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MODERN'S
OF

Supplementary Material

BUSINESS
STUDIES
2015-16
XII
CONTENTS
+ Experts' Testimonials
+ Evaluation, Value-based and Multidisciplinary (EVM) Questions
+ Project on Stock Market
+ Project on Business Environment – Nestlé and Society

Rajesh Kumar Mahajan

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Modern’s abc of Business Studies Books

EXPERTS’ TESTIMONIALS
Dr. Vikas Vijay: Formerly PGT (Commerce), New Era Public School, Maya Puri, New Delhi
“I know Mr Rajesh Kumar Mahajan from last 5 years. Since day one I found within him a
different fire and spark, which makes him unique in himself. Apart from having an ace
command over the subject, he is a good human being, an emotional, honest, kind hearted,
hardworking and a sincere person. He is a person on whom you can rely upon in each
endeavour. He believes in perfection and works hard to achieve his desired goal. Recently,
he has written a book on Business Studies, which is a master stroke of his. The content and
style of writing is teacher-student friendly. The book has been appreciated by masses. I
would urge others to read this book to gain knowledge and right information. I wish him
all the best in life. May god bless him with all the success in life.”
Ms. Jyotsana Dawar: Lecturer, Rajkiya Pratibha Vikas Vidyalaya, Tyagraj Nagar, New Delhi
“I have gone through the chapter – Internal and International Trade – beautifully written,
simple language, very well-articulated, knowledge is imparted in a smooth way.”
Ms. Sumuthy Raghunath: HOD Commerce, Cambridge School, Noida, Uttar Pradesh
“I feel your books are more student-friendly, each concept is perfectly explained, and your
application based questions are really good.”
Ms. Aashima: PGT (Commerce), St. Columbus School, Connaught Place, New Delhi
“I read your book. It was complete, easy and contains all important questions.”
Ms. Arti Chopra: PGT (Commerce), Ryan International School, Mayur Vihar, New Delhi
“I wholeheartedly congrats Mr. Rajesh Kumar Mahajan for his Business Studies books,
which have presented the various concepts in simplified manner and with day to day
examples. The content of the various lessons is sufficient enough to impart required knowledge
to the students. The quality of the questions and the suggested answers are appreciable.
The books cater to the needs of all schools but especially to the needs of government
schools where the language is generally a barrier in expression of knowledge. Yours is a
valuable contribution to the field of education. All the best for your future endeavours.”
Mr. I.S. Punjwaria: PGT (Commerce), Dr. Radhakrishnan International School, Defence
Colony, New Delhi
“I endorse Mr. R K Mahajan’s B. Studies book for its lucid style. It is very student friendly
and apart from enriching, it helps students to develop a love for the subject. Questions
based on applications are truly good.”
Dr. P.K. Taneja: HOD (Commerce), Inderprastha International School, Dwarka, New Delhi
“I have gone through the entire contents prepared by you for young business students. It
is absolutely child friendly and a good resource material. God bless you success. Please
continue helping young ones as they need mentors like you.”
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Mr. S.K. Taneja: Former Principal, Shyama Prasad Vidyalaya, Lodi Estate, New Delhi
“I have gone through your book and found that the presentation of contents is very clear
and easy to understand as well as pictures and tabular comparison is clear. I wish you will
get a very good response from the teachers and students.”
Ms. Manpreet Kaur: PGT (Commerce), Tagore International School, Vasant Vihar, New Delhi
"My sincere thanks to Mr. Mahajan for his contribution in the subject Business Studies.
The subject which seems easy but when it comes to writing, it becomes difficult for the
students. Here comes the solution in the form of B. Studies Books by Mr. Mahajan. The USP
of the book lies in its presentation. The language is simple and content is supported by many
examples. Also, enough number of questions are given in each chapter to help students in a
great way. This book is really worth your effort. Wish you a great success ahead.”
Mr. Piyush R. Mehta, Vice Principal, G-Kids School, Jodhpur (Rajasthan)
(1) I have gone through your books “Business Studies” for classes XI and XII. Your
books have appealed me a lot. What is the unique feature about the books is its simple
language. Moreover, pictures inserted at various places have made the topics interesting
and easy to understand. You have made the right use of the maxim- “A picture is worth
a thousand letters.”
(2) On the face, “Business Studies” appears to be a very easy and interesting subject.
But when a student starts exploring, he gets confused and bored. There are various books
available on this subject, but the language and presentation is such that it is difficult for
a beginner to understand and grasp the intricacies of the subject.
(3) Undoubtedly, NCERT books on “Business Studies” are good, but unfortunately
they suffer from the following drawbacks: (a) They are not updated frequently. There are
various instances in the textbooks which require updation but they have not been updated
for a long period of time. (b) There are some technical/conceptual errors, which require
immediate correction but they have not been corrected as on date. Your books have taken
care of the above mentioned drawbacks and have tried to solve the problems of the
students to a very great extent.
(4) I would request you to continue to take NCERT Textbooks as base but not to
rely upon it in totality. Wherever you find that there is a technical error/conceptual error,
do correct it in your book and make a note of it in the box itself so that students and
teachers of Business Studies are benefitted. The same thing applies to topics, which require
updation but have not yet been updated in the NCERT Textbooks.
Anyways, I would like to heartily congratulate you for making such a big and
wonderful effort in writing a wonderful book on “Business Studies”. I understand the
efforts and pain you must have gone through in writing a book on such a wonderful
subject, which requires a combination of legal, accounting and management skills.

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CORE VALUES OF A BUSINESS

Business values are the core principles or desired standards, which guide a business firm
on how to do the business. They sum up what business stands for and what makes it
special. While business plans and strategies may change, the core values of business should
remain the same. These are fundamental dimensions of human life, which indicate how
an individual reacts in real life situations and circumstances. The table below shows the
important core values of business:
• Good behaviour in human interaction • Sharing
• Discipline • Responsibility
• Respect for law and order • Conflict resolution
• Team work • Courtesy
• Fostering respect for differences • Honesty and integrity
• Sensitivity to environment • Compassion
• Concern for natural resources • Sensitivity
• Courtesy • Loyalty
• Team spirit • Objectivity
• Obedience • Efficiency
• Sincerity • Conservatism
• Conservation • Initiative
• Sympathy • Stability
• Peace • Harmony
• Humanity • Humility
• Gender parity • Decency
• Receptive • Morality
• Innovative • Dignity
• Productivity • Parity
• Modesty • Belongingness
• Dedication • Commitment
• Mental revolution • Social responsibility
• Caring • Accountability
• Respect for professional ethics • Honesty
• Belongingness • Impartiality
• Sustainable development • Mutual cooperation
• Women empowerment • Fair Remuneration
• Mental revolution • Concern for environment
• Sensitivity • Efficacy
• Empathy • Prosperity
• Adaptability • Punctuality
• Accomplishment • Sharing
Core Values of a Business as Suggested by CBSE
• Good behaviour in human interaction • Sharing
• Discipline • Responsibility
• Compassion • Respect for law and order
• Conflict resolution • Team work
• Honesty and integrity • Courtesy
• Fostering respect for differences • Sensitivity to environment

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EVALUATION, VALUE AND MULTIDISCIPLINARY (EVM) QUESTIONS

(4 – 5 MARKS)
Based on Chapters 1 – 3
1.
Innovations and research has made it possible to manufacture low cost, small cars.
Many new manufacturers have launched their economy models in the market.
Air Wings Motors Ltd. decided to open up a new branch in remote area of West
Bengal to manufacture small car ‘Mini’. This also created employment and
business opportunities for the rural youth and raised the standard of living of the
people in the region.
a) Which objective is the management trying to achieve? Explain.
b) Identify and explain the component of business environment emphasised in
the above situation.
c) State any two values that have been emphasised in the above case.
Ans. a) Social Objective. The objectives, which are undertaken by an organisation
for the benefit of society, are known as social objectives. Examples: Business
creating employment opportunities, raising standard of living and supporting
the local community
b) Technological Environment: It refers to the component of business
environment relating to scientific improvements and innovations, which
provides new ways of producing goods and services. Examples: New
innovations and research in the automobile industry
c) Values Emphasised:
• Equal Opportunity for growth and development
• Social responsibility
• Concern for the unemployed
2. Lok Seva Clinic does not display any information relating to any free medical
treatment to BPL (Below Poverty Line) Cardholder, even after the court’s orders.
It charges high fees for consultation from its patients and refuses to treat the poor
patients. Moreover, the female medical staff does not treat such patients with
due care due to insufficient salaries. It also pays attention to the medical
representatives and agents of drug manufacturing companies and takes gifts and
commission.
a) Which feature of management as a profession is not being followed by the
clinic?
b) By quoting the lines, identify the principle of management being violated.
c) In your view, what values are being neglected by the clinic?
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Ans. a) The clinic is not following the code of conduct in the medical profession.
Code of Conduct: It refers to the set of rules and regulations to be followed by
the members of a profession compulsorily while serving the society.
b) Principle violated here is ‘Equity’ as only female staff is getting low salaries.
Quoted Lines: The female medical staff does not treat such patients with due
care due to insufficient salaries.
Principle of Equity: It refers to the non-discriminatory and impartial treatment
or behaviour of the managers while dealing with their subordinates.
c) Values Neglected:
• Obedience of court’s orders
• Obedience of professional code of conduct
• Fulfillment of social responsibilities
• Care of unprivileged section of the society
3. In order to achieve target production of 50,000 units per month, the Production
Manager of Action Shoes Ltd. had to operate on double shifts. The workers were
given an incentive by providing differential wage rates such that those who would
produce standard units or more would be given 10% extra wages over the standard
output. Due to dispute between power companies and government, the manager
had to depend upon the gensets, which increased the cost of production but helped
to achieve the target in time.
a) In your opinion, what is lacking and what does the management achieve?
b) By quoting the lines, identify the technique of management being followed
here.
c) Identify the values emphasised by management in the above-mentioned case.
Ans. a) Management is lacking efficiency due to high cost of production whereas
effectiveness is achieved by meeting the target in time.
b) The technique adopted here is ‘differential wage rate system’.
Quoted Lines: 10% extra wages over the standard output.
Differential Wage Rate System: It is a technique of wage payment to
promote the work of efficient workers and motivate the inefficient workers
to improve their output.
c) Values Emphasised:
• Optimum utilisation of scarce resources
• Sincerity
• Responsible towards achieving the target
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4. Unique Electronics Ltd. is engaged in manufacturing electronic gadgets. To tap

