A Comprehensive Project Report On To study the impact of recession on small scale industries.

Submitted to: Gujarat Technological University, Ahmedabad. In Partial Fulfillment of the Requirement of the award for the degree of Master of Business Administration Gujarat Technological University, Ahmedabad. In Gujarat Technological University Under the Guidance of Miss. Shabana Pathan (Assistant Professor) By: Hemal V. Laheri (107600592001) Priyanka R. Dalsaniya(107600592034) Master of Business Administration Batch 2010-2012 MBA SEMESTER IV

Shree Leuva Patel Trust MBA Mahila College, Amreli MBA Programme Affiliated to Gujarat Technological University Ahmedabad.

GUIDES RECOMMENDATION
To, The Registrar, Gujarat Technological University, Ahmedabad. Subject: MBA Comprehensive Project Report Dear Sir / Madam, We are recommending that project report on The study the impact of recession on Small Scale Industries prepared by Ms. Hemal V. Laheri and Ms. Priyanka R. Dalsaniya as the partial fulfillment for the M.B.A degree of Gujarat Technological University, Ahmedabad. Thanking You.

Yours faithfully,
(Shabana Pathan)

STUDENT DECLARATION
We, the under signed Miss Hemal V. Laheri and Miss Priyanka R. Dalsaniya here by declare and confirm that the report for Comprehensive Project entitled To study the impact of recession on Small Scale industries is a result of our work and our indebtedness to other work publications, references, have been duly acknowledged. This project is just a part of our college curriculum and will not be used elsewhere.

Yours Faithfully

_______________ (Hemal V. Laheri) (Priyanka R. Dalsaniya)

PLACE: DATE:

PREFACE
M.B.A. programme is based on management study, every student need to be well versed not only with theoretical knowledge but also with practical aspects of all managerial areas. Practical knowledge is as important for student as a theoretical knowledge. All the principles of managements applied in companies have been already explained in classroom.To understand their real life application it becomes necessary for every student to understand them from industrial point of view. Comprehensive project report is a part of the management programs under Gujarat technological university. Management is growing body Keeping in mind the ever development field of management and great demand for marketing in our country, the university has arranged specialization program in many field of management. Thus it is our moral and obligatory duty to take this part of our studies with great enthusiasm and seriousness and give it the due importance. The report gives information about the potential performance of small scale industry at the recession period. The reports contain graphical representation & interpretation with each graph and Pie-charts. For the preparation of this report, we have used various details of Small Scale Industry for the purpose of Project repot. This comprehensive project proved to be an experience, which is required to become a true student of management and administration.

ACKNOWLEGEMENT
Project is the first step in the practical field from where one learns how to apply theory principles for practical purpose. To make a project success one needs help, understanding and co-ordination from all those who are directly or indirectly involved in this project. This project needs a lot of dedication concentration and hard work of the students and also it should be garnished with the topping of good guidance. We are deeply indebted to all of them for excellent ideas and assistance. We have highly obliged to the Gujarat Technology University for arranging the program of practical training in Master of Business Administration manner. We wish to give grateful acknowledgement to our respective project guide Ms. Shabana Pathan for her efforts, guidance, valuable comments and suggestions for making this project report. We would also thank our Principal Mr. Gopalkrushna Patel and institution Shree Leuva Patel Trust M.B.A Mahila College and also our faculty members whose kindness and support enabled us exposure to wider horizons of our knowledge. We also extent our heartfelt thanks to our family members and well wishers. Yours faithfully in such a

_______________ (Hemal V Laheri) (Priyanka R. Dalsaniya)

Date: Place: 5

TABLE OF CONTENTS SR NO. PARTICULARS PAGE NO.

CHAPTER-1
1.1

GENERAL INFORMATION
10 10 11 13 13 15 15 15 16 17 18

About small scale industry 1.1.1 1.1.2 Advantages associated with small scale industry Recession Effect on Small scale Industry

1.2

Role of Small Scale Industry In World Market 1.2.1 Performance of Small Scale Industries In the G globalization Era

1.3

Role of Small Scale Industry In Indian Market 1.3.1 1.3.2 1.3.3 1.3.4 1.3.5 Production Employment Export Opportunity Advantages of small Enterprises in Developing Market Economies

1.4

Role of Small Scale Industries In the Growth of Indian Economy

20

CHAPTER-2 INTRODUCTION OF THE STUDY

2.1 2.2 2.3 2.4 2.5 Literature Review Background of the Study Problem statement of the study Objective of the study Hypothesis 21 38 40 41 42

2.6 2.7

Scope of the study Utility of the study

43 44

CHAPTER-3 RESEARCH METHODOLOGY

3.1 3.2 3.3 3.4 3.5 3.6 3.7 Research Design Sources of the Data Data Collection Method Population Sampling Method Sampling Frame Data collection Instrument 45 46 47 49 50 51 52

CHAPTER-4 DATA ANALYSIS & INTERPRETATION

4.1 4.2 Tools and technique Hypothesis testing 53 67

CHAPTER- 5 RESULTS AND FINDINGS

5.1 5.2 Findings Limitations of the Study 68 71

CHAPTER- 6 SUGGESTIONS&CONCLUSION
6.1 6.2 7 8 Suggestions Conclusion Bibliography Annexure 72 73 74 80

LIST OF TABLE

SR. NO. 1.1 1.2 3.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15

PARTICULARS The relative importance of the SSI Contribution of SSI to Indian Economy Research Design Impact of recession on your business Any change in sales and marketing Any change in sales and marketing Any change in market Any change in market Any change in employment structure Any change in employment structure Impact on products or services offered Affected the financial structure of your organization The behavior of owner/manager at the declining period Any change in production or business processes Any change in production or business processes The organizations demand and supply affected The effect on the salary structure Hypothesis testing

PAGE NO. 14 20 45 53 54 54 56 56 58 58 60 61 62 63 63 65 66 67

LIST OF FIGURES
SR.NO.
1.1 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 Export Impact of recession on the firm Change in sales and marketing Change in sales and marketing Change in market Change in market Change in employment structure Change in employment structure Impact on product/services offered Affected the financial structure of your organization The behavior of owner/manager at the declining period Change in production or business processes Change in production or business processes The organizations demand & supply affected The effect on the salary structure

PARTICULARS

PAGE NO
17 53 54 55 56 57 58 59 60 61 62 63 64 65 66

1.1

ABOUT THE SMALL SCALE INDUSTRY

Small Scale Industries may sound small but actually plays a very important part in the overall growth of an economy. Small Scale Industries can be characterized by the unique feature of labor intensiveness. The total number of people employed in this industry has been calculated to be near about one crore and ninety lakhs in India, the main proponents of Small scale industries

1.1.1 Advantages associated with small scale industries This industry is especially specialized in the production of consumer commodities. Small scale industries can be characterized with the special feature of adopting the labor intensive approach for commodities production. As these industries lack capital, so they utilize the labor power for the production of goods. The main advantages of such a process lies in the absorption of the surplus amount of labor in the economy who were not being absorbed by the large and capital intensive industries. This, in turn, helps the system in scaling down the extent of unemployment as well as poverty. It has been empirically proved all over the world that small scale industries are adept in distributing national income in more efficient the economy and equitable manner among the various participation in the process of good production than their medium or larger counterparts. Small scale industries help the economy in promoting balanced development of industries across all the region of the economy This industry helps the various section of the society to hone their skills required for entrepreneurship

10

 Small scale industries act as an essential medium for the efficient utilization of the skill as well as resources available locally Indian economy is an under developed economy. Its vast resources are either unutilized or underutilized. A major section of man power is lying idle. The per capita income is low. Capital is shy and scarce and investment is lean. Production is traditional and the technique is outdated. The out put is insufficient and the basic needs of the people remain unfulfilled. Liberalization and globalization are the order of the day. The market forces will determine the systems and manner of production. The allocation of resources within the sector must be governed by the criteria of efficiency, productivity and competitiveness. The Small Scale Industries will have to move from a regime of protective environment to a competitive environment. Small scale industrial units feel apprehensive about globalization and the impact of the agreements with World Trade Organization (WTO). Small scale industries are playing a stellar role in the economic development of the country but the problems in performing the financial functions are the major hurdles in their development.

