Q.1: Define a sick unit.

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

Companies Act 1985, According to Act, a sick industrial company (being a
company registered for not less than seven year) which has at the end of any
financial year accumulated losses equal to or excluding its entire net worth
and has also suffered cash loses in the financial year and in the financial
year immediately proceeding.

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

Ans: 1) It helps to evaluate the current cash position of the firm.
2) it helps in making short term financial decision.
3) it shows the major sources and uses of cash.
4) it helps in taking loan from banks and other financial.

Q.3: define motivation.

Ans: motivation refers to the way in which urges, drives, desires, striving,
aspirations and needs direct, control or explain the behavior of human
being.

Q.4: What is flash report?

Ans: flash report contains forward-looking statements that are based current
expectation, assumption, estimates and projection about its business,
industry and capital markets around the world. These statements discuss
future expectation, identify strategies, and contain projection of results of
operations or of financial condition.
5.. List down barriers to entrepreneurship.
Ans.Barrirs of entrepreneurship are as follow:
1. Environment barrier

• Raw material

• Labour

• Machinery

• Land and building

• Other infrastructure
2. Financial barrier
3. Personal barriers

• Lack of confidence

• Lack of dependability

• Lack of motivation

• Lack of patience

• Inability to dream

• Sense of pride
4. societal barrier
6. State the various agencies involved in rehabilitation of sick unit?
Ans. various agencies are as follow

• IDBI

• IFCI

• ICICI

• RBI

• GOVERNMENT

7. Write full form of CED and EDII

Ans. CED-Centre for entrepreneur development
EDII-Entrepreneurship development institute of India
8. Write the formula of ‘debt service coverage ratio’
Ans. DSCR (Debt Service Coverage Ratio) can be interpreted by using the
following formula:
DSRC = PAT + Depreciation + interest on term debt + lease rentals
amortization
Repayment of term debt + interest on term debt + Lease
rental
9. Define SSI
An appropriate definition of a sick unit is given the sick Industrial
Companies Act 1985, According to Act, a sick industrial company
(being a company registered for not less than seven year) which has at the
end of any financial year accumulated losses equal to or excluding its entire
net worth and has also suffered cash loses in the financial year and in the
financial year.
Q.2: Explain training model of entrepreneurship development.

General introduction to entrepreneurship.

First of all the participants are exposed to a general knowledge of
entrepreneurship such as factor affecting small scale industries. The role of
entrepreneur’s in economic development, entrepreneurial behavior and the
facilities available for establishing small scale enterprise.
Motivating Training.
The training inputs under this aim at inducing and increasing the need for
achievement among the participants. Efforts are made to inject confidence
and positive attitude and behavior among the participants towards business.
It ultimately tries to make the participants to start their own business
enterprise after the complexion of the training programme. In order to
further motivate the participants sometime successful entrepreneurs are also
invited to speak about their experience in setting up and running business.
Management Skills.
Running a business whether large or small requires the managerial skill.
Since a small entrepreneur can not employ management experts to manage
his/her business, he/she need to be imparted basic and essential managerial
skills in the functional areas like finance, production and marketing.
Knowledge of managerial skills enables entrepreneur to run his/her
enterprise smoothly and successfully.
Support system and procedure.
The participants also need to be exposed to the support available from
different institutions and agencies for selling up and running small scale
enterprises. This is followed by the acquainting them with procedure for
approaching them, applying and obtaining support from them.
Fundamentals of project feasibility study.
Under this input, the participants are provided guidelines on the effective
analysis of feasibility of the particular project in view of marketing,
organizing, technical, financial, and social aspects. Knowledge is also given
hoe to prepare the project or feasibility report.
Plant visit.
In order to familiarize the participants with real life situations in small
business, plant visits are also arranged. Such trips help the participants
know more about an entrepreneur’s behavior, personality, thoughts and
aspirations. These influence him/her to behave accordingly to run his/her
enterprise smoothly and successfully.
 OR
Q.2: Explain various qualities of successful entrepreneur.
Ans: the qualities of successful entrepreneur are as follow:
1) Need to achieve: entrepreneurs have got strong desire to achieve
higher goals. Their inner self motivates their behavior towards high
achievement most of the people dream of success but do not take
action towards achieving this dreams.
2) Independence: most of the entrepreneurs starts on their own because
they dislike to work for others.
3) Risk-bearing: entrepreneur are the persons who take decisions under
uncertainty and thus they are willing to take risk, but they never
gamble with the results.
4) Locus of control: closely consist with McClelland’s theory of need for
achievement is the belief in internal locus of control.
5) Perseverance: entrepreneur has got the quality of sticking to job. He
decides to undertake. Once committed to a specific goal and course of
action, entrepreneurs become absorbed to it.
6) Positive self concept: entrepreneurs are always positive in their action.
Being an achiever, he directs his fantasies and dreams towards
achievement of worthwhile goals and sets extra ordinary standards of
excellence in what he is doing.
7) Hope of success: hope of success is a significant quality of
entrepreneurial personality. Entrepreneurs set their goals with a hope
of success rather than fear to failure.
8) Flexibility: most of the successful entrepreneurs measures the pros and
cons of a decision and tend to change if the situation demands.
9) Interpersonal skills: entrepreneurs are always comfortable while with
dealing with people at all levels.
10) Contorting uncertainty: successful entrepreneurs are always
optimistic and take every odd as the opportunity.
11) Stress taker: entrepreneurs are capable of working for long hours
and solving different complexities at the same time.
12) Innovators: successful entrepreneurs are innovators. They
consistency put their efforts in introducing new products.
13) Telescopic faculty: successful entrepreneurs always tend to think
ahead. They have got telescopic faculties which make them think for
the future.
14) Self confidence: entrepreneurs must have self confidence to
accomplish the task effectively and efficiently.
Q3.Explain implications of motivation theories on entrepreneurial
motivation and process of motivation.
Ans.1.implication of Maslow’s theory
Maslow’s theory is based on human needs. These needs are classified
into a sequential priority from the lower to the higher. According to him, all
human needs are classified into the live need-cluster as shown below:
i. Physiological needs:-there needs are basic to human life and
include food, clothing, shelter, air, water and other necessities of
life. They exert tremendous influence on human behavior.
Entrepreneur also being a man needs to meet his physiological
needs for survival .hence, he is motivated to work in the
enterprise to have economic rewards to meet the basic needs .he
takes business venture on small scale and seeks economic reward
from his enterprise.

