<P> Originally chartered as the "Governor and Company of Merchants of London trading into the East Indies", the company rose to account for half of the world's trade, particularly in basic commodities including cotton, silk, indigo dye, salt, saltpetre, tea, and opium . The company also ruled the beginnings of the British Empire in India . </P> <P> The company received a Royal Charter from Queen Elizabeth I on 31 December 1600, making it the oldest among several similarly formed European East India Companies . Wealthy merchants and aristocrats owned the company's shares . Initially the government owned no shares and had only indirect control . </P> <P> During its first century of operation, the focus of the company was trade, not the building of an empire in India . Company interests turned from trade to territory during the 18th century as the Mughal Empire declined in power and the East India Company struggled with its French counterpart, the French East India Company (Compagnie française des Indes orientales) during the Carnatic Wars of the 1740s and 1750s . The Battle of Plassey and Battle of Buxar, in which the British, led by Robert Clive, defeated the Indian powers, left the company in control of Bengal and a major military and political power in India . In the following decades it gradually increased the extent of the territories under its control, ruling the whole Indian subcontinent either directly or indirectly via local puppet rulers under the threat of force by its Presidency armies, much of which were composed of native Indian sepoys . </P> <P> By 1803, at the height of its rule in India, the British East India company had a private army of about 260,000--twice the size of the British Army . The company eventually came to rule large areas of India with its private armies, exercising military power and assuming administrative functions . Company rule in India effectively began in 1757 and lasted until 1858, when, following the Indian Rebellion of 1857, the Government of India Act 1858 led to the British Crown's assuming direct control of the Indian subcontinent in the form of the new British Raj . </P>

Explain the conditions that led to the establishment of east india company
find me the text answering this question