1.1.2 Recession Effects on Small Scale Industry There is a clear relationship between small business and the economy in general, especially in the in United States because much of economic growth is fueled by startup business. In spite of the hype about the internet startups, new companies come from every sector of the economy and every part of the world. All told, these small firms make a significant contribution to the economy simply by hiring one or two employees. The belief that small businesses fare poorly in economic slowdowns is a common misconception. Most solidly run small businesses actually hold their own during downturns. One reason for this misconception is that

11

entrepreneurial ventures experience a different growth curve than more established businesses. One reason many small businesses do well is that there has been a shift away from traditional sources of capital for small business. In spite of the efforts by the Small Business Administration to support loans for small business from traditional lenders, many businesses have not found success through this path or have found the obstacles too big of a challenge. Consequently, many entrepreneurs turn to credit cards, home equity, commercial lenders, and angel investors for their funding - and even in a good economy, they are not turning to traditional sources of funding. Therefore, when those sources dry up in a recession, small business is not affected.

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1.2 ROLE OF SMALL SCALE INDUSTRY IN WORLD MARKET

The role played by the small scale industry in the economic activity of advanced industrialized countries like Japan, Germany, Great Britain and the United States of America is significant. Many Nations, both developed and developing exteriorized that the small industry sector is a useful vehicle for growth, in the later for the creation of new employment opportunities on a wide scale in the shortest possible time Small and Medium enterprises account for approximately 80 percent of the private sector industrial workers and hence occupy an important position in the industrial structure of Japan. The employment creating capacity of the small and medium enterprises in Japan has been seen to be larger than that in Germany or United States. Indian economy is an under developed economy. Its vast resources are either unutilized or underutilized. A major section of man power is lying idle. The per capita income is low. Capital is shy and scarce and investment is lean. Production is traditional and the technique is outdated. The output is insufficient and the basic needs of the people remain unfulfilled

1.2.1 Performance of small scale industries in the globalization era SSI is considered as the backbone of the private sector all over the world, which assures their role in production, employment and sales. In addition to their role in economic development they play a vital role in social, political, and cultural development as well. However, the notable spread of SSI contributed to the increased severity of competition between these industries that often leads to the failure of these industries. Most SSI fail during the first year of establishment, and 90% of these industries are subject to failure during a period not exceeding their first 5 years

13

The relative importance of the SSI Year No. of SSIs No. of All Relative Importance 90% 89% 89% 92% 88% 90% 90%

Industries 2005 2006 2007 2008 2009 2010 2011 106730 103753 105662 130149 126196 132166 135732 118271 115820 118492 140338 141944 145699 150222 [Table1.1]

As shown in table the number of the SSI increased from 106730 projects in 2005 to 135732 projects in 2011.These numbers illustrates the relative importance of the number of SSI of the total number of industries in Jordan is more than 80%. The SSI was distributed in Jordan into three districts as follows: The northern district: 22% of the total small scale industries in Jordan. The middle district: 68% of the total small scale industries in Jordan. The southern district: 10% of the total small scale industries in Jordan.

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1.3 ROLE OF SMALL SCALE INDUSTRY IN INDIAN MARKET

1.3.1 Production The small-scale industries sector plays a vital role in the growth of the country. It contributes almost 40% of the gross industrial value added in the Indian economy. It has been estimated that a million Rs. of investment in fixed assets in the small scale sector produces 4.62 million worth of goods or services with an approximate value addition of ten percentage points. The small-scale sector has grown rapidly over the years. The growth rates during the various plan periods have been very impressive. The number of small-scale units has increased from an estimated 0.87 million units in the year 1980-81 to over 3 million in the year 2000. When the performance of this sector is viewed against the growth in the manufacturing and the industry sector as a whole, it instills confidence in the resilience of the small-scale sector.

1.3.2 Employment SSI Sector in India creates largest employment opportunities for the Indian populace, next only to Agriculture. It has been estimated that 100,000 rupees of investment in fixed assets in the small-scale sector generates employment for four persons.

1.3.2.1 Generation of Employment - Industry Group-wise Food products industry has ranked first in generating employment, providing employment to 0.48 million persons (13.1%). The next two industry groups were Non-metallic mineral products with employment of 0.45 million persons (12.2%) and Metal products with 0.37 million persons (10.2%). In Chemicals & chemical products, Machinery parts except Electrical parts, Wood products, Basic Metal Industries, Paper products & printing, Hosiery & garments, Repair services and Rubber & plastic products, the contribution ranged from 9% to

15

5%, the total contribution by these eight industry groups being 49%.In all other industries the contribution was less than 5%.

1.3.2.2 Location-wise Employment Distribution Rural Non-metallic products contributed 22.7% to employment generated in rural areas. Food Products accounted for 21.1%, Wood Products and Chemicals and chemical products shared between them17.5percent. Urban As for urban areas, Food Products and Metal Products almost equally shared 22.8% of employment. Machinery parts except electrical, Non-metallic mineral products, and Chemicals & chemical products between them accounted for 26.2% of employment. In metropolitan areas the leading industries were Metal products, Machinery and parts except electrical and Paper products & printing (total share being 33.6%)

1.3.2.3 State-wise Employment Distribution Tamil Nadu (14.5%) made the maximum contribution to employment. This was followed by Maharashtra (9.7%), Uttar Pradesh (9.5%) and West Bengal (8.5%) the total share being 27.7%. Gujarat (7.6%), Andhra Pradesh (7.5%), Karnataka (6.7%) and Punjab (5.6%) together accounted for another 27.4%. Per unit employment was high - 17, 16 and 14 respectively - in Nagaland, Sikkim and Dadra &Nagar Haveli. It was 12 in Maharashtra, Tripura and Delhi.

1.3.3 Export SSI Sector plays a major role in India's present export performance. 45%-50% of the Indian Exports is contributed by SSI Sector. Direct exports from the SSI Sector account for nearly 35% of total exports. Besides direct exports, it is estimated that small-scale industrial units contribute around 15% to exports indirectly. This takes place through merchant exporters, trading houses and 16

export houses. They may also be in the form of export orders from large units or the production of parts and components for use for finished exportable goods. It would surprise many to know that non-traditional products account for more than 95% of the SSI exports. The exports from SSI sector have been clocking excellent growth rates in this decade. It has been mostly fuelled by the performance of garments, leather and gems and jewellery units from this sector. The product groups where the SSI sector dominates in exports are sports goods, readymade garments, woollen garments and knitwear, plastic products, processed food and leather products. The SSI sector is reorienting its export strategy towards the new trade regime being ushered in by the WTO.
Exports

60000 53975 50000 43946 39249 40000 29068 30000 36470 48979

20000

[1.1]

10000

0 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

[1.1]

1.3.4 Opportunity The opportunities in the small-scale sector are enormous due to the following factors: Less Capital Intensive Extensive Promotion & Support by Government Reservation for Exclusive Manufacture by small scale sector 17

 Project Profiles Funding - Finance & Subsidies Machinery Procurement Raw Material Procurement Manpower Training Technical & Managerial skills Tooling & Testing support Reservation for Exclusive Purchase by Government Export Promotion Growth in demand in the domestic market size due to overall economic growth Increasing Export Potential for Indian products Growth in Requirements for ancillary units due to the increase in number of green field units coming up in the large scale sector. Small industry sector has performed exceedingly well and enabled our country to achieve a wide measure of industrial growth and diversification.

1.3.5 Advantages of Small Enterprises in Developing Market Economies From a theoretical perspective, SMEs have several advantages over both SOEs and large privatized SOEs (PSOEs). In SMEs the incentives for both managers and workers tend to be clearer and stronger than in larger organizations. Governance problems are less significant since in many cases the managers and owners are the same people. The small size of many of the SME firms allows owners easily to monitor the performance of managers while the cost of monitoring labour is also lower. Under the special conditions of the transition economy there are several additional advantages. There is likely to be less behavioural carry-over of bad work habits (from the especially chaotic last years of the planned economy system) in SMEs that are either new or had worked outside the main channels of the planned system. Small firms appear to have greater flexibility and potential for innovation, which are especially important in the unsettled conditions of the transition period. To the extent that the SME firms produce the same products or services as SOE and PSOE, their small size makes 18

them less prone to monopolist behaviour. Higher productivity is also likely in those product areas where there are no or few scale economies (e.g., services and specialty or niche manufacturing processes). It should be noted that many or even most of the existing or emerging SMEs are not really new

19

1.4. ROLE OF SMALL SCALE INDUSTRIES IN THE GROWTH OF INDIAN ECONOMY

The growth of industries in small-scale sector has been striking feature in the economic development of India. It has contributed to the overall growth of the country. Today SSI sectors occupy a place of strategic importance in Indian economic structure due to its considerable contribution in terms of output, export and employment. In 2010 to 2011 the growth rate of small scale industries were 8.6 percent and the growth rate of overall industrial sector was 6.9 percent. SSI has higher growth rate of production as compared to the overall growth rate of industrial sector. Small scale industries have significant contribution to the total industrial production and GDP. In the year 2010-2011 the contribution of small scale industries in total industrial production was 39.42 percent and the contribution in GDP is 6.71 percent. Thus small scale industries play a significant role in the economic growth of India.

