CHAPTER 38 | Small Scale Industries , y 8 significant ote in economy’ of any’ developing one gost oe tameeat anal gon nk dee ea SO gies OngamisaTton and sunall scale Industries Roant to promote mall seale indus count coonting eS ST Board, “small scale industry as a unit employing less a eg loyees aiusos Ra ws less than 100 employees without the use of power at not exceating &5 Lakh,” Now the employees employed Criteria is: ay g capital ots al asset ammount has also eqseeta by moe tha 3 Coes oo 2 - ie of Small Scale Industries : gsad into 5 types. guxcaeeen | asnufacturing Industries: Then include production of complete articles for direct : cgessenption, reer ndustriest These are the units special ” sis electroplating ete. , Industries: There provide services such as repairing of electrical and mechanical cod in product and services like welding: gages. » anslary Industries: The setee and other supplies. 4 Mining and quarrying: se units manufueture parts and components steb as nut and units are engaged in mining and quarrying. Rok of SSI in Economic Development capita income resulting in development ein per pita income of the country It generates employ SSI promotes equitable distribution of income, leads to economic growth ofundevel- 1 SSly have spread over conduits are located hour capital ratio sets development refers to the incre: 85 coatributes to the increase in per ¢ S24 income with low investment ®tSeuntapped capital and human resources which | ‘eitgions. In this way it helps in bringing of balanced developn ee According to the census of small scale units 62.19 pe su titd areas. They need shorter gestation period and have hig! aes to large industries. They have potential to react fo fast changing env iromment. be sewing fast contributing to inerease in production, employment and pgttts expo is 40 percent pus the country’s total expert, y, ae decentralisation of industries because of their flexibility in setting Up * location, exports. Theit of units in bh . Scanned with CamScanner184 Industrial Economics and Entrepreneurship Development Procedure to Set up an SSI SSI development is a key to industrial growth in India - as they provide great employmen, Opportunities and ensure better of use of finance and material resources and technolo The current trend in technological development across the globe with change the indusiy dynamics and bring about speedy industrial growth. The need of the hour is that more yoyp, energetic people should come forward and grab the opportunity at their disposal to be ay, entrepreneur. ‘The procedure to set up small scale industrial unit is given below. 1) Selection of Industry: First and foremost step is to select the industry to enter into, Ty make a selection of industry which suit you whether manufacturing, servicing, finanoe retiring, Construction, textile etc. 2) Location: Where to locate the industrial unit, make a choice. 3) Technology: Make a choice of technology required by industrial unit preferably indig. enous. Import of technology may cost more and it difficult. 4) Equipment and tools: Select the best lot of equipments and tools required for the unit, 5) Resource requirement: Determine the resource need and tap them. 6) Size of investment: Determine the size of investment the source of its availability. 7) Sources of Raw Material: Find out the sources of raw materials and contact the suppliers and ensure the timely supply. 8) Survey of market: This is yet another step an entrepreneur has to do. Conduct a market survey to find out the market for your product. This will enable your to fix price for the product, 9) Make a SWOT Analysis: Entrepreneur must know and analyse his strength, weak- nesses, opportunities and threats, Make swot analysis. 10) Project Report: After the above steps prepare project report. 11) Arrange for finance: Approach financial institutions for requirement of for long and short term finance ice. for fixed assets and working capital. 12) Obtain No objection Certificates (NOC): Apply to Directorate of industries fr permission to start the industrial unit, its registration and permission to obtain power connection. Also to obtain NOCS from local bodies such as Municipal Council até other offices. 13) Get the power correction: After obtaining NOC obtain the power connection from! electricity board through following due procedure. 14) Employ required staff: Next staff is to make recruitment of required personne!s ° manage the industrial units efficiently. — Hs M9 tan 37 Scanned with CamScannerChapter 38 Small Scale Industries 185 \d machinery and i jant 2” cf raw materials: After appointi ure P hi . pointing personnels F m5 of plant and machinery and install them and put an order for supply of raw pe ils: yet eee ear ement for distribution of produet: Product should reach the consumers f wm ‘ proper distribution channels. Appoint dealers and retailers. production: as ‘After completing above steps begin production. agtages oF ST i ngs ERE both economic and social, Some of them are as under. cae #7 donot require high eve of pd costly technology. a ar labour intensive hence they do not need large amount of capital. ¥ gcanulise the potential of unemployed and underemployed people of the region for 3 Sve purpose in the economy. india 's rich in agriculture, minerals and forests, SSI can start processing units of these 4 sources: 3) for establishing SSI unit short period is required. Production can start within short etd. ican earn foreign exchange by producing goods fro es a training ground to the entrepreneur on decision making thereby giving ty to convert their smal) size unit to medium size. bution of income which socially desirable. ® 93 1m locally available materials. 