12 PRESENTATION

AND APPRAISAL
PROJECT
MEANING AND DEFINITION OF A
An organisation or the enterprise is based on project.. In simple words, project
time. An entrepreneur has to take a
achieve the objectives within a definite
ofplan to
decisions
number
to convert his ideas into a running concern. In setting up his enterprise, his
decision-making starts with project selection. In fact, the project selection is the hrs,
cornerstone to be laid down in setting up an enterprise. The success or failure of an
enterprise largely depends upon a project. In simple words, a project is an idea or plan that
is intended to be carried out.
Definitions : The dictionary meaning of a project is that it is a scheme, design, a
proposal of something intended or devised to be achieved. Some more definitions of a
project are:
designed to achieve and oo.
1. A project typically has adistinct mission that it is
termination point, the achievement of the mission."-NeWman, Summer and Warresl
2. "The whole complex of activities involved in using resources to gain benefits »
-Gillinger
3. "Aproject is an organised unit dedicated to the attainment of agoalthe successfu
completion of adevelopment project on time, within budget, in conformance with nre.
determined programme specifications." Encyclopaedia of Management
4."The term praject means the establishment of a new enterprise or the introduction
of something new into an existing product mix. A project can encompass a wide range of
possibilities, from a single piece of machinery to an entire plan."
-David Clifton and D.E. Fyfte
5. "Project is a scheme for investing resources which can reasonably be analysed and
evaluated as an important unit." -Little and Mirrlee
Thus, it can be said that a project is a scientifically evolved work plan devised to
achieve a specific objective within a specified period of time. Projects can differ in their size,
nature and objectives, time duration and complexity but all the projects have three basit
attributes :
(i) A course of action,
(ii) Specific objective_,
(ii) Definite time prospective.
Every project has starting point and an end point with specific objectives.
/CHARACTERISTICS OF APROJECT
After the careful analysis of above definitions, we can evolve
of a project : following characteristi
1.
Newman, Summer and Warren: The Process of
1976,p 443. Management,'Prentice Hall of India Pvt. Ltd., Ne
 Project : Presentation and Appraisal
183
Definite Objective : Every project has a
are achieved. definite objective. The project comes to
) and when these
end as objectives
an
(ii) Single Entity Every project is a single entity
accountable authority. which is handed over tw an
(iii) Uniqueness : Every project is unique in itself. No two
although methodology can be 8ame. projects can be similar
(iv) Life Span : Every
project has a definite life 8pan. "The project comes
task. to an end
with completion of'
lw) Team Work : Project is a team work, and
without team spirit. hence no project can be completed
(vi) Uncertainty : Projects exist in uncertain
environment. When and which
oncertainty arise in lite span of a project cannot be found at any stage.
(vii) Element of Risk : An element of risk is always there in a
of risk is different in different projects. For example, if the objectivesproject. Such element
of a project are not
defined properly, more willbe theelement of risk.
(viii) Change :Change is law of life.' This saying applies to a project also. A project
has to undergo many changes in its lifetime.
(ix) Made to Order :Every project is formulated according to needs of the customer.
(x) Unity in Diversity : Unity in diversity is found in every project because it
comprises of many complexities, like technology, plant, material, labour, difficulty of work
cuiture, etc.
Thus, in any project there is comprehensive contribution of alternatives, appropriate
ideas, proper control and identification of key factors. Hence, a project is fully defined
economic activity which has a definite beginning and end.
OBJECTIVES 0F A PROJECT
A project is a proposal to invest to do some definite work, inereasing production of
goods and services in a particular area, or expansion and/or development of these goods or
services. Following are the main objectives of a project :
(i) Increasing production of goods or services
(ii) Increasing productivity of goods or services
(iii) Increasing capacities of existing projects
(iv) Increasing rate of profits at minimum risk and according to organisational plans
and policies
(v) Conducting test from time to time and evaluating them
(vi) Making objectives of the projects according to available resources.
IMPORTANCE OF A PROJECT
Aproject:
(i) Initiates the process of development.
(ü) Acts as a factor for speeding up economic development and progress
(iii) Contributes towards environment and development of basic infrastructure.
(iv) Provides framework for future activities of a project.
(v) Tries to bring necessary changes according to time.
(vi) Helps in speeding up social and cultural developments.
