Industrial Sickness & Role Of SIDBI

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Slide 1: 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 1 Industrial Sickness & Role of SIDBI in Rural Industrialization By Punit.K.Dwivedi Asst.Professor Bankatlal Badruka College for InformationTechnology Hyderabad-27 (A.P)

What is SIDBI ? : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 2 What is SIDBI ? Is an apex financial institution in the field of rural development. Is Small Industries Development Bank of India. Was setup under the SIDBI Act-1989 and commenced operation from April,1990. Has more than 80 XBO. Was de-linked from IDBI to provide functional autonomy and operational flexibility in year 2000.

What is Rural Industry ? : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 3 What is Rural Industry ? Means different types of village and small industries. Means industry appropriate for the rural areas as pointed by census records. Ice-cream ,bread,biscuits,pickles & chutney,rice-milling,confectionery,poultry feed,pot manufacturing,cottage industry,Khandsari udyog, Mat weaving, bamboo basket, rope making,khadi udyog,handlooms,artisan, sericulture,poultry farm,sheep farm,fisheries etc.

“SMALL” Makes “BIG” Difference : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 4 “SMALL” Makes “BIG” Difference Small industries contributes more than 45% share in industrial production. Share in services is more than 65%. 80% share in employment generation. More than 35% share in India’s export.

What is Industrial Sickness ? : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 5 What is Industrial Sickness ? An industrial unit is considered sick when its financial position is not satisfactory and it becomes worse year after year. It incurs losses and its capital reserves may be stretched-out in course of time. When its current liabilities are more than current assets, the organization may not be in a position to pay its liabilities.

Causes of Industrial Sickness… : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 6 Causes of Industrial Sickness… *Finance Constraints. 1) Weak equity base 2) Absence of financial planning and budgeting. 3) Inefficient WC 4) Inappropriate utilization and diversion of fund. 5) Absence of costing and pricing *Production Constraints. 1) Wrong selection of site 2) Inappropriate P&M 3) Poor R&D 4) Inadequate material control 5) Lack of quality control 6) Poor maintenance

Causes of Industrial Sickness : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 7 Causes of Industrial Sickness *Marketing Constraints. 1) Inaccurate demand forecasting 2) Wrong product mix 3) Lack of market research 4) Bad sales promotion 5) Depends on few buyers *Personnel Constraints. 1) Bad wages & salary admn. 2) Bad labor relations 3) Bad T&D 4) Bad manpower planning *Management Constraint. 1) Problems of corporate level 2) Problems of business level 3) Problems of bottom level.

Slide 8: 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 8 Promotion, Financing & Development of Small Scale Industries & To SIDBI Set up on April 2, 1990 for Co-ordinate the functions of institutions serving the Small Industries.

Slide 9: 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 9 Indirect Assistance Direct Assistance Finance Support services Sidbi'S Assistance

Slide 10: 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 10 Audited Financial Result For Year 2007-08 2008 2007 Total Income 1638cr. 1187cr. Total Expenditure (-) 1292cr. 728cr. Profit Before tax (=) 336cr. 449cr. Tax,FBT&Dfrd Tax (-) 138cr. 151cr. Net Profit 198cr. 298cr. EPS Rs.4.41 Rs.6.63

Slide 11: 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 11 Direct Assistance

SIDBI Nodal Agency for Government Schemes : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 12 SIDBI Nodal Agency for Government Schemes National Equity Fund Integrated Infrastructural Development Scheme Technology Development & Modernisation Fund Scheme Technology Upgradation Fund Scheme for Textiles and Jute Industries Tannery Modernisation Fund Credit Linked Capital Subsidy Scheme Credit Guarantee Fund Scheme for Small Industries (through separate Trust)

Direct Credit Scheme forSME & Service Sector : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 13 Direct Credit Scheme forSME & Service Sector Eligible Borrowers : New, Existing SME or Service Sector units Currency : Rupee or FC Term loan Purpose : Setting up a new SME unit/ service sector unit Modernisation, expansion, diversification Any other activity relevant to the project Marketing related activities Meeting working capital requirements Any other activity having linkages and benefits accruing to SME sector

TOTAL BANK CREDIT Rs. In crores : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 14 TOTAL BANK CREDIT Rs. In crores

ASSISTANCE BY SIDBI TO SSI'S Rs. In Crores : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 15 ASSISTANCE BY SIDBI TO SSI'S Rs. In Crores

