New Venture

A new venture in any organization still in its formative stages, Basically new ventures are founded by individuals intending to change the environment of a given industry by the introduction of either a new product or a new production process.

Approaches to New Ventures:

Different approaches to new ventures are as follows:

1. Starting a New Business: A start-up organization is one, which is created by the

entrepreneur himself. "A start-up gives the entrepreneur greater freedom in selecting goods or services, location, facilities, equipment, suppliers and professional services. Similarly, a start-up is not bound by the established procedures or legal commitments that an existing business often carries and to start-up avoids the possibility of inheriting problem customers, problem suppliers or problem employees".

2. Purchasing an Established Business: Sometimes, potential entrepreneurs purchase

established business to avoid problems involved in a start-up organization. Potential entrepreneurs also interested to purchase existing firm because there are certain benefits inherent in existing businesses. "The existing firm has already invested the time and effort required to choose, a good or service to product. select a location, establish a customer base, hire employees, select suppliers, design the organization structure and create operating procedures.

3.

Purchase of Franchise: Franchising is a marketing system of which the owner of a service,

trademarked product or business format grants exclusive rights to an individual for the local distribution and or sale of the service or product and in turn receives payment of a franchise fee, royalties and the promise of conformance to quality standards.

Starting of a New Venture:

Identification of business opportunities provides a framework for entrepreneurial activities A framework is generally governed by different stages.

1. Uniqueness
A new venture's range of uniqueness can be considerable, extending from fairly routine to highly non-routine. What separates the routine from the non-routine ventures the amount of innovation required during pre-start-up.

2.

Investment :
The capital investment required to start a new venture can vary considerably. In some industries less than Rs. 1,00,000 may be required, whereas in other industries crores of rupees are necessary. Moreover, in some industries only large-scale startups are feasible. For example, in the publishing industry one can start a small venture that can remain small or grow into a larger venture. By contrast, an entrepreneur attempting to break into the airline industry will need a considerable up-front investment. Another finance-related critical issue is the extent and timing of funds needed to move through

the venture process. To determine the amount of needed investment, entrepreneurs must answer questions such as these : (a) Will industry growth be sufficient to maintain break even sales to cover a high fixed-cost structure during the start-up period? 3.

Sales Growth
The growth of sales through the start-up phase is another critical factor. Key questions are as follows : (a) What is the growth pattern anticipated for new venture sales and profits? (b) Are sales and profits expected to grow slowly or level off shortly after start-up? In answering these questions, it is important to remember that most ventures fit into one of the three following classifications.

Lifestyle Ventures appear to have independence, autonomy, and control as their primary
driving forces. Neither large sales nor profits are deemed important beyond providing a sufficient and comfortable living for the entrepreneur. In Small Profitable Ventures, financial consideration plays a major role. Additionally, autonomy and control are important in the sense that the entrepreneur does not want venture sales (and employment) to become so large that he or she must relinquish equity or an ownership position and thus give up control over cash flow and profits, which, it is hoped, will be substantial. In High-growth Ventures, significant sales and profits growth are expected to the extent that it may be possible to attract venturer capital money and funds raised through public or private placements.

4. Product Availability
Essential to the success of any venture is product availability, the availability of a salable good or service at the time of venture opens its door. Some ventures have problems in this regard because the product or service is still in development and needs further modification or testing. Other ventures find that because they bring their product to market too soon, it must be recalled for further work.

5. CustomerAvailability
If the product is available for the venture is started, the likelihood of venture success is considerably better than otherwise. Similarly, venture risk is affected by customer availability for start-up. At one end of the risk continuum is the situation where customers are willing to pay cash for products or services before delivery. At the other end of the continuum is the enterprise that gets started without knowing exactly who will buy product.

Steps in Setting up a Small-Scale Industry

The main steps involved in the establishment of a small-scale industry are as follows: 1. Preparation of project a. Project identification b. Product or service selection

c. d. I. II. III. IV. V.

