Refinance Scheme for Acquisition of ISO 9000 Certification for SSI Unit (ISO 9000)

What is the Refinance Scheme for Acquisition of ISO 9000 Certification?

Refinance Scheme for Acquisition of ISO 9000 Certification for SSI Unit is one of the specific schemes of the Pondicherry Industrial Promotion Development and Investment Corporation Limited (PIPDIC), the Government of Puducherry undertaking established in 1974 to promote the union territory's industrial development and to finance its entrepreneurs.

ISO 9000 is the family of international quality management system standards. For a small scale manufacturer, certification is often the difference between being considered for an export order or a large buyer's vendor list and not being considered at all. But certification is expensive in a way that is hard to finance: the money goes on consultants, documentation work, audits and fees rather than on machinery a lender can take security over. That is the specific problem this scheme addresses.

According to PIPDIC's published schemes of assistance, the scheme covers the following expenditure: "Expenses on consultancy, documentation, audit, certification fees, equipment and calibrating instruments required would be taken into account for determining the loan requirement." The loan limit is need based: PIPDIC publishes no fixed ceiling, and the amount is determined by the assessed cost of those items.

The eligibility is correspondingly tight. PIPDIC restricts the scheme to "existing industrial concerns in the SSI sector having a good record of past performance and sound financial position", and then adds four express conditions. That combination, no ceiling but strict entry; is characteristic of a refinance product: PIPDIC is willing to fund the full cost, but only for units that have already proved themselves.

Who is eligible for the ISO 9000 refinance scheme?

A unit can apply if it satisfies the headline test and all four conditions.

The headline test: the applicant must be an existing industrial concern in the SSI sector having a good record of past performance and a sound financial position.

The four express conditions, as published by PIPDIC, are that the concern should:

• a) have been in operation for a period of at least four years;
• b) have earned profit and/or declared dividend during the preceding two financial years;
• c) not be in default to institution or banks in payment of their dues; and
• d) have been exporting their products directly or indirectly, or have plans to manufacture products for exports.

Condition (d) is worth reading carefully, because it is more accommodating than it first appears. A unit that has never exported still qualifies if it has plans to manufacture products for export. That is precisely the situation of most SSI units seeking ISO 9000, they want certification in order to start exporting. A credible, documented export plan satisfies the condition.

You cannot apply, or are not eligible, if:

• Your unit has been operating for less than four years. There is no discretion; the condition is stated as at least four years.
• Your unit did not earn a profit or declare a dividend in the preceding two financial years. A loss-making unit, however promising, does not meet condition (b).
• Your unit is in default to any institution or bank. This must be cleared before applying.
• Your unit neither exports nor has an export plan. A purely domestic unit with no export intention does not meet condition (d).
• You are not in the SSI sector. The scheme is written for small scale industrial concerns.
• You are a new unit seeking certification from the start. Certification costs for a start-up should be built into the project cost of a term loan under PIPDIC's general Scheme for SSI / MSI Sector, which lends up to Rs 1,000 lakh.
• You are seeking finance for a standard other than ISO 9000 without checking. PIPDIC's related Refinance scheme for Technology Development and Modernisation (RTDM) covers upgradation of process technology and products "with thrust on quality improvement comparable with acceptable domestic international standards", with project outlay not to exceed Rs 100 lakh, and may be the better fit for a broader quality and technology programme.

What expenditure does the loan cover?

PIPDIC names six heads of eligible expenditure, and a well-prepared application quantifies each.

The inclusion of equipment and calibrating instruments is the practically important part. Many SSI units discover mid-implementation that certification requires controlled measuring instruments the unit does not own, and that discovery arrives after the consultancy money has already been spent. Quantify the instrument requirement with the consultant before applying, so the loan covers the whole programme rather than only its first half.

Because the loan limit is need based rather than capped, the assessed cost of these six heads is what determines the sanction. A vague or partial estimate produces a vague or partial sanction.

What documents are required?