the opportunity, the company planned to manufacture LED TVs with Android
phone features but the company has been facing a lot of problems such as chaos
between production department and sales department. The general manager is
unable to integrate the efforts made by various departments. Sales department
blames production department for delayed production. Production department,
on the other hand, blames sales department for poor sales.
a) Identify the missing force in the above case and list one of its characteristic.
b) Which benefit has the company tried to achieve by scanning the business
environment?
c) List any two values which can be cultivated among the employees by using
the force identified in (a) above.
Ans. a) Missing Force: Co-ordination
Coordination: It is a force which unites the efforts of all the individuals of
different departments with the clear understanding of the objectives than an
organisation aims to achieve.
Characteristics of Co-ordination
• It integrates group efforts.
• It ensures unity of action.
b) The company has tried to achieve the first mover advantage.
First Mover Advantage: It refers to early identification of opportunities,
which helps an organisation to be the first to exploit them instead of losing
them to competitors.
c) Values Needed to be Cultivated:
• Co-operation: By integrating all group efforts.
• Unity: By ensuring that all activities aim at accomplishments of organisa-
tional goals.
5. To save electricity, the government decided to encourage the general public to
use LED lights. Seeing the opportunity, the directors of Moonlight Electricals
Limited decided to manufacture LED bulbs to boost its profits. The management
of the company has asked Mr. Simon, the production manager, to work for long
hours to meet the expected growing demand of bulbs in the market. He demanded
extra salary for overtime but the company ignored his request. As a result, he
could not contribute much to the company.
a) Name the objective which the management has focused to achieve.

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b) Identify the component of business environment related to the above

situation.
c) Which principle of Henri Fayol is violated in the above case? Explain.
d) Which values have been ignored by violating the above principle?
Ans. a) Organisational Objective: It refers to the utilisation of human and material
resources to the maximum possible advantage in order to fulfill the economic
objectives of a business such as survival, profit and growth.
b) Political Environment: It refers to the activities and elements related to
government affairs, which can prove to be opportunities as well as obstacles
in the smooth running of the business.
c) Discipline: It refers to the presence of good superiors at all levels, clear and
fair agreements, fulfilment of promises and commitments made by an
organisation and its employees among each other.
d) Values Ignored:
• Respect for employees
• Motivation
• Responsibility and sincerity of the employee
• Initiative
• Co-operation
6. Forbes & Company Ltd. has been in existence for the past twenty years. To prove
as a leader in the market, it has always changed itself and its goals according to
the needs of the environment, due to which it has earned good reputation and
huge profits over the decades. The employees have been demanding for hike in
their wages and salaries but the company does not pay any heed to their demands.
The employees got agitated and declared strike in the company due to which
the company's production was badly affected.
a) By quoting the lines, identify the characteristic of management in the above
case.
b) Identify and explain the scientific principle of management being violated in
the above case.
c) State values overlooked/ ignored by the management.
Ans. a) Management is Dynamic: It states that the management of an organisation
should adapt itself according to the changes taking place in the environment.
Quoted Lines: To prove as a leader in the market, it has always changed itself
and its goals according to the needs of the environment.

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b) Harmony not Discord: The principle emphasises that the management must
try to bring agreement in feeling, opinion, mutual understanding and eliminate
any kind of strife and tension in the minds of the employees.
c) Values Overlooked:
• Mutual understanding, sharing, compassion
• Good behaviour in human interaction
• Empathy
• Peace and stability
• Sense of belongingness
• Recognition of rights of others
• Fair remuneration
7. Veronica completed her Masters in Business Economics from University of Delhi
whereas Monica completed her Masters in Human Resources. They were
appointed by IM Limited through campus recruitment on the basis of their
qualifications, as well as physical, mental and intellectual capabilities as ‘Financial
Analyst’ and ‘Manager (Human Resources)’ respectively. The company promised
to give promotion after every three months on the basis of performance, which
it did not keep.
a) At which level of the management have both the employees been appointed?
b) Name and explain the scientific principle of management followed while
selecting the employees.
c) Name and explain the principle of management violated on the policy of
promotion.
d) State the values that the company has ignored at the time of promotion.
Ans. a) Both the employees have been appointed at the middle level of management.
b) Development of Each and Every Person to the Greatest Efficiency: A
proper care should be taken while selecting the employees. They must be given
the jobs according to their qualifications and competence. They must be given
proper training and development programs should be organised to achieve
efficiency in operations.
c) Discipline: It refers to the presence of good superiors at all levels, clear and
fair agreements, fulfilment of promises and commitments made by an
organisation and its employees among each other.
d) Values Ignored:
• Respect for professional ethics
• Respect for employees’ morale
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8. David, an employee in Bindal Steels Ltd. was instructed by Mr. Robert

(Production Manager) to increase production of steel products due to excess stock
of steel. On the other hand, Mr. John (Sales Manager) directed him not to
increase the steel production, as there was low demand for steel in the international
market due to restrictions on exports of steel products by the government in
'Imports and Exports (Control) Act.
David got confused regarding whose order to follow and hence, was unable to
work in a proper manner. Due to overlapping of orders and instructions, David
was unable to satisfy both the bosses, which led to conflicts in the organisation.
a) Name and explain the principle not being followed.
b) State two advantages of following this principle.
c) Which component of business environment has affected the exports of the
company?
d) Name the values that can be gained by following the above principle.
Ans. a) Unity of Command: A group of workers should receive orders and
instructions from only one boss and should be answerable to the same.
b) Advantages of Following the Principle
• Prevent overlapping of activities
• Promote coordination
c) Legal Environment: It refers to legal framework, court judgments, decisions
rendered by the various commissions/agencies, legislations and administrative
orders passed by the government that must be followed by the business units.
d) Values Gained:
• Avoidance of conflicts
• Maintain harmony between supervisors and employees
• Effectiveness
9. ‘AapkaVidyalaya’ believes in holistic development of students and encourages team
building through a mix of curricular, co-curricular and sports activities. On its
founder's day, a stage performance had been arranged. A committee of ten prefects
was constituted to plan different aspects of the function. They all decided to use
recycled paper for decoration. There was a spirit of unity and harmony and all
members supported each other. With mutual trust and belongingness, the
programmed was systematically planned and executed. Kartik, one of the prefects,
realized that unknowingly the group had applied one of the principles of
management while planning and executing the programme. He was so inspired
by the success of the function that he asked his father to apply the same principle
in his business. His father replied that he was already using this principle.

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a) Identify the principle of management applied for the success of the

programme.
b) State any two features of management highlighted in the above para.
c) Identify any two values which ‘AapkaVidyala’ communicated to the society.
(Delhi 2015)
Ans: a) Principle of Management
i) Esprit de Corps
Quoted Lines: there was a spirit of unity and harmony …..
ii) Harmony Not Discord
Quoted Words: Harmony, mutual trust and belongingness
b) Features of Management
i) Management is Goal Oriented
Quoted Lines: the programme was systematically planned and executed
ii) Management is a Group Activity
Quoted Lines: There was a spirit of unity and all members supported each
other.
iii) Management is All Pervasive
Quoted Lines: Father replied that he was already using the same principle
in his business.
c) Values Involved:
• Team spirit/team work
• Harmony/sincerity
• Sense of accomplishment and mutual cooperation
• Sharing
• Team building
• Holistic development of children

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Based on Chapters 4 – 6
1. Neeraj and Sahil conceived an idea to start a manufacturing business for a highly
demanded consumer durables and took loan from a commercial bank under the
MSME schemes meant for small business entrepreneurs. It was decided to set up
a registered office in Mumbai, a marketing unit at Pune and a manufacturing
unit in a backward village of Jharkhand to take advantage of Government subsidy.
This generated employment opportunities for the villagers. The 2% of their profits
were spent on developing pure water sources and development of roads.
a) Identify the function of management by highlighting the lines from the above
para to support your answer.
b) Explain two sources of recruitment that the company can use to recruit
vacancies.
c) Which concept is involved while spending 2% of profit for the benefits of
the society ?
d) Suggest a suitable organisation structure for the company giving two suitable
reasons.
e) Identify the values involved in their decision to set up a manufacturing unit
in a backward village of Jharkhand.
Ans. a) Planning: It is the future course of action, which determines the goals and
activities to be undertaken to achieve such goals. It bridges the gap between
where we are and where we want to be.
Quoted Lines: They conceived an idea to start a manufacturing business for
a highly demanded consumer durables.
b) Advertisement in newspaper, labour contractors, local placement agencies, etc.
c) Corporate Social Responsibility
d) Functional structure as the business deals in a single line of product and it is
immaterial to have separate functions being performed at different places.
e) Values Involved:
• Generating employment opportunities
• Sensitivity towards rural and backward people
• Compliance to CSR norms
• Regional development
2. Most of the automobile companies are facing a sharp decline in the sale of cars
over the past few years. After thorough research, the companies came to know
that the rising prices of petrol and higher interest rates on loans are the major
causes for decline. To boost its sales, it prepared a blue print and took the following
steps:
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• Empowered its entire production team to innovate and manufacture high

efficiency eco-friendly small diesel cars, which could be made available at
affordable prices.
• Authorised its marketing manager and executives to offer finance with
fabulous schemes and discounts to attract the masses.
As a result of these steps, the company was able to achieve a remarkable increase
in its turnover.
a) Name the type of plan adopted by the company to increase sales.
b) By quoting the lines, identify and explain the organising concept involved in
the above case.
c) State the values to achieve the said objectives of the company.
Ans. a) Strategy: It refers to comprehensive plan of action, which includes
determination of long term objectives, adopting a particular course of action
and allocating necessary resources to achieve such objectives keeping the impact
of business environment into consideration.
b) Decentralisation of Operations/ Authority: It refers to dispersal of authority
to empower the managers to take routine decisions at their own discretion
throughout the organisation.
Quoted Lines: “Empowered its entire production team…….” and “Authorised
its marketing manager……….”.
c) Value Points:
• Sensitivity towards lower end of people
• Innovation
• Nurturing environment
• Sustainable development
• Social Responsibility
3. Rajeev, the owner of Pathways Constructions decided to start a campaign to create
awareness among people for developing clean surroundings in their area. He
formed a team of 10 members to list the different ways for cleaning the
surroundings. One suggested to take the help of local residents, another suggested
that they might involve school going children in their venture. One more
suggestion was to take the help of unemployed youth one valuation of different
ways. It was decided to take the help of local residents.To achieve the desired
goal, various activities were identified like
• Purchase of necessary items dustbins, garbage bags, brooms, etc.
• Collection of garbage
• Disposal of garbage etc.