Location selection Project formulation Feasibility analysis Techno-economic analysis Project Design and Net-work analysis Input analysis Financial analysis

VI. Social cost benefit analysis VII. Project appraisal VIII. Pre-investment analysis. e. Business Plan preparation f. Selection of project

g. Project profile. 2. Decide on from of ownership. 3. Complete the legal requirements a) No objection certificate (NOC) b) Obtain SSI registration c) Obtain clearances from departments as applicable 4. 5. 6. 7. 8. Arrange for and and building Arrange for plant and machinery Arrange for infrastructure Prepare Project Report Apply and Obtain Finance (a) Proceed to implement (b) Obtain final clearance.

Preparation of Project
Meaning and Definition of Project:
A project is an speculative imagination or idea or plan that intended to be carried out. It involves allocation and consumption of resources in the expectation of a stream of benefits extending far into the future. The dictionary meaning of a project is that - it is a scheme, a design, a proposal of something intended or devised to be achieved in viable frame work. In other words, a project is an capital investment carried out as per plans to achieve a definite objective with a defined time frame. A project deals with three dimensions - Innovation, Vision and Risk. According to Newman, Summer and Warren - "A project typically has a distinct mission that it/s designed to achieve and a clear termination point, the achievement of mission". According to Gillinger - "A project is a whole complex of activities involved in using resources to gain

benefits".

Characteristics of Project :
The following are the important characteristics of project: (1) A project has a fixed set of objectives. Once the objectives have been achieved, the project ceases to exist. (2) A project cannot continue endlessly. It has come to an end. Thus, project has a definite life span. (3) A project is one entity and is normally entrusted to one responsibility center while the participants in the project are many. (4) A project calls for team work. The team is constituted of people belonging to different functional groups of organization. (5) A project has a definite life cycle reflected by growth, maturity and decay (6) No two projects are exactly similar. The location, the infrastructure, the agencies and the people make each project unique. Thus, all the projects are unique. (7) A project is subjected to a lot of change. (8) What is going to happen during the life cycle of a project is not fully known at any stage The details get finalized successively with the passage of time. (9) A project is always made to the order of its customer. The customer stipulates various requirements and puts constraints within which the project must be executed. (10) A project is a complex set of thousands of varieties. The varieties are in terms of technology, equipment and materials, machinery and people, work culture and ethics.

Project Classification: 1. Quantifiable and Non-quantifiable Projects :

The projects, where it is possible to make quantitative assessment of benefits, are called quantifiable projects, e.g., projects concerned with industrial development, power generation, mineral development, etc. On the contrary, where such an assessment of benefits is not possible, the projects become non-quantifiable projects, e.g., projects comprising health, education, welfare, etc

2. Sectoral Project :
Indian Planning Commission has made another classification of projects. According to this classification, a project may fall in any one of the following categories. a) Agriculture and Allied Sector b) Irrigation and Power Sector c) Industry and Mining Sector d) Transport and Communication Sector e) Social Services Sector f) Miscellaneous Sector. The project classification based on economic sectors is found useful in resource allocation more especially at macro levels.

3. Techno - Economic Projects :

Projects classification based on techno-economic characteristics fall in this category. This type of

classification includes : a. Factor Intensity - Oriented Classification: Factor intensity classification categories, the projects into capital intensive or labour intensive. If large investment is made in plan and machinery, the projects will be termed as capital intensive. On the other hand, if the project involves large number of human resources, it will be labour intensive. b. Causation - Oriented Classification: Causation oriented classification classifies projects as demand based or raw-material based. The very existence of demand for certain goods or services makes the project demand based, and the availability of certain rawmaterials, skills or other inputs makes the project raw-material based. c.

Magnitude - Oriented Classification: Magnitude oriented classification is based on

the size of investments involved in the project. On the basis of this classification, the project can be large-scale, small-scale or medium-scale projects.

(4) Financial Institutions Classification - (Growth - Generative Classification) :

All India and State Financial Institutions classify the projects according to their age and experience and the purpose for which the project is being taken up. According to project may be identified with any of the different stages in the process of its emergence or growth : They include: (i) (ii) (iii) (iv) New projects Capacity expansion/up gradation projects Modernization projects Diversification projects.

