The - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/36044/14/14...The total number of existing small scale industries in Mizoram in the year 2012 were 1656 1 units, out of which

162

CHAPTER 6

FINDINGS, SUGGESTIONS & CONCLUSION

6.1. Findings Regarding Small Scale Industries:

The total number of existing small scale industries in Mizoram in the year

2012 were 16561 units, out of which 76 units are selected for the present study.

The survey was conducted by visiting various small scale industries and some of

the respondents were contacted through correspondents. Table 6.1 shows the

number of respondents from eight districts of the state.

TABLE 6.1

NO. OF RESPONDENTS FROM 8 DISTRICTS

Sl. No District

No. of

existing

units

No. of

Respondents

1 Mamit 134 7

2 Kolasib 133 10

3 Champhai 153 10

4 Lunglei 285 6

5 Lawngtlai 111 8

6 Aizawl 666 20

7 Serchhip 90 7

8 Saiha 84 8

TOTAL 1656 76

1 Mizoram Industrial Survey 2012, A joint initiative of Industries Department, Govt. of Mizoram

and Mizoram Entrepreneurship Network

163

The following are the main findings of the study:

6.1.1. Year of establishment:

The survey reveals that majority (30.26%) of the units have been operated

for 6-10 years ,which means that most of the units were established after 2002

which is followed by 25 % of units operating for 11-15 years. A few number of

units with only13.16% have been operated for more than 20 years. (Table: 6.2).

TABLE: 6.2

DISTRIBUTION OF SSI UNITS BY LENGTH OF OPERATION AS

ON 31.12.12

Sl. No. Length of

Operation No. of Units Percentage

1 1-5 yr 15 19.74

2 6-10 yr 23 30.26

3 11-15 yr 19 25.00

4 16-20 yr 9 11.84

5 21yr and above 10 13.16

TOTAL 76 100.00

Source: Field Survey

164

Fig. 6.1

LENGTH OF OPERATION OF SMALL SCALE INDUSTRIAL

UNITS

6.1.2. Types of Organization:

There are various forms of organization like individual proprietorship,

Partnership, Public Limited Company and private Limited Company, cooperatives

etc. found in the industrial sector.

Sole proprietorship form of organization is the oldest and most common

form of organization for small scale industries. When two or more persons come

together, combine their capitals, skills and carry on business it is known as

partnership. When a business requires huge capital, company form of business

organization is preferred.

165

Table 6.3

ORGANISATIONAL STRUCTURE OF SMALL SCALE INDUSTRIES

Sl.No Types of organisation No. of Units Percentage

1

Individual

Proprietorship 68 89.47

2 Partnership 5 6.57

3 Public Ltd. Co. 0 0

4 Private Ltd. Co. 0 0

5 Co-operatives 1 1.32

6 Others 2 2.64

TOTAL 76 100


Fig. 6.2

ORGANISATIONAL STRUCTURE OF SMALL SCALE INDUSTRIES

Table 6.3 shows the organizational structure of small scale industries in the

study area. It has been found that the majority of small scale industrial units in the

166

state of Mizoram have individual proprietorship form of organization. The survey

reveals that 68 units (89.50%) belongs to this category which is followed by

partnership (6.57%), others (2.64%) and cooperatives (1.32%).

6.1.3. Investment in Plant and Machinery:

Investment in plant and machinery is an indicator of the size as well as the

strength and capacity of a business. Larger the industry, larger is the size of

investment in plant and machinery. There is also a chance of over investment on

plant and machinery even if the business is not in a position to utilize it

significantly. This may be a result of negligence in estimation, planning and

forecasting.

The range of investment in plant and machinery of sample units are shown

in table 6.4. Majority of the sample small scale units invest less than Rs. 50,000/-

(26.31%) in plant and machinery followed by a range of between Rs. 2 lakhs to Rs.

5 lakhs (22.36%), Rs. 50,000/- to Rs. 1 lakh (19.73%), and there was an equal

share of 19.73% each from the ranges between Rs.1 lakh to Rs.2 lakhs and Rs.5

lakhs and above respectively.

TABLE 6.4

DISTRIBUTION OF SSI ACCORDING TO INVESTMENT IN PLANT AND

MACHINERY

Source: Field survey

Sl.No Amount invested Rs. In Lakhs No. of Units Percentage

1 Less than 50,000 20 26.31

2 50,000-1,00,000 15 19.73

3 1,00,000-2,00,000 12 15.78

4 2,00,000-5,00,000 17 22.36

5 5,00,000 and above 12 15.78

TOTAL 76

167

Fig. 6.3

INVESTMENT IN PLANT & MACHINERY

6.1.4. Type of Premises:

For the successful running of business, its location plays a very important

role. Almost all business activities have certain locational advantages. Besides,

businessmen generally wish to operate their business within their own premises. If

a businessman does not have premises of his own for conducting his business

activities, he has to go for secondary options like rented premises, industrial estate,

etc.

From the survey, as shown in table 6.5, it was found that majority (64.47%)

of small scale units are operating in their own premises. 34.21% of the units under

study are running their business in rented premises which is followed by industrial

estates with 2.63%. One unit under the study is found operating in both its own and

rented premises.

168

TABLE: 6.5

DISTRIBUTION OF SSI BY TYPES OF PREMISES

Source: Field survey

Fig. 6.4

TYPES OF PREMISES

Sl.No Type of Premises No. of Units Percentage

1 Own Premises 49 64.47

2 Rented Premises 26 34.20

3 Industrial Estates 2 2.63

4 No Premises 0 -

TOTAL 77 100

169

6.1.5. Gender of Chief Executive

TABLE: 6.6

CLASSIFICATION OF UNITS AS PER GENDER OF OWNERS


Fig. 6.5

CLASSIFICATION OF UNITS AS PER GENDER OF OWNERS

From table 6.6, we can see that majority of the units have male owners with

76.32% while units with female owners constitute only 23.68%. Most of the units

having female owners are tailoring, handloom & handicrafts, etc.

