ENTREPRENEURSHIP DEVELOPMENT

ENTREPENEUR
Applied to business initially by French Economist, Cantillon in 18th century, to
define a dealer who purchases the mean of production to combine them into
marketable product.
Management Guru Peter Drunker ... The entrepreneur always search for
change ,responds to it & exploits it as an opportunity
An entrepreneur can both be originator or the value enhancer
A person with a vision, recognize & pursue opportunity, create & establish
business/new ventures, take into account the risk involved , have control over the
present & future & maintaining the flexibility to change.
ENTREPRENEURSHIP
Is the pursuit of a opportunity in creating the organization
A creation of new organization with their resultant jobs & wealth creation
Is the process of creating value by bringing together a unique package of resources
to exploit an opportunity

CHARACTERISTICS/QUALITIES OF AN
ENTREPRENEUR

NEED-ACHIEVEMENT
PULLING THEIR OWN STRINGS
MODERATES RISKS
ABILITY TO TOLERATE AMBIGUITY
MORE DONE IN LESS TIME (despite the objections of others)
Vision
Versatile Knowledge ( technological, operational , financial & market dynamic)
Desire to achieve
Independence
Able to take calculated risk
Responds positively to challenge
Self confident and optimistic
Value Addition Flexible & able to adapt
Able to get along with others better
Energetic & efficient
Dynamic Leader
Responsive to suggestions
Takes initiatives
Response to criticism
EMERGENCE OF ENTREPRENEUR
Background Factors
Education, Training & Experience
Family & other Support
Financial Conditions
Economics Factor
Government Policies

Financial Assistance
Ancillary Support
Factors of production
Rewards
Recognition
Social Status
Motivational Factors
Personal
Need for Achievement
Business
ENTREPRENEUR CONTRIBUTION

Develop New Market

Develop New Sources of Materials
Mobilize Capital Resources
Introduce New Technologies
Generate Employment
FACTORS AFFECTING ENTREPRENEUR

INTERNAL FACTORS
Internal factors are those which can be controlled by the management of
the unit
Entrepreneur Oriented Factors
Low risk bearing capacity
Low motivation
Lack of technical Knowledge
Lack of training
Production Related Factors
Location disadvantages
High cost of inputs
Poor capacity utilization
Poor quality controls
Inadequate inventory
Finance Related Factors
Lack of access to non institutional finance
Excessive dependence on financial institutions
Inadequate working capital
Non-availability of credits at right time
Delays in payment of customers
Delays in loan sanction
Marketing Related Factors
Promotional plans
Expansion Plans
New Product introduction
Product Cancellation
Sales Force Challenges
Pricing Strategies
Market expansion to new customer

EXTERNAL FACTORS
External factors are those that affect the market served by our business,
but are generally beyond our control
Government Policies
Business Trends
Shortage of power,water,transport & other critical raw materials
Consumer behavior
Customer Financial Situation
Competition
Technological Change
Industry Trends
Union
Inflation

ENTREPRENEURS FUNCTION

INNOVATION & DECIDING THE PROJECT

Foresee the potentially profitable opportunity & tries to exploit it.
Implies doing new things or doing of things that are already being done in a
new ways.
Includes introduction of new products , creation of new markets, application
of new process, discovery of new & better resources of raw materials
RISK-TAKING
Individual willing to assume risks involved in innovations, new ventures &
expansion of the existing venture.
Guarantees interest to lenders, wages to employees, rent to land lord etc.
Risks due to possibility of changes in the taste of consumers, techniques of
productions & new innovations.
RAISING FINANCE
Personal saving
family & friends
Banks,
Govt. Institution,
Public issues
PLANNING PRODUCTION
Bringing together various factors of production
Allocation of resources to minimize losses & reduce cost of production
Line of business
Capital to employ
Expansion & contraction of the size of the total business
Location & technique of production
MANAGING ENTREPRISE
Production plans
Arrangement of finance
Raw material purchase
Sales organization
Personnel management
EARNING PROFITS
Self & share holders
Lenders ( banks, F.I, Debt)

ENTREPRENEURIAL MOTIVATION

MASLOWS NEED THEORY

Self Actualization (Self Fulfillment)
Esteem (Prestige, status, self respect)
Social Needs(Affection, Friendship, belonging)
Safety & Security Need( protection, order, stability)
Basic Psychological Needs (food, water, shelter)
THE ACHIEVEMENT MOTIVATION THEORY
Need for Achievement
o Desire to do well not for the sake of social recognition but for inner personal
accomplishments
o Take risks, work hard, find new things, save money, reinvest the saving in
industry
o Ambition is the lever of all motives & Aimless life is a Goal less game
Need for Power
o Control the Envt.
o Leader follower relation
Need for Affiliation
o Strong desire for approval
o Sincere interest in the feelings of others

ENTREPRENEURIAL BARRIER
Environmental Barriers
Raw Material
o Non ava. Of raw material specially during peak season
o Increase in price
o Shifting towards alternate goods/service ( plastic to theromocol glass)
Labor
o Lack of skilled labor
Machinery
o Rapid technological development obsolete the existing
Land & Building
Other infrastructure requirements
Financial Barrier
Personal Barrier
Emotional blocks
Lack of confidence
Lack of dependability on others
o Need to replace the initial largely informal management with formality
o Spotting & filling markets needs than devising new effective management
systems
o Need is to employ people, exporting, total quality management, raising
equity
Lack of motivation
o Failure leads to demotivation

Lack of patience
o Desire to achieve in the first attempt
o Achieve success through CAKEWALK
Inability to dream
o Losing of interests for expansion
o THINK BIG TO ACHIEVE BIG
o Sense of pride/embarrassment
Societal Barrier
ENTREPRENEURIAL BARRIER
o Lack of social networks
o Deficiency in demands
o Cultural obstacles
o Crime
o Govt. Regulation

CLASSIFICATION OF ENTREPRENEURSHIP

Based on OWNERSHIP

Pure Entrepreneur e.g., Dhirubhai Ambani

Big Risk Taker
Responsible for inception of the business
Most creative ones
Second Generation Operators of family owned business e.g., Mukesh
& Anil Ambani
One who carry on the family tradition of doing business
Franchises, though restricted in freedom, have to invest their own
money & time in business
Owner Managers
Ones who have bought the business from the founders
Based on PERSONALITY
The Personal Achiever
Desire for Self- fulfillment
Prove their excellence in job performance
Self Driven
No external motivation
E.G Narayan Murhty
Induced Entrepreneur
One who are induced by some external factor to take up
entrepreneurship like supporting government policies, facilitating
institutional support
E.G Govt. providing subsidies, tax benefits
The Expert Idea Generator-Ability to sense the demand, Essence of
Entrepreneurship, e.g Bill Gates
The Real Manager
Ones who have bought the business from the founders
Believe in incremental change rather than radical
The Real Achievers
Based on THE TYPE OF BUSINESS

Business Entrepreneur
One who conceives an idea for a new product or service
Tap both production & marketing
Trading Entrepreneur
Ones who undertakes activities other than the manufacturing work
Identifies potential markets, stimulates demand
Agricultural
Raise the productivity of agriculture through mechanization, irrigation
& application of technologies for dry land agriculture
Industrial Entrepreneur
Identifies the potential needs & tailor product & service to meet the
needs
Has the ability to convert economic resources & technology into a
profitable venture
Corporate Entrepreneur
Ones who demonstrates his innovative skill in organizing & managing a
corporate undertaking
Based on AREA
Urban
Rural
GENDER & AGE

Based on MOTIVATION
Pure Entrepreneur
Ones who are motivated by psychological & economic rewards
Undertakes a entrepreneurial activity for his personal satisfaction in
work, ego & status
Induced Entrepreneur
One who is induced to take up an entrepreneurial task due to
favorable policy measures such as assistance, incentives &
concessions
Spontaneous Entrepreneur
Start their business out of their natural talents
Persons with initiative, boldness & confidence in their ability
Motivated
New Entrepreneur are motivated by their desire for self fulfillment
Based on STAGES OF DEVELOPMENT
First Generation Entrepreneur
Ones who starts an industrial unit by means of an innovative skill.
An innovator
Modern Entrepreneur
One who undertakes those venture which go well along with the
changing demand in the market
Ventures which suit the current marketing needs
Classical Entrepreneur
Stereo type entrepreneur

Men
Women
Young
Old

Aim is to maximize the economic returns at a level consistent with the

survival of the firm
Women Entrepreneur Enterprises
First time in 1988, termed as SSI unit/industry-related service
Managed by one or more women entrepreneurs
Based on USE OF TECHNOLOGY
Technical Entrepreneur
Craftsman type
Develops new & improved quality
Concentrate more on production than marketing
Professional Entrepreneur
Establisher but not the runner ( Cairn India)
Non Technical Entrepreneur
Developing new marketing & distributions strategies
/industry-related service
Managed by one or more women entrepreneurs

CLASSIFICATION OF ENTREPRENEURSHIP
Innovative Entrepreneurs
o For bearers of change in the business
o Full of creative idea & offer innovate products
o Networking ( pigeons- formal postage-telephonic-mobile-internet-e-mailvideo conferencing)
o Incremental values ( ring tones, camera, mobile television, net surfing)
Imitative Entrepreneur
o Adapt a new idea
o Risk-averse
Fabian Entrepreneur
o Highly cautious & sceptic
o Not interested in doing the change & they do it otherwise they will be out of
the market
Drone Entrepreneur
o Not open to creativity & change
o Prefers facing losses to introducing changes in processes, equipments &
policies
o Kicked out by changing Envt.
Copreneurs
o Husband & wife start business ( Ambay India)

CONCEPT OF ENTREPRENEURSHIP

It is an attempt to create value through recognition of business opportunity, the

management of risk-taking appropriate to the opportunity and through the
communicative & management skills to mobilize human, financial & material
resources necessary to bring a project to function
Refers to the functions performed by entrepreneur in establishing entreprise
Management = what manager do,
Entrepreneurship= what entrepreneur do

ENTREPRENEURSHIP DEVELOPMENT
Refers to the process of enhancing entrepreneurial skills & knowledge through
structural training.
Aims to enlarge the base of entrepreneurs in order to fasten the pace of new
ventures
Accelerates employment generation & economic development
Acts as a catalyst for rapid growth of small & medium industries.
1980 onwards, efforts were being made on identifying, training, motivating ,
equipping & developing people who otherwise would not accept entrepreneurship
as a career
WHY E.D
Accelerate the rate of economic development
Achieve the objective of balanced regional development
Problem of unemployment
Transition from tightly integrated to a market led , outward economy
Only possible when there is emergence of multitude of a small scale & rural
entreprise
Urban led entrepreneurial activity to rural entrepreneurial activity
STRATEGIES FOR ENTREPRENEURSHIP DEVELOPMENT
Choose the industries to develop.
Complete demarcation between public/private sectors industry
Existing publics sector should work on R & D
Build infrastructure.
Deregulate, privatize, where appropriate.
Facilitate entrepreneurship.
Motivate individual with abilities to come forward
Micro-lending
Management education & industrial training
Support small and medium scale enterprises.
Development of backwards area/region
Programmes to be build for entrepreneur whose technical & managerial
competence bring the desired development
Well designed economic policies
fiscal, commercial, industrial, & agriculture
FACTORS INFLUENCING ENTREPRENEURSHIP DEVELOPMENT
ECONOMIC
Capital
Ava. Of capital brings together all mean of production
Labor
Raw Material
Market
NON-ECONOMIC
Legitimacy of Entrepreneurship
Social Mobility
Physical Need
ROAD BLOCKS IN E-D
Non existence of clear cut policy

Lack of working capital/adequate financial support

Mis judging the market
Communication problem
Location
Credit associated problem
Political situation
Problem associated with raw material ava. & time boundedness
Lacks of training facilities e.g absence of entrepreneurial educational various
professional & business courses
Lack of knowledge regarding facillities & incentives offered by the Govt.

