PHASE 5

Limited Partner
A limited partner is a part-owner of a company whose liability for the firm's debts cannot exceed
the amount that an individual invested in the company. Limited partners are often called silent
partners.
Example:Ted, Greg, and Jeff decide to form the Brothers, LP with two of his friends. Brother,
LP is real estate firm that buys and sells residential real estate. Jeff actively manages the business
and is deemed to be the general partner. This means that Jeff has unlimited liability. Neither Ted
nor Greg has any active role in the partnership, so they are both deemed to be limited partners.
About a year later, Steve, a client, finds black mold in their home that Jeff sold to them. Steve
sues Brothers, LP and wins. Steve can also sue Jeff personally because he is a general partner,
but he can’t sue Ted or Greg personally because they are limited partners. The most Ted or Greg
can lose is their stake in the partnership.

Limited Partner Works

A limited partnership (LP) by definition has at least one general partner and at least one limited
partner. The general partner or partners manage the business from day-to-day. Although state
laws vary, a limited partner doesn't generally have the full voting power on the company
business of a general partner. The IRS thus considers the limited partner's income from the
business to be passive income. A limited partner who participates in a partnership for more than
500 hours in a year may be viewed as a general partner. Some states allow limited partners to
vote on issues affecting the basic structure or the continued existence of the partnership. Those
issues include removing general partners, terminating the partnership, amending the partnership
agreement, or selling most or all of the company’s assets.

Advantages of Limited Partnership

1. Tax benefits: The profits and losses in a limited partnership flow through the business to the
partners, all of whom are taxed on their income tax returns. The difference is that the limited
partners in the relationship get to share in the profits and losses, but they do not have to
participate in the business itself.

2. Liability limits: A limited partner’s liability for the partnership’s debt is limited to the amount
of money or property that the individual partners contributed to the partnership.This is not true of
the general partnership, where any money or property contributed becomes an asset of all the
partners.

3. The general partners take charge: In a limited partnership, the general partners deal with
the daily operations and responsibilities and don’t need to consult the limited partners for most
business decisions.

4. No turnover issues: Limited partners can be replaced or leave without dissolving the limited
partnership.

5. Less paperwork: Creating a limited partnership, like a general partnership, requires less
paperwork than forming a corporation. However, it’s important to create and file a partnership
agreement in the county where your company does business.

Disadvantages of Limited Partnership

1. Risks to the general partners: In a limited partnership, the general partners must carry the
burden of all the business’s debts and obligations. If the company issued or enters into
bankruptcy, all debts and liabilities are the responsibility of the general partners. Also, each
general partner can make decisions on behalf of the company, and those decisions become the
responsibility of all the general partners.

2. Compliance challenges: A general partnership does require less paperwork than a

corporation. However, because, in essence, you have investors (the limited partners), you must
still hold annual meetings and create a detailed partnership agreement.
 General Partner
A general partner is one of two or more investors who jointly own a business that is structured as
a partnership, and who assume a day-to-day role in managing it. A general partner has the
authority to act on behalf of the business without the knowledge or permission of the other
partners. Unlike a limited or silent partner, the general partner may have unlimited liability for
the debts of the business.

 General Partner Works

A partnership is any business entity that is formed by at least two people who agree to create a
company and share in its expenses and profits. A partnership arrangement is particularly
appealing to legal, medical, and creative professionals who prefer to be their own bosses but
want to expand their business reach. A partnership also offers a pool of investment for building
and maintaining a business on a scale that might be beyond the resources of a single individual.
In such cases, each professional becomes a general partner under the terms of the partnership
agreement. They share the expenses and responsibilities of operating the business and share in
the profits if it is successful. General partners typically bring specialized knowledge and skills to
the partnership and contribute to its pool of contacts and clients. Because the general partners
share management responsibilities, each has more time to devote to professional duties.

For example Dottie and Dave decide to open a clothing store. They decide to name the store
D.D.'s Duds. Dottie and Dave don't need to do anything special in order to form a general
partnership. Once Dottie and Dave agree to form the business, it's automatically considered to be
a general partnership.