Steps in Project Preparation

Projects preparation generally involves the following steps : a. Project Identification b. Product or Service selection c. Location Selection

d. Project Formulation Feasibility analysis Techno-economic analysis Project Design and Net-work analysis Input analysis Financial analysis Social cost benefit analysis Project appraisal Pre-investment analysis

e. Business Plan Preparation f. Selection of Project

g. Project Profile.

a. Project Identification :
In setting up enterprise, an entrepreneur work starts with project identification. product identification is concerned with the collection, compilation and analysis of economic data and the eventual purpose of locating possible opportunities for investment and with the development of the characteristics of such opportunities. The idea behind project identification is finding out business opportunities which are feasible and promising and which merit further expansion and appraisal. According to Peter F. Drucker, opportunities are three types :

1. Additive Opportunities: Additive opportunities are those opportunities which ensure the
entrepreneur to utilize the existing resources in a better way without in any way giving a change in the character of the business.

2. Complementary Opportunities : Complementary opportunities involves the introduction of

new ideas and as such lead to a certain amount of change in the existing structure. 3. Break through Opportunities : Breakthrough opportunity involve a fundamental change both in the nature and character of the business,

b. Selection of Product or Service : Product or service selection starts from where project identification ends. Entrepreneur is free to select any product which he thinks that product is profitable and viable from market point of view. The process of selection of a product has been considered as an important decisional area. If the entrepreneurs selects and develops a particular product they have to identify their opportunities/ideas and select their products on the basis of the following analysis.

Entrepreneurs may select their products based on their own experience or their partners experiences in the line. Entrepreneur may select products based upon the expansion and diversification plans or their own or any other on going business or industry. Entrepreneurs may select products which are likely to have a ready demand either in the local or regional market. Entrepreneurs may select products whose imports are banned or controlled by the government. Entrepreneurs may select products which show high profitability. Entrepreneurs may select products based on certain specific advantages available to that product such as reservation of product line for small units, concessional finances or other resources being made available by the government or other incentives.

Entrepreneurs may select product line, guided mainly by changes in certain aspects of industrial policy, more specifically changes in control and regulation of prices of rawmaterials.

Factors affecting in Product Selection

Entrepreneur is guided by different factors in selecting a particular product for project execution.

(1) Technical Knowledge: Availability of technical capability to entrepreneur helps him in selecting
a product in that particular technical field. Similarly, if entrepreneur himself have gained substantial amount of experience in manufacturing and marketing of a particular product then the selection of such a product would be helpful to him.

(2) Availability of Market: A wide market creates more demand for the product and market risk also
be reduced in that ways. The entrepreneur should have a clear cut answer about the product market How to sell and where to sell?

(3) Financial Strength: Manufacturing process of a product needs huge funds in capacity creation.
Prototype development, R & D, working capital expenses required at preliminary stage and payment of royalty, etc. Entrepreneur should ensure his position to what extent he is ready to invest in the product as well as to maintain liquidity of the business.

(4) Position of Competition: Product performance in market is also governed by the level of
competition available in that particular market.

(5) Priority of Products: In certain cases products belong to the priority sector industries and
certain products are reserved for exclusive production in small scale sector. In those cases level of competition is comparatively less in comparison to general products. Similarly, certain products are listed by the Government for exclusive purchase from the small scale sector. Thus, if particular product belongs to those categories these considerations generally receive more weightage in selection of the product.

(6) Seasonal Stability: Continuity in demand of a product during the whole year as a stable market
than to a seasonal product. Seasonal inelasticity of a product affects favorably in the section of a product. Side by side, sales of product should not be affected by abnormal fluctuations. An entrepreneur should prefer only those products which have continuous demand in the market.

(7) Restriction on Imports: It encourages entrepreneur favorably in selection of a particular

product. In case of ban or restriction on import of a product, domestic market provides considerable scope for such a product as there will be no or restricted supply of imported goods. Naturally, entrepreneurs would favour the production of those items which fall under ban list or restricted list of import.

