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CS.P.Eswaramoorthy, B.sc., Acs.,
Company Secretary in Practice,
7/25, Sri Sakthi Complex,
Nanjundapuram Road,
Ramanathapuram,'
Coimbatore - 641045
91 422 4216903
91 9443419246
91 99655 19246
E.Mail: eswaracs@gmail.com

 
******************************************************************************
Micro, Small MICRO, SMALL AND MEDIUM ENTERPRISES (MSME) – VIEW
and Medium Enterprises should seek registration with the Director of Industries of the concerned State Government.

 
NEW NOMENCLATURE AND CLASSIFICATION OF MSME
(As per Micro, small and Medium Enterprises Development Act,2006)

                               

 
      ENTERPRISES

                                                                  
                           

 
Manufacturing Enterprises
 
 
Service Enterprises

 
 
 
 
 
 
  (Ceiling on investment in Plant & Machinery ) (Ceiling on investment in Equipment )
Small Rs.25 lakh Rs.10 lakh
Micro Rs.5 Crore Rs.2 Crore
Medium Rs.10 Crore Rs.5 Crore
 
 
A. MANAFACTURING ENTERPRISES
(i)                 Micro Manufacturing Enterprises: The Investment in Plant and Machinery does not exceed Rs.25 Lakhs.
(ii)               Small Manufacturing Enterprises: The Investment in Plant and Machinery is more than Rs.25 Lakhs and does not exceed Rs.500 Lakhs.
(iii)             Medium Manufacturing Enterprises: The Investment in Plant and Machinery is More than Rs.500 Lakhs and does not exceed Rs.1000 Lakhs.
B. SERVICE ENTERPRISES
(i)                 Micro Service Enterprises: The Investment in Plant and Machinery does not exceed Rs.10 Lakhs.
(ii)               Small Service Enterprises: The Investment in Plant and Machinery is more than Rs.10 Lakhs and does not exceed Rs.200 Lakhs.
(iii)             Medium Service Enterprises: The Investment in Plant and Machinery is More than Rs.200 Lakhs and does not exceed Rs.500 Lakhs.
Calculation of Investment in Plant and Machinery
1. Cost of which shall be excluded while calculating the investment in plant and machinery as follows:
(i)    equipment such as tools, jigs, dies, moulds and spare parts for maintenance and the  
        cost of   consumable stores;
 
(ii)   installation of plant and machinery;
 
(iii)   research and development equipment and pollution control equipment;
 
(iv)   power generation set and extra transformer installed by the enterprise as per the 
         regulations of the State Electricity Board;
 
(v)    bank charges and service charges paid to the National Small Industries Corporation
        or the State Small Industries Corporation;
 
(vi)   procurement or installation of cables, wiring, bus bars, electrical control panels(not
         mounted on individual machines), oil circuit breakers or miniature circuit breakers
         which are necessarily to be used for providing electrical power to the plant and
         machinery or for safety measures;
 
(vii)   gas producer plants;
 
(viii)   transportation charges (excluding sales-tax or value added tax and excise duty) 
           for indigenous machinery from the place of their manufacture to the site of the
           enterprise;
 
(ix)    charges paid for technical know-how for erection of plant and machinery;
 
(x)     such storage tanks which store raw materials and finished products only and are
           not linked with the manufacturing process; and
 
(xi)    fire fighting equipment.
 
2.   While calculating the investment in plant and machinery referred above, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account provided that in the case of imported machinery, the following shall be included in calculating the value, namely:
 
           (i)    Import duty (excluding miscellaneous expenses such as transportation from the
                   port to the site of the factory, demurrage paid at the port);
 
           (ii)   Shipping charges;
 
           (iii) Customs clearance charges; and
 
           (iv)   Sales tax or value added tax.
REGISTERING MSME
The main purpose of Registration is to maintain statistics and maintain a roll of such units for the purposes of providing incentives and support services. States have generally adopted the uniform registration procedures as per the guidelines. It must be noted that small industries is basically a state subject. States use the same registration scheme for implementing their own policies.
BENEFITS OF REGISTERING
The registration scheme has no statutory basis. Units would normally get registered to avail some benefits, incentives or support given either by the Central or State Govt. The regime of incentives offered by the Centre generally contains the following: - Credit prescription (Priority sector lending), differential rates of interest etc. - Excise Exemption Scheme - Exemption under Direct Tax Laws. - Statutory support such as reservation and the Interest on Delayed Payments Act. (It is to be noted that the Banking Laws, Excise Law and the Direct Taxes Law have incorporated the word MSME in their exemption notifications. Though in many cases they may define it differently. However, generally the registration certificate issued by the registering authority is seen as proof of being MSME). States/UTs have their own package of facilities and incentives for small scale. They relate to development of industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies and other support. Both the Centre and the State, whether under law or otherwise, target their incentives and support packages generally to units registered with them.
 