ii. Safety and security needs:-after satisfying the psychological

needs, the next needs felt are called safety and security needs.
These needs find expression in such desires as economic security
and protection from physical dangers. Meeting these need
require more money and hence, the entrepreneur is prompted to
 work more in his/her enterprise .like physiological needs these
become inactive once they are satisfied.

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

refer to belongingness. all individuals want to be recognized and
accepted by others. Likewise an entrepreneur is motivated to
interact with fellow entrepreneurs, his employee and others.

iv. Esteem and status needs:-these needs refer to self esteem and
self respect .they include such needs which indicate self
confidence ,achievement, competence, knowledge and
independence. Entrepreneurs, the ownership and self control
over enterprise satisfies their esteem needs by providing them
status ,respect, reputation and independence.

v. Self actualization;-the final step under the need hierarchy model

is the need for self actualization. This refers to self fulfillment.
The term self actualization was coined by Kurt Goldstein and
means to become actualized in what one is potentially good at.
An entrepreneur may achieve and growth becomes pioneers
person for the specific industry.

2. Implication of McLennan acquire needs theory

According to David McClland,a person acquires three types of
needs as a result of one’s life experience .these three needs are:
 i. Need for affiliation:-these refer to need to establish and
maintain friendly and warm relations with others.
ii. Need for power:-these means the ones desire to dominate
and influence others by using physical object and actions.

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

accomplish something with own efforts .this implies one
will to excel in his/her efforts.

Process of motivation

Identificatio Cause Leads to tension creates

n of need tension satisfaction

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

personal goal or personal the identification satisfaction, it generates
the idea and the person motivated. So the first step for motivation
process is the identification of individual need. Any person himself
identify the need what they want.
II. Cause of tension:-after they find out what they want means that
they create some need or say expectation from the environment
.what he/she create some need motivated to the person to do the
business.
III. Leads to action:-after the need creation they start the business and
that called the entrepreneurial activity .this entrepreneurial activity
also supported by the environment and its produce the some goods.
 IV. Create satisfaction:-when person have some expectation and he
produce the goods same as they want for their need, when both are
match then create some satisfaction.

