Useful

1. PRESENTED BY:
HARSHIT SHARMA
IV SEMESTER
Creating Competitive/Developed
Micro, Small & Macro
Enterprises
“Masters in International Business”
Department of Banking & Business Economics
Mohan Lal Sukhadiya University

2. Content
Overview of Indian MSMEs
Opportunities for MSMEs
Challenges being faced by MSMEs
Creating Competitive MSMEs
Policies and Initiatives taken by Government of
India
Way of Growth of MSME’s
SWOT Analysis
Conclusion

3. Overview of the Indian MSMEs
In accordance with the provision of Micro, Small & Medium
Enterprises Development (MSMED) Act, 2006 the Micro,
Small and Medium Enterprises (MSME) are classified in
two Classes :
MSMEs
Manufacturing
Enterprises
Service
Enterprises

4. Definition of MSMEs
The limit for investment in plant and machinery / equipment for
manufacturing / service enterprises, as notified, vide S.O. 1642(E)
dtd.29-09-2006 are as under :

5. Investment Limits for service sector

6. MSME in India
Employs – More
than 60 Million
45% - Total
Industrial Output
40% - Total
Exports
Creates
more than
1 Million
jobs
annually.
Contribution
to GDP set to
expand to
22% by 2012
from current
17%.

7. Some quick estimates
The number of enterprises is estimated to be about 26 million
and these provide employment to an estimated 60 million
persons
Of the 26 million MSMEs, only 1.5 million are in the registered
segment while the remaining 24.5 million (94%) are in the
unregistered segment
The state-wise distribution of MSMEs show that more than 55%
of these enterprises are in 6 States, namely, Uttar Pradesh,
Maharashtra, Tamil Nadu, West Bengal, Andhra Pradesh and
Karnataka.
Source: 4th All-India Census of MSMEs, for reference year 2006-07

8. Some quick estimates (contd..)
About 7% of MSMEs are owned by women and more than
94% of the MSMEs are proprietorships or partnerships
MSMEs contribute 8 per cent of the country’s GDP, 45 per
cent of the manufactured output and 40 per cent of our
exports
The labour and capital ratio in MSMEs and the overall
growth in the MSMEs are much higher than in the larger
industries.
Source: 4th All-India Census of MSMEs, for reference year 2006-07

9. Opportunities for MSMEs in India
Opportunities provided by clustering approach:
Tirupur Garment Cluster
Ahmedabad Pharmaceutical Cluster
Chennai Leather Cluster

10. Opportunities for MSMEs in
India(contd..)
Automotive
Dairy Industry
Industrial machinery and machine tools
Auto and auto ancillary

11. Key challenges faced by Indian MSME sector
High cost of credit
Collateral requirements
Limited access to equity capital
Problems in supply to government departments and
agencies
Procurement of raw materials at a competitive cost
Lack of access to global markets

12. Key challenges faced by Indian MSME
sector(contd..)
Inadequate infrastructure facilities, including
power, water, roads, etc
Low technology levels and lack of access to
modern technology
Lack of skilled manpower for manufacturing,
services, marketing, etc
Absence of a suitable mechanism
Branding and Marketing

13. Steps that can be taken to meet these
challenges
Adopting new standards in technology, quality and
pricing to be able to survive in the marketplace.
This sector is very seriously looking for ICT
enablement
 Restructuring
 Building online presence as well as e-mail facilities.
 E-Commerce and enterprise management solutions

14. Creating competitive SMEs

15. Major thrust areas for increasing
competitiveness of MSMEs
Government has identified three major areas
that contribute to competitiveness of MSMEs
Technology (including quality): ICT systems like
ERP, HR & Information Systems, etc.
Skills development
Finance: MSMEs are beginning to move from a
reliance on bank credit to a variety of other specialized
financial services and options

16. Measures taken for promoting emerging
Financial Resources
Setting up of a separate trading exchange
exclusively for the MSMEs
Provision of special incentives for encouraging
larger flow of Venture Capital & Private Equity
funds into the sector
More liberal “All-in-Cost Ceilings” for SMEs to
raise low-cost funds through the External
Commercial Borrowing route
Bringing legislation on ‘Factoring Services’.

