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Category: Students Forum

Business Etiquette

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In the previous articles, we discussed etiquette norms for email phones and business meetings. It might be a good idea now to touch upon how personal grooming, attire and dining etiquette can make a great contribution in your overall success rating. In this concluding series of article on Business Etiquette, we shall discuss those norms in addition to discussing etiquette requirements for conducting a teleconference.

Etiquette for teleconferencing
An important consideration one has to keep in mind while engaging in teleconferencing, (especially with overseas client) is that you are not visible to him. The way you speak and conduct yourself on the phone is the sole criteria of his judgment. While most are familiar with general norms for conducting one on one teleconference, the challenge of engaging on multi-level team teleconference is entirely different. Some of the essential points are given below:

  • Set up an agenda and duration of call in advance.
  • Choose an anchor who will conduct the teleconference and introduce his team members.
  • Start with greeting and small talk not more than a minute.
  • If situation demands long articulation from one side, then keep asking for confirmation from the other side every few minutes. These could be ‘Do you agree?, Is it ok?, Am I coming out clear?, any queries?’ etc.
  • If no answer is forthcoming, then ask the anchor on the other side whether you can continue.
  • Do not interrupt the other side when they are talking. If you must, then interrupt with apology and explain the reason. If the interrupter is person other than the anchor, then he must announce his name and designation. This will remove confusion in the mind of person on the other side as to who has interrupted, why and at what designation level to appropriately respond to the interrupter.
  • If you find difficulty in understanding the accent, request the other side to repeat the sentence and to speak slowly.
  • If the other side has not understood you correctly then use sentences like ‘I think I need to explain more clearly’ or ‘I am afraid I have not been able to communicate it properly’. Never say ‘You are not understanding’ or ‘Your understanding is wrong’.
  • In case of a disagreement on a point, do not stretch it. Say ‘This may need further discussions, let’s park it’ and move on to the next point.
  • Wind up with summary and action plan on both sides.

Personal grooming and attire:
Famous American thinker Emerson once said ‘People begin to evaluate us before any words are ever spoken, who you are speaks so loudly —- I do not hear what you say’. Thus the way you dress and observe personal hygiene will have an impact on your chance to succeed. Some important etiquette tips are given below:

  • Always dress appropriate to occasion. Do not overdress or wear casuals for business meeting. If not sure about the dress code, it is better to stick to semiformal.
  • Ensure that your hair is properly combed and nails are clean and manicured. Shoes should be well polished.
  • The tie should not stretch below the belt. It is a general norm to wear the belt of the same colour as that of the shoes. Socks should be matching the colour of trousers.
  • Do not carry loose sheaf of papers. Carry a folder or a briefcase.
  • Do not make multiple fold of paper and stuff them in the pocket. Pockets should not be bulgy with papers and/or coins.
  • The pen should always be kept in the breast pocket of coat and not in the front pocket of a shirt.


Dining etiquette:
Business lunch and dinner have become indispensable part of modern business. Hospitality is not just a formality but a vehicle to conclude many important business negotiations. Though dining protocols are a subject by themselves and can warrant a separate article, it is essential to know a few basic etiquette norms. They are given below:

  • Always find out the preference of the guest if you are the host.
  • Reach a few minutes early than the given time if you are the host.
  • Please wait to be seated in a fine dining restaurant or a coffee shop of hotel.
  • Belongings should not be kept on the table but on the floor on the right hand.
  • Do not pick up napkin/spoon if it falls down. Politely ask a serving waiter for a new one.
  • Do not blow on hot food to cool it.
  • In the overseas restaurant ask for ‘No Meat’ dishes if you are a vegetarian. In some countries fish food is considered vegetarian.
  • Do not unfold napkin with jerk. When not finished with your meal, please ensure to leave the napkin on the seat if you need to leave your seat for any reason. If you have finished your meal, then please put the napkin on the table. These are silent signals to the waiter.
  • Swab the napkin on your face — Do not wipe with it.
  • Serving is always done from left to right and clearing from right to left. When you find multiple cutlery by your side for different courses, please use the same from the extreme left to right for each course. In such restaurants, water glass for you is on your right side.
  • Please do not use toothpick without covering your mouth with hands.
  • Start discussing business only after ordering is finished. However, you must be aware about protocols of certain countries like Japan where no business discussion is expected to be conducted over meal.
  • Please be discreet about settling the bill. Do not disclose the amount. Be quick to ask the bill as a signal to the serving staff as to who is the host.
  • Always thank the guest for his having graced the invitation and ask him whether he enjoyed the meal.

All the etiquette norms that we have discussed in the series of articles are only indicative. One must remember that the best etiquette is caring for comfort of others around you in a genuine way.
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Business Etiquette

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In the previous article on the subject of business etiquette, we discussed e-mail etiquette norms. In the current article we will discuss norms for mobile phone etiquette and business meetings.

Mobile phone etiquette

It was not a long time ago that there were training sessions on how to speak on the landline telephone. While technology is making landline telephones obsolete with introduction of mobile phones, fundamentals have not changed on how to communicate effectively on the phone. In fact, the need to know basic etiquette norms for handling conversations on the mobile phones has increased because of breach of privacy it can create. Hence, while some basic etiquette, such as speaking softly, introducing yourself if you are the caller and always asking for the person by his name followed by a designation when dialling a board-line in large organisations is taken for granted, some of the points that one must bear in mind about mobile etiquette are discussed below.

  •  Always ask whether the receiver is comfortable taking the call at that time. If not, find out what time would suit him.
  •  Please be careful in selection of the ring tone of the mobile. A wild ring tone will be very embarrassing in the business circle and will not be appreciated, as it could label you as frivolous. Imagine the negative impact a ring tone of a crying baby can create when you are in public place with business associates. As a professional, your ring tone as well as caller tune should be as sober as possible since it reflects who you are and your work culture.
  •  Always keep your mobile on silent or vibration mode during business meetings or while in club, auditorium, hospital or dispensary. Sometimes mobile phone usage is prohibited at certain public places, especially overseas; hence it is better to check the signs before using the mobile. For instance, there are some compartments in long-distance trains abroad where mobile phones are not allowed to be used.
  •  Do not ever listen to music on mobile phone at a public place without using headphones.
  •  If your phone is not responded, follow up by a text message with a request to call up when free. If your call is diverted to a voice mail, then leave a brief message as to why you called up and end with a date and time. If there is urgency, then state that on the voice mail. For instance, you may say that you called up to inform that you have not received the missing information which is required for submission of appeal and you should be contacted urgently to discuss the same.
  •  Do not take a call when you are in an important business meeting or consultation. It is extremely insulting and irritating to other members. If still unavoidable, then excuse yourself, walk away a short distance and quickly finish the call. Do not let it happen too frequently.
  •  While sending text messages, be brief and discreet. Never send any message of a sensitive nature. It is better to convey such message during one-on-one conversation. The reason is that you do not have control over the confidentiality on the recipient’s mobile.
  •  If you have put the call on a speaker phone, then inform the other side. Unaware, he could blurt out something that might not be appropriate for others to hear.

