problems and brief profile of sample...
TRANSCRIPT
Chapter - III
"•introduction
'Industrial Scenario of Karnataka
-•Problems of SSIs Financial Problems Non-Financial
-•Inadequate Supervision of Units by DiCs
-> Chitradurga District - A Profile
••Davangere District - A Profile
-•Performance of SSI in Chitradurga and Davangere Districts before formation of DICs
- • Profile of Sample Respondents (Units) in Chitradurga and Davangere District
Economic Status Social Group Educational Background Occupational Background Demiciliary Status Induction Pattern Location of Units Investment Level Occupational Background of Families
"• Conclusion
••Summary of the Chapter
CHAPTER-III
PROBLEMS AND BRIEF PROFILE OF SAMPLE UNITS
3.1: Introduction
The classical economists believed that laissez-faire policy would solve
all the problems of the economy and therefore, they were of the firm opinion that
no state intervention would be required to correct the ills of the economy.
However, the myth of this thesis was unmasked with the onset of depreciation of
thirties and the state intervention became an inevitable outcome. In addition,
most of the economic debates revolved around the causes of underdevelopment
in the countries outside Europe and North America and the strategy to be
adopted to take off from the state of under-development in those countries. The
outcome was the sudden spurt in the role of state as the harbinger of
development and this state dominance continued till mid-eighties. But the role
of the state has turned out to be a futile exercise and hence, most of the countries
have embarked upon the policy of liberalization and privatization. However, the
state intervention is totally irreversible as it has still an important role to play.
This situation continues in India in view of its inevitable pre-occupation with the
objectives of social and economic justice. In tune with these, the
industrialization programme was initiated in India with the launching of Five-
Year Plans.
59
3.2: Industrial Scenario of Karnataka
Kamataka, though predominantly an agrarian state, emerged as one of the
industrial states in India. The seeds of industrialization in Karnataka were sown
by Sir M. Vishweshwaraya who coined the slogan industrialize or perish1. As
a result, The state Bank of Mysore (1911), The Industries Department (1913),
Sandal Oil Factory (1916), The Mysore Iron Works (1923), The Chrome
Tanning Factory and Central Industrial Workshop were established. However,
the process of industrialization was signalled with the establishment of hydro
electric project at Shivanasamudra in 1930 and with the starting of the Bangalore
Woolen, Cotton and Silk Mills in 1884, The Central Industrial Workshop in
1897 and the industrial schools between 1889 and 1892. The effect of
importance given to industrial development can be seen from the increase in the
number of large scale units from 29 in 1920 to 105 in 1944. After Independence
and launching of Five-Year Plans, the industrial progress was rather slow but a
number of central public sector undertakings were established mainly in
Bangalore. Further, the period between 1950 and 1990 witnessed phenomenal
industrial activity and the state had established almost all ranges of industries
visualized by Sir M. Vishweshwaraya.
Besides the medium and large scale industrial undertakings, the
Government of Karnataka provided a number of benefits, incentives, etc., to
1. Surya Kanth U Kamath, 'Karnataka State Gazetteer ', Part-1,1982, Bangalore, Government of Karnataka,p. 823.
60
encourage the industrialists and entrepreneurs to start their own small scale units.
Because, the government realized that the SSIs have the potential to contribute
significantly for the economic development of the state in more than one way
such as providing employment opportunities to the unemployed youths,
utilization of locally available resources, increasing the production of goods and
services, etc. Consequently, there has been a continuous increase in the number
of SSIs which is evident from the statistics furnished in the table presented
m beiow. <3>go .£235
Year
1969-70
1973-74
1978-79
1984-85
1989-90.
1992-93
1995-96
1997-98
1999-00
Table - 3.
Number of units
3,900
13,457
21,847
55,060
1,05,567
1,37,311
1,75,380
2,23,631
2,52,971
: Structural Growth of SSIs in Karnataka
Investment (Rs. in lakhs)
3,456.70
9,963.50
19,692.77
79,915.88
1,00,770.67
1,47,300.14
2,25,678.00
3,29,039.00
4,62,497.00
Employment
47,960
1,35,004
2,51,765
4,84,908
7,32,102
9,30,018
11,47,365
13,47,974
15,05,800
Investment per
unit (Rs in lakhs) 0.88
0.74
0.90
0.91
0.95
1.07
1.29
1.47
1.83
Employment per unit
12
10
11
09
07
07
07
06
06
Source: Official Records of Directorate of Economics and Statistics, Government of Karnataka, Bangalore.
The table shows the cumulative progress of small scale units in Karnataka
from 1969-70 to 1999-2000 from the view points of number of units
established, investment made and employment opportunities generated. It can
be seen from the table that there has been a continuos increase in the number of
KUVEMPU UNIVERSITY L1*«AWT,
JUANA SAHYADR1, SHANKARA6HATT*. 61
units in the small scale sector. It increased from mere 3,900 as on March 31,
1971 to 21,847 by March 31, 1979 representing an increase by 17,947 during
this nine-year period which works out to about 1,994 units per annum. During
the next eleven years, from 1978-79 to 1989-90, the number of units increased
from 21,847 to 1,05,567 registering an increase by 83,720 or 3.83 times or by
383.21% during this eleven-year period which works out to an annual increase
by 7,611 units. During the next ten years, between 1989-90 and 1999-2000, the
number of units increased from 1,05,567 to 2,52,971 denoting an increase by
1,47,404 units or by 1.4 times or by 139.63%. During this 30-year period, the
number of units increased by 63.86 times. This clearly shows the continuous
increase in the industrial activities in the state.
Consequent to the increase in the number of units in the small scale
sector, one can find the increase in the number of persons employed in these
units. The number of employees increased from 47,960 as on March 31, 1970 to
15,05,800 by March 31, 2000 registering an increase by only 30.4 times which is
lower than the rate of increase in the number of units by 63.86 times.
Consequently, the number employees per unit decreased from 12 as on March
31, 1970 to 6 by March 31, 2000. One of the reasons for this may be the
inclination of SSIs towards modernisation. This becomes obvious from the fact
that the average amount of capital employed increased from Rs. 0.88 lakh per
unit on March 31, 1970 to Rs. 1.83 lakh by March 31, 2000. The total capital
employed in these small scale units increased from Rs. 3,456.7 crore on March
31,1970 to 4,62,497.00 crore by March 31, 2000.
62
3.3: Problems of SSIs
Though the units in the small scale sector in the state have been
contributing heavily for the economic development of the state, they have not
been able to the contribute their full potential due to many a number of problems
haunting them. Because, these problems are affecting adversely the overall
performance of SSIs. Most of these problems are common to a wide range of
SSIs. And the remaining few are either industry or unit or location specific.
However, an attempt is made in the following paragraphs to analyse briefly the
problems faced by the units in the two districts viz., Chitradurga and Davangere.
And these problems may be reckoned as the problems of SSIs in any of the state
and the country. However, these problems are classified into two broad
categories viz., financial problems and non-financial problems. Under each of
these two categories, a number of problems can be found as presented in the
Figure -3.1 followed by a brief analysis of each of the problems.
