Industrial Management & Entrepreneurship Prof.

Sachin Kallannavar

Module-5
Syllabus
Institutional Support: Different Schemes, TECKSOK, KIADB, KSSIDC, KSIMC, DIC
Single Window Agency, SISI, NSIC, SIDBI, KSFC.
Preparation of Project: Meaning of Project, Project Identification, Project Selection, Project
Report, Need and Significance of Report, Contents, Formulation, Guidelines by Planning
Commission for Project report, Network Analysis, Errors of Project Report, Project Appraisal,
Identification of business opportunities, Market Feasibility Study, Technical Feasibility Study,
Financial Feasibility Study & Social Feasibility Study

Institutional Support for Small Scale Industries (SSIs)

Institutional support for SSIs refers to the network of government organizations,
corporations, financial institutions, and promotional agencies established at the central, state,
and district levels to promote, finance, facilitate, and develop small scale industries.

They offer financial, marketing, infrastructural, training, technology, and policy

support to strengthen the SSI sector.

Different Institutional Supporting Agencies & Schemes

1. TECSOK (Technical Consultancy Services Organization of Karnataka)
 Established by the Government of Karnataka to offer technical, financial, and
managerial consultancy services to entrepreneurs.
 Functions:
o Project identification and feasibility reports
o Market surveys and technology reports
o Guidance for government incentives and approvals
o Project appraisal for financial institutions

2. KIADB (Karnataka Industrial Areas Development Board)

 State-level body for acquisition, development, and allotment of industrial plots and
infrastructure facilities.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Functions:
o Establishing industrial areas and estates
o Allotment of land to SSIs at reasonable rates
o Developing basic infrastructure (roads, water, power)
o Special economic zones (SEZs) and industrial parks

3. KSSIDC (Karnataka State Small Industries Development Corporation)

 A government body promoting and assisting small industries in Karnataka.
 Functions:
o Establishing industrial estates and sheds for SSIs
o Raw material distribution and procurement assistance
o Marketing support through exhibitions and trade fairs
o Financial and infrastructure services for SSIs

4. KSIMC (Karnataka State Industrial Marketing Corporation)

 Provides marketing support services for SSI products in Karnataka.
 Functions:
o Marketing consultancy services
o Organizing sales outlets and participation in expos
o Assisting with bulk procurement and government tenders
o Export promotion support for SSI products

5. DIC (District Industries Centre) – Single Window Agency

 Set up in each district under 1977 Industrial Policy to promote entrepreneurship and
industrial development.
 Functions:
o Single-window clearance for SSI approvals
o Registration of MSMEs (Udyam Registration)
o Financial assistance recommendations
o Entrepreneurship Development Programs (EDPs)
o Raw material distribution and marketing help

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

6. SISI (Small Industries Service Institute)

 Now known as MSME-DI — Development Institute
 Central government-run institute under the Ministry of MSME.
 Functions:
o Technical consultancy and skill development training
o Management consultancy and quality improvement services
o Project profiles, feasibility studies, market surveys
o Export promotion and cluster development initiatives

7. NSIC (National Small Industries Corporation)

 Government of India enterprise established in 1955 to promote small industries.
 Functions:
o Raw material assistance schemes
o Credit facilitation and performance guarantees
o Government purchase and tender registration
o Export assistance and technology incubation centers

8. SIDBI (Small Industries Development Bank of India)

 Apex financial institution for MSMEs’ finance, development, and promotion.
 Functions:
o Provides term loans, working capital finance, and venture capital
o Assistance for technology modernization
o Credit guarantee schemes for collateral-free loans
o SME rating and cluster development programs

9. KSFC (Karnataka State Financial Corporation)

 State-level financial institution providing financial assistance to small and medium
enterprises.
 Functions:
o Term loans for land, building, machinery, and working capital
o Special loan schemes for women entrepreneurs and backward areas
o Financial support for modernization and technology upgradation

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

o Equipment leasing and hire-purchase schemes

Government Schemes Supporting MSMEs

Scheme Purpose
PMEGP (Prime Minister’s Employment
Financial assistance for new micro-enterprises
Generation Programme)
MUDRA Yojana Collateral-free micro loans
CGTMSE (Credit Guarantee Fund Trust
Credit guarantees for collateral-free loans
for Micro & Small Enterprises)
Technology Upgradation Fund (TUF) Modernization of plant and machinery
Udyam Registration Simplified MSME registration process
Infrastructure and marketing for industrial
Cluster Development Programme
clusters

Preparation of Project

Meaning of Project

A Project is a specific business proposal, plan, or scheme undertaken to create a unique

product, service, or result within a defined time, cost, and resource framework.
In the context of entrepreneurship and industrial management, a project refers to an investment
plan aimed at setting up a new business unit, expanding an existing one, or introducing a
new product/service.

