Monday 12 March 2012

3rd SEMESTER MODEL EXAMINATION


MARIAN ACADEMY OF MANAGEMENT STUDIES
Marian Village, Puthuppady P.O, Kothamangalam-686 673

3rd  SEMESTER MODEL EXAMINATION, MARCH- 2012

COMPENSATION MANAGEMENT
Time:3hrs                                                                                                                            Marks:60
Answer all the questions
1.      a)   What is meant by compensation? What are the basic objectives & principles of wage & Salary administration?
Or
                 b)    Explain the factors influencing the wage structure.
2.      a)   Why is Social security important in determining compensation plans?
Or
      b)    Explain the basic concepts of dearness allowance.
3.   a)     Describe the process of JE.
Or
      b)    Explain how compensation influences organizations
4.   a)     Explain briefly the theories of wage?
Or
      b)    Explain briefly performance incentives & gain sharing.
5. Case Study:
Vikram Industries
“Vikram Industries” is an engineering goods manufacturing company located near Somatane phata about 50 km from Pune, on Pune Mumbai Highway.
Mr. Devidas, an unskilled permanent worker was asked to work in a press shop on a press machine, without any training of handling  such machine. Due to lack of knowledge & training Mr. Devidas was not all comfortable & confident while working on the press machine. In such a unsafe condition, he met with an accident & lost his right hand index finger.
Mr. Devidas, asked management to give compensation, as all the workers compensation as per the workmen’s Compensation Act, 1923. The management refused to give any compensation, as they felt that the accident took place due to the negligence on the part of the workers.
Mr. Devidas through his union took the matter for grievance redressal procedure but failed in getting any compensation from management. He then moved to the curt.
Questions
a.       Analyse the case
b.      Comment on the managements action
c.       Comment on the Devidas Approach
d.      Work out the compensation and advice the management for appropriate action.
(5x12= 60 Marks) 
FINANCIAL MANAGEMENT
Answer all questions
   Each question carries 12 Mark
1.      (a)    Define Financial Management and what are its scope and limitations.
                                                            OR
(b)   Explain the significance of the financial management of sick units?
2.      (a)    List out and explain four major theories/approaches of capital structure.
                                                            OR
(b)   Calculate degree of operating leverage, financial leverage and combined leverage from the following date:-
        Sales – 10,0000 units @ Rs.2 per unit – 200,000,  variable cost per unit @ Re 0.70
        Fixed cost  - Rs. 100,000
        Interest charges – Rs. 3668
3.      (a)    From the following capital structure of a co.  Calculate the overall cost of capital using  (a) book Value weights and (b) Market value weights.
Source
Book Value
Market Value
Equity share capital (Rs.10/share)
Rs. 45000
Rs. 90,000
Retained earnings
Rs. 15000
Nill
Prefrence share capital
Rs. 10,000
Rs. 10,000
Debentures
Rs. 30,000
Rs. 30,000

The after-tax cost of different source of finance is as follows:-
Equity share capital : 14%; Retained earnings: 13%, Prefrence  share capital : 10%; Debentures : 5%
OR
(b)   Explain the concept ‘Cost of capital’ as a device for establishing a cut-off point of capital investment proposal?
4.      (a)    An Engineering Co. is considering the purchase of a machine for its immediate expansion programme. There are three possible suitable for the purpose. The details are as follows:-
Machiner

(Rs.)
(Rs.)
(Rs.)
Capital Cost
3,00000
3,00000
3,00000
Sales
5,00000
4,00000
4,50,000
Net cost of production