3.3.1: Financial Problems
The financial resources of small scale units are so inadequate that they
have no money to survive and finance the activities during the period of business
strain. This leads to instability of property which deters banks from giving
unsecured loans. This also becomes clear from the fact that most of the cases
recommended by DICs to the financial institutions for loans and advances are
being rejected. Not only these recommendations but also the cases
63
Pro
blem
s O
F U
nits
in t
he S
mal
l Sc
ale
Sec
tor
Gra
nt o
f In
adeq
uate
Fi
nanc
e
Dis
crim
inat
ory
Tre
atm
ent t
o Sm
all
Scal
e un
its
Dem
and
for
Mar
gin
Mon
ey a
nd M
ortg
age
Proc
edur
al D
elay
Lim
ited
Pow
er to
D
ICs
Hig
h R
ate
of T
axat
ion
Rel
ease
of
Subs
idy
and
othe
r In
cent
ives
Fina
ncia
l Pr
oble
ms
Prob
lem
s of
S
SI's
N
on-F
inan
cial
Pr
oble
ms
Fig
ure-
3.1
Del
ay in
Reg
istr
atio
n
Indu
stri
al P
rem
ises
Mar
ketin
g Pr
oble
ms
Ele
ctri
city
Pro
blem
s
Raw
mat
eria
l Pr
oble
ms
Supp
ly o
f M
achi
nery
Eng
agem
ent o
f E
ntre
pren
eurs
Cor
rupt
ion
Lac
k of
Co
ordi
natio
n am
ong
diff
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t A
genc
ies
ON
4
t
recommended by the DICs under Prime Minister's Rozgar Yozana (PMRY) and
Vishwa Scheme are being rejected by the financial agencies though these
schemes are considered important in order to motivate educated and unemployed
youths to take-up entrepreneurship. In this background, some of the important
financial problems faced by the small scale units in the two districts are analysed
in the following paragraphs.
3.3.1.1: Inadequate Financial Assistance
If over-capitalization is bad for the industry, the under-capitalization is
worse. It has been observed that financial agencies not only reject the cases
recommended by the DICs, but also underestimate the credit requirements of
entrepreneurs as compared to the estimates made by the concerned DIC. Some
times, the loans are given in piece-meal basis instead of lumpsum payment
which doesn't fulfil the requirement of entrepreneurs. This attitude of financial
agencies develops the germs of failure for many units. Anyhow, both the
inadequate financial assistance and the complete rejection of applications by the
financial institutions are affecting the performance of small scale units adversely
and considerably. Because, this results in either giving up of the idea of
promoting small units by the potential entrepreneurs or closing down the
existing units or to resort to borrowing from the private money lenders2.
2. Ramakrishna K.T., "Finance for Small Scale Industries in India", Mumbai Ashia Publishing House, 1994, P. 12
65
3.3.1.2: Discriminatory Treatment to Small Scale Units
Though the governments have given priority to the small scale sector,
they have been subjected to the worse kind treatment by the financial agencies
which is a sad commentary of events. Even in respect of granting loans, this
sector is not being given its due share as compared to the priority sectors such as
agriculture, transport, service sector, etc. Consequently, the small scale sector
has not been able to obtain the required finance from the financial agencies and
therefore, it is affecting their performance.
3.3.1.3: Demand for Margin Money and Mortgage
Financial agencies demand tangible security and some times, insist upon
huge amount of margin money which is beyond the capacity of the small
entrepreneurs to pay. The credit worthiness of the units is judged by financial
agencies in terms of realizable value of assets and not in terms of ability of an
entrepreneur. The entrepreneurs who are not able to provide adequate property
to keep with financial agencies as mortgage cannot go in for the establishment of
units. Further, it was found that many unit-holders could not import the
viguined infant factors though they were given the licenses. This is due to the
financial constraints.
3.3.1.4: Procedural Delay
Unit-holders have to wait for months together and hanker after the
officials of financial agencies for getting their loans sanctioned in one call. It is 66
observed that units had to waste more than a year to get the loan sanctioned
though recommended by the concerned DIC. In addition to this, the financial
agencies ask for a lot of information, details and records, and they go on raising
quarries. This makes the procedure difficult. Quite often, a few get fed up with
this cumbersome procedure and give up the idea of establishing the units.
3.3.1.5: Inadequate Power to DICs
The entrepreneurs admitted that the DICs of Chitradurga and Davangere
are helping the small units considerably in overcoming their financial problems.
Unfortunately, the general manager of DIC is empowered for the sanction of
loan only up to Rs. 15,000 per unit which is very trivial if one considers the
financial requirements of the units. The immediate problem of the entrepreneurs
is, therefore, to find out the ways of mobilising the required capital to establish
their units. This problem of entrepreneurs requires immediate attention and
solution. Otherwise, this single problem itself may lead to many a number of
problems. It is, therefore, observed that every problem of small producer
concerning production or materials, quality or marketing is in the ultimate
analysis of financial one.
3.3.1.6: High Rate of Taxation
High rate of sales tax in Karnataka is one of the important reasons for
backwardness of small scale industries in Karnataka. The neighbouring states
viz., Kerala, Tamil Nadu, Goa and Andra Pradesh do not levy additional taxes
61
like entry tax, TOT, sur-charge, etc. Further, these neighbouring states levy the
taxes at lower rates and offering tax holiday stretched up to the year 2006 to
2008. Higher rates of taxation in Kamataka have become a boon for
entrepreneurs from the neighbouring states to market their products in Kamataka
at the cost of Karnataka's entrepreneurs.
During the field survey, it was found that the entrepreneurs are charged
with central excise at 16% and CST at 10% on the raw materials or inputs used
by small scale units. Adding to this is the high sales tax on finished products
making the small scale industries less attractive and less competitive.
3.3.1.7: Delay in the Release of Subsidy and other Incentives
The governments - both the central and the state - are offering a number
of incentives/subsidies to the small scale units. These incentives/subsidies
include refund of central sales tax, capital investment subsidy, etc. But these
facilities are not reaching the beneficiary-units for reasons better known the
authorities. Further, there are cases wherein the unit-holders are kept in dark
about the benefits made available to them by the governments3.
The above are some of the important problems faced by the small scale
units in Chitradurga and Davangere districts. Of course, the small scale units in
other districts in the state and also in other states are also facing similar
3. Ibid., p. 16.
68
problems. However, all these problems are adversely affecting the operational
activities of the units. The first casualty of all these problems is the under-
utilization of production capacity which is evident from the following table.
Table - 3.2: Capacity Utilisation Utilization of
Installed Capacity (%)
0 - 2 0
2 0 - 4 0
4 0 - 6 0
Above 60
Total
Number of Respondents
34
74
92
200
% age to Total
17
37
46
100
Source: Field Survey
From the above, it is obvious that 34 units (17 per cent) out of 200 are
utilizing only up to 20 per cent of their installed capacity. Another 74 units
representing 37 per cent are utilizing 20 - 40 per cent and the remaining 92 units
accounting for 46 per cent of the units are utilizing 40 - 60 per cent of their
installed capacity. The survey further revealed that no unit is utilizing more than
60 per cent of its installed capacity which is a matter of great concern. Because,
the cost of un-utilized capacity is to be borne by the units products making them
costlier and therefore, less attractive.
When the respondents were asked by the Researcher to state the most
important constraint responsible for the under-utilization of their capacity, they
provided the useful data. The summary of their response is presented below.
69
Ta SI.
No. 1.
2.
3.
4.
5.
6.
ble - 3.3: Reasons for Under-Utilization of Production Capacity
Reasons
Finance (working capital)
Raw materials
Power
Marketing
Labour
Others
Total
Number of Respondents
74
64
48
35
28
5
254
%age of Total
29
25
19
14
11
2
100
Note : Some respondents have reported more than one reason as responsible for under-utilization.