(vii) Determines future of nature of services.
 PREPARATION
STAGES OR PHASES OF PROJECT
different phases or stages. Whether
Any new project passes through detailed verifications. Basically, there : to or
invest in any new project is decided after are followinotngt
three stages in the process of project preparation
:

I. Pre-investment phase
II. Implementation phase
II. Operational phase.
search for profitable
L Pre-Investment Phase:This stage is related to
of investment and preparations. This stage begins with project identification, passes
The
opporttuhnirotugie
formulation and appraised process and ends with selection decision.
practically main objective
this stage is to determine whether the business idea will be possible in
f economic viability at the commercial level after due evaluation.
terms
In this stage final decision regarding selection of project after studying its practicabili
folowing are sub-steps in this stage :
(i) Identification of Investment opportunities,
(ü) Preliminary Project analysis,
(üü) Feasitbility study, and
fiv) Decision-making.
II Implementation Stage : After sufficient investigation and taking investmen:
decision, a detailed work plan is prepared for implementation of the project. Necessar
distribution of financial and other resources is done by top management. A control and
information system is developed for arranging the supply of necessary equipments and
other requirements, so that the project is implemented and started as fast as possible. A
facilities relating to production are established. Following are main tasks performed in this
stage :
(i) Preparing project and engineering designs.
(ü) Entering into contract with different parties to
(ii)
conplete the project.
Establishing buildings, plant, machinery, equipmnent, office, etc., according k
project requirements in order to start production process.
(iv) Recruitment, selection and training of
required personnel according to proe
requirements, viz., technicians, engineers,
/(v) Setting up plant for preparing managerial staff and labour.
IL. Operational Stage : This is the production process.
This stage begins with the production oflast and of course the longest stage of a proje
Operational stage includes following activitiesgoods and ends with completion of proje
:
(i) Uninterrupted operation of the
(ü) Maintenance of the quality production.
(iüi) Maintenance of standard of the product.
productivity norms.
(iv) Realisation of specific
(v) Market
and general objectives.
acceptance of the product.
(vi) Maintenance ofconsumer satisfaction.
Project identification PROJECT IDENTIFICATION
is concerned with analysis
economic data for the eventual
and with the purpose
the collection, compilation and investmeti
of locating
development the characteristics of such
of possible opportunities for
opportunities.
 Project : Presentation and Appraisal 185
Projecttidentification:is the most important decision because the fate of an
entirely dependent upon right choice of the project. organisation
is
Peter F. Drucker (1955) has suggested three kinds of
la)Additive, (b) Complementary, and (c) Break through. opportunities
:
(a) Additive opportunities are those opportunities which enable the
decision-maker to
better utilise the existing resources without changing the basic character of the business.
(b) Complementary opportnities are those opportunities which involve introduction
faow jdeas and require some change in the existing structure of business.
(c) Break through opportunities are those opportunities which involve entirely new
degs and therefore require fundamental change in both the structure and character of
business.
Additive opportunities involve the least disturbances in existing structure and hence
involve least risk. The element of risk is more in other two. With the increase in risk, it
becomes important to precisely define the scope and nature of project idea, to develop
alternative course of action, and to minimise resource consumption and risks to optimise
profits.
Necessity of project identification : Identification of the project is the most
important task because the success or failure of an enterprise is dependent upon right
selection of production. Although there are no strict rules or guidelines for identification of
the project, even then entrepreneur uses his experience and mental skills for this. If some
entrepreneurs become successful in some enterprises others also follow them and slowly
and steadily the strength of entrepreneur in a particular line increases to an extent that
the profit giving projects soon turn into loss giving, which is not a healthy trend. This is not
guaranteed that if some project is fruitful for some entrepreneurs, it will be same for others
also. The burning example of this trend is generator set industry in Ferozabad. This
industry was on peak a few years back and was making profits. The majority of entrepreneurs
in this industry were technically mature. But slowly many other entrepreneurs entered
this industry, who had least technical knowledge. The result was that the profit-making
industry was ruined, some of them even became insolvent. Thus, project identification is a
must for future entrepreneurs.
IMPORTANCE OF PROJECT IDENTIFICATION
Importance ofthe project identification can be known because of the following reasons:
(i) Pre-identified project acts as a factor of speeding up economic development.
