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INSTUTITIONAL TO ENTREPRENEUR PRESENTED BY RASHI SINGH (3227) VISHESH JAIN (3242)

1 GUESS THE FORMER SSI?

 It was started as a VSI, by John Bissell in 1958, after he left his Job at a consultant.

 Hint 1: John saw a huge Potential for for these indigenous products.

 Hint 2: They opened their first store in GK, in Delhi and now have over 85 retail outlets under a Franchisee Agreement all over the world. THE ANSWER ISŝŝŝŝŝ WHAT IS AN SSI?

As per the latest definition which is effective since December 21, 1999, for any industrial unit to be regarded as Small Scale Industrial unit : -

Investment in fixed assets like and equipments either held on terms on or on hire purchase should not be more than Rs 10 million.

However, the unit in no way can be owned or controlled or ancillary of any other industrial unit.

THERE ARE MORE THAN 12 MILLION SSI IN TODAY!! THE IMPORTANCE OF SMALL SSI:

(1) CONTRIBUTION TO GDP Ȃ 7%

(2) EMPLOYS OVER 30 MILLION PEOPLE

(3) ACCOUNTS FOR 45% OF OUR EXPORTS

(4) CONTRIBUTION TO INDUSTRIAL GROSS VALUE ADDED IS 35 Ȃ 40%

(5) AT AN AVERAGE A Rs. 1 MILLION INVESTMENT GENERATES Rs. 4.62 WORTH OF AND SERVICES. WHEN ŧSMALLŨ MAKES A BIG DIFFERENCE

SSI OFFER THE FOLLOWING BENEFITS TO AN ENTREPRENEUR:

(.) Large growth opportunities and potential in terms of exports.

(.) Low start up cost, lower capital and investment required.

(.) Extensive Support and assistance by Government.

(.) Lowe Tax Liabilities and greater share in the profits.

(.) Availability of Manpower Low cost of Manpower training SI(ZE) DOES MATTER!!

MOST SSI FAIL DUE TO THE FOLLOWING REASONS:

(.) FAILURE TO ADEQUATELY MARKET THEMSELVES

(.) FAILURE TO GET ADEQUATE FINANCIAL FUNDS

(.) FAILURE TO FACE STIFF COMPETITION FROM LARGE SCALE INDUSTRIES

(.) LACK OF ACCESS TO ADVANCE

Small Industries Development Of India (SIDBI) Introduction

Small Industries Development Bank Of India (SIDBI) as an all India principal independent financial institution ,was set up under the SIDBI act 1989 & commenced operations from April 1990.Sidbi was delinked from IDBI to provide greater autonomy and operational flexibility in 2000 Serves as a Principal Financial Institution for X Promotion X Financing X Development of industries in small scale sector X Coordinating the functions of institutions engaged in similar activities Channels Of SIDBI Assistance 1.Indirect Finance

By way of refinance and bills rediscounting through 894 primary lending institutions having 65000 outlets across the country. 2.Direct Finance

