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BUSINESSANDMANAGEMENT
EXTENDED ESSAY
“Will relocation to Mahindra World City (SEZ)
provide Opel Overseas with Competitive and cost
advantage”?

Candidate SessionNo.002760-00
2 “Will relocation to Mahindra World City (SEZ) provide Opel Overseas with Competitive and cost
advantage”?
Candidate Name: Agam Raj Gupta
Candidate Number:002760-006
WordCount: 3880
School:StepBy StepHigh School

advantage”?
Abstract
Opel Overseas is a Jaipur based handicraft exporter. The geopolitical changes in the
last three years have affected the export orders received by the Company . Therefore
the Company is looking for alternate strategies to reduce costs and improve its
production system be more modern. The Management is therefore exploring methods
to help reduce operational costs on one hand and implement changes which will give it
an ability to compete globally in the long term. Mahindra World City, a SEZ, has started
operating in Jaipur and Opel Overseas is considering relocating its labour intensive
Company to the SEZ. The extended essay has researched into the qualitative and
quantitative aspects of relocating to the SEZ. The research question therefore is:
“Will relocation to Mahindra World City (SEZ) provide Opel Overseas with
Competitive and cost advantage”?
The research is primarily based on data collected from secondary sources. The sales
and operation records of the Company were the source of gathering information
regarding the financial and non-financial aspects of the business. Based on the
exploratory research, an in-depth research on the various websites and a study of the
SEZ Act Of India was undertaken to get a holistic view of the effect of the move. The
collected information was analyzed using tools like SWOT, PEST, and financial ratios.
In the end after detailed analysis of the data, it was concluded that relocating to the SEZ
was an advantage to the Company as it will give them the advantage of lower costs.
Therefore the research concluded that the move to the SEZ should be considered as it
would give substantial financial and non financial advantages. However, a detailed
business plan should be compiled on the basis of this extended essay, prior to
undertaking the move.
(289 words)

advantage”?
Contents
Abstract..........................................................................................................................................3
Contents.........................................................................................................................................4
Introduction....................................................................................................................................5
Research Question ......................................................................................................................6
Research Methodology ...............................................................................................................8
Analysis And Discussion : Shifting to the Mahindra SEZ.....................................................10
1. Benefits of Mahindra World City SEZ ..........................................................................10
2. Financial Analysis ............................................................................................................15
1. PAYBACK PERIOD.....................................................................................................15
2. ACCOUNTING RATE OF RETURN (ARR).............................................................16
3. Qualitative Analysis ........................................................................................................17
Conclusion and Recommendation...........................................................................................21
References ..................................................................................................................................23
APPENDIX 1 Interview with the Director (excerpts) .............................................................24
APPENDIX 2: Projected Profit & Loss Account.....................................................................25
APPENDIX 3: Comparative Chart showing Advantage under EOU & SEZ Schemes....27
APPENDIX 4: EXPORT PROCEDURE..................................................................................29
APPENDIX5 Overview of Mahindra World City.....................................................................31
APPENDIX 6 Mahindra World City, Jaipur –PICTORAL REPRESENTATION ..............35

advantage”?
Introduction
Opel Overseas is an export house dealing in handicrafts and textiles in Jaipur
Rajasthan (India) . The company is over twenty years old and has a steady growth of
over 15%1. The Company has been in the forefront of the export business in Jaipur and
has sustained growth as its mission.
The Company has been operating since the year 1990 and specializes in export of
handmade handicrafts like marble artifacts, wooden items and furniture. The products
made by the Company are customized according to the preference of the buyer.
Therefore the Company has an edge over its competitors who prefer to make the
products according to pre decided designs. The European Union and UK are the
primary destinations that the organization exports its products to.
As the company operates in the international market, the recession which hit the
Global economies in the year 2008 left its impact on the exports. The handicraft exports
from India which were growing at a rate of over 20%2 suffered a set back and started
declining from the year 2007-08(Fig 1: Handicraft Exports From India).
3
Source: Handicrafts Export Promotion Council
Fig 1: Export of handicrafts from India
1 Financial Records:2007-2010
2 http://commerce.nic.in/annual2006-07/html/chapter2.html
3 http://www.handmadepapersindia.com/blog/index.php/2010/11/report-card-exports-handmade-paper-
handmade-paper-products/

