Ans.
Business environment is the sum total of all external and internal factors that Trends are the general tendencies or the courses of action along which events take
influence a business. You should keep in mind that external factors and internal
factors can influence each other and work together to affect a business. For
example, a health and safety regulation is an external factor that influences the
internal environment of business operations. Additionally, some external factors
are beyond your control. These factors are often called external constraints. Let's
take a look at some key environmental factors.
Political factors are governmental activities and political conditions that may affect
your business. Examples include laws, regulations, tariffs and other trade barriers,
war, and social unrest.
Social factors are basically sociological factors related to general society and social
relations that affect your business. Social factors include social movements, such
as environmental movements, as well as changes in fashion and consumer
preferences. For example, clothing fashions change with the season, and there is a
current trend towards green construction and organic foods.
Technological factors are technological innovations that can either benefit or hurt
your business. Some technological innovations can increase your productivity and
profit margins, such as computer software and automated production. On the
other hand, some technological innovations pose an existential threat to a
business, such as Internet streaming challenging the DVD rental business.
Nature of Business Environment:
The nature of Business Environment is simply and better explained by the
following approaches:
(i) System Approach:
In original, business is a system by
which it produces goods and services
for the satisfaction of wants, by using
several inputs, such as, raw material,
capital, labour etc. from the
environment.
(ii) Social Responsibility Approach:
In this approach business should fulfill
its responsibility towards several
categories of the society such as
consumers, stockholders, employees, government etc.
(iii) Creative Approach:
As per this approach, business gives shape to the environment by facing the
challenges and availing the opportunities in time. The business brings about
changes in the society by giving attention to the needs of the people.
Significance of Business Environment:
Business Environment refers to the “Sum total of conditions which surround man
at a given point in space and time. In the past, the environment of man consisted
of only the physical aspects of the planet Earth (air, water and land) and the biotic
communities. But in due course of time and advancement of society, man
extended his environment through his social, economic and political function.”
In a globalised economy, the business environment plays an important role in
almost all business enterprises. The significance of business environment is
explained with the help of the following points:
(i) Help to understand internal Environment:
It is very much important for business enterprise to understand its internal
environment, such as business policy, organisation structure etc. In such case an
effective management information system will help to predict the business
environmental changes.
(ii) Help to Understand Economic System:
The different kinds of economic systems influence the business in different ways.
It is essential for a businessman and business firm to know about the role of
capitalists, socialist and mixed economy.
(iii) Help to Understand Economic Policy:
Economic policy has its own importance in business environment and it has an
important place in business. The business environment helps to understand
government policies such as, export-import policy, price policy; monetary policy,
foreign exchange policy, industrial policy etc. have much effect on business.
(iv) Help to Understand Market Conditions:
It is necessary for an enterprise to have the knowledge of market structure and
changes taking place in it. The knowledge about increase and decrease in demand,
supply, monopolistic practices, government participation in business etc., is
necessary for an enterprise.
Q.2.What are the techniques of environment scanning ?
Ans.The external environment in which an organization exists consists of a
bewildering variety of factors. These factors are events, trends, issues and
expectations of different interested groups. Events are important and specific
occurrences taking place in different environmental sectors.
place. Issues are the current concerns that arise in response to events and trends.
Expectations are the demands made by interested groups in the light of their
concern for issues.
By monitoring the environment through environmental scanning, an organization
can consider the impact of the different eve trends, issues and expectations on its
strategic management process. Similarly any organization-facing environment as a
complex the scanning is absolutely essential, and strategists have to deal
cautiously with process environmental scanning.
The effort has to be to deal with it is such a manner that unnecessary time and
effort is not expended, while important facts are not ignored. For this to take
place, it is important to devise an approach or a combination of different
approaches, to environmental scanning.
Approaches to Environmental Scanning:
The experts have suggested three approaches, which could be adopted for, sort
out information for environmental scanning.
1. Systematic Approach:
Under this approach, information for environmental scanning is collected
systematically. Information related to markets and customers, changes in
legislation and regulations that have a direct impact on an organization’s activities,
government policy statements pertaining the organization’s business and industry,
etc, could be collected continuous updating such information is necessary not only
for strategic management but also for operational activities.
2. Ad hoc Approach:
Using this approach, an organization may conduct special surveys and studies to
deal with specific environmental issues from time to time. Such studies may be
conducted, for instance, when organization has to undertake special projects,
evaluate existing strategy or devise new strategies. Changes and unforeseen
developments may be investigated with regard to their impact on the
organization.
3. Processed-form Approach:
For adopting this approach, the organization uses information in a processed form
available from different sources both inside and outside the organization. When an
organization uses information supplied by government agencies or private
institutions, it uses secondary sources of data and the information is available in
processed form.
Sources of Information:
A company can obtain information from different sources, but it should be
ensured that the information is correct. The correct source should be tapped for
specific information for more accuracy. Information received form secondary
sources may sometimes even misguide strategy managers.