Credit Linked Capital Subsidy for Tech Upgradation of SSI : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 16 Credit Linked Capital Subsidy for Tech Upgradation of SSI New or Existing SSI units To facilitate technology upgradation in specified products/ sub sectors 15% capital subsidy from GoI on the loan amount (eligible loan ceiling Rs.100 lakh) SIDBI is the nodal agency

Receivables Finance Scheme : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 17 Receivables Finance Scheme Eligibility for SSIs Should be in existence for minimum 2 years. Should have made profits / declared dividends during past 2 years Not in default to Banks / FIs Limit based on credit sales to purchaser during past year / projected growth in sales for the current year

Receivables Finance Scheme : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 18 Receivables Finance Scheme Eligibility for large purchasers Minimum sales of Rs.15 crore Minimum net worth of Rs.3 crore Not in default to Banks / FIs Limit based on credit purchases from SSIs during past year / projected growth in sales for the current year

Equity type assistance Schemes- National Equity fund : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 19 Equity type assistance Schemes- National Equity fund To meet gap in equity For setting up new projects, expansion, modernisation, diversification of small scale units, service enterprises Project cost up to Rs. 50 lakh Min. promoters contribution 10% Soft loan 25% of PC – max. of Rs. 10 lakh Service charges – 5% p.a. on soft loan

Developmental programs – Focus Areas : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 20 Developmental programs – Focus Areas Entrepreneurship Development Programmes Supported 1,709 EDPs, comprising 779 programmes for rural youth, 331 for women and 599 for other target groups Human Resource Development Organised 240 SIMAPS and 1074 STUPs benefiting over 20000 participants Technology upgradation 25 clusters for upgradation adopted Set up TBSE – being converted to Technology Bank Pioneering initiatives taken in clusters include Mutual Credit Guarantee Fund (MCGF) Programme.

Focus Areas (Contd..) : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 21 Focus Areas (Contd..) Emphasis on environment management, quality management Conduct of over 88 awareness programmes on environment and quality management Constitution of Expert Group to advise on environment related issues Support for conducting workshops for specific industrial sectors to enable them to appreciate the concept of cleaner production. Research and Information Dissemination Book on Technology for SSIs WTO related studies

Mutual Credit Guarantee Fund (MCGF) : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 22 Mutual Credit Guarantee Fund (MCGF) MCGF is a Corpus mutually created by a group of potential borrowers and matching contribution by SIDBI. MCGF stands as a guarantee for loans given to each and every contributor to MCGF. MCGF operates on the principle that not all members will require loan at the same time and only a small percentage of borrowers might default.

Mutual Credit Guarantee Fund : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 23 Mutual Credit Guarantee Fund MCGF is managed and operationalised by a Legal Entity of the contributors to MCGF This corpus is placed with a lending agency and used as a security for leveraging funds for contributors. Thus, MCGF enables small units to avail bank loans without normal collateral requirements.

SIDBI Updates.. : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 24 SIDBI Updates.. Cisco announced that it is collaborating with Small Industries Development Bank of India and Tiruchirappalli Regional Engineering College- Science and Technology Entrepreneurs Park to promote information and communications technology ICT entrepreneurship and innovation in the country. Small Industries Development Bank of India (SIDBI) has signed a loan agreement with Japan International Cooperative Agency (JICA) for 30 billion yen (Rs.1, 500 crore).

Cont…… : 

Punit.K.Dwivedi Bankatlal Badruka College for Information Technology 25 Cont…… The loan will be used by SIDBI for financing the micro small and medium enterprises (MSMEs) for energy saving and environmental-friendly projects. The other projects include Chennai Metro project, Hyderabad outer ring road project (phase 2) and Capacity development for forest management and personnel training project. Annual Award-2008 at Tehran, Iran. Sidbi has been awarded as specific “Plaque of Merit”

VISIT SIDBI WEBSITE AT www.sidbi.com : 

Punit.K.Dwivedi 26 Bankatlal Badruka College for Information Technology VISIT SIDBI WEBSITE AT www.sidbi.com I am doing my Ph.D on “Role Of SIDBI In Rural Industrialization” Please feel free to Contact me for further details at: punit.hyd@gmail.com punit.dwivedi@yahoo.co.in Mobile: 09908024591 Thanking You