Sidco Project

CHAPTER - I

INTRODUCTION

IMK, Alappuzha Page | 1

INTRODUCTION

Kerala SIDCO, a Public Sector Undertaking of the Government of Kerala has

four decades of servicing to its credit as a Promotional Agency for Small Scale

Industries. This Corporation is rendering assistance to SSI's in the State, like

providing Infrastructure facilities, distribution of essential raw materials, marketing of

the SSI products, undertaking Civil and Electrical works etc.

Kerala SIDCO apart from its activities for development of Small Scale

industries in the State runs production units engaged in the manufacture of wooden,

steel, hospital furniture, computer furniture, laboratory equipments, and aluminium

fabrication of any design. Also marketing products manufactured by SSI units in the

state under our Marketing Assistance Scheme.

Marketing division of SIDCO provides assistance to small scale units in

canvassing orders from government departments and public sectors undertaking by

wary of contract marketing and tender marketing. There are seven sales emporia and

seven marketing centers all over Kerala. SIDCO participates in Exhibitions and

Trade Fairs on behalf of SSI sector for the promotion of their products. Steps are in

progress to market SSI products in Food, Plastic, Leather, and Rubber, Electrical in

addition to wood / steel /hospital furniture and Laboratory equipments. In the light of

Government orders from time to time SIDCO can supply various furniture to

Government Departments without participating in tender.

SIDCO mainly focusing on direct marketing, that means canvas orders from

the government institutions and offices by the marketing executives then give orders

to the small scale industries and collect products from the SSI units and sell the

products to the institutions from where the orders has been canvassed. SIDCO mainly

marketing the products to the government institutions rather than the private

institutions. The main customers of SIDCO are the government institutions and

offices.


1.1 OBJECTIVE OF THE STUDYThe project titled “To Evaluate and Study the Purchasing System Adopted by

SIDCO”, analyses the ability of purchasing department to select the proper sources of

supply of materials was studied. The objectives of this study are:

To study the factors considered in selecting the source of raw materials in

SIDCO.

To know about the accuracy in terms of time, in receiving the materials.

To study about the delivery of materials in SIDCO

To find whether there is any rate contract with the suppliers

To know the methods of choosing a supplier

To study about the consideration of other department during purchasing

To analyze whether the materials were inspected

To find the ways to reduce transportation cost

To analyze the relationship with the suppliers

To study about the mode of passing bills

1.2 SCOPE OF THE STUDYThe study is intended to attain a firsthand experience of the running of a marketing

department in an organization. The study helps to collect the detailed analysis of the

ability of purchasing department to select the proper sources of supply of material.

1.3 RESEARCH METHODOLOGY

The methodology section describes the research procedure. It describes the overall

research design, the methods of data collection, sampling procedure, field work,

including the analysis and interpretation of data. This research is targeted on the

decision making process of the purchasing manager of SIDCO which help him make

final solutions for the problem.

RESEARCH DESIGN

The research design applied here is the determination and statement of the general

research approach adopted for the project “To Evaluate and Study the Purchasing

System Adopted by SIDCO”


The research design here serves as a bridge between what has been established (the

research objective) and what is to be done to realize those objectives.

The research with the help of descriptive design tries to establish association between

factors.

The behavioral variables of people who are under study.

The situations variables that existed.

To demonstrate the cause and effect relationship the study has also used

experimental research design in some of the questions such as importance of

promoters activates market performance factors of consideration in stocking a

particular brand, competitive advantage etc.

1.4 METHODS OF DATA COLLECTION

The data collection method in the project includes primary and secondary data.

PRIMARY DATA

The primary data is obtained through observation and through direct

communication with respondents in one form or another or through personal

interviews. The primary data for the study obtained from unstructured interviews

with managers and departmental heads, employees and by direct observation.

SECONDARY DATA

Secondary data are those which have already been collected by someone else and

which have already been passed through statistical process. The secondary data were

collected from company records, journals, text books, annual reports, internet etc.

1.5 PROCESSING OF DATA

Processing implies editing, coding classification of collected data so that, that are

amenable to analysis. Percentages are often used data presentation for they simplify

numbers, reducing all of them to zero to hundred ranges.


1.6 TOOLS AND TECHNIQUES

SAMPLING

The research reaches its conclusion on the basis of sampling. The

study design statement finds out the target population which spells out the

sources from which the data are to be collected. In the particular research

design the target population in the employees of different sections in the

organization.

The two quantities most desired in a sample are its representatives and

stability. The sampling errors as well as non sampling errors is avoided as far

as possible in the selection of representatives.

The research also uses snowball sampling throughout which initial

method and additional units are obtained from information supplied by the

training department.

FIELD WORK

Personal interviewing is the chief method used in the survey.

Respondents will be more encouraging as most people are willing to supply

information when approached to personally. The interviewers can clear up

doubts which provide maximum accuracy. The language of the

communication can be adjusted to the status and educational level of the

person interviewed, thus avoiding inconvenience and misrepresentation.

In this survey the respondent’s selection errors, non response errors,

communication errors, recording errors and the like are minimized to be

greatest extent possible to achieve maximum information accurately. The

questionnaire prepared is pre-tested with five respondents.

ANALYSIS

The raw data received from the fields of primary collection is

validated, edited and coded of the preparation of analysis. In adequate,

inconsistent, irrelevant and illegible responses avoided for analysis. Their

conclusions are drawn by the research by logical inference.

The statistical analytical method is used to manipulate the data. Tables

were prepared on the basis of coded data with the help of statistical tools such

as simple percentage and the like. Ranking techniques are also used for

analyzing the data.


The collected data is brought to a quantitative order in an array by an

arrangement of data items in numerical sequence sample tabulation as well as

cross tabulation is used to investigate the relationship between two or more

variable.

On the basis of analyzed data some findings were extracted. After

evaluating the findings alternative course of action can be set of from

suggestion and recommendations.

1.7 LIMITATIONS OF THE STUDY

As usual for any research were also having certain limitations as

mentioned below

As in-depth study was not possible because the time limit was the main

constraint.

More time was required for collecting information from each respondent

because interviews were held only at the convenience of the informants.

The chances of personal prejudice were greater among the respondent.

As the collected and interpreted data is only from Thiruvananthapuram, the

conclusion cannot be applicable to the total market.

Marketing research used the techniques of science but it by itself is not an

exact science, so the result obtained is not very much applicable in all

situations.

Some of the customers and dealers were reluctant to give information at most

good faith.

I faced various difficulties in collecting data through questionnaire from the

public because of their illiteracy.

Many customers did not co-operate with me in the research process.


1.8 CHAPTERIZATION

Chapter 1 Introduction

This chapter covers objectives of study, scope of study, methods used for

collecting data, tools and techniques, limitation of the study and chapterisation.

Chapter 2 Review of Literature

Chapter 3 Industry Profile

This chapter includes detailed profile of the industry, growth and history of Indian

Textile Industry.