Etiquette for business meeting

It is important to set the agenda for the business meeting and set the time duration in advance. This is expected to be generally done by the initiator in consultation with the person with whom meeting is requested. It is always preferable to clarify whether any special hardware/software or Internet will be required during the meeting, so that arrangements could be made in advance. Having a back-up arrangement, should something fail, always saves embarrassment.

Be punctual. In case of an unavoidable delay, call up, apologise and request for revised time. If meeting for the first time, remember a few protocols. The host should introduce himself first with the guest and then his colleagues. The guest should then introduce his colleagues to the host and allow his members to self introduce to the members from the host side. Exchange of visiting cards should be done with the right hand or both hands with a slight bow. Do not put the visiting card in the wallet if you are a male. It literally means that you are sitting on someone in your pocket. As far as possible, let the visiting card remain in front of you on the table during the meeting, so that you are constantly reminded of the name and designation of the other person. It is advisable to distribute your card only to the main member and not to all the participants in the meeting unless asked specifically by someone.

 In formal meetings, wait for the Chairman to take the seat and sit where directed. Never jump to business talk without a few positive and polite statements of gratitude and appreciation. There are a few ice-breakers or a small talk on subjects of common interest like weather, current events, etc. which always helps set the ball in motion. Keeping time limit in mind give lead to get on with business. The lead could be something like . . . I will not take much of the precious time of the participants who have kindly consented to be present and with their permission whether it will be alright to move on to the first point of agenda.

After understanding the hierarchy, while presenting your point of view, always keep your eyes focussed on the anchor person. However, keep others also engaged with occasional eye-contact and enrolment by taking a small pause and asking if you are understood well enough. Keep your voice and body language soft and steady. Always voice your disagreement positively. For instance, you could say that you respect their viewpoint but you have certain practical considerations to be having a different viewpoint. Never show your impulse however unreasonable the contention from other side may be. Leave an escape vent to say that you are sure if that argument has come from person as distinguished as him then there must be some substance behind it and you will require some time to mull over it.

Start winding up before 5 minutes of the allotted time by summarising and end the meeting with thank you and wish to meeting again.

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Business etiquette

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Introduction Globalisation of economy has brought new opportunities to extend the boundaries of business beyond India. While these opportunities can be very exciting and enriching, they also present the challenges of successfully assimilating with different cultures and navigating business to the desired goal.

These challenges can sometimes become a major roadblock to achieving success when one unconsciously ignores established business etiquette practices.

Etiquette has to do with respect and civility in everyday life. It is about having well-mannered conversations, making others feel welcome and respected, and getting one’s view point accepted without belittling the other’s viewpoint and coming across in a way that makes a great impression.

In a series of articles in the coming months, we shall cover some of the aspects of our daily chores of business, where how we do it can make a BIG difference in our life and business. Some of the areas we would touch upon are enumerated below :

(i) Email etiquette
(ii) Mobile phone etiquette
(iii) Conducting meetings and teleconferences
(iv) Dining etiquette, attire and personal grooming.

Email In spite of its critical importance, email is sometimes treated in such a casual manner that small lapses can become a major hindrance in achieving a desired goal.

Given below are some of the points that may help to make the email communication more effective.

Selection of id Email id for business should be as simple as possible and preferably with name and surname. Selection of id with wild names can backfire. Thus krish. shah@xyz.com will be a far better choice than fantastickrish@xyz.com

Subject line Every email sent must have a subject line. It should not be too general such as ‘Hi’ ‘Bill’, ‘Payment’, ‘Meeting’, etc. as they do not serve any purpose and can be wrongly misinterpreted as spam. Correct way of putting a subject line is to briefly indicate the purpose of the email. Thus, if it is a reminder about payment, then it is better to write the subject line as ‘Payment for bill no.’ Never send email without a subject line as it will pose a great challenge to the recipient to locate your mail later to act on its content and will become an irritant.

First mail If the email is sent for the first time, then it is better to inform the recipient telephonically about the mail. This is because many times people have set a policy on their email server that they should receive mails in their ‘Inbox’ only from the addresses allowed by them.

Salutation It is preferable to write just the name as salutation unless you know the recipient close enough.

Content
Email should be brief and concise, but not in the SMS language. Any understanding or minutes should be enumerated pointwise giving numbers or bullets. One should never write the mail in ‘Capital’ letters as it is interpreted as if one is shouting. If the situation demands sending long text or working calculations, then it is desirable to send the same by way of an attachment.

Spam
Sometimes the recipient or his organisation’s e-mail policy may not appreciate/permit it since it can put undue pressure on his or organisation’s resources. Hence, it is always a good etiquette to take the general consent of the person in advance if you intend to put him on your mail list for circulation.

Reply
It is always desirable to reply the email of importance within maximum 48 hours. In case the email requires deliberation and/or consultations with others, then it is better to send an interim reply acknowledging the mail and informing the sender how long it will take to give a specific reply. As a sender, if one’s mail has not been replied to, then it will be advisable to write a reminder once on a forward of the previous mail. If even that is not replied to, then it should be ‘cooled off’ until there is a response from the intended recipient. Use discretion while clicking ‘Reply All’ as it has a viral effect increasing stress amongst colleagues.

Forward
One must be very careful while forwarding the email to delete the trail not intended for view by the recipient.

In the next article, we will cover mobile phone etiquette and expected norms for conducting teleconferences and meetings.

It has been my long-standing conviction that India is like a donkey carrying a sack of gold – the donkey does not know what it is carrying but is content to go along with the load on its back. The load of gold is the fantastic treasure – in arts, literature, culture, and some sciences like Ayurvedic medicine – which we have inherited from the days of the splendor that was India.

— Nani Ardeshir Palkhiwala

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.