OR
Q3.Govenment has devised many agencies to assist entrepreneur’s
.explain.
ANS. Government plays very important role do develop an entrepreneur
and enterprise. It provides directly or indirectly financial assistance to
them. For that many institutions are established by the government and runs
very successively.
• National small industries corporation(NSIC), small
industries development organization(SIDO), khadi and
village industries commission(KVIC), handloom board
,silk board, commodity board etc. have scheme to help in
promoting exports of goods manufactured by SSI units.
• SIDO is one of the important agencies that help SSI units
in marketing their products through consultancy, testing
and marketing facilities. The SIDO functions as nodal
agency for formulating, coordinating and monitoring
policies and programmers for promotion and development
of small –scale industries in the country.
• SIDO has promoted ancillary units to public sector
enterprise. Beside, many large industrial houses actively
pursue the policy of promoting ancillary units or their
purchase of stores.SSI units can take advantage of their
facility and secure a regular market for their products.
• District industries centers (DICs) provide marketing and
other assistance to SSI units under a single roof.
• State –level small industries corporation(SICs)participate
in tender programmes of government purchases and then
sub-contract these tender to SSI

• The government of India has established trade centers at

various places which publish information on market
potentials and conditions. These centers also organize fairs
and exhibitions where SSI units can exhibit and sell their
products.

• Twenty-seven small industry service institution (SISIs)

have been set up by SIDO at various places for
disseminating market information .thirty-eight exchange
centers have been set up within some SISIs to help units in
securing sub-contract jobs.
• The small –scale industrial sector raises term credit and
working capital required by it from commercial banks,
cooperative bank s and financial corporations.
• The SIDO has already setup 31 branch small Industries
service institute, 4 regional testing centres,3 process-cum-
product development centers and 20 field testing station to
 provide a comprehensive range of facilities to small-scale
units.
• The specialized institute like central institute of tool design,
Hyderabad, central tool room and training centers at
Ludhiana and Calcutta, central institute of hand tools,
Jalandhar institute of design of electrical measuring
instruments (IDEMI), Mumbai, integrated trading centre,
Nilokheri, National institute for entrepreneur and small
business development (NIESBUD), New Delhi conduct
specialized courses/programme /job oriented training
programmes for the benefit of small-scale industries.
 Q:4a): Explain various sources of new project
ideas.
Ans: 1) analyze the performance of existing
industries:
A study of existing industries in terms of their profitability
and capacity utilization can indicate promising investment
opportunities – opportunities which are profitable and
relatively risk free. An examination of capacity utilization of
various industries provides information about the potential
for further investment.

2) Examine the inputs and outputs of various

industries:
An analysis of the inputs required for various industries
may throw up ideas. Opportunities exist when:
• Materials, purchased parts, or supplies are presently
being procured from distant sources with attendant
time lag and transportation cost, and.
• Several firms produce internally some components
which can be supplied at a lower cost by a single
manufacturing who can enjoy economies of scale.
Similarly a study of the output of the existing
industries may reveal opportunities for adding value
through further processing of the main outputs, by
produces as well as waste products.

3) Review import and export:

An analysis of import statistics for a period of five
to even years is helpful in understanding the trends of
imports of various goods and the potential for import
substitution. Manufacturing of goods currently imported is
advantageous for several reasons:
• It improves the balance of payments situation.
 • I generates employments
• It provides a market for supporting industries and
services.

4) study plan outlay and governmental guidelines:

The governments play a very important role in
our economy. Its proposed outlay is in different sectors
provides useful pointers towards investment opportunities.
They indicate the potential demand for goals and service
required by different sectors.

5) Look at the suggestions of financial institution and

development agencies:
In a bid to promote development of industries in
their respective state. Financial corporation and other
development; bodies conduct studies, prepare feasibility
report, and offer suggestion to potential entrepreneurs. The
suggestions of these agencies are helpful in identifying
promising projects.

6) Investigate local materials and resources:

A search for project ideas may begin with
an investigation into local resources and skills various ways
of adding value to locality available materials may be
examines. Similarly the skills of local artisans may suggest
products that may be profitable produced and marketed.

7) Analyze economic and social trends:

A study of economic and social trends is
helpful in projecting demand for various goods and services.
Changing economic condition and customer preference
provide new business opportunities. For example: a greater
awareness of the value of time is beginning on the public.
Hence, the demand for time-saving products like prepared
food items, ovens, and powered vehicles has been
increasing.

8) Study new technological developments:

There is a large network of research
laboratories in India under the umbrella of the council of
scientific and industrial research and other bodies. New
products or new processes and technologies for exiting
products developed by research laboratories may be
examined for profitable commercialization.

9) Draw cues from consumption abroad:

Entrepreneurs willing to take higher risks
may identify projects for the manufacture of products or
supply of services which are new to the country but
extensively used abroad.

