Business and Economy

COMMONLY USED BUSINESS AND ECONOMIC ABBREVIATIONS

AAGR Average Annual Growth Rate
AAR Average Annual Return
ABB Asean Braun Boveri
ADAG Anil Dhirubhai Ambani Group
ADB Asian Development Bank
ADR American Depository Receipts
AGM Annual General Meeting
APEC Asia Pacific Economic Cooperation
APM Administered Price Mechanism
ASCII American Standard Code for Information
Interchange
ASSOCHAM Associated Chambers of Commerce and
Industry
B2B Business to Business
B2C Business to Consumer
BIS Bank for International Settlements, Bureau of
Indian Standards
BOP Balance of Payment
BPO Business Process Outsourcing
BRIC Brazil India Russia China
BSE Bombay Stock Exchange
CAGR Compounded Annual Growth Rate
CEO Chief Executive Officer
CFO Chief Financial Officer
CII Confederation of Indian Industries
CIS Commonwealth of Independent States
CMIE Centre for Monitoring Indian Economy
CPI Consumer Price Index
CRISIL Credit Rating Information Services of India Ltd.
CRR Cash Reserve Ratio
CSO Central Statics organization
DIAL Delhi International Airport Ltd.
EMI Equated Monthly Installment
EPS Earnings Per Share
EPZ Export Processing Zone
ESOP Employee Stock Ownership Plan
EXIM Bank Export and Import Bank
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act
FERA Foreign Exchange Regulation Act
FICCI Federation of Indian Chambers of Commerce
and Industry
FII Foreign Institutional Investor
FIPB Foreign Investment Promotion Board
GATT General Agreement on Tariffs and Trade
GDP Gross Domestic Product
GDR Global Depository Receipt
GNP Gross National Product
HDFC Housing Development Finance Corporation
HNWI High Net Worth Individuals
ICICI Industrial Credit and Investment Corporation of
India
ICRA Investment Information and Credit Rating
Agency of India
IDBI Industrial Development Bank of India
IFC Industrial Finance Corporation; International
Finance Corporation
ILO International Labour Organization
IMF International Monetary Fund
IPCL Indian Petrochemical Corporation Limited
IPO Initial Public Offering
IRDA Insurance Regulation and Development
Authority
IRR Internal Rate of Return
JV Joint Venture
KPI Key Performance Indicators
LIBOR London Inter-bank Offered Rate
LIC Life Insurance Corporation of India
M1 Money supply with public
M2 M1 + time related deposits + savings deposits,
money market funds.
M3 Aggregate monetary resources
MNC Multi National Corporation
MOU Memorandum of Understanding
NABARD National Bank of Agriculture and Rural
Development
NAFTA North American Free Trade Agreement
NASDAQ National Association of Securities Dealers
Automated Quotation
NASSCOM National Association of Software and Service
Companies (of India)
NAV Net Asset Value
NCAER National Council of Applied Economic Search
NHAI National Highways Authority of India Limited
NPA Non Performing Assets
NRIs Non-Resident Indian
NRS National Readership Survey
NSE National Stock Exchange
NYSE New York Stock Exchange
ONGC Oil and Natural Gas Corporation
OPEC Organisation of Petroleum Exporting Countries
OTCEI Over the Counter Exchange of India
PETA People for Ethical Treatment of Animals
PLR Prime Lending Rate
PPP Purchasing Power Parity
PSU Public Sector Undertaking
RBI Reserve Bank of India
RPI Retail Price Index
SAARC South Asian Association for Regional
Coorporation
SAIL Steel Authority of India Limited
SEBI Securities and Exchange Board of India
SENSEX Sensitivity Index (of Share Price on BSE)
SEZ Special Economic Zone
SLR Statutory Liquidity Ratio
SME SME
SWOT Strengths, Weakness, Opportunities and Threats
TISCO Tata Iron and Steel Co.
UHNWI Ultra-high Networth Individual
UNCTAD United Nations Conference on Trade and
Development
VAT Value Added Tax
WEF World Economics Forum
WPI Whole Sale Price Index
YTM Yield to Maturity




TYPES OF BUSINESS ENTITIES
A business entity is an institution engaged in an economic activity, producing, selling and distributing
goods/services with an aim of earning profits. Three important types of business entities are:
1. Sole Proprietorship
2. Partnership
3. Company

1. SOLE PROPRIETORSHIP
When an individual takes the initiative to start an activity related to start a trade or commerce for his own
economic benefit, it is known as sole proprietorship. A sole proprietor is a single person who owns,
maintains and manages the whole show in the business. All the salaries and other overheads only form a part of
the expenses of the sole proprietorship firm. After deducting all the expenses that relate to the business from total
receipts of the business, what remains is the profit which may either be reinvested in the firm or could be
withdrawn by the proprietor.

