UNIT - III

DEPARTMENT OF INDUSTRIES AND COMMERCE (DIC)

The ‘District Industries Centre’ (DICs) programme was started by the

central government in 1978 with the objective of providing a focal point for
promoting small, tiny, cottage and village industries in a particular area and to
make available to them all necessary services and facilities at one place. The
finances for setting up DICs in a state are contributed equally by the particular
state government and the central government. To facilitate the process of small
enterprise development, DICs have been entrusted with most of the
administrative and financial powers. For purpose of allotment of land, work
sheds, raw materials etc., DICs functions under the ‘Directorate of Industries’.
Each DIC is headed by a General Manager who is assisted by four functional
managers and three project managers to look after the following activities.

OBJECTIVES OF DISTRICT INDUSTRIES CENTRE (DIC):

The important objectives of DICs are as follow:

1. Accelerate the overall efforts for industrialization of the district.

2. Rural industrialization and development of rural industries and handicrafts.

3. Attainment of economic equality in various regions of the district.

4. Providing the benefit of the government schemes to the new entrepreneurs.

5. Centralization of procedures required to start a new industrial unit and

minimization- of the efforts and time required to obtain various permissions,
licenses, registrations, subsidies etc.

FUNCTIONS OF DISTRICT INDUSTRIES CENTRE (DIC):

i) Acts as the focal point of the industrialization of the district.

ii) Prepares the industrial profile of the district with respect to.
iii) Statistics and information about existing industrial units in the district in the
large, medium, small as well as co-operative sectors.

iv) Opportunity guidance to entrepreneurs.

v) Compilation of information about local sources of raw materials and their

availability.

vi) Manpower assessment with respect to skilled, semi-skilled workers.

vii) Assessment of availability of infrastructure facilities like quality testing,

research and development, transport, prototype development, warehouse etc.

viii) Organizes entrepreneurship development training programs.

ix) Provides information about various government schemes, subsidies, grants

and assistance available from the other corporations set up for promotion of
industries.

x) Gives SSI registration.

xi) Prepares techno-economic feasibility report.

xii) Advices the entrepreneurs on investments.

xiii) Acts as a link between the entrepreneurs and the lead bank of the district.

xiv) Implements government sponsored schemes for educated unemployed

people like PMRY scheme, Jawahar Rojgar Yojana, etc.

xv) Helps entrepreneurs in obtaining licenses from the Electricity Board, Water
Supply Board, No Objection Certificates etc. xvi) Assist the entrepreneur to
procure imported machinery and raw materials.

xvii)Organizes marketing outlets in liaison with other government agencies.

SMALL INDUSTRIAL DEVELOPMENT CORPORATION (SIDCO)

SIDCO, a Government owned Public Sector Corporation, was established

in November 1975 for the development and promotion for Small Scale Industries
in Kerala. God’s own Country, Kerala, is gifted with abundant natural resources
essential for establishing Industrial Units and SIDCO is taking the initiative to set
up industrial units. Kerala SIDCO as a ‘Total Solution Provider’ for Small Scale
Sector offers all facilities and assistance to set up Small Scale Units across Kerala.

The corporation is rendering valuable assistance to the industrial sector in

the State, including Consultancy Services at the beginning of the project to the
Identification of Industrial Site, Commissioning of project, Providing
infrastructure facilities, Distribution of essential raw materials, Marketing of the
MSME Products, Undertaking civil and electrical works etc. Kerala SIDCO
competently handles the necessary requisites of any project. Kerala SIDCO is
now in the path of profit and is now granting basic facilities and marketing
security to the industrialists and new entrepreneurs through its diversified
activities and new working style. Currently, SIDCO is expanding its area of
works by diversification to give new vision to MSME sector in Kerala.

SIDCO is a fully owned Government Corporation with its registered office

at Trivandrum. SIDCO owns and operates production units, raw materials depots,
Industrial Estates/ Mini Industrial Estates/ Industrial Parks, marketing
cell/emporia/centres, Civil Construction Division, IT&TC Division etc. Kerala
SIDCO has been distinguished as No.1 SIDCO among South Indian SIDCO’s
during 2010-2011 in the wake of the achievement of an unprecedented turnover.
Add to its credential, Government of Kerala recognized the IT&TC Division of
Kerala SIDCO as a Total Solution Provider to Government of Kerala.

SIDCO is playing a vital role for the promotion of Small Micro and
Medium Industries in the State that provides more than 10000 direct employment
opportunities and over 20,000 indirect employment opportunities, its activities to
lift this sector is very vital from social and economic view point.