advantage”?
Consequently, the organization’s sales declined steeply by over 35%4 of its average
annual gross revenue in the year 2008.. The Company has therefore been forced to
look for an alternate strategy in an attempt to revive its falling revenues and profits.
On one hand, the Company is trying to improve its profitability by focusing on markets
which were till now untapped by them. These are the developing economies like Russia,
and Brazil. However the challenge has been to maintain profitability as the consumers
in these countries are cost conscious and do not prefer to pay high prices for innovative
designs and superior quality. Therefore, the Company is trying to improve its bottom
line by reducing the costs of operations. It has evaluated different cost cutting strategies
like subcontracting to purchasing from alternate suppliers.5 However in both the cases
the loss of control on production and the adverse effect on quality deterred the
Company from adopting either of the strategies.
Research Question
4 Appendix 1:Interview with the Director
5 ibid

advantage”?
The primary causes for the Company’s problems are a mix of external and internal
factors. The main reasons can be attributed to: –
 High production cost – The Company specializes in hand made handicrafts
and uses very little modern machinery. This increases the cost per unit and the
individual nature of products prevents the company from using technical
economies of scale. As a result the Company has high cost of operations.
 Decrease in the number and size of orders on account of global recession-
there has been a reduction in the number and size of orders by almost 30% on
account of the global slowdown. The recession which affected the US and
Europe has decreased the purchasing power of the citizens6 and consequently
the demand too has decreased.
 Low Profit Margins: The Company uses premium pricing technique. However
with the decline in the number of orders on account of recession and increased
competition domestically, the Company had to shift to competitive pricing
strategy which affected the profit margins negatively7. Therefore the combined
impact of rising costs and reduced revenues and profit margins have affected the
growth of the Company and have created a problem for its long term viability,
 Competition From China made products: A drop in the sale has also been
registered on account of the increased competition from China which due to
economies of scale is able to produce the same products more economically.
Therefore the customers have started shifting to Chinese exports.
As per the Director, Mrs. Gupta, taken individually none of the above stated factors
would be a cause of grave concern but as all above are happening simultaneously they
66 http://business.timesonline.co.uk/tol/business/economics/wef/article3241372.ece
7 Appendix 1: Interview with the Director

advantage”?
are a serious cause of concern. Further, she feels that the time is right to undertake an
evaluation of the correct way forward and plan an approach which will help the
organization in the long run and after the recovery of the economies from the aftermath
of recession.
The Company is deliberating on a proposal to purchase a piece of land in the Special
Economic Zone(SEZ) being constructed on the outskirts of Jaipur8. The Mahindra
Group is creating the SEZ and has named it Mahindra World City. The SEZ is jointly
promoted by Mahindra Group9 and the government owned Rajasthan State Industrial
and Investment Corporation (RIICO)10.
In case the Company decides to relocate the factory it will get cost advantages which
will be beneficial for it in the long run. However, in the short term purchasing and setting
up a factory means substantial investment and will put even more pressures on a
Company reeling under the pressure of reduced orders and revenues. So it is important
to research into the effects of the relocation on the organization both financially and non
financially.
Therefore the dilemma which the Company is facing is that should they purchase this
land and relocate to the new site. Therefore the report researched into the proposed
move and the research question will be;
“Will relocation to Mahindra World City (SEZ) provide Opel Overseas with
Competitive and cost advantage”?
Research Methodology
8 Appendix 6: Location Map
9 www.mahindra.com
10 www.riico.com/

advantage”?
The researchis basedondata collectedfromsecondarysources,howeverinterview of the Director was
conducted (Primary research ) to clarify the doubts and help fill the lacunas in information collected.
Secondary Data Source
The main sources of information were the Company records on sales and orders
received. This was an aid in assessing the revenue versus profit margin factors with
reasonable accuracy. A Company profile was also studied to understand the business
in detail.
The websites of Government bodies like RIICO, Export promotion councils were a
source of data on macro economic level while the websites of income tax and sales tax
department added to the understanding of the taxation structure prevalent in India.
Continual reference to books on financial appraisal were made and the website of
Mahindra SEZ11 was an invaluable source of understanding the concept of the SEZ in
Jaipur. A detailed study of the SEZ Act of India12 was also done to make sure that the
financial impact of the relocation to the Company was clearly understood.
Primary Data Source
It involves collecting first hand information from the data sources. The only primary
research was the interview of the Dirctoe which was taken to help clarify the doubts
which arose during the research.
The data so collected was analyzed using a mix of planning tools like Qualitative Project
analysis and financial tools like Payback Period and the Accounting rate of return.
11 http://www.mahindraworldcity.com/jaipur.aspx
12 http://sezindia.nic.in/index.asp

