Mr. Linde is a German national, who came to India again on 1st April, 2024. He represents his company and wants to start business in India as well.…

Mr. Linde is a German national, who came to India again on 1st April, 2024. He represents his company and wants to start business in India as well. His company expertise in the manufacturing of Industrial machines. Recently launched “Make in India" movement has motivated Mr. Linde thinks that this might be the perfect opportunity for his company to establish his company in India. Last, Mr. Linde came to India on 1st April, 2012. He purchased a land for 50,00,000 and constructed a building by spending - 16,00,000. After that he opened a Private limited company in that building. He spent another - 2,80,000 for this. He also employed 3 people for survey and to understand the need of Indian customers and spent - 1,50,000 in salaries. He was disappointed in the response of market, who were importing everything from China back then. He closed the office & went back to Germany. All these years the office was closed and only an amount of 12,500 per month was paid to a guard and property tax was also paid. Property tax was paid on an average of 18,000 per year. Now when Mr. Linde is back, he opens the office and starts to plan on how this time he will capture the Indian market. Expenses started to incur as soon as the office opened: Salaries of staff - 2,50,000 per month.Electricity, water, & maintenance of office at 50,000 per month.Security staff at 15,000 per month. Linde plans to purchase a land in Manesar which will be used for the factory. After a search he found an appropriate land and purchased a land for 1.50 crores. He handed over the land to a SPV company of a REIT to build a state of the art facility for their factory. Factory will be built in 2 years. They will spend 85lacs each year for this construction. Linde, back in the Noida office, made 3 departments: (1) Office and administration (2) Sales and marketing (3) Account and Finance Expenses for these departments (except for salaries) are expected to be:- Office and administration = 95,000 per yearSales and marketing = 1,12,000 per yearAccounts and Finance = 88,000 per year Office overheads are to be bifurcated in these departments on the basis of their individual spending ratio. Technology is developed in Germany but at present its execution is not required. Therefore, they do not require any expert as of now and also because the factory is not ready. Mr. Linde, being the only person representing his company and lone German in the Indian office feels difficult to manage everything as he finds Indian corporate environment very challenging. He asked his company to deploy another German manager to India. This will cost the company additional two million Indian national rupee per year to relocate this additional manager in India. The German management is divided on this decision. The ones who disagree say "Mr. Linde is competent enough to run a small extension of our company in India. We will allocate more resources to Indian subsidiary when actual operations will start, till then everything can be managed by Mr. Linde alone. Right Indian Company is itself a cost centre and we are already paying him 3.5 million INR annually, therefore we are not ready to invest until it starts generating revenue”. Linde has another opportunity to relocate the head office, also, to Manesar, where the factory building is being constructed. The distance between head office and factory will reduce greatly, which will be highly beneficial when the factory will become operative. He will have to sale the old office in Noida, which will be sold at 2.50 crores and purchase a ready-made building in Manesar for 3.75 crores. This new building will have larger space that can accommodate the future needs for space, when company will grow. It seems to be like perfect investment opportunity to Linde. Expenses in this new building are expected to be:- Salaries of staff - 3,00,000 per monthElectricity, water, & maintenance of office at 80,000 per month.Security at 30,000 per month. Indexed cost of building in Noida is 2.25 crores and tax on long-term capital gain is 12.5%. On the basis of above information, answer the following 5 MCQs: