EXISTING INDUSTRIES

The contribution of the small scale sector can be gauged from the fact that this sector accounts for 40 percent of the industrial production, 35 percent of direct exports, 45 percent of overall exports and employment to over 18.6 million people. Traditionally Tamilnadu is one of the well-developed States in terms of industrial development. In the post liberalisation period Tamilnadu has emerged as one of the front runner by attracting a large number of investment proposals and its Current State Domestic Product is well over US $ 23 billion. Small Scale Industries have played an important role in the district economy by providing large-scale employment opportunities at relatively low capital investment. Chennai, the capital of the State, is one of the fast developing districts of Tamilnadu in terms of industrial development. A quick look at the industrial scenario of the district indicates a good mixture of large, medium and small scale industries.

  1. Performance of Medium and Large Scale Industries


  2. There are about 35 medium and large scale industries in the district manufacturing a variety of products catering to the domestic as well as international markets. Depending on these medium and large scale industries, development of small scale industries has taken place in the district. The district is proud to have some of the popular and noteworthy industries of national stature like Addison Co. Limited, Sympsons & Company Limited, Indian Oxygen, Murugappa Electricals, Hindustan Teleprinters, Best and Crompton Engg. Ltd., The Standard Batteries, Greaves Cotton & Co, HCL Hewlett Packward Ltd., Tractors and Farm Equipments, Indian Oxygen Limited, Eagle Flask, Amruthanjan limited. etc. Compared to other districts in the State, Chennai remain in the forefront in terms of industrial development.

    The details of medium and large-scale units along with products manufactured, capacity and employment is given in Annexure .1. of this report

  3. Performance of Small Scale Sector – A Review


  4. As on 31-3-1991 there were only 16,326 permanently registered small scale units in Chennai district which was grown to 40,300 as on 31-3-2001. These units are engaged in the manufacture of a wide range of products catering to the needs of domestic as well as international markets

    Industrial development is noteable in the fields of Hosiery and readymade garments, Paper and paper products, Machinery parts except electrical, metal products, electrical machinery apparatus, Miscellaneous industries, food industries, Rubber and Plastic products and chemical and chemical products. The share of different industrial groups is given in the following table:

    Table 5.1
    Product wise distribution of SSI units during 98-99, 99-00 & 2000-01


S NO Major NIC Code Detailed classification 1998 - 99 1999 - 2000 2000 - 2001
No.of units % to total No.of units % to total No.of units % to total
1 20 & 21 Food Products 1,507 4.5 1,628 4.4 1,762 4.4
2 22 Beverages, Tobacco Products 118 0.35 118 0.32 118 0.3
3 23 Cotton Textiles 85 0.25 85 0.23 85 0.2
4 24 Wool, Silk,Synthetic Fibre textile 30 0.09 30 0.08 30 0.07
5 25 Jute, Hemp & Mesta Products 25 0.07 25 0.07 25 0.06
6 26 Hosiery, Readymade Garments 5,340 15.9 5,898 16 6,287 15.6
7 27 Wood and Wood products 578 1.7 673 1.8 749 1.85
8 28 Paper and Paper products 4,594 13.7 4,909 13.4 5,584 13.86
9 29 Leather and Leather products 1,631 4.8 1,710 4.6 1,791 4.44
10 30 Rubber and Plastic products 2,047 6 2,196 5.9 2,267 5.63
11 31 Chemical & Chem. products 14.14 4.2 1,499 4 1,537 3.8
12 32 Non-Metallic Mineral products 578 1.7 663 1.8 695 1.7
13 33 Basic Metal products 613 1.8 726 1.9 899 2.23
14 34 Metal products and Parts 3,855 11.5 4,225 11.5 4,340 10.8
15 35 Machinery & parts except Electrical 3,694 11 4004 10.9 4,088 10.14
16 36 Electrical Machinery and Apparatus 2,233 6.6 2,426 6.6 2,624 6.5
17 37 Transport equipments & parts 1,391 4 1,612 4.4 1,922 4.8
17 37 Transport equipments & parts 1,391 4 1,612 4.4 1,922 4.8
18 38 Misc. Manufacturing Industries 3,827 11.4 4,255 11.6 5,493 13.6
Total 33,560 100 36,682 100 40,300 100

Source : Office of the Commissioner & Director of Industries And Commerce.



From the above table it can be seen that out of the total number of 40,300 units existing in the district as on 31-3-2001, 15.6 per cent are Hosiery and readymade garment units followed by paper and paper products 13.86 per cent and Metal products and parts with 10.8%.
  1. No.of Units and Investment level – Talukwise.


  2. Major concentration of the industry is found clustered in and around Mambalam – Guindy area with 10, 636 units accounting for 23.6 per cent of the total units, followed by Port – Thondiarpet Taluk with 10,411 units accounting for 23.1 percent. Other Taluks share is less than 20 percent.

