Chapter-1: 1.1 Introduction To Ssi
Chapter-1: 1.1 Introduction To Ssi
Chapter-1: 1.1 Introduction To Ssi
1.1 INTRODUCTION TO SSI: The SSI (Small Scale Industry) 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 and power. The investment scale in this industry varies from 5 lakhs to 1 crore for the fixed assets. Irrespective to number of workers engaged is called small cale 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 step 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 be 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 pursuer 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. Programs 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.
CHAPTER-2 ENTREPRENUER
Entrepreneur is the owner of the business who contributes the capital and bears the risk of uncertainties in business life. He organizes, manages, assumes the risks and takes the decision about the enterprise. He takes all the steps to establish undertaking, coordinates the various factors of production, and gives it a start. He should be able to evaluate, business, opportunities, together all the necessary resources and ensures the success of the enterprise.
2.1.1 ENTREPRENUER AS A RISK BEARER: According to Richard Cotillion, a rich man living in France, was the first who introduced the term entrepreneur as an agent who buys the factory production at certain price in order to combine them into product with a view to selling it at certain price. He illustrated the framer who pays out contractual income, which are certain to landlord, labour and sells at price that are uncertain. Thus they too are risk bearer agent of production. Uncertainty is defined as the risk which cannot be insure against and incalculable. 2.1.2 ENETREPREPNUER AS AN ORGANIZER: According to Jean-Baptize, Entrepreneur is a function of co-ordination, organization and supervision. According to him, an Entrepreneur is one who combines the land of one, the labor of another, capital of one another and thus produces product. By selling the product in the market he pays interest in capital, rent on land, wages to labor and what remains in his profit. 2.1.3 ENTREPREUER AS AN INNOVATOR: According to Joseph who has introduced new combination of factors of production. He said, it may occur in any one of the following five forms:
1. The introductions of new product in market. 2. The instituting of new production technique, which is not yet tested by experience in the branch of manufacture concern. 3. The opening of new market into which the specific product has not previously entered. 4. The discovery of new source of supply of raw material. 5. The carry input of new form of organization of any industry by creating of monopoly position or breaking up of it.
2.3
following:
Recruitment of men.
3.1.2 SMALL SCALE INDUSTRIES DEVELOPMENT ORGANIZATION (SSIDO): Its Headquarter Nirman Bhawan, New Delhi headed by the Development Commissioner (SSI) has a network of Small Industries Service Institute (SSIs)one in each State which helps in economical, technical, industrial information service, management consultancy services, training marketing etc. 3.1.3 NATIONAL SMALL SCALE INDUSTRIES CORPORATION (NSSIC): Its headquarters at New Delhi and Regional Offices at Kolkata, Mumbai, Chennai, Guwahati etc. FACILITIES PROVIDED: 1. 2. 3. 4. 5. Supply of machines and equipment on hire purchase Distribution of scare raw material imported components. Marketing assistance Assistance to SSI in securing orders for railway and defense Operating a credit guarantee scheme for those units which are registered within. and
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. 5. 6. Loans to hotel industry. Scheme for SC/ST-Grant financial assistance to SC/ST entrepreneurs at a nominal Scheme for physically handicapped-these provide financial assistance u
3.2.2 COMMERCIAL BANKS: SBI and its subsidiary banks and other Nationalised 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 center, Nilokheri, National Institute of Small Extension, Hyderabad and National Institute for Entreprepreneurship and Small Business Development. They conduct special courses, programmes, workshops, training programmes for the benefit of small scale industries. 3.3 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 unit. Overview of the steps taken by the go are: 1) Composite loans limit raised from Rs. 10 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.
CHAPTER-4 MARKETING
4.1 CONCEPT OF MARKETING
Studies reveal that different organizations have different perceptions of marketing and these different perceptions have led to the promotion of different concepts of marketing. It is found that at least Four distinct concepts of marketing have guided and are still guiding terms. They are: Exchange concept Production concept Product concept Sales concept
We will discuss these concepts in detail as below: 4.1.1 EXCHANGE CONCEPT: The exchange concept of marketing as the name indicates holds that the exchange of a product between the seller and buyer is a central idea of marketing. But a proper serutiny 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 serving the customer get completely overshadowed in this concept of marketing. 4.1.2 PRODUCTION CONCEPT: According to the production concept marketing is a merely related to production. They believe that marketing can be managed by managing production. The concept holds that consumers would as a rule support these products that are produced 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 substancial reduction in the unit cost of production. Yet they often do not get customers as they expected. Customers after all are motivated by a variety of considerations in their purchases. Easy availability and low cost are not the only parameters governing the customers buying action and the production concept thus fails to drive as the right marketing policy for the enterprise. 4.1.3 PRODUCT CONCEPT: The product concept is somewhat stiff form the production concept whereas the production concept seeks to win markers and profits v/a high volume of production and low unit cost of production. The product concept seeks to achieve the same result
via product excellence, improved products, new products and ideally designed and engineering products. It also places emphasis on quality assurance. Organizations that subscribe to the product concept of marketing believe that consumer goods automatically vote for products of high quality they spent considerable energy. Time and money on research and development brings in a variety of new products. They do not bother to study the market and the consumer in depth. They get totally embraced with the product and almost forget the consumer for whom the product is actually meant. They fail to find what the consumers actually need and what they would gladly accept. 4.1.4 SALES CONCEPT: The sales concept maintain that a company cannot except its products to get picked up automatically by the customers. The company has to consciously promote and push its products heavy advertising, high power personnel selling, large scale sales promotion, heavy price discounts and strong publicity and public relations are the normal tools used by the organization that rely on this concept. Evidently the sales concept too generates marketing myopia just as a exchange concept, production concept and product concept. It leads to a wrong or inadequate understanding of the market and consequently a total failure in the market place.