Remember that each general partner must be involved in the business in some way. At D.D.'s
Duds, the partners agree that Dottie will be responsible for buying the clothing and stocking the
store. Dave will be responsible for everyday store operations. Both partners will contribute
money toward establishing and funding the store. Dottie and Dave will split any business profits.
If the store loses money, then they'll also split the losses. Dottie and Dave have a typical general
partnership.
Fund Of Funds (FOF)

A fund of funds (FOF)—also known as a multi-manager investment—is a pooled investment

fund that invests in other types of funds. In other words, its portfolio contains different
underlying portfolios of other funds. These holdings replace any investing directly in bonds,
stocks, and other types of securities. FOFs usually invest in other mutual funds or hedge funds.
They are typically classified as "fettered," or only able to invest in funds managed by the FOF's
managing company, or "unfettered," or able to invest in funds across the market.

 Fund Of Funds Works

The fund of funds (FOF) strategy aims to achieve broad diversification and appropriate asset
allocation with investments in a variety of fund categories that are all wrapped into one portfolio.
There are different kinds of FOFs, with each type acting on a different investment scheme. A
FOF may be structured as a mutual fund, a hedge fund, a private equity fund, or an investment
trust. The FOF may be fettered, meaning it only invests in portfolios managed by one investment
company. Alternatively, the FOF can be unfettered, letting it invests in external funds controlled
by other managers from other companies.

Example: The Barclay Fund of Funds Index, sponsored by Barclay-Hedge, a provider of data on

alternative investments, is a measure of the average return of all FOFs that report into the
company database; it includes some 500 to 650 funds. As of March 2019, 583 funds had an
averaged return of 3.95% year-to-date.

Types of Fund of Funds

1.Asset allocation funds :These funds consist of a diverse asset pool – with securities
comprising of equity, debt instruments, precious metals, etc. This allows  asset allocation
funds to generate high returns through the best performing instrument, at a reduced risk level
guaranteed by the relatively stable securities present in the portfolio.
2.Gold funds :Investing in different Mutual Funds, primarily trading in gold securities
are gold funds. Fund of funds belonging to this category can have a portfolio of Mutual Funds
or the gold trading companies themselves, depending upon the concerned asset management
company.
3.International fund of funds :Mutual Funds operating in foreign countries are targeted by
the international fund of funds. This allows investors to potentially yield higher returns through
the best-performing stocks and bonds of the respective country.
Advantages of Investing in Fund of Funds
1.Diversification :Fund of funds target various best performing Mutual Funds in the market,
each specialising in a particular asset or sector of fund. This ensures gains through
diversification, as both returns and risks are optimised due to underlying portfolio variety.
2.Professionally trained managers :Fund of funds is managed by highly trained people with
years of experience. Proper analysis and calculated market predictions made by such portfolio
managers ensure high yields through intricate investment strategies.
3.Low resource requirements: An individual with limited financial resources can easily
invest in the top fund of funds available to earn higher profits. Monthly investment schemes
can also be availed while choosing a fund of funds to invest in.
Limitations of Fund of Funds
1.Expense ratio: Expense ratios to manage a fund of funds Mutual Funds are higher than
standard Mutual Funds, as it has a higher managing expense. Added expenses include
primarily choosing the right asset to invest in, which keeps on fluctuating periodically. This
expense amount to a substantial amount, and is deducted from the annual returns generated by
the asset management company.
2.Tax :Tax levied on a fund of funds are payable by an investor, only during redemption of the
principal amount. However, during recovery, both short-term and long-term capital gains are
subjected to tax deductions, depending upon the annual income of the investor and the time
period of investment. It should be noted that the dividend received on the investment is not
taxable, as the burden is borne by the issuing fund house.

Equity dilution

Equity dilution occurs when a company issues new shares to investors and when holders of stock
options exercise their right to purchase stock. With more shares in the hands of more people, each
existing holder of common stock owns a smaller or diluted percentage of the company. Further, their
share of the company’s profits is also diluted. This happens because the total number of shares goes up
but the company’s earnings after tax stay the same, so earnings per common share go down. This often
lowers the share price as well. To mitigate these downsides, company leaders must ensure that money
raised from the issuance of new shares is used to grow the company’s revenues and after-tax profits,
raising the price per share above the pre-issue price.