6.1.6. Particulars of Employees:

Generally small scale industrial units engage employees on need basis

unless there is an external pressure and obligation that the employer has to comply

with. Due to the freedom of employer to employ any number of persons, the

Sl. No Gender of Chief Executive Number Percentage

1 Male 58 76.32

2 Female 18 23.68

TOTAL 76 100

170

number of persons working in an industrial concern can be said to be an indicator

of the overall strength and capacity of an industry.

TABLE 6.7

GENDER-WISE CLASSIFICATION OF EMPLOYEES

Sl.No Gender

No. of

Employees Percentage

1 Male 336 82.76

2 Female 70 17.24

TOTAL 406 100


Fig. 6.6

CLASSIFICATION OF EMPLOYEES AS PER GENDER

Out of the total of 406 employees, it has been observed that majority of the

employees of small scale units in the state are male with 82.76% while female

employees constitute only 17.24% (Table 6.7).

171

TABLE 6.8

CLASSIFICATION OF EMPLOYEES ACCORDING TO RACE/CLAN


Fig. 6.7

CLASSIFICATION OF EMPLOYEES AS PER RACE/CLAN

It has been observed that majority of the employees are Mizos with 67%

and the rest 33% belongs to other race/clan (Table 6.8).

Sl.No Race/clan: No. of Employees Percentage

1 Mizo 272 67

2 Non-Mizo 134 33

TOTAL 406 100

172

TABLE 6.9

SKILL-WISE CLASSIFICATION OF EMPLOYEES


Fig. 6.8

CLASSIFICATION OF EMPLOYEES ACCORDING TO SKILL

Out of the total employees of 406, 44.09% are categorized as skilled labour

followed by 21.18% of semi-skilled and 34.73% of unskilled labour (Table 6.9).

Sl.No Skill:

No. of


1 Skilled 179 44.09

2 Semi-Skilled 141 34.73

3 Unskilled 86 21.18

TOTAL 406 100

173

TABLE 6.10

CLASSIFICATION OF EMPLOYEES ACCORDING TO EDUCATIONAL

QUALIFICATION


Fig. 6.9

CLASSIFICATION OF EMPLOYEES AS PER EDUCATIONAL

QUALIFICATION

It has been observed that majority of the employees (78.57%) are not

highly educated and belonged to under matriculation category; 14.78% of

employees have matriculation qualification; while there are only 6.65% having

above matriculation qualification (Table 6.10).

Sl.No Educational

Qualification:

No. of


1 Below Matriculation 319 78.57

2 Matriculation 60 14.78

3 Above Matriculation 27 6.65

TOTAL 406 100

174

6.1.7. Type of Activities:

The major activities covered under the research work in accordance with

the classification given by the Department of Industries are Food and beverage

items, Metal products, Repair services, cotton and Wool Textiles, Personal

Services, Restaurants and Hotels, Hosiery and Garments and Wood, Rubber and

Plastic Products.

It has been observed that the small scale industrial units in the state are

engaged in various types of activities. Table 6.11 gives a picture of different types

of activities, the sample units are engaged with. It has been observed that

maximum numbers of the units are engaged in two types of activities i.e. the

manufacturing of Metal based products (23.68%) and Wood, Rubber and Plastic

products (22.37%). Mizoram is endowed with vast forest resources and many SSI

units are based on the raw materials obtained directly from these forests. They are

mainly engaged in the production of wooden furniture, cane furniture, carpentry

works, bamboo works etc. The local artisans are highly skilled in manufacturing a

variety of beautiful handicraft products using these local raw materials.

It is surprising that metal based products dominates small scale sector of an

industrially backward state like Mizoram. Analysis reveals that 23.68% of the SSI

units are engaged in the manufacturing of metal based products. It has also been

observed that all the Metal based industries obtain their raw materials from outside

the state.

175

TABLE: 6.11

ACTIVITY WISE DISTRIBUTION OF SSI UNITS

Sl.No Activities/Types of Industries No. of Units Percentage

1 Food and Beverage items 14 18.42

2 Metal Products 18 23.68

3 Repairing Services 14 18.42

4 Cotton, Wool, Silk etc Textile 3 3.95

5 Personal Services 4 5.26

6 Restaurants & Hotels 1 1.32

7 Hosiery & Garments 5 6.58

8

Wood, Rubber & Plastic

Products 17 22.37

TOTAL 76 100


Fig. 6.10

ACTIVITY WISE DISTRIBUTION OF SSI UNITS

176

In fact, they are not large scale manufacturers, rather small repairing shops

engaged in steel fabrication, grills and gate making, window and door frame

making, steel and aluminium furniture, blacksmithy, aluminium utensils making,

jewelry, silver smithy and gold smithy etc.

Units engaged in repairing services like automobile repairing, tyre

repairing, watch and mobile phone repairing and units engaged in making food

products like bakery and confectionery, ice plant, paddy grinding, chow and

noodles manufacturing, baby food manufacturing, poultry, winery and packed milk

shared similar percentage of 18.42% each, which was followed by hosiery and

garment based units (6.58%), personal services (5.26%), cotton, wool, silk etc.

textile (3.95%) and restaurants and hotels (1.32%).

6.1.8. Sources of Power:

For the smooth and optimum utilization of capacity of any industrial

concern the importance of electricity is inevitable. The major source of power in

small scale industrial units in the state is electricity. Besides, coal, oil, LPG and

fire wood are also used as sources of power by the SSI units. Power consumed for

carrying entrepreneurial activity other than lighting purposes is taken as power

used. Table 6.9 shows the sources of power in SSI units and the total becomes 83

in number which is due to the fact that some units are using two different types of

power like electricity and oil, electricity and LPG etc.

Majority of the small scale industries use electricity as the main source of

power (Table 6.12). Out of 76 SSI units 54 units (71.05%) use electricity as the

main source of power followed by Oil (13.16%), Fire wood is used by 10.52%

units, while LPG is used by 3.95% units and coal by 1.32% only. 9.21% of the

units do not use any power. The overall consumption of power in the small scale

industrial unit in the state is very less.

