CHAPTER - I INTRODUCTION

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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.

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1.1 OBJECTIVE OF THE STUDY

The 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: y To study the factors considered in selecting the source of raw materials in SIDCO. y y y y y y y y y 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 STUDY

The 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

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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. y y y 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.

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1.6 TOOLS AND TECHNIQUES

y 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. y 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 respondents 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. y 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.

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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 y As in-depth study was not possible because the time limit was the main constraint. y More time was required for collecting information from each respondent because interviews were held only at the convenience of the informants. y y 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. y 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. y Some of the customers and dealers were reluctant to give information at most good faith. y I faced various difficulties in collecting data through questionnaire from the public because of their illiteracy. y Many customers did not co-operate with me in the research process.

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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, companys 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.

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CHAPTER - II REVIEW OF LITERATURE

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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. 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: y y y y y y y y 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 y Return to materials to the supplier which are not according to the required specification. The functional

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

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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.

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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. 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 Generally printed terms are used containing the

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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.

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CHAPTER - III INDUSTRY PROFILE

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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.

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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

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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.

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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.

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3.2 SMALL SCALE INDUSTRY IN INDIA

Since the time of independence, the small-scale sector in India has been a major contributor to countrys 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: y 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. y 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

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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.

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Year 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 (P)

Target 3.0 5.0 7.0 9.1 9.1 9.1 * * * *

Achievement 3.1 5.6 7.1 10.1 11.4 11.3 8.43 7.7 8.16 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.

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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%.

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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 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 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. Target (in lakhs.) 128.0 133.0 138.6 144.4 150.5 165 170.1 175.4 Achievement (in lakhs.) 134.06 139.38 146.56 152.61 160.00 167.20 171.58 177.3 Growth rate 3.28 3.28 5.15 4.13 4.88 4.50 2.61 3.33

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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 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 (P) P-Provisional Exports (Rs. (at current prices) Crores)

29,068 (14.86) 36,470 (25.50) 39,249 (7.61) 43946 (11.97) 48979 (10.2) 53975 (10.2)

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CHAPTER IV COMPANY PROFILE

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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, cooperative 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.

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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. y y y y y y y y y y y y 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

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SIDCO Objectives y y y y y 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 y y y y 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 y y y y y y C.T Ahamed Ali Shri. Saji Basheer M.P. Renji Shri.T.O.Sooraj,IAS Smt. Sreelakumari Samuel John

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Legal Advisors
Shri.R.T Pradeep

Bankers y y y y y y y 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 y y 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%.

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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.Ms of the DICS. As the importance of the DICS increased, SIDCOS 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 entrepreneurs, 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 entrepreneurs 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.

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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. y y y y y y y 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)

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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.

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SIDCO SALES EMPORIA & MARKETING CENTRES

Table No. 1 Sales Emporia
Sl no. Sales Emporia Location

1 2 3 4 5 6 7

Thiruvananthapuram Kollam Kottayam Thodupuzha Ernakulam Kannur Kozhikode

Spencer Junction, Thiruvananthapuram Municipal Stadium building, Kollam Nagampadam, Kottayam Near Fire Station, Idukki Road, Thodupuzha M.G Road, Ernakulam, Kochi Municipal Shopping complex, Kannur Industrial Estate, West hill, Kozhikode

Table No. 2 Marketing Centers

Sl no. Marketing Centers Location

1 2 3 4 5 6 7

Thiruvalla Alappuzha Thrissur Palakkad Malappuram Wayanad Kasargod

Opposie govt hospital, Thiruvalla East of Asramam jun, Avalukunnu, Alappuzha Industrial Estate, Ollur, Thrissur Industrial Estate, Olvakkode, Palakkad Industrial Estate, Manjeri, Malappuram Mini Industrial Estate, Sulthan Bathery, Wayanad Industrial Estate, Vidya Nagar, Kasargod

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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.

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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

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Table No. 3

SIDCO Industrial Estates

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Name of Industrial Estates Pappanamcode Umayanalloor Karunagapally Kollakadavu Cherthala Changanacherry Ettumanoor Palluruthy Mudickal (Perumbavur) Kallettumkara (Iringalakuda) Ollur Karakkad (Shornur) Olavakkode Manjeri West Hill Palayad (Thalassery) Kasargod District Trivandrum Kollam Kollam Alappuzha Alappuzha Kottayam Kottayam Ernakulam Ernakulam Thrissur Thrissur Palakkad Palakkad Malappuram Kozhikode Kannur 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.

