✓ Concept of Entrepreneurship and Intrapreneurship,

Entrepreneurship is “the ability and readiness to develop, organize and run a business
enterprise, along with any of its uncertainties in order to make a profit”.

Intrapreneurship is the process by which other new ventures are born within the
confines of an existing corporation.
It involves expansion by exploring new opportunities through new combinations of
existing resources.

Entre Intra
An entrepreneur refers to a person Intrapreneur refers to an employee of the
who set up his own business with a organization who is in charge of
new idea or concept. undertaking innovations in product,
service, process, etc
Has an Intuitive Approach Has a restorative Approach
Uses own resources. Uses resources provided by the company.
Risk is borne by the entrepreneur Risk is taken by the company.
himself.

Independent Dependent
Newly established enterprise Already existing enterprise

✓ Current India start-up growth and environment.

Ans)
India has an estimated 26,000 startups, making it the third-largest startup ecosystem in
the world.
India has recorded profit of over $36 billion in the past 3 years with 26 “unicorns” –
startups valued over $1 billion.
The Indian startup ecosystem has expanded quite rapidly mainly through private
investments including seed, angel, venture capital, and private equity funds, with
technical support from incubators, accelerators, and the government.
The government, for its part, is creating an enabling environment through its flagship
Startup India initiative, which came into force in 2016. The government is planning to
deploy ICT infrastructure and provide policy support for enhanced e-governance,
investments, and technology innovation through research and higher education to
support entrepreneurship and spur economic growth. Startup ecosystem has largely
grown in the large (Tier 1) cities and states especially in IT-enabled sectors.
However, Indian businesses face huge challenges, such as the unorganized and
fragmented market, a lack of clear and transparent policy initiative, lack of infrastructure,
knowledge and exposure etc.

✓ Types of Entrepreneur

a) Based on Functional Characteristics

1. Innovative Entrepreneur

An innovative entrepreneur is one who launches new products, discovers new markets,
establishes new methods of production and restructures the enterprise.

2. Imitative or adoptive entrepreneur

The imitative entrepreneur is one who simply imitates existing skills, knowledge, or
technology already in place in advanced countries.

3. Fabian Entrepreneurs

These are entrepreneurs that are very careful in their approaches and cautious in
adopting any changes.

4. Drone Entrepreneurs

These are entrepreneurs who do not like change. They are considered 'old school'.
They want to do business in their own traditional or orthodox methods of production and
systems.

b) Based on developmental angle

1. Prime mover: : This entrepreneur sets in motion a powerful sequence of

development,expansion and diversification of business.
 2. Manager: : Such an entrepreneur does not initiate expansion and is content just
staying in business.

3. Minor innovator: : This entrepreneur contributes to economic progress by

finding better use for existing resources.

4. Satellite: This entrepreneur assumes a supplier’s role and slowly moves

towards a productive enterprise.

5. Local trading: Such an entrepreneur limits his enterprise to the local market.

c) Based on Types of Entrepreneurial Business

Manufacturing: An entrepreneur who runs such a business actually produces the

products that can be sold using resources and supplies.For example,apparel and other
textile products etc.

Wholesaling: An entrepreneur with such a business sells products to the middle Man.

Retailing: An entrepreneur with such a business sells products directly to the people
who or consume them.

Service: An entrepreneur in this business sells services rather than products.

d) Based on the Nine Personality types of Entrepreneurs

The improver: If you operate your business predominately in the improver mode,you
are focused on using your company as a means to improve the world.

The advisor: This business personality type will provide an extremely high level of
assistance and advice to customers.

The superstar: Here the business is centered on the charisma and high energy of the
Superstar CEO.This personality often will cause you to build your business around your
own personal brand.

The artist: This business personality is the reserved but a highly creative type. Often
found in businesses demanding creativity such as web design and ad agencies.

The visionary: A business built by a Visionary will often be based on the future vision
and thoughts of the founder.
The analyst: If you run a business as an analyst,your company focus is on fixing
problems in a systematic way.

