CHAPTER - 1

INTRODUCTION
Sr.No.

Topics in the Chapter

1.1

Introduction

1.2

Forms of Business Organisation

1.3

Wholesaler and Retailer

1.4

Need of Accounting in Business Organisation

1.5

Information about Different cities of Gujarat (Selected)

1.1

Introduction
Accounting has evolved and emerged, as medicine, and most other

fields of human activity, in response to the social and economic needs of

society. Modern business has continuity never ending flow of economic
activities. Therefore, accounting has grown to meet a social requirement and
to guide the business and industry accordingly.
As business and society have become more complex over the years,
accounting has developed new concepts and techniques to meet the ever
increasing needs for financial information. Without such information, many
complex economic developments and social and economic programmes
might never have been undertaken.
The importance of the accounting process is not so felt like
manufacturing and the marketing activities, the reason being that the
manufacturing and marketing are prime activities while accounting is support
activity. The output of the accounting process is information. In the modern
knowledge and technology based economy and information backed-up
competitive business world, quick and reliable availability of information is a
pre-condition for success of business.
In todays business environments accounting practices play a
significant role in arriving at overall result at the end of the year. Earlier,
accounting was restricted to book keeping only but in todays scenario
accounting covers a wide range of activities, including business planning and
control, problem solving and performance evaluation and measurement.
Progress and prosperity of business depend upon adoption of proper
accounting practices. For a business to survive in the competitive era,
accounting contributes significantly, irrespective of the period it reveals to.
But most businessmen give less attention towards accounting of their
business transactions. They usually concentrate more on selling and buying
of their products and this has been more in the case of wholesale and retail
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businesses. Further, the transactions have increased enormously over a period

of time in number and value and therefore chance of profit-making have also
risen. A worthy business enterprise looks at profit, not as a transaction wise
proposition but looks at it as an annual result of business efforts. Of late,
customers expectations have risen and so have the variety and quantity of
goods to be stocked for sale. The sale of products on credit is part and parcel
of wholesale and retail business. Investment increases in direct proportion to
stocks and credit while profit rises in direct proportion to the risk borne. In
addition, it is very difficult for individuals or group of individuals to keep
track of each and every event and transaction of the businesses during a
particular period.
At present, the business world is very competitive and the cost of
businesses is going up. Because of high competition and rising cost of
business transactions, the margin available to the owners of business becomes
very thin. Therefore, the businessmen have to improve the financial
performance of the business by monitoring and measuring the results of
business regularly.

In this context, they have to regularly prepare the trial

balance, trading account, profit and loss account and balance sheet etc. They
also keep a record of sales, purchases, sales and purchase returns, stocks and
collections, etc. Further, it is very essential to communicate the accounting
information to tax authorities, banks, insurance companies, suppliers of
inputs and other creditors.
Accounting and the accounting practices play significant role in
arriving at the overall results at the end of the year by meticulously recording
every transaction during the year.
The accounting in the past was restricted to the record keeping but
today it covers a wide range of activities involving business planning and
control, decision making, problem solving, performance measurement and
evaluation, co-coordinating and directing, auditing and tax determination and
3

cost planning and management, etc. But the accounting in wholesale and
retail business is restricted to cash book, ledger, and trial balance, trading
account, profit and loss account and balance sheet and submitting these to tax
authorities and banks at the end of financial year for verification and tax
purpose and for continuation of banking facilities. Further, very few
businessmen use accounting for decision making and to evaluate their
financial performance.
The accounting may be done in two ways actual and accrual bases. In
the case of actual basis, actual receipt of incomes and actual payment of
expenditures are taken in to consideration irrespective of the period they
relate to while accounting the business transactions. But in the case of accrual
basis, income and expenditure of a particular period are taken consideration
irrespective of their time. Both these methods have their own merits and
demerits. But the wholesale and retail businessmen usually adopt actual basis
for accounting their business transactions irrespective of the benefits of
accrual basis due to lack of expertise.

1.2 Forms of Business Organization

Meaning of Business:
A business is an organization designed to provide goods, services, or
both to consumers. Businesses are predominant in capitalist economies, in
which most of them are privately owned and formed to earn profit to increase
the wealth of their owners. Businesses may also form not-for-profit or be
state-owned. A business owned by multiple individuals may be referred to as
a company, although that term also has a more precise meaning.
The etymology of "business" relates to the state of being busy either as
an individual or society as a whole, doing commercially viable and profitable
work. The term "business" has at least three usages, depending on the
4

scope the singular usage to mean a particular organization; the generalized

usage to refer to a particular market sector, "the music business" and
compound forms such as agribusiness; and the broadest meaning, which
encompasses all activity by the community of suppliers of goods and
services. However, the exact definition of business, like much else in the
philosophy of business, is a matter of debate and complexity of meanings.
Business organisation refers to all necessary arrangements required to
conduct a business. It refers to all those steps that need to be undertaken for
establishing relationship between men, material, and machinery to carry on
business efficiently for earning profits. This may be called the process of
organizing. The arrangement which follows this process of organising is
called a business undertaking or organisation. A business undertaking can be
better understood by analysing its characteristics.
Characteristics
1. Distinct Ownership: The term ownership refers to the right of an
individual or a group of individuals to acquire legal title to assets or
properties for the purpose of running the business. A business firm
may be owned by one individual or a group of individuals jointly.
2. Lawful Business: Every business enterprise must undertake such
business which is lawful, that is, the business must not involve
activities which are illegal.
3. Separate Status and Management: Every business undertaking is an
independent entity. It has its own assets and liabilities. It has its own
way of functioning. The profits earned or losses incurred by one firm
cannot be accounted for by any other firm.
4. Dealing in goods and services: Every business undertaking is
engaged in the production and/or distribution of goods or services in
exchange of money.
5

5. Continuity of business operations: All business enterprise engages in

operation on a continuous basis. Any unit having just one single
operation or transaction is not a business unit.
6. Risk involvement: Business undertakings are always exposed to risk
and uncertainty. Business is influenced by future conditions which are
unpredictable and uncertain. This makes business decisions risky,
thereby increasing the chances of loss arising out of business.
While establishing a business the most important task is to select a
proper form of organisation. This is because the conducts of business, its
control, acquisition of capital, extent of risk, distribution of profit, legal
formalities, etc. all depend on the form of organization.

The most important forms of business organisation are as follows:

A. Sole Proprietorship
B. Partnership
C. Joint Hindu Family Business
D. Joint Stock Company
E. Corporation
F. Co-operative Society

1.2 (A) Sole Proprietorship:

Meaning:
When the ownership and management of business are in control of one
individual, it is known as sole proprietorship or sole trader ship. It is seen
everywhere, in every country, every state, every locality. The shops or stores
which you see in your locality - the grocery store, the vegetable store, the
sweets shop, the chemist shop, the stationery store, the telephone booths etc.
come under sole proprietorship. It is not that a sole tradership business must
be a small one. The volume of activities of such a business unit may be quite
large. However, since it is owned and managed by one single individual,
often the size of business remains small.
Characteristics:
1. Ownership: The business enterprise is owned by one single individual
that is the individual has got legal title to the assets and properties of
the business. The entire profit arising out of business goes to the sole
proprietor. Similarly, he also bears the entire risk or loss of the firm.
2. Management: The owner of the enterprise is generally the manager of
the business. He has got absolute right to plan for the business and
execute them without any interference from anywhere. He is the sole
decision maker.
3. Source of Capital: The entire capital of the business is provided by
the owner. In addition to his own capital he may raise more funds from
outside through borrowings from close relatives or friends, and through
loans from banks or other financial institutions.
4. Legal Status: The proprietor and the business enterprise are one and
the same in the eyes of law. There is no difference between the
business assets and the private assets of the sole proprietor. The
business ceases to exist in the absence of the owner.
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5. Liability: The liability of the sole proprietor is unlimited. This means

that, in case the sole proprietor fails to pay for the business obligations
and debts arising out of business activities, his personal property can
be used to meet those liabilities.
6. Stability: The stability and continuity of the firm depend upon the
capacity, competence and the life span of the proprietor.
7. Legal Formalities: In the setting up, functioning and dissolution of a
sole proprietorship business no legal formalities are necessary.
However, a few legal restrictions may be there in setting up a particular
type of business. For example, to open a restaurant, the sole proprietor
needs a license from the local municipality; to open a chemist shop, the
individual must have a license from the government.

Advantages of Sole Proprietorship:

1. Easy Formation: The biggest advantage of a sole trader ship business
is its easy formation. Anybody wishing to start such a business can do
so in many cases without any legal formalities.
2. Better Control: The owner has full control over his business. He
plans, organises, co-ordinates the various activities. Since he has all
authority, there is always effective control.
3. Prompt Decision Making : As the sole trader takes all the decisions
himself the decision making becomes quick, which enables the owner
to take care of available opportunities immediately and provide
immediate solutions to problems.
4. Flexibility in Operations: One man ownership and control makes it
possible for change in operations to be brought about as and when
necessary.

5. Retention of Business Secrets: Another important advantage of a sole

proprietorship business is that the owner is in a position to maintain
absolute secrecy regarding his business activities.
6. Direct Motivation: The owner is directly motivated to put his best
efforts as he alone is the beneficiary of the profits earned.
7. Personal Attention to Consumer Needs: In a sole tradership
business, one generally finds the proprietor taking personal care of
consumer needs as he normally functions within a small geographical
area.
8. Creation of Employment: A sole tradership business facilitates self
employment and also employment for many others. It promotes
entrepreneurial skill among the individuals.
9. Social Benefits: A sole proprietor is the master of his own business.
He has absolute freedom in taking decisions, using his skill and
capability. This gives him high self-esteem and dignity in the society
and gradually he acquires several social virtues like self- reliance, selfdetermination, independent thought and action, initiative, hard work
etc,. Thus, he sets an example for others to follow.
10.Equitable Distribution of Wealth: A sole proprietorship business is
generally a small scale business. Hence there is opportunity for many
individuals to own and manage small business units. This enables
widespread dispersion of economic wealth and diffuses concentration
of business in the hands of a few.

Disadvantages of Sole Proprietorship:

1. Unlimited Liability: In sole proprietorship, the liability of business is
recovered from the personal assets of the owner. It restricts the sole
trader to take more risk and increases the volume of his business.
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2. Limited Financial Resources: The ability to raise and borrow money

by one individual is always limited. The inadequacy of finance is a
major handicap for the growth of sole proprietorship.
3. Limited Capacity of Individual: An individual has limited
knowledge and skill. Thus his capacities to undertake responsibilities,
his capacity to manage, to take decisions and to bear the risks of
business are also limited.
4. Uncertainty of duration: The existence of a sole tradership business
is linked with the life of the proprietor. Illness, death or insolvency of
the owner brings an end to the business. The continuity of business
operation is, therefore, uncertain.
Suitability of Sole Proprietorship:
Sole proprietorship business is suitable where the market is limited,
localised and where customers give importance to personal attention. This
form of organisation is suitable where the nature of business is simple and
requires quick decision. For business where capital required is small and risk
involvement is not heavy, this type of firm is suitable. It is also considered
suitable for the production of goods which involve manual skill e.g. Provision
Stores, handicrafts, filigree works, jewellery, tailoring, haircutting, etc.

