Ssi 2003

CONTENTS • INTODUCTION >> KHADI >> SMALL SCALE INDUSTRIES (SSI)

• CHUNABHATTI VISIT • VISIT TO KHADI BHAVAN >>FORT >>PRATHNA SAMAJ >> MOHD. ALI ROAD >> ZAVERI BAZAR >> DADAR

• VISIT TO KHADI & VILLAGE INDUSTRIES COMMISON (KVIC) • VISIT TO BANKS & DETAIL OF LOAN PROVIDED BY THEM >> BOMBAY MERCHANTILE >> STATE BANK OF INDIA >> UNION BANK OF INDIA >> PUNJAB NATIONAL BANK

>> ICICI BANK

• VISIT TO SSI & INTERVIEW >> KOHINOOR MANUFACTURERS >> PAL FASHION CO.PVT.LTD >> R MAHAVIR PLASTIC INDUSTRIES

INTRODUCTION KHADI

Khadi is not merely a piece of cloth. It is a philosophy. A way of life. A symbol of empowerment. Of pride. Of a great man’s vision of the relevance of roots. Khadi embodies the spirit of our national identity. Also “khadi” reminds us of the ideas and ideals, dear to Mahatma Gandhi. The father of the nation, Mahatma Gandhi revived ‘khadi’ as a symbol of Swadeshi, which played a crucial role in our freedom struggle and help the rural people to become self sufficient. The importance of Khadi and lies in the fact it is a source of livelihood for more than 9 lakh persons in the country who are engaged as Spinners, Weavers, and other

artisans, majority of which are women artisans. Khadi activities are available in the interior most remote villages, where no other source of employment is available. It may be mention that employment in khadi programme is steadily increasing from 8.48 lakhs in 2001-02 to 9.16 lakhs in 2007-08. It is necessary to increase the level of employment in khadi and accordingly , KVIC has drawn an ambitious plan, so that the employment level can be raised to 14.8 lakh persons in the terminal year of the XI plan i.e. 2011-12. At the sam time, the production level of khadi is expected to increase from Rs. 543.39 crores in 2007-08 to Rs. 996 crores in thye year 2011-12. The corresponding increase in sales of khadi is expected to increase from Rs.724 crores in 2007-08 to Rs. 1325 crores in 2011-12. This would only be possible, if we adopt a strategy for ‘marketting of rural products’, which must be competitive, strategic and flexible in nature, which will provide ample opportunities to be traditional rural based institutions and a new generations of marketing activities has to be established. It may be emphasized that ‘Khadi is a embedded in the psyche of Indians, which does not need a creation of brand awareness, as the brand ‘Khadi’ is already enjoying the seal of guarantee for purity, genuiness and integrity of ethnic rural products. At the same time, we must not forget that the saga of “khadi” was initiated by Gandhiji for “Self Reliance and sustainability of spinners and weavers in India ”. aggressive approach is needed to enhance the wages of spinners and weavers to make the lives economically and socially viable. To Gandhiji, khadi was the symbol of unity of Indian humanity, economic freedom and quality.

SMALL SCALE INDUSTRIES (SSI) Small scale industries are the backbone of the Indian industrial structure. They provide a variety of non-tradional low technology product. They are also engaged in processing preserving, manufacturing and servicing activities. Small scale industries constitute an important and crucial segment of the industry sector. Promotion and growth of SSI sector has been a cardinal feature of Indian industrial policy. SSI’s in india have been given a distinct identity and the government has accorded high priority to this sector on account of the vital role it plays in balanced and sustainable economic growth. It plays crucial role in the process of economic development by value addition, employment generation, equitable distribution of national income, regional dispersal of industries, mobilisation of capital and entrepreneurial skills and contribution to export earnings. It has all the characteristics of the decentralised sector such as small size and employment intensity and the entire lot belongs to private sector. The contribution of SSI sector to employment is next only to agriculture as dynamic and vibrant sector of the economy. Small scale industries play a key role in the industrialisation of developing countries. This is because they provide large scale employment and have a comparatively higher labour capital ratio. They need a shorter gestation period and relatively smaller market to be economic. They need lower investment, and facilitate and effective mobilisation of resources of capital and skill which might otherwise remain unutilised.

The Smal-Scale industry sector, manufacturing a wide range of more than 7500 products , not only caters to the needs of the lower income group , but also acts as a nursery for the development of entrepreneurial talent .It produces mass consumption items such as leather goods, plastic parts, ready-made garments as well as sophisticated items such as a television set, electro-medical systems , hearing aids , tape-recorders , process electro instruments etc. Ancillary units in the Small-Scale Sector supply a wide diversity of products to original equipment manufacturing producing bicycles , scooters , automobiles , tractors etc. simple machine tools such as leather drilling machines , printing machines , & writing machines are also being made in the small-scale sector , its contribution is next to agriculture in India. India is predominantly an agricultural country.The agricultural economy accounts for 42% of the national income & 72% of the N 7500 products , not only caters to the needs of Population. The agricultural sector is unable to provide employment to our teeming millions. Those who are employed are unable to enjoy a better standard of living. Small- intensive, have the potential to provide employment for a large proportion of industrial & agricultural labour forces. The Development of Small-Scale Industries is our integral par of the overall economic , social & industrial development of a country. The Government has given due importance to this sector of the economy to eradicate mass poverty and to ensure a better standard of living for the people.

VISIT TO CHUNABHATTI & DOCUMENTS We visited the Joint Director of industries in chunabhatti on 23 rd January 2009 and met Mr. Gautam the clerk who was kind enough to equip us with all the information about registration process of Small Scale Industries. There are many departments in the organisation such as custom duty department, excise duty department, election department industrial department. Our target was to get the registration details for small scale industries, so we directly headed towards the industrial department. Mr. Gautam said that the small scale industries Act have been replaced with Micro and Small Manufacturing Industries Act 2006 which was effective immediately. Then followed by a long discussion of the Part I and Part II procedures we were given the registration form which needs to be filled and duly signed by the owner. According to the information given by Mr. Gautam, it takes 5 days for a SSI to get registered. All the informations with concise details were imparted and we left with heavy knowledge about SSI registration process.