Direct material
40,000
50,000
48,000
Direct labour
50,000
30,000
36,000
Factory O/H
60,000
50,000
58,000
Administration cost
20,000
10,000
16,0000
S & D Cost
10,000
10,000
10,000
The economic life of the machine No:1 is 2 years while it is 3 years for the other two.
The scrap values are Rs.40,000, Rs.25,000 and Rs.30,000 respectively.
Sales are expected to be at the rates shown for each year during the full economic life of the machines. The costs relate to annual expenditure resulting from each machine.
Tax to be paid is expected at 50% of the net earnings of each year. It may be assumed that all payables and receivables will be settled promptly strictly on cash basis with no outstanding from one accounting year to another. Interest on capital has to be paid at 8% per annum.
You are requested to show which machine would be that most profitable investment on the principle of pay-back method.
(b)   Explain the concept of an operating cycle?
OR
Liabilities
Amount
Asset
Amount
Share capital
Bonds
Accounts payable
Provision for doubtful debts
Reserves & Surplus
2010
2011
Bank Balance
Accounts Receivable
Inventories
Land
Good will
2010
2011
70,000
12,000
10,360
700
10,040
1,03,100
74,000
6,000
11,840
800
10,560
1,03,100
9,000
14,900
49,200
20,000
10,000
1,03,100
7,800
17,700
42,700
30,000
5,000
1,03,100
5.  (a)     Tiny Tot limited supplies you the following Balance Sheet on 31st December.
Additional informations:-
1)      Dividends, amounting to Rs.3,500 were paid during the year 2010.
2)      Land was purchased for Rs.10,000.
3)      Rs.5000 were written off on Goodwill during the year.
4)      Bonds of Rs. 6000 were paid during the course of the year. You are required to prepare a cash flow statement.
OR
b) List and elaborate on the differences between cash flow Analysis and Funds Flow Analysis.
                                          Human Resource development

Answer all questions
1.             (a)     Define HRD. State the main objectives & issues involved in HRD.
Or
(b)     Explain the importance & scope of HRD
2.            (a)      Discuss the basic processes of coaching and mentoring.
Or
(b)     Identify HRD-OD interactions for overall growth of the organizations.
3.            (a)      Discuss the major issues in HRD practices in India.
Or
(b)     Explain the HRD practices in India public sector.
4.            (a)      Explain briefly TA & Sensitivity training.
Or
(b)     Emerging trends in HRD.    Discuss
5.            If you were hired as the Human Resource Manager in a large firm where human resource management is poorly integrated.
a)      What steps would you take to improve the integration
b)      Do you think that the knowledge of HRD will help you and
c)      How will you design HRD System
(5x12=60 Marks)
.

                                          Human Resource Planning
Answer all questions
6.             (a)     Define and explain the nature of Human Resource Planning at the Macro and Micro levels in an organization.
Or
(b)     Identify and explain the process of human resource planning and illustrate the same with reference to an organization known to you.
7.             (a)     Explain why and how career development planning is to be done by an HR Manager for the benefit of the employees under his control.
Or
(b)     Explain the concepts and procedures relating to Job Analysis and Job Description.
8.             (a)     What are the merits and demerits of two approaches to recruitment of new employees?
Or
(b)     Explain and compare the strengths and weaknesses of the various source of recruitment?
9.             (a)     Discuss the concept and process of selection.
Or
(b)     Explain the strengths and weaknesses of different types of interviews.
Case Analysis (Compulsory)
THE GROWING MINDS COMPANY
(RECRUITMENT AND SELECTION)
Growing Minds Inc. is a national chain of retail outlets, specializing creative in toys and innovative learning materials for children. The company caters to the upper layer of the market, and focuses on customer service for a competitive advantage. It provides workshops for parent and children on topics such as learning with the computer and indoor gardening, and offers crafts classes ranging from toy making and pottery works.
Growing Minds plans to expand and to open five new retail outlets, in the coming year. This may mean up to 200 new appointments, and the executive team wants to make sure that the best people are hired and retained. It has issued a challenge to its retail management personnel to design a staffing process that will accomplish these goals.
The children’s market in which Growing Mind operates demands service personnel who are endlessly patient; knowledgeable about children, toys and learning; and perhaps, most important, sociable, enthusiastic, and engaging. Excellent customer service is the top priority at the Growing Minds Company, and obtaining the desired performance from personnel has meant a major investment in training. Unfortunately, new workers often leave within an year of being hired. This means that the company barely gets an adequate return on the training it has invested in its new employees. Apparently, turn over is due (at least in part) to the demanding nature of the job. Recently, Growing Minds has been emphasizing the establishment of work teams to improve the quality of its services, identify and fix any problems in service delivery and brainstorm new opportunities. This approach has yielded better results than anticipated, so the team concept will be central to the new outlets.
QUESTIONS
1.      How can the Growing Minds Company attract the best applicants for jobs at its new retail outlets?
2.      How should the Growing Minds Company select the best candidates?
3.      How should Growing Minds socialize its employees so that they are attuned to the company’s culture and plans for the future?
4.         How should the Growing Minds deal with its turn over problems, and formulate its retention policy?
                                          Industrial Marketing Strategy
Answer all questions
Each question carries 12 Mark
1.      (a)     Briefly explain the industrial development in India.
Or
(b)        Explain the difference between industrial marketing and consumer marketing.
2.      (a)        How do you classify industrial products? Give suitable examples.
Or
(b)        Explain the nature of demand for industrial goods.
3.      (a)        What are Buy phases and discuss their marketing implications?
Or
            (b)        Identify and explain the important elements of buyer and seller relations.