Entrepreneurial Development Cycle (3S

Cycle of Entrepreneurship)
( M.P.Akhori)

SIMULATORY
Entrepreneurial education
Planned publicity for entrepreneurial opportunities
Identification of potential entrepreneurs through scientific methods
Motivational training
Help & guidance in selecting products & preparing project reports
Making ava. Techno economic information
Evolving locally suitable new products
Ava. Of locally agencies for training & counselling
Creating entrepreneurial forum
Recognition of entrepreneurial skills
SUPPORT
Registration of unit
Arranging of finance
Providing land, power & water
Guidance for obtaining machinery
Supply of scarce raw material
Getting licences
Granting tax relief /subsidies
Offering management consultancy
Help marketing product
Providing information
SUSTAINING
Help modernisation
Help diversification/expansion
Additional finance for fully capacity utilization
Deferring repayment/interest
Diagnostic industrial extension
Policy change
Creating new avenues for marketing
Quality testing
Need based common facilities centre

Entrepreneurial process

Entrepreneurial development is a process in which persons are injected with

motivational drives of achievement & in sight to tackle uncertain & risky situation
especially in business unit
Timmons Model of the Entrepreneurial Process
STAGES IN ENTREPRENEURIAL PROCESS ( 1ST THEORY)
IDENTIFY AN OPPORTUNITY
They see oppurtunity where others dont.
Identification of opportunity at the right time is the utmost important first
movers advantage
E.g Kushagra Bajaj of Bajajs Hindustan look the opportunity & growth in
sugar industry & made Bajaj Hindustan top notch in 2005.
ESTABLISH VISION
A clear understanding of the concept & what they are trying to do
Readjust his vision to keep his dream viable & fruitful
D.Ambani dream s of having mobile in every body hands.
PERSUADE OTHER
Can communicate the concept effectively
Forming the foundation team
Narayanmurthy of Infosys was supported by his wife ( financially &
psychologically) & couple of friends.
GATHER RESOURCES
Money, people & other things
Financial Resources..
Personal saving, family & friends, Banks, Govt. Institution, Public issues
Operating resources
TangibleMachineries, raw material, land office eqippment
Intangible Operating procedure, Transpotation, Management
Human Resource Development permanent/temporary, type of man
power, selection procedure, training, compensation, performance
appraisal, rewards, grievance procedure
Information Resources MIS
CREATE NEW VENTURE,PRODUCT OR MARKET
CHANGE/ADAPT WITH TIME

entrepreneur v/s manager

Who is entrepreneur?
A person, who innovates, organizes, manages and takes the risk of running an
enterprise.
One who allocates and manages the factors of production and bears risk.
One who has the ability to perceive latest economic opportunities and to devise their
exploitation.
The supplier of resources, supervisor and coordinator, and ultimate decision maker.
Who is manager?
A manager is someone who plans and makes decisions, organizes, leads, and
controls human, financial, physical, and information resources.

Managers in any organization are responsible for the performance of one or more
of their subordinates.
Managers must mobilize people and resources to accomplish tasks within their
department and are also held accountable for the results of their department.
Further, their goal is to help the organization achieve a high level of performance
through management.
Roles of a Manager

Interpersonal Role:
Figurehead-performs activities like greeting visitors, give awards to employees etc
Leader- Lead and motivate subordinates
Liaison- He is a link between organisation and outsiders.

Informational Role:
Monitoring- Collects information.
Disseminator- Distributes information.
Spokesperson- Represents his unit/organisation while interaction with outsiders.
Decisional Role:
Entrepreneur- Assumes risk in terms of results, due to dynamic factors of business.
Disturbance Handler- Tries to control forces that tend to disturb smooth functioning
of the organisation.
Resource Allocator- Allocates human, financial and physical resources according to
needs.
Difference between Entrepreneur and Manager
Risk bearing:
An entrepreneur not only organizes the entire production process but also undertakes
risks and uncertainties. An organizer starts production with an anticipation of demand
for his product. But when he actually brings the product to market, there may or may
not be demand for his product. This is a non-insurable risk he has to undertake. Thus
a brave organizer has to shoulder certain insurable and non-insurable risks also.
Innovation:
An entrepreneur must be an innovator to survive in the market and to retain the same
position for his product. Innovation means introducing new changes in production or
technology or market for the product. Profit as a reward for innovation is not a stable
one. It appears, disappears and reappears. Only the imaginative skillful few will remain in
the industry for ever.
Motive:
The main motive of an entrepreneur is to start a venture by setting up an enterprise.
He understands the venture for his personal gratification.
But, the main motive of a manager is to render his services in an enterprise already set
up by someone else.
Status:
An entrepreneur is the owner of the enterprise.
A manager is the servant in the enterprise owned by the entrepreneur.
Risk-bearing:
An entrepreneur being the owner of the enterprise assumes all risks and uncertainty
involved in running the enterprise.
A manager as a servant does not bear any risk involved in the enterprise.
Objectives:

An entrepreneur and a manager differ in their objectives. Entrepreneurs objective is to

innovate and create and he acts as a change agent.
where as a managers objective is to supervise and create routines. He implements the
entrepreneurs plans and ideas.
Rewards:
The rewards an entrepreneur gets for bearing risks involved in the enterprise is profit
which is highly uncertain.
A manager gets salary as rewards for the services rendered by him in the enterprise.
Salary of a manager is certain and fixed.
Fraudulent behavior:
An entrepreneur is not induced to involve in fraudulent behavior where as a manger
does.
A manager may cheat by not working hard because his income is not tied up to the
performance of the organization
Innovation:
Entrepreneur himself thinks over what and how to produce goods to meet the changing
demands of the customers. Hence, he acts as an innovator also called change agent.
But, what a manager does is simply to execute the plans prepared by the entrepreneur.
Thus, a manager simply translates the entrepreneurs ideas into practice.
Qualification:
An entrepreneur needs to posses qualities and qualifications like high achievement
motive, originality in thinking, risk-bearing ability and so on.
On the contrary, a manager needs to posses distinct qualifications in terms of sound
knowledge in management theory and practice.
An entrepreneur could be a manager but a manager cannot be an entrepreneur.
An entrepreneur is intensely dedicated to develop business through constant
innovation. He may employ a manager in order to perform some of his functions
such as setting objectives, policies, rules etc. A manager cannot replace an
entrepreneur in spite of performing the allotted duties because a manager has to
work as per the guidelines laid down by the entrepreneur.
On the downside, typical manager brings professionalism into working of an
organization. They bring fresh perspectives, ideas and approach to trouble
shooting which can be invaluable.

ENTREPRENEURSHIP DEVELOPMENT
PROGRAMME ( EDP)
ENTREPRENEURSHIP DEVELOPMENT
Refers to the process of enhancing entrepreneurial skills & knowledge through
structural training.
Aims to enlarge the base of entrepreneurs in order to fasten the pace of new
ventures
Accelerates employment generation & economic development
Acts as a catalyst for rapid growth of small & medium industries.

1980 onwards, efforts were being made on identifying, training, motivating ,

equipping & developing people who otherwise would not accept entrepreneurship
as a career
WHY E.D
Accelerate the rate of economic development
Achieve the objective of balanced regional development
Problem of unemployment
Transition from tightly integrated to a market led , outward economy
Only possible when there is emergence of multitude of a small scale & rural
entreprise
The micro and small enterprises (MSEs) constitute over 90% of total enterprises in
most of the economies.
Employment generation
MSE sector accounts for about 39% of the manufacturing output and around 33%
of the total export of the India (in term of value).
Ministry of MSME-GOI
Historic
ENTREPRENEURSHIP : EDUCATION, TRAINING & RESEARCH
Evolution of EDPs in India
1970 , in Gujarat , two innovative schemes of financing new entrepreneur by GIIC
leading to 300 units being set up
Technician scheme ( TS)
New Entrepreneurs scheme ( NES)
Setting up of Centre for Entrepreneurship Development (CED)
Change in approach towards pro active identification of new entrepreneurs
lack of motivation to take risks
Non avai of information
Lack of knowledge
At present 40 different agencies in 20 states
15 Small Industries Service Institutes ( SISIs) by GOI, conduct programmes for
fresh engineers, technical diploma holders
16 Technical Consultancy Organization ( TCOs) , jointly sponsored by IDBI, ICICI,
IFCI
10-12 other agencies such as nationalized banks, management institutes ,
university etc.

Organisations providing EDP (Institutional

Support System)
National Institute for entrepreneurship and Small Business Development (NIESBUD)
Established by Government of India in 1983
An apex body for coordination and supervision on activities of various institutes
engaged in entrepreneurial development
Helps evolution of EDP, model syllabi, effective training strategies, methodology,
manuals and tools
Activities undertaken:
Organize and conduct training programmes

 Coordinate training activities of various agencies/institutes

Provide affiliation to such institutes
Hold examinations and confer certificates to trainers and trainees
Small Industries Service Institutes (SISI)
Three months part time evening courses in management
4-6 weeks part time courses in intensive training in functional areas (marketing,
finance)
Special courses in quality control, HR, production planning, product development
etc
Mobile workshops imparting training on correct usage of tools and equipment
Helps with preparation of plant layouts
Helps individual firms on specific problems faced
Small Industries Development Organisation (SIDO)
Runs EDP in collaboration with financial institutes
Gives on the job training on shop floor (carpentry, electrical devices)
Sends its officials/trainers to organisations to update their knowledge
National Small Industries Corporation (NSIC)
Provides apprenticeship for 2 years
Training supervisory staff of SSI up to 2 years
Training to engineers up to 2 years
Training workmen for 12 months
Training to set up own venture
Advice on machinery and components
Production of technologically advanced machines
Entrepreneurship Development Institute of India (EDII)
Develops programmes for entrepreneurial training and development
Develops innovative training techniques for trainers
Focused attention on women entrepreneurs with first such EDP in 1988
EDP for rural entrepreneurship development in U.P and Orissa
Famous for organising camps on entrepreneurship
Conducted EDP in Sri Lanka, Nepal, Ghana, Kenya etc
National Alliance of Young Entrepreneurs (NAYE)
Contribution in encouraging women entrepreneurship
Set up womens wing in 1975
This wing assists women in:
Getting better access to resources, infrastructure, markets
Identify investment opportunities
Attending to problems of individual industries
Sponsor participation in trade fairs, exhibitions, conferences
Organise seminars, training programmes, workshops
ROAD BLOCKS/BARRIER IN E-D
Non existence of clear cut policy
Lack of working capital/adequate financial support
Misjudging the market
Communication problem

Location
Credit associated problem
Political situation
Problem associated with raw material ava. & time boundedness
Lacks of training facilities e.g absence of entrepreneurial educational various
professional & business courses
Lack of knowledge regarding facillities & incentives offered by the Govt.

