1. a. Problems of small scale industries: i.

Problem of raw material: procurement of raw materials tend to be a major problem faced by small scale industries, in the shape of an absolute scarcity, a poor quality raw material and a high cost. Previously it would depend on local materials, but with the emergence of modern sophisticated items, severe difficulty has been created with the need to obtain imported raw materials on account of the foreign exchange crisis or some other reasons. With local resources, problems are encountered due to the supply of raw materials at very high prices. ii. Problem of finance: the problem with finance is mainly due to 2 reasons. 1. Scarcity of capital 2. Creditworthiness of small units in the country Weak economic base causes small scale industries to seek credit from money lenders at very high interest rates, as opposed to seeking credit from banks and financial institutions. There now is a positive change of the attitude of banks in lending to small scale industries, nevertheless credit worthiness still weighs heavily with the nationalized commercial banks. It would be clear from the fact that units assisted by commercial banks up to June 1976, about 69% of the total credit was availed by 11% of the bigger units in the small scale sector which accounted for 55% of the total production. Thus, implying that a change in the outlook of banks is necessary to liberalize, the rules and practices of banking in the country. iii. Problem of marketing: iv. Problem of under-utilization of capacity: v. Other problems:

b. The Indian Companies Act 1956 defines a joint stock company as a company limited by shares having a permanent paid up or nominal share capital fixed amount divided into shares also of fixed amount, held and transferable as stock and formed on the principles of having in its member s only the holders of those shares or stocks and no other persons . The main features are as follows: i. Artificial Legal Person: a company is an artificial person created by law. Though without a body or conscience, just like a person, it can enter into contracts in its own name and likewise may sue and be sued by its own name. ii. Separate Legal Entity: a company is a distinct entity separate from its members or shareholders. Therefore shareholders of a company can enter into contract with the company. He/she can sue to company or be sued. iii. Common Seal: being an artificial person, the company cannot sign documents. Hence it uses common seal on which its name is engraved. Putting the common seal on papers relating to company s transactions makes them binding on the company. iv. Perpetual Existence: unlike partnership, the existence of a company is not affected by death, lunacy, insolvency or retirement of its members or directors. This is because the company enjoys separate legal existence from that of its members. It is created by law and dissolved by law itself. v. Limited Liability: the liability of the members of the company is normally limited to the amount of shared held or guarantee given by them. vi. Transferability of Shares: the member of a public limited company can sell his share to others without the consent of other shareholders. He has to follow the procedure laid down in the Companies Act for transferring his shares. However, there are restrictions for transferring shared to others in case of a private limited company. vii. Separation of Ownership from Management: The shareholders give right to the directors to manage the affairs of the company. The

directors are the representatives of the shareholders. Thus, ownership is separated from management. viii. Number of members: in case of a public limited company, the minimum number is seven and there is no maximum limit. But, for a private limited company, the minimum number of members is 2 and the maximum is fifty. 2. a. Main features of sole proprietorship The main features of proprietorship can be listed as follows: i. One Man Ownership: in proprietorship, only one man is the owner of the enterprise. ii. No Separate Business Entity: No distinction is made between the business concern and the proprietor. Both are one and the same. iii. No Separation between Ownership and Management: In proprietorship, management rests with the proprietor himself/ herself. The proprietor is a manager also. iv. Unlimited Liability: Unlimited liability means that in case the enterprise incurs losses, the private property of the proprietor can also be utilized for meeting the business obligations to outside parties. v. All Profits or Losses to the Proprietor: Being the dole owner of the enterprise, the proprietor enjoys all the profits earned and bears all losses incurred by the enterprise. vi. Less Formalities: a proprietorship business can be started without completing much legal formality. There are some business that too can be started simply after obtaining necessary manufacturing license and permits. b. Project feasibility assessment 3. 4. a. The elements of a project report are as follows: i. General Information and Introduction: ii. Organized structure