4.      (a)        Explain in detail the relevance of competitive advantage in industrial markets.
Or
(b)        Why the concept of Brand Equity is important for an Industrial marketer? Explain

5.      (a)        Write short note on:
1. Negotiation
2. Diversified customer
3. Customer Relationship Management
            Or
(b)        Describe the important characteristics of the different stages of industrial product life cycle and explain their marketing implication.
MANAGEMENT AND CONTROL SYSTEM
Time:3hrs                                                                                                                            Marks:60
Answer all the questions

1.      Explain the attributes of a good management accounting system. What are the advantages of management accounting information’s?
OR
        What are the steps involved in Activity Based Budgeting?

2.      Explain the various stages in ABC implementation.
OR
       Write a note on the strategic frameworks for value chain analysis.

3.      Explain the marketing, Production and consumable view point of product life cycle. What are the advantages and disadvantages of life cycle costing?
OR
        What is target costing? Explain the main features of target costing system.

4.      Explain the four types of quality costs with examples.
OR
What are the different types of financial performance analysis? Write a note on the significance of financial performance analysis.




Compulsory:
5.      Family store wants information about the profitability of individual product lines. Soft drinks, fresh produce and packaged food. The store provides the following data for the current year for each product line.


Soft drinks
Fresh produce
Packaged food
Revenues
Cost of goods sold
Cost of bottles returned
Number of purchase orders placed
Number of deliveries received
Hours of shelf-stocking time
Items sold
Rs. 7,93,500
       6,00,000
          12,000
                360
                300
                540
       1,26,000
Rs. 21,00,600
      15,00,000
                     0
                 840
               2,190
               5,400
       11,04,000
Rs. 12,09,000
         9,00,000
                      0
                   360
                   660
               2,700
          3,06,000



Family store also provides the following information for the current year:

Activity
Description of activity
Total cost
Cost-allocation base
Bottle returns
Returning of empty bottles
Rs. 12,000
Direct tracing of soft drink line
Ordering
Placing of order for purchases
    1,56,000
1,560 purchase orders
Delivery
Physical delivery and receipt of goods
    2,52,000
3,150 deliveries
Shelf-Stocking
Stocking of goods on store shelves and on-going restocking
     1,72,800
8,640 hours of shelf-stocking time
Customer support
Assistance provided to customers including checkout
     3,07,200
15,36,000 items sold

Required:
(i)                 Family store currently allocates support cost (all costs other than cost of goods sold) to product lines on the basis of cost of goods sold of each product line. Calculate the operating income and operating income as a % of revenues for each product line.
(ii)               If  Family store allocates support cost (all costs other than cost of goods sold )to product lines using an activity-based costing system, calculate the operating income and operating income as a % of revenues for each product line.



PERFORMANCE MANAGEMENT AND REWARD SYSTEM
Time:3hrs                                                                                                                            Marks:60
Answer all the questions
1.      a)     Explain the concept of performance management is a policy of business strategy.
OR
b)    Write a brief note on the scope and background of PMS.

2.      a)     Explain the meaning, objectives and process of performance appraisal
OR
b)    Explain the training need identification and its relevant methods.
3.      a)     Explain the concept and significance of reward system, its characteristics and components.
OR
b)    Differentiate between the need theories of motivation and the process theories of motivation.

