Plant Location Decisions and Factors Affecting Plant Location Plant location refers to the choice of the region where men, materials, money, machinery and equipment are brought together for setting up a business or factory. A plant is a place where the cost of the product is kept to low in order to maximize gains. Identifying an ideal location is very crucial, it should always maximize the net advantage, must minimize the unit cost of production and distribution. Plant location decisions are very important because once the plant is located at a particular site then the organization has to face the pros and cons of that initial decision.

1. PRANAV JADHAV, 29
PRATHAMESH BALURAGI, 04
AMOL CHAVHAN, 15
SAGAR AIRENI, 03
SAMEER DHURAT, 21 1

2. Sr. No. TITLE
Page No.
1 Introdution 3-
4
2 Factors affecting size of firm 5-6
3 Variation in demand 7
4 Factors of localisation 8-
13
5 Selection of site
15-18
6 Recent trends in location 19-
21
7 Government measures 22-
24
8 Industrial Estate
25-28
9 Government control 29-
30
10 Subjective Quantitative & Qualitative Analysis 31-35
11 Patanjali Ayurved Limited 36-

3. MERITS OF GOOD LOCATION
1. Reduce cost of Production and Distribution
2. Elevating the competitive strength
3. Profit margin
3

4. THE NEED TO SELECT A SUITABLE SITE:
1. Starting a new factory
2. Expansion of existing plant
3. Relocation of existing plant
PROBLEMS OF LOCATION:
1. Selection of the region
2. Selection of the locality
3. Selection of the actual site
4

5. 1. Available Capital
2. Entrepreneurial ability and Efficiency
3. Risk of Uncertainties
5

6. 1.AVAILABILITY OF CAPITAL:
Depends on size, type & nature of the firm.
Large capital investment industry viz. sugar refining.
2.ENTREPRENEURIAL ABILITY & EFFICIENCY:
Inefficiency of entrepreneur to take proper decisions & maintain
co-ordination in the industry is reflected in rising cost.
3.RISK OF UNCERTAINTIES:
Adjusting policies & strategies as per demand to survive &
maintain
position in the market.
6

7. 1. Permanent change
2. Cyclical fluctuations
3. Seasonal fluctuations
4. Erratic fluctuations
5. Types of Organizations
6. Availability of Inputs
7. Nature of Product
8. Laws of Return
9. Government Regulations
7

8. 1. PRIMARY FACTORS
2. SECONDARY FACTORS
8

9. 1. Supply of Raw Materials
2. Nearness to Market
3. Transport Facilities
4. Supply of labour
5. Power
6. Supply of capital
9

10. 1.Supply of Raw Materials:
Adequate supply of raw materials, cost and time for transport are
important.
2. Nearness to market:
It is important for industries where raw materials are obtained from
different sources.
Helps to supply goods to market in minimum time.
Adjust production according market demand.
3.Transport Facilities:
Speedy & cheap transport facilities for regular & timely supply of raw
materials and Transportation of labour are important aspects.

11. 4. Supply Of Labour:
Regular availability of skilled labour at optimum cost is necessary.
5. Power:
Sufficient & uninterrupted supply of power is needed to maintain
continuity in production.
6.Supply Of Capital:
Capital requirement for initial promotion & expansion of industry.
Since Capital is mobile nearness to capital is not required.
11

12. 1. Facilities
2. Natural Factors
3. Political Factors
4. Government Subsidies & Facilities
5. Historical & Religious Factors
6. Initial Start & Goodwill
7. Personal Factors
8. Miscellaneous Factors

13. 1. Sufficient water supply
2. Disposal of waters, wastes
3. Strategic factors like dangers of air-attacks
4. Availability of fire-fighting facilities
5. Availability of recreational, medical & educational facilities
6. Community attitudes
7. Ecological & environmental considerations
13

14. ECONOMIC SURVEY OF SITE SELECTION:
Helps to find out whether or not the location meets first the primary ,
and then the secondary requirements.
After analyzing various factors suitable regions can be selected.
COMPUTATION OF INVESTMENT & OTHER COSTS:
Ideal location permits lowest cost of production & its distribution.
For comparable unit cost of production in various locations ,the
location which requires least cost or fixed investment is preferred.
14

15. 1. Urban or City area
2. Rural area
3. Suburban area
15

16. 1. Good transportation facilities
2. Proper Communication services
3. Banking & credit facilities
4. Ample availability of skilled & unskilled workers
5. Vicinity of the market of the product
6. Educational, Medical & Recreational facilities
7. Municipal service facilities
16

17. 1. Land available at cheaper rates
2. Provision for future expansion
3. Labour is available at cheaper rates
4. Trade union movement is not very strong
5. Lack of congestion, so no danger of fire caused by surrounding
units
6. Rate of taxes are quite low
17

