Download pdf - Jigyasa

JIGYASA

Industry Institute Partnership Cell

N I

T I E

Volume 1 Issue 1

2

Jigyasa IIPC, NITIE Mumbai

Dctor

About Industry Institute Partnership Cell In the changing scenario of globalization and emerging new technologies, relationship between Industry and Institute has become indispensable to improve industrial competitiveness in the emerging economic landscape. In this endeavor Industry Institute Partnership Cell (lIPC), NITIE proposes to provide cost effective solutions to the techno-managerial problems faced by the Small Scale Industry through participation of NITIE Faculty and students in solving industrial problems. Started in 1995 under the aegis of AICTE, IIPC, NITIE has come a long way in providing support to the SSIs in and around Mumbai. It aims to strengthen the Industry Institute linkage with the small scale enterprises, IIPC, NITIE seeks to extend the training & consultancy services to Small-scale enterprises. IIPC, NITIE has an objective to strengthen the relationship of institute with Industries through various activities

Organizing Seminars, Conferences and Workshops for SSIs

Training and Consulting Services for SSIs

Undertaking Business Improvement projects IIPC, NITIE can offer assistance in the areas of Operations, Materials, Accounting & Finance, Marketing, Information Technology. It can offer general as well customized programs (both training & consultancy services) for the Small Scale organizations located in Mumbai and its near vicinity.

Productivity and Quality

Value Engineering

Materials Management

Financial Management

Marketing and Sales Management

Specific Topics for SSIs

NITIE – IIPC has also organized seminars at the following Industrial Associations

Bombay Industries Association

Ghatkopar Industries Estate

Vasai Industrial Association

Taloja Industrial Association

For more information visit http://nitie.net/iipc/

Coming together is a beginning… Keeping together is progress… Working together is success. (Henry Ford) NITIE is one of the premier business schools in India. Established in 1963 by the Government of India, through the International Labor Organization (ILO) with the assistance of United Nations Development Program (UNDP), it has consistently been ranked as one of top 10 business school over the years. NITIE is an autonomous body under the Ministry of HRD, Government of India and is governed by a Board of Governors comprising eminent personalities from government, academia and industry. It is recognized as a center of excellence along with the IITs, IIMs and IISc by the Ministry of HRD, Government of India. It has been ranked as 7th best B school in India by Wall Street Journal in 2009. For more information visit www.nitie.edu

3


Message from the Director

It gives me immense pleasure to know that the Industry Institute

Partnership Cell have initiated publication of a magazine “Jigyasa.” This

has the promise of taking the mission of NITIE – “To nourish a learning

environment conducive to foster innovations in productivity and

business development” forward. The application of classroom learning

to the real life problems faced by the corporate world would be the

greatest test of the mettle of budding managers of NITIE. Under the

able guidance of faculty members, students have been active in

providing cost effective solutions to the techno-managerial problems

faced by MSMEs for a long time. Jigyasa has the promise of reaching

out to even more numbers of MSMEs. I am confident that MSMEs

would benefit from their endeavor as much as they would get a chance

to implement their classroom learning to the real life problems.

These continued efforts to bring innovative methods to bridge real life

issues faced by industry, go on to reinforce the continuous ranking of

NITIE among top business schools in the country. No wonder NITIE

continues to be the preferred destination for leading business

establishments seeking the finest managers.

I applaud the zealous efforts of the students of IIPC and Prof. V. B.

Khanapuri who have taken the lead in this initiative. It is heartening to

be a part of the process that takes all the enterprising individuals and

companies along the learning curve of the institute. I wish the team all

the success ahead.

Dr. Subhash D. Awale

Director

NITIE, Mumbai

4


Message from Prof. Vivekanand B. Khanapuri

I congratulate the members of Industry Institute Partnership Cell

for coming out with the magazine Jigyasa, focused primarily on

issues/challenges faced by Micro Small and Medium Enterprises

(MSME’s). The magazine aims to bridge the knowledge gap by

dissemination of academic knowledge in terms of theoretical

frameworks, case studies and also provide relevant news to the

MSME’s. This I believe will go a long way in facilitating this

sector in enhancing their competitiveness and in turn contribute

towards the economic growth.