Characteristic of a Sole Proprietorship Business
i. Single Ownership
ii. Autonomy in Decision Making - The sole proprietor is the only decision maker and has
complete autonomy in decision making.
iii.
Quick Decision Making Since the firm is owned by a single person, the decision making is
prompt.
iv. Unlimited Liability In case of insolvency of the firm, the liability stands unlimited i.e. if the
assets of the firm are not enough to pay off the business debts the personal assets of the
proprietor are also attached to the firms property.
v. Can be winded up without any prior legal notice.
vi. No Separate Legal Entity In case of sole proprietorship, the owner and the business are
considered one and the same i.e. the actions taken by the proprietor are binding upon the
firm and vice versa.
2. PARTNERSHIP
An individual i.e. a sole proprietor may not be in a position to cope with the financial and managerial demands of
the present business world. As a result, two or more individuals may decide to pool in their financial ad non-
financial resources to start and carry on a business. The Indian partnership act defines partnership as, the
partnership between persons who have agreed to share the profits of business carried on by all, or any one of
them acting for all.

Characteristics of a Partnership Business
i. An association of two or more persons.
ii. An agreement entered into by all persons concerned.
iii. Existence of business (and not just an agreement) .
iv. The carrying on of business by all, or any one of them acting for all.
v. Sharing of profits (or losses)of the business.
From the point of view, the main thing is that relations among the partners will be governed by mutual agreement.
The agreement is known as The Partnership Deed which is to be properly stamped. It should be comprehensive
to avoid disputes later on. It is usual therefore, to find the following clauses in a Partnership business:
i. Name of the firm and the partnership business.
ii. Commencement and duration of business
iii. Amount of capital to be contributed by each partner
iv. Rate of interest to be provided to each partner on his capital
v. Disposal of profits and the ratio in which it would be done
vi. Amount to be allowed to each partner as drawings and the timings of such drawings
vii. Whether a partner will be allowed a salary
viii. Any variation in the mutual rights and duties of the partners
ix Method by which goodwill will be calculated
x Procedure by which a partner may retire and the method of payment of his dues
xi Treatment of losses arising out of the insolvency of a partner
xii Preparation of accounts and their audit
3. COMPANY
The word Company etymologically is a combination of two Latin words Com meaning with or together and
Pains meaning bread. Originally, it referred to a group of persons who took their meals together.
In business terminology, a company refers to a legal entity formed which has a separate legal entity from its
members, and is ordinarily incorporated to undertake commercial business.

Put in simple words, a company is nothing but a group of persons that have come together and have contributed
money for some common purpose and have incorporated themselves into a distinct legal entity in the form of a
company for the same purpose. A company is formed and registered under the Companies Act, 1956.
Characteristics of a Company
i. Separate Legal Entity - A company has a legal identity distinct from that of its members.
In a court case, Salomon vs. Salomon & Co. Ltd, 1807, the entity of the company has
been described as following A company is a person, artificial, invisible, intangible and
existing in the eyes of law.
ii. Limited Liability In a company limited by shares, liability of the members is limited to
the unpaid value of the shares whereas in a company limited by guarantee, liability of
the members is limited to such amount as the members may undertake to contribute to
the assets of the company, in the event of it being winded up.
iii. Perpetual Succession A companys life does not depend upon the life of its members.
Members of a company may come and go, may change from time to time, but that does
not affect the continuity of the company.
iv. Separate Property Since the company has a separate legal entity, it also has a
separate property of its own. No member can claim to be the owner of the companys
property till the existence of the company.
v. Transferability of Shares The shares in a company are freely transferable but subject
to certain conditions, such that no shareholder is permanently or necessarily attached
to the company.
vi. Common Seal - A company is an artificial person and does not have a physical
existence. A common seal is the official signature of the company under which it
operates and carries out its activities.
vii. Legal Entity Since a company is a separate entity, distinguished from its owners, it
has the capacity to sue and can be sued in its own name.
viii. Separate Management A company is owned by its shareholders but the management
of a company is in the hands of its managerial force constituted of Board of Directors,
employees etc. Thus the management of a company is separate from its owners. The
shareholders may or may not constitute a companys management.
ix One Share-One Vote The voting principle followed by a company is of the pattern
where one share constitutes one vote. If a person holds 100 shares of a company, he
has 100 eligible votes in that company.
Types of Companies

