Entrepreneurship Management

Micro , Small & Medium

Enterprises

Prof Bharat Nadkarni

 Entrepreneurship Management
Types of Start-ups
1. Lifestyle Firms
A small venture that supports the owner and usually does not
grow.
Privately held.
May grow after several years to 30 to 40 employees and
turnover of about Rs One/ Two crores
2. Foundation Company
A manufacturing with a steady growth, may also created from a
innovation or R & D set up and lays foundation for a new area.
This venture can grow from 10/50 employees to 500 employees
in 10 years and turnover of about Rs 10 to 25 crores.
Rarely goes public. Private investors,
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Types of Start-ups . . . contd.
3. High Potential Venture
A venture that has high potential for growth and therefore
receives great investor interest.
Its growth is far more rapid and after 5 to 10 years may employ
more than 1000 employees and turnover of more than Rs 100
crores.
These are the most important for the economic development.
Resource utilisation is maximum and always aim for
sustainable growth.
Diversify into many industries.
Aims for a Global Business group.
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Forms of Organisation

1. Sole Proprietorship
Is that form of business organisation which is owned and
controlled by a single person. He receives all the profits and
bears all the risks in the success or failure of the enterprise.”
2. Partnership Firms
“The relation between persons who have agreed to share profits
of business carried on by all or any one of them acting for all.”
3. Joint Stock Company
“A company is an artificial person created by law having
perpetual succession and a common seal.”
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4. Co-operatives
“An association of persons, usually of limited means who have
voluntarily joined together to achieve a common economic end,
through the formation of a democratically controlled
organisation, making equitable contribution to the capital
required and accepting a fair share of risks and benefits of the
undertaking.”
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Small Scale Enterprises

1. Manufacturing
2. Trading
3. Services

1. Manufacturing
Village & Cottage Industries
Handloom & Handicrafts
Modern SSI
a. Small scale units
b. Ancillary units
c. Tiny units
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Small Scale Enterprises

2. Trading
Wholesale
Retail
Commission Agents

3. Services
Professional Services ex. Doctors, Lawyers etc
Commercial Services ex. Real estate, Warehousing etc
Personal Services ex. Fashion shop, Laundry etc
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Definition
Small Scale Industries.
Definition: ‘Small –Scale Industrial Undertakings are those which
are engaged in the manufacturing, procession or preservation of
goods and in which investment in plant and machinery (original
cost) excluding the cost of land and building does not exceed Rs. 1.5
crore. Those would inter –alia, include units engaged in mining or
quarrying, or servicing of machinery. (Limit up to Rs 5 crores in
respect of 71 hi-tech export oriented items.)’’
Tiny Industries.
Definition: ‘Tiny or Micro industries are those, whose investment in
plant and machinery is up to Rs. 25 lakhs, irrespective of the
location of the unit. These include artisans, Khadi & Village
industries, handloom, sericulture, handicrafts coir , manufacturing
etc.
 Entrepreneurship Management
Small, Medium & Tiny Enterprises
Investment in Plant and Machinery/ Equipment
(excluding land and building)
as on 2007 - 2008

Manufacturing Enterprises Service Enterprises

Micro (Tiny) Up to Rs 25 lakhs Up to Rs 10 lakhs

Small More than Rs 25 lakhs and up More than Rs 10 lakhs and up to

to Rs 1.5 crores (5 crores – Rs 2 crores
export oriented)

