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Q.1: Define a sick unit.

An appropriate definition of a sick unit is given the sick Industrial

Companies Act 1985, According to Act, a sick industrial company (being a

company registered for not less than seven year) which has at the end of anyfinancial year accumulated losses equal to or excluding its entire net worth

and has also suffered cash loses in the financial year and in the financial

year immediately proceeding.

Q.2: What is the importance of making cash flow statement?

Ans: 1) It helps to evaluate the current cash position of the firm.

2) it helps in making short term financial decision.

3) it shows the major sources and uses of cash.

4) it helps in taking loan from banks and other financial.

Q.3: define motivation.

Ans: motivation refers to the way in which urges, drives, desires, striving,

aspirations and needs direct, control or explain the behavior of human

being.

Q.4: What is flash report?

Ans: flash report contains forward-looking statements that are based current

expectation, assumption, estimates and projection about its business,

industry and capital markets around the world. These statements discuss

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future expectation, identify strategies, and contain projection of results of

operations or of financial condition.

5.. List down barriers to entrepreneurship.

Ans.Barrirs of entrepreneurship are as follow:

1. Environment barrier

Raw material

Labour

Machinery

Land and building

Other infrastructure

2. Financial barrier

3. Personal barriers

Lack of confidence

Lack of dependability

Lack of motivation

Lack of patience

Inability to dream

Sense of pride

4. societal barrier

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6. State the various agencies involved in rehabilitation of sick unit?

Ans. various agencies are as follow

IDBI

IFCI

ICICI

RBI

GOVERNMENT

7. Write full form of CED and EDII

Ans. CED-Centre for entrepreneur development

EDII-Entrepreneurship development institute of India

8. Write the formula of debt service coverage ratio

Ans. DSCR (Debt Service Coverage Ratio) can be interpreted by using the

following formula:

DSRC = PAT + Depreciation + interest on term debt + lease rentals

amortization

Repayment of term debt + interest on term debt + Lease

rental

9. Define SSI

An appropriate definition of a sick unit is given the sick Industrial

Companies Act 1985, According to Act, a sick industrial company

(being a company registered for not less than seven year) which has at the

end of any financial year accumulated losses equal to or excluding its entire

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net worth and has also suffered cash loses in the financial year and in the

financial year.

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Q.2: Explain training model of entrepreneurship development.

General introduction to entrepreneurship.

First of all the participants are exposed to a general knowledge of

entrepreneurship such as factor affecting small scale industries. The role of

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entrepreneurs in economic development, entrepreneurial behavior and the

facilities available for establishing small scale enterprise.

Motivating Training.

The training inputs under this aim at inducing and increasing the need forachievement among the participants. Efforts are made to inject confidence

and positive attitude and behavior among the participants towards business.

It ultimately tries to make the participants to start their own business

enterprise after the complexion of the training programme. In order to

further motivate the participants sometime successful entrepreneurs are also

invited to speak about their experience in setting up and running business.

Management Skills.

Running a business whether large or small requires the managerial skill.

Since a small entrepreneur can not employ management experts to manage

his/her business, he/she need to be imparted basic and essential managerial

skills in the functional areas like finance, production and marketing.

Knowledge of managerial skills enables entrepreneur to run his/her

enterprise smoothly and successfully.

Support system and procedure.

The participants also need to be exposed to the support available from

different institutions and agencies for selling up and running small scale

enterprises. This is followed by the acquainting them with procedure for

approaching them, applying and obtaining support from them.

Fundamentals of project feasibility study.

Under this input, the participants are provided guidelines on the effectiveanalysis of feasibility of the particular project in view of marketing,

organizing, technical, financial, and social aspects. Knowledge is also given

hoe to prepare the project or feasibility report.

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Plant visit.

In order to familiarize the participants with real life situations in small

business, plant visits are also arranged. Such trips help the participants

know more about an entrepreneurs behavior, personality, thoughts andaspirations. These influence him/her to behave accordingly to run his/her

enterprise smoothly and successfully.