STRATEGIES FOR ENTREPRENEURSHIP DEVELOPMENT

Choose the industries to develop.
Complete demarcation between public/private sectors industry
Existing publics sector should work on R & D
Build infrastructure.
Deregulate, privatize, where appropriate.
Facilitate entrepreneurship.
Motivate individual with abilities to come forward
Micro-lending
Management education & industrial training
Support small and medium scale enterprises.
Development of backwards area/region
Programmes to be build for entrepreneur whose technical & managerial
competence bring the desired development
Well designed economic policies
fiscal, commercial, industrial, & agriculture
Training and Entrepreneurship Development Programme in India
Importance of Training
Ensures availability of skilled manpower at all management levels
Enhancing abilities, potential among entrepreneurs
Increase efficiency
Maintain and enhance product quality
Minimise wastages in production process
Minimise accidents on the job
Reduce fatigue and increase speed of work
Standardisation in industry and internal processes
Methods of Training
Individual instruction
Group instruction
Lecture method
Demonstration method
Written instruction method
Conference
Interview with Dr. H. P. Kumar, CMD, NSIC,
How does NSIC help startups and SMEs?

Help small business get assistance from the Credit Guarantee Trust Fund, if banks have
been reluctant to lend them money.
Small businesses can become suppliers to Government departments through the single
point registration scheme that we run. Under this scheme, SMEs are exempted from
payment of tender costs, earnest money and waiver of security deposit upto the
monetary limit for which the unit is registered with NSIC.
Memorandum of Understanding (MoU) with various nationalized and private sector
banks. Through syndication with these banks, NSIC arranges for credit support from
banks without any cost to MSMEs.
Provide assistance for marketing, raw material procurement and are in the process of
developing an e-commerce portal called msmemart.co.in, which will be an e-marketing
portal that can be used by both B2B and B2C businesses to reach their customers. You
have to pay an annual charge of Rs 5,000 and we will give you space to put up
information about your products and services. You can put your conditions, prices, decide
delivery schedules and so on. The website will cater to both domestic and international
businesses that operate in the MSME space.
What activities does NSIC conduct on-ground for budding entrepreneurs?
One of the things I am very proud of is the incubator centre that NSIC runs. Our
incubator centre is very different from those run by IITs. Here it is not just ideas that get
incubated, but this is a centre which provides a completely simulated environment for
running a business. Exposure is given in all areas of business operations such as
business skills development, identification of appropriate technology, hands on
experience on working projects, project / product selection, opportunity guidance
including commercial aspects of business. Low cost project technologies required for
setting up new small business enterprises are also displayed in working condition.
Budding entrepreneurs can enroll for a three-month course that we provide at the
incubation centre and get to experience live the mechanics of running a business. At the
end of the course everyone gets a course completion certificate that can be used by
entrepreneurs to avails various benefits. It entitles them to benefits like getting a loan,
etc.
Where in India are these centres setup?
We currently have 65 centres across the country and 2500 entrepreneurs have been
trained so far. The numbers have grown 33% year-on-year since we started the first pilot
in 2010. We have received enquiries to setup similar centres in Africa, Latin America, CIS
countries, Uzbhekistan and Arabian countries. Even African countries like Euthopia,
Rwanda, Mozambique, Zimbabwe and South Africa have approached us to set up
centres.
Entrepreneurship Development Programme (EDP)
Designed with an aim of encouraging self employment
Imparts training and motivates potential and existing entrepreneurs to start new
business or diversify and expand the existing one
Helps employment and wealth creation among educated unemployed youth
Well equipped to face risks and challenges as an entrepreneur
Government needs considerable human and material resource, importance to
detailed planning & implementation

Phases/Stages in EDP

Select area from existing government policy guidelines/ socio-economic reports

Techno-economic survey of the selected area; feasibility study

Identify potential and existing entrepreneurs interested in starting new
business/expansion/diversification
Training
Follow up and consultancy services

Pre-training phase
Identification & Selection of Entrepreneurs
interviews)

(written test, personal

The programme is well publicized and promoted to attract maximum applications

for screening
Selection of top 25 to 30 applicants only
Applications screened for:
Demographics and socio cultural data age, education, work exp, financial
resources, type of business etc
Motivation factors pull factors, source of encouragement, credibility, endurance,
concreteness of plans
Psychological test results- traits like risk taking, need for achievement
Designing of course curriculum
Building cases around entrepreneurs of all types, genders and all ages to enable the
students to identify with the protagonists in a case.
Selection of necessary tools, techniques and arrangement of Infrastructure.
Arranging Guest Speakers:
People who aren't larger than life, with whom students can identify themselves
Introduction to entrepreneurship
Training Phase
Creating the belief within students that they can become entrepreneurs
Personality profiling: Does the person have the right attitude to become an
entrepreneur? If not initiate remedial measures
To kindle need for achievement.
Inviting and then living with risk and managing uncertainty through case studies &
management games
Creativity, innovation and problem solving tools & Techniques.
Persistence to put in sustained efforts to make their venture succeed.
What to teach to develop successful entrepreneurs
"Fundamentals of Entrepreneurship"
How to examine needs, wants, & problems to see how they can find solutions to
them.
How to research the opportunity and idea thoroughly and select the "best"
opportunity.
Networking, Mentorship & forging Partnership: Entrepreneurship needs to be
taught as a process, not as a person. It's not about "I," it's about "We.
Profile of successful entrepreneurs
What to learn and how to learn from their failures to help them achieve success in
the future

"Fundamentals of Entrepreneurship"
Socio-politico-legal environment of business: Information on Government Policies
Accounting & Financial Management
Profile of successful entrepreneurs
How to source and employ resources: Venture Capital, Angel Investors etc: Mark
Zuckerberg, just 19 in 2006 managed $12.7 million in venture capital.
Various aspects of management: marketing, production, inventory control, labor
laws & taxation
Forecasting cash flows
What to teach to develop successful entrepreneurs
Beginning a New Venture
Developing Business Plans for their ventures and look for possible problems that
might arise: Rank the risks and the possible rewards.
Registration of firm/company, leases, employment contracts, interviewing
techniques
How to manage vendors, equipment suppliers, and customers; how to conduct
research
How to take the organization to a different level and sustain it: How do you make
the transition?
Discussion on several cases on IPOs and strategic acquisitions, as well as the
actual sale of a business.
Entrepreneurship Classroom Activities
"Business Plan Know How"
"Let's Speak 'ECONOMICS
"Visualize Your Future
"Franchising Know-How
"Market Research for the Classroom
"Business Startup Simulation
"Ethical Behavior is Good Business"
Promotion Basics
Post

Training Phase
To see how far the objectives have been achieved.
Suggesting guidelines for framing future policies to improve performance
Assistance in selection location of unit.
Help in bringing the trainees in touch with financial institutions
Entrepreneurial Initiatives in India
Institutes of national importance that have been setup through an act of
parliament (IITs, IIMs, NITs, AIIMS, IISc etc.) are the main leaders in the field of
knowledge transfer.
Examples:
o
Organizing Competitions like Great Idea, helping and incubating
ideas.
o
IIT Kharagpur: Nina Saxena Excellence in Technical award (Yearly).

Entrepreneurial Initiatives in India-

Top Incubation Center

1.
Centre for Innovation, Incubation&
Entrepreneurship (CIIE) - IIM Ahmedabad
Set up in 2001
Since inception CIIE has 15-odd innovations grow out of the incubation
centre in varied technologies
2.
Society for Innovation and Entrepreneurship (SINE)- IIT Bombay
Set up in 2004
It currently has 16 companies under its incubation programme
Entrepreneurial Initiatives in IndiaTop Incubation Center
3.
Cell for Tech Innovation, Development & entrepreneurship support- IIT
Chennai
Set up in 2000
Organises national level competitions, Breakthrough (general business plan
competition) and Genesis (social entrepreneurship plan competition)
4.
Society for Innovation and Development (SID) - IISc, Bangalore
Set up in 2006
The investigator is given a seed capital for Rs 20 lakh a year for two years as
soft loan for the approved plan
Entrepreneurial Initiatives in IndiaTop Incubation Center
5.
The SP Jain Centre for Entrepreneurship Development- SPJIMR
16-week 'Start Your Own Business' programme-a public programme held
every six months.
6.
Technology Business Incubator (TBI) - BITS Pilani
In association with DST, BITS has established Technology Business Incubator
in the area of embedded systems and VLSI design back in 2004
So far, TBI has helped spawn ten companies.
7.
Technology Incubation and Entrepreneurial Training Society (TIETS) IIT
Kharagpur
Set up in 2005, So far, the institute has been able to incubate two companies
through Concipio over the last three years. Besides, an in house panel has
helped 11-12 ventures take wing
8.
Nirma Labs, Nirma University, Ahmedabad
Established in 2004, Nirma Labs used to pride itself in a three-step model for
students who were interested to start their own businesses-training,
incubation and funding.

Objective of Incubation Centre

Encourage students with entrepreneurial bent of mind to come up with innovative
ideas and channelise their efforts to give births to new ventures by providing
mentorship at different stages of development of business venture

Facilitate idea generation and impart knowledge in business plan development and
implementation to the aspiring entrepreneurs
The Incubation Centre offers on-site business facilities like: office space,
computers, printers, communication systems, and Internet connectivity etc.
It also provides a meeting room for discussion, to propel ideas and to network.

Role of Incubation Centre

Facilitating visits to various research and design institutes across the country to
enable students to obtain ideas for new business ventures
Arranging for part-time assistance, short-term and long-term internships with
entrepreneurial ventures.
Real-world projects with startups
To provide mentorship for converting Ideas to Business Plans to Startups
Offering assistance in writing a business plans
Networking with other Industry Associations, entrepreneurial chambers
Arranging interactions between students, entrepreneurs, venture capitalists, and
others from the corporate world. To look in to the procedures, methodology, access
funding, mentoring among other activities for setting up and sustain a business
Provided infrastructure, networking, financial support, mentoring, etc.
Provide valuable management and consultancy advice to guide them through all
the how's, why's, what's and when's of business
Impart the hand holding support that most start-ups need, to enable them to move
forward and experiment with business models

CREATIVITY & ENTREPRENEURIAL PLAN

CREATIVITY
Creativity

Creativity is thinking up new things. Innovation is doing new things. Innovation is the practical
application of Creativity.
3m saying
Creativity isnt beginning from scratch, from a blank sheet.
Creativity isnt developing a new skill like, thinking out of the box, or any other tricks.
Creativity is Innovation (old becomes new)
Embracing the unexpected
Benefits of Creativity
Creates balance & order
Positive attitude
Maintain an individual's reliability
Resolve conflicts
Make thought & feeling clear
Leads to New innovation
Three Components of Creativity

Expertise
is, in a word, knowledgetechnical, procedural, and intellectual.
Three Components of Creativity
Creative-Thinking Skills
Creative-Thinking Skills determine how flexibly and imaginatively people approach problems. Do
their solutions upend the status quo? Do they persevere through dry spells?
Motivation

Not all Motivation is created equal. An inner passion to solve the problem at hand leads to solutions
far more creative than do external rewards, such as money. This componentcalled intrinsic
motivationis one that can be most immediately influenced by the work environment.
Creative Process

1.
2.
3.
4.
5.
6.