Chapter 4 Company Profile

This chapter contains the company details, company’s mission, vision, objectives,

group profile and product profile.

Chapter 5 Data Analysis And Interpretation

This chapter contains analysis of data collected and its interpretation.

Chapter 6 Findings, Suggestions and Conclusion

This chapter deals with findings during the study at the organization, the

suggestions made for improvement of the company and the conclusion.


CHAPTER - II

REVIEW OF LITERATURE


REVIEW OF LITERATURE

PURCHASE

“The total amount of goods procured by a business concern for cash or credit

for the purpose of sale or use is known as purchases”. In the case of a trading concern

this is the major item of expense. Goods purchased by the owner as it is not meant for

resale or processing into finished goods.

PURCHASE CONTROL

Material procurement is known as the purchase function. The functional

responsibility for purchasing is that of the purchase manager. The purchase manager

has the responsibility for purchase cost accounting and cost control.

Purchase Manager And His Duties

The purchase manager is entrusted with all purchasing activity. He has to

organize the purchase department systematically and efficiently. His in-efficiency to

perform his duties effectively has far reaching consequences on the finances of his

concern.

The duties or functions of the purchase manager are:

Prepare a purchase budget

Receive purchase requisition and ascertain the material requirements

Ascertain the sources of supply

Invite tenders from suppliers

Select the supplier who is offering best terms and conditions

Issue purchase order to the supplier concerned

Followup the purchase order to avoid any unnecessary delay in delivery

Receive the goods received note and goods inspection report to make sure that

the right type and right quantity of materials have been received

Return to materials to the supplier which are not according to the required

specification.

Verify the invoice with regard to the quantity, price and other relevant

particulars and pass it for payment.


Send the invoice to the accounting section.

CENTRALIZED AND DECENTRALIZED PURCHASING

Centralized purchasing means that all the purchase are made by the

specialized department organized for the specific purpose of purchasing. The

centralized purchasing only on purchasing department is there and all the purchase are

made by this department. This department is headed by the manager, who is

responsible for all purchase procedure. In this all the materials purchased are kept at

one central store.

Decentralized purchasing is exactly opposite to centralized purchasing. In this

separate stores are situated in various departments. The department requiring stores

can draw them from their respective stores. Thus decentralized purchase are made by

the individual department.

PURCHASE PROCEDURE

The sole function of the purchase department is to buy the light type of

material at reasonable price and supply them when required without interruption. The

purchase procedure varies from firm to firm depending upon the various requirements

and conditions. Forms and records are used to implement purchase procedure and

purchase policies. Following steps are commonly followed in purchase procedure.

1. Initial purchase requisition

It is the duty of these tore keeper t o initiate a purchase requisition. A

purchase requisition is a form used as a formal request ot the purchasing

department to purchase materials. In some cases this is prepared by the

departmental head, say for special materials. The formal request received

from the store keeper for purchase of certain materials is known as ‘Purchase

Requisition’. The purchase requisition may by either a regular purchase

requisition or special purchase requisition.

Regular purchase department is prepared by the store keeper for regular

stock of item. A special purchase requisition which is prepared by the

departmental head for special materials. It is usually prepared in triplicate.

The original copy is kept by the purchase department, the duplicate by the

store keeper and the triplicate is sent to the authorizing executive.


Bill of material: It is a complete schedule of materials and components

needed for a particular work order. The buying department is informed

through the bill of materials as to the quality, quantity and other specifications

of the materials required for a particular work.

2. Calling for tenders and selecting suppliers

The purchase department will have with them a list of suppliers.

Quotations are invited from these suppliers and a comparative study should be

made to decide who should be selected. A rational selection is made after

considerating the various capabilities of the supplier. Ultimately statement of

quotations is prepared giving particulars such as names and address of

suppliers, the price, their capacity to supply and the terms and conditions

relating to mode of payment, mode of delivery etc.

3. Purchase order

An order is a contract to buy a specific material or materials from a

supplier it serves as the basis of legal obligation to supply specified material,

subjected to price and terms standard in it. Five copies of an order are

prepared for sending each of supplies, receiving department, accounting

department, department which initiated the purchase requisition and purchase

department.

The order for goods should be drafted carefully in clear, definite words

without any ambiquity. Generally printed terms are used containing the

following particulars.

a. Order no, date, reference no.

b. Suppliers name and address

c. Description of items and quantity orderd

d. Rate and the amount

e. Mode and date of delivery

f. Packing and forwarding instruction

g. Cash discount and other terms of payment

h. Signature of the officials authourised to place the order

4. Receiving and inspection


When the goods ordered are received, receiving clerk checks whether the

packages and their contents are in the correct quantity. Delivery note and the

copy of purchase order. He would sign the copy of ‘delivery note’ as an

acknowledgedment of receipt of the goods.

The material will then be inspected by an inspector, who will prepare a

‘material inspection note’. He has to verify the quality and suitability of

materials in accordance with the specification as given in the purchase order.

Receiving clerk shall prepare a goods ‘received note’ in 5 copies to be

sent to

a. Purchase department

b. Accounting department for passing entries

c. Stores

d. Department initiating the requisition

e. One copy is retained for filing.

5. Making payment

Before making payment, the relevant invoices are checked by the

accounting section to confirm its authenticity as well as its arithmetical

accuracy. The quantity and price mentioned in the voice are checked.


CHAPTER - III

INDUSTRY PROFILE


INDUSTRY PROFILE

3.1 SMALL SCALE INDUSTRY

Small scale industries are differentiated from the former by the technique of

production. They use modern power driven machines and employ labor as well. The

raw materials are also obtained from outside, if not available locally. These industries

are larger in size than cottage industries. Their products are sold through traders

beyond local markets. In many developing countries, the role of these industries is

crucial as they provide employment to a large number of people. In countries like

India and China, a large number of goods such as clothes, toys, furniture, edible oil

and leather goods are produced by small scale industries.

The Industries Development and regulation act of 1990 defines a small scale

industries unit as a unit engaged in the production, processing and preservation of

goods, repairs and servicing, with an initial investment not exceeding Rs.60 lakhs on

plant and machinery.

The Major Objectives in Developing Small Scale Industries

The major objectives in developing small scale and medium industries are

given below:

To increase the supply of finished products.

To encourage capital formation.

To develop local entrepreneurship and skills.

To create employment opportunities.

To decentralize manufacturing activities from town areas and distribute them

in the rural sector.

To reduce regional imbalances.

To popular entrepreneurial and managerial abilities and skills.


The Importance of Promoting Small Scale Industries

The promotion of small scale industries is important due to the following

reasons.

Being labour - incentive, small scale industries provide the possibilities for

creating employment opportunities.

Small scale industries require comparatively lesser amounts of capital. So they

are suited to a country like India, where capital resources are meager.

When compared to large scale industries the small scale industries have very

short gestation period. They are quick yielding.

They can be successfully operated in rural and backward areas.

They can be installed as ancillary unit if- necessary.

They can act as catalytic agents to enhance the growth of entrepreneurship.