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After identification of different activities, the work was allocated to different

members.
a) Identify the concepts of management involved in the above situation and
quote the lines, which help in their identification.
b) Also identify the values which the company wants to communicate to the
society. (CBSE SP 2015)
Ans. a) Concepts Involved: Planning and Organising
Quoted Lines for Planning: ‘one suggested……….local residents.’; ‘To create
awareness…………area’(setting objectives); ‘One suggested to take help
…………. unemployed youth’; ‘It………..decided to take help of local
residents’; ‘On evaluation of differentways’
Quoted Lines for Organising: ‘To achieve desired goals……………disposal
of garbage etc.
b) Values:
• Respect for environment
• Teamwork
• Fulfilling social responsibility
4. Century Consumer Products India Ltd. has been manufacturing electronics
products. To expand its business operations, it wishes to manufacture electric
products. It decided to manufacture and sell Dish Washers in the market. For
this purpose, it set up a separate division for which applications for the post of
Divisional Manager were invited from female disabled persons.
a) Identify the functions (two) of the management by quoting the lines involved
in the above situation.
b) Explain with reason the type of organisational structure you would
recommend in the above case.
c) Which source of recruitment would you find the best to attract the candidates?
d) State the values that have been taken into account by the company.
Ans. a) Functions of Management:
• Planning: It is the future course of action, which determines the goals and
activities to be undertaken to achieve such goals. It bridges the gap between
where we are and where we want to be.
Quoted Lines: “decided to manufacture and sell dish washers”.
• Organising: It refers to the creation of organisational structure to from
hierarchy of job positions to establish superior-subordinate relationship for
the achievement of specific goals.

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Quoted Lines: “to diversify its business from electronics to electronic” and
“decided to set up separate division”.
• Staffing: It is the process of determining manpower requirements, which
includes the functions like recruitment, selection, training, development,
promotion, compensation and performance appraisal of the work force
to achieve the objectives of an organisation.
Quoted Lines: “applications for the post of ………persons”.
b) Divisional Structure would be required as the company is going to deal in
multiple products.
It refers to the organisational structure through which the whole organisation
is divided into a number of divisions based on the number of products being
manufactured by it.
c) Advertisement in the newspapers would be the best source to recruit the
manager.
d) Values Emphasised:
• Cause for women
• Support to disabled
• Supporting weaker sections
• Promotion of equality
5. ‘Snapdeal’ witnessed a grand success in its online shopping business. To promote
the e-commerce culture among more and more people, it decided to expand its
business operations and has created many new job positions in the organisation
structure. It appointed Asha who was pursuing her Masters in Business Economics
and Nisha who was pursuing her Masters in Human Resources. They were
appointed by the company from their respective colleges even before they could
appear for their final exams, as ‘Financial Analyst’ and ‘Manager (Human
Resources)’ respectively.
a) Identify the functions of management in the above situation.
b) Identify and explain the category of recruitment used by the company.
c) Which source of recruitment did the company use? State its two advantages.
d) Explain two other sources of recruitment of the same type, which the company
can use.
e) State the benefits involved in doing business electronically.
Ans. a) Organising and Staffing
b) Campus Recruitment: It is an external source of recruitment through which
the business organisations find the suitable candidates as per their requirements
from the campus of business schools, colleges and universities.

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c) External Source
Advantages of External Sources of Recruitment
• Qualified personnel
• Wider choice
• Fresh talent
• Competitive spirit
d) Placement agencies, Advertisements, Employment Exchange, Labour
Contractors
e) Values Involved:
• Adaptation to change
• Customer's convenience.

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Based on Chapters 7 – 8
1. Mr. Martin is working as a Production Manager in Cairn India Ltd. He is assisted
by qualified and competent workforce. He gives the opportunities to all his
subordinates to give their suggestions to achieve the most productive results.
Employees feel accomplished and their zeal to work gives good rise to production.
However, it led to increase in labour cost from acceptable range of 2% to 5% by
the end of the year, which needed immediate attention of the management.
a) Identify and explain the Leadership Style represented Mr. Martin.
b) Name the governing principle relating to the said deviation of labour cost.
c) State two values being assumed by him.
Ans. a) Democratic Leadership: It is a style of leadership in which the leader
encourages the employees to participate in the policies formation. The leader
repects their suggestions and recognises their efforts to motivate them further
and to seek their contribution.
b) Management by Exception: It is the practice wherein only the information
that indicates a significant deviation of actual results from the budgeted or
planned results is brought to the management's notice.
c) Values Assumed:
• Initiative
• Democratic rights
• Equality
• Concern
2. In an organisation, all the workers take things easy and feel free to approach their
superiors for minor queries and problems. This has resulted in everyone talking
to each other and inefficiency in the office. It has also resulted in loss of secrecy
and confidential information being leaked out. To supervise the affairs of the
workers, the company decides to install Closed Circuit Televisions (CCTVs),
which the employees consider as restriction on their freedom.
a) Which pattern of communication is being is followed in the above case?
b) Suggest the pattern of communication should be followed to avoid adverse
consequences.
c) Identify the limitation of controlling the company is suffering.
d) What values does the management in the above case overlook ?
Ans. a) The organisation is following free flow of communication in which all
members are allowed to communicate freely to one another.
b) The organisation should follow wheel pattern of communication in which
there is only a single centralised person who passes all types of information

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to appropriate employee so that the chances of information being leaked can

be avoided.
c) The limitation of controlling is ‘resistance to change’.
d) Values Overlooked:
• Discipline
• Sincerity
• Loyalty
• Initiative
3. Mr. Albert is working as a Head (Product Development), at Orchid Chemicals
& Pharmaceuticals Limited. He ensures that the employees know well in advance,
what they are expected to do and standards of performance, based on which they
will be appraised. He provides all such opportunities that are necessary for their
skill development and promotion. All these efforts have improved the employees'
motivation to achieve the desired targets in time.
a) By quoting the lines, identify and explain the incentive provided by the
manager to his subordinates. (only one)
b) Name and explain the benefit the manager has tried to achieve in the
controlling process.
c) State what positive values exhibited by Mr. Albert ?
Ans. a) Career Advancement Opportunities
Quoted Lines: He provides all such opportunities that are necessary for their
skill development and promotion.
b) Controlling Improves Employees’ Motivation: An effective control
mechanism helps in checking employees' performance from time to time.
Their actual work performance can be compared with the expected
performance or normal standards and remedial measures can be taken in time.
c) Values Exhibited:
• Responsible behaviour
• Commitment to work
• Passion for work
• Concern for the workers
4. A company was manufacturing ‘LED bulbs’ which were in great demand. It was
found that the target of producing 300 bulbs a day was not met by the employees.
On analysis, it was found that the workers were not at fault. Due to electricity
failure and shortage of workers, the company was not able to achieve the set targets
and alternative arrangement was needed.
To meet the increased demand, the company assessed that approximately 88
additional workers were required out of which 8 would work as heads of different

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 departments and 10 would work as subordinates under each head. The required
qualifications and job specifications were also enlisted. It was also decided that
necessary relaxation should be given to encourage women, persons from backward
and rural areas and persons with special abilities to assume responsible positions
in the organisation. All efforts were made to match the ability of the applicants
with the nature of work.
a) Identify the functions of management discussed above.
b) State the two steps in the process of each function discussed in the above para.
c) List any two values which the company wants to communicate to the society.
(Delhi 2015)
Ans. a) Functions of Management Involved
i) Controlling
Quoted Lines: ….set of target of producing 300 units
ii) Staffing
Quoted Lines: ….. company assessed that ……
b) Steps Involved
i) Steps in Controlling
• Comparison of actual performance with standards
Quoted Lines: It was found………producing 300 bulbs a day was not
met by the employees
• Analysing deviation
Quoted Lines: On analysis, it was found…….at fault.
• Taking corrective action
Quoted Lines: To meet the increased demand……………..each head.
ii) Steps in Staffing
• Estimating manpower requirements
Quoted Lines: to meet the increased demand……..under each head.
• Recruitment
Quoted Lines: The required qualifications……..….enlisted.
c) Values Involved
• Social responsibility
• Environmental methods of production
• Upliftment of under privileged children
• Women empowerment

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 Based on Chapters 9 – 10
1. TATA Motors Ltd. set up its unit in ‘Singur’ of West Bengal to manufacture
small car ‘NANO’. Due to protests by local community and political opposition,
it decided to relocate its plant to ‘Sanand’ in Gujarat. This delayed the launching
of the model by about 6 months. The Finance Manager has estimated the cost
of ` 100 crore to install plant and machinery and ` 10 crore for its working
capital requirements.
a) Identify the financial decisions highlighted in the above para.
b) Explain by giving a reason, why these decisions require a lot of caution.
c) As a finance manager, name the markets from where the funds can be arranged
for both purposes.
d) How would the protest and political opposition have affected the people of
West Bengal?
Ans. a) Investment Decision/Capital Budgeting Decision: Such decisions relate to
careful selection of non-current assets in which funds raised from debt and
equity will be invested by the firm.
Working Capital Decisions: Such decisions refer to management of short-
term funds such as cash, bank, trade receivables, etc. to manage/pay short-
term liabilities such as trade payables, outstanding liabilities, etc. The difference
between current assets and current liabilities is known as working capital,
which is used in the production of goods.
b) Reasons for Caution: Investment decisions involve huge amount and such
decisions must be taken after careful comparison of various alternatives
available such as where to invest. This is so because once such decisions are
taken, it becomes difficult to reverse them. Bad budgeting decisions may
severely damage the financial fortune of a business.
c) Capital Market for long-term funds requirements and Money Market for
working capital requirements.
Capital Market: It is a market from where long-term and medium-term
funds for a period of more than one year in the form of shares, debentures,
bonds, bank loans, etc. are raised to invest in non-current assets.
Money Market: It is a market from where short-term funds for a period
not more than one year in the form of call money, treasury bills, certificate
of deposits, commercial papers, bank overdraft, etc. are raised to invest in
current assets.
d) Effect of Protest and Political Opposition
• Effect on regional development
• Loss of faith of business entrepreneurs