7) SSI provid an opportunit "Sol acitate equitable distri 4) They help in developing rural areas of the country. 1) They help increase GDP of the country. i) Thy help in creation of economic stability in the country and prevent monopoly. 1) Lage scale industries in the country pave way for small scale counts. e.g. Motor car nanufacturing unit facilitate opening of repairing units across the country. 1) Small scale units have their own place in the country economy’ and are immune from imperfect competition which enable them to exist even they are not cost effective. costly infrastructure as larger scale enterprises. I y . ') They do not require heavy and enterprises. : He bring about integration of rural economy with large scale 3 Res substantial potion of demand for consumer goods ta a economic backwardness of rural areas. 1 Wing stout reduction in regional imbalanced. ty to make the country self relevant. ee employment and steady incom to the people of rural and semi-urban Scanned with CamScanner186 Industrial Economics and Entrepreneurship Development Limitations of SSI There are several challenges faced by SSI which are disadvantageous to their growth ayy development. Following are some of them. 1) Unrestricted Competition: In today liberalised world and unrestricted competition fro, large and multinational companies which have entered the area of consumer durable ang nondurable goods posed a potential challange to the SSI. They fail to meet the compe, tion from big players in the business. 2) Problem of Raw Material: The raw material used is of poor quality available at hig, cost. Now in modem times sophisticated products are being produced by modern many, facturing units. The raw material problem has become severe to them. The importeg material needs foreign exchange which most SSI can’t afford. 3) Finance: This is the limitation of SSI is on two count, one is because of scarcity of finance in the entire country, second is the credit worthiness of SSI units because of tye weak economic foundatic 4) Marketing: SSI mitre ti their products and win over consumes moreover quality of their prouNGt is comparatively low vis-a-vis large scale enterprise, However their sales have been organised by Trade Fair Authority of India and State Trading Corporation. Govt purchase their products. 5) Under utilisation of capacity: They are not utilising full capacity of their plant. Al typed of unit ranging from mechanical, electrical plastic, leather, automobile ancillay units all suffering from under utilisation of their capacity. Roughly 40 to 50 percest capacity left unutilised. 6) Lack of knowledge: They also suffer from several other problems in addition the one explained above. They are lack of technical knowledge, undeveloped distribution channel, inadequacy of raw material, finance crunch, inefficient management, lack of coordination between various support system, limitation of infrastructure facilities, lack of knowledge of market conditions etc. All this limitations part these SSI at a serious disadvantages. 7) Licence: Obtaining licences from the Industries depat f the states and local bodies is one of the big problems despite govt’s policy, the eaurcratgend petty oficial are rude and unhelpful. This causes lot of delay. Industrial development plant key role in India’s economic development, which is guided and monitored by the industrial policy. SSI’s have been given utmost importance by th Govt. of India since independence which is envisaged through Industrial Policy Resolutions from timer to time following are the IPRs, IPR 1948: It laid stress on the importance of small scale and village industries, IPR 14 provided protection to SSIs. Scanned with CamScannerChapter 38 Small Scale Industries 187 go; nas assigned following tasks to the SSIs. on oF EE employment opportunities for people with low per capita investment. ect AIF part of demand for consumer goods and partially that of capital goods. 3? pnobilise capital and entrepreneurial skills from rural areas. 9 ¢ chunk of entrepreneur craftsmen, artisans in getting employment, income ore ge their standard of living. ne king foreign market available for the SSIs. 9 onelp in man disparities in i 47 remove regions disparities in industrial development. Tenia Estate Projects and Rural Industries Projects were taken up. i yg77: The main stress of IPR 1977 was on effective promotion of SSI and cottage pies. UBS categorised, SSI into. outage and household industries to provide self employment. 3) Tiny sector where investment in plant and machinary upto Rs 1 Lakh situated in towns paving population than 50,000 and. ith an investment upto 10 lakh and ancillary units with an 3 Sl! scale Industries wi iqvestment of 15 Lakhs. IPR19T7: Proposed to set up District Industries Centre in SS. JPR 1980: the main objecti ‘num use of installed capaci 20Lakhs to SSI units and upto 2: ‘Nucleus Plants” in each industrial «reas. Ithas given emphasis in promotion 0 the spirt of setting up of SSIs. IPR 1990: Important features of this policy resolution are, vestment upto 5 Lakh, 60 Lakhs for SSIs and for ancillary ach district for development of ive of IPR 1980 is to increase industrial production through opti- ty. Ithas increased investment ceiling upto 2 lakhs for tiny units 2 Lakhs to ancillaries. These in replacement of DIC with ly backward district to give a boost to SST in backward village and rural industries. It has reengineered 