The document discusses small and medium enterprises (SMEs) in India. It finds that the number of SME units and their production and employment potential has been increasing rapidly over time, significantly contributing to the Indian economy. However, SMEs face constraints like lack of access to finance, infrastructure issues, and marketing challenges. The document proposes adopting a cluster development approach and open incubator model to create an environment where SMEs can collaborate and innovate. It also discusses using knowledge management strategies to help SMEs identify, create, retain and disseminate knowledge for achieving organizational goals.

1. Komal Agarwal
Nishat Anjum
Tanay Nangalia
Yashvardhan Kanoi
Small and Medium Enterprises

2. INTRODUCTION
The small and medium enterprises are defined as follows:

3. Source: Various publications of DCSME including Small Scale Industries in India – An Engine of Growth.

4. Regression of SME units and years
Independent Dependent R-square F-value Sig
Year SME units 0.995 1504.07 0.000
The trend line equation Y=-7712.4+3.91X shows that at
an all India level, the number of SME units are
increasing rapidly and has positive impact on Indian
economy.

5. Source: Various publications of DCSME including Small Scale Industries in India an Engine of Growth.

6. Regression of SME units and years
Independent Dependent R-square F-value Sig
Year Production 0.998 5306.99 0.000
The trend line equation Y=-3.E+07 +12731.3X shows
an increasing trend in the production of SMEs and we
conclude that in the span of 10 years the SMEs have
significantly contributed to the Indian economy output
wise.

7. Source: Various publications of DCSME including Small Scale Industries in India – An Engine of Growth.
When we apply the correlation analysis on the ‘All India export’ and
‘SMEs contribution’, we get the Karl Pearson’s co-efficient of
correlation as r=0.999. We conclude that the contribution of SMEs to the
exports of India is highly significant in the years from 1996-2009.

8. Source: Annual report of ministry of commerce
2009.

9. Source: Report of national statistics department 2009.

10. Regression of Employment Potential of SME units and
years
Independent Dependent R-square F-value Sig
Year Employmen
t potential
0.988 669.28 0.000
The of regression Y=-17825 +9.0289X shows a continuously
increasing trend in the employment potential of SMEs from 1999-
2009. This can be attributed to factors such as resources
endowment, availability of cheap skilled labor, favorable
government policies.

11. CONSTRAINTS

12. LOAN FINANCE
Raising finance from the financial institutions have the
following drawbacks for the SSIs:
• The rate of interest charged is higher
• Insufficient collateral
• Restrictive and conditional working capital limits
• Time consuming and cumbersome procedures
•The terms of credit are hard
• Improper assessment of requirements

13. .
INFRASTRUCTURE
Some of the essential infrastructural inadequacies are listed as
follows:
•Lack of access to dependable supply of electricity, which blocked the rise
of productivity and output of small firms.
•Poor transportation facilities in rural and semi-urban areas, which hampers
the access to newer and larger markets.
Hence, there is a need for improved roads, railways, port facilities; generic
infrastructure that boosts the local economy and enterprise specific
infrastructure such as provision of common effluent treatment plants
(CETPs), industrial estates, common quality check facilities, and
provision of potable water to small enterprises

14. PRODUCT RESERVATION
 The policy of reserving certain products to be exclusively
produced by the SSI sector is rather long standing and
unusual. It has come to be interpreted as a bottleneck to
productive efficiency of the SMEs.
 A list of over 800 products was made with the aim of
creating local employment using locally available resources
within a ‘protective’ policy framework. But the original
purpose was lost as the list kept undergoing frequent
revisions.
 Products manufactured under reserved category are
technically inefficient and poorer in quality as compared to
the non-reserved products.

15. .
MARKETING
The survival of small entrepreneurs essentially depends on marketing
techniques. Small entrepreneurs can promote their sales on the basis
of low prices along with credit to buyers, but which give rise to
several problems at a later stage.
Marketing as a profession is relatively underdeveloped in the SME
sector
which is primarily accounted to the paucity of funds. Many ad-hoc
initiatives have been taken by the Government to promote marketing
of products and which has failed to have a desired effect.

16. CLUSTER-DEVELOPMENT APPROACH
 Clusters refer to an assemblage of independent
firms, selling homogenous or complementary
products each faced with similar obstacles and
opportunities.
 Development of clusters can prove to be the
fountainhead of growth of SME’s in India, especially
after the Indian economy opened up to a highly
competitive business environment in 1991.

18. Source: Report by MSME foundation.

19. Open Incubator Model
 The open incubator model can create an
environment conducive for the clustering
process in a value chain in the selected field of
specialization in a country with a large
proportion of both skilled and unskilled labor.
 Innovative entrepreneurship in rural areas
based on local initiatives can help generate a
wider and deeper economic development
which in turn has a favorable impact on India
as a whole.