The students of NITIE apply their classroom learning to the live

industry problems in the MSME sector taken up under the

guidance of faculty members. MSME’s would thus benefit from

these varied experiences at these units along with the research

done by faculty members of the institute.

As the mouthpiece of the IIP Cell grows, I hope it quickly builds

up a reputation for a good read and reliable delivery. There are

some who can envision and even fewer who can bring that to

reality. I am delighted to see their vision and common dream

taking shape through toil in inception of this magazine. I hope

this magazine brings in more corporate and expert involvement

as it grows bigger and better, with wider distribution of its

upcoming editions. I have all my best wishes for making it

successful and sustainable.

Prof. Vivekanand B. Khanapuri

Professor-in-charge

Industry Institute Partnership Cell

5


From the Editor’s Desk

As we left behind the whirling and gyrating creeks of machines in the factory

and reeled off towards NITIE, we started to ponder over the effect of downturn

on these small industries. More often than not, it is someone’s entrepreneurial

quest. And they have to go through so much of beginners’ hardship. More than

2.6 crore MSME’s contribute 9% to India’s GDP and 40% to exports. And yet

according to the 4th National census, the percentage of sick MSMEs have

increased to 14.7% from 13.98% in 2000-01.

A study conducted by two business schools said that lack of funds contributed

to the sickness of 74% of the MSME’s followed by managerial incapability which

accounted for 71% of the cases. Industry Institute partnership cell of NITIE

targets the second one by providing cost effective solutions to SME’s. Students

use their classroom learning and simulations to solve real life scenario under

faculty guidance.

The MSME sector can only grow further. The government took a big step when

SEBI eased the listing norms for SME’s. As the upturn is now prominent in the

horizon, banks are ready to ease their financing norms. They are coming up with

new and innovative financial products especially for SME’s. The silver lining is

distinct.

This magazine has come out with the toil of many people and our thanks goes to

all the professors and fellow students. This would not have been possible

without the guidance and support of Dr. S. D. Awale, Director NITIE and Prof. V.

B. Khanapuri, Prof In charge, IIPC NITIE. My special thanks to Achyut Kaushik,

Lakxmikant Ramawat, Pulkit Kheria, Abhishek Dutta and whole IIPC team for

their constant support.

In this inaugural issue we bring to you prospective from various aspects of a

MSME i.e. working capital management, lean manufacturing, innovation and

ERP. We believe that this magazine would become the harbinger of knowledge

from the humble start which it has made. Hope you enjoy reading this magazine

as much as we enjoyed compiling it.

Rohit Kumar

Editor

Jigyasa

[email protected]

Volume 1

Issue 1

February 2010

Patron

Dr. Subhash D. Awale

Prof in Charge

Prof. V. B. Khanapuri

Disclaimer: The views

presented are author’s

personal and IIPC, NITIE

bears no responsibility

whatsoever for any article.

© 2010 IIPC NITIE Copyright License: Attribution

Non-Commercial (CC-BY-NC)

Back cover photo by Rachit Anand

6


Contents

About Industry Institute Partnership Cell

Message from the Director

Message from Prof in Charge

From the Editor’s Desk

Articles

Leaning SMEs

Innovation and R&D for SMEs in India

Latest Trends in ERP and its intervention for SMEs

SMEs working capital management

News Feature

World around SMEs

In Picture

Previous workshops, seminars and conclave

2

3

4

5

7

8

10

12

13

15

7


As an

organization

applies lean

principles, it is

able to realize

a net decrease

in inventory

and thus a net

increase in

cash.

Lean is about doing more with less: Less time,

inventory, space, people, and money. Lean is about

speed and getting it right the first time.

Lean manufacturing is a systematic approach for

identifying and eliminating waste in operations

through continuous improvement for doing

everything more efficiently, reducing the cost of

operating the system and fulfilling the customer’s

desire for maximum value at the lowest price.

