didn’t want to lose his company again.
• He had faced the consequences once, which is why he owns 99.77% of Navi. He has invested more than ₹4000 crores in Navi till now, that’s more than half of his net worth. He believes in what he is building. This could have been the ‘happy ending’ for him! But, no no.
• Everything was going well for Sachin and Navi. IPO was in the pipeline, but in July 2021, after years of quitting Flipkart, suddenly India’s financial crime agency; Enforcement Directorate, asked Flipkart, Binny Bansal, and Sachin Bansal to explain why they shouldn’t face a fine of $1.35 billion for alleged violations of foreign investment laws between 2008 and 2015. This issue was not new; it started back in 2012.
• Flipkart was accused of allegedly attracting foreign investment and running a subsidiary, WS Retail, which also sold goods on Flipkart and covered 30-40% of the total sales on Flipkart in 2016.
• Sachin and Binny founded WS Retail before Flipkart became a marketplace, so they were not breaking any rules at that time, but when they raised funds from investors while WS Retail was still in operation and made the majority of the sale on their platform, that’s where a line was allegedly crossed, and violation of the law happened. Flipkart cooperated completely when this investigation launched, but after years of Sachin exiting Flipkart, the issue came to light again.
• Sachin responded that he is no longer a part of Flipkart and, therefore, he’s not liable to pay any charges. The case is still going on, along with 6 other cases on Sachin across different cities.
• People from Delhi and a few other cities also started receiving messages from Navi that their loan is approved with their PAN no. written in the messages without any masking. The people receiving these messages had never used Navi in their lives. This issue became so big that theRBIstepped in.
• Many people also tweeted about it. On 17 May 2022, RBI declared Navi as not-suitable for Universal Banking License in a press release.

Lessons we can learn from Mr. Sachin Bansal

1. Craft Your Passion:

From Chandigarh, Sachin quit his job at Amazon to go for entrepreneurship, which nobody at the time of 2007 would dare to choose because it was a struggling time for internet-based spaces. Worse the global crisis hit just the year after. After early disagreement with parents, he started up in a two-bedroom apartment in Bangalore. What many called an impractical dream is a reality reality with a net worth of $1.3 billion. An example to learn from for those who started at the bottom. A true leader climbs up a staircase one step at a time and emerges top.

2. Find a Passionate Co-founder

Starting-up is arisky game. Find a co-founder who shares same passion as yours. Having diversity is necessary for a business. Take it from the Bansal founders who put together two different opinionated minds and created something this big.

3. Success Can Be Slow

Dream high but success is something that must be earned over time. If you are not ready to invest time, don’t even think about going forentrepreneurship. If Sachin Bansal were to set up an e-commerce platform and to think of scoring big immediately, then Flipkart would have never gone on to become the country’s first and the biggest? It took him 6 years to establish a brand.

4. Be Customer Reliable

Sachin knew only customers would decide their fortune. Instead of depending on third party logistics partners, they formed their – called e-kart, through which a lot of newly initiated services like cash on delivery, returns management, try-and-buy in fashion became easier to provide.

5. Experiments

When in growth, never fear to experiment. After the first three years of selling only books, it was time for Sachin to expand into other products too. Later in 2014, Flipkart acquired Myntra for clothing and fashion. Don’t stick to original plan if your calling grows your appetite.

6. Challenges As Lessons

Whenever he was in danger, he looked at thechallenges as opportunities. According to Sachin, this is the biggest trait any businessman should have, a quality that made him what he is today.

The Bottom Line

Sachin Bansal’s journey with Flipkart transformed the Indian e-commerce landscape. Their commitment to customer satisfaction, innovation, and strategic decision-making propelled Flipkart to unprecedented heights. The success story of Flipkart remains an inspiration for aspiring entrepreneurs and underscores the transformative power of e-commerce in emerging markets. The story of our Indian e-commerce poster boy is rewarding but extremely challenging. Every time he tries to do something great and things start going well, it seems like something stops him by placing roadblocks in his way.

In the fast-paced world of commerce, the term “refund” carries substantial weight. Understanding the nuances of refunds is crucial for both businesses and consumers. This article delves into the intricate realm of rebates, shedding light on their significance, the need for clear policies, and best practices in handling refund requests.

What is a Refund?

A refund is a financial transaction where a customer receives a reimbursem*nt for a purchase. This process is typically initiated under specific circ*mstances, such as obtaining a defective product, dissatisfaction with a service, or changing one’s mind about a purchase. Refunds play a crucial role in customer-centric business practices, providing a mechanism for rectifying transactions that didn’t meet the customer’s expectations.

Common Reasons for Refunds

Common reasons for refunds include various situations where customers seek reimbursem*nt for their purchases. Some of these reasons involve receiving a defective or damaged product, experiencing dissatisfaction with a service, or changing one’s mind about a purchase. Issues like late delivery, discrepancies between the product received and its description, or billing errors can also contribute to customers requesting refunds. Understanding these common reasons is vital for businesses to refine their refund policies and enhance customer satisfaction.

Importance of a Clear Refund Policy

In the dynamic landscape of commerce, the significance of having a clear refund policy cannot be overstated. This crucial element not only safeguards the interests of both businesses and consumers but also plays a pivotal role in shaping the overall customer experience.

• Building Customer Trust

At the core of a clear refund policy is the establishment of trust. When customers are confident they can easily navigate the refund process if needed, it creates a sense of security. This trust forms the basis of a solid and lasting relationship between the consumer and the business.

• Reducing Customer Perplexity

Clarity is critical to reducing customer perplexity. A well-articulated refund policy eliminates ambiguity and ensures that customers understand the terms and conditions of refunds. This clarity is not just a legal formality but a practical approach to providing customers with a straightforward understanding of what to expect.

• Navigating Ambiguities

By addressing potential ambiguities in the refund policy, businesses demonstrate a commitment to transparency. Ambiguities can lead to customer frustration and dissatisfaction, which can be avoided through clear communication and a user-friendly approach.

• Educating Customers

Proactive education is a powerful tool in reducing perplexity. Communicate the refund policy during purchasing, making customers aware of the conditions and procedures. This preemptive approach minimizes the chances of misunderstandings and ensures a smoother experience.

Crafting an Effective Refund Policy

Crafting a refund policy that is both clear and comprehensive involves several key considerations:

• Clarity and Transparency

A clear refund policy should leave no room for misinterpretation. It should articulate the conditions under which refunds are granted, the process for initiating a refund, and any exceptions that may apply. Transparency builds credibility and reinforces the commitment to fair business practices.

• Timely Processing

Time is of the essence in refund processes. Clearly define the timelines for processing refunds to manage customer expectations. Businesses that prioritize timely reimbursem*nts enhance customer satisfaction and demonstrate operational efficiency.

• Conditions and Exceptions

While clarity is crucial, acknowledging exceptions is equally essential. Communicate situations where a refund may not be applicable, such as specific product categories or time-limited refund periods. Managing expectations prevents potential conflicts and reinforces trust.

Impact on Customer Loyalty

The impact of a seamless and straightforward refund policy extends beyond individual transactions. It significantly contributes to building customer loyalty:

• Positive Customer Experiences

A hassle-free refund process contributes to positive customer experiences. Satisfied customers are more likely to become repeat buyers and advocates for the brand. Their positive interactions become a valuable asset for the business.

• Word-of-Mouth Recommendations

Customers with positive refund experiences are inclined to share their satisfaction with friends and family. Positive word-of-mouth recommendations can significantly influence potential customers and improve the business’s reputation.

• Handling Refund Requests: Best Practices

Effectively managing refund requests is critical to customer service and business operations. Navigating these requests with finesse not only preserves customer satisfaction but also contributes to a business’s overall reputation and success. Let’s delve into some best practices for handling refund requests seamlessly.

• Customer Support Excellence

Exceptional customer support is paramount in the realm of refund requests. Ensure that customers can access efficient and responsive channels for voicing their concerns. A dedicated and knowledgeable support team can promptly address issues, providing customers with clarity and reassurance.

• Streamlining the Process

Streamlining the refund process benefits both customers and businesses. Implement user-friendly interfaces and clear instructions to make the refund process straightforward. Simplifying the steps involved reduces customer frustration and enhances overall satisfaction.

• Automation Tools for Efficiency

In the digital age, leveraging automation tools can significantly improve the efficiency of the refund process. Automated systems can track and process refund requests swiftly, reducing the burden on manual efforts. This not only accelerates the resolution but also minimizes errors.

• Burstiness in Refund Scenarios

Businesses often encounter peak periods where refund requests surge, such as during sales or promotional events. Anticipating these bursts and having a scalable plan in place is crucial. Adequate staffing, clear communication, and proactive measures can help manage the increased demand.

• Addressing Unexpected Challenges

Unexpected challenges, such as product recalls or sudden market shifts, can spike refund requests. A flexible refund policy and robust customer communication strategy are imperative in these situations. Swift and transparent communication helps in retaining customer trust.

• Perplexity in Refund Policies

To handle refund requests effectively, businesses must proactively address customer perplexity regarding refund policies.

• Navigating Ambiguities

Regularly review and refine refund policies to eliminate ambiguities. Clarity in policies prevents misunderstandings and sets clear expectations for customers. Customers who understand the terms are more likely to navigate the refund process smoothly.

• Educating Customers

Proactively educate customers about the refund policy during the purchasing process. Clear communication at the outset reduces the likelihood of confusion and sets the stage for a positive customer experience.

Impact of a Seamless Refund Process on Customer Loyalty

A seamless refund process is more than just a transactional convenience; it is a powerful driver of customer loyalty. When businesses prioritize and execute refunds efficiently, the impact reverberates positively across the entire customer journey, influencing long-term commitment and advocacy.

• Positive Customer Experiences

At the heart of the matter is the creation of positive customer experiences. A seamless refund process contributes significantly to a customer’s overall satisfaction. When individuals encounter a hassle-free and quick resolution to their refund requests, it leaves a lasting impression, demonstrating the business’s commitment to customer-centric practices.

• Word-of-Mouth Recommendations

Satisfied customers often become brand advocates. Their positive experiences, especially with the refund process, become powerful stories they share with friends, family, and colleagues. Positive word-of-mouth recommendations serve as authentic testimonials, influencing potential customers to choose a brand known for its reliability and customer-friendly policies.

• Building Trust and Credibility

A seamless refund process is a testament to a business’s commitment to transparency and fairness. When customers trust that they can quickly receive a refund when needed, it builds credibility. Trust is a foundational element of customer loyalty, and businesses that prioritize a seamless refund process establish themselves as reliable partners in the eyes of their customers.

• Repeat Business and Customer Retention

Customers who experience a positive refund process are more likely to become repeat buyers. Knowing they can trust the business to address any issues promptly encourages them to make future purchases. This repeat business contributes significantly to customer retention, a key metric for sustained success in any industry.

• Enhanced Customer Satisfaction Metrics

Measuring customer satisfaction is an essential aspect of gauging business performance. A seamless refund process positively influences customer satisfaction metrics. Businesses that consistently provide hassle-free refunds often enjoy higher customer satisfaction scores, reflecting the effectiveness of their customer service practices.

• Differentiation in a Competitive Landscape

In a competitive market, where products and services may be similar, the customer experience becomes a crucial differentiator. A business known for its seamless refund process stands out from the competition. This positive distinction can sway potential customers in their decision-making process, contributing to market leadership.

• Mitigation of Negative Reviews and Feedback

How a business handles refunds can significantly impact its online reputation. A seamless process for addressing refund requests mitigates the likelihood of negative reviews and feedback. Customers with positive experiences, even in the face of an issue, are less likely to express dissatisfaction publicly.

• Technological Solutions for Refund Management

In the digital age, integrating technological solutions is instrumental in streamlining business refund management processes. Leveraging innovative tools enhances operational efficiency and contributes to a seamless and transparent experience for customers. Let’s explore some vital technological solutions for effective refund management.

• Refund Tracking Systems

Implementing refund tracking systems is a game-changer in the world of refund management. These systems provide real-time visibility into the status of refund requests. Customers can easily track the progress of their refunds, reducing uncertainty and increasing transparency. From a business perspective, refund tracking systems enhance operational control and facilitate proactive customer communication.

• Integration with E-commerce Platforms

For online businesses, integrating refund processes with e-commerce platforms is essential. This integration ensures a cohesive experience for customers who purchase online. When refund processes are seamlessly embedded within the e-commerce platform, customers can initiate and track refunds without navigating multiple systems. This integration minimizes friction and enhances overall efficiency.

• User-Friendly Interfaces

The integration with e-commerce platforms should prioritize user-friendly interfaces. Clear and intuitive interfaces simplify the refund initiation process for customers, reducing the likelihood of errors or misunderstandings. A well-designed user interface contributes to a positive customer experience, even in the context of a refund request.

Automation of Refund Processing

Automation plays a pivotal role in expediting refund processing. Automated systems can handle routine tasks such as verifying refund eligibility, processing transactions, and updating inventory. By automating these processes, businesses can significantly reduce the manual workload, minimize errors, and accelerate the refund timeline.

• Customer Relationship Management (CRM) Systems

Integrating refund management with CRM systems enhances the overall customer relationship. CRM systems can store detailed customer interactions, including refund requests and resolutions. This historical data is invaluable for understanding customer preferences, predicting potential issues, and personalizing future interactions. A CRM-driven approach to refund management fosters a customer-centric mindset within the organization.

• Data Analytics for Refund Trends

Analyzing data related to refund requests provides valuable insights into customer behavior and market trends. Businesses can identify patterns, such as common refund reasons or peak refund periods. These insights enable proactive measures, such as refining product descriptions, improving quality control, or enhancing customer support during anticipated busy periods.

• Artificial Intelligence (AI) for Fraud Detection

Utilizing AI for fraud detection is crucial in refund management. AI algorithms can analyze patterns and anomalies in refund requests, helping businesses identify potentially fraudulent activities. This proactive approach protects the company from financial losses while ensuring legitimate refund requests are processed efficiently.

• Continuous Improvement through Feedback Loops

Implementing feedback loops within technological solutions allows businesses to improve their refund processes continuously. Customer feedback, gathered through automated surveys or reviews, provides actionable insights. This iterative feedback loop enables businesses to refine policies, address pain points, and enhance customer experience.

Legal Aspects of Refunds

Navigating the legal landscape surrounding refunds is critical for businesses to ensure compliance, protect consumer rights, and maintain a trustworthy reputation. Understanding and adhering to consumer protection laws is essential in crafting and executing fair and transparent refund policies.

• Compliance with Consumer Protection Laws

Businesses must stay abreast of consumer protection laws applicable to their jurisdiction. These laws vary, but they commonly outline consumers’ rights in transactions. Ensuring refund policies align with these laws is crucial to avoid legal repercussions and maintain ethical business practices.

• Clear Communication of Refund Policies

Consumer protection laws often mandate that businesses communicate their refund policies to customers before purchasing. This includes providing information about the conditions under which refunds are granted, any applicable fees, and the process for initiating a refund. Clarity in communication is critical to compliance.

• Honoring Statutory Rights

Consumer protection laws may grant certain statutory rights to consumers, such as the right to a refund for faulty or misrepresented products. Businesses must be aware of and respect these rights, even if their refund policy includes additional conditions. Failure to honor statutory rights can lead to legal consequences and damage the business’s reputation.

• Refund Dispute Resolution

When disagreements regarding refunds arise between businesses and customers, a clear and effective dispute-resolution mechanism is essential. This may involve mediation, arbitration, or other alternative dispute resolution methods. Companies should outline these processes in their refund policies and ensure they align with legal requirements.

• Transparent Communication during Disputes

Transparent and open communication during refund disputes is crucial. Explaining the rationale behind refund decisions, providing evidence when necessary, and maintaining a cooperative approach can often resolve disputes amicably and prevent escalation to legal proceedings.

Documentation of Refund Decisions

Businesses should maintain thorough documentation of refund decisions and dispute resolutions. This documentation is evidence of compliance with consumer protection laws and can be valuable in case of legal challenges.

• International Considerations

Understanding and complying with refund laws across different jurisdictions is complex but necessary for businesses operating internationally. Each country may have unique regulations governing refunds, and companies must adapt their policies to meet these diverse legal requirements.

• Localization of Refund Policies

To ensure compliance, businesses should consider localizing their refund policies to reflect the specific legal nuances of each market. This may involve consulting legal experts in each jurisdiction to tailor policies accordingly.

• Cross-Border Dispute Resolution

Managing refund disputes that cross international borders requires careful consideration. Businesses may need to navigate multiple legal systems and jurisdictions, emphasizing the importance of having robust and adaptable dispute resolution mechanisms.

Conclusion

In conclusion, mastering the art of refunds is integral to fostering positive customer relationships and ensuring the long-term success of a business. A straightforward and efficient refund process mitigates customer perplexity and burstiness and solidifies trust and loyalty. By adhering to legal requirements, leveraging technological solutions, and prioritizing customer satisfaction, businesses can navigate the complexities of refund management with finesse. The impact of a seamless refund process extends beyond individual transactions, influencing positive word-of-mouth recommendations, repeat business, and market differentiation. Embracing continuous improvement and transparency in refund policies contributes to a customer-centric approach, positioning businesses as reliable and customer-friendly partners in the competitive marketplace. Ultimately, a well-executed refund process is not just a transactional detail; it is a strategic element that shapes a brand’s narrative, reinforcing its commitment to fairness, transparency, and customer satisfaction.

A capital account may be a book account in accounting that has accustomed to record the owners’ contributed capital and retained earnings—the total amount of a company’s earnings from its inception minus the whole dividends given to shareholders. It is reported within the equity portion of the company’s balance sheet at the underside. This section can be stated as owner’s equity during a single proprietorship and shareholder’s equity during a corporation.

In international macroeconomics, the capital account is the part of the Balance of Payments (BOP) that records all transactions between entities in one country and entities in other countries. Imports and exports of products, services, and capital, likewise as transfer payments like aid and remittances, form up these transactions. A capital account and a current account compose the balance of payments, while a more specific definition divides the capital account into a financial account and a capital account. The capital account is used to trace changes in national asset ownership, whereas the present account is employed to trace a country’s earnings.

A country’s capital account shows whether it is importing or exporting capital. Large fluctuations within the capital account can reveal a country’s attractiveness to international investors and have a big impact on exchange rates. Partners in a very firm or an indebtedness partnership (LLP) hold capital accounts. When a person joins, they are making a financial commitment to the corporation and investing in it. The capital share of every partner within the partnership agreement or LLP operating agreement is employed to calculate their share of gains and losses.

The capital account in accounting depicts a company’s net worth at a specific point in time. It is disclosed within the bottom section of the record and is additionally called owner’s equity for a sole proprietorship or shareholders’ equity for an organization.

Currency trading?

There are participants on the global currency market from all around the world. They trade in several currencies. Banks, corporations, central banks (such as the RBI in India), investment management companies, hedge funds, retail forex brokers, and investors like you are among the players in currency trading. The first thing to keep in mind is that when trading currencies, transactions always involve two different currencies. When trading currencies in India, you will be taking a position on a currency pair as opposed to the equity or stock market, where you would buy shares of a single firm.

The EUR/USD exchange rate, for instance, shows how much US dollars one Euro may buy. You purchase Euros using US dollars if you believe that the value of the Euro will rise relative to the US dollar.

The forex market, which enables currency pairs to be exchanged around-the-clock, is the biggest and most liquid asset market in the world.

Despite being the largest market in the world, only 20 or so currency pairs account for the majority of volume and activity. Each pair of currencies that is traded against another is often expressed in pips (% in points) to four decimal places, such as the EUR/USD pair. Currency prices are influenced by a variety of factors, including trade and financial flows, geopolitical risk and instability, and the economic health of the participating countries.

What is currency trading?

India and the rest of the world have 24 hour forex trading hours from Monday through Friday. India Standard Time, or IST, affects the hours that currency exchanges are open there. Consequently, to determine the open and close of the currency market, you must add 5 hours and 30 minutes to GMT. There are three distinct time periods known as the European, Asian, and American trading sessions. Despite some session overlap, the main currencies in each market are traded the majority of the time during those market hours. This suggests that specific currency pairings will have higher volume during specific sessions. Traders who stay with pairs cantered on the dollar will see the most activity during the U.S. trading day.

For MetaTrader users, the Indian forex market is open from 2:30 am IST on Monday through 1:30 or 2:30 am IST on Saturday. However, Indian stock market traders adhere to the India Exchange Market’s 9:15 AM to 15:30 PM IST schedule.

The currency exchange always takes place in pairs. The forex market needs you to buy one currency and sell another currency, in discrepancy to the stock request where you can buy or vend a single stock. It often offers the lowest liquidity but more volatility during the first hour of trading each week, especially when significant news is received over the weekend. After then, everything returns to normal, including the volatility, which is often lower during the Sydney session compared to other sessions. There will be more volatility for traders in the Asian time zones during this time when the Tokyo session begins because it shares the same time zones as China, Singapore, and other countries. Various lot sizes are employed while trading currencies.

A micro-lot is one thousand of a particular currency. However, one micro lot is equal to$ 1, 000 of your base currency, If your account is financed in dollars. A large lot is 100000 units, while a small lot is only 10000 units of the money you use as your base.

What moves currency?

Since many of the same factors that affect the stock market also affect the currency market, a rising number of stock traders are becoming interested in it. The largest of these is supply and demand. The value of the dollar rises when the world needs more of them, and falls when there are too many in circulation.

A few other factors that could impact currency prices are interest rates, fresh economic data from the biggest economies, and geopolitical concerns.

Currency trading tips?

Start with the basics before beginning anything new. Let’s examine some trading advice that all traders should take into account before trading currency pairs.

1.Understand the markets.

We cannot emphasize enough how crucial it is to educate oneself about the currency market. Before risking your own money, spend some time learning about currency pairs and the factors that influence them. It’s a time investment that could end up saving you a significant sum of money.

2. Create a plan and follow it

Successful trading depends heavily on having a trading plan. Your profit objectives, level of risk tolerance, approach, and assessment standards ought to be included. Once you have a plan in place, make sure that every trade you are thinking about is inside the constraints of your plan. Keep in mind that you are most likely sensible before making a transaction and illogical after making a trade.

3. Exercise

It is important to exercise before betting into actual trading, with a risk-free practice account, you may test your trading strategy under real market circ*mstances. Without putting any of your own money at risk, you’ll have the opportunity to experience what it’s like to trade currency pairs while putting your trading strategy to the test.

4. Predict the market’s “Weather Conditions”.

Fundamental traders like to trade based on news and other financial and political data, whereas technical traders seek to forecast market moves using technical analysis techniques like Fibonacci retracements and other indicators. Most investors combine the two. Regardless of your trading strategy, it’s imperative that you utilize the tools at your disposal to find potential trade opportunities in choppy markets.

5. Recognize Your Limits

Know your limitations. Knowing how much you’re willing to risk on each trade, adjusting your leverage ratio to suit your needs, and never taking on more risk than you can afford to lose are all examples of this.

6. Know When and Where to Stop

You don’t have time to spend every waking minute watching the markets. Stop and limit orders, which remove you from the market at the price you specify, allow you to more effectively manage your risk and safeguard possible earnings. In the event that the market turns around, trailing stops can help protect your earnings by following your position as it moves in the market at a predetermined distance. You cannot always lower your risk of losses by placing contingent orders.

7. Leave your feelings outside the door.

You have an open position and the market isn’t in your favor. Making a few deals that go against your trading strategy might help you make up for it.

Trading in “revenge” is rarely profitable. One must be careful not to allow emotion get in the way of a productive trading plan. Instead of ending up with two catastrophic losses after a terrible transaction, stick to your plan and make up the lost money gradually. Avoid jumping all-in to try to make up the lost money at once.

8. Be Consistent and Slow

One of the fundamentals of trading is consistency. All traders have seen financial disasters, but your chances of success rise if you maintain a winning edge. Making a plan and learning about trading are both helpful, but the real difficulty is in sticking to the plan with perseverance and commitment.

9. Never be hesitant to explore

Although consistency is crucial, don’t be hesitant to reassess your trading strategy if things aren’t going as planned. Your demands may alter as you gain more experience; your plan should constantly reflect your ambitions. Your plan should vary as your financial condition or goals do.

10. Pick the Best Trading Partner for Your Needs

When trading on the forex market, it is crucial to select the appropriate trading partner. Your trading experience can vary depending on the pricing, execution, and level of customer care.

India handed over 21000 tonnes of fertilizer urea to Sri Lanka under a special support Programme which help farmers in the country and help bolster bilateral cooperation for food security. This is the second time India is helping the crisis hit nation.

India Sri Lanka Relations

• India is Sri Lanka’s closest neighbour. The relationship between the two countries is more than 2,500 years old and both sides have built upon a legacy of intellectual, cultural, religious and linguistic interaction.
• Sri Lanka is India’s largest trade partner in South Asia. India in turn is Sri Lanka’s largest trade partner globally. Sri Lanka’s location in the Indian Ocean region as an island State has been ofstrategic geopolitical relevance to several major powers.
• Sri Lanka is in the midst of an unprecedented economic crisis. A critical shortage of foreign currency and runaway inflation have made life a misery for the South Asian country’s 22 million people.
• But when Sri Lanka suddenly found itself in a deep economic mess a few months back, it turned to India and the Bharatiya Janata Party (BJP) government in Delhi responded with financial help.
• This was not the first time though – in fact, no other country or institution has helped Sri Lanka as much as India in the past year.
• India, on the other hand, has provided around $3.5bn as credit and currency swap. As part of the credit line, it has dispatched several shipments of much-needed fuel, food and fertilisers to Sri Lanka in recent months.
• India has provided timely help by sending us fuel and food. Since the economic crisis began, India has emerged as a top lender for the island nation, providing millions in aid
• As Sri Lanka elected former Prime Minister Ranil Wickremesinghe as their new president, India promised to remain supportive and help the neighbouring nation in its economic recovery.

India’s helping hand

• When Sri Lanka was struggling to find a way out of the economic crisis, it turned to New Delhi for help and the Narendra Modi-led government responded with financial aid and more.
• India has provided around $5 billion worth of assistance to Sri Lanka of which $3.8 billion has been provided in 2022. In May, the island nation received its first consignment of a $16 million humanitarian aid package from India and in June, it sent more supplies with 14,700 metric tonnes (MT) of rice, 250 MT of milk powder, and 38 MT of medicines.
• Sri Lanka is facing a severe shortage of fuel and India has been providing fuel. In February 2022, the two countries signed an agreement for a $500 million supply of petroleum products from the Indian Oil Company through a credit line. This was expanded by a further $200 million in April.
• Two more ships of diesel and petrol to the neighbour were sent in July. Lanka has received more than 400,000 tonnes of fuel from India over the past three months.
• Kerala’s Trivandrum and Kochi airports are making provisions for more than 120 Sri Lanka-bound aircraft for technical landing so that they can refuel.

Winning Sri Lankan hearts-India supplies Urea

• In January, after India provided initial credit, the two countries announced that they will jointly operate 61 giant oil tanks built during World War II in Trincomalee.
• Adding to the fragrance of friendship and cooperation, High Commissioner formally handed over 21,000 tonnes of fertiliser supplied under India’s special support to the people of Sri Lanka.
• This follows 44,000 tonnes supplied last month under Indian support totaling about USD 4bn in 2022.
• The fertiliser will contribute to food security and support the farmers ofSri Lanka. It demonstrates benefits to the people from close ties with Indiaand mutual trust and goodwill between Indiaand Lanka.
• In May, India assuredSri Lankato immediately supply 65,000 metric tonnes ofureato avoid any disruption to the current Yala cultivation season in Sri Lanka.
• Yala is the season of paddy cultivation in Sri Lanka that lasts between May and August.
• The support from India ranges from economic assistance of close to USD 3.5 billion to help secure Sri Lanka’s food, health, and energy security by supplying essential items like food, medicines, fuel, kerosene and other essentials.
• India has committed to providing further financial aid to the country. By stepping up in times of crisis, India has wrested some influence from China over Sri Lanka.

Microsoft has become the first big tech company to join Open Network for Digital Commerce (ONDC) an Indian government-backed platform created to provide a level playing field to all e-commerce companies.

Microsoft and India Relations

• Microsoft Corporationis an Americanmultinationaltechnology corporationwhich producescomputer software,consumer electronics,and personal computers.
• It was founded by Bill Gatesand Paul Allen on April 4, 1975, to develop and sell BASIC interpreters for the Altair 8800.
• Microsoft India Private Limitedis a subsidiary of American software companyMicrosoft Corporation, headquartered inHyderabad, India.
• The company first entered theIndian marketin 1990 and has since worked closely with theIndian government, theIT industry, academia and the local developer community to usher in some of the early successes in the IT market.
• India has always been a vital part of Microsoft’s plans. The company has been in India for more than two decades and have a footprint of sales research, development, and customer service operations.
• Microsoft has more than 6000 employees in India and over 10000 partners in India. It creates thousands of jobs and vibrant technology ecosystem.

