An Initiative By :

DEPARTMENT OF COMMERCE School of Commerce and Management

Central University of Rajasthan, Kishangarh, Ajmer , India

Contact ID: comint@curaj.ac.in

Cover story :

Devaluation of Rupee

Highlights :

*Bhavani :The Entrepreneur

*Companies Act 2013

COMint Communicating Intelligence...

A QUATERLY E –MAGAZINE VOLUME –1, ISSUE-1, OCTOBER-DECEMBER,2013

Cover Story : Devaluation of Rupee Companies Act , 2013 Face to Face : Bhawani Story of an Entrepreneur Foreign Exchange Management Act

Companies Act, Companies Act, Companies Act, 2013.2013.2013.

Upcoming Conferences

CONTENTS

Cover Story : Devaluation of Indian Rupee

M oney is used by every human being on this earth, with the exception of someone living

on some undiscovered island. Money is the value assigned to a commodity, a piece of

paper, a coin or electronic data (think online banking and credit cards). It can be of dif-

ferent types-commodity money, representative money, fiat money and commercial bank

money. Gold coins, wheat, cattle or anything that has a value of its own and is used as a medium of ex-

change is commodity money. The use of commodity money is similar to barter, except that the commodity

used is widely accepted and can be easily handled. Representative money is token coins and notes that can

be exchanged for a fixed amount of precious metals or other commodities. Fiat money's value is imposed

by the government, which makes refusal of payments made in the notified legal tender, in the form of cur-

rency notes and coins, illegal. Instruments such as cheques, demand drafts and banker's drafts are commer-

cial bank money. They exist as entries in ledgers of financial intermediaries and can be used to make pay-

ments for goods and services

DEVALUATION OF MONEY

The devaluation of Indian Rupee is a matter of great concern for the general public of India, government of

India and the economists of our country as well . It is being discussed at every nook and corner of our

country.

What devaluation actually means?

Devaluation means, in layman language, a fall in the value of domestic currency in terms of foreign cur-

rency. For example, suppose the exchange rate between rupee and dollar is Rs 50= 1 $. If this exchange

rate is fixed at Rs. 60 = 1$ then it is called

Devaluation of Indian Rupee: Continues...

devaluation of rupee. Earlier Rs.50 could purchase a dollar and now more rupees Rs 60 are required to get

a dollar. So the value of rupee in terms of dollar has declined.

HISTORY OF INDIAN RUPEE AND ITS EXCHANGE RATE WITH US DOLLAR

After Independence i.e., from 1950 to 1973, Indian rupee was linked to British pound. In 1966 and 1973

devaluation happened. On 24th September 1975, the connection between Indian rupee and pound was bro-

ken. In 1975, the rupee ties to the pound sterling were disengaged. India established a float exchange re-

gime. In 1993 Liberalized exchange rate system (LERMS) was replaced by the unified exchange rate sys-

tem and hence the system of market determined exchange rate was adopted.

Rate of Exchange between Dollar and Rupee

FACTORS INFLUENCING VALUE OF MONEY The value of money keeps on changing with the society and its economic condition. One rupee in 1947 is

not same as one rupee today, in purchasing power. Generally, the value of money is linked with the eco-

nomic condition of a country.

1 4.79 4.79 4.77 4.78

7.56 8.39 7.86 12.36

17.5

32.42

44.94 44.09 47

65

0

10

20

30

40

50

60

70

194719501955196019651970197519801985199019952000200520102013

R

u

p

e

e

s

Year

RATE

Devaluation of Indian Rupee: Continues...

It depends upon the factors such as

Exports and Imports

Inflation

Interest rates

Growth Rate of country

Trade deficit

Performance of Equity Market

Foreign Exchange Reserve

Macro-economic policies

Foreign Investment Inflows

Banking Capital and

Geo-political conditions of country.

Income levels influence currencies through consumer spending. When income increases, people spend

more. Higher demand for imported goods increases, demand for foreign currencies and thus, weakens the

local currency. Trade balance (net inflow/outflow of money) and flow of capital, also affects the value of a

country's currency.

An increase in interest rates makes currency expensive, changes in cash reserve and statutory liquidity ratio

increases or decreases the quantity of money available, ultimately impacting its value. Since world is con-

verting into a global village, the international trade and movement of people is increasing rapidly, but there

is no currency that is acceptable across the globe. If you go to abroad for studies or for vacations, you have

to pay for services and goods in the currency that is accepted in that country. Even for online shopping on

stores run by foreign based companies, you have to pay the foreign exchange. The foreign exchange rate

for conversion of currencies depends on the economic situation and the exchange rate followed by the

country. Floating exchange rates, or flexible exchange rates, are determined by market forces without ac-

tive intervention of central government.