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 2. The management of Hi-power Energy Savers Private Limited has been running
financially sound for the past two decades and wishes to expand its business
operations in overseas. It spends statutory 2% of profit to fulfill the norms of
Corporate Social Responsibility (CSR) on Teach India Campaign for
underprivileged children where 80% of such children have got the jobs in reputed
firms. It is maintaining debt equity ratio 1:2. The company decided to raise the
funds in a manner to provide gain to the equity shareholders.
a) Name the financial decision involved in the above situation.
b) Which source of fund should the company opt for and why?
c) What is the condition to provide gain to the shareholders?
d) What would be the effect on the given ratio?
e) Which concept is associated with providing gain to shareholders?
f ) What are the values reflected by spending a part of profit on social issues?
Ans. a) The decision involved in the situation is ‘Financing Decision’.
Financing Decision: Such decisions relate to ascertainment of optimum
proportion between debt (borrowed funds) and equity (owners' funds).
b) Debt component shall be opted by the company to raise funds to avail the
benefits of trading on equity.
Debt Component relates to long-term borrowed funds in the form of
debentures, bonds, long-term loans, public deposits, etc.
c) Rate of Return on Capital Employed must be more than Rate of Interest on
debt component.
d) The ratio will increase.
e) The concept associated is Trading on Equity/ Financial Leverage.
Trading on Equity: It refers to the optimum capital structure consisting of
debt and equity where the inclusion of debt component gives rise to the return
on shareholders’ funds.
f) Values Reflected:
• Promotion of education
• Generation of employment

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 Based on Chapter 11 – 12
1. A famous restaurant in the city follows all unscrupulous and unfair trade practices
like adulteration, unhygienic products, false and misleading information. It claims
to sell vegetarian products and uses home delivery facility to deliver the products
at the doorsteps of customers. It discloses vegetarian ingredients on the labels.
Mrs. James ordered for some food items and on tasting the stuff, she doubted
the use of non-veg ingredients. She lodged a complaint against the restaurant.
On testing in the laboratory, it was found that the restaurant was using non-
vegetarian items in preparing its meals.
a) Name the activity which is undertaken by the marketer under product mix
to give the information about the product.
b) Which channel of marketing has been used by the restaurant?
c) Identify the important aspect of consumer protection from the consumer’s
point of view being referred above.
d) Mrs. James has filed a complaint in which type of consumer court?
e) Which consumer right has the company violated?
f ) What values have been overlooked by the company?
Ans. a) Labelling: It is a carrier of information like the name of the product, name
and address of the manufacturer, ingredients, graphics, directions to use,
maximum retail price, etc.
b) Direct marketing channel of distribution has been used by the restaurant.
c) Widespread Exploitation of Consumers: Although consumer is the king pin
of the market these days, there is a lot of exploitation of consumers as
businessmen use various unfair trade practices to cheat and exploit consumers.
Consumer protection provides a safeguard to consumers from such
exploitations.
d) Mrs. James must have lodged her complaint in District Court where the
complaints in which the value of goods and services alongwith compensation
claimed cannot exceed rupees twenty lakhs can be filed.
e) Right to be Informed: According to this right, every consumer has the right
to choose the goods or services of his or her choice. The right to choose means
an assurance of availability, ability and access to a variety of products and
services at competitive price.
f) Values Overlooked:
• Legal norms
• Breach of trust

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• Unfair trade practice

• tarnishing image
2. NC Cosmetics Ltd. launched a fairness cream exclusively for men. The company
claimed that the men who use such cream look more fair, handsome, and smart
as compared to the others who use fairness cream for women. Mr. Ramnik bought
a pack of the cream and applied as per the directions to use as claimed in the
advertisement, but he got rashes on his face.
a) Can Mr. Ramnik file a complaint against the company to claim the damages?
b) Who is consumer as per the Consumer Protection Act, 1986?
c) Name the term according to which the directions to use are printed on the
product.
d) State any two objections against such advertisement.
e) What values should the business organisations keep in their minds before
approving and finalising the advertisements?
Ans: a) Yes, he can file the complaint provided he possesses the cash memo.
b) A consumer is a person who uses or consumes the goods or avails of any service
for a consideration.
c) Labelling
d) Objections against Advertising:
• It adds to cost: Advertisement increases the cost of product or services,
which is ultimately passed on to the customer.
• It undermines social values: The people who cannot afford advertised
products feel dissatisfied and disappointed, and sometimes advertised
products do not find social approval.
e) Value Points:
• Moral values
• Sensitivity to the consumers’ needs
• Discouraging extravagancy
• Guiding the customers

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PROJECT : STOCK EXCHANGE

MEANING OF STOCK EXCHANGE
A stock exchange is an association of persons
engaged in the buying and selling of stocks, bonds and
shares for the public on commission and is guided by
certain rules and usages. The stock exchanges deal with
securities, which include shares, debentures, bonds,
government securities, etc.
DEFINITION OF STOCK EXCHANGE
The Securities Contracts (Regulations) Act, 1956 defines stock exchange as:
"It is as an organisation or body of individuals, whether incorporated or not, established for
the purpose of assisting, regulating and controlling the business of buying, selling and dealing
in securities".
S Securities for investor EX Exchange of securities transacted
T Tax benefits and exemption C Cyclopedia of listed companies
O Optimum return on investment H High yield
C Cautious approach A Authentic information
K Knowledge of market N New entrepreneur encouraged
G Guidance to investor and company
E Equity cult
Note: Stock exchange and stock market are two terms, which are used as common and
usually interchangeable in conversation. Both the terms refer to a platform in
which equity capital is obtained by firms and easily misunderstood as one and
the same thing.
STOCK EXCHANGE VERSUS STOCK MARKET
1. The stock exchange is a wider term than the stock market. Stocks that are sold
in the stock market are listed at the stock exchanges in relation to the country in which
the stock are sold. The stock market, on the other hand, is the general term that explains
all platforms where stocks (listed as well as non-listed) are traded in an organised manner.
2. A stock exchange is only an organisation that promotes stock trading through
the varieties of services offered to facilitate trade. Since stock exchanges are formed as
companies, they are operated under a profit motive through providing opportunities
for stock trading, whereas stock markets do not operate under any profit motive and
facilitate trading of shares and securities.
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FUNCTIONS OF STOCK EXCHANGE / SECONDARY MARKET

1. Liquidity and Marketability of Existing Securities
The main function of stock market is to provide ready market for sale and purchase
of securities. The presence of stock exchange market gives assurance to investors
that their investment can be converted into cash whenever they need. The investors
can invest in long term investment projects without any hesitation as stock exchange
can help them convert long term investment into short term and medium term.
2. Valuation / Pricing of Securities
The stock market helps to value the securities on the basis of demand and supply
factors. The securities of profitable and growth oriented companies are valued at
higher prices as there is more demand for such securities. The valuation of securities
is useful for investors, government and creditors. The investors can know the value
of their investment, the creditors can value the creditworthiness and the government
can impose taxes on the value of securities.
3. Safety in Transactions
In stock market, only the listed securities are traded and stock exchange authorities
include the companies' name in the trade list only after verifying the soundness
of company. The listed companies have to operate within the strict rules and
regulations maintained by various legal bodies. This ensures safety in dealing
through stock exchange.
4. Contributes to Economic Growth
In stock exchange, securities of various companies are bought and sold. This process
of disinvestment (sale) and reinvestment (invest again) helps to invest in the most
profitable investment proposals, which leads to capital formation and economic
growth.
5. Spreading of Equity Cult
Equity cult means encouraging general public to invest in equity shares. Stock
exchange encourages people to invest in ownership securities by regulating new
issues, better trading practices and educating public about investment.
6. Providing Scope for Speculation
To ensure liquidity and availability, the stock exchange permits healthy speculation
of securities. Speculation is necessary to a certain degree for liquidity and price
regulation.

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7. Better Allocation of Capital

The shares of profit making companies are quoted at higher prices and are actively
traded. Such companies can easily raise fresh capital from stock market. The general
public hesitates to invest in securities of loss making companies. Thus, stock
exchange facilitates allocation of investor's funds to profitable channels and enhances
capital formation in a country.
8. Promotes the Habits of Savings and Investment
The stock market offers attractive opportunities of investment in various securities.
These attractive opportunities encourage people to save more and invest in
securities of corporate sector rather than investing in unproductive assets such as
gold, silver, etc.
9. Economic Barometer
A stock exchange is a reliable barometer to measure the economic conditions of
a country. Stock exchange is also known as a pulse of an economy or economic
mirror, which reflects the economic conditions of a country. Every major change
in a country and economy is reflected in the prices of shares. The rise or fall in
the share prices indicates the boom or recession cycle of the economy.
HISTORY AND DEVELOPMENT OF STOCK EXCHANGE
The origin of the stock market in India goes back to the end of the eighteenth
century when long-term negotiable securities were first issued. However, the real
beginning occurred in the middle of the 19th century after the enactment of the
Companies Act, 1850, which introduced the features of limited liability and generated
investor interest in corporate securities.
IMPORTANT DATES
Year of Establishment Organisation
1875 Bombay Stock Exchange (BSE): The Native Shares and
Stock Brokers Association
1894 Ahmedabad Share and Stock Brokers Association
1908 Kolkata Stock Exchange: Lyons Range
1937 Stock Exchange in Madras
1940 • UP Stock Exchange at Kanpur
• Nagpur Stock Exchange at Nagpur
1944 Hyderabad Stock Exchange
1989 Over the Counter Exchange of India Ltd. (OTCEI)
1992 National Stock Exchange of India Ltd. (NSE)

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IMPORTANT TERMS

Forms of Stock After the economic reforms of 1991, Indian secondary

Exchanges market adopted three tier system:
a) Regional Stock Exchanges
b) National Stock Exchange (NSE)
c) Over The Counter Exchange of India (OTCEI)
Number of Stock 21 recognised stock exchanges, 2 at all India level (NSEI
Exchanges in India and OTCEI) and remaining at regional level.
Dalal Street The Mumbai Stock Exchange is known as Dalal Street.
Lyons Range Kolkata Stock Exchange is popular as Lyons Range.
Badla The transactions on a stock exchange may be on cash basis
or a carryover basis. Carry over (repo or reverse repo) basis
is known as badla. It refers to the postponement of the
delivery or payment of a transaction from one settlement
period (account) to another.
Accounts A stock exchange year is divided into periods called
Accounts, which vary from a fortnight to a month.
Bourse Bourse is another word for the stock market.
Sensex SENSEX stands for Sensitive Index.
Nasdaq NASDAQ stands for National Association of Securities
Dealers Automatic Quotations (New York Stock Exchange.
Nifty It is a National Index of fifty stocks.
Penny Stocks These are the securities that have no value on the stock
exchange but whose trading contributes to speculation.
Bulls Bulls (brokers) are the speculators who expect rise in price
of securities.
Teziwala Bulls are also known as teziwalas.
Bullish Market Bullish market is the situation of the stock exchange when
the prices of securities rise.
Bears Bears (brokers) are the speculators who expect decline in
the price of securities.
Mandiwala Bears are known as mandiwalas.
Bearish Market Bearish market is the situation of the stock exchange
when the prices of securities decline.

