With reference to Private Organisations, which of the following statements are correct? Private organisations can raise capital through issuing shares and debentures. They operate in sectors like information technology, hospitality, and pharmaceuticals. Their primary motive is to provide public services at subsidized rates.

With reference to Private Organisations, which of the following statements are correct?

Private organisations can raise capital through issuing shares and debentures.
They operate in sectors like information technology, hospitality, and pharmaceuticals.
Their primary motive is to provide public services at subsidized rates.

A1 and 2

B1 and 3

C2 and 3

DAll are correct

Answer:

Private organizations are entities owned, managed, and controlled by private individuals or groups, rather than by the government.
Their primary objective is typically profit maximization and wealth creation for their owners or shareholders. This distinguishes them fundamentally from public sector enterprises or non-profit organizations.

Private organizations, especially companies, employ various methods to raise capital to fund their operations and expansion.
Issuing Shares: This is a common way for companies to raise equity capital by selling ownership stakes (shares) to investors. Shareholders become part-owners of the company and share in its profits (dividends) and potential growth.
Issuing Debentures: These are debt instruments issued by companies to borrow money from investors. Debenture holders are creditors, not owners, and receive fixed interest payments over a specified period. This is a form of debt capital.

Private organizations operate across a vast spectrum of industries and economic sectors. Their presence is driven by market demand and profit potential.
They are prominent in sectors such as Information Technology (IT), encompassing software development, IT services, and digital solutions.
The Hospitality sector, including hotels, restaurants, travel agencies, and resorts, is largely dominated by private players.
The Pharmaceuticals sector, involved in drug discovery, manufacturing, and distribution, is another significant area where private organizations play a crucial role.
Other key sectors include manufacturing, finance, retail, telecommunications, education, healthcare, and infrastructure.

The statement that their primary motive is to provide public services at subsidized rates is incorrect for private organizations.
This objective primarily aligns with Public Sector Undertakings (PSUs) or government enterprises, whose aim is often public welfare, strategic control, or providing essential services (e.g., public transport, utilities) that might not be profitable for private entities.
Non-Profit Organizations (NPOs) or NGOs also focus on social, charitable, or community welfare missions rather than generating profits for owners.
While private companies may engage in Corporate Social Responsibility (CSR) activities, their core business function remains profit-oriented.

Companies Act, 2013 (India): This legislation governs the incorporation, functioning, and winding up of companies in India, including aspects related to capital raising and corporate governance.
Capital Market Instruments: Shares and debentures are key instruments traded in the capital markets. Understanding the difference between equity and debt instruments is crucial.
Initial Public Offering (IPO): The first time a private company offers its shares to the public, transitioning to a public limited company.
Types of Business Organizations: Be familiar with various forms of private organizations such as Sole Proprietorship, Partnership, Hindu Undivided Family (HUF), and Cooperative Societies, in addition to Private and Public Limited Companies, as their legal structures and liabilities differ.

Challenger App