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OR

Q.2: Explain various qualities of successful entrepreneur.

Ans: the qualities of successful entrepreneur are as follow:

1) Need to achieve: entrepreneurs have got strong desire to achieve

higher goals. Their inner self motivates their behavior towards high

achievement most of the people dream of success but do not take

action towards achieving this dreams.

2) Independence: most of the entrepreneurs starts on their own becausethey dislike to work for others.

3) Risk-bearing: entrepreneur are the persons who take decisions under

uncertainty and thus they are willing to take risk, but they never

gamble with the results.

4) Locus of control: closely consist with McClellands theory of need for

achievement is the belief in internal locus of control.

5) Perseverance: entrepreneur has got the quality of sticking to job. He

decides to undertake. Once committed to a specific goal and course of

action, entrepreneurs become absorbed to it.

6) Positive self concept: entrepreneurs are always positive in their action.

Being an achiever, he directs his fantasies and dreams towards

achievement of worthwhile goals and sets extra ordinary standards of

excellence in what he is doing.

7) Hope of success: hope of success is a significant quality of

entrepreneurial personality. Entrepreneurs set their goals with a hope

of success rather than fear to failure.

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8) Flexibility: most of the successful entrepreneurs measures the pros and

cons of a decision and tend to change if the situation demands.

9) Interpersonal skills: entrepreneurs are always comfortable while with

dealing with people at all levels.

10) Contorting uncertainty: successful entrepreneurs are always

optimistic and take every odd as the opportunity.

11) Stress taker: entrepreneurs are capable of working for long hours

and solving different complexities at the same time.

12) Innovators: successful entrepreneurs are innovators. They

consistency put their efforts in introducing new products.

13) Telescopic faculty: successful entrepreneurs always tend to think

ahead. They have got telescopic faculties which make them think for

the future.

14) Self confidence: entrepreneurs must have self confidence to

accomplish the task effectively and efficiently.

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Q3.Explain implications of motivation theories on entrepreneurial

motivation and process of motivation.

Ans.1.implication of Maslows theory

Maslows theory is based on human needs. These needs are classified

into a sequential priority from the lower to the higher. According to him, all

human needs are classified into the live need-cluster as shown below:

i. Physiological needs:-there needs are basic to human life and

include food, clothing, shelter, air, water and other necessities of

life. They exert tremendous influence on human behavior.

Entrepreneur also being a man needs to meet his physiologicalneeds for survival .hence, he is motivated to work in the

enterprise to have economic rewards to meet the basic needs .he

takes business venture on small scale and seeks economic reward

from his enterprise.

ii. Safety and security needs:-after satisfying the psychologicalneeds, the next needs felt are called safety and security needs.

These needs find expression in such desires as economic security

and protection from physical dangers. Meeting these need

require more money and hence, the entrepreneur is prompted to

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work more in his/her enterprise .like physiological needs these

become inactive once they are satisfied.

iii. Social need:-man is a social animal. These needs, therefore,

refer to belongingness. all individuals want to be recognized and

accepted by others. Likewise an entrepreneur is motivated to

interact with fellow entrepreneurs, his employee and others.

iv. Esteem and status needs:-these needs refer to self esteem and

self respect .they include such needs which indicate self

confidence ,achievement, competence, knowledge and

independence. Entrepreneurs, the ownership and self control

over enterprise satisfies their esteem needs by providing them

status ,respect, reputation and independence.

v. Self actualization;-the final step under the need hierarchy modelis the need for self actualization. This refers to self fulfillment.

The term self actualization was coined by Kurt Goldstein and

means to become actualized in what one is potentially good at.

An entrepreneur may achieve and growth becomes pioneers

person for the specific industry.