advantage”?
Analysis And Discussion : Shifting to the Mahindra SEZ
1. Benefits of Mahindra World City SEZ
Opel Overseas is an Export Oriented Unit13 and accordingly gets benefits from State
and Central Government schemes for such units. The proposed shift to the SEZ may
add to these benefits and a study of the total financial benefits and a comparison with
the existing business is required prior to taking any decisions.
The research shows that the primary benefits will be:
 Decrease in Cost accruing from:
 Increase in period for exemption from the income tax and other taxes –
Opel Overseas has not been paying income tax in accordance with the
benefit accorded to the EOUs in India. Yet this benefit is granted till the
year 201014 only. Therefore from the financial year 2011-2012, the
Company will have to pay income tax at the normal levels. Therefore a
shift to the SEZ will help the company to save Rs. One lakh15 fifty
thousand( at current profit levels of tax), which it may have to pay form the
financial year 2011-12
 No duties levied on goods purchased or imported for the unit at the SEZ.
This includes goods required for production or maintenance of the new
production unit. 16 Usually duty component for the imported raw material
and machines at approx 35% of the value. Hence, the items imported by
the firm are more expensive to this limit by approx 15%. The Company will
13 http://www.stpiconsultancy.com/eoubenefits.html
14 http://www.stpiconsultancy.com/eoubenefits.html
15 1 lakh=.1 million
16 http://www.stpiconsultancy.com/about_sez.html

advantage”?
save on the costs of importing the machinery and tools from China and
Germany. The company is planning to modernize its setup along with the
relocation decision and so the exemption from import duty will help it get
benefits to the tune of 35%17 on import costs as savings in import duty.
(As stated by the director they think it will be a good idea to plan for new
machinery as the ones being currently used are outdated and they would
like to import world class machinery rather than source local ones,
especially s they do not have to pay a duty. Further, the Company will also
be able to use more efficient machinery leading to savings in the
production costs.
 The operative unit at the SEZ would be able to claim for service tax refund
for services which are availed of from outside the tax free export zone18.
This will further help the organization to further reduce costs.
 The Purchase/Sale transactions would not attract any VAT or C.S.T19
charges20 Currently non- SEZ units have to incur a cost by way of service
tax to the tune of about 12.33% on banking charges, transport charges,
courier charges, security services and maintenance services/charges. The
Sales Tax itself is at the rate of 4 % of the invoice value. In addition they
have to pay a local tax known as Local Sales Tax, which is commodity
dependent but is at an average of 10 %. If the company relocated to the
SEZ then they have will a substantial cost savings of 4 % on all raw
material inputs and on local sales tax and service tax. A decrease in the
tax to be paid will help reduce costs and so boost the profit margins,
allowing the Company to be more competitive in the international market.
17 http://www.infodriveindia.com/indian-customs-duty/44219014-for-other-machinery.aspx
18 http://www.business-standard.com/india/news/sez-units-get-service-tax-relief/350968/
19 Central Sales Tax
20 http://stpam.org/str/note-special-economic-zone-vat

advantage”?
 The current land prices at Ajmer Road, Jaipur where the SEZ is located
are Rs. 636 per sq feet21 approximately. The land at Mahindra SEZ is
available at a subsidized rate of Rs22. 240 per sq feet. As compared to the
current market price, it is a saving of almost 200% on the purchase of the
land. These cost advantages can be used to offset and purchase the
machinery from other countries.
Apart from the cost savings the other benefits include:
 Speeding up the Exim Process: The SEZ has special customs area
staffed with custom officers which will deal with units within the SEZ.
Therefore, as their focus is only these units so the whole process
becomes faster, leading to substantial savings in time which may be
utilized by the Company for other purpose.
 The SEZ can have 100 % Foreign Direct Investment (FDI).23 Therefore in
future if the wants to undertake growth using a foreign partner or would
like to sell the business to a Foreign Company, then the options are
available to Opel Overseas on account of the permission being granted by
the Government for the same. Thus the use of Brownfield expansion24 is
available for Opel Overseas.
21 http://www.zamanzar.com/Jaipur/Ajmer+Road/Commercial-Property-Prices.html
22 $1= Rs.45.5 approx
23 http://www.sezindiainvest.com/
24A brownfieldexpansionmeans adding onto anexistingfacility. (source:
http://www.steelguru.com/glossary/category/6/Brownfield_Expansion.html)