Contribution of SSI to Indian economy Year Growth rate Growth rate of Contribution of Contribution in Total of SSI in

of SSI sector rate of overall SSI (%) industrial Sector (%)

Industrial Production (%)

Gross Domestic Product (GDP) (%)

2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

9.2 7.8 7.1 6.0 6.1 7.7 8.6

6.7 4.1 6.7 5.0 2.7 5.7 6.9 [Table-1.2] 20

39.70 39.94 40.02 39.91 39.63 39.48 39.42

7.02 6.81 6.69 6.86 6.67 6.82 6.71

2.1 LITERATURE REVIEW

2.1.1 Article-Small-scale industries in India in the globalization era: performance and prospects Author: M.H. Bala Subrahmanya Journal: International Journal of Management and Enterprise Development 2005 - Vol. 2, No.1 pp. 122 - 139 Small-scale industries engage a place of strategic importance in Indian economy in view of its significant contribution to employment, production and exports. However, since 1991 small-scale industries in India find themselves in an strongly competitive environment due to globalization, domestic economic liberalisation and intensity of sector specific protective measures. This paper shows the implications of globalisation and domestic economic liberalisation for small-scale industries and analyses its growth performance in terms of units, employment, output and exports. The paper concludes with policy recommendations to ensure the provisions and competitive growth of small-scale industries in India.

2.1.2 Article: Impact of globalisation on small scale industrial units Author : Dr. Kishor N. Jagtap Vol - I , ISSUE - XI [ December 2011 ] The article says that the Small scale industries in India are facing great threats and competition due to liberalized policies. The strong and lively small scale industries sector (now MSE) can derive the benefits of the new opportunities provided by the supporting policies which aim not only to protect but also to promote this segment. There should be thorough monitoring of these companies with a view to bring in professional managements. An industry-wise review should be done with regard to size, technology, location and the desired production bin. The plan could examine mergers, or breakups, as per technology requirements and pick over out high cost, uneconomic and low technology units.

21

2.1.3 Credit easing and the recession of 2007 -2009 - Was it worth it? Research in Business and Economics Journal Tarek Buhagiar University of Central Florida This paper investigates the results of the Quantitative/Credit Easing policy adopted by the Federal Reserve in retort to the most recent recession. This paper also explores credit easing and the history of the recession in the U.S. and the reactions on the price of oil and gold, the economic base, the DowJones, unemployment and GDP. Quantitative easing, according to a Bank of England brochure (2011), is conducted by Central Banks buying assets from private sector institutions that could be insurance companies, pension funds, banks or non-financial firms and credits the sellers bank account. However, in the United States the policy adopted by the Federal Reserve is one of Credit Easing. According to Bernanke, Credit Easing is similar to Quantitative Easing. The unemployment rate trend confirms Knotek and Tesrry (2009) findings that concluded that evidence suggests that banking crises are associated with large and constant increases in the unemployment rate. Banking crises that correspond with recessions are associated with even worse outcomes for unemployment.

2.1.4 Revisions Show Deeper 2007-2009 Recession By: Martin Crutsinger Ap Economics Writer WASHINGTON July 29, 2011 (AP) Economists have said the negotiations have injected a large amount of uncertainty into the weak recovery. Some businesses are holding back on hiring and expansion plans. "It is hard to see the economy getting much stronger," Paul Dales, an economist at Capital Economics, said in a research note. "In fact, if the debt ceiling is not raised ... we could well have another recession on our hands." The government also revised data going back to 2003. The data show the recession was even worse than previously thought. The economy shrank 22

5.1% during the recession, which lasted from December 2007 through June 2009, compared to the earlier estimate of 4.1%. The last recession began in December 2007 and lasted until June 2009. Though the economy has been growing since then, growth has been subpar. And the unemployment rate has remained eminent; it's now 9.2%. The revisions showed that growth in 2010 was a bit stronger than previously estimated. They put growth for all of 2010 at 3%, up from a previous estimate that the economy grew 2.9% in 2009.

2.1.5 Research Paper on the Recession of 2007-2009 Cynthia Funes American Government 230, 9:40-11:40 A.M. Mr. Jacobs June 28, 2011 Everybody in the United Stated was affected by the recession that began in December of 2007 and span all the way to June 2009. Even though the recession is over, many people are still being affected by it and have still not been able to recover from the great recession. The recent recession features the largest decline in output, consumption, and investment, and the largest increase in unemployment, of any post-war recession. Many people lost their jobs due to the recession and some of them are still having a hard time finding jobs and getting back on their feet. Businesses also received a great collapse that forced many of them into bankruptcy. The recession not only affected lower and middle class people, it also affected upper class citizens; it affected everybody. Unemployment was very unfortunate for the people during the recession. 2.1.6 The Great Recession of 2008-2009: Causes, Consequences and Policy Responses

Sher Verick International Labour Office (ILO) and IZA Iyanatul Islam 23

International Labour Office (ILO) and Griffith University IZA Discussion Paper No. 4934 May 2010 Through an deeply review of the crisis in terms of the causes, consequences and policy responses, this paper identifies four key messages. Firstly, divergent to widely-held perceptions during the boom years before the crisis, the paper underscores that the global economy was by no means as stable as suggested, while at the same time the majority of the worlds poor had benefited inadequately from stronger economic growth. Secondly, there were difficult and interlinked factors behind the emergence of the crisis in 2007, namely loose monetary policy, global imbalances, misperception of risk and lax financial regulation. Thirdly, beyond the aggregate picture of economic fall down and rising unemployment, this paper stresses that the impact of the crisis is rather diverse, reflecting differences in initial conditions, broadcast channels and vulnerabilities of economies, along with the role of government policy in mitigating the downturn. Fourthly, while the recovery phase has commenced, a number of risks remain that could disrupt improvements in economies and delay efforts to ensure that the recovery is accompanied by job creation. These risks relate in particular to the challenges of dealing with public debt and continuing global imbalances. http://abcnews.go.com/Business/wireStory?id=14187722

2.1.7 Financing Constraints and Unemployment: Evidence from the Great Recession By: Burcu Duygan-Bump, Alexey Levkov, and Judit Montoriol-Garriga Version: 14 December 2011 This paper exploits the differential financing needs across industrial sectors and provides strong pragmatic evidence that financing constraints of small businesses in the United States are important in explaining the unemployment dynamics during the Great Recession. We show that workers in small firms are more likely to become unemployed during the 2007-09 financial crises if they work in industries with high external financing needs. We find very similar

24

results for the 1990-91 recessions, but not for the 2001 recession, where only the former was related with a reduction in loan supply.

2.1.8 Measuring Financial Performance of Small Scale Industries: Some Evidences from India By: Hemanta Saikia Department of Economics, Debraj Roy College, Assam,India Journal of Applied Economics and Business Research JAEBR, 2(1): 46-54 (2012) The study indicates that the sustainability of the factor ratios are not up to mark and productivity of the inputs, especially the labour is low as compared to capital. So the mobility of the inputs is small and option among the modern technology is hard as the management and quality of the labour inputs are not good. Most of them have tiny formal training facility, and the infrastructure facilities of the units are far below the standard. However, when there is the limited capability of alternative among alternative's methods of production, the option is required in terms of type of industry that has flexibility of technology, production and future marketing opportunities. In developing countries generally there exists no distinctive relationship between the macro policy and micro industrial structure.