4.      a)     Explain in detail different types of pay structure
OR
b)    Comment on the topic Job Evaluation.
5.    Case Study
Scottrade’s Performance Management
Scottrade, Inc. was founded by Rodger O. Rincy (Riney) as Scottsdale Securities in 1980. Scottrade was considered a special place to work and there were many reasons for this. According to some experts, perhaps its most significant accomplishment was the fact that it had not resorted to layoffs in its history.
In the initial years of its operations, Scottrade did not have any formal talent management system in place. However, in the late 1990s, the company began to lay greater emphasis on this area. The performance management process at Scottrade began to lay greater emphasis on this area. The performance management process at Scottrade began at the top of the organization, with the senior executives and directors setting the strategy of the company for a five-year period.
At Scottrade, trading and development was a key part of the talent management process, In the first 18 years of its operations, the company did not have a training department. It relied on on-the-job training of the employees who would usually sit with someone to learn their job.
In addition to providing a competitive compensation package and a quarterly bonus program that was linked to the review process of its employees, Scottrade had various reward programs that reflected the passion of its employees.
Analysts noted that Scottrade had been performing well since its inception. A combination of online access and its local branch model had enabled the company to deliver a high level of customer satisfaction and had resulted in stiff growth in its customer base, according to industry observers.
Questions
1.      Critically analyse Scottrade’s performance management system.
(5x12)

RESEARCH METHODOLOGY
Time:3hrs                                                                                                                            Marks:60
Answer all the questions

1. a) Essentials of a good Research
                                     Or                                    
b)  Importance of Research in Management.
2. a) Explain different types of Research.
                              Or
b) Explain the Characteristics of a good questionnaire.
3.  a) What is a hypothesis? Highlight the procedure for developing a good hypothesis.
Or
b) Explain the significance of research report and narrate the various steps involved in writing such a report.
4. a) Describe different methods of sampling.
                                 Or
b) Shot note on:
  - Sampling error
  - Basic Principles of experimental design

5.  (a)  Distinguish between “Research Methodology” and “Research Methods”.
                                       Or
     (b) What are the different steps in Report Writing? Explain its significance.
RETAIL MANAGEMENT
Time:3hrs                                                                                                                            Marks:60
Answer all the questions
1. a) Write short notes on:
                                i.      Store Retailing
                              ii.      Retail Pricing Policy
                            iii.      Role of RFID technology in Retailing
                            iv.      Catalog Showroom
                                                                            Or       
b)  Explain the term “Positioning Strategy”. How positioning help to build brand equity for the retail store brand.?
2. a) What do you understand by the term “Environmental Analysis” in Retailing? What are the various methods of conducting an Environmental Analysis?
Or
b) What do you mean by “Store Design”? What are various aspects to be considered in   designing a store?
3. a) Discuss the term “Online Shopping”. Point out the various merits and demerits of Online Shopping?
Or
b) Elaborate on the role of “Sales Promotion” in Retail Business Management.
4 a) Explain the Buying Decision Process Model.
Or
   b) Explain the role of “Marketing Research” in retailing.


Compulsory
5. Assume that you have been hired as the Chief Operating Officer (COO) of India’s operations of Burger King’s Pvt. Ltd. Explain how will you establish the Burger King’s operations in India.
Your answer should include:
                    i.            Business Model
                  ii.            Organization Structure
                iii.            Store Format Details
                iv.            Store Layout
                  v.            Pricing Policy
(5x12)
SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
Answer all questions
   Each question carries 12 Mark
1.      (A)    Explain the different investment avenues
                             OR
(B)    Discuss the present scenario of Indian money market.
2.   (A)    Explain CAPM
                                   OR
      (B)    Ansari and Co’s next year dividend per share is expected to be Rs. 3.50. In the subsequent years, the dividend in expected to grow @ 10% per year. What should be the price, if the required rate of return is 15% per year. The providing market price is Rs. 75. 
      3.  (A)     Explain the Efficient Market Theory with three different forms?
OR
Fund
Return
Risk Free rate
Excess return
SD
Beta
1
20
10
10
8
0.80
2
30
10
20
15
1.10
          (B)     


                    Calculate Sharpe and Trey nor ratios for two hypothetical funds.\
4.  (A)   Why are secondary markets important to the effective functioning of primary security markets?
                                                                              OR
   (B)      Explain the different chart patterns used in Technical Analysis?
5. (a)                Compulsory Question:
              Following are the details of a portfolio with 4 securities.
              You are required to calculate the return and risk of the portfolio under single index model it the return on market index is 16.4% and the standard deviation of return on market index is 14%.
Security
Weights
Alpha (i)
Beta (i)
Residual Variance ( 2ei)
1
0.2
2.0
1.2
320
2
0.3
1.7
0.8
450
3
0.1
-0.8
1.6
270
4
0.4
1.2
1.3
180

                                              Services Marketing
Answer all questions
   Each question carries 12 Mark
10.             Write short notes on any two
a) Service failure and Recovery.
b) Gap Analysis
c) Benchmarking.