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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.

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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 1975 1982 1986 significance KSSIC was reconstituted as SIDCO to serve the small scale Industries Imported cement to meet the crisis in the construction sector in Kerala 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 1998 Development of Industrial Parks. 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.

y y y y y

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BUISNESS PROPOSALS TO INVESTORS

y y y 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 SIDCOs Sites. y Setting up of advanced study centers exclusively for industrial entrepreneurs

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CHAPTER V DATA ANALYSIS & INTERPRETATIONS

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DATA ANALYSIS & INTERPRETATIONS

1. Registered under Kerala SIDCO.
Table No.4 Sl. no 1 2 3 4 Opinion 0 5 years 5 10 years 10 15 years Above 15 years Total No. of respondents 22 15 10 3 50 Percentage 44 30 20 6 100

Registration
6%

20% 44%

0 5 years 5 10 years 10 15 years Above 15 years 30%

Figure No.1 INTERPRETATION 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.

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2. Factors considered in selecting the source of raw materials

Table No.5 Sl. no 1 2 3 4 Opinion Quality Price Transportation Others Total No. of respondents 40 5 0 5 50 Percentage 80 10 0 10 100

Selection of Raw Materials

0% 10%

10% Quality Price Transportation Others 80%

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.

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3. Purchase of raw material from external agency

Table No.6 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 32 6 12 50 Percentage 64 12 24 100

Source of Raw Materials

24% Yes No 12% 64% Sometimes

Figure No.3 INTERPRETATION From the survey conducted it can be found that the materials are purchased from external agency.

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4. Delivery of materials by the suppliers

Table No.7 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 38 5 7 50 Percentage 76 10 14 100

Delivery by suppliers
14%

10%

Yes No Sometimes

76%

Figure No.4 INTERPRETATION From the survey conducted it can be found that the suppliers are delivering the raw materials in time.

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5. Frequent change of suppliers

Table No.8 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 7 40 3 50 Percentage 14 80 6 100

Changing of suppliers
6% 14%

Yes No Sometimes

80%

Figure No.5 INTERPRETATION From the survey conducted it can be found that the purchase department in SIDCO wont change their supplier frequently.

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6. Rate contract with the supplier

Table No.9 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 42 0 8 50 Percentage 84 0 16 100

Rate Contract

0%

16% Yes No Sometimes

84%

Figure No.6 INTERPRETATION From the survey it can be understood that they have rate contract with the suppliers.

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7. Call for quotations from suppliers before choosing them

Table No.10 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 36 4 10 50 Percentage 72 8 20 100

Selection of Supplier

20% Yes 8% No Sometimes

72%

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

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8. Inspection of material for quality and quantity

Table No.11 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 45 0 5 50 Percentage 90 0 10 100

Material Inspection
0% 10%

Yes No Sometimes

90%

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.

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

Table No.12 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 28 12 10 50 Percentage 56 24 20 100

20%

Yes No 56% 24% Sometimes

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.

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10. Purchasing policy centralized or localized.

Table No.13 Sl. no 1 2 Opinion Centralized Localized Total No. of respondents 39 11 50 Percentage 78 22 100

Purchase Policy

22% Centralized Localized

78%

Figure No.10 INTERPRETATION From the survey conducted it can be found that the purchasing policy is centralized.

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11. Returning of material due to not meeting of specification

Table No.14 Sl. no 1 2 3 Opinion Frequently Rarely Never Total No. of respondents 10 20 20 50 Percentage 20 40 40 100

Material Specification

20% 40% Frequently Rarely Never

40%

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.

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

Table No.15 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 38 6 6 50 Percentage 76 12 12 100

Payment of Bill
12%

12%

Yes No Sometimes

76%

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.

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13. Receives finished goods on time from SSI units

Table No.16 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 30 6 14 50 Percentage 60 12 22 100

28% Yes No Sometimes 60% 12%

Figure No.13 INTERPRETATION From the survey conducted it can be found that the SSI units are supplying the finished products on time.

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14. Supply of customer orders on time Table No.17 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 40 0 10 50 Percentage 80 0 20 100

Customer Orders

20% 0% Yes No Sometimes

80%

Figure No.14 INTERPRETATION From the survey conducted it can be found that Kerala SIDCO is supplying the orders on time to their customers.