Formulation of the problem

Preparation
Saturation
Incubation
Illumination
Verification
1. Formulating The Problem
Formulating the problem is far more essential than its solution, which may be merely a matter of
mathematical or experimental skill.
To raise new questions, new possibilities, to regard old problems from a new angle
requires
creative imagination and marks real advances in science and business
Creativity Involves:
Convergent thinking:
Proceeds towards a single answer
The intellectual ability to logically evaluate, critique and choose the best idea from a selection of
ideas.
Focuses on Appropriateness
Groups excel at convergent thinking
Divergent (lateral) thinking:
Moves outward from the problem in many possible directions
Thinking without boundaries
The intellectual ability to think of many original, diverse, and elaborate ideas.
Focuses on Novelty
Individuals excel at divergent thinking
The world we have made as a result of the level of thinking we have done thus far creates problems we
cannot solve at the same level of thinking at which we created them.
Albert Einstein
2. Preparation
Gather any information the solution or response needs to account for
Set up criteria for verifying the solution's acceptability.
Creativity Involves Hard Work
Knowledge of Multiple Domains
Preparation
Genius is one percent inspiration, and ninety-nine percent perspiration.
Thomas Edison
3. Saturation
Becoming engulfed in the specifics and focusing on the problem.
Albert Einstein
Daydreamed about travelling on a sunbeam to the end of the universe to answer the question:
"What would happen if one could follow a beam of light at the speed of light?".
4. Incubation
Step back from the problem
Let our minds contemplate and work it through.
Time Period can last minutes, weeks, even years.

Satisfaction

 Keith Richard from the Rolling Stones told a story about the creation of their hit
"Satisfaction". He said he'd just gotten a cassette tape machine which had just
been invented and he used to sleep with his guitar.
He got up in the morning and saw that his tape had run to the end, so he rewound it. He played it
and heard the opening riff to "(I Can't Get No) Satisfaction" - followed by 30 minutes of him
snoring!"
Incubation
A hunch is creativity trying to tell you something.
Frank Capra
Ideas arise from the mind to provide the basis of a creative response.
Pieces of the whole or the whole itself
Short Time Period
Ralph Waldo Emerson
Look sharply after your thoughts, They come unlooked for, like a new bird seen in your trees, and, if you turn to
your usual task, they disappear.
5. Verification
Executes activities to demonstrate whether or not what emerged in illumination satisfies the need and
the criteria
Blocks to Creativity
Bias of Negativity. Adults in particular
lose their ability to see both positive
and negative aspects of a problem or situation or solution. Thus, they self limit
False Assumptions. Individuals make false assumptions about problems in order to fit problems into
their previously established
decision making processes.
Cultural Orientation. We often make assumptions about problem solving based on the organization,
culture and society that surround our behavior. These assumptions may not always be valid.
Einstellung effect. The memory for a particular sequence of operations binds decision makers so they
fail to examine other possibilities and uncover a simply solutions.
Inert Knowledge. Failure to access useful information because the situation differs

Blocks to Creativity
Functional Fixation. Too often we
focus on what has worked in the past
and fail to understand the problem area has changed.
Framing. Framing the problem the wrong way such that the focus is on gains rather than losses or
outcome versus process.
Overconfidence. Individuals tend to be overconfident in their ability to solve problems. They
remember their successes and forget about their failures.
Fearing rejection of ideas
Being afraid of making mistakes
Expecting others to be creative
Being unwilling to question others
Being unwilling to accept others input
Being unwilling to collaborate
Darwin: ...those who learned to collaborate and improvise...prevailed.
Idea Generation
First step in entrepreneurial activity
Involves the search for product ideas that will help firms achieve their strategic objectives.
These ideas need to be gathered and stored efficiently.
Research has suggested that 5-10 ideas need to be gathered before a viable product idea is found.
Creativity,Innovation & Idea

Creativity is the ability to develop new ideas and to discover new ways of looking at problems &
opportunities
Innovation is the ability to apply creative solutions to those problems & opportunities to enhance or to
enrich peoples lives
Having a great new idea is not enough; transforming the idea into a tangible product, service or business
venture is the essential next step
Leadership expert Warren Bennis says. todays successful companies live and die according to the
quality of their ideas
Millions of people come up with creative ideas for new or different products & services; most of them,
however, never do anything with them
Entrepreneurs are those who connect their creative ideas with the purposeful action & structure of a
business
Thus successful entrepreneurship is a constant process that relies on creativity, innovation & application
in the marketplace
Why & How
Recognizing Opportunities & Generating Ideas
1. Economic factors
2. Social factors
3. Technological Advances
4. Political Action/Regulatory statutes
Economic Forces

Consumers level of disposable income

Interest rate changes

More women in workforce

Social Forces

Both parents working: fast food

People too busy: Sony Walkman

Life stress: spas, wellness clinics

Technological Advances

Cell phones: people very mobile

E-commerce: people very busy

Political Action

New laws: help companies comply

Concessions like incentives , liberal taxation etc. on import substitute

Terrorism: Products & services to protect

1. Family & work patterns
2. Aging of the population
3. Increasing diversity in the workplace
4. Globalization of industries
5. Increased focus in health care & fitness
6. Proliferation of computers & Internet
7. Increase in numbers of cell phone users
8. New forms of music & entertainment
e.g Manukbhai of Pan Parag Pan Masala

Sources of New Ideas

Consumers
Informal & formal monitoring of potential ideas and needs- express their opinions.
Idea & need represents a large enough market to support new venture .
Existing Companies

Potential should also establish a formal method for monitoring & evluating competitive products
& services on the market
Existing companies survey
Profit areas
Govt. incentives
Export potential
New product idea
Distribution channels
Channel members-Excellent source of new ideas bcoz of their familiarity with the needs of the
market
Help in marketing the newly developed products
Existing products & services
Value addition, specific advantage to consumers, govt policies regarding import & export
Substitution
Replacement market- ink pen to gel pen
Technology chageover- wooden to PVC doors , chair & tables
Government
New product ideas can come in response to government regulations.
Organising Trade fair,
Research and development
Largest source of new ideas is the entrepreneurs own research and development efforts. E.g
LED, spect with changing colours etc.

Methods of Generating New Ideas

Focus groups
An excellent method for initially screening ideas and concepts.
Generally used for choosing apperel designs, cosmetics , health care products etc.
number of group members from 6-12
Todayss & tomorrow market needs
People selected are familiar with issues
Whats on customers mind
Conducted by trained moderator
Success depends on moderators ability to ask questions and keep on track
Co. womens slipper-concept of warm & comfortable slipper thats fits and old shoe
12 women focus group
Brainstorming
Generally used for generating ideas for new product packaging & distribution
4 Rules should be followed
1. No criticism is allowed by anyone in the group
2. Freewheeling is encouraged-wilder the idea the better
3. Quantity of ideas is desired- greater the no. of ideas the greater the likelihood of the emergence of useful
ideas
4. Combinations and improvements of ideas are encouraged- ideas of others can be used to produce still
another new idea
Brainstorming:
generate ideas quickly, no analysis or decision making.
Enthusiasm, originality, lots of ideas
Session moves quickly
Example: Bank to develop journal for industrial client

Focus group and brainstorming is different in the sense that FG is structured or moderated...while BS is
not a debate or discussion like that....its people giving lots of ideas without criticism allowed
Reverse brainstorming
A group method for obtaining new ideas focusing on the negative.
Finding fault by asking questions in how many possible ways can the idea flop
Maintain group morale
Stimulate innovative thinking
Often involves identification of everything wrong with an idea- followed by discussion how to
overcome these problems
Brainwriting
Form of written brainstorming.
It is a silent, written generation of ideas by a group of people.
This sheet can b passed around on e-mail as well
Pass the sheet around reach its owner
The only thing wrong with it is that there is no excitement of verbal discussion
Problem inventory analysis
Instead of generating new ideas themselves consumers provided with list of problems in general
product category
Then asked to identify & discuss products in this category that have particular problem
Can be used to test a new product idea.
Effective method since its easier to relate known products to suggested problems & arrive at a
new product idea than to generate an entirely new product idea by itself
Results must be carefully evaluated as they may not actually reflect a new business opportunity.
Gordon method
Method for developing new ideas when the individuals are unaware of the problem.
u dont give away too much detail about the problem
headline would be i wish there was something v cud do about the bad colors in my TV screen
Or Latest trends in fashion world
Checklist method
Developing a new idea through a list of related issues.
List of questions, suggestions, are developed for in depth discussions & arrive at a business idea
Who, how , why of the products
New ways of usage
Product modifications
Etc.
Product Planning & Development Process
Companies screen ideas by looking at:
consistency with corporate objectives
ability to serve customer needs
market potential
ability to manufacture, market, and service the product
Criteria should be:
Evaluate the new idea in terms of:
Market opportunity
Competition
Marketing system
Financial factors
Production factors.
Market opportunity

Competition
Marketing system
Financial factors
Production factors.

Idea Feasibility Analysis?

Feasibility Analysis
Preliminary evaluation of idea to determining if its worth pursuing
Provides more secure notion that a business idea is viable
Did analysis, feasible business:
Personal experience, observed others, surveyed customers
Did analysis, not feasible:
Dropped idea, focused on core competency
Preparing a Concept Statement
Concept Statement
One page description of a business
Given to people who provide feedback on the potential of the idea
Purpose of feedback:
Give sense of the viability of the business idea
Suggestions for how the idea can be strengthened or altered before proceeding
Prepare before feasibility analysis
Components of Concept Statement
Description of the product or service
Description of target market
Benefits of the product or service (value proposition)
Description of product/service differentiators
Description of how product/service sold/ distributed
Description of the founder(s) of the firm
When To Conduct a Feasibility Analysis
Timing of Feasibility Analysis
After concept statement evaluation
After opportunity recognition, before business plan
Before a lot of resources are invested
Components of Full Feasibility Analysis
Product/Service Feasibility
Industry/Market Feasibility
Organizational Feasibility
Financial Feasibility
Technical feasibility
Economic feasibility
Product/Service Feasibility
Composed of two primary tests
Concept testing
Usability testing
Industry/Market Feasibility
Three primary issues a proposed business should consider:
Industry attractiveness
Market timeliness
Identification of a niche market.