2.1.9 The Great Depression and the 2007-2009 Recession: The First Two Years Compared By: Hamid Shomali, Gwendolyn R. Giblin International Research Journal of Finance and Economics ISSN 1450-2887 Issue 59 (2010) EuroJournals Publishing, Inc. 2010 http://www.eurojournals.com/finance.htm The 2007-2009 recession was the most severe economic depression since the Great Depression. However, most research regarding the Great Depression focus on the entire decade of the 1930s. This paper compares the first two years of the Great Depression and 2007-2009 recession, including the: (1) causes; (2) severity; and (3) policy reactions. When viewed in this 25

manner, it appears that the more recent financial downturn is not another Great Depression.The United States economy is still experiencing many effects of the 2007-2009 recession. Yet the comparisons to the Great Depression are overstated because the economy did not go down to the same depths. To be sure, the economy remains in an unwanted state from the viewpoint of many individuals, companies, and society in general. The impact of the recession will be felt long-term, particularly because it will take time to re-absorb the unemployed into the active workforce. However, two years into the recession, the economy showed signs of turning around, which was not the case in 1931.

2.1.10 Globalization and Its Impact on Small Scale Industries in India By: Sonia, Research Fellow, Department of Commerce, Punjabi University, Patiala(Punjab). Dr. Rajeev Kansal, Reader, Department of Commerce, Punjabi University, Patiala(Punjab). Vol. 1, No. 2 (June, 2009) pp. 135-146 ISSN 0974-9977 PCMA Journal of Business Globalization has led to an Unequal Competition- a competition between giant MNCs and dwarf Indian enterprises. The small scale sector is a vital part of overall industrial sector of the country. The small scale sector forms a governing part of Indian industry and contributing to a significant proportion of production, exports and employment. In this study, an effort has been made to analyze the impact of globalization on the growth of small scale industries. The comparative analysis of growth pattern of key parameters between Preand Post Globalization periods reveals that the globalization had a negative impact on the growth of small scale sector measured in terms of number of units, production, employment and exports. A fall in the rate of growth of number of units and employment generation in post liberalisation period is a matter of serious concern for the policy- makers and planners. The result showed that globalization is almost a complete failure on growth front. To conclude, we can say that the recent trend of growth of SSI sector showed

26

the trust of Indian economy on globalization and liberalisation, which has failed to render a positive impact on the growth of Indian Small Scale Sector.

2.1.11 Small Industry and Globalization, Economic and Political Weekly, Vol. XXXIX, No. 20, 15 May 2004, Pg: 19992000. Mathew, M.C. (2004) highlighted the reason for panic in all India census report on smallscale industries. The study observed that the vitality and dynamical of the sector anticipated under an era of deregulation and dereservation remaining largely unrealized. The study stated that the country needs a strong small and medium enterprises policy, which was closely linked to its international commitments. The study suggested that at the strategy level, there were need to be mechanism by which the demography of small and medium enterprises sector itself becomes a matter of public security.

2.1.12 Productivity Awareness Among SSI Units: A Case Study, The Indian Journal of Commerce, Vol. 57, No. 2, April- June 2004, PP: 6472. Rajyalakshmi, N. (2004) reviewed the productivity awareness among SSI units in Visakhapatnam district of Andhra Pradesh at micro level and explored small- scale entrepreneurs, how they measured productivity in their units. The study based on primary data collected by using structured schedule through personal interviews. The study found that Chemical units were more capital intensive and it was low in food and agro units. Productivity awareness was not noticed in the SSI units. The study concluded that Success in small industry will be best achieved if the productivity culture will be clearly understood by all the employees.

2.1.13 Small Industry and Globalization: Implications, Performance and Prospects, Economic and Political Weekly, Vol. XXXIX, No. 18, 1 May 2004, Pg:18261834. 27

Subrahmanyabala, M.H. (2004) highlighted the impact of globalization and domestic reforms on small-scale industries sector. The study stated that small industry had suffered in terms of growth of units, employment, output and exports. Researcher highlighted that the policy changes had also thrown open new opportunities and markets for the small-scale industries sector. The author suggested that the focus must be turned to technology development and strengthening of financial infrastructure in order to make Indian small industry internationally competitive and contribute to national income and employment.

2.1.14 Challenges in Micro and Small Scale Enterprises Development: Some Policy Issues, Synergy: I. T. S. Journal of IT and Management, Vol. 3, No. 2, July 2005, PP: 67-81. Sudan, F. K. (2005) described the challenges in Micro and Small Scale Enterprises Development and policy issues by arising different questions related to Micro and Small Enterprises. The study explained the meaning, advantages, problems and policy options of MSE sector. The study concluded that all the policies which were opted by GOI were the efforts to form a dynamic MSE sector and a diversified economy providing expanded employment opportunities to absorb all new labour force and offer exciting career opportunities.

2.1.15 Contribution of Indian Small Scale Entrepreneurs to Economic Growth in India: Opportunities and Challenges in Global Economy, Prabandh- Journal of Management & Research, Vol. 23, June 2007, PP: 112. Rathod, C. B. (2007) described the importance of small scale industrial sector and also the contribution of Indian small scale entrepreneurs in world economy. The main objective of the study was to study the growth and pattern of the SSI sector and identify the reasons for success/ failures, to assess the impact of globalization on SSIs and export opportunity, to identify the barriers 28

and constraints that SSIs were facing to cope with globalization. The study analysed that SSI sector in India has been exhibiting a outstanding export performance; export had grown up to double digit from the last ten years. The study concluded that both opportunities and challenges were raised as the impact of globalization on Indian Industry as a whole and the small scale sector in particular. The study found that a major part of our exports would have to gear up to the new era of boundary less economy. The study has suggested that there was need for simplified legal and regulatory composition, good governance, sufficient and accessible finance, suitable infrastructure and competitive environment.

2.1.16 The 2007-2009 Recession: Similarities to and Differences from the Past Marc Labonte Specialist in Macroeconomic Policy October 6, 2010 Congressional Research Service 7-5700 www.crs.gov R40198 Both the 1973 and 1981 recessions featured large spikes in oil prices near the beginning of the recessionas did the recent one. Disruptions to oil markets and recessions have gone hand in hand all through the post-war period. The previous two recessions (beginning in 1991 and 2001) were unusually serene and brief, but subsequently featured long jobless recoveries where growth was slow and unemployment continued to rise. The recent recession did not feature a jobless recovery longer than the norm, but employment growth has been weak in 2010. A decline in residential investment (house building) during a recession is not unusual, and it is not uncommon for residential investment to decline more sharply than business investment and to begin declining before the recession. The recent reduction in residential investment was unusually severe, however, as indicated by the unusual decline in national house prices.

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2.1.17 Recession Effects on Small Scale Industry By Victoria Duff, Demand Media As a result of the credit crisis of 2008, job losses were steepest in the goodsproducing industries natural resources and mining, construction and manufacturing -- which accounted for about half of total losses from the Fourth Quarter 2007 to the Third Quarter 2009. Job losses were not the rule across all industries. Education and health services sectors saw an increase of 768,000 jobs, and the government sector added 115,000 jobs, according to a study published in the February 2010 Federal Reserve Bank of St. Louis "Review." Industries: In any recession, the industries affected most are manufacturing, construction and retail. When credit requirements tighten, the consumer buys less. This means manufacturers receive fewer orders from retailers. Layoffs begin, and consumer and business buying continues to decline. Lending: In 2009, considered the depth of the credit-crisis recession, small business lending by U.S. banks declined 22% from pre-crisis levels, according to a study by the Massachusetts Bankers Association. Reasons for this drop in lending include a remarkable decline in business transactions and recession-induced damage to the financial condition of most small businesses, making them unqualified for bank loans. Unemployment: There is a long-standing assumption that periods of high unemployment give rise to increased entrepreneurship, as people desperate to earn money turn to starting small businesses. A National League of Cities study for the Federal Reserve Bank of Atlanta found that in 2008, selfemployed businesses comprised 36% of all U.S. businesses and 7% of jobs nationally, although self-employment is not counted in the unemployment statistics. A study for the Kauffman Foundation found that the United States in 2009 saw the highest number of new entrepreneurs in 14 years and marked the second straight year of increase. The difficulty for this sector of small business is lack of resources. An unemployed worker, conducting a business

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out of his home, can't access bank loans to fund the expansion of his business. Midsize Companies: Midsize companies, in the $750,000 to $50 million revenue sector, find that a recession limits their access to adequate funding from banks and venture capital, according to a study for the Federal Reserve Bank of Atlanta. These companies tend to be small manufacturers; retail establishments, including automobile dealerships; restaurants; and construction industry companies. They tend to get crowded out of the tight credit markets by larger companies, because banks consider large companies less risky, and many of the large companies can access the public markets for capital in the form of stock issuance, or loans in the form of bond issuance.