In layman language, due to heavy imports, the supply of the rupee may go up and its value declines. In

contrast, when exports increase and dollar inflows are high, the rupee strengthens.

Devaluation of Indian Rupee : Continues...

CONSEQUENCES If you are thinking that, you have seen the worst of Indian economy, this season, then you should change

your thinking. After the devaluation of Indian Rupee, decelerate in economic growth, increase in inflation,

the next point of bigger concern is the increase in the rate of interests of various banks. It has been started

already and some banks like Axis Bank, HDFC Bank have already changed their base rates.

Why such things are happening, that is hike in interest rates? It has some obvious reasons. The several

faulty measures taken during the last three months has completely squeezed the supply of money with

banks. The steps taken to control devaluation in the value of rupee hasn‟t worked at all but these moves

have ensured troubles by banking system.

Ten year yield of government bonds have risen to 9.6% and are likely to increase in the days to come if sit-

uation continues like this. With little money in disposal, there is no other option for banks, but to raise in-

terest rates.

What will be the impact of this rate hike?

It is obvious that home loans, car loans and other loans for individuals will become dearer. This will also

affect the monthly expenditures of individuals and will exhaust their savings. Corporate sector will also be

hit hard with increased rate of interest as they will have to borrow the sum at higher rates. In fact this will

derail the entire economic system of India and will retard the growth rates.

ADVANTAGES

It‟s not that Devaluation of Rupee is always negative, it‟s a deliberate policy of the government ,it has its

advantages also.

Export-oriented sectors will benefit from rupee devaluation. These include software services, pharmaceuti-

cal and agriculture. These industries are basically export oriented. When rupee depreciates, exporters get

more for each dollar of sale proceeds.

REFERENCES

India today

Financial experts

Business today

Economic times and Google Scholar

About the author :

Alok Ranjan M.Com (III SEM) Email: alokranjan.com12@curaj.ac.in

NEW COMPANIES ACT: EXHAUSTIVE CHANGES

T he new Companies Act is came into force by replacing the Companies Act 1956. The Com-

panies Act 2013 will be enacted only after it is proclaimed in gazette ,that was already ap-

proved by the president of India on 30th August 2013.

PREVIOUS ACTS

In India, the first related to companies was in the year 1857. Then new Acts came in the year of 1866,

1882 and 1913. In 1950 a committee was made to avoid the deficiencies of the Act 1913. By the recom-

mendation and instructions of this committee the Companies Act 1956 came into force. Till now it has 24

amendments.

NEW ACT IN 2013

By overtaking various hurdles, the Companies Act got approval form the parliament. The Act got it‟s

structure by the proposal made by the proficient committee headed by J.J.Irani. This committee was en-

trusted in 2004 and submitted their report on 2005. Because of this report, the companies bill was present-

ed. The aim was to annulling the 1956‟s Act and enact the new law. But the parliament was dispersed and

the bill has being time-barred. After that a new Companies bill was presented in 2011. After making some

amendments and recommendations, in 2012 the bill was passed by both the houses of parliament. And

send it to the President for deliberating it.

PRIME GOALS

To help in Governments social and economic policies

To facilitate a healthy growth of the corporate sector

To protect the interest of investors and other stakeholders

To provide the authority to government to protect interest by interfering in the management, if the

company is involved in any fraudulent activities

To introduce laws to protect shareholders interest, because there is no direct chance for shareholders in

the companies administration

To ensure creditors interest

New Companies Act : Exhaustive Changes cont...

ONE PERSON COMPANY At present the sole proprietorship is the only venture that an individual can start in India. Mean while the

new Act opens endless chances. The sole proprietorship and partnership have unlimited, that is even own-

er‟s or partner‟s personal assets also has obligation to attachment. Meanwhile the company which are reg-

istered under Company Act has only limited liability.