The fireball: A business owned and operated by a Fireball is full of life, energy and
optimism. Your company is life-energizing and makes customers feel the company has
a get it done attitude in a fun playful manner.

The hero: You have an incredible will and ability to lead the world and your business
through any challenge.

The healer: If you are a Healer, you provide nurturing and harmony to your business.
You have an uncanny ability to survive and persist with an inner calm.

✓ Entrepreneurial Personality & Traits.

1. be passionate about achieving their goals

2. have a spirit of adventure (in fact, the word "adventure" is derived from the Latin word
meaning "to venture")
3. have a strong need to achieve and seek personal accomplishment
4. be self-confident and self-reliant
5. be goal-oriented
Clear objectives Communication Ability Human Relational ability Technical knowledge
Initiative Problem solver
Risk Taker

✓ Entrepreneurial Skills

Business management skills.

Teamwork and leadership skills.
Communication and listening.
Customer service skills.
Financial skills.
Analytical and problem-solving skills.
Critical thinking skills.
Strategic thinking and planning skills.
✓ Entrepreneurial Environment, Why somebody wants to be an entrepreneur?

Change – Entrepreneurs frequently want change, not only change, but they also want
to be the bearers of change.
They are solution givers and want to interrupt the status quo.
They have a vision like "I want to assemble the world's information" or "I want to put an
AC at every desk" and they take an attempt to make this change. In this attempt, some
succeed and some fail.

Challenge – Some people love challenges and they opt for starting a new business as
it is very challenging to handle big problems. These people find a typical job in a big
corporate boring and not challenging enough.

Creativity – Running one‘s own business is all about being more creative and having
the independence to make new discoveries.
One needs to have an infinite room to welcome and introduce creativity in a small
business.

Control – Some people tend to start a business because they don't want to be pushed
around and work for a product/company in which they have no way to shape their
destiny.
They want to be their own boss have their own time, own pace, location of their choice,
and employees of their choice and have a progressive role in deciding the direction of
the company.

Curiosity - Successful entrepreneurs are always anxious and ask - "what if we do it in

this way?”.
They want to have more than one option to do work and choose the best one from
them.
They are frequently anxious to see how their particular theory like "people want to do A
with B" works.

Cash – The last but not the least part is the cash. Money says it all. Many
non-entrepreneurs have a misconception that cash comes first for entrepreneurs but
this is never really true.
If this would be the case, then there is no reason for Ellison or Gates to keep expanding
their business aggressively after they have made more than a billion dollars. However,
money is not the primary motivation.
✓ Identification of Opportunities (entrepreneurs identify opportunities)

Business analysis
Customer/ Market Analysis
Competitors Analysis
Trend Analysis
Survey/ Questionares

In easier words,
1. Find a problem in your community, and provide a solution for it
2. Find opportunity in your personal experience
3. Look for ideas within existing businesses and present new solutions to the
existing problems.
4. Experience through philanthropic work and volunteering
5. Keep up with current events and avail new opportunities
6. Read and Read and use google to find out ways