advantage”?
 The SEZ Company can borrow up to US$500 million(approx equivalent to
INR 2500 million) in a year without any maturity restriction through
recognized banking channels25. The value of loan sanctioned depends on
the business plan and the credit rating of the Company. This will be an
important source of finance for the organization as it will allow the
Organization to borrow large sums of money for a longer period of time.
Hence, allowing the organization greater flexibility in arranging for loans
and also undertaking aggressive growth plans or capital investment.
 Single window clearance for Central and State level approvals- this will
help the firm get rid of the red tapism and will lead to faster working
around the bureaucracy.
Further, Mahindra World City has26 the following features which will be
advantageous to the Company :
 World class infrastructure: Keeping the needs of the exporters in mind
and the problems faced by them on account of poor infrastructure, the
MWC27 has invested to ensure that the infrastructure is world class, with
abundant power and water so that the units in the SEZ do not lose
production hours.
 External economies of scale: Due to availability of skilled manpower
from nearby villages, the supply of manpower is ensured.
 A one stop logistics Solution: The SEZ has an area earmarked for In-
house logistics and Warehousing zone. This will facilitate the movement
from the SEZ of the custom cleared goods and as the degree of
specialization will be high, so improvement in service levels will be seen.
25 http://sezindia.nic.in/index.asp
26 http://www.mahindraworldcity.com/jaipur.aspx
27 Mahindra World City

advantage”?
 Dedicated handicraft zone : The SEZ has exclusive areas marked
according to the type of products being produced. So due to all the
handicraft firms being clustered together, there may be many ancillary
firms available leading to time and cost savings due to external economies
of scale.
 The additional benefits are that the SEZ has Public Utilities like;
 Details of Accident Prone Areas
 Road Map/Road Details
 E mail Addresses and Telephone Numbers
 Accident/Trauma Care Centers
While these facilities are not essential yet their presence will benefit the organization as
the presence of these services will create a good image in the minds of the employees
and buyers regarding the concern which the Company has for emergency situations.
Analysis of the data collected to understand the benefits of relocation to the SEZ clearly
show that the Company stands to get substantial cost advantage which will have the
overall effect of decreasing the cost of operations and improve profit margins.
However, prior to undertaking any decision a financial cost benefit analysis of the
decision is a prerequisite.

advantage”?
2. FinancialAnalysis
After considering the cost advantages to Opel Overseas of relocating to the SEZ,
investment appraisal techniques were used to understand the attractiveness of the
project.
1. PAYBACK PERIOD
The initial investment required for setting up the factory is estimated to be Rs. 4.75
million28. The source of funds for the project is internal accruals and loan from the
bank29.
Years Cash Inflow
(all figures in
million)
Operating
Cost
Net Cash
Inflow
Cumulative
Cash Inflow
0 (4.75)
1, 5 4.3 .7 .7
2 5.1 4.1 1 1.7
3 5.2 3.8 1.4 3.1
4 5.4 3.7 1.8 4.9
5 5.5 3.3 2.2 7.1
Table 1:Fund Flow Statement
Calculating the payback period.
Time taken to Recover the funds: Amt to Be Recovered/inflows
=3 years 4.3 months
Therefore the company will recover Rs. 4.75 million in approximately 3 years and 4.3
months. The payback period is short enough to make the project financially attractive.
28 Appendix 1: Interview Of the Director
29 ibid

advantage”?
2. ACCOUNTING RATE OF RETURN (ARR)
The Calculation of ARR is based on Table 1 pg 14
ARR= (Annual Profits/Initial Investment)*100
Total Profit = 71 – 47.5
= 23.5
Average Profit = 23.5/5
= 4.7
ARR = (4.7 x 100) / 47.5
= 9.89%
The investment appraisal techniques return a payback of 3 years and 4.3 months and
an ARR of 9.89%. Both the figures are attractive enough to make the relocation
financially attractive. Moreover, the cost savings in operations coupled with the high
ARR and a short Payback Period make the project a financially lucrative decision both
in the short and the long run.

advantage”?
3. QualitativeAnalysis
The final decision to undertake a project depends not only on the financial advantages
but also on a host of non financial factors. Therefore, it is important to understand the
non financial advantages and risks which will accrue to the business as a result of this
business decision.
Capital Gains
The current premises of the organization which is located at Amer Road, Jaipur can be
easily sold or rented. This is because it is at prime location. The funds raised from the
sale may be utilised to finance the relocation and purchase of the new factory. This will
help to reduce the dependence on loans which may be expensive and prevent the
retained profits from being completely used up.
External Economies Of scale
The area is expected to benefit from external economies of scale as the presence of
handicraft exporters in close proximity will encourage skilled manpower and specialist
mechanics and support firms to setup in the vicinity. This will be advantageous as the
Company may otherwise have to spend money on hiring labour on increased wages.
Further transportation of samples, documents and shipments is another area of concern
in the current business structure. Non reliable service on account of low cost
advantages has often affected the delivery time of the Company. If the Company
relocates, this issue is addressed as there will be a presence of major international
cargo and courier movers, providing service at competitive rates.
Improved Quality Standards
Quality check at the SEZ would by default improve the quality of production and
positively impact the business by creating the image of superior quality. The handicrafts
would easily be able to establish their supremacy over the other inferior look alike which
have flooded the market. The buyer/importer would be able to easily understand the
Company’s commitment to authentic designs and quality.