(8) Supply of Raw Materials Adequate supply of raw material is necessary to maintain a
continuous production process of a product. Entrepreneur should also try to ensure a continuous supply of raw-materials in desired quantity for whole of the year. Local supply or external supply also affects the selection of a product. In case of external supply, entrepreneur will be required to maintain comparatively a high level of inventory or raw materials.

(9) Availability of Incentive Subsidy: Government generally provides different types

of incentives, concessions, tax exemptions, tax rebate, etc., on production of certain items which are treated as import substitutes or as an essential item.

(10) Ancillary Products: In case of product to be produced by ancillary units, it means will serve as a
major component for the parent industry. In this situation, there will be a ready demand for the product and entrepreneur can easily select this product for proposed project.

(11) Locational Advantage: There are certain products which are meant for production only in free
trade zones, export promotion zones, special export promotion zones. Government also provides export incentives and tax concessions etc., to these units, so it would be better for the entrepreneur to select these items for production purpose

(12) Licensing System: As per industrial policy, government formulates licensing policy from time to
time. In certain products, it is must for the entrepreneur to seek necessary licenses from the

government authorities.

(9) Government Policy: Product selection process should also be analyzed in terms of Government
policy and its impact. If Government Policy is favourable to a particular product then selection of that particular product will prove helpful to the entrepreneur.

c.

Location Selection:
One of the major decisions of entrepreneur has to make it about the location of the project enterprise where to set up the unit.

Steps in Project / Enterprise Location : Following steps are important in selection of particular
location or site of the plant, Selection of the region. Selection of the locality or community Selection of the exact site, and Selection of an optimum site.

Some of the major aspects to be considered before the deciding on the location of the project/enterprise are: Availability of land. Proximity to the market. Availability of raw materials. Availability of transportation and communication facilities. Supply of man power. Availability of incentives! concessions. Government policy. Availability of suitable infrastructure facilities. Local laws and regulations. Ecological and environmental factors. Regional development. Industrial estates and parks.

d.

Project Formulation :
The project formulation stage is an analytical management tool to study a series of alternatives to a situation or project proposals, evaluate the alternative approaches and make investment decision. Project formulation is an important strategy of pre-investment phase where product idea is to be converted into a Project idea.

Process of Project Formulation :

The project idea has to be withstood the following tests or the process of project formula tion involves following stages :

(1) Feasibility Analysis (2) Techno-economic Analysis (3) Project Design and Network Analysis (4) (5) (6) (7) Input Analysis Financial Analysis Social Cost Benefit Analysis Project Appraisal

(8) Pre-investment Analysis.

(1) Feasibility Analysis :

Feasibility analysis is the process of evaluating the project idea within the limitations of the project implementing body and the constraints imposed on the project situation by environment. The analysis is undertaken to determine the desirability of investing in future development of project idea. Feasibility study should focus on the issues like General information of the industry as a whole; Objectives of the proposal; Alternative ways, if any, of attaining the objectives and better suitability of the proposed project; Project description, gestation period, costs, technology proposed, anticipated life

Generally, the exercise in project analysis is carried out dividing it formally into two stages: (a) Pre-feasibility study (b) Project feasibility study, and

(a) Pre-feasibility Study :

Pre-feasibility study is the process of preliminary assessment and evaluation of project idea. The limitations of the project implementation body, external and internal constraints of the project are analyzed to determine if to proceed further and how to proceed further consideration the basic inputoutput characteristics of the project idea. In pre-feasibility study quick assessment is made to determine : If the product is promising for an investment decision and can be taken for further consideration or detailed study. Justifies detailed analysis further to go to project concept. Whether the project is attractive to the investors. Any special aspects, constraints or critical issues involved so that the aspect can be studied further etc.

(b) Feasibility Study :

It is the most important part of project formulation, for it provides answers to questions in detail on different aspects relating to a project. In practice this means investigating the project from six different aspects: market, technical, financial, economic and social, commercial and ecological.

