Seeing the capability of SME in executing projects, the Union ministry is considering reserving 10 percent of IT enabled projects for Small and Medium Enterprises (SMEs). The proposal is being circulated among the state governments to get a better response and to receive recommendations from stake holders. It is expected that the companies will get direct orders and even if the projects are given to big companies there will be provision for outsourcing 10 percent of the orders to SMEs.

The focus of the IT policy 2010-15 is on start up companies, IT products, SMEs and women entrepreneurs. Promoting women’s participation in the ICT sector is also its objective. More e-governance projects in local languages are also on its agenda.

At present there are 1,200-odd IT and IT-enabled Service (ITeS) companies. Out of these, 70-75 percent belongs to the SME category earning annual revenues not exceeding Rs 100 crores. A company is considered a start up if its annual return is between 50 lakh and 10 crore, with 50 employees and operating for less than five years.

The government has made provisions to grant incentives in the form of 25 per cent power subsidy to start-up companies, 25 percent reimbursement for premises rental expenses and recruitment assistance of 2.5 lakh per 50 persons recruited.

L Suresh, president IT and IT-enabled Service Industry Association of Andhra Pradesh (ITsAP) says, “Usually, SMEs are good at executing projects. But because of their size, they are disqualified from participating in large projects. Earmarking about 10 per cent of e-governance tenders for SMEs will ensure that companies will have a level playing field.”

To market intelligence, prepare research reports & analysis for SMEs, understand new trends in technology, the Andhra Pradesh government will create libraries with support from NASSCOM, IT Exporters Association, Software Technology Parks of India, ITsAP and Institute of Electronic Governance. For the libraries, Rs 10 lakh fund will be facilitated so that the SME sector can grow. In order to evaluate the strengths of SMEs, the government shall tie up with business analyst firms. This will enable smaller ICTs to establish linkages with bigger firms and help SMEs to find international markets.

Andhra Pradesh has set a target to raise its export value to Rs 70,000 crore by 2015. The current value is 32,000 crore. The state provided 2.51 lakh employment in 2009. New employment for 125,000 people is being targeted. IT sector’s export is 50 percent of the total exports from other sectors in the state.

Tags: e-governance, ITsAP, NASSCOM, SMEs, stake holders, start up companies, state governments, Union ministry, women entrepreneurs
Other related topics IT, Industry Expert, Marketing Tips, Small Business News, Software Solutions, Start a Business, Uncategorized | No Comments »

Small and medium enterprises (SME) fund is planned to be floated in next 1 ½ years with an initial corpus of Rs 100 crore by SBI Capital Markets Ltd. SBI has many SME clients who would be benefitted from this plan.

So far, SMEs of the country did not witness much support from private equity (PE) players because of a low capital base. Rajeev Krishnan, executive Vice President, SBI Capital Markets, says “The SME fund will be used to rope in private equity investment in SME, which otherwise is facing dearth of capital for furthering its business growth.”

FPOs (follow-on public offers) and financial services are also being guaranteed by SBI Capital Markets Ltd in this fiscal. This will definitely attract revenue growth as the PE funds are utilised to invest in the company’s growth phase. Krishnan says, “We expect to witness a 60 per cent rise in our revenue to Rs 1000 crore by end of this fiscal on the back of higher earnings from advisory services.”

Opportunity in the advisory space is further magnified by the central government’s disinvestment programme in public enterprises. $9 billion worth of proceeds is likely to be generated in the current financial year. A larger role is anticipated in ‘mergers and acquisitions’ from investment banks as it is going to leverage SBI’s banking relationship with other Indian corporates.

SBI caps in the last financial year had made loan arrangements of Rs 187,000 crore. In 2009, SBI caps concentrated in five major equity issues that generated Rs 136.5 billion. Mega issues like National Hydro Power Corporation (NHPC) Ltd raised $1.25 billion and Adani Power raised $630 million from the capital market.

Tags: financial services, investment banks, NHPC, SBI Capital, SBI Capital Markets Ltd, SBI’s banking relationship, SME
Other related topics Marketing Tips, Small Business News, Uncategorized | 1 Comment »

Under the Prime Minister’s Employment Generation Programme (PMEGP), the government asked banks to disburse loans so as to meet its target of financing 59,714 projects in the current fiscal year. The margin money assistance is Rs 836 crore and this should help in generation of employment for 5.97 lakh persons.

