Annual Report 2007-2008
IV
4.1.1 The National Small Industries
Corporation Ltd., (NSIC), an ISO 9001 certified company, since its establishment in
1955, has been working to fulfill its mission of promoting, aiding and fostering the growth of small enterprises in the country. With passing of the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006, NSIC has also included medium enterprises in its ambit for providing assistance under some of its schemes.
4.2.1 NSIC operates through 9 Zonal offices, 35 Branch Offices, 17 Sub-Offices,
5 Technical Services Centres, 3 Extension
Centres, 2 Software Technology Parks and
1 Office outside India – at Johannesburg
(South Africa).
To enhance the competitiveness of micro & small enterprises, NSIC provides integrated support services under Marketing,
Technology, Finance and other Support
Services.
4.3.1 Marketing Support
4.3.1.1 Marketing, a strategic tool for business development is critical to the growth and survival of small enterprises in today’s intensely competitive market. NSIC acts as a facilitator to promote the products of small enterprises and has devised a number of schemes to support small enterprises in their marketing efforts, both in and outside the country. These schemes are briefly described as under:l
Raw Material Distribution: NSIC has made arrangements with bulk manufacturers like M/s. Steel
Authority of India Ltd. (SAIL), M/s.
Rashtriya Ispat Nigam Ltd. (RNIL),
M/s. National Aluminium Company
Ltd. (NALCO) and Sterlite group for procuring raw materials. These arrangements are aimed at providing the raw material alongwi th financial assistance, as per the requirements of small enterprises.
During the year 2006-
07 Raw Material to the tune of
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MSME
Rs. 2109.37 crores was provided to small enterprises. During the year
2007-08, upto 31st December, 2007
Raw Material Assistance provided is
Rs.2205.40 crores.
l
Consortia and Tender Marketing :
Micro, small & medium enterprises in their individual capacity face problems to procure and execute large orders, which inhibit and restrict their growth.
NSIC, accordingly adopts Consortia approach and forms consortia of units manufacturing the same products, thereby easing out marketing problems of small enterprises. The
Corporation explores the market and secures orders for bulk quantities.
These orders are then distributed to small enterprises in tune with their production capacity. Testing facilities are also provided to enable small enterprises to improve and maintain the quality of their products conforming to the standard specifications.
During 2006-07, marketing assistance provided to the units was
Rs.15.25 crores and during financial year 2007-08 up to 31st December,
2007 assistance provided is Rs.17.05 crores.
l
Single Point Registration for
Government Purchase: NSIC operates a Single Point Registration
Scheme under the Government
Purchase Programme, wherein the registered small enterprises get purchase preference in Government
Purchase Programme, exemption from payment of Earnest Money
Shri Dinesh Rai, Union Secretary, Ministry of Micro, Small & Medium Enterprises (MSME), visit NSIC
Incubator at NSIC-Technical Service Centre, Okhla, New Delhi. Explaining the functioning of the
Incubator to him is Shri H.P. Kumar, Chairman-cum-Managing Director, NSIC and Shri Pravir
Kumar, Joint Secretary, Ministry of MSME.
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Annual Report 2007-2008
Deposit etc. The small enterprises registered under this scheme get the following facilities :
Ø Issue of tender sets free of cost.
Ø Advance intimation of tenders issued by DGS&D.
Ø Exemption from payment of earnest money.
Ø Waiver of security deposit up to the monetary limit for which the enterprise is registered.
Ø Issue of competency certificate in case the value of an order exceeds the monetary limit, after due verification.
2506 units were registered under Single Point Registration
Scheme during the year 2006-
07. During the year 2007-08, up to 31st December, 2007, another
1560 units have been registered under the scheme. l
Exhibitions and Technology Fairs: To showcase the competencies of Indian micro, small & medium enterprises and to capture market opportunities,
NSIC participates in select
International and National Exhibitions and Trade Fairs every year. NSIC facilitates the participation of the small enterprises by providing concessions in rental etc. Participation in these events exposes small enterprises to international practices and enhances their business prowess.
During 2006-07, NSIC organised/participated in 86 exhibitions and buyer-seller meets.