✓ ideas will be converted to opportunities

Figure out a problem that your idea solves. It is normal to be subjective and
emotional toward your precious idea. Desire is part of the process, but you need sales
to keep you in business. Instead of honing in on the great solution at first, work on
identifying a common problem your product will solve.
Research the competition. You may have never heard of your idea or see anyone
around doing it, but take it step further. Do your homework to see if similar products or
services exist. That could save you the headache of entering a saturated market or help
you enter from a different angle. Similar products or services could use your idea and
what you can do to improve them.
See a business consultant. A professional can guide you through completing each
step on your way to structuring your idea into a viable business. They can act as a
mentor to help you talk through if the idea makes sense to pursue. Business consultants
have an abundance of networks and could help you connect with the right business
funding too.
Find a market for your idea. Even if everyone wants your product, not all of them need
it, can afford it or will buy it. The objective is to up your chances of reaching buyers.
Market research is an important step to have a solid marketing plan and promote to
people who will convert into customers. Consider demographic information such as age
group, residence, income, a line of work and hobbies.
Find support and build your team. Business partners and a team who want to see
you succeed could speed up the process. Bringing the best of what each of you has to
the table with a team around you increases your chances of longevity in the business.
Big business names like Google, Apple, Twitter, Proctor and Gamble and Ben & Jerry’s
can attribute their lengthy business success to fusing good qualities within their
partnership.
Create your business plan. This foundation for success breaks down every
component of your business. Creating a business plan will put all the concepts
swarming around in your head in one place on a document. It helps you narrow down
critical projections for at least the first five years. Most investors require some form of a
business plan to consider placing their trust in your idea or company.
Find investors for your idea. Start with options that have the least amount of risk in
the early stages. Friends and loved ones, personal savings and crowdfunding pose the
least risk to your credit and are easier for a startup to obtain. With more experience,
pitching to a venture capitalist or angel investor could yield more funds in exchange for
company equity.
Solidify your brand and promote your business. Influencers control a large portion
of market activity, so that means you need to be the face of your brand. Work on
building a loyal following on social media before your business idea launches. Build
email lists, submit press releases and create anticipation for your upcoming product or
service.

✓ problem solving can create opportunities

Identify the problem – Don’t ignore your customer’s headaches. Ask yourself: Is there
anything you are not doing that you could be doing to serve them better? The more you
learn about your customer, their customers, and their business, the more you will
understand how you can impact their bottom line.
Do overall market research – Many questions can be answered by market research.
What is the current state? Where is the market going? Who are the main players? How
do consumers feel about the current solutions to their problems? How can you meet
their needs better?
Get a team in to collectively debate the problem – When group members are
interested in the problem, they will be more engaged with the problem-solving process
and invested in finding a quality solution.
Apply creative thinking and problem-solving strategies to identify a business
opportunity – Through creativity, you can come up with the most unthinkable ideas and
bring innovation into existing practices. It is the ability to use your imagination.
Imagination that will lead you to reach never-before-explored areas.

✓ Converting Business Opportunities into reality.

1. Research the Market

You may have a good business idea, but unless there's a viable market for it, your
product or service won't get off the ground.
Conducting a full market analysis will help you define your audience and size up your
competition.

1. Define Your Target Audience:

- Who has the problem that your product or service solves?
- Who's likely to need or want the solution you offer?
- Who has the drive and economic means to buy it?
- Where and how will they use your product or service?

Once you know and understand your potential customers, you can focus and target
your marketing efforts on reaching and attracting them.

2. Research Your Competition: Researching your competition involves identifying

your competitors and evaluating their strengths and weaknesses.

2. Test Your Idea

Before you dive headfirst into a new business, take some time and a few extra steps to
test your idea. Create a functional prototype that you can present to investors and your
target audience. Conduct focus groups to get feedback on the product or service before
bringing it to market. Then use the opinions and recommendations you gather through
the focus groups to improve your product or service. Testing your idea will save you
time and money in the long run.

3. Write a Business Plan

To start a business, you need a business plan. A business plan typically includes the
following parts:
- executive summary
 - company description
- products and services
- market analysis
- competitive analysis
- organization and management description
- marketing plan
- sales strategy
- request for funding
- financial projections

4. Develop a Financial Plan and Forecast

A financial plan and forecast are key components of your overall business plan and
required if you're applying for funding. A financial plan lays the steps you plan to take to
generate future income and cover future expenses.

5. Choose a Legal Structure

To choose the right legal structure for your business, start by analyzing your company’s
goals and the laws that will regulate your business.
Choose the structure that best fits your company, and remember that as your business
grows, you can change its legal structure.

6. Create a Marketing Strategy

To promote and sell your product or service, you need a marketing strategy. A
marketing strategy is a forward-looking scheme for reaching your target audience and
turning prospective consumers into customers. Your marketing strategy should cover
the four "P's" of marketing—product, price, place and promotion—and contain your
company's value proposition, market analysis, branding, positioning and campaign
marketing plans.
Turning that idea into reality requires hours of research, testing, planning and strategy,
not to mention patience and persistence.