Since the PMEGP launch in 2008, one lakh projects have been sanctioned and 10 lakh people employed. Out of the total loans sanctions, 15 percent is for SC, 7.5 per cent for ST, 27 per cent for OBCs, 5 percent for minorities and 30 percent for women. The general category entrepreneurs can find a subsidy of 15 percent and 25 percent on the project cost. The weaker sections of society can avail 25 per cent and 35 per cent subsidy.

Dinsha Patel, minister of state for MSME, has urged CMD of banks to issue policy circulars to all financing branches so as to fulfill the allocated targets. He said that the disbursements this year has been just 10 percent of the target. What is important now is that Khadi and Village Industries Commission (KVIC) should reach every village. The KVIC is the nodal agency for the implementation of PMEGP .

The Union Bank of India and KVIC signed an agreement for a ‘one bank, one nodal branch’ formula. This concept shall enable a single nodal branch to be used to coordinate with all other branches of the bank spread in the entire country.

Tags: Banks, financing branches, Khadi and Village Industries Commission (KVIC), MSMEs, MSMEs under PMEGP, one bank & one nodal branch formula, Union Bank of India
Other related topics Marketing Tips, SBA Loans, Small Business Loans, Small Business News, Uncategorized | No Comments »

The credit policy announced by Reserve Bank of India (RBI) has direct and indirect effects on MSMEs. They are meant for stepping up credit flow to small and medium enterprises and all public sector banks need to implement them to help the credit become accessible.

• The RBI has decided to make it compulsory for banks not to ask for any collateral for loans amounting up-to Rs.10 lakh when the loan is borrowed by Micro and Small Enterprises. (MSMEs). This will help in the growth of entrepreneurship that would eventually result in the launch of cheaper and better products in the market.

• RBI is forming empowered committees at its regional offices with RBI’s regional director as Chairman. This committee will review the progress in MSME financing and rehabilitate SME and SSI that are in a poor state. The committee shall also coordinate with other banks, financial institutions and state governments to improve bottlenecks and mandate smooth flow of credit to MSME sector. The regional committees shall also be instrumental in forming similar committees in district levels.

• The policy ensures specialized SME entrepreneurs to have easy access to credit and also equips bank personnel to gain required expertise. Re-designation of the existing SSI branches to SME branches are also on the anvil. This will surely lead to rise in competition among banks to lend money to SMEs. This will also help them to be better  equipped and flexible to extend finance and other services to SMEs.

• According to the circular issued by RBI on lending to SSI, vide circular RPCD.PLNFS.BC.No.03/06.02.31/2005-06 dated July 1, 2005, makes it mandatory of banks to accept loan applications of SSI units and also states a limit up to which banks shall be obliged to offer collateral-free loans. Based on these guidelines, more liberal policies for granting of loans to MSMEs can be formulated in-comparison to the existing policies. Till the Board of Banks formulates such policies, the current instructions of Reserve Bank are applicable to granting of loans for the SME sector.

RBI credit policy for MSMEs has opened up the scope for SMEs to expand and grow. The policies also provide an opportunity to nation to harness its latent strength in the form of MSMEs. The new guidelines are a guarantee to see the birth of new entrepreneurs.

This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to
info@biz2credit.com

Tags: accessible, credit, credit flow, Micro and Small Enterprises, MSMEs, Reserve Bank of India, small and medium enterprises, stepping up
Other related topics Building Credit, Business Credit Cards, Marketing Tips, Small Business News | No Comments »

MSMEs are facing a lot of hurdles according to a report published by Sidbi (Small Industries Development Bank of India). One major concern of Micro, Small and Medium Enterprises is lack of proper infrastructure support needed for their growth and development. The 2010 report is based on survey conducted on 200 MSMEs from every place of India.

Non-availability of infrastructure is not just one concern. There are other issues of concern to the MSMEs . The other key issues that need to be addressed are

1. Inadequate and Non-availability of timely credit.
2. Non-availability of skilled personnel.
3. Non-responsive cost competitiveness due to unavailability of greater automation in production facilities.
4. Inefficiency of energy in production processes.
5. Inadequate R&D and lack of brand building support.
6. Improper knowledge of government schemes with reference to information and communication technology (ICT).

These findings are part of a recent survey conducted by SIDBI among 42 micro, 114 small, and 44 medium enterprises spread across cities like Chandigarh, Hyderabad, Jamshedpur, Surat, Rajkot and Bangalore. The research has been conducted based on questionnaires, on-field discussions and interviews with MSME associations and trade chambers representing different sectors located in different places of India.