Example: ABC Co. started with 100,000 shares owned by 100 unique shareholders—meaning each
shareholder owned 1% of the company. To raise more capital, the business issued 10,000 new shares to
10 new shareholders, so that 110 shareholders now own 0.9% of the company each. As a result, each
shareholder also has slightly less voting power.

Before dilution:

 # of common shares = 100,000

 # of shareholders = 100
 # of shares/shareholder = 1,000
 % ownership = (1,000 ÷ 100,000) x 100 = 1%
 After dilution:
 # of common shares = 110,000
 # of shareholders = 110
 # of shares/shareholder = 1,000
 % ownership = (1,000 ÷ 110,000) x 100 = .9%

Equity Dilution Works

When a company goes public, usually through an initial public offering (IPO), a certain number of shares
are sanctioned to be offered initially. The outstanding shares are termed as “float.” If the company
issues additional shares – known as a secondary stock offering – the company is said to have diluted the
stock. Since the share of a company’s stock represents the ownership stake in the company, the
shareholders who purchased the IPO will now have a smaller stake in the ownership of the company.

For example, assume that a company issues 200 shares to 200 independent shareholders, with each
shareholder having 1% ownership in the company. If the company issues 200 more shares to 200 other
shareholders, the ownership of each shareholder reduces to 0.5%.

It also reduces the voting power of the shareholders. With the increase in the number of shares, each
existing shareholder owns a smaller percentage of the company, resulting in a decrease in the value of
each share. Normally, existing shareholders do not favor the dilution of shares or equity; hence,
sometimes, companies take initiatives, such as share repurchase programs, to limit dilution. Stock
dilution should not be confused with stock splits, which neither decrease nor increase dilution. When a
company enacts stock splits, current shareholders receive extra shares without any effect on their
ownership percentage in the company.
 Cause of Share Dilution
Although dilution decreases the value of shares, companies still issue additional shares. Some of the
causes of dilution are listed below:
1.Some companies may issue extra shares to seek additional capital for growth opportunities or
to settle outstanding debts. The value of the company’s stock and its profitability can be
improved through the capital received from issuing new shares in the stock market.
2.A company purchasing another company may issue additional shares to the shareholders of the
acquired company.
3.A company may offer stock options to its employees and other optionable securities. When the
stock options are exercised, they are converted into shares of the company. Thus, the number of
outstanding shares of the company increases.
4.Smaller companies may sometimes issue shares to independent service providers.
5. companies may issue warrants or other convertible securities, such as bonds. Warrants are
usually issued to lenders. When the securities are converted, new shares are added to the pool of
outstanding shares of the companies.
6.Shareholders with a major stake in the company can use share dilution to remove other
shareholders with less stake in the company or to get the latter’s consent to the plans that
normally they would not agree to.
 Effect of Dilution
Dilution affects the value of a portfolio depending on the number of additional shares issued and the
number of shares held. Dilution not only affects the share price but also the earnings per share (EPS) of
the company.
For example, a company’s EPS may be 50 cents per share before the issuance of additional shares, and it
may reduce to 18 cents after dilution. However, the EPS may not be affected if the dilution causes a
significant increase in earnings. The funds from dilution may help boost revenue, which can offset the
increase in the number of shares, and the EPS may not change.
Public companies may also calculate diluted EPS to determine the potential effect of dilution on stock
prices in case stock options are exercised. Dilution results in a decline in the book value of the shares
and the earnings per share of the company.

Rights Issue
A rights offering (rights issue) is a group of rights offered to existing shareholders to purchase
additional stock shares, known as subscription warrants, in proportion to their existing
holdings. These are considered to be a type of option since it gives a company's stockholders the
right, but not the obligation, to purchase additional shares in the company. In a rights offering,
the subscription price at which each share may be purchased is generally discounted relative to
the current market price. Rights are often transferable, allowing the holder to sell them in the
open market.
Rights Offering (Issue) Works
In a rights offering, each shareholder receives the right to purchase a pro-rata allocation of
additional shares at a specific price and within a specific period (usually 16 to 30
days). Shareholders, notably, are not obligated to exercise this right.  A rights offering is
effectively an invitation to existing shareholders to purchase additional new shares in the
company. More specifically, this type of issue gives existing shareholders securities called
"rights," which, well, give the shareholders the right to purchase new shares at a discount to
the market price on a stated future date. The company is giving shareholders a chance to increase
their exposure to the stock at a discount price

Types of rights issue

1. Fully paid rights issue: A fully paid rights issue is where an applicant is required to pay the
entire issue amount at the time of application.