(ii) An identified project leads to complete development, i.e., process of raising
income and employement.
(ii)An identified project provides direction to future activities of an organisation.
(iv) Project identification leads to long run profitability.
(v) Helps in speeding up social and culturaldevelopment.
(vi) Helps in developing basicfacilities and environment.
(vii) Project identification avoids time and again changes in projects,
PUJECT REPORT
Aproject may be defined "as a scheme, design, a proposal or something intended to
be devised." -Webster New 20th Century Dictionary
In simple words project report is a business plan. It is a written statement of what
entrepreneur is likely to take up. It is a course of action what an entrepreneur hopes to
 achieve in the business and how will he achieve it. Project report Serves as a big
to reach the destination determined by the entrepreneur. road map
Thus, a project report can best be defined as a well-evolved course of action to
the specified objective withina specified period of time. Hence, it is an operating achiev
A project report serves two purposes
(i) It serves as a guide map. It describes the direction by which the
document.
enterprise will
gain in what are the objectives, where it should be, how it is going to reach these so
(ii) Aproject report is made to attract lenders and investors. Although
preparation
of project report is not essential for smallscale entrepreneurs but stillit is advisahla
them to do so, because of many reasons such as getting financial assistance from
institátions and other government agencies. financial
Contents :Generally a good project report should contain following contents :
(i) General information, i.e., project profile and its details.
(i) Promoter's Name, educational qualifications, work and project related experience
(ii) Locational aspect place, lease or freehold, locational advantages.
(iv) Land and Building Area, construction area, type and cost of construction, ete
(v) Production Resource production processes, technical know-how, technology
alternatives, production programme, etc.
(vi) Various utilities, water, power, steam, compressed air, cost estimates and their
Sources.
(vii) Modes of transport and communication.
(viii) Details regarding raw material and its sources.
(ix) Details of mnanpower requirements and
sources.
(x) Product details, i.e., product mix, estimated sales,
competitors, standards, substitutes, etc. channels of distribution,
(xi) Working capital requirements.
(xii) Market details, i.e., ultimate users of
product, distribution of market as local,
national and international, trade practices,
promotional devices. market research, proposed sales
(xi) Requirement of funds.
(xiv) Cost of production and
(xv) Break-even analysis. profitability for first ten years.
(xvi) Schedule of
implementation.
Objectives of a Project Report :
(i) To obtain financial
(ii) To evaluate assistance.
investment opportunities.
(iüi) Tosend the report to Government
(iv) Tohave the
knowledge of departments and District Industries Cenu
(v) Comparative objectives and available resources.
study of estimated cost and
systematic viewpoints incomes.
(vi) Project reports are
(vii) Serve as strong basis for inyestment
for getting tax
subsidies and incentives from decisions. facilities,
Government concessions,
and other financial help,
It is very PROJECT APPRAISAL OR agencies.
possible only if important EVALUATION
that the resources used in a
the project is perfect and profitable. A project are fully utilised, whichis
entrepreneur
good project helps an
 Project : Presentation and Appraisal 187

achieve his goals and ensures fair returns on his investments. Thus, evaluation of the
to is most important for any project.
project
foaning : In simple words we can say that project appraisal is assessment of a
project. Project appraisal is done for both prop0sed as well as executed projects.
Theevvaluation for proposed projects is called ex-ante analysis and in case of executed
projectsitis called post-ante analysis. Here, we are dealing only with project appraisal of
proposed projects.
To adjudge the viability of a project, project appraisal is done. Thus, it is a cost
benefit analysis of different aspects of a project. In a project scarce resources are employed,
and hence an entrepreneur has to appraise various alternative projects before allocating
he scarce resources for the best project. Project appraisal helps him to select the best
among various alternative projects. Various economic, financial, technical, market,
managerial and social aspects are analysed for appraising a project.
Thus, project appriasal is a detailed evaluation of the project todetermine the technical
feasibility, economic necessity, financial viability of the project and the managerial future
competence required for its successful operation. It is a technique of judging
profitability,practicability and desirability of a project after considering various technical,
financial, economical, commercial and managerial aspects.