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Stag Stag is a speculator who applies for the new securities

expecting the prices will rise at the time of allotment.
Jobber A jobber also known as tarawaniwala is a member of stock
exchange, who buys and sells securities on his behalf to
sell them at higher prices and specialises in one kind of
security.
Odd Lot Trading Trading in multiples of 100 stocks or less

APPROVED STOCK EXCHANGES IN INDIA

At present, 21 stock exchanges are in existence as per SEBI Web information. These
stock exchanges are:
1. Ahmedabad Stock Exchange Ltd.
2. Bombay Stock Exchange Ltd.
3. Bangalore Stock Exchange Ltd.
4. Bhubaneswar Stock Exchange Ltd
5. Calcutta Stock Exchange Ltd.
6. Cochin Stock Exchange Ltd
7. Delhi Stock Exchange Ltd.
8. Gauhati Stock Exchange Ltd.
9. Inter-Connected Stock Exchange of India Limited
10. Jaipur Stock Exchange Ltd
11. Ludhiana Stock Exchange Ltd.
12. MCX - Stock Exchange Limited
13. Madhya Pradesh Stock Exchange Ltd
14. Madras Stock Exchange Ltd.
15. Magadh Stock Exchange Ltd.
16. National Stock Exchange of India Ltd.
17. OTC Exchange of India
18. Pune Stock Exchange Ltd
19. The Vadodara Stock Exchange Ltd.
20. U.P. Stock Exchange Limited
21. United Stock Exchange of India Limited
Note: The Hyderabad Securities and Enterprises Ltd. (erstwhile Hyderabad Stock
Exchange), Coimbatore Stock Exchange Ltd., Saurashtra Kutch Stock Exchange
Ltd. and Mangalore Stock Exchange have been granted exit by SEBI vide order
dated January 25, 2013, April 3, 2013, April 5, 2013 and March 3,2014
respectively.
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RECOGNITION OF STOCK EXCHANGES

A stock exchange is recognised only after the government is satisfied that its rules
and by-laws conforms to the conditions prescribed for ensuring fair dealings and
protection to investors.
REGULATORS OF STOCK MARKET
Securities and Exchange Board of India (SEBI) is the major stock market regulator
in India. However, the responsibility for regulating the securities market is also shared
by the Department of Economic Affairs (DEA), Department of Company Affairs (DCA),
and Reserve Bank of India (RBI).
MAJOR STOCK EXCHANGES WITH LARGE VOLUMES OF TRADE
1. The Bombay Stock Exchange (BSE)
2. The National Stock Exchange (NSE)
These stock exchanges are also the largest stock exchanges in the world on the basis
of listed companies and trading volumes.
BOMBAY STOCK EXCHANGE
Established in 1875, Bombay
Stock Exchange Ltd. is the Asia’s
first stock exchange and one of
India’s leading exchange groups.
Over the past 137 years, BSE has
facilitated the growth of the Indian
corporate sector by providing it an
efficient capital-raising platform.
Popularly known as BSE, the
bourse was established as "The
Native Share & Stock Brokers'
Association" in 1875. BSE is a
corporatised and demutualised
entity, with a broad shareholder-base, which includes two leading global exchanges,
Deutsche Bourse and Singapore Exchange as strategic partners. BSE provides an
efficient and transparent market for trading in equity, debt instruments, derivatives,
mutual funds and ensures redressal of their grievances whether against the companies or
its own member-brokers. It also has a platform for trading inequities of small and
medium enterprises (SME). More than 5000 companies are listed on BSE, making it
world's No. 1 exchange in terms of listed members. The companies listed on BSE Ltd.
command a total market capitalisation of USD 1.32 trillion as of January, 2013. It is
also one of the world's leading exchanges (3rd largest in December, 2012) for Index
options trading.
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BSE also provides a host of other services to capital market participants including risk
management, clearing, settlement, market data services and education. BSE is the first
exchange in India and second in the world to obtain an ISO 9001:2000 certifications and
receive Information Security Management System Standard BS 7799-2-2002 certification
for its On-line Trading System (BOLT). It operates one of the most respected capital
market educational institutes in the country (the BSE Institute Ltd.). BSE also provides
depository services through its Central Depository Services Ltd. (CDSL) arm.
Awards and Recognitions
1. The Golden Peacock Global CSR Award for its initiatives in Corporate Social
Responsibility
2. NASSCOM - CNBC-TV18's IT User Awards, 2010 in Financial Services
category
3. SKOCH Virtual Corporation Award in 2010
4. Responsibility Award (CSR) by the World Council of Corporate Governance.
Its recent milestones include the launching of BRICSMART indices derivatives,
BSE-SME Exchange platform, S&P BSE GREENEX to promote investments
in Green India.
Trading Mechanism at BSE
Bombay Stock Exchange’s trading system is popularly known as BOLT (BSE'S
Online Trading System). BOLT has a two tier system:
1. Traders’ Work Stations (TWS) are connected directly to the backend server-
SERVER AT BSE Terminal, which acts as a communication server.
2. Central Trading Engine (CTE)
Other services like Information Dissemination, Index Computation and
Position Monitoring are also provided by the system.
NATIONAL STOCK EXCHANGE
The National Stock Exchange of
India Ltd. (NSE) is a stock exchange
located in the financial capital of
India, Mumbai. The exchange was
incorporated in 1992 as a tax-paying
company and was recognised as a
stock exchange in 1993 under the
Securities Contracts (Regulation) Act,
1956. The NSE was started by a clutch of leading Indian financial institutions such as
Life Insurance Corporation of India, GIC, State Bank of India and Infrastructure

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Development Finance Company (IDFC) Ltd., at the behest of the Government of India
to bring transparency to the Indian market, and has a diversified shareholding comprising
domestic and global investors. It offers trading, clearing and settlement services in equity,
debt and equity derivatives. The NSE provides a modern and fully automated screen-
based trading system, with over two lakh trading terminals, through which investors in
every nook and corner of India can trade.
NSE's leading index is Nifty 50 or popularly Nifty and is composed of 50 diversified
benchmark Indian company stocks. Nifty is constructed on the basis of weighted average
market capitalisation method.
Trading Mechanism at NSE
NSE provides its customers with a fully automated screen-based trading system in
which a member can punch into the computer quantities of securities and the prices at
which he likes to transact. The transaction is executed as soon as it finds a matching
sale or purchase order from a counter party. It electronically matches orders on a price/
time priority and hence, cuts down on time, cost and risk of error, as well as on fraud,
resulting in improved operational efficiency. It allows faster incorporation of price
sensitive information into prevailing prices, thus increasing the informational efficiency
of markets. The stocks are held on demutualised format helping in fast, transparent
and efficient preservation and transactions.
DEPOSITORY
“Depository is an organization which holds shares, debentures, government securities,
mutual funds units etc. in electronic form at the request of the investors with the help of
D.P. (Depository Participant) registered with SEBI.”
MEANING OF DEPOSITORY PARTICIPANT
Depository Participant is an agent between depository and investors. Following
persons can be a Depository Participant subject to the fulfillment of requirements as
prescribed by SEBI:
1. Public Financial Institution
2. Commercial Bank
3. Foreign Banks Operating in India with the approval of RBI
4. State Financial Corporations
5. Clearing Corporations
6. Clearing Houses/ Corporations
7. Registrar to the Issue
8. Share Transfer Agent

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MEANING OF BENEFICIAL OWNER

Beneficial owner is the investor or account holder and is required to open DEMAT
ACCOUNT for the trading of securities at the stock exchanges.
WHO IS AN INVESTOR?
An investor can be an individual as well as non-individual. Individual investors could
be Indian residents or NRIs. Non-individual investors include corporates, FIs, FIIs,
Mutual Funds, Trusts, etc.
OPENING A DEMAT ACCOUNT (BENEFICIAL OWNER'S ACCOUNT)
To avail the services of a depository, an investor is required to open a Beneficial
Owner (BO) Account with a Depository Participant (DP) of any depository. Following
steps are required to follow to open a Demat Account:
1. Approach Depository Participant
2. Attach documents relating to proof of identity, proof of address and PAN card
3. Sign an agreement with the Depository Participant in the prescribed standard
format, which prescribes the rights and duties of both investor and Depository
4. Receipt of a copy of agreement and schedule of charges from Depository
Participant
5. Receipt of a unique account number which is called Beneficial Owner
Identification Number (B.O.I.D.) for an account opened in the electronic
systemby the Depository Participant
DIFFERENCE BETWEEN BANK AND DEPOSITORY
Basis Bank Depository
Aim It is the entity, which holds the It holds the securities of the
funds received in the form of investors.
deposits.
Transfer of It facilitates the transfer of funds It facilitates the transfer of
Funds and from one account to another or securities from one person to
Securities from one bank to another, another, under the instruction of
under the instructions of the the Beneficial Owner, i.e.
account holder. Investor.
Transfer of It facilitates the transfer of funds It facilitates the transfer of
Ownership without physical transfer of ownership of securities without
money. physical transfer of securities.
Safety of It helps in safekeeping of funds It helps the safe and secure
Transactions in the accounts. transactions of sale and purchase
of securities electronically.