Decentralization of authority is very easy to put into practice in the

management of a small industry.

Price Preference Offered To Small Scale Industry Units

For the purchases made by the Government Semi-Governmental institutions

and public companies from small scale units, the Government is giving the following

price-preferences:

15% on the products of industries which are situated outside the state.

5% on the products of medium scale industries and large scale industries

situated inside the state.

2% additional price to the products of small units with ISI registration.

Services Rendered By the Taluk Industries Offices

The services rendered by the Taluk Industries offices are to grant provisional

registration to small scale industry units, to help them in their coordination and

development etc. These offices make the entrepreneurs of small scale industries

informed about the incentives and assistance offered to them by the Government.

They also recommend the names of small scale units which deserve to get incentives

and assistance, to the respective District Industry office. They also help in promoting


new industry units, and provide leadership in conducting various schemes in the

Taluk level.

Bridge Finance

Bridge finance is an interim finance which commercial banks provide to

entrepreneurs on a short-term basis to enable them to tide over the delay in getting

sanctioned term loans. In case the borrowing entrepreneur delays in submitting

necessary documents, the commercial banks and other financial institutions shall also

delay in distributing sanctioned term-loans. This delay shall cause further delay in

commencing the business unit. In such a situation the entrepreneur approaches banks

to get bridge sanctioned. As soon the term loan is sanctioned the amount of the bridge

finance is repaid.

Green Channel Clearance

There are several small scale units each with a capital investment, less than

Rs.10 lakhs. In order to encourage the growth of such industries, the entrepreneurs

must get prior sanction from the control agencies. The agencies accord sanction with

retrospective effect. This system of getting prior sanction is known as ‘Green Channel

Clearance’. Industries which are enlisted as of polluting nature by the pollution

Control Board Shall not get this facility.

Tax Holiday Benefit

New industrial enterprises, including small scale industries are exempted from

paying income tax up to 6% of their profits (7.5% in the case of companies) from

their gross income. This is according to section 80J of the Income Tax Act. Now

according to section 80HH and 80HHA the entrepreneur of a small scale unit

established in a rural area is entitled to get exempted of 20% of his profits. A small

scale unit gets these exemptions for 10 years from the actual commencement of

production.


Different Types of Government Incentives

The central Government or the State Governments or both offer the following

incentives to entrepreneurs of small scale industries:

Export-import subsidies and bounties.

Interest free loans.

Subsidies for research and development

Subsidies on Capital investments.

Subsidies for transportation

Interest subsidies

Financial assistance for purchasing power generators

Exemption from property tax

Subsidies to artisans, craftsmen and entrepreneurs of traditional industries

including hand-loom industry

Incentives to non-resident Indians who start business concerns of their own

Special incentives to women entrepreneurs

Exemption from paying income-tax

Sales tax exemptions

Interest free sales tax loans

Subsidies for the purchase of laboratory equipments

Loans for industrial housing

Land and building at subsidized rates

Price preference for small scale industries

Subsidies for technical advice

Reduction in stamp duty

Seed capital facilities

Allotting prepared sheds

Making available controlled and subsidized raw materials

Financial assistance for conducting market studies.


3.2 SMALL SCALE INDUSTRY IN INDIA

Since the time of independence, the small-scale sector in India has been a

major contributor to country’s Gross Domestic Product (GDP). This traditional sector

in India is considered to have huge growth prospect with its wide range of products.

With 40 percent share in total industrial output and 35 percent share in exports, the

small-scale industrial sector in India is acting as Engine of Growth in the new

millennium.

The definition for small-scale industrial undertakings has changed over time.

Initially they were classified into two categories- those using power with less than 50

employees and those not using power with the employee strength being more than 50

but less than 100. However the capital resources invested on plant and machinery

buildings have been the primary criteria to differentiate the small-scale industries

from the large and medium scale industries. An industrial unit can be categorized as a

small- scale unit if it fulfills the capital investment limit fixed by the Government of

India for the small-scale sector.

As per the latest definition which is effective since December 21, 1999, for

any industrial unit to be regarded as Small Scale Industrial unit the following

condition is to be satisfied: -

Investment in fixed assets like plants and equipments either held on

ownership terms on lease or on hire purchase should not be more than Rs

10 million.

However the unit in no way can be owned or controlled or ancillary of any

other industrial unit.

The traditional small-scale industries clearly differ from their modern

counterparts in many respects. The traditional units are highly labor consuming with

their age-old machineries and conventional techniques of production resulting in poor

productivity rate whereas the modern small-scale units are much more productive

with less manpower and more sophisticated equipments.


Khadi and handloom, sericulture, handicrafts, village industries, coir, Bell

metal are some of the traditional small-scale industries in India. The modern small

industries offer a wide range of products starting from simple items like hosiery

products, garments, leather products, fishing hook etc to more sophisticated items like

television sets, electronics control system, various engineering products especially as

ancillaries to large industrial undertakings.

Nowadays Indian small-scale industries (SSIs) are mostly modern small-scale

industries. Modernization has widened the list of products offered by this industry.

The items manufactured in modern Small-scale service & Business enterprises in

India now include rubber products, plastic products, chemical products, glass and

ceramics, mechanical engineering items, hardware, electrical items, transport

equipment, electronic components and equipments, automobile parts, bicycle parts,

instruments, sports goods, stationery items and clocks and watches.

Since independence the Government of India has nurtured this sector with special care

with the following aims: -

To develop this sector as a major source of employment

To encourage decentralized industrial expansion

To ensure equitable distribution of income.

To mobilize capital investment and entrepreneurship skills

The small-scale industries play a vital role in the growth of the country. It contributes

almost 40% of the gross industrial value added in the Indian economy.

It has been estimated that a million Rs. of investment in fixed assets in the small scale

sector produces 4.62 million worth of goods or services with an approximate value

addition of ten percentage points.

The small-scale sector has grown rapidly over the years. The growth rates during the

various plan periods have been very impressive. The number of small-scale units has

increased from an estimated 0.87 million units in the year 1980-81 to over 3 million in

the year 2000.


When the performance of this sector is viewed against the growth in the

manufacturing and the industry sector as a whole, it instills confidence in the

resilience of the small-scale sector.

Year Target Achievement1991-92 3.0 3.11992-93 5.0 5.61993-94 7.0 7.11994-95 9.1 10.11995-96 9.1 11.41996-97 9.1 11.31997-98 * 8.431998-99 * 7.71999-00 * 8.162000-01 (P) * 8.90

P- Projected (April-December)* Target not fixed at constant prices

Employment

SSI in India creates largest employment opportunities for the Indian populace,

next only to Agriculture. It has been estimated that 100,000 rupees of investment in

fixed assets in the small-scale sector generates employment for four persons.

Generation of Employment - Industry Group-wise

Food products industry has ranked first in generating employment, providing

employment to 0.48 million persons (13.1%). The next two industry groups were

Non-metallic mineral products with employment of 0.45 million persons (12.2%) and

Metal products with 0.37 million persons (10.2%).