18. 1. City area is nearest so availability of both skilled & unskilled
workers
2. Land available at cheaper rates compare to urban areas
3. Adequate land for future expansion of unit
4. Infrastructure facilities developed either by government, municipal
authorities or industrial associates
5. Suited for medium size industries
18

19. 1. Priority for suburban areas
2. Industrial development in notified backward areas
3. Establishment of Industrial estate
4. Decentralization of Industries
5. Competition between Government & institutions
19

20. 1.Priority for the suburban areas:
For establishment of new unit or existing unit suburban areas are
preferred.
2.Industrial development in notified backward areas:
Central as well as state government provides incentives like cash
subsidy, tax relief, concessional financial assistance, cheaper land
& power supply etc in such areas.
3.Decentralization of industries:
Licensing policies of government are required to be followed.
20

21. 4. Establishment of Industrial estate:
Government of India has assigned responsibility to state
governments for
development of industrial estates in each districts of the state.
5.Competition between Government & institutions:
Sometimes the objective of local organizations & the government,
comes
in conflict on the issues of location of industries.
21

22. 1. Development and Regulation of industries Act 1951, was passed
with a view to prohibit the establishment or expansion of industries
in developed areas by formulating the industrial licensing policy in
India.
2. Encourage the establishment of industrial estates in rural and
semi-urban areas with infrastructure facilities like factory sheds,
water, electricity, transport, communication, warehousing, etc. at
concessional rates.
3. Establishment of public sector units in rural areas.
4. State government followed it up with a package scheme of
incentives for listed industries, if they set up in underdeveloped
areas.

23. 5. Relief from duties and taxes :-
Electricity Board offers rebates on its tariff to all new industries in
the backward areas for five years. Public water sources exempt
new industries in underdeveloped areas and state government
subsidies them to the extent of 1.6% of the value of such units.
6. Preference in government purchases :-
The government purchases 33% new units in the developing
areas at the lowest tendered process quoted in open competition
for a period of 6 years from the date of production.
Industrial units have to pay 25% of the cost of housing scheme
under industrial housing scheme will be subsidized to the extent of
10% of their share to be paid up to the housing board.
23

24. 7. Advance supply of building material to speed up industrial
construction.
8. Assistance in technical training in technical schools for personnel
in
these units.
9. State Industrial and Investment Corporation of Maharashtra
(SICOM)
assistance of plant location.
10. Government contribution to the extent of 75% of the cost feasibility
study by government agencies.
11. Interest free loan to the equal to the sales tax payable on purchase
of
raw materials and sale finished goods for 13 years.
12. Refund of sales tax on certain conditions and clearance from
SICOM.

25. 1. An industrial estate refers to place where a number of small
manufacturers undertake their production activities because of
certain facilities provided there.
2. Industrial estate with infrastructural facilities like land , building or
shed, water, power, transport warehousing, communication
banking will attract the large number of entrepreneurs to start
industries.
3. It may be government or also an co-operative basis which can be
started in the rural as well as semi-urban areas.
25

26. 1. Regional and balanced development
2. Increase in production of the country
3. Reduce the problem of unemployment in the country
4. Attract the new entrepreneurs to use modern methods and
techniques in manufacturing
5. To curb the environmental pollution in the industrial cities
26

27. 1. Basic common facilities at a reasonable price.
2. Well planned factory accommodation with water, electricity, roads.
3. It provides common facility services such as tool room, heat
treatment, equipment, electroplating units, testing laboratory.
4. All amenities are taken into consideration at the planning stage and
also the promoter of the industrial estates is specialized in this area.
5. Changed face of many rural and semi-urban areas by providing
employment.
27

28. 1. Raw materials, power, labour supply, technical knowledge, market,
transport, water supply, machinery, capital etc.
2. Industries dependent on these resources are localized in these
regions only.
3. Example: iron ore available in Orissa, Bihar, Madhya Pradesh.
4. Cotton textile industry in Mumbai because of its humid climate for
e.g. hinterland of Mumbai consists of cotton growing areas.
28

29. Government being the custodian of public interest, intervenes in the
locational decisions is under:
1. Through Licensing policy
2. Provides certain tempting incentives
3. Establishes giant public sector units
29

30. 1. To attain balanced regional development.
2. To narrow down the gap of inequality of income and wealth.
3. To reduce the concentration of the population and congestion of
industries in city areas.
4. As strategic defence policy, spread of industries reduces the
chances of heavy losses in war time.
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31. 1. Equal weights method
2. Variable weights method
3. Weight cum Rating method
4. Factor point rating method
5. Composite Measure method
31

