CHAPTER 1

INTRODUCTION

1.1 INTRODUCTION TO SSI

The SSI (Small Scale Industries) today is immense for the growth of country. Small
Scale Industries are the industries which are run with the help of hired labor and
which also use some simple machine and power.

The investment scale in the industry varies from 5 lakhs to 1 crore for the fixed assets.
Irrespective to number of workers engaged is called small-scale unit.

In India these type of industries are promoted to meet with the problems of excess
population and unemployment so the government of India promotes entrepreneur to
set up small scale industries by aiding him by giving loans, subsidiaries, land,
guidance etc. The strategy adopted by the government, 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 carefully) 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 and areas constitutes a new challenge,
programs for their development be drawn up and should be effectively implemented.

1
5. Adequate measures are a must for mobilizing and fostering the entrepreneurial talent
in the country. In the context, it should be realized that entrepreneurs are not the gift
of a particular class.

6. Economic administration by the state 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 Advantages of Small Scale Industries

1. These create immediate and permanent employment in large scale at relatively small
capital cost.

2. These can immediately meet a substantial part of the increased demand for consumer
goods.

3. These offer a good method of ensuring more equitable distribution of national

income.

4. These provide more chances of work and income.

1.3 Objectives of Small Scale Industries

1. Employment generation
2. Equitable distribution of national income
3. To meet increased demand
4. Decentralization
5. Better utilization of services
6. Balanced economic development
7. Self employment
8. Labour intensive and capital saving

2
 9. With small investment production can be easily started check on monopoly
10. Highly prcised machines and modern techniques are not needed.

1.4 Financial requirement for SSI

Since independence the 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 incentives to the small scale industries.
These packages of assistance are provided to the SSI by a large number of
organizations operating at national and state level. Development programs are being
carried out at low levels.

National level
Agencies which work at national level are:

a) Small Scale Industrial Board (SSIB).

b) Small Scale Industries Development Organization (SSIDO).

c) National Small Scale Industries Corporation

State level
Agencies working at state level are:-
a) State Directorate of Industries.
b) District Industrial Centre (DIC).
c) State Small Industrial Corporation (SSIC).
d) State Financial Corporation.
e) Commercial Banks.
f) Small Industries Development Bank of India (SIDBI).

1.5 Overview of the steps taken by the GOI is

1. Composite loans limits raised from Rs.10 lakhs to Rs. 25 lakhs.

3
2. In the national equality fond 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.
4. Task force is appointed by the Department of Economic Affairs to suggest
revitalization/ restructuring of State Financial Corporation.

1.6 Credit to SSI Sector from public Sector Banks RBI and its
support to

SSI
a) Investment limit rises from Rs. 60 lakhs to Rs. 300 lakhs.
b) Working capital limit raised to Rs 4 crores.
c) Lower rate of interest and the interest is 20% of their projected annual turnover.
d) Public sector banks have been advised to operational more specialized SSI branches
at Centers where there is a potential for financing many SSI borrowers.

1.7 AGENCIES HELPING SMALL SCALE INDUSTRIES

1. National Small Industries Corporation (NSIC)

2. National Institute of Small Industries Extension Training (NISIET)
3. Indian Investment Centre (IIC)
4. Export Promotion Councils (EPC)
5. Commodity Boards (CB)
6. Small Industries Development Of India (STC)
7. State Trading Corporation Of India (STC)
8. District industries centre (DIC)

1.8 ORGANIZATIONAL STRUCTURE OF SSI

There are 28 SISIs and 30 Branch SISIs set up in State Capital and other industrial
cities all over the country. The main activities of these institutions are as follows:-
Assistance/consultancy of prospective entrepreneurs.

Project profiles.

4
 Entrepreneurship development Programmes.
Motivational campaigns.
Production index.
Management development Programmes.
Energy conservation
Quality control and up gradation.
Export promotion.
Market surveys
Intensive technical assistance.

1.9 Organization under SSI

1. Regional Testing Centres (RTCs)
2. Field Testing Stations (FTSs)
3. Tool Rooms/Tool Design Industries (TRs/TDs)
4. Training institutes:
- National Institute of Small Industry Extension Training (NISIET)
- National Institute for Entrepreneurship and Small Business Development
(NIESBUD), New Delhi.

