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INTRODUCTION TO SSI
The SSI (Small Scale Industries) today is immense for the growth of the country. Small-scale industries are the industries which are run with the help of hired labour and which also use some simple machine & power.
The investment scale in this industry varies from 5 Lakhs to 1 crore for the fixed assets. Irrespective to no. of workers engaged is called small scale unit. The small-scale industries (SSI) constitute one of the vibrant sectors of the Indian economy in terms of employment generation, the strong entrepreneurial base it helps to create and its share in industrial production and exports. The Government created the Ministry of Small Scale Industries and Agro and Rural Industries (SSI&ARI) in October 1999 as the nodal Ministry for formulation of policy and co-ordination of Central assistance relating to promotion and development of the small-scale industries in India. The Ministry of Small Scale Industries and Agro and Rural Industries (SSI&ARI) was bifurcated into two separate Ministries, namely, Ministry of Small Scale Industries and Ministry of Agro and Rural Industries in September, 2001. Taking into account the high potential for growth in the SSI sector in terms of output, employment and exports, the role of the Ministry of Small Scale Industries is to strengthen the SSI sector, to enable it to remain competitive in market-led economy and generate additional employment opportunities. For achieving these objectives, the endeavor of the Ministry is to provide the SSI sector proper and timely inputs like:
1. Adequate credit from financial institutions/banks.
2. Funds for technology up gradation and modernization.
3. Adequate infrastructure facilities.
4. Modern testing facilities and quality certification laboratories; modern management practices and skill up gradation through advanced training facilities.
5. Marketing assistance.
6. Level playing field at par with the large industries sector.
In India these type of industries are Permuted to meet with the problems of excess population & unemployment so the govt. of India Per motes entrepreneur to step up small scale industries by aiding him by giving loans, subsidiaries, land, guidance etc.
The strategy adopted by the govt. is:
1. Public entrepreneurship should remain confirmed only to those industries and sectors where private enterprise, individual or corporate, is generally not attracted. Existing public entrepreneurship be improved through better management and by putting relatively greater emphasis on research and development. There is need to streamline the R & D wing of public sector enterprises.
2. All possible efforts are made very seriously (not casually) for the development of an industrial culture. It should be realized that the central core of entrepreneurship is the motive force since by its very nature, entrepreneurship implies positive action and initiative, motivated individuals with the right kind of combination of abilities and attributes can pursue their goal with unremitting courage and enthusiasm.
3. There is need to develop management education and industrial training.
4. The development of backward regions/areas constitutes a new challenge. Programmers for their development be drawn up and should be effectively implemented.
5. Adequate measures are a must for mobilizing and fostering the entrepreneurial talent in the country. In this context, it should be realized that entrepreneurs are not the gift of a particular class.
6. Economic administration by the sate should be improved and made more effective so that economic policies may fully achieve their objectives in the overall interest of the economy.
7. Financial institutions should provide adequate and timely credit and technical assistance, especially to the small and medium sized enterprises. They may also impart knowledge about the needs of the economy and they should file their massive data in terms of growth of new entrants or entrepreneurs in the field of industry.
1.2 MICRO SMALL & MEDIUM ENTERPRISES DEVELOPMENT (MSMED) ACT 2006
The Micro Small & Medium Enterprises Development (MSMED) Act 2006 was become operational from 2nd October 2006. The Act replaces the concept of “Industry” with “Enterprises”. Consequent to the implementation of this act, SSI Registration process has been dispensed with. The entrepreneur files the Entrepreneur Memorandum and gets an acknowledgement.