2.1.18 Effect of economic depression on the growth of small-scale industries in Nigeria (Online Project Report) The Small Scale Industry is acknowledged to have huge potential for employment generation and wealth creation in any economy. Yet in Nigeria, the sector has stagnate and remains relatively small in terms of its contribution to GDP or to gainful employment. Activity mix in the sector is also quite limited conquered by import dependent processes and factors. Although there is no reliable data, inaccurate indicators show that capacity utilization in the sector has improved perceptibly in the period since 1999, but the sector is still faced with a number of constraints (such as low patronage, low technical know-how, limited market, poor infrastructure, lack of incentives etc.) with lack of credit availability as the principal constraint. It is in this light that the main thrust of this research work will focus on the effect of structural rigidity which often characterizes economic depression on the growth of small industries in Nigeria.

2.1.19 Business strategies and performance during difficult economic conditions

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John Kitching, Robert Blackburn & David Smallbone, Small Business Research Centre, Kingston University Sarah Dixon, School of Management, Bath University, June 2009, URN 09/103 Bearing in mind the gaps and weaknesses in the literature, we summaries the key findings of the review and highlight key issues for policy makers to consider. First, the current recession, combined with the global financial crisis, debatably constitute a structural break, one likely to produce a new economic order whose defined parameters are only vaguely understood today. The specificities of the current crisis mean that any simple extrapolation of previous business experience of, or responses to, recession conditions is ruled out. In todays increasingly global economic environment, UK businesses might have to adapt to recession in quite different ways in comparison with previous downturns. Such a break is likely to require Continuing business as usual organizations to reconfigure their business models as well as their organisational structures and operations. appears not to be an option for most, if not all, organisations. Second, firms experiences of, and responses to, recession are diverse. Businesses take on a variety of strategic approaches to dealing with recession conditions. Some firms focus on retrenchment activities, entailing cost/asset-reduction, in order to preserve resources; other businesses use recession to exploit opportunities to invest, innovate and diversify; yet others, perhaps most, adopt an ambidextrous approach combining judicious cost/asset-reduction activity with equally carefully chosen investment projects to expand sales, profits and/or market share. Although widely regarded as giving business owners/managers good reasons to engage in retrenchment, recession also creates opportunities for innovation by incumbent firms, to stay in the game, and by new entrants who stain an opportunity. Businesses, it might be contended, are more likely to succeed if they combine strategies of cost efficiency and retrenchment (exploitation) with strategies of innovation and positioning for future growth (exploration). There may be a role for Government to promote a spirit of innovation and entrepreneurship, as the

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think-tank suggested, by legitimizing and promoting such activities. might include facilitating cross-sector dialogue.

This

Third, business performance is highly variable under recession conditions. Some firms prosper while others struggle and yet others are forced into closure. Within- and post-recession performance does not correlate with prerecession performance in an obvious way. Recession is likely to generate considerable volatility in business performance. leapfrog competitors. Erstwhile high-performers might struggle in recession conditions, while previous poor-performers may Market selection pressures appear to operate quite differently in times of recession in comparison with more buoyant periods. This market volatility increases pressures on businesses to adapt, as even previously secure and stable enterprises may find the ground shifting beneath their feet. Fourth, business performance under recession conditions does not map on to organisational characteristics such as business size or sector in an undifferentiated way. performers. Small and large firms are among the high and low Even in industries harshly impacted by recession, some

businesses perform better than others. Outcomes cannot simply be read off from organisational characteristics; performance, including survival, is contingent, to some degree, on how businesses act. Fifth, there is no single best practice strategy that guarantees business survival, or success, under recession conditions. The available evidence offers no consensus as to whether retrenchment, investment or ambidextrous strategies are more likely to bring about survival or success. The strategy literature does, however, point to the more likely success for organisations that adopt ambidextrous strategies. Improved levels of performance are no doubt contingent on a wide range of organisational, market and wider institutional characteristics, including government policy. Advocating strategies whose purpose is to exploit new market opportunities without analysis of the conditions that support them presupposes that such strategies are equally available to all businesses. Yet resource constraints, market and other characteristics are likely to prohibit their adoption by some firms. It is vitally important, therefore, for businesses to develop the capability to undertake strategic analysis in order to assess the key influences on 33

performance.

Business

owners/managers

need

to

increase

their

understanding of the internal and external conditions that enable or constrain adaptation to the crisis, in order to be able to adapt successfully. There may be a further role for government, therefore, in facilitating training to undertake strategic analysis.

2.1.20 Competitiveness of Small-Scale Industries of India By: Vidya Suresh P shashidhar Conference on Global Competition & Competitiveness of Indian Corporate Small industry sector has performed extraordinarily well and enabled our country to achieve a wide measure of industrial growth and diversification. By its less capital intensive and high labor inclusion nature, SSI sector has made large contributions to employment generation and also to rural industrialization. Under the changing economic scenario, SSI has both the challenges and opportunities before them. The business can compete on cost, quality and products at domestic and international level only if ideal investment in technology production process, R&D and marketing are made. Infrastructure bottlenecks are not completely solved. The promotional activities for SSI in India need to focus on improved credit flows, human resource development, appropriate technology and funds for modernization. So, this is the appropriate time to set up projects in the small-scale sector. It may be said that the position is positive, in fact promising, given some protection. This expectation is based on an essential feature of the Indian industry and the demand structures. The variety in the demand structures will ensure long-term co-existence of many layers of demand for consumer products / technologies / processes. There will be successful and well grounded markets for the same product/process, differentiated by quality, value added and sophistication. This characteristic of the Indian economy will allow complementary existence for various diverse types of units.

2.1.21 Have Small Businesses Beaten the Recession? BY: John Kitching Reader, Kingston University

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The paper analyses the impact of the current recession on a diverse sample of UK small businesses and their responses to it. All businesses are tenants of a major industrial and commercial property provider in London. Several major findings are presented. First, small firms experiences of recession are diverse: some firms suffer declining sales, while others achieve higher turnover and profits. Second, business responses under recession conditions are highly variable. Third, small business adaptation and performance during recession are contingent upon organizational factors such as resources available, and external influences, including product, labour and capital market conditions. Fourth, there is, therefore, no single best practice strategy that guarantees business survival, or success, during recession.

2.1.22 The Impact of the Global Crisis on SME and Entrepreneurship Financing and Policy Responses Contribution to the OECD Strategic Response to the Financial and Economic Crisis Centre for Entrepreneurship, SMEs and Local Development ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT It was recognized that in the current context of the most severe financial and economic crisis in decades, various factors such as increased risk hatred, decreased liquidity, depressing prospects for economic growth, etc. are having or are expected to have a highly negative effect on SMEs and entrepreneurs access to short and long term financing. Small firms are particularly weak because (a) it is more difficult for them to scale back since they are already small, (b) they are individually less diversified in their activities, (c) they have weaker financial structures or lower capitalization, (d) they have lower or no credit ratings, (e) they are heavily dependent on credit, and (f) they have fewer options for finance, especially in financial markets. With this in view, the measures that most governments are taking or planning to take to work against the effects of the crisis and stimulate their economies should include easing SME and entrepreneurship access to finance.

2.1.23 Why Small Businesses Were Hit Harder by the Recent Recession? Ayegl ahin, Sagiri Kitao, Anna Cororaton, and Sergiu Laiu 35

Although both large and small businesses felt the tingle of job losses during the 2007-09 downturn, small firms experienced unequal declines. A study of the recessions employment effect on small firms suggests that poor sales and economic uncertainty were the main reasons for their weak performance and slow recoveryproblems that affected large firms too, but to a lesser degree. Although a tighten credit supply constrained some small firms, weak consumer demand for the firms products and services was a more pressing factor, reducing revenues and dampening new investment spending. 2.1.24 Impact of global recession on Small Scale Industries in India 6th January 2012. Organized by: Departments of Commerce, Management and Economics The Small Scale Industrial (SSI) sector has acquired a well-known place in the socio-economic development of our country; Small Scale Industries though small in size, play a significant role in the Indian Economy. It is approved by the Government that, alongside agriculture, small scale industry is an important segment of Indian Economy. Small Scale Industries contribute considerably to employment generation, dispersal of Industrial activity to rural and backward areas, ushering in all round economic growth by value addition, ensuring the mobilization of local capital and developing entrepreneurial skills. They contribute 8% of the countrys GDP, employ about 60 million people through 2.6 crore enterprises and also contribute about 40% to the countrys export. Given the economic distress worldwide, the micro, small scale industries have been hit hard. Large number of workers have been laid off because of low demand, piled up inventory and squeezed credit market. A sector which provides maximum employment cannot be left to fend for itself without a major transformation led by the entrepreneurs, policy makers and also support organizations

2.1.25 A study of the small scale industries in economic development in Kolhapur district Asst. Prof. Shrimant M. Birajdar Sinhgad College of Arts & Commerce Narhe, Pune.41 ISSN No-2031-5063, Vol.1,Issue.V/Nov 2011pp.1-4 36

Small scale industries are an integral part of the present industrial structure. They present themselves as an essential and counting element of the world economy. Many times it is said that small scale industries are foreseeable back ward and lagging part of the economy, a relic of the past. But economic analysis and practical experience in many countries show that the smallscale industries have displayed remarkable persistence and have contributed significantly to the economy development of the country.