11.   (a)       What is service blue printing? Illustrate with an example of your choice.
Or
 (b)       Discuss the SERVQUAL model used by service organizations.


12.  (a)        ‘Process’ and ‘Physical Evidence’ are very important to financial services     organizations. Explain with relevant examples.
Or
(b)        Discuss the vital issues related to pricing of a service product. Explain with reasons, which factors play vital role in deciding pricing of:
a) Air line services.
b) Management consultancy service.
c) Foreign tours conducted by travel companies.
d) Education service such as M.D.P for corporate.


13.  (a)        Discuss the characteristics of major e-services provided in India. What steps/ precautions should be taken by marketer of e-service to ensure effective customer relationship and full customer satisfaction?
Or
(b)        What are strategic considerations for differentiation and obtaining sustainable competitive advantage for services marketing? Elaborate with the help of suitable illustrations.


14.  Mumbai Nutan Tiffin Carriers Ltd MNTCL, comprising of around 8000 semiliterate ‘dabbawalas’ of Mumbai, every day deliver more than 8.00 lakh tiffin boxes to working people across the city and later return the empty tiffin boxes to their respective homes same day.

A meager amount of Rs. 300/- p.m. is charged for this indispensible service, providing home cooked food to working people at their work place. In spite of complexity, hurdles of transport system and adverse climatic conditions, the quantum of error is as low as 1 error in 8 million deliveries.

The modes of conveyance used are bicycle, manually driven trolleys and suburban local trains. The entire process of giving / taking delivery is carried out with help of 3 different sets of carriers. With help of a unique colour code system, sorting of thousands of tiffin boxes is carried out within few minutes, at destination, thanks to the splendid team spirit and meticulous timings.

Although the common working Mumbcikar is getting home cooked food at all nooks and comers of the metro city due to efficient system of MNTCL, off late, there has been a marked decline in business, on account of changes in working and eating habits.

Questions:
a)      Critically examine the factors which have led to achievement of excellence in the service provided by MNTCL.

b)       Suggest suitable measures for improvement in business growth and higher   profitability for business continuity in the years to come, for MNTCL.

