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INCON13-GEN-007
A STUDY OF FACTORS RESPONSIBLE FOR GROWTH,
SICKNESS AND MORTALITY OF SME'S (BOUGHTOUT PARTS
AND ANCILLARY) IN MIDC, PIMPRI-CHINCHWAD
Subhash Chander Verma
Associate Professor,
IBMR, Chinchwad
Pune(Maharashatra)
ABSTRACT:
SME’s are the backbone of Indian Economy .They fulfil the need of large scale industries by
providing finished component, semi finished components and parts; charge the price very
economical from their customers; provide job opportunity to engineers ,diploma holders,
ITI’s and management candidates; utilize the resources in very economical manner.
Entrepreneurship is a critical factor in the growth of Indian economy. Indian entrepreneurs
are rare breeds in the society as ours as it is inhabited by a conservative group of people
.Most Indians are content with secure life rather than taking risk by venturing out as an
entrepreneur. Our culture doesn’t encourage us to realize ideas and be an investor.
Nurturing an idea is key to entrepreneurship. Studies have revealed that high mortality rate
of businesses are frequent due to the fact that some provisions are not adequately provided
for thus snuffing out life from such businesses. This high mortality rate is caused by so many
factors which includes financial parasites, financial illiteracy, Get rich quick syndrome,
unavailability of a compliant mentor and workable business plan. In the international field
SME’s plays very important role in incensement of GDP.SME’s accept the orders from
different large scale industries and delivery of the finished goods is given as per schedule.
Large Scale Industries completely depends on SME’s. SME’s increases the export of the
country. New Product Development and Market Research are carried out by SME’s.
Research is carried out on the base of primary data which has been collected from SME’s in
auto sector, located in MIDC Pimpri Chinchwad. Growth factors and problem faced by
SME’s points has been collected and tabulated in research paper.
SME’s is a vital sector for the economic growth of the country ,transformation of traditional
role of SME’s to a dynamic rule for the contributing substantionaly towards the GDP growth
of the country can not be over looked .This study has thrown light on various weakness and
malaise in the SME’S sector.
KEYWORDS:Ancillary, Bought out parts, Entrepreneurship, GDP, SME’s.
Origin of the research problem:
In the international field SME’s plays very important role in incensement of GDP.SME’s
accept the orders from different large scale industries and delivery of the finished goods is
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given as per schedule. Large Scale Industries completely depends on SME’s. SME’s
increases the export of the country. New Product Development and Market Research are
carried out by SME’s.
CURRENT STATUS:
1. The Indian automotive components industry has emerged as one of India’s fastest growing
manufacturing sectors and a globally competitive one. The total global auto components trade
was worth Rs.74,000 Cr in 2006-07 and is expected to grow to Rs.7,000,000 Cr in 2015.
2. The ACMA-Mckinsey vision 2015 document estimates the potential for the Indian Auto
Components industry to be Rs.1,60 ,000 Cr to Rs.1,80 ,000Cr in 2016. Automotive
components exports were worth Rs.11,200Cr and expected to reach Rs.72,000 Cr in 2015.
Interdisciplinary relevance:
The study involves the financial aspects of SME’s in addition to marketing and human
resource management.
Review of Research and Development in the Subject
International status:
The ILO estimates that 40 per cent of the jobless worldwide are young people. There will be
nearly 75 million unemployed youth aged 15 to 24 in 2012, an increase of nearly 4 million
since 2007. The youth unemployment crisis can be beaten but only if job creation for young
people becomes a key priority in policy-making.(1)
National Status:
During the 11th plan , SME were expected to grow by 13%,but it could not be achieved. Rs
648 billion has been recommended by planning commission for the 12th plan period (20122017) focused on resolving issues related to access to credit, markets, infrastructure,
technology and skilled manpower etc.(2)
It has been reported that the biggest challenge faced by SME's is that of financial
management. Most of the entrepreneurs who are running SME's having sound technical
knowledge but very less knowledge of financial management. Some great thinkers like
Mr.Annindya Mallick,Director Deolitte,India has suggested that microsoft oracle and SAP
can be developed for the betterment of SME's. (3)
As per Kunal Banerjee, CEO of Executive Search Firm Absolute HR International, 48% of
employers in India finding it difficult to find skilled workers. (4)
Pranbihanga Borpuzari found that there are 26 million SME's in India but many are not
eligible for listing on the SME's exchange. Most investors investing in SME's are foreign
investors, VCs, PEs institutional investors and banks. At the same time we need to give
opportunities to retail investors. It will improve the financial position of the SME's.(5)
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Significance of the study:
A small scale industry contributes significantly to strengthen the industrial structure of India.