2. Implication of McLennan acquire needs theory

According to David McClland,a person acquires three types of

needs as a result of ones life experience .these three needs are:

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i. Need for affiliation:-these refer to need to establish and

maintain friendly and warm relations with others.

ii. Need for power:-these means the ones desire to dominate

and influence others by using physical object and actions.

iii. Need foe achievement:-this refers to ones desire to

accomplish something with own efforts .this implies one

will to excel in his/her efforts.

Process of motivation

I. Identification of individual need:-individual need may be the

personal goal or personal the identification satisfaction, it generates

the idea and the person motivated. So the first step for motivation

process is the identification of individual need. Any person himself

identify the need what they want.

II. Cause of tension:-after they find out what they want means that

they create some need or say expectation from the environment

.what he/she create some need motivated to the person to do thebusiness.

III. Leads to action:-after the need creation they start the business and

that called the entrepreneurial activity .this entrepreneurial activity

also supported by the environment and its produce the some goods.

Identificatio

n of need

Cause

tension

Leads to tension createssatisfact

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IV. Create satisfaction:-when person have some expectation and he

produce the goods same as they want for their need, when both are

match then create some satisfaction.

OR

Q3.Govenment has devised many agencies to assist entrepreneurs

.explain.

ANS. Government plays very important role do develop an entrepreneur

and enterprise. It provides directly or indirectly financial assistance to

them. For that many institutions are established by the government and runs

very successively.

National small industries corporation(NSIC), small

industries development organization(SIDO), khadi and

village industries commission(KVIC), handloom board

,silk board, commodity board etc. have scheme to help in

promoting exports of goods manufactured by SSI units.

SIDO is one of the important agencies that help SSI unitsin marketing their products through consultancy, testing

and marketing facilities. The SIDO functions as nodal

agency for formulating, coordinating and monitoring

policies and programmers for promotion and development

of small scale industries in the country.

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SIDO has promoted ancillary units to public sector

enterprise. Beside, many large industrial houses actively

pursue the policy of promoting ancillary units or their

purchase of stores.SSI units can take advantage of theirfacility and secure a regular market for their products.

District industries centers (DICs) provide marketing and

other assistance to SSI units under a single roof.

State level small industries corporation(SICs)participate

in tender programmes of government purchases and then

sub-contract these tender to SSI

The government of India has established trade centers at

various places which publish information on market

potentials and conditions. These centers also organize fairs

and exhibitions where SSI units can exhibit and sell their

products.

Twenty-seven small industry service institution (SISIs)

have been set up by SIDO at various places for

disseminating market information .thirty-eight exchange

centers have been set up within some SISIs to help units in

securing sub-contract jobs.

The small scale industrial sector raises term credit and

working capital required by it from commercial banks,

cooperative bank s and financial corporations.

The SIDO has already setup 31 branch small Industries

service institute, 4 regional testing centres,3 process-cum-

product development centers and 20 field testing station to

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provide a comprehensive range of facilities to small-scale

units.

The specialized institute like central institute of tool design,

Hyderabad, central tool room and training centers atLudhiana and Calcutta, central institute of hand tools,

Jalandhar institute of design of electrical measuring

instruments (IDEMI), Mumbai, integrated trading centre,

Nilokheri, National institute for entrepreneur and small

business development (NIESBUD), New Delhi conduct

specialized courses/programme /job oriented training

programmes for the benefit of small-scale industries.

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Q:4a): Explain various sources of new project

ideas.

Ans: 1) analyze the performance of existing

industries:A study of existing industries in terms of their profitabilityand capacity utilization can indicate promising investmentopportunities opportunities which are profitable andrelatively risk free. An examination of capacity utilization ofvarious industries provides information about the potentialfor further investment.

2) Examine the inputs and outputs of variousindustries:An analysis of the inputs required for various industriesmay throw up ideas. Opportunities exist when:

Materials, purchased parts, or supplies are presentlybeing procured from distant sources with attendanttime lag and transportation cost, and.

Several firms produce internally some components

which can be supplied at a lower cost by a singlemanufacturing who can enjoy economies of scale.Similarly a study of the output of the existingindustries may reveal opportunities for adding valuethrough further processing of the main outputs, byproduces as well as waste products.