Objectives of Project Evaluation : Project evaluation is a tool for analysing
proposed projects. The following are itsmain objectives :
To arrive at concrete and pre-determined profits failures of the
success or
Evolving methods or measures to determine the rate of
proposed project
Collecting and compiling important information to know success or failure of the
"
proposed project. evaluating its technical
Conducting feasibility analysis of the proposed profit and
aspects
proposed projects.
"Determination of estimated cost and profit of
Evaluation
Various Aspects and Areas of Project
feasibility of a proposed project is done on the basis of evaluation of
Evaluation of
any of these factors affects entire proposed
various factors. Any weakness or drawback in
institutions also examine the feasibility of the
project. For example, banks and financial assistance. These institutions ensure whether the
project before granting loan or financial
Because they know that an entrepreneur
invested funds will give adequate returns or not.thereon only if there are sufficient returns.
will be able to pay back the amount or interest evaluation is a must, so that the desired
Thus, before starting the project, its detailed evaluated in this regard.
results are obtained. Thus, following aspects are to be
1. Technical Evaluation
2. Financial Evaluation
3. Managerial Evaluation
4. Commercial Evaluation
5. Socio-economic Evaiuntio..
6. Operational Evaluation
7. Environmental Evaluation
imnportant place in the
1. Technical Evaluation :Technical evaluation has the most experienced experts
proposed project which is done by qualified and
evaluation of a new or
 the field.
inexperts If the project size is very big and is of technical importance then servic
from outside can also be taken. Technical evaluation is based on following factors:
i) Location and site
(ii) Size and capacity of plant
(iii) Technology and Equipment
(iv) Product and product-mix
(v) Sources of Raw material and consumables
(vi) Building and layout
(vii) Manpower
(viii) Water and Steam Gas
Electricity and fuel
(x) Foreign collaborations
(xi) Efficient Treatment
(xii) Research and Development facilities
(xii)Latest Technology to be adopted
(xiv) Infrastructural facilities like Roads, Bridges, Railways, Airways, etc.
(xv) Product planning and scheduling ete.
2. Financial Evaluation: Taking decisions about heavy finances to be expanded in
the proposed project is an important decision. Both long-term and short-term capital is
needed in any project. The basic objective behind financial analysis is to see whether the
proposed investment is in a position to give fair returns and whether the entrepreneur
will be in a position to pay interest and principal on the financial assistance taken from
banks or other institutions. Financial analysis has a wide scope. Mainly it covers following
areas :

i) Estimation of cost, (ii) Cost of Production, (ii) Deciding about various financial
institutions from which finance is to be obtained, (iv) Determnining margin of safety in
relation to paying back capacity, (v) Debt-Equity Ratio, (vi) Working Capital and margin
money for the samne, and (vii) Profitability Analysis.
3.Managerial Evaluation :The success of anyproposed project is largely dependent
upon managerial capabilities.
Inefficiency on the part of management leads to failures even in very good projects.
On the other hand, if the management is capable, experienced and possesses organisational
capabilities even the weak projects become successful. Thus, while evaluating managerial
capacities, their source, understanding and trust-worthiness is to be evaluated. Hence,
while doing project appraisal the managerial competence or talent of the promoter should
be taken into consideration. Research studies have shown that most of the enterprises fall
sick because of lack of managerial competence or mismanagement. 1This is more so in case
of small scale enterprises where the proprietor is all in all, i.e., both owner and manager.
Due to this one-man show, he may be Jack of all trades but master of none.'
4. Commercial Evaluation : The proposed project should be completely sound a
healthy commercially. While appraising the project the following commercial aspectS a
to be given due consideration :
(i) Market demand of the product.
(ii) Availability of competitive products in the market.
1. s. S. Mehta: Sick Industry Syndrome in India: Some Aspects, Deeisions, Vol 15, Nos. 3 & 4,. July-October,
1998, p. 186.
 Lttòn and Appraisal
189
iii) Choice of the market.
(iv) Size of the market.
Position of demand and supply in national and
(vi) Nature of Competition. international markets.
) Pricepolicies and prices in comnparison to the type of product.
(viii) Market strategies, systems and
(ix) Import possibilities.
competence of sales force.
() Position and price of imports in the
substitute. country, in case the product is import
B. Socio-Econonmic Evaluation : It is
necessary to do the socio-economic evaluation
of any project, because a project whether commercial or non-commercial cannot dare to
nelect social interests. Thus, it is important for a project to contribute in attaining economic
andsocial objective of a country. Soci0-economic Evaluation of any project can be done after
considering the following contributionsmade by it towards society :
(i) Creation of employment.