Source: Field Survey
Out of 254 respondents, 74 respondents constituting 29 per cent attributed
the under-utilization of production capacity to the inadequacy of working capital
and another 64 respondents representing 25 per cent considered the problem of
raw material as the responsible factor. Because, the raw materials of required
quantity and quality are not available and/or provided as and when required and
at the reasonable prices. However, another 35 respondents (14 per cent) opined
that lack of adequate demand for their products is the main reason for
under-utilization of their production capacity. Few respondents stated that they
are facing marketing problem as they are not able to sell their products on credit
basis as demanded by the customers because of their poor financial position. 48
entrepreneurs accounting for 19 per cent considered power problem as the
important problem. Because, though the supply of electricity is regular, the low
voltage hampers their production. 28 entrepreneurs (11 per cent) attributed to
the labour problem due to the non-availability of skilled labour. And the
70
remaining 5 entrepreneurs (2 per cent) attributed the under-utilization of their
production capacity to other problems like obsolete machinery, diversion of
fund, etc.
3.3.2: Non - Financial Problems
Besides the financial problems, the small scale units are also facing a
number of non-financial problems which are presented and analysed very briefly
in the following paragraphs.
3.3.2.1: Delay in Registration
Though it is not necessary for a small scale unit to register itself, yet the
registration gives certain distinct privileges as well as facilities. Unfortunately,
the process of registration is cumbersome and time consuming. This proves to
be a great irritant. Therefore, most of the unit-holders especially rural
entrepreneurs prefer to go without registration formalities in Davangere and
Chitradurga districts. It is more so in places like Chellakere, Hiriyur, Honnali,
and Harapanahalli taluks. Most of these taluks are having more industrial units
particularly tiny units without getting any assistance from the DICs and
governments. The Researcher met a number of entrepreneurs during the survey
and found a number of unit-holders strongly alleging the DICs officials in this
regard. However, to overcome this difficulty and to make procedure simple, the
state government has come out with a scheme called Single Window
Committee. The idea of setting up of this committee under the chairmanship of
71
Deputy Commissioner of Revenue District was to provide all the requisite
facilities under one umbrella. The main criticism against the working of this
committee is about its inept handling of the cases as the committee fails to keep
its schedule of convening the meetings as per scheduled dates and/or timings and
about the total disregard to the interest of unit-holders. It has been observed that
meetings are held at the pleasure or convenience of the members defeating the
very purpose of the scheme. The details about the number of meetings held,
cases cleared, etc., give an idea about the working of the single window
committees.
Table - 3.4: Number of Meetings of Single Window Committee and the Decisions
Year
Chitradurga District
1995-96
1996-97
1997-98
1998-99
1999-00
Davangere District
1997-98
1998-99
1999-00
No. of Meeting
held
09
07
10
11
12
8
9
9
No. of Sheds and Sites
distributed
25 Sites
21 Sites, 4 sheds
75 Sites
28 Sites
4 Sites
9 Sites
19 Sites
14 Sites
17 Sites
Number of cases cleared
-
4
3
4
5
2
3
7
10
Nursing programmes to sick SSIs
-
1
7
1
3
5
4
5
Seed Money sanctioned
(Rs. in lakh)
-
02.50
16.14
02.50
07.50
03.00
07.00
08.00
Source: Records of DICs of Chitradurga and Davangere Districts
It is obvious from the above that for majority of the years of the study
period, meetings were not hold at least once in a month. To make the committee
operational and functional in each district, it would be in the fitness of things to
hold the meetings at least once in a month, if not twice a month. Further, the
72
committee which comprises of representatives of all the concerned agencies,
though clears cases which it deems fit for registration. However, the proposals
subsequently fell through in different departments who had already okayed the
proposals in the meeting. Hence, it is necessary to ensure that once a proposal
comes before the consideration of the committee and is found fit for registration,
the subsequent sorting by the same agencies at their individual levels should be
done away with.4
3.3.2: Industrial Premises
A suitable site for the establishment of units is an important factor for
acceleratmg the tempo of industrial activity. Against this backdrop, it is
observed that the potential entrepreneurs are facing the problem of site within
the industrial estates which offer the basic facilities like banks, roads, transport,
water and other infrastructural facilities. With the help of Karnataka State
Industrial Area Development Board (KIADB), the DICs of Davangere and
Chitradurga districts are playing important role for developing industrial area
and industrial estates. In Davangere city, there is a well equipped industrial area.
Out of six taluks in Davangere district, only two taluks viz., Davangere and
Harihar have the industrial area and industrial estates, and the remaining four
taluks have no industrial area and industrial estates. However, even these two
industrial area and industrial estates are not providing adequate number of sheds,
4. Ramesh., 'Growth Dynamics of SSI Sector in India', Abhigyan, Volume XVI, No.4 , October-December 1998, p.28.
73
sites and other infrastructural facilities. And the capacity of these industrial area
and industrial estates is very low. Hence, the DICs are lagging behind in
developing industrial area and industrial sheds. However, the KIADB has made
available the following.
SI. No.
1
2
Table - 3.5: Number of Sites Developet
Place
Davangere
Harihar
Total
Number of acres
075.00
039.62
114.62
bv KIADB Number of
Sites allotted 55
17
72
Source: Records of DIC, Davangere.
Out of 55 sites in Davangere, only 41 sites are allotted to small scale unit
holders, and the remaining are reserved. In Harihar, out of 17 sites, 14 are
allotted to small unit-holders. This clearly reveals that the DIC and KIADB are
not able to fulfill the total requirements of 80 and 52 entrepreneurs of Davanger<f
and Harihar respectively. Because of this, small scale industries in Davangere
district are remaining 38 and 39 is not able to active the Objectives.
In Chitradurga district, there is only one industrial area and one industrial
estate. The small units-holders of Chitradurga district are, therefore, very
strongly objecting the policy of the KIADB and DIC. Further, these industrial
area and industrial estate are not providing any facilities like water, electricity,
banks, etc.
74
3.3.2.3: Marketing Problems
It is a fact that the success of rural small scale industrial programmes
would finally rest on the marketing support. Lack of proper marketing network
for the produces of SSIs is one of the important problems faced by the SSIs. The
products of SSIs are sold mainly in the local market. As per the survey
conducted by this Researcher, 82 per cent of the output of SSIs is sold in the
local market and only the remaining 18 per cent of the output is sold outside
Davangere. Because, these products suffer from standardization, quality,
precision, designing, finishing, post-sales services, market intelligence and
finance. They possess little holding capacity. They, therefore, fall victim to the
middlemen's clutches.5 Consequently, the small scale entrepreneurs are not
reaping the full benefits of their industrial activities.
In Chitradurga district, 76 per cent of the unit-holders are selling their
products in local market without expected margin of profit. Products like
plastic, home appliances, pipes, grills, paper, office files and a number of
decorating materials are sold by the units to the agencies at lower prices.
Because, no marketing facilities are provided by the government to the products
of SSIs. Consequently, the SSIs are not in a position to sell their products at
profitable prices to reap the full benefits for the risk undertaken.
5. Mitra S.K., 'Small Scale Industries Credit Opportunities and Marketing Assistance', SEDME, Vol XXV, December 1998, p.89
75
3.3.2.4: Electricity Problem
The shortage of electricity is a serious problem and this problem is very
serious during the summer season. During summer, the KPTCL resorts to power
cut. Consequently, the unit-holders have to bear the labour cost without
production. So, the unit-holder is unable to reach the production targets. In
order to overcome this problem, the state government provides subsidy, at the
rate of 60 per cent, on the purchase of diesel generators. However, the operation
of diesel generator sets is very expensive and therefore, puts additional burden
on the entrepreneurs in the form of increased cost of production.
The small industrialists complained, during the field work, about this
problem. Though the government and its agencies have assured to supply
400 - 400 volts of power, the actual supply was only 200 - 260 volts. Due to low
voltage, the efficiency of machinery is affected to the extent of 40 per cent.
Further, curtailment in supply of power affects the efficiency of machinery by
another 15 per cent. Therefore, the efficiency of machinery is in total affected
by curtailment and low voltage of power to the extent of 55 per cent.