2. Partly paid rights issue: A partly paid rights issue is where an applicant is required to pay
only a partial amount at the time of application. The balance amount is to be paid as and when
subsequent calls are made by the company.

3. Renounceable rights issue: A renounceable rights issue can be easily transferred or sold to
other investors in the open market. A RE holder can opt to transfer his rights in case he does not
want to subscribe to his rights.

4. Non-renounceable rights issue: A non-renounceable rights issue cannot be transferred or

sold to anyone. In such cases, a RE holder not willing to exercise his right to buy the rights share
will have the only option to give up his rights and let the RE lapse.

Rights Issue Eligibility

Unlike initial and follow-up public offering, the rights issue is not open for the general public but
only to existing shareholders of the company. A company announces a record date in case of a
rights issue. To be eligible to qualify as an existing shareholder for the rights issue, one must
own the shares of the company as on the record date. The shares become ex-rights one day
before the record date. If you buy the shares on or after the ex-date, you will not be eligible to
receive rights entitlements as you would not qualify as an existing shareholder of the company as
on record date.

For example, a company offering a rights issue announces 18th August 2020 as the record date,
one must own the shares of the company in their Demat account as on that date. If one buys the
shares on 17th August, the person will not be considered as an existing shareholder in company
books even when he buys stock before the record date as the credit of shares in Demat will
happen on 19th August. The shares become ex-rights from 17th August.

Rights Issue Date

1.Record Date: A record date is a cut-off date to determine eligible shareholders for the rights
issue.

2.Issue Opening Date: The issue opening date is a date when one can start applying for the
rights issue.

3.Issue Closure Date: The issue closing date is the cut-off for applying for the rights issue. No
applications can be made post the issue closure date.

4.Rights Entitlement Trading Dates: These are the on-market renunciation of rights
entitlements dates within which the rights entitlements can be traded on the stock exchange. The
trading commences with issue opening date and generally closes 3-4 working days before the
issue closure date.

5.Allotment Date: The allotment date is when the company finalizes the allotment based on the
applications received and the Demat holding list of the rights entitlements.

6.Date of credit : The credit date is when the rights shares are credited to the Demat account
once the allotment is finalized.

7:Date of commencement of trading or Listing date: This is the date when the rights issue
shares will get listed on the stock exchange and trade along with other equity shares.
3 Rights Issue Benefits

Benefits for the company

1.Rights issue is the fastest mode of raising capital for the company.

2.It is a low-cost affair for the company as company can save on the underwriters fees,
advertisement expenses.

3.The confidence of the existing shareholders is retained by making the discounted offer to

existing owners as payback for being part of the company.

4.The company can raise additional funds without increasing the debt burden.

Benefits for the Shareholders

1.Rights issues provide an opportunity for existing shareholders to increase their stake in the
company at a lesser price than the current market price.

2.The rights issue retains the control of the company with existing shareholders when
subscribed by the existing shareholders without renouncing their rights to outsiders.

Rights Issue Disadvantages

1.The rights issue would result in dilution in the value of holdings of the existing shareholders.

2. One of the reasons, the company looks to issue rights share is the need for cash on account of
being cash strapped. This may sometimes give a wrong signal to investors that a company is
struggling which may impact the reputation of the company and the share price.

3.The rights issue would increase the number of shares of a company spreading the profit across
that many shares impacting earning per share (EPS).
PHASE 6
VALUATION METHODS

Discounted Cash Flow (DCF) Analysis

Discounted Cash Flow (DCF) analysis is an intrinsic value approach where an analyst forecasts the
business’ unlevered free cash flow into the future and discounts it back to today at the firm’s Weighted
Average Cost of Capital (WACC).A DCF analysis is performed by building a financial model in Excel and
requires an extensive amount of detail and analysis.  It is the most detailed of the three approaches and
requires the most estimates and assumptions. However, the effort required for preparing a DCF model
will also often result in the most accurate valuation. A DCF model allows the analyst to forecast value
based on different scenarios and even perform a sensitivity analysis. For larger businesses, the DCF value
is commonly a sum-of-the-parts analysis, where different business units are modelled individually and
added together.