The ownership is different from entity, this doctrine got approval in India by this Act. By this doctrine an

One Person Company can rescue their investor from the situation of dissolution of business even the mem-

bership or share holdings are concentrated on a single hand, we can see these features in new Act:

One Person Company should be registered as private company

The memorandum of One Person Company shall indicate the name of the other person, with his prior

written consent in the prescribed form, who shall in the event of the subscriber‟s death or his incapacity

to contract become the member of the company and the written consent of such person shall also be

filed with the Registrar at the time of incorporation of One Person Company along with its memoran-

dum of association and articles of association

The words “One Person Company “ shall be mentioned in brackets below the name of such company,

wherever its name is printed, affixed or engraved

Shareholder and Director may be the same person; no restriction for appointing more Directors

No need for annual general meeting

Where there is only one director on the Board of Directors (BoD), the resolution by such director is

entered in the minutes book, signed and dated by such director and such date shall be deemed to be the

date of the meeting of BoD for all purposes

The person who signed in memorandum of association in the time of registration is considered as direc-

tor

Accounting year of such company starts for 1st April and ends on 31st March

The audit report should be submitted to the Registrar signed by any of the director within 180 days

from the last date of the financial year

New Companies Act : Exhaustive Changes cont...

Even though these are the features of One Person Company in the new Act, It needs to get recognition

from other Laws and institutions. The Company may lead to face difficulties while raising funds from fi-

nancial institutions because of the „limited liability‟ feature of One Person Company .

SMALL COMPANIES There exist some differences in case of small companies as compared to companies Act 1956.

Only private companies are laying under this category

Paid-up capital of which does not exceed Rupees 50 lakh and turnover of which as per its last year

profit and loss account does not exceed rupees 2 crore

The holding company, subsidiary company, charitable institution and any company that is formed by a

special Act are not included under small companies

The title of small companies may change from year to year , because it depends upon the capital and

turnover.

BASIS COMPANIES ACT 1956 COMPANIES ACT 2013

Maximum number of Directors

12 15, may appoint more after passing special resolution

Number of Direc-tionship

15, except directionship in private compa-ny, unlimited companies, alternative direc-tionship and charitable companies

20, including alternative companies. In which the number of public com-panies should not be more than 10

Composition of board of directors

Minimum number of directors 2 in case of private limited companies, 3 in case of public sectors, and maximum is 12

Prescribed class of companies are required to appoint at least one wom-en director. At least one director should be a person who has stayed in India for a period not less than 182 days in the previous year

Resignation of di-rector

No specific provisions except that any change in directors to be filed with regis-trar of the company within 30 days

Director should send a copy of resig-nation letter and detailed reasons for resignation to registrar within 30 days of resignation

Disclosures in boards report

Section 217 contains disclosure require-ment of Board of Directors

Additional disclosure proposed by the bill, viz.,extract of annual return, number of Board meeting, corporate social responsibility, initiative and policy particulars of loans, guaran-tees, investment etc..

The directors who is not presented in board meetings

He will lose his post if he is absent in three consecutive Board meetings or all board meeting held on consecutive months with-out taking permission from the Board

If he is absent from all the meetings of the Board of Directors held during a period of twelve months with or without seeking leave of absence of the Board he will lose his post

THE CHANGES RELATED TO DIRECTORS OF THE COMPANY

SOCIAL RESPONSIBILITY It is the moral obligation of the company to spend a small part of profit for social welfare but the big

corporate houses in India aim only for profits. The new Act have some obligations that aims to those

companies who do not give importance to these social obligations. The Corporate Social Responsibility

(CSR) is not only a moral responsibility of the corporate world but also their legal obligation.

As per the Companies Act 2013, the following companies should form a CSR Committee :

Those companies whose Net worth is of Rs 500 crore or more

Those companies whose Turnover is of Rs 100 crore or more

Those companies whose Net profit is of Rs 5 crore or more

New Companies Act : Exhaustive Changes cont...

The committee should consist at least three directors out of which at least one should be an independent

director. They should create the companies CSR policies and should be implement and monitor it.

The Board is to ensure that at least 2% of the average Net profit of three years is spent by the company on

CSR activities every financial year, else the reason for not spending is to be specified in the Board‟s report

signed by director and company‟s secretary.

The committee formulates and recommends to the board, a CSR policy which shall indicate the activities

to be under taken by the company as specified in Schedule VII. The Committee should also indicate the

amount of money spent on CSR activities in the profit and loss account every year.

