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How to start a Coir Industry- a Step-by Step approach.

1. Identifying the opportunity

The overriding reason for anyone to think of establishing a Coir unit can
be summarised in one word – opportunity. An opportunity to provide a product
or service, which can generate sufficient surplus. This is all the more true if one
is a believer in the maxim, “Small is Beautiful”.
However, ideas need to be filtered through a multi-layer questions which is shown in
the following flow:
– Does the idea fire up your motivation?
– Is it a viable business proposition in your area?
– Does it match the needs of your client?
– Check it out with basic market research
– Test it out at market place
– Consult with the experts
– Look out for competition in the field
– Is it a sunrise industry?
– Your business opportunity
– Project conceptualisation
Once the ideas are screened and a viable business opportunity emerges the project
has to be conceptualised in all its dimensions. The 4 Ps of Project Conception is:
– PRODUCT (Shape, Size and Nature)
– PROCESS (Technology to produce the product)
– PLACE (Location of Plant)
– PARTNER (Technological of Financial Collaborator)

2. Making a Product Choice

In a project conceptualisation stage while making a product choice following factors
are related to product need to be considered:
– Product Line – Depth, Width
– Packaging
– Branding
– Warranties
– After Sales Service
Some other factors that one should consider while finalizing the product choice are:
– Ease of availability of raw-material
– Process Technology
– Accessibility to the market
– Incentive and support from Government
Market information is also important for product selection. Products, which are likely
to have a number of players in the market, are best avoided. Some such products in
the recent past have been plastic footwear, audio cassettes, disposable gloves and
bulk drugs.
In case the entrepreneur is looking for a product, which has export potential,
the following additional questions need to be asked:
– What should be the contents of export-product portfolio?
– What are the special requirements for packaging if one has to export
the products?
– What product adaptations are needed to be made for exporting a product
to a specific country?
– Are any WTO conditionalities involved e.g. “child labour free”, ISO 9000
certified, GMP followed etc.
The development of export-product portfolio can be done by considering 4
parameters viz.
– External demand conditions
– Internal supply capability
– Complexity of marketing tasks
– Amount of investment required to penetrate the market
Analysis can be conducted using this four dimensional model. The obvious choice is
a product which scores a high rating on first two parameters and low rating on last
two parameters.
EXIM (Export Import Bank of India) Bank has also developed an excellent model
to conduct the export-product portfolio analysis based on three parameters viz.
– Supply Capability In Product Group
– Domestic Environment
– Export Market Attractiveness
This analysis gives rise to product groups with high potential or low potential.
With regard to special packaging requirements one has to be careful about laws of
the country one is exporting to. For instance, while exporting to Australia, woodenpackaging
cannot be done.
Product adaptations for country’s specific needs look into things like whether
voltage supply is 220V or 110V for electric appliances and for automobiles whether
left-hand drive or right-hand drive is appropriate.
It has now become important to understand the implications of the various
agreements which form part of WTO.
Once the product is finalised, choices of process technology emerge.

3. Process Selection

Choices of process technology emerge once the product is finalised. For some
complex products, process know how has to be imported. In such cases
agreements for technology transfer should be made with due care to safeguard
interest. A lot of appropriate technology is being developed at CSIR and Defense
Research Labs and some of this technology can now be bought. Indigenously
developed process know-how has intrinsic benefits such as appropriateness and
relative inexpensiveness.
While checking out on a process technology, the following things need to
be considered with utmost care:
– Whether process requires very high level of skilled workers or complex machines?
– Whether process requires large quantities of water and/or power?
– Whether any process or product patent needs to be honoured while utilising
the selected process technology.
– Any special pollution or environmental regulations.
– Finally, the appropriateness to the indian environment and conditions.
Machinery and equipment
One of the major deficiencies in the micro, small and medium enterprises scenario
is the prevalence of outdated production and management methods hindering the
efficient operation of micro, small and medium- scale units. It was also found that
the most important reason for the reluctance of the small industrialists to install
modern machinery and equipment was the lack of investible funds. The main
objective of National micro, small and medium enterprises (NMSME) is to provide
machinery and equipment to small industrial units offering them long repayment
period with moderate rate of interest.

4. Arranging Finance

No Coir unit can take off without monetary support. This need for finance can be
classified into following types:
– Long and medium term loans
– Short term or working capital requirements
– Risk Capital
– Seed Capital/Marginal Money
– Bridge loans
Financial assistance in India for MSME units is available from a variety
of institutions. The important ones are:
(i) Coir Board, Govt of India
(ii) Commercial/Regional Rural/Co-operative Banks.
(iii) SIDBI: Small Industries Development Bank of India (refinance and
direct lending)
(iv) SFCs/SIDCs: State Financial Corporations /State Industrial
Development Corporations.
Long and medium term loans are provided by SFCs, SIDBI and SIDCs. Banks also
finance term loans. This type of financing is needed to fund purchase of land,
construction of factory building/shed and for purchase of machinery and equipment.
The short-term loans are required for working capital requirements, which fund the
purchase of raw materials and consumables, payment of wages and other
immediate manufacturing and administrative expenses. Such loans are generally
available from commercial banks. The commercial banks also sanction composite
loan comprising of working capital and term loan up to a loan limit of Rs.1 crore.
For loans from financial institutions and commercial banks a formal application
needs to be made. The details of documentation that need to be provided with the
loan application are indicated below:
– Documentation for Loan Application
– Balance Sheet and Profit Loss Statement for last three consecutive years of
firms owned by promoters
– Income Tax Assessment Certificates of Partners/Directors
– Proof of Possession of Land/Building
– Architect’s estimate for construction cost
– Partnership deed/Memorandum and Articles of Associations of Company
– Project Report
– Budgetary Quotations of Plant and Machinery
A sanction or rejection letter is issued by bank after its assessment of the
application. After receiving a sanction letter, applicants need to indicate in writing
their acceptance of terms and conditions laid down by FI/Banks.
Subsequently, loan is disbursed according to the phased implementation of the
project. In today’s environment there are other choices apart from commercial
banks and Government owned financial institutions. These options include venture
capital funds and non-government finance companies.