In Chemicals & chemical products, Machinery parts except Electrical parts, Wood

products, Basic Metal Industries, Paper products & printing, Hosiery & garments,

Repair services and Rubber & plastic products, the contribution ranged from 9% to

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

industries the contribution was less than 5%.

Per Unit Employment


Per unit employment was the highest (20) in units engaged in beverages, tobacco &

tobacco products mainly due to the high employment potential of this industry

particularly in Maharashtra, Andhra Pradesh, Rajasthan, Assam and Tamil Nadu.

Cotton textile products (17), Non-metallic mineral products (14.1), Basic metal

industries (13.6) and Electrical machinery and parts (11.2.) The lowest figure of 2.4

was in Repair services line.

Per unit employment was the highest (10) in metropolitan areas and lowest (5) in rural

areas.

However, in Chemicals & chemical products, Non-metallic mineral products and

Basic metal industries per unit employment was higher in rural areas as compared to

metropolitan areas/urban areas.

In urban areas highest employment per unit was in Beverages, tobacco products (31

persons) followed by Cotton textile products (18), Basic metal industries (13) and

Non-metallic mineral products (12).

Location-wise Employment Distribution - Rural

Non-metallic products contributed 22.7% to employment generated in rural areas.

Food Products accounted for 21.1%, Wood Products and Chemicals and chemical

products shared between them 17.5%.

Urban

As for urban areas, Food Products and Metal Products almost equally shared 22.8% of

employment. Machinery parts except electrical, Non-metallic mineral products, and

Chemicals & chemical products between them accounted for 26.2% of employment.

In metropolitan areas the leading industries were Metal products, Machinery

and parts except electrical and Paper products & printing (total share being 33.6%).

State-wise Employment Distribution

Tamil Nadu (14.5%) made the maximum contribution to employment.


This was followed by Maharashtra (9.7%), Uttar Pradesh (9.5%) and West Bengal

(8.5%) the total share being 27.7%.

Gujarat (7.6%), Andhra Pradesh (7.5%), Karnataka (6.7%) and Punjab (5.6%)

together accounted for another 27.4%.

Per unit employment was high - 17, 16 and 14 respectively - in Nagaland, Sikkim and

Dadra & Nagar Haveli.

It was 12 in Maharashtra, Tripura and Delhi.

Madhya Pradesh had the lowest figure of 2. In all other cases it was around the

average of 6.

Year Target (in lakhs.)

Achievement (in lakhs.)

Growth rate

1992-93 128.0 134.06 3.281993-94 133.0 139.38 3.281994-95 138.6 146.56 5.151995-96 144.4 152.61 4.131996-97 150.5 160.00 4.881997-98 165 167.20 4.501998-99 170.1 171.58 2.611999-00 175.4 177.3 3.33

P-Provisional

EXPORT

SSI Sector plays a major role in India's present export performance. 45%-50% of the

Indian Exports is contributed by SSI Sector Direct exports from the SSI Sector

account for nearly 35% of total exports. Besides direct exports, it is estimated that

small-scale industrial units contribute around 15% to exports indirectly. This takes

place through merchant exporters, trading houses and export houses. They may also

be in the form of export orders from large units or the production of parts and

components for use for finished exportable goods.

It would surprise many to know that non-traditional products account for more than

95% of the SSI exports. The exports from SSI Sector have been clocking excellent


growth rates in this decade. It has been mostly fuelled by the performance of

garments, leather and gems and jewellery units from this Sector.

The product groups where the SSI Sector dominates in exports, are sports goods,

readymade garments, woolen garments and knitwear, plastic products, processed food

and leather products.

The SSI Sector is reorienting its export strategy towards the new trade regime being

ushered in by the WTO.

Year Exports (Rs. Crores)(at current prices)

1994-95 29,068 (14.86)

1995-96 36,470 (25.50)

1996-97 39,249 (7.61)

1997-98 43946 (11.97)

1998-99 48979 (10.2)

1999-00 (P) 53975 (10.2)

P-Provisional


CHAPTER IV


COMPANY PROFILE


4.1 COMPANY PROFILE

Kerala SIDCO a Promotional Agency wholly owned by Government of Kerala

was set up in November, 1975. Kerala SIDCO, a Public Sector Undertaking of the

Government of Kerala has four decades of servicing to its credit as a Promotional

Agency for Small Scale Industries. This Corporation is rendering assistance to SSI's

in the State, like providing Infrastructure facilities, distribution of essential raw

materials, marketing of the SSI products, maintenance of 17 Industrial Estates, 36

Mini Industrial Estates and undertaking Civil and Electrical works etc. We are also

running 8 production Units, which are undertaking various kinds of jobs works in

metal and wood. Moreover Kerala SIDCO is supplying Bitumen to Local Bodies as

Nodal Agency and Paraffin Wax to small scale industries.

SIDCO is a fully owned Government corporation, set up to promote small

scale industries in the state. SIDCO was registered as a company on November, 1975.

This company is actually an amalgam of two former companies namely Kerala State

Small Industries Corporation (formed in July 1961) and Kerala Employment

Promotion Corporation (formed in 1974). The authorized share capital of the

company is Rs.13 crores comprising of 12000 equity shares of Rs.1000/- each, issued

subs rived and fully paid up capital is Rs.1244.02 lakhs. The main objective of the

newly formed corporation-which were clearly delineated in the Articles of

Association are extracted below:

To aid, council, finance and protect and promote the interests of small

industries in the state, stabilize and run any industrial undertakings projects or

enterprise whether owned or run by Government, statutory body, company, co-

operative society, firm or individuals by providing them with capital, credit, mean,

resources supply of machinery and equipments on hire purchase procurement and

distribution of scarce raw materials, advise on import control policy and export

promote in procedures marketing and sales of products, revitalization of sick units and

rehabilitation of defunct units, adequate information and publicity, construction,

maintenance, management and administration of Industrial Estates and Development

plots, provision of all infra structural facilities, technical and managerial assistance for

the prosecution of their work and business.


To promote employment and entrepreneurship among the skilled, semi-skilled,

trained experienced and educated members of the public by promoting, establishing

and undertaking the development areas and plots, growth centers, common facility or

service centers or others infra structural works on its own or as agents of

Governments or any other body corporate or co-operative society or person.

To promote and operate schemes for industrial development and to develop

entrepreneurship by providing package consultancy service, including pre-investment

services, investment services and post-investment services and for that purpose to

prepare and get or cause to be prepared reports, studies, surveys, procedures, designs,

blue-prints, statistics and other information necessary for successful implementation

of industrial projects.

Functions and Divisions

From the very inception of the new company, SIDCO was assisting the Department of

Industries in the implementation of 10000 Industries program.

SIDCO started in a big way with the following Divisions.