advantage”?
The investment in technology will create better stock control and prevent pilferages and
spoilage of the raw material. This in turn will ensure that the product is of the highest
quality and standard.
Contemporary Production Facilities
The existing factory is old and outdated as per the present and future requirements.
Building a new factory will help the Company to use the modern technology and
infrastructure to create a production facility which is not only efficient in production but is
also aesthetically appealing.
The modern infrastructure and equipment will help create an image of the Company as
one which sets and meets high quality standards. Moreover, the new premises will also
allow the organization to implement the health and safety norms as per the prevalent
standards. Therefore if any customer was to visit the factory, the Company will be able
to prove their commitment to quality easily. This in turn may improve orders and
revenues.
Centralized operations and effect on Labour
The Current facilities of the Organization are scattered in different areas with the
production facility located in Amer Road, the design facilities in another part of the town
at Old City and the export office in C scheme. This makes it difficult for the owners to
coordinate and increase the cost of travelling within the city. With the new facility being
set up all the departments will be housed at one location. This will make better
coordination possible, which in turn is expected to increase productivity.

advantage”?
Labour Costs
The SEZ is located in Mahapura, which is on the outskirts of Jaipur. As a result the
Company will have access to skilled labour which currently resides in Mahapura30. This
will generate cost savings to the company as it will not have to retrain the labour.
Quantitatively, this will result in cost savings to the tune of 6% of the total operating
costs31. Therefore, while the Company may have to hire new labour as the existing
ones may not wish to relocate on account of the increased distance. The current labour
force resides mainly in Amer32(North Of Jaipur), which is about three km from the
existing factory. The proposed site is on the other side of the town (South Of Jaipur)
which would increase the commuting distance by almost forty kilometers.
Uncertain Future
However despite the bulk of the factors being in favour of the relocation, the impact is
primarily due to the cost savings and modernization of the factory. There is no certainty
that the relocation will help in getting more orders as the decrease in orders has been
on account of macroeconomic environment and external factors like increase in
domestic and international competition. Therefore while the Company may improve
profit margins on account of lower costs it will not be able to improve revenues if the
marketing team is unable to create and capitalize on the business opportunity the new
factory may present.
30 Appendix1: Interview Of the Director
31 Financial Records 2007-10
32 Employee Profiles and Records,Opel Overseas,2010

advantage”?
Unemployment And Demotivated workforce.
The move to the new premises involves greater distance to be travelled by the
workforce. As most of the workers are in the lowest rung (Physiological Needs)of the
Maslow’s pyramid of Needs(Fig 3), as they are on daily wages. They are dependent on
the Company for their livelihood.
33
Fig 2: Abraham Maslow’s Hierarchy Of Needs
The relocation will cause them to travel a distance greater than forty kilometers per day,
and also increase their travel expenses. This increase will decrease their net income
and so they will feel motivated. This will affect their operational productivity and may
increase their labour turnover. Therefore the Company has to plan ahead to ensure that
employees are not retrenched and or demotivated.
33 http://arellevalla.com/2009/07/30/5-levels-of-a-mans-needs/.html

advantage”?
Conclusion and Recommendation
Based on the research carried out, the relocation appears to be a strategic move which
will accrue both financial and non financial advantage to the organization. The
conclusions drawn are;
 The primary motivator for moving to the SEZ is the extension in the exemption
from Income Tax which the Company will receive for the next five years and a
smaller percentage after that. The current income tax exemption is set to expire
after the fiscal year 2010-11.
 There will be external economies of scale on account of close proximity of other
handicraft exporters.
 The Company will gain substantial cost advantage on account of better
productivity due to new machinery and modern setup. Improved coordination
within the Company will result due to all the departments being located at one
place rather than being scattered all over Jaipur.
Thus, the relocation of Opel Overseas will be profitable for the Company and is
recommended. The recommendations are based on the cost advantages which will help
the Company remain competitive and regain the high levels of profitability it was
enjoying prior to recession. There are concerns about the way the things will develop in
the future but the Company need to address the marketing issues separately and use
the new premises as a means to prove its commitment to quality. Using this report as a
base, the Company may commission a project feasibility analysis to understand the
move to the SEZ in greater detail.