Micro Small and Medium enterprises are defined as below:
Manufacturing
Micro Enterprises- Investment in Plant and Machinery does not exceed Rs.25 lakhs
Small enterprises- Investment in Plant and Machinery is more than Rs.25 lakhs, but does not exceed Rs.5.00 crores
Medium enterprises- Investment in Plant and Machinery is more than Rs.5.00 crores but does not exceed Es.10 crores
Servicing
Micro Enterprises- Investment in equipment does not exceed Rs.10 lakhs
Small enterprises- Investment in equipment is more than Rs.10 lakhs but does not exceed Rs.2.00 crores
Medium enterprises- Investment in equipment is more than Rs.2.00 crores but does not exceed Rs.5 crores
HOW TO START A SMALL SCALE INDUSTRY
The steps involved in starting a small-scale industry are:-
1. Conduct Market Survey and Study the products as regards their demand in the market. Check whether it is a seasonal product or it has demand throught the year.
I. Study similar products available in the market that can be probable competitors. Analyze them as regards their utility, quality and cost.
II. Find whether the product can be exported.
III. Explore the possibility whether some product can be manufactured in collaboration with a foreign country. This provides readymade technical know how and save a lot of time and money otherwise wasted in developing a suitable method of manufacture.
IV. Decide the product that you are going to manufacture, on the basis of:-
a) Market Survey
b) Financial implication involved
c) Technical know how available
d) Experience in the line, etc.
1. Select a proper site for locating the unit.
2. Take a building for factory on hire or construct your own factory building.
3. Get yourself conversant with the rules and other information available from small-scale industries, Ministry of Industry, New Delhi.
4. Prepare a scheme in detail to manufacture the selected product such a scheme should include the requirement of and the approximate cost of:-
I. Land and building
II. Machinery, tools and other equipment
III. Direct labour
IV. Indirect labour
V. Direct material cost
VI. Indirect material cost
VII. Selling and distribution overheads
VIII. Working Capital for a unit time
IX. Depreciation
X. Total production cost per unit time
XI. Percentage of profit.
5. The scheme after it has been prepared is sent, for approval to the Directorate of Industries of the particular state.
6. A small scale unit has to get itself registered with the Directorate of industries in order to avail various facilities provided by the government, such as:-
I. Financial assistance
II. Raw materials water and power
III. Import license
IV. Factory accommodation
V. Government order
1.4 REGISTRATION OF SMALL SCALE INDUSTRIAL UNITS
The Scheme of voluntary registration of Small Scale, Village and Cottage Industries with the State Directorate of Industries was introduced in 1960 and such registered industrial units were made eligible for different types of assistances by the Governmental Agencies. Initially a uniform norm for registration were not laid down with the result that some of the States had granted different registration numbers to different lines of manufacturing processes to the same unit thereby resulting in multiple registration.
Therefore to avoid such anomalies a uniform set of Application Forms for both Provisional as well as Permanent Registration were evolved out at the time of introduction of the revised procedure of registration of these sectors of industrial undertakings in 1975. With the passage of time, the Government of India, Ministry of Commerce and Industries further simplified the procedures by simplification of the forms for registration and also introduced the coded system to indicate the State, Districts and the unit's serial number so as to facilitate computerization of the whole system of SSI registration, in 1989.
Registration of Small Scale, Village and Cottage industries are done under two stages, viz-
i. Provisional and
ii. Permanent Registration
Provisional Registration:
Provisional registration is granted to a unit at its pre- investment Period to enable it to take necessary steps to apply for financial credit, land or an industrial set, water, power or telephone connections, etc.
Permanent / Final Registration:
A provisionally registered industrial unit when it is about to go into production is to apply for grant of Permanent / Final Registration. An existing and functioning industrial unit is eligible to apply for Permanent / Final Registration without going into provisional registration processes.
1.5 FINANCIAL ASSISTANCE
Since Independence, Government of India has been giving all possible encouragement of SSI. A number of organizations have been set up by the Government of India to provide assistance and incentive to small-scale industries. These packages of assistance are provided to SSI by a large number of organizations operating at national and State level. Development Programmers are being carried out at two levels
a) National level
b) State level
Agencies which work at National level are:-
a) Small Scale Industrial Board (SSIB)
b) Small Scale Industries Development Organization
c) National Small Scale Industries Corporation.