During the year 2007-08, upto 31st
De cember, 2007, Corporation has participated in 55 such events.
l
Buyer - Seller Meets: Bulk and departmental buyers such as
Railways, Defence, Communication
Departments and large Companies are invited to participate in buyerseller meets to enrich micro, small
& medium enterprises’ knowledge regarding terms and conditions, quality standards, etc required by the buyer. These programmes are aimed at vendor development from small enterprises for the bulk manufacturers.
l
Export of Projects: NSIC is a recognized Export House and is exporting projects of micro & small enterprises to other countries. The major areas of operation are:
Ø Supply of Small Industry projects on turnkey basis and
Ø Export of IT solutions from India through Software Technology
Parks.
Export to the tune of Rs.68 crores was facilitated during
2006-07 and during 2007-08, upto 31st December, 2007 Export to the tune of Rs.60 crores has been facilitated.
4.3.2 Technology Support
4.3.2.1 Technology is the key to enhancing a company’s competitive advantage in today’s dynamic information age. Micro, small & medium enterprises need to develop
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MSME 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.
4.3.2.2 NSIC offers micro, small & medium enterprises the following support services through its Technical Services Centres and
Extension Centres:
Ø Material testing facilities through accredited laboratories;
Ø Product design including CAD;
Ø Common facility support in machining,
EDM, CNC, etc.;
Ø Energy and environment services at selected Centres and
Ø Practical training for skill upgradation
5531 units were served under common facility services during the year 2006-07 and during 2007-08, upto 31st December, 2007, 3845 units have been provided such services. l
Incubators for Small Enterprise
Establishment: Enterprise development is one of the thrust areas for nurturing the development and growth of micro and small enterprises in the country that is being facilitated by providing handholding support to micro and small enterprises in every field of business.
Incubator is one of the tools to achieve this as it provides the necessary facilities for prospective / potential entrepreneurs and start-up companies to learn product manufacturing processes coupled with technology development under one roof.
NSIC has set up Incubation
Centres for small enterprise establishment at its Technical
Centres, wherein low cost projects depicting appropriate technologies are displayed in working conditions.
These incubation centres provide comprehensive package of services including on the job training and other support services to establish own ventures.
At these incubators for enterprise establishment, NSIC facilitates the trainees / first generation entrepreneurs in:
Ø Getting training in basic business and entrepreneurial skills;
Ø Getting practical exposure on the machines;
Ø Selecting the projects;
Ø Preparation of the project reports / profiles;
Ø Identification of plant and machineries
/ equipments for the project;
Ø Procuring the plant and machineries / equipments;
Ø Installation of the machineries; and
Ø Other support services to establish their enterprises.
NSIC has also established an
Incubator for Information Technology at Okhla, New Delhi. Infrastructure facilities like ready to move in space, hardware, software etc. have been provided in the IT Incubator. Once the incubatee attains the maturity stage, it can avail the assistance under any of the schemes of NSIC.
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Annual Report 2007-2008
4.3.3 Credit Support
4.3.3.1 NSIC facilitates financing for micro, small & medium enterprises in the following manner: l
Meeting credit needs of Micro, Small
& Medium Enterprises through tie-up arrangements with Banks
One of the major challenges faced by micro, small & medium enterprises is inadequate access to finance due to lack of financial information and non-formal business practices. In this direction, NSIC launched a new scheme for facilitating sanction of loans for small enterprises from commercial banks. NSIC has entered into tie-up arrangements with eight banks (i.e. United Bank of
India, UCO Bank, Oriental Bank of
Commerce, Central Bank of India,
Bank of Maharashtra, YES Bank, UTI
Bank (now Axis Bank) and HSBC) for sanction of term loan and working capital facilities to the micro, small
& medium enterprises as per their requirements. Such arrangements facilitate smooth credit flow to micro, small & medium enterprises.
NSIC, provided credit facilitation to the small and medium enterprises to the tune of Rs. 215.03 crore during 2006-07 and Rs. 284.63 crore up to 31st December, 2007 during the year 2007-08, through tie up arrangements with banks. l
Financing for Procurement of Raw
Material (short term):
NSIC supports micro, small & medium enterprises by procuring and
NSIC pays the dividend to the Government. Union Minister of MSME, Shri Mahabir Prasad, receiving dividend cheque from Shri H.P. Kumar, Chairman-cum-Managing Director, NSIC at Vigyan
Bhavan, New Delhi.