177

TABLE: 6.12

SOURCES OF POWER IN SSI UNITS

Sl.No Source of Power No. of Units Percentage

1 Coal 1 1.32

2 Oil 10 13.16

3 LPG 3 3.95

4 Electricity 54 71.05

5 Fire wood 8 10.52

6 Not Needed 7 9.21

TOTAL 83


Fig. 6.11

SOURCES OF POWER

6.1.9. Buyers of the Products:

From the results of the survey, it has been found that majority of small

scale industrial units sell their products to private customers (Table 6.13). Most of

the products are sold in the local markets either through show room or from the

factory itself. They have also participated in various exhibitions and fairs both

within and outside the state. A significant number of units sold their products to

both private as well as government departments while intermediary units form a

very negligible portion.

178

TABLE: 6.13

BUYERS OF THE PRODUCTS OF SSI UNITS


Fig. 6.12

BUYERS OF THE PRODUCTS

It has also been observed that among the buyers of the products, some

foreigners also exist. The foreign customers are mostly from Myanmar who

purchase the products like shoes, garments, and other products which they find it

cheaper as compared to their own country. Most of the customers buy these SSI

products mainly with a business motive which they illegally export to the

neighbouring countries.

Sl.

No Buyers of Product No. of Units Percentage

1 Private Customers 73 96.05

2 Govt. Department 26 34.21

3

Intermediary Manufacturing

Units 2 2.63

TOTAL 101

179

6.1.10. Consumption of Power:

Consumption of power is one of the regular expenditures of industries. It

constitutes regular working capital expenditure of industries. Following table 6.11

shows the level of power consumed by the units.

TABLE: 6.14

CONSUMPTION OF POWER BY SSI UNITS

Sl.

No

Consumption of Power per

annum No. of Units Percentage

1 Up to 5000 66 86.85

2 Rs. 5000 to 10000 7 9.21

3 Rs. 10000 to 20000 2 2.63

4 Rs. 20000 above 1 1.32

TOTAL 76


Fig. 6.13

CONSUMPTION OF POWER

Through field survey it has been found that 66 units i.e. 86.85% of the units

consumed power less than Rs.5,000/- annually which is followed by 7 units

(9.21%) consumed between Rs.5,000/- to Rs.10,000/- per annum, 2 units i.e.

2.63% consumed between Rs.10,000/- to Rs.20,000/- per annum. There is only 1

180

unit (1.32%) which consumed power worth more than Rs.20,000/- and above

(Table 6.14).

6.1.11. Nature of Operation:

Most of the small scale industrial units in the state are operating on

perennial basis as shown in table 6.15.

TABLE: 6.15

NATURE OF OPERATION OF SSI UNITS

Sl.

No Nature of Operation No. of Units Percentage

1 Perenial 74 97.38

2 Seasonal 1 1.31

3 Casual 1 1.31

TOTAL 76 100


Fig. 6.14

NATURE OF OPERATION

181

Majority (97.38%) of the small scale industrial units are operating on

perennial basis while only 2 units are operating on seasonal and casual basis

respectively constituting only 1.31% each.

6.1.12. Capacity utilization:

The level of capacity utilization is a very important criterion for the

measurement of efficiency of industries. Utilization of total installed capacity

shows the extent to which an industry is managed efficiently. It has been observed

that many small scale industrial units in the state do not utilize their installed

capacity fully.

TABLE: 6.16

CAPACITY UTILIZATION OF SSI UNITS

Sl.

No Capacity Utilization No. of Units Percentage

1 Upto 50 % 13 17.1

2 50 to 75 % 25 32.9

3 75 to 100 % 38 50

TOTAL 76 100

Source: Field Survey.

182

Fig. 6.15

CAPACITY UTILIZATION

Table 6.16 shows that half (50%) of the industrial units utilized their

installed capacity between 75-100%, which is followed by 50-75% with 32.90%.

17.1% of the SSI units utilized their installed capacity at the level of less than 50%.

Lack of demand, non-availability of required raw materials in time and lack of

trained man power are some of the main reasons of under utilization of capacity.

TABLE: 6.17

RELATIONSHIP BETWEEN CAPACITY UTILIZATION AND

INVESTMENT IN PLANT & MACHINERY

Investment in Plant

& Machinery

Capacity Utilization

Upto

50%

50%-

75%

75%-

100% TOTAL

Less than Rs.50000

8 12 20

Rs.50000-100000 1 3 11 15

Rs.100000-200000 1 2 9 12

Rs.200000-500000 6 7 4 17

Rs.500000 and

above 5 5 2 12

TOTAL 13 25 38 76

Source: Own analysis

183

Analysis reveals that there is an inverse relationship between investment

and capacity utilization in this sector of the economy. The capacity utilization level

is higher among small units with low fixed investment as compared to big units

with large fixed investment and vice-versa.

6.1.13. Maintenance of Books of Accounts and Computerization:

Maintenance of proper records of overall activities is one of the vital

factors for the success and survival of business enterprise. Books of Accounts are

an important part of business. Maintenance of proper account is necessary for

systematic records of all transactions, ascertaining the net effects of the

organization, knowing the financial position of the business, providing information

to interested parties and decision making.

TABLE: 6.18

MAINTENANCE OF ACCOUNTS

Sl. No Book of Account Maintained No. of Units Percentage

1 Yes 37 48.69

2 No 39 51.31

TOTAL 76 100


184

Fig. 6.16

MAINTENANCE OF ACCOUNTS

It is very unfortunate that many small scale industries in the state do not

maintain proper books of account (Table 6.18). According to survey, 51.32% of

the SSI units do not keep any systematic record of their daily transactions. Some of

them simply write down their transactions in a register while some of them do not

maintain any record at all. 48.69% of SSI units maintain their accounts but that is

also not scientific.

TABLE: 6.19

COMPUTERIZATION OF ACCOUNTS

Sl. No Computerization of Records No. of Units Percentage

1 Yes 10 13.16

2 No 66 86.84

TOTAL 76 100


185

Fig. 6.17

COMPUTERIZATION OF ACCOUNTS

It has been observed that only 13.16% of SSI units under study have

computer for maintenance of records of the business (Table 6.19).

6.1.14. Sources of capital:

Capital is the life blood of any business and it is also one of the most

important factors of production. The growth, development and promotion of SSI

units largely depend on the timely availability of adequate capital. Various sources

of capital in SSI units are given in table 6.20.

