Small Scale Industries

Objectives
1. Definitions of SSI
2. Objectives and role of SSI in economic
development
3. Development of SSI in India
4. SSI Registration
5. Project Report Preparation
DEFINITIONS
Micro Enterprise: Investment in P&M 25
lacs in manufacturing & upto Rs 10 lacs in
equipment in service sector
S.S.I-Investment in p&m does not exceed
Rs500 lacs in manufacturing P&M and Rs10
to 200 lacs in equipment in service sector
Medium Enterprise: Above 500 lacs and up
to Rs1000 lacs in P&M in manufacturing
and Above Rs 200 lacs up to Rs500 lacs in
DEFINITIONS
equipment in service sector
 Ancillary units-proposes to supply 50%
of its production or services
Tiny units-Investment in p&m does not
exceed Rs25lacs
Village & cottage industry.--population
not exceeding 50000.
DEFINITION CONTD.

Women enterprises--SSI related service

where share of the women as partner
shareholders, directors not less than 51%.
Export oriented units--exports at least
30% of its production.
SSSBE--An industry related service
business enterprises with investment in
fixed assets upto 5lacs except land&bldg
Importance of S.S.I.

Provides employment next to Agri.

Accounts 40% of the total export of the
country
Plays crucial role in the economy.
Inherent advantage of S.S.I
1-Shorter gestation period
2-Low cost of establishment
3-Widely dispersed building wider
industrial base.
4-Low capital intensive.
5-Potential for employment
6-Effective mobilisation rural resource
Why S.S.I fails
Inordinate delay in sanction of credit limit
Need based lending not extended
Big units deleberately promote ancillaries
Placed order in large nos of small ones
Gets payment on the whims & fancies of
big units
Disadvantageous position of raising funds
 Inherent weakness of S.S.I.

Lacking basic infrastructure

Old/outdated technology
Poorly placed in market situation
Promoters lack specialisation
Weak capital base &lesser access to capital
market
Lacking managerial&professional skills
Inherent weakness of SSI contd.
Face resource crunch
Poor accounting system
No planning budgeting or monitoring
Short term fund are deployed for long
term uses
Pre operative expenses are not considered
in project appraisal
Role of Govt.of India& R.B.I
Banks should convey timely sanction
Loan applications to be timely disposed
Need based & timely credit to be extended
Simplified & uniform application form
Rejection of application form should be
done with approval of higher authorities
Collaterals upto 1lac not to be insisted

Role of GoI & R.B.I. Contd.
Financial assistance for meetig T/L&W/C
be given
Interest on delayed payment to SSI and
ancillary undertaking act 1993.
Target for financing priority secctor
where SSI is a constituent
Bankers approach to SSI financing
Anxiety to secure banks fund at any cost
Stop discounting bills of SSI units
Discourage to draw against book debts
Current ratio is lowered due to high
receivables
Branches are not equiped nor trained
Borrowers are not educated.
Preliminary Project Report
PPR is a document which describes the
progress at every stage of the project.
1. The composition and organization of the
enterprise
2. Description of the enterprise
3. Description of the product and the production
process
4. Requirement of the machinery and equipments
5. Available alternative technologies
Cont.
6. Quality and quantity of the required factors of
production
7. Names and addresses of their suppliers
8. Prices of the factors/inputs
9. Requirements of fuel and other utilities
Labour requirements.
10. Place and premises
11. Cost of production
12. Sales Revenue to be obtained from the
production programme
Cont.
14. Means of raising finance
15. Profitability analysis
16. Cash flow
Performa outline of a Preliminary Project
Report
Section A General Information about the Entrepreneur
Section B Information about the Project
Section C Information about the firm
Section D Details of the Proposed Project
Section E Description of the Location
Section F Plant Layout
Section G Break-even Analysis
Section H Cash flows
Section I Supplementary Details
Section J Two References
Section K List of Supplementary Documents
Network Analysis is a technique of sequencing and
scheduling of a project. In a network sequencing and
scheduling are treated separately in a composite frame. This
frame sets out task their sequences and also their inter-
relationships.
PERT is an acronym for Programme Evaluation and
Review Technique. It was created to plan and accelerate the
development of large projects which consists of numerous
activities. These activities are not time bound- and
independent of one another.
CPM is the Critical Path Method. It is activity- oriented. It
is basically concerned with obtainingss the trade – off
between cost and completion date for the projects.
The project which is to be analyzed by CPM or
PERT should possess the following essential
characteristics.
1. The project should consist of well defined
collection of jobs r activities which, after
completion, may mark the end of the project.
2. The jobs may be started and stopped
independently of each other, within a given
sequence.
3. The jobs are ordered. They must be performed in
a technological sequence.
Small Scale Industry
Registration
For obtaining the SSI registration, an entrepreneur
has to complete the following formalities:
1. Application in the prescribed form- application
forms are available in the DIC office
2. Project Report
3. No Objection Certificate (NOC) for the industrial
use of the given premise from the local self-
governing body
4. Affidavit- Prescribed forms of the Affidavit is
attached with the application form. It is provided
by the DIC office.
 No Objection Certificate
For obtaining NOC, an entrepreneur has to the
Directorate of Industries or the office of the DIC.
1. Duly filled up prescribed application form.
2. Legal document of the location of the unit
3. Certificate showing the industrial unit in the
conforming zone
4. If the industrial unit is located in an industrial
estate, a proof or a certificate indicating that the
industrial estate r gala is approved by the
government.
Contd.
5. Detailed scheme of the proposed product and the
production process
6. Detailed list of the machinery and equipments.
7. List of raw materials
8. Documents of the constitution of the unit
9. Electricity license documents
10. Ownership deed of the premises of the unit and
the area of the unit
11. Justification for NOC
12. Reserve Bank challan of the required amount
Other Issues
Finance
Machinery and Equipment
Raw Material
Manpower
Licence for power
Marketing arrangements
Certificates from other Authorities
Operational Planning
Project Planning
Strategic Planning