1) For tiny units increase in im upto 75 lakhs, ) Scheme of central investment subsidy for SSI in rural areas. ) To implement technology upgradation under Technology Development Centre, ) Establishment of SIDBI for timely and adequate flow of credit facilities. ¢ Nel 836 items are reserved by Govt. for production in SSI. {orerent delicensing implemented to Export Oriented Units set up in export proc 7 topte upto an investment of 75 Lakhs. ia isis Was given for training women entrepreneur. Sal Enterprise Policy 1991: New Policy of 1991 main ol lencensin fi it contributes to growth employment and export henever es leregulating. and debencratising. To review old stat Dip eeessen. The main features of new policy are listed below. | "Proposed several remedial measures to resolve problems. Ibjective to give impetus through decentnalising, utes and Scanned with CamScanner188 Industrial Economics and Entrepreneurship Development 2) Equity participation upto 24 percent by other industrial undertakings. 3) Recognition of service sector tiny sector and investment ceiling was raised to 5 lakhs from 22 Lakhs. provisions for easy access to financial institutions. 4) Relaxation of some provisions of labour laws. 5) Single window loans to products upto 20 (Lakh). 6) Khadi and village industries commission to be expanded. 7) Implementation of integrated infrastructure development. IPR 2000: The main features of this policy are as follows: 1) Limits of exemption for excise duty raised from %50 Lakhs to @1 Crore 2) Credit linked capital subsidy of 13 percent against locus for technological upgradatoy provided in specified industries. 3) Sickness and causes for SSI was looked into. 4) Grant of %75,000 to each SSI unit granted for obtaining ISO 9000 certification tll the eng of 10th plan. 5) SSI associations motivated to operate testing laboratories. 6) Composite loan limit was increased from €10 Lakhs to €25 Lakhs, 7) A group was contributed to streamline and repeal of redundant laws. 8) Coverage of integrated infrastructure development enhanced to all areas in the county. IPR 2001-02: It gave stress on the following: 1) Increase. in investment limit from %1 Crore to %5 Crores for units in handloom and hosiery. 2) Corpus fund under credit guarantee scheme increased to 200 crores. 3) 14 items de-reserved during June 2001 related to leather goods, shoes and toys. 4) Market Development Assistance scheme launched for SSI units only. IPR 2003-04: The special feature are: 1) Increase of investment into plant and machinary from 21 crore to 85 crore. 2) Directions to banks to provide credit and below their prime lending rate. 3) Composite loan limit was raised from 825 Lakhs to %50 Lakhs for SSI. 4) Dispensation limit of Collateral requirement raised from 215 Lakhs to 25 Lakhs. 5) Opening of specialised banks for SSI. 6) Small and medium enterprise fund of 10,000 Crore was set up under SIDBI to sol? problem of finance for SSI 7) Under Laghu Udyami Credit Card Scheme the credit limit was increased from 2 La to 210 Lakhs for borrower with good track record. IPR 2004-05: The main features of this policy framework are the following: 1) Initiation of promotional package for SSI. 2) Reservation of 84 items in October 2004, 3) Investment limit in plant and machinery raised from 81 Crore to 8S crore. a af Scanned with CamScannerStee Chapter 38 Small Scale Industries 189 National Commission on enterprises in informal sector was set uj suggested ee Paes productivity and generation. ofemployment Sea It «prom small and medium enterprise fund of 210,000 Crores und aa 4 recent Joan to SSI. inder SIDBI started 80 ypR 2005-06: It has offered the package for SSI. 1) 180 items id ») Small and me 7) manufacturing sector. ‘Tux concession have been provided to SSI for promotion of investment, 4) Technological facilities increased. 5) Biforts were made to ensure adequate flow of credit. 6) Measures w lentified for de-reservation. dium enterprises were recognised in serviced sector treated on par with SSI ere taken to promote marketing of product, Incentives to SSI several incentives are given for promotion of small scale industries in the country as they have vast potential in terms of employment, output, exports. It contributes nearly 35 percent ofthe total industrial output. SSIs have made remarkable progress during 1980s. Govt. sup- port is needed for their effective development. 1) Credit: Availability of credit at appropriate time is most important for the develop- ment and SSI unit. Eighth plan ensure timely and adequate availability of credit by the tatablishment of SIDBI. It has introduced new initiatives like sanction of composite Joan under single window concept and concessional loans to state corporation for infra- structure development. Under IPR 2003-04. Banks were directed to provide credit to SSI within an interest rate band 2 percent above and below prime landing rate. During the same resolution all loans upto 25 lakhs were made eligible for guarantee cover ‘under credit guarantee scheme. 2) Raw Materials: In IPR 1991 of indigenous raw material, I middlemen in procuring raw materials are removed. 3) Labour: Labour engaged in SS units need training to improve thelt skills thereby productivity. Govt vocational training programmes are undertaken to fulfill the need. SIDO has established a special cell providing training, 4) Technology and Equipment: Under IPR 1991 Technology development cell is estab- lishers to update and develop technology of SSI. Subsidies are greater for importing machines. Measures are taken. for improvement of equipments. 