How to apply for the ISO 9000 refinance scheme

1. Test yourself against the four conditions before doing anything else. Four years in operation, profit or dividend in the preceding two financial years, no default, and exports or an export plan. If any one fails, the application will not succeed and the preparation is wasted.
2. Engage an ISO 9000 consultant for a scoping assessment. Ask specifically for a written estimate covering consultancy, documentation support, internal and certification audits, and: critically — the equipment and calibrating instruments your unit will need to acquire to meet the standard.
3. Obtain a quotation from a certification body for the audit and certification fees.
4. Document the export position. If you already export directly or through a merchant exporter, attach the shipping bills or supporting records. If you do not, prepare a written export plan naming target products and markets and any buyer correspondence.
5. Assemble four years of audited accounts, confirming that the preceding two financial years show profit or a declared dividend.
6. Obtain a no-default position, statements from PIPDIC and from any bank or institution you owe, and clear any overdue amount first.
7. Register as a customer on pipdic.in, open Loan Applications, and file on the up-to-Rs-25-lakh or above-Rs-25-lakh form according to the amount assessed.
8. Upload the documents and submit, or file physically at the PIPDIC registered office, 60 Romain Rolland Street, Puducherry 605 001.
9. Attend the appraisal, where PIPDIC examines the unit's past performance, financial position and the certification programme's costing.
10. Accept the sanction, complete documentation and draw against the programme, keeping consultant invoices, audit fee receipts and instrument purchase bills for the file.

Units outside Puducherry city can use PIPDIC's regional offices: Karaikal on 04368-292317, Thattanchavady on 0413-2271206, an office on 0413-2678105, Mahe on 0490-2332560 and 2332720, and Yanam on 08863-2321243.

How do I check my application status?

1. Log in to your customer account on pipdic.in, from which the application was filed.
2. Call the PIPDIC registered office on 0413-2335116 or email info@pipdic.com with your application reference.
3. Use the enquiry form on pipdic.in for pre-sanction questions and the separate grievance form for complaints.
4. Ask your existing PIPDIC loan officer if the unit is already a borrower, since an existing relationship usually gives the fastest read on where a fresh file has reached.

Why applications get rejected, and how to fix them

• Fewer than four years in operation. The most common disqualification. There is no way around it; wait, and in the meantime fund certification through a general term loan.
• A loss in either of the preceding two financial years. Condition (b) requires profit or a declared dividend in the preceding two years. Restore profitability first.
• An outstanding default. Clear all overdue dues to every institution and bank, and obtain confirmation, before applying.
• No export record and no export plan. Write the export plan. Naming products, target markets and any buyer enquiries turns condition (d) from a bar into a satisfied requirement.
• Certification cost under-estimated. Applications that quantify only consultancy and certification fees, omitting equipment and calibrating instruments, produce a sanction that runs out mid-programme. Cost the whole thing at the outset.
• Consultancy quotation without scope. A single figure with no deliverables cannot be appraised. Ask the consultant for a scoped, phased quotation.
• Accounts not audited or out of date. Complete the audit for the latest financial year before filing.
• Applying as a new unit. Build certification cost into a project loan under the general SSI/MSI scheme instead.

What are the key dates?

PIPDIC accepts loan applications on a rolling basis and publishes no last date for this scheme. PIPDIC and the Government of Puducherry both operate a financial year from 1 April to 31 March, and that year matters here more than for most PIPDIC schemes: because two of the eligibility conditions are anchored to financial years: four years of operation and profit or dividend in the preceding two financial years.

The practical consequence is that a unit's eligibility can change with the closing of a financial year. A unit that fell short by one profitable year in March may qualify in April once the new audited accounts are ready. Time the application to follow the audit rather than precede it.

On the certification side, plan for the standard implementation cycle, system design, documentation, an internal audit round, and then the certification body's stage one and stage two audits, and structure the drawal so funds are available at each stage rather than all at the start.

How do I raise a grievance?

1. Use the grievance form on pipdic.in, which is separate from the corporation's general enquiry form.
2. Contact the PIPDIC registered office, 60 Romain Rolland Street, Puducherry 605 001, on 0413-2335116, fax 0413-2336842, or email info@pipdic.com.
3. Escalate to the Director of Industries and Commerce, Industrial Estate, Thattanchavady, Puducherry 605 009, on +91-413-2248476, +91-413-2248168 or +91-413-2248320.
4. The departmental head is the Secretary to Government (Industries and Commerce), Chief Secretariat, Puducherry 605 001, on +91-413-2336115.

PIPDIC charges its published processing and service charges only. No consultant or intermediary is authorised to collect money on a promise of arranging a PIPDIC sanction, and consultancy fees for ISO implementation should be paid against a written, scoped engagement rather than informally.