VISIT TO KHADI BHAVANS:We visited five branches of Khadi Bhandar located across Mumbai which is the part of our project. The branches are as follows:-

FORT Our very first visit was to Head Quarter of Khadi Bhavan located at Fort on 4th January 2009. It was a matter of privilege to meet the man of Honor & Pride, Mr. Pathak, the Manager of Khadi Bhavan. He gave us a very warm welcome to the ‘world of khadi.’ He not only imparted knowledge but also showed us the right way to live which is famous as Gandhigiri in today’s world. We were shown various products which were purely hand made. They were distinguished by keeping in different sections such as:• Cotton sarees • Flags • Gents- kurta payjama • Plain printed fabric • Foot wear • Poly vastra (polyster) • Chaddars (bed sheets) • Carpets • Village India (honey, cosmetics, agarbatti, almond, etc)

• Dhoti & Towels • Coating & Shirting fabrics • Silk for gents • Silk sarees • Sandalwood articles • Articles of marble • Wooden toys • Leather goods • Wall hanging • Furniture Items • Books • Raw silk & pure silk • Jewellery • Brass copper It took us a very short time to understand as to how GHANDIJI showed India the cycle of charkha in the year 1915.

(CLICKING PICTURES IS NOT ALLOWED FOR SAFETY REASONS)

ZAVERI BAZAR

We visited the branch of khadi bhavan located at zaveri bazaar on 6th January 2009, there we met Mr. Shankar Patel the clerk of the branch. It was under construction. It has khadi clothes and eatables. Arond 6 people were handling this branch.

PRATHNA SAMAJ

We visited the branch of khadi bhavan located at prathna samaj on 6th janyary 2009, there we met Mr. Suresh Agarwal the Manager of the branch. It has a wide range of khadi clothes and eatables (like in fort).

MOHAMMED ALI ROAD

We visited the branch of khadi bhavan located at mohammad ali road on 6th janyary 2008, there we met Mr.Amit Kamate, the clerk of the branch. It has khadi clothes and eatables. Arond 8 people were handling this branch.

DADAR

We visited the branch of khadi bhavan located at Dadar on 8 th January 2008, there we met Mr. Arvind Kolhatkar. It has khadi clothes, eatables and brass made pots and also variety of jewelleries. Around 8 people were handling this branch.

VISIT TO KVIC

We visited Khadi and Village Industries Commission located in Vile Parle on 19th January 2009, there we met Mr. Sanjay Samate, the Senior Artist. He was very much co-operative and gave all the necessary information about Small Scale Industries. The Khadi and Village Industries Commision is a statutory organisation engaged in the task of promoting and developing khadi and village industries with a view to creating employment opportunities in the rural areas and thereby strengthening the rural economy This is the main constitution which supports the growth of khadi in India and empowers the common man to flourish his talents. The basic objective of KVIC is to connect the villages to the developed cities and spread employment all over India. The KVIC was established in 1957 under the Khadi and Village Industries Commision Act, 1956. The following are the objectives of KVIC:• The social objectives of providing employment. • The economic objective of producing saleable articles, and • The wider objective of creating self-reliance amongst the people and also building up strong rural economy spirit. Functions of KVIC:• Promote the sale of khadi products • Encourage khadi and village industries • Financial assistance • Attending problems of KVIC Different samples from various categories of products were showcased in KVIC. Therefore we can call it Social Organisation.

PICUTRES

VISIT TO BANKS & DETAILS OF LOAN PROVIDED BY THEM We visited five banks of which three are nationalised banks and two are private. We collected the information regarding loan and schemes provided by them. The different banks visited by us are as follows:-

BOMBAY MERCHANTILE We visited BOMBAY MERCHANTILE BANK on 16th of January 2009, there we met Mr. Z A MENON the CEO of the branch. yes they do provide loans from ssi rate of interest is not low than 13.5% on reducing balance method done in daily basis. mortgages: 1. 2. 3. 4.

stock's book debt immovable assets hypotantication of other assets i.e furniture,fixture,machinery

TYPE S OF L OAN: 1. working term loan(for certain peroid of time 2. working capital loan(purchace of machinery,land & fixture)

period taken by bank to provide loan is 1-2mths it may be 1yr or may subjected to the submission of required documents yes they do require min. 2 guarantors the amount of loan is 5.25 cr

SCHEMES: 1. genral application 2. credit application

General Application(from consists of the following)    

Name Business purpose Personal information Information about guarantor

Credit application is for personal loans.

STATE BANK OF INDIA We visited the STATE BANK OF INDIA on 12th of January 2009, there we met Mr. Arvind Shetty These schemes are launched by SBI to provide hassle free loan to Traders.Any business man/ entrepreneur/ Professional and self employed person can avail this loan. Loan under the scheme can be availed to meet normal business requirements and is sanctioned against equitable mortgage of property. Any residential or commercial property in the name of unit/ proprietor/partner OR their close relatives is acceptable. Agriculture property or property outside urban limits is not accepted. The advance can be availed by way of Loan or Cash Credit limit. It can also be availed for Non Fund Based requirements (for issuance of Bank guarantees or LCs). Cash Credit limit or non fund based limit is renewable every 12 mths.Loan can be repaid in monthly or quarterly, even half yearly installments - as may be suitable to the borrower – in a period upto 5 years. Minimum and maximum amount of loan is Rs 25,000/- and Rs 5.00 Crore. Margin is 35%. i.e. loan can be upto 65% of the realizable value of the property or the business requirement- whichever is less. Business requirement is assessed on the basis of projected business turnover. Interest at floating rate is charged at monthly intervals on daily reducing balance. No Third party guarantee is required to avail the loan.

Frequently asked Questions 1. What

is this Scheme?