Lean principles come from the Japanese

manufacturing industry.

Lean theory basically focuses on reducing the 3

types of waste in an organization:

Muda: Non value-adding work

Muri: Overburden

Mura: Unevenness

(making the process smooth)

For many, Lean is a set of "tools"

that assist in the identification

and steady elimination of these

wastes (As waste is eliminated

quality improves while production

time and cost are reduced.)

Examples of such "tools" are Value

Stream Mapping, Kanban (pull systems) and Poka-

Yoke (error-proofing).

It is often understood that implementing lean

processes lead to more layoffs, but it depends on

the type of process used by the company. For the

company using make to order, shop floor tasks tend

to become more specialized, making substantial

layoffs more difficult to execute, whereas in the

make-to-stock, there are more workers doing the

same tasks. So, it is relatively easy to downside

some portions of that workforce consistently with

the drop in demand.

It has been often misunderstood that Lean can be

applied only to manufacturing setups. Lean as a

philosophy is applicable across industries, what is

required is the knowledge and application of core

values of lean principles.

As an organization applies lean principles, it is able to

realize a net decrease in inventory and thus a net

increase in cash. . Lean principles will enable any

organization to navigate the credit crunch by freeing

up cash, improving product quality, and reducing

costs while growing as a company.

Lean principles can help SMEs in increasing

productivity by practicing the following 5S strategy

step by step:

Sort: Organize the work area, leaving only the

tools and materials necessary to perform daily

activities.

Set In Order: Orderly

arrangement of needed items

so that they are easy to use

and accessible for “everyone”

to find. Orderliness eliminates

waste in production and

clerical activities.

Shine: Keeping everything

clean and swept. This

maintains a

safer work area and problem

areas are quickly

identified. An important part

of “shining” is “Mess

Prevention.”

Standardize: Creating a consistent approach for

carrying out tasks and procedures.

Sustain: Discipline and commitment of all other

stages. Without “sustaining”, your workplace can

easily revert back to being dirty and chaotic.

Once the enterprise has well established lean practices, it should extend the same to its suppliers to bring out a lean supply chain. Although this practice is business model dependent, the companies which have most of their manufacturing work outsourced to other firms must begin the process of improving the extended value stream much earlier than vertically integrated companies.

Leaning SMEs Amit Gera, I

st year PGP NITIE [email protected]

Bes

t P

ract

ice

8


Although

Indian SMEs

realize the

importance of

innovation,

most of them

still believe in

importing

technology,

rather than

developing

them in-house

or in

association

with, national

R&D centers.

Innovation and R&D for SMEs in India

In India, small and medium industries play a vital

role in the growth of the economy. Small industries

have a 40% share in industrial output, producing

over 8000 value-added products. They contribute

nearly 35% in direct export and 45% in the overall

export from the country. They are one of the

biggest employment-providing sectors after

agriculture, providing employment to 28.28 million

people.

Importance of Innovation

Innovation has always been the hallmark of small

and medium enterprises. SMEs that integrate

innovation can reap significant benefits. Studies

conducted by US Department of Commerce,

revealed that since World War II, 50% of all

innovations and 95% of radical innovations, have

come from new and smaller firms. The innovation

process is seen as a cycle involving trial and error,

where problems, at some stage of development

lead to the need for reevaluation of the earlier

stage of the innovation process.

Although Indian SMEs realize the importance of

technological innovation, most of the Indian SMEs

still believe in importing technology, rather than

developing them in-house or through/in

association with, national Research and

Development (R&D) centers. Indian SMEs, over the

years, have largely ignored their R&D and have

mostly not embarked on new product development

and technological up-gradation. This is despite the

fact, that India has the third largest pool of

technologically trained manpower.