Comparable Company Analysis

Comparable company analysis (also called “trading multiples” or “peer group analysis” or “equity
comps” or “public market multiples”) is a relative valuation method in which you compare the current
value of a business to other similar businesses by looking at trading multiples like P/E, EV/EBITDA, or
other ratios. Multiples of EBITDA are the most common valuation method.

The “comparable” valuation method provides an observable value for the business, based on what other
comparable companies are currently worth. It is the most widely used approach, as they are easy to
calculate and always current. The logic follows that if company X trades at a 10-times P/E ratio, and
company Y has earnings of $2.50 per share, company Y’s stock must be worth $25.00 per share
(assuming the companies have similar attributes).

Precedent transactions

Precedent transactions analysis is another form of relative valuation where you compare the company in
question to other businesses that have recently been sold or acquired in the same industry. These
transaction values include the take-over premium included in the price for which they were acquired.
The values represent the en bloc value of a business. They are useful for M&A transactions but can
easily become stale-dated and no longer reflective of the current market as time passes. They are less
commonly used than Comps or market trading multiples.
VALUATION IN INDIA

As per the provisions of Section 247 of companies Act, 2013 any valuation required to be done
under the Companies Act, 2013, has to be done by the professional called Registered Valuer
hence no professional other than Registered Valuer is eligible to perform the valuation task under
Companies Act, 2013.

At present IBBI (Insolvency and Bankruptcy Board of India) is the governing body for
Registered Valuers.

There are three categories of registered Valuer: –

a. Registered Valuer for Securities and Financial Assets

b. Registered Valuer for Land and Building

c. Registered Valuer for Plant and Machinery

VALUATION RULES, 2017

These rules may be called the Companies (Registered Valuers and Valuation) Rules, 2017.
They shall come into force on the date of their publication in the Official Gazette.
These rules shall apply for valuation in respect of any property, stocks, shares, debentures,
securities or goodwill or any other assets or net worth of a company or its liabilities under the
provision of the Act or these rules.
Explanation – It is hereby clarified that conduct of valuation under any other law than the Act or
these rules by any person shall not be affected by virtue of coming into effect of these rules.
Definitions ─ (1) In these rules, unless the context otherwise requires ─
(a) “Act” means the Companies Act, 2013 (18 of 2013);
(b) “authority” means an authority specified by the Central Government under section 458 of the
Companies Act, 2013 to perform the functions under these rules;
(c) “asset class” means a distinct group of assets, such as land and building, machinery and
equipment, displaying similar characteristics, that can be classified and requires separate set of
valuer for valuation;
(d) “certificate of recognition” means the certificate of recognition granted to a registered valuer
organisation under sub-rule (5) of rule 13 and the term “recognition” shall be construed
accordingly
(e) “certificate of registration” means the certificate of registration granted to a valuer under sub-
rule (6) of rule 6 and the term “registration” shall be construed accordingly;
(f) “partnership entity” means a partnership firm registered under the Indian Partnership Act,
1932 (9 of 1932) or a limited liability partnership registered under the Limited Liability
Partnership Act, 2008 (6 of 2009);
(g) “Annexure” means an annexure to these rules;
(h) “registered valuer organisation” means a registered valuer organisation recognised under sub-
rule (5) of rule 13;
(i) “valuation standards” means the standards on valuation referred to in rule 18; and
(j) “valuer” means a person registered with the authority in accordance with these rules and the
term “registered valuer” shall be construed accordingly.
Words and expressions used but not defined in these rules, and defined in the Act or in the
Companies (Specification of Definitions Details) Rules, 2014, shall have the same meanings
respectively assigned to them in the Act or in the said rules.
Eligibility for registered valuers.─
(1) A person shall be eligible to be a registered valuer if he-
(a) is a valuer member of a registered valuers organisation;
Explanation.─ For the purposes of this clause, “a valuer member” is a member registered
valuers organisation who possesses the requisite educational qualifications and experience for
being registered as a valuer;
(b) is recommended by the registered valuers organisation of which he is a valuer member for
registration as a valuer;
(c) has passed the valuation examination under rule 5 within three years preceding the date of
making an application for registration under rule 6;
(d) possesses the qualifications and experience as specified in rule 4;
(e) is not a minor;
(f) has not been declared to be of unsound mind;
(g) is not an undischarged bankrupt, or has not applied to be adjudicated as a bankrupt;
(h) is a person resident in India;
Explanation.─ For the purposes of these rules ‘person resident in India’ shall have the same
meaning as defined in clause (v) of section 2 of the Foreign Exchange Management Act, 1999
(42 of 1999) as far as it is applicable to an individual;
(i) has not been convicted by any competent court for an offence punishable with imprisonment
for a term exceeding six months or for an offence involving moral turpitude, and a period of five
years has not elapsed from the date of expiry of the sentence: Provided that if a person has been
convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven
years or more, he shall not be eligible to be registered;
(j) has not been levied a penalty under section 271J of Income-tax Act, 1961 (43 of 1961) and
time limit for filing appeal before Commissioner of Income-tax (Appeals) or Income-tax
Appellate Tribunal, as the case may be has expired, or such penalty has been confirmed by
Income-tax Appellate Tribunal, and five years have not elapsed after levy of such penalty; and
(k) is a fit and proper person:
Explanation. ─ For determining whether an individual is a fit and proper person under these
rules, the authority may take account of any relevant consideration, including but not limited to
the following criteria-
(i)integrity, reputation and character,
(ii) absence of convictions and restraint orders, and
(iii) competence and financial solvency.
START UP SCHEMES BY GOVERNMENT
List of government schemes launched to develop and encourage entrepreneurship in India.