- Integrated Training Centre (Industries), Nilokheri (Haryana).

5. Product-cum-Process Development Centres (PPDCs)

Six Centres are in existence. These are:- -

Firozabad for Glass Industry.

- Kannauj for Essential Oils.

- Meerut for Sports Goods and Leisure Time Equipment.
- Agra for foundry and forgings.
- Ramnagar for Electronic Industries
- Mumbai for Electrical Measuring Instruments.
The main motive of these Centres is to upgrade the technology of the manufacturer
and help in energy conservation.

5
 1.10 Training Institutes

All the 3 training institutes mentioned above are an autonomous body and are under

the administrative control of the office of DC (SSI). Their objective is to identify and

motivate traditional/non/traditional entrepreneurs and to provide training at National

and International level. These institutes provide training by imparting seminars and

workshops on topical issues. The Integrated Training Centre (Industry), Nilokheri is

the only institute that imparts training to the junior field staff i.e. Investigators/SIPOs

to expose to and educate them in the Programmes and policies of development and

promotion of small industries. At present its training consists of courses like

1. Rewinding of electric motors and house wiring.

2. Repairs to diesel engine and agricultural water pumps.

3. Servicing and repair to automobiles (cars and scooters).

1.11 Studs in Marketing Management

1. Product Planning
2. Sales Forecasting
3. Pricing Policy
4. Distribution Strategy
5. Role of Advertising (Personnel 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 products,
modification of existing lines.

6
 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 consumers
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 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.

2. Sales Forecast

Sales forecast is an estimate for the amount or unit sales for a specified future period
under a proposed marketing plan or programme.

As defined by the American Marketing Association it is an estimate of sales in

doclars or physical units for a specified future period under a proposed marketing
plan or programme 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.

7
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.

8
3. Pricing Policy

Pricing is a very critical decision. Pricing decisions are not easy to make. Hence
sound pricing policies must be adopted to ensure that the organization secures
satisfactory profits. For pricing decisions a marketing manager has to be familiar with
economic concepts useful in pricing decisions. He has to consider various pricing
factors which influence pricing apart from costs such as the customers characteristics,
the economic product characteristics, competitive environment and Governmental
control wherever applicable. The price of the product materially affects the demand
for it as well as the organization competitive ability for expenditure if the quality of
the product be improved this may be possible only if the customers are willing to pay
a higher price for it. Besides, if the product is not properly priced there might be
reluctance from the channels of distribution.

4. Distribution Strategy

Distribution may be defined as an operation or a series of operations, which

physically bring goods manufactured or produced by only particular manufacturers
into the hands of the final consumers to the users. A distribution strategy consists of
distributing or sub-dividing the total products of a manufacturer on a geographical
basis to various specific markets. There may be a state market, a National Market or
even a world wide market for the production while defining a strategy we have to deal
with two aspects. First, is the organizational aspects, it is concerned with how and
through what channels we should distribute. For this general marketing policy is
responsible for deciding the various channels for distribution. Secondly, is the
operational aspect of distribution or the physical distribution, it is concerned with
moving of goods from one place to another, including the warehousing storage and
transportation costs as well includes.

5. Advertising

To counter the markets at National and International level the GOI set up various
institutes like:-

9
1. Export Credit Guarantee Corporation Ltd. (ECGC)

2. State Trading Corporation. (STC)

3. Trade Development Authority.

4. National small Industries Corporation. (NSIC)

10
 CHAPTER 2

PROCEDURE TO START A SMALL SCALE

INDUSTRY
Starting of a small-scale industry is not a very easy task. At the same time it is not
difficult so, if different factors are considered before taking a decision to start it. For
starting, the first and most important work is to select a suitable site and then to make
a proper scheme and yet approved.

Procedure to start small scale industry consist of following important steps-

1. Getting Familiar

An entrepreneur desiring to set up an industry must first formulate comprehensive

setting the industry for its success. For this, he should be confident, enthusiastic and
realizing. He should therefore make himself familiar with the permanent policies and
procedures, assistants and facilities he can get from whom and how.

2. Selection of Industry

Selection of a suitable place for an industry is the key to success. Different factors for
the selection of the site are availability of the land, labour, raw material, power and
transport facilities and nearness to the market.