The Scheme is to provide loan to the Traders/ professionals/ entrepreneurs etc for their business needs on easy terms against property. 2. Who can take this loan?  ny business man/ entrepreneur/ Professional and self employed A person can take loan under the scheme 3. What is the amount of loan?  he amount of loan is Minimum Rs 25,000/-and Maximum Rs 5.00 T Crore 4 What type of property is accepted?

Any residential or commercial property in the name of unit/ proprietor/partner OR their close relatives is accepted. Agriculture property or property outside urban limits is not accepted 5 What is the margin? How much loan is given? The Margin is 35%. i.e. loan can be upto 65% of the realizable value of the property. However, if business requirements are less, the lower of the two amounts will be sanctioned. 6 How is business requirement calculated? It is based on projected business turnover. 7 What is the interest rate? Is it floating or fixed rate? The interest rate in linked to SBAR. It would increase/ decease with changes in SBAR (floating rate). For cash credit it is 0.25% below SBAR and for loans 0.25% above SBAR. Presently it is 13% for term loan and 12.50% for the Cash Credit limit based on present SBAR of 12.75% 8 What is the method of calculating interest? Interest reducing balance 9

is

calculated

and

applied

monthly

on

daily

Can I get Cash Credit limit also? Can I get Guarantee/ LC limits also? Yes.

10 Is there any processing charges? Yes.1% of the loan amount. 11 What is the repayment period? In case of Cash Credit it is reviewed by the Bank every 12 mths.Loan is to be repaid in maximum 5 yrs. 12 Whether repayment is monthly or quarterly It can be monthly, quarterly, even half yearly depending upon the requirement of the borrower. 13 Is there any guarantor required for the loan?

NO. If property is owned by somebody else, than only owners’ guarantee is required. 14 Whether I will have to take insurance of the property? Yes. 15 I have a loan account with other bank. Can I shift this to SBI under this scheme? Yes. 16 What documents I would have to submit Usual documents for identification and copy of the latest balance sheet, last income tax return etc and Advocate’s search report, title certificate and valuation certificate of the property that are normally required for creation of mortgage

GENERAL PURPOSE TERM LOANS State Bank of India grants term loans to small scale industries for meeting general commercial purposes like substitution of high cost debt,research and development, shoring up net worth and funding business expansion. The tenor of the loan is normally is 3 years, and the pricing is fine-tuned to suit the risk profile of the borrower. The repayment is structured in monthly or quarterly installments, according to the cash generation cycle. FAQs What are the eligibility criteria for these term loans? The SSI unit that takes the loan should not have any history of defaults in payment of interest or installments of the principal. The unit should have a strong performance record and a respectable credit rating as per the bank’s own credit assessment scales ( In case of loan above Rs. 25 lakhs ) What is the type of security/guarantee required for the loan? Extension of hypothecation charge over the current assets and fixed assets is required as primary security. Further, the borrower whose aggregate loans with the Bank exceed Rs 5 lakh may explore the possibility of collateralizing tangible security such as immovable property and third party guarantee. In all cases, personal guarantees of proprietors/partners/promoters have to be furnished.

What are the margins applicable? A minimum margin of 25 per cent is applicable for acquisition of land and building, building construction, renovation of offices, showrooms, godowns, purchase of equipment, vehicles etc. In other words, the quantum of the loan will be restricted to 75 per cent of the total expenditure.

LIBERALIZED CREDIT FOR SSI State Bank of India extends production-linked credit facilities to small-scale industries, ancillary industrial units and village and cottage industrial units on liberal terms and conditions. Under this scheme, the quantum of advances is not linked to the security furnished, but the genuine requirements of the unit. The pricing of the loan is based on credit assessment, and the units with strong ratings may be given finer rates. No collateral security is required for loans up to Rs 5 lakh. Composite term loans can be sanctioned up to Rs 25 lakh combining term loan and working capital. FAQs Q. What are the types of financial assistance under the Liberalized scheme? A. The Liberalized scheme offers a range of financial products including the following: Q.What are the margins applicable? A. For requirements up to Rs 25,000, no margins are involved. For limits ranging from Rs 25,000 to Rs 5 crore, the margin is set at 20 per cent. For credit limits above Rs 5 crore, a 25 per cent margin may be applied 1. 2. 3. 4.

Term loans for acquisition of fixed assets Working capital loans financing current assets Letter of credit for acquisition of machinery and purchase of raw materials Bank guarantee in lieu of security deposits to be made with government department/other departments for execution of orders. 5. Deferred payment guarantees for purchase of machinery on deferred payment basis. 6. Bill facility for purchase of raw materials and for sale of finished goods. 7. Composite loans (term loans plus working capital) up to Rs 25 lakh.

ENTREPRENEUR SCHEME

State Bank of India grants financial assistance to technically qualified, trained and experienced entrepreneurs for setting up new viable industrial projects. Loans are extended to technocrats who are unable to meet the normal margin requirements under the liberalized schemes. FAQs Q. What are the eligibility criteria for the Entrepreneur scheme? A.The borrower has to be a technically qualified person (a degree/diploma holder in engineering or technology), a craftsman with adequate experience or training or a person possessing a degree in business or industrial management, a chartered accountant or a cost accountant with relevant experience. Q. What are the types of financial assistance under the Entrepreneur scheme? A. The bank provides: • • •

term loans, working capital and equity fund finance

Q.What are the margins applicable? A. For requirements up to Rs 5 lakh, no margins are involved. For needs ranging from Rs 5 lakh to Rs 20 lakh, the margin is set at 10 per cent.