Key Characteristics of a Project

1. Specific Objective: Every project is designed to achieve a particular goal like setting up a
factory, launching a product, or modernizing a process.
2. Defined Time Frame: Projects have a start date, an end date, and specific milestones to
track progress.
3. Resource Allocation: Involves pre-planned use of financial, human, and material
resources for effective execution.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

4. Investment-Oriented: A project requires capital investment in land, machinery,

materials, and manpower.
5. Uniqueness: Every project is unique in terms of its objectives, processes, outputs, and
risks.
6. Risk and Uncertainty: Projects involve uncertainties in market acceptance, cost
overruns, and technical challenges.

Example of a Project
 Setting up a small-scale paper bag manufacturing unit
 Launching a new mobile application for food delivery
 Expanding a textile unit with modern machinery

Project Identification
Project Identification is the process of searching for and recognizing viable, feasible,
and profitable business ideas that can be converted into business ventures.
It involves analyzing various business opportunities, assessing market needs, and selecting
ideas that align with the entrepreneur’s skills, resources, and market trends.

Objectives of Project Identification

1. To recognize new and profitable business opportunities.
2. To match entrepreneurial interests, skills, and resources with market demand.
3. To identify projects that are technically, financially, and commercially feasible.
4. To discover innovative and competitive products/services.
5. To support regional and sectoral industrial development.

Sources of Project Ideas

 Market demand analysis
 Government industrial policies and promotional schemes
 Technological innovations
 Import substitution opportunities
 Export potential sectors

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Entrepreneur’s personal experience and expertise

 Consumer preferences and lifestyle changes
 Feasibility study reports and trade exhibitions

Factors to Consider During Project Identification

1. Market Potential — Current and future demand for the product/service.
2. Availability of Raw Materials and Technology.
3. Cost and Investment Requirements.
4. Location Advantages — Access to markets, resources, and infrastructure.
5. Government Incentives and Policy Support.
6. Risk and Competition in the Market.
7. Social, Environmental, and Regulatory Factors.

Steps in Project Identification

1. Environmental Scanning — Study economic, technological, and market trends.
2. Idea Generation — Collect and list possible project ideas.
3. Preliminary Screening — Eliminate impractical or high-risk ideas.
4. Detailed Analysis — Assess market, technical, and financial viability.
5. Selection of Promising Ideas — Choose ideas for detailed feasibility studies.

Project Selection
Project Selection is the process of evaluating and choosing the most suitable and
feasible project idea from the identified alternatives based on technical, financial, market, and
social viability.
It ensures that the selected project idea is profitable, sustainable, and aligns with the
entrepreneur’s resources, capabilities, and market demand.

Objectives of Project Selection

1. To select a project with maximum profitability and growth potential.
2. To ensure the project is technically, financially, and commercially feasible.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

3. To reduce the risks and uncertainties associated with business ventures.

4. To utilize the entrepreneur’s skills, experience, and resources effectively.
5. To align the project with market needs, government policies, and social benefits.

Criteria for Project Selection

 Market Feasibility — Assessing current and future demand for the product/service.
 Technical Feasibility — Availability of suitable technology, machinery, and raw materials.
 Financial Feasibility — Capital requirement, profitability, return on investment (ROI).
 Managerial Capability — Entrepreneur’s knowledge, skills, and management ability.
 Government Policies and Incentives — Supportive schemes, subsidies, and approvals.
 Risk Analysis — Market risks, financial risks, operational risks.
 Social and Environmental Impact — Employment generation, eco-friendliness.