✓ Location advantages for business growth.

Trade Access
One of the biggest location advantages for a company that sells physical products is
access to a comprehensive trade network. Trade agreements can reduce tariffs, making
it cost-effective to enter new markets.
Consumer/Market Proximity
Close proximity to the market helps to minimize travel time while maximizing the
number of potential customers.
Business Community and Culture
It helps to develop a strong local ecosystem that supports the business and helps in
expansion. The business community also helps to find experienced talent, innovate new
products and, ultimately, grow your business.
Proximity to Talent Sources
Communities that have a strong existing workforce have demonstrated that they can
retain talent.
Lower Costs
Cost savings come in all shapes and sizes, including labor costs, office rental, energy
rates, business taxes, etc., and each one of these types of costs differs between
countries.

✓ Start-ups and business incubation

A business incubator is a company that helps new and startup companies to develop by
providing services such as management training or office space.

An incubator concentrates its effort on helping innovative and fast growth startups that
are likely to have a significant impact on the local economy.

● They guide startups/ventures on how to compete with established industry

players.
● Business incubators help with the basics of business by providing business
training programs
● They provide networking activities.
● They help startups save on operating costs.
● Incubators provide marketing assistance.
● Incubators help with accounting/financial management like bank loans, loan
funds etc.
● They have a strong network of influential people who can connect
startups/ventures with established businesses and individuals.

✓ Skill Development

✓ Setting up a Small Enterprise.

<ans is same as converting opportunities into reality>
✓ Issues related to location

1. Market
The nearness of the market and the cost of delivering the goods are likely to be
important factors.
2. Raw materials
If the raw materials are bulky and expensive to transport it will clearly be in the
entrepreneur‟s interest to locate near to them.
3.Transport costs:
The two major influences are the pull of the market and the pull of the raw materials and
these are determined by whether or not the industry is bulk-increasing or
bulk-decreasing.
4. Land
Land costs vary considerably nationally and some firms, e.g. wholesalers, might need a
large square-footage. They might, therefore, be influenced by the cheaper rents and
property prices found in some areas.
5.Labour
The availability of labour might well attract firms to an area, particularly if that labour
force has the skills they require.
6. Safety
Some industries have to locate their premises well away from high density population
levels and their choice of location is limited.
7. Waste disposal
Certain industries produce considerable waste and the costs associated with the
disposal of this might affect their location.
8. Government
Government provides special assistance to areas of high unemployment. This takes
place within the UK, and is also a feature of wider European Union regional policy.

✓ Environmental Problems

Top environmental issues are centered on climate change these days. Greenhouse gas
emissions, which accelerate global warming, are at a level that significantly exceeds
the highest concentrations in ice cores ever recorded, according to Business Insider.
As climate change continues, the costs have nowhere to go but up. The following five
issues are the most likely to affect your business going forward.

> Air pollution

> Water Pollution
> Food and water shortage
> Waste management
> Over population
> Deforestation
> Global Warming
> Bio-diversity loss
> Acid Rain

✓ Environmental Protection Act, 1986

Man has tried to take nature to a considerable extent and his endeavor to conquer
nature has succeeded. The concern over the environment has grown as the quality is
degrading. It has been evidenced by increasing pollution, the loss of biodiversity, loss
of vegetal cover, growing risks of environmental accidents and also the harmful
chemicals in the ambient atmosphere has posed a threat to the environment.

Due to its growing risks, various legislations are being propounded by the government.
Various Acts related to a specific type of pollution have been passed in the India
legislature. The most important statute is the Environmental Protection Act, 1986, as it
is the general legislation for the protection of the environment.

Objectives:
(i) It was enacted to implement the decisions which were made at the United Nation
Conference on the Human Environment held at Stockholm in June 1972.
(ii) Creation of authority for government protection.
(iii) Coordinating the activities of various regulating agencies which is done under the
existing law.
(iv) The main task is to enact general laws for environmental protection, which could be
unfolded in areas of severe environmental hazards.
(v) Providing deterrent punishment to those who inculcate in endangering the human
environment, safety and health.
(vi) The main goal for the environment should be sustainable development and it can be
regarded as one of the goals for the Environment Protection Act, 1986.
(vii) Sustainable development includes achieving the object and the purpose of the act
as well as the protection of life under Article 21 of the Indian Constitution.