3) Review import and export:

An analysis of import statistics for a period of fiveto even years is helpful in understanding the trends ofimports of various goods and the potential for importsubstitution. Manufacturing of goods currently imported isadvantageous for several reasons:

It improves the balance of payments situation.

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I generates employments

It provides a market for supporting industries andservices.

4) study plan outlay and governmental guidelines:The governments play a very important role in

our economy. Its proposed outlay is in different sectorsprovides useful pointers towards investment opportunities.

They indicate the potential demand for goals and servicerequired by different sectors.

5) Look at the suggestions of financial institution anddevelopment agencies:

In a bid to promote development of industries intheir respective state. Financial corporation and otherdevelopment; bodies conduct studies, prepare feasibilityreport, and offer suggestion to potential entrepreneurs. Thesuggestions of these agencies are helpful in identifyingpromising projects.

6) Investigate local materials and resources:A search for project ideas may begin with

an investigation into local resources and skills various waysof adding value to locality available materials may beexamines. Similarly the skills of local artisans may suggestproducts that may be profitable produced and marketed.

7) Analyze economic and social trends:A study of economic and social trends ishelpful in projecting demand for various goods and services.Changing economic condition and customer preferenceprovide new business opportunities. For example: a greaterawareness of the value of time is beginning on the public.

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Hence, the demand for time-saving products like preparedfood items, ovens, and powered vehicles has beenincreasing.

8) Study new technological developments:There is a large network of research

laboratories in India under the umbrella of the council ofscientific and industrial research and other bodies. Newproducts or new processes and technologies for exitingproducts developed by research laboratories may beexamined for profitable commercialization.

9) Draw cues from consumption abroad:Entrepreneurs willing to take higher risks

may identify projects for the manufacture of products orsupply of services which are new to the country butextensively used abroad.

10) Identify unfulfilled psychological needs:For well-established, multi-brand product

groups like bathing sop, detergents, cosmetics, andtoothpaste, the question to be asked is not whether there isan opportunity to manufacture something to satisfy actualphysical needs but whether there are certain psychologicalneeds of the consumers which are presently unfulfilled.

11) Attend trade fairs:National and international trade provides

an excellent opportunity to get know about new productsand developments.

12) Stimulate creativity for generating new productideas:

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New product ideas may be generated bythinking along the following lines: modification,rearrangement, reversal, magnification, reduction,substitution, adaptation, and combination.

Q.4(b): Explain any two methods of demand forecasting.

Ans: after gathering the information on various aspects of the market from

primary and secondary sources the next step is to estimate demand i.e.demand forecasting. This can be done through qualititative and quantitative

methods:

A. qualitative jury and Delphi.

1. Jury of executive opinion method:

This method involves taking the opinions of the experts

or sales force team. The opinions of all experts or sales force teamare combined and finally a sales estimate is prepared.

Advantages:

It is speedy method for developing a demand forecasting.

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This method also takes place into consideration important factors

like competition, consumer preference, technological

development etc are considered to be important and critical.

Disadvantages:

Opinions are always subjective and not objective in nature.

The reliability of this technique is questionable.

2. Delphi method:

This method is used for eliciting the opinions of a group of expertwith the help of a mail survey.

Advantages:

It is understandable to user.

It seems to be more accurate and less expensive then the

traditional face to face group meetings.

Disadvantages: This is also based on the opinions, which are always subjective

and not objective.

What is value of the expert opinions?

B.Quantitave Exponential, time series and leading indirector.

This method generates forecasting on the basis of an analysis of

the historical data.

1) Exponential smoothing method: in exponential smoothing, forecasts

are modified in the light of observed errors. If the forecast value for

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year t, Ft, is less than the actual; value for year, st, the forecast for the

year t+1, Ft+1, is set higher than Ft.