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2.2 BACKGROUND OF THE STUDY

From various studies and analysis of articles and journals we have analyzed that the performance of the small scale industries for the development of the economy is vital and it plays a vital role in the growth of GDP. And recession is such a complex term which affects each Evert aspect of the economy. Thus recession creates a negative impact on the each and every sector of the economy. So we have taken such a topic in order to analyze the performance of the small scale industries in the recession period. SMEs and entrepreneurs play an important role in all economies and are the key generators of employment and income, and drivers of innovation and growth. In the ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT area, SMEs employ more than half of the labour force in the private sector. In the European Union, they account for over 99 % of all enterprises. Furthermore, 91 % of these enterprises are micro-firms with less than 10 workers. Given their importance in all economies, they are essential for the economic recovery. Even in normal economic conditions governments have recognized that, to survive and grow, SMEs need specific policies and programmes hence the comprehensive range of SME measures currently in place across the OECD members. However, at the present time, SMEs have been especially hard hit by the global crisis. These firms are more vulnerable now for many reasons: not only has the traditional challenge of accessing finance continued to apply, but new, particularly supply-side, difficulties are currently apparent. It is important to stress that SMEs are generally more vulnerable in times of crisis for many reasons among which are: It is more difficult for them to downsize as they are already small; They are individually less diversified in their economic activities; They have a weaker financial structure (i.e. lower capitalization); They have a lower or no credit rating;

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 They are heavily dependent on credit and They have fewer financing options.

SMEs in global value chains are even more vulnerable as they often bear the brunt of the difficulties of the large firms. Impact of the global crisis on SME and entrepreneurship financing Although there is no internationally agreed definition of small and medium sized enterprises (SMEs), the evidence suggests that these firms are being affected by the financial and economic crisis across economies. There is evidence that SMEs in most countries are confronted with a clear downturn in demand for goods and services if not a demand slump in the fourth quarter of 2008. For SMEs there are two related stress factors: a) increased payment delays on receivables which added - together with an increase in inventoriesresult in an endemic shortage of working capital and a decrease in liquidity and b) an increase in reported defaults, insolvencies and bankruptcies. Extended payment delays on receivables, especially in times of reduced sales, are leading rapidly to a depletion of working capital in many countries. Increased insolvency rates appear to confirm SMEs increased inability to obtain short-term financing. The stagnation in lending is true even of banks in countries where governments have deliberately strengthened banks balance sheets to allow them to grant additional credit to SMEs and/or where credit guarantee schemes exist. Confronted with worsening access to credit, SMEs are exploring alternative sources of finance such as the mobilisation of reserves, self-financing and factoring. Global venture capital fundraising slowed down between 2007 and 2008. 39

2.3 PROBLEM STATEMENT OF THE STUDY

A research problem in general, refers to some difficult which a researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for the same. There are two types of research problems, that is, those which relate to states of nature and those which relate to relationships between variables. Usually we say that a research problem does exist if the following conditions are met with: (1) There must be an individual (or a group or an organization), let us call it I, to whom the problem can be attributed. The individual or the organization, as the case may be, occupies an environment, say N, which is defined by the values of the uncontrolled variables, Yj. (2) There must be at least two courses of action, say C1 and C2, to be pursued. (3) There must be at least one outcome that the researcher wants, i.e., an objective. (4) The courses of action available must provide some chance of obtaining the objective, but they cannot provide the same chance, otherwise the choice would not matter.

Our research problem is: To study the impact of recession on Small Scale industries.

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2.4 OBJECTIVES OF THE STUDY

The main aim of this study is to examine the operations of small scale enterprises in a depressed economic, thereby taking into consideration various conditions such as economic, political, social, psychological e.t.c under which small-scale enterprises operate. In view of the above, the researcher intends to find out the following: To identify the major constraints confronting the operations of small-scale enterprises during economic recession; To examine the role played by government towards promotion and development of small-scale enterprises. To identify the economic potential of small-scale enterprises. To find suitable strategies that would enhance the growth and survival of small-scale enterprises during economic recession. To understand and deliberate on the impact of world recession on Indian economy. To discuss challenges faced by Small Scale Industries during the period of recession To deliberate and suggest the measures to meet the above challenges successfully. To discuss the role of Government in enabling the SSIs to face the challenges and sustain the industrial growth.

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2.5 HYPOTHESIS
Hypothesis is usually considered as the principal instrument in research. Its main function is to suggest new experiments and observations. In fact, many experiments are carried out with the deliberate object of testing hypothesis. Thus a hypothesis is defined as a proportion or a set of proposition set forth as an explanation for the occurrence of some specified group of phenomena either asserted merely as a provisional conjecture to guide some investigation or accepted as highly probable in the light of established facts. Hypothesis is tentative assumption made in order to draw out and test its logical or empirical consequences. In the context of statistical analysis, we often talk about null hypothesis and alternative hypothesis. If we are to compare method A with method B about its superiority and if we proceed on the assumption is termed as the null hypothesis. As against this, we may think that the method A is superior or the method B is inferior, we are then stating what is termed as alternative hypothesis. The null hypothesis is symbolized as H0 and the alternative hypothesis Ha. Thus our hypotheses are: H0: That there is no relationship between recession and the small scale enterprises in India. Ha: That there is relationship between recession and the small scale enterprises in India.

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2.6 SCOPE OF THE STUDY

This study shall focus on the operations of small scale enterprises in India. The economic potential of small scale enterprises shall also be explored as well as their benefits examined. The scope shall cover all the small scale enterprises that are operating in India. However, the survey shall be conducted in a selected area in Amreli district mainly and few of Surat and Ahmedabad. The project was conducted in only on 19 companies so finding of the project is limited upto this regions only. And the sample size used for this study is only 19 firms.

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2.7 UTILITY OF THE STUDY

It will help to identify the economic potential of small-scale enterprises. It will help to find suitable strategies that would enhance the growth and survival of small-scale enterprises during economic recession. To understand and deliberate on the impact of world recession on Indian economy. To know the challenges faced by Small Scale Industries during the period of recession. It can be used as a secondary data for further research

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3.1 RESEARCH DESIGN

Decision regarding what, where, when, how much, by what means concerning an inquiry or a research study or a research study constitute a research design. A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research design is the preparation of design of research project. In fact, research design is the conceptual structure within which research is conducted. It is a blue print for collection, measurement and analysis of data. Thus, design includes the outline of what the researcher will do from writing the hypothesis and its operational implication to final analysis of data. Research design Type of study Exploratoryof Formulative Overall design (1) Sampling design Flexible design Non-probability Design (2) Statistical design No pre-planned design for analysis (3) Observational design Unstructured instruments Structured or well out instruments collection of data (4) Operational design No fixed decisions about the operational procedures Advanced decisions about operational procedures. thought for for collection of data Probability sampling Design Rigid design sampling Probability sampling design Descriptive/ Diagnostic

[Table-3.1] For conducting this research Descriptive Research Design is used by us.