20. Stages in the Development of the
model:

21. The model proposes to establish
 A network of firms belonging to the same value
chain that sustain cordiality and cooperation
among them.
 Enable local authorities to improve the
conditions in the business environment and
generate new business opportunities for
enterprises to flourish.

22. Organizational structure
 The partners and beneficiaries to this model belong to the
value chain of the selected domain of specialization which
strives for collaborative benefits of all enterprises.
 Local authorities and members from the selected business
sector form the board representing the interests of the
business operations located in the specialized region.
 The management is carried on by nominated members from
the board who by means of a progressive networking
system establish chain of links between all specialized
business units and promote achievement of common
business ideals in the most cost effective and seller-
effective manner.

23. Process:
 Strategic Prioritization:
An area with specialized local business activity is demarcated to
check the potential for innovative development of SMEs based
on domains of specialization. In order to carry these out, expert
knowledge, technology, business and regional development
should be kept in mind.
 Collection of detailed information:
Interviews are conducted and entrepreneurial profiles are
assessed. On the basis of this survey, those projects are
chalked out which have the highest potential for growth and
have the maximum linkages.

24. • Key institutions:
Local authorities and R & D institutions are consulted for a proper
assessment of the business environment and a congenial
environment is sought to be created which can serve as a positive
externality for the cluster development program.
•Clarify the roles:
Lobbying with governmental authorities should be initiated from the
very onset so that the business agenda receives maximum
governmental assistance. Local policies must be so implemented
that they conform to the growth objectives of the enterprises.

25.  Engaging key groups:
Proper rehabilitations of the locals who have been displaced due
to the setting up of SME’s. Provision of incentives for
productive employment should be given.
 Continuous monitoring and dissemination of information:
To cater to the ever changing market tastes and preferences,
research and development techniques should be
institutionalized on a greater scale and along with the aid of
tacit and external knowledge constant innovation should be
provided to generate product sustainability.

26. • Network linkages
• Application of innovative technology and advanced research
and development
• Implementation of effective governmental policies so as to
boost the proper functioning of the Small and medium
enterprises
This model induces informed decisions regarding the adoption
of a cluster approach and entering into cluster-based relations.
The academic value can be added in the context of expanding
knowledge in relation to the impact of clusters on economic
development in transition countries.
In this cluster model we primarily focus on externality in
the form of:

27. Knowledge Management
Small and medium type industry in an economy requires
special treatment because of their special characteristics as
well as their contribution to national economy. In the event
of globalization, knowledge management provides a
systematic approach towards,
 Identifying
 Creating
 Retaining
 Disseminating the knowledge among the employees of an
organization who integrate and assimilate this knowledge to
achieve greater organizational goals.

29. CASE STUDY : SYMPHONY LTD.
 FOUNDER : ACHAL BAKERI
 OLD NAME : SANSKRUT COMFORT
SYSTEMS PVT. LTD
 FOUNDED ON 5TH
FEBRUARY 1988 IN
AHEMDABAD

30. HISTORY
 Started on 1988 the first air cooler made up of FRP
(fiberglass reinforced plastic ) and wooden grill was a
runaway success. The whole idea behind it was to design
an air cooler that resembled an and functioned like an air
conditioner.
 They also went on the national television network. This was
the first time an air cooler was advertised on TV in India.
 In 1994 they had their first IPO.
 After the IPO the company was forced to diversify into
varied product ranges in order to keep pace with their
competitors. However, the company failed to do so.

31. AFTER 2002 – MAJOR
TURNAROUND
After getting registered with BIFR Symphony was left with capital of only 2.8
crore . The stocks of the company had become penny stocks and the market
had written them off. Although the other products dint work well and their
production had to be stopped the air cooler business was doing pretty well.
Symphony decided to stick to its core DNA ie producing Air cooler and
adopted the Knowledge Management model to give itself a new and a fresh
start.
Research and development was given more emphasis in order to re
engineer and design a new innovative product with a lesser cost of
production and increased efficiency.
More emphasis was laid on increasing the strength of distribution and
aggressive marketing techniques were adopted to reach a larger customer
base.

32. KEY FINANCIALS
OF
SYMPHONY LTD.
OVER THE YEARS

34. Due to increase in the sales figure the size of the
company has witnessed a huge increase with a market
cpitalisation of 2.8 crores (2002) to 4700 crores (2014).

35. The shares of the company which were once traded as
penny stocks with lowest being at 40 paise (Oct 2013)
only are now being traded at a high price of Rs. 1370
(approx.)

36. Current Presence of the company :

37. CONCLUSION
We may conclude that the future of the industry is dependent
on the growth of the SMEs. The growth of SMEs is not only
important for industries but helps to generate a lot of
employment of labor. Therefore in a labor intensive country
like India the SMEs play a vital role in increasing the
standard of living as they help to generate a lot of
employment. Thus SMEs are A catalyst for socio-economic
transformation of the country, meeting the national
objectives of generating employment, reducing poverty, and
discouraging rural-urban migration.