SMALL AND MEDIUM ENTERPRISES (CASE STUDY- MSME FINANCING AND ITS IMPORTANCE IN ECON
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summer project pal
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Posts: 308
Joined: Jan 2011
#1
26-01-2011, 02:19 PM


CASE SUMMARY

The Micro, Small and Medium enterprises have lent a major hand in catapulting India to the
position of India’s fastest growing world economies. 40% of the country’s manufacturing output
and almost 38% of its exports come from this sector.MSME have generate huge employment – the present figure is
around 42 billion, and can promote balanced regional development along with a more equitable
distribution of wealth.
There are many problems faced by MSMEs. They generally borrow from NBFCs, who
themselves have their own share of liquidity problems so they can barely sustain the existing level
of lending let alone increase it. Micro export-oriented units, especially are finding it
extremely difficult.

Impact of Economic Crisis on SME Sector

The recession in the US market and the global meltdown, termed as Global recession have
engulfed complete world economy with a varying degree of recessional impact. This recession
resulted in job losses, dip in sales, profits etc. In India every sector had an impact of recession.

FUTURE OF SMEs:

Revision of provisions by RBI They are slowly recovering from the crisis situation. Economic
Crisis has actually created an opportunity for employees who were fired from their organizations
to come up with their own ventures. SMEs will get a
chance to list their stocks in NSE or BSE and raise money from the public.
SME's from the usual eligibility norms applicable for initial public offerings (IPOs) and follow-on
public offerings.


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seminar flower
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Posts: 10,120
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#2
18-07-2012, 05:05 PM

SMALL AND MEDIUM EN TERPRISE-AN OVERVIEW


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DEFINITIONS

Micro Enterprise: Investment in P&M25 lacs manufacturing & upto Rs 10 lacs in equipment in service sector
S.S.I-Investment in p&m does not exceed Rs500lacs in P&M and Rs10 to 200 lacs in equipment in service sector
Medium Enterprise: Above 500 lacs and upto Rs1000lacs in P&M in manufacturing and Above rs 200 lacs upto Rs500 lacs in
Equipment in service sectorncillary units-proposes to supply 50% of its production or services
Tiny units-Investment in p&m does not exceed Rs25lacs
Village & cottage industry.--population not exceeding 50000.

Inherent advantage of S.S.I

1-Shorter gestation period
2-Low cost of establishment
3-Widely dispersed building wider industrial base.
4-Low capital intensive.
5-Potential for employment
6-Effective mobilisation rural resource

Why S.S.I fails

Inordinate delay in sanction of credit limit
Need based lending not extended
Big units deleberately promote ancillaries
Placed order in large nos of small ones
Gets payment on the whims & fancies of big units
Disadvantageous position of raising funds

Inherent weakness of S.S.I.

Lacking basic infrastructure
Old/outdated technology
Poorly placed in market situation
Promoters lack specialisation
Weak capital base &lesser access to capital market
Lacking managerial&professional skills
Face resource crunch
Poor accounting system
No planning budgeting or monitoring
Short term fund are deployed for long term uses
Pre operative expenses are not considered in project and implimentation appraisal

Role of Govt.of India& R.B.I

Banks should convey timely sanction
Loan applications to be timely disposed
Need based & timely credit to be extended
Simplified & uniform application form
Rejection of application form should be done with approval of higher authorities
Collaterals upto 1lac not to be insisted




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