How to Set-Up an Enterprise - Sourcing Process, Raw Materials, Machineries and Equipments
Process Selection
Choices of process technology emerge
once the product is finalised. For some complex products,
process know-how has to be imported. In such cases agreements
for technology transfer should be made with due care
to safeguard interest. A lot of appropriate technology
is being developed at CSIR and Defence Research Labs
and some of these technology can now be bought. There
are some intermediaries like APCTT, TBSE, which can
help you to locate the relevant technologies. Besides
there are some In-house R & D centres of companies
which develop technologies and sell them to interested
parties. Indigenously developed process know-how has
intrinsic benefits such as appropriateness, relative
inexpensiveness and possibility to work with technology
developer.
While checking out on a process technology,
the following things need to be considered with utmost
care:
Whether Process requires very
high level of skilled workers or complex machines
?
Whether Process requires large
quantities of water and / or power ?
Whether any Process or Product
patent needs to be honored while utiising the selected
process technology.
Any special Pollution or Environmental
regulation.
The appropriateness to the Indian
environment and conditions.
Raw
Materials
Materials procurement and planning
are critical to success, of a start-up SSI unit. Inventory
management can lead to manageable cash flow situations,
otherwise if too much is ordered too soon considerable
amount of working capital gets locked up. On the other
hand, non-availability may result in production hold-ups,
and idle machine and manpower, hence increased cost.
For essential imported raw material whose lead time
are large proper planning is all the more essential.
Buy raw materials from reputed dealers and agencies
only, before ordering compare the prices and get
quotation from at least 3-4 places and also check whether
price is inclusive or exclusive of transportation cost.
While receiving the delivery check the quality and quantity
of the materials.
Choosing and ordering of right machinery
is also of paramount importance. In many cases technology
or process provides us with specifications which is
not provided, then an extensive techno-economic survey
of machinery and equipment available must be carried
out. International trade fairs and engineering fairs
are good places to look at available options. The entrepreneur
must also consult experts, dealers / suppliers as well
as users, prior to making a selection of equipment and
machinery. The advice of DIC, SISI and NSIC can also
be sought.
Many SSI entrepreneurs buy second
hand machines and equipments. This leads to one of the
major deficiencies in the small industry that of the
prevalence of outdated production and management methods
hindering the efficient operation of small scale units.
It was also found that the most important reason for
the reluctance of the small industrialists to install
modern machinery and equipment was the lack of invest able
funds. The main objective of National Small Industries
Corporation (NSIC) is to provide machinery and equipment
to small industrial units offering them long repayment
period with moderate rate of interest.
The hire purchase application
is to be made on the prescribed form.
The Director of Industries of
the State under whose jurisdiction the applicant falls,
forwards the application to the head office of the
NSIC at Delhi with his recommendation and comments.
All applications for indigenous
or imported machines are considered by acceptance
committees comprising of the representatives of the
Chief Controller of Imports, Development Commissioner,
Small Scale Industries and other concerned departments.
Decision of these committees are
conveyed to the parties concerned with copies to the
regional offices of the NSIC and the concerned Directorate
of Industries.
It is open to an applicant whose
case has been rejected to get his application reviewed
by a high powered committee known Performa invoice.
Once all these formalities are
completed by the hirer, instructions are sent to the
suppliers to despatch the consignment (duly insured
for transit risk) to the hirer and to send the R/R
or C/R as the case may be, to the regional office.
The NSIC after ensuring that all
dues have been paid by the hirer, releases the R/R
or C/R to him for taking delivery of the machines.
In case of imported machines,
the procedure is slightly different in as much as
the shipping documents are sent to the clearing agents
for clearing the consignment from the Customs and
dispatching it to the hirer.
Value Of Machines That Can Be Supplied
Rs. 7.5 lakhs, F.O.R. or landed cost
as the case may be.
Earnest Money
5% or 10% of the value of machinery
depending on whether the equipment is imported or indigenous.
In the case of furnaces and a few other items of equipment,
the rate of earnest money is different. Interest 9 per
cent per annum with a rebate of 2 per cent on prompt
payment. This interest is calculated on the value of
machines outstanding after deducting payment of earnest
money.
Administrative Charge
2 per cent on the sales value of machines and its recovery
by the NSIC is spread over the total installment period.
Period of Repayment
The value of the machines, after deducting the
earnest money received, called the Balance Value, is
payable along with interest and administrative charge
in 7 years. -+
The first installment is payable
after one year and six months from the delivery of
machines
The second and subsequent installment
are payable half-yearly thereafter.
Gestation Period
In case of certain type of machines
which become operative immediately on installation in
the service sector industries and job order establishment,
a gestation period of only 6 months shall be allowed
both to the new and existing units.
A rebate of 2% per annum is allowed on the interest
rates, in case an installment is paid on or before the
due date.
In case the payment of installment is not made within
one month of its separate due date, interest @ 2% per
annum over and above the normal rate is charged on the
defaulted amount from the date of default to the date
of actual payment. Remission in interests is allowed
in case one or more than one installment is paid in advance
of the due date(s).