Barriers to innovation for Indian SMEs

India has nearly 3 million SMEs, which produce a

diverse range of products from very basic to highly

sophisticated products. Despite their strength,

SMEs are facing tough challenges in the present

Kushagra Sagar, IInd year PGP NITIE [email protected]

Inn

ova

tio

n

scenario of liberalization and globalization. Indian

SMEs are finding it difficult to sell their products in

the domestic and international markets because of

increasing competition their conventional product

range. It will, thus, encourage exports and global

integration and propel SSI

Financial issues

The non-availability of institutional finance on

affordable and easy terms is hindering access to new

technologies. In India the situation is further

complicated by the fact that the preferred mode of

finance is either self or other sources.

Sources to overcome financial barrier

Innovation in developing countries is promoted by

venture capital, to help in indigenous development

of technologies. In India financial institutions, such as

Industrial Development Bank of India (IDBI),

Industrial Credit and Investment Corporation of India

(ICICI), Industrial Finance Corporation of India (IFCI),

and other banks are providing financial assistance,

for commercialization of indigenously developed

technologies and adoption of imported technologies

for wider domestic applications through venture

capital.

Small Industry Development organization (SIDO)

offers a number of financial services to SMEs. Some

of its the popular schemes are Credit Linked Capital

Subsidy Scheme for Technology Up-gradation, Credit

Guarantee Scheme, ISO 9000 / IS 14001 Certification

Reimbursement Scheme, Integrated Infrastructure

Development Scheme, Cluster Development program

, Mini Tool Room Scheme etc.

Steps taken by Government

i) SED Bill: The Small Enterprises Development (SED)

Bill is on the anvil. Enactment of this Bill will remove

the barrier to SSI growth, by inculcating a hassle free,

user-friendly environment enabling SMEs to diversify

9


R&D outputs do

not get

commercialized

for want of

initial

investment and

the needed

enabling

environment.

from their conventional product range. It will, thus,

encourage exports and global integration and propel

SSI towards the projected 12 % targeted rate of

growth.

ii) Credit Rating Scheme: The scheme has been

introduced to encourage the SSI Units to get their

credit rating done, by reputed third party credit

rating agencies. The credit rating will facilitate hassle

free flow of credit to SMEs, while enhancing the

comfort-level of the lending banks. Government of

India will reimburse 75% of the fees charged by the

rating agency subject to a ceiling amount.

iii) SME Fund: Small Industries Development Bank of

India (SIDBI) was set up in April, 1990 under an Act of

Parliament. SIDBI is the principal financial institution

for promoting, financing and development of

industries in the small-scale sector. To further

improve credit availability, a SME fund of $ 2 billion

has been operational from the year 2004.

iv) Credit cards: Laghu Udyami Credit Card (LUCC)

Scheme (Small Entrepreneur’s Credit Card) has been

liberalized. The credit limit has been enhanced from

$4000 to $20,000 for borrowers who have a

satisfactory track record.

Technological issues

Technology is the key to enhancing a company's

competitive advantage in today's dynamic

information age. SMEs need to develop and

implement a technology strategy in addition to

financial, marketing and operational strategies, and

adopt the one that helps integrate their operations

with their environment, customers and suppliers.

Organization supporting SME in technology

development

As technology is an important element, along with

price and quality in determining competitiveness,

many organizations are active in the area of offering

technological assistance to SMEs, including the

Council of Scientific Research (CSIR), Indian Institute

of Technology (IIT), Technology Information

Forecasting and Assessment Council (TIFAC),

National Research and Development Corporation

(NRDC), National Institute of Design (NID) Product

and Process Development Centers (PPDCs),

Inn

ova

tio

n

Mechanical Engineering Research and

Development Organization (MERADO), National

Small Industries Corporation’s (NSIC), and Asia

Pacific Center for transfer of Technologies

(APCTT).

Current scenario in India

At present, there are 2900 R&D institutions in

India, of which 1350 are in the private sector. Out

of these, over 1250 are in-house R&D units,

employing over 45,000 personnel. However, the

SME sector is largely aloof of such facilities. In the

majority of the cases, the R&D outputs do not get

commercialized for want of initial investment and

the needed enabling environment and

networking.