17. 1. Organic Strategies
Growth Strategies
a. New Product / Technology
b. New Market
c. New Customer

18. New Product/Technology:
Beginning …
New Search algorithm
Start-up of a company in a garage 12 years back by two PhDs.
Today …
$ 200 billion enterprise
… and growing
Today the name is used as generic for “search” on the internet.
The company leads the rankings when it comes to product/technology innovation.
Organic Growth

19. New Markets:
Different geography or different channels
Sales channel for India
Organic Growth
 Sales Channel – Direct/Retail/Outlet
 Result – No.1 PC/Laptop brand in India
within 8 years despite stiff competition
from entrenched foreign and local low cost
competitors.
 Sales Channel – Direct
IndianGlobal

20. New Customers:
Organic Growth
 Range of product in different product
categories.
 14000+ employees
 Revenue: Rs. 4500 Crore +
 One product – washing powder.
 Single entrepreneur
 Facility: own premises
TodayStart-up
Market is not just finding a customer but finding need
gaps that can be satisfied in a economically viable way.

21. Understanding the customer:
• MSMEs should focus not only on finding solution for its customers but also take care
of their preferences.
The company adapted to different sales channels for its customers in different regions
(Europe and America).
MSMEs: Growth Strategies
 Order book: more than Rs.1000 Crore.
 Market standing: Preferred supplier for to
all major global retailers
 Order book: Rs. 6 Lakh
 Market standing: Newcomer
TodayStart-up

22. To connect more closely with its customers it is
important for MSMEs to leverage “Branding”. A
strong brand build reassurance, credibility and
reliability among its customers.
Branding creates goodwill and goodwill helps entrench the position of the product in
the market
MSMEs: Growth Strategies

23. 2. In-organic Growth
Growth Strategies
a. Mergers & Acquisition
b. Strategic Partnership
c. Joint Venture

24. Mergers and Acquisitions:
In-organic Growth
 Control of target firm by buyer firm.
 Arise from buyer’s deep desire to expand.
 TATA + Corus = TATA
 Union of two firm. Often on equal terms.
 Often arise out of business necessities.
 Nissan + Renault = Nissan-Renault
AcquisitionMerger

25. Strategic Partnership:
Typically companies with complementary business
assets ally to harness the available market opportunity.
In mid – 2009 Intel joined hands with Nokia for developing a new class mobile
computing device and chipset architectures.
The devices will combine the performance of powerful computers with high-bandwidth
mobile broadband communications and ubiquitous Internet connectivity.
In-organic Growth

26. Joint Venture:
Established when two parties come together to set a new project.
The partners share markets, IP, other business assets and profits as per the agreed-
upon arrangement.
1. Tata Teleservices+ Virgin Group = Virgin Mobile India Limited
2. Bharti Enterprises + Wal-Mart = Best Price Modern Wholesale
Inorganic Growth

27. Policy Initiatives & Measures taken
by the Indian Government

28. ‘Udyami Helpline’, the Call Centre of Ministry of
Micro, Small and Medium Enterprises (MSME)
Proposed to link the ‘Charkhas Scheme’ of Khadi and
Village Indutries Commission (KVIC) with the
Mahatma Gandhi National Rural Employment
Guarantee Act (MGNREGA).
Enactment of the ‘Micro, Small and Medium
Enterprises Development Act, 2006’.
Policy Initiatives & Measures taken by the Indian
Government

29. Policy Initiatives & Measures taken by the Indian
Government
National Manufacturing Competitiveness
Program(NMCP)
Task Force to reflect on the concerns & issues
regarding MSMEs and formulate an agenda for
action.

30. SWOT ANALYSIS

31. SWOT Analysis
Strength
• Government support
• Low cost production
• High employment rate
Weakness
• Unskilled Labour
• Lack good Infrastructure
• Lack of new technology
Opportunity
• Create Export Oriented Units more
• Adaptation of effective marketing
strategies from relating MNC’s
Threat
• Entry of Big Firms or MNC’s
• Corruption
• Making of unrealistic NTB’s by foreign
countries
SWOT

32. Conclusion
MSME’s can utilize the Schemes of GOI.
Training & Development Programme for unskilled
Labour can make skilled labour.
Adaptation of Marketing strategies.
Funding help by Financial Institutions
 SIDBI
 NABARD
Use of new technologies.
Customer Satisfaction is Necessary .

33. THANK YOU