Agencies which work at State level are:-
1) State Directorate of Industries
2) District Industrial Center (DIC)
3) State Small Industrial Corporation (SSIC)
4) State Financial Corporations
5) Commercial Banks
6) Small Industries Development Bank of India (SIDBI)
National Level SSIB
It is all advisory body and comprises State Government Ministers Offices and representatives of several Institutions and associations. Its functioning is to plan, advice and coordinate the activities of Central and State Government. As such it does not render direct help to entrepreneurs. However, it helps the Government in involving new policy and programmer for small-scale sector.
Small Industries Development Organization (SIDO)
Its Headquarter Nirman Bhavan, New Delhi headed by the Development Commissioner (SSI) has a network of Small Industries Service Institutes (SISIs) one in each State which helps in economical, technical, industrial information service, management consultancy services, training and marketing etc.
The Office of the Development Commissioner (Small Scale Industries) is also known as the Small Industry Development Organization (SIDO). It is an apex body for assisting the Ministry in formulating, coordinating, implementing and monitoring policies and Programmers for the promotion and development of small-scale industries in the country and is headed by the Development Commissioner (SSI).
In addition, the SIDO provides a comprehensive range of common facilities, technology support services, marketing assistance, etc., through its network of 30 Small Industries Service Institutes (SISIs), 28 Branch SISIs, 7 Field Testing Stations (FTS), 4 Regional Testing Centers, 2 Small Entrepreneur Promotion and Training Institutes (SEPTI) and 1 Hand Tool Design Development and Training Center. The SIDO also has a network of Tool Rooms, Process-cum-Product Development Centers (PPDCs) and technology and training support institutes which are run as autonomous bodies registered as societies under the Societies Act. Its headquarters at New Delhi and Regional Offices at Kolkata, Mumbai, Chennai, Guwahati etc.
Facilities provided
1. Supply of machines and equipment on hire purchase
2. Distribution of scare raw material imported components.
3. Marketing assistance.
4. Assistance to SSI in securing orders for railway and defense.
5. Operating a credit guarantee scheme for those units which are
6. registered within.
State Financial Corporations
Almost every state has its own financial corporation to provide machines and long term loans to small and medium scale industries. Amount of loan varies from Rs. 5000 to Rs. 6.00 Lakhs and these loans are repayable in equal installments spread over a Period of 10-12 years. Important schemes of financing SFC are
1. A loan scheme for financing of village and cottage industries. Under this scheme they are financed to the extent of Rs. 25,000 and the interest rate is very low.
2. Assistance to tiny units – these grant assistance up to Rs. 2.00 Lakhs.
3. Scheme for technical entrepreneur – in order to encourage self employment these corporations provide financial assistance up to Rs. 2.00 Lakhs at very low interest rate to such technical entrepreneurs who have acquired a diploma or degree in any discipline of engineering
4. Loans to hotel industry
5. Scheme for SC/ST – Grant financial assistance to SC/ST entrepreneurs at a nominal margin such rates are charged at the rate of 10%.
6. Scheme for physically handicapped – these provide financial assistance up to Rs. 3.00 lakhs at a rate of 10%.
Commercial Banks
SBI and its subsidiary banks and other nationalized banks provide liberal term loans and working capital to small scale entrepreneurs and these loans are advanced for purchase of machine and material and to the technical entrepreneurs to encourage self employment.
Specialized institutes like – Central Institute of Tool Design, Hyderabad, Central Tool Room, Ludhiana and Kolkata, Central Institute of Hand Tools Jalandhar, Institute for Design of Electrical Measuring Instruments (IDEMI) Mumbai, Integrated Trading centre, Nilokheri, National Institute of Small Industry Extension, Hyderabad and National Institute for Entrepreneurship and Small Business Development. They conduct special courses, Programmers, workshops, training Programmers for the benefit of small-scale industries.