Feasibility study is defined as "a formal investigation of profitable opportunity which leads rational decisions about making an investment decisions". Feasibility studies consist of: Market feasibility/analysis Technical feasibility/analysis Financial feasibility/analysis Economic and Social feasibility/analysis Commercial feasibility/analysis Ecological feasibility/analysis

Market Feasibility/Analysis :

Any project has no value if the products/services are not sold. Hence, feasibility/ analysis from marketing prospective is made. The market feasibility/analysis consists of: Potential markets Market feasibility/analysis is concerned primarily with two questions What would be the aggregate demand of the proposed product/service in future. What would be market share of the project under appraisal?

To answer the above questions, it requires a wide variety of information and approTe ate forecasting methods. The kinds of information required are given below : Consumption trends in the past and the present consumption level. Past and present supply position. Production possibilities and constraints. Imports and exports. Structure of competition etc

Technical Feasibility/Analysis:
It is an attempt to determine how well the technical requirements of the industry can be met. Analysis of the technical and engineering aspects of a project needs to be done continually when a project is formulated.

The important questions raised in technical feasible/analysis are given below : (i) (ii) (iii) (iv) Have the preliminary tests and studies been done or provided for? Has the availability of raw materials, power, and other inputs been established"; Is the selected scale of operation is optimal? Is the production process chosen suitable?

Financial Feasibility/Analysis :
Financial Feasibility / Analysis deals with evaluation of the estimates of cost of the project to ensure that it contains all provisions for contingencies and are realistic, Financial feasibility/analysis seeks to ascertain whether the proposed project will be financially viable in the sense of being able to meet the burden of servicing debt and whether the proposed project will satisfy the return expectations of those who provide the capital. The aspects which have to be looked into while conducting a financial feasibility/analysis are as follows o The capital requirements and its time frame: The break - up of the capital requirements such as plants, machinery, land and buildings, other fixed assets of the proposed project. Working capital requirements at various stages of the project and period of operation. Means of Financing. Projected Profitability. Investment worthiness judged in terms of various criteria of merit. Projected financial position.

o o o o o

Economic Feasibility/Analysis :
The Economic Feasibility /Analysis include the government policies with regard to particular segment of the industries, the government incentives for specific location or tax holidays and the like. The feasibility/analysis should include the board economic aspects like o o o Demand projections. Anticipated sales volume and how the project is planning to meet the demands. Study c ````of improvements in output, enhanced services.

Commercial Feasibility/Analysis :
It evaluates the commercial aspects of the arrangements of the project. It also arrangement process for procurement of machinery and equipment examines the

Ecological Feasibility/Analysis :
In recent years, environmental concerns have assumed a great deal of significance Ecological feasibility/analysis should be done, particularly for major projects which has significant ecological implications like power plants and irrigation schemes, and for environment pollution industries (like bulk drugs, chemicals, and leather processing). The key questions raised in ecological analysis are as follows: o o What is the likely damage caused by the project to the environment? What is the cost of restoration measures required to ensure that the damage to environment is contained within acceptable limits?

(2) TECHNO-ECONOMIC ANALYSIS The Techno-economic analysis is concerned with the identification of the project demand potential and selection of the optimal technology suitable for achieving the project objectives.

(3) Project Design and Network Analysis :

Project design is the heart of the project entity. It defines the individual activities of the project and their interrelationships. It identifies the flow of events which must take place before a project can start. Project design and network analysis are concerned primarily with development of the detailed work plan of the project and its time profile. This plan is presented in the form a network diagram. Network analysis is carried out to identify the optimal course of action, so as to execute the project within the minimum time keeping in view the available resources.

(4) Input Analysis :

Input analysis helps in determining the resources requirements of the project analysis is basically concerned with the identification, quantification and evaluation of inputs required for the project. The objectives of input analysis are - (i) to identify the nature of the resources that a project will consume, (ii) to estimate the magnitude of the require: resources, and (iii) to evaluate the possibility of uninterrupted supply of inputs.