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MSME supplying raw materials like Steel,
Aluminium and Copper etc. alongwith financial assistance as required by them.
NSIC procures raw material from bulk producers and distributes the same in the requisite small quantities to micro, small & medium enterprises ensuring timely delivery thus, playing a role of the catalyst agency.
l
Financing for Marketing Activities
(short term)
NSIC facilitates financing for marketing activities such as
Internal Marketing, Exports and Bill
Discounting to micro, small & medium enterprises.
l
Performance and Credit Rating
Scheme for Small Enterprises
NSIC had formulated the
“Performance & Credit Rating
Scheme” for small enterprises and as its implementing agency, is operating the scheme through accredited rating agencies i.e. CARE, CRISIL, D&B,
FITCH, ICRA, ONICRA and SMERA.
The fee to be paid by the micro, small
& medium enterprises for the rating, is subsidized by the Government to the extent of 75% up to a maximum of Rs. 40,000/-. The scheme has become quite popular now and getting good response from the micro, small
& medium enterprises.
The rating serves as a trusted third party opinion on the unit’s capabilities and credit worthiness. A good rating enhances the acceptability of the rated unit in the market and also makes their access to credit quicker and cheaper and thus helps in economizing the cost of credit.
2742 units applied for rating during 2006-07 and 2170 units were rated. In the year 2007-08, upto 31st
December, 2007, 3296 units have applied for rating and 2500 units have already been rated.
4.3.4 Support Services l
Infomediary Services
Information plays a vital role in the success of any business.
Recognizing the importance of information and its relevance to micro, small & medium enterprises, NSIC provides Infomediary Services to small units. Besides hosting a website
( www. nsic.co.in
), NSIC hosts sector specific portals for focused information dissemination. Under this scheme, micro, small & medium enterprises can become members and avail a number of value added services.
Some important services are:
Ø Supplier database;
Value additions like directories of machinery makers and component manufacturers, spare capacity bulletin boards, discussion forums, virtual exhibitions, etc.
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Annual Report 2007-2008
2063 units were registered under the scheme during 2006-07 and during the year 2007-08, up to
31st December, 2007, 1980 units have already been registered. l
Insurance of Export Credit for Micro,
Small & Medium Enterprises under strategic alliance between NSIC and
ECGC
NSIC has entered, into an arrangement with Export Credit
Guarantee Corporation of India
Ltd. (ECGC) for facilitating small and medium enterprises to insure their export credits. Micro, small & medium enterprises would be helped in insuring their export credits through any office of the Corporation, located all over the country. This arrangement shall strengthen promotion of exports from small enterprises.
l
International Cooperation
For the last five decades,
NSIC has acquired various skill sets in the development process of small enterprises. The inherent skills are being networked to offer consultancy services for other developing countries. The areas of consultancy are as listed below:
Policy & Institutional Framework and
One of NSICs objectives is to facilitate sustainable international partnerships. The emphasis is on sustainable business relations rather than on one-way relations. Since its inception, NSIC has contributed to strengthen enterprise-toenterprise cooperation, southsouth cooperation and to share best practices and experiences with other developing countries, especially those in African, Asian and Pacific regions. Important initiatives are through setting up of institutional frameworks for promotion of micro, small & medium enterprises; conducting techno-economic assessment surveys; setting up industrial estates, provision of common facility services; support and extension services; supply of machinery, equipment and transfer of technology; ancillary development and sub-contracting relationships and technical and entrepreneurial training.
NSIC’s initiatives in this area are:
 Exchange of business / technology missions with various countries for facilitating enterprise-to-enterprise cooperation, joint of sustainable collaboration.
ventures, technology transfers and other forms
 Exploring new markets and areas of cooperation through:
- Identification of new export markets by participating in sector-specific exhibitions all over the world.
- Identification of countries in which
India has potential to export its technology, products and projects, such as the sub-Saharan countries,
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MSME
Central Asia the Indo-China region etc.
- Assistance to these countries in formulating their policy and institutional framework.
4.3.5 New Infrastructure Projects to facilitate MSMEs in Marketing their
Products l
Development of infrastructure at
NTSC, Okhla
NSIC
“Marketing is establishing
Development-cum-
Business Park” (MDBP) & “Laghu
Udyog Mart” at Okhla, New Delhi.