10

1.2 (B) Partnership:

Meaning:
A partnership form of organisation is one where two or more persons
are associated to run a business with a view to earn profit. Persons from
similar background or persons of different ability and skills, may join
together to carry on a business. Each member of such a group is individually
known as partner and collectively the members are known as a
partnership firm. These firms are governed by the Indian Partnership Act,
1932.
Characteristics:
1. Number of Partners: A minimum of two persons are required to start
a partnership business. The maximum membership limit is 10 in case
of banking business and 20 in case of all other types of business.
2. Contractual Relationship: The relation between the partners of a
partnership firm is created by contract. The partners enter into
partnership through an agreement which may be verbal, written or
implied. If the agreement is in writing it is known as a Partnership
Deed.
3. Competence of Partners: Since individuals have to enter into a
contract to become partners, they must be competent enough to do so.
Thus, minors, lunatics and insolvent persons are not eligible to become
partners. However, a minor can be admitted to the benefits of
partnership i.e. he can have a share in the profits.
4. Sharing of Profit and Loss: The partners can share profit in any ratio
as agreed. In the absence of an agreement, they share it equally.
5. Unlimited Liability: The partners have unlimited liability. They are
liable jointly and severally for the debts and obligations of the firm.
Creditors can lay claim on the personal properties of any individual
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partner or all the partners jointly. Even a single partner may be called
upon to pay the debts of the firm. Of course, he can get back the money
due from other partners. The liability of a minor is, however, limited to
the extent of his share in the Profits, in case of dissolution of a firm.
6. Principal-Agent Relationship: The business in a partnership firm
may be carried on by all the partners or any one of them acting for all.
This means that every partner is an agent when he is acting on behalf
of others and he is a principal when others act on his behalf. It is,
therefore, essential that there should be mutual trust and faith among
the partners in the interest of the firm.
7. Transfer of Interest: No partner can sell or transfer his interest in the
firm to anyone without the consent of other partners.
8. Legal Status: A partnership firm is just a name for the business as a
whole. The firm means partners and the partners mean the firm.
Law does not recognise the firm as a separate entity distinct from the
partners.
9. Voluntary

Registration:

Registration

of

partnership

is

not

compulsory. But since registration entitles the firm to several benefits,

it is considered desirable. For example, if it is registered, any partner
can file a case against other partners, or a firm can file a suit against
outsiders in case of disputes, claims, disagreements, etc.
10.Dissolution of Partnership: Dissolution of partnership implies not
only a complete closure or termination of partnership business, but it
also includes any change in the existing agreement among the partners
due to a change in the number of partners.
Advantages of Partnership Firm:
1. Easy Formation: A partnership can be formed without many legal
formality and expenses. Every partnership firm need not be registered.
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2. Larger Resources: As compared to sole proprietorship, a partnership

firm can pool larger financial resources. Thus it can enter into bigger
operations and can have more credit facilities. It can also have better
managerial talent.
3. Flexibility in operation: There is flexibility of operation in
partnership business due to a limited number of partners. These
partners can change their operations and amend objectives if necessary
by mutual consent.
4. Better Management: Partners take more interest in the affairs of
business as there is a direct relationship between ownership, control
and profit. They often meet to discuss the affairs of business and can
take prompt decision.
5. Sharing of Risk: In partnership, risk of loss is easier to bear by
individual partners as it is shared by all the partners.
6. Protection of minority interest: Every partner has an equal say in
decision making. A partner can prevent a decision being taken if it
adversely affects his interests. In extreme cases a dissenting partner
may withdraw from partnership and can dissolve it.
7. Better Public Relations: In a partnership firm the group managing the
affairs of the firm is generally small. It facilitates cordial relationship
with the public.
Disadvantages of Partnership Firm:
1. Instability: A partnership firm does not continue to exist indefinitely.
The death, insolvency or lunacy of a partner may bring about an
unexpected end to partnership.
2. Unlimited Liability: As the liability of partners is joint and several to
an unlimited extent, any one of the partners can be called upon to pay
all the debts even from his personal properties. Further, as every
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partner has a right to take part in the management of the firm, any
wrong decision by a single partner may lead to heavy liabilities for
others.
3. Lack of Harmony: Since every partner has equal right, there are
greater possibilities of friction and quarrel among the partners.
Differences of opinion may lead to mistrust and disharmony which
may ultimately result in disruption and closure of the firm.
4. Limited Capital: As there is a restriction on the maximum number of
partners, the capital which can be raised is limited.
Suitability of Partnership Firm:
In a partnership firm, a person from different walks of life having
ability, managerial talent and skill join together to carry on a business. These
increase the administrative strength of the organisation, the financial
resources, the skill and expertise, and reduce risk. Such firms are most
suitable for comparatively small business such as retail and wholesale trade,
professional services, medium sized mercantile houses and small
manufacturing units. Generally it is seen that many organisations are initially
started as partnership firms and later, when it is economically viable and
financially attractive for the investors, it is converted into a company.

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1.2 (C) Joint Hindu Family Business:

Meaning:
The Joint Hindu Family business is a form of business organisation
found only in India. In this form of business, all the members of a Hindu
undivided family own the business jointly. The affairs of business are
managed by the head of the family, who is known as the Karta .A Joint
Hindu Family business comes into existence as per the Hindu Inheritance
Laws of India. In a joint Hindu family business only the male members
get a share in the business by virtue of their being part of the family. The
membership is limited up to three successive generations. Thus, an
individual, his sons(s), and his grandson(s) become the members of a Joint
Hindu Family by birth. They are also called Co-parceners. The term coparceners imply that such an individual has got the right to ask for a partition
of the Joint Hindu Family business and to have his separate share. A daughter
has no right to ask for a partition and is, therefore, not a co-parcener.
Characteristics:
1. Legal Status: The Joint Hindu Family business is a jointly owned
business just like a jointly owned property. It is governed by Hindu
Law. It can enter into partnership agreement with others.
2. Membership: There is no membership other than the members of the
joint family. Inside the family also, it is restricted only to male
members who are co-parceners by birth.
3. Profit Sharing: All co-parceners have equal share in the profits of the
business. In the event of death of any of the co-parcener, his wife can
claim share of profit.
4. Management: The management of a joint Hindu family business is in
the hands of the senior-most family member who is known as the karta.

15

He has the authority to manage the business and his ways of managing
cannot be questioned by the co-parceners.
5. Liability: The liability of each member of the Joint Hindu Family
business is limited to the extent of his share in the business. But the
liability of the karta is unlimited as, it extends to his personal property.
6. Fluctuating Share: The individual share of each co-parcener keeps on
fluctuating. This is because, every birth of a male child in the family
adds to the number of co-parceners and every death of a co-parcener
reduces the number.
7. Continuity: A Joint Hindu Family business continues to exist on the
death of any co-parcener. Even on the death of the karta, it continues to
exist as the next senior most family member becomes karta. However,
a Joint Hindu Family business can be dissolved any time either through
mutual agreement between members or by partition.
Advantages of Joint Hindu Family Business:
1. Assured share in profits: Every co-parcener is assured a share in the
profits irrespective of his contribution to the successful running of the
business. This, in a way safeguards the interests of some members of
the family like minors, sick, disabled and widows.
2. Freedom in managing: The karta enjoys full freedom in conducting
the family business. It enables him to take quick decisions without
much interference.
3. Sharing of knowledge and experience: A Joint Hindu Family
business provides opportunity for the young members of the family to
get the benefit of knowledge and experience of the elder members and
also helps in inculcating virtues like discipline, self-sacrifice, tolerance
etc.

16

4. Unlimited liability of the karta: The liability of the co-parceners is

limited, except for that of the karta. This makes the karta to manage the
business in the most efficient manner.
5. Continued existence: A Joint Hindu Family business is not affected
by the insolvency or death of any member including that of karta. Thus
it can continue for a long period of time.
Disadvantages of Joint Hindu Family Business:
1. Limited resources: Joint Hindu Family business has generally limited
financial and managerial resource. Therefore, it cannot undertake big
and risky business.
2. Lack of motivation: There is always a lack of motivation among the
members to work hard. It is because the benefit of hard work does not
go entirely too any individual member but shared by all the coparceners.
3. Scope for misuse of power by the karta: Since the karta has absolute
freedom to manage the business, there is scope for him to misuse it for
his personal gains. An inefficient karta can also do harm to the
business.
4. Scope for conflict: In a Joint Hindu Family business the male
members of three successive generations are involved. It always leads
to conflict between generations.
5. Instability: The continuity of business is always under threat. It may
be due to a small rift within the family and if a co-parcener asks for a
partition the business is closed.
Suitability of Joint Hindu Family Business:
The success of Joint Hindu Family business is mostly dependent upon
the efficiency of the karta and the mutual understanding between the coparceners. Nevertheless, this type of business is losing its ground with the
gradual decline in the Joint Hindu Family system.
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1.2 (D) Joint Stock Company:

Meaning:
A Joint Stock Company form of business organisation is a voluntary
association of persons to carry on business. Normally, it is given a legal
status and is subject to certain legal regulations. It is an association of persons
who generally contribute money for some common purpose. The money so
contributed is the capital of the company. The persons who contribute capital
are its members. The proportion of capital to which each member is entitled
is called his share, therefore members of a joint stock company are known as
shareholders and the capital of the company is known as share capital. The
total share capital is divided into a number of units known as shares. You
may have heard of the names of joint stock companies like Tata Iron & Steel
Co. Limited, Hindustan Lever Limited, Reliance Industries Limited and Steel
Authority of India Limited etc. The companies are governed by the Indian
Companies Act, 1956. The Act defines a company as an artificial person
created by law, having separate entity, with perpetual succession and a
common seal.
Characteristics:
1. Artificial Person: A Joint Stock Company is an artificial person in
the sense that it is created by law and does not possess physical
attributes of a natural person. However, it has a legal status.
2. Separate Legal Entity: Being an artificial person, a company has
an existence independent of its members. It can own property, enter
into contract and conduct any lawful business in its own name. It
can sue and can be sued in the court of law. A shareholder cannot
be held responsible for the acts of the company.
3. Common Seal: Every company has a common seal by which it is
represented while dealing with outsiders. Any document with the
18

common seal and duly signed by an officer of the company is

binding on the company.
4. Perpetual Existence: A company once formed continues to exist as
long as it fulfils the requirements of law. It is not affected by the
death, lunacy, insolvency or retirement of any of its members.
5. Limited Liability: The liability of a member of a Joint Stock
Company is limited by guarantee or the shares he owns. In other
words, in case of payment of debts by the company, a shareholder is
held liable only to the extent of his share.
6. Transferability of Shares: The members of a company are free to
transfer the shares held by them to anyone else.
7. Formation: A company comes into existence only when it has been
registered after completing the formalities prescribed under the
Indian Companies Act 1956. A company is formed by the initiative
of a group of persons known as promoters.
8. Membership: A company having a minimum membership of two
persons and maximum fifty is known as a Private Limited
Company. But in case of a Public Limited Company, the minimum
is seven and the maximum membership is unlimited.
9. Management:

Joint

Stock

Companies

have

democratic

management and control. Even though the shareholders are the

owners of the company, all of the them cannot participate in the
management process. The company is managed by the elected
representatives of shareholders known as Directors.
10.Capital: A Joint Stock Company generally raises a large amount of
capital through issue of shares.

19

 Advantages of Joint Stock Company:

1. Limited Liability: In a Joint Stock Company the liability of its
members is limited to the extent of shares held by them. This attracts a
large number of small investors to invest in the company. It helps the
company to raise huge capital. Because of limited liability, a company
is also able to take larger risks.
2. Continuity of existence: A company is an artificial person created by
law and possesses independent legal status. It is not affected by the
death, insolvency etc. of its members. Thus it has a perpetual existence.
3. Benefits of large scale operation: It is only the company form of
organisation which can provide capital for large scale operations. It
results in large scale production consequently leading to increase in
efficiency and reduction in the cost of operation. It further opens the
scope for expansion.
4. Professional Management: Companies, because of complex nature of
activities and operations and large volume of business, require
professional managers at every level of organisation. And because of
their financial strength they can afford to appoint such managers. This
leads to efficiency.
5. Social Benefit: A joint stock company offers employment to a large
number of people. It facilitates promotion of various ancillary
industries, trade and auxiliaries to trade. Sometimes it also donates
money for education, health, community service and renders help to
charitable and social institutions.
6. Research and Development: A company generally invests a lot of
money on research and development for improved processes of
production, designing and innovating new products, improving quality
of product, new ways of training its staff, etc.