32. 1.Equal weights method:
2.Variable weights method:
32
Factors Potential Sites
S1 S2 S3 S4
F1 3 6 8 2
F2 4 5 9 3
F3 7 2 6 3
Sum of site ratings 14 13 23 8
Factor
s
Maximu
m
Points
Potential Sites
S1 S2 S3 S4
F1 400 300 350 350 200
F2 300 150 200 150 100
F3 100 50 75 80 40
Sum 500 625 580 340

33. 3.Weight cum Rating method
Calculation
45=2*4+3*4+5*5
As indicated by the table, S3 with the highest rating of 78 is chosen
33
Factors Weight
assigned
to factor
Potential Sites
S1 S2 S3 S4
F1 2 4 6 8 3
F2 3 4 4 9 2
F3 5 5 3 7 2
Site
Rating
45 39 78 22

34. 4.Factor Point Rating Method
Factor point rating sample
Decision Matrix
34
Factors Poor Fair Adequat
e
Good Excellen
t
F1 -14 10 0 5 12
F2 -2 -1 0 2 3
Factors Potential Sites
S1 S2 S3 S4
F1 0 -10 5 0
F2 0 -2 3 1
F3 0 0 0 0
Site
Rating
0 -12 8 1

35. Factors Site A Site B Site C
Cost of land 50,000 49,000 45,000
Buildings 4,50,000 4,20,000 4,80,000
Labour Charges 40,000 25,000 32,000
Power 10,000 9,000 10,000
Water 5,000 1,000 3,000
Cost of Raw material 1,00,000 80,000 85,000
Freight
1. Incoming
2. Outgoing
30,000
20,000
50,000
35,000
52,000
40,000
Local Taxes 5,000 NIL 3,000
Total Operating
Cost
7,10,000 6,60,000 7,50,000
Other Factors
Cost of Living Very High Low Moderate
Housing facilities Excellent Poor Good
Community facilities Excellent Poor Good
Community attitude Good Encouragin
g
Indifferent

36. Type Private
Industry Consumer Goods
Founded 2006
Founder Archarya Balkrishna
Baba Ramdev
Headquarters Haridwar,India
Area Served India and Nepal
Products Foods, beverages,
cleaning agents and
personal care products
Revenue ₹5,000 crore
(US$740 million) (2015-
16)
Number of employees 2,00,000

37. PLANT LOCATION
1. Manufacture in Uttarakhand
2. 150 Acre LARGEST PRODUCTION AREA
3. located in the industrial area of Haridwar
4. The state is promoting establishment of industrial estates, industrial
parks and growth centre in the State.
37

38.  A dedicated IT Park to come up in Dehradun
 Vast pool of a natural resource adds to the state’s attractiveness as
an investment destination
 Abundant availability of quality human resource base at competitive
rates.
Uttarakhand compares favourably with the all-India aggregates in
terms of the spread of basic infrastructural facilities.
38

39.  Investments in Uttarakhand enjoy a number of fiscal benefits like the
concessional industrial package offered by the state and the central
government.
 Tehri Hydro Development is one of the highest multipurpose projects to
be built across river Ganga.
OPPORTUNITIES:
 Possibility of becoming worlds top MNC
 Maximum marketing shares
ACHIEVEMENT:
 Giant FMCG in only 5 years
 Accomplished “Make in India concept”
 Tough competitor in the market for other MNCs and Indian companies
39

40. PLANT NAME :DMART, DOMBIVLI BRANCH
ADDRESS : Sagaon, Dombivli East
TYPE OF COMPANY : Private Retail
FOUNDED : 2016
40

41. NEAREST LANDMARKS:
Dombivli Railway Station - 3.6 km
Metro Junction Big Bazzar -6 km
Lodha Township -4 Km
Big Bazzar- 1.2 km (closed since July
2016 )
TARGET CUSTOMERS:
Middle-Class &
Upper Middle Class customers in 4 km
radius
COMPETITION:
Empress mall Big Bazzar
Other small shops
41

42. LOCATION FEATURES:
1. KALYAN-MUMBAI road 0.2 km
2. Easily assesibility from Dombivli Station by auto- rickshaw, KDMT,
NMMT bus services
3. Ample free parking space for about 100 two-wheelers & 50 LMV
CONCLUSION:
In 6 months DMart became primary source of daily household
goods in Dombivli .
42

43. We learnt how of plant location affects profitability & survival of any
company in the market.
43

44. 1. Production & Operation Management by S.A.CHUNAWALA
2. www.en.wikipedia.org
3. www.dcmsme.gov.in
4. www.dmartindia.com
5. www.electronicsforu.com
44