    Investments generated in these taluks are also higher than the other Taluks of the district. In Mambalam –Guindy taluk investment on land and Building is 23.6 and in plant and Machinery is 23.6 percent. In Port and – Thondiarpet area the invertment on Land and Building is 23.1 per cent and in Plant and Machinery is also 23.1 per cent

    The share of other Taluks both in number of units and investment generation is less than 20 per cent. Dispersal of units and investment level in different taluks of Chennai is given in the following table:

    Table. 5.2.
    Dispersal of SSI units and investment level in different taluks as on 31-12- 01


S NO Name of the Taluk No. of Units 0% to Total Investment
Land & Bldg.
(Rs. Lakhs)
% to Total P & M
(Rs. Lakhs)
% to Total
1 Port – Thondiarpet 10,411 23.1 13,742.52 23.1 8,693.19 23.1
2 Egmore -Nungambakam 7,098 15.74 9,369.36 15.7 5,926.83 7.73
3 Perambur-Purusaiwakam 8,864 19.65 11700.48 19.65 7, 401.44 19.65
4 Triplicane - Mylapore 8,096 17.94 10,686.72 17.94 6,760.16 17.94
5 Mambalam – Guindy 10,636 23.6 14,039.52 23.6 8,881.06 23.6
Total 45,105 100 59,538.60 100 37662.68 100

Source : Office of the Commissioner & Director of Industries and Commerce , Chepauk.


  1. Employment Scenario in SSI Sector.


  2. Small Scale Sector generates employment with low investment. This sector has the potential to generate high employment opportunity. Total employment generated directly by the registered small-scale industrial units in Chennai district as on 31-12-2001 is 2,97,766. Higher employment is in the group of textile and textile based industries. In these industries skilled workers are more than the unskilled workers. In textile and textile based industries average employment is 16 persons per unit. Average employment in the district is 7 persons per unit. Employment scenario in each Taluk is given in the following table-

    Table. 5.3.
    Talukwise Employment Scenario as on 31-12-2001.


S NO Name of the Taluk No.of PMT SSI Units. Employment Nos. o% to Total Average Employment
1 Egmore - Nungambakam 7,098 46,907 15.7 7
2 Perambur - Purusaiwakam 8,864 58,484 9.56 7
3 Triplicane - Mylapore 8,096 53,272 17.9 7
4 Mambalam – Guindy 10,636 70,307 23.6 7
Total 45,105 2,97,766 100 7

Source:Office of the Commissioner and Director of Industries and Commerce,Chepauk.

It can be seen from the above table that out of the total employment of 2,97,766 in the district, Mambalam – Guindy Taluk has the major share of 70,307 employment accounting for 23.6 percent while Port – Thondiarpet Taluk has 68,796 employment accounting for 23.1 percent. Other Taluks’ share is only below 20 percent of the total employment.

  1. Cottage Industries.


  2. As on 31-12-2001 there were 736 cottage industries manufacturing a variety of products generating employment for 1630 skilled and unskilled persons of the district. The details of the cottage industries are given in the following table:-

    Table 5.4
    Permanently registered cottage industries as on 31-12-2001


S. NO. Type of industry No.of units. Employment generated
1 Apparel and readymade clothing (including sarees, Dhothies.). 30 120
2 Leather goods making, boots, shoes, chappals, slippers. 247 497
3 Tailoring 98 294
4 Candle sticks manufacture 123 246
5 Miscellaneous 238 476
  Total 736 1630

Source:Commissioner and Director of Industries and Commerce, Chepauk.

  1. Handicraft Industries.


  2. As on 30-9-2001 there were 297 handicraft units in the district generating employment for 594 skilled and unskilled workers. The details on number of units and employment generated is given in the following table:

    Table 5.5.
    Permanently registered handicraft units as on 30-9-01


S. NO. Type of industry No.of units. Employment generated
1 Toys 42 84
2 Wooden articles 40 80
3 Instant Sambrani 57 114
4 Wooden Chair 40 80
5 Potteries 38 76
6 Drawing 42 84
7 Plastic wire chair 38 76
  Total 297 394

Source : Commissioner And Director of Industries of Commerce, Chepauk.

  1. Problems faced by Small Scale Industries.


    1. Small scale sector suffers from lack of economies of scale, unlike the large scale units. Moreover, in the context of liberalisation and growing domestic and international competition this sector needs support through promotional policies of credit and technology.


    2. A major and persistent problem faced by the SSI sector is non-availability of timely and adequate credit from the lending Institutions. Eventhough, the Government and RBI have taken various steps over the years, SSI sector’s problem of adequate credit availability still remains unsolved, especially working capital. There is a general feeling among the industrialists that while the lending Institutions are ready to extend credit facilities to big borrowers who can provide collateral security, they are very much reluctant to consider loan applications of small and tiny industrial units. The SSI units are being neglected by the banking sector and insufficient financial flow still remains unsolved.


    3. Delay in payments to the small scale industries by the parent units adds to their financial problems.


  1. Industrial Sickness


  2. During the survey it is observed that the rate of industrial sickness is increasing year by year. Provision of finance has a direct impact on the performance and growth of small scale sector. The main reason for intensification of the sickness is due to failure to detect the symptom of sickness in an early stage itself. Some units are facing working capital problems. The reasons found for sickness in industrial units are noted below:

    1. Management without proper planning
    2. Poor credit flow to small scale industries from financial institutions, especially working capital.
    3. Shift in demand for new product.
    4. Obsolete technology.
    5. Recession in domestic market and stiff resistance in the export market in the wake of South East Asian Crisis have caused enormous damage to the viability of many units.
    6. Many units are old and need modernisation to with-stand competition from domestic as well as international market.

    Exact basic data on sick industries are not available because all the small scale units are neither registered nor obtained bank loans.