Hence it is important that information should be verified for correctness before it
is processed and decisions are taken based on it.
Q.3. What is globalization, privatisation , liberalization ?
Ans:-Liberalization, Privatisation and Globalisation!
Economic environment is also called business environment and are used
interchangeably. In order to solve the economic problem of our country, the
government has taken several steps including control by the State of certain
industries, central planning and reduced importance of the private sector.
Accordingly, the main objectives of India’s development plans set were to:
a. Initiate rapid economic growth to raise the standard of living, reduce the
widespread unemployment and poverty stalking the land;
b. Become self-reliant and set up a strong industrial base with emphasis on heavy
and basic industries;
c. Achieve balanced regional development by establishing industries across the
country;
d. Reduce inequalities of income and wealth;
e. Adopt a socialist pattern of development — based on equality and prevent
exploitation of man by man.
With the above objectives in view, the Government of India as a part of economic
reforms announced a new industrial policy in July 1991.
The broad features of this policy were as follows:
1. The Government reduced the number of industries under compulsory licensing
to six only.
2. Disinvestment was carried out in case of many public sector industrial
enterprises.
3. Policy towards foreign capital was liberalized. The share of foreign equity
participation was increased and in many activities 100 per cent Foreign Direct
Investment (FDI) was permitted.
4. Automatic permission was now granted for technology agreements with foreign
companies.
5. Foreign Investment Promotion Board (FIPB) was set up to promote and
channelise foreign investment in India.
There were three major initiatives taken by the Government of India to introduce
the much debated and discussed economic reforms to transform Indian economy
from closed to open market economy. These are generally abbreviated as LPG, i.e.
Liberalization, Privatization and Globalization.
Liberalization:
Liberalization of the Indian economy contained the following features:
a. The economic reforms that were introduced were aimed at liberalizing the
Indian business and industry from all unnecessary controls and restrictions.
b. They indicate the end of the license-permit-quota raj.
c. Liberalization of the Indian industry has taken place with respect to:
(i) Abolishing licensing requirement in most of the industries except a short list,
(ii) Freedom in deciding the scale of business activities i.e., no restrictions on
expansion or contraction of business activities,
(iii) Removal of restrictions on the movement of goods and services,
(iv) Freedom in fixing the prices of goods and services,
(v) Reduction in tax rates and lifting of unnecessary controls over the economy,
(vi) Simplifying procedures for imports and exports, and
(vii) Making it easier to attract foreign capital and technology to India.
Privatisation:
Privatization was characterized by the following features:
a. The new set of economic reforms aimed at giving greater role to the private
sector in the nation building process and a reduced role to the public sector.
b. To achieve this, the government redefined the role of the public sector in the
New Industrial Policy of 1991.
c. The purpose of the same, according to the government, was mainly to improve
financial discipline and facilitate modernization.
d. It was also observed that private capital and managerial capabilities could be
effectively utilized to improve the performance of the PSUs.
e. The government has also made attempts to improve the efficiency of PSUs by
giving them autonomy in taking managerial decisions.
Globalisation:
Globalisation of the Indian economy contained the following characteristics:
a. Globalization is the outcome of the policies of liberalisation and privatization
already initiated by the Government.
b. Globalisation is generally understood to mean integration of the economy of the
country with the world economy. It is a complex phenomenon to understand and
apply into practice.
c. It is an outcome of the set of various policies that are aimed at transforming the
world towards greater interdependence and integration.
d. It involves creation of networks and activities transcending economic, social and
geographical boundaries.
e. Globalisation involves an increased level of interaction and interdependence
among the various nations of the global economy.
f. Physical geographical gap or political boundaries no longer remain barriers for a
business enterprise to serve a customer in a distant geographical market across
the globe.
Q.4. What are the five year planning? states its important feature ?
Ans:-Here we detail about the twelve salient features of India’s Five Year Plan.
1. Democratic:
The first important feature of Indian planning is that it is totally democratic. India
being the largest democratic country in the world has been maintaining such a
planning set up where every basic issue related to its Five Year Plan is determined
by a democratically elected Government. Moreover, while formulating a Five Year
Plan, opinions of various tiers of Government, various organisations, institutions,
experts etc. are being given due considerations.
2. Decentralised Planning:
Although since the inception of First Plan, the importance of decentralised
planning was emphasized so as to achieve active people’s participation in the
planning process, but the real introduction of decentralised planning was made in
India for the first time during the Seventh Plan.
Thus decentralised planning is a kind of planning at the grass root level or planning
from below. Under decentralised planning in India, emphasis has been given on
the introduction of district planning, sub-divisional planning and block-level
planning so as to reach finally the village level planning successfully.
3. Regulatory Mechanism:
Another important feature of Indian planning is that it is being directed by a
central planning authority, i.e., the Planning Commission of India which plays the
role of regulatory mechanism, so as to provide necessary direction and regulation
over the planning system.