Medium More than Rs 1.5 - 5 crores and More than Rs 2 crores and up to
up to Rs 10 crores Rs 5 crores
Comprehensive policy package
for SSI & Tiny Sector
 Entrepreneurship Management
Comprehensive policy package for SSI & Tiny Sector
• The Small scale industry (SSI) has emerged as India’s engine of
growth in the new millineum. By the end of March 2000, SSI
sector accounted for nearly 40 % of gross value of output in the
manufacturing sector and 35 % of total exports from the country.
There are around 32 lakh SSI/ tiny units in the country employing
more than 18 million people.
• The most important challenge faced by the SSI and tiny sector is
that of growing competition both globally and domestically.
The sector has also been facing problems which relate to
1) Credit 2) Infrastructure 3) Technology
4) Marketing 5) Delayed payment 6) Hassels on account of so
many rules and regulations
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In order to enable this sector to avail the opportunities and play
its role as an engine of growth, it is essential to address to the
problems effectively and urgently.
For having a focused attention on the development of SSI and
tiny sector, GOI has created a new ministry of SSI & Agro and
Rural industries in october 1999.
Interim report of the S P Gupta study team constituted by the
planning commission provided the background material for the
consideration of the group of ministers under the chairmanship
of Mr L K Advani.The team was put together by the then PM Mr
A B Vajpayee.
On the recommendations from the team, a comprehensive policy
package for the SSI and tiny sector was announced on 30 August
2000 by the PM.
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Characteristics of Small Scale Industries
Small scale industries are the backbone of the Indian traditional
structure. They provide a variety of non-traditional, low technology
product. Small-scale industries constitute an important and crucial
segment of the industry sector. It has all the characteristics of the
decentralized sector such as small size and employment intensity and
the entire lot begins to private sector. The contribution of SSI sector
to employment is next only to agriculture as a dynamic and vibrant
sector of the economy. Small –scale and cottage industries are the
most important employment providing sectors of the economy.
1. Small capital investment.
Small scale industries require less capital as compared to
medium or large-scale industries. E.g. an artisan’s family can
start their business with just few hundred rupees.
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2. Generate Employment.
Small scale industries are generally labor intensive and hence
create employment opportunities which is the need of the hour. It
helps in developing country to solve the problem of
unemployment.
3. Personal Contact.
There is personal supervision of all activities i.e. production,
purchase, labour, and marketing of goods and it is done by the
entrepreneur himself.
4. Location.
Small scale industries are generally located in rural and semi –
urban areas.
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5. Exploitation of human resources.
Child and women labor in particular are exploited by small scale
industries.
6. Growth.
The small scale industrial activity has been growing at faster rate
even than the large-scale sector.
7. Technology.
Small scale industries do not require high level of technology.
8. Dispersal of Manufacturing Activity.
Small- scale industries make it possible to transfer
manufacturing activities from congested metropolitan cities to
the rural and semi urban areas.
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9. Poor Organization and Management.
The management and organization of small-scale industry is
poor and negligible. There is no delegation of authority.
10. Ownership.
Most of the small-scale industries are privately owned and
organized as sole proprietorship. The owners and the family
workers generally form the largest component of small- scale
force.
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Importance of small scale industry
Small scale industries play an important role in the process of
country’s industrial development. It accounts for 40% of the total
values of industrial production and contributes directly about 33% of
aggregate exports.
In a developing country like India it is a small scale industry that
constitutes the backbone of industrial structure. Its development has
created vast employment opportunities and has also brought about
decentralization.
The following are the importance of SSI.
1. Labour intensive: - SSI do not require large amount of capital.
They are labour intensive and can provide employment to large
amount of people. The energy of the unemployed and the
underemployed may be utilized for productive purpose in the
economy.
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2. Equitable distribution of income and wealth: - By creating
opportunities for small business, small enterprises can bring
about a more equitable distribution of income and wealth which
is socially necessary and desirable.
3. Production: - SSI projects can be undertaken in a short period
and hence can increase the production in the short run and the
long run. The small sector produces a large production of the
national products.
4. Dispersal of manufacturing activities: - SSI will make possible
transfer of manufacturing activity from congested cites to the
rural and semi urban areas. This will help in bringing about a
balanced regional growth.
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5. Linkages: - The large scale industries create an opportunities or
facility for growth of small scale industry. The growth of large
motor industry will create opportunities for setting up of small
service station and repair centers.
6. Own identity: - Small scale enterprises have their own place in
the country’s economy. Imperfect competition protects the small
firms market and enables them to exist even if they are not
efficient in terms of cost.
7. Mobilization of services: - In the rural areas savings are
generally used in unproductive consumption. The growth of
cottage and small scale industry can offset the investment
opportunities to people living in under developed countries.
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8. Export potential: - Nearly 20% of the total value of export
comes from small scale industry. The main items of export of
small scale sectors include engineering goods, diamond cutting,
pharmaceuticals , sports goods , finished leather, ready made
cotton garments , processed foods , etc.
Apart from this, the small scale enterprises have the following
advantages too :
• They are innovative and productive.
• The products of these enterprises earn a substantial foreign
exchange.
• They have a favorable capital output ratio.
• They meet substantial part of increasing demand for consumer
goods including human consumption goods.
• They require a short gestation period.
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Opportunity
The opportunities in the small-scale sector are enormous due to the
following factors:
Less Capital Intensive
Extensive Promotion & Support by Government
Reservation for Exclusive Manufacture by small scale sector
Project Profiles
Funding - Finance & Subsidies
Machinery Procurement
Raw Material Procurement
Manpower Training
Technical & Managerial skills
Tooling & Testing support
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Reservation for Exclusive Purchase by Government
Export Promotion
Growth in demand in the domestic market size due to overall
economic growth
Increasing Export Potential for Indian products
Growth in Requirements for ancillary units due to the increase in
number of greenfield units coming up in the large scale sector.