Microsoft becomes first multinational technology firm to join ONDC

• The Company intends to introduce social eCommerce, i.e., group buying experience in the Indian Market.
• The US headquartered tech major intends to launch a shopping app for Indian customers, along with their social circle, harnessing the ONDC network to discover the best pricing among retailers and sellers.
• ONDC network is not just a model but a flexible idea that has a lot of explored and yet to be explored potential.
• By utilizing the strength of our open network users, Microsoft, too, can implement their creative ideas like social commerce swiftly.
• This collaboration will help widen the models available on the network and create a level playing field for stakeholders
• Microsoft and Oracle are looking to partner with ONDC to offer technology solutions that will enable companies to onboard the platform allow it to operate smoothly and scale up in future.
• He had said ONDC was forming several components that were beneficial for networkparticipants and policy makers.
• For example, in the works were a registry of buyers and sellers and logisticproviders, a network-wide reputation index, and an online dispute resolution framework.
• Cloud will be an important enabler for a project of this magnitude because it helps reduce IT infrastructure costs, helps faster time to market, is elastic, which means it can increase or decrease demand capacity on an as-needed basis.
• More importantly, it can offer scalability for unplanned growth and demand and is secure since the platform will be generating a lot of data.
• By 2030, the Indian eCommerce industryis anticipated to reach $400 billion, increasing at a 19% CAGR. ONDC aims to catalyse and accelerate this by enabling all kinds of buyers and sellers to leveragehe digitization of commerce through its network, as it is based on the concepts of decentralization, openness, and greater user utility.

Radhika Gupta is the Managing Director and CEO of Edelweiss Mutual Fund has proved that Disability is a matter of perception. Radhika Gupta is known as “the girl with the broken neck”. Let us take a look at her journey in detail

Radhika Gupta’s Early Life

• Gupta was born to a diplomat name Yogesh Gupta who was an Indian Foreign Service official. She has moved across continents along with her family. Radhika was born in Pakistan where she had complications at her birth and she ended up with broken neck.
• Radhika’s mothers name is Arti Gupta who is a school principal. Radhika got married to Nalin Moniz and the couple is blessed with a child Remy Gupta Moniz. Radhika Gupta owes the credit for her success to her father who inspired her to aim for the sky.
• She mentioned her father as her inspiration, who was born and brought up in a village in UP and ranked 7th in his civil service examinations. Her father’s piece of advice to her was that to come out of poverty, every generation has to make a quantum leap. He motivated her to study abroad and make that quantum leap so that she could enable future generations to accomplish further.

Educational Background

• Radhika Gupta is a graduate of the Jerome Fisher Program in Management and Technology from the University of Pennsylvania. She did her Bachelor of Science in Engineering in Computer Science from the University of Pennsylvania School of Engineering and Applied Science and Bachelor of Science degree in Economics from the University of Pennsylvania –The Wharton School in 2005.

Radhika Gupta Career Journey

• Radhika Gupta stated that at age of 22, she got rejected from her 7^th Job application and she decided to commit suicide due to which she was wheeled in to a psychiatric ward and diagnosed as depressed. After this incident she bagged a job at McKinsey and her life fell at track. At the age of 25 she moved to India and started her own Asset Management Firm with her husband and friend in the year 2009.
• The firm name was Forefront Capital Management which was later on acquired by Edelweiss Financial Services Limited in the year 2014. In 2016, Radhika Gupta assisted the acquisition of Ambit Alpha Fund and acquisition of the onshore business of JPMorgan Asset Management. Radhika Gupta headed Edelweiss Multi Strategy Funds Management Pvt Ltd. and was responsible for setting the strategic direction, overseeing investments, sales and distribution.
• Later in the year 2017, she replaced Vikaas Sachdeva and became CEO of Edelweiss Asset Management Co. She also has been influential figure on the board of the Association of Mutual Funds (AMFI) and served as Vice Chairperson for the two consecutive terms from 2021 to 2023. Her insights and leadership aided the industrial growth and innovation.
• In the year 2023, Radhika Gupta joined the Shark Tank India Season 03 series where she shared her passion for entrepreneurship and invested in emerging businesses. She tweeted that Shark Tank Show gave her excitement and commitment to support new ventures in a personal capacity. Her authenticity and storytelling made a profound impact online, as her video “The Girl with a broken Neck” which amassed over 301k views.

Leadership at Edelweiss Asset Management

• Radhika assumed the role of CEO at Edelweiss Asset Management when she was 34 years old. She launched Bharat Bond ETF in 2019 which is India’s first corporate Bond ETF. Edelweiss also achieved a notable growth in Assets Under Management (as of 31st March 2017) to over ₹ 1.20 lakh crore (as of 30th November 2023).
• Also in the year 2017, JP Morgan Mutual Fund integrated seamlessly to Edelweiss and she was instrumental in carving out the niche for Edelweiss as a robust retail financial brand.
• Radhika Gupta’s emphasis on creating innovative and customer centric solutions have not only resonated in the marketplace but also helped Edelweiss Mutual Fund’s place as a top tier performer, soaring to the 13^th position by September 2023 from the 30^th rank in March 2017.

Accepting Myself as Imperfect But Beautiful- Embracing the Disability

• In her new book,Limitless: The Power of Unlocking Your True Potentialpublished by Hachette, one of the most pertinent chapters is titled:TGIF: Thank God I’m Flawed. “You have to accept that you’re not unique in being flawed because it really makes you very normal,” “If you can use your flaws to your advantage, why not? Out of all the things I thought I’d get half well known for, a slightly crooked neck was the least. So, if you can make an edge out of your flaws, [do it] by all means.” These are the words said by Radhika Gupta when interviewed about her disability.
• Growing up, Gupta couldn’t participate in traditional hobbies that her classmates did – sports or otherwise. She found “identity and solace” in academia, particularly during her schooling years in Nigeria where she felt like a “gross misfit” studying alongside daughters of warlords in the late 1990s. Radhika Gupta was born with a permanent tilt to her neck due to certain birth complications. While it was not evident in the early years of her childhood, the tilt became prominent as she started to shed her baby fat.
• Radhika admitted in many of her interviews that she was extremely self-conscious about her ‘weird tilt’ and her self esteem took a beating. At one point in her life, she was afraid of losing weight as it would reveal the tilt prominently. But over time, she learned to embrace her flaws. Radhika saw her tilt from a different lens and realized it was one of the things that made her unique. It also inspired her for doing things differently.
• While in Nigeria, Radhika Gupta studied at the American International School. Her school classmates hailed from rich families who engaged in expensive hobbies such as horse riding etc. When she expressed her desire to inculcate a hobby, her parents insisted that she learn bridge. She described herself as a simple girl who studied very hard and played bridge since the age of 13.
• While applying to Ivy League colleges in America, she realized that her humble background may not be particularly helpful in fetching an admission. When she asked her mother what she would say, considering the fact that she wasn’t an Olympic medalist, a musical award winner or unlike any of the typical students admitted into Ivy Leagues, her mother advised her to stay true to herself. Her honesty and simplicity came off as a breath of fresh air and Radhika was offered admission into the prestigious Wharton Business school.
• In an interview, she revealed that when she was being interviewed for a job at Mckinsey by a senior partner that conversation lasted for 90 minutes during which she spoke about Bridge for 85 minutes. Turns out the senior partner Diane was herself a bridge champion who had participated in numerous tournaments. Fascinated by a young girl who played bridge since age 13, she was hired immediately. Radhika always insists on being true to oneself because there will always be some interested in our story.

Lessons We Can Learn From Radhika Gupta

Despite her disability Radhika Gupta has shown her capabilities and set an example. She used her weakness and accepted her flaws and this itself became her biggest strength. Truth and Honesty are the qualities which aided her for her growth. In her book named “ Limitless” in which she has thrown light on her hardships, how she braved multiple rejections and ignored the crushing comments. So instead of being depressed about disabilities follow your dreams and also learn from Real life examples of such great personalities. Here are six important messages She gave through her life

• Start taking no for an answer; it will probably do you good
• Embrace feedback and work towards improving yourself
• Begin taking risks, or else you’ll lose yourself to the everyday grind
• Kickstart conversations that you want to have; without doubting yourself
• Admit if you don’t know something and reach out for help
• Strive for work-life integration instead of making work-life ‘perfect’

Modern technology continues to advance at astonishing speeds, and recent years have given us plenty of remarkable developments in the fintech sector in particular. Improvements were long overdue, and thanks to rapid modernisation within the industry, customers are now enjoying a far better experience. However, we’re only at the beginning of the cross-border payment revolution. As the change becomes reality, it’s the financial institutions that will be expected to step up and provide efficient cross-border payment systems that their clients demand — especially in regions where the need for trusted, reliable cross-border payments is increasing rapidly. With goods and services moving more quickly and across greater distances than ever before,customers are increasingly demanding cross-border payments that are as seamless and convenient as domestic ones.

What Are Cross-Border Payments?

• Today’s e-commerce world has a global reach. Payments, remittances, and purchases all often require money exchanged across borders.Cross-border payments are transactions where the payee and the transaction recipient are based in separate countries.The transactions can be between individuals, companies or banking institutions who are looking to transfer funds across territories. For merchants who are operating internationally, it is crucial that they are able to accept payments across all countries that they are targeting.Many different scenarios need to be accounted for when a merchant needs to deal with international payments because each country has its own set of rules. The demand for cross-border payments is so high thatsteps are being madeto improve cross-border payments as a whole.
• Over the past few decades, the increased international mobility of goods and services, capital and people has contributed to the growing economic importance of cross-border payments. Factors that have supported the growth in cross-border payments include manufacturers expanding their supply chains across borders, global investment flows and international trade and e-commerce.

Insights

• India is the largest Global Market at around $ 83 Billion , for Inward Remittance flow followed by China and Mexico according to a PWC report released in July.
• Cross Border Payments undergo multiple level of verifications in each country. International payments require foreign transaction fees , and dealing in exchange rates. When a transaction is executed various local entities have to work together to transfer the funds.
• India and Singapore are working to link their digital payments systems to enable “instant, low-cost fund transfers,” in a major push to disrupt the cross-border transactions between the two nations that amounts to over $1 billion each year.
• The project to link India’s Unified Payments Interface (UPI) and Singapore’s PayNow is targeted for operationalization by July 2022. Users on either of the systems will be able to make transactions to one another without having to sign up to the second platform, the banks added.
• “When implemented, fund transfers can be made from India to Singapore using mobile phone numbers, and from Singapore to India using UPI virtual payment addresses (VPA). The experience of making a PayNow transfer to a UPI VPA will be similar to that of a domestic transfer to a PayNow VPA,” said Monetary Authority of Singapore in a press statement.
• India’s central bank described the project as a “significant milestone in the development of infrastructure for cross-border payments” between India and Singapore, and said the linkage “closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments.”

Cross-Border Payments Landscape

Despite the availability of conventional modes, transaction fees and excessive regulatory and documentation requirements make small-value transactions unattractive. The cost and speed of delivery strongly influence the customer’s final selection of payment mode. Recently, FinTechs have leveraged technology and captured the white space in cross-border payments left unaddressed by legacy models.Since 2016, India’s cross-border remittances have been growing steadily at a CAGR of 8%,driven by the increase in global mobility of goods and services, international travel and international workforce.

Past

1. Correspondent Bank/Swift: Society for Worldwide Interbank Financial Telecommunications (SWIFT) system is a vast messaging network used by banks and other financial institutions to quickly, accurately, and securely send and receive information, such as money transfer instructions. Indian banks tie up with foreign correspondent banks and open a NOSTRO account. The correspondent and Indian bank process the transfer request through the SWIFT messaging infrastructure.
2. Money Transfer Saving Scheme: MTSS is a strategic tie-up between overseas principals and Indian agents who disburse funds to beneficiaries in India at ongoing exchange rates.
3. Rupee Drawing Arrangement: Rupee Drawing Arrangement (RDA) is a channel to receive cross-border remittances from overseas jurisdictions. Under this arrangement, the Authorised Category I banks enter into tie-ups with the non-resident Exchange Houses in the FATF compliant countries to open and maintain their Vostro Account.
4. Postal Channels: The International Financial System (IFS) is a software/platform developed by the Universal Postal Union (UPU) to facilitate both inward and outward remittances through the postal channel across partner countries. These transfers are conducted over electronic data interchange (EDI) messages from India Post’s central server to the IFS national server to the destination country postal operator through the UPU system.

New Current

Emergence Of Fintech: FinTechs have leveraged technology to introduce low-cost solutions for international payments for individuals, small businesses and corporates. FinTechs have revolutionised the cross-border payments ecosystem through enhanced customer service, extensive global reach, flexible payment options, lower fees, and reduced transaction times.FinTech companies facilitate transfers in a secure, fast and affordable way.Each cross-border transaction consists of a set of two individual domestic transactions. Settlement between accounts/offices is done several times a month to optimise exchange rates. The transfer fees range from 0.25–3% of the transaction amount and depend on the destination.

Future Models

1. Faster Payment Rails: FinTechs are leveraging entrenched faster payment rails to offer seamless cross-border payment services. The transactions will be funded through the user’s bank account or registered card. Integration of UPI with the faster payment systems of Singapore and Thailand, which uses proxy identifiers like mobile numbers, will enable payments through this route. This would reduce the information and effort required for cross-border payments. The partnership will help FinTech companies to expand their presence in several markets and more aggressively compete with rivals that have a wider reach.
2. Distributed Ledger Technology (Dlt): FinTechs, banks and IT companies have been experimenting with DLT in the cross-border remittance space. This model uses a bidirectional messaging and settlement component that validates transactions using DLT before funds are transferred.This model is gaining increasing acceptance among customers who transfer smaller amounts of money, particularly in small-to-medium businesses.

Key Challenges: Cross-border payments involve different time zones and different currencies. Multiple compliance checks add layers of friction such as significant delays, exorbitant charges and uncertain receipt of payment.Innovation and partnership among stakeholders can help in addressing challenges around speed, cost and transparency in cross-border payments

Advantages:

Cross Border Payments has few Advantages also which are listed below :

Final Thoughts

For merchants looking to expand their markets overseas, it is integral that they are knowledgeable about cross-border payments. Keeping up to date with the latest innovations will provide your customers with the best payment experience possible and encourage return custom. The mechanisms of international payments can be complicated, so it is worth partnering with an experienced PSP who will help you overcome any challenges. As the economy becomes more interconnected across borders, there is a growing appetite for fast, efficient and accessible payments to be made in every part of the world.

With growth in eCommerce, global trade and migration, cross-border payments are on the rise for both businesses and consumers, from family members sending money to their native countries to growth in online marketplaces. Many initiatives are underway with central banks, international organizations and the private sector – all of which are innovating to address persistent barriers and gaps. However Compliance with anti-money laundering and anti-terrorism financing regulation will be the most persistent challenges in cross-border payments.

Billionaires play a crucial role in shaping the world economy, politics, and philanthropy. The list of billionaires include members who are technology giants, founders and also invest their wealth in many companies they have started. Among the Billionaires list Elon Musk as broke all records and captured the title of richest person. The Tesla Chief Executive officer netted an additional $US 95.4 billion to the end of year close, bolstered by the success of Tesla and SpaceX after losing $ US 138 billion in 2022. Let us understand Mr. Elon Musk Life Journey and how he became the Richest Man in the World.

Who is Elon Musk??

Elon Musk is a businessman and investor who is the founder chairman, CEO and chief technology officer of SpaceX ; Angel investor, CEO product architect and former chairman of Tesla Inc chairman and CTO ofX Corp.; founder ofthe Boring CompanyandxAI; co-founder ofNeural inkandOpenAI; and president of theMusk Foundation.

Family Background of Elon Musk

• Elon Musk was born in Pretoria to Errol Musk and Maye Musk. He attended the University of Pretoria before immigrating to Canada at age 18, acquiring citizenship through his Canadian born Mother. He has British and Pennsylvania Dutch ancestry.
• His mother,Maye Muskis a model and dietitian born inSaskatchewan, Canada, and raised in South Africa.
• His father,Errol Musk, is a South African electromechanical engineer, pilot, sailor, consultant, and property developer, who partly owned a Zambianemeraldmine nearLake Tanganyika, as well as a rental lodge at theTimbavati Private Nature Reserve Musk has a younger brother,Kimbal, and a younger sister,

Education Background

• Musk attendedWaterkloof House Preparatory School,Bryans ton High School, andPretoria Boys High School, from where he graduated. Musk arrived in Canada in June 1989 and lived with a second cousin in Saskatchewan for a yearworking odd jobs at a farm and lumber mill.
• In 1990, he enteredQueen’s UniversityinKingston, Ontario. Two years later, he transferred to theUniversity of Pennsylvania(UPenn), where he completed studies for a Bachelor of Arts degree in physics and a Bachelor of Science degree in economics from theWharton School.Although Musk said he earned the degrees in 1995, UPenn maintains it awarded them in 1997.
• He reportedly hosted large, ticketed house parties to help pay for tuition, and wrote a business plan for an electronic book-scanning service similar toGoogle Books.
• In 1994, Musk held two internships inSilicon Valley: one at energy storage startup Pinnacle Research Institute, which investigated electrolyticultra-capacitorsfor energy storage, and another atPalo Alto–based startupRocket Science Games.
• In 1995, he was accepted to a PhD program inmaterials scienceatStanford University.However, Musk decided to join theInternet boom, dropping out two days after being accepted and applied for a job atNetscape, to which he reportedly never received a response

PayPal and SpaceX

• Musk attendedQueen’s Universityin Kingston, Ontario, and in 1992 he transferred to theUniversity of Pennsylvania, Philadelphia, where he received bachelor’s degrees inphysicsandeconomicsin 1997.
• He enrolled in graduate school in physics atStanford UniversityinCalifornia, but he left after only two days because he felt that theInternethad much more potential to change society than work in physics.
• In 1995 he foundedZip2, a company that provided maps and business directories to online newspapers. In 1999 Zip2 was bought by the computer manufacturerCompaqfor $307 million, and Musk then founded an online financial services company, X.com, which later became PayPal, which specialized in transferring money online. The online auctioneBaybought PayPal in 2002 for $1.5 billion.
• Musk was long convinced that for life to survive, humanity has to become a multi-planet species. However, he was dissatisfied with the great expense ofrocketlaunchers.
• In 2002 he founded Space Exploration Technologies (SpaceX) to make more affordable rockets. Its first two rockets were theFalcon1 (first launched in 2006) and the larger Falcon 9 (first launched in 2010), which were designed to cost much less than competing rockets.
• A third rocket, theFalcon Heavy(first launched in 2018), was designed to carry 117,000 pounds (53,000 kg) to orbit, nearly twice as much as its largest competitor, theBoeingCompany’sDeltaIV Heavy, for one-third the cost. SpaceX has announced the successor to the Falcon 9 and the Falcon Heavy: the Super Heavy–Starship system.
• The Super Heavy first stage would be capable of lifting 100,000 kg (220,000 pounds) tolow Earth orbit. The payload would be the Starship, a spacecraft designed for providing fasttransportationbetween cities on Earth and building bases on the Moon and Mars.
• SpaceX also developed theDragonspacecraft, which carries supplies to theInternational Space Station(ISS). Dragon can carry as many as seven astronauts, and it had a crewed flight carrying astronauts Doug Hurley and Robert Behnken to the ISS in 2020.
• The first test flights of the Super Heavy–Starship system launched in 2020. In addition to being CEO of SpaceX, Musk was also chief designer in building the Falcon rockets, Dragon, and Starship. SpaceX is contracted to build the lander for the astronauts returning to the Moon by 2025 as part of NASA’s Artemis space program.

Tesla

• Musk had long been interested in the possibilities of electric cars, and in 2004 he became one of the major funders ofTesla Motors(later renamed Tesla), an electric car company founded byentrepreneursMartin Eberhard and Marc Tarpenning. In 2006 Tesla introduced its first car, theRoadster, which could travel 245 miles (394 km) on a single charge.
• Unlike most previous electric vehicles, which Musk thought were stodgy and uninteresting, it was a sports car that could go from 0 to 60 miles (97 km) per hour in less than four seconds. In 2010 the company’sinitial public offeringraised about $226 million.
• Two years later Tesla introduced the Model S sedan, which was acclaimed by automotive critics for its performance and design. The company won further praise for its Model X luxury SUV, which went on the market in 2015. The Model 3, a less-expensive vehicle, went into production in 2017 and became the best-selling electric car of all time.
• Dissatisfied with the projected cost ($68 billion) of ahigh-speed railsystem in California, Musk in 2013 proposed analternatefaster system, theHyperloop, a pneumatic tube in which a pod carrying 28 passengers would travel the 350 miles (560 km) betweenLos AngelesandSan Franciscoin 35 minutes at a top speed of 760 miles (1,220 km) per hour, nearly thespeed of sound.
• Musk claimed that the Hyperloop would cost only $6 billion and that, with the pods departing every two minutes on average, the system could accommodate the six million people who travel that route every year. However, he stated, between running SpaceX and Tesla, he could not devote time to the Hyperloop’s development.

X (formerlyTwitter)

• Musk joined thesocial mediaserviceTwitterin 2009, and, as @elonmusk, he became one of the most popular accounts on the site, with more than 85 million followers as of 2022.
• He expressed reservations about Tesla’s being publicly traded, and in August 2018 he made a series of tweets about taking the company private at avalueof $420 per share, noting that he had “secured funding.”
• The following month the U.S.Securities and Exchange Commission(SEC) sued Musk for securities fraud, alleging that the tweets were “false and misleading.”
• Shortly thereafter Tesla’s board rejected the SEC’s proposed settlement, reportedly because Musk had threatened to resign.
• However, the news sent Tesla stock plummeting, and a harsher deal was ultimately accepted. Its terms included Musk’s stepping down aschairmanfor three years, though he was allowed to continue as CEO; his tweets were to be preapproved by Tesla lawyers, and fines of $20 million for both Tesla and Musk werelevied.
• Musk was critical of Twitter’s commitment to principles offree speech, in light of the company’s content-moderation policies. Early in April 2022, Twitter’s filings with the SEC disclosed that Musk had bought more than 9 percent of the company.
• Shortly thereafter Twitter announced that Musk would join the company’s board, but Musk decided against that and made a bid for the entire company, at a value of $54.20 a share, for $44 billion. Twitter’s board accepted the deal, which would make him sole owner of the company.
• Musk stated that his plans for the company included “enhancing the product with new features, making thealgorithmsopen sourceto increase trust, defeating the spam bots, and authenticating all humans.”
• In July 2022 Musk announced that he was withdrawing his bid, stating that Twitter had not provided sufficient information about bot accounts and claiming that the company was in “materialbreachof multiple provisions” of the purchase agreement.
• Bret Taylor, the chair of Twitter’s board of directors, responded by saying that the company was “committed to closing the transaction on the price and terms agreed upon with Mr. Musk.” Twitter sued Musk to force him to buy the company.
• In September 2022 Twitter’s shareholders voted to accept Musk’s offer. Facing a legal battle, Musk ultimately proceeded with the deal, and it was completed in October. Among Musk’s first acts as Twitter’s owner were to lay off about half the company and to allow users to purchase for $8 a month the blue check-mark verification, which had previously beenbestowedby Twitter upon notable figures.
• In addition, he disbanded Twitter’s content-moderation body and reinstated many banned accounts most notably that of former U.S. presidentDonald Trump, which had been suspended after theU.S. Capitol attack on January 6, 2021. Advertising revenue fell sharply as many companies withdrew their ads from the platform. Musk changed the name of the company from Twitter to X in July 2023.

Elon Musk Net Worth

• Musk is currently said to be the richest person in the world, overtaking former Amazon CEO Jeff Bezos
• Musk’s net worth sits at over $260 billion, nearly $70 billion more than Bezos’ current estimation of about $190 billion.
• His wealth skyrocketed over the past few years thanks to his majority ownership of Tesla, which increased in value substantially since 2020. SpaceX also has helped Musk’s net worth skyrocket and could catalyze even more growth in the next two years.
• Since 2017, Musk’s fortune has shown an annual average increase of 129 per cent, which could potentially see him enter the trillion-dollar club in just two short years, achieving a net worth of $1.38 trillion by 2024 at age 52
• SpaceX generates massive incomes by charging governmental and commercial clients to send various things into space, including satellites, ISS supplies, and people

Unlocking Genius Mind-Elon Musk

The importance of having a big vision

• One of the most valuable lessons we can learn from Elon Musk is the importance of having a big vision for your life and work. Musk has always been driven by a desire to create a better future for humanity, whether it’s through colonizing Mars, reducing greenhouse gas emissions, or developing brain-machine interfaces.
• He believes that we need to think big and aim high if we want to achieve great things and leave a lasting legacy.
• Musk’s big vision has inspired him to take on some of the most challenging and ambitious projects in history, such as building reusable rockets, creating electric cars, and revolutionizing transportation. His vision has also attracted top talent, investors, and partners who share his passion and want to be part of something meaningful and impactful.

The power of persistence and determination

• Another lesson that we can learn from Elon Musk is the power of persistence and determination in achieving your goals. Musk has faced numerous setbacks, failures, and obstacles in his career, but he has never given up or lost faith in his vision. Instead, he has used each setback as a learning opportunity and a chance to improve his skills, knowledge, and strategies.
• For example, SpaceX had multiple failed launches in its early days, but Musk and his team continued to refine their technology and processes until they achieved success. Tesla faced skepticism and criticism from the auto industry, but Musk and his team persisted in their mission to make electric cars mainstream and affordable. Neuralink is still in its early stages, but Musk is determined to create a brain-machine interface that could change the way we live and work.

Taking risks and embracing failure

• A third lesson that we can learn from Elon Musk is the importance of taking risks and embracing failure as part of the innovation process. Musk has never been afraid to take bold bets and pursue untested ideas, even if they seem crazy or risky at first.
• He believes that the biggest rewards come from the biggest risks, and that failure is not the opposite of success, but a necessary stepping stone on the path to success.
• For example, SpaceX’s reusable rockets were once considered too risky and expensive to develop, but Musk saw the potential for reducing the cost of space travel and increasing its accessibility. Tesla’s electric cars were once seen as a niche market for eco-conscious consumers, but Musk saw the potential for disrupting the entire auto industry and accelerating the transition to sustainable energy. Neuralink’s brain-machine interface is still in its early stages, but Musk sees the potential for enhancing human cognition and communication.

The value of innovation and disruption

• A fourth lesson that we can learn from Elon Musk is the value of innovation and disruption in creating transformative change. Musk believes that innovation is the key to solving many of the world’s most pressing problems, such as climate change, resource depletion, and inequality.
• He also believes that innovation requires disruption, or challenging the status quo and creating new solutions that are better, faster, and cheaper than existing ones.
• For example, Tesla’s electric cars disrupted the traditional auto industry by offering a superior driving experience, longer range, and lower costs. SpaceX’s reusable rockets disrupted the space industry by reducing the cost and time of space travel, and opening up new opportunities for exploration and research. The Boring Company’s tunneling technology could disrupt the transportation industry by enabling faster and cheaper underground travel.

The art of delegating and leading a team

• A fifth lesson that we can learn from Elon Musk is the art of delegating and leading a team to achieve a common goal. Musk is a master of assembling and motivating high-performing teams that can tackle complex and ambitious projects with speed and precision. He knows how to delegate tasks, empower team members, and align their efforts towards a shared vision and strategy.
• For example, SpaceX’s rocket launches involve hundreds of people from different disciplines and backgrounds, but they all work together towards a common goal of delivering payloads into space. Tesla’s production lines require coordination and collaboration among thousands of employees, but they all share a commitment to quality, safety, and efficiency. Neuralink’s research teams include experts from neuroscience, engineering, and computer science, but they share a passion for advancing human knowledge and capabilities.

The need for continuous learning and self-improvement

• A sixth lesson that we can learn from Elon Musk is the need for continuous learning and self-improvement in staying ahead of the curve and adapting to change. Musk is a lifelong learner who is constantly seeking new knowledge, skills, and experiences that can enhance his creativity, innovation, and leadership.
• He reads extensively, attends conferences and workshops, and seeks feedback from his peers and mentors.
• For example, Musk’s interest in physics, engineering, and space exploration led him to pursue degrees in those fields, even though he could have started his career without them. Musk’s curiosity and passion for innovation led him to explore new industries, such as electric cars and brain-machine interfaces, that were outside his comfort zone. Musk’s willingness to learn from failures and mistakes led him to refine his strategies and approaches until he achieved success.

The impact of technology on society and the environment

• A seventh lesson that we can learn from Elon Musk is the impact of technology on society and the environment, and the responsibility that innovators and leaders have in shaping its future.
• Musk believes that technology can be a force for good, but also a source of unintended consequences and ethical dilemmas. He advocates for responsible innovation and a long-term perspective that takes into account the social, economic, and environmental implications of technology.
• For example, Musk’s electric cars and solar panels aim to reduce carbon emissions and promote sustainable energy, while also creating jobs and economic growth. Musk’s space exploration and colonization ambitions aim to inspire and educate people about the wonders of the universe, while also advancing scientific knowledge and discovery. Musk’s brain-machine interface aims to enhance human cognition and communication, while also raising ethical and privacy concerns.

Conclusion

Elon Musk’s genius mind offers many valuable lessons for anyone who wants to achieve great things and make a positive impact on the world. From having a big vision to embracing failure, from taking risks to leading a team, from continuous learning to responsible innovation, Musk’s lessons can inspire and guide us towards a better future. By applying these lessons to our own lives and work, we can become more confident, creative, and impactful individuals who contribute to the common good and leave a lasting legacy.

Ritesh Agarwal-The Youngest Billionaire of India has a net worth of around Rs 16000 crores. The most amazing part is Ritesh Agarwal founded OYO when he was just 21 years old. In the span of 10 years OYO became one of the top hotel chains in the world with an approximate valuation of more than Rs 330 crore. Since the inception of OYO, the founder has never looked back. Let us understand The Youngest Billionaire Mr. Ritesh Agarwal success story in detail.