ACTIVITIES OF SMALL INDUSTRIAL DEVELOPMENT

CORPORATION (SIDCO)

The major activities of SIDCO are under the following divisions.

 Raw Material division

 Production division
 Marketing division
 Construction division
 Industrial Infrastructure division
 Information Technology and Telecommunication Division

NATIONAL SMALL INDUSTRIES CORPORATION (NSIC)

National Small Industries Corporation (NSIC), is an ISO 9001:2015

certified Government of India Enterprise under Ministry of Micro, Small and
Medium Enterprises (MSME). NSIC has been working to promote, aid and foster
the growth of micro, small and medium enterprises in the country. NSIC operates
through countrywide network of offices and Technical Centres in the Country. In
addition, NSIC has set up Training cum Incubation Centre managed by
professional manpower.

MISSION: “To promote and support Micro, Small & Medium Enterprises
(MSMEs) Sector” by providing integrated support services encompassing
Marketing, Technology, Finance and other services.

VISION: “To be a premier Organization fostering the growth of Micro, Small

and Medium Enterprises (MSMEs) Sector”.
FUNCTIONS OF NATIONAL SMALL INDUSTRIES CORPORATION
(NSIC)

1) Provide machinery on hire-purchase schemes to small scale industries.

2) Provide equipment leasing facility.

3) Help in export marketing of the products of small-scale industries.

4) Participate in bulk purchase programme of the Government.

5) Develop prototype of machines and equipment’s to pass on to small-scale

industries for commercial production.

6) Distribute basic raw material among small-scale industries through raw

material depots.

7) Help in development and upgradation of technology and implementation of

modernization programmes of small-scale industries.

8) Impart training in various industrial trades.

9) Set up small-scale industries in other developing countries on turn-key basis.

10) Undertake the construction of industrial estates.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

It is a national institution for promotion, financing and development of

small scale industries. It came to operation on April 2, 1990. SSI can avail
financial assistance from SIDBI through its direct and indirect financial
assistance programme. All the programmes of the SIDBI are directed to solve the
problems of the SSIs in areas like, quality of upgradation, obsolescence of
technology and technology improvement, marketing, infrastructure development,
delayed realization of bills, ancillarisation, export financing and venture capital
financing.
Mission: To facilitate and strengthen credit flow to MSMEs and address both
financial and developmental gaps in the MSME eco-system.

Vision: To emerge as a single window for meeting the financial and

developmental needs of the MSME sector to make it strong, vibrant and globally
competitive, to position SIDBI Brand as the preferred and customer - friendly
institution and for enhancement of share holder wealth and highest corporate
values through modern technology platform.

FUNCTIONS OF SMALL INDUSTRIES DEVELOPMENT BANK OF

INDIA (SIDBI)

1. Small Industries Development Bank of India refinances loans that are extended
by the PLIs to the small-scale industrial units and also offers resources assistance
to them.

2. SIDBI also serves the functions of discounting and rediscounting of bills of

SSI units.

3. It also helps in expanding marketing channels for the products of SSI (Small
Scale Industries) sector both in the domestic as well as international markets.

4. It offers services like factoring, leasing etc. to the industrial concerns in the
small-scale sector.

5. It promotes employment-oriented industries particularly in semi-urban areas

for creating employment opportunities and thus checking the relocation of people
to the urban areas.

6. It also initiates steps for modernisation and technological up-gradation of

current units.

7. It also enables the timely flow of credit for working capital as well as term
loans to Small Scale Industries in cooperation with commercial banks.
8. It also co-promotes state-level venture funds.

9. SIDBI helps in National small scale industries making Hire purchase, leasing
and marketing activities.

10. SIDBI provides various soft loans like Mahila vikas nidhi, National enquiry
fund, Mahila udayam Nidhi and also provides seed capital to the start ups.

KHADI VILLAGE INDUSTRY COMMISSION (KVIC)

The Khadi and Village Industries Commission was established by an Act

of Parliament in 1956. Promoting Khadi and Village Industries in the rural areas
is the basic objective of KVIC. It provides marketing support to the rural
industries. KVIC and established retail outlets throughout India for selling the
products of the rural industries.

There are 30 State Khadi and Village Industries Board functioning in India
to cater to the needs of the Khadi and Village industries. The KVIC provides
necessary support needed to the entrepreneurs through State Khadi and Village
Industries Boards and Khadi and Village Industries Programme.