Ft+1= Ft + et

Where, Ft+1= forecast for year t+1

=smoothing parameters

et= error in the forecast for year t=S=t Ft.

2) Moving average method:

This method is bases of moving average, successive arithmetic

averages are computed from overlapping group includes all theobservation in a given time interval, termed as the period of moving

average.

The moving average if group is always shown at the center of its

period. The process of computing moving average smoothness out the

fluctuation in time series data.

3) Leading indicator method:

Leading indirector are variables, which change ahead of othervariables, the lagging variables. Hence, observed changes in leading

indicators may be used to predict the changes in lagging variables.

For examples: the changes in the level of income of consumer may be

used to predict the change in the demand for particular goods by

consumer.

OR

Q4xplain term loan procedure

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Ans. Procedure for a Project Loan

1. Submission of Loan ApplicationThe borrower may submit the application form to the lending

institution or bank. The borrower is required to fillup a common

application form which covers the following aspects.

a. Business detail including; Corporate office, Administrative office,

etc...

b. Promoters' background and details

c. Particular of the project like plant capacities, process technical

arrangement.

d. location of plant, machinery, raw materials, Human resource, etch.

e. Life of project

f. Cost of project

g. Means of financing

h. Marketing and selling arrangement

i. Profit ability of project

2. Initial Processing of Loan Application

When the application is of receive; institution check whether

it is completed for lf it is incomplete the borrower has asked to

furnish the details which are not provided

3. Appraisal of the proposed Project

The detail appraisal of the project is done by the leading financial

institution. Appraisal covers marketing, technical, financial,

managerial & economic aspects. Appraisal report is normally

preparedwithin two months after the side inspection & is placed before

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the SEM for a decision about the approval of project and determining.

The sharing arrangements among the institution once a favorable

decision is taken of the SEM and the sharing arrangement work out

the case is referred to board of directors of the lead financialinstitutions.

4. Issue of the letter of the sanction

After the appraisal of proposed project report and field survey, based

on the report, the board of director of the lead financial institution

approves the proposal. After the approval leading financial instituteissue the letter of sanction to the borrower

5. Acceptance of the term & condition by the borrower

Once the receiving the letter of sanction from the lead financial

institution the borrowing unit calls its board meeting, at which the

term & condition associated with the letter of sanction are discussedand accepted & an appropriate resolution is passed.

6. Execution of Loan Agreement

The lead financial institution after receiving the letter of acceptance

from the borrower send the draft of the arrangement to the borrower to

be executed by authorized person and proper stamp

7. Disbursement of Loan

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When the borrower units purchases the share of leading financial

institute and make signature of agreement after this leading financial

institute disbursement the loan amount

8. Creation of Security

The term loan provided by the financial institution is secured to the

mortgage or immovable properties and hypothecation of movable

property.

9. Monitoring

Monitoring of the project is done at the implementation stage and

operation stage till the final installment of the loan is repaid by the

borrower. Periodically the borrower is require to submit information

ontthe progress of the project, projected fund flow stamen etc..based

on these information provided by the borrower.

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Q5.write short note

A)Warning signal

Ans: WARNING SINGNAL SICKNESS

The following action of a indicate that the unit sick going to be sick

Continuous irregularity in cash credit accounts.

Low capacity utilization;

Profit fluctuation, downward trend in sales and stagnation or fail in

profit following by contraction in the share of the market;

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High rate of rejection of good manufactured;

Failure to pay statutory liabilities;

Constant utilization of cash credit facilities to the hilly failure to pay

timely installment of principal and interest on the loan and installment

credit;

Non-submission of periodical financial date/stoke statement etc. in

time;

Financing capital expenditure out of funds provide for working capital

purposes;

Decrease in working capital on account of;

1. Increase in debtors and particular industry combined with many

failures;

2. Increase in creditors;

3. Increase in inventories which may include a large number of

slow or non-moving items;

Rapid turnover of key personnel;

Existence of a large number of low suits against a company;

Rapid expansion and too much diversification within a short time;

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Sudden/frequent changes in management-whether professional or

otherwise and/or dominated by one man/few individuals;

Diversion of found for purposes other than running the unit

Any major changes in share holding.