20

 Disadvantages of Joint Stock Company:

1. Formation is not easy: The formation of a company involves
compliance with a number of legal formalities under the companies
Act and compliance with several other Laws.
2. Control by a Group: Companies are controlled by a group of persons
known as the Board of Directors. This may be due to lack of interest on
the part of the shareholders who are widely dispersed; ignorance,
indifference and lack of proper and timely information. Thus, the
democratic virtues of a company do not really exist in practice.
3. Speculation and Manipulation: The shares of a company are
purchased and sold in the stock exchanges. The value or price of a
share is determined in terms of the dividend expected and the
reputation of the company. These can be manipulated. Besides there is
excessive speculation which is regarded as a social evil.
4. Excessive government control: A company is expected to comply
with the provisions of several Acts. Non-compliance of these invites
heavy penalty. This affects the smooth functioning of the companies.
5. Delay in Policy Decisions: A company has to fulfil certain procedural
formalities before making a policy decision. These formalities are time
consuming and, therefore, policy decisions may be delayed.
6. Social abuses: A joint stock company is a large scale business
organisation having huge resources. This provides a lot of power to
them. Any misuse of such power creates unhealthy conditions in the
society e.g. having monopoly of a particular business, industry or
product; influencing politicians and government in getting their work
done; exploiting workers, consumers and investors.
Suitability of Joint Stock Company:
A joint stock company is suitable where the volume of business is
quite large, the area of operation is widespread, the risk involved is heavy and
21

there is a need for huge financial resources and manpower. It is also preferred
when there is need for professional management and flexibility of operations.
In certain businesses like banking and insurance, business can only be
undertaken by joint stock companies.

1.2 (E) Corporation:

A corporation is a legal entity that is created under the laws of a state
designed to establish the entity as a separate legal entity having its own
privileges and liabilities distinct from those of its members. There are many
different forms of corporations, most of which are used to conduct business.
Early corporations were established by charter and many of these chartered
companies still exist. Most jurisdictions now allow the creation of a new
corporation through registration. Corporations exist strictly as a product of
the corporate law.
An important contemporary feature of a corporation is limited liability.
If a corporation fails, shareholders normally only stand to lose their
investment and employees will lose their jobs, but neither will be further
liable for debts that remain owing to the corporation's creditors.
Despite not being natural persons, corporations are recognized by the
law to have rights and responsibilities like natural persons ("people").
Corporations can exercise human rights against real individuals and the state,
and they can themselves be responsible for human rights violations.
Corporations are conceptually immortal but they can "die" when they are
"dissolved" either by statutory operation, order of court, or voluntary action
on the part of shareholders. Insolvency may result in a form of corporate
'death', when creditors force the liquidation and dissolution of the corporation
under court order, but it most often results in a restructuring of corporate
holdings. Corporations can even be convicted of criminal offenses, such as
fraud and manslaughter.
22

Although corporate law varies in different jurisdictions, there are four core
characteristics of the business corporation:

Legal personality

Limited liability

Transferable shares

Centralized management under a board structure

1.2(F) Co-operative Society:

Meaning:
Any ten persons can form a co-operative society. It functions under the
Cooperative Societies Act, 1912 and other State Co-operative Societies Acts.
A co-operative society is entirely different from all other forms of
organization discussed above in terms of its objective. The co-operatives are
formed primarily to render services to its members. Generally it also provides
some service to the society. The main objectives of co-operative society are:
(a) Rendering service rather than earning profit
(b) Mutual help instead of competition
(c) Self help in place of dependence.
A cooperative (also co-operative; often referred to as a co-op) is a
business organization owned and operated by a group of individuals for their
mutual benefit. Cooperatives are defined by the International Cooperative
Alliance's Statement on the Cooperative Identity as autonomous associations
of persons united voluntarily to meet their common economic, social, and
cultural needs and aspirations through jointly owned and democratically
controlled enterprises. A cooperative may also be defined as a business
owned and controlled equally by the people who use its services or by the
people who work there. Cooperative enterprises are the focus of study in the
field of economics.

23

On the basis of objectives, various types of co-operatives are formed:

a. Consumer co-operatives: These are formed to protect the interests of
ordinary consumers of society by making consumer goods available at
reasonable prices. Kendriya Bhandar in Delhi, Alaka in Bhubaneswar and
similar others are all examples of consumer co-operatives
b. Producers co-operatives: These societies are set up to benefit small
producers who face problems in collecting inputs and marketing their
products. The Weavers co-operative society, the Handloom owners
cooperative society are examples of such co-operatives.
c. Marketing co-operatives: These are formed by producers and
manufactures to eliminate exploitation by the middlemen while marketing
their product. Kashmir Arts Emporium, J&K Handicrafts, Utkalika etc. are
examples of marketing co-operatives.
d. Housing Co-operatives: These are formed to provide housing facilities to
its members. They are called co-operative group housing societies.
e. Credit Co-operatives: These societies are formed to provide financial
help to its members. The rural credit societies, the credit and thrift
societies, the urban co-operative banks etc. come under this category.
f. Forming Co-operatives: These are formed by small farmers to carry on
work jointly and thereby share the benefits of large scale farming. Besides
these types, other co-operatives can be formed with the objective of
providing different benefits to its members, like the construction cooperatives, transport co-operatives, co-operatives to provide education etc.
Characteristics:
1. Voluntary association: Individuals having common interest can come
together to form a co-operative society. Any person can become a
member of such an organisation and leave the same.

24

2. Membership: The minimum membership required to form a co-operative

society is ten and the maximum number is unlimited. At times the
cooperatives after their formation fix a maximum membership limit.
3. Body corporate: Registration of a society under the Co-operative
Societies Act is a must. Once it is registered, it becomes a body corporate
and enjoys certain privileges just like a joint stock company. Some of the
privileges are:
(a) The society enjoys perpetual succession.
(b) It has its own common seal.
(c) It can own property in its name.
(d) It can enter into contract with others.
(e) It can sue others in court of law.
4. Service Motive: The primary objective of any co-operative organisation
is to render services to its members in particular and to the society in
general.
5. Democratic Set up: Every member has a right to take part in the
management of the society. Each member has one vote. Generally the
members elect a committee known as the Executive Committee to look
after the day to day administration and the said committee is responsible
to the general body of members.
6. Sources of Finances: A co-operative organisation starts with a fund
contribute by its members in the form of units called shares. It can also
raise loans and secure grants from the government easily. One fourth of
the profits of the co-operative are transferred to its fund every year.
7. Return on capital: The return on capital subscribed by the members is in
the form of a fixed rate of dividend after deduction from the profit.

25

 Advantages of Co-operative Society:

1. Easy Formation: Formation of a co-operative society is easy as
compared to a company. Any 10 persons can voluntarily form an
association and get themselves registered with the Registrar of Cooperative societies.
2. Limited Liability: The liability of the members is limited to the extent
of capital contributed by them.
3. Open Membership: There is no restriction on any individual to be a
member of any co-operative.
4. State Assistance: Co-operatives get a lot of patronage in the form of
exemptions and concessions in taxes and financial assistance from the
state governments which no other organisation gets.
5. Middlemans Profit Eliminated: Through the co-operative the
consumers control their own supplies and by this means the
middlemans profit is eliminated.
6. Management: A co-operative functions in a democratic manner. Each
member has only one vote.
7. Winding up: The dissolution of a co-operative firm is quite difficult. It
does not cease to exist in case of death, or insolvency or resignation of
a member. It has thus a fairly stable life.
Disadvantages of Co-operatives:
1. Limited Capital: The amount of capital that a co-operative can
generate is limited because of the membership remaining confined to a
locality or region or a particular section of people.
2. Problems in Management: Generally it is seen that co-operative do
not function efficiently due to lack of managerial talent.

26

3. Lack of Motivation: Co-operatives are formed to render service to its

members than to earn profit. This does not provide enough motivation
to manage the co-operatives effectively.
4. Lack of Co-operation: Co-operatives are formed with the very idea of
co-operation. But, it is often seen that there is lot of friction and
bickering among the members due to personality differences, ego clash
etc.
5. Lack of Secrecy: Maintenance of business secrecy is one of the
important factors for the success of enterprise which the co-operatives
always lack.
6. Dependence on Government: The inadequacy of capital and various
other limitations make co-operatives dependant on the government for
support and patronage in terms of grants, loans and subject themselves
to interference.
Suitability of Co-operatives:
When the purpose of business is to provide service than to earn profit
and to promote common economic interest, the co-operative society is the
only alternative. Co-operatives are also preferred as it is easier to raise capital
through assistance from financial institutions and government. Generally it
seems that a co-operative society is suitable for small and medium size
operations. However, the large sized Indian Farmers and Fertilisers
Cooperative and the Kaira Co-operative Processing Milk under the brand
name AMUL are the illustrious exceptions.

27

1.3 Wholesalers and Retailers

Normally goods and services pass through several hands before they come to
the hands of the consumer for use. But in some cases producers sell goods
and services directly to the consumers without involving any middlemen in
between them, which can be called as direct channel. So there are two types
of channels, one direct channel and the other, indirect channel.
There are many indirect channels like:
Producer,
Wholesaler,
Retailer,
Consumer,
Wholesalers and retailers are important middlemen who generally
facilitate flow of goods from the producers to the consumers. Let us study in
details about them.

1.3 (A) Wholesalers

Wholesalers are one of the important middlemen in the channel of
distribution who deals with the goods in bulk quantity. They buy goods in
bulk from the producers and sell them in relatively smaller quantities to the
retailers. In some cases they also sell goods directly to the consumers if the
quantity to be purchased is more. They usually deal with a limited variety of
items and also in a specific line of product, like iron and steel, textiles, paper,
electrical appliances, etc.
Let us know about the characteristics of wholesaler.
Characteristics of Wholesalers
The followings are the characteristics of wholesaler:
(i)

Wholesalers buy goods directly from producers or manufacturers.

(ii)

Wholesalers buy goods in large quantities and sells in relatively

smaller quantities.
28

(iii)

They sell different varieties of a particular line of product. For

example, a wholesaler who deals with paper is expected to keep all
varieties of paper, cardboard, card, etc.

(iv)

They may employ a number of agents or workers for distribution of

products.

(v)

Wholesalers need large amount of capital to be invested in his

business.

(vi)

They generally provide credit facility to retailers.

(vii) He

also

provides

financial

assistance

to

the

producers

or

manufacturers.
(viii) In a city or town they are normally seen to be located in one particular
area of the market. For example, you can find cloth merchants in one
area, book publishers and sellers in one area; furniture dealers in one
area etc.
Functions of Wholesalers
You have well understood the meaning of wholesaler and listed their
characteristics. Now let us know about the functions of wholesalers.
Following are the functions, which a wholesaler usually performs.
(a) Collection of goods:
A wholesaler collects goods from manufacturers or producers in large
quantities.
(b) Storage of goods:
A wholesaler collects the goods and stores the safely in warehouses,
till they are sold out. Perishable goods like fruits, vegetables, etc. are stored
in cold storage.
(c)

Distribution:
A wholesaler sells goods to different retailers. In this way, he also

performs the function of distribution.

29

(d)

Financing:
The wholesaler provides financial support to producers and

manufacturers by sending money in advance to them. He also sells goods to

the retailer on credit. Thus, at both ends the wholesaler acts as a financier.
(e)

Risk taking:
The wholesaler buys finished goods from the producer and keeps them

in the warehouses till they are sold. Therefore, he assumes the risks arising
out of changes in demand, rise in price, spoilage or destruction of goods.
1.3 (B) Retailers
Retailers are the traders who buy goods from wholesalers or sometimes
directly from producers and sell them to the consumers. They usually operate
through a retail shop and sell goods in small quantities. They keep a variety
of items of daily use.
Characteristics of Retailers
The following are the characteristics of retailers:
(i)

Retailers have a direct contact with consumers. They know the

requirements of the consumers and keep goods accordingly in their
shops.