— Bill Gates
Look well to this day. Yesterday is but a dream and tomorrow is only a vision. But today well lived makes every yesterday a dream of happiness and every tomorrow a vision of hope. Look well therefore to this day

— Francis Gray

I like thinking big. If you’re going to be thinking anything, you might as well think big

— Donald Trump

”India is an institutionalised democracy of long standing. Democratic changes in govern-ment should be seen as a sign of strength. We expect the reform process to continue although the emphasis may change.”

— Sanjeev Sanyal

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Students’ Annual Meet

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The Students’ forum of the BCAS has been actively working towards pursuing the vision of providing students a platform conducive for growth and pursuit of knowledge. A step in that direction has been the organising of the fourth students’ annual meet, henceforth to be called as the Jal Dastur Students’ Annual Day. The event was a mix of learning, guidance, inspiration, healthy competition, fun and loads of prizes to be won. The workshop enjoyed the enrolment of over 200 students with active participation in all the contests organised. The meet was organised on Saturday, 6th August 2011 at Directiplex, Andheri 3.00 p.m. Like the first students’ annual meet, this year too we invited Padma Shri CA T. N. Manoharan, a very dear friend of the Society. Mr. Manoharan addressed the students on the topic ‘Design to Win’. The key-note was a blend of theory and case studies in real life. Mr. Manoharan shared with the students his experiences in personal and professional life which in his opinion has played an instrumental role in his successes. Mr. Manoharan chose to draw inferences from his tryst with Satyam Computer Services revival wherein qualities like persistence, discipline, hard work, empathy, positive attitude, in-depth understanding of the ground realities and most importantly the will to succeed were amongst the fundamental reasons for the turnaround of the failed organisation. Mr. Manoharan was successful in striking a cord with the students and driving home the point that challenges may vary but the approach to tackle them can be standardised. With the right approach Mr. Manoharan emphasised, success can be delayed but not denied. The audience redeemed their faith in the learned speaker’s address by giving a worthy applause filled with gratitude and appreciation. The Forum expresses its sincere appreciation to Padma Shri T. N. Manoharan to have spared his valuable time for the common interest of the students’ fraternity. Elocution competition: BCAS had organised an Elocution competition for CA students under the auspices of Smt. Chandanben Maganlal Bhatt Elocution Fund. The competition enjoyed the participation of 33 students conducted at the Conference room of BCAS, Mumbai on Saturday 28th May 2011.

All the participants were given three minutes each to present their views on respective topics. Participants were judged by three very dear friends of the BCA Society; Sonalee Godbole, Mihir Sheth and Nitin Shingala. Each participant competed for 100 marks broken up into the undermentioned criteria: Personal Appearance, Speech Opening, Eye Contact, Voice Modulation, Gestures, Contents, Speech Conclusion, Time Management & Overall Impact. Finally the judges unanimously shortlisted eight participants to compete for the coveted Elocution Prize trophies.

All the finalists competed fiercely in front of a large audience to make a lasting impression on our judges for the finals; Aspi Doctor, Joe Rodrigues and Shyam Lata. The audience was treated to some of the finest speeches encompassing information, humor, satire, thought provocation, inspiration, vision and last but not the least, lots of passion. But like all competitions, only some win while some lose.

This competition was no different, five participants perished and the top three winners emerged to claim the gleaming crystal trophies.

The winners
The winners of the elocution competition were as follows:

Quiz Contest
‘Quiz 20-Twenty’ the quiz contest is organised by BCAS only for CA students. The quiz was designed to test the participants’ knowledge about current affairs and general knowledge; it also had a dash of academics to rake up that grey matter. All in all, infotainment formed the core of this event.

It was an inter-firm competition with all the firms invited to send their best teams to fight for the coveted prizes. The participants in the quiz contest had to appear for a standard set of questions. They were screened on the basis of the marks they scored in this questionnaire. The top scorers were short-listed but announced only on the day of the final quiz on 6th August 2011. The eliminations of the quiz took place along with elocution competition at the conference room of the BCAS Office, Churchgate, Mumbai on Saturday, 28th May 2011. Total number of students participating in the eliminations was over 60 students.

The shortlisted teams to compete in the final round of the quiz were as follows:

The competition had its share of ups and down. All the teams gambled for their fortunes, some got rewarded while some paid dearly. The audiences were treated with a mix of knowledge, fun and most importantly, healthy competition. The winners of the quiz contest were as follows:

The winner of this year’s rotating firm trophy is M/s. B. K. Oza & Associates. Awakening the writer within The writing competition was initiated last year and now this year onwards it is named in the memory of Jal Dastur. The competitive strives to harness talent in literary skills. The initiative also enjoyed the strong backing of the BCAS Foundation. Write-ups not exceeding 1000 words were invited from all the participants and the responsibility of assessment was entrusted to the Society’s very dear friends K. C. Narang, Pradip Kapasi, Gautam Nayak and Pradeep Shah. All the judges need no introduction and anybody regularly following the BCA Journal, must be aware of the immense contribution done by these learned people to the journal over a long period of time.

The winners of the article writing contest were as follows:

The task of the judges was more demanding in this case unlike other competitions because unlike other cases this competition performance cannot be taken of face value. A lot of reading between the lines is necessary by the contestants who don the cap of an evaluator of such contest. But our judges did not let us down and gave us our three winners for this year, the ones who toiled and gave their 100% to the competition, and hence rightly deserved to win. The winner of this year is yet to join a chartered accountant firm for articleship, hence this year the rotating trophy for the firm has not been presented. The evening ended with a show of appreciation for all the persons responsible for organising this wonderful evening full of guidance, entertainment and fun. The students were treated with a sumptuous meal after a hard day’s work with renewed promises to organise and participate in many such programmes to follow in future.

Acknowledgements

 We would like to express our sincere gratitude to all the undermentioned persons without whose support this event would not have scaled the heights it did.

  • Padma Shri T. N. Manoharan
  •  Shri Sohrab E. Dastur
  • Shri Mukesh Bhatt
  •  Shri Mahendra Turakhia
  •  BCAS Foundation
  •  All the Judges for the various Competitions
  •  Mr. Ashish Fafadia
  •  The Admin Team at Directi Iplex
  •  President & Vice-President, BCAS
  •  Office Bearers of the Bombay Chartered Accountants’ Society
  •  Core Group Members of BCAS.
  •  The Admin Team at B

Jal Erach Dastur Students’ Annual Day:

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Jal Erach Dastur Students’ Annual Day celebration was organised on Saturday, 26th May 2012 at the Navinbhai Thakkar Auditorium of Shri Vile Parle Gujarati Mandal, Vile Parle (East), Mumbai-400057.

