Leverage-Financial Management

This would be useful for those who are pursuing their CS Professional Program.

Leverage: An advantage derived indirectly i.e using one thing to derive a benefit on another thing.

There are three kinds of leverages:

a) Operating Leverage.

b) Financial Leverage.

c) Combined Leverage.

Operating leverage can be computed using the following formula:

Contribution/Earning before interest and tax(EBIT)

Financial Leverage can be computed using the following formula:

Earning before interest and tax(EBIT)/ earning before tax(EBT)

Combined Leverage can be computed using the following formula:

Financial Leverage * Operating Leverage

From the following table we can understand how to compute contribution , EBIT and EBT.

Particulars                                                           Amount

Sales                                                                   

Less: Variable cost                                             

Contribution                                                       

Less: Fixed cost                                                   

EBIT                                                                    

Less : Interest on borrowed funds                        

EBT                                                                     

Less: Tax                                                             

Profit after tax                                                    

Less: Preference share dividend                          

Profit available for Equity shareholders              

My view on the case filed against Hindustan Pencils Ltd

http://www.thehindu.com/todays-paper/tp-national/law-student-sues-company-over-racist-crayon/article4793506.ece

Hindustan pencils have a crayon named skin color, and this has hurt the sentiments of an individual who's skin tone does not match the color used in that crayon. Everyone has a right to seek action against someone else's action which has offended them. But the question here is, whether it's worth getting offended here in this situation or not.

Some questions which came to my mind when I read the article are :

a) Does the company endorse the used skin color as a superior one?
b) Does the company say that the used skin color is the only ideal skin color?
c) Does the company say that the used skin color is the only skin color under the sun?
d) Does the company relate an individual's personal attributes to the color of the skin?
e) What skin are they talking about here? Human skin? Animal skin?
f) Which layer of the skin were they referring to?

May be the usage of the word skin can be challenged on a ground that it refers to a human organ(http://en.wikipedia.org/wiki/Human_skin) and such reference should not be used. It is like calling a black color car as hair color car. And this can be offensive to some people as they might feel sick using a product which refers to a human part.

The article speaks about how in the USA, flesh color was replaced with peach. Well black and white are two terminologies used to refer to Black skin and White skin humans, would you sue consumer goods manufacturers who have products colored Black and White saying that they are racists?

In India, so far, I have never come across someone distinguishing an other using Black, Brown etc. There is caste based discrimination, language based, region based, but I have never seen color based discrimination.

Why should well educated people waste their valuable time suing companies over this?

There are bad roads, bad drainage, bad governance for which we can sue.

And for the part in the article, which speaks about companies selling skin lightening products, yes if they put up advertisements, which show a person with a fair skin has a better chance to clear an interview or get into a college then yes they should be sued, as such ads are offensive and can affect the mindset and confidence of youngsters.

Right to information act,2005- continued

Following are the types of information exempted from the ambit of the RTI act, 2005:

a) Information regarding the national security, sovereignty and integrity of India, relations with foreign states and information which leads to incitement of an offence.
b) Information which has been expressly prohibited to be published by a court or a tribunal.
c) information disclosure of which would cause breach of privilege of parliament or the state legislature.
d) commercial confidence, trade secrets, intellectual property, disclosure of which would harm the position of the third party, unless competent authority is satisfied that larger public interest warrants so.
e) Information available to a person in a fiduciary relationship, unless larger public interst warrants so.
f) Info received in confidence from foreign government.
g) Information which would impede process of investigation or prosecution of offenders.
h) Information which would endanger life or safety of a person.
i) cabinet papers, including record of deliberations of the council of ministers, secretaries and other officers.
j) Information which would affect the privacy of another individual and there is no larger public interest which would warrant so.

provided that information which cannot be denied to the parliament or state legislature cannot be denied to any person.

Information regarding something which has occurred twenty years ago can be provided if such information does not violate points a) c) i) given above.

Doctrine of separability:

Where an information sought comes under any of the above categories, but a part of such information does not meet the requirements of non disclosure and such part can be completely severed from the other part, it can be provided to the person who has sought the information.

Third party information:

Third party information is that which provided by a third party, in this case the information commission has to notify the third party that such information is being sought by an applicant. The third party is then invited to make a submission as to whether such information should be submitted or not. Usually in larger public interest the concerns of the third party are not taken into account, unless it is some trade or commercial secret protected by law. The third party is entitled to an appeal.