1. Public Company
Public Company is a company in which shares are held collectively by the general public rather than a selected
few individuals. Minimum number of members in a public company is seven, if members become less than
seven, the company is no longer a public company but is rather a private company.
2. Private Company
Private company means a company which by its articles of association,
l Restricts the right of members to transfer its shares
l Limits the number of its members to fifty. In determining this number of 50, employee-members and
ex-employee members are not to be considered.
l Prohibits an invitation to the public to subscribe to any shares in or the debentures of the company.
If a private company contravenes any of the aforesaid provisions, it ceases to be a private company and loses all
the exemptions and privileges which a private company is entitled to. Minimum number of members in a private
company is two. A private company does not need a separate certificate from the Registrar of Companies for the
commencement of its business.
3. Companies deemed to be Public Limited Company
A private company will be treated as a deemed public limited company under one of the following circumstances:
l Where at least 25% of the paid up share capital of a private company is held by one or more body
corporates, the private company shall automatically become a public company on and from the date
on which the aforesaid percentage is so held.
l Where the annual average turnover of the private company during the period of three consecutive
financial years is not less than Rs 25 crores, the private company shall be, irrespective of its paid up
share capital, deemed a public company.
l Where not less than 25% of the paid up capital of a public limited company is held by the private
company, then the private company shall become a public company on and from the date on which
the aforesaid percentage is so held.
l Where a private company accepts deposits from public, after an invitation is made by advertisement
or renews deposits from the public (other than from its members or directors or their relatives), such
company shall become public company on and from the date when such acceptance or renewal is
first made.
4. Limited and Unlimited Companies
Companies may be limited, limited by shares or limited by guarantee.
a) Company limited by shares - In this case, the liability of the members is limited to the amount
of uncalled share capital. No member of the company limited by the shares can be called
upon to pay more than the face value of shares or so much of it as has remained unpaid. The
members of limited companies have no liability in case of fully paid up shares.
b) Company limited by the guarantee - A company limited by guarantee is a registered company
having the liability of its members limited by its Memorandum of Association (MoA) to such
amount as the members may respectively thereby undertake to pay if necessary on
liquidation of the company. The liability of the members to pay the guaranteed amount arises
only when the company has gone into liquidation and not when it is a going concern.
c) Unlimited Company: The liability of the members of an unlimited company is unlimited.
Therefore their liability is similar to that of the liability of the partners in a partnership firm.
5. Section 25 Company
Under the Companies Act, 1956, the name of a public limited company must end with the word Limited and the
name of a private limited company must end with the word Private Limited. However, under Section 25, the
Central Government may allow companies to remove the word Limited / Private Limited from the name if any of
the following conditions are met by:
l The company is formed for promoting commerce, science, art, religion, charity or other socially
useful objectives.
l The company does not intend to pay dividend to its members but apply its profits and other income
in promotion of its objectives.
6. Holding and Subsidiary Companies
A company shall be deemed to be a subsidiary of another company if:
l That other company controls the composition of its board of directors
l That other company holds more than half (>50%) in face value of its equity share capital.
