BUSINESS OBJECTIVE

BUSINESS OBJECTIVE

• To engage in the professional consultancy business of recruitment/placement/executive search/headhunting etc.
• To offer Human Resource related services to Corporate Clients.

NAME OF COMPANY & CONSTITUTION

• The Company will be called "Executive Recruiters Private Limited" (ERPL).
• It will be a private limited Company with following ratio/proportion of share-holding:
• 3P/Parekh Family/Friends $\rightarrow$ 51%
• Raju Kapur/Family/Friends $\rightarrow$ 49%
• Nirmit will be the "Chairman" of the Company, whereas Raju will be the Managing Director.
• All appointments/contracts/agreements/payments will be made under joint signature of both Nirmit & Raju. Bank-accounts will be operated under joint-signatures.

EQUITY CAPITAL

• Initial equity capital would need to be about Rs. 6 lakhs to take care of Working-capital needs of the first 4/5 months of operations.
• This could be increased later depending upon the business growth in the proportional contribution of 51% (3P) // 49% (Raju).

DAY-TO-DAY OPERATIONS

• Raju will be responsible for all day-to-day operations of the Company and will be paid a monthly salary.
• Nirmit will not draw any salary.
• Raju will not engage in any other business/commercial activity, either on his own or through any relative/friend/firm. He will not act as Consultant/Advisor to any other person/firm, nor hold any "office" in any other commercial/business organisation even in non-executive/non-salaried/honorary position/status.

Contributions

3P	Raju
* Brand Equity comprising:	* Contacts.
* Company's Intellectual Properties	* Personal Time & Effort
* Domain Expertise
* Contacts with Clients & Candidates
* Existing Orders/Inquiries
* Future Inquiries
* Office Premises
* Support staff Services & Infrastructure

 

OFFICE PREMISES/INFRASTRUCTURE

• Through appropriate "agreement" 3P will permit ERPL to use its leased premises at 2nd floor of Lok Centre, along with all the infrastructure installed there in.
• In order for ERPL to "access" the computer network of 3P, ERPL will apply & install a leased-line between the two buildings. Once the leased line becomes functional, 3P will install its proprietary ORDER EXECUTION SYSTEM at Lok Centre office, along with other necessary softwares.
• However, if any standard, third-party, software packages are required to be purchased, ERPL will order the same directly on its own. 3P will arrange to install these at the Lok Centre premises.

CAPITAL EXPENDITURE

• Any/All Capital expenditure required to be done, will be done directly by ERPL. Such expenditure may include Computers/Printers/Xerox m/c/hub/router/epabx/ etc. etc.

WORKING CAPITAL

• As far as LOK-CENTRE office premises are concerned, ERPL will monthly reimburse to 3P, the actual Lease-rent being paid.
• As far as all other routine/operating expenses are concerned, ERPL will make all payments directly from its own bank-account to concerned parties. These expenses include (but are not limited to):
• Electricity
• Telephone
• Stationary
• Travel
• Conveyance
• Eqpt. rental
• Insurance
• Entertainment
• Postage
• Repairs & Maint.
• Contracts etc. etc.
• In addition ERPL will pay to 3P, reasonable "Interest + Depreciation" on the CAPITAL-COST which 3P has incurred in furnishing the LOK-CENTRE office.

MANPOWER

• ERPL will engage/appoint employees on its own, who are required to be appointed on a full-time basis, to work exclusively for ERPL.
• As far as manpower required on adhoc/part-time "support-functions" is concerned, 3P will render these "services" to ERPL and charge ERPL for the same on a monthly basis.

These "Services" will comprise of:

• Peons/Mailroom/Despatch/Receipt
• Receptionist cum Tele Operator (Rupali)
• Accounts (Srilekha)
• Personnel (Monica)
• Security (Shukla)
• Networking (Reena)
• Database (Abhi)
• Webmaster/Customer Support (website based) (Sanjeev)
• Software Develop & Support (Vinay/Chawla)
• Data Entry (Dhyanesh/Vittal).

• 10% of the monthly salaries of such "support-staff" would be debited to ERPL.

MARKETING

• ERPL will carry-out its own marketing/advertising/publicity independent of 3P.
• In case of any specific "Common"/"Joint" marketing campaign (e.g.: adverts/seminars), the expenses will be shared between 3P & ERPL, through prior estimation/consultation/agreement.

MARKET/CLIENTELE/NON-COMPETITION

• In order to avoid internal competition between 3P & ERPL, 3P will cease to operate in certain select & predetermined "Industry-Sectors".
• All/any executive-search requirements of these predetermined Industry-sectors will be handled by ERPL only.
• If 3P receives any inquiries/leads/requests from these sectors, the same shall be passed-on to ERPL to handle.

Intellectual Property Use

• 3P owns following intellectual properties:
• Business Concepts (e.g.: Virtual Employ-Exchange etc)
• Logo
• Registered Names
• URLs (websites)
• Software/Search Engines
• Databases (Clients/Candidates/Corporates)
• Systems/Procedures etc. etc.
• Literature
• For allowing/permitting ERPL to make use of such intellectual properties owned by 3P, ERPL & 3P will enter into a legal agreement.
• ERPL will pay to 3P an annual "ROYALTY" for use of 3P's intellectual properties described above.