Consequently, the production and profitability of the units are affected
adversely. Regarding the power problem, the entrepreneurs of Chitradurga
district allege that Chitradurga is being discriminated regarding the power
supply. It is well known that in Kamataka, the power tariff is higher than in
Kerala and Goa states.
76
3.3.2.5: Raw Material Problem
In view of the rising tempo of industrial activities, the non-availability of
right type of raw materials at reasonable prices and in adequate quantity has
affected the entire industrial sector. Because of their smallness and weak
financial position, SSIs have to utilize the services of middlemen to get raw
materials on credit basis. Such an arrangement results in higher costs and is
particularly disadvantageous to the small units when the raw materials are
imported.
In Davangere and Chitradurga districts, most of the SSIs especially, oil
industry, cotton industry, fruit industry and decorticating industry units depend
on agricultural sector. As is known, the raw materials are available from this
sector only during the harvest season. There is therefore, no regular supply of
raw materials and most of the small industrialists do not have the facility to
procure and store the materials for the whole year. Because, it requires huge
working capital and unfortunately, most of the small unit-holders suffer from
working capital. Because of this reason, it is not possible for the units to work
throughout the year and it leads to sickness in SSIs. The problem pertaining to
the raw materials can be analysed under four major heads viz., (a) Insufficient
supply, (b) High lead time, (c) Inaccurate assessment of materials, and (d) High
prices.
77
3.3.2.5.1: Insufficient Supply:
Non-availability of raw-materials in adequate quantity has been posing a
serious threat and challenge to the very survival of the industrial units. A
general observation gathered from the field survey has convinced this
Researcher that those who are entrusted with the responsibility of providing raw-
materials to the units have failed to supply the same to the extent of actual
requirement. A gap between the actual requirement of raw materials as assessed
by DICs and the actual supplies made by the State Small Scale Industries
Development Corporation (SIDC) can be found in almost all the cases. In such a
situation, the unit-holder is forced to be contended with the under-utilized
capacity of his unit. This in turn gives rise to many other problems to the unit
holders such as increased cost of production, reduced profit or increased loss etc.
It was found during the survey of 200 units that in the normal course, the
authorities provide only 5 per cent of the actual requirement to each unit-holder.
The survey also revealed that the unit-holders in Chitradurga district are being
discriminated as for as supply of raw-material is concerned by SSIDC.
However, it is obvious from the above that the small industrialists are
provided with inadequate quantity of raw materials. This inadequate supply
coupled with erratic supply of materials are hindering the smooth working of the
units. Though the SSIs are contributing about 45 per cent to the total industrial
production of the country, it is unfortunate to note that their share in the total
allotment of raw materials is only about 10 per cent.
78
3.3.2.5.2: Long Lead Time
Even the inadequate quantity of raw materials supplied by the authorities
is not made available as and when required by the small industrialists. During
the field survey, the Researcher found the inordinate delay in supply of raw
materials to the units by the concerned agencies. The example of one unit
engaged in the manufacture wire furniture,, is worth mentioning. It has obtained
48 tons of wire rods from Steel Authority of India which has been fully
consumed one month before. The machines were seen by the Researcher lying
idle in the unit due to the non-availability of raw materials.
The assessment made by the DIC of Chitradurga for another unit engaged
in the manufacture of candles was 163 metric tons of wax per annum.
Directorate of Industries and Commerce issued an order6 advising SIDC for
stoppage of raw materials to the said unit till re-assessment of raw material is
made. It is surprising to note that the re-assessment order7 was issued by the
Directorate of Industries and Commerce fixing the requirement at 131.76 metric
tons per annum. In the process, it took about one year for the Industries
Department for reassessment. The unit complained that during this period, it
procured the raw material from the open market. As a result, the unit had to
incur an additional cost of Rs. 24,000. This way, there has been an inordinate
delay in the supply of raw materials to the units by the authorities causing a
number of problems to the units which ultimately result in loss.
6. Order No. RM. 9/24-25, dated April 17, 1997. 7. Order No. RM 36/1493-94, dated March 22,1998.
79
3.3.2.5.3: Inaccurate Assessment of Raw Material Requirement
The DICs of Chitradurga and Davangere are not taking their job seriously
to help the small scale industrial units. Because, their assessment with regard to
the requirements of raw materials was found to be erroneous and erratic. It is
based on irrational judgement and imaginary assessments. The case of a unit
engaged in the manufacture of cattle and poultry feed is a glaring example in this
regard which sheds light on the functioning of DICs with regard to assessing the
exact requirement of units. The assessment of raw material requirement made
by the concerned DIC in the present case has changed from time to time though
the plant capacity remained unchanged. As a result, the unit suffered loss.
3.3.2.5.4: High Prices
The government policy regarding the raw materials is not favourable.
For example, the rates of all kinds of wood have been enhanced by the
government during 1996. These rates were higher than the rates prevailing in
the open market. Further, the rates of raw-materials as charged by the SIDC are
higher than that of the Steel Authority of India for some of the items of raw-
material.
Besides, one more problem haunting the SSIs is that SIDC does not
provide all types of raw material to the entrepreneurs. In this connection, a unit
engaged in the manufacture of transformers, repairing of radios and TVs stated
that it requires the raw materials like anemeld copper wire, lamination (core),
80
spare parts of transformers, etc. Unfortunately, SIDC does not deal with these
types of items. Therefore, the unit has no other alternative except to purchase
such items from the market at high prices. As a result, the unit is facing the
problem of competition as it is not able to offer its products and services at
competitive prices. Because of this problem, the entrepreneur is utilizing only
55 per cent of the installed capacity of his unit.
From the above, it is obvious that the small scale units in the districts are
facing a number of problems with respect to the raw materials and these
problems are making them less competitive impairing their commercial viability.
3.3.2.6: Supply of Machinery
Due to non-availability of sufficient funds, small scale units are forced to
use the old and out-dated machinery. And this is affecting both the quantity and
the quality of their production adversely. No doubt, the National Small Scale
Industries Corporation (NSIC) plays an important role in providing machinery to
small units on hire-purchase basis. But the procedure for the procurement of
machinery from this corporation is lengthy and cumbersome. This lengthy and
cumbersome procedure discourages many entrepreneurs. Consequently, the
entrepreneurs are not making use of the facility extended by the governments
through their agencies. And this is defeating the very purpose of the scheme.
81
3.3.2.7: Engagement of Entrepreneurs
On the one hand, the entrepreneurs are not able to employ a large number
of clerical and managerial staff and on the other, small entrepreneurs have to
look after many activities concerned with raw material, marketing, finance, etc.
Therefore, they remain engaged in pursuing their cases with various agencies
like DICs, SIDOC, Directorate of Industries and Commerce, Banks, etc. The
small unit-holders in Chitradurga and Davangere districts opine that their work
remain undone by these agencies if they do not pursue their cases. Their cases
are not treated on priority basis by the concerned agencies though the DICs have
advised them to do so. Consequently, most of their time is wasting in moving
from one office to another and from one table to another in the same government
office.
3.3.2.8: Corruption
Davangere District Small Industries Association and Entrepreneurs feel
strongly that they have to tip the officials at all stages and all the concerned
agencies including DICs. The entrepreneurs state that delays in various offices
and all stages are common and in most of the cases, there is a deliberate delay.
The files do not move until the palms of the concerned officials are greased.
However, there are few exceptions. The entrepreneurs, therefore, opine that it is
better to forego various subsidies/incentives due to corruption and procedural
delay.
82
3.3.2.9: Lack of Co-ordination among Different Agencies
The lack of co-ordination among various agencies such as, Directorate of
Industries and Commerce, SIDC, Financial Agencies, DICs, etc., is affecting the
interest of small scale units. It would be pertinent to state here that DICs have
their own norms for the financial appraisals and for the same exercise, the
financial agencies use their own norms which are different from that of DICs.