It has emerged as an engine of growth for the present millennium. This sector has been
playing a prominent role in the socio-economic development of the country for the past five
decades. The small scale sector which forms part of the total industrial sector has direct
impact on the growth of the national economy. In fact, through the establishment of a more
flexible, innovative and competitive structure, the small enterprise sector is being accepted as
key to sustainable economic growth .In the context of the liberalization as experienced
through integration with the global economy in a phased manner and national and
international competitive environment, perspectives and strategies for small industries
development have undergone a sea change. The biggest challenge for SSI, in the emerging
market scenario is to fully exploit the benefits of their product and process capabilities on
sustainable basis (1).
iii) Objective:
1. To investigate the factors contributing towards growth of SME’S.
2. To find out the factors that contributes towards SME’s sickness, directly or indirectly.
3. To find out the factor which are finally responsible for SME’s mortality.
Hypotheses:
H1: SME’s growth is a consequence of government incentives, competitive skill of
employees and availability of cheap raw material.
H2: SME Sickness is due to Financial causes like non -availability of easy capital, low
interest- capital, and high product cost.
H3: SME mortality is caused due to unskilled Manpower, Miss-Management and Dispute
among Partners. .
H4: SME mortality is also caused due to Tough competition, Depend on single customer,
Poor efficiency of machines and Out-Dated product.
H5: SME mortality is also caused due to poor Govt. Rules and Regulations, Natural calamity,
Bankruptcy due market change.
iv) Methodology: Proposed Methodology
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It will be an “Empirical Research” based on the data to be collected directly from the field,
experience and observation of the researcher.
Total Population
For the purpose of the research study, the SME’s employees of automobile industries in the
PCMC Pimpri Chinwad.
Sample
To study the above objectives, 30 companies situated in PCMC from Pune district were
selected from a variety of sector to get a comprehensive picture. Initially, 100 employees
from these companies were contacted. They were briefed about the purpose and requested to
participate in the study. The questionnaire was distributed to the participants at work place.
Only 30 employees responded
Sample Design
For the purpose of the study, the researcher wishes to use Deliberate Sampling.
Procedure of the Study
The respondents were approached through senior managers of their organization. The
researcher was initially introduce himself to the respondents and after establishing rapport,
were request them to participate in the study.
Instrument for Data Gathering
The relevant data for the study was collected from primary and secondary sources. The
primary data was collected with the help of a structured valid and reliable Questionnaire,
Personal Interview with the respondents. The secondary data was collected through
electronics and internet search, records, survey reports, journals and magazines on the
subject, Company Manuals, Various publications from National Organizations like
ASSOCHAM, The Ministry of Corporate Affairs, etc
Data Analysis:The data was collect on a 5 point scale .Descriptive statistics like mean ,standard deviation
and percentage distribution were analyzed.
Findings:Indian Pricing System no competitive in the global market, because of economies of scale.It
is a paradox that most industrialized countries like USA ,Japan,China & Italy are looking
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forward to doing superior business due to the marketing opportunity in India,while our own
product not getting good market and not having fast expansion due to known competitive
prices. This is a lesson for SME’s.
In the similar lines the employees from the SME’s haves shown the great concern
about availability of fixed capital(60%),working capital (65%).60% SME’s are facing longer
lead time to obtain the raw material, 60% SME’s are facing problem of scarcity of raw
material & 70% are facing storage problems.
Similarly there are problems in the area of marketing, trained manpower, lack of trade fairs &
volume discounts.
Very interestingly it is also reveled that the lack of marketing competency among SME’s &
staff affected by the welfare & social security.
Recommendations:
1. Central Government & state government should provide adequate financial aids,
training facility & infrastructure development.
2. Large scale industries should treat SME’s as their business partner.
3. SME’s should be motivated to sale their product in international market.
4. Banks & financial institutions should be liberal towards SME’s while giving them
loans, overdrafts & CRR.
5. Government should bring SME’s in mod vat relaxation bracket.
Limitations:
1. The study is conducted as a limited scale due to paucity of time & other resources.
2. The sample size is limited to a particular region. A large study could throw more light
on this vital topic.
Conclusion:
SME is a very vital sector for the economic growth of a country. Transformation of
traditional of SME’s to a dynamic rule for contributing substantially towards the GDP
growth of the country can’t be overlooked. This study has thrown light on various
weaknesses & malaise in the sector. Hence the SME’s expiring industrialist, educated
youth & financial service organizations as well as government authority would find
the study very useful.
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REFERENCES:
1. JIMS8M Volume 16,No.4,Oct.-Dec.2011,ISSN No. 0973-935 Page No. 32
2. The Economic Times Pune ,Thursday, 31thMay 2012 ,Page NO.15
3. The Economic Times, Pune ,Thursday, 31thMay 2012 Page NO.14
4. The Economic Times ,Pune ,Thursday, 31thMay 2012,Page NO.14
5. Entrepreneur Oct.2011, Vol. 3, Issue to Page No. 34.
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