advantage”?
Limitations and Future Research
The research was undertaken in an objective manner. However, there may be elements
of biasness due :
 Lack of competitor analysis; there was reluctance on the part of the promoters of
the Mahindra SEZ, to provide details about the customers who had already
purchased the land in SEZ. So competitor analysis was not possible, and the
effect of how having competitors in the area will negatively impact the business
operations was not calculated
 Hesitation of directors to provide accurate financial data. The owners did not wish
to provide accurate financials due to confidentiality issues. However the
estimations provided by them were cross checked to ensure their accuracy to a
large extent.
The tax policy is up for review in the year 2013 and any changes in the taxation
structure proposed by the government will affect the accuracy of the report and
consequently will affect the decision of the Company.
The report also did not undertake network analysis to estimate the time required before
the operations can be started in the SEZ and so it is recommended that the Company
undertakes project management which may use the elements from this report.

advantage”?
References
 Hoang, Paul. (2007), Business And Management, Melbourne: IBID Press.
 Milling, Brian E. (April 2001),The Basics of Finance: Financial Tools for Non
Financial Managers, iUniverse.com
 http://www.caclubindia.com/books/manual_sez_ftwz_ifsc/ accessed on 28.11.10
 sezindia.nic.in/ accessed on 14.12.10
 www.mahindraworldcity.com
 http://economictimes.indiatimes.com/

advantage”?
APPENDIX 1 Interview with the Director (excerpts)
Q1. What are the problems faced by the company due to the economic slowdown?
The Problems faced by the company at the present scenario are:
 Less orders in the factory.
 High cost of production.
 Low profit margins.
 Competition from substitutes from china which are cheaper.
Q2. What is the USP Of the company? What are your main markets
The USP of the company is its Products that are fused with a classical Indian look. They are primarily
exported to the US and Europe.
Q3. How has the recession affected your company? What has been your strategy
Sales have decreased almost 40%. The customers have stopped buying or prefer to deal in low price
products rather than quality based ones.
We have tried a variety of things from concentrating in alternate markets like Brazil and Russia to
subcontracting our products, however there have been many disadvantages so we have stopped them for
now.
Q4. What is the average income tax you pay?
We are an EOU so we don’t pay tax. But after 2010-11 the tax benefit will end.
Q5. What are the cost cutting strategies you are looking for?
As a Cost cutting strategy our only focus is at relocating to SEZ. However we are not sure as the
investment amount are approximately Rs.48 lacs approx.
Q6. What are the strengths and weaknesses of your company?
Strengths- Brand name, good quality and designs
Weakness- High cost of production, old machinery and scattered office premises all over the town

advantage”?
APPENDIX 2: Projected Profit & Loss Account
During the year First year
Cost Production Amount Sales/Revenue Amount
To Opening Stock 0.00 By Sales 50,00,000.00
To Purchase 1200000.00
To Consumable 535000.00
To Salary/Wages/Bonus 1550000.00
(Staff Welfare, Labor Charge)
To Packing Expenses 32000.00
To Freight 25000.00
To Electric & Water 216000.00
To Printing & Stationery 5000.00
To Postage & Courier 4000.00
To Travelling Expenses 18000.00
To Office Expenses 12000.00
To Vehicle Expenses 20000.00
To Selling/Distribution Exps. 35000.00
To Deprecation 100000.00
To Pre-operative Exps. 50000.00
To Profit 3,70000.00
5000000.00 Total 5000000.00

advantage”?
Particulars Amount Particulars Amount
Capital Account Invest land in Sez 2900000.00
Share Holder Fund 3000000.00 Machinery Assets
Generator, Cutting machine,
Unsecured Loan 1700000.00 Ultrasonic machine, packing Mac.,
etc, machine 1000000.00
Provision/ Outstanding Exps. 50000.00
Sundry Debtors 100000.00
Cash & Bank Balance 200000.00
Security & Other Advance 250000.00
Pre-operative Exps. 300000.00
Total 4750000.00 Total 4750000.00

advantage”?
APPENDIX 3: ComparativeChart showing Advantageunder EOU& SEZ
Schemes
Source: http://finance.indiamart.com/exports_imports/export_financing/export_units/index.html
Sr.
No. Benefits SEZ EOU
1 Income Tax
100% tax holiday for a period of 5
years and 50% benefit for 5 years
thereafter. 50% for an additional 5
years on plough back of Profits. No
time limit mentioned. Units setting
up anytime will avail the same
benefits.
100% IT tax holiday up to
31.03.2009 or first 10 years
whichever is earlier
2 Construction Material
Goods for infrastructure
development maintenance i.e.
construction material allowed to be
imported / procured indigenously
duty free
Goods for infrastructure
development maintenance i.e.
construction material not allowed to
be imported / procured indigenously
duty free
3 Service Tax
SEZ units / developer exempted
from payment of Service Tax
EOUs not exempted from payment
of Service Tax, however CENVAT
credit is allowed for service tax paid
4 Central Sales Tax
Exempted on the goods procured
indigenously
No CST exemption, however CST
reimbursement to be claimed from
jurisdictional DC
5 DTA Sale
allowed on payment of full customs
duty as applicable on imported goods
Limited DTA sale up to 50% of
FOB value of exports permitted on
payment of concessional rate of
duty
6 Trading Unit
Trading units are allowed be set up
in SEZ
Trading units not permitted to be set
up under EOU scheme
7 Domestic Procurement
Supply from DTA to SEZ are
physical exports
Supply from DTA to EOU
considered as deemed exports
8 Benefit to DTA
supplier
For supplies from DTA, benefit of
DEPB/DFRC/Advance License
available. The drawback/claim of
rebate applicable as in case of
For supplies from DTA, benefit of
deemed export
drawback/OFRC/Advance license /
Refund of terminal excise duty