(ii)

Retailers sell goods not for resale, but for ultimate use by consumers.
For example, you buy fruits, clothes, pen, pencil etc. for your use, not
for sale.

(iii)

Retailers buy and sell goods in small quantities. So customers can

fulfill their requirement without storing much for the future.

(iv)

Retailers require less capital to start and run the business as compared
to wholesalers.

(v)

Retailers generally deal with different varieties of products and they

give a wide choice to the consumers to buy the goods.

30

 Functions of Retailers
All retailers deal with the customers of varying tastes and
temperaments. Therefore, they should be active and efficient in order to
satisfy their customers and also to induce them to buy more. Let us see what
the retailers do in distribution of goods.
(i) Buying and assembling of goods:
Retailers buy and assemble varieties of goods from different
wholesalers and manufacturers. They keep goods of those brands and variety
which are liked by the customers and the quantity in which these are in
demand.
(ii) Storage of goods:
To ensure ready supply of goods to the customer retailers keep their
goods in stores. Goods can be taken out of these stores and sold to the
customers as and when required. This saves consumers from botheration of
buying goods in bulk and storing them.
(iii) Credit facility:
Although retailers mostly sell goods for cash, they also supply goods
on credit to their regular customers. Credit facility is also provided to those
customers who buy goods in large quantity.
(iv) Personal services:
Retailers render personal services to the customers by providing expert
advice regarding quality, features and usefulness of the items. They give
suggestions considering the likes and dislikes of the customers. They also
provide free home delivery service to customers. Thus, they create place
utility by making the goods available when they are demanded.
(v) Risk bearing:
The retailer has to bear many risks, such as risk of:
(a) Fire or theft of goods
(b) Deterioration in the quality of goods as long as they are not sold out.
31

(c) Change in fashion and taste of consumers.

(vi) Display of goods:
Retailers display different types of goods in a very systematic and
attractive manner. It helps to attract the attention of the customers and also
facilitates quick delivery of goods.
(vii) Supply of information:
Retailers provide all information about the behavior, tastes, fashions
and demands of the customers to the producers through wholesalers. They
become a very useful source of information for marketing research.
Distinction between Wholesaler and Retailer
You have studied about wholesaler and retailer. You might have
noticed that both of them differ in their style and function. Let us find out
these differences.
Sr. No

Wholesaler

Retailer

(i)

Buys goods in large quantities.

Buys goods in small quantities.

(ii)

Buys goods directly from producers.

Generally buys goods from the

wholesalers

(iii)
(iv)

Deals with limited variety of goods.

Deals with wide range of products.

Requires more capital to start and run Requires less capital to start and run
the business.

the business

(v)

Sell goods for resale purpose.

Sell goods for consumption.

(vi)

No direct contact with consumers.

Direct contact with consumer.

(vii)

No special attention is given to In order to attract the attention of

decoration of shop.

customers

retailers

give

more

attention to decoration of shop.

32

1.4 Needs of Accounting in Business

To know the business results regularly
To manage and minimize business risks
To manage assets and liabilities of the business
To increase profitability of the firm
To manage investment in stocks and credit
To take investment decisions
To control business expenditure
To minimize the cost of transactions
To meet requirements of banks, tax and insurance etc.

33

1.5

Information about Different cities of Gujarat (Selected)

34

1.5 (A) About Ahmedabad City

It is the largest city in the state of Gujarat, with a population of
approximately 55 lakhs. Located on the banks of the River Sabarmati, the
city is the administrative centre of Ahmedabad district .In colloquial Gujarati,
it is commonly called Amdavad. Ahmedabad was founded in 1411 by Sultan
Ahmed Shah to serve as the capital of the Gujarat Sultanate. The city is
named after its founder. Under British rule, a military cantonment was
established and the city infrastructure was modernised and expanded.
Although incorporated into the Bombay Presidency during the British rule in
India, Ahmedabad remained the most important city in the Gujarat region.
The city established itself as the home of a booming textile industry, which
earned it the nickname "The Manchester of the East." Ahmadabad gained
prominence as commercial capital of the state. The city is witnessing a major
construction boom and population increase. A rising centre of education,
information technology and scientific industries, Ahmedabad remains the
cultural and commercial heart of Gujarat.
History:
Archaeological evidence suggests that the area around Ahmedabad has
been inhabited since the 11th century, when it was known as Ashapalli or
Ashaval. At that time, Karandev I, the Solanki ruler of Anhilwara (modern
Patan), waged a successful war against the Bhil king of Ashaval, and
established a city called Karnavati located at the present time area of
Maninagar close to the river Sabarmati. According to legend, Sultan Ahmed
Shah, while camping on the banks of the River Sabarmati, saw a hare chasing
a dog. Impressed by this act of bravery, the Sultan, who had been looking for
a place to build his new capital, decided to locate the capital at this forest area
close by to Karnavati right on the river bank and christened it Ahmedabad.
The incident is popularly described in a one liner saying "Jab kutte pe sassa

35

aaya, tab Badshah ne shaher basaya". When the hare chased the dog, seeing
that act of bravery then the Emperor built the City.
The British East India Company took over the city in 1818 as a part of
the conquest of India. A military cantonment was established in 1824 and a
municipal government in 1858. In 1864, a railway link between Ahmedabad
and Mumbai was established by the Bombay, Baroda, and Central India
Railway , making Ahmedabad an important junction in the traffic and trade
between northern and southern India. Large numbers of people migrated from
rural areas to work in textile mills, establishing a robust industry.
The Sabarmati Ashram, home of Gandhi. The Indian independence
movement developed strong roots in the city when, in 1915, Mahatma
Gandhi established two ashrams the Kochrab Ashram near Paldi in 1915
and the Satyagraha Ashram (now Sabarmati Ashram) on the banks of the
Sabarmati in 1917 that would become centers of intense nationalist
activities. During the mass protests against the Rowlatt Act in 1919, textile
workers burned down 51 government buildings across the city in protest at a
British attempt to extend wartime regulations after the First World War. In
the 1920s, textile workers and teachers went on strike, demanding civil rights
and better pay and working conditions. In 1930, Gandhi initiated the Salt
Satyagraha from Ahmedabad by embarking from his ashram on the famous
Dandi Salt March.
Ahmedabad became the capital of the new state of Gujarat after the
bifurcation of the State of Bombay on 1 May 1960. During that period, a
large number of educational and research institutions were founded in the
city, making it a major center of higher education, science and technology.
Ahmedabad's economic base was diversified with the establishment of heavy
and chemical industries in its vicinity around the same period. In recent
years, the effects of liberalization of the Indian economy have energized the
city's

economy

towards

tertiary

sector

activities

like

commerce,
36

communication, construction activities. The city has witnessed the

establishment of scientific and service industries, the expansion of the
information

technology

sector,

and

significant

improvements

in

transportation and communications. Ahmedabads population is growing,

which has resulted in a construction and housing boom.
Geography and Climate
Ahmedabad is located at 23.03N 72.58E23.03; 72.58 in western
India at an elevation of 53 meters. The city sits on the banks of the River
Sabarmati, in north-central Gujarat. It spans an area of 205 km. The
Sabarmati frequently dries up in the summer, leaving only a small stream of
water. The city is located in a sandy and dry area. Except for the small hills
of Thaltej-Jodhpur Tekra, the city is almost flat. Two lakes are within the
city's limits Kankaria Lake and Vastrapur Lake. Ahmedabad is divided by
the Sabarmati into two physically distinct eastern and western regions. This
part of the city houses educational institutions, modern buildings, wellplanned residential areas, shopping malls, multiplexes and new business
districts centered around roads Such as Ashram Road, C.G.Road and SarkhejGandhinagar Highway etc.
Under the Koppen climate classification, Ahmedabad has a tropical
savanna climate. The weather is hot through the months of March to June
the average summer maximum is 45 C (113 F), and the average minimum
is 23 C (73 F). From November to February, the average maximum
temperature is 30 C (85 F), the average minimum is 15 C (59 F), and the
climate is extremely dry. Cold northerly winds are responsible for a mild chill
in January. The southwest monsoon brings a humid climate from mid-June to
mid-September. The average rainfall is 93.2 cm (36.7 inches), but infrequent
heavy torrential rains cause the river to flood. The highest temperature
recorded is 47 C (116.6 F) and the lowest is 5 C (41 F). In recent years,
37

Ahmedabad has suffered from increasing air, water and soil pollution from
neighboring industrial areas and textile mills.
Civic administration
Ahmedabad

is

administered

by

the

Ahmedabad

Municipal

Corporation. Some of the regions surrounding the city are administered by

the Authority. The Ahmedabad Municipal Corporation was established in July
1950 under the Bombay Provincial Corporation Act, 1949. Executive powers
are vested in the municipal commissioner, who is an Indian Administrative
Service officer appointed by the Gujarat state government. The city serves as
the headquarters of Ahmedabad district and as the seat of the Gujarat High
Court. The Ahmedabad city police are headed by a Police Commissioner, an
Indian Police Service officer. Ahmedabad boasts of some of the largest
number of hospitals in the country - both government and private. The
Ahmedabad civil hospital is the largest hospital in Asia.
Demographics
As per the 2011 Indian census, the area under Ahmedabad Municipal
Corporation has a population of 55, 20,085. Ahmedabad has a literacy rate of
79.89%, which is the Second highest in Gujarat after Gandhinagar.
Ahmedabad is home to a large population of Vanias , belonging to the
Vaishnava sect of Hinduism and the sects of Jainism. Most of the residents of
Ahmedabad are native Gujaratis. Although Gujarati is spoken, Hindi is very
commonly spoken, especially in commerce, education, politics, government,
shops, and road signs. There is a sizeable population of Punjabis, Marathis,
Telugu, Tamils, Sindhis, Malayalis and Marwaris, who bring their native
language and culture to the city
Education
Schools in Ahmedabad are run either by the municipal corporation, or
privately by entities, trusts and corporations. Most schools are affiliated with
38

the Gujarat Secondary and Higher Secondary Education Board. A few

schools are affiliated to the Central Board for Secondary Education, Council
for the Indian School Certificate Examinations, International Baccalaureate
and National Institute of Open School. A large number of colleges in the city
are affiliated with Gujarat University. Other deemed universities in
Ahmedabad include the Nirma University of Science & Technology and the
Dr. Babasaheb Ambedkar Open University. The Gujarat Vidyapith was
established in 1920 by Mahatma Gandhi without a charter from the British
Raj and became a deemed university in 1963. Other institutions such as the
Indian Institute of Management, the National Institute of Design, the Mudra
Institute of Communications, the Entrepreneurship Development Institute of
India, B.J. Medical College, NHL Municipal Medical College and the Center
for Environmental Planning and Technology are located in Ahmedabad.
Many national academic and scientific institutions, such as the
Physical Research Laboratory, the Indian Space Research Organization, were
established in the 1960s largely through the efforts of prominent
astrophysicist

and

industrialist

Vikram

Sarabhai.