5) Infrastructure: Lack of power supply, transporiation and C affect the quality and quantity of production and its delivery. Al launching of Integrated Infrastructure development scheme in rural and bac! is step taken to increase performance of SSI. the tiny and SSI units were given priority in allocation urdles are removed for getting licences. A number of mmunication(@ adly II these add to cost the ‘kward areas # Scanned with CamSeanner190 Industrial Economies and Entrepreneurship Dew 6) Industrial Estates: Land and buildings in SSI. Power and water are made available 7) Markets: This sa major problem faced SSI, Govt factured by them steps taken to improve inftaste of the products. Import duties are slashed on RAW B00ds for exports. This has opened export © ‘Tax Holiday: New Industrial units including sx ‘ment of income tax under section $0 J of the annum of the Capital employed, Deduction at th no nies) from total income in coleed in the assess ing. This concession is for five years from Com satisfy following condition, 1) They should employ 10 or more workers iam with power, 2) They should not have formed by splitt In addition to this they get exemption trom s Sickness in Small Business ops problems of severe nature it becom The Sick Industrial Companies Act 1985 defines a s which has at the end of any financial year accumulated Lasse entire networth and has also suffered from cash los proceeding such financial year.” The study team of SBI in 1975 defined a sick unit as, surplus on a continuing basis and depends on i funds.” It is evident from the above definition that sickness be OK Process of Industrial Sickness The process of sickness starts in the following way, 1) Disorder in some of the functional areas such as production, masvet human resources. Fall in profit during previous year may lend to losses it Deterioration takes place gradually. 2) Date equity ratio start deteriorating. Scanned with CamScannerChaptor 30 Small Seale Industries 194 s1areas sat disintegrating and gradually become ine i boconves Less han one, debt equity ratio worsen farthe. drt incurring unit become completely sick. : fynction ont 1 ses ane of capacity of plant 7 a . arorge of fund ) or yories are in OXCCSS. 9 i treakdown in plant, 9 Fee qagment of provident fmdtexes nk islinents 1) Bay er of human resources, ? 0 jallin value of sharegihe stock market, 2) Fay in ait of aecounls. 1) esingbnks fr efance jg Low nora of employees. causes of Industrial Sickness many closely related factors work collectively to cause industrial sickness. There be classified into external and internal. 1) sternal causes: These are external and hence beyond the control of industry. There ‘quses are time and industry bound therefore they vary from time to time and industry to industry some of them are listed below. a) Change in industrial policies of govt from time to time. b) Non-availability of raw material power and transport in adequate quantity and on time. Even skilled labour force is in inadequate supply. «) Indequate demand for the product. ¢) Nature play spoilsport sometimes e.g earthquake floods, drought etc. ¢) Labour unrest such as strikes. ) Recessionary trend in economy. g) Shortage of timely finance. under control of industries, but they arise due to deficiencies human resources. Inefficient management ‘There are causes can 2) Internal Causes: There are in production, marketing, finance, materials, of the industry is the sole reason for disruptions. These causes are: 4) Choice of improper location of industrial unit. ») In efficient production planning 6) Improper recruitment and inadequate training of workers. 4) Improper estimation of finance or funds and power required by the unit. ©) In adequate demand because of reverse competition. 4) Smal size of unit itself become the cause of sickness as it fails to make necessary adjustment in its functional areas if changes in govt. policies take place or changes in market demand. "There emall units ae very emall pd therefore nuscepdivet© Chang # —_ - — _ : i Tay Scanned with CamScanner192 Industrial Heonomies and Entrepreneurship Development Effects of Industrial Sickness ENects of industrial sickness are huge on different segment of oon below: stitutions: There are huge losses to institutions because of locking of their funds in sick industrial oxi capacity to repay. 2) Loss of Employment: The persons employed in these units lose exp of income. The several thousand employees face grim situation. 3) Industrial unrest: Throwing of workers and employees ov opposed by trade unions and resort to strike leading to industrial 4) Effect on Investors: Industrial sickness adversely effect invest share of sick units become unattractive since then prices are thin their money from markets. It promotes psychology of despai 5) Effect of prospective entrepreneur: Industrial sickness wozk tive young entrepreneur. They prefer to stay away from indas the development of economy of the country. 6) Loss of revenue to the government: Gove lose taxes from not in a position to pay government its dues. Industrial sickness is Review Questions . What are the types of small scale industries? .. Discuss the role of SSI in economic development. . Explain the procedure to set up small scale industrial unit. . Discuss the advantages of small scale industries to the co: . Discuss in brief the policies governing small scale inc . What are the special features of New small enterprise policy o: . What are the special features of IPR 2000? 9. What are the special features of IPR 2003-04? 