Khadi and Village Industries Board in Collaboration with the concerned

District Rural Development Authority has brought out the following
developments:

 Upgrading of Khadi and Village industries technology.

 Improving quality of KVI products
 Establishing rapport with exporters for exporting KVI products
 Utilising distribution network of large scale and reputed business houses.
 Expanding need based product line in KVI.

FUNCTIONS OF KVIC

The following are the functions of Khadi Village and Industries

Commission:
1. It plans, promotes, organizes, and implements programmes for the
development of Khadi and Village Industries (KVI).

2. It coordinates with multiple agencies that are engaged in rural development for
several initiatives with respect to khadi and village industries in rural areas.

3. It maintains a reserve of raw materials that can be further promoted in the

supply-chain.

4. It aids in creating common service facilities that help in processing of raw

materials.

5. It aids the marketing of KVI products through artisans and other avenues.

6. It creates linkages with multiple marketing agencies for the promotion and sale
of KVI products.

7. It encourages and promotes research and development in the KVI sector.

8. It brings solutions to the problems associated with the KVI products by

promoting research study and enhancing competitive capacity.

9. It also helps in providing financial assistance to the individuals and institutions

related to the khadi and village industries.

10. It enforces guidelines to comply with the product standards to eliminate the
production of in genuine products.

11. It is empowered to bring projects, programmes, schemes in relation to khadi

and village industries’ development.

SMALL INDUSTRIES SERVICE INSTITUTE (SISI)

At the heart of all agencies dealing with development of small industry is

small industries development organization, SIDO. It was originally known as
central small industries organization (CSIO). Attached to the ministry, SIDO
administers small industries service institute (SISI’s). The small industries
service institutes (SISI’s) are set-up one in each state to provide consultancy and
training to small and prospective entrepreneurs. The activities of SISs are co-
ordinate by the industrial management training division of the DC, SSI office
(New Delhi). In all there are 28 SISI’s and 30 Branch SISI’s set up in state capitals
and other places all over the country. SISI has wide spectrum of technological,
management and administrative tasks to perform.

FUNCTIONS OF SISI

1. To assist existing and prospective entrepreneurs through technical and

managerial counseling such as help in selecting the appropriate machinery and
equipment, adoption of recognized standards of testing, quality performance etc.

2. Conducting EDPs all over the country;

3. To advise the Central and State governments on policy matters relating to small
industry development;

4. To assist in testing of raw materials and products of SSIs, their inspection and
quality control;

5. To provide market information to the SISI’s;

6. To recommend SSI’s for financial assistance from financial institutions;

7. To enlist entrepreneurs for partition in Government stores purchase

programme;

8. Conduct economic and technical surveys and prepare techno economic feasible
reports for selected areas and industries.

9. Identify the potential for ancillary development through subcontract

exchanges;

10. Organize seminars, Workshops and Industries Clinics for the benefit of
entrepreneurs.
 UNIT – II

PROJECT REPORT

The project report is a document that contains all information regarding the
proposed project. It is served as a blueprint of all operations to be undertaken for
attaining the desired results. The project report is basically the business plan of
action and clearly describes its goals and objectives. It is one that helps in
converting the business idea into a productive venture without any chaos or
confusion as it defines strategies for project execution.

Information from various aspects like technical, financial, economic,

production and managerial are together constituted in project report for better
understanding. It describes all inputs required for the accomplishment of a project
so that they can be arranged accordingly at the right time.

The project report is an essential tool available with management for proper
monitoring of operations and helps them in recognizing any problems. Managers
through project reports are able to estimate all costs of operations and possible
profitability of the proposed project.

MEANING & DEFINITION

A Project Report is a document which provides details on the overall

picture of the proposed business. The project report gives an account of the
project proposal to ascertain the prospects of the proposed plan/activity.

Project Report is a written document relating to any investment. It contains

data on the basis of which the project has been appraised and found feasible. It
consists of information on economic, technical, financial, managerial and
production aspects. It enables the entrepreneur to know the inputs and helps him
to obtain loans from banks or financial Institutions.
 The project report contains detailed information about Land and buildings
required, Manufacturing Capacity per annum, Manufacturing Process, Machinery
& equipment along with their prices and specifications, Requirements of raw
materials, Requirements of Power & Water, Manpower needs, Marketing Cost of
the project, production, financial analyses and economic viability of the project.

CHARACTERISTICS OF PROJECT REPORT

1. Scope: The project report gives a clear picture of what is to be done or to be

achieved. It describes the goals of the proposed project and activities to be
undertaken for achieving these goals.