The lack of co-ordination can further be imagined from the fact that the number
of units identified as sick by the Banks in Karnataka State is 17,316 as on March
31, 1992, whereas the number of units declared as sick by the Department of
Industries and Commerce, Bangalore as on the same day is 17,132.
That means, inspite of the uniform definition of sickness in units given by
the Reserve Bank of India, the same has not been followed by the concerned
agencies which they are otherwise supposed to follow. As a result, one can
observe the delay in providing remedial measures to the sick units. All these
narrate the absence of co-ordination among the agencies concerned with
industrial development. Therefore, the main objective of providing all facilities
to the units under one roof in DIC set up is far from reality.
Many of the above problems could be solved if not eliminated altogether
provided DICs supervise the functioning of the units regularly and adequately.
In this connection, the DICs should exercise greater vigil on the units. But the
field survey revealed that the performance of DICs is not satisfactory as evident
from the following.
83
3.3.3: Inadequate Supervision of Units by DICs
The DICs are equipped with the required field staff who are supposed to
develop a link between the DIC management and the entrepreneurs. But it is
unfortunate to note the dissatisfactory performance of the field staff which is
evident from the following table.
SI. No.
1.
2.
3.
4.
5.
6.
Table - 3.6: Frequence Frequency of
Inspection
Once in a month
Once in three months
Twice a year
Once a year
Rarely
Never
Total
/ of Visits to Units by D Number of units
inspected
04
08
14
20
74
80
200
[Cs
%age to total
02
04
07
10
37
40
100
Source: Field Survey
The above table reveals that out of 200 sample units, 80 units accounting
for 40 per cent have never been inspected by the field staff of DICs whereas 74
units (37 per cent) have rarely been inspected. Only 4 units, out of 200, have
been inspected once in a month. In the opinion of the entrepreneurs, the
inspection is carried out by the DICs field staff just to fulfill the formality. The
problems of units are not being heard, verified and discussed.
During the field survey, many units were found to be non-functioning.
The units were either de-registered by the DICs or had been closed down by the
84
entrepreneurs. Some units existed only on paper. This can be attributed to many
reasons including:
1. The DICs fail to redress the problems of entrepreneurs in time, and
2. Some unscrupulous persons get double registration for the same unit.
The objective behind this malpractice is to misappropriate financial
and non-financial assistances offered by the DICs like subsidies, more
and more participation in the government purchase programme, etc.
From the above analysis, it becomes clear that there is no constant contact
between the DICs and the entrepreneurs. Therefore, the problems of the units
are not identified at the early stage. Hence, the unit is closed or becomes sick to
be admitted to "emergency ward". This brings the point to the fore that, DICs
field staff need to be activated and supervised. The constant supervision and
inspection of units ensure viability of units on the one hand and provide
guidelines for the future plans of DICs on the other.
However, the analysis made in the forgoing pages reveals that there are
certain problems which are beyond the control of DIC officials. For instance,
non-cooperation from financial agencies, SICOP, shortage of power, etc. In
addition to this, the Researcher observed certain flaws which are attributed to
units such as mis-management, lack of industrial concept, unfair intentions, etc.
It was observed that some units are over-enthusiastic about their projects and
jump into the business. Some entrepreneurs have spent lot of money on
unproductive heads like, the construction of office building and decoration.
85
From the above, it is clear that there are various problems faced by the
units as well as DIC officials. The development of SSIs is a state subject and the
main assistance to SSIs should come from the state. If the government takes
steps for the development of infrastructural facilities and to reduce the problems,
if not eliminated completely, faced by units in the small scale sector as well as
DIC officials, better future prospects (of developing SSIs) can be expected.
After a brief analysis of the problems of SSIs in Chitradurga and
Davangere districts, it is necessary and appropriate to present a brief profile of
the units selected for the present study. However, before looking into the profile
of the sample units, let us have a brief look at the two districts selected for the
present study.
3.4: Chitradurga District
Chitradurga is one of the important districts in Karnataka and it is situated
roughly in east-south part of the state. It has an eventful history and has rich
cultural tradition. The whole area of Chitradurga revenue district lies in the
valley of Vedavati river with the Tungabhadra river flowing for a few miles
along the boundary in the north-west.
Prior to the formation of Davangere district, the Chitradurga district was
divided, for administrative purpose, into two sub-divisions viz., Chitradurga
sub-division and Davangere sub-division. However, after the formation of
Davangere district, two more taluks (viz., Hosadurga and Holalkere) were
brought to Chitradurga sub-division. Now, Chitradurga district consists of six
86
taluks. These taluks are further sub-divided into hoblies, each of which in turn
consists of about 30 to 50 villages. The following table presents more details
about the area, number of villages, population and the hoblies in each of the
taluks in Chitradurga district.
Table- 3.7: Chitradurga District - Area Population, Villages etc.,
SI.
No.
]
2
3
4
5
6
Name
of the Taluk
Challakere
Chitradurga
Hiriyur
Holalkere
Hosadurga
Molakalmuru
Total
Area (sq. kms)
2,055.95
1,365.10
1,692.03
1,094.84
1,416.40
736.49
8,360.81
Number of
Villages
175
163
150
163
194
77
922
Number of
Hoblies
4
4
4
4
4
2
22
Population
Rural
2,41,000
2,18,600
1,91,200
1,67,000
1,82,600
94,900
10,95,300
Urban
38,300
1,03,400
37,500
12,200
17,300
8,700
2,17,400
Total
2,79,300
3,22,000
2,28,700
1,79,200
1,99,800
1,03,700
13,12,700
Note : Taluk-wise figures are as worked out by the State Survey Department and local bodies.
Sources: 1. Suryanath U. Kamath., Karnataka Gazetteer, first edition, Vol. II. 2. Department of Economics and Statistics, Chitradurga at Glance,
1997-98, Government of Karnataka, Bangalore.
The district occupies the seventh place in the state as far as geographical
area is concerned and eleventh place from the point of view of population.
Among the taluks, Challakere is the largest taluk followed by Hiriyur and the
smallest taluk is Molakalmuru from the point of view of area. From view point
of population, Chitradurga is the thickest populated taluk followed by Challakere
and the least . populated taluk is Molakalmuru.
The important rivers that flow through the Chitradurga district are
Tungabhadra, Vedavathi, Janagahalla and Swamamuky. The rivers Tungabadra
87
and Vedavathi flow in the district for 125 and 129 miles respectively and
flowing towards Andra Pradesh. However, major part of the district lies in the
dry land characterised by huge undulating plains in the hollows of which are
situated the villages with small groves of trees round them. In the places where
there is some water, one can find coconut gardens. The pastures too are good
especially in the cooler months of the year. It is surmised that the soil was once
less sterile, and records of old times mention the occurrence of fine timber trees,
but no trace of these now remains owing to the indiscriminate manner in which
the forests were cut down to provide wood for agricultural implements and other
purposes. Even a little water is enough for the land to smile and in spite of the
low average rainfall, certain parts of the district produce very good crops in
years of normal rainfall.
3.5: Davangere District
Davangere is one of the newly created districts in Karnataka. It is
(roughly) situated at the centre of the state and it came into existence on August
15, 1997. The district is formed transferring one or more taluks from the
neighbouring three districts viz., Chitradurga, Davangere, Harihar and Jagalur
taluks from Chitradurga district, Chaimagiri and Honnali taluks from Shimoga
district and Harapanahalli taluk from Bellary district. Thus, there are 6 taluks in
the district. The district is bound by Bellary district in the north, Chitradurga in
the east and Shimoga in south. Davangere town is the head-quarter of the
district and it is known as Manchester of Karnataka.