B) Projected financial statement.

Financial statement are the result of the accounting of the

accounting process which begins with recording with recording of

transactions.the according process involves recording ,classifying

and summarizing business transactions in a systematic way.

Definition:

it is a process of evaluating the relationship between component

part of a financial statement to obtain a better understanding of a

firms position and performance.

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Objective of analysis

To estimate the earning capacity of a firm

To estimate the financial position and financial performance

of a firm

To determine the long term liquidity as well as solvency of a

firm

To determine the debt capacity of a business

To decide about the future prospects of a firm.

Methods of financial analysis:

Comparative statement

Trend analysis

Common size statement

Funds flow analysis

Cash flow analysis

Ration analysis

Cost-volume profit analysis

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Limitation of financial analysis

The figures drawn from one year statement have

limited use and value. It is dangerous and risky to

depend solely upon them

The basic nature of financial statement are historic.

It is only a study of interim report

It is based upon only monitory information and

non-monitory items are completely ignored.

It does not consider changes in price levels.

Analysis is only a means and not an end in itself.

The condition and circumstances of one-firm can

never be identical with that of another firm.

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C) Location selection:

The choice of location and site follows an assessment of demand, size,

and input requirement. Though often used synonymously. The terms

location and site should be distinguished. Location refers to fairly

broad area like a city; an industrial zone, or a coastal area, site refers

to a specific piece land where the project would be set up.

The factor of location and site can be divided into the following

categories:

(A) Primary factor:

(1) Supply of raw material: It is necessary to considered the

adequate supply of raw materials and the nature of raw

material is not regular, it may lead to frequent stoppages

and breakages in production. The time and the cost of

transporting raw materials is also important, therefor

industrial unit are location near sources of raw material.

(2) Nearness to market: it is important from the point if view

if his control over the market. It is important for supplying

goods to the customers in a minimum period of time. It

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reduces the cost of transporting-finished goods to the

market.

(3) Transport facility: it is needed for the regular and timelysupply of raw materials at low materials at low cost and for

transporting finished goods on time to the market. A

producer has to choose a speedy and cheep means of

transport after making a comparative cost study of

different; means of transport.

(4) Supply of labor: the supply of labor at low cost is

important. If the supply of labor is not regular man hour

and machine hour are last forever procedure should try to

regularize the supply of laborers by reducing absenteeism

and strikes due to unsatisfactory working condition.

(5) Supply of power: it is necessary for the process of

production and for transporting the finished goods and raw

material. Power may be electrical, diesel, and atomic

energy. Power shortages lead to tremendous loss due to

stoppage of machineries.

(6) Supply of market: industry required capital for vital

promotion and expansion, therefore a capital market must

be developed. In industrial centers, large scale production,

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mechanization and big industries requires large amount of

capital and debenture capital for long period.

(B) Secondary period:

(1) Natural factor: land, waters, climate, sources of raw

material and agriculture climate and some natural factors

which are important for some industries like cotton textiles.

Sugar and jute.

(2) Political factor: the government policy of licensing and

encouraging the development of industries in

underdeveloped regions determines the locations of

industries.

(3) Government subsidies and facilities: the government may

encourage the dispersal of industries in underdeveloped

areas by making capital, land, water and power available at

subsidies rates. By giving these facilities the government

may develop industry in backward areas and this will result

in regional balancing of industries as well as economy.

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(4) Initial start and goodwill: some industries get located at a

place because some industrial starts the industry at that

place at an early stage.

(5) Miscellanies factors:

Sufficient waters supply, if water is consumed in

large quantities in production processes.

Disposal of water

Strategic factors like dangers of air attack

Availability of fire fighting facilities

Availabilities of recreational medical and

educational facilities.

.

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