2. Resource: It shows the means or resources required to meet the desired scope.
Project report serves as the roadmap which tells the direction in which business
should go for attaining its goals.

3. Time: The project report denotes the standard time required for the completion
of each and every task of the proposed project.

4. Quality: The project report explains the desired standards to be achieved by

the completion of all tasks. Limit of deviations that can be accepted from these
defined standards are also contained in this report. 5. Risk: Risk is an unavoidable
factor associated with every business and needs to monitored properly. The
project report considers all risk factors that may arrive at the completion of the
proposed project and also tells the ways for recovering from these factors.

NEED/OBJECTIVES/PURPOSE OF PROJECT REPORT

1. Selecting Best Investment Proposal: Project report is an efficient tool for

analyzing the status of any investment proposal. It shows the expected
profitability and risk associated with the project and this way helps in choosing
the best option.
2. Approval of Project: It is essential for registration or approval purposes of the
proposed project. Different authorities like District industries center, Directorate
of industries, government departments, etc. require project reports for giving
approval.

3. Tracking: The Project report assists in tracking the current activities of the
project. It helps team members and other stakeholders to check the project
progress from time to time and helps in finding out any deviations against the
original plan.

4. Visibility: Another important advantage of having the project report is that it

gives full insight into the project. It gives a clear description of activities to be
undertaken and avoids any confusion or disorder.

5. Risk Identification: Identification of risk is a significant step for the

completion of every project. The project report enables in spotting the risk early
and taking all corrective actions timely.

6. Cost Management: Project report helps in managing the expenses through

regular reporting of all activities. It sets the standard cost of every operation in
advance and helps in finding out any deviation in these costs through tracking of
the project.

7. Financial Assistance: It is an important tool for availing financial assistance

from financial institutions or fund providers. The project report enables financial
institutions in judging the profitability of the proposed project and then takes the
decision accordingly for approving the funds.

8. Test Business Soundness: Project report helps in testing the profitability and
soundness of the proposed project. It tells the total estimated costs, possible
income and risk associated with any proposal.
Requirements / Contents of a Project Report

Following are the contents of a project report:

1. General Information

A project report must provide information about the details of the industry
to which the project belongs to. It must give information about the past
experience, present status, problems and future prospects of the industry. It must
give information about the product to be manufactured and the reasons for
selecting the product if the proposed business is a manufacturing unit. It must
spell out the demand for the product in the local, national and the global market.
It should clearly identify the alternatives of business and should clarify the
reasons for starting the business.

2. Executive Summary

A project report must state the objectives of the business and the methods
through which the business can attain success. The overall picture of the business
with regard to capital, operations, methods of functioning and execution of the
business must be stated in the project report. It must mention the assumptions and
the risks generally involved in the business.

3. Organization Summary

The project report should indicate the organization structure and pattern
proposed for the unit. It must state whether the ownership is based on sole
proprietorship, partnership or Joint Stock Company. It must provide information
about the bio data of the promoters including financial soundness. The name,
address, age qualification and experience of the proprietors or promoters of the
proposed business must be stated in the project report.
4. Project Description

A brief description of the project must be stated and must give details about
the following:

 Location of the site,

 Raw material requirements,
 Target of production,
 Area required for the work shed,
 Power requirements,
 Fuel requirements,
 Water requirements,
 Employment requirements of skilled and unskilled labour,
 Technology selected for the project,
 Production process,
 Projected production volumes, unit prices,
 Pollution treatment plants required.

If the business is service oriented, then it must state the type of services rendered
to customers. It should state the method of providing service to customers in
detail.

5. Marketing Plan

The project report must clearly state the total expected demand for the
product. It must state the price at which the product can be sold in mthe market.
It must also mention the strategies to be employed to capture the market. If any,
after sale service is provided that must also be stated in the project. It must
describe the mode of distribution of the product from the production unit to the
market. Project report must state the following:

 Type of customers,
 Target markets,
  Nature of market,
 Market segmentation,
 Future prospects of the market,
 Sales objectives,
 Marketing Cost of the project,
 Market share of proposed venture,
 Demand for the product in the local, national and the global market,
 It must indicate potential users of products and distribution channels to
be used for distributing the product.