Credit Support
Credit is the prime input for sustained growth of small-scale sector and its availability continued to be a matter of concern. To provide credit support to the various SSI units various policies have been formulated by the GOI. Various institutes like SFC, SIDC, NISC, SIDBI are providing financial support to various SSI units.
Overview of the steps taken by the GOI
1) Composite loans limit raised from Rs. 10 Lakhs to Rs. 25 Lakhs.
2) In the National equity fund scheme (NEF) the project cost limit has been raised from Rs. 25 Lakhs to Rs. 50 Lakhs.
3) Soft loan limit restrained to 25% of the project cost.
4) Task Force is appointed by the Department of Economic Affairs to suggest revitalization/restructuring of the State financial Corporation.
Credit to SSI Sector from Public Sector Banks
RBI and its support to SSI
1. Investment limit rose from Rs. 60 Lakhs to Rs. 300 Lakhs
2. Working capital limit rose to Rs. 4 crore.
3. Lower rate of interest and the interest is 20% of their projected annual turnover.
4. Public sector banks have been advised to operationally more specialized SSI branches at Centers where there is a potential for financing many SSI borrowers.
1.6 MARKETING & PRODUCT PLANNING
Concept of Marketing:-
Studies reveal that different organizations have different perception of marketing and these different perceptions have led to the promotion of different concept of marketing. It is found that at least 5 distinct concept of marketing have guided and are still guided business terms. They are:
1. Exchange concept.
2. Production concept.
3. Product concept.
4. Sales concept.
5. Marketing concept.
1. Exchange concept:- The exchange concept of marketing as the name indicates hold that the exchange of a product b/w the seller and a buyer is a central idea of marketing. But a proper scrutiny of the marketing would readily reveal that marketing is very much broader than exchange. The other important aspect of marketing such as concern for the customer, the generation of the venue satisfaction, the creative selling and integrated action for service the customer get completely overshadowed in this concept of marketing.
2. Production concept: - According to the production concept marketing is a merely related to production .They believe that marketing can be managed St by managing production. The concept hold that consumer would as a rule supported these product that are product in a great volume and allow unit cost organization voting for this concept are influenced by a drive to produce all that they can .They do achieve high production efficiency and a substantial reduction in the unit cost of production. Yet they often do not get customer as they expected. Customers after all are motivated by a verity consideration in their purchases. Easy availability and low cost are not only parameters governing the costumers buying action and the production concept thus fails to drive as the right marketing polices for the enterprise.
3. Product concept: - The product concept is somewhat stiff from the production concept where as the production concept seeks to win markets & profits via high volume of production and low unit cost of production. The product concept to seek to archive the same results via product excellence, improved product, new products and ideally design and engendered products. It also places emphasis on quality assurance. Origination that subscribes to the product concept of marketing believes that customer goods automatically vote for products of high quality they spent considerable energy. Time and money own research and development brings in a verity of new product. They do not bother to study the market and consumer in depth. They get totally embraced with the product and almost forget the customer for whom the product is actually meant. They fail to find what the customers actually needs and what they would gladly aspect.
4. Sale concept: - The sale concept maintains that a company cannot expect its product to get pick up automatically by the costumer. the company has to consciously promote and push its heavy advertisement, high power personal selling, large scale sale promotion, heavy price discount and strong publicity and public relation are the normal tool used by the organization that relay on the concept. Evidently the sale concepts too generate marketing myopia just as a exchange concept, production concept and product concept. Its lead to wrong or inadequate understanding of the market and consequently a total failure in the market place.