Managerial issues

The Indian industrial environment was

traditionally identified by its regulative and

protective characteristics. Till, 1990, the Indian

economy was inward looking and protected from

internal and external competition. In the absence

of competition, firms did not develop the

technological capability needed for penetrating

the global market. Decades of long protective

environment also reduced the risk taking capacity

of the SME manager and made him complacent

and averse to risk. SME manager chose to avoid

risky situations and thus blocking the dawn of

innovation.

Conclusion

SMEs are sometimes less aware of global

standards, they only think about local

competition. It is imperative to have a shift in way

of thinking. In term of investment many foreign

companies are at the door, so SMEs should

concentrate on upgrading their product so that

there will be longer relationship with those MNCs.

Government also plays an important role, Indian

government will have to act in same manner what

China had done 30 years ago- implementing SME

innovative idea at national level thus encouraging

SMEs for innovation.

References

1. www.niscindia.com

2. www.ciionline.org

3. www.laghu-udyog.com

4. www.innovation.com

http://www.niscindia.com/

http://www.ciionline.org/

http://www.laghu-udyog.com/

http://www.innovation.com/

10


ERP was a very

costly affair.

Thanks to the

intrusion of

internet and

open source

applications,

SMEs could

enter the

market of

prospective

buyers.

Latest trends in ERP and its interventions for SMEs

Amit Singhal, Ist year PGP NITIE [email protected]

Enterprise Resource Planning (ERP) calls for

constant modifications and up gradations. ERP

developers are facing tremendous pressure

both from vendors and companies. In this

context it becomes important to analyze the

ERP's trends and modalities.

Need based applications

Organizations had to implement ERP

throughout their systems irrespective of the

fact whether they help in all the functions or

in one particular function. This became a big

hurdle to the firms and main disadvantage of

ERP. They had to purchase the whole

applications even if it meant that most of

them would be idle except for the core

function.

The latest ERP software programs have

overcome this menace. They offer need based

applications. The firms need not be worried

even if these software programs were not

available. They were given the liberty to

purchase and install software programs

pertaining to that particular function. This has

helped to increase the scope of ERP not only

among large firms but among SMEs as well.

ERP's intervention in SMEs

ERP was a very costly affair. Thanks to the

intrusion of internet and open source

applications, SMEs could emerge as

prospective buyers. This has not only widened

the horizon of SMEs but also increased ERPs

usage among large firms.

These large firms were not able to invest huge

money in spite of adequate funds. ERP for

small business calls for voluminous

investments. But the question that kept

ringing in the market was, Can everyone afford

it.? The answer was a stubborn no initially but

ERP's and ERP applications designed for SMEs

have successfully overcome the above

limitations.

Some relevant issues concerning ERP for SMEs:

Evolution of ERP in SMEs:

ERP was a term restricted purely to elite class.

This scene was witnessed in the IT market for

some long time ever since ERP was introduced.

The large organizations went ahead with ERP

process unmindful of the negative

consequences of not non-inclusion of SMEs, not

to forget mentioning the fact that they took

every proactive measure to curb the same.

Needless to say ERP firms were also interested

in serving such large players. So ERP for SMEs

remained a mere dream.

ERP Vendors and Corporate giants:

It so happened that the number of larger

companies without ERP turned out to be nil,

thanks to the awareness created by vendors and

IT researchers. No doubt companies were

initially a hesitant lot and apprehensive on just

hearing the word ERP. However the industry

proved them otherwise. Then came a stage

where a company could not exist but without

ERP. Even if their performance was satisfactory

they were not able to gain any competitive

advantages.

The story of how goliaths adapted to ERP has lot

of significance in studying their interaction with

SME. These bigger companies were not

providing the required business to ERP vendors.

Even though there are many big companies the

number of vendors was always greater in

Tren

ds

11


With basic ERP

software,

tailor-made

system is

being sold by

ERP

companies.