6. Capital Structure and operating cost

The project report must describe the total capital requirements of the
project. It must state the source of finance, it must also indicate the extent of
owner’s funds and borrowed funds. Working capital requirements must be stated
and the source of supply should also be indicated in the project. Estimate of total
project cost, must be broken down into land, construction of buildings and civil
works, plant and machinery, miscellaneous fixed assets, preliminary and
preoperative expenses and working capital. Proposed financial structure of
venture must indicate the expected sources and terms of equity and debt
financing. This section must also spell out the operating cost.

7. Management Plan

The project report should state the following.

a. Business experience of the promoters of the business,

b. Details about the management team,

c. Duties and responsibilities of team members,

d. Current personnel needs of the organization,

e. Methods of managing the business,

 f. Plans for hiring and training personnel,

g. Programmes and policies of the management.

8. Financial Aspects

In order to judge the profitability of the business a projected profit and loss
account and balance sheet must be presented in the project report. It must show
the estimated sales revenue, cost of production, gross profit and net profit likely
to be earned by the proposed unit. In addition to the above, a projected balance
sheet, cash flow statement and funds flow statement must be prepared every year
and at least for a period of 3 to 5 years. The income statement and cash flow
projections should include a three-year summary, detail by month for the first
year, and detail by quarter for the second and third years. Break- even point and
rate of return on investment must be stated in the project report. The accounting
system and the inventory control system will be used is generally addressed in
this section of the project report. The project report must state whether the
business is financially and economically viable.

9. Technical Aspects

Project report provides information about the technology and technical

aspects of a project. It covers information on Technology selected for the project,
Production process, capacity of machinery, pollution control plants etc.

10. Project Implementation

Every proposed business unit must draw a time table for the project. It must
indicate the time within the activities involved in establishing the enterprise can
be completed. Implementation schemes show the timetable envisaged for project
preparation and completion.
11. Social responsibility

The proposed units draws inputs from the society. Hence its contribution
to the society in the form of employment, income, exports and infrastructure. The
output of the business must be indicated in the project report.

GENERAL PRINCIPLES OF A GOOD REPORTING SYSTEM

A good reporting system helps the management in proper planning and

controlling. If the reports are available to every level of management at the proper
time, current activities may be regulated and controlled and necessary corrective
actions may also be taken in time. Hence, some principles have been followed for
making the reporting system more effective. Such principles are briefly explained
below.

1. Proper Flow of Information

2. Proper Timing
3. Accurate Information
4. Relevant Information
5. Basis of Comparison
6. Reports should be Clear and Simple
7. Cost
8. Evaluation of Responsibility

PERFORMA OF A PROJECT REPORT

A project report for new business conducts a profound road map for
effectual business venture. It discusses whether the business requires finance or
not, the challenging risks, several problems en route, etc. Hence it becomes vital
for every new business to prepare a project report, to acquaint them on
forewarning issues.

.
Project report for New Business - Format

Below is the sequence of standard format which should be followed while

preparing new business project report:

1. Background of the business.

2. Customer’s profile

3. Long and short term Corporate Objectives

 To perform a viability assessment of the proposed new business ideas in

terms of marketability, technical feasibility, financing and authorities
 To be able to prepare a relevant business plan
 To recognize fundamental startup issues

4. Market Analysis

Brief discussion on the type of market, chief influencers, players, etc.,

 Market description.
 Reasons for starting business in a particular market
 Target clients
 Advantages of the services offered by the new business
 Market consumption patterns
 Past and existing supply location
 Production prospects and limitations
 Exports and Imports
 Price structure
 Flexibility of demand
 Client behaviour, purposes, intentions, impetus, approaches, inclinations
and needs
 Supply network and marketing rules formulated by the government
  Government and technical limitations imposed on the promotion of the
product

5. Financial Assessment

 Investment expenditure and value of the entire project

 Methods of investment
 Anticipated productivity
 Money flows of the project report
 Investment value evaluated in context of different points of merit
 Estimated financial ranking
 Marketing Assessment
 Product
 Price
 Place
 Promotion

6. Operational Plan

 Business models
 Production of goods and services

7. Financial Plan

8. Management Structure

9. Business structure (Ownership, staff, etc.,)

10. SWOT Analysis: Significant Success aspects depending on Strengths,

Weaknesses, Opportunities and Threats to be faced by the firm in future.

11. Appendices

 Break-Even Assessment
 Profit and Loss Synopsis
  Fund Flow Summary

TIPS FOR DESIGNING AN EFFECTUAL PROJECT REPORT FOR

NEW BUSINESS

While designing a project report for new business it is vital to keep the
following points in consideration:

1) Target Market
2) Market approach
3) Market Rivalry
4) Be practical

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