Josch, a young II Tian and an MBA with inclination towards writing started a small net based business of content writing in the year 2001 by the name -'21st Century Content. Initially, his business focused on website copywriting and business blog writing. Riding the wave of sourcing work from India by western countries, his business grew quite rapidly. Josch was also able to easily establish his business on account of high quality original content produced by him. He produced contents that scored high in the subject matter; he would extensively study a subject and write content that was directed to the target readers. With increase in business he gradually engaged freelancers and shared a part of his revenue as compensation to them. However, he continued to do editing himself before delivering contents to the clients. With the increase in the business his focus shifted from writing contents himself to have a team to write content. He personally monitored them to ensure quality. In the year 2006 he had a team of twenty persons who were working with him on regular basis. Out of these twenty persons eight were assigned responsibility to coordinate with the clients and content writers and four worked on checking quality. Remaining persons looked after other sundry matters in business. There are also good number of external experts who were available on the basis of need. The business benefited through its unique network organization structure that comprised of separate small expert groups in each subject area. These individuals were not on regular payroll and were compensated according to their contribution. The structure helped the company define short term goals and deploy manpower when an assignment was initiated. In the year 2008, the global economic environment went into recessionary phase. The overall business environment became quite difficult and many businesses found it tough to survive. However, recession had little impact on the business of Josch. His major customers were in United 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 shares worth 11 crores were subscribed by seven of his friends. His previous business was valued 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). Josch became the Managing Director of the company: Articles of Association of the Company prescribe the maximum number of directors as 9. To manage the affairs of the company, different divisions were created as operations, marketing, finance and human resources. The biggest department was operations that Josch 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 Josch also proposed to constitute the following committees that was kept pending: A. Audit Committee B. Stakeholders Relationship Committee 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: Josch 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. Laxman, 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. Josch 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. Laxman, 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 Namira, 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. Josch Any project needs to be considered from all angles. I agree we need to consider the environment and the government policies on its safeguard. Laxman, 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. Josch My focus is not on Indian clients. I know the firm and it has obsolete machines. "Josch 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: B. Descriptive/Numerical Questions 11. ( In this case the Articles of association of the Company has prescribed the maximum number of directors as 9. Suppose, the Board of Directors of the company proposes to increase the number of Directors to 15. Advise, whether Board of Directors can do so? (5 Marks) (ii) Mr. Josch, the director of the company goes abroad for a period of more than 3 months and an alternate director 'Mr. Neeraj' has been appointed in his place. During the period of his absence, a board meeting was called. In this connection, with reference to the provisions of the Companies Act, 2013, advise whom should the notice of Board meeting be served whether to Mr. Josch or to Mr. Neeraj? (5 Marks) 12. (a) Give your views on the approach of Josch to diversify to printing business? (4 Marks) (b) Namira has been asked to prepare an environmental report under the government's new environmental policy. Identify factors of environmental costs to be included in environmental report. (6 Marks) 13. The company seeks your advice for computing the applicable import duties/taxes on the machine imported from Iceberg Germany. The company also desires to know whether it can avail input tax credit of such duties/taxes paid by it? Further, the company seeks your assistance in optimizing the tax cost on the import of second machinery to be purchased next month. Suggest methods/ways, if any, by which the tax cost on the import of second machinery can be reduced/minimized. (10 Marks)