ERP vendors

are speeding-

up to integrate

most of these

additional

capabilities.

multiples. This means only the best could strike

deals and there was no possibility for mediocre

or average vendors (in terms of

performance).The best players also found that

they had none to serve after a point of time

because almost every company in the market

successfully established ERP (whether on the

first or further attempts).

Stabilization of ERP in SMEs:

So they had to naturally look for greener and

fresher pastures. SMEs were the only answer.

The next question was how to provide best

services at an affordable cost and still make

profit. In this case the vendors had to be

worried only about the number of sales they

could make and not the quantum of profits

because the number of vendors was few and

far between when compared with the number

of SMEs choosing to go for ERP.

As it goes "necessity is the mother of Invention"

vendors had to devise cost effective

applications to meet the demands of the SMEs.

This was the origin of ERP for SMEs. This

benefited them in terms of business. On the

other hand the SMEs enjoyed greater benefits

by making use of this application.

In fact, the latest trend is that with basic ERP

software, tailor-made system is being sold by

ERP companies. ERP vendors are speeding-up to

integrate most of these additional capabilities.

This type of customized or tailor-made

enterprise system is easy to install and

implement for SMEs. It also takes less time to

implement and chances of implementation

failure are lesser.

Hence, SMEs are becoming the popular choice

of ERP vendors. There is an increasing

awareness of ERP in SME market. It has

practically helped to unravel the myth that ERP

is exclusively meant to business empires.

Reduction in implementation time

ERP was discouraged by companies because

they took such a long time to get implemented

and set the whole process into action. Since

this resource was spent excessively there were

chances for reduction in potential business and

losing man-hours.

The current day ERP applications are less

complex to install and train. This has reduced

the amount of time.

Open Source, Web enabled and wireless

technologies

These are three important elements that have

rejuvenated the functioning of ERP. Open

Source ERP has done away with the hassles of

paying license fees not only during installation

but also whenever a modification is made. The

companies are relieved of depending on ERP

vendors even for minor modifications.

Web enabled ERP helps in making the

enterprise operations go online. Any

stakeholder or third party can access the

required information very easily and that too

by sitting anywhere in the world. This proves

to be of great asset for distributed companies

and more so during emergencies when the

details are to be sourced immediately.

Wireless ERP is sharing enterprise information

through devices like internet and other devices

making it possible for outsiders to access the

same. It has helped organizations to make use

of the communication channels effectively and

efficiently. It has made it possible for many

elements to operate in ERP which were

otherwise not possible.

Conclusion

ERP trends reflect positive signals for the ERP

vendors and companies availing their service.

It is important to remember the fact that both

the vendor and the company will be able to

make use of any advantage (including the

modern facilities) only through proper

coordination, teamwork and nurturing a

cordial atmosphere. Mere IT ERP trends will

not help in this aspect.

Tren

ds

12


If the company

is pushed to a

cashless

bankruptcy-

like situation,

what good

would be huge

topline or

bottom line

growth?

SMEs working capital management

Rohit Kumar, Ist year PGP NITIE [email protected]

Working Capital (WC) is considered to be the

life blood of an organization. If properly

managed and nurtured, the business prospers

and grows; else it tends towards financial

distress. Maintaining high inventory levels

reduce the cost of possible interruptions in the

production process. However it strains the WC

in terms of holding costs. Next, granting trade

credit favors the firm’s sales. But, granting

excessive trade credits above a limit may again

be harsh on the Income Statement of firms.

Managing this fine balance, for the inventory

as well as for the ‘trade credit’ becomes even

more important when there is a liquidity

crunch in the economy as sharp decreases in

sales can greatly limit available cash. Even in

the post-slowdown recovery period, cash WC

improvement should be more important than

companies concentrating on topline or bottom

line growth. If the company is pushed to a

cashless bankruptcy-like situation, what good

would be huge topline or bottom line growth?

WC management is particularly important in

the case of startups and SMEs. Most of these

companies’ assets are in the form of current

assets. Also, short term debt is one of their

main sources of external finance which is

reflected on the balance sheet as current

liabilities. The management of WC involves

managing inventories, accounts receivable and

payable and cash. The goal of WC

management is to ensure that a firm is able to

continue its operations and it has sufficient

ability to satisfy both maturing short-term

debt and upcoming operational expenses.