88
According to available information, the name Davangere is derived from
the name Davankere, a tank that existed here. Earlier, it was a centre of cattle
trade. The village that existed near the tank was called Davanakere.
Subsequently, it became Davangere. Hyder Ali gave it as a Jahgir to the
Maratha Chief Appaji Ram who encouraged merchants to settle here. Appaji
Ram died without heirs, but the place destined to be what it is today. It is not
only one of the biggest and most populous cities but also one of the major and
thickly populated cities in the state. Being situated in a groundnut and cotton
growing track, the city has a number of cotton and groundnut oil factories. The
details about the taluk-wise geographical area, population, number of hoblies
and villages are presented below.
SI. No.
1.
2.
3.
4.
5.
6.
>ourc
Table - 2
Name of the Taluk
Harapanahalli
Channagiri
Jagalur
Davangere
Honnali
Harihar
Total
5s: 1. Suryanat
\.8: Davangere District - Area Population etc., Area (sq.
kms)
1,438.0
1,210.0
964.5
936.1
888.0
476.8
5,913.4
h U.Kan
Number of
Villages
74
199
134
156
146
77
786
lath., Kai
Number of
Hoblies
4
6
3
3
6
2
24
rnataka (
Population
Rural
1,99,000
2,43,200
1,24,700
2,21,700
1,79,000
1,50,100
11,18,600
Gazetteer, :
Urban
34,100
14,100
12,100
2.92,400
21,000
66,600
4,40,300
irst editic
Total
2,34,000
2,57,300
1,36,700
5,14,100
2,00,000
2,16,700
15,58,800
»n, Government of Karnataka, Bangalore.
2. Department of Economics and Statistics, Davangere District at Glance, 1998-99, Government of Karnataka, Bangalore.
89
It can be seen from the above that Davangere district is a smaller district
when compared to Chitradurga district from the view point of geographical area.
However, it is more populated than Chitradurga. Among the taluks,
Harapanahalli taluk is the largest followed by Charmagiri and the smallest is the
Harihar taluk. From the view point of population, Davangere taluk is the highly
populated taluk in the district followed by Charmagiri and the least populated
taluk is Jagalur. Another important aspect is that the urban population in
Davangere taluk is more than that of rural population. One of the resons for this
is the educational institutions and business establishments.
Major part of the district lies in the irrigated land characterised by he
undulating plains in the hollows of which are situated villages with small groves
of trees round them. In the irrigated area of the district, one can find pady,
coconut gardens, and arrecanut gardens. The pastures too are good in the winter.
It is surmised that the soil was once less sterile and records of old times mention
the occurance of fine timber trees, but no trace of these now remains owing to
the indiscriminate manner in which the forests were cut down to provide wood
for agricultural implements and for other purposes. The important rivers that
flow through .1. Davangere district are Tungabhadra and Vedavathi. These
rivers flow in the district for 150 miles and flow towards Andra Pradesh.
In the present tempo of planning and development, the importance of
industries in the economic development of a district need not be emphasized.
Because, development of industries is an accepted factor in the evaluation of a
90
region's economy. Chitradurga and Davangere districts are favourably situated
in regard to the production of most of the raw materials required for the
development of industries in these districts. The vast net work of roads and the
Bangalore-Poona railway line passing through both the districts provide the
necessary infrastructure as for as the transportation is concerned. Prior to the
creation of Davangere district, Davangere and Harihar taluks were the two
important places of industrial activities in Chitradurga district. At present, these
two are included in Davangere district.
Agricultural raw materials of considerable value are raised every year.
Cotton which constitutes the main item of raw materials for the textile industries
and oil seeds, especially groundnut, which are responsible for the establishment
of many a number of oil units are grown in considerable quantities. Among
SSIs, handloom weaving and beedi manufacture are important in Chitradurga
and Davangere districts.
Of the traditional indigenous industries, the most important was
handloom weaving. The other industries in Chitradurga and Davangere districts
were those connected with pottery and goldsmithy practiced on a fairly large
scale. These industries in Chitradurga and Davangere districts showed a natural
tendency to become centralised in a few important towns where special facilities
for their development were available. Though the handloom weaving still
remains in Chitradurga and Davangere districts, the availability of cheap and
rapid means of commumcation helped the emergence of power-loom as a
91
formidable rival to the handloom. It is noteworthy that in spite of this
competition, it has survived to be one of the most important industries in
Chitradurga and Davangere districts. The silk fabrics of Molakalmuru are being
produced for several decades and are still popular. The woolen blankets called
kamblies made in both the districts are known for their quality and durability in
Jagalur, Hiriyur and Chitradurga taluks of the districts.
Another important traditional industry in the districts is the oil pressing
industry. This industry was promoted by a class of people called Ganigas. The
work of crushing the oil seeds was done mostly in the primitive wooden or stone
oil mills called ghanas. Several kinds of seeds viz., Hutchellu (Niger), Honge
(Pongami? Glabra), Kadalekayi and Haralu (Castor) were crushed in these mills.
Among the other traditional industries were leather tanning and the
making of buttons and earthsall. Most of these are now extinct due to a variety
of reasons, the chief of which were paucity of funds, insufficient supply of raw
materials, want of skilled workers, lack of efficient management and the absence
of proper marketing facilities.
3.6: Performance of SSIs in Chitradurga and Davangere Districts before Formation of DICs
In Chitradurga district, the DIC was established in 1978. But the DIC of
Davangere was established only after the formation of Davangere district i.e., in
the year 1997. Therefore, Davangere and Harihar taluks were included in
92
Chitradurga district before 1997. Hence, it is necessary to analyse the
performance of SSIs before the formation of Chitradurga and Davangere DICs.
In the industrial development of a region, SSIs are of considerable
importance. The Small Industries Service Institute (SISI), Bangalore conducted
a survey of SSIs in Chitradurga district in the year 1960. However, no survey
has been conducted in Davangere district so far. In all, there were 193 small
scale industrial units in Chitradurga district including Davangere in which about
Rs. 46,00,000 of capital was invested and their output was valued at about Rs.
91,00,000. They had provided employment opportunities to over 1,300 persons.
SI. No.
1
2
3
4
Table - 3.9: SSI units in C
Particulars
Number of units
Employment
Investments (Rs. In lakhs)
Value of Out put (Rs. In lakh)
Foundary
18
230
8.44
4.94
Macliine Tools
6
200
6.17
8.41
hitradurga Agriculture Implements
10
85
0.943
1.34
District Steel
Furniture
4
12
0.57
0.70
in before 1978 Repairs
and Services
6
35
0.75
0.36
Other Industries
149
738
29.00
75.25
Total
193
1,300
46
91
Source: 1. Suryanath U. Kamath., District Gazetter, Government of Karnataka Press, Bangalore.
The industries mainly related to foundry, general engineering, machine
tools and parts, agricultural implements, steel furniture, automobile repairs,
wood working and wooden furniture, leather tool wear, printing, rice, and oil
mills. In 1967, there were 18 units in the district engaged in foundry and general
engineering works with an estimated total investment of about Rs. 8.44 lakh.
93
They had employed about 230 persons and produced articles worth about Rs.
4.94 lakh.
The number of small scale industrial units engaged in the manufacture of
machine tools and parts was 6. They had invested about Rs. 6.17 lakh and
employed over 200 persons. The value of total production was about Rs. 8.14
lakh per annum. Agricultural implements such as sickles, pick-axes, memties,
kulas, etc., were being manufactured by about 10 units in the district. They had
invested about Rs. 94,300 and produced articles worth about Rs. 1.34 lakh.