Thus under the present regulatory mechanism, every planning decision in India
originates from the Planning Commission and being finally approved by the
National Development Council. Moreover, the Planning Commission of India is also
having adequate regulatory mechanism over the successful implementation of
planning.
4. Existence of Central Plan and State Plan:
Another important feature of Indian planning is that there is the co-existence of
both the Central Plan and State Plans. In every Five Year Plan of the country,
separate outlay is earmarked both for the Central Plan and also for the State Plans.
Central Plan is under the exclusive control of the Planning Commission and the
Central Government, whereas the State Plan is under the exclusive control of State
Planning Board and State Government which also requires usual approval from the
Planning Commission.
5. Public Sector and Private Sector Plan:
Another notable feature of India’s Five Year Plan is that in each plan, a separate
outlay is earmarked both for public sector and the private sector. In each five year
plan of the country, public sector investment and private sector investment
amount is separately fixed, which comprises the total investment in each plan.
India, being a mixed economy, it is quite natural that a separate investment outlay
for public as well as the private sector is being maintained in each plan.
6. Periodic Plan:
One of the important features of Indian planning is that it has adopted a periodic
plan of 5-year period having five depurate Annual Plan components. This type of
periodic plan approach is quite suitable for realizing its definite targets.
Need of paying attention to 5 important factors in 12th five year plan
Attention is required to be given on 5 moot factors during the 12th five year plan.
Firstly, Commitment to making available the resources to states as much as is
possible. According to the plan, Rural Development Flexi Fund (RDF)would be
created. In its coffers, initially 40000 crores of rupees is to be allocated. The
central government will directly provide the states the share for fulfilling the needs
and priorities of the stats. As for example, Bihar can express it willingness to spend
more on its rural road construction work, whereas, Rajasthan can give its wishes o
rural water supply scheme. This fund will provide money to both the states to be
spent on the projects of their choice.
1. Secondly, the chief thrust of this plan would be on mutually related health,
nutrition, water supply, cleanliness program etc. The PM has already branded
nutrition as the national shame. The government is going to spend much more on
these priorities. The area of National Health Scheme is going to be broadened in the
plan to make available the health facilities to the entire Indians. Much emphasis
would be laid upon the prevention measures and primary health care (PHC).
The plan aims at reducing the children mal nutrition rate by ½ from what it is at the
present moment. Besides, much stress has been laid on ‘Nirmal Bharat Project’.
Under the scheme of things of this scheme, a longer lasting cleanliness would be
done with the people’s participation and at least ½ of the Indian rural areas would
be made ‘Nirmal Gram’ where people shit out I the open.
2. Third specialty of the plan is to firmly deal with corruption so widely rampant in
India. For this, a complete transparent system has been ensured in the allocation of
resources. Under the plan, competitive tenders would be invited for the schemes to
be implemented for allotment of resources purposes, , bringing in legislations for
public buying, and for redresses of citizen’s grievances, systems are intended to be
developed.
3. Fourthly, the specialty of the plan is a firmer resolve for strengthening up the Rajiv
Gandhi Panchayat empowerment of the Panchayati Raj Institutions. Ten times
more provisioning has been made under the plan for the budget allocations to
Panchyats. This is never before increase. This would lend off strength to our gram
panchayats and gram sabhas. Such a mechanism would be developed into this that
would augment the process of participation of as more of peoples as would be
possible so that the benefits could reach unto the ‘AamAadami’. Additional fund to
the states would be allocated so as to make their panchayati raj institutions more
strong.
4. The plan’s 5th specialty is that, it’d the first time round that the environmental
safety has been taken care of. A clear cut goal has been fixed in the plan so that we
don’t do verbal performance but the real ones to achieve the targets laid down in a
well defined manner under the schemes of things of this plan. As for instance the
carbon discharge would be brought down to the base year of 2005 by 20-25 % at
the end of 2020. This is a credible war resolution against environmental changes
happening so drastically increasing its tentacles every advancing years round.
Similarly, forest wealth conservation has also bee taken care of.
bsence of Chairman, any of the three ViceChairmen shall preside over the
meetings of the Governing Body. 15. One-fifth of the members of the Council and
one-fourth the members of the Governing Body shall constitute the quorum;
provided that, if a meeting is adjourned for want of quorum, the subsequent
meeting called on the basis of the same agenda will not require to have the
prescribed quorum. 16. President of the Council and Chairman of the Governing
Body shall have power to invite any other person(s) to attend meetings of the
Council and the Governing Body, respectively, but such other person(s) shall not
be entitled to vote at the meetings. 17. All disputed questions at meetings of the
Council and the Governing Body shall be determined by vote, each member having
one vote. In the case of an equality of votes, the persons presiding shall have a
casting vote. 18. Any business which is may be necessary for the Council or the
Governing Body to perform, except such as has to be placed before the Annual
General Meeting of the Council or relates to framing, amendment and repeal of
bye-laws and the amendment of Rules, may be carried out by circulation among all
the members respectively of the Council or the Governing Body and approval by a
majority of members signing shall be as effective and binding as if such Resolution
had been passed at the meeting of the Council or the Governing Body, provided
that at least the number of members constituting the quorum respectively, of the
Council or the Governing Body record their views on the Resolution. 19. (1)
Following shall be the officers of the Council:- (a) Director General; (b) Secretary;
Such other officers who may be declared by the Governing Body to be officers of
the Council. (2) Director General shall be the principal Executive Officer of the
Council. He shall be appointed by the Government of India and the term of his
office and other conditions of service shall be as the Government of India may
determine. He will be assisted by the Secretary and such other officers as may be
appointed from time to time by the authority competent to make such
appointments. (3) Subject to the Rules and Bye-laws of the Council, and such other
directions as may be given by the authorities of the Council, the Director General
shall be responsible for the proper administration of the affairs of the Council. 20.