✓ Basics of Accounting:

✓ Assets
- Current assets (CA) are those that will be converted to cash within one year.
Typically, this could be cash, inventory or accounts receivable.
- Fixed assets (FA) are long-term and will likely provide benefits to a company for
more than one year, such as real estate, land or major machinery.
- Asset class definition: An asset class is a group of securities that behaves
similarly in the marketplace. The three main asset classes are equities or stocks, fixed
income or bonds, and cash equivalents or money market instruments.

✓ Liabilities
- Liabilities (current and long-term) definition: A company's debts or financial
obligations incurred during business operations.
Current liabilities (CL) are those debts that are payable within a year, such as a debt
to suppliers.
Long-term liabilities (LTL) are typically payable over a period of time greater than one
year. An example of a long-term liability would be a multi-year mortgage for office
space.

✓ Equity

Equity and owner's equity (OE) definition: In the most general sense, equity is
assets minus liabilities. An owner’s equity is typically explained in terms of the
percentage of stock a person has ownership interest in the company. The owners of the
stock are known as shareholders.

✓ Revenue

Revenue is the total amount of income generated by the sale of goods or services
related to the company's primary operations.
Revenue, also known as gross sales, is often referred to as the "top line" because it sits
at the top of the income statement.
KEY TAKEAWAYS
Revenue is the total amount of income generated by the sale of goods or services
related to the company's primary operations.
Income or net income is a company's total earnings or profit.
Both revenue and net income are useful in determining the financial strength of a
company, but they are not interchangeable.

✓ Expense

Expenses (FE, VE, AE, OE) definition: The fixed, variable, accrued or day-to-day
costs that a business may incur through its operations.
Fixed expenses (FE): payments like rent that will happen in a regularly scheduled
cadence.
Variable expenses (VE): expenses, like labor costs, that may change in a given time
period.
Accrued expense (AE):an incurred expense that hasn’t been paid yet.
Operation expenses (OE): business expenditures not directly associated with the
production of goods or services—for example, advertising costs, property taxes or
insurance expenditures.

✓ Working capital
Capital (CAP) definition: A financial asset or the value of a financial asset, such as
cash or goods. Working capital is calculated by taking your current assets subtracted
from current liabilities—basically the money or assets an organization can put to work.

✓ Marketing Mix

The marketing mix refers to the set of actions, or tactics, that a company uses to
promote its brand or product in the market.
The 4Ps that make up a typical marketing mix - Price, Product, Promotion and Place.
However, nowadays, the marketing mix increasingly includes several other Ps like
Packaging, Positioning, People and even Politics as vital mix elements.

The 4Ps of marketing:

Price: refers to the value that is put for a product. It depends on costs of production,
segment targeted, ability of the market to pay, supply - demand and a host of other
direct and indirect factors.

Product: refers to the item actually being sold. The product must deliver a minimum
level of performance; otherwise even the best work on the other elements of the
marketing mix won't do any good.

Place: refers to the point/ location of sale. In every industry, catching the eye of the
consumer and making it easy for them to buy it, is the main aim of a good distribution or
'place' strategy. Retailers pay a premium for the right location.

Promotion: this refers to all the activities undertaken to make the product or service
known to the user and trade. This can include advertising, word of mouth, press reports,
incentives, commissions and awards to the trade. It can also include consumer
schemes, direct marketing, contests and prizes.

✓ What is the importance of the marketing mix?

All the elements of the marketing mix influence each other. They make up the business
plan for a company and handled right, can give it great success. The marketing mix
needs a lot of understanding, market research and consultation with several people,
from users to trade to manufacturing and several others.

✓ STP.