Technical Consistency

Research and Development

Entrepreneurs Development

Raw material

Finance (share participation and margin money loan)

Sick unit Revival

Import and Export

Marketing

Machinery

Manufacturing

Information and publicity

Industrial Estate and Infrastructure

SIDCO Objectives


Development of small Industries in the state by providing

Infrastructure facilities

Raw material supplies

Marketing products of SSI units

Promotional activities for SSI products

Opportunities open for prospective Business partners Kerala SIDCO

Availability of Industrial land

New B.S Avenue through J.V Partnerships

Facilities for out sourcing parts and components

Training to B.S aspirants and entrepreneurs

4.2 GOVERNING BODY & EXECUTIVE COMMITTEE

Governing body & the executive committee controls the entire organization.

Two members that is the Director and the registrar are from the organization.

Chairman& Director

C.T Ahamed Ali

Managing Director

Shri. Saji Basheer

Directors

C.T Ahamed Ali

Shri. Saji Basheer

M.P. Renji

Shri.T.O.Sooraj,IAS

Smt. Sreelakumari

Samuel John


Legal Advisors

Shri.R.T Pradeep

Bankers

State Bank of India

State Bank of Tranvancore

Syndicate Bank

Canara Bank of India

Bank of India

United Commercial Bank

District treasury, Thiruvananthapuram

SUBSIDIARY COMPANIES

SIDKEL Television Ltd.

SIDCO Mohan Kerala Ltd.

SIDKEL Television Ltd.

SIDKEL Television Ltd. was promoted by SIDCO jointly with KELTRON.

The company was incorporated in March 1964 and commences its production in

January 1985. The factory is located at managers. SIDCO has contributed 74% of

the paid up capital and KELTRON SIDCO has contributed 26%. The company

manufactures both colors and black & white television sets. The company has entered

into an exclusive marketing arrangement with KELTRON for the sale of the

companies products. As per the agreement, SIDCO is to nominate four members on

the Board including the chairman and KELTRON two members including M.D, Two

members are nominated by Govt.

SIDCO – MOHAN Kerala Ltd.

It is a subsidiary company of SIDCO. The company was promoted by SIDCO

jointly with Mohan Meakin Ltd in the year 1980. As per the memorandum and article

of Association of the company, SIDCO is to contribute 51% of the paid up capital and

Mohan Meankin 49%.


The concept envisaged, while promoting this company, was to establish 34

feeder units manufacturing with a “mother units” to assist the small units in

centralized purchase of raw material, and also marketing their products, directly, the

concept of mother unit did not take off

As per the memorandum and Articles of Association of the company, SIDCO

is to nominate 5 members including the chairman, and Mohan Meakin $ members

including M.D but these two subsidiaries are now in the stage of liquidation.

When the Dist. Industries centers were formed, powers of SIDCO were

decentralized and given to the G.M’s of the DICS. As the importance of the DICS

increased, SIDCO’S activities reduced. Now the major promotional activities are

being dealt with by the DICS themselves. Since 1980-81, Government also stopped

giving any budgetary assistance to SIDCO for development activities.

SIDCO is presently at the cross roads. The only division, which is running

profitability, is the Raw material division. The future of the production Division has

been under consideration. The Industrial Estate division which is charged with

providing the infrastructure facilities for entrepreneur’s, cannot perform its functions,

such as maintains of the Industrial Estate in an efficient manner unless there is

Governmental assistance or unless some income generating projects are formulated

even if the entire entrepreneur’s occupying all the available shed pay their rents

regularly, the income may not be sufficient for the proper unknown of the Estates.

The construction division finds itself with very little work to do.


4.3 IMPORTANT ACTIVITIES OF KERALA SIDCO

It is a promotional agency wholly owned by the Govt. of Kerala was set up in

November 1975. This corporation is rendering to SSI in the state. At present the

important activities of SIDCO are distribution of raw material to SSI units, Marketing

of SSI products, maintains of 17 industrial estates, 36 mini Estates and doing under

take civil works for industries department and Government agencies. We are also

running, production units, which are undertaking various kinds of jobs works in metal

and woods.

MARKETING DIVISION

RAW MATERIAL DIVISION

PRODUCTION DIVISION

CONSTRUCTION DIVISION

INDUSTRIAL ESTATE DIVISION

INDUSTRIAL PARKS

TRAINING PROGRAMS

MARKETING DIVISION

Marketing Division of SIDCO provides assistance to Small Scale Units in

canvassing orders from Government and other Public Sector Undertakings by way of

Contract Marketing and Tender Marketing. This Division participates in Tenders

floated by Government Departments and Public sector Undertakings on behalf of SSI

unit to market their products.

The Marketing Division is now having seven sales emporia at

Thiruvananthapuram, Kollam, Kottayam, Thodupuzha, Ernakulam, Kozhikode and

Kannur. Besides there are seven marketing centers at Thiruvalla, Alappuzha, Ollur,

Palakkad, Manjeri, Wayanad and Kasaragod. SIDCO participates in exhibitions and

Trade Fairs on behalf of SSI sector to promote them by displaying SSI products.

As requested by us, G.O.(Rt) No.10/2005/SPD dated 03.02.05 permitted them

to supply Hospital Furniture/Lab Equipments etc to Government Departments/ Public

Sector Undertakings and Local Bodies without tender. Similarly as per G.O.(Rt)


No.8/2005/SPD dated 24.01.05 SIDCO is supplying Wooden Furniture and Other

Furniture respectively without participating tender. SIDCO is supplying electrical

items such as CFL, Sodium Vapour Lamps, Tubes, Tube Fittings etc to Panchayaths,

Municipalities, Corporations and Other Public Sector Undertakings.

Steps have also been taken for marketing of SSI products through SIDCO with

a common branding proposed by Kerala State Small Industries Association. As

SIDCO is a promotional agency, the products of SSI units should be marketed

through SIDCO. The main items selected are food products, Plastic products, Leather

and Rubber, Electrical Products in addition to Wood, Steel, Hospital Furniture and

Laboratory Equipments.

During the year 2004-2005 Marketing Division achieved a turnover of Rs.16

crores. The interior decoration work of the High Court of Kerala, Modular seating

arrangements in Government Secretariat, Thiruvananthapuram; supply of Furniture

and Hospital equipments to Government Medical College, Thissur; Work under MGP

at Malappuram Collectorate and Furnishing work at Government Guest House,

Palakkad etc are some of the prestigious works undertaken by Marketing Division

during the previous year.

SIDCO is working hand in hand with the Kerala state Small Industries

Association and SIDCO Suppliers Association for the development of the SSI sector

in Kerala.


SIDCO SALES EMPORIA & MARKETING CENTRES

Table No. 1

Sales Emporia

Sl

no.

Sales Emporia Location

1 Thiruvananthapuram Spencer Junction, Thiruvananthapuram

2 Kollam Municipal Stadium building, Kollam

3 Kottayam Nagampadam, Kottayam

4 Thodupuzha Near Fire Station, Idukki Road, Thodupuzha

5 Ernakulam M.G Road, Ernakulam, Kochi

6 Kannur Municipal Shopping complex, Kannur

7 Kozhikode Industrial Estate, West hill, Kozhikode

Table No. 2

Marketing Centers

Sl

no.