The Director General shall prescribe duties of all officers and staff of the Council
and shall exercise supervision and disciplinary control as may be necessary subject
to the Orders, Rules and Bye-laws of the Council.
Q.8. What is IDR act ? states its rules ?
Ans:- The Industries(Development and Regulation) Act, 1951 (Act No. 65 of
1951) *** [31st October, 1951] An Act to provide for the development and
regulation of certain industries BE it enacted by Parliament as follows :- CHAPTER I
PRELIMINARY 1. Short title, extent and commencement--(1) This Act may be called
the Industries (Development and Regulation) Act, 1951. (2) It extends to the whole
of India (3) It shall come into force on such date as the Central Government may,
by notification in the Official Gazette, appoint. 2. Declaration as to expediency of
control by the UnionC It is hereby declared that it is expedient in the public
interest that the Union should take under its control the industries specified in the
First Schedule. 3. Definitions In this Act, unless the context otherwise requires.--
(a) A Advisory Council@ means the Central Advisory Council established under
section 5; (aa) Aancillary industrial undertaking@ means an industrial undertaking
which, in accordance with the proviso to sub-section (1) of section 11B and the
requirements specified under that sub-section, is entitled to be regarded as an
ancillary industrial undertaking for the purposes of this Act; (ab) Acurrent assets@
means bank balances and cash and includes such other assets or reserves as are
expected to be realised in cash or sold or consumed within a period of not more
than twelve months in the ordinary course of business, such as, stock-in-trade,
amounts due from sundry debtors for sale of goods and for services rendered,
advance tax payments and bills receivable, but does not include sums credited to a
provident fund, a pension fund, a gratuity fund or any other fund for the welfare of
the employees, maintained by a company owning an industrial undertaking; (ac)
Acurrent liabilities@ means liabilities which must be met on demand or within a
period of twelve months from the date they are incurred; and includes any current
liability which is suspended under section 18FB; (b) ADevelopment Council@
means a Development Council established under section 6; (bb) Aexisting
industrial undertaking@ means -- (a) in the case of an industrial undertaking
pertaining to any of the industries specified in the First Schedule as originally
enacted, an industrial undertaking which was in existence on the commencement
of this Act or for the establishment of which effective steps had been taken before
such commencement, and (b) in the case of an industrial undertaking pertaining to
any of the industries added to the First Schedule by an amendment thereof, an
industrial undertaking which is in existence on the coming into force of such
amendment or for the establishment of which effective steps had been taken
before the coming into force of such amendment; (c) Afactory@ means any
premises, including the precincts thereof, in any part of which a manufacturing
process is being carried on or is ordinarily so carried on-- (i) with the aid of power,
provided that fifty or more workers are working or were working thereon on any
day of the preceding twelve months; or (ii) without the aid of power, provided that
on hundred or more workers are working or were working thereon on any day of
the preceding twelve months and provided further that in no part of such
premises any manufacturing process is being carried on with the aid of power; (cc)
AHigh Court@ means the High Court having jurisdiction in relation the place at
which the registered office of a company is situate; (d) Aindustrial undertaking@
means any undertaking pertaining to a scheduled industry carried on in one or
more factories by any person or authority including Government; (ad) Anew
article@, in relation to an industrial undertaking which is registered or in respect
of which a licence or permission has been issued under this Act, means -- (a) any
article which falls under an item in the First Schedule other than the item under
which articles ordinarily manufactured or produced in the industrial undertaking at
the date of registration or issue of the licence or permission, as the case may be,
fall; (b) any article which bears a mark as defined in the Trade Marks Act, 1940 (5
of 1940), or which is the subject of a patent, if at the date of registration or issue
of the licence or permission, as the case may be, the industrial undertaking was
not manufacturing or producing such article bearing that mark or which is the
subject of that patent; (e) Anotified order@ means an order notified in the Official
Gazette; (f) Aowner@, in relation to an industrial undertaking, means the person
who, or the authority which, has the ultimate control over the affairs of the
undertaking, and, where the said affairs are entrusted to a manager, managing
director or managing agent, such manager, managing director or managing agent
shall be deemed to be the owner of the undertaking; (g) Aprescribed@ means
prescribed by rules made under this Act; (h) Aschedule@ means a Schedule to this
Act; (i) Ascheduled industry@ means any of the industries specified in the First
Schedule; (j) Asmall scale industrial undertaking@ means an industrial undertaking
which, in accordance with the requirements specified under sub-section (1) of
section 11B, is entitled to be regarded as a small scale industrial undertaking for
the purposes of this Act; (k) words and expressions used herein but not defined in
this Act and defined in the Companies Act, 1956 (1 of 1956), have the meanings
respectively assigned to them in that Act. 4. [Saving.] Rep., by the Industries
(Development and Regulation) Amendment Act, 1953 (26 of 1953), s.3 (w.e.f.
