Ten easy steps for Compliance Management | Manufacturing Law | Compliances Involved

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2. 2A simple, fast and inexpensive compliance management tool designed for small and medium business
What Generally Constitutes Manufacturing?
Manufacturing is the value added production of merchandise for use or sale
using labour and machines, tools, chemical and biological processing, or
formulation. The term may refer to a range of human activity, from
handicraft to high end technology.
What do judicial pronouncements say?
The question that what comprises manufacturing process has been subject to
many judicial examinations. Some of the activities listed below have been
considered to be manufacturing processes.
• The work of composition in printing business
• Cooking and preparing food in the kitchen of a hotel
• Breaking up of boulders
• Activities of electricians, pipe-line fitters, cleaners, watchmen, etc. engaged in a
water supply scheme.
• Commercial establishment receiving the products in bulk and after unpacking
the products, pack them as per the need of the customer’s requirement.

3. 3A simple, fast and inexpensive compliance management tool designed for small and medium business
Manufacturing Under Law
Statutory Definition Judicial Pronouncements
“Manufacturing process" under Section 2(k) of Factories
Act, 1948 means any process for-
(i) making, altering, repairing, ornamenting, finishing,
packing, oiling, washing, cleaning, breaking up,
demolishing, or otherwise treating or adapting any
article or substance with a view to its use sale, transport,
delivery or disposal, or
(ii) pumping oil, water, sewage or any other substance;
(iii) generating, transforming or transmitting power; or
(iv) composing types for printing, printing by letter press,
lithography, photogravure or other similar process or
book binding;
(v) constructing, reconstructing, repairing, refitting,
finishing or breaking up ships or vessels;
(vi) preserving or storing any article in cold storage,
• Mohan Singh and Ors. v. The Chairman Railway Board and Ors.
MANU/SC/0829/2015A
The definition of "manufacturing process" does not mandate that
the manufacturing activities should be carried on in one building alone.
• Satnam Overseas Ltd. v. Commissioner. of Central Excise
MANU/SC/0419/2015
Process of manufacture:
(i) Process would be treated as "manufacture" only if new product
known to market came into existence with original product losing its
original character.
(ii) Mere addition in value, after original product had undergone
certain process, would not bring it within the definition of 'manufacture'
unless its original identity also underwent transformation and it became
a distinctive and new product.
(iii) Mere addition to addition would not make it different product if the
primary and essential character of the product after addition still
remained same. There has to be a transformation of the product into
new commodity, commercially known as a distinct and separate
commodity.

4. 4A simple, fast and inexpensive compliance management tool designed for small and medium business
Compliances
on the Basis
of Activity
Start of
Operations
Ongoing
Compliances
Shifting/
Closure of
Operations
• Registrations
• Approvals
• Permissions
• Licenses
• Consents
• Periodic Filings
• Display Requirements
• Maintenance of Registers and
Records
• Maintenance of policy documents
• Payment obligations
• Sending Notices
• Notice of Closures
• Full & Final
Settlements
Compliances on the Basis of Activity

5. 5A simple, fast and inexpensive compliance management tool designed for small and medium business
Factors that Influence Compliance
Industry
Locations
Employee/
Workmen
Strength
• Food
• Pharmaceutical
• Cement
• Automobile
• Machinery
• Construction
• Chemical
• Oil and Gas
• Central Act and State Rules
• State Act and State Rules
Factories Act read with State Rules
Contract Labour Act read with State Rules
State Shops and Establishments Act and
Rules
State Labour Welfare Fund Act and Rules
• Contract Labour Act
• Employees Provident
Fund Act
• Employees State
Insurance Act
• Compliances under
Factories Act
Compliances on the Basis of Other Aspects

6. 6A simple, fast and inexpensive compliance management tool designed for small and medium business
Representative Sample for Law Applicability for
Manufacturing Sector
Definitely Applicable May be Applicable
• Factories Act, 1948
• Electricity Act, 2003
• Industrial Disputes Act, 1947
• Legal Metrology Act, 2009
• The Air (Prevention And
Control Of Pollution) Act, 1981
• The Water (Prevention And
Control Of Pollution) Act, 1974
• Boilers Act, 1923
• Petroleum Act, 1934
• Bureau of Indian Standards Act,
1983
• Bio-medical Waste Management
Rules, 2016
• E-waste (Management) Rules,
2016
• Motor Vehicles Act, 1988