2. Sales Forecasting 3. Pricing Policy 4. Distribution Strategy 5. Role of Advertising (Personnel Selling) 6. Quality We will discuss now in details as below: 4.3.1 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. 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. 4.3.2 SALES FORECAST: - A 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 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) 2) The outside uncontrollable force likely to influence the company sales. The internal proposed changes in the marketing strategies and tacties 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 three types: 1. 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.
2. MEDIUM RANGE FORECAST:- Which extends from one year to about four years into future. This type of forecasting is important for a) Estimating profits, budgeting expenses etc, b) Determining dividend policy c) Deciding rate of maintenance expenditure d) Determining schedule of operations. 3. LONG RANGE FORECAST:-extending to at least five years into future and in case we of really large organisations 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. 4.3.3 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 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 is to 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 a reluctance from the channels of distribution. 4.3.4 DISTRIBUTION STRATEGY: Distribution may be defined as an operation or a series of operation, 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 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. 4.3.5 ADVERTISING: To counter the markets at National and International level the GOI set up various institutes like:1) Export Credit Guarantee Corporation Ltd. (ECGC) 2) State Trading Corporation. (STC) 3) Trade Development Authority. 4) National small Industries Corporation.(NSIC)
CHAPTER-5 ORGANIZATION
5.2 ORGANIZATIONS UNDER SSI:1) Regional Testing Centers (RTCs) 2) Field Testing Stations (FTSs) 3) Tool Rooms/Tool Design Industries (TRs/TDs) 4) Training institutes: i. National Institute of Small Industry Extension Training (NISIET) ii. National Institute for Entrepreneurship and Small Business Development (NIESBUD), New Delhi. iii. Integrated Training Center (Industries), Nilokheri (Haryana) 5) Product-cum-Process Development Centers (PPDCs) Six centers are in existence. These are:-Firozpur for glass industry. -Kannauj for essential oils. -Meerut for sports goods and leisures time equipments. -Agra for foundry and forgings -Ramnagar for electronic industries
-Mumbai for electrical measuring instruments The main motive of these centers is to upgrade the technology of the technology of the manufacturer and help in energy conservation.
EXPERIMENT
AIM: Exercise on assessing the industrial potentiality of any area.
Product name: Cultivator Raw Material: Mild steel Market Sales S. NO. 1. 2. 3. 4 5 6 7 8 9 : U.P. Bihar, Haryana : Approx. 225 units per year Factors Considered Sector-6 (Phoosgarh) Transportation charges Rs. 25000 including packing, forwarding sales tax etc. Land Availability/Land 4000/yard cost Proximity to market Sector-3 (Industrial Area) Rs. 30000 5000/yard Remarks Phoosgarh is preferred Phoosgarh is preferred is is be be is is is
Situated closer Comparatively Phoosgarh to market farther from the preferred market Electricity & water Intermittent Continuous Sec-3 facility preferred Labour charges Rs. 2300/ month Rs. 2300/ month Either can selected Availability of raw Easy Easy Either cab material selected No. of competitors Less Comparatively less Phoosgarh preferred Weather subsidies are Yes Yes Phoosgarh offered by the Govt. preferred Cost of raw material Rs. 9lacs/ yr. Rs. 9lacs/ yr. Phoosgarh preferred
Result: Phoosgarh is preferred over Sec-3 because of following factors:It is situated closer to the market. Cost of land is less. No. of competitors is less. Subsidies are offered by Govt. in this area. Raw material is available easily. Transportation charges are less. Thus Phoosgarh is the suitable area as regarding the industrials potentiality.