Steps in Project Selection

1. Preliminary Screening — Shortlist project ideas based on initial feasibility.
2. Detailed Feasibility Studies — Conduct market, technical, financial, and social feasibility
assessments for each shortlisted project.
3. Comparative Analysis — Compare alternative project options based on set criteria.
4. Final Selection — Choose the most profitable, feasible, and suitable project for
implementation.
5. Preparation of Project Report — Develop a comprehensive report on the selected project.

Importance of Project Selection

 Ensures optimal use of limited resources.
 Increases the success rate of business ventures.
 Helps in risk minimization and profitability maximization.
 Aligns the business idea with market demand and growth trends.
 Supports strategic business planning and financing.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Project Report
A Project Report is a comprehensive, detailed, written document that outlines the
business objectives, technical details, financial projections, market analysis, and feasibility
studies of a proposed business project.
It acts as a blueprint for starting and running a business venture, providing
information required for decision-making by entrepreneurs, investors, financial institutions, and
government bodies.

Need and Significance of Project Report

1. Financial Assistance: Required by banks and financial institutions for granting loans,
subsidies, and working capital.
2. Decision Making Tool: Helps entrepreneurs and investors assess the feasibility,
profitability, and risks involved.
3. Operational Blueprint: Acts as a guideline for implementation, resource allocation, and
business operations.
4. Government Approvals: Required for obtaining licenses, permissions, and benefits under
government schemes.
5. Attracting Investors and Partners: Provides a professional presentation of the business
proposal to potential stakeholders.
6. Risk Assessment and Planning: Identifies possible challenges, helping in contingency
planning and strategic decisions.

Contents of a Project Report

Section Description
Executive Summary Brief overview of the business proposal
Promoter’s Profile Background, experience, qualifications of the entrepreneur
Product/Service Details Description, features, uniqueness, uses
Market Analysis Demand estimation, target market, competition analysis
Technical Feasibility Manufacturing process, technology, machinery, raw materials
Location and Layout Factory location, site advantages, factory layout

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Organizational and
Management team, staffing pattern
Manpower Structure
Capital cost, working capital, projected profit & loss, balance
Financial Details
sheet, cash flow
Implementation Schedule Timeline for project activities and milestones
Social and Environmental
Employment generation, eco-safety, social benefits
Impact

Formulation of a Project Report (Steps)

1. Define Project Objectives: Clearly state the purpose, goals, and scope of the business.
2. Collect Required Data: Gather information on market trends, technical processes, costs,
legal requirements, etc.
3. Conduct Feasibility Studies: Carry out market, technical, financial, and social feasibility
analyses.
4. Draft Financial Projections: Prepare detailed estimates for capital costs, sales, operating
expenses, profitability, ROI.
5. Develop Implementation Plan: Frame an activity schedule and timeline for project setup
and operations.
6. Compile and Finalize Report: Organize data into a structured report format and review for
completeness and accuracy.
7. Submit for Approvals: Present to financial institutions, government departments, and
investors as required.

Guidelines by Planning Commission for Project Report

The Planning Commission (now replaced by NITI Aayog) earlier issued structured
guidelines for preparing a comprehensive project report to ensure uniformity, clarity,
accuracy, and completeness.
These guidelines help entrepreneurs, financial institutions, and government bodies
evaluate the technical, financial, and social feasibility of a project proposal.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Guidelines by Planning Commission for Preparing a Project Report

1. Introduction and Objectives of the Project
 Clearly define the project’s objectives, purpose, and intended outcomes.
 Mention the reasons for selecting the particular business activity.

2. Details of Promoters
 Include names, qualifications, business background, financial status, and experience of
the promoters.
 State their roles and responsibilities in the proposed business.

3. Product Profile and Description

 Explain the nature of the product or service.
 Include product specifications, uses, demand potential, and competitive advantages.

4. Market Analysis and Demand Forecasting

 Conduct a detailed demand-supply analysis, market trends, pricing strategies, and
competition study.
 Present future market potential for the product/service.

5. Technical Feasibility
 Explain the production process, machinery, equipment required, raw materials, labor, and
infrastructure facilities.
 Assess the availability of technology and technical expertise.

6. Project Location and Site Analysis

 Justify the choice of location based on factors like proximity to raw materials, labor,
transport, utilities, and markets.
 Include factory layout and land area details.