Ritesh Agarwal – Biography
Ritesh Agarwal Early Life and Education

Ritesh Agarwal was born on 16^th November 1993 in a Marwari Family. He was born in Bissam Cuttack, Odisha and bought up in Titilagarh. His family ran a small shop in Rayagada. He graduated from Sacred Heart School and later St. Johns Senior Secondary School before moving to Delhi in 2011 for college.

Ritesh Agarwal Net Worth and Investments

Ritesh Agarwal Net Worth is around Rs 16000 crore. The company has a growth rate of 100 percent over the past four years. Ritesh Agarwalhas invested in27rounds.Their most recent investment was inFirst Bud Organics(Angel Round)on Mar 30, 2024.

• Some notable companies in their investment portfolio includeUnacademy,Cars24andZingbus
• Their investments are primarily inConsumer, Enterprise Applicationsand 17 moresectors
• Their investment portfolio includes companies inIndia, Singaporeand 1 more

Ritesh Agarwal Family

Agarwal married Geetansha Sood, a native ofLucknow, on 7 March 2023. Oyo founderRitesh Agarwaland his wife Geetanshi Sood have welcomed a baby boy into their family.

Ritesh Agarwal – OYO Rooms

• OYO Rooms was founded by Ritesh Agarwal in 2013. At the age of 19 with an initial investment of Rupees 82 lakh Ritesh started OYO as a platform to book budget accommodation. The company began its operations with just five hotels in Gurgaon, India.
• Over the years OYO expanded rapidly and evolved in to one of the largest hospitality chains globally. OYO offers wide range of budget friendly and mid-range accommodations.
• In 2018, Agarwal secured USD 1 billion in funding for his company, a feat that earned him the distinction of becoming the youngest self-made billionaire in India. Following this achievement, he gained recognition as the world’s second self-made billionaire, with Kylie Jenner holding the first position.

How Ritesh Agarwal Started OYO

• Immense love for innovation, Ritesh chose to drop out of college and pursue his vision. At the tender age of 18 in 2012, he embarked on his business career with Oravel Stays, a budget accommodation portal.
• This venture received a grant of Rs 30 lakh and set the stage for his subsequent success. In 2013, at just 19, Agarwal earned a coveted spot in the Thiel Fellowship, initiated by Peter Thiel, securing a USD 100,000 grant to bring his ideas to fruition.
• With this opportunity, he transformed Oravel Stays into OYO Rooms, a disruptive force in the hospitality industry. The success of Oravel Stays laid the foundation for OYO Rooms’ inception in May 2013, marking a significant milestone in Agarwal’s entrepreneurial journey.

The First Initiative

• OYO started as Oravel Stays, a platform for listing and booking budget accommodations. Agarwal renamed it to OYO in 2013 after receiving a grant of $100,000 from the Thiel Fellowship, a program for young innovators by PayPal co-founder Peter Thiel. OYO operated on a full-fledged hotel chain model that leased and franchised assets.
• It invested in capex, hired general managers to oversee operations and customer experience, and generated job opportunities for hospitality enthusiasts. OYO expanded to Malaysia in 2016, its first region outside India. It also introduced dynamic pricing to capitalize on seasonality, demand surges and special events.
• OYO expanded to China, Indonesia, the UK, the US, Europe and the Middle East in 2018 and 2019. It also launched new products and services such as OYO Townhouse, OYO Life, OYO Workspaces, OYO Wizard and OYO OS.
• YO had more than 43,000 properties and 10 lakh (1 million) rooms across 800 cities in 80 countries as of January 2020. It had over 17,000 employees globally. OYO’s investors included SoftBank Group, Didi Chuxing, Greenoaks Capital, Sequoia India, Lightspeed India, Hero Enterprise, Airbnb and China Lodging Group.

Challenges for OYO

• The COVID-19 pandemic severely affected the travel and hospitality industry, reducing the demand for hotel rooms and forcing many hotels to shut down or reduce their capacity.
• OYO faced allegations of fraud, mismanagement, breach of contract and non-payment from some of its hotel partners, who accused the company of changing the terms of agreements, withholding payments and manipulating data.
• OYO faced regulatory hurdles and legal disputes in some of its markets, such as China, Japan, the US and India. For example, it was sued by a US hotel owner for $8.5 million over alleged fraud and breach of contract. It also faced tax raids and investigations by Indian authorities over alleged tax evasion.
• OYO faced competition from other players in the budget hotel sector, such as Treebo Hotels and FabHotels in India, Huazhu Hotels Group and Meituan Dianping in China, and Airbnb and Booking.com globally.
• OYO faced internal turmoil and layoffs as it tried to cut costs and streamline its operations. It reportedly laid off or furloughed thousands of employees across its markets in 2020 and 2021. It also saw several senior executives leave or resign from the company.
• As a result of these challenges, OYO’s valuation dropped from $10 billion in 2019 to $3 billion in 2020. It also reported a net loss of $510 million in 2021. It struggled to raise new funds from its existing or new investors amid the pandemic-induced crisis.

Ritesh Agarwal – Shark Tank India

• AsShark Tank India Season 3continues to gain momentum amongst audiences, the ‘sharks’ are having their moments on the show. Especially, the new ‘sharks’ joining this season, have been getting a lot of attention.
• Ritesh Agarwal has been appreciated for his pleasant demeanor on the show. He once said in the Shark Tank show – “I personally don’t like to call myself a shark. I am more like a dolphin probably. When I was coming to the show, my motivation was very simple, I want to support founders.
• This has been my goal and Shark Tank has not disappointed me. Great ideas are valuable, but more than that it is the founder and person behind the company that matters. I believe the jockey is more important than the horse.”

Ritesh Agarwal Personal and Professional Achievements

• Ritesh Agarwalhas won many awards and accolades for his work including the Business World Young Entrepreneur Award. He is a regular speaker at entrepreneurial conferences and institutes across India and the world and a fellow of the Thiel foundation.
• All achievements of Ritesh Agarwal have included in a book called “Kaleidoscope” written by him, which has around 25 award-winning short stories, selected amongst several other stories nominated in an online contest organized by SpringTide. Other than that, he loves traveling and going for long drives to unwind himself and likes playing basketball when he is not working.

Lessons You Can Learn From Ritesh’s Story

1. Learn something by doing it: You should be focused on your goals, and learn whatever helps to achieve your goals by practically doing it. Failure is a natural part of the entrepreneurial journey, according to Ritesh. He views failure as a stepping stone to success, emphasizing the importance of learning from your mistakes and using them to fuel your growth. Ritesh’s own experiences with failure have taught him valuable lessons and shaped his approach to business. By embracing failure and learning from it, entrepreneurs can become more resilient and better equipped to overcome challenges.
2. Follow your passion: Mr. Ritesh Agarwal said that if you follow your passion, you can achieve your dream faster than others.
3. Create an opportunity to work with entrepreneurs and start-ups: One of Ritesh’s key insights is the importance of building your environment. He suggests attending conferences, seminars, and networking events to connect with like-minded individuals and learn from their experiences. Ritesh also advocates for reading widely from various sources to expand your knowledge and stay informed about industry trends and developments. By immersing yourself in a stimulating environment, you can foster personal and professional growth.
4. If you have advantages, use it: If you find any kind of advantages that our society I providing, use it, do something wild and create a career of your choice.
5. Create a strong network: The most important thing for becoming a successful entrepreneur is to create teams who have the same passion as you.
6. Always be restless: Once you achieve your goal, don’t take a rest, set higher goals, and try to achieve it. In times of trouble, Ritesh advises maintaining patience and stability to avoid demotivation. He warns against volatility, which can disrupt your focus and hinder your progress. By staying grounded and composed, entrepreneurs can navigate challenges more effectively and stay on course toward their goals.

The Asian Development Bank (ADB) is a global development finance agency whose aim is to help developing member countries in reducing poverty and improving people’s quality of life.

The Asian Development Bank (ADB) came into existence in 1966 and it is headquartered in Manila, Philippines. It aids to push social and economic development by providing loans, technical assistance, grants, and equity investments. Asian Development Bank is owned and financed by its 68 members, 49 of them are from the region.

ADB’s key partners are governments, the commercial sector, non government organizations, development agencies, community-based groups, and foundations. ADB will follow three complementing strategic agendas: inclusive growth, ecologically sustainable growth, and regional integration, as outlined in Strategy 2020, a long-term strategic framework approved in 2008.The major objective of the Asian Development Bank is to ensure market prosperity and enhance collaboration among Asia-Pacific countries.

The ADB oversees significant projects within the region and sometimes raises funding through international bond markets.

To promote development, the Asian Development Bank provides grants, loans, technical support, and equity investments to its developing member nations, the private sector, and public-private partnerships. They also use co-financing activities to supply support while tapping official, commercial, and export finance sources.

Members and associate members of the international organisation Economic Commission for Asia and the Far East are eligible to affix the ADB.

Other regional and non-regional developed countries that are members of the United Nations or any of its specialised agencies are eligible.

A finder’s fee, commonly referred to as “referral revenue” or “referral fee,” is a commission given to a middleman or transaction facilitator. Because the intermediary found the deal and alerted interested parties to it, they are compensated with a finder’s fee. It is assumed that without the facilitator, the parties would not have discovered the agreement, and as a result, the facilitator deserves payment.

The finder’s fee may be paid by either the buyer or the seller of the transaction, depending on the circ*mstances surrounding the deal’s establishment or conclusion.

A finder’s fee, also known as a referral fee, is compensation given to the person or organization who connected a potential client with an opportunity in order to close a contract.

The specifics of a finder’s fee can differ from transaction to transaction, with a payout typically equaling a percentage of the successful sale; in certain circ*mstances, the “fee” is simply an unofficial gift.

A finder’s fee is a compensation and serves as an incentive to maintain business relationships and resources that represent an organization’s needs to potential partners or customers. Although contracts are not necessary in these types of agreements, formulating and agreeing to conditions for finder’s fees can help both parties stay on the same page regarding the extent of the compensation that will be provided. This might be especially helpful for contacts who bring the company new business on a regular basis.

What are shares?

Shares are fractional ownership interests in a corporation. For some businesses, shares are a type of financial instrument that allows for the equitable distribution of any declared residual profits in the form of dividends. A stock with no dividend payments does not distribute its income to its shareholders. Instead, they look forward to further stock price growth as business profits rise.

Shares are an organization’s equity capital, and there are two primary kinds of shares: common shares and preferred shares. As a result, the terms “shares” and “stock” are frequently used synonymously.

Types of shares?

The majority of the shares that specific firm issues are equity shares, sometimes referred to as ordinary shares. Equity shares can be transferred and are actively traded on stock exchanges by investors. As an equity shareholder, you have the right to dividend payments in addition to voting rights on corporate matters.

However, these pay-outs are not constant. Equity investors share in any losses incurred by the business up to the amount they invested.

Observe how equity shares are divided according to share capital:

• Authorized Share Capital: Each company is required to specify the maximum amount of capital that can be raised through the issuance of equity shares in its Memorandum of Associations. However, the cap may be raised by completing specific legal processes and paying additional fees.
• Issued Share Capital: The amount of the company’s capital that has been made available to investors through the issuance of equity shares is denoted by this term. The issued share capital, for instance, would be Rs 10 lakh if the company issued 10,000 equity shares at a nominal value of Rs 100 each. Known as subscribed share capital, subscription share capital is the portion of the issued capital that has been purchased by investors.
• Paid-Up Capital: The sum of money that investors have contributed to hold the company’s shares is referred to as paid-up capital. Both subscribed capital and paid-up capital refer to the same amount because investors pay the complete amount at once.

Now consider the classification of equity shares based on the definition:

• Bonus Shares: The term “bonus shares” refers to extra shares that are given as a gift or bonus to current shareholders.
• Rights Shares: A firm can issue new shares to its current owners at a predetermined price and within a specific timeframe before making them available for trade on stock markets.
• Sweat Equity Shares: If you have made a significant contribution to the company as an employee, the corporation may choose to reward you by issuing sweat equity shares.
• Voting And Non-Voting Shares: Although the majority of shares have voting privileges, the business may grant shareholders with differential or no voting privileges.

Here are some share categories based on returns:

• Dividend Shares: A business has the option to prorate dividend payments by issuing new shares in place of cash.
• Growth Shares: These kinds of shares are linked to businesses that experience rapid growth. While such businesses might not pay dividends, the value of their stocks rises quickly, giving investors financial gains.
• Value Shares: These kinds of shares are sold on the stock market at prices that are below their true worth. Investors can anticipate an increase in price over time, giving them a higher share price.

In comparison to regular shareholders, preferential shareholders are given preference in receiving a company’s profits. Additionally, preferred shareholders are compensated before common shareholders in the event of a company’s insolvency. The many share types that fall under this category are as follows:

• Cumulative And Non-Cumulative Preference Shares: In the case of cumulative preference shares, the benefit is carried over to the following fiscal year if a certain company does not pay an annual dividend. Unpaid dividend advantages are not offered by non-cumulative preference shares.
• Participating vs. Non-Participating Preference Shares: Participating preference shares permit shareholders to earn excess profits following the company’s payment of dividends. This is in addition to receiving dividends. Other than dividends that are received regularly, non-participating preference shares do not have any such advantages.
• Convertible/Non-Convertible Preference Shares: While non-convertible preference shares have no such advantages, convertible preference shares can be converted into equity shares after fulfilling the necessary requirements by the company’s Article of Association (AoA).
• Redeemable/Irredeemable Preference Share: At a set price and time, a firm may repurchase or claim redeemable preference shares. There is no maturity date for these shares. However, there are no such restrictions on irredeemable preference shares.

Shares meaning?

The capital of a firm is split up into tiny, equal units of a finite number. Shares are the name given to each unit. A share, to put it simply, is a portion of ownership in a business or a financial asset. Shareholders are investors who possess stock in a corporation.

For instance, if a firm has a market capitalization of Rs. 10 lakh and each share is valued at Rs. 10, then there will be 1 lakh shares issued.

Owners of a corporation have the option of issuing preferred shares or common stock to investors. In exchange for funds required to expand and run the business, companies issue equity shares to investors. The founders or partners of privately held businesses or partnerships own the stock. Shares of small businesses are sold to outside investors on the primary market as they expand. Friends and relatives may be among them, followed by angel or venture capital (VC) investors. If the business keeps expanding, it might try to obtain more equity money by selling shares to the general public through an IPO (IPO). A company’s shares are referred to as being publicly traded once they are listed on a stock exchange following an IPO.

Companies issue stock for a variety of reasons, all of which are important to the long-term objectives of the business.

• These privileges give shareholders with a record the ability to decide whether or not to approve the issuance of additional securities or the payment of dividends, as well as vote on other corporate decisions. Additionally, some common stock has pre-emptive rights, allowing stockholders to purchase additional shares and maintain their ownership stake when the company issues additional stock.
• The quantity of shares that a company’s board of directors may issue is known as authorized shares. The number of shares that are distributed to shareholders and included in ownership calculations is known as the number of issued shares.
• Shareholders may set a cap on the authorized number of shares as they see fit because it affects their ownership. Shareholders hold a meeting to examine the matter and come to a decision when they want to increase the number of authorized shares. The state receives a formal request through the filing of articles of amendment when shareholders decide to increase the number of authorized shares.

Conclusion

After understanding share and its types, now let’s understand the general norm. The majority of businesses issue common shares. These give owners a continuing stake in the business and its earnings, offering the possibility of investment development through both capital gains and dividends. Additionally, common shares have voting privileges, providing stockholders greater control over the company. Companies that issue shares do so primarily to raise capital for operations and growth. The investor who buys these shares does, however, acquire a portion of the company. When investing in equity shares, the shareholder gets voting privileges within the company. The process of raising money via stock shares is known as “equity financing.”

In the intricate world of finance, a ledger stands as a crucial document, serving as a backbone for accurate record-keeping and financial analysis. Let’s delve into what a ledger entails and why it holds paramount importance in various economic domains.

Introduction

Definition of Ledger:

A ledger is a comprehensive record-keeping system in finance. It is a centralized repository for tracking and recording all financial transactions within an organization or an individual’s financial portfolio. It provides a detailed account of economic activities, creating a chronological trail of credits and debits.

Importance of Ledger in Finance:

The significance of a ledger in finance cannot be overstated. It acts as a financial compass, offering a clear and organized view of an entity’s monetary transactions. The ledger provides essential information for decision-making, financial analysis, and reporting. Whether in business or personal finance, a well-maintained ledger is crucial for understanding financial health, making informed decisions, and ensuring compliance with regulatory requirements. It serves as a fundamental tool for effective financial management.

Types of Ledgers

Types of Ledgers: In-Depth Exploration

In the financial landscape, ledgers play a crucial role, and understanding the various types is fundamental to effective record-keeping. Here’s a detailed exploration of the main types of ledgers:

1. General Ledger:

• Definition:The general ledger is the central repository for all financial transactions within an organization.
• Purpose:It provides a comprehensive overview of a company’s financial health, offering insights into assets, liabilities, equity, revenue, and expenses.
• Structure:Organized into accounts, each representing a specific financial aspect, facilitating systematic tracking.

2. Subsidiary Ledger:

• Explanation:The subsidiary ledger is a detailed expansion of specific accounts found in the general ledger.
• Purpose:It offers a more granular view, breaking general categories into individual transactions for enhanced clarity.
• Examples:Common examples include accounts receivable and accounts payable, tracking specific transactions related to customers or vendors.

3. Nominal Ledger:

• Definition:Also known as the income statement, this ledger records revenue, expenses, gains, and losses.
• Purpose:It aids in calculating net income and provides insights into the profitability of a business.
• Focus:Primarily focused on the flows of revenue and expenses over a specific period.

4. Private Ledger:

• Explanation:The private ledger is typically used in larger organizations and is restricted to specific departments or individuals.
• Purpose:Enhances confidentiality and control by limiting access to financial information.
• Example:A private ledger might be dedicated to the finance department for confidential financial reporting.

5. Control Ledger:

• Definition:This ledger controls and verifies the accuracy of entries in subsidiary or departmental ledgers.
• Purpose:Acts as a cross-reference tool to ensure consistency and accuracy across various financial records.
• Validation:Entries in control ledgers help prevent errors and discrepancies in subsidiary ledgers.

6. Sales Ledger:

• Explanation:Focuses specifically on sales-related transactions, tracking customer accounts and receivables.
• Purpose:Enables businesses to monitor sales performance, outstanding payments, and customer credit.
• Detail:Contains individual customer accounts, recording sales, payments, and outstanding balances.

7. Purchase Ledger:

• Definition:Concentrates on all purchasing activities, recording transactions with suppliers and accounts payable.
• Purpose:Facilitates efficient payable management, ensuring timely suppliers’ payments.
• Detail:Includes supplier accounts, purchase transactions, and payment records.

8. Memorandum Ledger:

• Explanation:Used for temporary or occasional entries that do not belong to regular ledger accounts.
• Purpose:Provides a space for adjustments, corrections, or one-time transactions without affecting standard ledger entries.
• Use Case:Helpful for recording extraordinary events or correcting errors without disrupting the main ledger.

Components of a Ledger

In the financial realm, a ledger is more than just a record-keeping tool; it’s a structured system comprising several essential components. Let’s delve into the intricate details of the critical elements that constitute a ledger:

1. Accounts:

• Definition:Accounts are the building blocks of a ledger, representing distinct financial elements such as assets, liabilities, equity, income, and expenses.
• Purpose:They serve as individual containers for specific types of financial transactions, providing a systematic way to organize and track activities.

2. Debits and Credits:

• Explanation:Every transaction in a ledger involves a dual-entry system, where debits and credits must balance.
• Purpose:Debits increase asset and expense accounts but decrease liability and revenue accounts, while credits have the opposite effect. This system ensures accuracy and adherence to accounting principles.

3. Ledger Entries:

• Definition:Ledger entries are detailed records of each financial transaction, including the date, description, and amounts.
• Purpose:They create a chronological trail of financial activities, offering transparency and accountability. Entries are recorded in the respective accounts affected by the transaction.

4. Journal Entries:

• Explanation:Journal entries are the initial recordings of financial transactions before being transferred to the ledger.
• Purpose:They capture the specifics of each transaction, including the accounts involved and the amounts. Journal entries provide a preliminary record for subsequent entry into the ledger.

5. Balancing:

• Definition:Balancing in a ledger refers to ensuring that the total debits equal the full credits for a given period.
• Purpose:Balancing is critical to verify the accuracy of ledger entries and maintain the integrity of financial records. It prevents discrepancies that may lead to errors in financial reporting.

6. Opening Balances:

• Explanation:The initial balances in each account at the beginning of a financial period.
• Purpose:Opening balances set the starting point for the ledger, reflecting the financial position carried forward from the previous accounting period.

7. Closing Balances:

• Definition:The final balances in each account at the end of a financial period.
• Purpose:Closing balances indicate the cumulative effect of all transactions during the accounting period. They become the opening balances for the subsequent period.

8. Trial Balance:

• Explanation:A summary of all ledger accounts and their balances, prepared to ensure the equality of debits and credits.
• Purpose:The trial balance is a diagnostic tool uncovering errors in ledger entries before preparing financial statements. It aids in maintaining accuracy in financial reporting.

9. Ledger Codes:

• Definition:A system of codes assigned to each account in the ledger for quick reference and organization.
• Purpose:Ledger codes streamline the tracking and retrieval of information, especially in large ledger systems, making it easier for accountants and financial professionals to manage and analyze data.

Ledger in Accounting Systems

In the complex accounting world, the ledger is central in ensuring accurate and transparent financial records. Let’s explore how the ledger functions within accounting systems.

Manual Ledger Systems:

• Description:Historically, ledgers were maintained manually, requiring meticulous entry of financial transactions into physical books.
• Characteristics:Time-consuming, prone to errors, and demanding heightened attention to detail.
• Advantages:Provides a tangible, chronological record of transactions.

Computerized Ledger Systems:

• Definition:In the digital age, computerized ledger systems have become the norm, leveraging technology for efficient and accurate financial record-keeping.
• Advantages:
• Efficiency:Automation speeds up data entry and retrieval processes.
• Accuracy:Reduces the risk of human error and allows for real-time updates.
• Analysis:Enables quick and sophisticated financial analysis.
• Disadvantages:
• Dependency:Reliance on technology poses a risk of system failures.
• Security Concerns:Robust cybersecurity measures are needed to protect sensitive financial data.

Ledger in Personal Finance

In personal finance, the ledger takes on a different but equally vital role, aiding individuals in managing their financial lives.

Budgeting:

• Tracking Expenses:A personal ledger assists in monitoring and categorizing daily expenditures.
• Monitoring Income:It provides a clear view of income sources, aiding in budgeting and financial planning.

Importance of Personal Ledger:

• Financial Discipline:Helps individuals maintain financial discipline by tracking and controlling spending.
• Goal Setting:Supports goal-setting by providing insights into saving and spending patterns.

Tax Preparation:

• Record-Keeping:A personal ledger is a valuable resource during tax preparation.
• Compliance:Ensures individuals adhere to tax regulations by providing a detailed financial history.

Benefits of Personal Ledger:

• Awareness:Increases awareness of financial habits, fostering better financial decision-making.
• Goal Achievement:Assists in achieving financial goals through informed planning.

Challenges in Personal Ledger Management:

• Consistency:Requires consistent tracking, which can be challenging for some individuals.
• Learning Curve:Initial unfamiliarity with ledger systems may pose a hurdle.

Importance of Keeping an Accurate Ledger

Maintaining an accurate ledger is not just a routine accounting task but a foundational element in the financial management of organizations and individuals. Let’s explore the profound importance of ensuring precision in ledger-keeping.

1. Financial Decision Making:

• Informed Choices:An accurate ledger provides a comprehensive overview of financial transactions, empowering decision-makers with the information needed to make informed choices.
• Risk Mitigation:By understanding financial health, organizations can mitigate risks and capitalize on opportunities strategically.

2. Tax Preparation:

• Regulatory Compliance:A meticulously maintained ledger ensures compliance with tax regulations by offering a straightforward income, expenses, and transactions record.
• Optimized Tax Outcomes:Accurate financial records enable individuals and businesses to maximize their tax outcomes, identifying potential deductions and credits.

3. Financial Transparency:

• Stakeholder Confidence:Transparent financial records, facilitated by an accurate ledger, instill confidence in stakeholders, including investors, partners, and regulatory bodies.
• Accountability:Financial transparency enhances accountability, a cornerstone in building and maintaining trust with various stakeholders.

4. Strategic Planning:

• Business Growth:Organizations can use accurate ledger data to assess their financial health, identify areas for improvement, and develop strategic growth plans.
• Resource Allocation:In personal finance, accurate ledgers aid in effective resource allocation, ensuring that funds are allocated to meet financial goals and obligations.

5. Operational Efficiency:

• Audit Trail:An accurate ledger is a reliable audit trail, allowing to track and verify financial transactions.
• Process Improvement:By identifying patterns and trends in financial data, businesses can enhance operational efficiency and streamline financial processes.

6. Budgeting:

• Expense Control:In personal finance, an accurate ledger facilitates effective budgeting by tracking expenses and identifying areas where adjustments can be made.
• Financial Discipline:It promotes financial discipline by providing a real-time view of spending habits, helping individuals stay within budgetary limits.

7. Financial Reporting:

• Stakeholder Communication:Accurate ledgers form the basis for generating reliable financial statements, which is crucial for effective stakeholder communication.
• Investor Attraction:For businesses, transparent and accurate financial reporting can attract investors seeking trustworthy financial information.

8. Legal Compliance:

• Regulatory Requirements:Accurate ledger records are essential for compliance with various financial regulations, protecting organizations and individuals from legal repercussions.
• Auditing Success:During audits, precise ledgers facilitate a smoother process, demonstrating a commitment to compliance and accuracy.

Common Mistakes in Ledger Keeping

While maintaining a ledger is essential for accurate financial records, various common mistakes can compromise its effectiveness. Recognizing and addressing these errors is crucial for preserving the integrity of financial data. Let’s explore some prevalent mistakes in ledger keeping:

1. Misclassifying Transactions:

• Error Description:Placing a financial transaction in the wrong account category.
• Impact:Misclassification distorts the accuracy of financial reports and can lead to misguided decision-making.
• Prevention:Implement a rigorous system of checks to verify the correct categorization of transactions.

2. Forgetting Entries:

• Error Description:Overlooking or forgetting to record specific financial transactions.
• Impact:Only complete ledgers lead to accurate financial statements, hindering a comprehensive understanding of financial health.
• Prevention:Establish a systematic approach to record all transactions promptly.

3. Inconsistent Recording:

• Error Description:Failing to consistently record transactions promptly.
• Impact:Inconsistency can lead to gaps in financial records, making it challenging to trace the economic history accurately.
• Prevention:Implement a regular schedule for ledger updates and adhere to it diligently.

4. Ignoring Reconciliation:

• Error Description:Neglecting to reconcile ledger balances with bank statements or other financial records.
• Impact:Unreconciled ledgers can result in discrepancies and errors that must be noticed, affecting financial accuracy.
• Prevention:Conduct regular reconciliations to ensure ledger balances align with external financial statements.

5. Lack of Documentation:

• Error Description:Failing to keep supporting documents for ledger entries.
• Impact:With proper documentation, verifying the authenticity and accuracy of recorded transactions becomes easier.
• Prevention:Implement a robust documentation system, attaching invoices, receipts, or other relevant documents to ledger entries.

6. Overlooking Duplicate Entries:

• Error Description:Accidentally recording the same transaction more than once.
• Impact:Duplicate entries inflate financial figures, leading to incorrect financial statements and potential errors in decision-making.
• Prevention:Establish a method for cross-referencing entries to identify and rectify duplicates.

7. Ignoring Decimal Errors:

• Error Description:Making errors in decimal placement when recording transaction amounts.
• Impact:Decimal errors can significantly distort financial figures, impacting calculations and financial analysis.
• Prevention:Double-check transaction amounts for accuracy, paying close attention to decimal points.

8. Inadequate Backup Procedures:

• Error Description:Need to regularly back up digital ledger data.
• Impact:Data loss due to system failures or other unforeseen circ*mstances can result in significant setbacks.
• Prevention:Implement regular backup procedures, ensuring the safety and integrity of ledger data.

9. Ineffective Communication:

• Error Description:Lack of communication between departments or individuals responsible for ledger entries.
• Impact:Discrepancies can arise when information is not effectively communicated, leading to confusion and errors.
• Prevention:Establish clear communication channels and protocols for sharing financial information.

Ledger and Financial Reporting

In the intricate world of finance, the relationship between ledgers and financial reporting is symbiotic, each playing a crucial role in communicating an organization’s fiscal story. Let’s delve into how the ledger intertwines with the financial reporting process.

1. Generating Financial Statements:

• Ledger Foundation:The ledger is the foundation of financial statements.
• Financial Statements:These statements, including the balance sheet, income statement, and cash flow statement, derive their data directly from the ledger.

2. Accuracy and Reliability:

• Ledger’s Role:An accurate ledger is imperative for the reliability of financial reports.
• Trustworthy Data:Financial reports are only as dependable as the ledger from which they originate, emphasizing the need for precision in ledger-keeping.

3. Balance Sheet Insights:

• Ledger Entries:The balance sheet detailing an organization’s assets, liabilities, and equity is a product of ledger entries.
• Accurate Reflection:An accurately maintained ledger ensures that the balance sheet reflects the entity’s financial position.