MDBP will be a multi-storied, stateof-the-art building having a total covered area of approx. 37,000 sqm.
“Laghu Udyog Mart” would be a preengineered steel building system spread over an area of 9500 sqm. for exhibition purposes l
Development of infrastructure at
NTSC, Hyderabad
Construction of “Exhibitioncum-Marketing Development
Business Park” at Hyderabad has also been taken up. The Park will be a five-storied building with a covered area of approx. 15,000 sqm. Ground floor would be utilized for exhibition purposes and the upper floors will be given on lease and licence basis to micro and small industries / service providers, IT & ITES / BPOs and financial institutions / banks.
4.4.1 The Corporation organised the 15th series of Techmart India, 2007 coinciding with India International Trade Fair at Pragati
Maidan, New Delhi. Shri Mahabir Prasad,
Hon’ble Minister of Micro, Small & Medium
Enterprises, Govt. of India inaugurated the exhibition and appreciated the efforts made by NSIC for small enterprises.
Ø 190 units including 70 from North
Eastern Region participated in the event. The display covered a wide range of products and services from all focused sectors.
Ø A new initiative was taken by providing special enclosure of
“Working Techmart” where standalone technologies for entrepreneurs were put on display besides live cluster demonstration of units from
North Eastern Region.
Ø Foreign delegates from South Africa,
Poland, Saudi Arabia, Senegal,
Nigeria, Mozambique, Sri Lanka,
Brazil, Afghanistan, Nigeria, Iran,
Botswana, Libya, Ethiopia, Angola and Tunisia visited Techmart.
Ø NSIC was awarded the Gold Medal for Special Display in the theme category by India Trade Promotion
Organisation, the organiser of
IITF’2007.
4.4.2 International Consultancy Services
The various skill sets acquired by NSIC in the development process of small enterprises are being networked to offer consultancy services to other developing countries.
Under this, a consultancy assignment was undertaken in KwaZulu-Natal,
South Africa. This assignment was to provide and render services for the development of a framework for the support to small, medium and
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Annual Report 2007-2008 micro enterprises in KwaZulu-Natal
Province. As a fallout of the successful completion of the assignment, which was widely appreciated, further business propositions have opened for consultancy services as well as supply of small industry projects.
4.4.3 International Exhibitions
To show case the competencies of Indian micro, small & medium enterprises in the international market and expose the small enterprises to international practices and enhance their business competitiveness, NSIC takes small enterprises for participation in international exhibitions and trade fairs. The units participating in these fairs are provided various concessions.
A Combination of
Vision and Pragmatism
4.5.1 The Corporation was in continuous losses till the year 2004-05. With a view to make the Corporation self sustaining various measures were initiated during the past three years. The need of the hour was to consolidate upon the range of services provided which would not only enhance its competitiveness but also provide an added edge to its operations. It required major decisions including those about the hiving off of some of its prime activities of the past. To regain the vitality and dynamism, to establish its creditability and restore the confidence of its stakeholders and the small industries, the Corporation undertook the following as focus areas:
4.5.2
Direct Operator Vs. Facilitator:
Considering past performance, financial capability, inherent disadvantages in respect of operations, the role of a ‘ facilitator ’ was considered more appropriate for NSIC.
This saw the Corporation withdrawing from
‘Direct Financing’ and instead making tie ups with banks for facilitating the credit required by the SSI (now MS) units. NSIC has entered into tie-up arrangements with eight banks (i.e. United Bank of India, UCO
Bank, Oriental Bank of Commerce, Central
Bank of India, Bank of Maharashtra, YES
Bank, UTI Bank (now Axis Bank) and HSBC for sanction of term loans and working capital facilities to the MSMEs as per their requirements. Such arrangements facilitate smooth credit flow to this sector. This also saved NSIC from investing/blocking its funds and incurring costs thereon and avoiding huge losses on account of provisioning for bad and doubtful debts.