WITHDRAWAL OF BUSINESS PROFITS

• There will be no withdrawal of business profits from the firm by 3P or by Raju, in any manner other than as clearly laid down in advance in the Article of Association/MOU or some such similar agreement.

Separation

• Should Raju ever decide to quit this business 3P will have the first right to acquire his 49% share-holding in the Company.
• In case 3P does not wish to acquire this stake, Raju may sell his "shares" to any other party acceptable to 3P.
• In case 3P ever decides to quit this "Private Limited" company, Raju will have the first right to purchase/buy-out 3P's stake, failing which 3P may sell this stake to any other party of its choice - without referring to Raju.
• In such events, 3P may at its own sole discretion, terminate various "agreements" entered into between 3P & ERPL, or re-negotiate the same on fresh terms.

New Partnership (Date: 23-11-01)

| 3P brings | Raju brings |

| * Brand Name | * His own time/effort |

| * Annex [A] $\rightarrow$ 4000/mon | |

| * Annex [B] $\rightarrow$ 50,000/mon | |

Proposal

• Both Parties bring-in equity capital of Rs. 1.0 lakh each (50:50 share). This money will be mainly used for paying "salary" of any staff employed by the partnership.
• All "fixed" + operating office expenses ([Annex: A] [Annex: B]) to be borne by 3P by way of its contribution during "Gestation Period".
• 3P not to charge new partnership firm any amount towards these expenses during the gestation period. (Marked with an 'X')

• On his part, Raju will not draw any "salary" (i.e. charge anything by way of compensation to the partnership firm) during the gestation period. (Marked with an 'X')
• He contributes by way of his own time/effort. (Marked with an 'X')
• At the end of the "gestation period", whatever "Net Profit (after taxes)" partnership firm has made, will be brought into the firm's books by way of "EQUITY" (50:50). (Marked with an 'X')
• After the "gestation-period" is over, the partnership firm will:
• reimburse (pay) 3P for Annex A + Annex B. (Marked with an 'X')
• pay a salary of Rs. [ ]/mon. to Raju for his time/effort. This salary will be equal to (Annex A + Annex B) expenses to be paid to 3P. (Marked with an 'X')

• The "gestation-period" could be 6 months. (Marked with an 'X')
• Raju will attend to partnership's "business" on full time basis and not engage in any other business/commercial activity, on his own or through any relative's firm. He will also not hold any "office" in any other commercial/business organisation, even in non-executive/non-salaried status. (Marked with a checkmark)
• To enable the new partnership firm to "capitalize" on the brand-equity of 3P, the new firm will be named "3P PLACEMENTS". (Marked with an 'X')
• Should 3P, at anytime, decide to quit/opt-out of the new partnership firm, Raju shall not continue the business in the name of "3P PLACEMENT". This name/Intellectual property rights shall revert to 3P. For this reason, "3P PLACEMENT" name will be registered/trade-marked by 3P and "loaned" to new partnership firm, as long as 3P continues as a 50% partner. (Marked with an 'X')

• Should Raju decide to quit/opt-out of the new partnership firm at any time, 3P will have the first right to buy-out his partnership share (his stake), as per books of account.
• Raju can sell his share to any other party only in case 3P is unwilling/refuses to "buy" him out. (Marked with a checkmark)

What 3P brings to the "Table"

3P's "Contribution" to New Partnership Firm

Interest + Deprec. on CAPITAL COST of the New Office	Office Operating Expenses for smooth running of new office	Brand Equity (Existing Inquiries)
Annex = A	Annex = B	Services
Rs. 4000/month	Rs. 50,000/month

 

Annex = A

What "Capital Cost have we incurred in setting-up new office?

Bills of
Yadav [ ]	- Painting	[ ]
Laljee [ ]	- False Ceiling	[ ]
Chamista [ ]	- Cabin	[ ]
	- Furniture	[ ]
	- Electrical Wiring	[ ]
	- Computer Wiring (LAN)	[ ]
	- EPABX	[ ]
	- Computers	[ ]
	- Attendance System	[ ]
	- Other ready-made bought-out items	[ ]
	- Materials Purchased	[ ]

 

GRAND - TOTAL $\rightarrow$ Rs. 2.0 L ?

What is Interest ($15\%$) on this Capital Investment? + Depreciation ($10\%$)?

$$25\% \text{ of } 2\text{L} = 50,000/\text{yr}$$

$$\rightarrow 4000/\text{month}$$

This is 3P's "Fixed" Contribution to New Partnership Firm

Annex = B

Operating Expenses for JV (Partnership)

Manpower Costs	Office Operating Costs	Financing Costs
Salaries (Dir.)	10000 - Rent (office)	Servicing of Equity or Borrowings
10000 - Electricity (Dir)
5000 - Telephone (Dir)
2500 - Stationary (Dir)
(COOP) - Travel (outstation) (D)
5000 - Travel (local Conveyance) (D)
5000 - Rent (Computers) (D)
2000 - Entertainment (D)
-	-
-	-
-	-
50,000 $\rightarrow$ Total (approx)