The event commenced with Saraswati Vandana followed by welcome address by President Pradip Thanawala. Chairman Mayur Nayak commended the efforts put in by students in organising this event. He briefed about various activities of the students undertaken by the BCAS. He welcomed the Key Note Speaker Padmashri T. N. Manoharan, past president of the ICAI. The key-note speaker made a very inspiring presentation with the help of Power point. The topic was ‘Transcending the challenges’. The talk was motivational and inspirational. He touched upon various topics such as values of life, setting goals, managing time, putting hard work, focusing on the career, sacrificing unimportant things and distractions, keeping physical, emotional and mental balance, maintaining highest standards in profession, etc. There were three competitions, namely Essay Writing, Elocution and Quiz.

1. Essay competition

46 students took part in the Essay competition; three essays were selected for printing in the BCA journal. The judges for the Essay Competition were Mihir Sheth, core group member and member of the HR Committee, Vipin Batavia, Past President of the Chamber of Tax Consultant and member of the HR Committee and Sangeeta Pandit, core group member. The winners were (1) Rohan Shah (2) Rushab Vora (3) Chhaya Joshi 2. Elocution competition The Elocution Competition was organised under the auspices of Smt. Chandanben Maganlal Bhatt Foundation. Mukesh Bhatt from the said Foundation graced the occasion and presented trophies to the winners. 31 students took part in the Elocution competition. After the elimination round, finally eight participants competed on the Annual Day for the 1st, 2nd and 3rd positions. It was a close competition as all of them did a good job. The judges for the elimination round of Elocution competition were, Ashok Solanki, Aliasgar Kherodawala and Vijay Bhatt. The judges for the final round were TV actor Sumeet Raghavan, Rajesh Muni, Past President and Stanny Pinto, an academician.
The winners of the Elocution competition were:

  1. First Prize – Utsav Shah – Rashmin Sanghvi & Associates
  2. Second Prize – Shweta Agarwal
  3. Third Prize -Shweta Mishra –  PHD & Associates

3. Quiz competition 45 students took part in the Quiz competition. Four teams comprising two students each were selected for the final round. The Quiz competition was hosted by the Ashish Fafadia in his inimitable style. He made even the audience to participate in the quiz.

The winners of the Quiz competition were:

  1. First – Murtaza Bootwala – B.D. Jokhakar & Co.- Prize Riken Patel C.M. Gabhawala & Co.
  2. Second – Ashish Shukla – M.B. Nayak & Co.Prize Ashwini Shah M.B. Nayak & Co.
  3. Third – Bhuma Iyer -R.R. Muni & Co. Prize Sonal Pilwankar R.R. Muni & Co.

This year more than 400 students registered and about 50 principals and parents witnessed the talent presented by students. The event was compered by Shweta Agarwal and Nishad Vora and was well supported by Khusboo Shah. The event concluded with a sumptuous and delicious dinner.

Students left for home with lots of learning, fun and rich experience.

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What happens when one spends beyond one’s means?

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If you have Rs.100 in your pocket, then you cannot spend Rs.200. It’s very logical, right? The good news is that today’s world is no longer logical! It’s indeed very easy to spend more than what you have. But it’s equally important to analyse the cost of this extravagance.

A country spending way beyond its means will surely have a far greater impact than a school kid overshooting his pocket money. As the scale of this lavishness increases, the following two distinct trends are observed:

(1) The system of financing the gap becomes more and more complex

(2) The person spending gets more and more distant from the one paying for it.

Let us now see a few examples to understand fully how this evil system works.

A child and his pocket money
A school-going child has Rs.1,000 as pocket money savings and wishes to buy a video game DVD worth Rs.2,000. In a normal scenario, the child will comfortably make a gullible puppy face in front of the elders (technically may be called ‘financers’) and get the money. The advantage of being a child is that he rarely has to return it back. The amount involved is relatively negligible and the ones affected are close family members, pretty harmless.

Credit card — The prodigal’s best friend
Generally, anyone who wants to spend, what he is yet to earn uses a credit card. No doubt, when used wisely, a credit card is a wonderful source of free credit, but sadly, not all are wise. According to RBI, 1 in every 10 credit card holders defaults on payment. As of March 2011, there were 1.8 crore credit cards with average spending of Rs.41,862. Thus, we can estimate the defaults, at 10% of spending, to be Rs.7,536 crore.

Now, who pays for these? For the defaults made good by the customers, he pays a whopping 36% interest. But if he is unable to pay, the bank has to write them off. The real pinch is felt by the private shareholders of these banks and the government in case of nationalised banks. Not to forget, the management where the remuneration is linked to the profits, also feels the heat.

I owe you money? . . . Oh! Sorry, it just went down the drain . . .

Jean Paul Getty said, “If you owe the bank $100, that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”

No statement explains the paradox better! When huge corporations do business with others’ money, it’s not them but the lenders who have to worry about the state of business. One of the most recent examples is of a ‘reputed’ airline company. According to a leading broker’s estimate, the debt exposures of that particular airline company maybe a whopping Rs.10,000 crore. Using the corporate veil, the management will safely escape from the liability they have created. So, the ones ultimately shelling out Rs.10,000 crore may include banks, shareholders and creditors. Imagine thousands of crores going down the drain, in times of monstrous rise in cost of living and record high interest rates!

Banks going bust!
It’s not always that the banks that are on the losing side. Some clever devils in dark suits manage to pass on their mistakes to unsuspecting investors. Since banks are traditionally considered conservative, and people like you and me, easily fall for such dud schemes. And soon the bubble bursts, in turn, making everyone burst into tears. Take the example of the most monumental fall of recent times, the Lehman Brothers. With a debt equity ratio of 35 to 1, it was a ticking time bomb. Its debt was close to US $613 billion at the time of default. The damage does not end there. Bail-outs and stimulus packages followed the 2008 crisis from which the world has still not fully recovered. The total impact of the whole global economic crisis has cost trillions of dollars, millions of jobs and countless hungry stomachs. Consider this; the family of a jobless daily labourer has to go hungry while the ones responsible for overshooting their means enjoy barbeque parties in lavish bungalows! The ones suffering include creditors, shareholders, governments, taxpayers, citizens and the list goes on.

