Transcript the institute of company secretaries of india

EMERGING CONTRIBUTORS TO INCLUSIVE GROWTH
MICRO SMALL AND MEDIUM ENTERPRISES
S.K.AGGRAWAL,
MA., LL.B., M.B.A., F.C.S.
DIRECTOR,
VIMAL ORGANICS LTD.
SEPTEMBER 2, 2010
 SME Sector is important, needs no elaboration
 How and why SME sector is successful and is the economic
catalyst for the country ?
Let us look at some data
compiled by
MSME MINISTRY
ANNUAL REPORT 2009-2010
GROWTH AND PERFORMANCE OF MICRO, SMALL
AND MEDIUM ENTERPRISES (MSMEs)
The Sector accounts for :
 28 million units
 65 million people employed
 6000 products
 45% of manufacturing output
 40% of the total exports of the country
NUMBER OF ENTERPRISES IN MSME SECTOR
EMPLOYMENT IN MSME SECTOR
Recognizing the contribution and potential of the
sector, the definitions and coverage of the Small
Scale Industry (SSI) sector were broadened
significantly under the Micro, Small and Medium
Enterprises Development (MSMED) Act, 2006
which recognized the concept of “enterprise” to
include both manufacturing and services sector
besides, defining the medium enterprises.
MSME Sector – Higher Growth Rate viz-a-viz
overall industrial sector
COMPARATIVE DATA ON GROWTH RATES OF MSE SECTOR
YEAR
GROWTH RATE OF IIP
(BASE 2001-02) (%)
IPP (OVERALL
INDUSTRIAL
GROWTHRATE OF
SECTOR) (%)
2002-2003
8.68
5.7
2003-2004
9.64
7.0
2004-2005
10.88
8.4
2005-2006
12.32
8.1
2006-2007
12.60
11.5
2007-2008
13.00
8.0
NATURE OF ACTIVITY
SECTOR
(%)
Manufacturing/ Assembling/
Processing
66.67 %
Repairing & Maintenance
16.33 %
Services
17.00 %
TYPES OF MANAGEMENT/OWNERSHIP
No. of enterprises managed by
Male
86.17 %
Female
13.83 %
Total
100 %
TYPES OF ORGANIZATION
DISTRIBUTION BY TYPE OF ORGANISATION
Proprietary
90.36%
Partnership
3.85 %
Pvt. Company
2.69 %
Pub. Ltd. Company
0.53 %
Cooperatives
0.30 %
Others
2.27 %
 According to YouGov and Legatum Institute Survey of
4000 business SME in China and India, the Indian
entrepreneurs say their main motivation is independence,
being one’s own boss.
- reported in the Economic Times dt. 11.08.2010
 FICCI has set up :
FICCI – MSME Intellectual Property Facilitation
Centre in association with MSME Ministry, Govt. of India
SME STOCK EXCHANGE
SMEs contribute around 20% of GDP and are the
largest generator of employment (approximately 25
million). In India, SME sector is the second largest
employer, after agriculture. With the Indian
economy growing at more than 9 percent and size
of the economy crossing the $1 trillion mark, the
need of SMEs to raise capital is becoming
increasingly critical – SEBI discussion Paper
1. SEBI Issued a modal listing agreement for SMEs
seeking listing on SME Exchange 12 Aug 2010
2. “ At present, nearly 3000 SMEs trade through BSE
which number is expected to grow manifold”
ET, Friday June 4,2010
3. There are 210,000 listing under the heading “ SME
Stock Exchange in India,” at the Google Search
Engine.
.
1 Instant decision making
 No notes, no papers, no consultation
 Gut feeling
2 Personal Knowledge
3 Personal first hand information
4 No time clock for work (0 HRS to 24 HRS )
5 Often times –more often than not – everyone in the
family is a contributor to business
6 Negligible labour problems: interpersonal
relationship between the owners and the
employees is intimate.
7 And when he needs, he can always take help
from outside, but here he always remembers
(even if he has not read E. Dickinson)
“That Love is all there is,
Is all we know of love,
it is enough,
the freight should be proportionate to the groove”.
 Achievement motivation motivates none
more than a SME entrepreneur.
 Here everything is in First Person Singular,
there is hardly any plurality.
Centralized and yet decentralized
Personal attention to every detail; he would almost
personally know all his employees, know his
customers and know his suppliers. He would also
know, again personally, all the associates in the
Electricity Department, Excise, ST, IT, Local Police
Station, etc.
SME sector- there is no unemployment; in fact it is
a big fraud by Politicians that there is
unemployment. Where are the men available ?
SME sector is the largest provider of trained
manpower to large scale sector
RISING INDIAN MIDDLE CLASS
 Consumer spending in Asia is likely to reach $32 trillion
by 2030
 Asia to contribute 43% of worldwide consumption in
next 20 years
 205 million Indians joined the ranks of those spending
$2 to $20 per day from 1990 to 2008
 Over the next two decades, the Indian middle class is
expected to touch 1 billion mark.
The Economic Times, 20th August 2010, Page-4
This confirms that an individual CS can carve out a profitable
niche for himself.
 be a job-provider as against a job-seeker
 turn employer and not worry to be employee
 be a master of his own destiny
 Instead of working within a Delegation of Powers given by
others, enjoy all the power given unto himself.
 Untold , Unlimited freedom
- financially
- emotionally
- psychologically