Section II Unit-3

8/7/2019 Section II Unit-3

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Small Scale IndustriesSmall Scale Industries

y Objectives

1. Definitions of SSI

2. Objectives and role of SSI in economicdevelopment

3. Development of SSI in India

4. SSI Registration

5. Project Report Preparation



DEFINITIONSDEFINITIONS

y Micro Enterprise: Investment in P&M 25 lacs

in manufacturing & upto Rs 10 lacs in

equipment in service sector

y S.S.I-Investment in p&m does not exceedRs500 lacs in manufacturing P&M and Rs10

to 200 lacs in equipment in service sector

y

Medium Enterprise: Above 500 lacs and upto Rs1000 lacs in P&M in manufacturing and

Above Rs 200 lacs up to Rs500 lacs in



DEFINITIONSDEFINITIONS

equipment in service sector

y Ancillary units-proposes to supply 50% of

its production or services

y Tiny units-Investment in p&m does not

exceed Rs25lacs

y Village & cottage industry.--population not

exceeding 50000.



DEFINITION CONTD.DEFINITION CONTD.

y Women enterprises--SSI related service

where share of the women as partner

shareholders, directors not less than 51%.

y Export oriented units--exports at least

30% of its production.

y SSSBE--An industry related service

business enterprises with investment infixed assets upto 5lacs except land&bldg





Inherent advantage of S.S.IInherent advantage of S.S.I

y 1-Shorter gestation period

y 2-Low cost of establishment

y

3-Widely dispersed building widerindustrial base.

y 4-Low capital intensive.

y 5-Potential for employment

y 6-Effective mobilisation rural resource





Inherent weakness of S.S.I.Inherent weakness of S.S.I.

y Lacking basic infrastructure

y Old/outdated technology

y Poorly placed in market situation

y Promoters lack specialisation

y Weak capital base &lesser access to capital

market

y Lacking managerial&professional skills



Inherent weakness of SSI contd.Inherent weakness of SSI contd.

y Face resource crunch

y Poor accounting system

y

No planning budgeting or monitoringy Short term fund are deployed for long

term uses

y Pre operative expenses are not

considered in project appraisal



Role of Govt.of India& R.B.IRole of Govt.of India& R.B.I

y Banks should convey timely sanction

y Loan applications to be timely disposed

y Need based & timely credit to be

extendedy Simplified & uniform application form

y Rejection of application form should be

done with approval of higher authoritiesy Collaterals upto 1lac not to be insisted

y



Role of GoI & R.B.I. Contd.Role of GoI & R.B.I. Contd.

y Financial assistance for meetig T/L&W/C

be given

y Interest on delayed payment to SSI and

ancillary undertaking act 1993.

y Target for financing priority secctor

where SSI is a constituent



Bankers approach to SSI financingBankers approach to SSI financing

y Anxiety to secure banks fund at any cost

y Stop discounting bills of SSI units

y Discourage to draw against book debts

y Current ratio is lowered due to high

receivables

y Branches are not equiped nor trained

y Borrowers are not educated.



Preliminary Project ReportPreliminary Project Report

y PPR is a document which describes theprogress at every stage of the project.

1. The composition and organization of the

enterprise2. Description of the enterprise

3. Description of the product and theproduction process

4. Requirement of the machinery andequipments

5. Available alternative technologies



Cont.Cont.

6. Quality and quantity of the required factorsof production

7. Names and addresses of their suppliers

8. Prices of the factors/inputs9. Requirements of fuel and other utilities

Labour requirements.

10. Place and premises

11. Cost of production

12. Sales Revenue to be obtained from theproduction programme



Cont.Cont.

14. Means of raising finance

15. Profitability analysis

16. Cash flow



Performa outline of a PreliminaryPerforma outline of a Preliminary

Project ReportProject Reporty Section A General Information about the

Entrepreneur

y Section B Information about the Project

y Section C Information about the firm

y Section D Details of the Proposed Projecty Section E Description of the Location

y Section F Plant Layout

y Section G Break-even Analysis

y Section H Cash flows

y Section I Supplementary Details

y Section J Two References

y Section K List of Supplementary Documents



y Network Analysis is a technique of sequencing andscheduling of a project. In a network sequencing andscheduling are treated separately in a compositeframe. This frame sets out task their sequences andalso their inter-relationships.

y PERT is an acronym for Programme Evaluation andReview Technique. It was created to plan andaccelerate the development of large projects whichconsists of numerous activities. These activities arenot time bound- and independent of one another.

y CPM is the Critical Path Method. It is activity-oriented. It is basically concerned with obtainingss thetrade ² off between cost and completion date for theprojects.



The project which is to be analyzed by CPMor PERT should possess the followingessential characteristics.

1. The project should consist of well defined

collection of jobs r activities which, aftercompletion, may mark the end of theproject.

2. The jobs may be started and stopped

independently of each other, within a givensequence.3. The jobs are ordered. They must be

performed in a technological sequence.



Small Scale Industry RegistrationSmall Scale Industry Registration

For obtaining the SSI registration, an entrepreneurhas to complete the following formalities:

1. Application in the prescribed form- applicationforms are available in the DIC office

2. Project Report

3. No Objection Certificate (NOC) for theindustrial use of the given premise from thelocal self-governing body

4. Affidavit- Prescribed forms of the Affidavit isattached with the application form. It isprovided by the DIC office.



No Objection CertificateNo Objection Certificate

y For obtaining NOC, an entrepreneur has tothe Directorate of Industries or the office of the DIC.

1. Duly filled up prescribed application form.2. Legal document of the location of the unit3. Certificate showing the industrial unit in

the conforming zone

4. If the industrial unit is located in anindustrial estate, a proof or a certificateindicating that the industrial estate r gala isapproved by the government.



Contd.Contd.

5. Detailed scheme of the proposed product andthe production process

6. Detailed list of the machinery and equipments.

7. List of raw materials

8. Documents of the constitution of the unit

9. Electricity license documents

10. Ownership deed of the premises of the unit and

the area of the unit11. Justification for NOC

12. Reserve Bank challan of the required amount



Other IssuesOther Issues

y Finance

y Machinery and Equipment

y Raw Material

y Manpower

y Licence for power

y Marketing arrangements

y Certificates from other Authorities



y Operational Planning

y Project Planning

y Strategic Planning