Powers and functions of the information commission:

1)) To receive a complaint from a person who has not been able to :
a) Submit a request for information.
b) Receive the information within the stipulated time.
c) Who has been refused information.
d) Required to pay a higher fee than usual.

2) Initiate inquiry regarding the above mentioned matters if there is any substance to it.

3) The commission shall have the same powers as that of a civil court while summoning and enforcing attendance of witnesses and compel them to give oral or written evidence on oath and to produce the documents or things, requiring discovery of documents, receiving evidence on affidavit, requiring any public record from court or office.

4) Commission can require any document to which this act applies and the same cannot be refused by any public authority which is in possession of such document.

Right to Information continued- part 1

Few points relating to obligations of public authorities:

1) All public authorities must create and maintain a database of all information available with them, all records must be duly indexed, cataloged and records which are to be computerised are done so. This is to facilitate access of information all over the country.

2)  Within 120 days of enactment of this act publish:
a)particulars of the organization
b) powers and duties of its officers,
c)procedure followed in decision making,
d) norms set by or discharging functions.
e) Salaries of its officers and employees
f) Annual budget allocated
g) How money  is spent by the public authority
h) appointments made in the offices.
i) Manner of execution of subsidy programs.
j) statement of the board, minutes of the meetings.
k) facilities available to citizens for obtaining information.
l) categories of documents held by it
m) rules and regulations used by it for disseminating information

It should be noted that all public authorities must provide information suo moto than to make the public seek information under this act.

The state information commission shall appoint a state chief information officers and state information officers, other officers and staff to assist them.

The central information commission shall appoint a Central Chief Information Officer and information officers, other officers and staff to assist them.

How to obtain information?

a) Applicant shall make a request in writing in english or hindi or in the official language of the area in which he's submitting the application.
b) Such application shall be made with the concerned fees.
c) If such application cannot be made in writing then , assistance shall be rendered to such person making the request orally to reduce it in writing.
d) Applicant shall not disclose any details about him other than those necessary for contacting him.
e) Where an applicaiton is made and such information is available with another public authority then such application shall be transferred to such other public authority and inform the applicant about such transfer.
f) Such transfer mention above shall not be made later than 5 days from the date of receipt of application.
g) Each application has to be disposed of in 30 days , and where the application is regarding the life and liberty of any person then such application shall be disposed of in 48 hours.
h) Any failure to give information shall be a deemed refusal.
i) Where further fees has to be paid , then the applicant shall be intimated along with how such fees is calculated.
j) Where authority failed to provide information within the time limit, the applicant shall be provided information free of cost.
k) If the application is rejected then such reason for rejection, period of appeal against such rejection, particulars of appellate authority shall be provided.

Next blog: Information exempted from RTI and Information commissions. 

The Right to Information Act, 2005

Some important definitions:

1) Appropriate government : with relation to a public authority receiving significant funds from the central government , the central government.

with relation to a public authority which receives significant funds from the state government, the state government.

2) Central information commission means the central information commission constituted under sub section 1 of section 12.

3) State information commission means the state information commission  constituted under sub section 1 of section 15.

4) Central public information officer includes the central public information f=officer and the assistant central public information officer.

5) Chief information commissioner and information commissioner means the chief information commissioner appointed under sub section 3 of 12.

6) Competent authority-
The speaker in case of the Lok Sabha
The chief Justice of the High Court in case of the High Court
The chief Justice of the Supreme Court in case of the Supreme court
The President of India and the state governor of the concerned state in case of an authority constituted under the constitution.

7) Record-
It means any 1) Manuscript, file, document.
                     2) Any microfilm microfiche, facsimile copy of a document
                    3) Any reproduction of image or images in such microfilm.
                     4) Any material produced by a computer device.

8) Right to information refers to the right to accessible information under this act and includes the right to- take notes, copies, extracts, samples, obtaining information in the form of diskettes, floppies, tapes and video cassettes.

9) State public information officer means the state public information officer and the assistant state public information officer appointed under sub section 2 of section 5.

10) Third party means any person other than a citizen seeking information , includes a public authority.

CRPC - F.I.R

First information report (F.I.R) Sections: 154-156.

A police officer who receives information of any cognizable offence being committed or been committed then he shall file a first information report F.I.R. Any person who has information about any cognizable offence committed then he can go to a police station and give the station in charge the information ,who shall file a F.I.R based on the information.