(5) Financial Analysis :

Financial analysis involves the estimating the project costs, estimating its operating costs and profits and fund requirements. With help of the financial analysis entrepreneur compares various project proposals on the basis of generally accepted scale of measurement. Some of the analytical tools used in financial analysis are Ratio analysis, profit analysis, discounted cost flow, projected fund flow analysis, cost-volume profit analysis etc

(6) Social Cost-benefit Analysis :

Under this analysis, estimates of social costs and social benefits are made and presented for computation of social profitability of the project. While financial analysis will go to justify a project from the profitability point of view, social cost-benefit analysis will consider the project from the national viability/community point of view

(7) Project Appraisal :

A project appraisal is the method of assessment of cost benefit and other analysis of different aspects of a proposed project with an objective to find viability and choose the best alternatives. Project appraisal is made for proposed new projects and executed projects. Generally, a project appraisal is referred to for the new proposed as Ex-ante analysis and for executed projects the appraisal is called as post-ante analysis.

(8) Pre-investment Analysis :

It indicates that project proposal is now ready for formal approval and in final shape. With the help of different analysis undertaken by the entrepreneur various conclusions already drawn to present a clear picture

e.

Business Plan Preparation:

A business is the written document giving in details all relevant internal and external elements that affect business and strategies for starting a new venture. It must describe current status, expected needs, and projected results of new business. Every aspect of the venture needs to be covered: the project, marketing, research and development, manufacturing, management, critical risks,

financing, and milestones or a timetable.

Business planning is an ongoing process in any industry or business or business enterprise. It is more important for a new business. The preliminary business plan drawn initially goes evolving and refining as the entrepreneur learns more about market, the project, the management team and the fund requirements of the new venture. f.

Project Selection:
Project selection starts from where project formation ends. In this step, project idea identified are screened on the basis of their feasibility analysis, techno-economic analysis project design and network analysis, input analysis, financial analysis, social cost-benefit analysis, project appraisal, pre-investment analysis. After screening the project ideas are translated into project proposals. After developing a large number of project proposals, the entrepreneur will select the most appropriate

g.

Project Profile :
A project profile gives a bird's-eye view of the proposed project. This may be used for obtaining the Provisional Registration Certificate (PRO) from the District Industries Centre and making, applying for Industrial Areas Development Board for land or State Small industrial Development Corporation (SSIDC) for shed and other infrastructures. In formation heads in a Project Profile is as follows : o Introduction o Promoter(s) Background (education, experience and so on) o Product(s) description (specification, uses, and so on) o Market and marketing

Decide on Form of Ownership :

Choice of proper form of ownership is a crucial problem with which an entrepreneur is confronted while launching a new enterprise. The form of ownership determines the level of ownership, risk, responsibilities, control and management of business enterprise. There are four main legal forms of ownership, from which the choice can be made: (1) Sole Proprietorship (2) Partnership (3) Joint Stock Company. and (4) Co-operative Society.

Complete the Legal Requirements :

For establishment and management of a new venture/setting up of a small scale enterprise, entrepreneurs come across a number of situations to follow laws of the land. Right from the conception stage in promoting the enterprises, entrepreneurs should be careful to obey the legal formalities, procedures, policies and plans for the government so as to make themselves free from any sort of legal hassles in future.

(A) No Objection Certificate (NOC) from Local body / Panchayat / Municipality:

While promoting a new venture the entrepreneur has to obtain No Objection Certificate from local body/panchayat/municipality as well as the requisite permission to start of SSI. This is done for the purpose of construction of industrial sheds and for land utilization as well as for the benefit which may be given to the entertain course of its operation by the government.

(B) Obtain SSI Registration : Small-scale and ancillary units that is undertaking with
investment in plant and machinery of less than Rs. 1 crore should seek registration with the Director of Industries of the concerned State Government.

Provisional Registration Certificate (PRC) : A provisional registration certificates is the initial registration for starting a small-scale industry. It enables the entrepreneur initiate necessary steps to bring the unit into existence.
Registration Formalities : The entrepreneur should make an application in the scribed application form (in duplicate) along with the following :

(1) Prescribed court fee stamp (2) Copy of the project profile (3) Partnership deed/Memorandum and Articles of Association, as the case may be (4) Affidavit, as per format on appropriate stamp paper.