Through SIDBI¶s own 38 offices by means of several -made schemes to reach the assistance to specific target groups. Promotional and developmental activities Involving accredited non governmental , scientific and research institutions, technology institutions, institutions etc Since inception, sanctions and disbursements of SIDBI aggregated 66,229 crores and 46,392 crores respectively. Besides financing,SIDBI provides developmental and support services to the SSI sector. These initiatives of the bank aim at improving the inherent strength of the SSI units on one hand and generation, economic rehabilitation of rural poor on the other. Over the years,SIDBI¶s promotional and development initiatives have crystallized into 5 thrust areas: 1.Enterprise promotion (a) rural industries programme (b) Mahila Vikas Nidhi (c) 2.Human resource development 3.Technology upgradation 4.Environment and quality management 5.Information dissemination The bank has striven in the last 8 years to meet the objectives for which it has been set up. The assistance provided by SIDBI has evolved over the years meet almost all the requirements of SSI¶s covering a wide spectrum of units from ³hi-tech´ state of the art units to traditional units Thus SIDBI is poised to play its apex rule more effectively while serving the SSI sector with the required financial and support services. Financial Assistance to Medium Scale Units  The medium scale units are also eligible for concessional interest of 12.50% / p.a. for units located in any industrially backward areas. However in respect of units located in non backward areas, the applicable rate of interest shall be 14% p.a.  The debt equity ratio allowed to msu, the repayment schedule of msu shall also be determined after taking into consideration their profitability and debt servicing capacity, subject to the condition that the maximum repayment period doesn't exceed 10 yrs from the date of sanction. Modernization Assistance To SSU And MSU  The primary objective of this scheme is to encourage industrial units overcome backlog of modernization and to adopt improved and updated technology and methods of production and prevent mechanical and technological obsolescence.  The modernization programmes should primarily aim at:  Upgradation of process, technology and product  orientation  Import substitution  Energy savings  Anti measures  Improvements in material handling  Improvement in capacity utilization  Conservation of scarce resource  Irrespective of the location of the unit, interest rate of 11.5% p.a. shall be charged on all rupee loans for modernization purposes Rehabilitation Assistance To SSU And MSU  The scheme for rehabilitation covers all smu and msu¶s and units in cottage and village industries which have been assisted by the SFCs and SIDS or are self financed and which are classified as sick. Rehabilitation loans are extended by commercial to such units will also be eligible for refinance under the scheme. Financing Of Industrial Estates  Financial institutions have commenced extending direct assistance for financing of industrial estates. such ventures costing up to 300 lacs and not less than 15 acres are covered under the IDBI refinance scheme where primary lending is effected through the SFCs,SIDS and commercial banks,  The main aspect considered in proposal for setting up of industrial estates are the suitability of the location, availability of power,water,, skilled and unskilled labour, and communication. Significant emphasis is therefore laid on physical survey of the size and proper designing.. Repayment Schedule

 In respect to loans being refinanced by IDBI a repayment period of 10 years including an initial moratorium of 2-3 years is prescribed. The period may be extended up to 12 years in exceptional cases. SMALL AND MEDIUM ENTERPRISE DEVELOPMENT (SMEDO) SIDO(Small Industries Development Organization)* Introduction

 It is the apex level organization set up for the policy-making, coordinating and monitoring agency for the development of SSIs.It maintains a close liaison with government, financial institutions and other agencies which are involved in the promotion and development of SSIs.The SIDO functions through a network of 27 offices,31 sisi,37 extension centres,3 product cum process development centre's.  The SIDO covers all SSI except those falling within the specialized boards and agencies like KVIC,COI boards, central board etc. Functions of SIDO Functions Relating To Coordination  Evolution of a national policy for the development of SSI  Coordination of the various policies and programmes introduced by the state govt.  Maintaining liaison with relevant central ministries, planning commission etc  Coordination of the programme for the development of industrial estates Functions Relating To Industrial Development  Securing items reserved for production by ssi  Assessing the requirements of indigenous and imported raw materials and components for the small scale sector  Preparing model schemes, project reports and other technical literature for prospective entrepreneurs  Rendering support for the development of ancillaries Functions Relating To Extension Services  Provision of technical services for improved technical process, product planning, selection of machinery, preparation of factory layout and .  Provision for consultancy and training to strengthen the competitiveness of ssi  Provision for assistance to small industries to market their products  Provision for economic investigation. National Small Industries Corporation (NSIC) Introduction

 NSIC was set up in 1955 as a public undertaking. It is engaged in promoting and developing SSI in the country. Supply of machinery on hire purchase basis has been the important activity of NSIC. Functions

 Supplying machinery on hire purchase basis  Procuring govt orders for SSI  Importing and distributing scarce raw material, components and parts among actual users in small scale sector  Undertaking the of industrial estates  Providing training in selected trades  Developing and upgrading technology particularly for projects based o n wastes  Cooperating with the developing countries in setting up SSI projects on turnkey basis KHADI AND VILLAGE INDUSTRIES COMMISSION

(KVIC)

32  KVIC was established in 1956 under the KVIC Act  It aims to plan organize and implement programmes for the development of Khadi and Village Industries as specified in the schedule of KVIC Act, 1956  Initially, only 10 village industries were listed in the schedule but later 16 more industries were added in the schedule