10) Identify unfulfilled psychological needs:

For well-established, multi-brand product
groups like bathing sop, detergents, cosmetics, and
toothpaste, the question to be asked is not whether there is
an opportunity to manufacture something to satisfy actual
physical needs but whether there are certain psychological
needs of the consumers which are presently unfulfilled.

11) Attend trade fairs:

National and international trade provides
an excellent opportunity to get know about new products
and developments.

12) Stimulate creativity for generating new product

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

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

Ans: after gathering the information on various aspects of the market from
primary and secondary sources the next step is to estimate demand i.e.
demand forecasting. This can be done through qualititative and quantitative
methods:

A. qualitative – jury and Delphi.

1. Jury of executive opinion method:

This method involves taking the opinions of the experts
or sales force team. The opinions of all experts or sales force team
are combined and finally a sales estimate is prepared.

Advantages:
• It is speedy method for developing a demand forecasting.
 • This method also takes place into consideration important factors
like competition, consumer preference, technological
development etc…… are considered to be important and critical.

Disadvantages:
• Opinions are always subjective and not objective in nature.
• The reliability of this technique is questionable.

2. Delphi method:
This method is used for eliciting the opinions of a group of expert
with the help of a mail survey.

Advantages:
• It is understandable to user.
• It seems to be more accurate and less expensive then the
traditional face to face group meetings.

Disadvantages:
• This is also based on the opinions, which are always subjective
and not objective.
• What is value of the expert opinions?

B.Quantitave – Exponential, time series and leading indirector.

This method generates forecasting on the basis of an analysis of
the historical data.

1) Exponential smoothing method: in exponential smoothing, forecasts

are modified in the light of observed errors. If the forecast value for
 year t, Ft, is less than the actual; value for year, st, the forecast for the
year t+1, Ft+1, is set higher than Ft.

Ft+1= Ft + ᾳ et

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

ᾳ=smoothing parameters
et= error in the forecast for year t=S=t –Ft.

2) Moving average method:

This method is bases of moving average, successive arithmetic
averages are computed from overlapping group includes all the
observation in a given time interval, termed as the period of moving
average.
The moving average if group is always shown at the center of its
period. The process of computing moving average smoothness out the
fluctuation in time series data.

3) Leading indicator method:

Leading indirector are variables, which change ahead of other
variables, the lagging variables. Hence, observed changes in leading
indicators may be used to predict the changes in lagging variables.

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

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

OR

Q4xplain term loan procedure

Ans. Procedure for a Project Loan

1. Submission of Loan Application

The borrower may submit the application form to the lending
institution or bank. The borrower is required to fill—up a common
application form which covers the following aspects.
a. Business detail including; Corporate office, Administrative office,
etc...
b. Promoters' background and details
c. Particular of the project like plant capacities, process technical
arrangement.
d. location of plant, machinery, raw materials, Human resource, etch.
e. Life of project
f. Cost of project
g. Means of financing
h. Marketing and selling arrangement
i. Profit ability of project

2. Initial Processing of Loan Application

When the application is of receive; institution check whether
it is completed for lf it is incomplete the borrower has asked to
furnish the details which are not provided

3. Appraisal of the proposed Project

The detail appraisal of the project is done by the leading financial
institution. Appraisal covers marketing, technical, financial,
managerial & economic aspects. Appraisal report is normally
preparedwithin two months after the side inspection & is placed before
 the SEM for a decision about the approval of project and determining.
The sharing arrangements among the institution once a favorable
decision is taken of the SEM and the sharing arrangement work out
the case is referred to board of directors of the lead financial
institutions.

4. Issue of the letter of the sanction

After the appraisal of proposed project report and field survey, based
on the report, the board of director of the lead financial institution
approves the proposal. After the approval leading financial institute
issue the letter of sanction to the borrower

5. Acceptance of the term & condition by the borrower

Once the receiving the letter of sanction from the lead financial
institution the borrowing unit calls its board meeting, at which the
term & condition associated with the letter of sanction are discussed
and accepted & an appropriate resolution is passed.

6. Execution of Loan Agreement

The lead financial institution after receiving the letter of acceptance
from the borrower send the draft of the arrangement to the borrower to
be executed by authorized person and proper stamp

7. Disbursement of Loan
 When the borrower units purchases the share of leading financial
institute and make signature of agreement after this leading financial
institute disbursement the loan amount

8. Creation of Security
The term loan provided by the financial institution is secured to the
mortgage or immovable properties and hypothecation of movable
property.