UNION BANK OF INDIA We visited UNION BANK OF INDIA on 13th of January 2009, there we mat Mr. Arun Biswas. CREDIT GUARANTEE FUND SCHEME FOR SMALL INDUSTRIES (CGFSI) CGFSI has been introduced jointly by Government of India and Small Industries Development Bank of India (SIDBI) for providing hassle free loans upto Rs.25.00 lacs to SSI units. Eligibility SSI units engaged in manufacturing and IT software related activities including Small Service and Business (Industry) Related Enterprises (SSSBE) and certain Agri Clinics and Agri Business Centres and advances granted under Artisan Credit Card. Credit facilities sanctioned to a single eligible borrower not exceeding Rs.25.00 lacs at interest not exceeding BPLR + 3%. Loan should be sanctioned without obtaining any collateral security and third party guarantee. Guarantee Fee One time guarantee fee payable upfront @ 1.5%. Annual service fee payable is @ 0.75% of credit limits covered under the scheme every year. The Bank is absorbing 50% of guarantee fee as well as service fee, w.e.f. 1.4.2003 Guarantee Cover Maximum guarantee cover available to the extent of 75% of defaulted amount, maximum being Rs.18.75 lacs per borrower.

Credit Gurantee Fund Scheme For Small Inusteries (CGFSI) UNION ARTISAN CREDIT CARD (UACC) • Scheme to simplify credit delivery procedure to Artisans. • To meet the investment as well as working capital credit requirements of artisans in a flexible and cost effective manner . • The loan will be sanctioned as cash credit, Working Capital Term Loan(WCTL), and/or term loan to artisans. • The maximum per party limit is Rs.2.00 lacs. • Guarantee cover is available as per Credit Guarantee Scheme of GGFSI.

PUNJAB NATIONAL BANK We visited PUNJAB NATIONAL BANK on 14th of January 2009, there we met Mr. Dhaval Gutta. The spirit of Enterprise knows no boundaries, irrespective of the scale of operations. Realizing the significance that, SSI Sector contributes 40% of the gross turnover in Manufacturing Sector, gives employment to 283 lakh persons, produces 7500 products and contributes more than 35% of the country's exports, PNB has formulated a number of measures to provide a impetus for the growth of the SSI Sector.

AMOUNT OF LOAN • •

Term Loan (Need based). Working Capital Loan liberally sanctioned at 20% of projected annual turnover basis.

Composite Loan Limit has been raised to Rs. 100 Lakh (for Term Loan Working Capital).

MARGINS • • •

Expedious sanction upto Rs.10.00 Lakh for borrowers having good track record, under Laghu Udyami Card and Rs. 2 lakh under PNB Artisans Credit Card Scheme. Simplified Loan Application Forms for convenience of borrowers. Loan Applications complete in all respects duly receipted & acknowledged.

Speedy Processing within specified time norms. Upto Rs.2 Lakh Over Rs.2 Lakh and upto Rs.5 Lakh Over Rs.5 Lakh

2 weeks 4 weeks 8 -9 weeks

RATE OF INTEREST • • • •

Advances upto Rs.50, 000 at BPLR* minus 2%. Advances above Rs.50,000 & upto Rs.2 Lakh at BPLR minus 1%. Advances Above Rs.2 Lakh & upto Rs.20 Lakh at BPLR. Advances Above Rs.20 Lakh - Linked with Credit Risk Rating.

Interest Rebate of 0.50% and margin at 10%, irrespective of loan amount, available to women borrowers under Mahila Sashaktikaran Abhiyan. Term Premia of 0.50% is to be added for arriving at interest rate in respect of loans repayable in 3 years & above. *BPLR 11.50% p.a )

COLATERAL SECURITY

• • •

Advances upto Rs.5.00 Lakh without collateral security. Advances over Rs.5 Lakh and upto Rs.25 Lakh, based on good track record and financial position, no collateral insisted upon. Advances upto Rs.25 Lakh guaranteed under Credit Guarantee Fund Trust for Small Industries Scheme (for manufacturing SSI, service Industries & IT units) without collateral security.

SSI SCHEMES AVAILABLE •

Sarthak Udyami - Scheme for financing SSI

•

SME Sahayog Scheme

•

PNB Vikas Udyami - Scheme for Loans acquisition of ISO - 9000 Series Certification

•

PNB Pragati Udyami - Scheme for financing SSI related Services / Business Enterprises

•

PNB Kushal Udyami

• •

PNB Garrage Yogana PNB Laghu Udyami Credit Card - A simplified Loan Delivery Mechanism

•

Loans for setting up Industrial Estates

•

PNB Artisan Credit Card - Scheme to provide hassle free financial support to Artisan

PURPOSE OF THE LOAN For setting up new units; expansion, modernization & renovation of existing units; purchase of land, construction of building, machinery, equipment etc; and working capital facilities.

ELIGIBILITY Small Enterprises (SSI): Units engaged in industrial activity with original investment in plant & machinery upto Rs.500 lakh. Micro Enterprises (Tiny Units): Units with initial investment in plant & machinery upto Rs.25 lakh, irrespective of the location of the unit.

LOAN AMOUNT

Need based. (Composite loans upto Rs.100 lakh).

MARGIN* Upto Rs.2,00,000/- NIL Above Rs.2.00 lakh upto Rs. 5 lakh 15% Above Rs. 5 lakh 20% For old machinery having a minimum life of 5 years. (In case of Gen-set, it should not be older than three years)

WORKING CAPITAL CC (Hyp.) Upto Rs.2,00,000/- NIL Above Rs.2.00 lakh upto Rs. 5 lakh 15% Above Rs. 5 lakh 20% CC(P) 15% Against Book Debts upto Rs.5 lakh 20% Book Debts above Rs. 5 lakh 25%

REPAYMENT Upto 7 years (for term loan) depending upon projected profitability, over and above the gestation period of 6 to 12 months.

COLLATERAL SECURITY - No Collateral Security & Third Party Guarantee for Loans upto Rs.50 lakh covered under Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE).

FINANCIAL ASSISTANCE TO MEET UNFORESEEN EXPENDITURE OF SME ENTERPRISES HAVING GOOD TRACK RECORD. PURPOSE For contingencies like additional purchase of raw material including packing material/ handling charges for the execution of bulk orders, taking part in national / international trade exhibition, payment of consultancy charges, machinery repair, labour payments, etc.