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3.2 SOURCES OF DATA

So far our research is concern that we used both the data source for our study on small scale industry. Primary sources includes Personal interview Questionnaire

Secondary Sources includes Brochures Reports and Publication Books Historical documents Online articles and journals

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3.3 DATA COLLECTION METHOD

We know that there are mainly two sources of data viz. 1) Primary data 2) Secondary data Primary data are those which are collected afresh and for the first time, and thus happen to be original in character. We collect primary data during the course of doing experimental research but in case we do research of the descriptive type and perform surveys, whether sample surveys or census surveys, then we can obtain primary data either through observations or through direct communication with respondents in one form or another or through personal interviews. There are various types of collecting primary data, particularly in surveys and descriptive researches. Like: 1. Observation method 2. Interview method 3. Through questionnaire 4. Through schedules 5. Others Secondary data, on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical process. Secondary data may either be published data or unpublished data. Usually published data are available in : 1. Various publications of the central, state are local governments; 2. Various publications of foreign governments oe of international bodies and their subsidiary organizations; 3. Technical and trade journals; 4. Books, magazines and newspaper; 5. Reports and publications of various associations connected with business and industry, banks, stock exchanges, etc. 6. Reports prepared by research scholors, universities, economists, etc, in different fields;

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7. Public records and statistics, historical documents, and other sources of published information The sources of unpublished data are many; they may be found in dairies, letters, unpublished biographies and also may be available with scholars and research workers, trade associations, labour bureaus and other public/ private individuals and organizations. The researcher would have to decide which sort of data he would be using for his study and accordingly he will have to select one or the other method of data collection. For our research study we have used both the method for data collection i.e. primary as well as secondary data collection method.

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3.4 POPULATION
From a statistical point of view, the term Population/ Universe refers to the total of the items or units in any field of inquiry, whereas the term population refers to the total of items about which information is desired. The attributes that are the object of study are referred to as characteristics and the units possessing them are called as elementary units. The aggregate of such units is generally described as population. Thus, all units in any field of inquiry constitute universe and all elementary units constitute population. Quit often, we do not find any differences between population and universe, and as such the two terms are taken as interchangeable. However, a researcher must necessarily define these terms precisely. The population or universe can be finite or infinite. The population is said to be finite if it consists of a fixed number of elements o that it is possible to enumerate it in its totality. An in finite population is that population in which it is theoretically impossible to observe all the elements. Thus, in an infinite population the number of items is infinite i.e. we cannot have any idea about the total number of items. The population size of our research is 20 small scale companies.

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3.5 SAMPLING METHOD

A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the sample. Sample design may as well lay down the number of items to be included in the sample i.e., the size of the sample. Sample design is determined before data are collected. There are many sample designs from which a researcher can choose. There are different types of sample designs based on two factors i.e. the representation basis and the element selection technique. On the representation basis, the sample may be probability sampling or it may be non probability sampling. Probability sampling is based on the concept of random selection, whereas non-probability sampling is non-random sampling. On element basis, the sample may be either unrestricted or restricted, when each sample element is drawn individually from the population at large, then the sample so drawn is known as unrestricted sample, whereas all other forms of sampling are covered under the term restricted sampling. The sample design used for conducting this research is convenient sampling

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3.6 SAMPLING FRAME

The elementary units or the group or cluster of such units form the basis of sampling process in which they are called as sampling units. A list containing all such sampling units is known as sampling frame. It is also known as source of list from which sample is to be drawn. It contains the names of all items of a universe (in case of finite universe only). If source list is not available, researcher has to present it. Such a list should be comprehensive, correct, reliable and appropriate. It is extremely important for the sample frame to be as representative of the population as possible. If the population is finite and the time frame is in the present or past, then it is possible for the frame to be identical with the population. In most cases they are not identical because it is often impossible to draw a sample directly from population . as such this frame is either constructed by a researcher for the purpose of his study or may consist of some existing list of the population. For instance, one can use telephone directory as a frame for conducting opinion survey in a city. This refers to the number of items selected from the universe to constitute a sample. It was major problem before us. Sample size selected is 19 samples. These sample sizes fulfill the requirement of efficiency, representative, reliability and flexibility.

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3.7 DATA COLLECTION INSTRUMENT

When a job like research is conducted, then there has to be various tools & techniques that are used for its successful completion. The major technique used in our survey is the questionnaire method, which is also a major tool for collecting primary information in making research. There are various advantages of this method for which we selected from various methods. Thus the reason why here this method is selected is as follows: Questionnaire method: Questionnaire method is a structured process of following prescribed sequences of specific questions and knowing the response from the respondents. Here a formal list of questions is set up and then the selected group of persons is given this formulated questionnaire to know their responses. Answers are mostly limited to the list of alternatives which are stated & implied. The data so obtained are easier to tabulate & interpret & this method also produces more reliable result.

Graphical Method:

Graphical method is easiest method to represent the any numerical information. It is the oldest method for represent the data. Anyone can make the judgment from the graph and can conclude the information. There are many types of graphs such as, column, bar, cylinder, pyramid, pie etc For the purpose of our research and to make us analysis easy we use Pie chart and column chart for the Graphical presentation of our research analysis.

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1. Impact of recession on your business. Particulars Yes No [Table-4.1] Total 19 1 20

Interpretation: The main question of our analysis is to identify that whether the small scale industry is been affected or not? Then from the analysis we have come to know that majority i.e. 95% of the companies are been affected due to the recession.

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2. Any change in sales and marketing. Particulars Yes No [Table-4.2] Total 18 1 19

If yes then: Particulars Increased sales effort Reduced selling price Increased advertising & promotional experience Reduced advertising & promotional experience Other [Table-4.3] Total 9 9 0 0 0 18

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Interpretation: 18 companies owner said that they had the impact on their sales and marketing and 1 said that there is no change in sales and marketing of their firms. And among 18, 9 have said that they changed they have increased their sales efforts where as 9 said that they have reduced selling price.

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3. Any changes in market. Particulars Yes No [Table-4.4] Total 18 1 19

If yes then: Particulars Selling to new types of customer Selling more to existing customers Selling in new geographic markets Other [Table-4.5] Total 6 8 4 0 18

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Interpretation: Among the 19 respondents, 18 have said that the recession has a impact on their market and it changes due to depressed economy. And among those 18, 33% said that they are selling to new types of customer, 45% said that they are selling more to existing customers and 22% are selling in new geographic markets.

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4. Any change in employment structure Particulars Yes No [Table-4.6] Total 11 8 19

If Yes then: Particulars Reduced No. of Employees Introduced new working practices Increase use of external labor Increase use of training Other [Table-4.7] Total 7 3 1 0 0 11

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Interpretation: Again the important factor that affects the performance of an organization is the employment structure and from the analysis we have analyzed that more than 50% have changed the employment structure i.e. 11 companies have changed the employment structure and among them 64% respondents have reduced No. of employees, 27% have introduced new working practices and 9% have increased use of external labour.

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5. Impact on products or services offered.. Particulars Introduced new or improved product of services Reduced range of products/services offered Increased use of intellectual property Other [Table-4.8] Total 9 7 3 0 19

Interpretation: From the survey, another important factor that is products and services offered by the firms, then we have come to know that all the 19 firms had a impact of recession on the small scale firms and 47% have introduced new or improved product of services, 37% reduced their range of products/services offered and 16% increased the use of intellectual property in order to prevent themselves from the high completion.

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6. Affected the financial structure of your organization.. Particulars Shortened payment periods from customers/creditors Extended payment period to suppliers Reduced investment expenditure Increased debt financing Other [Table-4.9] Total 5 9 3 2 0 19

Interpretation: Now coming to the financial structure of an organization then due to recession, 26% firms have shortened payment periods from customers/creditors, 47% firms have extended payment period to suppliers, 16% reduced investment expenditure and 11% have increased debt financing.

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7. The behavior of owner/manager at the declining period.. Particulars Personally worked longer hours Cancelled personal holidays performance Other changes in owner-manager behavior [Table-4.10] 7 19 Total 7 4

Sold personal assets to compensate for poor business 1

Interpretation: During the recession the behavior of owner/manager changes where 37% firms owners psersonally worked for longer hours, 21% have cancelled personal holidays, 37% says that there are other changes in owner/manager behavior and 5% sold there personal assets to compensate for poor business performance.

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8. Any change in production or business processes.. Particulars Yes No [Table-4.11] Total 6 13 19

If yes then: Particulars Used suppliers Invested in new equipment Others [Table-4.12] Total 3 3 0 6

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Interpretation: Due to recession only 6 firms have changed the production or business services and among them 50% have gone for suppliers option and 50% have invested in new equipment.

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9. The organizations demand and supply affected. Particulars Not affected Average Highly [Table-4.13] Total 3 14 2 19

Interpretation: Organizations demand and supply is also affected due to recession where 16% have said that they have not affected, 74% firms said that there was average impact of recession on their demand and supply and 10% firms demand and supply is been highly affected due to recession.

