ENTREPRENURSHIP

(By Dr. B.S. Suresh Babu)

Muralidhar a Science Graduate started a Small Scale Industry in .1995 for manufacturing
components to a large public sector company in Bangalore. Since his father had just then
retired from service, he took financial help from him and invested Rs. 12.00 lakhs in his
Small Scale Industry for purchase of Machinery. He did not prepare a DPIR to seek. any
financial assistance either from Bank or Financial Institution,
He took jobbing work from. the Public Sector and used to supply components @ Rs.50
per piece and the performances of the Unit was satisfactory. Over a period of six years,
many competitors entered the market and the price paid by the Public Sector came down
to Rs. 35 per piece. During the same period, the cost of power increased by 50% and the
labour cost went up by 25%.
The order inflow to the -unit dipped continuously from 2001 onwards and the unit has
been making losses continuously since the prices got slashed to a. level of Rs. 30/- per
piece in 2007. The industry has been using the same machines since inception,
The Promoter of the unit -desired to change his product i.e. enter into manufacture of
accessories for Two wheelers Market. He wanted to supply these products directly to
retail outlets. This venture called for requirement of working capital of Rs. 20 lakhs. The
promoter approached a few Bankers for Working Capital assistance. Since he had already
invested all his finance for purchase of Machinery and further incurred loss for past. 8
years Bankers refused to provide finance to him. Muralidhar was not in. a position to
bring additional funds fur investment in his unit,
From the above data, analyze the stages at which the entrepreneur
has erred to fall prey to the situation.