7. Financial Details
 Provide detailed estimates for:

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

 Fixed capital requirements

 Working capital needs
 Break-even analysis
 Profitability projections
 Cash flow and repayment schedules

8. Organizational and Management Structure

 Specify the proposed business organization type (proprietorship, partnership, company).
 Present the proposed management team, roles, staffing, and administrative plan.

9. Implementation Schedule (Time Frame)

 Outline the project’s major milestones such as land acquisition, machinery procurement,
installation, trial runs, and commercial production commencement.

10. Social and Economic Benefits

 Highlight the benefits like employment generation, contribution to regional development,
export promotion, and social upliftment.

Network Analysis
Network Analysis is a project management technique used for planning, scheduling,
coordinating, and controlling complex projects involving multiple interrelated activities.
It helps in visually representing project activities, identifying critical paths, estimating project
duration, and resource allocation.

Objectives of Network Analysis

1. To plan and manage complex projects systematically.
2. To identify critical and non-critical activities in a project.
3. To optimize time, cost, and resource utilization.
4. To monitor and control project progress and delays.
5. To provide a visual representation of project activities and their interrelationships.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Common Techniques of Network Analysis

1. PERT (Program Evaluation and Review Technique)
 Used for projects with uncertain activity durations.
 Involves three-time estimates for each activity:
o Optimistic time (O)
o Most likely time (M)
o Pessimistic time (P)
 Helps calculate expected time and project duration using probability.

2. CPM (Critical Path Method)

 Used for projects with predictable, fixed activity times.
 Identifies the critical path — the longest sequence of dependent activities that determine
the minimum project completion time.
 Allows time-cost trade-offs by allocating additional resources to reduce project time.

Basic Elements of Network Analysis

 Activity: Any task or job consuming time and resources.
 Event (Node): A point where an activity starts or finishes.
 Network Diagram: A graphical representation of the sequence of activities.
 Critical Path: The longest duration path through the network with zero float.
 Float (Slack): The amount of time an activity can be delayed without affecting the
project completion date.

Importance of Network Analysis

1. Enables systematic planning and scheduling of complex projects.
2. Assists in identifying critical activities and bottlenecks.
3. Facilitates optimum allocation of resources and manpower.
4. Helps in monitoring, controlling, and rescheduling activities if delays occur.
5. Improves decision-making and risk management in project execution.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Errors of Project Report

A Project Report is a detailed document outlining the technical, financial, managerial,
and marketing aspects of a business project. However, if it’s poorly prepared, it can lead to
project failure, financial losses, or rejection by financial institutions. Errors in project reports
occur when essential details are omitted, overestimated, or incorrectly projected.

Common Errors in a Project Report

1. Overestimation of Sales and Profitability
 Exaggerating demand forecasts and sales volumes.
 Assuming optimistic market conditions without realistic validation.

2. Underestimation of Costs
 Ignoring hidden costs like transportation, insurance, taxes, and contingencies.
 Incorrect estimation of operating and maintenance expenses.

3. Incomplete Market Analysis

 Failing to properly assess demand-supply gaps, consumer preferences, and competition.
 Ignoring changing market trends and external market risks.

4. Technical Inaccuracies
 Providing vague or incomplete information about manufacturing processes, equipment,
and raw material requirements.
 Overlooking technical feasibility and operational challenges.

5. Unrealistic Time Schedules

 Overestimating speed of land acquisition, equipment delivery, installation, and startup.
 Not providing adequate time buffers for delays.

6. Ignoring Environmental and Legal Compliance

 Not considering statutory approvals, pollution control norms, and safety standards.
 Neglecting social and environmental impact assessment.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

7. Inadequate Risk Analysis

 Overlooking possible project risks like cost overruns, delays, and operational problems.
 No contingency plans for market, financial, or technical risks.

8. Poor Financial Planning

 Incomplete or unrealistic financial projections for capital costs, working capital, cash
flow, and profitability.
 Miscalculating loan repayments and interest costs.

Impact of Errors in Project Report

 Rejection by financial institutions or investors.
 Project delays and cost overruns.
 Financial losses and business failure.
 Legal complications due to non-compliance.
 Loss of credibility and market reputation.

Project Appraisal
Project Appraisal is the systematic evaluation of a proposed project’s feasibility,
profitability, and desirability before committing resources to it.
It involves analyzing the project from various aspects to assess whether it is worth investing
time, money, and effort.