Reducing the cash conversion cycle to a

reasonable extent increases firms’ profitability.

Firms can improve their profitability by

reducing the number of days accounts

receivable are outstanding and by reducing

inventories. This can be done by proactively

reminding customers of upcoming payment

deadlines.

Management can use decreasing demand for

products to reduce inventories so as to offset

low demand. Companies whose performances

remain strong can use WC strategies to solidify

their financial positions.

According to a Harvard Business Review

research, companies that master the delicate

balance between cutting costs to survive today

and investing to grow tomorrow do well after a

recession. These companies reduce costs

selectively by focusing more on operational

efficiency, even as they invest relatively

comprehensively in the future by spending on

marketing, R&D and new assets.

The pinnacle of WC management is achieved

when companies work on negative WC. Costco

USA, a membership only warehouse club retail

chain perfected this model. You need to be a

member to use their service by paying an initial

sum. They accept only cash or debit card,

which gives them instant cash. However they

get goods from suppliers on a credit for certain

number of days. Thus they generate negative

working capital which gives them enough cash

for business expansion. Thus they are able to

sustain on wafer thin profit margins. No

wonder they say “Cash is King.”

References 1. http://hbr.org/2010/03/roaring-out-of-recession/ar/1 2. BCG Report: Winning in a downturn Managing Working capital Th

ink

13


SME Exchange: India debates, China begins

China opened its SME stock exchange and in

comparison, India’s plan for a similar exchange is just

beginning to sprout despite making early moves.

Known as Growth Enterprises Market, the exchange

will be run by the Shenzhen Stock Exchange and on

October 23rd, the first day of the new board it had an

initial batch of 28 companies listed and available for

trading.

The market regulator SEBI has already floated the

concept for setting up the exchange which will enable

SMEs to raise capital from the primary market. “SEBI is

working on it. The norms are being finalized and

would be released soon,” Finance Ministry sources

said. The exchange will help small enterprises that

could not fulfill the trading requirements of the BSE

and the NSE, raise capital, sources said. The BSE, NSE

and the new entrant MCX Stock Exchange (MCX—SX)

have shown interest in setting up a SME exchange.

Bhushan Steel plans SME Steel Park at Orissa

Bhushan Steel Ltd (BSL) has requested permission

from the Orissa government for establishing a ‘SME

Steel Park’ around its 3mtpa steel plant being set up

at Meramundali in Dhenkanal district at an investment

of Rs5828 crore. According to informed sources, the

company has sought 1,000 acres of land for the

proposed SME steel park, of which 200 acres will be

earmarked for local downstream units. BSL will also

provide the raw materials, infrastructure support,

assured power supply and marketing support to the

units proposed to come up in the steel park.

In response to the company’s request, the state

industries department has asked it to submit a

combined application form and detail project report

(DPR) to the Industrial Promotion and Investment

Corporation of Orissa Ltd.

Google puts SME plans on dashboard

In a bid to tap a bigger pool of small and medium

businesses on the Internet, online search giant Google

has added a new feature to its existing local business

center (LBC). The new dashboard feature will provide

businesses with new visibility into the ways their local

listings are found on Google, enabling them to make

smarter decisions about attracting customers.

"Businesses will now be empowered with information

on how their listing is being searched and from where

- trends that will enable businesses to make informed

decisions to reach out to potential customers," said

Manik Gupta, product manager, Google India. "This

feature is a boon for businesses that do not have a

website of their own but want to use the Internet for

doing business," added Gupta.

Report says over 50 per cent of missing SME units in

Ahmedabad

It is difficult to trace out the whereabouts of a large

number of small and medium enterprises (SME)

registered in Ahmedabad district if the official figures

released by the State Industries Commissioner’s office

are to be believed. The figures of the nowhere-to-be-

seen units in Ahmedabad are half of such units in the

state.