Marketing Centers Location

1 Thiruvalla Opposie govt hospital, Thiruvalla

2 Alappuzha East of Asramam jun, Avalukunnu, Alappuzha

3 Thrissur Industrial Estate, Ollur, Thrissur

4 Palakkad Industrial Estate, Olvakkode, Palakkad

5 Malappuram Industrial Estate, Manjeri, Malappuram

6 Wayanad Mini Industrial Estate, Sulthan Bathery, Wayanad

7 Kasargod Industrial Estate, Vidya Nagar, Kasargod


RAW MATERIAL DIVISION

Raw Materials Division is engaged in the distribution of various raw materials

to the SSI sector and public sector undertakings in Kerala through the district Raw

material depots in each district. Our distribution includes Iron and steel, Paraffin wax,

Titanium Dioxide, Plastic granules, Cement, G.I. pipes, Aluminum sheet and

Petroleum products like Lubricants, Rubber process Oil and Bitumen. Kerala SIDCO

is also appointed as the agency for distribution of Bitumen to the Local Bodies vide

G.O (P) NO.88120021LSGD dated, 31.05.03 by the Govt of Kerala. The Govt of

India has sanctioned Rs.2 crores for the Import of Paraffin wax under the Japanese

Debt Relief Grant Assistance Scheme. Coal India Limited nominated Kerala SIDCO

as an agency for the distribution of coal amongst small consumers in the state with the

annual requirement of 24000 tonnes. We are also having a plan for establishing a high

Tech Industrial Park in the vacant land available at Raw material division premises on

joint ventures basis, if possibility of raising funds is there for this. Steps for setting up

of Residential Flats on joint venture basis in the vacant land of SIDCO Auto

Engineering unit at pachalam are also under way. We have also a proposal for setting

up of our own steel stockyard at SIDCO, Gandhi Nagar, and Kochi for the benefit in,

Kerala. We are trying for find out the small manufacturing firms which wish to

market their products through SIDCO and nourish their business supply to the

Government organization such a planning is in the preliminary stage.

PRODUCTION DIVISION

At present 8 Production units are functioning. All units are depending on job

works. 4 units undertake manufacture of wooden furniture, all kinds of Timber

partition works. One unit namely Government instrument Workshop undertake the

manufacture of Steel furniture, Cash Chests, Leveling instruments etc. One of the unit

namely Service Workshop, Ollur undertake all type of Steel Fabrication works, Dies,

Fixtures etc. another unit at Umayannalloor ie. SIDCO tools, undertake precision

machinig jobs, dies, fixtures etc. The Pressure Die-Casting Unit, Pappananmcode,

Trivandrum manufacture Pressure Die- Cast Components. Government Departments

can purchase various furniture and equipments from our Production units without

observing Tender formalities.


CONSTRUCTION DIVISION

The Construction Division offers a package of integrated services for the

design, execution and management for various types of Civil and Electrical Works.

This division is a full-fledged division headed by a Chief engineer with Architects,

Civil and Electrical Engineers. There is a network of Engineers throughout the State

and the Division has built up considerable expertise and experience in the field of

Civil and Electrical works of major projects for the past 35 years. SIDCO is the Nodal

Agency for implementing infrastructure facilities for Development Plot, Development

areas and Construction of Multistoried buildings and other factory buildings for

industries Department and other sister concerns, and those works are carried out

through the Construction Division .The mode of arrangement and those works are as

per the rules and regulations laid down by Kerala Public Works Department. Our

clients are Industries Directorate, Tourism Department, Serified, Kerala Khadi and

Village Industries Board, Government Secretariat. Coir Corporation, Foam Mattings,

Pollution Control Board, Alappuzha Municipality, Kerala State Poultry Development

Corporation, Rajiv Gandhi Centre for Bio-Technology.

INDUSTRIAL ESTATE DIVISION

Kerala SIDCO owns 17 Conventional Industrial Estates and 36 Mini Industrial

Estates which are functioning in different Districts of Kerala. There are 920 factory

sheds in which more than 750 SSI units are functioning. The above said factory sheds

were allotted on Lease basis, Hire Purchase basis and Out Right Purchase basis. A

very few sheds are vacant for allotment preferably on Out Right Purchase basis. In

addition to these factory sheds, Industrial Plots are being allotted to the entrepreneurs

in Industrial Estates, Mini Industrial Estates and Industrial Parks for constructing

factory sheds of their own design to run industrial units. Considering the importance

of Small Scale Industries, as part of Government Policy, the scheme for setting up of

One Industrial Park in each of the 140 Assembly Constituencies of the State is being

implemented by SIDCO


Table No. 3

SIDCO Industrial Estates

Sl. No. Name of Industrial Estates District

1 Pappanamcode Trivandrum2 Umayanalloor Kollam3 Karunagapally Kollam4 Kollakadavu Alappuzha5 Cherthala Alappuzha6 Changanacherry Kottayam7 Ettumanoor Kottayam8 Palluruthy Ernakulam9 Mudickal

(Perumbavur)Ernakulam

10 Kallettumkara(Iringalakuda)

Thrissur

11 Ollur Thrissur12 Karakkad

(Shornur)Palakkad

13 Olavakkode Palakkad14 Manjeri Malappuram15 West Hill Kozhikode16 Palayad (Thalassery) Kannur

17 Kasargod Kasargod

INDUSTRIAL PARKS

SIDCO is entrusted with the scheme of establishing one Industrial Park in

each Legislature Assembly Constituency. Land is allotted on 90 years saleable lease.

We have succeeded in establishing Industrial Parks at Athani in Thrissur District,

Angamaly in Eranakulam District, Shornur in Palakkad District and Moodadi in

Kozhikode District and Thiruvarpu in Kottayam. We have succeeded in allotting 530

cents of land in the above Industrial Parks on 90 years lease scheme to Industrialists.

Around 27 Acres of developed is available in the above Parks for allotment.

Allotment is being made by Quotation cum Auction. Steps are underway to develop

land in Industrial Parks at Kunnamthanam in Pathanamthitta District and Chelakkara

in Thrissur District .New areas are being identified in other constituencies.


IMPORT and EXPORT DIVISION

SIDCO has recently formed a new division called Import and Export Division

attached to the Marketing Division at Kochi with a view to give all possible assistance

to the SS Sector by functioning as the canalizing Agent for the SSI units in kerala

both for their raw material import and product export.

IT and TELECOMMUNICATION DIVISION

Kerala SIDCO has recently formed a new division called Information

Technology and Telecommunication Division for expanding its area of business

operations to the field & Information Technology and Telecommunication. Areas

identified under this project are E- Governance, office Automation, modernization of

office, smart card development. Statewide Area Network, state of art

Telecommunication and communication Park Micro Documentation etc.for the

Government Departments/Agencies. SIDCO has entered in to MOU with M/s. Indian

Telephone Industries a premier PSU under the Ministry & Communication,

Government of India for setting up joint ventures in the state. The division has already

initiated action for setting up a Telecom-city in Thiruvananthapuram joining hands

with ITI.