What is bigger? Bankrupt countries!
Greed has no limit. What happens when governments spend beyond their means? Countries go bankrupt! Some casualties include Argentina, Zimbabwe and the latest one, Greece. Greece had pushed very hard to enter the European Union so that it could use the Euro to borrow cheaply. The interest rate it used to pay on its borrowings before joining EU was 10-11% which fell to 3-4% immediately after adopting Euro. So, it kept mounting debt. Before it could repay the old one, it took a new, bigger loan. The proceeds were not always used to repay the old loan, but to fund their spending spree. It should be noted that the pension entitlement in Greece is around 92% of last salary that too at a time when Greece has a very fast ageing population. Since the adoption of Euro, the average wage of public sector workers doubled. These, along with large-scale tax evasion are some of the reasons for the mess this country finds itself in. Portugal, Spain and Italy too are sitting ducks. The impact of this looming crisis shall be more than anyone can ever fathom. Ripples of this crisis shall affect billions of people and deeply hurt the global economy.

Conclusion
Credit is the reason any business or economy runs. However, if you cross your limits, the impact will be felt at places and by people beyond your imagination. The only way to prevent such damage is by knowing your limits. We should not confuse limits with restrictions, no one likes restrictions! However, by setting budgetary limits we can ensure no one suffers. For articles like us, it has to start by managing the whole month’s expenses within the stipend earned. Being a disciplined money manager is not the job of the faint hearted! The whole marketing world is conspiring to raid our wallets. It is for us to protect it and keep the spending within limits. Yes, tough task!!

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Students’ Forum

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Dear friends, On Saturday, 11th June 2011 the forum has organised the Annual Day Programme to celebrate its 4th anniversary at Direct I-Plex, Andheri (w), starting from 3.30 p.m.

The Programme holds promise to achieve the following benefits:

Keynote address: At the Society it has always been our endeavour to harness talent and provide an environment not only conducive for pursuit of knowledge but also to provide a platform for future chartered accountants to achieve their potential.

Our learned speaker for the day Padma Shri (CA) T. N. Manoharan shall address the students throwing light on the various challenges that the path beholds and an alternative approach that one can follow to combat those challenges.

Awakening the writer within: Students pursuing the Chartered Accountancy Course are welcome to participate in the writing competition whereby they can write an essay on any topic of their liking and submit it to km@bcasonline.org and mark a copy to gm@ bcasonline.org. Only original ideas and viewpoints need to be expressed through the essays. Any essay found to be copied from the Internet or an existing write-up shall be disqualified.

Your write-ups should not exceed more than 1,000 words. The Editorial Committee of the BCAS will assess your contribution and if selected your essay will be published in BCAJ. The decision of the Editorial Committee is final and shall not be questioned under any circumstances whatsoever. Three selected best contributions will be awarded a prize. A certificate of participation will be issued to all the participants. Kindly note, your essays with your complete details and your registration number with ICAI should reach not later than May 23rd 2011.

Elocution Competition 2011 (for CA Students) Saturday, 11th June 2011:

“He came, He spoke, He won” — this is a story of a good communicator. The one who speaks convincingly and impressively wins half the battle. Now here is the opportunity of the year for CA students to present their communication skills. Be little humorous, let imagination run wild at the Elocution Competition organised by BCAS for CA students under the auspices of Smt. Chandanben Maganlal Bhatt Elocution Fund. The contestant will be given five minutes to express his/her views on any one of the undermentioned topics:

(a) Scams (Your Take on Combating It)
(b) Why I wished to be a C.A.?
(c) Coping with Stress (Your Mantra Decoded)
(d) An appointment with GOD (Your Agenda for the Meeting)
(e) Freedom of Expression (Used or Overused)

Those desirous of participating should enrol on or before May 23rd 2011. The best three speakers selected by a panel of judges will be awarded handsomely. An elimination round will take place on June 4th 2011, Saturday at the Society Office Churchgate starting from 2.30 p.m.

Strike fast: A quiz is organised at the Annual Day to enable you to test and gain more general knowledge, basic information on commerce, economics, health, sports and entertainment.

Articles of the same firm or self-formed groups can participate and compete as a group. Three prizes will be awarded to the winning team and a certificate for participation will be issued to each participant.

A rotating trophy is up for grabs to be awarded to the winning team’s CA firm.

Do not miss the opportunity to meet and enjoy with your student friends. Enrolment is limited for 200 students.

And above all, a sumptuous buffet to end a wonderful evening.

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Prize winning essays from the Essay Competition held by the Society for Students

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Is India progessing or regressing?

Charmi Doshi
1st Prize

“Progress is the activity of today with assurance of tomorrow”, these words were rightly quoted by Sir Emerson. ‘India’, ‘Bharat’, ‘Hindustan’, as many names as many cultures, religions, languages, a complete hotchpotch of diversity and traditions. But being multi-linguistic and extremely diversified just does not make it a fully developed country, but yet, surely it plays a great role in chiselling the structure of the country. The question to be asked today is, ‘Is India capable of becoming a superpower or at least change its title from a ‘developing’ to a ‘developed’ country?’

Well, the answer is crystal clear, ‘Capability is never equal to power unless it is backed by intent and willingness to use the power in the pursuit of ‘National Interest’.

Let me put it this way; you are on a long road trip. Do you always find the road to be smooth and complete the journey without any obstacle? This same concept applies to the journey of a country from an underdeveloped to a developed one. There are always highs and lows, sometimes uneven road; similarly in the entire process of development, the country has to go through all the phases of highs and lows. So, this makes it clear that in the path of progression one has to face regression but, with the condition of bouncing back even higher. No doubt, India has progressed immensely in the past few decades that even our forefathers would have never imagined. Seeing the current scenario, it is definitely clear that India is progressing but, is it exactly how we imagined?

Tall towers in cities like Mumbai and Bangalore, four-lane drive ways in cities like Ahmedabad, monorails and metros in Delhi and Kolkata, sealink as a flyover above the sea, huge dams, constant electric supply, automatic cars, defence equipments matching the World class standards, space-crafts circumnavigating the space etc.. etc.. etc.. all these are the most lively and vibrant examples of tremendous progress the country has made in the past few decades. Today, a man can circumnavigate the globe within 24 hours. This has made the saying very clear that ‘Sky is not the Limit’. India is like the new ‘epitome’ of opportunities in the World. Many multi-nationals and business houses are looking forward to open their businesses in India. Discovery of life saving drugs, excelling in the fields of Science and Mathematics have made the Nation really proud. The most recent development in the field of ‘BPO & KPO’ i.e. business process outsourcing and knowledge process outsourcing.