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DEPOSITORIES REGISTERED WITH SEBI

At present, there are two Depositories registered with SEBI.

1. National Securities Depository Limited (NSDL)

2. Central Depository Services (India) Limited (CDSL)

SERVICES OF DEPOSITORIES
Services of depositories relate to the benefits of dematerialisation of securities, i.e.
conversion of physical securities into electronic forms. The depositories provide the
following services to the investors:
1. Elimination of Risk of Loss of Securities
Depositories eliminate all risks associated with physical certificates such as risk
of loss, mutilation or theft of certificates.
2. Elimination of Bad Deliveries
Before the dematerialisation, there used to be loss of deliveries of shares and
securities certificates. No such problems arise now due to electronic transfer of
the securities.
3. Instant Transfer of Securities
After the payout once the securities are credited to Demat Account, there is
instant transfer of securities from the name of one person to another. There
is no need to apply for the change of name to the company or registrar.
4. Fast Settlement Cycles
All the settlement relating to transfer of securities is done on the second working
day from the trade day due to the existence of Demat Account, which ensures
speedy transfer of transactions and improves liquidity.
5. Waiver of Stamp Duty
No stamp duty is payable by the investors for transfer of any kind of securities
in Demat form.
6. Convenience in Change of Address and Transmission
If the investor (Beneficial Owner) wishes to make certain changes relating to
bank account, address nomination, etc., he or she can do so very simply
just by informing Depository Participant.

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TRADING AND SETTLEMENT PROCEDURE

Trading in securities* is now done through electronic screen-based system with
the help of internet. Earlier the trading in the shares and securities used to take place on
the floor of stock exchange under the auction system. The deals were struck among the
brokers, prices were shouted out and the securities were sold to the highest bidder.
Under the new system, every stock exchange has its main computer system with
many terminals spread across the country. Every broker is a member of a stock exchange
and his/her office known as Trader Work Stations (TWS) is connected to the computer
terminal of main stock exchange.
* As per Section 2(h) of Securities Regulation Act, 1956, the term securities include
shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities.
BENEFITS OF ELECTRONIC TRADING SYSTEM
1. Transparency
All the parties involved in the buying and selling of shares and securities are able
to see prices in the stock exchange when the business is transacted.
2. Efficiency of Information
It helps in passing the information on capital developments to fix the prices of
shares and securities.
3. Helps to Transact Globally
The people from all the over the country and even abroad, who wish to participate
in the stock market, can buy or sell securities through brokers without knowing
each other.
4. Single Trading Platform
Through electronic system of trading of shares and securities, all trading centers
spread over the country have been brought onto one trading platform, i.e. the
stock exchange.
5. Demutualisation
Demutualisation refers to separation of ownership and control of stock exchange
from the trading rights of members. Through demutualisation there is reduction
of chances of brokers using stock exchange for personal gains.
6. Dematerialisation / DEMAT
It is the process by which physical certificates of an investor are converted to an
equivalent number of securities in electronic form or to directly allot securities in
electronic record form and credited into DEMAT Account (also known as
Beneficial Owner Account) with his Depository Participant.

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7. Rematerialisation
It is the process by which the securities in the electronic form are converted into
physical form.
Note: Demutualisation and Dematerialisation is the result of emergence of opening of
National Stock Exchange.
STEPS IN THE TRADING AND SETTLEMENT PROCEDURE

Electronic Trading System

1. Approach Registered Broker

An investor intended to buy or sell securities has first to approach a broker(a) duly
registered with SEBI and to sign broker-client agreement by providing necessary
detail(b). After the agreement form is filled, broker opens Trading (Demat) Account
in name of the investor.
a) Brokers
Brokers are the authorised persons or institutions, appointed by the SEBI to
work as Depository Participants (DP) in the stock exchanges. A broker may
be an individual, partnership firm or corporate body, etc.
b) Necessary Documents
(i) PAN Number
(ii) Date of Birth and Address Proof
(iii) Educational Qualifications and Occupation
(iv) Residential Status (Indian/NRI)
(v) Bank Account Details
(vi) Depository Account Details
(vii) Name of any other Broker with whom registered
(viii) Client Code Number in the Client Registration Form

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2. Opening Demat and Bank Account

As the broker-client agreement form is signed by the investor, the broker opens a
Demat (i.e., Dematerialised) Account in name of the investor. The Depository
Participant (bank, financial institution or stock broker, etc.) operates his Demat
Account for holding and transferring the securities and cash to the Depository*,
which holds securities in the electronic format.
(*NSDL – National Securities Depository Ltd. and CDSL – Central Depository Services
Ltd. in India)
3. Placing Order
After the opening of a Demat Account, investor can place an order to his broker
(DP) to buy or sell certain securities with a clear instruction regarding number
of securities and the range of price at which the securities have to be bought or
sold.
4. Execution of the Order
As the order is placed, the broker will connect his server to the server of main
stock exchange to match the share and best price available. When the desired shares
with the desired price can be bought or sold, it is communicated to the broker's
terminal and deal is struck automatically. After that, broker issues a Trade
Confirmation Slip to the Investor.
5. Issuance of Contract Note
A contract note with Unique Order Code Number assigned by stock exchange is
delivered by the broker to the investor, which contains the details relating to
number of securities bought or sold, the price, day and date of deal along with
the broker's commission. Such contract note is legally enforceable in the court to
settle disputes and claims.
6. Process of Settlement
Under rolling settlement, all open positions at the end of the day mandatorily
result in payment/ delivery ‘n’ days later. Currently, trades in rolling settlement
are settled on T+2 basis where T is the trade day. The settlement cycle has been
reduced from T+3 rolling settlement to T+2 w.e.f. April 01, 2003.
a) Pay-in-day is the day when the investor has to deliver the shares he intends to
sell or pay cash for the securities he intends to buy to the broker (Depository
Participant) immediately after the contract note is issued, which should be done
a day before the broker delivers the shares or pay cash to the stock exchange.
b) Pay-out-day is the day when the exchange will deliver the shares or make
payment to the other broker. The broker at the other end will have to make
payment to the investor within 24 hours of the pay-out-day since he has already
received the payment from the exchange.
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For example, a trade executed on Monday has to be mandatorily settled by

Wednesday (considering two working days from the trade day).
At present, the pay-in and pay-out happens on the 2nd working day after the trade
is executed on the exchange, that is, settlement cycle is on T+2 rolling settlement.
Note: The broker can make delivery of shares directly in the investor's Demat
Account. For this, the investor has to instruct his Depository Participant to take the
delivery of securities.
STOCK MARKET OPERATIONS – A REAL LIFE SITUATION
LIST OF STOCKS OF 25 LISTED COMPANIES IN INDIA
Time Period = August 21, 2014 to September 21, 2014
Source: Economic Times
Stock Price Stock Price Gain
on on or Percentage
Stock Name Industry 21/8/2014 21/9/2014 Loss Change
Col.1 Col. 2 Col 3 = Col.2 Col 4
Col. 1 =(Col.3/
Col.1)*100
1. Apollo Tyres Ltd. Auto 172.15 206.25 34.1 19.81
2. Cipla Ltd. Pharma 492.9 627.8 134.9 27.37
3. Larsen & Turbo Ltd. Infrastructure 1,531.95 1,535.3 3.35 0.22
4. Wipro Ltd. Information Technology 549.4 586.65 37.25 6.78
5. Ashok Leyland Ltd. Auto 36.65 39.7 3.05 8.32
6. DLF Ltd. Construction 196.6 171.95 –24.65 –12.54
7. Tata Steel Ltd. Iron & steel 536.6 510.4 –26.2 –4.88
8. Idea Cellular Ltd. Telecommunication 156.4 173.2 16.8 10.74
9. Hindustan Petroleum Petroleum 467.45 479.45 12 2.57
Corporation Ltd.
10. Bharat Heavy Electricals Electronics 229.4 226.85 –2.55 1.11
Ltd. (BHEL)
11. Hindalco Industries Ltd. Metals 177.85 164.3 –13.55 –7.62
12. Sun Pharma Pharma 857.95 806.85 –51.1 –5.96
13. State Bank of India(SBI) Banking 2,467.8 2,568.5 100.7 4.08
14. Bharti Airtel Ltd. Telecommunication 371.1 414.85 43.75 11.79
15. Exide Industries Auto 166.4 172.05 5.65 3.4
16. ONGC Ltd. Oil & Gas 426 405 –21 –4.93
17. Reliance Industries Ltd Oil & Gas 994.85 994.6 –0.25 –0.03
18. Gas Authority of India Oil & Gas 431.45 450.4 18.95 4.39
Ltd (GAIL)

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19. ITC Consumer Products 345.75 359.45 13.7 3.96

20. PC Jewellers Ltd. Consumer Products 153.6 216.05 62.45 40.66
21. Bajaj Electricals Ltd. Electronics 291.45 284.2 –7.25 –2.49
22. Tata Motors Ltd. Auto 512.6 519 6.4 1.25
23. YES Bank Ltd. Banking 574.6 582.3 7.7 1.34
24. NDTV Ltd. Media 81.2 103.2 22 27.09
25. Dish TV India Ltd. Media 57.5 57.5 0 0

INVESTMENT PORTFOLIO
An investment portfolio is a collection of assets owned by an individual or by an
institution.
It may include real estate, 'hard' assets such as gold bars, securities such as stocks,
bonds, mutual funds, money market funds, etc.
Investment Portfolios of a few investors are stated below, which have been designed
according to the investors risk and return profile and choice of industry.
Portfolio No. 1 (Mr. Gaurav Bansal)
Essentials
1. The portfolio consists of 5 stocks of different companies of different sectors.
2. Investor Mr. Gaurav Bansal has invested ` 50,000 in equal proportion in the 5
stocks selected by him with prior consultation of some of his friends.
3. Investment period has been assumed to be of 1 month, i.e. from 21/08/2014
till 21/09/2014.
4. Gain or loss has been worked out by taking the difference between Terminal
Value of Investment (i.e. value as on September 09, 2014) and Initial Values
of Investment (i.e. August 21, 2014).
Investment Portfolio of Mr. Gaurav Bansal
Stock Name Stock Figures
As on August 21, 2014 as on Septermber Gain
Stock Name Industry 21, 2014 or
Price Money Quantity Price Value of Loss
Invested Bought Investment
1. Tata Motors Ltd. Auto 512.6 10,000 20 519 10,126 126
2. PC Jewellers Ltd. Consumer Products 153.6 10,000 65 216.05 14,065 4,065
3. Bharti Airtel Ltd. Telecommunication 371.1 10,000 27 414.85 11,180 1,180
4. ONGC Ltd. Oil & Gas 426 10,000 24 405 9,505 –495
5. Cipla Ltd. Pharma 492.9 10,000 20 627.8 12,738 2,738

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Note: There are several sectors of economy where investors may place their savings in
order to obtain attractive returns. In the case of Mr. Gaurav Bansal, five sectors:
auto, consumer products, telecommunication, oil & gas and pharma have been
selected for investment. Many reasons need to be analysed before making
investment into a particular sector. A rational investor has to take reasonable care
before investing in stocks. Likewise, Mr. Gaurav placed his ` 50,000 equally into
five stocks.