1.10.1953).CHAPTER II THE CENTRAL ADVISORY COUNCIL AND DEVELOPMENT
COUNCILS 5. Establishment and constitution of Central Advisory Council and its
functions.- (1) For the purpose of advising it on matters concerning the
development and regulation of scheduled industries, the Central Government
may, by notified order, establish a Council to be called the Central Advisory
Council. (2) The Advisory Council shall consist of a Chairman and such other
members, not exceeding thirty in number, all of whom shall be appointed by the
Central Government from among persons who are in its opinion capable of
representing the interests of- (a) owners of industrial undertakings in scheduled
industries; (b) persons employed in industrial undertakings in scheduled industries;
(c) consumers of goods manufactured or produced by scheduled industries; (d)
such other class of persons including primary producers, as in the opinion of the
Central Government, ought to be represented on the Advisory Council. (3) The
term of office of, the procedure to be followed in the discharge of their functions
by, and the manner of filling casual vacancies among, members of the Advisory
Council, shall be such as may be prescribed. (4) The Central Government shall
consult the Advisory Council in regard to- (a) the making of any rules, other than
the first rules to be made under subsection(3); and may consult the Advisory
Council in regard to any other matter connected with the administration of this
Act in respect of which the Central Government may consider it necessary to
obtain the advice of the Advisory Council. 6. Establishment and constitution of
Development Councils and their functions - (1)The Central Government may, by
notified order, establish for any scheduled industry or group of scheduled
industries, a body of persons to be called a Development Council which shall
consist of members who in the opinion of the Central Government are- (a) persons
capable of representing the interests of owners of industrial undertakings in the
scheduled industry or group of scheduled industries; (b) persons having special
knowledge of matters relating to the technical or other aspects of the scheduled
industry or group of scheduled industries; (c) persons capable of representing the
interests of persons employed in industrial undertakings in the scheduled industry
or group of scheduled industries; (d) persons not belonging to any of the aforesaid
categories, who are capable of representing the interests of consumers of goods
manufactured or produced by the scheduled industry or group of scheduled
industries.
Q.9. What are the roles & functions of SEBI ?
Ans:-Objectives of SEBI:
Objectives of SEBI The primary objective of SEBI is to promote healthy and orderly
growth -of the securities market and secure investor protection. The objectives of
SEBI are as follows: To protect the interest of investors, so that, there is a steady
flow of savings into the capital market. To regulate the securities market and
ensure fair practices. To promote efficient services by brokers, merchant bankers,
and other intermediaries, so that, they become competitive and professional. 8
Functions of SEBI:
Functions of SEBI The SEBI Act, 1992 has entrusted with two functions, they are
Regulatory functions And Developmental functions 9
Regulatory Functions:
Regulatory Functions Regulation of stock exchange and self regulatory
organizations. Registration and regulation of stock brokers, sub-brokers, Registrars
to all issues, merchant bankers, underwriters, portfolio managers etc.Registration
and regulation of the working of collective investment schemes including mutual
funds. Prohibition of fraudulent and unfair trade practices relating to securities
market. Prohibition of insider trading Regulating substantial acquisition of shares
and takeover of companies. 10
Developmental Functions:
Developmental Functions Promoting investor’s education Training of
intermediaries Conducting research and publishing information useful to all
market participants. Promotion of fair practices Promotion of self regulatory
organizations 11
Powers of SEBI:
Powers of SEBI Power to call periodical returns from recognized stock exchanges.
Power to compel listing of securities by public companies.Power to levy fees or
other charges for carrying out the purposes of regulation. Power to call
information or explanation from recognized stock exchanges or their members.
Power to grant approval to bye-laws of recognized stock exchanges. 12
Powers of SEBI continue..:
Powers of SEBI continue.. Power to control and regulate stock exchanges. Power
to direct enquiries to be made in relation to affairs of stock exchanges or their
members. Power to make or amend bye-laws of recognized stock exchanges.