The

Ahmedabad

Management Association is a notable institution established to impart

management training and experience to young students and professionals.
The campus was opened with a plan to offer 100 courses in various technical
disciplines.
Transport
Road - National Highway 8, linking Delhi to Mumbai, passes though
Ahmedabad connecting it with Gandhinagar, Delhi and Mumbai. The
National Highway 8C links Ahmedabad to Gandhinagar. It is connected to
Vadodara through National Expressway 1, a 94 km long highway with only
two exits. This expressway is part of the Golden Quadrilateral project. The
Ahmedabad Municipal Transport Service runs the local bus service in the
39

city. In 2005, Ahmedabad Municipal Transport Service began a drive to

convert all of its petrol and diesel engine buses to run on compressed natural
gas engines to reduce the effects of air pollution. Ahmedabad Municipal
Transport Service runs more than 750 buses.
Ahmedabad BRTS - A Bus rapid transit system for the city, maintained
by the Ahmedabad Janmarg Limited. The Bus rapid transit system is modeled
on the International standards and proved to be highly affordable and
effective in operation. It has revolutionised the system of public transport in
the city.
Rail -Ahmedabad is one of the six operating divisions of the Western
Railway. Railway lines connect the city to all towns in Gujarat and other
major Indian cities. The Ahmedabad Railway Station, locally known as
Kalupur Railway Station is the city's main terminus.
Air -The Sardar Vallabhbhai Patel International Airport serves both
domestic and international flights to and from Ahmedabad .The airport
connects the city with destinations across India and the world.
Economy
In the 19th century, the textile and garments industry received strong
capital investment. On 30 May 1861 Ranchhodlal Chhotalal founded the first
Indian textile mill, the Ahmedabad Spinning and Weaving Company Limited.
This was followed by the establishment of a series of textile mills such as the
Calico Mills, Bagicha Mills and Arvind Mills. By 1905 there were about 33
textile mills in the city. The textile industry further expanded rapidly during
the First World War, and benefited from the influence of Mahatma Gandhi's
Swadeshi movement, which promoted the purchase of Indian-made goods.
Ahmedabad was known as the "Manchester of the East", for its largely
expanding realms of the textile industry.

40

Ahmedabad has a thriving chemicals and pharmaceuticals industry.

Two of the biggest pharmaceutical companies of India - Zydus Cadila and
Torrent Pharmaceuticals - are based in the city. The city serves as the
corporate headquarters of the Adani Group, which is a leading multinational
trading and infrastructure Development Company. The Nirma group of
industries, which runs a large number of detergent and chemical industrial
units, has its corporate headquarters in the city. In recent year many foreign
companies have set up their sales offices and production facilities in
Ahmedabad. Amongst them are Bosch Rexroth, Germany (hydraulic
components), Stork, Netherlands (textile machinery, joint venture with ATE,
India's leading textile equipment trading house),Rollepaal, Netherlands and
Johnson Pumps, Sweden.
Indian Destinations" for Information Technology enabled services
ranked Ahmedabad fifth among the top nine most competitive cities in the
country. City is the largest supplier of denim and one of the largest exporters
of gems and jewelers in India. Ahmedabad plays a strong and significant role
in providing commercial resources and market access for the economies of
neighboring cities. A majority of the working-age citizens of Ahmedabad are
traders and business people. This has led to the creation of major mercantile
corporations and artisan guilds that are a key influence on the economic life
of Gujarat. The city's educational and industrial institutions have attracted
students and young skilled workers from the rest of India.
For

this

study

purpose

Manekchokbazar,

Kalupurbazar,

Madhavpurbazar, Ashram Road and Laldarvaza, areas businessmen were

taken as a sample.

41

1.5 (B) About Vadodara City

Vadodara is the third most-populated city in the Indian state of Gujarat
after Ahmedabad and Surat. It is one of four cities in the state with a
population of 41, 57, 568. It is also known as the Sayaji Nagari Vadodara or
Baroda, formerly the capital city of the Gaekwar State, is situated on the
banks of the Vishwamitri, a river whose name derived from the great saint
Rishi Vishwamitra. It is located southeast of Ahmedabad. It is the
administrative headquarters of Vadodara District.
Vadodara is home to almost 41,57, 568 people. The beautiful Lakshmi
Vilas Palace and the Maharaja Sayajirao University of Baroda which is the
largest university in Gujarat and undoubtedly the best. It has a high literacy
rate by Indian standards of 78%. Major industries include petrochemicals,
engineering, pharmaceuticals, plastics and Forex. Famous companies such as
Asea Brown Boveri company, Reliance Industries, Larsen and Toubro,
Industrial Petroleum Chemicals Ltd, Oil and Natural Gas Corporation and
Sun Pharmaceuticals all have a strong presence in this city, also it has
presence of Information Technology multi-national companies.

History
The first noted history of the city was of the early trader settlers who

settled in the region in 812 AD. The province was mainly Hindu-dominated
with Hindu kings ruling till the year 1297. The Gupta Empire was the first
power in the region in the early years of the Christian era. After fierce battles,
the region was taken over by the Chalukya Dynasty. Finally, the kingdom
was annexed by the Solanki Rajputs. By this time the Muslim rule had spread
across India, and the reins of power were then snatched by the Delhi Sultans.
The city was ruled for a long time by these Sultans, until they were easily
overthrown by the Mughal emperors. The Mughals' biggest problem were the
mighty Marathas who slowly but eventually took over the region. It became
42

the capital of the Maratha Gaekwads. Sayaji Rao III (1875-1939), a most able
ruler, made many public and bureaucratic improvements in the region.
Although the British had a major influence on the region, Baroda remained a
princely state until Independence. Like all other princely states, Baroda also
joined the Dominion of India in 1947.
The eighteenth largest and one of the cosmopolitan cities of India,
Vadodara alias Baroda is located on the banks of Vishwamitri River. This
garden city is the industrial capital and the third most populated town of
Gujarat and also the administrative headquarters of Vadodara District. Due to
its rich cultural traditions, the district is referred to as Sanskari Nagari. With
many museums and art galleries, this upcoming hub of industries and
Information Technology is a favorite spot of tourists. Vadodara was once
called Chandravati, after its ruler Raja Chandan, then Virakshetra or Viravati,
the abode of the brave and then Vadpatra because of the abundance of banyan
trees on the banks of the Vishwamitri. From Vadpatra it derived its present
name.
Origin of name
Two thousand years ago, there was a small town known as "Ankottak"
present day Akota on the western bank of the river Vishwamitri. The earliest
mention of Vadodara is in a Granth or charter of 812 that identifies it as
"Vadapadraka", a village attached to the nearby town of "Ankottaka". In 600
AD severe floods in the Vishwamitri forced the inhabitants to move to the
eastern side of the river to a village known as "Vatpatrak" (Leaf of Banyan
tree) which developed into Vadodara. In the 10th century, Vadapadraka
replaced Ankottaka as the main town.
The greatest period in the Maratha rule of Baroda started with the
accession of Maharaja Sayajirao III in 1875. It was an era of great progress
and constructive achievements in all fields. Maharaja Sayajirao III, who ruled
from 1875 to 1939, did much to modernise Baroda, establishing compulsory
43

primary education, a library system, a university, and model textile and tile
factories, which helped to create Baroda's image as a modern industrial hub.
Modern Vadodara is a great and fitting memorial to Maharaja Sayajirao. It
was the dream of this able administrator to make Baroda an educational,
industrial and commercial centre and he ensured that his dream would come
true. For this reason, the city is also referred to as Sayaji Nagari.
With India's independence in 1947, the last ruling Maharaja of Baroda
State acceded to India. Baroda State was merged into to Bombay State
shortly after independence, which was divided into the states of Gujarat and
Maharastra in 1960, with Baroda becoming a part of Gujarat. In recent times,
Vadodara was affected by the devastating January 26, 2001 earthquake that
struck Gujarat. The city was spared the devastation suffered by some of the
other major cities in Gujarat.
Geography and Climate
Vadodara is located at 2218N 7311E in western India at an
elevation of 39 meters. It is the 18th largest city in India with an area of
148.95 km. The city sits on the banks of the River Vishwamitri, in central
Gujarat. The Vishwamitri frequently dries up in the summer, leaving only a
small stream of water. The city is located on the fertile plain between the
Mahi and Narmada Rivers. According to the Bureau of Indian Standards, the
town falls under seismic zone-III, in a scale of I to V.
Vadodara is divided by the Vishwamitri into two physically distinct
eastern and western regions. The eastern bank of the river houses the old city,
which includes the old fortified city of Vadodara. This part of Vadodara is
characterised by packed bazaars, the clustered and barricaded Pol system of
shanty buildings, and numerous places of worship. This part of the city
houses educational institutions like the Maharaja Sayajirao University, the
Vadodara Railway Station, modern buildings, well-planned residential areas,
44

shopping malls, multiplexes and new business districts centered around R. C.

Dutt Road, Alkapuri and more recently, the Old Padra Road and Gotri.
The weather is hot through the months of March to July the average
summer maximum is 36 C (97 F), and the average minimum is 23 C
(73 F). From November to February, the average maximum temperature is
30 C (85 F), the average minimum is 15 C (59 F), and the climate is
extremely dry. Cold northerly winds are responsible for a mild chill in
January. The southwest monsoon brings a humid climate from mid-June to
mid-September. The average rainfall is 93 cm (36.7 inches), but infrequent
heavy torrential rains cause the river to flood. The highest temperature
recorded is 47 C (116 F) and the lowest is -1 C (30 F).
Civic Administration
Vadodara is administered by the Vadodara Mahanagar Seva Sadan .
Some of the regions surrounding the city are administered by the Vadodara
Urban Development Authority. The Vadodara Municipal Corporation was
established in July 1950 under the Bombay Provincial Corporation Act, 1949.
The two main institutions involved in planning and development in
Vadodara are the Vadodara Mahanagar Seva Sadan and the Vadodara Urban
Development Authority. The jurisdiction of both these agencies is
demarcated clearly not only physically but also functionally. The governing
acts for both the institutions differ. The principal responsibility of Vadodara
Urban Development Authority is to ensure a holistic development of the
Vadodara agglomeration covering an area of 714.56 km. Whereas Vadodara
Municipal Corporation is involved in the development of a limited area of
148 km.The Vadodra City Police are headed by a Police Commissioner, an
Indian Police Service officer.

45

 Demographics and Culture

Vadodara metropolitan area had a population of 41, 57,568. Males
constitute 52% of the population and females 48%. Vadodara has an average
literacy rate of 78%, higher than the national average of 59.5%.Gujarati,
Marathi, Hindi and English are the languages spoken in the city.
Vadodara is one of Indias most cosmopolitan cities. Thanks to the
vision

and

broadmindedness

of

the

Gaekwads,

the

subsequent

industrialisation, the proliferation of academic activities and a strategically

important geographical location, Baroda has welcomed a wide variety of
people from all over India and also from all over the world. In all of this, the
sprawling and cosmopolitan Maharaja Sayajirao University campus and the
large number of local, national and foreign industries act as a catalysing and
unifying force. The great museums on the palace grounds such as the
Maharaja Fateh Singh Museum and art gallery are unique and carry artifacts
from around the nation and the world. There are Gujarati film studios in the
city as well as a large number of large old-style movie theatres in addition to
the newer multiplexes that have sprung up in the past few years. Classical
music and dance have their patrons, and so does the modern stage and pop
culture. The culture and the traditions are both alive and being forever
experimented with lots of joy.
Education
The patronage of education started with Maharaja Sayajirao and the
city has built further on the academic infrastructure established by him. The
present educational foundation rests on over 20 public schools and over 100
private schools. Towering over all is the Maharaja Sayajirao University, the
jewel in the Vadodara crown, so to speak. MSU is the only university in
Gujarat with English as the only medium of instruction. It has 13 faculties
and 17 residential hostels, 4 of them for women students. The university
46

caters to over 200,000 students. There are various courses on offer, ranging
from Medicine to Commerce. The university has been divided into several
departments and there are number of courses offered in each of the
department. The Fine Arts faculty is famous worldwide for its contribution in
arts. The faculty of Performing Arts is also a very reputed institution teaching
music, drama, dancing etc. The recent decision of Confederation of Indian
Industry to develop Vadodara as 'Knowledge City has been well received by
the Barodians all over the world.
Transportation
The city is on the major rail and road arteries joining Mumbai with
Delhi and Mumbai with Ahmedabad. Due to this Vadodara is known as a
Gateway to the Golden Quadrilateral.
Road - National Highway 8, connecting Delhi and Gandhinagar with
Ahmedabad to Mumbai, passes through the city. Vadodara is also connected
with Ahmedabad through Indian National Expressway 1, a stretch of 97 km
Super Highway with exits at Anand, Nadiad, S.P.Ring Road and Ahmedabad.
Public transport vehicles within the city include buses, auto rickshaws and
taxis. There are a few private bus and taxi services as well.
Rail -Vadodara was part of historic BBCI Railway. Railway had
arrived in Vadodara in January 1861. On November 5, 1951 the BBCI
Railway was merged with the Saurashtra, Rajputana and Jaipur railways to
give rise to the Western Railway. Now, the Vadodara Railway Station
belongs to the Western Railway division of Indian Railways and is a major
Junction on the Western Railway Main Line. Vadodara junction is Gujarat's
Busiest Junction. One can travel to almost all the parts of India from
Vadodara Junction. It has one of the largest Electric Locomotives Shed in
Gujarat and various trains have a loco change over at Vadodara.