We all know that in NASA organisation maximum employees are Indian. In each and every part of the World Indians are spreading goodwill and are shining all the way. What would we call all this? This is nothing but splendid performance proving the ability to progress by our Nation. Then, why is it still referred to as ‘stagnant and developing’? No doubt, the country is on its path to success. But with success come many downfalls and negative elements. Who said the developed countries do not face the adverse elements?

Yes! You heard it right, even the superpowers of the World have gone through their ‘Regression’ phase. But, what is important to know is ‘Do the adverse elements of a nation in the path of progress outweigh the favourable elements?’ This is where India is lagging behind. With each step of success comes a number of obstacles and hurdles which pulls back the country to step 1. Pollution, black money, corruption, indiscipline, are the very common hurdles present in this Nation. ‘If you want to get the work done, fill your pockets before going out’, ‘bribe’ the most common terrorist of the Nation. Adulteration in food, using cheap quality materials in building infrastructure just for earning few extra rupees at the cost of endangering the entire country, black money circulating faster than air, money laundering, ill practises like caste discrimination and untouchability. Who can say that the country which has developed so much is still backward that most of its children are malnourished and live below the poverty line? Wealth in hands of few is the ongoing picture. More than five lakh villages are still without power; more than half of the population is still illiterate. Is this exactly what we call ‘favourable progress’? It is high time that we fellow Indians must awaken and sow the seeds of development with minimum chemicals to it.

 In the end, I would like to say that no doubt India is progressing yet, it needs to change and modify its ways.

‘While India is developing to the fullest extent with infrastructure and technology on its peak, our fellow Indians are still living in ‘drudgery’. Progression has to come with regression. But, on the condition of bouncing back even higher.

‘Progress is like a double-edge sword’. It is upon us whether we want to use it to cut vegetables or to kill a person? Thus, India is definitely progressing but it is still a slave to many ill practises giving rise to regression.

Religion & Spirituality

Aneri Merchant
2nd Prize

Every religion stems out of spirituality. Religion becomes rigid and restricts you but spirituality brings that expansion you crave for.

 —Sri Sri Ravi

Shankar Religion and spirituality are the two defining factors in the determination of the higher values of life. These two functions of the inner call of a human being correspond to life in the world and life in God. The relationship between the world and God is also the relationship between religion and spirituality.

A large number of people identify themselves as “spiritual but not religious.” This phrase probably means different things to different people. The confusion stems from the fact that the words “spiritual” and “religious” are really synonymous. Both connote belief in a Higher Power of some kind. Spirituality is about personal experience of a new dimension to life and living by the lessons learned therein. Religion is blind faith in somebody else’s theories, and then conforming to their expectations and demands. Before the 20th century, the terms religious and spiritual were used more or less interchangeably.

The word spirituality gradually came to be associated with a private realm of thought and experience while the word religious came to be connected with the public realm of membership in religious institutions and participation in formal rituals. Since the birth of humankind, our biggest inner struggle has been to achieve a level of complete peacefulness through religion or spirituality.

In India, there is a discipline prescribed for the gradual evolution of the human individual by stages of

 (1) education,

 (2) adjustment of oneself with the demands of natural and social living and,

(3) detachment from the usual entanglements in life and

(4) final rootedness of oneself in God. (Sanyasa)

Every religion has its various restrictions imposed on a person, keeping all human activity confined to specific areas of living, with its several dos and don’ts – ‘do this’ and ‘do not do that’. There cannot be any religion without these two mandates imposed on man.

People in the first two stages of life mentioned above are placed under an obligation to follow these dos and don’ts of religion in social behavior, in personal conduct and dealings with people in any manner whatsoever.

Every religion has these ordinances, defining the duties, which are religious, whether in the form of ritual, worship, pilgrimage, daily diet, and devotion and adherence to the scripture of the religion. These restrictions are lifted in the third stage where the life of a person is mainly an internal operation of thought, feeling and understanding and experiences of the materialistic life.

Even though, religion has evolved and shifted through many individual beliefs, yet the essence of spirituality has always been the same.

Spirituality exists wherever we struggle with the issue of how our lives fit into the greater cosmic scheme of things. This is true even when our questions never give way to specific answers or give rise to specific practices such as prayer or meditation. We encounter spiritual issues every time we wonder where the universe comes from, why we are here, or what happens when we die.

According to one of the religion writers, Malik Khan, Religion is applied to a great variety of human ideas, acts, and institutions. All the attempts to shift out from these common elements, which would represent the “essence” of religion, have ended in failure. Men have fought and died for their religion. Art and literature have flowered forth as expressions of faith. Many people acknowledge religion as the basis for strength, hope, and significance in their lives.

Religion is an institution established by man for various reasons. You confess your sins to a clergy member; go to elaborate churches to worship, you are told what to pray and when to pray All those factors remove you from God.

Spirituality is born in a person and develops in the person. It may be kick started by a religion, or it may be kick started by a revelation. Spirituality extends to all facets of a person’s life. Spirituality is chosen while religion is often times forced.

Sri Sri Ravi Shankar in a recent interview promoted spirituality. According to him, when people become saturated by so many different kinds of experiences, even by various comforts, there is a quest to know something else, something deeper in life.

Spirituality is imbibed in a person. You don’t have to leave or sacrifice anything to have a spiritual life. You can be spiritually and materially abundant. As you become more and more spiritually fulfilled, you act more and more out of a sense of responsibility rather than a sense of greed or attachment. One may achieve financial value but if you gather a lot of stress and tension in the bargain, that affects your own health, your own peace of mind, your own relationships, then what’s the point? What are you gathering all the wealth for?

An expensive bed is no good if you can’t sleep. Losing health to gain wealth and then spending that earned wealth to regain health doesn’t sound like good economics at all.

To sum it up,

•    There is not one religion, but hundreds but there is only one type of spirituality.

•    Religion speaks of sin and of fault while spirituality encourages “living in the present” and not to feel remorse for which has already passed – Lift your spirit and learn from errors.

In the end what matters is faith, faith in an upper power, a divine energy to help us find a light through an empty tunnel in our darkness of lives.

A Report on Jal Erach Dastur Students’ Annual Day Function held on 23rd February 2013 at the Navinbhai Thakkar Auditorium, Vile Parle, Mumbai.