ELIGIBILITY Existing borrowers whose accounts have been classified as standard assets for the last three consecutive financial year and are enjoying credit limits above Rs. 20 lakh. For term loans & working capital of above Rs. 20 lakh, the threshold credit rating should be ‘BB’ (on the closing of previous financial year). Credit risk rating for any of the earlier years should not be below “B”.

EXTENT OF LOAN The facility is extended by way of clean cash credit limit. Special credit limit for an amount equal to 20% of the aggregate working capital limits (i.e. fund based and non fund based separately), subject to a maximum of Rs. 25 lakh.

ASSESSMENT A simple assessment will be made by computing 20% of the aggregate cash credit working capital limits (i.e. limits against stock and bills put together) or Rs.25 lakh which ever is lower.

REPAYMENT The borrowers are free to utilize the facility upto 12 times in a year. Each amount of withdrawal is repayable within maximum period of two months and there should be a gap of 15 days between the date of complete repayment of outstanding and the next withdrawal.

SECURITY Collateral security to be obtained as per bank’s extant guidelines. The charge on available security by way of primary/ collateral to the existing sanctioned limits will be extended to cover the clean cash credit limit.

ICICI BANK We visited ICICI BANK on 15th January 2009, there we met Mr. Mitesh Kalpak. Secured Loan Group Standard Interest & Processing Fee Rates W.e.f. August 1, 2008 Products Minimum & Maximum Limits Interest Rate Processing Fee Rate Loan Against Card Receivables Rs 10/- Lacs to Rs 10/- Crores *(IBAR + CC Premia (0.50) - 0.25% 2.50% Enterprise Credit Rs 10/- Lacs to Rs 3/- Crores *IBAR + CC Premia (0.50) - 1.25% 2.00% Smart Trade Upto Rs 3/- Crores *IBAR + CC Premia (0.50) - 1.25% 2.00% Flexi Credit Rs 10/- Lacs to Rs 5/- Crores *IBAR + CC Premia (0.50) - 1.75% 1.75%

*IBAR is currently at 17.25% Cash Credit Premia is currently 0.5% Term Premia varies with the Tenure

VISIT TO SSI & INTERVIEWS We visited three small scale industries located across mumbai and took the interviews of the incharge. The industries visited sare as follows:-

KOH IN OOR MAN UFACTU RE RS

Since 1982 Manufacturers of Quality Men’s Wear Fancy Shirts & T-Shirts ADDRESS Plot no. 157, Road No. 4, Motilal Nagar, Opp. Ganesh Temple, Goregaon (West).

DATE OF VISIT 23RD JANUARY 2009

PAR TNERS *) Mr.Sanjay S. Mehta

*) Mr.B.K.Jodhavar

*) Mr.Manoj O. Mehta

*) Mr.Dilip M. Soni

RA W M ATE RI AL S The Company uses Quality Fabric for Manufacturing their Product. They Purchase their Raw Material from the foll. Distributors they are as follows :1.) Arvind Mills,

2.) OM Textiles,

3.) Shivji Textiles,

4.) Shantilal Enterprises

They get a Cash Discount of 10% on cash Transaction on the Purchase of 2500Kgs. Of Fabric they get a Discount of 20% on Cash Purchase & 10% on Credit Purchase. The Octroi that has to be Paid while they Purchase the required Raw Material from Outside are Paid by the Company.

PR OCE SS There are 5 Processes that the Product has to under go before it is Dispatched they are as Follows :-

•

Cutting :- The Raw Material/Fabric is being cut into Pieces & then sent to the next Process. The Cloth Cutting Scissor is being utilized for this purpose.

•

Stitching :- After the Cutting work is over then Stitching is done to arrive at the derived shape of Shirt/T-Shirt. The Machinery Utilized for this Purpose are Singer, Overlock, Fatlock, Carbutton, Piping, Pickoting.

•

Checking :- Inspection is done to check whether the Product has been Properly Finalized.

•

Ironing :- After Inspection the Product goes for Ironing. The Machine used for this Purpose is Iron.

•

Packing :- Once all the Procedure is over & the Product is Ironed then the Product is Packed for Selling.

Financial Capacity :- Turn Over – above 2.5 Crore annually Net Profit around 15 Lacs annually. Labour Input :- There are 30 Workers in the Industry work for around 8-12 Hrs a Day Their Monthly Salary is About 5000/- Rs. Each Working Environment :- Employees are allowed Three brake time a day for lunch (30 Min), Twice for Tea ( 15 Min each) And A small Canteen Facility is also been provided to workers. A healthy friendly relationship is maintained between the Employer & the Workers Customers :- Their Product is been supplied to Distributors & Retailers all over Mumbai, Thane District, Pune, Navi Mumbai And Some Other City Of Maharastra also. Competitors :- Their Are numbers of Competitors in the Market But very Stiff Competition has been from some other’s quality Products Manufacturers Like Cambridge, Jimmy Jonnie, Apple Plus, Ass, Rudrakash , Jamkudi, Life Style etc. But due to Our Products Quality they have been able to face the competition Successfully and survive in this Business

INTERVIEW 1. What motivated you to start this SSI?

 Change in fashion and demand for textile industries. 2. Which form of ownership company has?  Partnership firm, with 20:20:20:40 (40% holder is the financer) 3. Type of registration? (I.e. permanent or provisional.)  Permanent.

4. How many labour are there in your organization and what is the qualification of the labors? 

30 workers, sometimes more i.e. depends on demand and those workers are on daily wages. No barrier of qualification except some knowledge related to textile.

5. Does Kohinoor provide any kind of training to the workers?  Yes, we provide training which is mandatory to every worker for 1 month.

6. How many types of Products Company manufacture?  There are men’s T-shirts and shirts in different fabrics.

7. Pricing?  The pricing is decided by following way:-

Fixed cost + Variable cost + profit = Price Fixed cost = Salary, deprecation on plant and machinery, lighting expenses etc... Variable cost = Raw materials cost, discount. Profit margin = 20% on cost.