Segmentation, targeting, and positioning (STP) is a marketing model that redefines

whom you market your products to, and how. It makes your marketing communications
more focused, relevant, and personalised for your customers.
In short, STP is a marketing approach where you segment your audience, target the
best-fit audience segments for your product, and position your product to capture your
target segment effectively.

The STEP Formula

The easiest way to remember the STP model is through the STEP formula, which is
Segmentation + Targeting = Positioning
Segmentation: Segmenting the audience into smaller groups based on specific
attributes gives you better clarity on who benefits the most from your product and how.
Targeting: This is the stage where you decide which segments you created during the
segmentation phase are worth pursuing.
The criteria for choosing the targetable segments:
- Size: Your audience segments must have enough potential customers to be
worth marketing to.
- Difference: There should be a measurable difference between any two
segments.
- Reachability: The segments should be accessible to your sales and marketing
teams and not be marred by technical or legal complications.
- Profitability: The segment should have a low-to-medium customer acquisition
cost (CAC) while bringing in high returns, i.e., the audience must be willing to spend
money on your product.
- Benefits: Different benefits attract different segments.
- Positioning: The final stage of the STP model, positioning, we use the insights
gained from segmentation and targeting to decide how to communicate our product to
chosen audience segments.

✓ Benefits of STP marketing

Improved engagement: Because we’re targeting precise audience segments with
personalized messages, our audience finds us relevant and are more likely to engage
and convert.
Reduced marketing costs: Since you're targeting only those segments with a high
potential return on investment, you're no longer wasting your budget on channels and
segments that don't work.
More robust product: As we have a target audience, we can make improvements
based on feedback, fostering focused product innovation.

✓ HRM

HRM (Human Resource Management) ensures the smooth functioning of an

organization.
The process starts with formulating the right policies for the job requirements and ends
with ensuring a successful business growth of the company.
Therefore, HRM is an invisible agent that binds all the aspects of the organization to
ensure smooth progress.

✓ Functions of HRM:

1. Job design and job analysis: Job design involves the process of describing
duties, responsibilities and operations of the job. To hire the right employees based on
rationality and research, it is imperative to identify the traits of an ideal candidate who
would be suitable for the job.
Job analysis involves describing the job requirements, such as skills, qualification and
work experience.
2. Employee hiring and selection: Recruitment is one of the primary functions of
human resource management. HRM aims to obtain and retain qualified and efficient
employees to achieve the goals and objectives of the company. All this starts with hiring
the right employees out of the list of applicants and favorable candidates.
3. Employee training & development: ​Imparting proper training and ensuring the
right development of the selected candidates is a crucial function of HR. After all, the
success of the organisation depends on how well the employees are trained for the job
and what are their growth and development opportunities within the organisation.
4. Compensation and Benefits: Benefits and compensation form the major crux of
the total cost expenditure of an organisation. It is a must to plug the expenses, and at
the same time, it is also necessary to pay the employees well. Therefore, the role of
human resource management is to formulate attractive yet efficient benefits and
compensation packages to attract more employees into the workplace without
disturbing the finances of the company.
5. Employee performance management: The next activity on HR functions list is
effective employee performance management. Effective performance management
ensures that the output of the employees meets the goals and objective of the
organisation.
6. Managerial relations: Relationships in employment are normally divided into
two parts — managerial relations and labour relations. While labour relations is mainly
about the relationship between the workforce and the company, managerial relations
deals with the relationship between the various processes in an organisation.
7. Labour relations: Cordial labour relations are essential to maintain harmonious
relationships between employees at the workplace. At the workplace, many employees
work together towards a single objective. However, individually, everyone is different
from the other in characteristics. Hence, it is natural to observe a communication gap
between two employees. If left unattended, such behaviours can spoil labour relations in
the company.
8. Employee engagement & communication: Employee engagement is a crucial
part of every organization. Higher levels of engagement guarantee better productivity
and greater employee satisfaction. Efficiently managing employee engagement
activities will help in improving the employee retention rates too.
9. Health and safety regulations: Every employer should mandatorily follow the
health and safety regulations laid out by the authorities. Our labour laws insist every
employer to provide whatever training, supplies, PPE, and essential information to
ensure the safety and health of the employees.
10. Personal support for employees: HRM assists employees when they run into
personal problems which may interfere with the workflow. Along with discharging
administrative responsibilities, HR departments also help employees in need.
11. Succession Planning: Succession planning is a core function of HRMs. It aims
at planning, monitoring, and managing the growth path of the employees from within the
organizations.
12. Industrial Relations: It’s usually the production lines and manufacturing units
where this HR function is mostly used. You see, Unions exist in factories and
manufacturing units. And their responsibility is towards the goodwill about the workers
— in fact, they’re always vocal and upfront about.

