Justify the following statements.
1) Generally Small Scale Industries are sick.
1. There are many problems faced by Small Scale Industries. These problems may be internal problems or external problems.
2. Internal Problems are like unskilled labour or untrained labour, lack of managerial skills and marketing skills, lack of modernisation, etc.
3. External problems like shortage of working capital, inadequate loans, delayed payments, shortage of raw material, etc.
4. According to RBI a sick unit is that which has incurred a cash loss for one year, is likely to continue it for the current year as well as following year.
5. Thus, mainly due to financial problem, industrial units are unable to sustain themselves and are called as sick units.
2) Small Scale Industry requires less amount of capital.
1. The production of Small Scale Industries is less.
2. General unskilled labours are employed.
3. As production is a less raw material requirement is also less.
4. In a place like India, Where capital formation is low, small business is suitable.
5. Due to small in size, such a form of business can easily adapt to a changing atmosphere. This promotes flexibility. It can easily change their working style without much loss as compared to large businesses.
6. Thus, SSI requires less amount of capital.
3) Small Scale Industries have problems.
Small scale industries have to face many problems:
1. Lack of Adequate Finance: Due to the small scale of production and sale, Banks and Financial Institutions are afraid to give loans.
2. The problem of Raw material: Due to inadequate finance they cannot purchase raw material at a time Thus, the cost of raw material increases.
3. Labour Problem: Due to inadequate finance, they cannot employ skilled labour which affects production.
4. Marketing Problem: The goods manufactured if not marketed properly can be risky as it will affect the sales.
5. The problem of Transport: Transportation cost increases the cost of the product which hampers the sale as large scale industries cost may be less.
6. Sickness: Due to financial problem industrial units are unable to sustain themselves and finally turn to sick units.
7. Thus, Small Scale Industries have problems.