10. Discuss the special features of IPR 2005-06. 11. What are the incentives available for development of SSI? 1 2, 3, 4, 5. Explain the limitation of small scale industries. 6. 7. 8. 12, What do you understand by sickness in small business? 13, Explain the process of industrial sickness. 14, Discuss the causes of industrial sickness. 15, Explain the external causes of industrial sickness. 16. Elaborate the effects of industrial sickness. Scanned with CamScannerCHAPTER 35 preparation of Project Report ance of Project Report rf , ; _ fe ge identification ofa project and its implementation the project report is formu- ning various relevant aspect fer © . 0 eneprnr get projectreport before investment or project i a vot 25sess the: ni snd of proposed product to be produce. eres out the cost of investment as well as operational cost. vs Ov re expected profitability of proposed investment. sntrepreneur who takes discussion on proposed project but also financers, ‘tment involved take their discussions to extend help. arket to raise some risk capital for his venture project stors about profitability of his venture. is undertaken. st only te seis and state depat wur has to go to money m: gearepreneur t fi a in instrument in convincing inves sgorserve 08 ject Report and Its Scope project report incorporating relevant data in respect of a project serves as a guide to man- goer and records merits and demerits in allocating ‘goods and services. A project report ‘prepared for analyzing the extent of opportunities in the contemplated project. detailed study and analysis of various aspect of project. It {ts of the project. It enables the entrepreneur to + is sound on technical, commercial, financial bisprepared by an expert after {vsacomplete analysis of inputs and outpul aézstand at mutual stage whether the project ‘tdeconomical parameters. interested partners in the project report Fauncal institutions and commercial bankers are ion, banks for getting loans. The ‘ths prepared for direct submission to financial corporati "preneur get the report prepared by consultant. ‘pects of Project Report “conomic Aspects lrep re : . . Sent economic qualification for investment. Market analysis pertains to: 2) How bie s }) po” Dig is the present market? 9 How Much is likely to grow? Much of the future market the proposed project can captures? Scanned with CamScanner160 Industrial Economics and Entrepreneurship Development 2. Technical Aspect The appropriate report should give details about technology needed, equipment ang machinery sources of availability. 3. Financial Aspect : The report should indicate the total investment required including sources of finance ang the entrepreneur contribution. It should present comparison of cost of capital with retury on capital. 4. Production Aspect The project should bring out whether the product is export worthy and should also gig details of the design of product. 5. Management Aspect The report should contain qualification and experience of the person to be on the manage. ment of job. Contents of a Project Report 1. Object and scope of the report. 2. Product characteristics (specification, product uses and application standard and quality) 3. Market position and trends (installed capacity, production, anticipated demand, prospect and information on import and export. 4. Raw material (requirement, prices, sources, properties of raw material) 5. Manufacture (processes, selection, production schedule and production techniques) 6. Plants and machinery (equipment and machinery instrument, lab requirement, water supply, electric load, ete. 7. Land and building: requirement of load area, building, construction schedule. 8. Financial implication (fixed and working capital, investment, payment cost ete.) 9. Marketing Channels (trading procedures and marketing strategy. 10. Personnel (requirement of staff, labours and expenses wage payment. The project report is prepared for submission to financial institutions for the report. It cat be also prepared by expert. There are several organization which help entrepreneur in preparing such reports. Small industries source institute (SISI) and small industries development organization (SIDO) help the entrepreneur in this regard. Project is a basic proposal of an entrepreneur. It is a course of action of doing business of | entrepreneur. It is a systematically devised to achieve a specific objective written a specified | time period. It is blue print of doing business. World Bank defined project as “an approval for a capital investment to develop facilities to provide goods and services.” Scanned with CamScannerChapter 38. Pre “ Preparation of Project pout Mera jes involved in use of resources venvetits, in use of resources to gain benetit Q ie activiti in patio” a7 no? ng information is i ows followins information is included, voter: Name, adress, quaifcation ener agonal expe of Pron t rs if any have to be stated, rience of entteple oh the project below probler reference of analysis of industry (0 wl Here organisation and the if : 1 profes erf amcor past performance, present portion, its "gon and Organisation: constitution ic. bys i oredr py hay res and regation and fi ss met a TS incase of partnership Hm. Hee roisteationt it applica r getting registration cet ‘ficate istrict i _ of Directorate of Industries. sgistration certificate trom pistriet of product: utility of product range of product, its mover its substitutes > d produ sign. anvantages tered ing the following aspects terprise on the land owned or case hold rights industrial areas We he Municipal ot local