(iü) Contribution towards economic progress of a country
(ii) Contribution in equitable distribution of income and wealth.
(iv) Encouraging self-dependence.
(v) Earning of foreign exchange and saving.
(vi) Development of backward areas
(vii) Development of small, cottage and allied industries.
(viii)Contribution in basic infrastructure and industrial atmosphere.
(ix) Contribution in development and transfer of technology.
(x) Improvement in types and quality of production.
(xi) Improvement in national welfare, life style and standard.
(xii) Contribution in upliftment of village and backward classes.
and energy.
(xiii) Proper utilisation of scarce resources and preservation of power
country.
(xiv) Priorities of the project in economic structure of the
(xv) Contributing in upliftment of social status.
(xvi) Preventing misuse of social property.
6.Operational Evaluation:The operationalevaluation of ameet project helpsin studying
project. The capacity of a project must be able to the demand of the
the capacity of the capacity for first four to
product-mix. Operational Evaluation helps to predict its optimumor manpower requirements at
five years. This can also estimate the achievement of objects
various levels of capacity utilisation.
7. Environmental Evaluation : The situations, country, time in which a person
takes birth and lives is called environment. Broadly speaking, projects are of two types:
(i) Production oriented projects, i.e., projects dealing with materialistic projects, i.e.,
etc
cement, paper, steel, chemicals, soap, oils, fertilizers, textiles, education,
(ii) Service oriented projects, i.e., prajects dealing with services, i.e., health,
security, law and order consultancy, etc.
Environment is primarily concerned with production oriented projects. Before starting
project it is necessary to give certificate to the Government that such project will not
Such be pollution free. Thus,environment
affect the environment adversely and the project will
analysis is also an important part of project evaluation.
 BREAK-EVEN ANALYSIS
Break-even Analysis is an important part of marginal cost analysis, It i.
determine that level of activity at which total cost is equal to total revenues.
analysis is based on cost-volume-profit relationship. With thebe help
the effect of changes in cost volume and price on profit can determined.
of break-even
Breanalak-eyvensis,
Break-even point shows that point of production or sales where there is no
loss or in other work at break-even sales or production only fixed and variable proit or
met. Thus, to earn profit, the entrepreneur will have to sell more than costs are
Any sale or production below break-even point gives losses. break-even
in which profits
point.
Thus, the break-even analysis defines the manner from a
vary with the changes in level of production activity. project
The break-even analysis is most commonly known as Cost-Volume-Profit (CV
analysis. It is apoint of zero profit or loss. In broad sense it refers to a system of analw
that can be used to determinethe probable profit at any level of activity.
Break-even Point (in Rs.) =
Fixed cost Mathematically,
P.V. Ratio
Fixed Cost
Break-even Point (in units)
Contribution per Unit
where P. V,. Ratio = Contribution x 100 and contribution = Sale - Marginal Cost
Rs.) Sales
Break-even Analysis can also be shown with the help of following chart.
000
(in 50 Margin of Break/-even
Point
Revenues Safety
40 (in Rs.) Margin of
Safety in (units)
30
and Total Cost
20
Cost
10 FixediCost Line

Sales &Output
PLANNING COMMISSION'S GUIDELINES FOR PROJECT,/
FEASIBILITY REPORT
In order to process investment proposals and
arrive at investment decisionS)e
Planning Commission of India has issued some guidelines
project report, which are summarised as follows: for the formulation of a re
1. General Information : The feasibility report should include an analysis ofthe
industry to which the project belongs. It should contain theindustry.
the
The description of the type of industry should also be given,past i.e., its priorities,the
performance of i
increasein
production, role of public sector, allocation of
This should contain entire
technique,etc:
information about the enterprise which isofsubmitting the
feasibility report.
