Gaurav Agrawal & Associates
Contact No: +91 9644455571, 8109758760
Start Up India
As per the website of start-up India, the following criterion has been given for an entity to qualify as a start-up. Therefore, to avail the benefits under the scheme of start-up India, the following tests have to be passed:
1) The venture shall be started and has not crossed the age of 7 years, which shall be calculated from its date of incorporation/registration. In case of biotechnology firms, the age limit has been increased to 10 years.
2) the incorporation of the venture shall be done as:
a) Private Limited company or
b) Registered Partnership or
c) Limited Liability Partnership.
3) The turnover for any fiscal year shall not exceed INR 25 Crore.
4) The entity’s existence should not have been come into existence via the means of splitting up or reconstruction of a business already in existence.
5) The entity shall be working towards innovation, development or improvement of products or services. It can also be considered as a start-up if the potential of the business succeeding is high or is involved in high employment creation/ wealth creation.
Importance of Registration
1) Self-Certification – This is an effective way to reduce the reduce the liability of certification as the start-ups are allowed to self-certify compliance with 9 labour laws and environmental laws. No inspection shall be done, for cases dealing with labour laws, for a period of minimum three years.
2) Start-up Patent application – This fast tracks the process of filing the patents and further grants a rebate of 80% in filing patents. This rebate will be provided on the total value of the patent fees and shall be provided once the patent is filed.
3) Public Procurement – This ensures that the opportunities are given for start-ups and experienced entrepreneurs are equal. This has been changes as earlier there was a requirement of having a prior experience and or prior turnover but this has been relaxed for start-ups.
4) Winding Up of the Company– This ensures that the winding up of the company can be done in the period of 90 days under the insolvency and Bankruptcy Code 2016.
5) Investment – this has made possible the availability of INR 10,000 core worth of funds for investments into start-ups via the means of alternative investment.
6) Credit – This ensures that there is an availability of INR 2,000 crore worth o credit for start-ups through national credit guarantee trust or SIDBI over 4 years.
7) Tax exemptions – This ensures that there is a tax exemption of Income-tax for a period of 3 years. Further, this also provides for exemption on capital gain and on investments above fair market value which is made by incubators or angel investors.
8) Learning – This programme will provide opportunities to learn from the experienced and shall also promote the research and innovation among students.
9) Mobile application– The start-up India provides the facility to companies to register via a single platform on the mobile application. This process has resulted in the simplification and has made the process very easy.
Due Diligence and Valuation
Primary Types of Due Diligence
- Technical & Commercial
This analysis can be done using some of these approaches:
- Asset-based approach
- Liquidation value
- Income-based approach
- Market approach
The decision to make a merger and an acquisition or investment can yield promising returns and offers an opportunity to create significant value realisation if properly-managed.
Potential significant risks should be highlighted so that sound decisions regarding the transaction can be made. This assessment process requires an extensive and thorough due diligence to help determine if the acquisition is viable.
And in line with creating value through due diligence, value justification for assets and liabilities is just as important to achieve a synergy between the two.
Due Diligence for Value Creation
Due diligence is the examination of potential target for merger, acquisition, privatisation or similar corporate finance transaction by a buyer, providing reasonable investigation focusing on material future matters.
The main purpose of conducting a due diligence process is to control overall transaction risk by identifying, quantifying and substantiating the value of the firm.
Knowing What It’s Truly Worth
The valuation of a business or its fundamental assets needs a combination of strategic, financial and operational mix to paint a full and accurate picture of the business. Valuation is the process of estimating the potential market value of a company’s financial assets or liabilities.