47

Air - Vadodara Airport is located north-east of the city. It has domestic

and international flight.
Economy
Vadodara enjoys a special place in the state of Gujarat. Until the early
1960s Vadodara was considered to be a cultural and educational centre. The
first modern factory (Alembic Pharmaceuticals) was established in Vadodara
in 1907 and subsequently companies such as Sarabhai Chemicals, and Jyoti
came up in the 1940s. By 1962 there were 288 factories employing 27,510
workers. At that time, the dominant industrial groups were chemicals and
pharmaceuticals, cotton textiles and machine tools. The establishment of
Bank of Baroda by Sayajirao III in 1908 also help industrial growth.
In 1962, Vadodara witnessed a sudden spurt in industrial activity with
the establishment of Gujarat Refinery and Indian Oil Corporation Limited at
the nearby village of Koyali. Several factors like raw material availability,
product demand, skillful mobilization of human, financial and material
resources by the government and private entrepreneurs have contributed to
Vadodara becoming one of Indias foremost industrial centres. The discovery
of oil and gas in Ankleshwar led to the industrial development of Gujarat in a
big way. The Vadodara region is the largest beneficiary in the process of this
industrialisation. Gujarat Refinery went into the first phase of production in
1965. The refinery being a basic industry made vital contributions on several
fronts at the regional and national levels.
In Vadodara various large-scale industries such as Gujarat State
Fertilisers & Chemicals , Indian Petrochemicals Corporation Limited and
Gujarat Alkalies and Chemicals Limited have come up in the vicinity of
Gujarat Refinery and all of them are dependent on it for their fuel and
feedstock. Other large-scale public sector units are Heavy Water Project,
Gujarat Industries Power Company Limited, Oil and Natural Gas Corporation
and Gas Authority of India Limited. In addition to these public sector
48

enterprises, a number of other large-scale enterprises have come up in the

private sector such as Bombardier Transportation, a Canadian company
manufacturing the Delhi Metro from its site in Savli. The establishment of
large industrial units in a region automatically brings into existence a number
of smaller enterprises. Vadodara is no exception and the city and the
surrounding areas are today humming with industrial activity.
The industrialisation of Vadodara has attracted entrepreneurs not only
from Vadodara but also from all over Gujarat and the rest of India. In line
with the 'Knowledge City' vision of the Confederation of Indian Industry,
Vadodara is gradually becoming a hub in Gujarat for IT and other
development projects. Vadodara is also home to the Vadodara Stock
Exchange .
For this study purpose Mangalpura bazaar, Hathikhana Market, Sardar
Market yard, Nyaimandir area and Alkapuribazar areas businessmen were
taken as a sample.

49

1.5 (C) About Rajkot City

Rajkot is the largest city in the state of Gujarat. Rajkot is ranked 22nd
in the worlds fastest growing cities and urban areas from 2006 to 2020.
Rajkot is a city of Gujarat state in India and administrative headquarters of
the Rajkot District, located on the banks of the Aji River and Niari River.
Rajkot was the capital of the Saurashtra state from 15 April 1948 to 31
October 1956 before merging in bilingual Bombay State on 1 November
1956. Rajkot was merged into Gujarat State from bilingual Bombay state on
May 1, 1960.
History
Rajkot has been under many different rulers since it was founded.
Rajkot has a long history and played a significant part in Indian independence
movement.
Foundation
Rajkot was founded by Thakur Saheb Vibhaji Ajoji Jadeja of the
Jadeja clan and Sunni muslim Raju Sandhi in 1612 AD, in the middle of
Saurashtra. Vibhaji Ajoji was the grandson of Jam Sataji of Nawanagar, the
present day Jamnagar. Rajkot was named in honour of its co-founder, Sunni
muslim Raju Sandhi.
Nawab Rule
Masum Khan, a deputy Faujdar of Junagadh's Nawab, conquered
Rajkot in the year 1720 AD and changed the name of Rajkot to Masumabad.
In 1722 AD, fortress was built with about 4 to 5 kilometers perimeter and had
walls that were 8 feet wide. There were eight gates, each studded with iron
spikes on its outer side for access to Masumabad. Further, there was a gate
without spikes called Khadaki Naka near Nakalank Temple. The ruins of the
fort wall can be seen in the bastion in the Ramnath para area. Gates of Bedi
Naka and Raiya Naka were modified during the colonial times. The chief

50

Engineer of British Agency, Sir Robert Bell Booth, renovated Bedi gate and
Raiya Naka gate and built the present three storied clock towers in 1892.
Masumabad was later conquered by the Jadeja clan and its name
restored to Rajkot. Bavajiraj Jadeja built Darbargadh, the first palace of this
princely state. Bavajiraj was succeeded by his son, Sir Lakhajiraj Jadeja, the
most prominent ruler amongst the Jadeja rulers to that time, who constructed
Lalpari and Randarda lakes. Dharmendrasinhji Jadeja, succeeded his father,
Sir Lakhajiraj, but died while hunting of Lion in Sasan Gir and was
succeeded by his brother Pradyumansinhji Jadeja, Sir Lakhajiraj Jadeja's
second son. Rajkot was merged into Republic of India during Pradumansinh
educational institutions, such as Connaught Hall and The Rajkumar College.
Mahatma Gandhi spent the early years of his life in Rajkot when his
father was a Diwan to the king of Rajkot. Gandhi fasted to ask to form a
people's council and liberation of people of Rajkot at Rashtriya Shala in
March 1939.
Post independence
After independence Rajkot became capital of the State of Saurashtra,
headed by U. N. Dhebar as Chief Minister. Rajkot was merged into the
newly-created Gujarat State when it was separated from the bilingual
Bombay State on May 1, 1960. Thakore Sahib Pradyumansinhji died in 1973.
His son, Thakore Sahib Manoharsinhji Pradyumansinhji, who has carved out
a political career at the provincial level, succeeded him. He served as a
Member of the Gujarat Legislative Assembly for several years and as the
state Minister for Health and Finance. The Heir Apparent, Yuvraj Sahib
Mandattasinhji has embarked on a business career and environmentalism.
Geography and Climate
Rajkot is located at 22.3N 70.78E22.3; 70.78. It has an average
elevation of 134 meters. The city is located on the bank of Aji River and
51

Nyari River which remains dry except the monsoon months of July to
September. The city is spread in the area of 104.86 km.
Rajkot has a tropical wet and dry climate, with hot, dry summers from
mid-March to mid-June, the wet monsoon season from mid-June to October,
when the city receives 620 mm of rain on average. The months from
November to February are mild, the average temperature being around 20C,
with low humidity.
The region experiences a lot of rainfall and high-speed winds during
the time of the year after the monsoon season as well as the months of May
and June. However, June experiences lesser amount of rainfall and winds
than the post-monsoon time. Thunderstorms are another important part of the
Rajkot weather in the months of June and July. During summer time, the
temperature ranges between 24C and 42C. In the months of winter, Rajkot
temperature varies between 10C and 22C but on a whole winters are
pleasant.
Civic Administration
Rajkot is managed by many government bodies, including Jilla Seva
Sadan (Rajkot district Collector Offices), Rajkot Municipal Corporation,
Rajkot Urban Development Authority and Police Department of Gujarat and
Rajkot City Traffic Police Department.
Demographics and Culture
Population of Rajkot city is 12, 86,995 as per official census report for
2011. Rajkot city has an average literacy rate of 80.6%, higher than the
national average. A clear majority of the people here are Hindus.
The people in Rajkot are predominantly vegetarians and are
vehemently against any form of hunting. This could be the main reason for
the survival of rich fauna in this city. The women in Rajkot are very fond of
52

jewelry. Large chains, pendants and other heavy gold jewelry are a common
sight during marriages and festivals. The Rajkot men love to flaunt thick gold
chains and numerous rings on their fingers. The attire changes with the
season and approaching festivals. The ladies normally wear the Gujarati
flavor of the Sari and men can be seen in flowing Kurtas and in the formal
wears Rajkot city is best known as a place that mixes tradition with
modernity. This perfect blend is evident in its architecture and cuisine. The
21st century has not left Rajkot India trailing behind. Rajkot is multicultural.
People have arrived from various part of the world. One can find many
languages, like...Gujarati, Hindi, Urdu, and English are well understood.
Rajkot is frequently referred to as "Rangilu Rajkot" meaning colorful
Rajkot. The people of Rajkot like to enjoy themselves to the fullest no matter
which season or time of the day.
Education
A number of schools in the city are run by Corporation. They include
20 schools and learning centers. There are also some well-known selffinanced public schools making a significant contribution to the field of
education in Rajkot. It also has Union Government Human Resource
Development Ministry run Jawahar Navodaya Vidyalaya, now shifted to
Jamnagar highway premise. Earlier it started at the Juni Khadki school
premise of Sir Lakhajiraj High School and later on moved to its own building
on the Jamnagar Road. It is Central Board of Secondary Education Board
affiliated, residential school for girls and boys, providing a high quality
education to those selected at the Class VI level all India entrance test.
The city is home to Saurashtra University, several colleges, and other
institutions of higher education, both public and private. The city has many
engineering colleges. The Saurashtra University is the city's public
university; it provides one of the most modern and sophisticated
53

infrastructures in the region for higher studies. It is spread across

approximately 410 acres of lush green land with many post graduation
departments.
Transport
Rail and Bus - Rajkot Railway Station is a main railway junction of
Saurashtra, trains for the all the major cities of India are available from here.
Rajkot Municipal Corporation has restored city bus services with Public
Private Partnership in 2007. Rajkot Municipal Corporation and a private
company are providing around 80 Compress Natural Gas buses under 15 to
20 routs in city and suburbs. Rajkot Municipal Corporation is also working
for Rajkot Bus Rapid Transit System for providing better transportation
within city. Rajkot has sufficient number of auto rickshaws, which are
running round the clock within city, most of which are converting to
Compress Natural Gas from petrol or diesel.
Roads and Highways - The Gujarat State Road Transport Corporation
runs regular buses to and fro from Rajkot to other cities of Gujarat. There are
so many people who travelling daily with Gujarat State Road Transport
Corporation. Rajkot is very well connected with Gujarat State Highways,
National Highway 8 and East-West Corridor. Rajkot is allocated the vehicle
registration code GJ-3 by Road and Transport Office which is a government
body. There are a number of private bus operators connecting city with
Maharashtra, Rajasthan, Delhi, Madhya Pradesh and other states of India.
Air - Aviation is developing slowly in the city. Daily multiple flights to
Mumbai are served by Indian Airlines and Jet Airways and by other carriers.
Intermittent services to Ahmedabad and hopping service to Bhavnagar on the
way to Mumbai have been undertaken periodically. Currently Indian Airlines
and Jet Airways offer daily flights between Rajkot and Mumbai Airport.