It has to be understood the F.I.R does not have any evidenciary value, it has can only be used to corroborate or contradict evidence produced under the Indian evidence act.

Delay in filing F.I.R is tolerated. For eg: A was attacked by 4 people and was grievously injured. A's relatives who were witness took him to the hospital immediately and filed the F.I.R only the next day, the police officer cannot refuse to file the F.I.R citing that it is delayed. The responsibility of A's relative was to save his life at that time and not give information to the police. Therefore its ok that the F.I.R was filed a day later. 

A police officer cannot refuse to file an F.I.R , a complaint can be given about the concerned officer who refuses to file an F.I.R in a case. Once a F.I.R is filed the copy has to be given to the informant free of cost.

F.I.R does not make any person guilty or not guilty. It just records information about the alleged commission of a cognizable offence.

A police officer carries out the investigation based on the F.I.R. After the investigation is completed and the charges are definite against the accused then a charge sheet is filed against the accused by the public prosecutor in charge of the said case.

Juvenile Justice (Care and Protection of Children) Act,2000

The Juvenile justice act is the talk of the day after the Delhi Gang Rape incident, as one of the rapists, who was also the most brutal one among them is a juvenile and might escape harsh punishment.

Following are the features of the JJ Act for those who are interested and for those who are not interested but would have to read it anyway to get that 40 % to get your degrees :

1) The juvenile justice care and protection of children act replaced the erstwhile juvenile justice act 1986.

2) The JJA 1986 defined a boy who is 16 y.o.a and below as a juvenile and girl who is 18 y.o.a and below as a juvenile, The 2000 act repealed this and made a uniform 18 years of age for being a juvenile.

3) Certain definitions were replaced, such as a Juvenile delinquent was made into a juvenile in conflict with law.

4) Neglected juveniles are to be called as juvenile in need of care and protection.

5) The juvenile welfare boards and juvenile courts were made into child welfare committee and juvenile justice boards.

6) The 2000 act introduced the concept of adoption which was missing in the 1986 act.

For those who are wondering who a neglected juvenile/child in need of care and protection is, no its not a juvenile who didnt get access to an android phone, A neglected juvenile is :

1) One who is found begging.

2) Who is a destitute.

3) Parent or guardian is unfit or incapacitated to exercise control over the juvenile.

4) Lives in a brothel or with a prostitute or frequently goes to any place used for purpose of prostitution or is found to lead a life associated with a prostitute or a depraved life or with a drunkard.

Juvenile justice board :

Every district shall have a juvenile justice board for exercising powers relating to juvenile in conflict with law.
The board shall consist of a Metropolitan Magistrate, or a Judicial Magistrate of the first class, as the case may be.
No Magistrate can be appointed unless he has expert knowledge in child psychology.
No social worker shall be admitted to the board unless they have experience for atleast 7 years in health, education or welfare activities pertaining to children.

Powers conferred on the Board can be exercised by the high court or by the court of sessions in appeal, revision or otherwise.

When a magistrate who is not empowered to exercise the functions of the board is of the opinion that the person brought before him is a juvenile, he shall without any delay forward the person to the appropriate authority having jurisdiction over the proceedings.

Even if its discovered at a later stage of the case, or after disposal of the case that the person was a juvenile at the time of commission of the offence then the sentence passed shall have no effect and the person shall be forwarded to the board.


Orders which can be passed regarding the juvenile :

1) Allow juvenile to go home after advice and counseling .

2) Direct the juvenile to participate in group counseling or other activities.

3) Order Juvenile to perform community service.

4) Direct juvenile to be released for good conduct.

5) No case can a sentence exceeding 3 years can be passed.

6) Direct the juvenile to be sent to a special home for a period not exceeding 3 years.

A social investigation report shall be filed on the juvenile which is done on the findings of a probation officer or any other authorized person.

The juvenile shall be sent to an observation home while there is an inquiry pending against him

Such observation home shall be set up in every district by the government or by a voluntary organisation in collaboration with the government.

A special home shall be set up where the juvenile is sent once he/she is found guilty and is sentenced. In no case can a Juvenile be held in a special home exceeding 3 years.

The objective of the home is rehabilitate the juvenile in conflict with law or juvenile in need of care and protection.

Following are the various punishment given out regarding juveniles:

1) Punishment for cruelty to juvenile.

2) Punishment for employing child or juvenile for begging.