Arrange for Land and Shed :

For any industrial project, a suitable industrial site or a ready industrial shed required. The promoters of the unit could consider taking an industrial site and constructing a shed as per their requirement. Alternatively, they could consider taking an industrial shed on rent or on ownership basis.

Industrial Land : Once the location of the unit is decided, the land for the project could be
conveniently taken from the State Industrial Areas Development Board. However private land could also be purchased, but it has to be converted for industrial purpose other necessary legal/formalities will have to be completed.

Industrial Shed : For setting up an SSI unit, the promoters could consider using -a ready
industrial shed. This could be on rent or on ownership basis. Rental sheds have to be arranged from private owners. Purchase of industrial sheds has to be arranged from private owners. Purchase of industrial sheds is possible under outright purchase or hire purchase scheme.

Arrange for Plant and Machinery :

The plant and machinery required for the project could be purchased from recognised manufacturers/dealers. The plant and machinery could also be taken on a hire purchase scheme operated by the National Small Industries Corporation (NSIC). This is a Government of India Corporation.

Arrange for Infrastructure :

The main infrastructure facilitates requires for a SSI unit are land or shed for the project, power connection, water supply, and telephone facility, etc. Single Window Agencies (SWAs) are set up at

district level for the benefit of scale industries. The SWA provides clearances for various infrastructure and other ties for the tiny and small-scale industries.

Preparation of Project Report :

Project report may be defined as "a report which provides all necessary information the unit proposed to be set up for the manufacture of a product or rendering a services Webster New 20th Century Dictionary defines "a project as a scheme, design, a proposal of something intended or devised". In simple words, "project report is a written statement of what an entrepreneur proposes to take up". A project report enables the entrepreneur to know how much money, manpower and material would be required to set up a project, type of machine and technology required and the economic gains from the project. Need and Importance of Project Report :

Project Report is a great importance. The Need and Importance of project report are discussed below : (1) It acts like a road map of the project (2) It describes the direction of the enterprises is going in, what its goals are, where it wants to be, and how it is going to get there. (3) It enables an entrepreneur to know that he is proceeding in the right direction. (4) It helps in attracting lenders and investors. (5) It is required and beneficial for small-scale enterprise to apply for financial assistance from the financial institutions and the commercial banks. (6) It is on the basis of project report that the financial institutions make appraisal, if the enterprise requires financial assistance. (7) It ensures the practicability of a project in terms of different factors like economy, finance, technology and social desirability. (8) it shows economic soundness of the proposal to other organization/authorities, which provide various assistance such as work shed, raw material, seed/margin money,etc. (9) It is also need by the entrepreneur for carrying out expansions or starting a new production line. (10) It helps in determining the profitability of the project and minimising risks in the execution of the project.

Implement the Project and Obtain Final Clearances :

The enterpreneurs will have to take necessary steps to physically implement the proje:- after obtaining the various licenses, clearances, infrastrucuture facilities and so on. The followrc are the major activities that the entrepreneurs have to undertake for implementing the projea.

Construct Shed : If the entrepreneurs have takne a ready-made shed from the S:E Small Industries Development Corporation or have made arrangements for rental sheds/premises then they need not go through this step. However, if they have obtained land in an indusn estate or have made arrangements for vacant land privately, then they have to take steps construct the shed for their industry.
The concerned authorities like the municipal corporations or municipalities or villa panchayats and so on, as the case may be, should approve the plane for the industrial st-E The entrepreneurs should obtain suitable quotations from established contractors and de: on awarding the contracts to suitable contractors. Alternatively, they could undertake - construction of a shed by arranging for materials and labour directly. While contructing shed entrepreneurs have to take necessary steps to

arrange for water supply, drainage syste electrical wiring and so on, through licensed contractors.