Type and size of industry should be decided by the market study, quality and price of
other product with which proposed item be in competition. Demand and supply of
position of the product should be before selecting the type of industry. Owner should
make himself conversant with all acts, rules of central and state governments etc.
3. Preparation of Scheme

After deciding the product to be manufactured and the place of industry, a detailed
scheme is prepared. This scheme include number of machines, their approximate cost,

11
requirements of land and building, number of workers and other staff, their salaries
and estimated production cost, expected profit, proposed factory layout and plant
layout.

12
 CHAPTER 3
PROJECT AT A GLANCE
1. NAME OF INDUSTRY Jai Bharat Maruti

2. NAME OF DIRECTOR Mr. Jay Sharma, Mr, Bharat Jain

3. ADDRESS Plot No. 5, Maruti Suzuki India Limited

Joint Venture Complex, Gurugram

4. DATE OF 1987
INCORPORATION

5. SIZE Small scale industry

6. PRODUCT Connecting Rod

7. DETAILS ABOUT THE 32516 pieces of connecting rod are produced

PRODUCT per annum of 310 working days

8. MARKETING Demand in manufacturing of engines for two

ASPECTS wheelers

9. MANUFACTURING Manufacturing process consist of forging,

PROCESS drilling, turning, milling, auto black, center
checking, grinding, inspection, packing

10. EMPLOYMENT 29

11. POLLUTION No pollution of whatsoever nature is involved

in manufacturing process.

13
 CHAPTER 4
PRODUCTION PROCESS
4.1 LOCATION AND SITE SELECTION
The proposed location of plant is PLOT NO. 5, MARUTI SUZUKI INDIA
LIMITED JOINT VENTURE COMPLEX, GURUGRAM. The plant is on the
basis of following consideration:

1. Gurugram is an industrial area ,close to market easily availability of workers

2. This region possess all the facilities which an industrial area needed
3. Electricity is provided at cheaper rate
4. Plant layout involves arranging and coordinating the physical plant facilities in a
pattern that affects the maximum efficiency in the combination of man machine and
material for operation of any unit of business

A good layout is one that provides for full utilisation of available equipment for
operation material handling devices and man power.

4.2 PRODUCTION PROGRAMS

1. The scheme is prepared on the basis of double shifts working and 310 working days
in a year.

2. 28520 pieces are produced in 310 days

3. 5030 m2 area is required to established the industries
4. Construction cost has been taken on the basis of estimate given by the architect.

5. No pollution control measures are required except exhaust fan

14
 4.3 INTRODUCTION AND USES OF PRODUCTS
Specially designed for the highly level of comfort, our range of connecting rod is
made of steel alloy material to ensure long service life. Their enduring design and
quality construction made them durable performers in any environment the
connecting rod are economically priced.

In a reciprocating piston engine, the connecting rod or con rod connects the piston to
the crank or crankshaft. Together with the crank, they form a simple mechanism that
converts reciprocating motion into rotating motion.

Connecting rods may also convert rotating motion into reciprocating motion.

4.4 PRODUCT FEATURES

1. Made from steel alloy
2. Tough and lightweight
3. Simple design
4. Maintenance free
5. Superior quality
6. Durability and reliability
7. Excellent finish and cost effective
8. Immediate delivery

4.4 MARKET POTENTIAL

Connecting rods are used in the engines. The development of automobile industry
have direct impact on this industry. Every two wheeler engine needs a connecting rod.
India is a developing country and a huge market and in a recent years demand for the
automobiles especially two wheelers increases rapidly so it is clear that the demand
for the engines and for the connecting rod is very bright and likely to increasing trend
in every year . Hence there is a good scope for this type if industry

15
4.5 SPECIFICATION OF PRODUCT
Steel alloy connecting rod with the specification:
Length of the connecting rod 117.2m
m
Width of connecting rod 18mm
Surface finish 3.2ra
Diameter of bigger end 15mm
Diameter of smaller end 11mm

4.6 RAW
MATERIAL
Type of raw material steel
alloy
Quantity per annum 19964k
g

4.7 SPECIFICATION OF MACHINE

1. FORGING MACHINE
Brand name KIRLOSKA
R
Capacity 700 ton

2. DRILLING MACHINE
Brand name KIRLOSKA
R
Drilling capacity 40mm
Spindle speed range 90 to 1000
rpm
Drilling motor 1400 kw/rpm

