INTRODUCTION TO SMALL SCALE INDUSTRY

THE SSI (SMALL SCALE INDUSTARY) today is immense for the growth of the country. Small scale industries are the industries which are run with the help of  their labours and which also use some simple machine and power.

The investment scale in this industry from 50 lakh to 1 crore for fixed assets. Irrespective number of worker engaged is small scale industry unit.

In India these type of industries are permuted to meet with the problem of excess population and unemployment so the government of India prate entrepreneur to step up small scale industries by aiding him by giving loans, land ,guidance etc .The strategy adopted  by the government is:-

• Public enterprenship should remain confined only to those industries and sector where private enterprise, individual or cooperate, is generally not attracted. Existing public entrepreneurship be improved through better management and by putting relative greatly emphasis on research and development. There is need to streamline the R&D wing of public sector enterprise.

• All possible efforts be made very seriously (not casualty) for the development of an industrial culture. It should be realize that the central core of entrepreneurship is the motive force since by its very nature, entrepreneurship implies positive action and individual with the right kind of combination of ability can pursue their goal with unlimited courage and enthusiasms.

• There is need to development management education and industrial training.

• The development of backward region / area constitutes a new challenge. Program for their development be drawn up and should be effective implemented.

• Adequate measure is a must for mobilizing & casting the entrepreneurs talent in the country .In this context, it should be realized that entrepreneurs are not the grief of a particular classes.

• Economic administration by the state should be improved and made more effective so that economic policy may be fully achieve their objective in the overall interest of economy.

• Financial institute should provide adequate and timely credit and timely create and technical assistance, especially to the small and medium sized enterprise. They may also impart knowledge about the need of economy and they should file their massive data in term of growth of new entrants or entrepreneurs in the field of industry.

HOW TO START A SMALL SCALE INDUSTRY

The steps involved in starting a small-scale industry are:-

• 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.

1. Study similar products available in the market that can be probable competitors. Analyze them as regards their utility, quality and cost.
2. Find whether the product can be exported.
3. 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.
4. Decide the product that you are going to manufacture, on the basis of:-

• • Market Survey
  • Financial implication involved
  • Technical know how available
  • Experience in the line, etc.

• Select a proper site for locating the unit.

• Take a building for factory on hire or construct your own factory building.

• Get yourself conversant with the rules and other information available from small-scale industries, Ministry of Industry, New Delhi.

• Prepare a scheme in detail to manufacture the selected product such a scheme should include the requirement of and the approximate cost of:-

1. Land and building
2. Machinery, tools and other equipment
3. Direct  labour
4. Indirect labour
5. Direct material cost
6. Indirect material cost
7. Selling and distribution overheads
8. Working Capital for a unit time
9. Depreciation
10. Total production cost per unit time
11. Percentage of profit.

• The scheme after it has been prepared is sent, for approval to the Directorate of Industries of the particular state.
• 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:-

1. Financial assistance
2. Raw materials water and power
3. Import license
4. Factory accommodation
5. Government order

FINANCIAL REQUIREMENT

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 industry. These packages of assistance are providing to SSI by a large number of organization operative at national and state level. Development program are being carried out at two level

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 Industrial Corporation.

AGENCIES WHICH WORK AT STATE LEVEL ARE:-

a) State directorate of industries

b) District industrial center (DIC).

c) State small industrial corporation (SSIC).

d) State financial corporation.

e) Commercial bank.

f) Small industries development bank of India (SIDBI).

NATIONAL LEVEL SSIB

It is all advisory body and comprises state government ministry office and representative of several institution & association. Its functioning is to plan, advice and coordinate the activities of center and state government. As such it does not render direct help to entrepreneur. However, it helps to government in involving new polices and program for small scale sector.

Small Industrial Development Organization (SIDO)

Its headquarter at  Nirman Bhavan, New Delhi headed by the development commissioner (SSI) has a network of small industries Service Institute (SISIs) one in each state which help In economical, technical, industrial information services, management casualty services, training & marketing.

NSIC

Its headquarter at New Delhi & regional office at Kolkata, Mumbai, Chennai, Guwahati etc.

Facilities provided:-

Supply of machine and equipment on hire purchase

1.) Distribution of scare raw material imported components.

2.) Marketing assistance

3.) Assistance to SSI in securing order for railway and defense.

4.) Operating a credit guarantee scheme for those units which are registered within.

