In 2001, under the name Quality Contents, Raman Bal, a young IT engineer and an MBA with a flair for writing, started a small net-based content writing company. Initially, his company concentrated on copywriting on websites and writing business posts. Riding the wave of sourcing work by western countries from India, his company developed very rapidly.

On account of the high quality original content created by him, Raman Bal was also able to easily develop his company. He produced content that ranked high in the subject matter; he would research a subject thoroughly and compose content that was targeted at the target readers. With business growth, he gradually engaged freelancers and shared a portion of his income as compensation with them.

He continued to edit himself, however, before providing the customers with content. His emphasis changed from writing content itself to getting a team to write content with the increase in the business. To ensure consistency, he personally supervised them. In 2006, he had a team of twenty people who frequently worked with him. Eight of these twenty people were given the task of coordinating with consumers and content writers and four focused on quality control. Remaining individuals looked after other different business matters. There are also a good range of external experts available on a need-based basis.The company benefited from its unique structure of a network organisation consisting of different small expert groups in each subject area. Such people were not on a daily payroll and were paid on the basis of their contribution. When a task was introduced, the structure helped the organisation identify short-term priorities and deploy manpower.

The global economic climate entered a recessionary period in the year 2008. The overall market climate was very daunting, and many companies found it difficult to survive. However, the recession had little effect on Raman Bal's company.

customers were in United States and European countries. Half of his sales were to the customers in United States.

He also helped the clients during recession by providing free designs. He engaged seven designers and delivered contents in attractive designs. He would normally design the contents free of cost as an additional service. Sometimes when a complex design was requested by the client, he would charge a nominal price to cover cost. This became a huge selling point for his business as foreign clients found it really cheap to get the content designed from the same organisation. It also saved them time and hardship of getting the matter designed separately. Raman Bal also got assignments that were highly technical in nature and required services of outside experts.

In the year 2008-09 his total annual turnover increased to Rs 7 crores with a profit of Rs

3.15 crores. His portfolio of activities also increased to the following:

Marketing emails and letters

Brochures, pamphlets, fliers

Press Releases

Creating miscellaneous corporate communications

Preparation of marketing presentations.

Writing Case studies

Creation of White papers

Research / Industry / Market report writing

His business grew further. In April, 2011 his business was incorporated as a private limited company with the name Quality e-Contents India (P) Ltd. The authorized share capital was kept as Rs 80 crores consisting of 8 crore shares of Rs 10 each. Out of which sharesworth 11 crores were subscribed by seven of his friends. His previous business wasvalued at 30 crores by an independent valuer -Delhi based firm of Chartered Accountants. He was issued shares for the same amount. A Japanese venture Capital Firm Japan

Offshore Venture invested a sum of 2 million dollar into the company. ($ 1=Rs 65).

Raman Bal became the Managing Director of the company. To manage the affairs of the company, different divisions were created as operations, marketing, finance and human resources. The biggest department was operations that Raman decided to handle himself. Under him he recruited a general physician, a Chartered Accountant and an engineer to look after different technical areas. The assignments were often in the areas of medicine, finance or related to engineering. The total employee strength increased to 125. At this time Raman Bal also proposed to constitute the following committees that was kept pending:

Audit Committee

Stakeholders Relationship Committee

Corporate Social Responsibility Committee

The following is the financial performance of the company in last five years.

Particulars 2016-17 2015-16 2014-15 2013-14 2012-13

Net Sales (Rs Crores) 22 25 29 27 17

EBITDA (Rs Crores) 13 14 15 10 9

Net Profit (Rs Crores) 9 10 11 6 4

Raman Bal was very positive about his business and wanted to expand it further. He also desired to enter into the business of printing. With existing client base he felt that he can easily achieve success by exporting printed material to the foreign clients. He called a meeting of senior company executives in May, 2017 to consider expansion into printing business. The following is the excerpt of discussion:

Raman Bal

Our company has been growing steadily. Copywriting and creation of designs have given us significant growth. Now it is time for next leap. Let us install a state of Art printing press.

The Japanese venture capitalist has agreed to make further investments in the company. They have assured another 2 million dollars. They are also ready to put in more if we convert Quality e-Contents India (P) Ltd to a public company listed in major bourses in country. It is time for us to make a killing.

Shridhar, Head Finance

Printing is totally a new area for the company. In Delhi and in adjoining cities there are several printing presses. We can take printing assignment. However, instead of creating our own infrastructure, we may test the concept by outsourcing it to outside printing presses. This way we will reduce risk.

Raman Bal

We should not be pessimistic and kill the idea as soon as it is floated. Let us analyse it and if this group feels to drop the idea we can drop it. I have no objections. My average revenue per client will increase to five times. I already have an industrial plot in Noida. The same can be transferred at the market rate.

Shridhar, Head Finance

I never tried to reject the idea. I wanted to suggest a conscious approach on account of the homework that I have done. Handing a printing press would be an altogether new experience for the company. It is a capital intensive project. The project requires huge capital and running expenses. At least 20 crores for a basic setup is required. A single sheet fed four colour offset machine of a reputed brand will cost us upward of rupees 2.5 crores. I am talking about a second hand machine and not a new machine which will be at least 7 to 8 crores. If we go for faster web offsets or increase the paper size the rates would be still more. Then we also need other infrastructure. We need to install pre-press and post press units. The company will need machines such as computer to plate machine, folding machines, perfect binders, etc.

Sulekha, Head - Marketing

There is nobody to handle such infrastructure in the company.

Vikrant, Head - Operations

It would be totally new experience for all of us. We should install a new machine. I am sure venture capitalist will agree for more investments. I started my career in a pre-press department of a large press and have worked there for five years.