While the state has projected 12 to 14 per cent

growth in the SME sector during the Eleventh Plan

period (2008-13), skeptics say a large number of the

22,745 missing units in Gujarat (12,864 in Ahmedabad

alone) existed only on paper to get official benefits .

The report on the registered micro, small and medium

enterprises (MSME) of Gujarat reveals that as per the

provisional results of the Government of India’s

Fourth Census as on March 2007, out of 2.30 lakh

units in the state, 34,945 units have been shut down

and 2,29,756 were found functioning.

World around SMEs News Desk, Jigyasa

14


U

Banks enhance SME focus

IDBI Bank has taken an initiative to strengthen its base

in the mid-corporate, SME and retail sectors.

"Pursuant to formation of a dedicated vertical for SME

customers, the bank has plans to set up 40 City SME

Centers (CMCs) out of which 15 have already been set

up."

Axis bank has now realigned its business into four

strategic business units (SBU). The four new SBUs of

the bank now are retail banking, SME and agriculture,

corporate banking, non-banking retail subsidiaries and

corporate center. Retail banking, along with SME and

agriculture, will be headed by Mr. S K Chakrabarti. Mr.

Chakrabarti was earlier the ED in-charge of mid-

corporates and SME. Unlike other banks where retail

and SME are under a same person, this was not the

case in Axis. The move for SBUs will help bring in more

business focus into these units.

POSCO opens SME promotion center

POSCO has opened a promotion center in one of its

overseas SCM offices in Thailand in order to support

small and medium enterprises' overseas operations

Mr. Hwang said in his congratulatory speech "I hope

the new promotion center will be a foundation stone

upon which both major corporations and SMEs can

build up trust in their relationships to help each other

succeed in overseas markets."

Another promotion center for SMEs opened at the

second plant of POSCO-IPPC in the Indian city of Pune.

The goal of this center is to help Korean SMEs to play

a part in the now booming auto industry in the area.

Meanwhile, POSCO plans to expand the facility to

other countries if the two turn out to be a success not

only at helping SMEs doing overseas business but also

at creating new demand for it by locating upcoming

centers in industrial complexes that contain

processing centers.

PE funding for SMEs

Whatever funding happens for MSMEs, it is late-

stage funding, when risks for the investors are less

than at the time of founding of the company. “And

whenever they have been realized, it's the larger

players who have benefited," said Ramesh Kumar,

MD and CEO, Zwirn Pragati Capfin. So what ails PE

funding in MSMEs?

"Lack of awareness is a primary issue," said

Chandrakant Salunkhe, president, SME Chamber of

India. Moreover, any proposal from an MSME is

looked at with skepticism because of a lack of

business plan and transparency. Harsh Kaul, CEO,

Sidbi VC, said given the stringent norms, only 10% of

the MSME units will qualify for funding.

The trend of launching private equity (PE) funds to

invest in SMEs is catching on in India. IndiaCo

Ventures Ltd, a Pune-based wealth advisory and

investment firm, is planning to launch an offshore PE

fund that will primarily focus on SMEs. The road

show for the fund is scheduled to start in the first

week of December. IndiaCo plans to raise nearly

$500 million from Europe and West Asia.

SMEs take to tele-conferencing

In today’s competitive environment, organizations of

all sizes and across industries are trying to contain

costs without limiting their ability to execute and

innovate. Unified communications (or UC, such as

tele-conferencing and video-conferencing) is no

longer restricted to large enterprises.

Anshul Dhingra, senior marketing manager, Polycom

(India & SAARC), observes, “SMEs have been

enjoying the benefits of UC solutions to collaborate

with various stakeholders. Voice conferencing has

found application across the SME segment. With

increased awareness about the vast benefits of visual

collaboration solutions, the SME market is fast

adopting this technology as well.”

World around SMEs

15


Seminars, workshops, training sessions for SMEs and NGO Melas conducted by IIPC, NITIE over the period

16


NITIE, Mumbai

Please send your comments/feedbacks to [email protected]