State financial corporation

Almost every state has its own financial cooperation to provide machine and long term loans small and medium sale industries. Amount of loan varies from Rs. 5000 to Rs. 6. lakhs and these 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 corporation 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 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 institute like, Central Institute of Tool Design, Hyderabad, Central Tool Room, Ludhiana and Kolkata, Central Institute of Hand Tool Jalandhar, Institute for Design of Electrical Measuring Instruments (IDEMI) Mumbai, Integrated Trading centre, Nilokhedi, National institute of small Industry Exton, Hydrabad and National Institute for Entrepreneurship and Small Business Development. They conduct special courses, programmers, Workshops, training programmers for the benefits 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 formulates by the GOI. Various institutes like SFC, SIDC, NISC, and SIDBI are providing financial supports to various SSI units.

Overviews of the steps taken by the GOI are:-

1. Composite loans limit raised from Rs. 10 lakhs to Rs. 25 lakhs.
2. In the National equity fund scheme (NEF) the project cost limits 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.

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:-

• 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.

• Marketing increases employment opportunity.

• Marketing helps to increases national income.

• Marketing is a connecting link between consumer and producer.

• 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

• The development and Induction of new ideas.

• The modification of exiting lines as may be required in term of changing costumer’s need and performance.

• The discontinuance of elimination of marginal or unprofitable product.

Product can be classified as:-

• Customer products

• Industrial products

• Defense products

Customer products:-goods design for use ultimately by the costumer or household and in such from they can be used with out commercial processing.

Industrial products:-goods which are designed to be sold primarily for use in producing goods destined to be sold primarily to the ultimate consumers.

2. Sale Forecast Defined: - a sales forecast is an estimate for the amount or unit sale for a specified future period under a purposed marketing plan or program.

As define by American marketing association it is “an estimate of sales in dollars or physical units for a specified future period under a purposed marketing plan or program and under an assumed set of economic and other forces outside the unit for which forecast is made.”

Marketing of proper sale forecast require an assessment of:-

1 The outside uncontrollable forces likely to influences the company sales.

2. The internal proposed changes in the marketing strategies and tactics of the company which are likely to affect the sale.

Sales forecast can be for a specified product line or 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 Forecasts: - which generally extends from a few weeks to about six months or at most one year in future. Companies mostly do this as day-to-day forecasts for their production control needs and to plan for long term financial needs.

2. Medium Range Forecasts: - 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 dividing policy

c) Deciding rate of maintenance expenditure

d) Determining schedule of operation.

It is use full for the following purposes:-

a) Estimating inventory requirement

b) Providing adequate shipping facilities

c) Assessing production worker requirements.

d) Estimating working capital needs

e) Setting production runs for each product

f) Fining sales quotes be possible only if the costumer

3. Long Range Forecast: - Extending to least five years into futures and in case of really large organization extending over a longer period up to ten years or even more.

It is useful in 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 in flow from sales.

3. Estimating companies long range personnel needs.

4. Highlighting futures problems.

3. Pricing polices: - Pricing is a very critical decision. Pricing decision is not easy to make. Hence sound pricing polices must be adopted to ensure that the originations secure satisfactory profit. For pricing decision a marketing manager has to be familiar with economic concept useful in pricing decision. He has to consider various pricing factor which infusing price a part from cost such as costumer characteristics, the economical product characteristics, competitive environment and government control whenever applicable. The pricing of the product materially affected the demand for it as well as the origination competitive ability for expenditure if the quality of the product is to be improved this may are willing to pay higher price for it. Beside, 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 operation , which physically bring goods manufactured or produced by only particular manufactured into the hands of the final consumers to the users .  Distribution strategies consist of distribution 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 worldwide 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 other, including the warehousing storage and transportation costs as well includes.   These aspects are some times described as “logistics of distribution”

Advertising: - To counter the market 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)

Organizational Structure of SSi: - There are 28 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.

• Entrepreneurship development programmes.

• Motivational campaigns.

• Production index.

• Management development programmes.

• Energy conservation.

• Quality control and up gradation.

• Export promotion.

• Market surveys.

• Intensive technical assistance.

Organizations under SSI:-

1) Regional Testing Centers (RTCs)

2) Field Testing Stations (FTSs)

3) Tool Rooms / Tool Design Industries (TRs/TDs)

4) Trading institutes:

• National Institute of Small Industry Extension Training (NISIET)

• National Institute for Entrepreneurship and small business development (NIESBUD), New Delhi.

• Integrated Training Centre (Industries), Nilokhedi (Haryana).

Training Institutes:- All the three training institutes mentioned above are an autonomous body and are under the administrative control of the office of DC (SSI).Their objectives 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), Nilokhedi 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) Repair to diesel engine and agricultural water pumps.

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

• Written by Lohit Seth.
• In category Engineering.
• 14 years ago.

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