INDUSTRIAL RELATIONSHIP AND LABOUR LAW

ADDITIONAL LEARNING
RULES AND REGULATIONS FOR ESTABLISHMENT OF FACTORIES
S.G.Sai sarath
15BBA0036
DEFINATION:
Factory as any premises including the precincts thereof.
1. Where 10 or more workers are working or were working in any day in the
preceding 12 months with the manufacturing process being carried on with the
aid of power.
2. Where 20 or more workers are working or were working in any day in the
preceding 12 months with the manufacturing process being carried on with the
aid of power.
The term factory does not include mines because mines are covered under
Indian Mines Act. Similarly mobile unit of armed forces, railway running shed
or hotel, restaurant etc... Are not factory.
The manufacturing processing may be carried on at two different sites. The
following establishment has been held to be factories.
1. Railway workshops
2. Salt works even on open structure of land.
3. The premises employed seven permanent workmen in the manufacturing
process using power
4. Establishments which prepare food items, drinking items etc
The following establishments have not been held to be factories:
1. Railway running sheds. 2. Exhibition or Cinema theaters. 3. Contraction
Works.
1. Meaning of Manufacturing Process:
a) Manufacturing process means any process of making altering, repairing,
ornamenting packing, roiling, washing, cleaning breaking up any article or
substance with the view to its use, sale, transport, delivery or disposal.
b) Pumping oil, water and sewerage.
c) Generating, transforming power.
d) Composing types of printing, printing by letters presslethography,
photography or other process of book binding.
e) Construction, reconstructing, repairing or breaking up ships or vessels.
f) Preserving or storing any article in cold storage.

2. Meaning of worker: A worker is a person employed directly or through an

agency in any manufacturing process or any other kind of work incidental to or
connected with the manufacturing process.
It does not include any member of the armed forces of the union. The worker
may be employed for wages or not, but there must be some line between the
worker and the manufacturing process.
The relationship between the worker and the employer is master and servant.
The following persons have been held to be workers:
Persons employed in a kitchen preparing food items.
Persons selling the manufactured article in a factory.
Watchman of a factory.
Apprentices and trainees.
An artist employed for remuneration.
Persons employed in the manufacturing of match sticks.
Persons employed in the manufacturing of cigarettes or beedies.
RULES AND REGULATIONS OF FACTORIES:
The state gov is empowered to make rules for licensing and registration of
factories under Sec 6 of the Factories Act Before a site is used for a factory, the
employer must get the previous permission in writing from the state gov or form
the chief inspector. The following procedure must be complied with, before
obtaining permission from the state gov or chief inspectors.
The following are the provisions for establishing a factory :
MSME Registration
Every business registered in India is provided certain benefits by the
government of India based on its classification in the type of entity it is i.e
Small, Medium or Micro. When you register a Micro, Small and Medium
Enterprise, you will get an MSME certificate (provisional or permanent).

This MSME certificate helps you enjoy various benefits like priority sector
lending (you get loans easily), differential rates of interest (you pay lesser
interest on loans), various exemption under tax laws, get environmental
clearances, etc.

When you are about to start your Micro, Small and Medium Enterprise, you
should apply for a Provisional Registration.

Once you are given the Provisional MSME Certificate and you start production
you can apply for a Permanent Certificate, which opens up more benefits for
you.

It may not be compulsory to register your Micro, Small and Medium Enterprise,
but it is definitely what youd want to do. It will provide you may government
benefits and schemes eligibility.
Final Registration
A provisionally registered industrial unit when it is about to go into production
is to apply for grant of Final Registration. An existing and functioning industrial
unit is eligible to apply for Final Registration without going into provisional
registration processes.
Provisional Registration
Provisional registration is granted to a unit at its pre- investment period to
enable it to take necessary steps to apply for financial credit, land or an
industrial set, water, power or telephone connections, etc.
MPCB Consent
Setting up a manufacturing unit in India attracts many types of licenses
from Indian Government i.e both State and Central, One of such license is
for the Pollution Licenses.
Any industry, which discharge sewage or effluent into the environment or
emit any pollution in air will have to obtain consent of the State Pollution
Control Board.
Similarly any industry / process generating, storing, transporting,
disposing or handling hazardous waste are required to obtain
authorization from MPC Board.