16
3. GRINDING MACHINE
Brand name KIRLOSKAR
Thickness of wheel 250mm
Bore diameter 32mm
Grain size 100
Wheel size 300mm
Abrasive A 12 O3

17
 CHAPTER-5
PROCESS FLOW DIAGRAM

Raw material

Forging operation

Drilling operation

Turning operation

Milling operation

Auto black

Centre Checking

Grinding

Inspection & Packing

18
 CHAPTER-6
PROCESSES
The manufacturing processes for connecting rod for engines involves following
operations:

1. CNC twin turning

2. Drilling
3. Internal threading
4. Grinding
5. Inspection
6. Packing

1. CNC twin turning operation

This machine involves making the threading at the one end of the connecting
rod. The programming is done on the machine to set the required diameter and
for the rpm. The threading is done on the two side named as thread side and
piston side. The piece is fixed in the head stock and then clamped with help of

pneumatic paddle and then machine sta

Fig 3 : CNC turning operation

19
2. DRILLING OPERATION
In drilling operation a hole is providedfor the flowing of the fluid

Fig 3 drilling operation

3. INTERNAL THREADING
Internal threading is done on one end of the rod after the drilling so that the
connecting rod can attach to the damper case

4. GRINDING OPERATION
In the grinding operation the grinder is used to give the final dimension to the
connecting rod , the other objective of grinding is to give the surface finishing

5. CHECKING OPERATION
In this process the connecting rod is inspected for checking the hardness
strength as per the design specification

6. PACKING
In this operation the finished goods arepacked and stored in the stores

20
 CHAPTER 6
PROCESSES

The manufacturing processes for connecting rod for engines involves following
operations:

7. CNC twin turning

8. Drilling
9. Internal threading
10. Grinding
11. Inspection
12. Packing

7. CNC twin turning operation

This machine involves making the threading at the one end of the connecting
rod. The programming is done on the machine to set the required diameter and
for the rpm. The threading is done on the two side named as thread side and
piston side. The piece is fixed in the head stock and then clamped with help of
pneumatic paddle and then machine starts to cut

CHAPTER 6
PROCESSES

The manufacturing processes for connecting rod for engines involves following
operations:

13. CNC twin turning

14. Drilling
15. Internal threading
16. Grinding
17. Inspection
18. Packing

21
 8. CNC twin turning operation
This machine involves making the threading at the one end of the connecting
rod. The programming is done on the machine to set the required diameter and
for the rpm. The threading is done on the two side named as thread side and
piston side. The piece is fixed in the head stock and then clamped with help of
pneumatic paddle and then machine starts to cut

CHAPTER 6
PROCESSES

The manufacturing processes for connecting rod for engines involves following
operations:

19. CNC twin turning

20. Drilling
21. Internal threading
22. Grinding
23. Inspection
24. Packing

9. CNC twin turning operation

This machine involves making the threading at the one end of the connecting
rod. The programming is done on the machine to set the required diameter and
for the rpm. The threading is done on the two side named as thread side and
piston side. The piece is fixed in the head stock and then clamped with help of
pneumatic paddle and then machine starts to cut

22
23
 CHAPTER 7
COST OF PRODUCT

MACHINERY AND EQUIPMENT

S.NO MACHINERY AND PRICE NO. TOTAL
EQUIPMENT VALUE(Rs)

1 Forging machine 14,45,000 1 14,45,000

2 Drilling machine 4,40,000 2 8,80,000

3 Grinding machine 4,10,000 1 4,10,000

4 Milling machine 5,85,000 1 5,85,000

5 CNC centering machine 10,00,000 1 10,00,000

6 Roughness tester 25,000 1 25,000

7 Jig and fixture 350 10 3,500

24
8 Testing equipments 9,000 1 9,000

9 Water pumps 7,000 2 14,000

10 Water cooling arrangement 14,000 1 14,000

11 Generator 4,00,000 1 4,00,000

12 Helping tools - - 8,000

13 Electrification and installation - - 22,000

14 Water supply - - 13,000

15 Furniture - - 30,000

TOTAL - - 48,58,500

25
UTILITIES

S NO PARTICULARS REQUIREMENT PER

MONTH (Rs.)