9. Monitoring
Monitoring of the project is done at the implementation stage and
operation stage till the final installment of the loan is repaid by the
borrower. Periodically the borrower is require to submit information
ontthe progress of the project, projected fund flow stamen etc..based
on these information provided by the borrower.
Q5.write short note
A)Warning signal
Ans: WARNING SINGNAL SICKNESS

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

 Continuous irregularity in cash credit accounts.

 Low capacity utilization;

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

profit following by contraction in the share of the market;
 High rate of rejection of good manufactured;

 Failure to pay statutory liabilities;

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

timely installment of principal and interest on the loan and installment
credit;

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

time;

 Financing capital expenditure out of funds provide for working capital

purposes;

 Decrease in working capital on account of;

1. Increase in debtors and particular industry combined with many

failures;

2. Increase in creditors;

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

slow or non-moving items;

 Rapid turnover of key personnel;

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

 Rapid expansion and too much diversification within a short time;

  Sudden/frequent changes in management-whether professional or
otherwise and/or dominated by one man/few individuals;

 Diversion of found for purposes other than running the unit

 Any major changes in share holding.

B) Projected financial statement.

Financial statement are the result of the accounting of the

accounting process which begins with recording with recording of
transactions.the according process involves recording ,classifying
and summarizing business transactions in a systematic way.

Definition:

“it is a process of evaluating the relationship between component

part of a financial statement to obtain a better understanding of a
firms position and performance.”
Objective of analysis

• To estimate the earning capacity of a firm

• To estimate the financial position and financial performance

of a firm

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

firm

• To determine the debt capacity of a business

• To decide about the future prospects of a firm.

 Methods of financial analysis:

• Comparative statement

• Trend analysis

• Common size statement

• Funds flow analysis

• Cash flow analysis

• Ration analysis

• Cost-volume –profit analysis

 Limitation of financial analysis

• The figures drawn from one year statement have

limited use and value. It is dangerous and risky to
depend solely upon them

• The basic nature of financial statement are historic.

• It is only a study of interim report

• It is based upon only monitory information and

non-monitory items are completely ignored.

• It does not consider changes in price levels.

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

• The condition and circumstances of one-firm can

never be identical with that of another firm.
C) Location selection:

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

and input requirement. Though often used synonymously. The terms
‘location’ and ‘site’ should be distinguished. Location refers to fairly
broad area like a city; an industrial zone, or a coastal area, site refers
to a specific piece land where the project would be set up.

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

(A) Primary factor:

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

adequate supply of raw materials and the nature of raw
material is not regular, it may lead to frequent stoppages
and breakages in production. The time and the cost of
transporting raw materials is also important, therefor
industrial unit are location near sources of raw material.

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

if his control over the market. It is important for supplying
goods to the customers in a minimum period of time. It
 reduces the cost of transporting-finished goods to the
market.

(3) Transport facility: it is needed for the regular and timely

supply of raw materials at low materials at low cost and for
transporting finished goods on time to the market. A
producer has to choose a speedy and cheep means of
transport after making a comparative cost study of
different; means of transport.

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

important. If the supply of labor is not regular man hour
and machine hour are last forever procedure should try to
regularize the supply of laborers by reducing absenteeism
and strikes due to unsatisfactory working condition.

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

production and for transporting the finished goods and raw
material. Power may be electrical, diesel, and atomic
energy. Power shortages lead to tremendous loss due to
stoppage of machineries.

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

promotion and expansion, therefore a capital market must
be developed. In industrial centers, large scale production,
 mechanization and big industries requires large amount of
capital and debenture capital for long period.

(B) Secondary period:

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

material and agriculture climate and some natural factors
which are important for some industries like cotton textiles.
Sugar and jute.

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

encouraging the development of industries in
underdeveloped regions determines the locations of
industries.

(3) Government subsidies and facilities: the government may

encourage the dispersal of industries in underdeveloped
areas by making capital, land, water and power available at
subsidies rates. By giving these facilities the government
may develop industry in backward areas and this will result
in regional balancing of industries as well as economy.
(4) Initial start and goodwill: some industries get located at a
place because some industrial starts the industry at that
place at an early stage.

(5) Miscellanies factors:

• Sufficient waters supply, if water is consumed in

large quantities in production processes.

• Disposal of water

• Strategic factors like dangers of air attack

• Availability of fire fighting facilities

• Availabilities of recreational medical and

educational facilities.