ACTIONS AGINST FRAUDULENT ACTIVITIES

We already seen a number of fraudulent activities with billions of rupees by the corporate houses within

the loopholes of the Companies Act 1956, this instigated the government of India to think beyond it and to

form independent statutory authority centre with Companies Act 2013. They are :

National Financial Reporting Authority

National Company Law Tribunal

Serious Fraud Investigation office

By these Authorities we can expect fair and true justice to investors, creditor and depositors from

the fraudulent activities of the corporates.

REFERENCES

http://digitalpaper.mathrubhumi.com/157516/Kasargod/09-September-2013#page/1/1 http://www.slideshare.net/ANANDGAWADE1/new-company-act-highlights http://egazette.nic.in/WriteReadData/2013/E_27_2013_425.pdf Google Images About the author : Krilesh K M..Com (III SEM) Email : krileshk.com12@curaj.ac.in

It is often hard to distinguish between the hard knocks in life and those of opportunities

Frederick Philips

T he following interview is of such a simple, humble, down to earth and most importantly

smart human being who was able to distinguish between those hard knocks in life and oppor-

tunities. He was able to capitalize on the opportunities that he saw coming. Today he is a

successful Entrepreneur in the campus of the Central University of Rajasthan. He is BHA -

VANI. The following is his interview.

Q.1 When asked about his childhood he said. .

Humare paas kuch nahi tha. He had a very scribbled childhood. He had his education till standard 8th.

Even the basic amenities of his life were difficult to be fulfilled by his family. He belonged to a very poor

family and its income was based on agriculture. After leaving school he started to work as a daily laborer.

He left for Kishangarh (the Marble city) and started to work there with an average wage of Rs. 40 – 50 per

day. He worked there for around a year or so. Then he came back to his native place and started working in

a factory which was set up within a distance of 4kms. It manufactured Hydra steel for cranes. He worked

there for 2 years.

Q.2 We asked him what was the reason behind choosing this profession?

The Central University of Rajasthan was about to be set up in the village area of Bandarsindri. Ye humara

charakha zameen tha. The area in which the university is located was previously the grazing ground of the

cattle of the village. Bhavani‟s father took the charge of fencing the area of the university. For the first one

year the university had a temporary campus at Kishangarh. When the construction of the buildings in the

university began a huge army of laborers was introduced. This is where Bhavani used his acumen and tar-

geted the needs and basic demands of the laborers. Tea was one of the most common needs of the laborers

and Bhavani grasped the opportunity. This was not the first time when Bhavani used Tea as a source of

income. Previously Bhavani‟s father had set up a tea stall in the nearby factory where the former was em-

ployed. Bhavani happily exclaims with a metaphor “ Rail patri pe chadti hai to dibbe apne aap hi lagna

shuru ho jate hain” ( When a railway engine starts the following compartments begin to join it automati-

cally). He even said that his main target was no the student community but the daily laborers who worked

there.

Q.3 We asked him what was the reason of shifting from paper cups to glass?

Yahan ka parivesh thoda bigad ne laga aur wo kafi mehnga bi tha. Education till 8th standard never

stopped Bhavani from thinking intellectually. In the beginning he was providing tea in small paper cups.

He even placed trash bins for them. Some of the students used to have tea there and dump the cups in the

dustbin but many of the students were in a habit of having tea with a walk.

FACE TO FACE

Sadly the students used to throw the cups here and there damaging the environment of the campus which

upset Bhavani. He also had a business point of view in this. Rs. 8000 to 10000 spent every month on plas-

tic cups.

This is where he had the idea of providing tea in glass. He had to make an initial expense of Rs. 2000 to get

these and a monthly investment of Rs. 500-600 for the broken or misplaced glasses. By doing this he got

the following advantages:

1.He started to work in an environment friendly manner.

2.His overall expenditure was reduced.

3.He gave a touch of sophistication when he started providing tea in glass.

4.Previously when he provided tea in the cups a strange smell was experienced by the consumers as the

quality of the tea was hampered by the gum/glue which was used in the manufacturing of the paper

cups (if consumed late). He overcame this problem also.

Q.4 We asked him a very straight forward and a simple question. Why are the students attracted to

you and not the canteen although there is just a slight difference between the price structures?

Bhavani answered “mere haav baav k liye ” (because of my behaviour towards them). He said that

when any of the students used to ring him up for any help, he was always ready for them. He used to wait

late at night for the students only to provide them tea and biscuits. And also Bhavani was able to give a

friendly ambience to both the parties, especially the students. He was successful enough to provide the stu-

dent with a completely youthful environment. He was also working very much under the rules and regula-

tions of the university.