Power to grant registration to market intermediaries.Power to declare applicability
of Section 17 of the Securities Contract (Regulation) Act 1956, in any State or area,
to grant licenses to dealers in securities. 13
Various departments under SEBI:
Various departments under SEBI S. No.Name of Dept. 1.MARKET INTERMEDIARIES
REGULATION AND SUPERVISION DEPARTMENT (MIRSD) 2.DERIVATIVES AND NEW
PRODUCTS DEPARTMENT (DNPD) 3. INVESTMENT MANAGEMENT DEPARTMENT
(IMD) 4. INVESTIGATIONS DEPARTMENT (IVD) 5. LEGAL AFFAIRS DEPARTMENT
(LAD) 6. OFFICE OF INVESTOR ASSISTANCE & EDUCATION (OIAE) 7.DEPARTMENT
OF ECONOMIC & POLICY ANALYSIS (DEPA) 8. INFORMATION TECHNOLOGY
DEPARTMENT (ITD) 14
Regulation by SEBI: Recent Cases:
Regulation by SEBI: Recent Cases VEDANTA-CAIRN ISSUE SEBI has not yet cleared
Vedanta group's open offer for Cairn India, a mandatory requirement for
conclusion of London-based mining group's $9.6 billion acquisition to foray into oil
sector. London-listed Vedanta had in August last year agreed to buy up to 51 per
cent stake in Cairn India from Cairn Energy Plc. Following the acquisition, its group
firm Sesa Goa was to make an open offer for buying an additional 20 per cent in
the company that owns India's largest on land oil field. But the company could not
make the open offer following an oil ministry intervention with SEBI. The ministry
said the deal was contingent upon government approval, which is still under
process. SEBI is holding back the approval for the open offer as the government is
yet to give its go ahead. 17
Regulation by SEBI: Recent Cases:
Regulation by SEBI: Recent Cases DECCAN-CHRONICLE HOLDINGS Ltd. ISSUE Sebi
allowed the Deccan Chronicle Holdings Ltd to buy-back 3.45 crore shares or 14.17
per cent equity from the market at an estimated cost of Rs 270 crore . This will be
the second time the Deccan Chronicle would come out with an offer to buy-back
its shares, following which the equity of the promoters in the company could go up
to 73.83 per cent from 63.37 per cent currently. SEBI, while exempting Deccan
Chronicle from making the mandatory public announcement before coming out
with the buy-back offer, has, however, asked the company "not of seek any further
exemption pursuant to any further buy-back". Referring to the general issue of
companies buying back their own shares, Sebi order said, "repeated buy-back
offers by a company is not something that Sebi , as a regulator, would like to
encourage, given the fact that it would be misused by entities to consolidate their
holding at the expense of the company.
Q.10. What is corporate governance ?
Ans:- Section A: Introduction 1 – About this paper A - The purpose of this paper is
to give policy makers, private sector leaders, experts and Investors – including
foreign Investors - an overview of the main issues and developments in some of
leading and emerging countries, providing benchmarks for measuring progress. -
Part 1 Case of UK 2010 & Basel 2 CG 2006 - Part 2 Case of Egypt ( Rosc Report 2009
) - Part 3 Case of Finland (Finnish Code) 2008/2009 - Part 4 Case of State of Qatar
2009 - Part 5 Case of Saudi Arabia 2006/2009 - Part 6 Case of UAE 2007/2009 -
Part 7 Case of Kingdom of Bahrain 2010 - Part 8 Case of Sultanate of Oman
2002/2010 - Part 9 Conclusion & References B - Research and experience show
that certain key Corporate Governance arrangements are very important and
critical to Private-Sector led economic growth, enhanced welfare, increased
investment, capital market efficiency and company performance C – Egypt & Gulf
Area - MENA Countries - in their efforts to stimulate growth, investment and
employment, increasingly acknowledge the importance of improved Corporate
Governance for the success of the economic reforms underway. D - Good
corporate governance is also important for the sound development of the banking
sector. Banks channel public savings to the corporate sector. If banks are not in a
position to assess the viability of debtor companies, they risk accumulating non-
performing loans and be forced into direct or indirect renationalization to avoid
systemic risk. A common challenge of the banking sector in emerging economies Is
banking capture by corporations. This capture often occurs with the help of the
government, pointing to the importance of another aspect of governance, the
governance of banks. 2 – Corporate Governance Definition Governance is: Very
formal the process of Governing a country or organization. (M.Tarek Youssef,
1991) Corporate governance is: “The system by which companies are directed and
controlled…..” Report of the Committee on the Financial Aspects of Corporate
Governance…. (UK - Cadbury Report, London, 1992)… Corporate governance is: Set
of rules that define the relationship between stakeholders, management, and
board of directors of a company and influence how that company is operating. At
its most basic level, corporate governance deals with issues that result from the
separation of ownership and control. But corporate governance goes beyond
simply establishing a clear relationship between shareholders and managers”.