4. Income Statement Clarity:

• Ledger Transactions:The income statement, portraying revenues, expenses, gains, and losses, draws directly from ledger transactions.
• Profit and Loss:The ledger’s accuracy directly influences the income statement’s profit and loss figures’ reliability.

5. Cash Flow Statement Accuracy:

• Ledger Data:The cash flow statement, depicting cash inflows and outflows, relies on ledger data to illustrate an organization’s liquidity.
• Financial Decision-Making:Accurate cash flow information from the ledger is essential for effective financial decision-making.

6. Auditing Processes:

• Ledger Transparency:During audits, the ledger serves as a primary reference point for auditors.
• Verification:Auditors rely on the ledger to verify the accuracy of financial transactions and ensure compliance with accounting standards.

7. Compliance and Accountability:

• Ledger Integrity:An accurate ledger reinforces an organization’s commitment to financial compliance.
• Stakeholder Confidence:Transparent financial reporting, rooted in a reliable ledger, fosters accountability and builds stakeholder confidence.

8. Management Reporting:

• Strategic Insights:Management relies on financial reports from the ledger for strategic insights.
• Performance Evaluation:The ledger aids in evaluating organizational performance, guiding decision-makers in refining strategies.

9. Continuous Improvement:

• Feedback Loop:Financial reports, influenced by the ledger, provide feedback on the organization’s financial health.
• Decision Adjustment:Decision-makers can use this feedback loop to adjust strategies, fostering a culture of continuous improvement.

Ledger’s Role in Business Expansion

As businesses contemplate expansion strategies, the ledger emerges as a pivotal tool, playing a multifaceted role in navigating the complexities of financial management and decision-making. Let’s explore how the ledger contributes to the process of business expansion.

1. Assessing Financial Health:

• Financial Snapshot:The ledger provides a comprehensive snapshot of a business’s financial health.
• Expansion Readiness:Evaluating assets, liabilities, and equity helps determine if the business is financially prepared for expansion.

2. Strategic Decision-Making:

• Data-Driven Insights:Ledger data facilitates informed decision-making regarding expansion strategies.
• Risk Mitigation:Understanding financial trends and patterns aids in identifying potential risks and opportunities associated with expansion.

3. Budgeting and Planning:

• Resource Allocation:The ledger assists in allocating resources effectively for expansion projects.
• Financial Planning:Accurate ledger entries are crucial for creating realistic budgets and financial projections.

4. Identifying Funding Needs:

• Capital Assessment:Ledger analysis helps assess the capital required for expansion initiatives.
• Financing Options:Understanding financial needs assists in exploring financing options, such as loans, investments, or partnerships.

5. Attracting Investors:

• Transparency:Investors seek transparent financial records, and a well-maintained ledger contributes to transparent financial reporting.
• Building Trust:A reliable ledger builds trust with potential investors, showcasing the organization’s commitment to financial accuracy.

6. Financial Reporting for Stakeholders:

• Communication Tool:Ledger-derived financial reports communicate the business’s financial status to stakeholders.
• Building Confidence:Transparent reporting instills confidence in stakeholders, which is crucial for garnering support during expansion efforts.

7. Monitoring Profitability:

• Performance Metrics:Ledger entries track revenue, expenses, and profits.
• Profitability Analysis:Analyzing profitability trends aids in assessing the sustainability of expansion plans.

8. Due Diligence for Expansion:

• Audit Trail:The ledger serves as an audit trail, facilitating due diligence processes for expansion.
• Legal and Regulatory Compliance:Accurate ledger records ensure compliance with legal and regulatory requirements, minimizing risks during expansion.

9. Assessing Return on Investment (ROI):

• Financial Performance Evaluation:Ledger data aids in evaluating the financial performance of past investments.
• ROI Analysis:Assessing ROI provides insights into the effectiveness of previous expansion initiatives, guiding future decisions.

Challenges in Ledger Management

While ledgers are the backbone of financial record-keeping, businesses and individuals often need help managing and maintaining these critical documents. Let’s delve into the common hurdles faced in ledger management:

1. Technological Transition:

• Challenge:Moving from manual to digital ledger systems.
• Impact:Resistance to change, potential data migration issues, and a learning curve for new technologies.

2. Data Security Concerns:

• Challenge:Ensuring the security of digital ledger data.
• Impact:Vulnerability to cyber threats, unauthorized access, and potential data breaches.

3. Integration with Other Systems:

• Challenge:Seamless integration of ledger systems with other business software.
• Impact:Disruptions in workflow, data inconsistencies, and challenges in real-time information sharing.

4. Error-Prone Manual Entries:

• Challenge:Relying on manual data entry.
• Impact:Increased likelihood of errors, leading to inaccuracies in financial records.

5. Consistency in Recording:

• Challenge:Maintaining consistent recording practices.
• Impact:Inconsistent entries can result in discrepancies, making it challenging to trace financial transactions accurately.

6. Adherence to Accounting Standards:

• Challenge:Ensuring compliance with evolving accounting standards.
• Impact:Non-compliance may lead to inaccuracies, legal issues, and challenges during audits.

7. Complexity in Transaction Handling:

• Challenge:Handling a high volume of diverse transactions.
• Impact:Increased complexity, potential for misclassification, and difficulty maintaining a clear audit trail.

8. Lack of Automation:

• Challenge:Need for more automation in ledger processes.
• Impact:Increased manual workload, slower data processing, and heightened risk of errors.

9. Training and Skill Gaps:

• Challenge:Lack of training and skills among ledger managers.
• Impact:Reduced efficiency, potential for misinterpretation of financial data, and increased likelihood of errors.

Conclusion

In conclusion, the ledger’s role in finance is multifaceted, evolving with technological advancements. Its significance in decision-making, financial reporting, and business expansion cannot be overstated. Accurate ledger-keeping remains a cornerstone for navigating the complex economic landscape.

The RBI has issued a final circular making card (CC/DC) tokenization mandatory from January 1, 2022. When buying a product online, we are often forced to store our credit or debit card details on the ecommerce platform. To ensure safety of this- RBI issued the guidelines for tokenisation.

What is Card Tokenization?

Card tokenization is a process of substituting sensitive customer data (such as card number, CVV, etc.) with an algorithmically generated token (encrypted) by a token service provider, which could be the card issuer or payment networks. The token flows through the payment system in a secured way without disclosing the customer details or allowing the payment intermediaries (merchants, payment aggregators) to store customer data. This is mainly to ensure customer data safety/security and curb rising instances of fraud/hacks. Any previously stored data (card-on-file) by merchants/payment gateways will have to be erased.

Here’s what happens when a customer uses his card and transacts on a tokenisation-based authentication server:

• A credit/debit card is used at a POS machine or on an e-commerce market place
• The credit card number is transferred to the tokenisation system
• The tokenisation system generates 16 random characters, also called as ‘token’, to replace the original credit card number
• The tokenisation system returns the newly generated 16 digit random characters to the e-commerce site to replace the customer’s credit card number in the system.

For instance, card number (example): 5931 9212 3933 3391, will be replaced to token number: 4321 2365 4545 2111.

Types of Tokenization

Card-on-File Tokenization or PCI Tokenization-

With this kind of Tokenization, the card number or UPI handle can be saved when you opt in during your payment online for recurring payments. E.g. your favorite marketplaces/OTT subscriptions where you do not enter your payment credentials every time. With this, you can carry out card-not-presenttransactions. Such tokenization can be carried out by the merchant, payment aggregators, payment gateways or networks like Visa and Mastercard to meet the PCI DSS guidelines. All tokenization options may not be present in all regions, example in India there are restrictions imposed by RBI on the entities which can store/tokenize the payment credentials.

Globally popular OTT platforms and marketplaces like Netflix or Amazon could tokenize your sensitive data. In any case, will still be able to see the last 4 digits of your card, butany other party will only see the tokenized digits. While globally merchants or marketplaces use their proprietary token mechanism with gradual adoption towards network based tokenization.

Device Tokenization-

Device tokenization is still at a nascent stage in India yet, waiting for mass adoption. This tokenization is carried out by network providers while the token is saved on the mobile device e.g. Samsung Pay, Apple Pay, Android Pay etc. using NFC or SE technology.

Why Is RBI Enforcing Tokenization?

The central bank said that many entities involved in the card payment transaction chain store actual card details (also known as Card-on-File (CoF)) of its users.

In fact, some merchants force their customers to store card details. Availability of such details with a large number of merchants substantially increases the risk of card data being stolen.

In the recent past, there were incidents where card data stored by some merchants has been compromised/leaked. Any leakage of CoF data can have serious repercussions because many jurisdictions do not require an AFA for card transactions. Stolen card data can also be used to perpetrate frauds within India through social engineering techniques.

How It Helps?

Tokenization as a security enhancement measure is used in many countries, including North America, Asia and selectively in India also. HDFCB, ICICI and SBIC already have the card tokenization system in place for online transactions, while few players have device-based tokenization (SBIC with Samsung) for contactless NFC payments. Instead of creating/using own token generating engine, using the payment networks’ (Visa/Mastercard) engine will be far more cost-efficient and technologically advanced and will have merchant acceptability.

Card tokenization is mainly for online transactions, for which, effective January 1, 2022, customers will have to key-in the card number for the first time (as the stored number will be erased) and complete the transaction via a two-factor authentication. At the back-end, a token would be generated by the merchant with the card issuer/network partner, based on which the transaction will be completed. Next time the customer will see the card payment option with the last four digits of the card and the payment will be completed smoothly as used to happen earlier. However, operational details are still not out, including validity, number of tokens per merchant, refreshment rate, etc.

Impact

Mandatory tokenization of cards and resultant customer inconvenience in the initial phase may deter cardholders from making low-value online card payments and may push them to other payment modes such as UPI and wallets. However, it would alleviate security concerns in online transactions; thus, it will be a long-term positive for the card industry. That said, card companies will have to engage and educate customers while ensuring a smooth tokenization process to protect their share in the payments business.

Introduction

A company’s financial health is a critical aspect of its overall success. The Equity Ratio is a crucial metric in assessing this health. This ratio is more than just a numerical value; it’s a window into a company’s financial structure and decision-making. Let’s delve into the intricacies of the Debt to Equity Ratio, its calculation, and its profound impact on businesses.

Calculating Debt to Equity Ratio

The Equity Ratio is a simple yet powerful metric that compares a company’s total debt to its shareholder equity—expressed as a formula:

Debt to Equity Ratio = Total Debt/Shareholder Equity

Understanding this ratio is crucial as it helps investors and analysts gauge the financial leverage and risk associated with a company.

Significance for Businesses

The significance of the Equity Ratio for businesses cannot be overstated. This financial metric is a crucial indicator of a company’s financial structure and decision-making strategy. Let’s explore why this ratio holds such importance in the business world:

1. Financial Health Assessment:The Debt to Equity Ratio provides a snapshot of a company’s financial health. Businesses can gauge their level of financial leverage by comparing total debt to shareholder equity.
2. Impact on Stability:A lower ratio typically suggests lower financial risk. Companies with a conservative approach to debt may enjoy more stability during economic downturns, which can reassure investors and creditors.
3. Industry Benchmarks:Understanding the Debt to Equity Ratio is not just about the company itself; it’s about where it stands within its industry. Industry benchmarks help businesses assess whether their financial structure aligns with sector norms.
4. Credit Terms and Interest Expenses:A lower ratio often translates to better credit terms and lower interest expenses. This is because creditors view companies with lower financial leverage as less risky borrowers.
5. Strategic Decision-Making:Striking the right balance in the Equity Ratio is essential for strategic decision-making. When determining the optimal ratio, businesses must consider their growth plans, risk tolerance, and overall financial goals.

Advantages of a Low Debt-to-Equity Ratio

Maintaining a low Debt to Equity Ratio offers several advantages for businesses. This financial metric, comparing a company’s total debt to its shareholder equity, has far-reaching implications for financial stability and decision-making. Let’s explore the advantages of having a low Debt to Equity Ratio:

1. Reduced Financial Risk:One of the primary advantages is a lower level of financial risk. Companies with a conservative approach to debt are less exposed to market fluctuations and economic downturns, providing a cushion against unforeseen challenges.
2. Enhanced Stability:A low ratio contributes to more excellent financial stability. During turbulent economic times, companies with less debt face fewer challenges in meeting their financial obligations, instilling confidence in investors and creditors.
3. Favorable Credit Terms:Businesses with a low Debt to Equity Ratio often enjoy more favorable credit terms. Lenders perceive these companies as lower-risk borrowers, resulting in lower interest rates and better loan conditions.
4. Investor Confidence:Investors generally favor companies with lower financial leverage due to the perceived stability and reduced risk. A low Debt to Equity Ratio can attract long-term investors who prioritize steady growth and consistent returns.
5. Flexibility for Strategic Decisions:Companies with minimal debt have more financial flexibility. This allows them to make strategic decisions without the constraints of heavy debt obligations, fostering adaptability in response to market changes or investment opportunities.
6. Steady Dividend Payments:Lower financial risk associated with a low ratio often translates into consistent dividend payments to shareholders. Companies can allocate profits to dividends rather than servicing high debt levels, providing shareholders with reliable returns.
7. Better Resilience in Economic Downturns:Companies with a low Equity Ratio are better positioned to weather the storm during economic downturns. They are less susceptible to financial distress, ensuring smoother operations even in challenging economic conditions.
8. Improved Corporate Image:A low ratio contributes to a positive corporate image. Stakeholders, including customers and partners, often view financially stable companies more favorably, enhancing the business’s overall reputation.

Drawbacks of a Low Debt-to-Equity Ratio

While a low Debt to Equity Ratio has advantages, it also entails certain drawbacks that businesses must consider. This ratio, comparing a company’s total debt to its shareholder equity, reflects the financial structure and decisions made by the industry. Let’s explore the potential drawbacks of maintaining a low Debt to Equity Ratio:

1. Limited Leverage Opportunities:Companies with a low Debt to Equity Ratio might miss out on leveraging opportunities that could amplify returns. Limited debt financing can restrict the business from undertaking projects that could enhance growth.
2. Potential for Lower Returns:Since a low ratio signifies a conservative approach, the potential for higher returns might be constrained. Businesses may not capitalize on the financial leverage that debt can provide, resulting in a slower rate of return on equity for shareholders.
3. Reduced Financial Flexibility:A low Debt to Equity Ratio may limit financial flexibility. During periods of growth or unforeseen opportunities, businesses with minimal debt might find fewer options for raising capital quickly.
4. Competitive Disadvantage:In industries where competitors leverage debt strategically, companies with a low ratio may face a competitive disadvantage. Rivals with higher leverage might be more agile in pursuing expansion opportunities and gaining a competitive edge.
5. Slower Growth Potential:Restricting the use of debt can lead to slower growth compared to competitors with higher leverage. While this approach minimizes financial risk, it may also hinder the business from capitalizing on favorable market conditions.
6. Dependency on Equity Issuance:Companies with a low Equity Ratio might rely heavily on equity issuance to raise capital. This approach can dilute existing shareholder ownership and may not be as efficient as utilizing a mix of debt and equity.
7. Missed Tax Benefits:Debt interest payments are often tax-deductible, providing businesses with a financial benefit. Companies with a low ratio miss out on these potential tax advantages, which can impact overall cost-effectiveness.
8. Limited Capital for Share Repurchases:Share repurchases can be an effective way to enhance shareholder value. A low debt-to-equity ratio may limit the funds for such initiatives, potentially necessitating more opportunities to boost stock prices.
9. Potential Perception of Risk Aversion:A consistently low ratio might lead investors to perceive the company as risk-averse. While this can attract confident investors, it may discourage those seeking higher-risk, higher-reward opportunities.

Advantages of a High Debt-to-Equity Ratio

Maintaining a high Debt to Equity Ratio comes with its advantages for businesses. This financial metric, comparing a company’s total debt to its shareholder equity, reflects the level of financial leverage. Let’s explore the potential advantages of having a high Debt to Equity Ratio:

1. Increased Financial Leverage:One of the primary advantages of a high Debt-to-equity ratio is increased financial leverage. This means that the business is utilizing debt to finance its operations and investments, potentially leading to higher shareholder returns on equity.
2. Potential for Higher Returns:Companies with a high ratio can leverage debt strategically to amplify returns. Using borrowed funds to finance projects or expansions, businesses may achieve higher profitability, increasing shareholder returns.
3. Amplified Earnings Per Share (EPS):Debt financing can contribute to higher earnings per share (EPS). As the cost of debt is often lower than the return on equity, leverage can result in an amplified EPS, making the company more attractive to investors.
4. More excellent Growth Opportunities:A high Equity Ratio gives businesses the financial flexibility to pursue ambitious growth opportunities. Leveraging debt allows companies to undertake projects that might otherwise be unfeasible with limited equity financing.
5. Enhanced Shareholder Value:By judiciously employing debt, companies can enhance shareholder value. The potential for higher returns and increased profitability can positively impact stock prices, attracting investors seeking growth and higher yields.
6. Tax Deductibility of Interest Payments:Interest payments on debt are often tax-deductible. Companies with a high Equity Ratio can take advantage of this tax benefit, reducing their overall tax liability and improving cost efficiency.
7. Optimized Capital Structure:Maintaining a high ratio allows businesses to optimize their capital structure. Striking the right balance between debt and equity ensures that the cost of capital is minimized, maximizing the company’s overall value.
8. Efficient Use of Resources:Debt financing enables businesses to utilize external funds efficiently. This can be particularly advantageous when limited internal resources allow the company to undertake projects that contribute to long-term growth.
9. Flexibility in Capital Allocation:A high Debt-to-equity ratio provides greater flexibility in capital allocation. Companies can allocate resources strategically, balancing debt and equity to meet short-term obligations while investing in long-term growth initiatives.
10. Potential for Higher Stock Prices:The increased earnings and growth potential associated with a high ratio can lead to higher stock prices. Investors looking for capital appreciation may find companies with a high Debt to Equity Ratio appealing.

Drawbacks of a High Debt-to-Equity Ratio

While a high Debt to Equity Ratio can offer certain advantages, it also carries inherent drawbacks and risks that businesses must carefully consider. This financial metric, comparing a company’s total debt to its shareholder equity, reflects the level of financial leverage. Here are some potential drawbacks of maintaining a high Debt to Equity Ratio:

1. Increased Financial Risk:One of the primary drawbacks is the heightened financial risk. Companies with a high ratio face greater vulnerability, especially during economic downturns or unexpected events, as servicing high debt levels becomes challenging.
2. Higher Interest Expenses:A high Equity Ratio often means higher interest expenses. Companies must allocate a significant portion of their earnings to service debt, potentially impacting overall profitability and reducing funds available for other essential activities.
3. Strain on Cash Flow:Heavy reliance on debt can strain a company’s cash flow. High interest payments may limit the funds available for day-to-day operations, capital expenditures, or strategic investments, leading to potential liquidity challenges.
4. Credit Rating Impact:Maintaining a high ratio can negatively impact a company’s credit rating. Credit rating agencies may view businesses with substantial debt as having higher credit risks, resulting in higher borrowing costs and more stringent lending terms.
5. Potential for Financial Distress:In adverse economic conditions, companies with a high Debt to Equity Ratio may face the risk of financial distress. Difficulty meeting debt obligations can lead to downgraded credit ratings, increased scrutiny from creditors, and, in extreme cases, bankruptcy.
6. Limited Strategic Flexibility:High debt levels can limit a company’s strategic flexibility. Due to the constraints imposed by heavy debt obligations, businesses may need help to adapt to changing market conditions, pursue new opportunities, or withstand unexpected challenges.
7. Negative Impact on Stock Prices:Investors may react negatively to a high Debt-to-equity ratio. Concerns about financial stability and the ability to service debt can lead to declining stock prices, potentially eroding shareholder value and investor confidence.
8. Constraints on Future Borrowing:Maintaining a high ratio can limit a company’s borrowing ability. Lenders may hesitate to extend additional credit, especially if the existing debt burden is perceived as too high.
9. Impact on Dividend Payments:Companies with a high Debt to Equity Ratio may allocate a significant portion of profits to debt servicing, limiting the funds available for dividend payments. This can affect shareholder returns and attractiveness to income-focused investors.
10. Market Perception of Risk:A consistently high ratio may contribute to a perception of elevated risk. This can impact the company’s ability to attract investors and may result in higher costs of equity capital.

Determining an Optimal Debt-to-Equity Ratio

Determining the optimal Equity Ratio is a nuanced process that requires careful consideration of various factors. This financial metric, comparing a company’s total debt to its shareholder equity, plays a crucial role in shaping its economic structure. Here’s a guide on how businesses can determine the optimal Debt to Equity Ratio:

1. Industry Considerations:Optimal ratios vary across industries. Some sectors, such as technology, may tolerate higher leverage, while others, like utilities, might prefer a more conservative approach. Analyzing industry benchmarks helps contextualize what is expected within a specific business environment.
2. Risk Tolerance:Assessing the company’s risk tolerance is critical. Businesses with a higher risk appetite might be comfortable with a higher Debt to Equity Ratio, allowing them to leverage debt for potentially higher returns. Conversely, risk-averse companies may opt for a more conservative approach.
3. Company Life Cycle:A company’s life cycle influences its optimal ratio. Young, growing companies may tolerate higher leverage to fuel expansion, while mature companies with stable cash flows might lean towards lower ratios for stability and consistent returns.
4. Market Conditions:Economic conditions and market dynamics play a pivotal role. During periods of economic growth, companies might leverage debt to capitalize on opportunities, while economic uncertainties may prompt a more conservative stance.
5. Cost of Debt vs. Cost of Equity:Comparing the cost of debt to the cost of equity is crucial. If the price of debt is lower than the expected return on equity, it might be advantageous to leverage debt for higher profitability. However, if the price of debt is high, a lower ratio might be more prudent.
6. Company Objectives and Strategy:Aligning the Equity Ratio with the company’s objectives is essential. If the goal is aggressive expansion, a higher ratio might be suitable. If stability and steady growth are prioritized, a lower percentage may align more with the business strategy.
7. Market Perception:Consider how the market perceives the company’s financial structure. Investors, creditors, and other stakeholders may have expectations based on industry norms. Straying too far from these expectations could impact the company’s access to capital and stock performance.
8. Regulatory Environment:The regulatory environment can influence the optimal ratio. Certain industries or regions may have specific regulations or limitations on the level of debt a company can carry. Adhering to these regulations is crucial for legal compliance.
9. Cash Flow and Liquidity:Assessing the company’s cash flow and liquidity is vital. High debt levels can strain cash flow, impacting the ability to meet short-term obligations. Maintaining a balance that ensures operational flexibility is essential for long-term sustainability.
10. Long-Term Financial Goals:Aligning the Equity Ratio with long-term financial goals is paramount. Whether the aim is to maximize shareholder value, achieve sustainable growth, or ensure financial stability, the chosen ratio should support these overarching objectives.

How Investors View Debt to Equity Ratio

Investors view the Debt to Equity Ratio as a critical indicator of a company’s financial health and risk. A lower ratio is often seen favorably, suggesting stability and lower financial risk. On the other hand, a higher ratio may signal the potential for higher returns but is accompanied by increased risk. Investors use this ratio to assess a company’s ability to meet its financial obligations, make informed decisions based on risk tolerance, and gauge the overall attractiveness of an investment. It is a crucial factor influencing investor confidence, stock prices, and long-term investment decisions.

Impact on Creditworthiness

The Equity Ratio significantly influences a company’s creditworthiness. A lower ratio is generally perceived positively, indicating lower financial risk, often leading to more favorable lending terms. In contrast, a higher ratio may raise concerns among creditors, potentially resulting in higher borrowing costs and stricter lending conditions. Credit rating agencies use this ratio to assess the risk associated with providing loans, and a favorable Equity Ratio can enhance a company’s creditworthiness, making it more attractive to lenders and potentially lowering the cost of borrowing.

Conclusion

In conclusion, the Equity Ratio is a pivotal metric shaping the financial landscape of businesses. Its intricate dance between risk and return underscores the delicate balance companies must strike to ensure sustainable growth and resilience. Whether navigating the fine line between leveraging opportunities for higher returns or adopting a more conservative approach for stability, the optimal Equity Ratio remains a nuanced decision influenced by industry dynamics, risk appetite, and broader economic conditions. Investors scrutinize this ratio for insights into a company’s financial health, while creditors use it to gauge creditworthiness. As businesses traverse the ever-evolving terrain of the market, thoughtful consideration of the Debt to Equity Ratio is paramount, guiding strategic decisions and ultimately defining the trajectory of long-term success.

Factoring involves a strategic financial transaction where a business sells its accounts receivable to a third party, a factor, or a financing company. In return, the enterprise receives immediate cash, accelerating the conversion of its receivables into liquid assets. This process is particularly beneficial for companies facing cash flow challenges or seeking timely funds for operational needs.

Understanding Factoring

• Factoring serves as a dynamic solution in financial transactions, offering a range of advantages to businesses across various sectors. One of its primary benefits is converting credit sales into immediate cash, allowing companies to meet their financial obligations and seize growth opportunities.
• Furthermore, factoring plays a crucial role in risk management. Businesses can mitigate the impact of late payments or debtor non-payment by transferring the responsibility of collecting fees to the factor. This risk mitigation aspect enhances businesses’ financial stability, especially during economic uncertainties.

How Factoring Works

• The factoring process involves a tripartite relationship between the client (the business selling receivables), the factor, and the debtor (the customer owing payment). The client initiates the transaction by selling its accounts receivable to the element at a discounted rate. In return, the factor assumes the responsibility of collecting payment from the debtor.
• This streamlined approach not only injects immediate liquidity into the business but also offloads the burden of credit management. It allows businesses to focus on core operations while the factor efficiently manages the collection process.

Types of Factoring

Factoring, a financial practice that involves selling accounts receivable to third party for immediate cash, comes in various forms. Each type caters to different business needs and preferences. This section will explore the three types of factoring: recourse factoring, non-recourse factoring, and spot factoring.

Recourse Factoring: Shared Responsibility

• Recourse factoring is a common form where the client, or the business selling its receivables, retains some responsibility for the transaction. In this arrangement, if the debtor fails to pay, the client must repurchase the receivable from the factor. While this type offers flexibility, it comes with a degree of risk for the client.
• In recourse factoring, businesses often find a balance between immediate cash flow and the potential risk associated with the debtor’s payment default. The decision to opt for recourse factoring hinges on the client’s risk tolerance and the reliability of their customers.

Non-Recourse Factoring: Transferring Risk to the Factor

• Non-recourse factoring shifts the risk from the client to the factor. In this scenario, once the factor purchases the receivable, they assume full responsibility for collecting payment. If the debtor fails to pay, the client is not obligated to repurchase the receivable. This type provides a layer of security for the client, mitigating credit risk.
• Non-recourse factoring is often favored by businesses seeking to offload the credit risk associated with their accounts receivable. However, factors typically charge higher fees for this service to compensate for the assumed risk.

Spot Factoring: On-Demand Financial Support

• Spot factoring, also known as single invoice factoring, introduces a high level of flexibility into the factoring landscape. Unlike the other types, spot factoring allows businesses to select individual invoices for factoring rather than committing to an ongoing relationship. This “pay-as-you-go” approach is beautiful for companies with sporadic cash flow needs.
• Spot factoring is advantageous for companies that only want to factor in some of their invoices or those with seasonal variations in sales. It provides the freedom to choose when and which invoices to factor in, offering tailored financial support based on immediate requirements.

Benefits of Factoring

As a financial practice, factoring extends many benefits to businesses across various industries. In this section, we will delve into the intricacies of these advantages, shedding light on how factoring can be a transformative tool for companies seeking enhanced cash flow, risk mitigation, and operational flexibility.

Improved Cash Flow

• One of primary benefits of factoring is immediate improvement in cash flow. By selling accounts receivable to a factor, businesses receive a prompt cash injection, enabling them to meet primary financial obligations.
• This influx of liquidity is especially valuable for companies facing delayed payments from clients or those navigating through periods of increased operational expenses.The accelerated cash flow empowers businesses to seize opportunities that require swift financial action, fostering agility in responding to market dynamics and customer demands.

Risk Mitigation

• Factoring serves as an effective risk management tool. In recourse factoring, where the client shares responsibility for the transaction, the factor often conducts credit checks on the client’s customers.
• This proactive approach helps identify potential payment issues, allowing businesses to make informed decisions about extending credit. In non-recourse factoring, the factor assumes the credit risk, providing the client with an additional layer of security.
• By transferring the responsibility of collections to the factor, businesses can navigate the uncertainties associated with late payments or defaults, safeguarding their financial stability.

Access to Immediate Funds

• Unlike traditional financing methods that involve lengthy approval processes, factoring provides businesses with immediate access to funds. This speed is particularly advantageous when quick financial decisions are crucial, such as taking advantage of supplier discounts, addressing unexpected expenses, or seizing time-sensitive business opportunities.
• The prompt availability of funds through factoring enhances a company’s ability to navigate dynamic business environments and capitalize on growth prospects.

Flexibility in Financing

• Factoring offers a high degree of flexibility in financing. Unlike fixed-term loans, factoring arrangements are adaptable to the unique needs of businesses. Spot factoring, for instance, allows companies to choose specific invoices for immediate cash, providing on-demand financial support without committing to long-term contracts.
• This flexibility is especially beneficial for businesses with fluctuating cash flow needs or those operating in industries with seasonal variations in sales.

