You are on page 1of 19

PROCEDURES & DOCUMENTS

INVOLVED IN SETTING UP OF A RETAIL OUTLET

Submitted By : Mrudula Pathakota, Mythili.S, L. Preethi & R.Sri vidya MFM III Sem , NIFT , CHENNAI

BUSINESS & ITS TYPES

A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers

Can be Sole Proprietorship, Partnership or Pvt Ltd.


Can be from the home market or foreign investment. Can be based on the Franchising or License model.

Before doing all the registration mandatory to ans the below ques :

What ? ( Product ) Where ? ( Location) How ? ( Floor Plan & Merchandise & Marketing ) When ? ( Duration of biz) & then

Financial Plan & Procedure

Sole Proprietorship Registration Documents


PAN Card TAN (Tax Collection & Deduction Account Number) VAT/ CST Registration Central Excise License Professional Tax Employee Provident Fund Registration ESI (Employee State Insurance) Registration

Partnership Registration Documents


PAN Card Partnership deed TAN (Tax Collection & Deduction Account Number) VAT/ CST Registration Central Excise License Importer Exporter Code Professional Tax Employee Provident Fund Registration ESI (Employee State Insurance) Registration

Pvt Ltd. Registration Documents

Involves 12 basic procedures as follows :

Procedure 1

Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)

ID Proof & Residence Proof is mandatory Time to complete: 1 day Cost to complete: INR 100

Procedure 2

Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)

7 certification authorized agencies in India. Time to complete: 3 days Cost to complete: INR 1,500

Procedure 3

Reserve the company name online with the Registrar of Companies (ROC) (National)

Time to complete: 2 days Cost to complete: INR 500

Max of 6 suggested name has to be enclosed in application


Approved name appears on ROC website

Procedure 4

Stamp the company documents at the State Treasury (State) or


authorized bank (Private)

Requires e form 1, e form 18 & e form 32 with MOA, AOA & approval of initial directors

Time to complete: 1 day

Cost to complete: INR 1,300 (INR 200 for Memorandum Of Association + INR 1,000 for Articles Of Association for every INR 500,000 of share

capital or part thereof + INR 100 for stamp paper for declaration Form 1)
Procedure 5

Get the Certificate of Incorporation from the Registrar of Companies,

Ministry of Corporate Affairs (National)


Time to complete: 5 days Cost to complete: INR 14,133

Procedure 6

Make a seal (Private) Time to complete: 1 day Cost to complete: INR 350 (aprx )

Procedure 7

Obtain a Current Account with bank & Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)

Time to complete: 7 days Cost to complete: INR 67

Procedure 8

Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in Income Tax Department

Time to complete: 7 days Cost to complete: INR 57

Procedure 9

Registration with Office of Inspector, Shops and Establishment Act Time to complete: 2 days Cost to complete: INR 2000

Procedure 10

Register for Value-Added Tax (VAT) at the Commercial Tax Office (State) Time to complete: 12 days Cost to complete: INR 5,100

Procedure 11

Register for Profession Tax at the Profession Tax Office (State) Time to complete: 2 days Cost to complete: No cost

Procedure 12

Register with Employees Provident Fund Organization (National) & Register for medical insurance at the regional office of the Employees State Insurance Corporation (National)

Min. 20 employees in an org.

Time to complete: 12 days


Cost to complete: No cost

If the outlet is inside a mall ?

Signing a lease agreement for the space with the mall along with the
above procedure.

FDI in Retail Requirements MBO Procedure


o

The foreign retailers must invest a minimum of US$ 100 million on the project.

A minimum of 50% of the total investment must be made in back-end infrastructure, such as warehouses, supply chains, cold chains, etc. The government has clarified that infrastructure will not include investment in real property or rentals or front offices.

The respective state government prior approval is mandatory to set up


retail stores in an Indian state. The state government has the discretion to grant such permission.

The company needs to self certify for the above.