TABLE: 6.20

SOURCES OF CAPITAL OF SSI UNITS

Sl.

No Source of Capital No. of Units Percentage

1 Commercial Bank 13 17.10

2 Other Financial Agency 4 5.26

3 Own Fund 64 84.21

4 Money lenders 0 0.00

5 Relative / Friends 2 2.63

TOTAL 83


186

Fig. 6.18

SOURCES OF CAPITAL

The total number has become 83 which is due to the fact that there are 7

units having more than one source of capital. It has been observed that internal

source i.e. own fund is the major source of capital in SSI sector in the state. It

accounted for 84.21% of the total capital employed by small scale industrial units.

The rest of the capital is obtained from external sources in the form of borrowing.

The share of commercial bank in the form of borrowed fund is 17.10%, while that

of other financial agency is 5.26%. Other external sources like friends and relatives

accounted for only 2.63% of the total capital.

It may be noted that while interviewing the respondents, many of them

stated that they applied for loan from commercial banks but they failed to get it.

They also stated that had there been more capital for investment, their business

would have grown faster and achieved greater success.

6.2. Personal Profile of the Owner:

6.2.1. Gender of the owner:

As already seen in 6.1.5, 76.32% of the owners are male and the rest

23.68% are female.

187

6.2.2. Age of the owner:

The age of the owner plays a significant role in the overall growth and

development of any industrial concern. Innovative spirit, adoption of new methods

and techniques of production, progressive attitude, risk taking ability, etc. are

closely related to the age of the owner. Table 6.16 shows distribution of units

according to age of owners.

TABLE: 6.21

DISTRIBUTION OF UNITS ACCORDING TO AGE OF OWNERS

Sl.No Age group of Owners /

Proprietors Number Percentage

1 18 – 25 years 3 3.95

2 25 – 35 years 17 22.37

3 35 – 45 years 21 27.63

4 Above 45 years 35 46.05

TOTAL 76 100


Fig. 6.19

DISTRIBUTION OF UNITS ACCORDING TO AGE OF OWNERS

188

Table 6.21 shows that majority of the entrepreneurs (46.05%) are in the age

group of more than 45 years. This implies that unemployed youths in the state are

not showing keen interest in the establishment of small scale industrial units to

uplift the level of their living standards. Entrepreneurs in this age group usually

have more motivation and have ability to take the risk. Entrepreneurs in the age

group of 35-45 years accounted for 27.63%. People in the age group of 25-35 years

are 22.37%. Entrepreneurs in this category are generally enthusiastic and

competitive and have progressive outlook. 3.95% of entrepreneurs belong to the

age group of 18-25 years.

6.2.3. Educational Qualification of Entrepreneurs:

There is a notion that educated person has an advantage over uneducated

person in achieving success in every line of activity. It is a major criterion which

determines the value of human resources. Economic development of a country

highly depends on the availability of quality human resources; this is particularly

true in case of entrepreneurial growth. Literacy affects the decision of a

prospective entrepreneur in selection of an enterprise, location and cost of project

and application of modern technology. It also helps in day to day decision making

as well as in running of a project. Education makes him aware of various facilities,

incentives and policies of the government. An educated entrepreneur generally has

a good vision of the future which helps him in planning and decision making.

TABLE: 6.22

EDUCATION LEVEL OF OWNERS/ENTREPRENEURS

Sl.

No Educational Qualification No. of Units Percentage

1 Matriculation 20 26.32

2 HSS 17 22.37

3 Graduate 9 11.84

4 Other 30 39.47

TOTAL 76 100


189

Fig. 6.20

EDUCATION LEVEL OF OWNERS/ENTREPRENEURS

The educational level of entrepreneurs of sample units is shown in table

6.22. It can be seen that 39.47% of the entrepreneurs belong to other category

which mainly includes owners having educational qualification lower than

matriculation level. Entrepreneurs with formal education up to matriculate

contribute 26.32% while 22.37% of the entrepreneurs have higher secondary level

of education, only 11.84% of entrepreneurs are graduates.

6.2.4. Training and Experience:

For the success of business, training of the owners as well as employees

plays a very important role. Training and experience enhance knowledge, skill and

managerial capability. In order to keep pace with the latest technology, training

becomes essential in all industrial units. Some entrepreneurs were trained before

starting their business while some had undergone training after setting up of their

business. It is found that majority of the entrepreneurs of small scale industries in

Mizoram have not been given due importance to training. Only 24 out of 76

entrepreneurs i.e. 38.58% (Table 6.23) have attained formal training out of which

17.11% of them were trained for less than 6 months duration. The remaining

68.42% of entrepreneurs run their business without any formal training.

190

TABLE: 6.23

TRAINING OBTAINED BY OWNERS OF SSI UNITS

Sl.

No Training No. of Units Percentage

1 Less than 6 months 13 17.11

2 6 - 12 months 6 7.89

3 12 - 18 months 1 1.32

4 18 above 4 5.26

5 No training 52 68.42

TOTAL 76 100


Fig. 6.21

TRAINING OBTAINED BY ENTERPRENUERS

Experience of entrepreneurs in the sample units is given in Table 6.24. It is

observed that 34.21% of entrepreneurs have business experience of more than 15

years, followed by 1-5 years, 5-10 years and 10-15 years of experience with

19.74% respectively. 6.58% of entrepreneurs have less than 1 year experience.

Since 65.79% of entrepreneurs have less than 15 years of experience it reflects the

juvenile stage of industrialization in the state.

191

TABLE: 6.24

EXPERIENCE OF ENTREPRENEURS IN SSI UNITS AS ON 31.3.2012

Sl.

No Experience No. of Units Percentage

1 Less than 1 year 5 6.58

2 1 - 5 years 15 19.74

3 5 - 10 years 15 19.74

4 10 - 15 years 15 19.74

5 15 above 26 34.21

TOTAL 76


Fig. 6.22

EXPERIENCE OF ENTREPRENEURS

6.2.5. Reasons for Choosing this Occupation:

There can be many reasons for choosing a definite line of business. Table

6.25 indicates the various reasons which motivate entrepreneurs to choose

entrepreneurship as their profession. Here the total number is 83 which is due to

192

the fact that there are some entrepreneurs are having more than one reason for

choosing their occupation.