STRATEGIC MARKETING
Time:3hrs                                                                                                                            Marks:60
Answer all the questions
1.      a)  Explain the consumer buying decision process
                        Or
            b) What do you mean by “Marketing Plan”
2.      a)  Explain  different product strategies
                        Or
            b) What is PLC. What are the various conditions and strategies in different phases?
3.   a) What do you mean by environmental analysis. State different methods.
Or
b) Elaborate on Integrated Marketing Communication (IMC).  Point out the various         merits of (IMC)
4.   a) Discuss the link between strategic Marketing and Marketing Management.
Or
      b) Elaborate on CRM. Is it the key for long term business.
      5.    Compulsory question.
            State Bank of India: Competitive Strategies of a Market Leader
Introduction
In March 2003, State Bank of India (SBI) and its associate banks had 13,579 branches, one of the largest branch networks for any bank in the world. It played a key role in providing working capital finance and term loans to Indian industry.
In 2003, SBI had eight business units - corporate banking, international banking and domestic banking for concentrating on core business areas; associate banks unit for looking after these banks, credit division unit to monitor overall credit and three other business units including finance, corporate development and inspection for in-house work. SBI was the largest commercial bank in India in terms of revenues, assets, deposits, branches and workforce. Since the late 1990s, SBI had been losing market share in the Indian banking industry due to the tough competition from private sector. By adopting modern technology and offering superior customer service, the private sector banks gained a significant share in urban banking.
Expressing concern over this trend, in an interview to the Asian Banking Journal, AK Purwar, SBI's Chairman and Managing Director since November 2002, said, "The top most priority for the bank has been retention of market share. As a PSU bank, SBI was losing its market share. Although it was at a very slow pace, it was definitely losing its market share." To regain lost ground, SBI initiated a major internal restructuring exercise. The bank responded to competition by taking several measures including offering an array of new products and services, forging alliances with other business entities, entering new areas of business and adopting novel ways of reaching out to customers and providing them value-added services.
Background Note
The origin of SBI dates back to the early 19th century, when the Bank of Calcutta was established in Calcutta (present day Kolkata in the state of West Bengal) in June 1806 under the aegis of the Government of Bengal.
Three years after its inception, the bank was renamed Bank of Bengal on receiving its charter. It was a unique banking institution as it was the first joint-stock bank in British India.
Next came the Bank of Bombay in April 1840 followed by the Bank of Madras on July 1843. By 1876, the three presidency banks, together with their branches, agencies and sub-agencies, covered major inland trade centers in India. Bank of Bengal had 18 branches while the other two had 15 branches each. Initially, the business of these banks was restricted to discounting bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. The last quarter of the 19th century witnessed rapid commercialization in India owing to the expansion of the railway network, to cover all major geographic regions of the country.
The three presidency banks were both beneficiaries and promoters of this commercialization process as they became involved in the financing of practically every trading, manufacturing and mining activity in the Indian sub-continent.
The three presidency banks were amalgamated in January 1921 to form the Imperial Bank of India. The new bank performed the triple role of a commercial bank, a banker's bank and a banker to the government.
However, the quasi-central bank role performed by the Imperial Bank ended with the formation of the Reserve Bank of India (RBI) as the central bank of India in 1935. RBI's establishment was a catalyst in the conversion of the Imperial Bank into a purely commercial bank. At the time of Independence in 1947, the Imperial Bank had acquired a paramount position in the country's banking industry.
It had a capital base of Rs.118.5 mn, deposits of Rs. 2.7514 bn and advances of Rs. 729.4 mn. It had a network of 172 branches and over 200 sub-offices spread all over India. When the first Five Year Plan was launched in 1951, the rural sector was given top priority.
The Imperial Bank and other commercial banks too operated mainly in urban areas and had not yet penetrated the rural sector. To overcome this lacuna, it was recommended that a state-partnered and state-sponsored bank be created to take over the Imperial Bank and integrate the former state-owned or state-associated banks with it.
Liberalization of the Indian Banking Industry
Private sector banks made their first appearance in January 1993. During that period, PSBs accounted for over three-fourths of total banking industry assets. They were weighed down with huge NPAs (Non-Performing Assets), falling revenues, lack of modern technology and a massive and highly unionized workforce. New entrants began to erode the market share of the nationalized banks, especially in metro cities and urban areas. The PSBs found it increasingly difficult to compete with the new private sector banks and the foreign banks. These banks also employed state-of-the-art technology, which helped them to save on manpower costs and concentrate on providing better service.
The Restructuring