Portfolio Analysis
Portfolio of Mr. Gaurav should be defined as an attractive portfolio due to the
following facts:
Initial Investment = `
50,000
Investment Value after 1 month = `
57,614
Investment Period = 1
month
Net Gain from Portfolio = `
57,614 – ` 50,000
= `
7,614
7614
Gain (%) = × 100
50,000
= 15.25% per month or 182.74% per annum
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Portfolio No. 2 (Mr. Amar Saxena)

Investment Portfolio of Mr. Amar Saxena
Stock Name Stock Figures
As on August 21, 2014 as on Septermber Gain
Stock Name Industry 21, 2014 or
Price Money Quantity Price Value of Loss
Invested Bought Investment
1. NDTV Ltd. Media 81.2 10,000 123.15 103.2 12,709 2709
2. YES Bank Ltd. Banking 574.6 10,000 17.4 582.3 10,132 132
3. Bajaj Electricals Ltd. Electronics 291.45 10,000 34.31 284.2 9,751 –249
4. Hindustan Petroleum Petroleum 467.45 10,000 21.39 479.45 10,255 255
Corporation Ltd.
5. Tata Steel Ltd. Iron & steel 536.6 10,000 18.64 510.4 9,514 –486

Portfolio Analysis
Mr. Amar Saxena made total investment of ` 50,000 in five stocks of
differentindustrial sectors in equal proportion of ` 10,000.
The market value of investment after 1 month investment period became ` 52,361.
He makes a gain of ` 2,361 (` 52,361 – ` 50,000).
2,361
Gain (%) = × 100 = 4.72% per month or 56.67% per annum
50,000
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40
COMPARATIVE ANALYSIS OF INVESTMENT PORTFOLIOS OF TWO INVESTORS
Mr. Gaurav Bansal Mr. Amar Saxena
Market Market
Stock Money Value Stock Money Value
Name Industry Invested After 1 Gain or Loss Name Industry Invested After 1 Gain or Loss
Month Amount (in %) Month Amount (in %)

Tata Auto 10,000 10,126 126 1.26 NDTV Media 10,000 12,709 2,709 27.09
Motors Ltd.
C
Y

C
Y
PC Consumer 10,000 14,065 4,065 40.65 Yes Bank Banking 10,000 10,132 132 1.32
K
M

M
K
Jewellers Products Ltd.

Modern’s abc of Business Studies – XII (CBSE)

Bharti Telecomm- 10,000 11,180 1,180 11.8 Bajaj Electronics 10,000 9,751 –249 -2.49
Airtel unication Electrical
Ltd.
ONGC Energy 10,000 9,505 –495 –4.95 HPCL Petroleum 10,000 10,255 255 2.55
Ltd.
Cipla Pharma 10,000 12,738 2,738 27.38 Tata Steel Iron 10,000 9,514 –486 -4.86

3/28/2015, 4:28 PM
Ltd. Ltd. & steel
Total 50,000 57,614 7,614 15.228 Total 50,000 52,361 2,361 4.722
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FACTORS AFFECTING PRICES OF SECURITIES AT STOCK

EXCHANGE
Stock markets can be volatile and determining the reasons for the fall and rise in
particular stock is a complex activity. Factors which affect the prices of shares and
securities may be direct or indirect, company related or environment related and so on.
The following are some of factors that affect or even predict the buying and selling of
stock that ultimately affects stock prices of the companies
1. Demand and Supply
This fundamental rule of economics holds good for the equity market as well.
The price is directly affected by the trend of stock market trading. When more
people are buying a certain stock, the price of that stock increases and when more
people are selling the stock, the price of that particular stock falls. Although, it is
difficult to predict the trend of the market, a stock broker can give a fair idea of
the ongoing trend of the market.
2. News
News is undoubtedly a huge factor when it comes to stock price. Positive news
about a company can increase buying interest in the market while a negative press
release can ruin the prospect of a stock. Sometimes, despite amazingly good news,
a stock can show least movement. It is the overall performance of the company
that matters more than news.
3. Earning per Share
Earning per share is the profit that the company makes on each share in a quarter.
It is mandatory for every public company to publish the quarterly report that
states the earning per share of the company. So, if one wants to make a profitable
investment, he needs to keep a watch on the quarterly reports to know financial
health of the companies and scrutinise the possibilities before buying stocks of
particular stock.
4. Price-Earning Ratio
Price-Earning ratio gives a fair idea of how a company's share price compared to
its earnings. If the price of the share is much lower than the earning of the company,
the stock is undervalued and it has the potential to rise in the near future. On the
other hand, if the price is way too much higher than the actual earning of the
company then the stock is said to be overvalued and the price can fall at any point.
5. Market Sentiment
The price of the stock of a company is affected most of the times by general
market direction during a session. In a bull market, price of most companies will
rise and in a bear market, stock prices of most of the companies will fall. One

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can gauge the market sentiments by looking at stock indexes or its future price
movement.
6. Inflation and Interest Rates
One of the most predictable influences of the stock market is periodic adjustments
of interest rates by the Reserve Bank of India to combat inflation. When interest
rates are raised, many investors sell or trade their higher risk stocks for government-
backed securities such as bonds to take advantage of the higher interest rates they
yield and to ensure that their investments are protected.
7. New Major Contracts or Major Government Orders
A company that is able to obtain new major contracts or major government orders
is expected to see a bull run in its stock price. Those companies that fail in the
contract bidding normally experience the fate of sell-off in its stocks.
8. Share Buy-Back
The act of share buy-back by a company reduces the number of shares available
in the open market. Due to the law of supply and demand, a reduction in shares
available for trading in this case will cause a drop in supply, which will normally
help increase the share price.
9. Internal Developments
Developments that can occur within companies will affect the price of its stock,
including mergers and acquisitions, earnings reports, the suspension of dividends,
the development or approval of a new innovative product, the hiring or firing of
company executives and allegations of fraud or negligence. Stock price movements
will be most drastic when these internal developments are unexpected.
10. World Events
Company stock prices and the stock market in general can be affected by world
events such as war and civil unrest, natural disasters and terrorism. These influences
can be direct and indirect, and they often occur in chain reactions.
Example: The social uncertainty and fear generated by the terrorist attacks on
September 11, 2001, affected markets directly as they caused many investors in the United
States to trade less and to focus on stocks and bonds with less risk.
BIBLIOGRAPHY
1. http://www.nseindia.com
2. http://www.bseindia.com
3. http://economictimes.indiatimes.com
4. http://money.rediff.com
5. http://www.kotaksecurities.com
6. www.world-exchanges.org
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PROJECT ON BUSINESS
ENVIRONMENT
NESTLÉ AND SOCIETY
GOOD FOOD, GOOD LIFE
Nestlé is committed to enhance the quality of consumers’
lives through nutrition, health and wellness. Our mission of
“Good Food, Good Life” is to provide the best tasting, most
notorious choices in a wide range of food and beverage
categories and eating occasions from morning to night. The first Logo since 1968

HISTORY OF NESTLÉ
History begins back in 1866, when the first European
condensed milk factory was opened in Cham, Switzerland, by
the Anglo-Swiss Condensed Milk Company.
1867 – Founder Henri Nestlé, a German pharmacist, launched
Farinelactée, a combination of cow’s milk, wheat flour
and sugar, saving the life of a neighbour’s child. Nutri-
tion has been the corner stone of the company ever
since.
1905 – Anglo-Swiss Condensed Milk Company merged with
Nestlé Henri Nestlé – Father of
Nestlé
1918 – Purchase of several existing factories in the United States
to meet the new demand created for dairy products during war
1925 – Acquisition of Peter, Cailler, Kohler Swiss Chocolate Company
1938 – Nescafé coffee was launched
1940 – Nestea was launched
1943 – Initial launch of Nescafé
1947 – Introduced Maggi products, merger with Alimentana S.A.
1948 – Nesquik, the instant chocolate drink, was developed in the United States
1974 – Diversification outside the food industry, Nestlé became a major shareholder
in L’Oreal - one of the world’s leading makers of cosmetics
1977 – Second venture outside the food industry, acquisition of Alcon Laboratories Inc.
- a U.S. manufacturer of pharmaceutical and ophthalmic products

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1981 – Became the first company to develop and apply policies based on the International
Code for the Marketing of Breast-milk Substitutes (“WHO Code”)
1984 – Acquisition of American Food Giant, Carnation
1988 – • Italian brand Buitoni became a part of Nestlé’s portfolio
• A new boycott against Nestlé in the United Kingdom
1993 – Liberalisation of FDI with the opening up of Central
and Eastern Europe as well as China
2001 – Nestlé merged with the Ralston Purina Company
2002 – Merger of its U.S. ice cream business with Dreyer’s and acquisition of Chef
America Inc. – a leading frozen food product business
2003 – Acquisition of Mövenpick Ice Cream
2006 – Acquisition of Jenny Craig and Uncle Toby’s and articulated the concept of Creating
Shared Value for the first time
2007 – Acquired Novartis Medical Nutrition, Gerber and Henniez

MEDICAL NUTRITION

2009 – Held the first Creating Shared Value Forum in New York to discuss serious
global challenges in the areas of nutrition, water and rural development
2010 – • Launched the Nestlé Cocoa Plan to help farmers rejuvenate their farms and
increase productivity
• Acquired Kraft Foods’ frozen pizza business