It is found that the majority i.e. 61.84% of the entrepreneurs have chosen

this profession due to the fact that they are interested in this line of business.

21.05% of the entrepreneurs stated that they established their business due to

family pressure. Only 19.74% of the entrepreneurs admitted that there was no other

option to choose as a career. Preference to have an independent way of life as the

factor motivated only 6.58% of the entrepreneurs. None of the entrepreneurs have

chosen this vocation for government assistance. This indicates that majority of the

entrepreneurs in the state are not aware of the various schemes, incentives and

subsidies provided by the government for the SSI sector. When enquired about

their future plan for the unit, majority of the respondents wanted to expand their

units to increase production and profit. But they do not have any specific strategy

to achieve the goal.

TABLE: 6.25

REASONS FOR CHOOSING THIS OCCUPATION

Sl.

No Reasons for Choosing No. of Units Percentage

1 No other option 15 19.74

2 Family Pressure 16 21.05

3 For Govt. Assistance 0 0

4 Interest in this line of Activity 47 61.84

5

Preference to have independent

life 5 6.58

TOTAL 83


193

Fig. 6.23

REASONS FOR CHOOSING THIS OCCUPATION

6.2.6. Problems faced by the Units:

There can be no unit free from problems, which may be different in nature

from one another. Problems pertaining to small scale industries in the study area

are multi-dimensional. It varies from unit to unit and also from location to location.

Problems faced by the units from urban areas are also different from that of their

counterparts in the rural areas.

Table 6.26 shows various problems faced by small scale industries within

the state. Financial problem is the major problem of the sample units. Here also

some units faced more than one problem which resulted in the total being 111.

42.11% of the units considered finance as a serious problem which unfavorably

affected their performance level. It was found that had there been sufficient funds

businesses could have become more prosperous. 36.84% of them have inadequate

power supply while 34.21% have a problem related to raw materials. 22.37% of

194

the units have marketing problems of their products followed by transport problem

with 5.26% and management problem with 3.95%.

TABLE: 6.26

PROBLEMS FACED BY SMALL SCALE INDUSTRIES

Sl.

No Problems faced by the Unit No. of Units Percentage

1 Financial 32 42.11

2 Transport 4 5.26

3 Marketing of Products 17 22.37

4 Raw Materials 26 34.21

5 Inadequate Power Supply 28 36.84

6 Management 3 3.95

7 Other 1 1.32

TOTAL 111


Fig. 6.24

PROBLEMS FACED BY SMALL SCALE INDUSTRIES

195

Transportation problem generally crops up due to the hilly landscape of the

state. Mizoram has no proper rail network or developed waterways and roads are

the only mode of transportation in the hill state. Transportation cost is very high as

compared to other states. All industrial units in the state are adversely affected due

to the poor network of roads.

Problems relating to raw materials is another serious problem faced by the

SSI units. Units which procure their raw materials from outside are the worst

victims. Financial problem associated with small scale industrial units is mainly in

the form of working capital shortage. Management is not a serious problem for the

small scale industrial unit. Most of the small scale industrial units located in rural

areas are badly affected due to insufficient power as compared to their counterparts

in the urban areas. This is mainly due to inadequate power supply and their poor

maintenance in the rural areas.

6.3. SUGGESTIONS FOR SMALL SCALE INDUSTRIES:

In the light of the above findings the study suggests the following measures for the

growth and development of small scale industries as well as entrepreneurship

development in the state of Mizoram:

1) Existence of proper infrastructural facilities is necessary for the

development of industrialization. In the absence of proper infrastructure

like power supply, road communication etc, it is difficult for the industries

to reach satisfactory levels. It is a confirmed fact that if infrastructural

facilities are adequate, economic progress is possible but if they are

inadequate, it hampers the progress of the economy as a whole.

Unfortunately, even today the infrastructure facilities in Mizoram are not at

a satisfactory level and industrial sector is the direct victim and sufferer

particularly in the areas of electric power supply and transportation. The

real concern of the state can be judged from the state of development of its

industries or from the way it gives importance towards the development of

infrastructure within the state. Power and electricity is the basic

infrastructure around which all economic activities revolve.

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The state of Mizoram has as many as 73 possible locations ideal for

developing small hydel plants. The State Government has cleared 11

projects sites already that can be implemented subject to availability of

fund. The Ministry of Renewable Energy is offering a subsidy of 50% on

the project cost in case of small hydel plant up to 3 MW of capacity.

Though the state has vast hydro-electric potential and the government also

has given certain efforts, yet the progress in this field is very slow thereby

creating an enormous gap between the demand and supply of electricity. In

order to overcome the serious power problem it is suggested that the

government should seek and encourage private investment in the power

sector.

Large business houses of the country having experience in this field

like Tata, Reliance etc. and even foreign companies must be invited to

exploit the massive potential of the state. The construction of Tuirial Hydro

Electric Power has been completed and immediate steps should be taken to

utilize its capacity to the maximum. Besides, proposal for Mat, Tuivai,

Tuivawl and Kolodyne etc. mini hydel projects should be speeded up so

that the state can start generating electricity at the earliest. Though Serlui

and Maicham Hydro Electric Power are in operation, the power generated

from these hydel projects is below the projected capacity. If the

government works on the potential hydro electric power generation with

full swing, the state has all possibilities to become self sufficient in power

generation.

Due to the absence of adequate rail network, air ways and

waterways, people of the state solely rely on road transport which is very

narrow, cursive, rough and dangerous. As such, there is a burning need to

improve the means of transport and communication in order to move ahead

towards industrial development. The construction of the ongoing project of

Katkhal- Bairabi rail line covering Sairang, which is about 20 Kms away

from Aizawl, is hampered by the demand of high compensation from the

land owners and the government should take all the necessary steps to

make a settlement with the landowners immediately. Besides, air transport

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facility should be extended to other parts of the state, mainly in the

southern region.