To overcome the intense competition from private and foreign banks, SBI planned a major organizational restructuring exercise. The key aspects involved redesigning of branches, providing alternate channels; focus on a lean structure and technological upgradation. A business process reengineering (BPR) team was constituted in June 2003 with McKinsey & Company as consultants. The BPR's basic goal was to create an operating architecture that would facilitate service delivery of international standards. The project objectives were defined as "increasing customer satisfaction and convenience, freeing up time for branch manager and branch staff to focus on sales and marketing, simplifying process for employees, enhancing SBI's competitiveness in the market, increasing the profitability through higher market share and improved process efficiency..."
New Products and Services
Apart from restructuring, SBI launched several innovative, value-added products and services to project a customer friendly image. It launched a special service for corporate customers called 'telebanking and remote login' to support transactional requests.
This facility would be available at 593 branches, and remote login at 269 branches. The bank's trade finance solution, called EXIMBILLS, was intended to handle trade finance transactions efficiently and enhance the range of services provided to corporates and network branches. In March 2004, SBI announced that it would introduce 'anywhere banking' facility for its customers from over 9000 branches across India in the next two years. All branches in Mumbai would provide this facility by December 2004. SBI also launched different customized loan programs to cater to various sections of society depending on income levels and repayment capabilities. Interest rates and repayment periods were tailor-made to suit the customer groups.
Alliances and Tie-Ups
To boost its business, SBI entered into several alliances and tie-ups with automobile, insurance, mutual fund, project finance and medical equipment companies.
Auto Finance
Unlike other competitors that relied on reduced interest rates to get business, SBI extended the tenure of car loans from five to seven years, thereby lowering the monthly debt repayment burden of the loan seeker. SBI entered into a tie-up with Maruti, the largest automobile manufacturer in India, to provide loans for purchase of Maruti cars at the rate of 10.05 per cent and 11.25 per cent for three years and above three years respectively. After the scheme was introduced, SBI emerged as the largest financier for Maruti cars in India and the number of Maruti vehicles financed grew by 17 per cent in the fiscal 2003-04 over fiscal 2002-03.
The Marketing Initiatives
SBI carried out various marketing initiatives to enhance its reach. They included segregating and targeting existing high value customers, cross sales of other products, setting up call centers and outbound sales force to secure new customers. Plans were also made to utilize database marketing to pursue large and medium sized corporates, government and trade finance customers. Database marketing was expected to draw increased revenue from cross selling, lower costs and increased customer loyalty. SBI also introduced various other ways of reaching out to customers like extension of hours of work and aggressive marketing through print and television media. SBI increased daily working hours by two hours and Sunday banking was introduced.
Looking Ahead
SBI's restructuring exercise and growth strategies resulted in an increase in profits for the fiscal 2003-04. Net profits stood at Rs 36.81 bn for the fiscal ended 2003-04 as against Rs 31.05 bn the previous fiscal, an increase of 18.55 per cent. Operating profits stood at Rs 95.535 bn compared to Rs 77.754 bn in the fiscal 2002-03. In spite of SBI's efforts to reduce workforce, staff costs rose by 13.3 per cent, mainly due to additional contribution to pension fund and provision for leave encashment. The net NPA level came down from 4.5 per cent in the fiscal 2002-03 to 3.5 per cent in 2003-04. SBI aimed at 2 per cent NPA by 2004-05 .
Issues:
» Understand the strategies adopted by a market leader in the banking industry to retain its market share
» Explore the reasons how a market leader can lose its market share significantly
» Study the marketing initiatives adopted by SBI to reposition itself as a customer-oriented bank
» Examine the challenges that can be faced by a market leader due to the changes in the industry structure
» Study and analyze the structure of the Indian banking industry
TAX AND TAX PLANNING
Time:3hrs                                                                                                                            Marks:60
Each question carry equal marks
3.      a)   Provide a detailed list of various types exceptions under income tax act in India
Or
                 b)    Discuss the concept of Tax incidence
4.      a)   Computation of Salary income (Problem)
From the following details in respect of Mr. Aamir, calculate the income chargeable under the head income from salaries.
Basic Salary                                                               Rs. 3,40,000
Dearness allowance                                                          1,60,000
House rent allowance                                                       1,48,000
City compensatory allowance (per month)                          34,000
Profession tax deducted from salary                                     6,000
The following additional information is provided:
a)      Mr. Aamir was provided various taxable perquisites which were valued at Rs. 24,000.
b)      Mr. Aamir was provided a car exclusively for travel between his residence and office. He lives in a house owned by him.
Or
c)      Computation of  income from Business or Profession.