Order for Machinery : Entrepreneurs should take steps to order the necessary machineequipment and
so on, through deaie: s or make arrangements to get them on hire purchase through NSIC or any other suitable organization. The terms and conditions for ordering machinery, equipment and so on, will very from dealer to dealer. Hence, entrepreneurs will have to make the necessary arrangements as per the terms and conditions of the dealers. Delivery dates will vary depending the type of machinery, equipment, and so on and the dealer through whom these are ordered. Keeping these factors in mind, entrepreneurs should plan to order the necessary machinery, equipment and so on such that they are able to obtain them in time to implement the project.

Recruit Personnel : Depending upon the size of the industry and type of product, entrepreneurs will have to hire different types of personnel for the industry. Certain managerial and technical personnel may be required in the initial stages of the project. These personnel may be needed for preliminary work, for supervision and related work during planning and implementation of the project. Accordingly, entrepreneurs should take steps to hire key managerial and technical personnel well in advance. Most of the other personnel and office staff will be needed as soon as the unit is ready for commissioning. Accordingly, the entrepreneur should plan to hire such other persons at the appropriate time. Arrange for Raw Materials : Entrepreneurs should plan for required raw materials as soon as they proceed to implement the project. They should try to get the necessary samples for the basic raw materials and components that they need to buy from outside for the project. During the implementation of the project, they should finalise the sources of raw materials and quality and quantity requirements for the project. Accordingly, they should plan and order the necessary raw materials and components so that they start receiving the supplies from the date of expected commissioning of the project. Marketing : Entrepreneurs would have already put thought to the market for their project and the marketing plan that they desire to take up for the products. They should build up the necessary contracts for marketing during the implementation stage. Tney have to undertake the necessary ground work of contacting prospective customers and preparing necessary plans for marketing. The planning should cover the product(s) design, pricing, promotional activities and distribution systems. Erection and Commissioning : Once the building is ready and the ncessary plant and machinery have arrived, entrepreneurs have to take steps to erect the machinery. The various items of plant and machinery should be erected as per the prepared loan. Sometimes sophisticated machinery is supplied along with the service of erection. In such cases, the erection and commissioning will be undertaken and completed by the machinery suppliers. Alternatively, the entrepreneurs have to take the necessary steps to erect the plant and machinery.
After the plant and machinery is erected, the entrepreneurs should proceed to commission the plant. Initially, during the trial-run period, entrepreneurs will have to make necessary adjustadjustments and changes in production and processes to obtain the desired quality products. Once the production/process of the units is standardised, they can proceed with commercial production.

Obtain Final Clearances : Entrepreneurs are required to take several final clearances when the unit is ready for commissioning or as soon as it goes into production. Accordingly, entreprenuers are advised to refer to the various preliminary clearances they have obtained from different departments/organisations and take necessary steps to obtain final clerances or approavals as required.

E n v i r o nm e n t P ol l ut i on r e l a t e d C l e a r a n c e s :

1. Pollution Control : A No Objection Certificate (NOC) should be obtained from the Slam Pollution
Control Board before commencement of construction activity. In case the indus74 falls in the highly polluting category, a full-fledged or rapid Environmental ImpactAssessr-err (EIA) has to be carried out and submitted to the State Pollution Control Board for appro.a after which the construction can commence.

2.

Industries requiring water, and affecting effluent disposal : A No-Object Certificate

should be obtained from the State Pollution Control Board before commen of construction activity.

3. For units functioning ouside the industrial area : Permission has to be souorT from the
municipal corporation/municipality / panchayat. In case private agricultural Ian: purchased for the project, the land whould have to be rezoned as industrial zone. Permisscr to convert such agricultural land to industrial area would have to be obtained from the -ime office of the Directorate of Town and Country Planning before the actual start c- -.- construction.

4.

Registration and licensing of a boiler : Safety clearances of the Chief Elect-ar Inspector
and the Chief Inspector of Boilers required before commencing operations ortr electrical and pressure vessels (boilers) respectively. For registration as a 100 per cent export -oriented unit (EOU) - which enjoy many additional concessions, the clearance of the Development Commissione, the Export Processing Zone (EPZ) is required. If the company wishes to offer equity s'-F.--4m to the public, the clearance of the securities Exchange Board of India (SEBI) has :At taken