4.5.2 Raw Material Assistance: Tie ups were made with various bulk manufacturers of raw materials (like SAIL, RINL, NALCO,
HCL, HZL etc.) so as to extend to the SSI units (now MSEs) the benefits of economies of scale as well as steady availability of raw materials. To add more raw materials in our fold, dialogue has been initiated with the
Indian Oil Corporation, Gas Authority of India
Ltd., Coal India Ltd. and Hindustan Organic
Chemicals Ltd. for distribution of bitumen in southern states. A godown has been made operational at Chennai for handling the sale of bitumen on behalf of Chennai
Petrochemical Corporation Ltd.
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MSME
4.5.3 Insurance of Export Credit for
Small Enterprises under Strategic
Alliance between NSIC and ECGC: NSIC entered into an arrangement with Export
Credit Guarantee Corporation of India Ltd.
(ECGC) for facilitating small and medium enterprises to insure their export credits.
Small & Medium Enterprises would be helped in insuring their export credits through any office of the Corporation, located all over the country. This arrangement shall strengthen promotion of exports from small and medium enterprises.
4.5.4 Enlarging Client Base: The
Corporation increased its reach by opening sub offices, extension offices in various new areas. In addition, NSIC signed
Memorandum of Understandings (MoUs) with 49 Industry Associations, whereby services at door steps could be provided to their members. The membership schemes were introduced with certain ‘ add-on ’ features for attracting small enterprises to join the NSIC family.
4.5.5 Incubators for Small Enterprise
Establishment: The Corporation has set up Incubation Centres for small enterprise establishment at its Technical Centres, wherein low cost projects depicting appropriate technologies are displayed in working conditions. The incubation centre provides comprehensive package of services including on the job training and other support services to establish own venture.
It has also established an Incubator for Information Technology at Okhla, New
Delhi. Infrastructure facilities like ready to move in space, hardware, software etc. has been provided in the IT Incubator. Once the incubatees attain the maturity stage, it can avail the assistance under any schemes of
NSIC.
4.5.6 International Consultancy
Services : The various skill sets acquired by
NSIC in the development process of small enterprises are being networked to offer consultancy services to other developing countries.
4.5.7 Human Resource Development
– Training Motivation, Redeployment:
Retraining and redeployment of under utilized manpower in Groups B, C & D was also carried out wherein the identified employees were imparted training at in-house Training- cum-Motivational Programmes. After imparting necessary training, the identified manpower has been redeployed in recently opened new offices.
For employees to have better understanding of the Corporation’s value system and philosophy, NSIC’s Code of
Business Conduct and Ethics was prepared and circulated to all employee, to read and make compliance thereof, a priority.
4.5.8 Rationalization of Staff – To the
Optimal Level of 860: The level of staff strength which was 1214 as on 31.03.2002 has been reduced to 860 as on 31.03.2007.
Effective use of Voluntary Retirement
Scheme also enabled the shedding of the surplus manpower.
4.5.9 Recovery of Stuck Capital: To address the cases of chronic default, the
Corporation designed and implemented One
Time Settlement Scheme on All India basis.
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Annual Report 2007-2008
A focused and structured approach led to reduction in stuck capital to Rs. 192.69 crore by 31.03.2007.
During the year, the Corporation surged ahead in business performance, achieving record business growth with the business turnover standing at an all time high of Rs. 2197.89 crore, showing an increase of 43% over the last year.
As a result of above measures, the
Corporation made a turnaround in the year
2006-07 and earned a profit of Rs. 4.92 crores before amortization of VRS expenditure showing an increase of 51.16% over the previous year’s net profit before amortization of VRS expenditure. The Corporation earned a net profit of Rs.2.84 crores as against
Rs.1.25 crores in the previous year.
4.6.1 In view of the improved performance,
NSIC paid dividend @20% of the Net Profit rounded off to the nearest thousand of Rs
56,90,000/- after a gap of many years.
Inauguration of Techmart India’ 2007. Hon’ble
Union Minister (MSME), Shri Mahabir Prasad inaugurates the Techmart India’ 2007 at Pragati
Maidan, New Delhi in the presence of Shri H.P
Kumar, Chairman-cum- Managing Director, NSIC.
NSIC signed MoU with HSBC Bank for providing credit facilities to MSEs. Signing the MoU are Shri
H.P. Kumar, Chairman-cum-Manager Director,
NSIC and Shri Subir Mehra, Country Head,
Commercial Banking, HSBC Bank.
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