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The Students’ Forum of Human Resources Committee organised this function for the CA Students. The programme commenced with Saraswati Vandana and was followed by a welcome address by Mr. Naushad Panjwani, Vice President. Mr. Mayur Nayak, Chairman of the HR Committee, praised the efforts put in by students in organising this mammoth event and outlined various activities carried out by the Students Forum.

Mr. Nilesh Vikamsey central council member of the ICAI in his, the Keynote address , gave a very inspiring presentation titled “Power of Dream & Power of Positivity”.

To mark the Annual Day four competitions were held, namely, Essay Writing, Elocution, Debate and Talent Showcase. The results are as given below. 1.

Essay Writing Competition

The judges Mr. Vipin Batavia, Ms. Sangeeta Pandit and Mr. Mukesh Trivedi evaluated essays written by 59 students and prizes were awarded to the following three :

Award Name of the Participant Name of the Firm
First Prize Charmi Doshi Pradip Kapasi & Co.
Second Prize Aneri Merchant Rashmi Modi & Co.
Third Prize Mudit Yadav NMAH & Associates
2. Elocution Competition

The Elocution Competition was organised under the auspices of Smt. Chandanben Maganlal Bhatt Foundation and was graced by the presence of

Mr. Mukesh Bhatt, a family member, who presented the trophies to the winners.

Out of thirty-six students who participated in the elimination round, eight students made it to the final round. The judges of the elimination round were Ms. Shruti Shah, Mr. Nitin Shingala, and Mr. Mihir Sheth.

The judges for the final round were Mr. Suresh Prabhu, Mr. Atul Bheda, and Mr. Shrikant Kanetkar. As the competition was intense the Judges in their discretion awarded 5 prizes as against 3 normally declared.

The winners are as follows:

Award Name of the Participant Name of the Firm
First Prize Kartik Srinivasan Pankaj Parekh & Co
Second Prize Shweta Agarwal Churuwala & Associates
Third Prize Mudit Yadav NMAH & Associates
Consolation Prize Amishi Vora Pradip Kapasi & Co.
Consolation prize Kush ganantra Paras Sheth & Associates
3. DebatingCompetition
Out of fifty-one student participants in the elimination round, sixteen participants made it to the final round. The final round was moderated by Mr. Ashish Fafadia in his inimitable style by involving the audience and this made the debate even more interesting. He was assisted by Mr. Mukesh Trivedi and Mr. Krishna Kumar Jhunjhunwala, judges for competition.

The winners are as follows:

4. Talent Show

Out of the twelve nominations, nine participants were selected for the final round of the Talent Show that was judged by Mr. Suril Shah and Mr. Nipun Nayak. The following three performers were adjudged winners.

The winners are as follows:


The Annual Day was attended by nearly 300 strong audience comprising mainly of the students, who were enthusiastically supported by their appreciative Principals and Parents. The event was compered by Ms. Khushboo Shah and Mr. Chintan Shah with active support of Ms. Shweta Agarwal.

The participants and the audience bonded over a sumptuous and delicious dinner and left home refreshed by joyful learning and a fun-filled experience.

Discounted Cash Flow (DCF) Valuation

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Introduction
In business, ‘Cash flow is the king’ and Discounted Cash Flow uses cash flows to arrive at the value of an enterprise. The term Discounted Cash Flow (DCF) has gained popularity in the financial world, especially in the world of valuation. With the Indian economy going through the ‘developing’ phase and private sector booming, there is a spurt in mergers and acquisitions, corporate restructuring, and foreign investments in India. At the same time, Indian entrepreneurs are exploring foreign shores. It is important, in this backdrop, to know what DCF is all about and also to learn about DCF’s importance.

DCF calculations have been used in some form or the other, since money was first lent at interest during the ancient times. It gained popularity as a method for valuation of stocks after the market crash of 1929. Irving Fisher, in 1930, in his book “The Theory of Interest” and John Burr Williams, in 1938, in “The Theory of Investment Value” first formally expressed the DCF method in the modern economic terms.

Basically, the DCF method is a method whereby an enterprise as a whole or its shares are valued, using the concept of the time value of money and estimating future cash flows of the enterprise. The cash flows that an enterprise will generate over a fairly long period, are discounted to their present value, to arrive at the value of the enterprise or shares, as the case may be.

Equity valuation vs. Enterprise valuation

The DCF method of valuation is used not only for valuation of equity, but also for the enterprise valuation. When valuing an enterprise, we consider the cash flows before debt commitments unlike in equity valuation where we consider the cash flows available to equity shareholders of the company after fulfilling all other commitments.

Enterprise valuation, also called business valuation of the company is used for arriving at the purchase consideration during amalgamations, absorptions, mergers, demergers, etc. This method also helps credit rating companies like CRISIL, ICRA, etc. to arrive at the ratings to be assigned to a company.

Three Important factors to be considered for DCF
Discount Rates

Discount rates applied to cash flow should be commensurate with the risk involved in the business. Discount is based on the cost of capital to the enterprise which considers the risk involved. Cost of capital is the weighted average of cost of equity and after tax cost of debt.

Cost of Equity is mainly dependent on market risk and the expected return for that investment. There are various types of risks involved in a business – project risk, competitive risk, political risk, economic risk, etc. Cumulatively, all these are called as market risk.

The most common and widely used model for measuring the risk is Capital Asset Pricing Model (CAPM). In CAPM, all the market risk is captured in ‘Beta’. We derive the risk measure ‘Beta’ as follows:

       Covariance of asset with market portfolio
———————————————————-
            Variance of market portfolio

Assets having risk higher than average (market portfolio) will have a Beta greater than 1, while less riskier assets than average will be less than 1. A riskless asset will have a Beta of 0. There are three main factors that affect ‘Beta’.
 i) Type of Business
ii) Degree of operating leverage
iii) Degree of financial leverage

Determination of Beta becomes quite difficult in private and closely held businesses. In such cases, we generally consider comparable Betas of publicly traded companies. Risk free rate is also an important part of determination of cost using CAPM. Generally, risk free rate is the rate of return on government securities of appropriate maturity. But not all government securities are risk–free.

Last part of CAPM model is ‘equity risk premium’. This is the extra return that investors demand over and above the risk–free rate. It is the return for taking higher risk by not investing in riskfree asset. It normally ranges from 4% to 12%.