advantage”?
physical export available
9 Cost recovery charges
No cost recovery charges
recoverable for the customs staff
deputed during office hours.
Exclusive customs staff deployed in
the SEZ for handling customs work
Cost recovery charges for Merchant
Overtime recoverable for the
customs staff deputed even during
office hours. No exclusive customs /
central excise staff for handling
customs / Central Excise work
relating to the unit
10 Period of utilization Duty free goods (except capital
goods) to be utilized within the
validity period of LOP
Duty free goods (except capital
goods) to be utilized within the
validity period of 03 years
11 Foreign Investment 100% FDI investment permitted
through automatic route for SEZ
manufacturing unit and formal FIPB
approval not required
Formal FIPB approval required as
per sectoral guidelines
12 Customs
Documentation
All import / export documentation
and assessment formalities to be
completed in the zone itself
All import / export documentation
and assessment formalities to be
completed at the respective port of
import / export
13
Examination of Goods
No routine examination of exports /
import goods by customs
Examination of exports / import
goods by customs except in cases
where self certification is allowed
14 Warehousing License
Private Bonded Warehouse License
not required
Private Bonded Warehouse License
is required
15
Location Requirements
SEZ can only be set up in the SEZ
notified under section 4 of the SEZ
Act
No such requirement for EOU, EOU
can be set anywhere in the country
on standalone basis provided the
area has been declared as
warehousing stations
16
Investment
Requirements
No minimum statutory investment
limit prescribed
Minimum investment limit of 01
crore in plant & machinery required
except under certain specified
sectors such as software,
handicrafts, etc.

advantage”?
APPENDIX 4: EXPORTPROCEDURE
The following chart sums up the viability and business prudence to move to the
Mahindra World City SEZ of Opel Overseas:
Export procedure
The procedure for export from Special Economic Zone through seaports or airports or Inland
Container Depot or Container Freight Station or Land Customs Station or by Post or by Courier or
by Personal Carriage, as the case may be, shall be as under:
EXPORT PROCEDURE If services are exported in non-physical form, the
export value is to be furnished by the Unit on self
certification basis as per the instructions of the
Reserve Bank of India.
Filing of the shipping
bill
Assessment of shipping
bill
Examination of goods in
SEZ

advantage”?
Movement of export
consignment
Let export order given on the basis of self certification by the Unit

advantage”?
APPENDIX5 Overview of MahindraWorld City
Infrastructure Development Sector consists of Mahindra GESCO, Club Mahindra
Holidays, Mahindra World City, Mahindra Water Utilities, Mahindra Consulting
Engineers and Mahindra Infrastructure Developers.
Mahindra World City works on the concept that high quality infrastructure and a liberal
and supportive business environment can only promote more foreign investments.
The Mahindra Group is a key player in providing world-class infrastructure through the
Mahindra World City brand. The City's plug-n-play infrastructure and well-planned
township helps create a great working environment and an amazing living experience.
Mahindra has successfully developed India's first World City at Chennai. After this
milestone, the Group plans to come up with two more such projects, one at Jaipur and
another at Pane.
Mahindra World City, New Chennai - Corporate India's first operational Special
Economic Zone (SEZ) and India's first Integrated Business City is promoted by the
Mahindra Group and TIDCO (Govt of Tamil Nadu Enterprise). It is a public-private
initiative.
Situated on the NH45, Mahindra World City is located 45 km from Chennai city and is
30 mins away from Chennai international airport. Spread over 1,400 acres (5.7 km²),
Mahindra World City is well connected by both road and rail links, with Paranur railway
station on site.
Mahindra World City is divided into 3 sector-specific Special Economic Zones (IT/ITES;
Apparel and Fashion Accessories and Auto Components), a Domestic Tariff Area and
a Residential / Social zone. Mahindra World City today has over 35 customers with
leading companies like BMW, Braun, TTK Group, CapGemini, Infosys, Nestronics,
Mindtree, Renault, Nissan, Wipro, Timken and TVS Group of companies, among
others.