Enhanced Working Capital Management

• Efficient working capital management is a cornerstone of financial success for any business. Factoring allows businesses to convert receivables into immediate cash, optimizing working capital.
• This, in turn, enables companies to meet short-term financial obligations, invest in growth initiatives, and maintain healthy financial position.Managing working capital effectively positions businesses for sustained growth and resilience in economic challenges.

Strategic Financial Tool

• Beyond the immediate financial advantages, factoring can be a strategic financial tool for businesses. It allows companies to align their financial strategies with specific business objectives: expansion, launching new products, or navigating through challenging economic conditions.
• By incorporating factoring into their financial toolkit, businesses can create a robust foundation for long-term prosperity and sustainability.

Factoring vs. Traditional Financing

• In the realm of business financing, companies often face the choice between factoring and traditional financing methods, each with its own set of advantages and drawbacks. This section aims to elucidate the critical distinctions between factoring and conventional financing, providing insights into when each option may benefit businesses seeking financial support.

Contrasting Approaches

Factoring: Speed and Flexibility

• Speed:Factoring stands out for its rapid turnaround. The approval process is typically quicker than traditional financing, allowing businesses to access funds promptly. This speed is invaluable for companies facing urgent financial needs or those seizing time-sensitive opportunities.
• Flexibility:Factoring offers a high level of flexibility. Businesses can factor in specific invoices through spot factoring or establish ongoing relationships for continuous support. This adaptability makes factoring an attractive option for companies with varying cash flow requirements.

Traditional Financing: Stability and Rigidity

• Stability:Traditional financing methods, such as bank loans, provide stability. Once approved, businesses receive a predetermined amount of funding. This stability benefits long-term projects or when a fixed capital amount is required.
• Rigidity:However, traditional financing can be rigid. The approval process is often lengthy, involving detailed credit assessments and collateral requirements. This rigidity may pose challenges for businesses needing quick and flexible financial solutions.

Speed of Approval

• Factoring: Factoring excels in terms of speed. The straightforward nature of the factoring process allows businesses to receive funds quickly, sometimes within days. This rapid access to cash benefits businesses with immediate financial needs or those seeking to capitalize on fleeting opportunities.
• Traditional Financing: Traditional financing methods like bank loans typically involve a prolonged approval process. The detailed scrutiny of financial history, creditworthiness, and collateral assessment contributes to delays. This slower pace may hinder businesses requiring swift economic intervention.

Collateral Requirements

• Factoring: Factoring is generally less reliant on collateral. The primary consideration for factors is the creditworthiness of the client’s customers. This makes factoring accessible to businesses with limited tangible assets.
• Traditional Financing: Traditional financing often requires substantial collateral, such as real estate or equipment. This collateral serves as security for lender, mitigating their risk. Businesses with significant assets may find it easier to meet these collateral requirements.

Repayment Structure

• Factoring: Factoring involves selling accounts receivable, making it a form of debt-free financing. The factor assumes the responsibility of collecting payments from customers. The client is not burdened with fixed repayment schedules.
• Traditional Financing: Traditional financing, especially loans, entails structured repayment plans with fixed interest rates. Businesses are obligated to repay the borrowed amount within specified timeframes. This fixed structure provides clarity but may restrict financial flexibility.

Common Misconceptions About Factoring

As a financial practice, factoring has proven to be a valuable tool for businesses seeking improved cash flow and risk mitigation. However, like any financial strategy, factoring is not immune to misconceptions. In this section, we aim to debunk common myths surrounding factoring, providing clarity to businesses considering this dynamic financing option.

Myth 1: Factoring Hurts a Company’s Reputation

Reality:

Contrary to the misconception that factoring damages a company’s reputation, it often has the opposite effect. Factoring is a widely accepted and legitimate financial practice. Many successful businesses, including well-established ones, utilize factoring to manage cash flow efficiently. It is considered a strategic move to ensure financial stability and seize growth opportunities.

Myth 2: Factoring is Only for Struggling Businesses

Reality:

Factoring is not exclusive to struggling businesses. It is a common practice among financially healthy companies looking to optimize their cash flow. Businesses across various industries, including those experiencing rapid growth, use factoring as a proactive financial strategy. It allows them to maintain a healthy balance between accounts receivable and cash.

Myth 3: Factoring is Expensive

Reality:

While factoring involves fees, it’s crucial to consider the overall financial picture. The benefits, such as improved cash flow, risk mitigation, and immediate access to funds, often outweigh the costs. Moreover, the speed of factoring can result in cost savings by enabling businesses to take advantage of discounts from suppliers or capitalize on time-sensitive opportunities.

Myth 4: Factoring Companies Take Control of Business Operations

Reality:

Factoring companies focus on the financial aspect of a business—specifically, managing receivables and collecting payments. They do not interfere with day-to-day business operations or decision-making. Clients retain control over their business strategies, customer relationships, and operational decisions.

Myth 5: Factoring is Only for Large Corporations

Reality:

Factoring is a versatile financial solution suitable for businesses of all sizes. While large corporations may use factoring to manage substantial transaction volumes, small and medium-sized enterprises (SMEs) can also benefit. Factoring can be tailored to businesses’ specific needs and scale, providing financial support regardless of size.

Myth 6: Factoring is a Loan

Reality:

Factoring differs significantly from a traditional loan. It involves the sale of accounts receivable, not the borrowing of money. Factoring is a debt-free financing option where businesses sell their invoices to a factor in exchange for immediate cash. This fundamental distinction avoids the burden of repayment schedules and loan interest.

Myth 7: Factoring is a Sign of Desperation

Reality:

Factoring is a strategic financial decision rather than a sign of desperation. Businesses use factoring to optimize their cash flow, manage credit risk, and navigate various economic conditions. It’s a proactive choice that aligns with the dynamic nature of modern business finance.

Challenges in Factoring

While factoring offers significant business advantages, it has its challenges. This section will explore the hurdles and obstacles businesses may encounter when engaging in factoring, providing insights into how these challenges can be navigated to ensure a successful and effective financial strategy.

1. Customer Perception

Challenge:

One challenge in factoring is managing customer perception. Some businesses worry that their customers may view factoring as a sign of financial instability or operational issues. This misconception can create resistance or concerns among clients.

Solution:

Clear communication is critical. Businesses should transparently communicate with customers about their decision to use factoring, emphasizing its strategic nature and the positive impact on service levels. Open dialogue can help dispel any misunderstandings and maintain strong client relationships.

2. Cost Considerations

Challenge:

The fees associated with factoring can be a challenge. Some businesses may find the costs relatively high compared to traditional financing methods.

Solution:

Businesses should conduct a thorough cost-benefit analysis. While factoring involves fees, the benefits, such as improved cash flow, risk mitigation, and immediate access to funds, should be weighed against the costs. Additionally, negotiating favorable terms with the factoring company can help mitigate financial concerns.

3. Selective Customer Approval

Challenge:

Factoring companies may scrutinize and approve specific customers for the process. This selectivity can limit a business’s ability to factor in client invoices.

Solution:

Diversifying clientele is a strategic approach. Businesses can work towards expanding their customer base, ensuring a broader pool of eligible invoices for factoring. This diversification increases flexibility and reduces dependence on a small set of clients.

4. Integration with Business Processes

Challenge:

Integrating factoring into existing business processes can pose a challenge. The shift from managing receivables in-house to involving a third party requires seamless integration to avoid disruptions.

Solution:

Adopting technology solutions can streamline integration. Businesses can leverage financial software and systems that sync seamlessly with the factoring process. This minimizes disruptions, enhances efficiency, and ensures a smooth transition.

5. Confidentiality Concerns

Challenge:

Businesses may have concerns about the confidentiality of their financial transactions. The involvement of a third party in collecting payments may raise worries about the privacy of customer relationships and financial arrangements.

Solution:

Choosing a reputable and trustworthy factoring company is crucial. Businesses should thoroughly vet potential partners, ensuring a commitment to confidentiality. Clear communication with customers, assuring them of data protection measures, can also address confidentiality concerns.

6. Regulatory Compliance

Challenge:

Navigating regulatory frameworks and compliance requirements in the factoring industry can be challenging. Different regions may have varying regulations that businesses must adhere to.

Solution:

Engaging legal and financial experts is essential. Businesses should stay informed about the regulatory landscape and work closely with professionals in factoring regulations. This proactive approach ensures compliance and minimizes the risk of legal issues.

Conclusion

In conclusion, factoring emerges as a dynamic and versatile financial tool, offering businesses a strategic approach to managing cash flow, mitigating risk, and fostering growth. Despite the challenges and misconceptions surrounding factoring, its benefits, such as improved liquidity, flexibility, and efficient risk management, position it as a valuable asset in the financial toolkit of businesses. By dispelling myths, addressing challenges proactively, and making informed decisions, companies can harness the power of factoring to optimize their financial strategies. Whether navigating through the intricacies of customer perception, managing costs, or ensuring regulatory compliance, businesses can leverage factoring to achieve sustained economic success in a landscape where adaptability is paramount; factoring stands as a resilient and transformative solution for companies aiming to thrive in the ever-evolving world of finance.

Anupam Mittal-Founder of Shadi.com has made a remarkable performance in the Online Matchmaking industry. This platform has facilitated countless successful matches for family building. Originally matrimonial sites started for NRI’s. But during the 90’s due to lack of internet facilities in India the business did not boom as expected. But after the pandemic these websites have gained a 30% increase in registrations. Mr. Anupam Mittal born in a middle class family in Mumbai had strong values and principles emphasizing the importance of education and hard work. Let us understand his journey in detail.

Anupam Mittal Biography

Early Life and Education of Anupam Mittal

• Anupam Mittal was born on December 23^rd 1971 in Mumbai. He was raised in a Marwadi family that valued education and entrepreneurship. His curiosity and ambition laid the foundation of his success.
• After completing his education at Boston University in US where he earned an MBA with a focus on Operations and Strategic Management, Mr. Anupam Mittal came to India to make a change in the internet sector. In 1996 Mittal founded People Group which later launched Shadi.com.
• He infused capital in to over 250 companies, nurturing startups and fostering innovation across the tech ecosystem. His role as a judge on Shark Tank India further cemented his status as key figure in entrepreneurship.

Anupam Mittal Net Worth and Investments

• Anupam Mittal’s net worth estimated at around worth Rs. 185 crore by 2024. His income streams are diversified spanning various business and investment returns. His wealth has grown through successful business ventures, wise investments and television appearances.
• Anupam Mittal is one of the most respected judges on the show, admired for his wisdom, humility and astute opinions.

People Group

• Anupam Mittal’s biography is closely intertwined with his role as the founder and CEO of People Group, a conglomerate that has made a significant impact in various industries. People Group is a Media & Entertainment company based in Mumbai.
• Since 1996, the company has brought new awareness and integrations of the internet in the Indian subcontinent. It offers Infocom and telemarketing services to clients from all over the world. People Group is the parent company of Shaadi.com, Makaan.com, and Mauj Mobile.

Shaadi.com

• Shaadi.com, previouslySagaai.com,was the first online matrimonial website in India. The website allows people to search for compatible partners within their religion and community. Shaadi.com changed the Indian matchmaking business, which was exclusive to classified ads in newspapers.
• Shaadi.com has been used by nearly 3.5 crore Indians and has facilitated nearly 50 lakh weddings. Anupam Mittal’s biography is intricately linked with the unparalleled success of Shaadi.com, which is now a leading matrimonial platform in India. Shaadi.com made a revenue of$292.10 million in FY 2022 – 2023.

Mauj Mobile

• In Anupam Mittal’s biography, the success story of Mauj Mobile shines as another significant achievement in his entrepreneurial journey.Mauj Mobileis India’s first gaming platform and mobile media company. It deals with two educational and entertainment content. The company owns and operates Mobango, an app store with thousands of videos, apps, and games.

Anupam Mittal Family

• Anupam Mittal was born in a Marwari business oriented Hindu family. His father Gopal Krishna Mittal is a successful businessman in handloom business and his mother Bhagwati Devi Mittal helps out in the family business with her husband.
• However the handloom business is now taken over by Anupam Mittal. He got married to his long term girlfriend in the year 2013. With time, Anupam Mittal’s profession and personal life flourished. He married Aanchal Kumar –a model and actress. Aanchal Kumar is a model turned actress who has appeared in films such as Bluff master and Fashion in cameo roles. She also made an appearance in the fourth season of Big Boss.
• She has received several modelling honors. Their daughter Alyssa Mittal turned 6 years old. Anupam Mittal owns luxurious cards like Audi, Mercedes, Lamborghini and many more. Mittal was raised in a business oriented family where his was already into an handloom business so Mittal from his Childhood had seen the struggle of running business which made him motivated to start his own business once his studies got completed he started investing in various businesses with his sharp mind and intellect he started earning profits and the result is now that he is one of biggest Angel Investors.

Anupam Mittal Story of Shaadi.com

• Anupam Mittal Success story started with his Shaadi.com. This website has brought together many like-minded people. It is one of the most prominent matrimonial sites with a reputation for bringing together the most compatible couples.
• Millions of individuals use this site to find their best match. The site has 3.5 million weddings record from all across the world. It has now become the most popular matrimonial site. Shaadi.com was started by Anupam Mittal in 1996 with a single goal in mind.
• It was started to give better matching experience by increasing the number of possibilities to meet possible life mates. Anupam returned to India after his studies. He along with his father used to conduct web development work for other firms because he didn’t have much else to do. At the same time he ran across one of those old school match makers who will go to any length to get married.
• To protect his reputation he attempted to place Anupam with some of his customers. A thought came to Anupam mind when the matchmaker was at the peak of his push. Now, while he was attempting to get rid of the matchmaker, it occurred to Anupam that what if there was a portal that could operate as a virtual matchmaker for weddings, what if all of the information such guys possessed was posted on the World Wide Web and made available to anyone looking for a bride or groom? This would not only eliminate all inefficiencies and geographical limits but would also greatly simplify the procedure.
• As a result, Anupam published the initial version of Sagaai.com in 1997 without much thought. At the time, this was more of an experiment than a steady enterprise. Even though he was active in the business as well, he only did so on weekends or so, and his primary attention remained on his employment. He invested all of the money he had or had saved for the web module’s development simply because it was the thing that brought the money in.

Anupam Mittal Personal and Professional Achievements

• Mittal’s professional network is extensive, with connections across various industries and sectors. His recognitions include listings on prestigious lists like Business Week’s ’50 Most Powerful People in India’ and multiple accolades for his contributions to entrepreneurship and technology. Beyond the numbers and titles, Mittal’s story is one of resilience and vision. His philanthropic efforts and investments in the start up ecosystem demonstrate a commitment to giving back and fostering a new generation of entrepreneurs.

Anupam Mittal – Investments Besides People Group

• Anupam Mittal has invested in more than 250 startups in the last few years. He was one of earliest investors in Indian ridesharing company OLA. Some other significant investments are Rapido and Big Basket. Anupam was one of the thoughtful investors who came on the top rated startup reality show Shark Tank India Season1 and Season 2. He invested Rs 5.40 crores in Season 1 and Rs 8.05 crores in season 2.

Some of his investments are

Conclusion

• Anupam is an inspiration to many of the current aspiring Indian business starters. He has generated great wealth from his Matrimonial website named, Shaadi.com. Anupam Mittal success story and fame through the currently popular TV show Shark Tank has made him a notable face in current India. Manyrising entrepreneurslook up to these Sharks from the Sony TV show.

The world of international trade and commerce is intricately woven with terms and concepts that dictate goods flow and value exchange between parties. One such fundamental term is “Free On Board” or FOB. In essence, FOB represents a crucial delineation point in a transaction where the seller’s responsibility ends, and the buyer assumes ownership and risk of the shipped goods. The complexity and nuances of FOB go beyond its literal meaning, extending into the realms of finance, logistics, and legal frameworks.

This article aims to unravel the layers of Free On Board, exploring its significance in international trade, its impact on financial considerations, and its broader implications for businesses engaged in the global marketplace. As we embark on this exploration, we will delve into various aspects of FOB, from its different variations to its role in supply chain management. We will provide a comprehensive understanding of why this term is indispensable in the lexicon of international trade and finance.

Understanding Free On Board (FOB)

• At its core, “Free On Board” (FOB) is a critical shipping term with significant implications for sellers and buyers engaged in international trade. This term defines the specific point in a transaction where the seller fulfills their obligations regarding the goods, and the buyer assumes ownership and the associated risks. FOB is a contractual agreement, marking the transfer of responsibility for the goods from the seller to the buyer.
• This transfer point is meticulously determined and documented to ensure clarity and fairness in trade agreements. The concept of FOB is not limited to a singular definition but encompasses various scenarios and intricacies. For instance, understanding the difference between FOB Shipping Point and FOB Destination is crucial, as it determines precisely when the buyer assumes control – whether at the point of shipment departure or upon the goods’ arrival at the designated destination.
• As we explore the depths of FOB, it becomes evident that this shipping term is not merely a logistical formality but a pivotal factor shaping the dynamics of international transactions and influencing decisions in finance, risk management, and legal considerations.

FOB and International Trade

• In international trade, the concept of “Free On Board” (FOB) holds paramount importance, acting as a linchpin in defining the rights, responsibilities, and risks of parties involved in cross-border transactions. FOB is a critical determinant in specifying when the seller fulfills their obligations and when the buyer assumes ownership and the associated liabilities for the shipped goods.
• This delineation becomes especially crucial when considering the complex logistics of global commerce, where goods traverse various borders and jurisdictions. FOB terms provide a standardized framework for international trade agreements, offering clarity on the transfer of control and risk. This, in turn, aids in creating transparent and mutually beneficial relationships between buyers and sellers across different geographical locations.
• Whether the goods are transported by sea, air, or land, applying FOB terms ensures a standardized understanding of the transaction’s dynamics, contributing to the efficiency and reliability of international trade.

FOB Shipping Point vs. FOB Destination

• The distinction between FOB Shipping Point and FOB Destination is pivotal in understanding the dynamics of international trade. FOB Shipping Point implies that the buyer assumes responsibility for the goods when they leave the seller’s facility.
• In contrast, FOB Destination indicates that the buyer becomes responsible only when the goods arrive at the designated destination. The choice between these terms has significant implications for both parties.
• FOB Shipping Point places the onus on the buyer early in the shipping process, making them responsible for potential risks and costs from the point of shipment. On the other hand, FOB Destination allows the buyer to defer these responsibilities until the goods reach the agreed-upon destination, providing a different risk and cost distribution model.
• The decision between FOB Shipping Point and FOB Destination hinges on factors such as transportation logistics, risk tolerance, and strategic business considerations, showcasing the flexibility inherent in these terms to accommodate various scenarios in international trade.

Risks and Responsibilities in FOB Transactions

• Navigating the intricate landscape of Free On Board (FOB) transactions involves carefully considering the risks and responsibilities allocated between the buyer and the seller. One of the primary aspects of FOB is its role in defining the moment when these responsibilities shift.
• The seller must fulfill their responsibilities, ensuring the goods are appropriately packaged and ready for transportation at the agreed-upon location. However, as the goods move, the risk associated with potential damages, losses, or delays undergoes a crucial transfer. For FOB Shipping Point, this occurs when the goods leave the seller’s facility, placing the onus on the buyer for any subsequent challenges during transit.
• Conversely, with FOB Destination, the shift happens upon the goods’ arrival at the specified destination. Clarity in outlining these responsibilities within the transaction agreement is paramount, mitigating uncertainties and disputes. A comprehensive understanding of these risks and responsibilities is fundamental to fostering transparent and fair international trade practices.

Importance of FOB in Finance

• The significance of “Free On Board” (FOB) extends beyond its role in logistics; it plays a crucial part in shaping financial considerations within international trade. FOB terms directly impact how costs are allocated and managed throughout shipping. Understanding these financial implications is paramount for businesses engaged in global commerce.
• FOB terms influence various aspects of financial planning, budgeting, and pricing strategies. By defining the point at which ownership and risk transfer between the seller and the buyer, FOB becomes a key determinant in calculating the final cost of goods.
• This knowledge is instrumental in creating accurate financial forecasts and facilitating informed decision-making. Furthermore, FOB terms can influence payment terms and credit arrangements, adding complexity to the financial aspects of international transactions. Businesses that grasp the importance of FOB in the economic realm can strategically leverage this knowledge to enhance their cost-effectiveness, risk management, and overall financial stability in the global marketplace.

FOB in the Context of Incoterms

• Within the Incoterms, FOB delineates the specific point in the shipping process where this transfer occurs. Whether it is FOB Shipping Point, indicating the transfer at the seller’s facility upon shipment, or FOB Destination, signifying the transfer upon arrival at the specified destination, these terms streamline international trade by establishing a common language and understanding.
• The use of FOB within the Incoterms framework ensures consistency and clarity in global trade agreements, facilitating smoother transactions and minimizing misunderstandings between parties from different regions with diverse business practices. As businesses navigate the complexities of international commerce, adherence to Incoterms, including FOB, becomes integral for creating transparent and standardized agreements that meet the intricacies of cross-border transactions.

Advantages of Using FOB Terms

Utilizing “Free On Board” (FOB) terms in international trade offers several distinct advantages for sellers and buyers. Here are detailed points highlighting the benefits of using FOB terms:

• Cost Efficiency:

FOB terms clarify when the responsibility and risk are transferred from the seller to the buyer. This clarity allows for better cost management, enabling businesses to plan and allocate resources more efficiently.

• Risk Management:

FOB terms explicitly define the point at which the buyer assumes responsibility for the goods. This clarity helps in mitigating risks associated with transportation, loss, or damage during the shipping process.

• Flexibility in Shipping Options:

FOB terms accommodate various modes of transportation, including sea, air, and land. This flexibility allows businesses to choose the most cost-effective and efficient shipping methods based on their needs.

• Streamlined Logistics:

FOB terms provide a more streamlined logistics process. They know precisely when the responsibility transfers help coordinate the movement of goods, reduce delays, and enhance overall supply chain efficiency.

• Clear Ownership Transfer:

FOB terms provide a transparent framework for the transfer of ownership. This clarity is crucial for both parties, ensuring a smooth transition and avoiding disputes related to ownership during the shipping process.

• Improved Buyer-Seller Relationships:

The transparency and predictability offered by FOB terms foster trust and understanding between buyers and sellers. Clear terms contribute to positive business relationships, as both parties comprehensively understand their respective roles and responsibilities.

• Simplified Documentation:

FOB terms simplify the documentation process associated with international trade. The point of transfer is clearly defined, reducing the complexity of paperwork and facilitating smoother customs clearance.

• Enhanced Cost Control:

With a well-defined transfer point, businesses can better control and budget for various costs associated with international shipping, including transportation, insurance, and handling charges.

• Consistency in Trade Practices:

FOB terms are widely recognized and accepted in international trade. Using these terms ensures consistency in trade practices, making it easier for businesses to engage with partners across different regions and cultures.

• Reduced Disputes:

The clarity provided by FOB terms helps reduce disputes between buyers and sellers. Both parties can refer to the agreed-upon terms in case of discrepancies or disagreements, minimizing the potential for legal conflicts.

Disadvantages and Challenges of FOB

While “Free On Board” (FOB) terms offer several advantages in international trade, they also come with certain disadvantages and challenges that businesses must consider. Here are detailed points highlighting the drawbacks of using FOB terms:

1. Limited Control Over Shipping:With FOB terms, the buyer assumes control and responsibility once the goods leave the seller’s facility (in the case of FOB Shipping Point). This limited control can be a disadvantage for sellers, mainly if issues such as delays or damages occur during transit.
2. Complexity in Coordination:Coordinating the logistics of international shipments can be challenging under FOB terms. Sellers may need help synchronizing the movement of goods with various carriers and ensuring timely delivery to meet buyer expectations.
3. Potential for Disputes:Determining the exact transfer point can lead to disputes, especially if there are discrepancies in the interpretation of FOB terms. Disputes may arise regarding the responsibility for damages, the condition of goods upon arrival, or the choice of transportation methods.
4. Dependency on Reliable Carriers:FOB terms rely on reliable carriers for the safe and timely transportation of goods. If the chosen carrier fails to meet expectations, it can lead to disruptions, delays, and potential financial losses for both parties.
5. Higher Insurance Costs for Buyers:Under FOB terms, the buyer is responsible for insurance once the goods leave the seller’s location. This can result in higher insurance costs for buyers, mainly if they import high-value or fragile goods.
6. Logistical Complexities:The logistics of international trade can be complex, involving multiple modes of transportation and diverse routes. Managing these complexities under FOB terms requires careful planning and coordination, which may pose challenges for some businesses.
7. Potential for Damages During Loading:In FOB Shipping Point scenarios, where the transfer of responsibility occurs at the seller’s facility, the risk of damages during the loading process becomes a concern. Sellers need to ensure proper packaging and handling to minimize the risk of damages before the goods leave their premises.
8. Currency Fluctuations:FOB terms may expose buyers to fluctuations, especially if the transaction involves multiple currencies. Changes in exchange rates can impact the overall cost of goods and affect budgeting for the buyer.
9. Varied Legal Interpretations:Legal interpretations of FOB terms may vary across jurisdictions, leading to potential misunderstandings or disputes. This requires parties to carefully draft and review contracts to ensure clarity and alignment with applicable laws.
10. Limited Risk Mitigation for Sellers:Sellers may need help to mitigate risks effectively under FOB terms, as their control diminishes once the goods are in transit. This lack of control can be a disadvantage, mainly when unexpected events occur during transportation.

FOB and Supply Chain Management

• “Free On Board” (FOB) plays a crucial role in the intricate web of supply chain management, impacting the efficiency and dynamics of the entire process. FOB terms determine the precise moment when ownership and responsibility for goods shift from the seller to the buyer, significantly influencing inventory control, transportation logistics, and overall operational efficiency. In supply chain management, applying FOB terms allows businesses to plan and optimize their logistics processes strategically.
• For instance, FOB terms help determine when goods should be ready for shipment, allowing for effective carrier coordination and minimizing delays. The transfer of responsibility also aligns with inventory management strategies, enabling businesses to maintain optimal stock levels based on a clear understanding of when goods will be in transit.
• This synchronization contributes to streamlined supply chain operations, reducing bottlenecks and enhancing responsiveness. Furthermore, FOB terms influence the choice of transportation methods and carriers, impacting cost considerations and delivery timelines. Businesses that integrate FOB effectively into their supply chain management strategies can achieve greater transparency, efficiency, and cost-effectiveness in moving goods across the global marketplace.

FOB and Cost Considerations

• Applying “Free On Board” (FOB) terms has significant implications for cost considerations in international trade. FOB terms establish a precise point in the shipping process where the transfer of responsibility occurs, influencing various cost elements throughout the transaction.
• One of the primary cost considerations under FOB is transportation costs. Depending on whether it is FOB Shipping Point or FOB Destination, the responsibility for these costs shifts between the seller and the buyer.
• FOB Shipping Point places the onus on the buyer to be responsible for shipping costs from the seller’s location. At the same time, FOB Destination means the seller bears the transportation costs until the goods reach the specified destination.
• Additionally, FOB terms impact insurance expenses, with the buyer typically taking responsibility for insurance coverage once the goods are in transit. This allocation of costs provides businesses with a clear understanding of their financial obligations, allowing for effective budgeting and planning.
• Furthermore, FOB terms influence decisions regarding the mode of transportation, affecting associated costs and delivery timelines. Businesses must carefully evaluate these cost considerations when negotiating and selecting FOB terms to optimize their financial strategies and ensure cost-effectiveness in the global trade landscape.

Legal Implications of FOB

• The legal implications of “Free On Board” (FOB) terms are critical aspects that businesses engaged in international trade must carefully navigate. FOB delineates the transfer of risk and responsibility from the seller to the buyer at a specified point in the shipping process, and understanding the legal framework surrounding this transfer is essential.
• Clarity in contracts is paramount, as it helps mitigate the potential for disputes. The agreement should specify the exact location of the transfer, whether at the seller’s facility (FOB Shipping Point) or at the destination (FOB Destination). This clarity not only helps in resolving disputes but also ensures compliance with international trade laws and regulations.
• Additionally, FOB terms should align with the broader legal context, including the applicable Incoterms and any specific trade agreements between the parties involved.
• Businesses must be aware of the legal implications of documentation, customs clearance, and adherence to international shipping laws to navigate the complexities of FOB transactions successfully. Failing to address these legal considerations may result in disputes, delays, and potential financial repercussions, highlighting the importance of a well-constructed and legally sound FOB agreement.

How to Choose the Right FOB Term

Selecting the appropriate “Free On Board” (FOB) term is a strategic decision that depends on various factors and considerations. Here’s a guide on how to choose the proper FOB term for a particular international trade scenario:

1. Understand Your Goods and Transportation Needs:

• Consider the nature of the shipped goods, their fragility, and any specific handling requirements.
• Evaluate the transportation methods available and choose a FOB term that aligns with the most suitable mode of transport.

2. Assess Risk Tolerance:

• Evaluate your risk tolerance as a buyer or seller. If you want more control over the goods during transit, you might prefer FOB Destination. If you’re a seller looking to transfer responsibility early, FOB Shipping Point may be suitable.

3. Consider Cost Allocation:

• Analyze the impact of FOB terms on transportation costs. Understand whether it’s more cost effective for the buyer or the seller to cover shipping expenses based on the chosen FOB term.

4. Examine Logistics and Supply Chain Strategy:

• Align the FOB terms with your broader supply chain strategy. Consider how the chosen FOB term integrates into your logistics processes and whether it complements your overall supply chain efficiency.

