Case Study
Passage with linked questions
Case Set 1
Case AnalysisPassage
Ramesh, a software engineer, invented a low-cost water purification device using locally available materials. He wants to manufacture and sell it across India on a large scale. After consulting his friends, he decides to form a company. He begins by identifying the business opportunity and then hires engineers and chartered accountants to study whether the technology can be scaled up easily, whether the required funds can be arranged, and whether the market demand justifies the investment. After all three studies give positive results, he proceeds to apply to the Registrar of Companies for a name. He submits three names in order of priority. His first choice, 'PureWater India Limited', is approved. He now moves to the next steps of company formation.
Question 1: What is the stage of company formation that Ramesh is currently involved in? Name any two activities he has performed in this stage.
- Ramesh is involved in the Promotion stage of company formation.
- Two activities performed: (i) Feasibility studies – technical, financial, and economic; (ii) Name approval from the Registrar of Companies.
Question 2: Why did Ramesh submit three names to the Registrar of Companies instead of just one?
- The Registrar may reject a proposed name if it is identical or similar to an existing company's name, or if it is misleading.
- By submitting three names in order of priority, the promoter increases the chance that at least one name will be approved, avoiding delays in company formation.
Question 3: Explain the three types of feasibility studies that Ramesh's team conducted and state the purpose of each.
- Technical Feasibility: Examines whether the required technology, raw materials, and infrastructure are available to execute the project successfully.
- Financial Feasibility: Assesses whether the funds required for the project can be arranged through available means; if the outlay is too large, the project may be abandoned.
- Economic Feasibility: Evaluates whether the project will be profitable and generate sufficient returns even if it is technically and financially viable.