Organizational Feasibility
There are two primary issues to consider in this area:
Management prowess
Resource sufficiency
Financial Feasibility
The most important issues to consider at this stage are:
Capital requirements
Financial rate of return
Overall attractiveness of the investment
Technical Feasibility
Economical Feasibility

Product/Service Feasibility
Product/Service Feasibility Analysis
Assessment of overall appeal of proposed product/service
Main idea: before rushing to development, be sure product/service is what customers want
Two components of product/service feasibility analysis:
Concept testing
Usability testing
Product/Service Feasibility: 3 reasons to conduct
1. Validate underlying premises of product/ service idea
Use phone interviews, focus groups, watch consumers perform tasks, customer advisory boards
Ex: PepsiCo developed model of 5 types of teens and tries to predict how trends move through
teen populations
2. Help developing idea
Show idea to potential customers and make changes along the way
Estimate potential market share
Survey questions
Market research surveys
Product/Service Feasibility: 1st Component
Concept Testing
Purpose: Gauge customer interest, desirability, purchase intentions
Involves showing a representation of product/service to prospective users
Occurs before the sample stage
Websites and graphic designs are taking this to a new level
Concept test concept statement
Concept test: tests feasibility of specific product/service idea
Concept statement: is a preliminary evaluation of entire business idea
Product/Service Feasibility: 2nd Component
Usability Testing
Purpose: determine ease-of-use and users perceptions of using product
While tempting to rush a product/service to market ,usability tests are good investments
of resources
Eliminate potentially frustrating aspects of product/services
Involves creating a physical prototype and giving it to users, measuring usage results, and
making modifications as necessary
Also called: user tests, field trials
Product/Service Feasibility:
3 forms of usability testing
1. Basic Prototype: fairly simple prototype that is given to friends/colleagues for feedback
American Inventor
Gym class exercise mat

2. Elaborate Usability Test: large-scale tests for well-funded or existing ventures

Lab testing, elaborate customer measurement devices (e.g., Google), etc.
3. Hybrid Test: Follow-me-home testing (e.g., day-in-the-life research)
Product/Service Feasibility: 4 Benefits
1. Getting product right the first time
2. Avoid obvious flaws in product/service design
3. Use time and resources more efficiently
4. Potentially identify complementary product/ service offerings
Industry/Market Feasibility Analysis
Industry/Market Feasibility Analysis
Purpose: assess overall appeal of the market
3 primary issues to consider:
1. Industry attractiveness,
2. Market timeliness, and
3. Identification of a niche market
Industry/Market Feasibility Analysis:
Industry Attractiveness
Issue 1: Industry Attractiveness
Primary determinant of feasibility is attractiveness of industry chosen
Characteristics of attractive industries:
1. Large and growing (growth is very important)
2. Industries are important to customers (e.g., must haves likes)
3. Early in the industry lifecycle to avoid price competition
4. Industries are not crowded with competitors
How to assess industry attractiveness?
1. Forces in the broad environment (e.g., technological, sociocultural/demographic,
political/legal, economic, global trends)
2. Primary and secondary research
Market Timeliness
Issue 2: Market Timeliness
Will the market be receptive to the product/service?
If its a modification on existing offerings (e.g., cell phones with cameras) ask:
1. Is the window of opportunity open?
2. Are customers buying?
3. Are competitors making money?
If its a breakthrough product/service (e.g., Yahoo with internet search engines) ask:
1. Can we capture a first-mover advantage?
Example: Microsoft in computer operating systems
2. Will we suffer from a second-mover advantage?
Example: IBM vs. Dell in personal computer retailing
Issue 3: Identification of a Niche Market
Niche markets are places in larger market segments that represent narrower groups of customers
3 reasons for new firms to sell to niche markets:
1. Allows a firm to establish itself in industry and avoid competing against major
competitors (e.g., specialty retailers vs. Wal-Mart)
2. Allows a firm to focus on serving specialized markets very well
3. Avoids trying to be everything to everybody in a broad market
Successful example: buyandhold.com and small scale investments

 Problematic example: Iridium and satellite phones (tried to serve everyone)

Organizational Feasibility Analysis
Organizational Feasibility
Purpose: determine if business has sufficient skills/resources to bring product/service to market
successfully
Non-financial factors important to consider here
2 primary issues to consider:
1. Management prowess
2. Resource sufficiency
Management Prowess
Issue 1: Management Prowess
Firm must evaluate the ability of the management team
Determine the passion and expertise to launch the venture
2 most important factors in this area:
1. Passion of the solo entrepreneur/founding team has for the idea
2. Extent the entrepreneur/founding team understands the markets in which the firm will
participate
Ventures with established networks have an advantage
Successful Example: eBay
Failed Example: Garden.com (e.g., no gardening/ gardening retail expertise
Resource Sufficiency
Issue 2: Resource Sufficiency
Assessment of resources needed to launch proposed venture
Focus is on nonfinancial resources:
Availability of affordable office or plant space,
Likelihood of government support,
Labor pool quality,
Proximity to key suppliers, customers, and similar firms (clusters)
Likelihood of strategic partnerships,
Likelihood of attaining
To test resource sufficiency: list critical nonfinancial resources needed to move idea forward
successfully
If resources not available, it may be impractical to proceed with the business idea
Financial Feasibility
Involves the capability of the project organisation to raise the appropriate funds to implement the
proposed project
Loan ava./schedule,equity
The most important issues to consider at this stage are:
Starrt up Capital requirements
Expenses, investor income & disbursements
Segregate between one time & recurring costs
Cost of sales, professional fees, technology costs, administrative cost, sales &
marketing cost & wages & salary
Start up Capital sources
Financial rate of return
Parameters in F.A
Projections- price of products/cost of various resources required to manufacture goods/capacity
utilization
Period to be justified with PLC, period of debt
Financing-

appropriate financing mix with repayments schedule

Working capital loan
Depreciation schedule for income tax purposes
Financial indicators
Debt Service Coverage ratio ( DSCR)
DSCR= PAT+Depriciation+interest/interest+principal sum repaymnt
DSCR of 1.5 is good
Net present Value Method
Considers time value of money
NPV of all inflows & outflows of each occuring during the entire life of the projectis determined
by discounting
Pay Back period
Length of time required to break even on net investment
Interest Cover ratio
Indicates the safety & timely payment of interest to lenders of money
ICR= PAT+ depreciation+interest/interest
Quick Screening
Markets and Margins
Competitive Advantages
Value Realization
Overall Potential
Markets and Margins
Competitive Advantages

Technical Analysis
Assesses the details of how you will deliver a product or service
A flow chart of how your products & services evolve & move through your business to physically reach
your market
Issues of technical design like size, location, timing & choice of technology
T.A provides an opportunity to consider how a company can best take advantage ot its investment plan,
polices framework, & development projects to build to use science & technology effectively
In the early stages of companys development, emphasis should be on building local capacity to import
technology & later on development of local technology

Parameters to consider in T.A

Materials
Study of chosen raw material vis a vis its maunfacturing process
Investment on plants & machinery also depends on raw material, Volume discount
Technology
Study of alternates technology reaching to appropriate technology,
Depends on quality & quantity proposed to be manufactured
Large quantity-Mass production
Comemercial grade- not high quality
Pharma product- quality
appropriate technology differs by country to country & state by state & location by location
Managements requirements
Senior levels, office & clearical, production & distribution, professional staffs ( lawyers,
engi,markts, acco)
Product Mix
Needs & preference of the customer leading to variation in size & quality
E.g- dies of plastic container
Operating scale

Analysis of market/cost/capacity utilization

Technical knowledge
Analysis of requiste knowledge/experience
Technical /organisation collaboration
Reputation/suitable to local condition/Govt. approval/handling of unforeseen situation
Some other factos like location/ transportation & shipping/plant & machinery/project scheduling

Economic Analysis
Feasibility of the proposed project to generate economic benefits
How to allocate resources among many competing uses, consideration of oppurtunity cost
Project with same outcome but higher return
Cost V/S Benefit analysis
Handling of sunk cost
Establish the shadows prices for the labour when market price is distorted
Cost V/S benefit analysis not always used specially in education & health project, power & water
( where prices are publically administered)
Elements of E.F
Value-cost price
Is every step in your process adding value
Is your cost as low as possible
Are your prices appropriate given the value, competition & cost involved
Hidden costs
Expense not normally included in the purchase price of an equipment or machine, such as for
maintenance, supplies, training, and upgrades
Scale V/S scope
Market & Demand
Risk
Can you evaluate , & quantify all the risks
Technique of E.F
Economic rate of return
Revenue generation for Govt., conservation/earning of foreign exchange/creation of employment
Social rate of return
Why do venture fail
Poor execution
Crisp execution rather than clever idea lead to success
Need the discipline to know when to handover the reins to a professional manager
No viable market
Find the customer first & then look for his satisfaction
Too much leverage
Under capitalising the business
Plan adequate funds when you launch to cover sunk cost
Lack of competitive advantages
Mee too kind of business
Insulates your business from competition
Competing head to head with industry leaders
Big companies can undercut prices, overspend on advertising, choke off suppliers & distributors
Break-up of the funding team
Poor pricing strategy
Product Planning and Development Process
Five major stages:

Idea stage.
Concept stage.
Product development stage.
Test marketing stage.
Commercialization.

Small Scale Industries, its Rationale,

Objective and Scope.

Small Industries : A unit engaged in manufacturing, servicing , repairing,

processing & preservation of goods having investment in plant & machinery , at an
original cost not exceeding 5 crore
Before MSMED, 2006
Conventional cottage & handicrafts units employing traditional labor intensive
methods , mostly in village
Operational undertaking having investment up to 60 lakhs in fixed assets in plant
& machinery

Tiny unit

Ancillary unit
MSMED Act 2006

Classification

Manufacturing
Enterprises

Service Enterpris

Micro

25 lakh

10 lakh

Small

5 crore

2 crore

 Medium

10 crore

5 crore

Examples of SSI

Ice Creams

Bread

Biscuits

Oil extracts

Rice mills

Garments

Health services

Legal services
Classification of SSI

Traditional Industries artisan based , located mostly in rural, semi urban areas &
have nominal investment in P & M

Khadi & Village Industries

Handloom

Handicrafts

Coir

Sericulture ( Silk)

Modern Industries- units that are power driven machinery & posses better
production techniques as compared to traditional sector. Generally located in close
proximity to large industrial centre & urban areas.