SIDCO consortium for Automobile Body Building

SIDCO is planning to form a consortium of Automobile Body Building units

in the state under its leadership to promote this Industry in the state by canvassing

orders for bus body building from the Government Departments/Public sector

undertakings/local bodies

RIGHT TO INFORMATION

Under the Right to Information Act, as directed by the Government, SIDCO has

formed an Information cell with the Managing Director as appellate authority.


SUPER CHECK CELL

A super check cell is formed with the vigilance officer as the conener to conduct

super check cell of the articles supplied by Marketing Division and Production units

with a view to avoid quality complaints.

Milestones in last 30 years

Year significance

1975 KSSIC was reconstituted as SIDCO to serve the small scale Industries

1982 Imported cement to meet the crisis in the construction sector in Kerala

1986 SIDCO consortium implemented Bus Body Building project for

KSRTC

1990 Supplies made to Education Department under operation Black Board

Scheme of Government of Kerala

1997 Development of Industrial Parks.

1998 SIDCO contribution to the National space Program leading to the

Development of PSLV was appreciated by ISRO.

Prestigious Projects Undertaken

Interior decoration of court halls of High court of kerala

Modular seating at Government Secretariat, Thiruvananthapuram

MGP project at Malappuram collectorate.

Supply of Medical Equipments & Furniture at Medical College, Thrissur

Furnishing works at Government Guest House, Palakkad.

BUISNESS PROPOSALS TO INVESTORS


Technology up gradation and modernization of SSI units/production units.

Investment in Infrastructure development on SIDCO's Industrial Plots.

Setting up of High Tech Industrial Parks of International Standard in SIDCO’s

Sites.

Setting up of advanced study centers exclusively for industrial entrepreneurs


CHAPTER – V

DATA ANALYSIS & INTERPRETATIONS


DATA ANALYSIS & INTERPRETATIONS

1. Registered under Kerala SIDCO.

Table No.4

Sl. no Opinion No. of respondents Percentage

1 0 – 5 years 22 44

2 5 – 10 years 15 30

3 10 – 15 years 10 20

4 Above 15 years 3 6

Total 50 100

44%

30%

20%

6%

Registration

0 – 5 years5 – 10 years10 – 15 yearsAbove 15 years

Figure No.1INTERPRETATION

It is clear from the above table that majority of the respondents are registered

below 5 years that is 44%, 30% of respondents are registered between 5 - 10 years,

20% of the respondents are registered between 10 – 15 years. The remaining 6% is

above 15 years.


2. Factors considered in selecting the source of raw materials

Table No.5


1 Quality 40 80

2 Price 5 10

3 Transportation 0 0

4 Others 5 10

Total 50 100

80%

10%

10%

Selection of Raw Materials

QualityPriceTransportationOthers

Figure No.2

INTERPRETATION

From the survey conducted it can be found that all factors like quality, price,

transportation and even other means are also considered in selecting the source of raw

materials.


3. Purchase of raw material from external agency

Table No.6


1 Yes 32 64

2 No 6 12

3 Sometimes 12 24

Total 50 100

64%12%

24%

Source of Raw Materials

YesNoSometimes

Figure No.3

INTERPRETATION

From the survey conducted it can be found that the materials are purchased from

external agency.


4. Delivery of materials by the suppliers

Table No.7


1 Yes 38 76

2 No 5 10

3 Sometimes 7 14

Total 50 100

76%

10%

14%

Delivery by suppliers

YesNoSometimes

Figure No.4

INTERPRETATION

From the survey conducted it can be found that the suppliers are delivering the raw

materials in time.


5. Frequent change of suppliers

Table No.8


1 Yes 7 14

2 No 40 80

3 Sometimes 3 6

Total 50 100

14%

80%

6%

Changing of suppliers

YesNoSometimes

Figure No.5

INTERPRETATION

From the survey conducted it can be found that the purchase department in SIDCO

won’t change their supplier frequently.


6. Rate contract with the supplier

Table No.9


1 Yes 42 84

2 No 0 0

3 Sometimes 8 16

Total 50 100

84%

16%

Rate Contract

YesNoSometimes

Figure No.6

INTERPRETATION

From the survey it can be understood that they have rate contract with the suppliers.


7. Call for quotations from suppliers before choosing them

Table No.10


1 Yes 36 72

2 No 4 8

3 Sometimes 10 20

Total 50 100

72%

8%

20%

Selection of Supplier

YesNoSometimes

Figure No.7

INTERPRETATION

From the survey conducted it can be found that SIDCO used to call for quotation from

suppliers before choosing a supplier


8. Inspection of material for quality and quantity

Table No.11


1 Yes 45 90

2 No 0 0

3 Sometimes 5 10

Total 50 100

90%

10%

Material Inspection

YesNoSometimes

Figure No.8

INTERPRETATION

From the survey conducted it can be found that the material purchased is inspected for

quality and quantity most of the time.


9. Purchases made when there is quantity or price discount.

Table No.12


1 Yes 28 56

2 No 12 24

3 Sometimes 10 20

Total 50 100

56%

24%

20%

YesNoSometimes

Figure No.9

INTERPRETATION

From the survey conducted it can be found that the SIDCO makes bulk purchases

when there is quantity and price discount.


10.Purchasing policy centralized or localized.

Table No.13


1 Centralized 39 78

2 Localized 11 22

Total 50 100

78%

22%

Purchase Policy

CentralizedLocalized

Figure No.10

INTERPRETATION

From the survey conducted it can be found that the purchasing policy is centralized.


11.Returning of material due to not meeting of specification

Table No.14


1 Frequently 10 20

2 Rarely 20 40

3 Never 20 40

Total 50 100

20%

40%

40%

Material Specification

FrequentlyRarelyNever

Figure No.11

INTERPRETATION

From the survey conducted it can be found that the materials from the supplier not

according to the required specification are rarely returned to the supplier.


12.Checking and passing of bills for payment of purchased materials

Table No.15


1 Yes 38 76

2 No 6 12

3 Sometimes 6 12

Total 50 100

76%

12%

12%

Payment of Bill

YesNoSometimes

Figure No.12

INTERPRETATION

From the survey conducted it can be found that the checking and passing of bills for

payment of purchased materials are done mostly.


13.Receives finished goods on time from SSI units

Table No.16


1 Yes 30 60

2 No 6 12

3 Sometimes 14 22

Total 50 100

60%

12%

28%

YesNoSometimes

Figure No.13

INTERPRETATION

From the survey conducted it can be found that the SSI units are supplying the

finished products on time.


14. Supply of customer orders on time

Table No.17


1 Yes 40 80

2 No 0 0

3 Sometimes 10 20

Total 50 100

80%

20%

Customer Orders

YesNoSometimes

Figure No.14

INTERPRETATION

From the survey conducted it can be found that Kerala SIDCO is supplying the orders

on time to their customers.