In simple terms: It’s a methodical process to decide whether a project idea should be accepted,
modified, or rejected based on financial, technical, market, and social grounds.

Objectives of Project Appraisal

1. To assess the technical, financial, and market feasibility of a project.
2. To examine the profitability and risk factors associated with the project.
3. To ensure optimum utilization of resources.
4. To assist in sound decision-making for investments.
5. To evaluate the project’s social, environmental, and economic benefits.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Types / Aspects of Project Appraisal

1. Market Appraisal
 Study of demand-supply trends, consumer preferences, price patterns, and competitor
analysis.
 Assesses market potential and acceptance of the product or service.

2. Technical Appraisal
 Examines technical feasibility of production processes, plant capacity, technology,
machinery, and availability of raw materials.
 Verifies suitability of location, infrastructure, and utilities.

3. Financial Appraisal
 Analyzes cost estimates, capital structure, sources of finance, profitability
projections, and cash flow statements.
 Calculates important financial indicators like:
o Return on Investment (ROI)
o Break-even Point
o Payback Period
o Internal Rate of Return (IRR)

4. Economic and Social Appraisal

 Evaluates the project’s contribution to employment generation, regional development,
income distribution, and environmental protection.
 Examines alignment with government policies and social welfare objectives.

Importance of Project Appraisal

1. Reduces investment risks by ensuring viability and profitability.
2. Helps financial institutions and banks in credit sanction decisions.
3. Guides entrepreneurs in selecting the most suitable and feasible project.
4. Supports optimal allocation of limited financial and human resources.
5. Facilitates better project planning, scheduling, and implementation.
6. Assures that the project aligns with legal, environmental, and social regulations.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

Identification of Business Opportunities & Feasibility Studies

Business opportunity identification is the process of discovering viable, profitable,
and feasible business ideas based on market needs, resources, and entrepreneurial capabilities.
It involves analyzing gaps in the market, emerging trends, and unsatisfied demands that can be
converted into successful business ventures.

Sources of Business Opportunities

1. Market trends and consumer preferences
2. Technological innovations
3. Government industrial policies and incentives
4. Problems and limitations in existing products
5. Import substitution and export potential
6. Trade fairs, exhibitions, and market surveys
7. Entrepreneur’s personal experience and skills

Need for Feasibility Studies

Once a business opportunity is identified, it’s essential to conduct feasibility studies to
assess its viability, profitability, and risks before investment. These studies help in informed
decision-making by evaluating the project from multiple angles.

Types of Feasibility Studies

1. Market Feasibility Study

It assesses the market demand, customer needs, competition, pricing trends, and future
market potential for the proposed product or service

Key Focus:
 Demand-supply analysis
 Target market segmentation
 Competitor analysis
 Pricing, promotion, and distribution strategies
 Consumer behavior and buying patterns
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Importance: Ensures there is sufficient and sustainable market demand before launching the
business.

2. Technical Feasibility Study

It evaluates the technical requirements, production processes, machinery, technology, raw

materials, and labor availability necessary to implement the project.

Key Focus:
 Production methods and technical know-how
 Plant location and site advantages
 Infrastructure facilities (power, water, transport)
 Availability and cost of raw materials
 Capacity planning and process layout

Importance: Ensures that the project can be executed technically with available resources and
infrastructure.

3. Financial Feasibility Study

It involves the assessment of capital requirements, funding sources, profitability, financial

risks, and overall financial viability of the project.

Key Focus:
 Project cost estimation (fixed and working capital)
 Source of finance (equity, debt, loans, subsidies)
 Sales and revenue projections
 Profitability analysis (ROI, payback period, BEP)
 Cash flow analysis

Importance: Determines whether the project is financially sustainable and profitable in the long
run.

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Industrial Management & Entrepreneurship Prof. Sachin Kallannavar

4. Social Feasibility Study

It evaluates the project’s impact on society, environment, employment generation, and

community development.

Key Focus:
 Employment generation potential
 Contribution to regional economic development
 Environmental safety and pollution control
 Social acceptability and community welfare benefits

Importance: Ensures the project is socially responsible, legally compliant, and aligned with
public interest.

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