Rs.

Rs.
Salary of staff

34,000
Gross profit    
6,86,000
General expenses

48,000
Commission and discount
2,17,200
Bad debts written off

 15,000
Sundry receipts
43,000
Reserve for losses

  2,000
Short-term profit on sale of

Fire insurance premium (office premises)

  4,200
Investment
31,000
Advertisement
Rs.2,400



Add : Outstanding
Rs.1,600
4000


Interest on X’s capital

3,500


Interest on bank loan

14,500


Expenditure on acquisition of a patent




Right acquired and put to use on




June 30, 2010

17,000


Lump sum consideration for acquiring know-how on March 3, 2011

60,000


Depreciation on plant and machinery

28,000


Provision for outstanding sales tax and excise duty

13,000


Net profit

7,34,000

    _______


9,77,200

9,77,200
Other information:
1.      Advertisement expenditure include Rs. 3,400, being cost of 2 diaries  (cost of each being Rs. 1,700)
2.      Depreciation on plant and machinery according to income-tax provision comes to Rs.29,700.
3.      Salary to staff includes payment of Rs. 8,000 to a relative which is unreasonable to the extent of Rs.3,000.
4.      General expenses include (a) expenditure of Rs. 4,800, incurred by X on training of his employees,
b) commission of Rs. 10,000 for securing a business order, and (c) compensation of Rs. 6,000 paid to an employee while terminating his service in the business interest.
5.   Out of outstanding sales tax and excise duty, Rs. 3,000 is paid on July 10, 2011 and Rs.8,000 is paid on October 3, 2011. The balance is not paid as yet. Due date of filing return of income is July 31, 2011.
6.  Income of X from company deposit is Rs. 12,000, which is not shown in the Profit and Loss Account.
Determine the taxable income and tax liability of X for the assessment year 2011-2012, assuming that insurance premium paid by X on the life insurance policy of Mrs.X is Rs. 3,200.
5.      a) Write a notes
1.   Cost inflation index
2.   Notional cost of acquisition
3.   Cost of improvement
4.   Capital Asset
5.   Transfer of Capital Asset
                                                     OR
                 b)  Discuss various functional parameters involved in Advance tax.
4. a) What is the significance of accounting year in taxation paln?\
                                                         OR
   b) Computation of Income from House property
In the context of a residential property, the following information relateable to the asst. year 2008-09 is given for determination of the Gross Annual Value (GAV):
i. Municipal Valuation                                                                                          Rs. 1,20,000 p.a.
ii. Rent on which property has been let out            Rs. 20,000 p.m.                     Rs. 2,40,000 p.a.
iii. Period for which property remained vacant                                                        2 months
The GAV would be Rs. 2,00,000.
In respect of this property, the assessee incurs following expenses during the year 2007-08:


Rs.
(A)
Muncipal taxes (including Rs. 2000 relating to previous year)
9,000
(B)
Repairs
12,000
(C)
Interest on money borrowed for construction of the house from Canara Bank
28,000
(D)
Repayment of Loan for house Construction to Canara Bank
24,000
(E)
Chowkidar & Mali’s pay
20,000

The sourses of income of income of A during the previous year are:

(i)
Salary
1,80,000
(ii)
Interest from bank
48,000
(iii)
Dividends
12,000

A has deposited Rs. 24,000 in the Public Provident Fund. Income computation of A inclusive of property income
5. a) What are the provisions regarding wealth tax and gift tax in the income tax?
OR
   b) Discuss the power of survey given to incometax authorities under section 133 A.

WORKING CAPITAL MANANGEMENT
Answer all questions
   
5.      (a)    What are the factors affecting working capital?
                                                OR
(b)   What are the sources of working capital?
6.      (a)    What are the inventory control techniques?
                                                OR
(b)   Calculate the economic order quality from the following particulars:
        Annual requirements per year – 6000 units.
        Cost of materials per unit Rs. 5
        Carrying cost per item for one year – Re. 1
        Cost of placing and receiving one order – Rs.60
Alternative order size in units 6,000, 3,000, 2,000, 1200, 1000, 600 and 200.
7.      (a)    Briefly describe cash forecasting?
                                                OR
(b)   How will firm accelerate cash inflows and slow down cash outflows?
8.      (a)    What are the dimensions in receivables management?
                                                OR
(b)   What are the recent trends in working capital management.
9.      Compulsory

Cost per unit (Rs.)
Raw materials
400
Direct labour
150
Overheads (Excluding depreciation)
300
Total cost
850

(a)    From the following information you are required to estimate the net working capital requirement:
Additional information:
Selling price                                                      Rs.1000 per unit
Output                                                              Rs. 52,000 units per annum
Raw materials in stock                                     average 4 weeks
Working program (Assume 50%
Completion stage with full material
Consumption                                                    average 2 weeks
Finished goods in stock                                    average 4 weeks
Credit allowed by suppliers                              average 4 weeks
Credit allowed by debtors                                average 8 weeks
Cash at bank is expected to be                         Rs. 50,000
Assume that production is sustained at an even pace during the 52 weeks of the year. All sales are on credit basis. State any other assumption that you might have made while computing.