Small Scale Industrial Undertaking

EOU [Export oriented] SSI unit

Ancillary industrial unit

Women Entrepreneurs Enterprises

Women Entrepreneurs Enterprises

 Handled by one or more women

Share capital of not less than 51% as partners
EOU
Unit with an obligation to export at least 30% of its annual production by the end of
third year of commencement of production & having investment ceiling in fixed
assets plant & machinery up to 5 crore
Product list includes 140 products lines including 27 hoisery, 14 hand tools, 13
stationery, 10 drug & pharmaceuticals, 7 sports, etc.
Ancillary industrial unit
It engages in the manufacture of parts, accessories, components

It supplies at least 50% of its production to other industries

Investment in plant & machinery upto 5 crore

Tiny Industrial Unit

Investment is around 25 lakh
Ex: Laundry,poultry,Dairy
The need and Rationale of SSI was emphasized by Industrial Policy resolution in
1956
SSI provide immediate large scale employment and effects a more equitable
distribution of national wealth. They also mobilize resources of capital and skill which
might otherwise remain unutilized. Establishment of SSIs all over the country also
reduces unnecessary and unplanned urbanization and migration to cities
Objectives/Need SSI ?
Utilize locally available raw materials
To meet local demands
Utilize locally available skills & technology
Create Employment oppurtunities
Balanced regional growth
Need for equality
Need for Decentralization
Need for More Entrepreneurs
Need to improve economy of the nation

 To mobilize the countrys untapped capital and human resources

To improve the standard of living
To encourage small entrepreneurs to grow and realize their dreams
To improve the life style of BPL
Bring socio economic changes
Equitable distribution of national income
To avoid unplanned urbanization
Characteristics of SSI
Personal character
Labor intensive
Independent Management
Simple Organization
Capital Investment will be less ( Entrepreneur saving)
Mainly engaged in manufacturing of parts, components ( light consumer goods
etc.)
Unorgamized work force
Change over of the work
Fixed assets form the largest components of small units

Use local resources

Setup in rural and semi-urban areas

Do not obey standards

Market share will be very small
Division and specialization of labor is low
Employ simple technologies & rely on extensive use of individual skills
Scope of small scale industry: Activities
Manufacturing activities
Construction activities
Public utilities
Service or repairing activities

 Financial activities
Retailing activities
Wholesale business.
Scope of small scale industry: India
Suitable for Indian economy which is short of capital & labor intensive,

Higher contribution by having 1/8 of the capital

Earned Rs. 12658 in foreign exchange by export while corporate sector

consumed more foreign exchange than it earned, employ 165 lakhs people
as compared to 66 lakhs

Investment per person while hiring Rs. 15000 V/s 3.44 lakhs)

Contribution in export (15.6 % in 1973-74 to 50% in 2005-06

High per unit output of capital invested & per unit of energy
Scope of small scale industry
More flexible
Reduce economic & regional disparities, (63% of small industries in backward
regions, 42% in rural areas)
Less damage to environment
Local economic development like education, local forestry, kitchen gardens,
transport facillities like water, electricity etc.
Advantages of SSI
SSI in rural area provide employment to artisans & landless labour & bring down
their migration to urban areas
Problem of surplus labour
Reduce the drawbacks of capitalism i.e monopoly concentration of wealth
By facilitatng decentralization, they promote balanced regional growth & help to
overcome the problem of unplanned urbanization
Self Employment Opportunities to educated unemployed & facilitate development
of individual skill, talent
Do not Require High end Technology
More suitable for improved labour management relations
Dependence on agriculture can be reduced
Location Independent

 Use Local resources

They help earn and foreign exchange
Promotes local craftsmanship and handicrafts
Require simple technology and low managerial skills
Helps to large industry by acting as ancillaries
Raise the purchasing power of the villagers & contribute the better quality of life.
Disadvantages of SSI
Raw Material: scarcity, poor quality
Marketing
Outdated Technology
Over Protection by Government
Lack of Research and Development activities
Lack of efficient successors

SSI

Medium & Large Industries

Registration at Director of Industries or

state & union territories for the purpose of
allocation of resources

Licensing & registration with

the government

Less capital intensive, involve use of

moderate technology & highly labour
intensive

More capital intensive, less

labour intensive & high
technology

Sole proprietory

Either public & private

Produce goods that are consumed by local

population

Consumable by masses

Small gestation period

Have long gestation period

Role of SSI in Economic Development

Promotion of Exports

Arrest migration of youth from rural to urbans thereby reducing social frustration
pressure, economic income disparities
As per ILO ( International Labour Organization), self employment is recognized as
pride of ownership & ability to grow out of meaningless life into a person of
increased status, mproved life style & ability to control his destiny
Cultural preservation
Equitable distribution of wealth
Promoting Regional Development
Inspiring new entrepreneurs
Providing employment
Conversion of people from unemployment to empyed reduces the social burden by
converting tax user to tax payer
Quickly size the business oppurtunity to suit the changing economic situation
Nationalization in term of local control rather than dependence of MNCs
Mobilization of local resources
Feeding large scale industries

Steps to start SSI

Project and Product Identification

Selecting the form of ownership

Location of the unit

Preparation of project report

Registration of Project report
Arrangement of finance
Procuring of licenses and getting NOC

Creating physical infrastructure

Recruitment of staff

Procuring raw materials

Electrification procedures and water facilities

Starting production
Marketing the product
Project and Product Identification: Points to followed
New product or a imitative product
Improve upon a existing product in term of additional uses, comfort or saving in
costs
Economic viability of the product should cover

Volume of existing demand in the domestic maket

Export market

Degree of import substitution

A new product idea can pull the market

Relevant information can be gathered from various publications, research
laboratories of CSIR etc

Studying the market potential

Form of ownership

Sole Ownership
Family Ownership
Private Limited Company

Private Limited Company private limited company is a voluntary

association of not less than two and not more than fifty members, whose
liability is limited, the transfer of whose shares is limited to its members and
who is not allowed to invite the general public to subscribe to its shares
Location of Unit

Options

Land from industrial area developed by directories of industries

Private developers

Private lands

Factory shed in industrial estates by state industrial development agencies

Site available in free trade zones like Santacruz ( Mumbai)

Raw Material avai.

Nearness to Market

Near to source of labour

Availability of Infrastructure

Site enjoy all incentives provide by the Govt.

Climate and environmental factors

Designing Capital Structure

Bank Loans
Venture Capitalists
Personal Money
Preparation of project report
Introduction about the project
Preliminary analysis of alternatives
Project Description
Technical feasibility

Description of product specification

Raw material available as per requirement

Outline the manufacturing process

Quality control measures

Power supply, avai. Of water, transport facilities, & communication networks

Financial feasibility and analysis

Project cost covering non recurring expenses like land & building, P & M, etc.

Recurring expenses like working capital, raw materials needs wages etc.

Break even analysis

% of profits over total investment

Economic Viability

Compilation of demands for domestic & export market

Most appropriate installed capacity requirement

Suitable price

Revenue & share expected

 Marketing Plan
Registration of Project report
Benefits of Registration
Credit prescription ( Priority sector lending)
Excise exemption scheme
Exemption from direct tax laws
Tax subsidies
Power tariff subsidies
Capital investment subsidies
Objective of Registration Scheme
To maintain a roll of small industries to which package of incentive & support are
targeted
To provide a certificate enabling the units to avail benefits mainly in term of
protection
To serve the purpose of collection of statistic
To create nodal centres at the centre , state & district levels to promote SSIs
Features of the Registration Scheme
Registration is voluntary & not compulsory
Two types of registration is done

Provisional registration

Permanent registration

- It is applied for when the entrepreneur is ready to start his commercial production
Provisional registration ( PRC)
Duly filled registration form along with challan in original through which the fee is
being remitted
Provisional registration is meant to enable to take the necessary steps to bring the
unit into existence.
Converted into permanent once the unit comes into existance
Valid for one year in the first instance & thereafter may be renewed by a period of
two or more years in six monthly extensions on submission of the satisfactory
proof that the party is working
PRC Intitle

 Apply for the municipal license, panchayat samithi to construct the shed to
establish a unit
Apply for power/ water connections
Apply for financial assistance to Banks or other financial agencies on the basis of
project report
Apply to NSIC for procuring machinery on hire purchase basis
Obtain sales tax, excise duties , etc wherever required
Obtain various NOC & clearances from regulatory bodies such as pollution control
board, labor regulations etc.
Apply for import of raw materials
Apply for a shed in an industrial estate
Procedure for Registration
Prescribed application form should be submitted to the concerned technical
authority
It should provide complete details of the item to be manufactured, expected
annual turnover, requirement of imported equipment, imported raw material &
local raw material. Transport , particulars about skilled & unskilled labour along
with capital requirement
Unit apply for PRC in prescribed form along with fee of Rs. 2,50/ by DD
No field enquiry is done & PRC is issued
PRC is valid for 5 yrs & if entrepreneur is unable to set up the unit in this period, he
can apply afresh
Registration with other authorities
Sales tax authorities
Central excise authorities
Reserve Bank of India ( in case of exporting units)
Regional licensing authorities ( in case of export/import)
Permanent Registration Certificate
Application should be made in the prescribed form only
Rent receipt of the land lord or photo-copy of the house tax receipt in the name of
the unit
One photocopy of the sale bill of every item.
Photo copy of purchase invoice of machinery

 Photo copy of purchase invoice of raw material

Partnership deed copy if the unit is partnership concern
An affidavit in the prescribed proforma duly attested by notary
Photo- copy of approved scheme & project report
All registered units should submit yearly reports of raw material received, utilized,
stocks in hand, production & sales to the director of industries, in triplicate
regularly within three months after the end of the accounting year
An industrial unit which has commenced production or is found to be in the
readiness to go into production is eligible to get the Permanent Registration
certificate
All registering units ( Permanent Registration) are required to submit their Annual
production returns giving information regarding raw materials received/utilised,
stocks in hand/production & sales to DIC, by the end of April.
Failure constitute ground for refusing to sponsor the units application for
import/allocation of raw materials
This certificate enables the unit to get
Excise exemption
Income tax & sales tax exemption as per state govt. policy
Incentive & concession in power tariff
Price & purchase preference for goods produed
Ava. Of raw materials
De- Registration
A small scale unit may be de-registered by the registering authority on any or more
of the following grounds
If the unit remained closed continuously for a period exceeding one year
If the unit failed/refused/avoided to give full & truthful information as called
upon the registering authority from time to time
Misused the raw material allocated to it
Unit is found to be subsidiary of or owned or controlled by a medium or large
scale undertaking
If the fixed investment in P & M of one or more units set up by common
partner within the country for the manufacture of similar/different products
exceeds the fixed investment ceiling prescribed in the definition of small
scale undertaking
No Objection Certificate

 Process:
Under the existing pollution Control Laws, all type of industrial units, before
establishing are required to seek CONSENT TO ESTABLISH (NO OBJECTION
CERTIFICATE) from environmental pollution angle.
For this purpose Board has prescribed an application format. Industries are
required to submit an application along with necessary enclosures pertaining
information's like site details, proposed pollution control plans, registration
certificate from Industry Department, etc.
Completed application has to be submitted either to General Manager,
District Industrial Center (GM, DIC) or to Regional Officers Pollution Control
Board.
According to the provisions of Water (Prevention & Control of pollution) Act 1974
and revised provisions of the Act, Industries and local bodies who are discharging
their effluent to river / ground/sever has to obtain consent after furnishing
application on prescribed form and prescribed fee.
Time Frame:
According to the Act, the application has to be disposed off within four
months from the date of receipt to the Board. It is examined while disposing
the application that there is arrangement in the industry for, necessary
purification and the flow after treatment is being disposed according to the
standards laid down by the Board.
As per the provisions of Air (Prevention & Control of pollution) Act 1981 and
revised provisions of the Act for running any industry and disposal of effluent to the
Air, or for using any new redesigned chimini or for continuing disposal of effluents
to the air it is essential to obtain consent from the Board on prescribed application
form and fee. There is provision for disposal of the application within four months
from the receipt of the application to the Board. Appeal, against any order passed
by the Board, can be made within thirty days efore the Appellate Authority.