 Startup India Seed Fund

 Startup India Initiative
 ASPIRE
 MUDRA Bank
 Ministry of Skill Development and Entrepreneurship
 ATAL Innovation Mission
 eBiz Portal
 Dairy Processing and Infrastructure Development Fund (DIDF)
 Support for International Patent Protection in Electronics & Information Technology (SIP-EIT)
 Multiplier Grants Scheme (MGS)
 Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
  Software Technology Park (STP) Scheme
 The Venture Capital Assistance Scheme (VCA)
 Loan For Rooftop Solar Pv Power Projects
 New Gen Innovation and Entrepreneurship Development Centre (New Gen IEDC)
 Single Point Registration Scheme
 Modified Special Incentive Package Scheme (M-SIPS)

Startup India Seed Fund

On 16 January 2021, Prime Minister Narendra Modi announced the launch of the 'Startup India Seed
Fund' — worth INR 1,000 crores — to help startups and support ideas from aspiring entrepreneurs. PM
Modi said that the government is taking important measures to ensure that startups in India do not face
any capital shortage.
 Startup India Initiative

The Prime Minister of India launched the Startup India Initiative in the year 2016. The idea is to increase
wealth and employability by giving wings to entrepreneurial spirits. The government gives tax benefits
to startups under this scheme and 798 applicants have made use of this scheme to date. The
Department of Industrial Policy and Promotion is maintaining this initiative and is treating it as a long
term project. Moreover, the overall age limit for startups has been increased from two years to seven
years. And for biotechnology firms, the age limit is ten years from the date of incorporation. It is one of
the best government-sponsored startup schemes for entrepreneurs as it provide several concessions.

 ASPIRE

Aspire | Small Business Ideas for Rural Areas in India

The government has made continuous efforts to improve the social and economic aspects of life in rural
areas of India. Since 56% of the Indian population lives in the rural areas, the government is promoting
entrepreneurship and innovation in the rural sector. The ASPIRE scheme aims at increasing employment,
reducing poverty, and encouraging innovation in rural India. However, the main idea is to promote the
agro-business industry. The Ministry of Medium and Small Enterprises has tried to boost economic
development at the grassroots level. The total budget of the scheme was INR 62.5 crores for the period
of 2014-2016.

 MUDRA Bank

Mudra Bank | Government Funding Schemes for Startups in India

Micro Units Development Refinance Agency (MUDRA) banks has been created to enhance credit facility
and boost the growth of small business in rural areas. The government has introduced this scheme to
support small businesses in India. In 2015, the government allocated INR 10,000 crores to promote
startup culture in the country. The MUDRA banks provide startup loans of up to INR 10 lakhs to small
enterprises, business which are non-corporate, and non-farm small/micro enterprises. MUDRA comes
under Pradhan Mantri Mudra Yojana (PMMY) which was launched on 8 April 2015. The loans have been
categorized as Tarun, Kishore, and Shishu. The assets are created through the bank’s finance and there
is no collateral security.