 
Where MSME has to be registered?
DIC (District Industries Centre) is the primary registering centre.
Registration Procedure:
EM ( Entrepreneur Memorandum) has to be submitted to the Concerned DIC.
The form of Memorandum is in two parts. Any person who intends to establish a micro, small or medium enterprise engaged in providing or rendering of services may file or those who want to establish medium enterprise engaged in the production or manufacture of products shall file Part- I of the Entrepreneurs Memorandum to District Industries Centre.
Once the above enterprises start production or start providing or rendering services, they shall file Part II of the Entrepreneurs Memorandum to District Industries Centre.
 In case of non- filing of Part II of the Entrepreneurs Memorandum within two years of the filing of Part I, the Memorandum (Part I) filed by the entrepreneur will become invalid.
 In case of change in the investment in plant and machinery or in equipment, the enterprises who have already filed Entrepreneurs Memorandum should inform the District Industries Centre of the same in writing within three month of the change in investment.
 In   case   of change of products and that of services or addition in products or services, the enterprises which have already filed Entrepreneurs Memorandum shall inform the District Industries Centre of the same in writing within three months of the change
TYPES OF EM FILING
There are two types of filing of Entrepreneur Memorandum - Part I & Part II.
      1. Entrepreneur Memorandum Part I is for the proposed enterprises.
      2. Entrepreneur Memorandum Part II is to the established enterprises after
           commencement of commercial production.
ONLINE FILING OF ENTREPRENEUR MEMORANDUM - PART I
 The online service for filing of Entrepreneur Memorandum Part-I is introduced to mainly help the entrepreneurs to obtain acknowledgement to EM Part I readily without contacting the General Managers of District Industries Centers and Regional Joint Director, Chennai. Further it is informed that this online service is introduced by the Department of Industries and Commerce with good intension that entrepreneurs shall furnish the correct and true details to file online E.M.
 This Online Entrepreneur Memorandum Acknowledgement shall be valid only if self certified by the applicant and also the receipt of self certified copy of generated online application at the respective DIC/Regional Joint Director of Industries and Commerce, Chennai within 30 days from the date of filing of online application. In case the self certified copy of the generated application above is not received by the General Manager, District Industries Centre/ Regional Joint Director of Industries and Commerce, Chennai within one month from the date of generation of the application by the entrepreneur, the online Acknowledgement will be cancelled by the General Manager, District Industries   Centre / Regional Joint Director of Industries and Commerce, Chennai and displayed in the website.
                                          
Prior Clearance from Pollution Control Board is COMPULSORY in respect of units for following Line of Activity:
 

S.No
                                      CATEGORY
1
Distillery
2
Animal and Vegetable Plantations and Processing (Tannery, Sago, Starch)
3
Fertilizers
4
Paper and Paper Pulp
5
Chemical Industries
6
Petroleum Refineries
7
Textile Processing, Dying and Bleaching
8
Iron Melting, Electro Plating, Heat Treatment
9
Refractories
10
Thermal Power Stations
11
Cement
12
Drug and Pharmaceuticals
13
Paints and Varnishes
14
Solvent Factories
15
Pesticides and Insecticides
16
Asbestos Industries
17
Foundry
18
Aromatic Chemicals
19
Petro Chemical Industries
20
Man Made Fibre units
21
Photo Film Manufacturing

 
 
 
DE-REGISTRATION
A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
It crosses the investment limits.
It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
It does not satisfy the condition of being owned, controlled or being a subsidiary of any other
 Collateral Free Loans - Micro and Small Enterprises
 
On September 21, 2007 banks were advised, vide our circular RPCD.PLNFS.No 3068/06.02.31/2007-08, that they may extend collateral-free loans upto Rs.5 lakh, to all new loans sanctioned to the units of MSE sector (both manufacturing and services enterprises) as defined under MSMED Act,2006. Banks may extend collateral-free loans upto Rs.5 lakhs to all new loans to the MSE sector (both manufacturing and service enterprises).
 
Finance Minister Pranab Mukherjee , presenting the Union Budget 2009-10 on July 6, has given some respite to the MSME sector. Acknowledging that the slowdown in exports due to the global demand slump has hit small and micro units the hardest, the minister has proposed the formation of a special fund for the sector.

The proposed fund, worth Rs 4,000 crore,will be formed out of the Rural Infrastructure Development Fund (RIDF) and provided to the Small Industries Development Bank of India (SIDBI).

This fund is expected to incentivise banks and State Finance Corporations (SFCs) to extend loans to MSMEs by refinancing 50% of incremental lending to these players during 2009-10. According to the minister, this move will facilitate credit flow at affordable rates for MSMEs and thereby provide them the much-needed fiscal support.

The announcement of the proposed fund has lifted the spirits of the MSME segment. “For several months we have seen suffering due to the credit crunch. We hope that with the formation of this fund we will be able to get adequate funds to revive our business,” said GC Ghosh, proprietor of Radha Export International, a small-sized basmati rice exporting company in Kolkata.
 
 
Other industries are required to get Industrial License under the Industries (Development & Regulation) Act,1951.
 
VISIT : www.viesva.com



Category Corporate Law, Other Articles by - P ESWARAMOORTHY 



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