Clusters may be defined as the sectoral and the geographical concentration of the enterprises particularly in the Micro, Small, and Medium Enterprises. This faces common opportunities and threats that can provide the following-

Awaken external economics. For example- The specialized suppliers of the raw materials and components and the machinery, skills specified to sectors, etc.

Give favor to the emergence of specialized technical, financial, and administrative services.

Formation of the assistant ground for the inter-firm cooperation development and the specialization the cooperation among both the public and private local institutions. This promotes the production, innovation, and collective learning of the local area.

 

Importance

The industrial development of India has achieved significant milestones by providing 40% of the nation’s industrial output and 35% of the direct output. Numerous clusters that have been existed for a few decades and some for even centuries played an important role within this sector. The industrial clusters include processed food, rice milling, engineering, wet grinding, hand tools, etc. There are more than 65k industrial and artisan and micro-enterprise clusters. These represent Indian social-economic heritage. It has also a significantly high share of employment issues.

 

Categories

The clusters can be divided into two sub-types mentioned as follows-

• Industrial clusters

• Artisan clusters

Development initiatives

Many institutions in India have started taking up the cluster projects besides the govt. initiatives to promote the small scale and cottage industries and regional clusters. This development process was done by removing the policy impediments, providing financial support, upgrading the technology, skill, and quality, providing the market support, and improving the links between the small and the large firms.

Characteristics

• The commonality in the processes of the production, quality control, testing, energy conservation and Pollution controlling.

 

• The same level of technological and marketing strategy or practices.

 

• Presence of the active channels for the communication among the members of the cluster.

 

• Common challenges and opportunities.

Advantages

• Increased productivity through the specialized inputs information accessing etc.

 

• Rapid innovation

 

• New business formation Directing economic development and recruiting activities.

 

• Encouraging the communities to give refocused efforts on the existing industries.

 

• Attracting foreign investments.

 

• Aid the firm in faster-growing.

 

What are the supports available for cluster financing to develop?

The engaged Ministry has implemented the Micro, Small and medium Enterprises or MSMEs and Cluster development programme or MSME-CDP. Here support system is provided to them for the diagnostic studies.

Soft inventions: General awareness, counseling, motivation and trust building, participation in the seminar etc.

Hard Inventions: Setting up of Common facility Centre, Creation or Upgradation of infrastructural facilities etc.

How the value of plant and machinery is calculated?

The calculation method of the valuation of plant and machinery has a basis like the market value, the equitable value, or the fair value. These three bases have their own individual definitions.

The basis of the valuation is determined by the purpose of that valuation, for example, if the purpose of that exercise is to ascertain an expected selling or asking the price on the open market and then Market Value is the appropriate basis regarding these.

 

1. Definition of the bases:

• Market value

If an asset or liability should exchange the estimated amount on the valuation date between the willing buyer and willing seller in a transaction after proper marketing. The engaged parties had acted knowledgeably and prudently without any kind of compulsion.

 

• Equitable value

The transfer of an asset or liability between the identified knowledgeable and willing parties comprises the estimated price which reflects the respective interests of those parties.

 

• Fair value

The price receiving to sell an asset or paid to transfer a liability in an orderly transaction between the market or sector participants at the fixed date.

Conclusion

Generally, one of the mentioned approaches is adopted for the plant and machinery valuation. The comparison method which can also be stretched for including the speaking with the dealers for the anecdotal market evidence or the opinions and the considering that asks the prices meant for similar assets.

For the machines, income approaches can be adopted sometimes. This has an income stream attributable to them. This is a rare experience. The income approach is more commonly used to value the intangible assets or their goodwill.

The basis and the method of the valuation should also have reference to the best method of sale envisaged if it is appropriate. For example, if someone is considering a sale by auction to be the best way for maximizing the optimum realization, then the Market Value ex-situ that assumes a sale as individual items is appropriate. However, a sale of all the machines by the private treaty for the removal is generally considered as a better option, then the Market Value ex-situ that assumes a sale of the assets as a whole is comprising more appropriate, and all the comparable market evidence will be sought and successfully considered.”