Telecommunication facilities like broad band and internet should be

provided by all the existing telephone service providers. The people in

general and the SSI entrepreneurs in particular should be encouraged to

learn and know the advantage and usefulness of internet. Besides, in order

to avoid uneven industrial growth in the state, apart from the already

existing industrial infrastructure, more industrial estates and growth

centers, Export promotion Industrial Park (EPIP), Industrial Cluster and

Food Park should be established in other parts of the state. Various Public

awareness programmes and functions may be organized at regular intervals

to promote industrialization.

2) The rich and vast forest resources of Mizoram can be utilized for speeding

up of industrialization in the state. The state of Mizoram has the largest

bamboo forest in the country, about 80% of the land is covered by forest, of

which around 80% is formed by bamboo forest. Among the natural

resources, Bamboo is a major forest product of the state. Various species of

bamboo are grown naturally in the forest. Government should give priority

towards the development of bamboo based industries. It should give more

power and autonomy to Bamboo Development Agency to promote bamboo

and its products. Though there is a problem in setting up of large scale

industries due to the inconvenient geographical location and hilly terrain,

yet there is plenty of scope to setup mini paper mill and other bamboo

based industries to manufacture products such as bamboo board, bamboo

ply, mat ply etc. in the state.

The state is also rich in natural timber and it has tremendous

advantage in setting up of plywood and other wood-based industries. Once

the Government takes the initiative, private entrepreneurs will surely come

forward. As long as the raw materials required for these types of industries

are locally available, working capital can be saved to a great extent from

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acquiring it as compared to industries requiring raw materials which are not

locally available.

3) Mizoram is bestowed with a climate which is suitable for cultivation of

almost all kinds of crops. Though it is not self sufficient in production of

the main part of our food i.e. rice, yet the state produces other agricultural

and horticultural products in huge quantities which can be efficiently

utilized by setting up of small scale industries based on these resources.

Recently, the inhabitants of Hnahlan area of Champhai district have

started grape cultivation. The grapes which are cultivated in this area are

used for making Grape Wine called Zawlaidi and the farmers have started

to earn considerable return on their investment. The government should

make lenient obligation for these grape growers towards payment of taxes

and duties etc. Cash crops are also grown widely in the hill slopes of the

state. Fruits like passion fruit, pine apple, orange, lemon, banana, papaya

etc., spices like ginger, cardamom, chilies, cinnamon, black pepper,

turmeric etc. are grown intensively all over. Besides, oilseeds like mustard,

soyabean and sesame are also grown in the state.

It was learnt that the cultivators and farmers have to sell most of

their products at very cheap rates to traders due to the highly perishable

nature of the products since there are not sufficient facilities like cold

storage and other scientific techniques to preserve these commodities in the

state. The problem of marketing and transportation of these agricultural and

horticultural products can be minimized to a great extent with the setting up

of Agro-based industry. This would in turn, generate more income,

employment and occupational mobility and security on the one hand and

will ensure fair price and protect the farmers from distress sell during

surplus period on the other.

Poor infrastructural facilities and geographical obstacles rule out the

feasibility of major industries in the state. Small and Medium Scale Agro-

based industries can be established in this context. The state government

should make attractive schemes and incentives to catch the attention of the

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talented young entrepreneurs of the state in this sector and collaborate with

large industrial houses of the country or even foreign companies to promote

industrialization in the state.

4) The operation of small scale industries in the state is badly hampered due to

inadequate and non-availability of funds in time. Existing industrial units

are suffering from lack of working capital. Financial problem among the

industrial units in Mizoram is one of the major constraints towards

industrial growth which requires instant remedy. Being ‘No industry state’,

the centre is supposed to give due priority and the state deserves more

assistance from All India Financial Institutions. Financial institutions like

SIDBI, IDBI, IFCI etc. may be encouraged to open branches throughout the

state so that better and smooth credit flow is ensured within the state.

In order to overcome the problem of availing loans from

commercial banks, simplification in the existing procedures of granting

loans to SSI, can be considered. Minimal paper work, delegation of more

power to branch managers and other subordinates etc. are some of the other

worthwhile measures that can be taken to alleviate the financial problems

of Small Scale Industries in the state to a great extent.

5) The importance of a peaceful and harmonious employer-employee

relationship cannot be ignored for having a good working environment. The

employer-employee relation is closely related to the growth of industries.

Harmonious relationship should prevail between employer and worker. Self

motivation among the employees and workers is found to be most

appropriate and desirable for every industry to attain success.

To safeguard the welfare of employees and workers, a Labour

Commissioner’s Office should be set up in the state to enforce various

labour laws, provide statutory cover to the workers through conciliatory

efforts, adjudicatory measures and to promote welfare oriented activities to

minimize their suffering. All the industrial units in the state should initiate

200

labour welfare measures like medical benefit, payment of bonus, retirement

benefit, gratuity etc. This will create a healthy environment among workers

as it would increase their productivity and the industrial sector will

experience a new era of development.

6) Individual or sole proprietorship is the most common form of enterprise in

the state. As long as pooling of skill and knowledge is concerned,

partnership and company are ideal types of organization. Therefore,

entrepreneurs should be encouraged to set up partnership or company type

of industry. Industrial Estates and Growth Centers should be made more

attractive for entrepreneurs by providing suitable industrial infrastructure so

that those who operate their business on rented premises will be attracted

and they will find it more convenient, profitable and safer to operate in

these centres.

7) The ongoing project of international border trade called ‘Look East Policy’

between India and Myanmar and India and Bangladesh should be

immediately implemented. This would facilitate industrial units of

Mizoram to sell their products in foreign countries. Industries based on

natural resources and agricultural and sericultural products will mainly be

the beneficiaries of the Look East Policy. For the rapid development of

Look East Policy, the following suggestions are highlighted:

a) The Government of India has played a vital role for the rapid

construction of roads communication between Rih-Tiddim and Rih-

Falam for which the Border Roads Organisation has already submitted

Detailed Project Report. This project has to be given top priority as it

will become part of the Trans Asian Highways which would enable

easier accessibility to South East Asian Countries. Apart from these,

other viable projects like the Kaladan Multi Modal Project should be

completed as early as possible and all possible efforts should be taken

for its early completion. Up-gradation of the existing Land Custom

Stations with better equipment and facilities is also necessary.

