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PRESENTATION ON

PRESENTATION ON. FINANCIAL PROBLEMS RELATING TO SMALL SCALE INDUSTRIES AND PUBLIC SECTOR UNDERTAKINGS.

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PRESENTATION ON

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  1. PRESENTATION ON FINANCIAL PROBLEMS RELATING TO SMALL SCALE INDUSTRIES AND PUBLIC SECTOR UNDERTAKINGS

  2.  A small-scale industry is one in which the investment in plant & machinery is less than Rs. 1 crore. When investment is less than Rs. 25 Lakhs it qualifies to be treated as a “Tiny” sector SSI. A small scale industry…

  3. Importance of SSIs in india Employment generation Mobilisation of resources and entrepreneurial skill Equitable distribution of income Regional dispersal of industries Provides opportunities for development of technology Indigenisation Promotes exports Supports the growth of large industries Better industrial relations

  4. Sources of finance for small scale sector… Sources of finance I Fixed Working capital I ______________________________________________ I I I I I I State Govt. SFC’s NSIC SSICS SIDCS Commercial banks Commercial Banks Industrial co-operative banks Indigenous banks Money lender Investment corporations

  5. OBJECTIVES OF SMALL SCALE INDUSTRIES 1. To create more employment opportunities with less investment. 2. To remove economic backwardness of rural and less developed regions of the economy. 3. To reduce regional imbalances. 4. To mobilise and ensure optimum utilisation of unexploited resources of the country. 5. To improve standard of living of people. 6. To ensure equitable distribution of income and wealth. 7. To solve unemployment problem. 8. To attain self-reliance. 9. To adopt latest technology aimed at producing better quality products at lower costs.

  6. FINANCIAL PROBLEMS RELATED TO SSIs… The small-scale and cottage industries do not have sufficient knowledge of institutional credit and thus often fail to utilize the existing institutional facilities. Their assets position does not help them to get institutional credits or bank loan. As most of the small-scale and cottage industries are proprietary or partnership firms they can not raise capital from the financial market by floating shares, stock or debentures.  They mostly depend on non-institutional sources of credit, provided by cooperative societies or some individuals, which are inadequate and costly. They mostly require small amounts of credit which are very difficult for the existing financial institutions to handle.

  7. PUBLIC SECTOR UNDERTAKING…PSU or Public Sector Undertakings are State/Government-owned Enterprises like Air India Limited, Bharat Heavy Electricals Limited, Coal India Limited,Food Corporation of India, Hindustan Aeronautics Limited, India Trade Promotion Limited, National Thermal Power Corporation, etc. 

  8. CHARACTERISTICS Government Ownership and Management Financed from Government Funds Public Welfare Public Utility Services Public Accountability Excessive Formalities

  9. ROLE OF FINANCIAL MANAGEMENT IN PSUs Role of financial advisor Capital budgeting decisions Capital structure decisions Working capital management Audit Annual report: Pricing policy Status of public sector undertaking

  10. Financial problems related to PSUs… • Under utilisation of installed capacity is a major reason for the low level of profitability and poor performance particularly in case of capital intensive units. • the pricing policy is determined by the political and social objectives rather than financial objectives. Lack of rational pricing policy has resulted in poor profitability. • Most Public Sector Enterprises are over-capitalised and hence productivity of capital is low. • Poor planning and delay in implementation of projects resulted in a raise in the cost of the projects. • The failure to give adequate return on the huge public sector investment has been a major contributing factor towards the recent fiscal and foreign exchange crises which has put severe strains on the indian economy.

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