Ministry of Skill Development and Entrepreneurship

The task of promoting entrepreneurship was earlier given to different departments and government
agencies. In 2014, the Prime Minister decided to dedicate an entire ministry to build this sector as he
felt that skill development required greater push from the government's side. Furthermore, the idea is
to reach 500 million people by the year 2022 through gap-funding and skill development initiatives.

ATAL Innovation Mission

Atal Innovation Mission | Initiatives for Entrepreneurship development

In the budget session of 2015, the Indian government announced the Atal Innovation Mission (AIM);
with the name coming from Atal Bihari Vajpayee, the Former Prime Minister of India. Atal Innovation
Mission was established to create a promotional platform involving academicians and draw upon
national and international experiences to foster a culture of innovation, research, and development. The
government allocated AIM about INR 150 crores in the year 2015.

eBiz Portal

eBiz Portal | Government Schemes for Startup Projects in India

This is the first electronic government-to-business(G2B) portal. The main purpose of the portal is to
transform and develop a conducive business environment in the country. eBiz Portal was developed by
Infosys in a public-private partnership model. It is a communication center for investors and business
communities in India. The portal has launched 29 services in 5 states of India, viz., Andhra Pradesh,
Delhi, Haryana, Maharashtra, and Tamil Nadu. The government will add more services to the scheme
with time.

Dairy Processing and Infrastructure Development Fund (DIDF)

DIDF | Startup India Initiative

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India.
The Government of India announced the creation of Dairy Processing and Infrastructure Development
Fund under NABARD in the Union Budget of 2017-18 for the sustained benefit of farmers. The total
corpus for this fund is INR 8000 crores over a period of 3 years (i.e. 2017-18 to 2019-20)

Milk Unions, multi-state milk cooperatives, state dairy federations, milk producing companies, and
NDDB subsidiaries meeting the eligibility criteria under the project can borrow loan from NABARD. The
loan component would be 80% (maximum rate) with the end borrower's contribution at 20 % (minimum
rate). Borrowers shall get the loan at an interest rate of 6.5% per annum. The period of repayment will
be 10 years. The respective state government will be the guarantor of loan repayment. Moreover, if the
borrower is not able to contribute his or her share in the scheme, the state government shall step in.
Support for International Patent Protection in Electronics & Information Technology
(SIP-EIT)

SIP-EIT | Startup Schemes in India

The Department of Electronics and Information Technology (DeiTY) has launched a scheme entitled
“Support for International Patent Protection in E&IT (SIP-EIT)”. This scheme provides financial support to
MSMEs and Technology Startups for international patent filing.

Features and benefits of the SIP-EIT scheme are:

Financial support is provided for international filing in Information Communication Technologies and
Electronics sector.

The Reimbursement limit has been set at a maximum of INR 15 lakhs per invention or 50% of the total
charges incurred in filing and processing of a patent application, whichever is lesser.

The SEP-EIT scheme can be applied at any stage of international patent filing by the applicant.

Multiplier Grants Scheme (MGS)

MGS | Government Grants for Startups in India

Department of Electronics and Information Technology (DeitY) started the Multiplier Grants Scheme
(MGS). The scheme aims to encourage collaborative Research & Development (R&D) between industry
and academics/institutions for the development of products and packages. Under the scheme, if the
industry supports the R&D of products that can be commercialized at the institutional level, the
government shall provide financial support which will be up to twice the amount provided by industry.
MGS promotes and expedites the development of aboriginal products and packages. The government
grants would be limited to a maximum amount of INR 2 crores per project and the duration of each
project could considerably be less than 2 years. It would be INR 4 crores and 3 years for industry
associations.

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was set up by the
government of India to provide business loans to micro-level businesses, small-scale industries, and
startups with zero collateral. It allows businesses to avail loans at highly subsidized interest rates
without requiring security. By working along with SIDBI (Small Industries Development Bank of India),
the government provides a maximum amount of up to INR 100 lakhs under this scheme for boosting
new enterprises as well as rehabilitating the existing ones. Primarily meant for manufacturing units, this
loan can be availed in the form of working capital or term loan.
Software Technology Park (STP)

The Software Technology Park (STP) scheme is a totally export-oriented scheme for the development
and export of computer software. This includes the export of professional services using communication
links or media.