8. The plot in which the goods are manufactured, was the hired one or it own by him?  It is owned by kohinoor

PAL FASION.CO.PVT.LTD (Manufacturing Jeans and Denim Garments )

DATE OF VISIT 24th JANUARY 2009

FACTORY A DDRESS :

Unit No . 114 , Tejpal Industrial Estate ,

Andheri - Kurla Road , Saki - Naka , Mumbai - 400072 .

COM PANY 'S PR OFILE : More than ten years ago, when India just started rising to jeans culture one of the early players who joined and actually defined the momentum of growth was Tejpal Industries . The company, though started in 1980, was earlier engaged in manufacturing trousers. Today, the company is manufacturing jeans wear under the brand name PAL. PAL is one of the leading brands at national level. With the complete in-house state-of-the-art manufacturing facilities. The company is geared up to grow faster and meet the challenges in the domestic and booming export markets

LOC ATIO N OF FACT ORY : Location of industry enterprise plays an important role in the development of the industry. It affects the cost structure, growth potential and profitability of an enterprise.

RE NT :

3000 sq.ft. * Rs. 20 = Rs.60000 / month

Factory Area: 3000sq.ft. 1.Office Area: 200sq.ft. 2.Manufacturing Area:2000sq.ft. 3.Storage Area: 800sq.ft.

FO RM OF OWNE RS HIP OR TYPE OF ORGAN ISA TI ON

: Partnership firm having 4 Partners. 1 . Mr .Vinay .Ghosh - Chairman 2 . Mr . Kapil .Singh - Director

3 . Mr . Amit .Sharma - Director 4 . Mr . Sachin . Patil - Treasurer

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TH IS

:

The partners were not from a rich family and they wanted to do something on their own. SSI seemed to be a good option because it gives them the opportunity to use their entrepreneur skills, less capital intensive and allowed them to work independently. The partners had conducted a market survey and had found that this product line has very good profit margin and also the competition is very low. Moreover, Jeans Manufacturing Industry has very bright future outlook.

IN VESTME NT O R C APIT AL : In Fixed Assets - Rs. 5 Lacs In Plant & Machinery - Rs. 25 Lacs

GOVERNMENT APPROVALS: REGISTRATION DETAILS SR. NO.

REGISTERATION

1)

REGISTRATION OF SSI The development commissioner - PROVISIONAL (industries) directorate of industries

a)

- PERMANENT

AUTHORITY

COMPANY DETAILS Obtained provisional license after 3 months of application and permanent license after 1 year of application.

b) 2)

Approval from the Owner of the industrial Obtained industrial estate and estate company buying of the premises

by

the

3)

Import license for capital Joint director general Obtained equipment as per EXIM of foreign trade company policy government of India

by

the

4)

Company registration

Registrar of companies

Obtained company

by

the

5)

Registration as firm

Registrar of companies

Obtained company

by

the

6)

Sales tax registration

Sales tax concerned

officer Obtained company

by

the

7)

Water Approval.

Connection

Obtained company

by

the

8)

Pollution Control Board NOC

Obtained company

by

the

9)

State Electricity Board Approval/ Sanction

Obtained company

by

the

SOUR CE S OF FIN AN CE : PAL Fashion borrows funds / takes loans mainly from 3 Banks :

• Bank of India • Bank of Baroda • Dena Bank The interest rates for the loans are @ 12 %, but this is where the industry gets a concession as 8% out of the 12 % is paid by KVIC and remaining 4 % by the industry

itself. This is perhaps the only concession offered to the industry by the Government of India.

Market Area

:

Every product is not preferred by everyone. Everyone has its own likes and dislikes. Some may like a particular thing very much but some may just take it just another product in the market that’s it. So it is very important for any company to know which market will be the best suitable for the product. The product should suit their status and lifestyle; this is exactly what their company aims at a market where their product will sell the most after doing a survey they came out with this result. As a new company in this industry has first introduced their product only in Maharashtra and that too in specific area in Maharashtra such as Mumbai, Pune, Nagpur, Nasik and places where we find buyer of their product. They are targeting every one who is between 16-40yrs and whose pocket dose not allow to spend much but wants to still remain fashionable .

Competitors : Even their company is not away from this race any more they have just entered this market in 2005 , but while doing this survey they came to know that they have their Big Brothers in the industry some of them are known as Python hell boy, frod, sturdy…. These companies are well established in this industry and they have their market well set. Their biggest competitors are Python, sturdy, and frod they have decent % of share in the market. Their company aims at competing with these big companies because they feel that they can offer a better product than their competitors because they have given a special attention to the effect which looks good on their jeans and are in fashion This is their USP (unique selling process) which is a special feature of their product and which will help in selling their product in the market. they have noticed some loop holes in their competitors and that is where they will target so as to show the presence of they product in the market. The quality of their product is more or less same that is a standard quality however they have a less % of profit and that’s why they have a selling price which is less than that of their competitors and this step is taken so as to enter into the market.

RAN GE OF PR ODUCTS : Lad ies Wear - Fashionable & Stylish Jeans Denim Shorts , Denim Skirts , Denim Jackets .

Mens Wear - Fashionable & Stylish Jeans Denim Shirts , Denim Jackets , Denim Caps & Hats .

QU ALITY CONTR OL : The company will take a good care to ensure quality, both at the supply point as well as finished goods point. As soon as the raw materials would be received from the suppliers, the engineers would check: 1.

The dimension

2.

Quality

3.

Quantity

After this is done the materials would be taken for processing. The quality will be ensured at every stage. Say for example the product has to undergo three processes, then after completion of each process the quality will be checked.

If not found up to the mark they would be immediately rejected. After all the processing & assembling, the final product will be checked & if accepted or if found as per the standards set, it will be sent for packaging. Thus from the above explanation it can be inferred that the company will take a good care to ensure the quality.