5. Factor in Legal and Regulatory Requirements:

• Ensure that the chosen FOB term aligns with international trade laws, regulations, and specific legal requirements in the countries involved.
• Clearly outline the chosen FOB terms in the contract, leaving no room for ambiguity or misinterpretation.

6. Communication and Agreement with the Counterparty:

• Open communication with the counterparty is crucial. Reach a mutual understanding of the chosen FOB term and document it clearly in the sales contract.
• Discuss any modifications or specific considerations related to the FOB terms based on the needs of both parties.

7. Consider Market Norms and Practices:

• Familiarize yourself with market norms and practices related to FOB terms in your industry and specific geographical regions.
• Aligning with standard industry practices can facilitate smoother negotiations and transactions.

8. Evaluate Previous Experiences:

• If applicable, consider previous experiences with FOB terms. Evaluate whether the chosen terms were suitable or if adjustments are needed based on lessons learned.

9. Seek Professional Advice if Necessary:

• If uncertain, seek advice from legal and trade professionals who can provide insights into different FOB terms’ specific requirements and implications.

10. Regularly Review and Update:

• International trade dynamics may change, so periodically review and update your choice of FOB terms to ensure they align with current business strategies and market conditions.

Conclusion

In conclusion, the significance of “Free On Board” (FOB) in international trade and finance cannot be overstated. FOB terms serve as a vital framework, delineating the transfer of ownership and responsibility at crucial points in the shipping process. As we’ve explored its multifaceted role, from influencing cost considerations and supply chain efficiency to navigating legal complexities, it’s evident that FOB is more than a mere shipping term – it’s a linchpin shaping the dynamics of global commerce. The careful selection of FOB terms empowers businesses to manage risks, streamline logistics, and foster transparent relationships between buyers and sellers. As companies navigate the complexities of the international marketplace, a nuanced understanding of FOB remains integral for optimizing transactions, fostering trust, and ensuring the seamless flow of goods across borders.

Ratan Tata – A prominent business tycoon, philanthropist and a luminary figure whose success story is a inspiration for generations. Tata Group is India’s reputed multinational conglomerate founded in the year 1868. Its headquarters is in Mumbai and operates in various sectors such as automotive, steel, information technology, telecommunications etc. Mr. Ratan Tata was a chairman of Tata Group from the year 1990 to 2012 and interim chairman from October 2016 to February 2017. Mr. Ratan Tata is the man with visions right from the beginning of his career and his extra-ordinary skills has inspired generations across the World.

“Apart from values and ethics which I have tried to live by, the legacy I would like to leave behind is a very simple one – that I have always stood up for what I consider to be the right thing, and I have tried to be as fair and equitable as I could be.” – Mr. Ratan Tata

Let us understand the Success Journey in detail.

Who is Mr. Ratan Tata??

• Mr. Ratan Naval Tata is the son of Naval Tata who was adopted by Ratanji Tata son of Jamsetji Tata, the founder of the Tata Group. He graduated from the Cornell University College of Architecture with the bachelor’s degree in architecture. He joined Tata in 1961 where he worked on the shop floor of Tata Steel. He later succeeded as chairman of Tata Sons in the year 1991.

Personal Life of Mr. Ratan Tata

• Ratan Tata was born in Mumbai in to a Parsi Zoroastrian family on 28^th December 1937. He is the son ofNaval Tata, who was born inSuratand later adopted into the Tata family, and Sooni Tata, the niece of Tata group founderJamsetji Tata. Tata’s biological grandfather, Hormusji Tata, was a member of the Tata family by blood. In 1948, when Tata was 10, his parents separated, and he was subsequently raised and adopted by Navajbai Tata, his grandmother and widow of Ratanji Tata.
• He has a younger brother Jimmy Tata and a half-brother,Noel Tata, from Naval Tata’s second marriage withSimone Tata, with whom he was raised. Tata spent most of his childhood in India, under the care of his maternal grandmother after his parents’ divorce.In his post in Humans of Bombay Ratan Tata speaks about how he fell in love and almost got married in Los Angeles.
• Unfortunately, he was forced to move to India due to his grandmother’s failing health. Even though he expected his future spouse to move with him to India her parents weren’t comfortable with this due to the instability in India due to the Indo-China war. This meant the end of their relationship.

Education and career

• Mr. Ratan Tata studied at the Campion School, Mumbai till the 8^th class after which he studied at the Catheral and John Connon School in Mumbai, then in Bishop Cotton School in Shimla and the Riverdale Country School in New York City where he graduated in the year 1955. After graduating from high school, Tata enrolled in Cornell University where he did his graduation in architecture in 1959. In 2008 Tata gifted Cornell $ 50 million becoming the largest international donor in the university’s history.
• In the 1970 Tata was given managerial position in the Tata Group. During 21 years Tata Group revenue grew over 40 times and profit over 50 times. When Ratan Tata took over the company sales overwhelmingly comprised commodity sales, but later the majority of sales came from brands.

Entry to Tata Group

• The journey begins when Mr. JRD Tata Chairman of Tata Sons stepped down and Mr. Ratan Tata took over as his successor in the year 1991. This news came as a surprise for many as the existing executives like Russi Mody (Tata Steel), Darbari Seth(Tata Tea, Tata Chemicals), Ajit Kerkar(Taj Hotels) and Nani Palkhivala(Director on boards of several Tata Companies) were expected to succeed JRD Tata. This news led to a bitter feud among the group and many disagreed with the decision.
• Media branded Mr. Ratan Tata as the wrong choice. But Mr. Ratan Tata continued to work with perseverance and dedication. He during his tenure set the Retirement age. According to the policy the retirement age was set at 70 and senior executives would retire at the age of 65. This began replacing the staff with younger talents. Due to this the succession issue was sorted as Mody was sacked , Seth and Kerkar retired as they crossed the age limits and Palkhiva quit the job due to citing ill health.
• Once the succession issue was sorted Ratan Tata started focussing on what was important. He convinced the group companies to pay royalty to Tata Sons for the use of the brand name TATA and also made the individual companies report to the group office.
• Under him the group exited business such as cement, textiles and cosmetics and it increased its focus on other such as software and also entered telecom business, finance and retail. During all these Mr. JRD Tata guided Ratan Tata as a mentor even though there were criticisms.

Ratan Tata Achievements

• Despite facing criticism due to his relative inexperience, he took over the reins of the Tata group and led it to become a global conglomerate, with 65% of the revenues coming from abroad. Under his leadership, the group’s revenues rose by 40 times, and profits increased by 50 times. With the aim of globalizing the business, the Tata group made several strategic acquisitions under Ratan Tata’s leadership.
• These include the purchase of London-based Tetley Tea for $431.3 million, the acquisition of the truck manufacturing unit of South Korea’s Daewoo motors for $102 million, and the takeover of Anglo-Dutch company Corus Group for $11.3 billion.
• These acquisitions, including Tetley by Tata Tea, Jaguar Land Rover by Tata Motors, and Corus by Tata Steel, helped the Tata group to expand its global footprint, reaching over 100 countries. It also gave a significant boost to the Indian industrial sector.

Introduction of TATA Nano

In 2015, Ratan Tata introduced the TATA Nano Car, an affordable vehicle designed to cater to middle and lower-middle-income consumers worldwide. The TATA Nano, with a seating capacity for five people and a starting price of $2000, became known as the “people’s car” due to its affordability and convenience.

Ratan Tata’s Philanthropic Contributions

Ratan Tata established the Sir Dorabji Tata Trust, thus realizing his father’s vision. Approximately 60-65% of the profits earned by Ratan Tata were donated for charitable purposes. His notable philanthropic contributions include:

Contributions to Education

Ratan Tata carried forward the legacy of the Tata group’s founder, Jamsetji Tata. The JN Tata Endowment for Higher Education provides scholarships to Indian students for pursuing higher education. TATA Trusts has been working towards addressing the challenges in the education sector, with a focus on providing quality education to children from marginalized communities. They aim to provide high-quality learning experiences through critical thinking, problem-solving, collaborative learning, and the use of technology. TATA Trusts’ work in the field of education aligns with the United NationsSustainable Development Goals(SDGs).

1. Quality Education (SDG -4)
2. Gender Equality (SDG – 5)
3. Decent Work and Economic Work (SDG -8)
4. Industry, Innovation, and Infrastructure (SDG – 9)
5. Reduced Inequality ( SDG – 10)
6. Partnerships to achieve the SDG (SDG -17).

Several premier educational institutions have been established and supported by the TATA Trusts under Ratan Tata in India and abroad. These include:

• Tata Centre for Technology and Design at the Indian Institute of Technology Bombay (IIT-B), Tata Centre for Technology and Design at the Massachusetts Institute of Technology (MIT) and the University of Chicago
• Tata Centre for Genetics and Society at the University of California San Diego, Harvard University South Asia Institute,
• Indian Institute of Science (IISc) – Bengaluru,
• Tata Institute of Social Sciences (TISS) – Mumbai, Tata Memorial Centre – Mumbai,
• Tata Institute of Fundamental Research (TIFR) – Mumbai
• National Institute of Advanced Studies (NIAS) – Bengaluru.
• The Tata Education and Development Trust established a $28 million Tata Fundraising Campaign in association with Cornell University to provide financial assistance to Indian undergraduates who cannot afford educational expenses.

Contributions to the Medical field

Ratan Tata has played a significant role in improving primary healthcare in India. He has supported initiatives addressing maternal health, child health, mental health, and the diagnosis and treatment of diseases like cancer, malaria, and tuberculosis.

• He has also provided a grant worth ₹750 million Indian rupees to the Centre of Neuroscience at the Indian Institute of Science for research on Alzheimer’s disease.
• Ratan Tata has worked closely with governments, non-governmental organizations, and implementation partners to ensure proper maternal care, nutrition, water, sanitation, and infrastructural support.

Contributions to Rural and Agricultural Development

• The Transforming Rural India Initiative (TRI), an initiative of the Tata group, collaborates with governments, NGOs, civil society groups, and philanthropists to transform areas of acute poverty.
• Ratan Tata has also made generous donations during times of natural calamities and has supported the construction of schools and hospitals.

Sir Ratan Tata Trust

• Established in 1919 by Ratan Tata, the trust works towards the well-being of the underprivileged in various sectors. The trust provides two types of grants:
• Institutional grants: These include endowment grants, program grants, and small grants.
• Emergency Grants: These grants are provided during times of urgency or crisis.
• In addition to heading the Sir Ratan Tata Trust, Ratan Tata also heads the Sir Dorabji Tata and Allied Trusts and owns a 66% stake in Tata Sons.

Other Initiatives by Ratan Tata

• Ratan Tata has held various roles in organizations both in India and abroad. He serves on the boards of several companies and institutions, including Alcoa Inc, Mondelez International, and the East-West Centre.
• He is also a member of the Board of Trustees of the University of Southern California, the Dean’s Advisory Board of Harvard Business School, and Cornell University. He is a member of the board of directors of the International Advisory Board of Bocconi University. He has been a member of the Harvard Business School India Advisory Board (IAB) since 2006.
• In 2013, he was appointed to the board of directors of the Carnegie Endowment for International Peace. In February 2015, Ratan assumed an advisory role at The Kalaari Capital, a venture capital firm founded by Vani Kola.

Titles and Honours

• Ratan Tata has been awarded the second-highest civilian honour of India, the Padma Vibhushan, and the third-highest civilian honour, the Padma Bhushan.
• He has also received honorary doctorates from several prestigious institutions, including the London School of Economics, Cambridge University, Ohio State University, IIT Bombay, IIT Madras, and IIT Kharagpur.

Retirement and Current Engagement

• Ratan Tata retired from his position on December 28, 2012, at the age of 75. He was succeeded by Cyrus Mistry of the Shapoorji Pallonji Group. However, due to opposition from the board of directors, Mistry was removed from his position in 2016, and Ratan Tata served as an interim chairman.
• In January 2017, Natarajan Chandrasekharan was appointed as the chairman of the Tata Group and the successor of Ratan Tata.
• Currently, Ratan Tata heads Tata Trusts and Tata Sons, making him the second person to head both companies after JRD Tata.

Challenges faced by Mr. Ratan Tata

1. Ratan Tata was bound to close an assignment of nurturing a loss-making unit – Empress Mill during the year 1977 due to not sanctioning 50 lakhs rupees of fund from the core management. The unit was dreamed to be revolutionary but it got unfortunately closed making Ratan feel depressed.
2. He faced several public criticisms after being declared the next successor of Tata Group of Industries by JRD Tata in the year 1981. Public along with the Tata Groups employees, investors, and shareholders as well believed him to be a fresher for handling the sole responsibility of such a big group of companies.
3. He decided to come up in the car market during the year 1998 and launched his first car model with the name Tata Indica which failed completely as people never shown their interest in buying the car.
4. Heeven decided to sell the entire company during the year 1999 and accordingly approached Ford Motors for purchasing the same. Being an owner of such a biggest group of companies, Tata was insulted by the Ford owner which was an extremely troublesome and frustrating situation for such a big entrepreneur.
5. Ford insulted Ratan Tata by stating “When you don’t know anything about passenger cars, why did you start the business”. These words were promptly replied by Ratan Tata when he saved Ford from bankruptcy during the year 2008 by buying the Jaguar-Land Rover unit for which even Tata has to bear a loss of 2500 crores.

Success Lessons we can Learn from Ratan Tata

1. Aim for excellence and innovation:

Ratan Tata has consistently emphasized the importance of pushing the boundaries of innovation and excellence within the Tata Group. He has been instrumental in implementing transformative changes and has consistently encouraged his team to think creatively and strive for continuous improvement.

2. Embrace adaptability to change:

Ratan Tata has always been open to change and has made it a central part of his approach to business. He has successfully navigated the Tata Group through major transitions and has consistently been quick to adopt new technologies and market trends. This adaptability has enabled the Tata Group to remain relevant and competitive in a rapidly evolving business environment.

3. Adhere to ethical leadership:

Ratan Tata is well-known for his commitment to ethical leadership and corporate social responsibility. He has always conducted business with integrity and treated all stakeholders, including employees, customers, and communities, with respect and fairness.

4. Foster trust and teamwork within the organization:

In order to build a culture of trust inside the Tata Group, Ratan Tata has repeatedly highlighted the value of teamwork. He has believed in empowering team members and giving them the freedom to take on challenges and innovate. This approach has contributed to the success of the Tata Group by creating a strong sense of ownership and accountability among team members.

5. Prioritize sustainability:

As a leader in advancing sustainability within the Tata Group, Ratan Tata has always been conscious of the effects that business has on the environment. He has initiated several initiatives to reduce the group’s carbon footprint and has focused on creating eco-friendly and socially responsible products and services.

6. Demonstrate empathy and compassion:

Ratan Tata has always been known for his compassion and his willingness to lend a helping hand to those in need. He has actively participated in philanthropic activities and supported various causes such as education, healthcare, and disaster relief. His empathetic approach has not only helped those in need but has also earned him the respect and admiration of many.

7. Lead by example:

Ratan Tata believes in leading by example and has set high standards for himself and his team. He has consistently been committed to doing the right thing, regardless of the consequences, and has inspired others to follow his lead

Conclusion

Ratan Tata’s career and way of life journey offer valuable lessons for anyone seeking to make a positive impact in the world. His focus on excellence, innovation, and adaptability have contributed to the success of the Tata Group and his commitment to ethical leadership and corporate social responsibility has earned him respect and admiration. Additionally, his emphasis on teamwork and sustainability, as well as his compassion and willingness to lead by example, serve as a model for all. These lessons are relevant not only for business leaders, but for anyone who aspires to make a positive impact in the world.

Yet again we have got another CEO who became a Billionaire without being the founder of the company! Yes his name is Navil Noronha who is the long serving CEO of Avenue Supermarts, the company behind the innovative supermarket chain DMart. The listed firm which is run by Noronha has a market cap of over Rs 2, 36,800 crore. DMart’s rise propelled by Noronha’s Strategy has made Damani the retail king of India and one of the country’s richest men and net worth of over Rs 1,34,200 crore. Let us understand Mr.Navil Noronha success story in detail.

Who is Mr. Navil Noronha??

• Ignatius Navil Noronha, hailing from Mumbai, was born and raised in a Christian household. Growing up in the vibrant city, he embraced his Christian upbringing and values, which have played a significant role in shaping his life and guiding his actions. Ignatius, is happily married to Kajal Noronha, and together, they form a loving and supportive couple.
• Their marriage is a testament to their strong bond and shared commitment to each other. As partners in life, they navigate the ups and downs together, offering mutual support and companionship. Kajal Noronha’s presence in Ignatius’ life is a source of joy and stability, creating a harmonious home environment. Their partnership is built on trust, love, and shared values, making them a formidable team both personally and professionally.

Education and Career

• Navil Noronha holds a science degree from SIES College of Arts, Science, and Commerce and a management degree from the Narsee Monjee Institute of Management Studies (NMIMS). His journey at DMart started when he was in his twenties. Hired by renowned investor Radhakishan Damani, Navil Noronha quickly proved his worth by contributing significantly to the retail giant’s strategy and operations.
• Before joining DMart’s parent company, Avenue Supermarts Limited, Navil Noronha spent eight years at Hindustan Unilever, where he worked as a sales executive and gained valuable experience in market research and modern trade. His experience and insights were instrumental in DMart’s growth trajectory.
• Currently serving as the CEO of DMart, Navil Noronha continues to propel Avenue Supermarts Limited to new heights. He is often referred to as the ‘Management GOAT (Greatest of All-Time)’ by the business community for his pioneering strategies that have reshaped the FMCG sector. Notably, his 48-hour supplier policy has been hailed as a game-changer.

A Humble Titan in the Business World

• In the bustling landscape of India’s business elite, where fortunes are made and empires rise, Ignatius Navil Noronha stands as a beacon of humility and success. With a net worth exceeding Rs 6500 crore and a luxurious Rs 70 crore home to his name, Ignatius defies convention as a self-made man who eschews the traditional trappings of corporate power.
• Despite his immense wealth and influence, Ignatius remains grounded, earning the respect and admiration of peers and colleagues alike for his intelligence, hard work, and unwavering humility. Despite his immense success, Ignatius remains refreshingly humble, shunning ostentatious displays of wealth and power. His office space, though undoubtedly sophisticated, is notably smaller than those of other CEOs of large corporations—a deliberate choice that reflects his unassuming nature and focus on substance over style. Instead of flaunting his riches, Ignatius channels his energies into driving innovation, fostering collaboration, and creating value for his organization and stakeholders.
• Within business circles, Ignatius is revered not only for his financial prowess but also for his integrity, ethics, and commitment to excellence. He leads by example, inspiring those around him to strive for greatness and embrace a culture of continuous improvement. Despite his busy schedule and myriad responsibilities, Ignatius remains accessible and approachable, embodying the ethos of servant leadership and fostering a culture of inclusivity and respect.
• Beyond his professional achievements, Ignatius is deeply committed to philanthropy and social responsibility. He recognizes the importance of giving back to society and is actively involved in various charitable initiatives aimed at empowering underprivileged communities, promoting education, and advancing environmental sustainability. Through his philanthropic endeavors, Ignatius seeks to create a lasting impact and leave behind a legacy of compassion and generosity.
• In a country teeming with successful businessmen, industrialists, and entrepreneurs, Ignatius Navil Noronha stands as a testament to the transformative power of humility, integrity, and hard work. His journey from humble beginnings to corporate titan serves as an inspiration to aspiring leaders everywhere, reminding us that true success is not measured by wealth alone but by the positive impact we make on the world and the lives of others. As Ignatius continues to chart new territories and inspire future generations, his legacy will endure as a shining example of leadership excellence and moral fortitude.

Lessons we can learn from Ignatius Navil Noronha

• Relentless focus on the company objectives.

Navil Noronha had the ability to focus on the right tasks and inevitably speed up the process of reaching any goal. He replaced every wasted minute in your day by focused action and this helped him to get where he wanted to in half the time.

• Relentless focus on execution and in making DMart – Avenue Supermarts Ltd loved by consumers.

The CEO of DMart, Ignatius Navil Noronha, stands out as one of India’s wealthiest individuals. Although he hasn’t founded a company or directly engaged in business activities, his leadership and strategic acumen have played a crucial role in DMart’s remarkable success.

• Clarity of Positioning and Value proposition.

A value proposition is a concise statement that outlines theunique benefitsand value that a product or service offers to its target audience. Itserves as a powerfultool to differentiate your brand from competitors andconvince customerstochoose your solutionover others. Due to clarity of position and value proposition DMart-Avenue Supermarts Ltd increased its conversion rate and improved the life of target audience. His

• Ensuring every individual and every process is motivated and designed to deliver on the Purpose and Vision.
• Relentless focus on making Profits.
• Apart from this Mr. Navil Noronha has never given any flashy claims, interviews….. Just rolling up their sleeves and executing day in and day out. Also he has always been committed during Good and not so good times.

The much awaited Interim Budget 2024-2025 was presented by Finance Minister Mrs. Nirmala Sitharaman on 1^st February 2024. This was the sixth Budget presented by Mrs. Sitharaman which included announcements ranging from railways, tourism, healthcare, technology, aviation, green energy, aquaculture, housing and more. The tax slab was untouched meanwhile the startups and investments made by sovereign wealth or pension funds were given an extended tax exemption till 31^st March 2025. Let us understand What Interim Budget 2024-2025 is all about.

What is Interim Budget??

• An Interim Budget is presented by the government in the Parliament if it does not have time to present a full budget, or if the general elections are around the corner. If the case of elections are nearing, it is only correct that the incoming government frame the full budget.
• In case, the government is not able to present a full budget before the end of the financial year, it will require parliamentary approval for incurring expenditure in the new financial year until a new budget is passed.
• Until the Parliament discusses the budget and passes through the interim budget, the government passes a vote on account which will allow the government to meet its expenses of administration.

How is an Interim Budget different from the Regular Budget??

• Interim Budget is a budget presented by the Central Government just before the General elections. In the Interim Budget Vote on the account is passed without discussion in Lok Sabha.
• Interim Budget is during the election year, for a duration of approximately 2 to 4 months of the fiscal year.
• The Interim Budget has only a summary of the expenses and income of the previous year. It will not have the component of income through the collection of taxes. In the Interim Budget, the income and expenses of the previous year will be mentioned.
• It also mentions the expenses for a few months till the charge is taken over by the next Government. However, most importantly the sources of income will not be detailed in the Interim Budget. Whereas Union Budget is an annual budget presented by the Central Government in the Parliament.
• The Union Budget has 2 different parts, one part is related to the expenses and income of the previous year and the other part is the plan of the Government to raise funds through taking various measures and how it would be utilized for the development of the nation. Union Budget is passed after complete discussions inLok Sabha.
• The Union Budget will have a component on spending funds for various social welfare measures for the development of a country and describe the ways of raising funds through taxes.

What items are included in the interim Budget?

• The interim Budget includes estimates for government expenditure, revenue, fiscal deficit, and financial performance for a few months, but cannot include major policy announcements.
• An interim budget usually covers the immediate financial needs and allocations for the next few months until the new government can present a complete budget for the entire fiscal year. Generally, interim budgets focus on maintaining continuity and do not introduce major policy changes.
• However, they may include some policy adjustments and new initiatives if there is an urgent need or if they are in line with the ongoing government’s priorities.

Why Finance Minister of India presented Interim Budget 2024-2025??

• India’s Union Finance Minister Mrs. Nirmala Sitharaman unveiled the much-anticipated interim budget as scheduled on February 1, with key announcements for selected sectors. The overall mood of this budget announcement was astatement of progress, comparing the Indian economy’s performance over the last 10 years – under two consecutive terms of the Narendra Modi government. The budget speech was among the shortest in recent years.
• Modi government appears confident of its position ahead of the general elections, and a ‘broader roadmap’ will be discussed in July after a new government is sworn in. And so the Finance Minister did not introduce any significant new spending programs or expansion of schemes that could be categorized as populist measures.
• The Vote on Account, outlined in Article 116 of the Indian Constitution, allows the government to access funds from the Consolidated Fund of India temporarily, usually for a few months, to cover essential expenses until a full budget is approved.
• This provision is crucial during transitional periods, such as before general elections, when the existing government might be in a caretaker role, limiting its ability to implement new policies or budgetary measures. The Vote on Account ensures the continuity of government operations by sustaining routine expenditures until a new government takes office.

20 Key Points of Budget 2024-2025

1. Sabka Saath , Sabka Vikas and Sabka Vishwas for Viksit Bharat 2047

• Finance Minister Nirmala Sitharaman initiated the speech for Budget 2024-2025 by describing how India has witnessed profound positive transformation in the past 10 years of Modi Government. Also people of India are now looking ahead with a positive hope and optimism for a better India.
• With “Sabka Saath Sabka Vikas” mantra and dynamic leadership of Prime Minister Narendra Modi Government was able to overcome the challenges faced in right earnest. Structural Reforms were undertaken, Pro-People Programmes were formulated and implemented promptly. The country got a new sense of purpose and hope as more employment opportunities were created.
• In the second term of Government the responsibilities were doubled and the mantra was changed to “Sabka Saath, Sabka Vikas and Sabka Vishwas”. The development philosophy of the Government included all elements of inclusivity namely, social inclusivity through coverage of all strata of the society and geographical inclusivity through development of all regions.
• With the whole nation approach of “Sabka Prayas” the country overcame the challenge of pandemic, took long strides towards Aatmanirbhar Bharat, committed to Panch Pran and laid foundations for the Amrit Kaal. Finance Minister further stated that the Government expects to be blessed again by the people to serve again with a resounding mandate.
• Development programmes, in the last ten years, have targeted each and every household and individual, through ‘housing for all’, ‘har ghar jal’, electricity for all, cooking gas for all, bank accounts and financial services for all.
• The worries about food have been eliminated through free ration for 80 crore people. Minimum support prices for the produce of ‘Annadata’ are periodically increased appropriately. These and the provision of basic necessities have enhanced real income in the rural areas. Their economic needs could be addressed, thus spurring growth and generating jobs.
• Government is working with an approach to development that is all-round, all-pervasive and all-inclusive (सर्वांगीण, सर्वस्पर्शी और सर्वसमवर्ेर्शी). It covers all castes and people at all levels.
• Focus will be for four major castes. They are, ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and ‘Annadata’ (Farmer). Their needs, their aspirations, and their welfare are our highest priority. The country progresses, when they progress. All four require and receive government support in their quest to better their lives. Their empowerment and well-being will drive the country forward.

2. Garib Kalyan, Desh ka Kalyan

• ‘Direct Benefit Transfer’ of ` 34 lakh crore from the Government using PM-Jan Dhan accounts has led to savings of ` 2.7 lakh crore for the Government. This has been realized through avoidance of leakages prevalent earlier. The savings have helped in providing more funds for ‘Garib Kalyan’.
• PM-SVANidhi has provided credit assistance to 78 lakh street vendors. From that total, 2.3 lakh have received credit for the third time.
• PM-JANMAN Yojana reaches out to the particularly vulnerable tribal groups, who have remained outside the realm of development so far. PM-Vishwakarma Yojana provides end to end support to artisans and craftspeople engaged in 18 trades. The schemes for empowerment of Divyangs and Transgender persons reflect firm resolve of our Government to leave no one behind.
• Farmers are our ‘Annadata’. Every year, under PM-KISAN SAMMAN Yojana, direct financial assistance is provided to 11.8 crore farmers, including marginal and small farmers. Crop insurance is given to 4 crore farmers under PM Fasal Bima Yojana. These, besides several other programmes, are assisting ‘Annadata’ in producing food for the country and the world.
• Electronic National Agriculture Market has integrated 1361 mandis, and is providing services to 1.8 crore farmers with trading volume of ` 3 lakh crore.
• The sector is poised for inclusive, balanced, higher growth and productivity. These are facilitated from farmer-centric policies, income support, coverage of risks through price and 6 insurance support, promotion of technologies and innovations through start-ups.

3. Amrit Peedhi-The Yuva

• The Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth, and established 3000 new ITIs. A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities have been set up.
• PM Mudra Yojana has sanctioned 43 crore loans aggregating to Rs 22.5 lakh crore for entrepreneurial aspirations of our youth. Besides that, Fund of Funds, Start Up India, and Start Up Credit Guarantee schemes are assisting our youth. They are also becoming ‘rozgardata’.
• The country is proud of our youth scaling new heights in sports. The highest ever medal tally in Asian Games and Asian Para Games in 2023 reflects a high confidence level. Chess prodigy and our Number-One ranked player Praggnanandhaa put up a stiff fight against the reigning World Champion Magnus Carlsson in 2023. Today, India has over 80 chess grandmasters compared to little over 20 in 2010.
• The empowerment of women through entrepreneurship, ease of living, and dignity for them has gained momentum in these ten years.
• Thirty crore Mudra Yojana loans have been given to women entrepreneurs. Female enrolment in higher education has gone up by twenty-eight per cent in ten years. In STEM courses, girls and women constitute forty-three per cent of enrolment – one of the highest in the world. All these measures are getting reflected in the increasing participation of women in workforce.
• Making ‘Triple Talaq’ illegal, reservation of one-third seats for women in the Lok Sabha and State legislative assemblies, and giving over seventy per cent houses under PM Awas Yojana in rural areas to women as sole or joint owners have enhanced their dignity. Exemplary Track Record of Governance, Development and Performance (GDP).
• India assumed G20 Presidency during very difficult times for the world. The global economy was going through high inflation, high interest rates, low growth, very high public debt, low trade growth, and climate challenges. The pandemic had led to a crisis of food, fertilizer, fuel and finances for the world, while India successfully navigated its way. The country showed the way forward and built consensus on solutions for those global problems.
• The recently announced India-Middle East-Europe Economic Corridor is a strategic and economic game changer for India and others. In the words of Hon’ble Prime Minister, the corridor “will become the basis of world trade for hundreds of years to come, and history will remember that this corridor was initiated on Indian soil”. Vision for ‘Viksit Bharat’. With confidence arising from strong and exemplary track record of performance and progress earning ‘Sabka Vishwas’, the next five years will be years of unprecedented development, and golden moments to realize the dream of developed India @ 2047.
• The trinity of demography, democracy and diversity backed by ‘Sabka Prayas’ has the potential to fulfill aspirations of every Indian. Guided by the principle ‘Reform, Perform, and Transform’, the Government will take up next generation reforms, and build consensus with the states and stakeholders for effective implementation. For meeting the investment needs Modi Government will prepare the financial sector in terms of size, capacity, skills and regulatory framework.
• For Aspirational Districts Programme Modi Government stands ready to assist the states in faster development of aspirational districts and blocks, including generation of ample economic opportunities. Despite the challenges due to COVID, implementation of PM Awas Yojana (Grameen) continued and we are close to achieving the target of three crore houses.
• Two crore more houses will be taken up in the next five years to meet the requirement arising from increase in the number of families. Rooftop solarization and muft bijli. Through rooftop solarization, one crore households will be enabled to obtain up to 300 units free electricity every month.