• Announced the creation of Nestlé Health Science and the Nestlé Institute of
Health Sciences
2011 – Announced partnerships with the Chinese food companies Yinlu, a manufacturer
of ready-to-drink peanut milk
2012 – Acquired Pamlab – a U.S.-based company with an innovative portfolio of medical
food products
2013 – Became the first food company to partner with the Fair Labor Association (FLA)

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NESTLÉ IN SOCIETY: CREATING SHARED VALUES (CSV)

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NESTLÉ'S CORPORATE BUSINESS PRINCIPLES

The Nestlé Corporate Business Principles are at the basis of the company’s culture, which
has developed over the span of 140 years. At Nestlé, it is called as Creating Shared Value.
Nestlé is committed to the following business principles in all countries, taking into
account local legislation, cultural and religious practices.
Nutrition, Health and Wellness: Nestlé’s core aim is to enhance the quality of consumers
lives every day, everywhere by offering tastier and healthier food and beverage choices and
encouraging a healthy lifestyle. It is expressed via their corporate proposition ‘Good Food,
Good Life’.
Quality Assurance and Product Safety: All over the world, the Nestlé name represents
a promise to the consumer ensuring the safety and high standard of the products.
Consumer Communication: Nestlé is committed to responsible, reliable consumer
communication that empowers consumers to exercise their right to informed choice and
promotes healthier diets. Nestlé respects consumer privacy.
Human Rights in our Business Activities: Nestlé fully supports the United Nations
Global Compact’s (UNGC) guiding principles on human rights and labour and aims to
provide an example of good human rights’ and labour practices throughout the business
activities
Leadership and Personal Responsibility: Nestlé’s success is based on people. It treats
each other with respect and dignity, and expects everyone to promote a sense of personal
responsibility. Nestlé recruits competent and motivated people who respect their values;
provides equal opportunities for their development and advancement; protects their privacy
and does not tolerate any form of harassment or discrimination
Safety and Health at Work: Nestlé is committed to prevent accidents, injuries and illness
related to work, and to protect employees, contractors and others involved along the
value chain.
Supplier and Customer Relations: Nestlé requires its suppliers, agents, sub-contractors
and their employees to demonstrate honesty, integrity and fairness, and to adhere to their
non-negotiable standards. In the same way, Nestlé is committed towards its own
customers.
Agriculture and Rural Development: Nestlé contributes to improvements in agricultural
production, the social and economic status of farmers, rural communities and in
production systems to make them more environmentally sustainable.
Environmental Sustainability: Nestlé commits itself to environmentally sustainable
business practices. At all stages of the product life cycle, Nestlé strives to use natural
resources efficiently, favour the use of sustainably-managed renewable resources and target
zero waste.
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Water: Nestlé is committed to the sustainable use of water and continuous improve-
ment in water management. It recognises that the world is facing a growing water chal-
lenge and that responsible management of the world’s resources by all water users is an
absolute necessity.

NESTLE BRANDS
Most people know Nestlé through its brands. The company’s portfolio covers almost
every food and beverage category, giving consumers tastier and healthier products to
enjoy at every eating occasion and throughout life’s stages including times of special
nutritional need. Some of the Nestlé’s brands include:

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ENVIRONMENTAL SUSTAINABILITY
The goal of Nestlé is not to be only tastier and
healthier but also to serve the environment along
their value chain. Nestlé takes it as a challenge to
identify the areas for improvement at every stage:
from farm to consumer and beyond.
The company is determined to live up to the
expectations of its employees and external stake-
holders. To build trust, it integrates environmental
sustainability into their communications and Zero Waste: Nestlé encourages recycling of
waste material.
educates all its employees to live by the Nestlé
business principle on environmental sustainability.
Raw Material: Nestlé sources its raw materials directly from farmers and its semi-processed
raw ingredients from vendors. It aims to source materials from the areas around its
factories, if possible.
Manufacturing: Nestlé explores opportunities to improve efficiency, quality and
environmental performance across manufacturing. It has almost halved its
direct Greenhouse Gas (GHG) emissions per tonne of product. Further, it has reduced
its water use and energy consumption by 33.8%. 61 factories have been generating zero
waste for disposal.
Packaging: The packaging of Nestlé products is crucial to prevent food waste, guarantee
high quality standards and inform consumers. Nestlé challenge itself to achieve both
performance and functionality during the design process.
Transport: Nestlé optimises distribution networks and route planning across all its
operations. It explores opportunities to improve transportation, for instance, by using sea
and rail instead of road. It expands driver training, both from a perspective of safety and
environmental efficiency.
Information and Dialogue: Nestlé is continually improving its products’ environmental
performance across the entire value chain. It gives its consumers product information
based on scientific, substantiated evidence so that they can make informed choices.
Waste and Recovery: Nestlé’s goal is simple but ambitious: zero waste. It aims to
recover and reuse materials to create some value from them – from energy recovery to
animal feed.
Resource Efficiency: The Nestlé Environmental Management System (NEMS) ensures
efficiency, quality and productivity. It focuses on doing more with fewer resources and
creating less waste by developing the infrastructure for public waste recovery and recycling.

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Environmental Impact on Products: The environmental performance of a product

starts with good ecodesign and clear understanding of environmental lifecycle impacts.
For this, Nestlé has carried out lifecycle assessments for all main product categories and
partnered to create EcodEX – a tool that gives product designers a faster way to analyse
impacts.
Climate Change Leadership: Nestlé has a holistic approach towards climate change. It
is committed to phase out Hydro-Fluoro Carbons (HBCs) and replacing them with safe
and more environmentally sustaining alternatives.
Natural Capital: Nestlé has taken proactive role in tackling deforestation, particularly in
palm oil to achieve zero net deforestation by 2020. It pledges that its products will not be
associated with deforestation.
Packaging and the Environment: Nestlé strives to reduce the environmental impact on
its packaging considering the factors like water usage, non-renewable energy use, solid
waste generation and promotes recovery and recycling. Nestlé has been systematically
reducing the weight of its packaging since 1991, with a reduction of over 500 million kg
by the end of 2014.
Product Labelling: In accordance with Nestlé’s policy on environmental sustainability,
which was first established in 1991, it is committed to provide science-based, meaningful
and verifiable environmental information about its products and activities. For example,
Nestlé has launched the world’s first free mobile application for iPhone and Android
devices to help people recycle waste packaging correctly.
FOOD SCIENCE AND TECHNOLOGY
Nestlé’s R&D engineers have been working in
a variety of fields – from packaging and
equipment to food processing technologies
and manufacturing new beverage systems.
Food scientists develop processes and
technologies that enable the development of
safe, nutritious foods and beverages while
keeping on the cusp of new developments in
food science and technology.
Nestlé is a world-leader in a large number of Probiotics Research: Nestlé’s scientists
conduct a bench scale fragmentation study.
different technologies. Here are a few examples:
Fermentation and Probiotics: The Nestlé Research Centre is one of the first to look at
the molecular interaction of probiotics with intestinal cells and has sequenced several
probiotic genomes for better understanding of their characteristics and mechanisms of
action.

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Extrusion: Nestlé maintains strong expertise in hot extrusion (e.g. infant and breakfast
cereals), co-extrusion (e.g. filled bars and snacks) and cold extrusion (e.g. ice-cream and
chocolate).
Healthier Fats: Nestlé has also developed technologies that allow it to use natural vegetable
oils instead of partially hydrogenated fats in Maggi bouillon cubes and seasonings.
Foam Booster Technology: This produces the creamy head for Nescafé Cappuccino, with
less fat, and is much denser and long-lasting than regular foam.
Malt Extraction: Nestlé claims to have developed a new process for malt extraction
for Milo that meant less sucrose and more complex carbohydrates in the product. It was
launched in Malaysia in 2006, and in 2007 it was rolled out across Asia.
HUMAN RIGHTS AND COMPLIANCE
The Nestle reccognises its responsibility and respect human rights, has been founded
on clear principles and strives to comply with the laws and regulations in place wherever
it operates as well as adhering to international standards.
Human Rights: Since the launch of its
online human rights training tool in 2011,
it has trained 37,768 employees across 64
countries. It is the first multinational
company to issue a public report on
Human Rights Impact Assessment.In
2013, Nestlé began implementing a new
Rural Development Framework that, for
the first time, included detailed human
rights indicators for its supply chain. In Human Rights: Nestlé is working to raise awareness
April 2014, it organised a stakeholder among employees and integrate respect for human
rights into its supply chain traceability and
consultation on our approach to human management systems.
rights and rural development.
Child Labour: By 2015 with 60,000
farmers trained on child work/labour
practices; 60 schools built or renovated.
Today, around 168 million children across
the world are forced to work. Effective,
long-term solutions require a multi-
stakeholder approach that includes
industry, government and NGOs.
Nestle'sambition remains to prevent and
eliminate all forms of child labour from Helping Hand: A teacher giving lessons at a new
our supply chain, while respecting family school in Goboué, Lakota, Côte d’Ivoire, built by
Nestlé and its Cocoa Plan partners in 2013.
situations and the legitimate need for rural
development.
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CONCLUSION
Consumer interest in the nutritional quality and impact of foods on health has
probably been the priority of the governments of various countries. The companies have
been busy in spreading the message that healthy foods and a balanced diet are vital for
good physical and mental health and a general feeling of wellness.
Nestlé is one of the world's leading food companies and intends to remain so. Its
commitment to high quality market research ensures that it remains fully aware of changes
in consumer behaviour and tastes. For instance, KitKat was launched in 1937 and since
then it has consistently been one of the best-selling chocolate bars. It has acquired an
instantly recognizable brand name and identity. Once created, however, a brand name
needs constant maintenance. KitKat's ability to remain a brand leader over a period of
sixty years is not an accident. The long-term maintenance of a brand name requires
continuous monitoring and investment. Brand image must be seen as dynamic, not a
static factor. The same consumer perceptions that create brand loyalty can also turn
against a product that fails to adjust and adapt to changing altitudes.
The entire case project on Nestlé examines its background to sustainable
development, its strong rooted business ethics, and its environment protection acts. It
also looks at how Nestlé S.A. - the world's leading food company - developed a policy
and current business practices that reduce the company's ill-effects on the environment.
BIBLIOGRAPHY
www.casestudies.co.in
economictimes.indiatimes.com
www.nestle.com
www.google.co.in
www.wikipedia.org

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