The scheme is unique in its nature as it focuses on only one sector, i.e., computer software. The scheme
integrates the government concept of "100% Export Oriented Units" (EOU), "Export Processing Zones"
(EPZ), and the concept of Science Parks or Technology Parks as operating elsewhere in the world. The
sales in the Domestic Tariff Area (DTA) shall be permissible up to 50% of the export in value terms. STP
gives total depreciation on capital goods over a period of five years.

The Venture Capital Assistance Scheme (VCA)

Small Farmer’s Agri-Business Consortium (SFAC) has launched the Venture Capital Assistance (VCA)
scheme for the welfare of farmer-entrepreneurs and to develop their agri-business. The scheme is
approved by the banks and financial institutions regulated by the RBI. It intends to provide assistance in
the form of term loans to farmers so that the latter can meet the capital requirements for their project's
implementation. VCA promotes the training and nurturing of agri-entrepreneurs.

The quantum of the loan will be 26% (40% for hilly regions) of the promoter’s equity. The maximum
amount of loan provided under this scheme will be INR 50 lakhs.

Loan For Rooftop Solar Pv Power Projects

Loan for Rooftop Solar Projects | Government Support for Entrepreneurs in India

To build reliance on non-conventional sources of power, the government of India has decided to set up
40,000 MWp of Grid-Interactive Rooftop Solar PV Plants in the next five years. These rooftop solar PV
plants will be set up in residential, commercial, industrial, and institutional sectors in the country and
shall range from 1 kWp to 500 kWp in terms of capacity. Such rooftop plants are economically viable
since they can produce electricity using solar energy at about INR 7 per kWh without any subsidy. The
government also provides a subsidy of 15% on these plants to the associations or individual companies,
making the scheme even more lucrative.

NewGen Innovation and Entrepreneurship Development Centre (NewGen IEDC)

NewGen IEDC is an initiative launched by the National Science and Technology Entrepreneurship
Development Board under the Department of Science and Technology, Government of India. The
initiative aims to inculcate the spirit of innovation and entrepreneurship among the Indian youth. It also
endeavours to support and encourage entrepreneurship through guidance, mentorship, and support.

NewGen IEDC is a five-year programme that would be implemented in educational institutions. It will
support up to 20 new projects.

Single Point Registration Scheme (SPRS)

SRPS | Indian Government Schemes for Startup Business

The Single Point Registration Scheme (SPRS) was launched in 2003. It is managed by the National Small
Industries Corporation (NSIC). NSIC registers all Micro & Small Enterprises (MSEs) in India under the
Single Point Registration Scheme to enable them to participate in government purchases.

Enterprises are classified as Micro, Small, or Medium based on the limit of investment. Eligible MSME
units are provided with Udyog Aadhar registration certificate. All central ministries, departments, and
PSUs shall set an annual goal of minimum 20% of the total annual purchases of products produced or
rendered by MSMEs. About 358 items are reserved for exclusive purchase from MSMEs .

Modified Special Incentive Package Scheme (M-SIPS)

The government of India has approved a special incentive package to promote large-scale
manufacturing in the Electronic System Design and Manufacturing (ESDM) sector. The scheme is called
the Modified Special Incentive Package Scheme (M-SIPS).

Under M-SIPS, the Indian government will provide a subsidy of 20% on capital investments in special
economic zones (SEZs) and 25% on capital investments in non-SEZs for individual companies. It also
provides the re-imbursement of CVD/excise on capital equipment for non-SEZ units. Re-imbursement of
central taxes and duties is also provided for high technology and high capital investment units.
References

https://www.myaccountingcourse.com/accounting-dictionary/limited-partners
https://corporatefinanceinstitute.com/resources/knowledge/deals/general-partnership/
https://www.investopedia.com/terms/d/dilution.asp
https://startuptalky.com/list-of-government-initiatives-for-startups/
ICSI BOOK OF VALUATION
Corporate book of management and accounting
https://corporatefinanceinstitute.com/resources/knowledge/valuation/valuation-methods/