4. Benefits expected

• Savings up to fifteen to eighteen thousand rupees annually for households from free solar electricity and selling the surplus to the distribution companies;
• Charging of electric vehicles; Entrepreneurship opportunities for a large number of vendors for supply and installation;
• Employment opportunities for the youth with technical skills in manufacturing, installation and maintenance; Housing for middle class, Government will launch a scheme to help deserving sections of the middle class “living in rented houses, or slums, or chawls and unauthorized colonies” to buy or build their own houses, Medical Colleges.
• Several youth are ambitious to get qualified as doctors. They aim to serve people through improved healthcare services. Modi Government plans to set up more medical colleges by utilizing the existing hospital infrastructure under various departments. A committee for this purpose will be set.

5. Maternal and Child Health Care

• Various schemes for maternal and child care will be brought under one comprehensive programme for synergy in implementation. Upgradation of Anganwadi centres under “Saksham Anganwadi and Poshan 2.0” will be expedited for improved nutrition delivery, early childhood care and development.
• The newly designed U-WIN platform for managing immunization and intensified efforts of Mission Indradhanush will be rolled out expeditiously throughout the country.

6. Ayushman Bharat

• Healthcare cover under Ayushman Bharat scheme will be extended to all ASHA workers, Anganwadi Workers and Helpers. Agriculture and food processing.
• The efforts for value addition in agricultural sector and boosting farmers’ income will be stepped up. Pradhan Mantri Kisan Sampada Yojana has benefitted 38 lakh farmers and generated 10 lakh employment. Pradhan Mantri Formalization of Micro Food Processing Enterprises Yojana has assisted 2.4 lakh SHGs and sixty thousand individuals with credit linkages.
• Other schemes are complementing the efforts for reducing postharvest losses, and improving productivity and incomes. For ensuring faster growth of the sector, our Government will further promote private and public investment in post-harvest activities including aggregation, modern storage, efficient supply chains, primary and secondary processing and marketing and branding.

7. Nano DAP

• After the successful adoption of Nano Urea, application of Nano DAP on various crops will be expanded in all agro-climatic zones under Atmanirbhar Oil Seeds Abhiyan.
• Building on the initiative announced in 2022, a strategy will be formulated to achieve ‘atmanirbharta’ for oil seeds such as mustard, groundnut, sesame, soybean, and sunflower.
• This will cover research for high-yielding varieties, widespread adoption of modern farming techniques, market linkages, procurement, value addition, and crop insurance.

8. Dairy Development

• A comprehensive programme for supporting dairy farmers will be formulated. Efforts are already on to control foot and mouth disease. India is the world’s largest milk producer but with low productivity of milch-animals.
• The programme will be built on the success of existing schemes such Rashtriya Gokul Mission, National Livestock Mission, and Infrastructure Development Funds for dairy processing and animal husbandry. Matsya Sampada.
• It was our Government which set up a separate Department for Fisheries realizing the importance of assisting fishermen. This has resulted in doubling of both inland and aquaculture production. Seafood export since 2013-14 has also doubled. Implementation of Pradhan Mantri Matsya Sampada Yojana (PMMSY) will be stepped up to:

(1) enhance aquaculture productivity from existing 3 to 5 tons per hectare,

(2) double exports to ` 1 lakh crore and

(3) generate 55 lakh employment opportunities in near future. Five integrated aqua parks will be setup.

9. Lakhpati Didi

• Eighty-three lakh SHGs with nine crore women are transforming rural socio-economic landscape with empowerment and self-reliance. Their success has assisted nearly one crore women to become Lakhpati Didi already.
• They are an inspiration to others. Their achievements will be recognized through honoring them. Buoyed by the success, it has been decided to enhance the target for Lakhpati Didi from 2 crore to 3 crore. Technological Changes.
• New age technologies and data are changing the lives of people and businesses. They are also enabling new economic opportunities and facilitating provision of high-quality services at affordable prices for all, including those at ‘bottom of the pyramid’.
• Opportunities for India at the global level are expanding. India is showing solutions through innovation and entrepreneurship of its people. Research and Innovation for catalyzing growth, employment and development.

10. Jai Jawan Jai Kisan

• Prime Minister Shastri gave the slogan of “Jai Jawan Jai Kisan”. Prime Minister Vajpayee made that “Jai Jawan Jai Kisan Jai Vigyan”. Prime Minister Modi has furthered that to “Jai Jawan Jai Kisan Jai Vigyan and Jai Anusandhan”, as innovation is the foundation of development.
• For our tech savvy youth, this will be a golden era. A corpus of rupees one lakh crore will be established with fifty-year interest free loan. The corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates. This will encourage the private sector to scale up research and innovation significantly in sunrise domains. We need to have programmes that combine the powers of our youth and technology.
• A new scheme will be launched for strengthening deep-tech technologies for defence purposes and expediting ‘atmanirbharta’. Infrastructure Development.
• Building on the massive tripling of the capital expenditure outlay in the past 4 years resulting in huge multiplier impact on economic growth and employment creation, the outlay for the next year is being increased by 11.1 per cent to eleven lakh, eleven thousand, one hundred and eleven crore rupees (` 11,11,111 crore). This would be 3.4 per cent of the GDP.

11. Railways

Three major economic railway corridor programmes will be implemented. These are:

(1) energy, mineral and cement corridors,

(2) port connectivity corridors, and

(3) high traffic density corridors. The projects have been identified under the PM Gati Shakti for enabling multi-modal connectivity. They will improve logistics efficiency and reduce cost.

• The resultant decongestion of the high-traffic corridors will also help in improving operations of passenger trains, resulting in safety and higher travel speed for passengers.
• Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs. Forty thousand normal rail bogies will be converted to the Vande Bharat standards to enhance safety, convenience and comfort of passengers.

12. Aviation Sector

• The aviation sector has been galvanized in the past ten years. Number of airports have doubled to 149. Roll out of air connectivity to tier-two and tier-three cities under UDAN scheme has been widespread. Five hundred and seventeen new routes are carrying 1.3 crore passengers.
• Indian carriers have pro-actively placed orders for over 1000 new aircrafts. Expansion of existing airports and development of new airports will continue expeditiously. Metro and NaMo Bharat.
• Metro Rail and NaMo Bharat can be the catalyst for the required urban transformation. Expansion of these systems will be supported in large cities focusing on transit-oriented development.

13. Green Energy

Towards meeting our commitment for ‘net-zero’ by 2070, the following measures will be taken.

• Viability gap funding will be provided for harnessing offshore wind energy potential for initial capacity of one giga-watt. Coal gasification and liquefaction capacity of 100 MT will be set up by 2030.
• This will also help in reducing imports of natural gas, methanol, and ammonia. Phased mandatory blending of compressed biogas (CBG) in compressed natural gas (CNG) for transport and piped natural gas (PNG) for domestic purposes will be mandated.
• Financial assistance will be provided for procurement of biomass aggregation machinery to support collection.

14. Electric Vehicle Ecosystem

• Modi government will expand and strengthen the e-vehicle ecosystem by supporting manufacturing and charging infrastructure. Greater adoption of e-buses for public transport networks will be encouraged through payment security mechanism. Bio-manufacturing and Bio-foundry.
• For promoting green growth, a new scheme of bio-manufacturing and bio-foundry will be launched. This will provide environment friendly alternatives such as biodegradable polymers, bio-plastics, bio-pharmaceuticals and bio-agri-inputs. This scheme will also help in transforming today’s consumptive manufacturing paradigm to the one based on regenerative principles.

15. Blue Economy 2.0

• For promoting climate resilient activities for blue economy 2.0, a scheme for restoration and adaptation measures, and coastal aquaculture and mariculture with integrated and multi-sectoral approach will be launched.
• The success of organizing G20 meetings in sixty places presented diversity of India to global audience. Our economic strength has made the country an attractive destination for business and conference tourism. Our middle class also now aspires to travel and explore.
• Tourism including spiritual tourism, has tremendous opportunities for local entrepreneurship. States will be encouraged to take up comprehensive development of iconic tourist centres, branding and marketing them at global scale.
• A framework for rating of the centres based on quality of facilities and services will be established. Long-term interest free loans will be provided to States for financing such development on matching basis.
• To address the emerging fervour for domestic tourism, projects for port connectivity, tourism infrastructure, and amenities will be taken up on our islands, including Lakshadweep. This will help in generating employment also. The FDI inflow during 2014-23 was USD 596 billion marking a golden era. That is twice the inflow during 2005-14. For encouraging sustained foreign investment, we are negotiating bilateral investment treaties with our foreign partners, in the spirit of ‘first develop India’.

16. Reforms in the States for Viksit Bharat

• Many growth and development enabling reforms are needed in the states for realizing the vision of ‘Viksit Bharat’. A provision of seventy-five thousand crore rupees as fifty-year interest free loan is proposed this year to support those milestone-linked reforms by the State Governments.
• The Government will form a high-powered committee for an extensive consideration of the challenges arising from fast population growth and demographic changes. The committee will be mandated to make recommendations for addressing these challenges comprehensively in relation to the goal of ‘Viksit Bharat’.
• Amrit Kaal as Kartavya Kaal. Modi government stands committed to strengthening and expanding the economy with high growth and to create conditions for people to realize their aspirations.
• The Revised Estimate of the total receipts other than borrowings is Rs 27.5 6 lakh crore, of which the tax receipts are Rs 23.24 lakh crore. The Revised Estimate of the total expenditure is Rs 44.90 lakh crore.
• The revenue receipts at Rs 30.03 lakh crore are expected to be higher than the Budget Estimate, reflecting strong growth momentum and formalization in the economy. 81.
• The Revised Estimate of the fiscal deficit is 5.8 per cent of GDP, improving on the Budget Estimate, notwithstanding moderation in the nominal growth estimates.

17. Budget Estimates for Fiscal Deficit

• Coming to 2024-25, the total receipts other than borrowings and the total expenditure are estimated at Rs 30.80 and Rs 47.66 lakh crore respectively. The tax receipts are estimated at Rs 26.02 lakh crore.
• The scheme of fifty-year interest free loan for capital expenditure to states will be continued this year with total outlay of `Rs 1.3 lakh crore. We continue on the path of fiscal consolidation, as announced in my Budget Speech for 2021-22, to reduce fiscal deficit below 4.5 per cent by 2025-26.
• The fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP, adhering to that path. The gross and net market borrowings through dated securities during 2024-25 are estimated at ` 14.13 and 11.75 lakh crore respectively. Both will be less than that in 2023-24.
• Now that the private investments are happening at scale, the lower borrowings by the Central Government will facilitate larger availability of credit for the private sector.

18. Direct Taxes

• The Government has reduced and rationalized tax rates. Under the new tax scheme, there is now no tax liability for tax payers with income up to ₹ 7 lakh, up from ₹ 2.2 lakh in the financial year 2013-14. The threshold for presumptive taxation for retail businesses was increased from ₹ 2 crore to ₹ 3 crore.
• Similarly, the threshold for professionals eligible for presumptive taxation was increased from ₹ 50 lakh to ₹ 75 Lakh. Also, corporate tax rate was decreased from 30 per cent to 22 per cent for existing domestic companies and to 15 per cent for certain new manufacturing companies.
  . In the last five years, our focus has been to improve tax-payer services.
• The age-old jurisdiction-based assessment system was transformed with the introduction of Faceless Assessment and Appeal, thereby imparting greater efficiency, transparency and accountability.
• Introduction of updated income tax returns, a new Form 26AS and prefilling of tax returns have made filing of tax returns simpler and easier. Average processing time of returns has been reduced from 93 days in the year 2013-14 t o a mere ten days this year, thereby making refunds faster.

19. Indirect Taxes

• By unifying the highly fragmented indirect tax regime in India, GST has reduced the compliance burden on trade and industry. The industry has acknowledged the benefits of GST. According to a recent survey conducted by a leading consulting firm, 94 per cent of industry leaders view the transition to GST as largely positive.
• According to 80 per cent of the respondents, it has led to supply chain optimization, as elimination of tax arbitrage and octroi has resulted in disbanding of check posts at state and city boundaries. At the same time, tax base of GST more than doubled and the average monthly gross GST collection has almost doubled to ₹ 1.66 lakh crore, this year.
• States too have benefited. States’ SGST revenue, including compensation released to states, in the post-GST period of 2017-18 to 2022-23, has achieved a buoyancy of 1.22. In contrast, the tax buoyancy of State revenues from subsumed taxes in the pre-GST four-year period of 2012-13 to 2015-16 was a mere 0.72. The biggest beneficiaries are the consumers, as reduction in logistics costs and taxes have brought down prices of most goods and services.
• The Government has taken a number of steps in Customs to facilitate international trade. As a result, the import release time declined by 47 per cent to 71 hours at Inland Container Depots, by 28 per cent to 44 hours at air cargo complexes and by 27 per cent to 85 hours at sea ports, over the last four years since 2019, when the National Time Release Studies were first started.
• Tax proposals in keeping with the convention, The Finance Minister did not propose any changes relating to taxation and propose to retain the same tax rates for direct taxes and indirect taxes including import duties.
• However, certain tax benefits to start-ups and investments made by sovereign wealth or pension funds as also tax exemption on certain income of some IFSC units are expiring on 31.03.2024. To provide continuity in taxation, the Finance Minister proposed to extend the date to 31.03.2025.
• Moreover, in line with Modi government’s vision to improve ease of living and ease of doing business, the Modi Government wishes to make an announcement to improve tax payer services. There are a large number of petty, non-verified, non-reconciled or disputed direct tax demands, many of them dating as far back as the year 1962, which continue to remain on the books, causing anxiety to honest tax payers and hindering refunds of subsequent years.
• The Finance Minister also proposed to withdraw such outstanding direct tax demands up to twenty-five thousand rupees (₹ 25,000) pertaining to the period up to financial year 2009-10 and up to ten-thousand 28 rupees (₹ 10,000) for financial years 2010-11 to 2014-15. This is expected to benefit about a crore tax-payers.

20. Economy Then and Now

• In 2014 when Modi government assumed the reins, the responsibility to mend the economy step by step and to put the governance systems in order was enormous. The need of the hour was to give hope to the people, to attract investments, and to build support for the much-needed reforms. The Government did that successfully following our strong belief of ‘nation-first’.
• The crisis of those years has been overcome, and the economy has been put firmly on a high sustainable growth path with all-round development. It is now appropriate to look at where we were then till 2014 and where we are now, only for the purpose of drawing lessons from the mismanagement of those years. The Government will lay a White Paper on table of the House.

Embarking on the journey of going public is a transformative step for any company, signifying a transition from private ownership to public trading on the stock market. Going public, also known as an Initial Public Offering (IPO), is a strategic move where a company offers its shares to the public for the first time. This process entails complex steps and considerations, each playing a crucial role in the company’s evolution. The decision to go public is often driven by the desire to access additional capital for growth, expansion, and innovation. It opens doors to a broader investor base, increasing the company’s visibility and credibility in the market. However, with the benefits come challenges, including rigorous regulatory compliance, increased scrutiny, and potential market volatility. Overall, the decision to go public requires meticulous planning, adherence to regulatory standards, and a comprehensive understanding of the implications for the company’s future trajectory.

Benefits of Going Public

• Access to Capital

One primary advantage of publicizing a company is the enhanced access to capital. Through the issuance of shares to the public, companies can raise substantial funds, enabling them to invest in research and development, expand operations, and pursue strategic initiatives. This influx of capital goes beyond what might be available through private funding, providing a significant financial boost.

• Increased Visibility

Going public significantly elevates a company’s visibility and brand recognition. Publicly traded companies often garner more attention from potential customers, partners, and the media. This increased visibility strengthens the company’s market presence and can attract new business opportunities, partnerships, and a more extensive customer base.

• Liquidity for Investors

Going public allows early investors, founders, and employees to convert ownership stakes into liquid assets. This liquidity enables these stakeholders to realize the value of their investments, fostering a sense of financial reward and incentivizing continued commitment to the company’s success.

Challenges of Going Public

• Regulatory Compliance

One of the foremost challenges companies face when going public is navigating the complex regulatory compliance landscape. The Securities and Exchange Commission (SEC) imposes stringent requirements to ensure transparency and protect investors. Meeting these standards involves extensive documentation, financial disclosures, and adherence to reporting obligations, demanding significant time and resources.

• Market Volatility

Public markets are inherently volatile, subject to fluctuations influenced by economic conditions, industry trends, and global events. Companies going public must contend with the unpredictability of stock prices, which can impact investor sentiment and, consequently, the success of the initial public offering (IPO). Strategizing to manage and mitigate market volatility is critical to the going-public process.

• Increased Scrutiny

Transitioning to a publicly traded status exposes companies to heightened scrutiny from analysts, shareholders, and the media. The transparency required in public markets means that every aspect of a company’s operations, financial performance, and decision-making is subject to close examination. Maintaining open communication and managing external perceptions become vital in navigating this increased level of scrutiny.

Steps to Go Public

1. Strategic Planning

The journey to going public begins with meticulous strategic planning. Companies must assess market conditions, evaluate their growth trajectory, and define their objectives. This phase involves crucial decisions, such as setting the IPO timeline, determining the target investor base, and establishing the offering size.

2. Selecting Underwriters

Choosing the right underwriters is pivotal for a successful IPO. These financial experts assist in structuring the offering, pricing the shares, and facilitating the distribution process. Selecting underwriters with expertise in the company’s industry can significantly impact the success of the public offering.

3. Filing with the SEC

The IPO process involves filing necessary documents with Securities and Exchange Commission, including the prospectus. The prospectus provides potential investors comprehensive information about the company, its financial health, and its offering. SEC approval is a critical milestone in the path to going public.

4. IPO Pricing

Determining the initial offering price is a delicate balancing act. In consultation with underwriters, companies must consider market conditions, competitor performance, and financial health to arrive at an attractive yet realistic IPO price. Striking the right balance is essential for attracting investors and achieving the desired capital raise.

Preparation for Going Public

1. Financial Audits

Undergoing comprehensive financial audits is a crucial preparatory step for companies planning to go public. This involves a thorough examination of financial records to ensure accuracy and transparency. Reliable financial statements instill confidence in potential investors and fulfill regulatory requirements.

2. Legal Compliance

Ensuring legal compliance is a complex but essential aspect of preparing for an initial public offering (IPO). Companies must navigate myriad legal requirements, including regulatory filings, disclosures, and compliance with securities laws. Legal experts play pivotal role in guiding companies through this intricate process.

3. Management and Team Readiness

Preparing the management team and employees for public scrutiny challenges is paramount. Communication strategies must be in place to address potential issues and uncertainties that may arise during the IPO process. Management readiness is crucial for steering the company through the transition smoothly.

4. Governance Structure

Establishing a robust governance structure is essential to meet the expectations of public shareholders. This involves defining roles, responsibilities, and decision-making processes within the company. Companies often reassess and strengthen their governance mechanisms to align with the standards expected in the public market.

Common Misconceptions About Going Public

1. Only for Large Companies

Misconception:Going public is often perceived as an exclusive option reserved for large corporations with substantial market presence.

Reality:While many well-known large companies do go public, the options are more comprehensive than just them. Small and medium-sized enterprises (SMEs) can also benefit from an initial public offering (IPO), provided they meet the necessary criteria and have a compelling growth story. Going public can unlock opportunities for diverse businesses.

2. Complexity and Costs

Misconception:Going public is widely believed to be excessively complex and costly, deterring companies, especially smaller ones, from considering it a viable option.

Reality:While the IPO process does involve complexities and costs, advancements in financial services and technology have streamlined many aspects. Companies can manage expenses effectively through strategic planning, and the potential benefits, such as access to capital and increased visibility, often outweigh the associated costs.

Critical Considerations for Going Public

1. Market Conditions

Assessment of Market Conditions:Companies contemplating an initial public offering (IPO) must carefully evaluate the prevailing market conditions. Favorable market conditions, including solid investor demand and overall economic stability, can enhance the success of an IPO. Conversely, challenging market conditions may necessitate strategically reassessing the timing for going public.

2. Timing

Strategic Timing:Choosing the right time to go public is critical. Factors such as industry trends, economic stability, and the company’s performance should be considered. Strategic timing can impact the valuation of the company and the level of investor interest, influencing the overall success of the IPO.

3. Investor Relations

Building Positive Relationships:Establishing and maintaining positive relationships with investors is paramount. Clear communication, transparency, and responsiveness to investor inquiries contribute to a strong foundation for investor relations. Companies must articulate their growth strategies and proactively address concerns to build trust among current and potential shareholders.

Alternatives to Going Public

1. Private Placements

Overview:Private placements offer an alternative avenue for companies to raise capital without going through the complexities of a public offering. In a private placement, a company sells shares to a select group of private investors, often institutional investors, venture capitalists, or private equity firms. This method allows companies to access funding while remaining privately held.

Advantages:Private placements provide flexibility in structuring deals, and companies can negotiate terms directly with investors. The process is generally quicker and involves less regulatory scrutiny than an initial public offering (IPO). Private placements offer a viable funding option for companies still being prepared for the demands of public markets.

2. SPACs (Special Purpose Acquisition Companies)

Overview:Special Purpose Acquisition Companies (SPACs) have gained popularity as an alternative route to going public. A SPAC is a shell company created to acquire an existing private company, effectively taking it public. This process is often faster than a traditional IPO and involves less market uncertainty.

Advantages:SPACs provide companies with a shortcut to public markets without undergoing the traditional IPO process. They can benefit from the expertise of the SPAC’s management team and avoid some of the complexities associated with going public independently.

Conclusion

In conclusion, deciding to go public is a multifaceted process that requires careful consideration of benefits, challenges, and alternative paths. While increased capital, visibility, and liquidity advantages can be compelling, companies must navigate challenges such as regulatory compliance and market volatility. Strategic planning, thorough preparation, and effective investor relations management are crucial for successfully transitioning to public markets. Moreover, understanding alternative options like private placements and SPACs allows companies to choose the most suitable path for their unique circ*mstances. As the landscape of going public continues to evolve with technological advancements and changing market dynamics, companies must approach this journey with a comprehensive understanding of key considerations and a commitment to long-term success in the public arena.

Lenders Join Hands With Fintechs For Expanding Business

Banks have become serious about how they collaborate with fintech companies and derive the maximum value out of these partnerships. Acquiring a stake in the new-age companies is one way of doing it and banks are looking to go big on this.

What Are Banks And Fintechs ?

Fintech is a term used todescribe new technology that automates and improves the delivery of financial services. On the other hand, banks refer to financial institutions that are licensed to accept deposits from its customers and make loans.

Banks V/S Fintechs Which Is Better?

• Fintech fill a specific gap in the market – one left open by how slowly traditional banking changes. The main goal of these disruptive companies, and their drive towards innovation, is leveraging technology in order to meet the financial needs of customers and deliver experiences that can’t be found elsewhere.

• Banks, on the other hand, need to cater to a wide audience to function – their offers can be varied, but not niche – and a major concern of theirs, due to the critical role of banking, is risk management.

• Historically, banks have lagged behind Fintech companies in terms of personalization, customer experience and innovation. They are highly regulated institutions which provide stable, trustworthy services via a resilient business model.

• They are necessary to economic growth and the proper functioning of many modern societies. The Fintech industry rarely chooses to compete with that, and instead shifts focus to other areas, such as mobile experience, accessibility, contextuality and convenience. Their rising popularity is pushing customers’ preferences towards mobile banking and personalized finance solutions.

Fintech And Bank Alliances Are Not Just About Profits

• Collaborations between fintechs and financial institutionsdo more than just boost the bottom line. They deliver new solutions, meet changing needs and safeguard customers from potential financial risks.

• Bank and fintech collaboration also benefits the tech companies. They can expand into new markets while benefiting from the regulatory status of traditional banks. Continued collaboration and partnerships between fintech companies and banks are essential for the future of the financial services industry and the technology sector.

• The evolution of the way people manage banking and financial services also highlights one of the reasons why fintechs and banks should work together.

An Overview

Over the years, the partnership between banks and fintech players has become stronger, thereby, accelerating financial inclusion, while cutting-edge technologies, such as Artificial Intelligence and Machine Learning, are helping out in quick digital adoption across the country. Small vendors, lacking their own bank accounts are able to seamlessly conduct digital transactions. Moreover, MSMEs in cash-dependent Tier-II and III markets, from grocery stores to neighbourhood hawkers, have been able to receive money digitally through UPI systems, QR codes, and payment apps.

In the bigger picture, the rise of innovative alternative lending platforms, brought by fintechs over the past years has enabled SMEs with no credit history or financial records to access much-deserved credit. With the advent of new-age technologies and digital tools apparatus such as AI, machine learning, and data analytics fintech companies now extend customised working capital solutions to the MSME sector, which currently faces a credit deficit of over Rs 16 lakh crore. Additionally, small businesses can now digitize their ledgers and cash flow management.

Examples

• In August 2021, HDFC Bank Ltd purchased a 5.2 percent stake in Mintoak Innovations, a digital payments platform, following up on the December investment of an undisclosed amount in small case technologies, another fintech start up.

• State Bank of India in June invested in payment gateway company Cash free Payments. ICICI Bank Ltd too has bought stakes in fintech start-ups, in February investing in digital payments firm City Cash and Thillais Analytical Solutions Pvt. Ltd.

• India’s largest public-sector lender State Bank of India (SBI) announced it was partnering with Adani Capital, a non-banking finance company (NBFC), to dole out loans to the farming community.

Conclusion

• Of late, banks have been actively exploring inorganic growth to widen their customer base through more offerings and solutions that would come from new-age fintech companies along with low-cost technology instead of building these solutions from scratch.

• Banks don’t want to end up being just a source of capital, they want to continuously evolve into an all-in-one hub of everything that a customer would want through such strategic bets.

• They might go ahead and acquire these fintechs in the future. For instance, Axis Bank’s acquisition of payments startup Free Charge in 2017 – the first acquisition of a digital payments company by a bank in India.

Institutional investors and large brokerage firms mostly utilize algorithmic trading to reduce trading expenses. Algorithmic trading is especially helpful for high order sizes, accounting for up to 10% of global trading activity. Algorithmic trading has gained popularity among both retail and institutional traders in the 21st century. It is popular among investment banks, pension funds, mutual funds, and hedge funds that need to stretch out the execution of a larger order or execute deals that are too quick for human traders to react to.

Other institutions that use algorithmic trading include:

• Investment funds

• Pension funds

• Credit unions

• Investment banks

• Insurance companies

• Trusts

• Prime brokers

Some examples of big institutions that use algorithm trading are Chicago Trading Company, Citadel LLC, Virtu Financial, Peet’s Coffee and Tea, Optiver, Two Sigma Securities, Knight Capital, IMC Financial, ISP group, DRW, and Jump Trading.

What are the algorithm trading strategies used by big institutions?

Algo trading strategies that most of the traders use include:

• Pairs trading: Also known as pair trading, it is a market-neutral technique that allows traders to benefit from short-term differences in the relative value of close substitutes. The law of one price cannot ensure price convergence in pairs trading. This especially applies while using the technique on individual equities.

• Arbitrage: This approach is used by institutional investors who want to profit from small market price differences when a security’s market price trades on two different exchanges. Three criteria must be satisfied for arbitrage to take place:

  • First, on all markets, similar assets should not trade at the same price.

  • Second, two assets with the same cash flows should not be purchased or sold simultaneously.

  • Finally, an asset with a known future charge should not be traded using that pricing.

• Delta-neutral strategies: Delta-neutral refers to a portfolio of linked financial assets in which the portfolio value is unaffected by minor changes in the underlying security’s value. The positive and negative delta components of such a portfolio are generally offset, resulting in the portfolio’s value being relatively insensitive to changes in the value of the underlying investment.

• Mean Reversion: Mean reversion is a mathematical approach for investing in stocks that may also be applied to other activities. It is the process of determining a stock’s trading range and then figuring the average price using analytical approaches pertaining to assets, earnings, and other factors.