Tags: government schemes, MSMEs, Sidbi
Other related topics Marketing Tips, Small Business News, Uncategorized | No Comments »

Coimbatore has become a hot bed of e-marketing. The adoption of internet based marketing has resulted in rise of job orders from overseas customers. Coimbatore has more than 50,000 SMEs, and this initiative has reduced marketing costs and increased international job orders.

The Tamil Nadu Association of Cottage and Micro Enterprises (TACT) disclosed that 15 percent of units in Coimbatore are having their own websites. The major industry types that Coimbatore houses are engineering, automotive components, textile machinery and pumps. Industries in Coimbatore have recorded 10 -15 percent increase in job orders from abroad. J. James, president of TACT, says, “What we thought would be a cost-cutting measure — adoption of e-marketing — has yielded more profits.”

K Raja, in December 2009, started a website for his engineering unit in Coimbatore and for the first time secured a job order from a German customer this year. He comments that by building links and creating valuable content help to gain traffic. Then M Saravanakumar, the owner of a Coimbatore-based Auto Engineering Works company, has 40 % orders from overseas customers. He says that, ‘profit margins in the domestic market were a fraction of those on foreign orders’. He recently purchased five new machines worth Rs 26 lakh each for his unit.

E-marketing can help SMEs perform efficiently in the global market. The reason is it gives SMEs global reach, makes lower cost interactive campaigns that brings measurable results and improves upon organizations’ marketing goals.

Tags: automotive components, e-marketing, foreign orders’, internet based marketing, job orders, marketing goals, Micro Enterprises, SMEs, textile machinery
Other related topics Auto, Marketing Tips, Small Business News, Uncategorized | No Comments »

In a recent development, 20% of government purchases are slated to be procured from the MSMEs. This is proposed by the National Small Industries Corporation (NSIC), in order, to boost the annual sales of micro, small and medium enterprises (MSMEs). Though the proposal is still in the consultation stage, but within 3 to 6 months, NSIC expects it to become legislation after receiving notification from the ministry of Micro, Small & Medium Enterprises.

NSIC Chairman and Managing director H P Kumar, said that the rules are framed to boost the MSME sector. He attended a seminar in Chandigarh where he said that the state governments will also have to frame similar rules to make 20% of purchases from MSMEs mandatory. According to the proposed rule, PSUs will have to make 20% of total purchases from micro units, at-least for three years and then on a yearly basis. NSIC will conduct inspections to give certifications of quality under the single point registration scheme.

NSIC is also responsible for raw material distribution under the raw material assistance scheme. This scheme, is meant to help MSMEs procure raw materials easily and to enable small enterprises finance the purchase of indigenous and imported raw materials. There are already 40 NSIC raw material distribution centres and 10 more are yet to open. The centres distribute steel, aluminum and other ferrous metals across India and are trying to add zinc, non-ferrous metals and plastic raw materials to the list. “NSIC distributed raw material to the tune of Rs 4,300 crore last year and we look forward to having a turnover of Rs 6,000 crore this year,” Kumar said.

Around 358 items are classified out of 6,000 products produced by the Indian MSMEs which should be included in government purchases from MSMEs. Enterprises registered with NSIC are entitled to various schemes and benefits like tender sets’ free availability and exemptions from payment of earnest money.

A L Agarwal, vice-chairman, Haryana Chamber of Commerce and Industry, said “This is definitely going to help Indian MSMEs. Once the rules become legislation it will give a fillip to MSMEs.”

Tags: help Indian MSMEs, NSIC, raw material distribution centres
Other related topics Marketing Tips, Small Business News, Small Business Trade, Uncategorized | No Comments »

Managing an SME can be a difficult task as it involves a lot of challenges to keep the company going. The key aspects to manage are like production, staffing, logistics and finance. Besides, ‘sale and marketing’ has to be dealt with business acumen and planning. Real success comes from finding more clients and the ability to market product and services. The need to discover more effective marketing systems is growing everyday.

Resorting to traditional marketing systems is good but then they have their own niches and a limited access to customers. TV, radio, newspapers, magazines, direct mail, and yellow pages are all confined in their own boundaries and can meet the demands of finding just a limited number of customers. Advertising in these Social media is good for SMEs publicity but won’t always add large no. of customers. So, SME owners need to depend on Online Social media that can really generate increased traffic flow and shape their future.

SMEs are, nowadays, getting more interested to use ‘online social media channels’. It has taken the advertisement world by storm for large no. of customer additions and its immense reach. This serves multiple purpose like Lead Generation, Brand Awareness, Online Reputation Management, Customer Relations and Customer Retention.