PROJECT APPRAISAL

Refers to the process of assessing, in a structured way, the case for proceeding
with a project or proposal.
Project appraisal is the effort of calculating a project's viability.
It involves comparing various options, using economic appraisal or some

other decision analysis technique.

KEY ELEMENTS FOR APPRAISAL
Eligibility
Legal Framework
Promoter's standing

 Technology and Design

Time Schedule
Investment Cost
Environmental and Social Compatibility
Market prospects
Economic
Financial Viability
Eligibility
Regional Development
Rational use of energy, efficiency
Environmental protection
Legal Framework
Policies, public acceptance
Safety
Environmental compatibility
Procurement of licenses
Promoter's standing
Management capability
Financial robustness
Access to loan securities
Technology and Design
Viability and performance
Adaptation to technical progress
Local-specific requirements
Life expectancy
Time Schedule
Preparation of feasibility studies
Environmental studies
Licensing requirements ,Time needed for procurement

 Local conditions (climatic, etc)

Investment Cost
Local and foreign currencies
Phasing of expenditure
Margins for var. contingencies
Cost justification
Environmental and Social Compatibility
Compliance with international standards
Least-polluting technology
Market prospects
Demand pattern
Degree of competition
Tariff level and structure
Product quality
Economic+Financial Viability
Cost effectiveness
Financial rate of return
Pay-back period, etc
Environmental Damage

Business Plan

What is a Business Plan?

A business plan identifies an innovative ideas, researches the external

environment to list the opportunities & threats, identifies internal strength &
weakness, asses the feasibilities & allocates resources in the best possible
manners
The Business Plan Serves Dual Purposes

Inside the firm: the plan helps the company develop a road map
for executing its strategies and plans

A clearly written business plan articulating the vision and future

planelps employees to operate in a consistent and purposeful
manner

Outside the firm: the plan introduces potential investors and other
stakeholders with the business opportunity the firm is pursuing and
how it plans to pursue it
Ideal business plan

What business I am in?

What do I sell?
Where is my market?
Who will buy my product?
Who is my competitor?
What is my promotional strategy?
How much money is needed to operate my firm?
How will I get the work done?
What management control is needed?
Where will the business be twelve months from now?
Where will it be two years from now?
When should I revise my plan?
Where can I go for help?
General Types of Business Plans

Summary Business Plan

10-15 pages

Good for firms in early stages of development that want to test the
waters to see if investors are interested

Full Business Plan

25-35 pages

Good for firms at the point of needing funding; offers blueprint of

firms operations

Operational Business Plan

40-100 pages

Mostly intended for internal audience; offers blueprint of operations;

provides guidance to managers
Steps/Elements of Business Plan

1.Summary
2.Introduction to the business plan
Phase I: Data collection & analysis
3.General description of the industry
4. Description of the firm
5. Description of the product/services
6. Market area, size & characteristics
7. Customers
8. Competition
Phase II: Strategy formulation
9. Overall marketing strategy
10. Location
11. Advertising & promotion
12. Pricing
13. Method of selling & distribution
14. servicing, warranties & packaging
15. Sales & credit terms
16. Other marketing strategy elements
17. Description of premises & facilities
18. Production methods & equipments
19. Material & sources of supply
20. Key personnel
21. Compensation & ownership
22. Staffing plan
23. Supporting professional services
24. Manufacturing assistance & staff training
25. Long term plans
26. Critical risk , assumptons & how to solve
Phase III: Forecasting Results
27. Estimated market share

28. Sales forecast

29. Determining cash requirements
30. Pro-forma P & L statement
31. Pro-forma Cash flow statement
32. Pro-forma balance sheet
33. Break even analysis
34. Explanations of projections
35. Ratio analysis
Business Planning Process
Idea Generation
Environmental Scanning
Feasibility Analysis
Project Report Preparation
Evaluation , Control & Review
Environmental Scanning
External Environment

Socio- Cultural Appraisal

Values, norms , fashions

Help in understanding the level of rigidity/ flexibilty of a given society

towards a new product/concept

US V/s UAE regarding innovative product

Technological Appraisal

Technological know how avai.

Modern technological expected

Economic Appraisal

Inflation, per capita income & consumption pattern,

Demographic Appraisal

Age, sex, education, income etc.

Govt. Appraisal

Assess the various policies, incentives, subsidies, grants, etc.

Govt. policies in Uttranchal V/S U.P regarding electricity

Environmental Scanning

Internal Environment

Raw material

Production/Operation- Ava. Of various machine

Finance

Market

Human Resources

Feasibility Analysis

Market Feasibities

Estimate the demand of the proposed product/service

Market share

Who are the consumer, present & prospective

Present & future demand
Seasonal distribution of demand
Geographical distribution of demand
Willing price
Marketing mix of the competitors
Feasibility Analysis
Technical/Operation Feasibities

Assess the operational ability of the proposed business

Material avai.

Quality & quantity

Price sensitivity of raw material

Perishable time of raw material

Choice of technology

Capacity of the plant

Amt. of investment

Production cost

 Plant location

Proximity of raw material

Ava. Of infrastructure like power, transportation, water

Feasibility Analysis
Financial Feasibities

Assess the financial issues of the proposed business ventures

Cost of land & building

Cost of P & M
Preliminary cost estimation

Cost required in conducting

Market survey, preparing feasibility report, expense in registering, etc.

Provision for contingencies

Changes in evnt. Like price of raw material or transport

Working capital estimates

Profitability projections
Project Report Praparation

Cover Page and Table of Contents

Cover page: include name of the company, address, phone number, date,
contact information for lead entrepreneur

The Executive Summary

Short overview of entire business plan; provides everything need to known

about ventures distinctive nature

Sometimes investors ask for executive summary and then full business
plan only if executive summary is sufficiently convincing

Description of the industry

Industry outlook & growth potential

Market & customers ( size, new requiremt & market trend)

Competitive advantages

National & economic trends

The Business

Introduce the business by describing the opportunity, the problem/need

addressed and how the business addresses the problem/need

Include a brief history of the firm, the companys mission statement, and
objectives

Explain the firms competitive advantage and a brief description of the

business model

Management Team

Include a brief summary of the qualifications of each member of the

management team

Including his/her relevant employment and professional experiences,

significant accomplishments, and educational background

Funding Requirement

Debt/Equity

The product/ service

Description

Comparative analysis with similar/substitute

Company Structure, Ownership

the structure of the new venture, including the reporting relationships among
the top management team members

Explain how the firm is legally structured

Finally, discuss patents etc.

Very important as it forms the foundation for the valuation and

competitive advantage of many entrepreneurial companies

Project Report

The Plan

Marketing plan

Market demography, like profiles of customers & end user

SWOT of the market

Market mix strategy

Product mix

Promotion mix

Pricing mix

Distribution mix

Operations Plan

This deals with day-to-day operations of the company

Includes overview of manufacturing plan (or service delivery plan)

Describe network of suppliers, business partners, and service providers

needed to build/produce the product/service

Describe risks/regulations pertaining to the operations

Plant location, material requirement, inventory management, Quality

control

Organizational Plan

Organizational chart

Details about BOD

Manpower planning

Financial Plan

Demonstrate the financial viability of the business

Begin by explaining the funding needed during the next three to five years
along and explain how the funds will be used

Include (realistic) financial projections (assumption sheet)

Include financial statements (e.g., income statement, statement of cash

flows, balance sheets, etc.)

Discuss exit strategy

Critical risk

Management risk

Marketing risk

Operational risk

Financial risk

Appendix

Resumes of the founders & key employess

pictures of product prototypes
Details

Project engineering

Preliminary information

Required finances, NOC,

Registration in sales tax, excise duty

Calculation of preliminary expenses such as expenses incurred during

trail production, advertisement, expenses while getting loan,

Production programmes

Shift arrangements

production procedures

Details on technical aspects of the product & the process of

manufacturing step by step with plat layout

Raw material

Consumables / Utilities power, water, fuel,oil etc.

Machinery cost

In computing value, do include sales tax, octroi, transportation & insurance

cost

Personnel requirement

Factory staff, their number, monthly & yearly emoluments

Administrative staff, their numbers

Sales staff

Other administrative expenses

Stationery & printing, Postage, telephone, travelling, business mazagine

subscription, technical & legal fees, advertisement expenses, after sales
services

Working capital calculation

Raw material stock, good under process, finished goods stock, store &
spares, monthly expenses ( Day & Weeks)

Total cost of the project

Fixed + pre-operation expenses +working capital+ provision for

contingencies

Production programme

To promote industrial activities,the government brought resolution.19482003 those are called as Indutrsial Policy Resolutions

IPR 1948
Need to protect and promote Cottage Industries, it was made to solve problems of
small scale industry segment with respect to raw material, labors, capital,
transportation and marketing
IPR 1956
Aimed at Protection plus development
Resolution initiated the modern SSI India
128 Products were reserved for exclusive production in small sector

After 1948 industrial policy resolution, significant development Took place in India,
economic planning proceeded in an organized basis and the first five-year plan was
completed

IPR 1977
Aimed at :Protection plus development plus Promotion
Three Categories

Cottage and household industries

Tiny sector

Small Scale industry

IPR 1980
Higher employment generation;
Increase in the investment ceilings from
Rs 1 Lakh to Rs 2 Lakhs, from 10 to 20 lakhs, 15-20 lakhs
Correction of regional imbalances;
Strengthening of the agricultural base through agro based industries and
promotion of optimum inter-sectoral relationship;
Promotion of export-oriented industries;
Consumer protection against high prices and bad quality
IPR 1990
Investment ceilings for SSI raised from 35 to 60 lakhs
For ancillary units 45 to 75 lakhs
Around 800 items were reserved for exclusive manufacture in small sector.
The government started SIDO; Small scale industries development organization

IPR 1991 The New Small Enterprise Policy 1991

Objective was to promote small scale sectors to improve the economy of the
nation
Reduced the complexities in acquiring licenses

Tiny industries were come up anywhere in India

Labor will be made an equal partner in progress and prosperity

Foreign Technology Agreements[FTA]
Government Policy Resolution in 1999
Steps taken to improve investment limits
Steps taken to promote exports
Announced incentives to improve quality
Turnover limit for SSI was enhanced from 4 to 5 Crores
A new union ministry for SSI
A national program to promote industrialization was announced, with a target of
100 rural clusters every
Government Policy Resolution in 2003
Lending rates to open SSI was reduced by 2%
More SIDBI branches were opened
All India SSI census was carried-out
Planning Commission; India
The PLANNING COMMISSION is an institution in the Government of India, which
formulates Indias Five year plan.
Planning commission was set up on 15 MARCH 1950, with Prime minister
JAWAHARLAL NEHRU as the chairman
Government Support to SSI during 5 year plan
First five year plan (1951-1956)
Rs.48 crore-SSIs
India Handloom Board
All India Handicrafts Board
All India and village industriesBoard
Small scale industries Board