54

Rajkot is located at a short distance from the city centre. The airport is owned
by the Airports Authority of India and has a 1,841 meters long runway.
Economy
The city contributes to the economy of the state with heavy and small
scale industries under the patronage of Gujarat Industrial Development
Corporation and Gujarat State Financial Corporation. The economy of Rajkot
got another shot in the arm with 28 crore World Bank aid for development of
infrastructure of the city. Many a renowned business houses made a beeline
for grabbing the property market in the city, before it skyrockets. The plans
are already in place to beautify and modernize the ancient city, including a
Rock Garden, ala Chandigarh. Another 25 crore project to rebuild the Kaisere-Hind, the only major bridge linking to the city, is already nearing
completion. All such infrastructure development will add to the economic
wealth and promote the local business houses.
Rajkot is famous for its jewellery market, silk embroidery and watch
parts. The city hosts several small scale manufacturing industries. Some of
the industrial products for which Rajkot is known include Bearings, Diesel
Engines, Kitchen Knives and other cutting appliances, Watch Parts ,
Automotive Parts, Forging industry, Casting industry, Machine tools, Share
Market, Software Development Companies.
Rajkot is well known throughout the world for its casting and forging
industries. Over the last few years, it has started to play an increasingly
important role in the complex supply chains of many global engineering
companies that make products such as electric motors, automobiles, machine
tools, bearings, etc. Companies such as Echjay Industries, Prashant Castings
(P) Ltd,Doctor Pumps Rolex Rings, etc. are prime examples of this trend and
due to huge investments by the Government and private sector in local
infrastructure such as highways, ports, power plants etc., many more
55

companies are expected to join them. There are about 500 foundry units in
Rajkot. The cluster came-up mainly to cater to the casting requirements of the
local diesel engine industry. The geographical spread of the cluster includes
Aji Vasahat, Gondal Road and Bhavanagar Road areas. Majority of the
foundry units in Rajkot produce Grey iron castings for the domestic market.
A very small percentage of the foundry units export castings such as electric
motor castings, automobile castings etc. Rajkot is most famous for
mechanical industry especially in Shapar nearby rajkot.
Rajkot is also famous for its gold purity. It has one of the largest gold
markets in India. Rajkot is also growing up in Software Industries and
Information Technologies. There are many Small Office, Home Office
companies working in web development and many new multinational
software companies and call centers are setting up their operation and
development center in Rajkot.
In the near future, the government of Gujarat will allocate large land
areas for the development of Special Economic Zone which will be parted in
three different areas and will include industries such as Software, AutoMobiles, etc. Rajkot is also famous for its textile printing units, this units
products Cotton sulvar-suits and Cotton prints sarees, and also make a pure
silk patoda.
For this study purpose Bus station Market, Shastri Nagar, Yagnik Road
and Trikon bag to Madvichok areas businessmen were taken as a sample.

56

1.5 (C) About Surat City

Surat formerly known as Suryapur or Khubsoorat is the eighth largest
city in India. The city proper is the seventh most populous city in India and
49th in the world. Surat is the administrative capital of district. The city is
situated on the left bank of the Tapti River, 14 miles from its mouth. A moat
divides the older parts of the city, with its narrow streets and handsome
houses, and the newer suburbs. The city is largely recognized for its textile
and diamond businesses. It is also known as the diamond capital of the world
and the textile capital of India. 92% of the world's diamonds are cut and
polished in Surat. Surat is also the third cleanest city in India after
Chandigarh and Gandhinagar. Surat was once the largest city in India. It has
one of the highest Gross Domestic Product growth rates in India at 11.5% as
of 2008. Surat was the primary port of India during the Mughal period, a
distinction it lost to Bombay during the British Raj.
History
In the early centuries during the reign of the Mughal emperor Jahangir,
the port of Surat was used as the gateway to Makkah for pilgrims of the hajj
from India's interior regions. Both the Makkai Pool and the Mughal Sarai
guest house for hajjis are indicators of this historical significance. Surat is
mentioned in the Sanskrit epic, the Mahabharata when Lord Krishna stopped
there enroute from Mathura to Dwarka. According to other later Sanskrit
records, the area was ruled by the Western Chalukyas in 610 CE, and
continued to be ruled by Hindu kings until one of Qu buddin Aibak's
generals captured it. The Parsis started to settle there in the 12th century, and
added greatly to its prosperity. Local traditions state that the city was founded
in the last years of the fifteenth century by a Brahman named Gopi, who
called it Suryapur, or 'City of the Sun'. In 1512 and 1530 Surat was burned
and ravaged by the Portuguese who were trying to maintain influence in the
area. In 1513 the Portuguese traveler, Duarte Barbosa, described Surat as an
57

important seaport, frequented by many ships from Malabar and various parts
of the world. By 1520 the name of the city was Surat.
Surat eclipsed Khambhat as the major port of western India, when
Khambhat's harbour began to silt up by the end of fifteenth century. During
the reigns of the Mughal emperors Akbar, Jahangir and Shah Jahan, Surat
rose to become a chief commercial city of India and an imperial mint was
established there. As the major port on the west coast of India, Surat also
served as the port for the Hajj to Mecca. At the end of the 16th century, the
Portuguese were undisputed masters of the Surat sea trade. There still is a
picturesque fortress on the banks of the river built in 1540.
In 1608, ships from the British East India Company started docking in
Surat, using it as a trade and transit point. In 1613, the British Captain Best,
followed by Captain Downton, overcame Portuguese naval supremacy and
obtained an imperial fireman establishing a British factory at Surat following
the Battle of Swally. The city was made the seat of a presidency under the
British East India Company after the success of the embassy of Sir Thomas
Roe to the court of emperor Jehangir. The Dutch also founded a factory.
At its zenith, Surat was popularly viewed as the city of Kubera, the
God of Wealth. In 1664 the Maratha King Shivaji attacked Surat, a key
Mughal power centre, and a wealthy port town which generated a million
rupees in taxes. When Shivaji arrived in Surat, he demanded tribute from the
Mughal commander of the army stationed for port security. The tribute was
refused and instead of battling the Marathas, the Mughal commander sent an
emissary to assassinate Shivaji, but in vain. Shivaji conquered the city and
forces under his command exacted their revenge. Shivaji's army sacked Surat
for nearly 3 weeks, looting both the Mughal and Portuguese trading centers.
However, no men or women were molested or taken as slaves as was the
Maratha practice. The poor were spared.

58

The prosperity of Surat received a fatal blow when Bombay was ceded
to the British as part of the dowry for Catherine of Braganza's wedding to
Charles II in 1662. Shortly afterwards, in 1668, the British East India
company established a factory in Bombay and Surat began its relative decline
concurrent with the rise of British interests in Bombay.
Surat was sacked again by Shivaji in 1670. By 1689, the British East
India Company had moved the presidency to Bombay. At its height, Surat's
population reached an estimated 800,000, but by the middle of the 19th
century the number had fallen to 80,000. The British took control of Surat
again in 1759, and assumed all government powers of the city in 1800.
The city and the surrounding district remained comparatively tranquil
during British rule. Even during the Revolt of 1857 (also known as the first
struggle for India's independence), peace was not disturbed, owing to the
largely mercantile interests of the local population. In the 19th century the
Bawamia family was the wealthiest and most powerful family in the city of
Surat, they were also heavily involved in the development of the city by
focusing on maximizing exports to increase revenue and hence increase
savings which led to investment in the diamond industry.
A fire and a flood in 1837 destroyed many of buildings of Surat.
Among the interesting monuments that survive that destruction are the tombs
of English and Dutch merchants and their families, dating to the 17th century,
including those of the Oxenden brothers.
By the early 20th century, the population had slowly climbed to
119,306 and Surat was a center of trade and manufacturing, although some of
its former industries, such as shipbuilding, were extinct. There were cotton
mills, factories for ginning and pressing cotton, rice-cleaning mills and paper
mills. Fine cotton goods were woven on hand-looms, and there were special
manufactures of silk brocade and gold embroidery. The chief trades were

59

organized in guilds. Manufacturing and trading brought an eclectic mix of

ethnicity to the city, making Surat's culture unique.
In 1994, a combination of heavy rains and blocked drains led to
flooding of the city. A number of dead street animals and public waste were
not removed in time and a plague epidemic spread through the city, which
caused a number of countries to impose travel and trade sanctions. The
municipal commissioner during that time, S. R. Rao and the people of Surat
worked hard in the late 1990s to clean the city up, after which it was
recognized in many circles as the 'second-cleanest city in India'.
Geography and Climate
Surat is a port city situated on the banks of the Tapti river .The city is
located at 2110N 7250E. It has an average elevation of 13 meters. The
Surat district is surrounded by Bharuch, Narmada (North), Navsari and Dang
(South) districts. To the west is the Gulf of Cambay. The climate is tropical
and monsoon rainfall is abundant (about 2,500 mm a year).Surat has grown
in area since the early 1700s. The oldest part of the city developed in the area
between the train station and the area known as Athwalines. Since the 1970s
most of the new development including the most desirable location for the
city's burgeoning middle and upper class is the area between Athwalines and
the coast at Dumas.
Surat has a Tropical monsoon climate, moderated strongly by the
Arabian Sea. The summer begins in early March and lasts till June. April and
May are the hottest months, the average temperature being 30 C. Monsoon
begins in late June and the city receives about 800 mm of rain by the end of
September, with the average temperature being around 28 C during those
months. October and November see the retreat of the monsoon and a return
of high temperatures till late November. Winter starts in December and ends
in late February, with average temperatures of around 22 C, and little rain.
60

Very often heavy monsoon rain brings floods in the Tapi basin area. In
last two decades, the city has witnessed major floods every four years, the
worst being the flood of August 2006, perhaps the costliest in the city's
history. In the second week of August 2006, a massive flood caused severe
damage to the city of Surat. According to a report released by Indian Institute
of Management - Ahmedabad, massive flood after release of water from Ukai
Dam had caused major human tragedy and property damage estimated at Rs
22,000 cr on that day.
Civic administration
The Surat Mahanagar Sewa Sadan is responsible for the city's civic
infrastructure as well as carrying out associated administrative duties. BJP is
at present having majority and is the ruling party. Surat Mahanagar Sewa
Sadan is one of the wealthiest municipal corporations in India which really
works hard for Surat and providing necessary amenities. The Surat city also
has maximum numbers of Fly-Overs in India which also makes it as fly-over
capital of India.
Demographics and Culture
Population of Surat city is 4462002 as per official census report for
2011. Surat has an average literacy rate of 83%, higher than the national
average of 79.5%. Gujarati, Marathi and Hindi are the main languages
spoken in Surat. Over 0.6 million people or about 11% hail from Uttar
Pradesh and Bihar. Surat also has sizeable Parsee, Jewish, and Bohra Muslim
populations.
Surat is known for its Surti cuisine, which includes perennial favorites
such as Ghari, Locho, Undhiyu, Rasaawala Khaman, and Surti Chinese. Surti
cuisine is not as sweet as other Gujarati food, and is quite spicy. Roadside
kiosks, called "laaris" or "rekdis", are popular. In the cooler winter months,
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Suratis converge at river Tapi's banks to eat Ponk, a roasted cereal that is
available only in this part of the world.
The kite-flying festival of Utraan which falls on Makar Sankranti
14 January - is very popular in the city. It is also well known for the
celebration of Chandi Padvo which usually occurs around October and is a
holiday unique to Surat. This day comes after one of the two biggest full
moon days of the Hindu calendar year, "Sharad Purnima". On this day, Surtis
buy almost 100 tons of Ghari and other Surti delicacies, then head to the
city's seaside beach area, Dumas where they have dinner and a late night
snack under the full moonlit sky.
Education
Schools in Surat are either "municipal schools" or private schools,
which in some cases receive financial aid from the government. The schools
are affiliated either with the Gujarat State Board or the Central Board for
Secondary Education and few schools are affiliated under National Institute
of Open Schooling. Gujarati or English are the usual languages of instruction.
The government-run public schools lack many facilities, but are the only
option for poorer residents who cannot afford the more expensive private
schools. A majority of residents prefer private schools because of better
infrastructure and the use of English as a medium of instruction.
Surat has the prestigious, Sardar Vallabhbhai National Institute of
Technology, commonly known to local people as SVR from its earlier name
Sardar vallabhbhai regional engineering college. This is one of the National
Institute of Technologys, is a premier engineering college, and is also
located here. It is among the top five of all National Institute of
Technologys in India and top most in Gujarat for technical education. With
its festivals throughout the year, the college keeps a very vibrant atmosphere
inside as well as outside the campus. Most colleges in the city are affiliated
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with the Veer Narmad South Gujarat University. A Parsi Theatre Academy is
being opened in the Muglisara area of Surat, by Yezdi Karanjia, who has a
long experience in staging Parsi plays. It is hoped that it will generate some
interest among school goers, and breathe new cultural life into the dwindling
community.
Transportation
The developing city Surat's infrastructure is improving rapidly. Surat
has excellent roads according to Business Today Magazine. SMC tries to
improve road infrastructure like Gandhinagar. Recently four Ring-Roads
were introduced by CEPT from Ahmedabad IIM which are; 1.Old Ring
Road, 2.Inner Ring Road, 3.Middle Ring Road, 4.Outer Ring Road which
will definitely improve the traffic problems of Surat. The Outer Ring Road
which starts near Palsana forms ring and leaving routes to the city of Surat
from various points and connects Surat smoothly with its Suburbs. The city
has recently seen the completion of a large number of road projects,
particularly elevated roads, or flyovers, in the diamond and textile zones of
the city. This has significantly cut down the commuting time for many people
traveling to the diamond and textile districts. One of the very few "MultiLayer Flyovers" in India is now in Surat over Majura Gate. The Varachcha
flyover of Surat is India's longest flyover under city municipal limits in the
four lane category.
The Golden Quadrilateral highway system passes through Surat. The
city is connected to the National Highway 8 through a 16 km connector
highway. National highway 6, also known as Surat - Kolkata Highway, starts
from Hazira and passes through surat city and connects the city to Dhule,
Nagpur, Sambalpur, Kharagpur and Kolkata.National highway 228, also
known as Dandi Heritage highway, starts from Sabarmati in Ahmedabad and