"Corporate governance involves a set of relationships between a company’s
management, its board, its shareholders and other stakeholders. Corporate
governance also provides the structure through which the objectives of the
company are set, and the means of attaining those objectives and monitoring
performance are determined." (OECD 2004) Corporate governance is: "The
relationships among the management, Board of Directors, controlling
shareholders, minority shareholders and other stakeholders". IFC states, Corporate
governance is: The process carried out by the board of directors, and its related
committees, On behalf of and for the benefit of the company's Shareholders and
the other Stakeholders, to provide direction, authority, and oversights to
management, “It means how to make the balance between the board members
and their benefits and the benefits of the shareholders and the other
stakeholders”.
Q.11. What is exim bank & what are its function ?
Ans:-The Export-Import Bank of India was set up by the Government of India on
January 1, 1982. Its main objects are:
1. To ensure and integrated and co-ordinated approach in solving the allied
problems encountered by exporters in India.
2. To pay specific attention to the exports of capital goods;
3. Export projection;
4. To facilitate and encourage joint ventures and export of technical services and
international and merchant banking;
5. To extend buyers’ credit and lines of credit;
6. To tap domestic and foreign markets for resources for undertaking development
and financial activities in the export sector.
The functions of Exim Bank include:
(a) Planning, promoting and developing exports and imports;
(b) Providing technical, administrative and managerial assistance for promotion,
management and expansion of export sector.
The functions of Exim Bank include:
(a) Planning, promoting and developing exports and imports;
(b) Providing technical, administrative and managerial assistance for promotion,
management and expansion of exports; and
(c) Undertaking market and investment surveys and techno-economic studies
related to development of exports of goods and services.
The Exim Bank has a 17-member Board of Directors, with Chairman and Managing
Director as the chief executive and full-time director. The Board of Directors
consists of the representative of the Government of India, RBI, IDBI, ECGC,
commercial banks and the exporting community.
The authorised capital of Exim Bank is Rs. 200 crores, of which Rs. 75 crores is paid
up. The banks have secured a long-term loan of Rs. 20 crores from the
Government of India. It can also borrow from the RBI. It is empowered to raise
resources in domestic and international markets.
The Bank began its lending operations from March, 1982. Till June, 1982, it has
extended assistance up to Rs. 133 crores to the export sector in various ways.
The establishment of Exim Bank may be regarded as a right step in the export
promotion policy and programmme of the Government.
During 1984, the Exim Bank sanctioned various programmes of funded assistance
of Rs. 430 crores. It also launched a new programme to provide term finance for
export-oriented units, under which assistance was provided through a consortium
for establishing a 100 per cent export unit in the ceramics industry.
The Exim Bank also extended its financial assistance to Indian exports through
letters of credit, re-lending facility, export bills rediscounting, overseas investment
finance, facilities for deemed exports and assistance to hundred per cent export
units and units in free trade zone.
At the end of December 1984, the Exim Bank’s outstanding underfunded and non-
funded assistance amounted to Rs. 415 crores and Rs. 510 crores, respectively.
In 1984, the Exim Bank signed a loan agreement to borrow one billion yen from
the Japanese commercial yen market.
In June 1986, the Exim Bank introduced a new programme called the Export
Marketing Fund (EMF), under which finance is made available to Indian companies
for undertaking export marketing activities. The programme also covers activities
like desk research, minor product adaptation, overseas operations and travel to
India by buyers overseas. During 1986, Rs. 78 lakhs were sanctioned, while Rs. 3.4
lakhs have been utilised under the EMF.
On whole, the Exim Bank concluded an agency credit line of US $ 15 million with
the International Finance Corporation (IFC).
During 1994-95, Exim Bank sanctioned Rs. 2,466 crore and disbursed Rs. 2,130
crore of financial assistance under various lending project.
Q.12. What are the roads of states & control pollution control board ?
Ans:- According to Section-3, the Central Board shall consist of the following handling environmental issues within an organization. The ISO 14001 standard is
members: based on the Plan-Check-Do-Review-Improve cycle.
(a) A full time Chairman (to be nominated by the Central Government) having The Plan cycle deals with the beginning stages of an organization becoming ISO
knowledge or practical experience in matters related to environmental protection 14001-compliant. The Check cycle deals with checking and correcting errors. The
or having knowledge and experience in administration of institutions dealing with Do cycle is the implementation and operation of the ISO 14001 standard within an
aforesaid matters. organization. The Review cycle is a review of the entire process by the
(b) Not more than five officials nominated by the Central Government. organization's top management. And the Improve cycle is a cycle that never ends
(c) Not more than five persons nominated by the Central Government from as an organization continually finds ways to improve their EMS.
amongst the members of State Boards. The entire process can take several months to several years depending on the size
(d) Not more than three non-officials nominated by the government to represent of the organization. If an organization is already ISO 9000-certified, the
interests of agriculture, fishery, agriculture-trade etc. implementation of ISO 14001 does not take as long. When an organization is
(e) Two persons nominated by the government to represent the companies or compliant, they can either register with a third-party registrar or self-declare their
corporations owned by the Central Government. compliance. The ISO 14001 standard is the only ISO 14000 standard that allows an
(f) One full time Member-Secretary (to be appointed by the Central Govt.) having organization to be registered or "certified.
knowledge and experience of scientific engineering or management aspects of
pollution control.