Q.5 When asked about his past, present and future he said…

When asked about the difference in him now and six years back he said that he is very happy right now not

only because of his financial status but also because the local inhabitants of his village have started to re-

spect him a lot. He has a good reputation right now. Six years back he had no clue that he would be owning

his own tea shop and would be employing others under him.

When asked about his long term goals he said he wants to run his own restaurant in the university premis-

es. He exclaims “ apne ko yahan thodi jagah mile, hum sabka seva karein , sabko apni taraf akarshit ka-

rein aur meri famous cheez ko aur famous karun” ( I hope to get some more space here where I can attract

more and more consumers by rendering my service. I also wish to provide more fame to the items that I

provide).

He kept on saying one thing that aj main jo kuch bi hun wo sab Kendriya Vishwavidyala ki badaulat hun.

About the authors:

Anshuman Mohanty M.Com (III SEM)

Krilesh.K M.Com (III SEM)

Pankaj Agarwal M.Com (III SEM)

FACE TO FACE CONT...

HISTORY

Foreign exchange management transactions were regulated in India by the foreign exchange regulations act

(FERA),1973.This act also sought to regulate certain aspects of the conduct of business outside the country

by Indian companies and in India by foreign companies.

The FERA was widely described as a draconian and obnoxious law. Following the economic liberalization

ushered in 1991,some amendments to the FERA were affected in 1993.

There was a lot of demand for a substantial modification of FERA in the light of the on going economic

liberalisation and improving foreign exchange reserve positions. accordingly, a new act the foreign ex-

change management act(FEMA)1999,replaced the FERA.

INTRODUCTION

The FEMA, which came into effect from January 1 ,2000,extends to the whole of India and also applies to

all branches, offices and agencies outside India, owned controlled by a person residing in India.

OBJECTIVES

The objectives of FEMA are:

To facilitate external trade and payments

To promote the orderly development and maintenance of foreign exchange market

DEALINGS IN EXCHANGE MARKET

Section 3 of FEMA imposes restrictions on dealing on foreign exchange and foreign security and payments

too, and receipts from any person outside India. Accordingly, except as provided in terms of the act, or

with the general or special permission of the reserve bank, no person shall:

Deal in any foreign exchange of foreign security with any person other than an authorised person

Make any payment to or for the credit of any person resident outside India in any manner

Receive otherwise through an authorised person, any payment by order or on behalf of any person resi-

dent outside India in any manner.

Enter into any financial transaction in India as a consideration for or in association with acquisition or

creation transfer of a right to acquire, any asset out side India by any person.

FOREIGN EXCHANGE MANAGMENT ACT

FERA and FEMA: A Comparision

In FEMA, only the specified area is relating to the foreign exchange regulated, while in FE

RA ,anything and everything that has to do with foreign exchange was controlled

The aim of FEMA is facilitating trade as against that of FERA, which was to prevent misuse, in other

words, the theme of FERA was “everything that is specified is under control”. While the theme of FEMA

is “everything other than what is expressly covered is not controlled”. Thus there is lot of deregulation.

In the process of simplification, many of the “laid downs” of the erstwhile FERA has been withdrawn.

CONCLUSION

The foreign exchange management act (FEMA)1999,replaced the foreign exchange regulation act

(FERA),1973,which regulated the foreign exchange transactions in India, and which sought to control the

certain aspects of the content of business outside the country by Indian companies and in India by foreign

companies. The FEMA, which turn into effect from January 1 ,2000,extends to the whole of India also

applies to all branches , offices and agencies outside India , owned or controlled by a person resident in

India

About the author : Rashmi Raj M.Com (I SEM) Email: rashmiraj.rose@gmail.com

FOREIGN EXCHANGE MANAGMENT ACT continues…

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BEING THE RICHEST MAN IN THE CEMETRY DOESN’T MATTER TO ME….

GOING TO BED AT NIGHT SAYING WE HAVE DONE SOMETHING WONDERFUL...

THAT IS WHAT MATTERS TO ME.

STEVE JOBS (1993)

TEAM COMint comint@curaj.ac.in Contact Details Alok Ranjan 9001183058 Kriles K 7742550835 Anshuman Mohanty 9001213081

Department of Commerce Central University of Rajasthan Bandarsindri, Kishangarh Ajmer - 305801 http://www.curaj.ac.in/Default.aspx?PageId=136