1 Transportation 45,000

2 Telephone 2,500

3 Electricity 10,000

4 Water 2,000

5 Fuel for generator 5,000

6 Stationary 5,000

7 Maintenance and repairing cost 5,000

8 Other expenses 5,000

TOTAL 79,500

26
MANPOWER

S NO NAME OF POST NO. OF SALARY PER TOTAL

PERSONS MONTH VALUE

(Rs.)

1 Manager 1 12000 12000

2 Engineer 1 9000 9000

3 Accountant 1 4000 4000

4 Junior engineer 2 5000 10000

5 Salesman 2 4500 9000

6 Clerk cum store keeper 2 4000 8000

7 Skilled workers 8 3500 28000

8 Unskilled workers 10 3000 30000

9 Watchmen 2 4000 8000

Total salary per month 1,15000

27
RAW MATERIAL
S NO ITEM QUANTITY PRICE PER TOTAL
PER UNIT VALUE
KG/PEICE

1 Steel alloy 700 kg 250.00 175.00

2 Spray material - - 4.00

3 Packing cost - - 8.00

Total raw material per 187.00

connecting rod

28
 CHAPTER 8
PRODUCTION PROGRAMME

Total day in the year 365

No. of Sundays in year 52
Another holidays 3
Total working day 310

Working minutes in one day 960 minutes(2 shifts)

Machine starting time 15 minutes
Maintenance time 25 minutes
Actual production time in one day 920 minutes
Product cycle time 10 minutes
Production per day 920/10=92 connecting rod
Production per year 92310=28,520 connecting
rod
Raw material cost 28520187=Rs 5,33,240
Raw material coming in 12 instalments

So cost of raw material per month Rs 4,44,436

LAND COST

Area=50m30m=1200 Sq. m.
Rate per sq.m. = Rs 2500
Cost of land = 12002500 = Rs 30,00,000

29
BUILDING COST

Material Rs
600000
Door, main gate Rs300000
Foundation Rs60000
Labour Rs50000
Others Rs20000
Total building capacity Rs103000
0

FIXED CAPITAL
Machinery and equipment cost Rs485850
0
Land cost Rs300000
0
Building cost Rs103000
0
Total fixed capital Rs
7088500

WORKING CAPITAL (FOR 3 MONTHS)

S NO PARTICULARS FOR ONE FOR THREE

MONTHS MONTHS

1 Staff and labour 115000 345000

2 Raw material 444436.66 1333310

30
 3 Utilities 79500 238500

4 Cash in hand 572353 1717060

Total 1211289.66 3833869

TOTAL COST OF PROJECT

Land Rs3000000
Building Rs1030000
Machinery Rs4858500
Working capital Rs3633869
Total cost Rs10722369

MEANS OF FINANCES
Loan from bank

Land Rs3000000
Building Rs1030000
Machinery Rs4858500

For raw material (short term loan)

At 9% p.a. interest Rs6000000

Our contribution Rs4000000

31
 CHAPTER - 9
ECONOMY OF PROJECT

S NO PARTICULAR AMOUNT AMOUNT

FOR ONE FOR ONE
MONTH YEAR

1 Raw material 444436.66 5333240

2 Salary and wages 115000 1380000

3 Utilities 79500 954000

4 Depreciation on -- 583020
machinery@12%

p.a.

5 Interest on capital -- 540000

investment@ 9%

p.a.

Total 9068225

32
TURNOVER
=NO OF CONNECTING RODSALE PRICE

=28520540

=Rs 1,54,00,800

GROSS PROFIT
=TURNOVER COST OF PRODUCTION

=1,54,00,800 90,68,225

=Rs63,32,775

33
 CHAPTER 10
BREAKEVEN POINT ANALYSIS

Break even analysis is of consideration help in engineering design profit analysis. The
break point means the level of output or sales at which there is no profit or loss. Thus
an organization or business is said to break revenue equals its total cost.

Breakeven point = (fixed cost)/(fixed cost +profit)

=(6873020)/(6873020 + 6628842.50)
=50.90%

34