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15. Requirements from the store keeper for purchasing

Table No.18 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 28 8 14 50 Percentage 56 16 28 100

28% Yes No Sometimes 56% 16%

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.

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16. Proper purchasing reduces inventory carrying cost

Table No.19 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 38 6 6 50 Percentage 76 12 12 100

Inventory Carrying Cost

12%

12%

Yes No Sometimes

76%

Figure No.16 INTERPRETATION From the survey conducted it can be found that the proper purchasing reduces inventory carrying cost.

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

Table No.20 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 25 5 20 50 Percentage 50 10 40 100

Analysis of Transportation Facility

40% 50%

Yes No Sometimes

10%

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.

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18. Availability of sufficient storage space

Table No.21 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 16 10 24 50 Percentage 32 20 48 100

Storage Space

32% 48%

Yes No Sometimes

20%

Figure No.18 INTERPRETATION From the survey conducted it can be found that the firm provides sufficient storages space as and when required.

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19. Risk of running over of stock

Table No.22 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 30 10 10 50 Percentage 60 20 20 100

Over of Stock

20% Yes No Sometimes 20% 60%

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.

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20. Purchase budget

Table No.23 Sl. no 1 2 3 Opinion Yes No Sometimes Total No. of respondents 37 3 10 50 Percentage 74 6 20 100

Purchase Budget

20% Yes 6% No Sometimes

74%

Figure No.20 INTERPRETATION From the survey conducted it can be found that the organization provides a particular purchase budget.

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CHAPTER VI FINDINGS, SUGGESTIONS & CONCLUSION

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FINDINGS
y In SIDCO, all factors like quality, price and transportation are considered in selecting the source of raw material. y y y y y In SIDCO the material are purchased from external agency. The materials are delivered in time from the supplier in SIDCO. Purchase department in SIDCO wont 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. y The material purchased is inspected for quality and quantity most of the time from the survey conducted in SIDCO. y y 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. y We can obtain the information that the purchasing department before making any purchase considers the requirement of the entire department. y We can get the information that the proper purchasing reduces inventory carrying cost. y It can be found that the firm provides sufficient storage space as and when required.

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SUGGESTIONS
y Transportation cost of material can be reduced by choosing appropriate method of transportation. y The whole purchase department can be computerized to make the processing fast. y y y 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 y A planned budget should be made every financial year for the purchase department. y y y y y y y 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.

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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 dont provide more in-depth study.

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APPENDIX

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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? [ ] Yes [ ] No [ ] Sometimes 10. Will you change your supplier frequently? [ ] Yes [ ] No [ ] Sometimes 11. Do you have any rate contract with the suppliers? [ ] Yes [ ] No [ ] Sometimes 12. Do you call for quotation from suppliers before choosing a supplier? [ ] Yes [ ] No [ ] Sometimes 13. Does the materials purchased is inspected for quality and quantity? [ ] Yes [ ] No [ ] Sometimes 14. Will you make bulk purchases when there is quantity and price discount? [ ] Yes [ ] No [ ] Sometimes 15. Is the purchasing policy centralized or localized? [ ] Centralized [ ] Localized

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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? [ ] Yes [ ] No [ ] Sometimes 18. Do you receive the finished goods from SSI units on time? [ ] Yes [ ] No [ ] Sometimes 19. Do you supply the materials to the customers on time? [ ] Yes [ ] No [ ] Sometimes 20. Do you receive regular requirements from the store keeper for purchasing? [ ] Yes [ ] No [ ] Sometimes 21. Before making a purchase, does the requirements of all the departments are considered? [ ] Yes [ ] No [ ] Sometimes 22. Does proper purchasing reduces inventory carrying cost? [ ] Yes [ ] No [ ] Sometimes 23. Do you analyze different transportation facilities so as to reduce transportation cost? [ ] Yes [ ] No [ ] Sometimes 24. Are you provided with sufficient storage space? [ ] Yes [ ] No [ ] Sometimes 25. Does your department have ever faced the risk of running over of stock? [ ] Yes [ ] No [ ] Sometimes 26. Does your organization provide purchase budget? [ ] Yes [ ] No [ ] Sometimes

Yours faithfully Manu.M IMK, Alappuzha

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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

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