PROJECT REPORT
NTODUCTION:
The name of the firm: JUNEJA AGRI Pvt. Ltd. 1. Product: Produces cultivator (24) with a production level of 225 units per yr. 2. Market survey: Sales approx. 225 units per yr. Basic market is in U.P. & Bihar 3. Process: The Various process used in Manufacturing of cultivator are as follows: Cutting: Various angles are cut in accordance with the req. Welding: to form the basic frame of cultivator are welded together. Assembling: Other necessaries of cultivator are assembled/ attached welded at the required position. Painting: After getting the cultivator in final form, it is painted. 4. Location: The firm is located at Fatehabad. 5. Premises: Land req. for the production is 550 yards; cost of land is approx. 22lacs. 6. Raw material: the detail of raw material req. is as follows: Angle (M.S.), Bars (M.S.), Disc, Hub, Bush, Wheels, Shaft etc. 7. Marketing: Distribution channel for selling the product is Fatehabad. 8. Bio-Data: Entrepreneur is a non tech graduate, having a work experience of approx. six yr. 9. Finance: Punjab National Bank, Fatehabad gives fainancial assistance. 10. Sales & Profit: Yearly sales of the firm is about 225 units and profit is approx. 12.741Lacs. Scheme [fixed investment] 1. Land: [Area 550 yards] [Value in Rs. 22Lacs] 2. Building: [The building used by the firm is own] a. Go down area 280 yards [estimated cost Rs. 1lacs] b. Factory shade is about 200yards [estimated cost Rs. 2lacs] c. Office area 70 yards [estimated cost Rs. 1.5lacs] Total cost of land, building Rs. 26.5Lacs
3. Machinery & equipment: S. no. 1. 2. Name of Machine/Equipment Hydraulic Press Lathe machine Qty. 1 2 Total cost 50,000 70,000
3. 4. 5.
1 1
(Including packing, forwarding, transportation charges, sales tax) 4. Other Fixed investments: Electrification & installation charges: Rs. 2,80,000 Cost of tools, jigs and fixtures: Cost of office equipment furniture: Rs. 70.000 Rs. 35,000
Total other fixed investment: Rs. 3.85lacs 5. Pre-operative expenses: Expenditure on documentation: Rs. 15,000 Expenditure for acquisition of technology: Rs. 10,000 Expenses during construction of building & Architects fees: Rs. 20,000 Interest on loans till production starts: Total pre-operative expenses: Nil Rs. 45,000
Total investment of fixes assets: Rs. 32.6lacs 6. Recurring expenses: 1. Raw material: Raw material per year: Transportation expenses per year: Loading & unloading: Total cost of raw material: Rs. 9.31lacs 2. Personnel per month: Supervisor cum manager: Worker skilled: Unskilled: Rs. 1,500 Total expenses on staff: Rs. 8,300/Rs.2,300 Rs. 2,500 Rs. 9lacs Rs.25,000 Rs. 6,000
3. Consumable per month: Electricity: Water: Fuel: Lubricants & oil packing material: Total consumables: 4. Overheads per months: Transportation: Maintenance: Renewals: Insurance: Miscellaneous unforeseen: Total overheads: Rs. 12,800/Working Capital: 1. One month requirement of raw material Electricity etc. 2. One month salaries & wage: 3. One month expenditure for postage, selling expenses Total working capital Rs. 90,300 Total investment in projects: Fixed assets Working capital Total investment Total cost of production per year: Raw material per yr. Wages per yr. Consumable per yr. Rs. 23,000/-
Rs. 10,000 Rs. 8,000 Rs. 4,000 Rs. 4,000 Rs. 1,000
Rs. 1,800 Rs. 1,000 Rs. Nil Rs. 10,000 Rs. Nil
Total cost production per yr. Sales: 1. Total annual sale of finished goods 2. Total amount sale of by product Total annual sale Gross Profit: 1. Annual sale 2. Less annual cost of production 3. Less Depreciation
Rs. 14,60,200
a. On cost of building (5%)Rs. 22,500 b. On cost of machinery(10%) c. On cost of furniture & other other fixed assets(20%) Total depreciation Total gross profit Profit before taxes: 1. Gross profit 2. Less interest on fixed assests (13.5%) 3. Less interest on working (5%)Rs. 54,180 4. Less interest on borrowing (i.e seed money @ 4%) 5. Less office expenses: Salaries of office staff Postage & correspondences Traveling expenses Bank commission etc. Stationary Rs. 48,000 Rs. 100 Rs. 10,000 Rs. 2,000 Rs. 600 Rs. Nil Rs. 12,74,100 Rs. 4,40,100 Rs.6,52,000 Rs. 6,90,000 Rs. 12,74,000 Rs. 16,200
Total expenses (per year) Rs. 60,700 Less selling expenses: Advertisement Commission of agent Discount etc. Total selling expenses (per year) Profit before taxes (1274100-440100-54180-60700-5000) Less provision for income tax Net profit Self-drawing Cash account (Net profit-self-drawing+depreciation) Break Even Point: BEP= Fixed Cost * 100/(Fixed cost + Gross profit) = 3260000 * 100/(3260000+1274100) = 326000000/4534100 = 71.89% Rs. 12,54,820 Rs. 7,14,120 Rs. Nil Rs. 7,14,120 Rs. 1,50,000 Rs. 5,000 p.y Rs. Nil Rs. Nil Rs. 5,000