Online Social media marketing has the potential to increase your net profit without raising the costs. There are several means to improve its effectiveness. The social media tools has proved effective in recent times. Blogging, for example, is used by businesses to make their online presence felt and to connect directly with customers with updates about products, deals, news and services. With blogging, SMEs will always find groups of people who would love to know more about their products and with whom they can form a community. Relying on Social networking websites like Twitter, Facebook and YouTube can also be very fruitful as they are a window to connect and interact with customers directly. It is not just that one shares information, but it also give an opportunity to post photos, videos and messages to promote a business. Facebook gives the option to create mini web pages for the growth of business. Youtube is valuable for posting videos. So, SMEs can use ‘Online Social media’ to attract huge traffic.

Tags: online social media, online social media channels, online social media marketing, SME, social media tools
Other related topics Marketing Tips, Small Business Loans, Small Business News, Small Business Trade, Uncategorized | No Comments »

Indian SMEs are able to remain optimistic in the wake of last year’s downturn which has been quite encouraging. While IT, healthcare, pharmaceuticals, and construction remain the major drivers for the Indian SMEs, they are constantly keeping an eye on the volatile US and European markets. But the real question is, is it wise to invest in the US and European markets now? The inspiration to invest comes from President Obama’s categorical support for the SMEs working in his country. In his speech he lauded the SMEs for creating more jobs in the US rather than exporting them to other countries.

Obama was quoted saying “Historically, small businesses have created roughly two out of every three new jobs in our country. To replace the millions of jobs lost in the recession, we need to make sure small companies are able to open up, expand, and add names to their payrolls… small businesses will help lead this economic recovery. And that’s why we will continue to stand by them.”

As America starts to rise from the ashes of the recession, it is open to lending more opportunities to SMEs that promise to create new jobs. This is going to be a turning point for Indian SMEs who wish to set up offices in the US and for firms that want to go global. Business expansion is not just to be seen in the US. Now, the European Investment Bank (EIB) has also extended its support for their small and medium-sized enterprises as it commits to make €30 billion available for SMEs and to provide technical assistance to micro-financing institutions. The business wing of the European people’s party has also pledged to open new offices in other countries for expansion of European business. The current slowdown is not just a time of crisis, it may also a time of opportunity. Around 40% of Indian SMEs seem to be optimistic about this growth trajectory.

During the period between 2004 -09, Indian companies alone created 40,000 jobs in the US and states within the US had been competing to invite Indian SMEs by providing them incentives. Now, asset prices have gone down in the US, which makes it an enticing time to invest now but we are still a ways off from a full recovery. It may or may not be the right time for SMEs to invest in the US and European markets- that is something that still needs to be decided.

Tags: economic recovery, European Investment Bank
Other related topics Marketing Tips, Small Business News | No Comments »

“Software as a Service (SaaS)” has been growing exponentially in recent times due to the trend that companies are now opting for low cost alternatives. The SaaS platform is considered to be an important milestone of internet services. The viability of SaaS to propel us into the next level of growth should not be underestimated. Though this view is fervently supported by many research firms and SMEs, there are inherent security concerns around the SaaS model. It is debatable whether data can be hacked into while in transmission, though most data providers say it is unlikely. While this is still in question, it is important that both vendor and client work together to develop security protocols so that the client’s data is always safe both onsite and offsite.

The benefit of using a SaaS model is that it provides manufacturers an easy way to upgrade their functionality as well as the ability to reach out to their clients easily. Because SaaS is just a model for the delivery of technology solutions, it is important that templates be created according to industry specifications in order to boost security and achieve optimum services. This is why it is vital for every company to develop their SaaS business application to run on the web. SMEs are increasingly growing conscious of the advantages of “Software as a Service” as this is undoubtedly a direct and affordable means to reach out to millions of customers.

The adoption rate of SaaS is not dependent on the firm size. SMEs have similar adoption rates as large enterprises but adoption is more dependent on the security aspect of the service. Vendors who invest on best practice technologies and ensure that the client data is sacrosanct are normally trusted by SMEs. Providers that rely on more suite-oriented application software that can confirm the clients’ data is secure are most approached by SMEs. In summary, though there are perceived security issues with the SaaS model, there are ways to circumvent these potential security breaches.

Tags: inherent security, internet services, SaaS model, security, software-as-a-service, technology solutions, underestimated
Other related topics IT, Industry Expert, Marketing Tips | No Comments »