Basic Joint venture Benefits, Features and Types

Projects with precisely measured and defined outputs are less likely to run into contract disputes. In general, in a well-designed and supported PPP the advantages will outweigh the disadvantages. As we have already discussed, the huge inflow of FII demands more local currency which leads to the appreciation of the domestic currency. The hike in prices makes the exports expensive which ultimately leads to the lesser demand in the international market.

• Inflation causes a fall in exports as no one is interested in buying products at higher costs .
• Joint venture agreement between two or more organizations, maybe of the same country or different countries.
• The goals of a joint venture are not always clear and are rarely communicated clearly to all parties involved.
• Since they are compatible enough for export to other foreign nations, 100% export-based units are built for this purpose.
• Knowing that the EV market in India will grow from bottom-up, a policy designed to benefit only electric three-wheelers and two-wheelers seems prudent.

A sole proprietorship is a business with a single proprietor or owner. It is the most basic type of for-profit organization and the least regulated by the government. The owner of a sole proprietorship makes all the decisions about the business and is free to keep all the profits he or she makes from the business. Partnership Registration Choice in registering your partnership.

Unincorporated Joint Venture:

Ideally, a project should be procured as a PPP on the basis of a clear demonstration that it provides value for money compared with public sector procurement. However, it is difficult to demonstrate VFM in advance due to uncertainties in predicting what will happen over the life of the project and due to a lack of information about comparable previous projects. A PPP is not a panacea for all the public sector’s funding and infrastructure problems and PPPs are not always the most appropriate procurement option. Most of these can be minimised under certain circumstances and through careful management of the PPP design by the Sponsoring Authority. They also help in the development of the economy by making the long-term capital available for projects. Apart from this, they also increase the incentive of firms for providing more information.

• Forming a joint venture with a larger, well-known brand can help such businesses achieve increased marketplace visibility and credibility more quickly.
• It is a well-understood fact that new enterprises need new workers.
• Innovations and inventions happen out of necessity to meet challenges of competition.
• Project financing doesn’t result in less costly resources under all circumstances and in all ventures, hence the contracting expenses are still very high.
• It needs higher funding costs relative to those incurred indirect financing because of its complexity.

As in every business transaction, there should be a point beyond which a joint venture partner will not go in respect to critical business and legal issues. One cannot negotiate a good deal unless one is willing to walk away from an unacceptable one. Those individuals can often provide valuable input early in the process and save the venture from significant cost and possible failure once underway. Because different companies are collaborating, there is a significant disparity in expertise, assets, and investment. This can have a negative impact on the joint venture’s effectiveness. When this occurs, participants must focus on the joint venture, and their individual businesses suffer as a result.

Inorganic Growth in lieu of Organic Growth

It makes it difficult to dissolve the company – Registration can be a boon but it can be a problem as well at the time of dissolution of the company. It requires time and money to dissolve a registered company and has a set of legal provisions to be followed during dissolution. It implies the company to have a required structure – It becomes necessary for the company to have a structured business with management, operational component and accounting practices. Jio-bp will bring together our combined knowledge, expertise and experience to provide high-quality fuels and services, and will expand RIL’s portfolio of over 1400 existing retail sites to 5,500. Jio-bp will also include RIL’s aviation fuels business, currently operating at over 30 airports across India, in order to tap the potential of this rapidly growing market.

Especially, where there is merger between profit making and loss-making company. Major income tax benefit arises from set-off and carry forward provision https://1investing.in/ u/s 72A of the Income-tax Act, 1961. All of the following are claimed advantages of joint venture except ____________________________.

Legal Assistance

L&T Ltd. demerged its cement division into a separate company Ultratech Cement Co. Later, the resulting company was transferred to Grasim Industries . Post deal, L&T benefited from realized value of its cement division and focus on their core businesses such as engineering and construction. Grasim Ind. was benefited through economies of scale, increased capacity, overall competitiveness, multifunctional synergies and combined resource pool.

When a foreign firm enters the domestic market, all the securities standstill and, competition kicks in. They challenge the domestic firm with higher quality and cheaper prices. It helps the domestic players to get up in order to survive the tough competition.

Advantages of Company Registration in Delhi:

The project funds are collected mostly on the basis of the contracted liability, when. There’s also the issue of swap batteries having lower range, given their disposable nature. The issue was highlighted by SUN Mobility Chairman and Co-founder Chetan Maini, a pioneering figure in the Indian EV industry who introduced the Reva to the world. At present, the GST on a separate battery is at 18 percent as opposed to on a battery sold with an EV, which attracts only 5 percent GST. Knowing that the EV market in India will grow from bottom-up, a policy designed to benefit only electric three-wheelers and two-wheelers seems prudent. Batteries are the most expensive and fastest depreciating component of an EV and establishing a swapping system could go a long way in alleviating costs, range and resource management concerns.

As long as the project is well specified in terms of the output requirements then each private sector bidder has an incentive to produce an innovative response and to minimise cost. FDI and FII are both ways of making investments in a foreign country. There are advantages and disadvantages of FDI and FII both, we will discuss them later. It gives a separate legal identity to the company – Company registration in Delhi means that the company will have a legal identity.

There are a variety of reasons to collaborate with another company on a temporary basis, including growth, product creation, and market entry . JVs are a popular way to bring together the business prowess, market knowledge, and staff of two organizations that are otherwise unrelated. Private Limited Company is the simplest and a very popular form of Business Registration in India. The association of persons can be natural or legal or a mixture of both sharing a common end of profit. The company may enter into contracts, purchase, and sell the property. The company can sue and be sued by outsiders as well as by its members.

In a joint venture, operating costs, the cost of labor, advertising, marketing or promotion and all other related costs are shared among participating entities. Each organization involved is able to cut down its expenses and optimize costs by using economies of scale. However, the standard for VFM is different in India to more economically developed countries such as Australia or the UK. In India, many projects procured in the public sector, experience time and cost overruns, and hence it is likely that well-managed private procurements will deliver savings.

Strategic alliances allow organizations to pursue opportunities at a faster pace. It provides access to additional knowledge and resources that are held by the other party. Inorganic growth strategy includes change in the corporate identity through involvement/alliance/association with other entities. All mergers and acquisitions have one common goal, i.e., to create synergy that makes the value of the combined companies greater than the sum of the two parts. The success of a merger or acquisition depends on whether this synergy is achieved or not. Synergy may be in the form of higher revenue streams and cost savings.

The partnership firm is constituted under a contract between the partners. The contract between the partners is known as a partnership deed which regulates the relationship among the partners and also between the partners and the partnership firm. Joint Venture is a separate entity formed by two or more companies to undertake sotp valuation commercial activities together. In a joint venture, a new enterprise is formed with participation in ownership, control and management of two or more parties. Strategic alliance is a partnership between enterprises for common benefits such as cost reduction, technology sharing, product development, market access etc.

Improve corporate performance to achieve competitive advantage by adopting the radical changes brought out by information technology. The strategy adopted shall depend on the purpose or organizational goals and hence a different strategy shall apply to different companies. Tax benefits – Companies also use mergers and amalgamations for tax purposes.