They had provided employment to about 85 persons.
There were only four units in the district engaged in the manufacture of
steel furniture such as cots, chairs, tables, etc. The estimated total investment in
these units was about Rs. 57,000, while the total value of production was about
Rs. 70,000. Six units were engaged in the repair and servicing of automobilies
in the district.8. The estimated total investment of these units was about Rs.
75,000, while the estimated total value of the repairs and services done was over
Rs. 36,000 per annum. About 35 persons had been employed in these units.
Besides these small scale industrial units, there were several other units
engaged in electrical repairs, cart manufacture, tyre retreading, cement products
manufacture. All these units were in the private sector and were contributing to
the industrial development of the district.
8. Suryanath U. Kamath., 'District Gazetter, 1985', Volume 2, Government of Karaataka Press, Bangalore.
94
With various measures taken by the governments to provide assistance to
SSIs such as provision of cheap and enough power, supply of machinery on hire
purchase basis, financial and raw material assistance, development of industrial
estates and availability of technical and economic guidance by the Small
Industries Service Institute, etc., the number of SSIs in the district has been
growing in the recent years.
Chitradurga, though predominantly an agrarian district, has emerged as
one of the industrial districts in Karnataka. And as Davangere district is
predominantly an agricultural and commercial centre, it has made a significant
contribution to the development of the state.
Before evaluating the performance of DICs of Chitradurga and Davangere
districts, it would be better to give a brief profile of sample respondents in
Chitradurga and Davangere districts.
3.7: Profile of Sample Respondents (Units) of Chitradurga and Davangere Districts
As a prelude to the evaluation of performance of DICs of Chitradurga and
Davangere, a profile of 200 sample respondents has been presented below so
that these cross sectional parameters or variables comprising of socio-economic
characteristics may become useful for linkages and interpretations from the view
point of various functions of DICs of Chitradurga and Davangere districts.
95
3.7.1: Economic Status
The support of a sound economic base for any type of activity is very
important and it is more so in the case of industrial venture. The contents of the
table presented below shed light on the economic status of 200 small
industiialists selected for this study from both the districts. The distiibution of
respondents in terms of high, middle and low income groups is clear from the
table. The respondents with an annual income above Rs. 1.5 lakh each were
classified as having high economic status. Respondents with income ranging
from Rs. 75,000 and Rs. 1.5 lakh per annum were grouped under middle
economic status and low economic status was associated with an annual income
below Rs. 75,000.
From the table (Table-3.10), it is obvious that there are 96 respondents
working out to 48 per cent of the total number of respondents and they were
found to be having high economic status. This is a pre-requisite as the
establishment of units requires sufficient capital. The respondents in middle
Table-3.10: Economic Status of Respondents
SI. No.
1.
2.
3.
Economic Status (Rs. Lakhs)
High (above 1.50)
Middle (0.75-1.50)
Low (below 0.75)
Total
Number of Respondents
Davangere
60
30
12
102
Chitradurga
36
52
10
98
Total
96
82
22
200
Percentage
48
41
11
100
Source: Field Survey
96
income group number 82 and they constitute 41 per cent of the total number of
respondents. In the low economic status group, there are of 22 respondents
representing 11 per cent. However, in Davangere district, the number of
entrepreneurs with high income is more than in Chitradurga district. In
Chitradurga, more number of entrepreneurs fall into middle income group.
Any how, one cannot conclude that the industrialists in the high income
group are able to finance the activities of their units on their own. Because, the
financial requirement of a unit depends upon a large number of variables such as
the nature of the product, degree of mechanisation, size of production, etc.
Further, the entrepreneurs may not be able and/or willing to invest their entire
fund only in the industrial units as they may have to meet a number of other
obligations.
3.7.2: Social Group
Social scientists have conceptualised caste primarily as an endogenous
group, a hereditary group and a status group. Further, the social group is always
considered to be related to the caste which may broadly be classified into
forward caste and backward caste. This feeling of high caste and low caste is
considered to be deep-rooted and all pervasive in Indian society and these groups
are found to be having glaring inequalities. In this background, the distribution
of respondents based on caste factor which has been classified into forward
communities, backward communities, backward castes, minority communities,
97
schedule caste and schedule tribe, based on popular government classification, is
presented below.
SI. No.
1.
2.
3.
4.
5.
Source:'.
Table-3.11: Social Groups of Respondents
Social Groups
Forward communities
Backward communities
Backward castes
Minorities
SC and ST
Total 7ield Survey
Number of Respondents
82
61
15
29
13
200
Percentage
41.00
30.50
7.50
14.50
6.50
100.00
From the above, it is obvious that the distribution pattern of respondents
is 82, 61, 15, 29 and 13 from forward communities, backward communities,
backward castes, minorities, and SC and ST respectively constituting 41.00 per
cent, 30.50 per cent, 7.50 per cent, 14.50 per cent and 6.50 per cent respectively.
That means, majority of the respondents were found to be from forward and
backward communities accounting for 71.50 per cent of the respondents.
3.7.3: Educational Background
Education has a significant influence on the personality of a person. It
develops better awareness of the environment and determines his course of life
besides helping him to earn his livelihood. The normal perception is that an
educated person can make a better use of resources and opportunities resulting in
good returns on investment. In this background, the table below presents the 98
educational background of the respondents in the categories of semi-literate, pre-
degree, graduation, post-graduation, technical education and professionals.
Table-3.12: Education Background of Respondents SI.
No. 1.
2.
3.
4.
5.
6.
Education Level
Semi-Literate
Pre-Degree
Graduation
Post-Graduation
Technical Education
Professionals
Total
Number of Respondents
8
83
41
25
32
11
200
Percentage
4.00
41.50
20.50
12.50
16.00
5.50
100.00
Source: Field Survey
It may be noted here that the semi-literates include only those who could
read and write or those who had only primary education. Their number in the
sample size is only 8 representing 4 per cent. The pre-degree holders had
education up to pre university and their number is the largest in the sample size
with 83 representing 41.50 per cent. There are 41 respondents having graduation
constituting 20.50 per cent and another 25 respondents with post-graduation and
they account for 12.50 per cent of the respondents.
There are 32 industrialists with technical education working out to 16 per
cent of the total number of respondents and the remaining 11 respondents are
with professional education and they account for only 5 per cent. On the whole,
99
most of the respondents are found to be possessing the qualification of pre-
degree and this group was followed mainly by graduates and technical
education.
3.7.4: Occupational Background
It is a fact that the experience in the concerned field enable a person to
take up the entrepreneurship with confidence as he was exposed to the field
earlier. In this background, it was observed that majority of the respondents
were involved in other occupations or employment earlier. The distribution
pattern of respondents based on this criterion in Davangere and Chitradurga
districts is presented in the following table.
Table - 3.13: Occupational I SI.
No.
1.
2.
3.
4.
5.
6.
Occupational Background
Trader
Agriculture
Government employee
Professionals
Factory worker/officer
Un-employed
Total
tackground of Respondents Number of
Respondents
102
16
19
17
13
33
200
Percentage
51.00
8.00
9.50
8.50
6.50
16.50
100.00
Source: Field Survey
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Majority of the respondents numbering 102 had the trading background
and their percentage is 51 of the total number of respondents. The next highest
group is the unemployed youths having no occupational background and their
number is 33 and the percentage stands at 16.50. There are 19 respondents
having government employment as occupational background and their
percentage is 9.50. There are also 17 respondents with professional background.
This group was followed by agriculture as the occupational background by 16
respondents whose percentage works out to 8. Thirteen factory workers and
officers from private sector have entered the small scale industry sector and they
constitute 6.50 per cent of the total number of respondents. To sum up, majority
of the respondents come from business background and it is followed by
government service, professionals, farmers and factory workers as their
occupations before taking up the entrepreneurship. The unemployed youths
constitute the second largest group in the total number of respondents.