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b) Implementation of free movement regime between India and Myanmar

is necessary for border trade. There is always a problem of cross

border movement. Even today India and Myanmar have not yet agreed

for free cross border movement which is mandatory for the success of

trade between the two countries.

c) As India is far more developed than Myanmar and Bangladesh who

lack necessary infrastructure for promotion of trade between the

countries, it may consider improving their required trade infrastructure

and facilities. This action would definitely help in promotion of trade

between the countries at a greater speed.

d) As far as Mizoram is concerned, it can promote Tourism from the

government level. By promoting Tourism which is also known as

smokeless industry, more tourists can be attracted. Mizoram needs to

improve and develop Tourism and Hospitality management and

encourage its youths to embrace more of tourism. More tourist lodge

and hotels should be set up near the border areas.

e) In connection with exports, to cater the international market, the

quality of goods must comply with the World Trade Organisation

standard. For this purpose, quality of the products must be upgraded to

compete with competitors in the international markets and meet the

expectations of buyers.

8) At present, Small Scale Industries are mainly engaged in manufacturing

products to meet local demand. Proper skill up-gradation is required for the

production of marketable product, optimum utilization of raw materials,

packing and packaging etc. Their entrepreneurship and managerial

capability needs to be improved. It has been observed that most of the

workers in SSI sector of the state are unskilled. To solve this problem of

lack of skilled workers, a proper human resource planning is to be prepared

at the state, district and block level. Necessary step should be taken to

promote the required skills through education, training and other human

resource development programmes. Steps are also required to be taken to

minimize dependency on migrated and foreign workers. Strict

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administrative action and encouragement of local manpower may prove to

be fruitful in this regard. Institutes under the state government should be

mobilized to impart skill and knowledge through proper training.

9) Though training is necessary it is not sufficient for the full development of

entrepreneurship in the state. Training alone may result in mere

entrepreneurship but there is no assurance of success unless it is supported

by a favorable external environment. The socio-political and administrative

set up of the state shapes the attitude of prospective entrepreneur to a large

extent.

Once an innovative youth comes out with the right attitude,

enthusiasm and technical know-how, he is suddenly struck by

administrative drawback, corruption, non-cooperation and lack of interest

among the officials. Consequently, his enthusiasm and interest slow down

and finally he too becomes hopeless. The social, political and

administrative system should be put in order and in right shape to achieve

the greater goal.

10) Right attitude of the general public is also another important factor for

industrialization. It is a conventional fact that people with right attitudes,

total dedication and right conception can change the existing system.

People should overcome the lust to earn easy money and set their mind to

take risks positively. Given the strength, needs, opportunities and the great

potential of agriculture, horticulture, sericulture and forest calls for a

significant effort, both on the part of the State and the Centre and the

diligent inhabitants of the state to generate appropriate industrial climate in

the State. Packages of incentives and the inbuilt talents of the Mizos in the

form of a big drive are required to move the economy on the path of

industrialization. A steady approach is necessary where the government, the

business class and the educated youths should join their hands together and

come forward with a new vision and energy to break the vicious circle of

non-industrialization in the state.

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11) Trade wise marketing plan may be helpful and evolve based on the

following strategy:

a) Adoption of marketing Special Purpose Vehicle (SPV) or

Agency:

A society, PSU or Individual unit having experience in the field of

marketing certain products outside the state and having commitment

for the upliftment of Small Scale Industries and rural economy may

be adopted as SPV. The adopted SPV will Conduct Market survey

and analysis with their expertise. Identification of marketable

products, quality requirements, optimum quantity of product and

prevailing market rate will also be done. This vital information

should be passed on to Small Scale Industries for production

planning. The products of these Small Scale Industries will be

marketed through this SPV thereby making proper forward and

backward linkages. The rate at which the products of Small Scale

Industries collected at the SPV level will be fixed so as to benefit

both SPV and the Small Scale Industries. In doing so, the

intervention of Government may also be required so as to safeguard

the interest of Small Scale Industries against exploitation from SPV.

b) Adoption of Single Branding System:

The product of a single Small Scale Industry is too small to

mobilize market outside the state. The products of a group of Small

Scale Industries producing the same materials will be marketed

outside the state by a single SPV under a common brand name.

Collection of products from many enterprises together can make

products of marketable quantity thus mobilizing regular marketing

network and can have proper market share in the demand market

outside the state and even for export.

c) Allocation of adequate working capital for SPV :

Many people running Small Scale Industries come from low income

groups. The sustainability of their engagement in Small Scale

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Industrial activity will depend on whether they can get regular

income. The turn over cycle, especially at the initial stage, should

be made as short as possible, preferably, spot payment be made as

soon as it is accepted by the SPV. At the most, the credit period

should not be more than a week’s time. On the other hand, the SPV

will bear a longer turnover cycle for the products to be marketed

outside the state. This may be ranging from one month to 3 months

cycle depending on the product. During this period the SPV will

need sufficient capital so as to make regular payment to the micro

enterprises.

d) Formation of proper Godowns with packing and

packaging facilities:

At a place easily accessible for the beneficiaries/ units, there must

be a collection point with Go-down facilities. Final touch and

quality checking should be done by SPV at this point. Packing and

Packaging as per the requirement of the product should also be done

at this point.

12) Mizos are talented with a gift of garb and do not have much problem in

learning also. This advantage can be taken up significantly. A thorough

survey should be conducted to find out the gifted and talented persons all

over the state and arrangement should be made for them to impart their skill

through training centers and they should be paid a reasonable remuneration.

In this way talents of the people would be unearthed. The state government

should also help these talented people in setting up industries which would

be most appropriate for them.

1) Generally Mizo families are small with an average of 4 to 5 members.

While implementing Family Planning Programme of the Central

Government, the people of Mizoram are encouraged not to bear many

children which results in shortage of man power or labour workforce within

the state. Even well-to-do families do not want to have many children

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irrespective of their potential to look after them. In order to overcome this

problem of shortage of labour and dependency on non-Mizo workers, the

people should be encouraged to bear children as many as possible. At

present, Mizoram accounts for only 0.09% of India’s population.