Next we come to the cost of the debt. Determining the cost of debt is comparatively simple. It is the interest rate on the money borrowed by the enterprise to finance its operations. Interest being a tax deductible expense, the cost of debt to the enterprise should be considered, after taking into account the tax benefit on the interest paid. This is arrived at, using the following formula: After tax Cost of Debt = interest rate *(1-tax rate)

Finally, we determine the Weighted Average Cost of Capital (WACC) by taking the weighted average of the cost of equity and debt according the proportion in which they have been utilised in the enterprise. This WACC is the discount rate for discounting future cash flows. Estimating Future Cash Flows Now, the important thing is to estimate the future cash flows. These are the key to DCF valuation. The term cash flows means free usable earnings. Free Cash Flow is derived as follows:

Free Cash Flow = Net Income – (Capex – Depreciation) – Change in non-cash working capital + (Debt raised – Debt repayment).

The above formula is used for equity valuation. While valuing a business or an enterprise, adjustments on account of debt is not required to be made.

This is just the basic formula, but practically, one needs to do many adjustments to the accounting earnings to arrive at the correct free cash flow to the equity. For example: R. and D. Expenses: Future benefits of these expenses are uncertain. Where benefits are expected, these may be capitalised and amortised over their life while estimating the cash flows. Similarly, for advertisement expenses if benefits are expected over a long period one may take the same stand.

One Time Expenses: All onetime expenses, extraordinary expenses which are not expected to recur in future should be ignored.

Expenses/receipts of fluctuating nature: Items such as foreign currency fluctuation whether positive or negative should be appropriately considered.

Tax subsidies: Government often offers tax subsidies and credits to specified businesses in the form of tax holiday. In such cases, particularly if tax holiday has a sunset clause, then tax is calculated at normal rates ignoring the tax holiday. Cash flows should be after considering the tax impact.

While past earnings may be used as a guide, what is important is to estimate future cash flows. Forecasting period is also an important factor as for how many years the cash flows are to be estimated and discounted. Normally, we estimate the cash flows for a period of five years. But it can be more or less, depending upon the industry and market conditions and certainty with which future cash flows can be estimated. It is subjective and depends upon the valuer and assumptions made.

Terminal Value

Since it is impossible to estimate cash flows for a long period, we estimate cash flows for a finite period, for which estimate can be made and calculate Terminal Value which is liquidation value of the enterprise at that point. Here, we assume, a growth rate of the enterprise. It is a rate at which the enterprise is expected to grow on a year-on-year basis after the terminal year. As we are assuming growth rate for a fairly long period, the rate should not be higher than the overall growth of the economy.

                                  Cash flow (n+1)

 Terminal Value = ————————————-                          
                               Cost of equity – Growth rate

During enterprise valuation, we replace cost of equity with cost of capital in the above equation.

Final Valuation
Finally, the enterprise is valued by discounting the future estimated cash flows along with terminal value calculated in the final estimated year with the cost of capital or cost of equity as the case may be. Sum of all these present values will be the enterprise value for an enterprise. For equity value we deduct debts from the enterprise value. We can find value per share by dividing equity value with number of shares outstanding.

Advantages of DCF

•    The DCF model considers the projected cash flow of a company while determining share value of the company. Investors as well as the management are interested in the future growth, rather than the present assets.
•    It gives a more realistic value of shares if the cash flow projections can be made realistically.
•    DCF assumes the going concern approach unlike other valuation techniques.

Limitations of DCF
•    In case of newly incorporated company/non operative company, it is difficult to project future cash flow and DCF may give inappropriate valuation.

•    It is also not suitable for companies with large asset base with negative cash flows, as use of this method will not depict the real value of the company.

•    Assumptions have a big impact on the value arrived at by using DCF. Any change in the estimation of core rates will change the entire value and the purpose of valuation might not be fulfilled.

DCF and Statutory Provisions
FEMA guidelines for issue of shares

The Reserve Bank of India (RBI), by Notification no. FEMA 205/2010-RB, dated 7th April, 2010, amended the pricing guidelines applicable for issue of shares by an Indian company to a non-resident and for the transfer of shares of an Indian company from a resident to a non-resident. The new guidelines stipulate that the value of shares is to be determined using the DCF method, in the case of shares of an unlisted limited company. Prior to this change, valuation was required to be done on the basis of guidelines issued by erstwhile Controller of Capital Issues. These guidelines prescribed valuation based on historical earnings and asset values.

However, the DCF method posed a problem in valuation of shares of a new company. So, recently, RBI issued a Circular No. 36 dated 26th September 2012 under which shares can be issued to non-residents at face value if these are by way of subscription directly to Memorandum of Association which clarified the uncertainty on this issue.

Income-tax Act

Section 56(2)(viib) as inserted in the Finance Act, 2012 provides that if a closely held company issues shares at a higher price than Fair Market Value (FMV), then the difference over and the FMV if exceeding Rs. 50,000 will be taxable in the hand of issuing company.

Recently, vide Notification No. 52/2012 dated 29-11- 2012 amending Rule 11UA of Income Tax, the CBDT introduced DCF valuation as one of the two the methods for determining the FMV of unquoted shares for the purposes of section 56(2)(viib).

ITAT (Chennai) in a recent case of Ascendas (India) Pvt. Ltd. (ITAT No. 1736/Mds/2011) held valuation of shares under DCF method as an appropriate method to determine Arm’s Length Price (ALP). In the said case, assessee sold shares to its ‘Associated Enterprise’ and considered the value as per CCI guidelines for the purpose of determining the ALP. The Transfer Pricing Officer (TPO) rejected the valuation technique and directed to consider the value as per the DCF method for the purpose of determining ALP. The Tribunal held that none of the six methods specified in section 92C and Rule 10B of the Income-tax Rules were appropri-ate in this case. It further held that CCI guidelines were issued for a different purpose and cannot be used for calculation of ALP and held that the DCF method of valuing shares and enterprise which is the method accepted internationally should be used. The Tribunal finally held that the DCF method adopted by the TPO was in accordance with section 92C(1) of the Act and it would give the value as per ‘comparable uncontrolled price’.

Conclusion

Considering the volume of cross–border FDI transactions, the use of the DCF method for valuation has increased substantially. DCF valuation will prove as a great opportunity for the young generation of chartered accountants to expand their services by providing valuation services.

Finally, the valuation itself is a subjective and varies from valuer to valuer. As Warren Buffet says “Price is what you pay and value is what you get”. Value is an intrinsic value derived from the asset unlike price, which is negotiated between the buyer and the seller.