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10. The effect on the salary structure . Particulars Decreased wage/salary Increased bonus for extra work No change Others [Table-4.14] Total 6 4 9 0 19

Interpretation: In the recession period firms are facing the problems of finance and thus it affects on the salary structure directly where 32% of the firms have decreased wages/salary, 21% increased bonus for extra work and 47% have not changed their salary structure.

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4.2 HYPOTHESIS TESTING

Goodness of fit test

Test is applied from the analysis of: Whether the recession has the impact on the small scale industries? Respondents reply Yes No Total 19 1 20 [Table-4.15] H0: That there is no relationship between recession and the small scale enterprises in India. Ha: That there is relationship between recession and the small scale enterprises in India. 10 10 9 -9 8.1 8.1 16.2

fo

fe

fo-fe

(fo-fe)2/fe

2 Calculated= 16.2
2 tabulated at 0.05 level of significance, Degree of Freedom (r-1)(c-1): X2 tab= 3.8415 Thus, X2 Cal> X2 Tab i.e. 16.2 > 3.8415 Therefore test is significant. H0 is rejected and Ha is accepted. That there is relationship between recession and the small scale enterprises in India.

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5.1 RESULTS AND FINDINGS

We analyzed that there are various constraints confronting the operations of small-scale enterprises during economic recession; . . We analyzed that there are various challenges faced by Small Scale Industries during the period of recession i.e. problem of credit availability, have to find new investment, unemployment and so on.

From the analysis we have come to know that majority i.e. 95% of the companies are been affected due to the recession.

18 companies owner said that they had the impact on their sales and marketing and 1 said that there is no change in sales and marketing of their firms. And among 18, 9 have said that they changed they have increased their sales efforts where as 9 said that they have reduced selling price.

Among the 19 respondents, 18 have said that the recession has a impact on their market and it changes due to depressed economy. And among those 18, 33% said that they are selling to new types of customer, 45% said that they are selling more to existing customers and 22% are selling in new geographic markets.

Again the important factor that affects the performance of an organization is the employment structure and from the analysis we have analyzed that more than 50% have changed the employment structure i.e. 11 companies have changed the employment structure and among them 64% respondents have reduced No. of employees, 27% have introduced new working practices and 9% have increased use of external labour. 68

 From the survey, another important factor that is products and services offered by the firms, then we have come to know that all the 19 firms had a impact of recession on the small scale firms and 47% have introduced new or improved product of services, 37% reduced their range of products/services offered and 16% increased the use of intellectual property in order to prevent themselves from the high completion.

Now coming to the financial structure of an organization then due to recession, 26% firms have shortened payment periods from customers/creditors, 47% firms have extended payment period to suppliers, 16% reduced investment expenditure and 11% have increased debt financing.

During the recession the behavior of owner/manager changes where 37% firms owners personally worked for longer hours, 21% have cancelled personal holidays, 37% says that there are other changes in owner/manager behavior and 5% sold there personal assets to compensate for poor business performance.

Due to recession only 6 firms have changed the production or business services and among them 50% have gone for suppliers option and 50% have invested in new equipment.

Organizations demand and supply is also affected due to recession where 16% have said that they have not affected, 74% firms said that there was average impact of recession on their demand and supply and 10% firms demand and supply is been highly affected due to recession.

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 In the recession period firms are facing the problems of finance and thus it affects on the salary structure directly where 32% of the firms have decreased wages/salary, 21% increased bonus for extra work and 47% have not changed their salary structure.

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5.2 LIMITATIONS OF THE STUDY

As we cannot totally relay on the answers given by the customer because sometimes they do not have confidence on the answer provided. Thus, the study has following limitations.

As we filled the questionnaire, it is also a limitation because the sample size used is only 19. Geographical Location The project was conducted in only Amreli district, few of Surat and Ahmedabad so finding of the project are valid only for this region only Sampling Techniques Due to convenience we used non probability convenient sampling technique.

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6.1 SUGGESTIONS
The financial institutions need to be proactive for providing hassle free credit. The State as well as Central Government should provide necessary facilities to face cut throat competition. To provide continuous power supply to units for smooth flow of production. To provide proper training inputs from professional institute. To prevention of industrial sickness and revival of viable sick units. To provide infrastructure facilities to units. There is a need to promote professionalism in units. It is need to adopt total quality management in units. The SSI units should adopt ISO standards. The foreign direct investments should be allowed. The industrial policy should in favour of SSI unit. The political intervention in the process needs to be unveiled completely. The focus should be on providing backward and forward linkages. The strengthening the SSI units through promotion of quality competitiveness and research and development. The streamlining procedures, bottlenecking and creation of hassle free industry friendly environment. The commercial exploitation of local resources and economic potential. The innovation and learning method and important breakthroughs can take place in the SSI sector for its survival and growth. The SSI units to look upon the employees as assets and take cognition of the need to improve their skill.

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6.2 CONCLUSION
The recession has had a deeper employment impact on small businesses than on large ones. Small firms attribute the relatively sharp decline in jobs mostly to poor sales and economic uncertaintyproblems that also affected large firms, but to a lesser degree. Tightened access to credit and adverse financial conditions also constrained small firms but a more important factor was the decline in new investment and associated financing in the face of weak consumer demand for the firms products and services. The recovery of small businesses is a significant component of job creation and the overall economic recovery. Our findings do not imply that credit availability is unimportant for small and young firms. Rather, as sales conditions improve and credit demand picks up, access to credit by small firms will help ensure that high-potential businesses and entrepreneurs can succeed. To conclude, the current recession represents both a threat and an opportunity for UK businesses. Although limited resources render small firms vulnerable to changes in the external environment, through their own resource acquisition and mobilisation activities they are able to exert an important influence over their own performance and survival. Vulnerability is not, therefore, a given characteristic of small enterprises. Small business owners are able, through their own activities, to demonstrate resilience, although the sources of this resilience may influence its sustainability and influence on longer-term business performance.

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9. Hemanta Saikia , Measuring Financial Performance of Small Scale Industries: Some Evidences from India, Journal of Applied Economics and Business Research JAEBR, 2(1): 46-54 (2012) 10. Hamid Shomali, Gwendolyn R. Giblin , The Great Depression and the 2007-2009 Recession: The First Two Years Compared, International Research Journal of Finance and Economics, ISSN 1450-2887 Issue 59 (2010), EuroJournals Publishing, Inc. 2010.

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8 QUESTIONNAIRE
TO STUDY THE IMPACT OF RECENT RECESSION ON SMALL SCALE INDUSTRIES. We, Hemal V. Laheri and Priyanka R. Dalsaniya doing this Research on performance of small scale industries during recession period. Kindly give some of your valuable time to answer the following questions aimed at measuring the functions in your organization. You are requested to provide frank, honest and unbiased answer. The data from the questionnaire will solely be used for educational purpose and will be kept confidential. Thank You for your generous help Kindly choose at least one of the options given below for each question. You can also give your remarks on available space. I would highly appreciate your cooperation in this regard.

(1) Is there any impact of recession on your business? Yes No If no, then go to personal details.

(2) Is there any change in sales and marketing? Yes No If yes then how? Increased sales effort Reduced selling price Increased advertising & promotional experience Reduced advertising & promotional experience

(3) Do your businesses have faced any changes in market? Yes No If yes then how? Selling to new types of customer

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 Selling more to existing customers Selling in new geographic markets Others

(4) Is there any change in employment structure? Yes No If yes then how? Reduced number of employee Introduced new working practices Increase use of external labor Increase use of training Others

(5) What is the impact on products or services offered? Introduced new or improved products of services Reduced range of products / services offered Increased use of intellectual property (Eg. Patent, registered design, trademark, copyrights) others

(6) How does the recession have affected the financial structure of your Organization? Shortened payment periods from customers / creditors Extended payment period to suppliers Reduced investment expenditure Increased debt financing Others

(7) What is the behavior of owner/manager at the declining period? Personally worked longer hours Cancelled personally holidays Sold personal assets to compensate for poor business performance Other changes in owner-manager behavior

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(8) Is there any change in production or business processes? Yes No If yes then how? Used suppliers Invested in new equipment Others

(9) In which way the organizations demand and supply affected? Not affected Average Highly

(10) What is the effect on the salary structure at that time? Decreased wage/salary Increased bonus for extra work No changed

PERSONAL DETAIL: NAME: GENDER: ADDRESS: Male Female

CONTACT NO.: (M)___________(O)__________(R)_______________ *******Thank You*******

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