There are two types of consent

Consent to Establish
All the industries and activities needing consent must obtain consent to establish
before actual commencement of the works for establishing the industry/activity.
Consent to Operate
This consent needs to be taken before actual commencement of production
including trial production. This consent is valid for certain duration.
Documents required to get the consent to establish
Site plan/index
Topographical Map
Detailed layout plant of different processes and point sources of effluent
discharge/emissions and position of stack and documents including D.G.
set capacity in KVA.
Details of Water Pollution Control/Air Pollution Control devices
proposed to be provided.
Ambient Air Quality Report (if available)
SSI Certificate/NOC from Directorate of Industries Government of
Maharashtra.
 D.G.T.D. Registration. ( if applicable )
Details of chemical reactions with mass balance.
Consent fees in the form of D.D. drawn on favour of MPCB.
Local body NOC.
Under taking on Rs. 20 stamp paper or Chartered Accountant certificate
about proposed Capital Investment ( Land, building, and machineries.
Documents required for consent to operate/renewal
Detailed layout plant of different processes and point sources of effluent
discharge/emissions and position of stack and documents including D.G.
set capacity in KVA.
Process flow sheet.
Latest analysis report of effluent, fuel gases, solid waste & hazardous
wastes.
Details of Water Pollution Control/Air Pollution Control devices
provided.
Ambient Air Quality Report (if available)
SSI Certificate/NOC from Directorate of Industries Government of
Maharashtra.
D.G.T.D. Registration. (if applicable )
Details of chemical reactions with mass balance.
Consent fees in the form of D.D. drawn on favour of MPCB.
Xerox copy of previous consent (for renewal only).
Xerox copy of Environmental Clearance of Government of Maharashtra
or Government of India in case of 1st consent to operate in case of
industries/process requiring environmental clearance.
Factory Licence
The factory owners are required to notify and also register their premises with
the local governing authority before the beginning of operations. This helps in
facilitating the risk management at workplace and the total implementation of
Safety and Health Management Systems in factory premises.

Documents required:
Application Form for the Consent.
DD For the statuary Fees Amounted.
Lease Agreement copy with owner Or 7/12 Copy.
Grampanchayat NOC copy in name of Company.
Final drawing copy of factory and layout copy.
Declaration for the investment and Project profile by Chartered
accountant.
Water Budget means input water, uses, applications, losses, recycled,
Effluent.
Manufacturing process of each product with flow diagram.
SSI Registration copy Or IEM Registration. Copy.
Process flow diagram.
M.O.A. Copy.
List of Raw Material With monthly or annual consumption.
List of manufacturing Products with monthly or annul consumption.
Details of the Generators or boilers.
Details of the Stack and the chimney.
Details of hazardous and non hazardous waste, treatment and disposal.
ETP/STP scheme, process and diagram.
 Other rules and regulation to be followed by factory
In the field of Material Procurement Defence Procurement Manual
and Ordnance factory Board Purchase & Procurement Manual is
available.
For accounting of labour and material we follow our Store Accounting
Procedure.
For leasing and licensing of facilities in estates we have a Land Lease
Policy, 1990 approved by the government. It provides for the method
adopted/criteria to be followed for leasing out land for market, school,
banks, etc.
Detailed instructions are issued by DOP&T based on rules in the
matters of recruitment, promotion, reservation etc.
CVC instructions received from time to time are followed for ensuring
transparency and impartiality in purchase matters.
In construction of building and other facilities, the standard rates and
estimates given in MES regulations are followed.
In most of our units ISO 9001 systems are incorporated to ensure
quality output, customer satisfaction and continued improvement in
our methods. Work is carried out on the production shop floor as per
the Standing instructions.

Types of Business Entities in India

In India, the following types of business entities are available:

Private Limited Company

Public Limited Company
Unlimited Company
Limited Liability Partnership (LLP)
Partnership
Sole Proprietorship
Liaison Office / Representative Office
Project Office
Branch Office
Joint Venture Company
Subsidiary Company
 Private Limited Company
A private company is a company which has the following characteristics:

shareholders right to transfer shares is restricted;

the number of shareholders is limited to 200; and
an invitation to the public to subscribe to any shares or debentures is prohibited.
A Private Limited Company is the most popular form of business entity used for
Foreign Investors in India, including USA investors in India. There are
various requirements for forming a private limited company in India. There are
various steps required to establish a business in India, before and after
incorporation, as mentioned hereinafter.

Public Limited Company

A public company is defined as a company which is not a private company. The
following conditions apply only to a public company:

It must have at least seven shareholders.

A public company is not authorized to start business upon the grant of the
certificate of incorporation. In order to be eligible to commence business as a
corporation, it must obtain another document called trading certificate.
It must publish a prospectus or file a statement in lieu of a prospectus before it
can start transacting business.
A public company is required to have at least three directors.
It must hold statutory meetings and obtain government approval for the
appointment of the management.
There are several other provisions contained in the Companies Act 1956 which
are applicable only to public companies and should be consulted.