3) Penalty for giving intoxicating substances to a juvenile.

4) Punishment for exploitation of juvenile or child employee.

5) All the above offences are cognizable offences.


6) Alternative punishment.- Where an act or omission constitute an offence punishable under
this Act and also under any other Central or State Act, then, notwithstanding anything contained
in any law for the time being in force, the offender found guilty of such offences shall be liable to
punishment only under such Act as provides for punishment which is greater in degree.

Rehabilitation and social integration:

The objective of the special homes are to rehabilitate and socially integrate the juvenile delinquents. Alternatively the following can be used to rehabilitate and socially integrate juveniles.

1) Adoption:

Orphaned, surrendered and abandoned children can be given up for adoption by following the requisite provisions.

No child can be given up for adoption:

unless two members of the committee declare that the child is legally free to be adopted. This is done in case of abandoned children.

2 months have to elapse since the parents agreed to surrender their children.

a child who is capable of understanding things, that child's consent too must be taken.

The court can give a child for adoption irrespective of marital status, irrespective of the sex of the person adopting, and also children can be given up for adoption to childless couples.

Foster care:

Foster care is a temporary set up. Which is done for temporary placement of children who are to be given up later for adoption.

The state government can make rules for foster care and adoption . 

A child placed in foster care can be visited by the original parents of the child. Depending on the situation the child can go back to his own home.

Sponsorship:

A sponsorship scheme can  be given to the adopted children and the families so that educational, medical and nutritional requirements of the child can be met. A individual sponsorship,group sponsorship or a community sponsorship can be arranged.

The state government makes the rules regarding the sponsorship.

After care organisation:

A child who leaves the special home can be sent to the after care organisation. Such organisation helps the Juvenile in achieving an industrious life and shall help him in not committing offences again.

No juvenile shall be made to stay in an after care organisation for more than three years.

A juvenile who is more than 17 but less than 18 can stay till he is 20.

Industrial employment standing orders act 1946

Features and applicability of the act :

1) Applies to the whole of india 

2) Applies to and industrial establishment employing 100 or more workmen. 

r has employed 100 or more workmen during the preceding 12 months.

3) The act enables the appropriate government to apply the act to any industrial employing less than 100 workmen provided 2 months notice has been given to that Industrial undertaking.

4) The act cannot take away better benefits given to employees under previous enactments.

Appellate authority :

There shall be an appellate authority constituted under the act with a specific jurisdiction to whom the appeals can  be filed. Such authority is appointed by the appropriate government by notification in the official gazette.

Certifying officer :

Any labour commissioner or regional labour commissioner can be appointed as a certifying offficer for the purpose of this act.

Draft standing orders :

1) any industry to which the act applies shall submit draft standing orders to the certifying officer withing 6 months .

2) 5 copies of such draft standing orders are to be submited to the certifying officer.

3) Shall contain details of the employees and details of trade unions if any.

4) A group of employers in a similar establishment can submit a joint standing order.

5) Such draft orders can be certified provided they are in conformity with the act, have provided for all the provisions of the act, its for the certifying officer to judge the fairness of the provisions.

6) The certifying officer shall make an entry in the register and file a copy of the same. Such copy can be obtained on payment of a fee.

Modification of standing orders :

The standing orders in order to be modified should not have been modified in the last 6 months. And it shall not be modified again except with the permission of the employer and employee.

Subsistence allowance:

A subsistence allowance is payable @ the rate of 75 % to an employee who is suspended while there is an inquiry pending against him regarding charges or complaints of misconduct.

Any dispute in this matter shall be referred to a labour court.

If the employee is entitled to a better allowance under any other act then he shall be eligible for the same.

Penalties :

1) For not providing for the act.

2) For contravening the provisions of the act.

3) Failure to submit draft standing orders.

4) For not adhering to the model standing orders.

5) No suit can be instituted without the support of the appropriate government.

Note :

The appropriate government can exempt any Industry from the provisions of this act.

The schedule of the model standing orders contains the following :

1) classification of workers .

2) Period and hours of work, holidays, pay days and wage rates.

3) Shift working.

4) Attendance.

5) Leave and holidays.

6) Closure or reopening of a section or unit.

7) Termination.

5) Suspension & dismissal for misconduct.

6) Requirement to enter premises.

7) Means of redress against unfair treatment.

8) Other matters as may be prescribed by the appropriate government.