15.Requirements from the store keeper for purchasing

Table No.18


1 Yes 28 56

2 No 8 16

3 Sometimes 14 28

Total 50 100

56%

16%

28%

YesNoSometimes

Figure No.15

INTERPRETATION

From the survey conducted it can be found that the purchasing department receives

regular requirements from the store keeper for purchasing, only 16% of respondents

feel never and 28% of them feel sometimes.


16.Proper purchasing reduces inventory carrying cost

Table No.19


1 Yes 38 76

2 No 6 12

3 Sometimes 6 12

Total 50 100

76%

12%

12%

Inventory Carrying Cost

YesNoSometimes

Figure No.16

INTERPRETATION

From the survey conducted it can be found that the proper purchasing reduces

inventory carrying cost.


17.Analyzing different transportation facilities so as to reduce transportation cost.

Table No.20


1 Yes 25 50

2 No 5 10

3 Sometimes 20 40

Total 50 100

50%

10%

40%

Analysis of Transportation Facility

YesNoSometimes

Figure No.17

INTERPRETATION

From the survey conducted it can be found that Kerala SIDCO analyzes different

transportation facilities so as to reduce transportation cost.


18.Availability of sufficient storage space

Table No.21


1 Yes 16 32

2 No 10 20

3 Sometimes 24 48

Total 50 100

32%

20%

48%

Storage Space

YesNoSometimes

Figure No.18

INTERPRETATION

From the survey conducted it can be found that the firm provides sufficient storages

space as and when required.


19.Risk of running over of stock

Table No.22


1 Yes 30 60

2 No 10 20

3 Sometimes 10 20

Total 50 100

60%20%

20%

Over of Stock

YesNoSometimes

Figure No.19

INTERPRETATION

From the survey conducted it can be found that the department has ever faced the risk

of running over of stock.


20.Purchase budget

Table No.23


1 Yes 37 74

2 No 3 6

3 Sometimes 10 20

Total 50 100

74%

6%

20%

Purchase Budget

YesNoSometimes

Figure No.20

INTERPRETATION

From the survey conducted it can be found that the organization provides a particular

purchase budget.


CHAPTER – VI

FINDINGS, SUGGESTIONS &

CONCLUSION


FINDINGS

In SIDCO, all factors like quality, price and transportation are considered in

selecting the source of raw material.

In SIDCO the material are purchased from external agency.

The materials are delivered in time from the supplier in SIDCO.

Purchase department in SIDCO won’t change their suppliers frequently.

We can understand that they have rate contract with the supplier

We can understand that SIDCO used to call for quotation from supplier before

choosing a supplier.

The material purchased is inspected for quality and quantity most of the time

from the survey conducted in SIDCO.

Purchasing policy is centralized in SIDCO

In SIDCO, the checking and passing of bills for payment of purchased

materials are done in time almost always.

We can obtain the information that the purchasing department before making

any purchase considers the requirement of the entire department.

We can get the information that the proper purchasing reduces inventory

carrying cost.

It can be found that the firm provides sufficient storage space as and when

required.


SUGGESTIONS

Transportation cost of material can be reduced by choosing appropriate

method of transportation.

The whole purchase department can be computerized to make the processing

fast.

Discounts in terms of price and quantity should be properly utilized.

Inventory cost can be reduced by making purchases at proper intervals.

The relationship with the suppliers can be improved by conducting frequent

meeting with the suppliers

A planned budget should be made every financial year for the purchase

department.

Financial losses during delivery of material should be reduced.

Management decisions relating to purchases should also be considered.

Appoint more employees to make the work easy.

Careful utilization of raw material is essential to avoid wastage.

Proper planning is essential in SIDCO which minimizes risk

Material received should be tested for quality specification

Products should be produced for all required consumers other than

government institutions.


CONCLUSION

The study was to analyze the effectiveness of purchasing system in SIDCO.

SIDCO holds a good position among government organization in Kerala.

The purchase policy adopted by SIDCO is satisfactory from the study. Only

very few disadvantages could be found out from the study. The limitations of the

study don’t provide more in-depth study.


APPENDIX


TO EVALUATE AND STUDY THE PURCHASING SYSTEM

ADOPTED BY SIDCO

Sir/Madam,

I am doing a study on the “PURCHASING SYSTEM ADOPTED BY SIDCO” as a

part of my MBA course. The information given by you will be kept confidential and

will not be used for any other purpose. So I request you to co-operate with this

venture by giving valuable information.

1. Name of the SSI unit:

2. Name of the Proprietor:

3. Age :

4. Designation:

5. Education qualification:

6. How long you have been registered with Kerala SIDCO?

[ ] 0 – 5 years [ ] 5 – 10 years [ ] 10 – 15 years [ ] above 15 years

7. What are the factors considered in selecting the source of raw materials?

[ ] Quality [ ] Price [ ] Transportation [ ] others

8. Do you purchase raw materials from external agency?

[ ] Yes [ ] No [ ] Sometimes

9. Do you receive materials from suppliers in time?


10. Will you change your supplier frequently?


11. Do you have any rate contract with the suppliers?


12. Do you call for quotation from suppliers before choosing a supplier?


13. Does the materials purchased is inspected for quality and quantity?


14. Will you make bulk purchases when there is quantity and price discount?


15. Is the purchasing policy centralized or localized?

[ ] Centralized [ ] Localized

16. Have you ever returned the materials to the suppliers which are not according to the

required specification?


[ ] Frequently [ ] Rarely [ ] Never

17. Does the checking and passing of bills for payment of purchased materials are done

in time?


18. Do you receive the finished goods from SSI units on time?


19. Do you supply the materials to the customers on time?


20. Do you receive regular requirements from the store keeper for purchasing?


21. Before making a purchase, does the requirements of all the departments are

considered?


22. Does proper purchasing reduces inventory carrying cost?


23. Do you analyze different transportation facilities so as to reduce transportation cost?


24. Are you provided with sufficient storage space?


25. Does your department have ever faced the risk of running over of stock?


26. Does your organization provide purchase budget?


Yours faithfully

Manu.M

IMK, Alappuzha


BIBLIOGRAPHY

BOOKS

1. Kothari. C.R, “Research Methodology, Methods & techniques”. (2004), 2nd

Edition, New Age International (P) Ltd, Publishers, New Delhi.

2. V.S Ramaswamy & S. Namakumari “ Marketing Management” third edition.

3. Umasekaran “Research methods for business, a skill building approach”,

(2007). 4th edition, Wiley India (P) Ltd, New Delhi.

4. Kotler Philip, “Marketing Management”, (2000), 12th edition, Pearson

Education.

READING MATERIALS

1. COMPANY MANUAL

2. MAGAZINES

WEBSITES VISITED

1. www.keralasidco.com

2. www.google.com

3. www.wikipedia.com


Documents

Sidco Project