(2) Constitution of State Boards: Q.14.What is environment audit & how it is conducted ?
Under Section-4, of the State Pollution Control Board may be constituted having The Environment Protection Act 1970 (‘the Act’) states that an environmental
the same constitution as the Central Board. audit assesses the nature and extent of harm, or risk of harm, to the environment
(3) Constitution of Committees: posed by an industrial process or activity, waste, substance or noise. It is about
A board may constitute as many committees as necessary. The members of a understanding the type of pollution and the harm it poses.
committee shall be paid such fees and allowances for attending to any other work Planning authorities, government agencies and private businesses use the
of the Board. environmental audit system to determine the condition of a site and its suitability
(4) Constitution of Joint Boards: for use, or to advise what’s required to make a site suitable for use.
According to Section-14 of the Act, under agreement between two or more con- Environmental audits must deliver authoritative, independent and transparent
tiguous States, Joint Boards may be constituted for those states, by the Central or advice and recommend measures to reduce identified risks to the environment
State Governments. from a site or industrial facility.
(5) Terms and Service Conditions of the Members of the Board: An environmental audit is a tool that enables companies to assess:
(a) Terms and service conditions of the Member Secretary and Chairman shall be  Their compliance with the environmental laws and the conditions of
as prescribed by the Government. their environmental approvals or permits; and
(b) Rest of the members shall hold office for a term of three years.
(c) A member shall be eligible for renomination.
 The effectiveness of their environmental plans, policies, practices, controls and
records.
(d) Central or State Government may remove a member of the Central or State
Environmental audits can also help companies identify ways to reduce waste, save
Board at any time by giving him reasonable notice and opportunity.
money, improve overall efficiency and minimize liability risks. But the
(e) The Chairman may resign by addressing his resignation to the government and
environmental laws don’t require companies to conduct environmental audits. So
a member may resign by addressing his resignation to the Chairman.
many companies don’t—and as a result, they miss out on many valuable
(f) In the case of insolvency, unsound mind, conviction for the offence under this
opportunities.
Act, conviction for the offence involving moral turpitude, inability to attend three
We’ll explain the benefits of conducting an environmental audit and how to do so.
consecutive meetings, abusing position as member of the Board, Partnership with
There’s also a chart on page X explaining what each jurisdictions’ primary
anybody dealing with sewage or trade effluent etc., are some conditions for
environmental law has to say about environmental audits. And on page X there’s a
disqualification of the member. Seat of the disqualified member shall fall vacant
Model Form based on one issued by Hong Kong’s Environmental Protection
and a person nominated to fill such a vacancy shall hold office for the remaining
Department that you can use post-audit to create an action plan for addressing
term.
issues the audit identified.
Functions of the State Boards:
WHY CONDUCT AN ENVIRONMENTAL AUDIT?
Under Section 7-B, the following are the functions of a State Board:
In general, no environmental law in Canada requires companies to conduct
(a) Planning a comprehensive programme for prevention, control and abatement
environmental audits as a matter of course. There are two jurisdictions in which a
of pollution of streams and wells.
company may be required to conduct an environmental audit in certain
(b) Advising the State Government regarding water pollution control or location of
circumstances. Under the federal CEPA, a court may require a company to conduct
industries.
an environmental audit after being convicted of an environmental violation. And
(c) Conducting and encouraging investigations and research relating to different
under Alberta’s Environmental Enhancement and Protection Act, an
aspects of water pollution.
environmental protection order may require a company to conduct an
(d) To collaborate with the Central Board for training personnel for handling water
environmental audit.
pollution programmes and organising related mass education programmes.
(e) Inspecting trade effluents and waste water treatment plants.
(f) Prescribing effluent standards for the sewage and trade effluents.
(g) Evolving economical and reliable methods of disposal, treatment and reuse of
waste water (in agriculture).
(h) Laying down the standards of treatment of sewage and trade effluents to be
discharged into any stream.
(i) Making, varying or revoking any order for preservation or control of discharge
of waste into streams and wells or construction of systems for disposal of
effluents.
(j) Establishing or recognising laboratories for analysis of samples.
(k) Performing such functions as may be entrusted by Central Board or State
governments.

Q.13. What is ISO 14000?

ISO 14000 is a series of environmental management standards developed and
published by the International Organization for Standardization ( ISO ) for
organizations. The ISO 14000 standards provide a guideline or framework for
organizations that need to systematize and improve their environmental
management efforts. The ISO 14000 standards are not designed to aid the
enforcement of environmental laws and do not regulate the environmental
activities of organizations. Adherence to these standards is voluntary.
The ISO 14001 standard is the most important standard within the ISO 14000
series. ISO 14001 specifies the requirements of an environmental management
system (EMS) for small to large organizations. An EMS is a systemic approach to