The control of the composition of the Board of Directors of the company means that the holding company has the
power at its discretion, to appoint or remove all or majority of directors of the subsidiary company without consent
or concurrence of any other person.
7. Government Company
A Government Company is the one in which 51% or more is held either by the central government or by the state
government or is jointly held by the central and the state government. All the decisions pertaining to its
management and operations are taken by the government.
8. Foreign Company
A company that has been incorporated outside India, under the law of some other country, is registered in that
country and has set up its business in India is called a Foreign Company
Brand/Company Punchlines
Brand/Company Punchline
1 AKAI Land Of Rising Technology
2 ACCENTURE Innovation Delivered
3 AIR DECCAN Simplifly
4 AIR INDIA Moving India Forward
5 AIR SAHARA Emotionally Yours
6 AIRTEL EXPRESS Express Yourself
7 ALLEN SOLLY Friday Dressing
8 ALLIANZ INSURANCE The Power On Your Side
9 APPLE COMPUTERS Think Different
10 BAJAJ AUTO Inspiring Confidence
11 BAJAJ PULSAR Born In A Gym, Not In A Studio
12 BAJAJ SPIRIT The College Bike
13 BLUE STAR May Your Theatre Always Be House Full
14 BLUESTARAC Breathe Easy
15 BOURNVITA Balanced Nutrition.Great Taste
16 BROOKE BOND Cheers Your Senses
17 BSNL Connecting India
18 BUSINESS STANDARD When You're Sure
19 BUSINESSWORLD Magazine Of The New Economy
20 C A That Manages E-Business
21 CHOLAMANDALAM INSURANCE Enter A Better Life
22 CITIBANK The City Never Sleeps
23 CLUB MAHINDRA HOLIDAYS Holidays For A Lifetime
24 CROCODILE Tough Guys, Dress Easy
25 CROMPTON GREAVES Everyday Solutions
26 DDMAS Art Of Beauty
27 DHL We Move The World
28 DHL We Make Importing Smooth
29 DOORDARSHAN Satyam Sivam Sundaram
30 ELECTROLUX India Makes Life A Little Easier
31 ENERGIZER Keep Going
32 ESSAR STEEL 24 Carat Steel
33 FED-EX The World On Time
34 FORD MONDEO Redefined Aggression
35 FORD MOTORS Built For The Road Ahead
36 GODREJ LOCKS Peace Of Mind.Guaranteed
37 GRAVIERA SUITINGS The Man Of Substance
38 GUCCI Quality Is Remembered Long After The Price
Is Forgotten
39 HAIER Inspired Living
40 HARLEY-DAVIDSON If You Don't Have To Answer To Anyone,
What Would You Do
41 HARROD'S RETAILER, London ENTER A DIFFERENT WORLD
42 HERO HONDA CBZ Motorcycling Unplugged
43 HERO HONDA PASSION Born In A Studio, Not In A Factory
44 HINDUSTAN TIMES Let There Be Light
45 HITACHI Inspire The Next
46 HONDA THE The Power Of Dreams
47 HSBC World's Local Bank
48 HUGHES SOFTWARE Think Skywards
49 HYUNDAI ELANTRA Play A Bigger Game
50 HYUNDAI'S NEW AD Drive Your Way
51 JOBSAHEAD.COM Fill In Your Ambition
52 JOHNNIE WALKER WHISKEY Keep Walking
53 KINGFISHER AIRLINES Fly The Good Times
54 KODAK You Press The Button And We Do The Rest
55 LACOSTE Because What You Are
56 LG Expand Your Life
57 LG AC Breathe Healthy
58 LUFTHANSA There Is No Better Way To Fly
59 MARUTI SUZUKI Count On Us
60 NIKON At The Heart Of The Image
61 NOKIA Connecting People
62 OBC Where Every Individual Is Committed
63 OCM Be Somebody
64 ONIDA Neighbors Envy, Owners Pride
65 PAGALGUY.COM Insanely Different
66 PAI INTERNATIONAL A World Of Home Appliances
67 PANTALOONS Where India Shops
68 PARRYWARE Sparkling Clean Glamour Rooms
69 PARX (RAYMONDS PRODUCT) Catch Up With Life
70 POWER (FUEL WITH
ENERGYBOOSTERS FROM HPCL)
Unleash The Power Within
71 PROFESSIONAL TUTORIALS Success Simplified
72 PUNJAB NATIONAL BANK The Name You Can Bank Upon
73 RAYMOND The Complete Man
74 REID AND TAYLOR Bond With The Best
75 SAMSONITE Because You Earned Your Wings
76 SBI With You -All The Way
77 SINGAPORE AIRLINES A Great Way To Fly
78 SPICE JET Flying For Everyone
79 TALLY Power Of Simplicity
80 TATA Improving The Quality Of Life
81 TATA Empowering People
82 TATA INDICA Spoil Yourself
83 TATA INDICOM Talk As You Pay, Pay As You Talk-
84 THAI AIRWAYS Smooth As Silk
85 TIMES OF INDIA Let Truth Prevail
86 TOYOTA Touch The Perfection
87 TRUMP (MTNL) The Easy Way To Stay In Touch
88 UNION BANK OF INDIA Good People To Bank With
89 VIRGINIA SLIM CIGARETTES You've Come A Long Way Baby
90 VOLKSWAGEN Think Small
91 VSNL Gateway Of India To The World
92 WILLS LIFESTYLE Enjoy The Change
93 XEROX The Document Company
94 HONDA DIO From India To The World.And To You