 Coir Board
Central silk Board

Second five year plan (1956-1961)

Rs.187 crore-Industries
60 Industrial Estates
Providing Basic facilities-power,watertransport etc..,

Third five year plan (1961-1966)

Rs.264 crore
For development of SSI
Cottage industries

Fourth five year plan (1969-1974)

Rs 293 crore
346 Industrial Estates Providing Employment to about80,000 people

Fifth five year plan (1974-1979)

Rs.611 crore
Aim-Reduce poverty
Government had initiated wideprogrammesleading to thedevelopment of SSI
Sixth five year plan (1980-1985)
Rs.1945 crore
Reservation of 409 items for purchase from SSIs
836 items reserved for exclusive production in SSIs
1982-Council for Advancement of Rural Technology (CART)
To provide consultancy services intechnical,managerial,marketin
Seventh five year plan (1985-1990)
Rs.2752 crore

 Up gradation of technology
Increased Employment from96-120lakh persons

Eighth five year plan (1992-1997)

Rs.6334 crore
To Establish appropriate tool rooms & training institutes
Introduced new initiatives like sanction of Loans

Eighth five year plan (1997-2002)

Foreign direct investment plan(Plan)
Disinvestment commission board set up to facilitate development of new
technologies and assimilation of imported technologies.
Special schemes to promote industrial development of remote places.
Sick industries Corp Act was amended.

Incentives & Facillites

Credit Guranteee Fund Scheme for SSI ( 30 th aug 2000 , run by CGTSI,Credit Gurantee Trust
find for small Industries)

Ava. Credit upto 10 lacs without third party gurantee later on increased to 25 lacs

As on 31st mar 2004, 45 eligible institutions comprising of 26 public sector banks, 10

private sector banks ,6 rural banks & 3 others NSIC,NEDFi,SIDBI have become the
member lending institutions

NEDFi- North Eastern Development Financial Corporation

Initiatives for Women Intrepreneurs

SIDO & other organisation have introduced

Process/product oriented EDPs in areas like TV repairing, leather goods,

screen printing etc.

Outstanding Women prize

Women cell to provide assistance to women entrepreneurs

Income generating scheme providing training cum income for needy

SIDBI has introduced

Mahila Udham Nidhi-providing equity to women entrepreneur

Mahila Vikas Nidhi-offering developmental assistance

Incentives to North Eastern Region

Development of Industrial infracture

10 crores from Govt & rest from to be raised by state govt.

Transport subsides - is to subsidize the transport cost on raw material and finished
goods to and from NE states and inter state movement within the NE region.

@ 90% of the transport cost for the movement of raw materials from one
state to another within the NE region as well as outside the NE region.

@ 90% of the transport cost for the movement of finished goods outside the
NE region and @ 50% of transport cost from one state to another within the
NE region.

@ 90% of the transport charges for movement of steel from Guwahati

Stockyard of M/s Steel Authority of India Limited (SAIL) to the site of the
industrial units in the NE region.

Fiscal Incentives

To new industrial units & their expansion

Total tax free zone for 10 yrs

Industrial in growth centres will be given investment subsidies at 15%

in plant & machinery to a maximum ceiling of 30lacs

Interest subsidy of 3 % on working capital loans for 10 yrs after

starting production

Relaxation on PMRY

Expansion in scope to cover areas of piggery, poultry, fishing small tea

garden etc.

Other incentives

Comprehensive insurance scheme in consultation with GIC & 100% premium for 10
yrs by Central Govt.

One time grant of 20 crore to north east development financial corporation for techo
industries studies

Providing assistance for restructuring states PSUs

Incentive scheme for QMS

Reimbursement of expenses for acquiring ISO-9000 certification in Small scale sector to

the extent of 75% & max to Rs 75,000 & also extended to EMS-ISO 14001

EMS- Environment Management System

Incentives for Exporters

Duty drawback

Excise duty paid for various inputs in manufacturing

Duty paid for import of raw materials

Excise rebate- An excise tax is one levied on specific goods or commodities produced or
sold within a country

Exported goods have excisable goods in manufacturing

Marketing assistance

Assistance for market surveys

Participation of various trade exhibitionsassisatnce of R & D work & consultance

services

Raw materials

Priorty in allotment like steeel & alloys etc.

Engineering export promotion council reimburses the rate difference of raw material

EOU ( export oriented units)

Separate space in industrial areas called EPZ ( export processing zones)

Near to sea or airport

Ready made plots & buildings

100% foreign investment approved

Income tax exemtion for 5 yrs

Concessional rates working capital loans

Exempted from excise duty

No license is required for import of machineries , spares part

Necessary administrative faclities, container facility , customs clearance &

security in EPZ.

Fiscal Support

To be competitiveness of Small Scale Sector, the exemption for excise duty limit
raised from Rs. 50 lakhs to Rs. 1 crore.

Credit Support

The composite loans limit raised from Rs. 10 lakhs to Rs.25 lakhs.

In the National Equity Fund Scheme, the project cost limit is raised from Rs. 25 lakhs
to Rs. 50 lakhs. (small scale units are given equity type seed capital assistance to
meet the margin money requirements of small units)

The soft loan (loan with a below-market rate of interest) limit is retained at 25 per
cent of the project cost subject to a maximum of Rs. 10 lakhs per project.

Assistance under the NEF is be provided at a service charge of 5 per cent per
annum.

Infrastructural Support

The Integrated Infrastructure Development (IID) Scheme will cover all areas in the
country with 50 per cent reservation for rural areas.

Marketing Support

The Vendor Development Programme, Buyer-Seller Meets and Exhibitions will take place
more often and at dispersed locations.

Streamlining Inspections/Rules and Regulations

To minimise harassment to Small Scale Sector a Group will be set up to recommend within
3 months, means of streamlining inspections.

Self-certification will be progressively encouraged in lieu of inspections, which should be

prescribed under the three following conditions:

On receipt of specific complaint;

Selection of unit for sample check (Say 10 per cent of total units); and

For audit and safety purposes.

Technological Support and Quality Improvement

Capital Subsidy of 12 per cent for investment in technology

To encourage Total Quality Management, the Scheme of granting Rs.75,000/- to each unit
for opting ISO-9000 Certification

SIDO, SIDBI and NSIC will jointly prepare a Compendium of available technologies for the
R&D institutions in India and abroad and circulate it among the industry associations for
the dissemination of the latest technology related information.

One time Capital Grant of 50% will be given to Small Scale Associations which wish to
develop and operate Testing Laboratories, provided they are of international standard.

Entrepreneurship Development

Capacity building in the SSI sector, both for entrepreneurs as well as workers, will be given
top priority.

Rehabilitation of sick units

guidelines for the rehabilitation of currently sick but potentially viable SSI units.

Limited Liability Partnership (LLP)

Registration
Limited Liability Partnership (LLP) is an incorporated business organisation. It
is a Body Corporate having the features of a Partnership Firm and a Limited
Company. The management of LLP is defined by LLP agreement and partners
have the freedom to regulate affairs of the LLP. Minimum two persons are
required to register a LLP and there is no restriction regarding maximum
number of members.
Benefits of LLP

Separate legal entity

Limited Liability to partners

Simple process of Registration

Perpetual existence irrespective of changes in partners

No requirement of audit of accounts until turnover reaches Rs.40 lakhs

or Contribution Rs.25 lakhs

Less tax as compared to company

No requirement of minimum capital contribution

No restrictions as to maximum number of partners

Steps for LLP Registration in India

STEP 1 DPIN and DSC
Apply DPIN (Designated Partner Identification Number) for every proposed
Designated Partners (Minimum -2). At least one Designated Partner should
have a valid Digital Signature.
STEP 2 Apply for Name
Selection of business name is crucial for the image of an organisation. Select

a name which reflects the planned business. Ensure selected name satisfy
LLP Name Guidelines and file an online application.
STEP 3. Filing of LLP Registration Documents
After the approval of name LLP registration documents are filed. On scrutiny
of documents filed, Registrar of LLP will register the LLP and certificate of
Registration will be issued.
STEP 4. Documentation of and filing of LLP agreement and Consent
of Designated Partners
With in 30 days from the date of Incorporation of LLP, partners of LLP have to
execute the LLP agreement and same has to be filed with Registrar of LLP in
Form 3 and the consent to act as Designated Partner/Partner has to be filed
in Form 4.

Features

Company

Registration

Compulsory registration required Not compulsory.

Name

Partnership firm

LLP

Compulsory

with the ROC. Certificate of

Unregistered Partnership registration

Incorporation is conclusive

Firm will not have the

required with

evidence.

ability to sue.

the ROC

Name of a public company to end No guidelines.

Name to end

with the word limited and a

with LLP

private company with the words

Limited Liability

private limited

Partnership

Capital

Private company should have a

contribution

minimum paid up capital of Rs. 1

lakh and Rs.5 lakhs for a public
company

Not specified

Not specified

Legal entity

Is a separate legal entity

status

Liability

Not a separate legal

Is a separate

entity

legal entity

Limited to the extent of unpaid

Unlimited, can extend to Limited to the

capital.

the personal assets of

extent of the

the partners

contribution to
the LLP.

No. of

Minimum of 2. In a private

2- 20 partners

Minimum of 2.

shareholders /

company, maximum of 50

Partners

shareholders

Foreign

Foreign nationals can be

Foreign nationals cannot Foreign

Nationals as

shareholders.

form partnership firm.

No maximum.

shareholder /

nationals can
be partners.

Partner

Taxability

Meetings

The income is taxed at 30% +

The income is taxed at

Not yet

surcharge+cess

30% + surcharge+cess

notified.

Quarterly Board of Directors

Not required

Not required.

Annual Accounts and Annual

No returns to be filed

Annual

Return to be filed with ROC

with the Registrar of

statement of

meeting, annual shareholding

meeting is mandatory

Annual Return

accounts and

Firms

solvency &
Annual Return
has to be filed
with ROC

Audit

Compulsory, irrespective of share Compulsory

Required, if the

capital and turnover

contribution is
above Rs.25
lakhs or if
annual turnover
is above Rs. 40
lakhs.

How do the

High creditworthiness, due to

Creditworthiness

bankers view

stringent compliances and

depends on goodwill and higher

disclosures required

credit worthiness of the compared to

partners

Perception is

that of a
partnership but
lesser than a
company.

Dissolution

Very procedural. Voluntary or by By agreement of the

Less procedural

Order of National Company Law partners, insolvency or

compared to

Tribunal

company.

by Court Order

Voluntary or by
Order of
National
Company Law
Tribunal

Whistle
blowing

No such provision

No such provision

Protection
provided to
employees and
partners who
provide useful
information
during the
investigation
process.