rthoty is Focation IS residential st Availability of material vith its SOURCES guppy oF OUT, Load, need for fel, atity of n sanction’ courve ane ae for training. availability and requirement of PONE with | diesel » coal, gas ete with Uilties: ach as oll heir source of sl vet. missions, Pollution control: If there iss 2 cause for cre ase of ‘should be clearly mentioned alongwith dumps: sew gtr Plat fon system? “Availability of tel ic of transport, Need and modi included in the report. shoutd be stated § Communica econ aistanees (0 DS covered and 1S | Trnsport facilities: ‘ficulties in transport S st of machines complete li iid accor 4 Machines and equipments: A ’ semade type, cost and source of supply Selection of technology: selected technology x itcluded n its report. etc shou and its souree ofa Scanned with CamScanner162 Industrial Heonornioy and tutropronoutabiy Dovelopawnt 1) Capacity of the planes ‘Che installation and eoused capacity oF the plant with the working shilts should be stated 1 the report, D Rescarch and Development: Intentions and plans for estabishing reveatel and deyey, opment facilities should be included in the report, 3) Market Potential: The aspects relating to market potential for the product such ag demand for the product and supply position with the price to be charged in details should hg cluded in the report, 4) Cost of Capital and Sources of Kinanee: Details of cupital items: such as and and buildings, machines and their cost of installation, detailed sources of finance with name of financial institutions ete are to be included in project report 5) Working Capital Requirement: Requirement of working capital with its source of supe ply duly filled in the detailed format should form part of report, 6) Other financial Aspe ‘This includes cost of production expected sales and revenug thereby carning of profit of loss its account, cash from statement, 1t is better to prepare y Break Even Analysi 7) Economic and Social Variables: Entrepreneur are from the society and they have socia responsibility to run business, As a part this obligation, the project report must include th lamage to the society with costs to control, abetment costs, need for pollution contro treatement of effluent with the cost incurred, Besides the above details, project report should include the quantua of employment gene ated, use of local resources, import substitution, development of ancillaries, export pote tial, development in the local area, 8) Project Implementation: Last but not the least, the enterprise should laid down implementation scheme which ensures completion of activities involved on time, The del in implementation of project shall become the cause of jeopardy and its financial viabi way be last for implementation of project activities should be divided with task and set u network analysis PERT and CPM. Scanned with CamScannerdemand for product at every stage cat be WEIL ATU ES Factors Governing Project Selection A project having good market is selected by the entrepreneur. First step is to identify the project, It can through the follow ‘ing ways. ead to development of that, a) Observation: The scarcity of some product or service may lea ailability of raw material and skill may lead to new project idea. b) Trade and professor magazines: Reading through there magazines keep entrepreneur updates and generate new ideas. . ¢) Bulletins of Research Institutions: Research findings published through these bulletins genetic new ideas, ~ t information relating to trade ) Government sources: Government publishes commerce and about new development taking place in India and abroad also lead to new ideas. All these sources generate new ideas leading to new projects. Projects can be selected once they identified. They need to be examined on the basis of sev- eral factors which are given below, then make a final selection of the project. 1) Technology: The technology needed to develop the project should be available within reach. This makes it easy to start with, To import technology is a difficult task and costly one. 2) Equipment: The entrepreneur should select the best equipment suits to his requirement of project. 3) Investment size: Rationale and accuracy are required decide the size of investment, hence it should be properly estimated. Shortage of it should not be felt later. 4) Location: It is yet another factor which make a selection of the project. It should be selected in such a way that raw material and other resources are available in the vicinit | 5) Marketing: If product is not properly marketed it leads to several trouble. Therefor entrepreneur should assured himself of the demand for the product in the market. Scanned with CamScannerV CHAPTER 4) Market Survey ang Product Selectioy vey A market survey is an objective and systomatic cattoction, feotsti, ANALYSES AME gy Pretation of data about existing or potential murkets toe a produet series, Thiv lothnitigy Will be better understood by looking at the objectives al a market autvey, Darts a mathe survey, one needs to focus on: Size of the market and the anticipated market share ia tors af volume and valu, 7 Pattern of demand i.e, seasonal or tluotuating in tine (ina month, day, ete). Market structure Buying habits and motives of buyers: Unique selling proposition of certain products sorviees, Past and present trends affecting the selected proxluet or similar product, Schedule for Market Survey A market survey is not restricted to collecting intiormation on the market tit a product, bi also about marketing infrastructure and existing market conditions, Designing a market sw vey schedule could fetch a lot of data, Questions may’ be designed on these ates: Existence of competitors, their products and marketing strategies, Information on all consumer groups, Information on competing products similar proxtts Attitude of existing/potential consumers, including buying protenences, beha ioutr ete, Objectives of Market Surve: 1. Clearly identify the issue/problem that needs to be investigates, 2. Market Survey Tools, Preparation of Schedule and Technique of Data Collection. 