The retailers can set up stores in only those Indian cities which have a population of more than 1 million. There are approximately fifty (50) such

cities India.
o

It is mandatory for the retailers to source at least 30% of the manufactured items in the store from small or medium Indian enterprises

Prior approval of DIPP and FIPB will be required to determine whether the proposed investment satisfy the guidelines.

RBI - Banks shall not honour foreign cheques presented after 3 months of issue

The notification lays down the pre-conditions for undertaking MBO retailing which do not include requirement of a foreign company to set up

entity. Hence there is flexibility in this regard.


Investment should be only in the form of equity , CCPS & CCD retail trading, in any form, by means of e-commerce, would not be

permissible, for companies with FDI, engaged in the activity of multibrand retail trading. Single Branded Outlet
o

Foreign single brand retailers are now permitted to invest 100% in the Indian market.

This implies that the foreign single brand retailers can now set up their own entities / subsidiaries in India without requiring tie ups with the Indian companies.

RBI - Banks shall not honour foreign cheques presented after 3 months of issue

Retail Requirements for Franchising


o o

Analyzing the need ( Concept, market & finance ) Registration of Franchise Disclosure Document with trade commission Info about business, operating manual, description of mgt teams business experience

Decision about the model


The franchise fee and royalty percentage The term of your franchise agreement The size territory you will award each franchisee What geographic area you are willing to offer franchises within The type and length of training program you will offer

Whether franchisees must buy products or equipment from your company

The business experience and net worth franchisees need How you will market the franchises Whether you want an owner-operator for each unit or area/master franchisees who will develop multiple unit

o o o o

Create Needed paperwork & register as franchisor Make key hires Selling Franchises Support Franchises

Cash And Carry Wholesale Trading

100% FDI is allowed in wholesale trading which involves building of a large distribution infrastructure to assist local manufacturers.

The wholesaler deals only with smaller retailers and not Consumers.

Strategic Licensing Agreements

Some foreign brands give exclusive licences and distribution rights to


Indian companies.

Through these rights, Indian companies can either sell it through their

own stores, or enter into shop-in-shop arrangements or distribute the


brands to franchisees.

Mango, the Spanish apparel brand has entered India through this route with an agreement with Piramyd, Mumbai, SPAR entered into a similar agreement with Radhakrishna Foodlands Pvt. Ltd

Manufacturing and Wholly Owned Subsidiaries.

The foreign brands such as Nike, Reebok, Adidas, etc. that have whollyowned subsidiaries in manufacturing are treated as Indian companies and are, therefore, allowed to do retail.

These companies have been authorised to sell products to Indian consumers by franchising, internal distributors, existent Indian retailers, own outlets, etc.

For instance, Nike entered through an exclusive licensing agreement with

Sierra Enterprises but now has a wholly owned subsidiary, Nike India
Private Limited.

Discounted Stores

Apply for a doing business as license and register your name through your county or city, according to Business.gov.

Obtain a vendor's license simultaneously as you will need to pay sales taxes.

Export Surplus Selling Stores Additional certificates required


a resale permit, fictitious name certificate, sales and use tax permit or Employer Identification Number.

Bibliography :

http://www.dcmsme.gov.in/howtosetup/grgxx01x.htm http://www.professionz.com/in/businesses-in-india/how-to-start-a-business.html

http://trak.in/tags/business/2009/07/01/starting-business-in-india-simplified-process/
http://www.indiacompanysetup.com/india-company-formation-pvt-ltd/ http://ccsindia.org/ccsindia/interns2002/02.pdf http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/Publications/4488131171300070514/india.pdf http://elagaan.com/company/sole-proprietorship-registration-india http://business.gov.in/starting_business/org_partnership.php http://www.anaassociates.com/publications.php http://www.entrepreneur.com/article/204998 http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Indian%20Reta il-%20Time%20to%20change%20lanes.pdf http://www.wikihow.com/Start-an-Online-Store

You might also like