Awareness programmes towards generation of more population along with

all its advantages should be organized. In this way, the state will become

self-sufficient in man power in the future time and the problem of high

labour cost will also automatically be reduced.

6.4. SUGESTIONS FOR SEMI GOVERNMENT UNDERTAKINGS:

1) High administrative expenses and losses must be reduced to the maximum

by taking remedial measures. Implementation of early/voluntary retirement

scheme is required to reduce the number of existing employees which

would help in reduction of administrative expenses. It has been observed

that many employees of the corporations under study are ready to accept

early/voluntary retirement scheme if and when implemented. The scheme

should be made applicable for employees of all semi government

undertakings. While framing the scheme, care should be taken to cover

eligibility criteria for availing the scheme, formula for calculating the

severance compensation and social safety net measures for displaced

employees including re-skilling/training programmes that may be offered to

facilitate them to seek alternate employment opportunities.

2) Strengthening of Board of Directors with induction of Independent

Directors having appropriate industry experience would help the

corporations in undertaking necessary actions for ensuring their

sustainability.

3) The number of government departments, institutions, committees, meetings

etc. involved in decision making process should be less to shorten the time

consumed by the lengthy process. Any process causing delay in action must

be removed and monitoring/screening committee with an authority to take

final decision should be set up.

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4) On account of the significant investment in modern plant and machinery for

fruit processing, in order to manufacture products adhering to applicable

quality regulations for domestic and international markets, there has been

interest from the private sector in associating them for the marketing of the

products by leveraging their network. Due to this positive step, attempts

should be undertaken to involve the private sector in the development of

logistics infrastructure in terms of cold chains, material handling facilities

etc. at the processing plants to ensure lower level of wastage of raw

materials and finished goods.

5) The state government should have policies or regulations for enabling

corporation reforms in terms of a common framework for identifying

corporations to be reformed, restructured, privatized and closed. Besides,

institutional mechanism should be established for implementing and

monitoring the corporation reform process. For this purpose, coordination

with sponsoring Ministries for implementing reform measures in

corporations under their administrative control, etc. should be taken into

account.

6) Since formulation of pay scales of employees in corporations under study

lies in the hands of the state government, implementation of equal pay for

equal job is necessary to remove the inferior feelings of employees.

Employees would be happy and satisfied if their counterparts in other

corporations enjoy the same pay scale. This would increase their motivation

level as well as productivity.

7) For making concrete decision regarding continuation or closure of these

semi government undertakings, categorization based on performance can be

made as given below:-

i) to be retained and restructured under government ownership,

ii) to be privatized and,

iii) to be closed.

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By analyzing their performances, it has been suggested that:-

i) MIFCO would be retained and continue availing support from the

government of Mizoram in form of grants to fund its losses and

high administrative expenses. Further, it is suggested that the

authorization for procurement of all agricultural produce along with

the establishment of market linkages for the same should rest with

MIFCO.

ii) It is also suggested that MKVIB and ZIDCO would continue their

operations under the government ownership. ZIDCO should

continue its operations focussing on loan recovery for purposes of

non-performing assets management and industrial infrastructure

development in line with mapping of requirements in the state.

MKVIB may concentrate more on imparting of skill and technical

know-how through training by providing better training facilities to

its training centres. Frequent spot inspection should be carried out

and analysis of performance should be done to find out the

problems faced by the units and to give necessary support and

suggestions as per requirement.

iii) ZOHANDCO is suggested for closure due to:

a. Unfavorable financial performance resulting in high level of

accumulated losses,

b. Insufficient working capital to provide raw material supply

on credit which is the vital support required by weavers,

artisans and craftsmen,

c. Lack of skills within the organization to offer the requisite

support to weavers, artisans and craftsmen, and

d. Existence of another comparatively better performing

Government body i.e. MAHCO, (Mizoram Handloom and

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Handicraft Cooperative Society Ltd. MAHCO) supporting

the socio-economic development of handloom and

handicraft sector within the state.

6.4.5. ZONUN MAT PLY (P) Ltd.:

1) It has been observed that the company needs government support and

assistance towards promotion of its products. Arrangement should be made by

the government to buy the products of this company and use them in

government offices and buildings which would in return create high demand

for the products within the state. This would enable the company to produce

more and mainly cater to the local demand and save high transportation cost

incurred outside the state. In order to raise the level of appreciation of the

product among private consumers within the state, the company should give

more attention towards advertising of its products with all its utility through

media like newspapers, radio and televisions.

2) The government should formulate relaxed policies and regulations for

manufacturing units especially in respect of marketing strategy and raw

material procurement. This would enable the industry to have freedom to

penetrate into any market and also avail raw materials as per the convenience

of the manufacturers.

3) Taxes and other charges levied by the government should be revised in order

to relieve the company from the burden of heavy taxes and other related legal

charges.

4) Unnecessary loss suffered by the company due to irregular and inadequate

power supply can be overcome by providing uninterrupted and sufficient

power supply. Since Zonun Mat Ply Ltd. is the only existing private limited

company within the state, the state government should pay more attention to

provide better power supply and also at a cheaper rate.

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Future Scope of the Study:

Although this study has touched upon various facets of industrialisation in

Mizoram, there still exists enough scope for more detailed studies on the subject.

Studies with regard to contribution of the small scale sector on the lives of the

people of Mizoram, economic impact of industrialisation, socio-economic changes

due to industrialisation, etc. can be undertaken.

CONCLUSION:

From the above discussion, we can conclude that there is hardly any

industrialisation in the state of Mizoram as of today. Whatever industries are

present, are only of a per-functionary nature and hardly provide any substantial

employment to the people of the state.

Although we have seen and discussed the problems due to which

industrialisation could not take off in the state, there is still vast potential especially

in view of the large border areas with which Mizoram is connected. Also the Look

East Policy of the Government of India will have a great impact on the economy of

Mizoram and would definitely lead to industries being set up in the state.

The people would also require to put in their efforts by persuading both the

Central and the State Government to play a major role in the development of the

industries in the region.

The - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/36044/14/14...The total number of existing small scale industries in Mizoram in the year 2012 were 1656 1 units, out of which

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