3. Do not be prejudiced, as an entrepreneur, you must be open-trinded and contident 4, Do not be impatient or angumentative, Yourabjotive Ws to yet information the trast of yeu" 5. Do not reveal privileged information to others, for you may’ lo sources, —— ws Scanned with CamScannerChapter 36 Market Survey and Product election 169 Ie discussing. Mal i ke notes immediately after an interview. People es while discu rites while talking. not ine Maple if one W it pre] i i without preparation and sequencing of questions Ensure that the inte . \¢ inter- =F geri? ‘ be ime FOF you. My . “i wh ch competitors as “likely competitors” but meet them as “potential clients” ents) ‘view as producer plems from different angles: your own point of products/services okt the pro ‘ 10 omers/consumnet® viewpoint as buyer and end users of som ypoint for they may have addressed similar problems. rkcet research process and check impulses/gut jective throughout the ma encing the research. nail F on orally influ ple and cleara form as possible. fro! wn the subject. If other subjects sul 9. pit cpedule in as sim rface during the research, ae 4 tight control 0} ina 8 pe atention tHeY deserve. it f jete the research promptly and maintain confidentiality lest the competitors hear can OTB ‘ahead in the market. 1 seprpared to take necessary action, which the research identifies. 9. Use the research % anesiatelY for the good of the enterprise. i and processes ~ the lessons Jearnt and areas (0 2 «pew all market fngrove next time. Ca ade for selling the product ho has to identify 2 ‘ate prt of project ygement m: should i fal sed in the project report. entrepreneur WI particular batisvery essential for being ful in business Venture: sins factors influence the entrePr the right prod Whether import restriction oF € weigh favorable or otherwise in the sol f ‘erms the domestic market offers consi erable scope fF sellin : 2poduet would not be met bY impo! selected fall in the category o be import ers the ne gopreneur would favo" it and in _ She erms, he would definitely not shO¥ his favor tt We enrepeneur oF his partners have vauturing and marketing of certain P! ld be their advantage- ict is: Scanned with CamScanner© x v. Nually at this stage the VR Fotostosa Hontontios aint tgp nenemstiy Development f profitability that general A _Mhe selontion of'prntiet depends based upon degree of profitability that generally rufes : information compil tho anather, The selection therefore will depend upon the inform piled for putoutar Line of product for it profitability, 7 jovernment for producing a product which Many ooneessions ate available thom the Government for produ p ‘ ; ‘ | items, hence if a particular produgy SOUVES AN AT TaPOUE substitute or even essenti . : aaxation policies the entre. SHHOYs substantial amount ort incentives, concessions, liberal preneur etyoyy these advantages for particular product. Many prntict belong to the priority industries or small seale sectors certain products ave bstad by government for purchasing exclusively for SST selection of such product Would be advantages is for entreprencur and also receive due consideration before the selection ofa product, sa significant role in selection of product if the s the scope of marketing. 7 re marker ot the product also play POdued has ay export market it wider Certain products are permitted for production only if the license is obtained from appro- Paate duthorigy A product belonging to licensed category get high weightage in selection, Many products enjoy vantages in regard to the scale of manufacture or carry local advantages eg. if product is produced in free trade zone or backward area special. jucentives and concession are made available for manufacturing such a product. Ia product belongs to an ancillary unit, it serves as a major component for parent industry, i provide a ready demand, hence this type of product entails easy marketing, lection of product would also be weighed in favour or against depending upormhether ornot the machinery and raw material required wound be imported. Stmularly the seldetion would also be based upon skill and unskilled labour position as well as technical knowledge avai lable, Scanned with CamScanneri “9! Wor ing Capital and soy ae C5 of Finan me 179 Jopment Bi as Development Bank of tng, ial institutio i ara finan N set wy Jf nxed from IDBI to provige w® SIDBI te este industries small scale reat financial vlPF roject finance, Promotion It's in an ea cn ie nal and deyelon aM + Ut prom levelo Ce is throw, ates, gh Refinance ad en pr 1 gs paareae ort to institutions. It is po} Ons. It is poised to play ment 3 ‘would be financing infrastructure ie rl nen ne Salen , tech Serving SSI sector. su t nolo, SY UP gradation marketing and 89 and sta tonomy ig Pict yas A toh Oe an cal Institutions i ve Jopment Bank i: pial Deve! of India (11 ed in 1964 under the At ore oan ° eo it ory of RBI. It extends financial ass ps financial assistance to § ; ve ise fx aes a extension of small industries, eee ea 0 ai uity up to 5 