DIS TRIB UT IO N : Now this was the quality and feature of the product but they want customer to believe and to accept that, so for that they need to bring our product into the reach of the customers. Their one of the most important motto is that their product should stone through away distance from their customers. And to achieve that their distribution channel should be very strong.and for that they have decided to out source their distribution network. Why outsource , is because that they believe that then to have business agencies will work hard and which will result in proper distribution of their product and which will also save their time and money. They will be selling their product to the distributors and after that it will be them who will be selling their product into the market. They will allow them to add their margin and sell the product in the market. However the margin should be within the set parameters because they don’t want them to add a big margin and to raise their products cost which will reduce the sales in the market. As they have just entered in the market, to create awareness among the customers is very important because if the customers are not aware of the product they will not show interest in buying their product. But being a small scale industry they don’t have a big budget for marketing of their product so they have decided to market their product at a place which can attract their target audience and will be cost effective for them and that can be newspapers, Maxine, etc As they have decided to sell their product directly to the distributors. There are some distributors who have the market in Mumbai and Pune and from which they accept a majority % of sales

Name of distributors

Place

% of sales

1.

Arvind distributors

Mumbai

30% of sales

2.

Top distributors

Mumbai

24% of sales

3.

L & K distributors

DISTRIB UTION

Pune

20% of sales

IN DO MESTIC

MARKETS

: Their brand has a very effective distribution network. They have worked out a quick delivery system to ensure controlled inventories at the retailers end. For instance, They are replenishing stocks within 24 hours

MARK ET TRE ND : Market has always being growing for denims. The market what was before what it is now there has been a huge difference in that. Before people didn’t use to buy denims because they were not fashion cozy at that time and they felt very comfortable in cotton trousers but now thanks to media and television people have changed their taste now they prefer wearing denim jeans instead of cotton trouser. People still wear cotton trouser however if they are going to office and now they prefer wearing a denim when they go for freak-out. It looks good and appealing and also it is more durable then a cotton trouser. And this statement is supported by the survey done by many big companies in recent years. In the following chart we can see the change what has occurred in this industry. Product

Source of Data

Sales 3yrs

Current

Ago

Sales

Projected sales in 3yrs

‘00000

‘00000

‘00000

Rs:- 48,750

Rs:- 73,125

(avg of all) 1.

Denim

- ORG company

Jeans

- Times research

Rs:- 24,375

- Alliance group

LABOU R INT ENSIVE :

Small-scale industries do not require large amount of capital. They are labour intensive and can provide employment to large amount of people. The energy the unemployment and the underemployed may be utilised for productive purpose in the economy.

DE TAILS ABO UT THE W OR KE RS EMPL OYED ü They have 25-75 workers. .

Skilled:

.

Unskilled:

25 - 50 workers 10 - 15 workers

ü They work on shift basis. ü Minimum working hours:

9 hours

ü Minimum salary:

4000 per month

ü Overtime calculated:

On per hour basis

ü Job timings:

9 a.m to 6 p.m

OBJ EC TIVE S : Ensured adequate safety measures and to promote the health and welfare of the workers employed in factories Prevent haphazard growth of factories through the provisions related to the approval of plans before the creation of a factory. •Regulates working condition in factories. •Basic minimum requirements for ensuring safety, health and welfare of workers. •Applicable to all workers.

MAIN PR OVIS IONS : •Compulsory approval, licensing and registration of factories. •Health measures. •Safety measures. •Welfare measures. •Working hours. •Employment of women and young persons. •Annual leave provision. •Accident and occupational diseases. •Dangerous operations. •Penalties. •Obligations and rights of employees.

INTERVIEW 1. Industrial Shed is Hired or Owned ? - They have two industrial shed out of which one is owned by them and the other is on rental basis. 2. Type of Registration ?

- BOMBAY SMALL SCALE INDUSTRIESASSOCIATION and registered under B.N.T.C. ACT,1959 and the registration number is NTC-189/94. 3. Power Connection ?

- Power Connection is given from RELIANCE ENERGY LTD. and owned by the owners. 4. Advertising & Promotional Activities ? 1Advertising in Local Magazine 2Gifts to premium customers 3Mouth publicit 5. Quality Assurance ?

- “The concept of Quality Assurance emphasizes the importance of Quality in everything we do. To achieve total customer satisfaction, the quality of our products must be our number one priority. ” 6. Special Incentives & Financial Assistance is received from Government ?

- They do get electricity, water and other raw materials at concessional rates. They get rebates in tax that needs to be paid from profits generated from the business. They also get some subsidies from government. 7. Annual Turnover of PAL Fashion .Co.Pvt.Ltd ? - In 2007-2008 , Annual turnover was Rs . 40 Lacs .

8. Profit Margin ?

- The business enjoys a profit margin of about 10%-20%. (Further information was not provided to us due to security reasons.)

9. Governing authorities? •

BMC: BMC governs the working of the business for the main reason of ensuring that the business is working within the area of operation for which it has gained license from BMC.

•

LABOR UNIONS: The Labor Unions see to it that minimum wages are paid to the laborers and the medium level employees. They also keep a tight watch to ensure that there is no exploitation, of the human labor, prevalent in the business organization.

•

IT DEPARTMENT: The Income Tax Department governs the working of the organization to see to it that proper income tax is paid at regular intervals by each and every individual connected with the business.

•

SALES TAX DEPARTMENT: Similar to the Income Tax Department, the Sales Tax Department also keeps a check on the regular payment of sales tax (now VAT).

10. Problems faced ? •

Hike in Electricity Charges: Since the working of the organization is based on various machines like Sewing-machine, Cutting machine, etc. which in turn work on electricity, the recent hike in electricity prices have affected the operational efficiency of the business.

•

Lack of skilled labor: The business is carried out with the help of machines. And these machines have to be handled by trained and skilled labor, which is very rare. So the business has to incur additional expenditure on training the employees and the labor force in order to make them capable of handling the complicated machines.

11. Future plans ?

Purchase 4 color Computerized Panel Control machines, the cost of which is Rs. 22 lakhs each. 12. Benefits?