Small industry sector has performed exceedingly well and enabled

our country to achieve a wide measure of industrial growth and
diversification.
 Entrepreneurship Management

Business Incubation Program

for SSI

Prof Bharat Nadkarni

 Entrepreneurship Management
Small – Scale business entrepreneur is a lone force behind
starting, sustaining and running his firm. Therefore, if he is
strengthened the business would automatically become
strong on its own. Hence, for sustaining the enterprise it is
very important to equip him with the support system.
It was found that the mortality rate in SSI is very high. The
Government, therefore, planned Business Incubation
Programs to help small businesses by providing support at
Start up or when they find themselves unable to sustain.
 Entrepreneurship Management
The Incubation program provide consultancy support in
following forms :
1. Basic benefit of Office space
2. Coaching
3. Funding
4. Technical, Financial and Managerial
5. Marketing Research Study and Forecasting
6. Modernisation schemes and financial & technical help for
the same
7. Growth Strategy
8. Other common services
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Support Organisations for SSI & Tiny Sector
1. Small industries development organisation (SIDO)
Apex body for formulating policies for SSI.
2. Small industries service institute (SISI) - it’s a service agency
provides tech. and mgmt consultancy services
3. National small industries corpn. Ltd. (NSIC)
helps SSI securing govt orders
4. Small industries development bank of India (SIDBI)
Micro financing, bill discounting
5. Technology bureau for small enterprises ( TBSE)
technology transfer, facilitating joint ventures
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Support Organisations for SSI & Tiny Sector
6. Maharashtra industrial development corpn. (MIDC)
development of industrial areas by acquiring land,
developing infra stucture
7. Maharashtra small scale industries development corpn. Ltd.
(MSSIDC)
supply of raw material credit, bank guarantees, credits,
warehousing services.
8. Maharashtra industrial & technical consultancy services ltd.
(MITCON)
policy and macro studies, region and industry studies, long
range planning, computer services, market research.
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S I D B I : (Small Industries Development Bank of India)

Functions

1. Refinance Assistance

2. Direct Assistance

3. Bills Scheme
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1. Refinance Assistance
a. Seed capital scheme
b. Single window scheme
c. Provision of term loan
d. Scheme for tourism related activities
e. Equipment refinance scheme

2. Direct Assistance
a. ISO 9000 scheme
b. Project finance scheme
c. Scheme for foreign currency
d. Pre-shipment credit foreign currency loan. (PCFC)
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3. Bills Scheme
a. Bill direct discounting schemes
b. Bill rediscounting scheme

• SIDBI Venture Capital Ltd.

• SME Growth Fund

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S I S I: (Small Industries Service Institute)
Schemes of assistance and services
1. Technical consultancy services
a. Technical guidance
b. Identification and preparation of Business plans
c. Selection of equipment, M/c, Raw materials
d. Technical upgradation
e. Participations in Seminars, Workshops, Clinics
2. Managerial Consultancy Services
3. Economical Investigation Services
4. Entrepreneurial and Ancilliary Dev. Programs
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N S I C : (National Small Industries Corporation)
a. Composite Term Loan Scheme
i. M/c and Equip. Hire purchase schemes
ii. Equipment leasing
iii. Working capital finance
iv. Raw materials assistance
v. Marketing support programs
vi. Tender marketing
vii. Govt. stores purchase program
viii. Special Export programs – UN supplies
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