lakhs. It is administer any , ; : 0 . Ibis administered js Italso oe eee of professionals for counseling aaa constancy services ‘areas through Voluntary Executive Corporation Cell (VECC) As per Narsimhan pier DBI should perform refinancing role instead of direct financing, dustrial Finance Corporation of India (IFCI) ‘Retup under IFCT Act 1948. It provides loans through rupee and foreign currency; Jing subscription to shares and debentures and help in purchase of equipments It sssarted new promotional schemes such as interest subsidy to women entrepreneur, sub- isinoosultancy fees to SSI, encouraging modernisation of SSI, control of pollution in sium and SSI. It has taken interest in development of ‘backward districts. cl) ment Corporation of India (ICI developing small and der Indian companies Act befor + It provides assistance in following ways. jlndustrial Credit and Invest ws se up in January 1955 un stlum industries in private sectol ’) Provides loan in rupee and forei 6) Underwrites and guarantees sub: {Offers financial services such as capital etc, 4)1'sarted banking operations from January 1994. Set up Fl Asset Management Company and Mutual Fund. Guarantees loans from other institutions: h inly SSIs. oma din beneficiaries are private sector mai ign currency scription to leasing an shares and debentures. \d asset credit, deferred credit, venture Merchant Banking Division, Scanned with CamScanneralqunti (Whit val Fcmnenn anal Hrteytenonnaiyy Hewett fast) ‘i 1) Aclante ta Hteconats wetton Hanke oF tnd -aik units and provide assigts Clot at tin fet py HALE a Apa 197 to Fook alter sick units and provide assistange for modernisation, diversificn (hot ohabitititionmnelreeunatiuetlon, Un provide aay senices i | Henowwthon and expanaton, Healaa provides aiuudatanice Int © Pen Noaing anid, nveretiant bank, 4) UM tannranee Corporation oF dln (HEC) trans variety of in He wari ontubtivtiod tn 1946 wholly owned beer 5% in controlled fund in Conta | sil cul 75% poliotow anit weil eerily to the aociely, Haves! Pa rural electrifieau Stilo Coyt'c oem ition, H provides foun fo housing, water supply, ‘ation ete ct ¢ sector. aaa provviele Loma, unter writing, of whires to corporate see! 6) Unt 'tyaxt of ndin (UND ACh oxtabtishod under an net of Parliament int " thronph soll of nite and invewty the amount into corporate inves neription to xharew and debentures, 1 has launched several schemt 964, It mobilises savings from the Poop, stments, it underwrite gy es and mutual funds, 7) Stvte Hinanelal Corporation (SCS) . _ : In onder fo meet the requirements of large number of small scales units State Finan) Corporation Aet was passed by the Parliament in September 1951 to facilitate setting upp SEC& in the sliatew, Accordingly the first SEC was set up in Punjab in 1953. Now there are jg SECx in the country. The main funetions of SECs are 1) ‘To provide long term finance to small scale and medium sized cooperative, public ad private company units, 2) ‘To undertake the issue of shares and debentures, 4) ‘To prant lonns and advance to industrial undertakings repayable within 20 years, 4) ‘To finance small road transport operators, hotels, hospital and nursing homes and tour related activities, 5) ‘To assist in modernisation, 8) State Industrial Development Corporation (SIDCs) | SIDC% are formed under Indian Companies Act 1956 during carly sixties and sever) us fully owned State Govt undertakings for promoting industrial development. The ma functions of SIDC 1) To provide term loan, 2) ‘To underwrite direct subscription to share and debentures and provide guarantee. 3) ‘To undertake promotional activities such as conducting surveys, entrepreneutial 6° ‘opment, preparing, feasibility reports, 4) ‘To provide (echnical guidance, plant location, 5) ‘To assist in equipment leasing, merchant banking, venture capital ete. 9) Hxport Import Bank of India (EXIM BANK) Exim Bunk set up in January 1982 to take ov ; Pa fi 4 “ ‘er Operati inance of IDBL. Its functions are peration of the International fi Scanned with CamScannerChaptar ng NODHOC AT Workin, capita And SOURCES Of Finance SAN wide nancial HSINANCE LO IMPOFLEry jy oxporters 10 promote ne ‘ jo Vl jdo finance 10 Joint ventures in fey a one ers credit and Tinen of ¢ 2 golfer PS merchant banking func Verto ant I tions of companies e j fo" ide advance information and India’s foreign relpN countries, cdi 10 foreign banks and governments, Mein paged in foreign trade, i ale Duninons advinory services to Indian exporters, i Mr ide technical and administrative ayvistinee to tra for a) ilers engaged in import export isinncSS+ ee inti i elath 1 bg provide advance information relating to Mmultilaterally funded projects at global level lo : ., . ) port promotion Exim bank hav launched three wehemnen, is . ‘ vaduction equipment finance programme, yin i marketing, finance, ) ao vendor development finance, ) small Seale Industries Board (Sst ius started in 1954 by the Central Govt with the objective of developing small scale justices throughout the country, ‘The developm nent of SSI involves various ministri partments and other like land owners, financial ins titutions cte, In order to facilitate ative coordination between them SSIB is created, The director of SSIB advises gout out activities relating to small industries, As it involves many ministries and depart- nfs. the committee governing SSIB consists of industries minister as chairman, members paliament, state industry minister, ‘The apex body take many decisions on all matters acerning SSI. | Vontinnn Cartel Scanned with CamScanner