advantage”?
Mahindra World City, Jaipur - Following the success of Mahindra World City, New
Chennai, and the second Mahindra World City was established in Jaipur. Inaugurated
in December 2006, Mahindra World City, Jaipur is spread over an area of 3,000 acres
(12 km²). Promoted by the Mahindra Group in partnership with Rajasthan State
Industrial Development and Investment Corporation Ltd (RIICO, an agency of the
Government of Rajasthan). Mahindra World City, Jaipur is being developed as a multi-
product Special Economic Zone on the format of an “Integrated Business City”.
Besides these exclusive zones, there will also be a Domestic Tariff Area (DTA)
catering to the demand of domestic industries. Mahindra World City, Jaipur will also
have a dedicated Logistics and Warehousing Zone for the manufacturing companies in
order to provide complete end to end solutions.
Mahindra World City, Jaipur has one of the largest IT/ITeS centric SEZs under
development in India. The total area spread over 750 acres (3.0 km²) is under
development and has already attracted top companies such as Deutsche Bank,
Infosys, Wipro, Nagarro, Truworth, Tech Mahindra and QH Talbros among others.
A Technology Park ‘Evolve’ promoted by Mahindra World City, Jaipur will also come
up as part of the IT / ITeS SEZ. Set in a campus of 25 acres, the Technology Park will
lease built-up space for IT/ITES companies.
Mahindra World City – Karla (Pune District) - an Integrated business city with a multi-
product Special Economic Zone and a Domestic Tariff Area, Mahindra World City,
Karla will be spread over an area of 3000+ acres with separate zones for IT/ITES,
Manufacturing, Warehousing and Logistics. Jointly promoted by the Mahindra Group
and MIDC, (a Government of Maharashtra undertaking), Mahindra World City, Karla is
located off the Mumbai-Pune Expressway. Around 2 hours from Mumbai, Mahindra
World City, and Karla is close to Mumbai and Pune airports and the two international

advantage”?
seaports, JNPT and Mumbai seaports.
Advantage of Mahindra world city
Master planned by Jurong Constructions, Singapore, Mahindra World City will be truly
international in every way. From wide roads to seamless internet connectivity, every
little detail will be taken care of. Also a unique plug-n-play format will offer a quick start-
up and reduced cost of ownership. The City gives you an opportunity to operate in a
totally supportive environment and profit non-stop.
A modern Business City, Mahindra World City will be replete with state-of-the-art
infrastructure, flexible tenancy formats and with wide roads, potable water, power,
Telecom and data connectivity.
Fail-safe utilities in the form of stable power through an in-zone sub-station and
unlimited bandwidth through an optic fibre network.
Mahindra World City provides double benefit - Fiscal benefits, Tax Holidays and
Hassle free operations coupled with world class Physical & Social Infrastructure .
The benefits include:
 Multiple tenancy formats
 Plug-n-play infrastructure
 Well connected with a wide road network
 Fail proof power grid, water supply and data connectivity
 Fibre optic communication backbone
 DTA at Mahindra World City indeed offers suppliers to the SEZs, EoUs and
companies looking at tapping domestic markets an unparallel advantage.
 Premium housing facilities
 24 / 7 medical care
 Schools and educational institutions

advantage”?
 Banks and ATMs
 Telephone exchange and post office
 Clubs and recreation centers
 Retail malls and Community centers
Mahindra World City, Jaipur – The splendor of Rajasthan
 Promoted by Govt. of Rajasthan through RIICO and Mahindra Group.
 Both RIICO and Mahindra Group joined hands and signed Shareholders’
Agreement on 25th June, 2006.
 Integrated business city spread over in 3000 acres.
Shareholding / Participation
in ownership of the
Company
Mahindra Lifespaces –
74%
RIICO –
26%
Directorship (No. of
Directors)
Mahindra Lifespaces – 6
RIICO - 4
 Focus sectors –
 IT / ITES
 Light Engineering including Automotive/Auto Component
 Handicrafts
 Apparel
 Gems & Jewellery
 Logistics and Warehousing
 DTA & Social Infrastructure
 Master planners: JURONG Consultants Pte Ltd, Singapore.
 Landscaping consultants: Site Concepts, Singapore.
 Development of residential and social infrastructure is planned to have holistic &
inclusive development.

advantage”?
APPENDIX 6 Mahindra World City,Jaipur –PICTORAL REPRESENTATION

advantage”?
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