5. Filing of Udyog Aadhaar Registration

The online Udyog Aadhaar registration process has been created with an aim to
encourage online filing of Entrepreneurs Memorandum (also known as MSME
registration) for Micro, Small and Medium Enterprises. The online Udyog Aadhaar
registration process will simplify the registration process with an online and simple
one page registration form. In the form, the MSME will self certify its existence, bank
account, business activity details, employment and ownership details and other
information.
Click here to access online Udyog Aadhaar registration form.
Documents and Information Required for Online Udyog Aadhaar Registration
1. Aadhaar Number– 12 digit Aadhaar number issued to the applicant.
2. Name of Owner– The applicant name as mentioned on the Aadhaar Card
issued by UIDAI.
3. Social Category – Applicants Caste: General / Scheduled
Caste / Scheduled Tribe / Other Backward Castes. The proof of belonging to
SC, ST or OBC may be asked by appropriate authority, if and when required.
4. Name of Enterprise– Name of the legal entity to conduct business. One
applicant can have more than one enterprises doing business and each one
can be registered for a separate Udyog Aadhaar and with the same Aadhaar
Number.
5. Type of Organization– Type of Business entity or Legal Entity.
1. Proprietorship
2. Partnership Firm
3. Hindu Undivided Family
4. Private Limited Company
5. Co-Operative
6. Public Limited Company
7. Self Help Group
8. Others (Limited Liability Partnership)
6. Postal Address– Address of the business including mobile and email
address.
7. Date of Commencement– The date on which businesses was started.
8. Previous Registration Details– Details of previous MSME registration, if
applicable should be entered here.
9. Bank Details– Details of bank account of the company including IFSC Code
and Bank Account number.
10. Major Activity– Major area of activity of the business – manufacturing or
service.
11. NIC Code– The appropriate NIC Code should be entered from
the National Industrial Classification (NIC) handbook. Click here to
download NIC Code Handbook.
12. Person employed– The total number of people employed in the business.
13. Investment in Plant & Machinery / Equipment– Amount of money
invested in terms of machinery and equipment by the business.
14. DIC– Details of the District Industry Center nearest to the business, if
required.
For more assistance, get in touch with an IndiaFilings Business Expert. IndiaFilings
can also help you obtain Udyog Aadhaar registration in India.

6. Construction of Building

Once an industrial plot for the unit is secured, then the next job is that of finding a
suitable architect. Design of factory building has to be in consonance with the type
of industry and have an appropriate plant layout.
An architect’s estimate of building construction is essential for loan applications.
Further, architect’s certificate for money spent on building is needed for
disbursement of loan.

7. Getting the Utility Connections

Among the utilities of prime importance are power and water. In many cases getting
power connection causes delay in setting up of plant. Therefore it is imperative to
commence work on these aspects with diligent follow up. Power connections are
generally of either LT (Low Tension) or HT (High-tension) type. If connected load is
upto 75 HP, LT connection is provided. For connected loads of 130 HP or higher
only HT connection is provided.
A formal application needs to be made in a specified form to the state electricity
board. An electrical inspector is deputed for evaluation of application to factory
site, after which the load is sanctioned. In areas of power shortage, it is advisable
to augment the power supply with a captive generating set.
Water connection is also obtained likewise by applying in advance in formal
forms. The water supply can be augmented by installation of tubewell.

8. Getting 3M’s Right Men

Projections for manpower and staffing are made in the project report. However it is
necessary to time the induction of manpower in a planned manner. The engineers
and operatives must be available before the installation of the machinery.
Machinery

Choosing and ordering of right machinery is also of paramount importance. In
many cases technology or process provides us with specifications which is not
provided, then an extensive techno-economic survey of machinery and equipment
available must be carried out. International trade fairs and engineering fairs are
good places to look at available options. The entrepreneur must also consult
experts, dealers / suppliers as well as users, prior to making a selection of
equipment and machinery. The advice of DIC, MSMEI and NSIC can also be
sought.

Materials
Materials procurement and planning are critical to success, of a start-up with a
MSME unit. Inventory management can lead to manageable cash flow situations;
otherwise if too much is ordered too soon considerable amount of working capital
gets locked up. On the other hand, non-availability may result in production holdups,
and idle machine and manpower. For essential imported raw material whose
lead-time is large proper planning is all the more essential.
Every SSI unit has to comply with various regulations in force. These include
regulatory, taxation, environmental and certain product specific clearances.
This section looks into the methodology of obtaining these approvals and
clearances.

Subject to this, an entrepreneur can set up a SSI unit anywhere in the country
without any restriction. The units are, of course, subject to the locational/land use
and zoning restrictions in force under the local laws.

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