iii. Promoters iv. Location v. Land and building vi. Product details vii. Plant and machinery viii. Production process ix. Raw material x. Manpower xi. Power and Water xii. Utilities xiii. Production Programmed xiv. Market xv. Miscellaneous Assets xvi. Requirement of Capital xvii. Sources of Finance xviii. Working Capital xix. Cash flow statement xx. Break-even Analysis xxi. Project Economics xxii. Profitability Projections xxiii. Implementation b. Factories Act of 1948 The main objective of the Factories Act is to ensure healthy and safe working conditions for workers. The main provisions of this Act are as follows: i. Definition of Factory: Under Section 2 (m) a factory is defined as any premises including its precincts wherein (a) a manufacturing process is carried on and (b) the specified number of workers (10 in case manufacturing is carried on with the aid of power and 20 if carried on without power) are employed. ii. Health of Workers: The Act contains the following provisions to safeguard the health of workers 1. Cleanliness

2. Disposal of wastes and effluents 3. Ventilation and temperature 4. Prevention of dust and fume 5. Artificial humidification 6. Prevention of overcrowding 7. Lighting 8. Drinking water 9. Latrines and urinals 10. Spittoons iii. Safety of Workers: In order to ensure safety, the Act provides for: 1. Fencing of machinery 2. Work on near moving machines-only trained males wearing tight fitting clothing 3. Prohibition of employing young persons to work on dangerous machines 4. Maintenance of striking gear or other devices for cutting off power 5. Casing of power-driven machinery 6. Prohibition of employing women and children near cotton openers 7. Proper hoists and lifts, etc. 8. Protection against dangerous fumes 9. Appointment of safety officers iv. Welfare of Worker: The Act provides following facilities to a worker: 1. Washing 2. Storing and drying clothing 3. Sitting 4. First aid appliances 5. Canteen (where 250 or more workers are employed) 6. Shelters, rest rooms and lunch rooms 7. Crches (where 30 or more women are employed) 8. Welfare officers ( where 500 or more workers are employed)

v. Other Provisions: The Act regulates hours of work, holidays and leave with wages, etc. vi. Obligations of the Employer: Under the Act, every employer or occupier of a factory is required to 1. Obtain, wherever necessary, approval for the location and construction of the factory 2. Procure license and registration in operating the factory 3. Implement all the provisions of the Act and provide the prescribed facilities to workers. 4. Send in written notice to the Chief Inspector of Factories at least 15 days before occupying or using any premises as a factory. 5. Display notice, maintain registers and records prescribed under the Act and submit necessary returns to the Government. 6. Report fatal and other accidents and occupational diseases, if contracted by and workmen, to the prescribed authority. 5. a. Short-term sources of financing an enterprise Short term finance is obtained for a period of up to one year. These are required to meet the day-to-day business requirements, i.e. it is obtained to meet the working capital requirements of the enterprise. The sources could be: i. Loans from Commercial Banks ii. Public Deposits iii. Trade Credit iv. Factoring v. Discounting Bills of Exchange vi. Bank Overdraft and Cash Credit vii. Advance from customers viii. Accrual Accounts Finance is one of the essential requirements of any enterprise. Before actually setting up their units, small entrepreneurs need to know very clearly about the type and extent to their financial requirements. Integral to financial requirements is to know about the possible alternatives sources from which

finance can be availed of. Given the shortage of lack of entrepreneurs own funds/ resources, the Government of India as a part of its policy of promotion os small-scale sector in the country, has set up a host of institutions to meet the financial requirements of small entrepreneurs. b. Elements of marketing mix: The elements of marketing mix are i. Product: The product consists of the policies and procedures relating to the product times to be offered and services to be rendered. It also includes research and development programmes and the new product policy. ii. Price: This element of marketing mix consists of the policies and procedures relating to the price level, price specifications and the price policy. iii. Promotions: This element includes special selling plans or devices directed at or through the trade, form of devices for consumer promotions and trade promotions. iv. Place (Physical distribution): This element includes policies and procedures relating to the channels to be used between the plant and the consumer, the degree of selectivity among wholesalers and retailers and attempts to co-operation of trade. Marketing mix is bound to be different across the companies selling with different products. Marketing mix may also vary between the two companies of same product categories. 6. a. Determining kind of ownership b. Criteria for ownership structure