Page 216 - DMGT106_MANAGING_HUMAN_ELEMENTS_AT_WORK

Managing Human Element at Work

Notes primary criteria to differentiate the small-scale industries from the large and medium scale
industries. An industrial unit can be categorized as a small-scale unit if it fulfils the capital
investment limit fixed by the Government of India for the small-scale sector. As per the latest
definition which is effective since December 21, 1999, for any industrial unit to be regarded
as Small Scale Industrial unit the following condition is to be satisfied: Investment in fixed
assets like plants and equipments either held on ownership terms on lease or on hire
purchase should not be more than ` 10 million. However, the unit in no way can be owned
or controlled or ancillary of any other industrial unit.
The new definition of an SME clarifies the typology of enterprises. It distinguishes between
three types of enterprise on the basis of the type of relations they have with other enterprises
in terms of percentage interest in capital, voting rights or the right to exercise a dominant
influence:

• Autonomous enterprises;
• Partner enterprises;
• Linked enterprises.

9.1.1 Autonomous Enterprises
These are by far the most common type. These include all enterprises which are not one of
the other two types (partner or linked). An enterprise is autonomous if it:
• Does not have a holding of 25% or more in another enterprise;
• Is not owned 25% or more by an enterprise or public body or jointly by several linked
enterprises or public bodies, with a few exceptions;
• Does not draw up consolidated accounts and is not included in the accounts of an
enterprise which draws up consolidated accounts and is thus not a linked enterprise.

9.1.2 Partner Enterprises
This type represents the situation of enterprises which establish major financial partnerships
with other enterprises, without the one exercising effective direct or indirect control over
the others. Partners are enterprises which are neither autonomous nor linked to one another.
An enterprise is a partner of another enterprise if:

• It has a holding of 25% to less than 50% in the other enterprise;
• The other enterprise has a holding of 25% to less than 50% in the applicant enterprise;
• The applicant enterprise does not draw up consolidated accounts which include the
other enterprise, and is not included by consolidation in the accounts of the other
enterprise or of an enterprise linked to it.

9.1.3 Linked Enterprises
These correspond to the economic situation of enterprises which form a group through the
direct or indirect control of the majority of the capital or voting rights (including through
agreements or, in certain cases, through individual shareholders), or through the ability to
exercise a dominant influence on an enterprise. Such cases are thus less common and very
different from the two preceding types.

9.1.4 Staff Headcount
The staff headcount is measured in annual work units (AWU), i.e. the number of persons who
worked full-time within the enterprise in question or on its behalf during the entire
reference year under consideration. The number of persons who have not worked the full

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