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