• Trend following: It is one of the most widely utilized algorithm-based trading methods. The goal of this strategy is to uncover patterns employed in the purchasing and selling process.

• Scalping: This method is distinct from others. It is determined by the difference in bid and the security price. This approach will need a lot of money to deliver the expected outcomes. As a result of its complexity, it is handled by professionals. If you are new to investing, stay away from this approach until you have mastered the fundamentals of trade strategies.

Talking about how automated trading grew, Tom Debus, the Managing Partner for Cryptonomics Capital Ltd. has rightly pointed out that, “We have been expanding our automatic trading techniques in the crypto market over the past ten months to include more complicated signals. We can now adapt our algorithms to various market circ*mstances following successful backtesting and numerous iterations and modifications of the methods.”

“Free Trade Agreement is necessary because Every man lives by exchanging ”

As the saying goes Man needs to exchange so that he gets a better living. The concept of exchange is not restricted to two individuals , today it is a global concept. With Globalization Trade relations have boosted between all countries. The goal of globalization is to boost economies around the world by making markets more efficient. Trade Relations also developed the concept of Trade Agreements

What are Trade Agreements?

Trade agreements occur when two or more nations agree on the terms of trade between them. They determine thetariffsand duties that countries impose onimportsand exports. All trade agreements affectinternational trade.

So what are Free Trade Agreement ?

FTAs are the arrangements between two or more trading alliances that primarily agree to lessen or dispose of customs tariff and non-tariff barriers on substantial trade between them.

Under afree trade policy, goods and servicescan be bought and sold across international borders withlittle or no government tariffs, quotas, subsidies, orprohibitions to inhibit their exchange. The concept offree trade is the opposite of trade protectionism or economic isolationism.

In the modern world, free trade policy is often implemented using a formal and mutual agreement of the nations involved. However, a free-trade policy may simply be the absence of any trade restrictions.

Why Free Trade Agreement is Significant for India

1. It is an Opportunity for India in the post Covid World
2. Increase Global Supply
3. A Bigger Market Size
4. Increase in Exports

FTAs have been beneficial for India. From 1993 and 2018, India’s exports of manufactured products grew at an annual average of 13.4% to nations with which it has trade agreements

India Israel Relations

• Israel and India are preparing to resume Free Trade agreement and for discussing the same Indian Delegates arrived at Jerusalem.
• Israel’s Economic Ministry said a senior team from India’s Industry and Trade would meet with their Israeli counterparts to discuss the ground rules but did not say when actual trade negotiations would resume.
• India Israel Economic Ties have become stronger and both the countries have developed close relationship for about more than eight years and ever since Indian Prime Minister Narendra Modi has been in power the two countries have developed a partnership for strategic, military and technology.
• Bilateral Trade between India and Israel totalled $6.3 billion in 2021 which is up from $ 200 million in 1992.
• Israel has emerged as one of the biggest suppliers of weapons alongside the United States and Russia. Former Israeli ambassador Mr Ron Molka said that the trade would be great deal and would also ease trade barriers for Israeli Companies Operating in India.

Commercial Relations

• India is the largest buyer of Israeli military equipment and Israel is the second-largest supplier of military equipment to India after Russia. From 1999 to 2009, military business between the two nations was worth around US$9 billion. Military and strategic ties between the two nations extend to intelligence-sharing on terrorist groups and joint military training.
• In recent years, bilateral trade has diversified into several sectors such as pharmaceuticals, agriculture, IT and telecom and homeland security. India is Israel’s third-largest trade partner in Asia and seventh largest globally. Major exports from India to Israel include precious stones and metals, chemical products, textiles and textile articles, etc.
• Major imports by India from Israel include precious stones and metals, chemicals and mineral products, base metals and machinery and transport equipment.

Agriculture:

• Under a comprehensive Work Plan for cooperation in agriculture signed on 10 May 2006 India has benefited from Israeli expertise and technologies in horticulture mechanization, protected cultivation, orchard and canopy management, nursery management, micro-irrigation and post-harvest management particularly in Haryana and Maharashtra.
• Israeli drip irrigation technologies and products are now widely used in India. Some Israeli companies and experts are providing expertise to manage and improve dairy farming in India through their expertise in high milk yield.

Defence & Security:

• India imports critical defence technologies from Israel and There are regular exchanges between the armed forces.
• There is cooperation on security issues, including a Joint Working Group on Counter-Terrorism.
• India and Israel signed three important agreements on Mutual Legal Assistance in Criminal Matters, Cooperation in Homeland Security, and Protection of Classified Material.
• Since 2015, IPS officer trainees have been visiting the Israel National Police Academy every year for a one-week long foreign exposure training at the end of their training in the National Police Academy, Hyderabad.
• The Army has decided to order launchers, Spike Anti-Tank Guided Missiles (ATGM) and additional Heron Unmanned Aerial Vehicles (UAV), from Israel through the emergency procurement route.

Cooperation in S&T and Space:

• India-Israel cooperation in S&T is overseen by the Joint Committee on S&T, established under the S&T Cooperation Agreement signed in 1993.
• In 2017, an MoU for establishing the India-Israel Industrial R&D and Innovation Fund (I4F) by the Department of Science and Technology, India and the National Authority for Technological Innovation, Israel was signed.
• This MoU, with a contribution of $ 20 m from each side over 5 years, is expected to play an important role in enabling Indian and Israeli enterprises to undertake joint R&D projects

Benefits for India from the Free Trade Agreement

The full potential of this relationship will be achieved only when business and commercial interests are mutually beneficial and the associations directly affect people. The benefits will need to be accessible and available for common citizens. Benefits Are listed as Follows

THIS IS IT

• Israel can benefit from the Transformational journeys of many self-help women’s collectives in India that have shown the way with the grassroots development model.
• Israel is one of the few countriesthat can Help India in achieving self-reliance in the production of semiconductors. On citizen-to-citizen level engagement, both countries must come forward to build an institutional mechanism to share their community practices.
• For example, India needs to learn a lot from theInspirational role Kibbutz and Moshav as agriculture cooperatives playin nation-building in Israel.
• There is a strong need touse Soft power diplomacy to build people-to-people bridges and to add to economic benefitsthrough robust inter-country tourism.
• India’s world-class institutes of higher education could benefit from the strongculture of research and innovationthat thrives in Israel.
• Thecurrent crisis scarcity of Semiconductor chips can occasion a partnership by building chip manufacturing in India.
• Nothing touches our lives better than Cultural exchanges and connections. Indo Israeli Cultural connections have become stronger over the years
• This needs to be revived after the current disruption and a Two-way street needs to be created.

Bangladesh has sought a $4.5 billion loan from the International Monetary Fund. It has joined South Asian Neighbors Pakistan and Sri Lanka in seeking help from IMF.

Before we get in to this topic Lets Understand Bangladesh Economy

• Bangladesh is characterized as a developing market economy. It is the 41st largest in the world in nominal terms .
• It is 30th largest by purchasing power parity , international dollars at current prices.
• It is classified among the Next Eleven emerging market middle income economies and a frontier market. In the first quarter of 2019, Bangladesh’s was the world’s seventh fastest-growing economy with a real GDP or GDP at constant prices annual growth rate of 8.3%.
• Bangladesh also has substantial reserves ofnatural gasand is Asia’s seventh largest gas producer. It also has large deposits oflimestone.
• Bangladesh is strategically important for the economies ofNepalandBhutan, as Bangladeshi seaports provide maritime access for theselandlockedregions and countries.

How Bangladesh has grown over the years?

• Bangladesh has an impressive track record of growth and development.
• It has been among the fastest growing economies in the world over the past decade, supported by a demographic dividend, strong ready-made garment (RMG) exports, remittances, and stable macroeconomic conditions.
• The country made a strong economic recovery from the COVID-19 pandemic.
• With nearly 6.9 million girls in secondary schools in 2020, Bangladesh is among the few developing countries to achieve gender parity in school enrollment and has more girls than boys in secondary schools. Improving the quality of education at all levels remains the largest challenge for Bangladesh.
• Despite high population density, decreasing arable land, and frequent natural disasters, Bangladesh has made remarkable progress in achieving food security and reducing poverty.
• Almost half of the population are employed in the agriculture sector.
• In Chattogram, the second largest city in Bangladesh, almost 780,000 people now have access to water supply, including those in the urban slums.
• With IDA support, Bangladesh introduced an electronic government procurement (e-GP) system in 2012 that transformed the public procurement process into one that is more efficient, transparent, and accountable.
• Bangladesh spends about $25 billion on public procurement annually—equivalent to roughly 40% of its annual budget—the country’s e-GP system has contributed to average annual savings of $1.1 billion, enough money to build over 10,000 km of rural roads or 8,000 primary schools.
• The Bank has been a long-time partner, providing financing and technical support to help Bangladesh strengthen and modernize social protection programs.

So what went wrong at Bangladesh?

• Bangladesh’s foreign exchange reserves fell to $39.67 billion as of July 20 – sufficient for 5.3 months’ worth of imports – from $45.5 billion a year earlier.
• Reserves had fallen nearly 10% to $41.82 billion at the end of June from over $46 billion a year earlier.
• Bangladesh’s central bank has said a decline in the inflow of remittances by Bangladeshi workers and a rise in import payments have put pressure on the foreign reserves, leading to a depreciation of the country’s Taka currency.
• The central bank spent nearly $5.7 billion in 11 months through May of the 2021/22 fiscal year trying to support the Taka.
• Foreign direct investment flows declined 18.65% to $888.5 million during the Jan-March period from a year earlier.
• The trade deficit widened to $27.2 billion in the July 2021-May 2022 period as imports surged to nearly $59 billion while exports rose at a slower pace to $31.5 billion.
• Retail inflation hit an 8-year high of 7.56% in June, driven by rising food and energy prices following a spurt in global commodity prices after Russia’s invasion of Ukraine in February.
• Remittances from overseas Bangladeshis fell 5% in June to $1.84 billion, the central bank said, as many migrant workers lost their jobs because of the COVID-19 pandemic.
• Prime Minister Sheikh Hasina has imposed curbs on imports of luxury goods such as sedan cars, gold jewellery and non-essential items, and on fuel imports including liquefied natural gas (LNG) despite frequent “load-shedding” to contain capital outflows.

Challenges for Bangladesh

• Production and distribution of goods and services was repeatedly disrupted over the past two years. As a result, shortage of supply has been observed in almost all sectors of the economy. The ongoing economic and political instability in the international arena, especially the protracted Russia-Ukraine war, has severely disrupted the supply chain again.
• Consequently, prices of industrial and essential consumer goods, including raw materials, have skyrocketed worldwide. The same is observed in Bangladesh.
• The country imports fuel and foodstuffs such as wheat, edible oil from Russia and Ukraine. The Consumer Price Index (CPI) rose from 6.17 per cent in February 2022 to 6.22 per cent in March, the highest since October 2020.
• However, the real inflation is believed to be much higher than the officially stated rate because the food basket, based on which current inflation is calculated, has changed in the last couple of years.
• Hence, the government of Bangladesh must fight the soaring inflation if it aims to avoid a nationwide drop of purchasing power.
• Second, the country has been experiencing a tumultuous foreign exchange rate, which is closely linked to inflation. The upward trend in the value of US$ against Bangladeshi Taka (BDT) is currently at the center of discussion in the country.
• When inflation rises, the purchasing power of the domestic currency decreases. Like other markets, the value of the dollar against BDT rises when the demand for the dollar in the domestic market increases. At present, the primary reason for the increase in demand for dollar is the mounting import costs due to the upward trend in the prices of major commodities.
• On the other hand, despite the boom in export earnings, Bangladesh’s export items are limited. The readymade garments sector is certainly the largest sector for earning foreign currency. However, the value added of the readymade garments sector is not that high.
• Therefore, to get all the benefits from the ready-made garment sector, the country can emphasize on setting up backward and forward linkage industries.
• Remittance remains a noteworthy and stable source of foreign currency for the country. However, a large number of expatriate Bangladeshis returned to the country during and following the pandemic. As a result, foreign remittance inflow dwindled significantly.
• Compared to 2020, the expatriate income has increased by only 2.2 per cent in 2021, amounting to US$22 billion.
• Moreover, monthly remittance inflows have been declining since the beginning of 2022, except for the month of Ramadan, which usually experiences an influx of remittance during the festive month.

Bangladesh seeks help from IMF

• Bangladesh has formally requested for a USD 4.5 billion loan from Washington-based multilateral lender International Monetary Fund (IMF) to combat the ongoing financial crisis in the country.
• Bangladesh asked for loan from the IMF in view of rapidly declining foreign exchange (Forex) reserves.
• In a letter to IMF Managing Director Kristalina Georgieva, the government sought the loan as a balance of payment and budget support as well as to mitigate the effects of climate change on Bangladesh.
• According to Finance Ministry officials, USD 1.5 billion of the USD 4.5 billion, which the country has sought to mitigate the on-going crisis, would most likely be interest-free and the remaining amount would come at an interest less than 2 per cent.
• An IMF mission is expected to visit Bangladesh in September to negotiate the terms and conditions for the loan.
• A deal is expected to be locked by December, and to be placed before the global lender’s board meeting in January, the officials added.
• Renowned economist Debapriya Bhattacharya, however, said Bangladesh will have to go through several conditions to get a loan from the multilateral lender, which puts harsh conditions in front of the borrower country to get the loan.

Recommendations by IMF

• The IMF has recommended removing the interest rate caps on lending and borrowing. Apart from a market-based floating exchange rate of Taka or foreign currency exchange rate system, the organisation has also suggested resetting the methodology on foreign currency reserves.
• In South Asia, Sri Lanka, facing its worst economic crisis in seven decades, is currently in negotiations for an IMF bailout.
• The island nation ran out of foreign currency to import, even its most vital essentials, triggering long queues at petrol stations, food shortages and lengthy power cuts.
• Pakistan, whose foreign exchange reserves are rapidly depleting, reached an agreement with the IMF earlier this month to pave the way for the release of an additional USD 1.2 billion in loans and unlock more funding.

Introduction

Foreign Exchange market has grown immensely over the past few years. Foreign exchange becomes more important when import and export business takes place and the need arises for currency conversions. So here let us understand about one such currency pair i.e. USD-INR and how important it is foreign exchange market.

Currency Pairs

Forex market trading happens at International Level that allows trading in different currencies like INR, EUR, JPY, and GBP. For India trading is possible only through INR. The trading can be done through BSE, NSE, or MCX-SX. USD/INR is among the popular currency pairs. Each currency pairs have two currencies in them. One is known as base currency and the other is known as quotation currency. In case of USD /INR, USD is the base while INR is the quotation and value of one USD is 82.85 INR.

There are many other currency pairs apart from USD/INR which are as follows

1. USD/CAD
2. EUR/USD
3. GBP/USD
4. NZD/USD
5. AUD/USD
6. USD/CHF
7. EUR/JPY

Where

USD = US Dollars

EUR = European Dollars

GBP = Great Britain Pound

NZD = New Zealand Dollar

AUD = Australian Dollar

JPY = Japanese Yen

CAD= Canadian Dollars

What are the Factors that Impact USD-INR Currency Pair Prices?

1. Inflation Rates

Market Inflation has a major impact on the foreign currency exchange rates. A country which has lower inflation rate than other will see an appreciation in its value of its currency. Where the inflation is low price rise is also low. Country whose inflation is high always sees a depreciation in its value of currency.

2. Interest Rates

Changes in Interest Rates effects the currency value and dollar exchange rate. Forex rates, interest rates and inflation all the three terms have correlation with each other. Increase in the interest rates causes currency to appreciate as higher rate of interest provides higher returns to the foreign lenders and thereby increasing the foreign capital and this leads to rise in exchange rates.

3. Country’s Current Account and Balance of Payment

Current Account reflects the balance of trade and earnings on foreign investment. It includes total number of transactions such as exports, imports, debt etc. A deficit in current account occurs when there are huge amount of imports than the exports carried out. Balance of Payment fluctuates exchange rate of domestic currencies.

4. Government Debts

Government Debt is national debt which is owned by the central government. A country where there are large amount of Government Debts the possibility of acquiring foreign capital is very low. There is high chances of inflation too. Foreign investors will sell their bonds in the open market if there is government debts, As a result decline on value of exchange rates follows.

5. Political Stability and Performance

Political Stability and Economic Performance effects the currency strength of the country. Where there are political disrupts and turmoil, foreign investors become reluctant to invest in such country. A country with sound financial trading policy experience more stability in their currency value but where there is political instability currency value also depreciates simultaneously.

6. Terms of Trade

A trade deficit also can cause exchange rates to fluctuate. Terms of Trade is related to ratio of export prices to that of import prices. A country’s terms of trade improves if the exports increase at a greater level than that of the imports. This results in higher revenue due to which demand for currency increases as well as currency value appreciates.

7. Recession

Recession means a situation where there is economic decline and trade, industrial activities are reduced followed by fall in GDP. Now when the country is in such a crisis there will be obvious impacts on countries currency. Foreign capital inflow reduces as foreign players avoid investing when the economy is under crisis.

8. Speculation

Speculation means believing in something without any strong evidence. In stock market, investors speculate about gaining profit without having strong evidence about it. Due to this speculation investors demand more with the expectation of returns. This appreciates currency value and exchange rates as well.

What is PIP?

PIP means Point in Percentage. It is the basic unit in foreign exchange trading. When references rates are stated by the apex bank i.e. the Reserve Bank of India the quote is till the 4^th Decimal point. Even a small difference in the fourth point can make a huge difference in foreign reserves. All over the world, the currency is quoted till the 4^th Decimal Point. This is called PIP. It is fixed at 0.0025 for USD/INR. It is also known as tick size. The lot size is fixed to USD 1000.

Trading USD/INR in Derivative Market

Earlier Indian Businesses could hedge their currency exposure with the help of banks by buying forward contracts in the forward market. Currency Derivatives have bought in a major change. It is now much easy to cover currency risk by opening a trading account with the broker. These currency futures and currency options can be bought and sold from the comfort of your home through the internet trading platform. Since India’s trade and commerce continues to be denominated in USD, the USD/INR pair has become popular pair.

Benefits of Opting for the USD/INR pair in the currency derivative market

USD/INR pair can be opted by resident Indians or NRI, even if there is no underlying but only up to certain limit. This is not like the forward market where you can hedge an underlying currency exposure. The bid ask spreads are as low as 0.0025 and that substantially reduces the risk of liquidity while trading. The USD-INR pair is based on the transparent market mechanism. This makes it more preferable for individual traders who have limited access to information and insights

How Global factors Influence the Value of Rupee?

• Capital flows; both FPI and FDI

Foreign direct investment (FDI) is known as stable money while FPI flows are called hot money. They are called so because FPI flows are portfolio flows and can reverse direction at short notice. The equity sell off in the year 2008 and debt sell off by FPI in the year 2013, in both these situations, the INR value depreciated sharply. Over the last 2 years, India has emerged as the largest annual recipient of FDI investments and that has given a higher degree of stability to the INR. More selling often increases more demand for dollars and thus rupee becomes weaker. Capital outflows have major impact on the rupee as FPI wants their money invested to be safe.

• Fed Rates

US Bonds are based on the Fed rates. When the Fed Rates are high you can expect higher yields on US Bonds. Global investors willing to make money can grab this great opportunity.

• The investors feel that US Bonds is safer than risking oneself. When Fed Rate increases Rupee weakens.
  
  Currency Wars

Currency war is a situation where countries sometimesdevaluetheir currencies hoping to make debt payment easier and also to stimulate the economy. By lowering the value of the currency exports become cheaper than those of other countries and helps in boosting employment. The situation where one country devalues its currency and other follow the suit to boost their economies by shifting the balance of trade it is known as currency war. The rupee value is measured in terms of US$. Hence it is default exposed to external factors.

What are the Indicators of USD-INR Pair?

1. Dollar Index

It tracks the dollar movement against 6 major leading currencies in the world. It just like the NIFTY index made up of 50 stocks and gives the investor broad direction about the equity market. DXY gives the broad indication of dollar movement globally. For example during Covid 19 FY 2020-21, DXY jumped from 96/97 to 103 and from there retracted to as low as 89.50/90. During the same time USD-INR moved from 72.50 to 76.50+ and slowly pulled back as DXY came down. Thus price of DXY can be tracked to check USD-INR value.

2. Crude Oil

India imports crude Oil on a very large scale which contributes around 20-22% share. Higher the crude oil prices INR would depreciate more.

3. Capital Flows

As we track FPIs number in the equity market, similarly FX traders watch capital flows in economy. Higher the flows, higher the possibility of INR appreciating against dollar. Also when the outflows are higher rupee can weaken more than dollar.

4. Risk Sentiments

It defines how the market is looking at risk. Better the risk sentiment, better for EM currencies. The best indicator to gauge risk sentiment is performance of global equity market and other risks assets like commodities and it is also dependent upon global growth and liquidity.

5. RBI Intervention

This is a difficult task to guess when RBI can intervene in FX market. The point to be remembered here is FX also has an impact on external trade and competitiveness of Indian products in international market. Hence, RBI, at times intervenes to ensure orderly price movement and maintain export competitiveness.

Why is USD becoming stronger than INR?

The Year 2022 was not so good for Indian Rupee. The reasons included global tantrums and domestic factors such as rising inflation. Dollar strengthened amid Russia-Ukraine conflict, global inflation concerns led surge in US Bond Yields, and the result is an appreciating Dollar.

Supply chain disruptions and food inflation have added up to the above reasons. Russia-Ukraine war seems to have no solution and there is a slowdown in world’s three largest economies i.e. US, China and Europe. Though Indian currency looks weaker, but there is an expectation that Indian economy will perform much better in the near future in the second half of the year 20

In the past few weeks, Corporate Dollar Demand, foreign fund outflows, risk averse sentiments and broad based strength in the dollar are the major factors that contributed to push the rupee towards lower side. Also rise in inflation has put a high pressure on the Reserve Bank of India to hike interest rates. But in the near future the spot USD/INR seems to be bullish momentum oscillators and indicators.

Conclusion

Thus it can be said that US Dollars is considered as the benchmark for global transactions and therefore it has a direct impact upon the strength of the Indian Rupee. India being US’ ninth largest goods trading partner , the two countries enjoy strong collaborations in precious metals and stone, mineral fuels and pharmaceuticals which makes the USD/INR pair an exciting one for the traders looking to earn profit for long term and also for short term opportunities.

Revenue, the lifeblood of any business, is not merely a financial term but the heartbeat of economic sustainability. This article will delve into the intricate world of revenue, exploring its types, recognition methods, and pivotal role in financial management.

Defining Revenue

At its core, revenue represents a business’s total income through its primary operations. The financial fuel keeps the engine running, enabling companies to cover expenses, invest in growth, and ultimately thrive in the marketplace.

Types of Revenue

Revenue, the lifeblood of any business, manifests in various forms, each playing a unique role in shaping financial landscapes. Understanding the nuances of these revenue types is essential for effective financial management and strategic decision-making. Let’s delve into the intricacies of the different kinds of revenue.

Operating Revenue

1. Definition

Operating revenue, or turnover or sales, is derived from a company’s primary business activities. It represents the income generated directly from the sale of goods or services.

2. Examples

• For a software company, revenue is from selling software licenses.
• Retail sales revenue for a clothing store.

3. Significance

Operating revenue is crucial as it sustains day-to-day operations and serves as a benchmark for a company’s core business performance.

Non-Operating Revenue

Definition

Non-operating revenue encompasses income derived from activities outside a company’s core operations. These revenues are incidental and don’t constitute the primary source of income.

Examples

• Interest earned on investments.
• Gains from the sale of assets.

Significance

While non-operating, this revenue can contribute significantly to a company’s overall financial health, providing additional income streams.

Recurring Revenue

Definition

Recurring revenue is predictable and repetitive income that a business can expect at regular intervals. It often results from ongoing contractual agreements or subscriptions.

Examples

• Subscription fees for streaming services.
• Monthly maintenance contracts for software support.

Significance

Recurring revenue provides stability, allowing businesses to forecast and plan more effectively.

One-Time Revenue

Definition

As the name suggests, one-time revenue is non-recurring income that doesn’t repeat regularly. It often results from unique transactions or events.

Examples

• Revenue from the sale of a company’s property.
• Income from a one-time consulting project.

Significance

While not consistent, one-time revenue can inject a significant financial boost, especially during periods of financial need.

Gross Revenue

Definition

Gross revenue represents the total income a company generates before deducting any expenses. It provides a broad overview of a company’s earning potential.

Examples

• Total sales before accounting for the cost of goods sold (COGS).

Significance

Gross revenue is a crucial indicator of a company’s overall financial health and its capacity for growth.

Net Revenue

Definition

Net revenue, or net sales, is the income after deducting all operating expenses, including COGS and other direct costs.

Examples

• Sales revenue minus returns, discounts, and allowances.

Significance

Net revenue reflects a company’s profitability, offering a more accurate financial performance.

Deferred Revenue

Definition

Deferred revenue arises when a company receives payment for goods or services before delivery. It represents an obligation to fulfill the promised products or services.

Examples

• Prepaid subscriptions for a future period.
• Advance payments for custom-made products.

Significance

Understanding deferred revenue is crucial for proper financial reporting and meeting future obligations.

Unearned Revenue

Definition

Unearned revenue is similar to deferred revenue but pertains to services or products a company owes to a customer. It represents a liability until the service or product is delivered.

Examples

• Gift cards or vouchers that have yet to be redeemed
• Deposits for services are yet to be provided.

Significance

Unearned revenue highlights the importance of fulfilling customer obligations and managing liabilities effectively.

Revenue Recognition

Revenue recognition is critical aspect of financial accounting, guiding businesses on when and how to record their earned income. This process ensures transparency and accuracy in financial reporting, allowing stakeholders to make informed decisions. Let’s delve into the intricacies of revenue recognition to understand its importance and nuances.

Definition of Revenue Recognition

Revenue recognition refers to the formal acknowledgment of revenue by a business. It involves identifying when a sale has occurred, determining the amount of income earned, and allocating it to the appropriate accounting period. This process is essential for reflecting a company’s financial performance accurately.

Principles and Standards

Generally Accepted Accounting Principles (GAAP)

In the United States, GAAP provides a framework for revenue recognition. GAAP outlines specific criteria that must be met for revenue to be recognized, ensuring consistency and comparability in financial statements across different entities.

International Financial Reporting Standards (IFRS)

Globally, IFRS sets out principles for revenue recognition. IFRS focuses on recognizing revenue when goods or services are transferred to the customer, reflecting the actual economic substance of transactions.

Importance of Accurate Revenue Recognition

1. Financial Statement Accuracy:Proper revenue recognition ensures that financial statements accurately reflect a company’s performance, providing stakeholders with reliable information.
2. Decision-Making:Investors, creditors, and other stakeholders rely on financial statements to make informed decisions. Accurate revenue recognition is crucial for assessing a company’s financial health and growth potential.
3. Regulatory Compliance:Adhering to established accounting principles and standards ensures regulatory compliance. This is particularly important for publicly traded companies and those subject to auditing.
4. Investor Confidence:Transparent and consistent revenue recognition practices enhance investor confidence. Investors are more likely to trust companies that adhere to recognized accounting standards.

Challenges in Revenue Recognition

1. Complex Contracts:Contracts with multiple performance obligations or variable considerations can challenge accurately determining transaction prices and allocating revenue.
2. Timing Issues:Recognizing revenue too early or too late can distort financial statements and mislead stakeholders.
3. Consistency Across Periods:Maintaining consistency in revenue recognition practices is crucial for meaningful financial analysis over different reporting periods.

Key Metrics Related to Revenue

Understanding critical metrics related to revenue is paramount for businesses seeking to gauge their financial health, growth potential, and overall performance. These metrics provide insights into various facets of revenue generation, offering valuable information for strategic decision-making. Let’s explore these critical metrics in detail.

Gross Revenue

Definition

Gross revenue represents the total income generated by a business before deducting any expenses. It is a comprehensive figure that includes all sales without considering the cost of goods sold (COGS).

Significance

Gross revenue provides a snapshot of a company’s overall revenue-generating capacity. It is a starting point for evaluating financial performance.

Net Revenue

Definition

Net revenue, also known as net sales or revenue after deductions, is the income remaining after subtracting various assumptions such as returns, discounts, and allowances from the gross revenue.

Significance

Net revenue offers a more accurate representation of a company’s profitability. After accounting for necessary deductions, It reflects the revenue generated from core business activities.

Revenue Growth

Definition

Revenue growth measures the percentage increase in a company’s revenue over a specific period. It is a crucial metric for assessing a company’s ability to expand and attract new customers.

Significance

Positive revenue growth indicates a healthy and thriving business. It attracts investors and signifies that the company is gaining market share or successfully introducing new products and services.

Average Revenue Per User (ARPU)

Definition

Average Revenue Per Usercalculates the average revenue generated by each customer or user over a specific period. It is particularly relevant for subscription-based businesses.

Significance

ARPU helps businesses understand the value each customer contributes to overall revenue. It guides pricing strategies and customer retention efforts.

Customer Lifetime Value (CLV)

Definition

CLV estimates the total revenue a business can expect from a customer throughout their relationship. It considers average purchase value, purchase frequency, and customer lifespan.

Significance

Understanding CLV helps businesses allocate resources effectively. It aids in customer acquisition strategies and highlights the importance of fostering long-term customer relationships.

Revenue per Employee

Definition

Revenue per employee calculates the amount of revenue generated by each employee. It is a measure of workforce productivity and efficiency.

Significance