Sulekha, Head - Marketing

We also need to consider environmental issues. Recently, a lot of factories have been given notices to close their operations. We need to have a macro view of the matter. There is also new environmental policy of Government.

Raman Bal

Any project needs to be considered from all angles. I agree we need to consider the environment and the government policies on its safeguard.

Shridhar, Head Finance

As an option we may also consider acquision of a firm located in Gurgaon. They have all the infrastructure for pre-press and post-press work. They have existing clients for such kind of work in Gurgaon. We can buy our own machinery and install in its premises that has ample space.

Raman Bal

My focus is not on Indian clients. I know the firm and it has obsolete machines.

Raman Bal was able to convince all the members of group on purchase of new machine and installation of other infrastructure. The same was also approved by the board later which sanctioned an outlay of thirty crores. They also decided to increase the Share Capital and invite Japanese venture Capitalist to invest more in the company.

The company also decided to import two new printing machines. One of the machine was imported from Iceberg in Germany. A contract was made with Iceberg on CIF basis. However, on account of delayed implementation of the contract on part of the Quality e- Contents India (P) Ltd and increase in the prices, Iceberg refused to supply the machine at

the price decided earlier. There were detailed discussions between the two parties. As a result of several negotiations, the parties agreed for a negotiated price payable as follows:

Particulars Contract Price () Changed Price () Negotiated Price ()

CIF Value 7,50,000 7,80,000 7,60,000

Air Freight* 10000 10000 10000

Insurance 3750 3900 3800

*Air freight includes include loading, unloading and handling charges associated with the delivery of the imported goods to the place of importation.

Further there were vendor inspection charges (not required for making the machine ready for shipment) amounting to 7500. There was also commission payable to local agent of the exporter at the rate of one per cent of FOB in local currency. The Inter-bank rate 1 = Rs. 105. The other particulars relating to rate of duties and date of filing of bill of entry etc. are as follows:

Date of bill of entry Basic customs duty Exchange rate in Rs.

(notified by CBEC)

18.09.2017 10% 102

Date of arrival of aircraft Basic custom duty Exchange rate in Rs. (notified by CBEC)

15.09.2017 15% 98

The machine was not liable to GST compensation cess. Rate of integrated tax is 18%.

QUESTIONS

Multiple Choice (2 Marks each).

The factor which are largely considered in outsourcing decisions is/are :

• Quality of Suppliers
• Reliability of Suppliers
• Design Secrecy
• All of them

Company shall directly or indirectly give loan or guarantee to any person/other body corporate

not exceeding 60 % of Paid up share capital and free reserves or 100%. of its free reserves and securities premium account, whichever is more

Exceeding 60% of paid up share capital , free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is less

exceeding 60% of its paid-up share capital, free reserves and securities premium account or 100% of its free reserves and securities premium account, whichever is more

not exceeding 60% of its paid-up share capital, free reserves and securities premium account or one hundred per cent. of its free reserves and securities premium account, whichever is more

As per the provisions of the Companies Act, 2013, the Board of Directors of the company wants to contribute to charitable funds for the year 2017-18. What is the maximum amount of contribution that the company can make without prior permission from the company in general meeting:

• 0.4 crores
• 0.5 crores
• 1.4 crores
• 1.5 crores.

Suppose the Quality -e content (Pvt) Ltd wants to get merged with the any other company. Who amongst the following are eligible to raise objections to the scheme of compromise and arrangement:

• Persons holding less than 10% of shareholding or having debt amounting less than 5% of the total outstanding debt as per the latest audited financial statement
• Persons holding less than 10% of shareholding or having debt amounting 5% of the total outstanding debt as per the latest audited financial statement
• persons holding in 10% of shareholding or having debt amounting less 5% of the total outstanding debt as per the latest audited financial statement.
• persons holding 10% or more of shareholding or having debt amounting 5% of the total outstanding debt as per the latest audited financial statement.

As per the requirement of the Companies Act, 2013, which companies do not require the holding of at least one meeting of the Board of Directors to be conducted in each half of a calendar year with ninety days gap between the two meetings :

private company

Private start-up company

Both the company

None of the above

Import and export under the Foreign Trade Policy without number is not permitted unless specifically exempted.

IEC

GSTN

PAN

All of the above

Mr. X has imported certain goods from Singapore. He intends to clear the goods from the customs station for home consumption. The vessel containing the goods arrives at customs station on 05.07.20XX. 06.07.20XX is a public holiday. Mr. X has not filed the bill of entry till the time the vessel arrived at the customs station. Mr. X can file the bill of entry latest by:

(a)05.07.20XX

(b)06.07.20XX

(c)07.07.20XX

(d)08.07.20XX

Which of the following expenses is not includible in the assessable value of the imported goods?

Cost of the packing incurred by buyer but not included in the price paid for the imported goods.

Royalty related to imported goods required to be paid as consideration of sale.

Cost of transport to the place of importation

Buying commission paid by the buyer but not included in the price paid for the imported goods

Who is/are related persons in terms of customs valuation rules for imported goods?

Members of the same family.

One person indirectly controlling the other person.

Employer and employee.

All of the above

For export goods, the relevant rate of exchange for the purpose of conversion of the value of export goods is the rate prevalent on the date of:

Filing shipping bill

Filing bill of export

Filing bill of entry

Let export order Identify the correct option

(i) and (ii)

(i) and (iv)

(i), (ii) and (iv)

(iii)

Descriptive/Numerical

(a) Give your views on the approach of Raman Bal to diversify to printing business? (4 Marks)

(b) Sulekha has been asked to prepare environmental report under the government's new environmental policy. Identify factors of environmental costs to be included in environmental report.