5. Marketing Concept
Importance of marketing to the society:-
a) Marketing helps to achieve and maintain to rise the standard of living. Marketing bring new variety of good to the consumer and better and rigorous marketing gives soon for mass production. Under mass production, the cost of product is low. So, people can have more goods for their money, which results in high standard of living.
b) Marketing increases employment opportunity.
c) Marketing helps to increases national income.
d) Marketing is a connecting link between consumer and producer.
e) Marketing helps to maintain stability:- Economic stability is the sign of any efficient and dynamic economy and economy stability is maintained only when there is balance in supply and demand. If production is more then demand the access goods cannot be sold at acceptable prices then stokes of goods would be picked up and there would be glut all the market in fall in price. Similarly, if production is less then demand price is shooting up resulting in higher price. In such a situation marketing maintains the economic stability by balancing production and consumption.
Steps in Marketing Management:-
1. Product planning
2. Sale Forecasting
3. Pricing Policy
4. Distribution Strategy
5. Role of Advertising (personal selling)
6. Quality
1. Product planning:- Product planning may be defined as “the act of marketing out and supervising the search, screening, development and commercialization of new product, modification of existing line.”
Product planning involves three important considerations
a) The development and Induction of new ideas.
b) The modification of exiting lines as may be required in term of changing costumer’s need and performance.
c) The discontinuance of elimination of marginal or unprofitable product.
Product planning may be defined as “the act of marketing out and supervising the search, screening, development and commercialization of new products, modification of existing lines”.
Product planning involves three important considerations-
1. The development and introduction of new ideas
2. The modification of exiting lines as may be required in terms of changing consumer’s need and preferences.
3. The discontinuance of elimination of marginal or unprofitable products.
Products can be classified as-
1. Consumers products
2. Industrial products
3. Defense products
Consumer’s products
Goods designed for use ultimately by the consumers or household and in such from they can be used without commercial processing.
Industrial product
Goods, which are designed to be sold primarily for use in producing goods or rendering services, as contrasted with goods destined to be sold primarily to the ultimate consumers.
Sales Forecast Defined
A sales forecast is an estimate for the amount or unit sales for a specified future Period under a proposed marketing plan or programmed.
As defined by the American Marketing Association it is “an estimate of sales in dollars or physical units for a specified future Period under a proposed marketing plan or programmer and under an assumed set of economic and other forces outside the unit for which the forecast is made.
Marketing of a proper sales forecast requires an assessment of:
1. The outside uncontrollable force likely to influence the company sales.
2. The internal proposed changes in the marketing strategies and tactics of the company, which are likely to affect the sales.
Sales forecast can be for a specified product line or it can be for a market as a whole or for any portion of it. According to the time Period, the sales forecast can be divided under 3 types-
Short run forecast – which generally extends from a few weeks to about six months or at most one year in future. This is mostly done by companies as day-to-day forecasts for their production control needs and to plan for long term financial needs.
Medium range forecasts – which extends from one year to about four years into future. This type of forecasting is important for:
1. Estimating profits, budgeting expenses etc.
2. Determining dividend policy
3. Deciding rate of maintenance expenditure
4. Determining schedule of operations.
Long Range Forecast
Extending to at least five years into future and in case of really large organizations extending over a longer Period up to ten years or even more.
It is useful in the following ways –
1) Anticipating the magnitude and timing of capital expenditures required for new facilities in the future.
2) Determining probable trends and range of cash inflows from sales.
3) Estimating companies long-range Personnel needs.
4) Highlighting future problems.
INTRODUCTION:
Manufacturing of paper is under the category of pulp&paper industry. This industry has occupied a unique place in the industrial scenario of our country. Indian Paper Industry is a booming industry and is expected to grow in the years to come. The usage of paper cannot be ignored and this awareness is bound to bring about changes in the paper industry for the better. It is a well known fact that the use of plastic is being objected to these days
II. Market Potential:
. The paper industry in India has become more promising as the domestic demand is on the rise. Increasing population and literacy rate, growth in GDP, improvement in manufacturing sector and lifestyle of individuals are expected to account for the growth in the paper industry of India. BILT and ITC are among the largest producers of paper and paperboard in India. Many of the existing players are increasing their capacity to meet the growing demandIn domestic market and exportmarket it has made spectacular progress in last decade.