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passes through Anand, Kheda, Ankleshwar and passes through Surat city to
Navsari and ends up in Dandi.
Railway - Surat is connected to the national railway system through the
Western Railways. It is connected to Mumbai and beyond to south India.
There are also links to many cities to the north. The Surat Railway Station is
in the eastern-central part of the city near major hotels and business houses.
There is also a connection to the Central Railways through Udhana Railway
Junction and the Tapti line which connects Surat with central India and cities
like Jalgaon,Amravati. There are numerous daily trains that travel to the
north, south and east throughout the day. Passenger trains range from local
trains that stop at all stations on the way to express trains like the August
Kranti Rajdhani Express. In addition, there are goods trains that move the
goods produced by the city to the rest of the country and beyond, and bring
supplies into the city.
On 22nd August 2008, the SMSS bus service was opened by the city
Mayor Dr. Kanubhai Mavani. It is considered the best city bus services in
India. These buses are CNG-fueled and have an LCD screen in the front
giving details about the journey. The conductor uses an electronic machine to
print out the tickets. The bus stops are modern and comfortable. The bus
service in general is relatively hi-tech and modern.
Surat has successfully started Bus Rapid Transit System, by 2010.
Surat is expected to get a Metro by 2015 in its 1st phase Surat will be
connected by Navsari which is 40 km. In the 2nd phase Udhana and Hazira
will be connected which is 35 km. The project is under construction as Twin
City project. It has been passed and signed by the State Government of
Gujarat. Surat has its own port which is used for shipping freight. A plan to
connect Surat with Mumbai, Goa, Dubai, and Bhavnagar through ferry
services is moving forward.

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 Economy
Surat is economic capital of Gujarat and also one of the economic hubs
of India. Surat is famous for its diamond industry and textile industry, along
with silk and chemicals. It is at the heart of India's thriving diamondpolishing industry, which in 2005 cut 92% of the world's diamond pieces and
earned India $15 billion in exports. Gujarati diamond cutters emigrating from
East Africa established the industry in 1901 and by the 1970s Surat-based
diamond cutters began exporting stones to the US for the first time. Though
much of the polishing work takes place on small weight stones, Surat's
workshops have set their eyes on the lucrative market for finishing larger,
pricier stones in the future. It is a major production centre for synthetic
textiles in India.
Surat is known for producing world-class synthetic textiles. It is known
as the Manchester of East. Surat has excellent roads according to Business
Today Magazine. The November 18, 2008 issue of the Wall Street Journal
had an article about the diamond industry in Surat. It claims that 80% of the
world's finished diamonds are cut and polished in this city. However the
wages of the industry's workers remained flat for years and 250,000 workers,
or one-third of the city's diamond industry workforce, has left between 2005
2008, leaving about 5,00,000. Only after a July 2008 strike did the workers
obtain a 20% salary raise, their first in a decade.
Surti households have been declared the most prosperous in the
country by the National Council of Applied Economic Research and Future
Capital Research's Roopa Purushothaman in their latest study. The average
annual household income in the diamond city is Rs 4.57 lakh - the highest in
the country. The Patel from the Saurashtra region of Gujarat are the main
businessman in the city and also in the out country. Even its Gross Domestic
Product growth of 11.5 per cent for the many consecutive years is the fastest
in the country. Recently Surat's diamond and textile industry faced the
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recession due to slowdown in US economy but the picture has changed and
today Surat is the only city in world not facing recession. The textile industry
is boosted compared to past times and the diamond industry is also in a better
condition than in previous times. The oldest business of Surat Jari has made
Surat the world embroidery capital. There are approximately 80,000
embroidery units in Surat which makes Surat the embroidery capital too.
Surat also has many large industrial units such as Reliance petrochemical
plant, Essar's 10 million tonne steel plant, Krishak Bharati Cooperative
Limited, fertilizer plant, Larsen and Toubro Engineering unit, gas processing
plant of Oil and Natural Gas Corporation, National Thermal Power
Corporation gas power plant. All at Hazira and ABG Shipyard (Shipbuilding
Yard) and Ambuja Cement (grinding Unit) at Magdalla port where as Torrent
mega power plant and Gujarat Industries Power Company Limited are
located at Kamrej.
Surat has a computerized water distribution system and while
computerized drainage system is under implementation. It has one of the best
water treatment plants in India. Every part of Surat has drainage and street
lights.
For this study purpose Chock Bazar, APMC Market, Sardar Gunj
Market, Delhi Gate and Zapa Bazar areas businessmen were taken as a
sample.

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1.5(E) About Mehsana City

Mehsana is a city and a municipality in Mehsana district in the Indian
state of Gujarat. It is situated near Ahmedabad and Gandhinagar, Mehsana is
one of the largest cities in North Gujarat, followed by Patan and Palanpur. A
number of primary industries including dairy, and oil and natural gas are
situated in or around the city. The city is also famous for its local Mehsani
buffalo breed, having the first water park in Eurasia, and the largest iron and
steel market in India.
Mehsana is now also slated to have airport the first privately-operated
airport in Gujarat which will function as an air flight training centre of
Ahmedabad Aviation and Aeronautics Ltd. The flight training centre, which
has come up at an abandoned airport, has been developed by the.
Geography
Mehsana is located at 23.6N 72.4E23.6; 72.4. It has an average
elevation of 81 meters above sea level. It is approximately 70 km away from
the mega city, Ahmedabad.
Civic Administration:
The Mehsana municipality

is responsible for the city's civic

infrastructure as well as carrying out associated administrative duties.

Demographics
Mehsana had a population of 20, 27,727. Mehsana has an average
literacy rate of 77%, higher than the national average of 59.5%.
Education
Mehsana is home to an educational institution called Ganpat
Vidhyanagar or, officially, Ganpat University. Disciplines within the
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university include engineering, pharmacy, management, higher computer

studies, and military school for girls, central board school. 10 km from
Mehsana city another educational institution called L.C.Institute of
Technology is located, which offers courses in Computer Engineering,
Electronics and Communication Engineering, Mechanical Engineering,
Electrical Engineering. Also there is Diploma College in same campus called
M. L. Institute of Diploma Studies, which offers courses in Mechanical
Engineering, Electrical Engineering and Automobile Engineering. Diploma
institute is affiliated with Technical Examination Board Gandhinagar. There
are three agriculture research centers
The Krishi Vigyan Kendra is sponsored by the Indian Council of
Agricultural Research, New Delhi, and is implemented by the Mehsana
District Education Foundation, Ganpat University. Khreva.The Krishi Vigyan
Kendra works on three fundamental principles viz.
1. Agricultural Production as prime goal
2. Work experience is main method of imparting the training
3. Priority to weaker section of the society is the back bone of the Krishi
Vigyan Kendra programme.
Sprat's Setu Caravan, Hyderichowk is a multipurpose empowerment
center offers various social services like Reading room, SSC-HSC coaching,
spoken English program, computer training, educational video, science show,
book club, study circle, group discussion, hand work, mehndi work, self help
groups, cultural hours, youth hours, women hours, senior citizen's hours,
carrier quiz, basic management, computer accounting, workshops, personality
development etc. This center is open to all from 8am to 9pm throughout the
year except 5 decided holidays. Most of services are free to all and it covers
all most all age groups.

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Divine Child International School a CBSE and Cambridge university

afflicted residential school. Founded in 1995 this school provides best
education in both circular as well as non-circular activates.
Transportation:
Road connections include the National Highway from Ahmedabad to
Delhi, passing through Rajasthan. The six-lane highway from Mehsana to
Ahmedabad enables travel-times of less than an hour. In addition to private
road services, the State Transport operates bus services to Ahmedabad every
10-15 minutes.
Mehsana is connected by rail to all major cities in India. There are
daily trains to and from Delhi and Mumbai, and direct weekly or bi-weekly
trains connecting major cities in the North and South India including Cochin,
Bangalore and Trivandrum. All the major trains from Delhi and Mumbai
have a stop in Mehsana.
The nearest airport is Sardar Vallabh Bhai Patel International Airport
at Ahmedabad. Prepaid Taxis are available to Mehsana from the Airport
itself. The nearest Port is at Dholera
Economy
Mehsana has witnessed substantial industrial development over the
past few years, primarily due to its strategic location. There are around 7,183
small scale industries operating in Mehsana in Chemicals, Textiles, Rubber &
Plastic articles, Metals, Repairing Services, Food & Agro processing and
engineering sector. Mehsana has been identified as biotechnology zone by
Government of Gujarat. Under infrastructure development in the public
sector, the State Government has proposed to set up an Agri-Biotechnology
park at Mehsana
Dudhsagar Dairy -The Mehsana District Cooperative Milk Producers
Union Ltd. Mehsana, popularly known as Dudhsagar Dairy, is a member of
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the state-level Gujarat Cooperative Milk Marketing Federation Ltd.

Dudhsagar Dairy is the largest dairy in Asia, processing on an average 1.41
million kilograms of milk each day. Dudhsagar Dairy is a technology pioneer
in its industry, using information technology to simplify, automate, and
improve operational efficiency.
Oil and Natural Gas Corporation Limited -Established in November
1967, the Mehsana fields have grown into the highest onshore-producing
asset of the Oil and Natural Gas Corporation Limited Covering an area of
6000 sq. km with 28 fields. Mehsana also has 1311 oil wells and 16 gas wells
producing 5800 tons per day.
Engineering Industry mainly metallurgical industries and Food and
Agro processing are the major industries attracting investments in the
Mehsana .The presence of Chemical industry players like Nirma Ltd. which
has set up its manufacturing unit in the Mehsana producing a range of
products like synthetic detergents, soap bars, Sulphuric acid, shampoo and
toothpaste. The wholly-owned subsidiary of Canadian frozen food major
McCain Foods has set up a potato processing unit in Mehsana
For this study purpose Gunj Bazar, Station Road, Azad Chock
Chipdibazar, Modhera Road, Radhanpur Road,B.K.Road areas businessmen
were taken as a sample.

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