3.7.5: Demiciliary Status
The demiciliary status has an influence on generation of ideas, location of
the units, establishment and operation of units in view of exposition to different
types of environment. For the purpose of this study, the respondents were
categorised into localites consisting of respondents from Chitradurga and
Davangere cities, semi-localites covering respondents from other taluks of
Chitradurga and Davangere districts, adjacent localites comprising of
respondents from other districts in Kamataka state and non-localites consisting
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of respondents from other states. The distribution pattern of respondents under
each of these categories is presented in the following table.
Table - 3.14: Demiciliary Status of Respondents SI.
No. 1
2
3
4
Demiciliary Status
Local
Semi-local
Adjacent-local
Non-local
Total
Number of Respondents
115
56
23
6
200
Percentage
57.50
28.00
11.50
3.00
100.00
Source: Field Survey
As expected, there are 115 local respondents representing 57.50 per cent
of the total number of respondents. This group is followed by semi-local
respondents numbering 56 and they constitute 28 per cent. There are 23 adjacent
local respondents representing 11.50 per cent of the total number of respondents.
The non-local respondents numbering only 6 constitute 3 per cent of the total
number of respondents. That means, majority of the respondents is from the
twin cities (district head-quarters).
3.7.6: Induction Pattern
One of the essential pre-requisites for venturing into entrepreneurial task
is to have prior knowledge about venturing activity and procedures to be adopted
for venturing. This is often labelled as induction. The table protrays the
induction pattern of respondents in terms of trainees and non-trainees.
102
SI. No.
1
2
"able- 3.15: Induction Pattern of Respondents
Induction partem
Trainees
Non-trainees
Total
Number of respondents
62
138
200
Percentage
31
69
100
Source: Field Survey
Induction Pattern of Respondents
I Trainees
I Non-trainees
69%
Figure - 3.2
The hignlight of this distribution partem is that a large number of
respondents numbering 138 had no formal training or induction and they
constitute 69 per cent of the total number of respondents. The remaining 62
respondents constituting 31 per cent had some formal training and induction.
3.7.7: Location of Units
The locational distribution of units is likely to have a bearing on their
performance. Because, the infrastructural facilities play an important role in
attracting the entrepreneurs and also in the performance of SSIs. Further, it may
103
be noted here that these facilities are concentrating only in the urban area and no
facilities are available in rural area. Hence, the respondents are categorised into
urban, semi-urban and rural respondents and the same is presented ki table
below.
Tab SI.
No. • 1 .
2.
3.
e - 3.16: Location of Respondents 1
Location
Urban
Semi-Urban
Rural
Total
Number of Respondents
105
63
32
200
Jnits
Percentage
52.50
31.50
16.00
100.00
Source: Field Survey
Of the 200 respondents, 105 representing 52.50 per cent of the total
number of respondents are having their units in Chitradurga or Davangere city
and they are categorised as urban respondents. There are another 63 semi-urban
respondents having their units at the taluk level and their percentage stands at
31.50. Lastly, there are 32 rural respondents constituting 16 per cent. In
nutshell, it can be concluded that most of the SSIs are urban centred followed by
sub-urban and la ?tly, rural area.
3.7.8: Investment Level
The invej tment level of a unit is also an important factor influencing the
decisions on venture adoption and role perception of DICs of Chitradurga and
Davangere. The respondents are classified into four categories as heavy (above
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Rs. 10 lakh), medium (between Rs. 5 lakh - Rs. 10 lakh), small (Rs. 1.5 lakh to
Rs. 5 lakh) and marginal (below Rs. 1.5 lakh) investors.
Table - 3.17: Investment-wise Classification of Respondents SI.
No. 1.
2.
3.
4.
Investment of Group
Heavy (above Rs. 10 lakh)
Medium (between Rs. 5 lakh - 10 lakh)
Small (between Rs. 1.5 lakh -5 lakh
Marginal (below 1.5 lakh)
Total
Number of Respondents
23
37
124
16
200
Percentage
11.50
18.50
62.00
8.00
100.00
Source: Field Survey
It can be seen from the above that only 23 respondents, out of 200,
accounting for just 11.5 per cent have invested more than Rs. 10 lakh each in
their units. Another 37 respondents constituting 18.5 per cent have employed a
capital of more than Rs. 5 lakh but less than Rs. 10 lakh each. Majority of the
units numbering 124 representing 62 per cent have invested Rs. 1.5 lakh to Rs. 5
lakh each in their units. And the remaining 16 units representing 8 per cent have
invested less than Rs. 1.5. lakh each of capital.
3.7.9: Occupational Background of Families
The occupational background of families acts as a morale booster
providing an environment during early childhood and later. Hence, the
respondents are categorised, on the basis of parent's occupation, particularly on
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the basis of father's occupation. The respondents are categorised as
businessmen, farmers, factory workers, government employees and professionals
on the basis of their parental occupation.
Table - 3.18: Occupational Background of Families SI.
No. 1.
2.
3.
4.
5.
Parental occupation
Trader
Agriculturist
Factory worker
Government employee
Professional
Total
Number of respondents
86
32
29
31
22
200
Percentage
43.00
16.00
14.50
15.50
11.00
100.00
Source: Field Survey
86 respondents, out of the total number of respondents of 200,
representing 43.00 per cent had their parental occupation as traders. Parents of
another 32 respondents representing 16 per cent are farmers as against 29
respondents having their parental occupation to be factory work and this
category accounts for 14.50 per cent. There are another 31 respondents
accounting for 15.50 per cent having their parental occupation as government
employment. The remaining 22 respondents, 11 per cent, had their parents'
professional background. The outstanding feature of occupational background
of parents of respondents is that most of them are traders with more or less,
equal distribution of the remaining respondents in the parental occupation of
farming, government employment, factory worker and profession.
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3.7.10: Age of Units
The last variable considered for the profile of SSIs in Chitradurga and
Davangere districts is the age of units. For this purpose, three different periods
are considered. They are the units established during 1980-81 and 1990-91,
between 1990-91 and 1995-96, and between 1995-96 and 1999-2000. The table
presented below presents the distribution pattern of respondents based on the
year of establishment.
Table - 3.19: Period of Establishment of Units SI. No.
1
2
3
Period (years)
Early Period (1980-81 to 1990-91)
Middle period (1990-91 to 1995-96)
Recent Period (1995-96 to 1999-2000)
Total
Number of respondents
62
96
42
200
Percentages
31.00
48.00
21.00
100.00
Source: Field Survey
During the early period, 62 respondents (31 per cent), out of 200,
established their units. Another 96 respondents established their units during the
middle period and their percentage comes to 48. The remaining 42 respondents
(21 per cent) have their units established during recent period viz., between
1995-96 and 1999-2000.
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Conclusion
To sum up, the distribution pattern of respondents was characterised by
high and medium economic status with the background of almost high social
status but not with much of high educational level originating from non-
domiciliary status having not so much induction with almost budding
entrepreneurship at young age from almost highlevel families with a heavy
concentration of units in urban areas with an injection of small investment
backed up by trading background of parents having established their units
mainly in the middle period.
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Summary of the Chapter
At the beginning of the chapter, a brief analysis of the industrial scenario
of Karnataka was presented followed by an analytical presentation of the
problems faced by the SSIs. Both the financial and non-financial problems of
SSIs in Davangere and Chitradurga distiicts were analysed. Then a brief
account of performance of SSIs in erstwhile Chitradurga district was given and
this was followed by a brief profile of the units selected for the purpose of the
present study.
109