✓ Labour Laws- the varied body of law applied to such matters as employment,
remuneration, conditions of work, trade unions, and industrial relations.
It includes social security and disability insurance as well. Labour law has won
recognition as a distinctive branch of the law within the academic legal community.

Factors in labour law

The general tendency in the modern development of labour law has been the
strengthening of statutory requirements and collective contractual relations at the
expense of rights and obligations created by individual employment relationships.
How important these latter remain depends, of course, on the degree of personal
freedom in the given society as well as the autonomy of both employer and worker
allowed by the actual operation of the economy. In such matters as hours of work,
health and safety conditions, or industrial relations, the statutory or collective elements
may define most of the substance of the rights and obligations of the individual worker,
while with respect to such things as the duration of his appointment, his level and extent
of responsibility, or his place in the scale of remuneration, these elements may provide
what is essentially a framework for individual agreement.

✓ Factories Act

The Factories Act, 1948 (the Factories Act) lays down provisions for the health, safety,
welfare and service conditions of workmen working in factories.
It contains provisions for working hours of adults, employment of young persons,
leaves, overtime, etc.
It applies to all factories employing more than 10 people and working with the aid of
power, or employing 20 people and working without the aid of power.
It covers all workers employed in the factory premises or precincts directly or through an
agency including a contractor, involved in any manufacture.
Some provisions of the Act may vary according to the nature of work of the
establishment.

✓ Organizational support services - Central and State Government, Incentives and

Subsidies.
✓ Sickness of Small-Scale Industries

Industrial sickness can be defined as a steady imbalance in the debt-equity ratio and
distortion in the financial position of the unit. A sick unit is one which is unable to
support itself through the operation of internal resources.
Once the sick units continue to operate below the break-even point (at which total
revenue = total cost), industries are forced to depend on external sources for funds for
their long-term survival.
According to the criteria accepted by the Reserve Bank of India, “a sick unit is one
which has reported cash loss for the year of its operation and in the judgment of the
financing bank is likely to incur cash loss for the current year as also in the following
year.”

✓ Causes of sickness

1. INADEQUACY OF WORKING CAPITAL

Shortage of Working Capital is one of the main reasons for sickness. There may be a
delay in sanction of working capital by financial institutions. Industrial units find it difficult
to meet our day to day operations due to the time gap between sanction of term loan
and working capital needs.

2. NON-AVAILABILITY OF CREDIT

Sickness in the SSI sector may be attributed to non-availability of credit. Delay in getting
loans may result in stoppage of work or lead to production loss. Low production may
lead to reduced sales which in turn may lead to financial loss.

3.POOR AND OBSOLETE TECHNOLOGY

Some industrial units use technology which is outdated that affect the quantity and
quality of production which results in production loss.

4. NON-AVAILABILITY OF RAW MATERIAL

Sometimes, the raw material required by the unit may not be available in abundance.
Hence, this affects the production and the sales of the goods.
5. MARKETING PROBLEMS

Lack of marketing knowledge, competition or change in the taste of buyers, may result
in less demand for the goods.

6. ERRATIC POWER SUPPLY

Shortage in power supply affects the industries. This results in delay in production of
goods and leads to financial losses.

7. LABOUR PROBLEMS

The relationship between the employer and the employees may not be cordial. Some of
the labor problems such as strike, lay off, lock out may lead to industrial sickness.