 Project : Presentation and Appraisal 191
2. Preliminary Analysis of Alternatives:This should contain (a) present data or
between demand and supply for the outputs which are to be produced, (b) data on the
capacitythatt would eavailable from projects that are in production or under implementation
gap be
atthetime when report is prepared, (c) a complete list of all existing plantsin the industry,
givingthheir capacities
and their level of production actually attained, (d) a list of projects
for whichletters of intentMicences have been issued, and (e) alist of proposed projects. All
options that are technically feasible should be considered at this stage. The location of the
iect,its implications, an account of foreign exchange requirements should also be looked
The relative profitability and the rate of return on investment should also be calculated
and presented in the report:
3. Project Description : The feasibility report should provide a brief description of
the technology or process chosen for the project. Information related todetermination of
ontimally of the location chosen should also be included. In addition a feasibility report
must present information on specific point in order to assist in assessment of enviornment
efects of aproject, i.e., population, water, land, air, flora, fauna, effects arising out of the
project's pollution and other enviornmental description, etc. The report should contain a
list of important items of capital requirements and operational requirements of plant, of
water and power, of personnel organisational structure planned, transport costs, activity
wise phasing of construction and factors affecting it.
4. Marketing Plan : Marketing plan should contain:
(a) Data on marketing plan, demand and supply in each area to be served.
(b) The methods and data used for estimating supply and selection of market areas.
(c) Estimates of degree of price sensitivity.
(d) Analyses of past trends of prices.
5. Capital Requirements and Costs :The estimates of capital requirements and
cost should be presented. These estimates should be reasonably completed and properly
estimated. All information on costs should be carefully collected and presented.
6. Operating Requirements and Costs :Operational costs are those which are
incurred after commencement of the project or commercial production. These costs relate
tocost of raw material and intermediaries, fuel, utilities, labour, repairs, selling expenses,
etc. All such information should be collected and presented.
7. Financial Analysis : Financial analysis is presented to measure the financial
viability of the project. It should include proforma balance sheet. Depreciation should be
allowed on the basis of standards fixed by Bureau of Public Enterprises. Foreign exchange
requirements should be cleared by the Department of Economic Affairs. The feasibility
report should also take into account income tax rebates, incentives for backward areas,
accelerated depreciation, etc. The report must analyse the sensitivity of rate of return on
the level and pattern of product prices.
8. Economic Analysis : An enterprise must try to present the impact of foreign
trade, indirect costs and profit on its operations after carefully asessing them.
9. Miscellaneous Aspects : Various other aspects like use of computers, Data
Processing Services, Cash Flow Statements and accounting procedure should also be
presented.
LEGAL REQUIREMENTS FOR ESTABLISHING A NEW UNIT
Everyday many new industrial units are established but it is not necessary that
every unit willbe successful. There are many reasons for this and one of the most important
 among these is not completing some of thelegal requirements in establishinga unit. Most
as co-incidence.
entrepreneurs do not realise this fact and treat their failures which are to hhe
of the is full of legal and statutory formalities
that modern
wellisthought
fact business
before establishing a business unit. "Establishing a new unit is like giving
birth to achild", which means that as a mother has to take many precautions before giving
birth to a child,in the same way an entrepreneur has to undergo and follow many legal
formalities and procedures. It is important to follow conditions and rules forwarded by
a new unit.
Central and State govenmments before establishing
Before 1991 India followed controlled regime, i.e., there were many complex procedw.
for establishing a new unit. That era is often termed as "License Raj'. But thanks to n
reduced or abolished a num
lndustrial Policy announced on 24th July, 1991 which has
place to economi
of stationery requirements for setting up an enterprise and given a
liberalisation, privatisation and globalisation.
fulfilled befow
Broadly speaking following legal or statutory requirements are to be
establishing a new unit:
n.License : The first and the foremost step to be taken for establishment of a now.
business unit is to obtain license from the concerned authority either in the Central
Govemment or from the State Government, as the case may be. It is important to note that
as per the new Industrial Policy, 1991, no license is required for the establishment of small
scale industrial unit either from Central Government or State Government. Industrial
units employing less than 100 workers and having a fixed cost of less than 10 lakh rupees
are not required to obtain any licence under the Modified Industrial (Development and
Regulation) Act, 1951. Moreover, under the New Industrial Policy of liberalisation and
globalisation, no new small scale unit isrequired to take any license for the establishment
of small scale Industry from the Central or State Government. Only Municipal License is
to be obtained. As per the provisions in new licensing policy, only 15 industries are required
to obtain license, others are exempted. Many concessions are given for import of foreign
technology so that they can compete internationally. Priority industries are now free to
import foreign technology upto Rs. 1 crore or upto 15% of domestic sales or 8% of the
exports/without any license.
