Starting of the Small scale industry

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Starting of an SSI :

Starting of an SSI By: Vinod.S.Gudadinni Mcom 2 nd sem

Steps for Starting a Small Industry ::

Steps for Starting a Small Industry : The Various Basic Steps for Starting a Small Enterprise is as Given Below :

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The Steps are discussed below : 1) Project Selection : The Project Selection & the Preliminary Activities involve the following : Product or Service Selection . Location Selection . Project Feasibility Study . Preparation of Project Profile . Business Plan Preparation .

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a) Product or Service Selection : This is the first & most important step in setting up a small enterprise. Because, the further prospects, actions & efforts in setting up the small enterprise & commencing its commercial activities successfully depend on this decision. b) Location Selection : After deciding on the Project, the next important decision an Entrepreneur has to make is about the Location of the Project. There are a Few factors associated with the same :

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c) Project Feasibility Study : The important facts of Project Feasibility Study are as follows : 1) Market Analysis is carried out to find out the aggregate demand of the proposed Product / Service & what would be the Market Share of the proposed project. 2) Technical Analysis seeks to determine whether the prerequisites for the successful commissioning of the Project have been considered & reasonably good choices have been made with respect to Location, Size, Process & so on. 3) Financial Analysis seeks to ascertain whether the proposed project will be Financially viable in the sense of being able to meet the burden of Servicing Debt & Satisfy the return on Investment Expectations of the Promoter’s.

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4) Economic Analysis : (Social Cost – Benefit Analysis) is concerned judging a Project from the larger, social point of view. In such an evaluation, the focus is on the Social Costs & Benefits of the Project. 5) Project Profile : This gives a Bird’s Eye View of the Proposed Project. This may be used for obtaining Provisional Registration Certificate ( PRC ) from the District Industries Centre. e) Business Plan Preparation : A Business Plan is used to make Crucial Start Up Decisions to reassure Lenders, Investors, to measure Operational Progress ; to Test Planning Assumptions ; to Adjust Forecasts; & to set the standard for good Operational Management.

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2) Decide on the Constitution : To start any Enterprise, the Promoter’s have to decide on the Constitution of the Unit. There are 3 Major Alternatives : a) Proprietary b) Partnership c) Company . a) Proprietary Enterprise : A Single Individual is the Owner of such an Enterprise. The Proprietor may proceed to obtain PRC from the DIC.

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b) Partnership Enterprise ( Firm ): This is an Association of Two or more Persons, subject to a Maximum of 20 Persons. They are governed by the Indian Partnership Act , 1932 & rules framed there under the State Govt. It is advisable to have a Partnership Deed Agreement on Stamp Paper of Appropriate Value. c) Company : This may be a Private or Public Limited Company. A Private Limited Company can be formed with a minimum of 2 Persons & a Maximum of 50 Persons. A Public Limited Company can be formed with a Minimum of 7 Persons & Maximum number of Persons is unlimited. Company is governed by the Companies Act, 1956.

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3) Obtaining SSI Registration : Entrepreneurs desiring to start a Small Enterprise have to initially obtain a PRC (Provisional Registration Certificate). Once the Unit goes into Production, the PRC has to be converted into a Permanent Registration Certificate ( PMT ). a) PRC : This is the Initial Registration reqd for starting a Micro & Small Enterprise. The Entrepreneur has to apply & obtain a PRC after selection of the Project & deciding on the Location of the Unit. This Application is necessary for Infrastructural Facilities such as Land, Shed, Power etc & Finance from the Financial Institutions.

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b) Permanent Registration Certificate (PMT) : A Micro or a Small Enterprise can get a Permanent Registration Certificate when it actually commences Commercial Production / Service. PRC would be converted to PMT when the Unit commences its Commercial Activities. 4) Specific Clearances : There are a number of Statutory Clearances reqd to start Micro & Small Enterprises. Some of them are given below : a) Agricultural Land Conversion into Non – Agricultural Land (NA Conversion). b) Building Plan approved by the Local Authorities. c) Factories Act & Labor Dept. d) Trade License from the Local Authorities. e) Pollution Control Board Clearances. f) Food Adulteration Act License. g) BIS Certification wherever applicable etc.

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5) Land or Shed Selection : For any Industrial Project, suitable Industrial Site or a ready Industrial shed is reqd. The Promoters of the Unit could consider taking an Industrial Site & constructing a shed as per their requirement, alternatively, could consider taking a ready Industrial Shed on Ownership Basis also. 6) Plant & Machinery : This requirement for a Particular Project could be purchased from recognized manufacturer’s / dealers. This could also be taken on Hire Basis operated by National Small Industries Corporation Limited ( NSIC ). 7) Infrastructure Facilities : For Micro or Small Enterprises the main infrastructure facilities are Land or Shed for the Project , Power Connection , Water Supply & Telephone & Internet Facility

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8) Project Report : A detailed Project Report provides such a plan for the Project. The Report is useful to the Entrepreneur for Planning & Implementing the Project. This is essential for Obtaining Finance & other clearances for the Project. 9) Finance : For starting a Small Enterprise, Term Loan Finance for the Fixed Assets like Land, Building, Plant & Machinery etc ., can be availed. This Loan can be availed from Karnataka State Financial Corporation (KSFC) & or from the Commercial Banks

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