8. POOR MANAGEMENT

The entrepreneur must be a good planner, organizer and a manager. If the Industrial
Unit promoters lack managerial skills, then it may lead to several problems.

9. DISPUTE AMONG PARTNERS

There may arise disputes between the partners or family members running the unit.
This results in stoppage of work and leads to industrial sickness.

✓ symptoms of sickness,

The important signals of sickness are:

1. Decline in capacity utilization

2. Irregularity in maintaining bank account
3. Non-submission of the data to bank financial institutions
4. Inventories in excessive quantities
5. Frequent break down in plant/equipments
6. Decline in technical deficiency
7. Decline in the quality of the products/services
8. Shortage of liquid funds for short-term financial obligations
9. Default in the payment of statutory dues
10. Frequent turnover of personnel in the industries.
✓ cures of sickness

✓ Role of Banks and Government in reviving sick industries.

Banks:

In order to rehabilitate sick industrial units the commercial banks have granted various
concessions, such as:
(i) grant of additional working capital facilities to overcome the shortage of working
capital faced by such units,
(ii) recovery of interest at reduced rates,
(iii) Suitable moratorium on payment of interest; and
(iv) Freezing a portion of the out-standings in the accounts, etc.

Besides these concessions, commercial banks have also initiated a number of steps on
the organizational front to understand the problem of sick industrial units and their
rehabilitation.

Government :

(i) A policy framework regarding measures to deal with the problem of industrial
sickness was laid down in the guidelines announced in October 1981 (modified in
February 1982) for guidance of administrative ministries of the Central Government,
State Government and financial institutions.
(ii) Government taking over the management of a number of industrial units under the
provisions of the industries (Development and Regulation) Act, 1951, with the aim of
reviving them by providing management of support and financial support through banks
and financial institutions has not so far proved an effective measure for revival of sick
units.

(iii) Government has announced the following concessions: (i) amended the Income-Tax
Act in 1977 by addition of section 72A by which tax benefit can be given to healthy units
when they take over sick units by amalgamation with a view to reviving them, and (ii)
introduced a scheme on January 1, 1982 for provision of margin money to sick units in
the small-scale sector to enable them to obtain necessary fund from banks and financial
institutions.

(v) The Industrial Reconstruction Corporation of India (IRCI), established by the

Government to revive and rehabilitate sick units, was in 1985 converted into a statutory
corporation now known as the Industrial Reconstruction Bank of India (IRBI) with the
aim of overcoming the inherent difficulties which had been faced by the (IRCI).

(vi) In 1983 the RBI advised financing banks to evolve methods to diagnose sickness in
industrial units at the incipient stage itself.

(viii) A scheme for the grant of excise loan to sick/weak Industrial units, introduced in
1989 has been further liberalized in 1990. Under the scheme, selected sick units will be
eligible for an excise loan not exceeding 50 percent of the excise duty actually paid for 5
years.

(ix) Board for Industrial and Financial Reconstruction (BIFR) set up under SICA 1985 for
determining the preventive, ameliorative, remedial and other measures in respect of
sick industrial units and for expenditure enforcement of the measures determined.

✓ Revival

The government undertakes the following measures to revive and rehabilitate the sick
industrial units.

Financial Assistance
As per the directions of the RBI, the commercial banks granted the following
concessions to sick industrial units:

● Rescheduling of loans and interest:

● Grant of additional working capital:
● Waiving off interest on loans:
● Moratorium on payment of interest, etc.
Organizational measures
The different organizational measures are given below:

● State-level inter-institutional committees: These are set up by the RBI to ensure

better coordination between the banks, state governments, and other concerned
financial institutions.
● Special Cell: It was set up by the Rehabilitation Finance Division of the IDBI to
assist the banks for the revival of sick units.

Fiscal Concessions

● The government amended the Income Tax Act in 1977 to provide a tax benefit to
those units which take over the sick units for reviving them.
● The government announced a scheme for the grant of excise loans to sick/weak
units.
● Under this scheme, selected sick units are eligible for excise loans not exceeding
50% of the excise duty paid over the preceding 5 years.