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-
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 the environment is contained within acceptable limits?
Check your progress
Match the following
Issues
Type of Analysis
1.
Availability of know how with the entrepreneur
Economic
Or to be procured
2.
Ability to meet the burden of servicing debt
Technical
3.
The impact of the project on the level of
Ecological
social costs-benefits
5.
Identification, quantification and evaluation
Financial
of project inputs
6.
Likely damage caused by the project to the
Input
environment
5.2.6 LEGAL AND ADMINISTRATIVE
Think of the plight of the entrepreneur who worked on the idea of a laundry to cater to hotels and hospitals,
finds it eminently feasible only to learn subsequently that ‘laundry’ does not figure as an industry within the
administrative definition of SSI as applicable on that date. Another entrepreneur in Kalyani (West Bengal)
developed an Ayurvedic preparation only to find that the office of DIC did not have an expert to validate the
project; the product had to be marketed as a confectionary item! What is implied from these examples is that
the entrepreneur has to be sure also of the administrative and legal issues involved in the project. These
include, choice of the form of business organisation, registration and clearances and approvals from the
diverse authorities.
Forms of Organisation
Sole Proprietor: At the time of startup the entrepreneur usually has to handle all
functional responsi- bilities of the venture and handles production, marketing, personnel, finance himself. As
a result the vast majority of new businesses start as sole proprietors. This form has the added merit of being
free from formalities regarding incorporation or maintenance of accounts or auditing etc.
Partnership: As the business grows the requirements for funds and management will
also increase which might lead him to enter into partnership with one or more persons. It is always
preferable to have a written agreement in the form of a partnership deed which clearly indicates the names
and addresses of the partners, their ages, contribution to capital, profit sharing ratio etc. This form also
makes for pooling of skills and responsibilities and spread of risk.
Company: A company can be a private limited company, in which case it can have a
minimum of 2 and a maximum of 50 members. It can be a public limited company,
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which has to have a minimum of 7 members, and there is no maximum limit. This form of organisation
provides vast amounts of capital as they, unlike the private limited company, invite the general public to
subscribe to its shares and also provide limited liability. The Companies Act of 1956 governs the companies.
Co-operative: A co-operative is an enterprise owned and controlled by people
working in it. Generally they are formed for some specific purpose like a housing co-
operative society.
Clearances and Approvals:Setting up of an industrial unit requires the entrepreneur
to obtain a number of clearances and approvals regarding land use, pollution control and safety. In this
regard, you would be required to interact with the local government authorities such as the municipalities/
village panchayats and state pollution control boards. In case, you wish to avail the incentives accruing to the
firms registered under Export Processing Zone/Special Economic Zone (SEZ), Software Technology Park
(STP), or 100% Export Oriented Unit you would be required to register as such. Besides, certain products
may require specific clearances from the relevant departments/authorities. Box entitled ‘Product-Specific
Clearances’ illustrates a few examples of the necessary clearances and approvals vis-à-vis specific products.
Box 5.1: Product Specific Clearances
•
For established a printing press-District Magistrate
•
For pesticides – Central / State Agricultural Department
Ministry of Agriculture
•
For safety matches / fireworks – licence under Explosives
Act from Directorate of Explosives
•
For household electrical appliances – licence from the
Bureau of Indian Standards
•
Wood working industry within 8 km from forest – District Forest
Officer
•
For Drugs and Pharmaceuticals – drug license from State Drug
Controller.
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Check your Progress
From where SSIs will take the final clearances for
1.
Pesticides
- ____________________________
2.
Household electrical appliance
- ____________________________
3.
Drugs and Pharmaceuticals
- ____________________________
4.
Printing Press
- ____________________________
5.
Registration as a 100% export
oriented unit
-
___________________________
6.
Pollution Control
-
___________________________
5.3 PROJECT REPORT
The findings of the feasibility analysis may be compiled in a project report. See Annexure 5.1 ‘Specimen Pro
forma of Project Report.’ These findings may be vetted by the independent consultants/experts. Funding
agencies have their own set-up for the appraisal of these reports. The idea is that the optimist entrepreneur
may have overlooked certain aspects that may have a bearing on the ultimate feasibility of the proposed
business idea. It is often felt that financial institutions tend to over- emphasise the financial feasibility of the
project and do not pay adequate attention to its commercial and economic viability. This security-driven
approach is forwarded as one of the reasons why some promising ventures are turned down despite their
sound techno-economic viability.