• • • •

Increase in efficiency Good resolution of variety Decrease in cost Expansion of production capacity

13. Social responsibility? •

Donation in Government Hospitals (E.S.I.S. Hospital, Kandivali)

• Donation in Orphanage

R A MAHAVIR PLASTIC INDUSTRIES MANUFACTURES.OF: PLASTIC NOVELITES & HOUSEHOLD ARTICALS.

DATE OF VISIT 25th JANUARY 2009

ADDRESS:REGISTERED OFFICE:390/94, Sheikh Memon Street, 2nd floor, Mumbai- 400002. (India)

FACTORY R Mahavir Plastic Industries Agarwal Udyog Nagar, Bldg.No.8, Gala No.14, Satiwali Road, Waliv, Vasai Road (East) - 401208. Dist-Thane (Maharashtra, India)

COMPANY PROFILE R. Mahavir Plastic Industries was established in 1987 by Mr. H. T. Kothari and his sons Hasmukh, Prakash and Arvind. Initially the area was just 1000 sq.ft. And the factory had only 7 conventional moulding machines. The area where initially production took place was Jogeshwari.

During 1994 all of the Kotharis agreed that to increase the production. However, the old location Jogeshwari offered no scope for expansion. Due to this the management decided to move to Vasai and created the better infrastructure by going for latest machines and installed them in specious area. The present area where the factory is located is around 10,000 sq.ft. And the workshop area is around 60% of the same. The company has a sales outlet in the market area of Mumbai at Crawford Market. As a company philosophy, all products that manufactured under R. Mahavir brand or any other associated brand are made from food grade, virgin raw material. The vendors are latest mould makers and use C.N.C. tooling machine. Customized moulding Food containers & storage a container is our speciality. Our range is 50 ml - 15000 ml various shapes. Asthentically designed most of the products are nestable & not voluminous. We keep adding products as per the latest trend and style. We also make made to order & custom mould. Keeping the customer’s needs in mind, we have been extending PRIVATE LABEL facility to select clients for bulk supplies of products. We manufacture quality products as per the highest international standards. Our process involves usage of 100% virgin plastics raw material, moulded at state-of-the-art manufacturing facilities. The company uses PP, HDPE, LDPE and GPPS (General Purpose Polystyrene) for producing its products.

TYPES OF PRODUCTS Company R.Mahavir Plastic Industries manufacture the products Like:-

1)

Containers

2)

Utility products

3)

Lunch boxes

4)

Dry fruit containers

PRODU CT L IST Dry fruit container Letter Rack Fridge items Water Jug/Mug/Tumbler Dust-Pan Thread & Needle Box Soap-Case Bathroom & Toilet Stand Tray Funnel Multi Purpose Rack Fruit Bowl & Basket Packaging Containers

INTERVIEW 9. What motivated you to start this SSI unit?  Mr. Hasmukh Kothari had replies that R. Mahavir was stared by his father Mr. H. T. Kothari. From last 21 year this organization is running successfully.

10. Which form of ownership company has?

 R. Mahavir is sole proprietorship. Mr. Hasmukh Kothari is owner of the R. Mahavir.

11. The plot in which the goods are manufactured, was the hired one or it own by him?  The manufacturing plot is owned by the Mr. Hasmukh Kothari.

12. Type of registration? (I.e. permanent or provisional.)  R. Mahavir had permanent registration.

13. How many labour are there in your organization and what is the qualification of the labors?  There are 12 to 15 workers at day time, 9 workers at night time are working in the organization.

14. Does R. Mahavir provide any kind of training to the workers?  R. Mahavir is providing the training to workers for 3 to 5 days for work on machine. 

15. Power connection?  The manufacturing unit had three face power connections.

16. What measures company is taking for procurement of Raw Materials?  For the procurement of raw materials there is separate warehouse for the raw materials and for finish goods. And the area the warehouse is covered is about 250 sq ft

17. How many types of Products Company manufacture?  R. Mahavir is manufacturing many kind of products such as  CONTAINERS

 UTILITY PRODUCTS  LUNCH BOXES  DRYFRUIT CONTAINERS

Product List Dry fruit container Letter Rack Fridge items Water Jug/Mug/Tumbler Dust-Pan Thread & Needle Box Soap-Case Bathroom & Toilet Stand Tray Funnel Multi Purpose Rack Fruit Bowl & Basket Packaging Container 18. Pricing?  The pricing is decided by following way:-

Fixed cost + Variable cost + profit = Price Fixed cost = Salary, deprecation on plant and machinery, lighting expenses etc... Variable cost = Raw materials cost, discount. Profit margin = 20% on cost.

R. Mahavir is supplying his product to the wholesalers so if any wholesalers buying in quantity then R. Mahavir is providing 10% of discount

.

19. Advertisement \ promotional activities? R. Mahavir had good contact with there customers. So, R. Mahavir is not doing any advertisement on T.V... R. Mahavir is just doing promotion through his browser. 12.Quality Assurance?  R. Mahavir purchase good quality of raw materials and they are also providing training to the workers so the quality of product is maintain.

13.Which kind of research R.Mahavir is going to know the preference, taste of the customer?  R. Mahavir knows about his customers through the wholesalers. Because wholesalers and retailers are the direct connected to the customers so they know the preference, tastes of the customer.

14.What special Incentives and Financial Assistance is received from Government?  As the company is into export business it enjoys various tax benefits like: 

VAT benefits

 Excise benefits.  Octroi benefits.  Income tax Benefits.  Subsidiaries on raw materials.

15.Do you think that liberalization, globalization and privatization are good for SSI units?

 Mr. Hasmukh Kothari Reply that due to the liberalization, globalization and privatization there is so much competition in local market. And there is chance of the wipeout of SSI units. Because of the foreign competitors the pricing cannot affords by the local manufacturer.

16.According to you what is the future of SSI sector in India?  Due to the liberalization, globalization and privatization there is so much competition. But government of India is taking so many steps for the development of SSI units. So, at least for 10 to 15 years the future of SSI sector is quit bright.

OVERALL PICTURES OF KHADI BHANDARS