33 KVIC -OPERATES STATE-LEVEL

COOPERATIVE SOCIEITES(30138)

STATE LEVEL KVIBs(30)

REGISTERED INSTITUTIONS (5599)

34  Khadi and Village Industries Boards, Registered Institutions and C0-operative and has collectively employed 0.84 million individuals at end-March 2000.  The KVI programme covers 0.26 million villages in the country.  They operational strategy of KVIC includes :  To promote rural employment  To intensify industries in rural areas  To standardize and exercise quality control  To provide promotion assistance  To promote export incentives for design and development

35  Functions Of KVIC:  The KVIC is charged with the planning, promotion, organisation and implementation of programs for the development of Khadi and other village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary.

Its functions also comprise up of a reserve of raw materials and implements for supply to producers, creation of common service facilities for processing of raw materials as semi-finished goods and provisions of facilities for marketing of KVI products apart from organization of training of artisans engaged in these industries and encouragement of co-operative efforts amongst them.

The KVIC is also charged with the responsibility of encouraging and promoting research in the production techniques and equipment employed in the Khadi and Village Industries sector and providing facilities for the study of the problems relating to it, including the use of non-conventional energy and electric power with a view to increasing productivity, eliminating drudgery and otherwise enhancing 36 their competitive capacity. (SFCs) State Financing Corporations Introduction

 A Central Industrial Finance corporation was set up under the industrial Finance corporations Act, 1948 in order to provide medium and long term to industrial undertakings which fall outside normal activities of commercial banks. The State governments expressed their desire that similar corporations be set up in states to supplement the of the Industrial financial corporation. State governments also expressed that the State corporations be established under a special statue in order to make it possible to incorporate in the constitutions necessary provisions in regard to majority control by the government, guaranteed by the State government in regard to the payment principal. In order to implement the views Expressed by the State governments the State Financial Corporation bill was introduced in the Parliament. Features

 The bill provides that the state government may, by notification in the official gazette, establish a financial corporation for the state.  The share capital shall be fixed by the State government but shall not exceed Rs 2 crores . The issue of the shares to the public will be limited to 25 % of the share capital and the rest will be held by the State Governments, The Reserve Bank, Scheduled Banks, Companies, Investment Trusts, Co- operative banks and other financial institutions.  Shares of the corporation will be guaranteed by the Sate government as to the re ± payment of principal and the payment of a minimum dividend to be prescribed in consultation with the central government.  The corporation will be authorized to issue bonds and debentures for amounts which together with the contingent liabilities of the corporations shall not exceed five ± times the amount of the paid ± up share capital and the reserve fund of the corporations. These bonds and debentures will be guaranteed as to payment of the principal and payment of interest at such rate as may be fixed by the State government.  The corporation may accept deposits from the public repayable after not less than five years, subject to the maximum not exceeding the paid up capital.  The corporation will be managed by a board consisting of a majority of Directors nominated by the Sate governments , The Reserve banks and the industrial Finance corporation of India financial resources of SFCs

The SFCs mobilize their financial resources from the following sources are : 1. Their own Share capital 2. Income from investment and repayment of loans 3. Sale of bonds 4. Loans from the IDBI ( To some extent ) 5. Borrowings from the Reserve Bank of India 6. Deposits from the Public 7. Loans from State Governments. broad functions of State Financial Corporations:

 Project advisory and Finance  AS a catalyst in small scale industrial growth the SFCs provide the following services:  a) Investment appraisal  Project conceptualization and related services, including guidance in relation selection of projects, preparation of feasibility studies, capital structuring, techno ±economic feasibility, financial , project management design etc.  Credit Syndication including assistance in legal documentation etc.  Documentation of various project documents  Placement of debt ± equity including design of the structure of instruments,  placement of instruments with financial institutions, bank etc.  Assist in organizational structural changes like : (1) Analysis of operational performance (2) Study of existing organizational structure (3) Study of the existing statures and rules and regulations (4) Market analysis with respect to products (5) Review of domestic and international scenario (6) Valuation of fixed assets and inventory (7) Advising on formation of new entity (8) Preparation of relevant agreements / legal documents. ‡ Research / Information Services A dedicated research team looking at both macro ± level issues as well as sector ± specific, industry research. The expertise of the professional research team and a large diversified data base enables SFC to provide erudite research reports to the corporate world.