Z. Clearance from Pollution Control Board : Pollution has become a serious
problem for the entire world today. Poilution may be of different types like air pollution,
water pollution, sound polltion, etc. Itis mandatory for an entrepreneur to obtain polluton
clearance certificate from the Pollution Control Board under the Water (Prevention and
Control of Pollution) Act, 1974 and Ai. (Prevention and Control of Pollution) Act, 1981
3. Provisional Registration Certificate : AProvision
to be obtained from the concerned District Registration Certificate nas
Industry Centre of the state by the entrepren
who intends to establish an industry. It is initially issued for a period of one year, which
can be further extended for a period of siX months each for two terms, in case the unit is
not in a position to start production due to
TheProvisional Registration circumstances beyond his control.
(i) To apply for a built up shedCertificate entitles the entrepreneur :
or a plot in an
(ii) Toapply for municipal license. industrial estate.
(iiü)To apply for power
(iv) To apply for financialconnection. institutions.
4. Permanent Registration assistance from a After
Certificate: bankobtaining
or other financial
Provisional Registration
Certificate, if the industrial unit has actually to
start

production, permanent registration certificate is started production or is about

 ntatton and Appraisal 193
Registration under Shops and Establishment Act : It is mandatory for a
6. industrial unit for getting itself registered under Shops and Establishment Act
small,
scale
concernedstate in
in which
which unit is to be established. The main objective of this Act is
regulateworking hours, weekly holidays and payment of salaries to the employees.
ofthe
to
6. Capital.Issue Certificate : Every industrial unit requires a capital, both working
asfxed. Therefore, after obtaining permanent registration certificate, enterprise
fixed.
well
requiredtotake sanction for issue of necessary capital under Capital Issue (Control) Act,
As

1947.
Pegistration under the Factories Act, 1948 : If the proposed unit intends to
carryon
manufacturing unit by employing 10 workers or more with the aid of power or 20
workers or more without the aid power, it is required to get itself
of registered and obtain
license under
Factories Act, 1948 from the concerned State Government.
8. Import Licence: In case the proposed unit intends touse imported raw material,
the Chief Controller of
enare and machinery it is required to obtain import licence from
Delhi.
Imports and Exports, New an entrepreneur
9. Registration of Small Scale Industrial (SSI) Units : In casehimself registered
to get
intends to establish a small scale industrial unit, he is required
of Small Units of the concerned State.
and obtain necessary certificate from Directorate
1948: If the entrepreneur
10. Notice by the Occupier under the Factories Act, is also required to give 15
Act, 1948, he
is required to obtain license under the Factories factory inspector before occupying the
days notice in the prescribed form to the concerned
factory to start production.
Commodities Act, 1955:If the new enterprise
.¤1.Certificate under Essential
required to obtain necessary certificate under
intends to produce essential goods, it is also
the Essential Commodities Act, 1955 Low
Obtaining Power Connection : Power is categorised in two parts{1) The
12. connected
A consumer can avail LT only if the
Tension (LT) and (2) The High Tension (HT). connected load is between 75 HP and 130 HP.
where the
load is upto75 Horse Power (HP) or HT supply and if the connected load
exceeds
avail either LT supply
the cousumer can Most of the small scale units fall in
LT
130HP, the unit is classified as HT Consumer.
category.
connection, the new entrepreneur has to apply to concerned State
To get a power security deposit amounting to
to pay
Electricity Board. The new entrepreneur may have
according to rules.
three months power consumption or
:The entrepreneur has to apply to local
13. Application for Water Connection
municipal authority to ensure adequate water supply. :Ifthe entrepreneur
14. Registration with Sales Tax and Income Tax Authority
tax registration number from the
is engaged in trading business he has to obtain a sales
Department also.
State Government and if necessary from Income Tax
15. Registration with Excise Department : If the entrepreneur he is engaged in
required
manufacturing business on which excise is levied by Central Government, is
to get registered with Excise Department. to get
16. Registration of Trademarks : The manufacturing concerns are required
the same trade
their trademarks registered in order to prevent other manufacturers in of trade
mark,e.g., Coca Cola, Colgate, Brooke Bond, etc. The application for registration