‡Legal Advisory Services A full ± fledged legal cell , comprising of experienced professional with expertise in handling cases of diverse nature ,offer legal help services . The services rendered by this unit comprise investigations and preparations of title reports , besides advisory services in respect of matters under dispute where an independent consultant view is required . Specific Functions Of SFCs:

 The SFCs while giving loans to industrial units see to it that loans are secured by a PLEDGE, MORTAGAGE, HYPOTHECATION of movable and immovable property or other tangible assets or guarantee by the state government or scheduled commercial bank , they also accept personal pledge by the entrepreneur . SFCs do not give loans on the basis of second mortgage.  Grant loans or advances to industrial concern repayable within a period not exceeding 20 years.  Providing guarantee for loans raised by industrial units from commercial banks and state banks.  Providing guarantee for deferred payments in cases where industrial units have purchased capital goods on a deferred payment basis.  To underwrite the issue of shares, bonds and debentures of industrial concerns.  To Subscribe to shares, bonds and debentures of industrial concerns.  Guarantee loans raised by industrial concerns which are re- payable within a period not exceeding 20 years and which are floated in the public market  SFCs grant loans to industrial units for the purchase of fixed capital assets like land, machinery. In some exceptional cases, some SFCs also provide loans for working capital requirements in combination with loans for fixed capital.  SFCs provide loans in foreign currency for the import of machinery and technical know ± how, under the IDA (International development association) and tie up.  SFCs however are prohibited from subscribing directly to the shares or stock of any company having limited liability except for underwriting purposes and granting any loans or advance on the of its own shares . SFCs - Contributory to development of small scale industries in the Indian economy  There are at present 18State financial Corporations and almost every state has a financial corporation of its own.  During 2000-2001 SFCs had sanctioned loans aggregating to 2800 crores and disburse Rs 2000 crores. Their assistance in the form of loans has declined subsequently due to the existence of a large amount of Non ± Performing assets.  Over 70 % of the total assistance sanctioned and disbursed by all SFCs is provided to small scale industries. Attempts are now being made to strengthen the role of SFCs as regional development banks.  The SFCs sanctioned seed capital assistance under the seed capital schemes introduced and operated by IDBI. This assistance is available to promoters of small business units. Since June 1989, SFCs have also been implementing special schemes of seed capital assistance to women entrepreneurs.  Assistance is extended in the form of loan or grant or a combination of both to voluntary agencies working for women in decentralized industries. List Of 18 State Financing Corporations In India.

Assam Financial Corporation Andhra Pradesh State Financial Corporation Bihar State Financial Corporation Delhi Financial Corporation Gujarat State Financial Corporation The Economic Development Corporation of Goa Haryana Financial Corporation Himachal Pradesh Financial Corporation Jammu & Kashmir State Financial Corporation Karnataka State Financial Corporation Kerala Financial Corporation Madhya Pradesh Financial Corporation Maharashtra State Financial Corporation Orissa State Financial Corporation Punjab Financial Corporation Rajasthan Financial Corporation Tamil Nadu Industrial Development Corporation Ltd. Uttar Pradesh Financial Corporation West Bengal Financial Corporation THE CURIOUS CASE OF SURABHI INDUSTRIES!

While joining a Masters degree program in Technology in VIT during June 2003, Vendhan had a dream of starting his own business instead of taking up a job. He wanted to be in his own village and wanted to help his villagers by becoming a job provider.

He worked with a company for four years to gain hands on experience in the field of µMill Boards¶ made from recycled waste paper and then prepared a business plan and applied to the SFC for financial assistance and technical assistance. This is widely used in packaging, industry and in stationery making sectors. The business depends on the ability to source the waste paper at low cost, providing product variants and ensuring optimal efficiency using local manpower by sharing skills to them.

He started his Company in 2006 and his first factory came into operation in 2007 and was called Surabhi Industries. He current employs over 50 people in his factory and earns over Rs. 5 Lakhs every year.

Vendhan is grateful to the SFC for providing him with loans, subsidized incentives and technical assistance under TePP.