7. 7A simple, fast and inexpensive compliance management tool designed for small and medium business
Statutory Mandate for ensuring sound compliance –
Representative Examples
Some of the important statutory mandates you will find are as follows:
In addition to the above compliances a company has the following additional obligation to ensure that it is compliant
under every applicable Statute :
Companies Act, 2013 (Section 134(5)f) -“Directors needs to ensure that they had devised proper systems to ensure
compliance with the provisions of all applicable laws and that such system were adequate and operating effectively”.
Factories Act, 1948
(Central Act read with State Rules)
Shops and Establishments
(State Act read with State Rules)
Welfare statutes like
Employees Provident Fund Act, 1952
(Central Act read with Central Rules)
Penalties
Has several compliances like Compulsory
approval, licensing and registration of
factories, measures on health, safety and
welfare, working hours, leaves etc.
Has compliances like registration requirements,
working hours, opening and closing hours,
overtime, leaves etc.
Mandates Filing Declaration and Nomination
Form, Preparing Contribution Cards, Filing
statement of contribution every month.
Under the Factories Act, it extends to and includes
fine up to Rs. One Lakh and Imprisonment up to Two
Years, whereas under the Employees Provident Fund
Act, 1952 it extends to and includes fine up to Rs. Ten
Thousand and Imprisonment up to Three Years.
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8. A simple, fast and inexpensive compliance management tool designed for small and medium business
Regulation of the employment and other conditions of service of employees
employed in small factories.
• Seeks to consolidate 14 Labour Acts to establish a single labour law
• Exclusion of person performing administrative, supervisory or managerial
functions
• Payment of wages before 7th of the succeeding month
• Electronic deposit of wages in the bank account of the worker
• Tracking of attendance and late coming
• Mandatory insurance for all workers
• Registers may be maintained in hard or soft form.
Small Factories (Regulation of Employment
and Conditions of Services) Bill, 2014
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9. 9A simple, fast and inexpensive compliance management tool designed for small and medium business
Driven by Leadership
This is critical because otherwise there will be no prioritization and the entire effort will be lost
Does the
company
wish to be
compliant?
YES NO
Building positive
reputation
Higher productivity in
company
Avoidance of
Statutory hassles
Affects reputation
May adversely affect
business opportunities
Discourage investors
Exposing your business
to unpredictability
• This has to be driven by the leadership because this is not something that will see immediate
return like revenue from seller
• Compliance means long term return in terms of peace of mind
• Compliance is a corporate culture that is built overtime.

10. 10A simple, fast and inexpensive compliance management tool designed for small and medium business
Create effective Compliance
Management System:
• Create appropriate structures reporting directly to the
leadership or the Management/Board of Directors
• An effective compliance management system
mitigates the adverse impacts on achieving
objectives.
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Gap Analysis:
• In case of an existing/ going concern if you already have
a system in place to follow the compliances then you
should do a gap analysis between laws you already
follow and the laws that you need to follow.
• In case you do not have any system in place then you
need to understand the nature of your business
operation and identify the laws applicable.
Bespoke Compliance Landscaping :
• Identify the applicable Statutes that your company or
organization has to comply with.
• Detect if any exemptions as notified by the Central or
State Government is applicable to your unit or
company, for example factories located at SEZs get
tax exemptions.
Steps for end-to-end Compliance Management

11. 11A simple, fast and inexpensive compliance management tool designed for small and medium business
Prevention of Sexual Harassment at workplace
Align company policies with the statutory compliances that are either existing or
are identified as applicable
Waste Management policies
Maternity benefit
Leave policy
IT policy
Company Ethics
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Steps for end-to-end Compliance Management

12. 12A simple, fast and inexpensive compliance management tool designed for small and medium business
• Forms one of the most integral part of compliance
management within a company.
• There should be a proper system in place to educate
the employees about the organization’s compliance
program and its policies and the way the company
handles compliance management.
• Training has to be provided at every level of the
company starting with the management to the
employees through formal or informal staff meetings.
• Legal mandates should be explained to the employees
properly so that they are aware of their obligations as
well as the procedure to execute them.
• All the compliance activities need to be segregated
and allocated department wise. For e.g., The Human
Resource Management Department will take care of
the Labour and Employment related Laws, the Finance
Department will take care of the Fiscal Compliances,
The Company Secretarial Department will manage the
corporate compliances etc.
• The company should have an effective mechanism in
place to review and keep a check on the compliance
activities done by the personnel to whom it was
allocated and the same should be done before the due
date of the compliances arrive.
Training and education:
Allocation of Duties: 6
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Steps for end-to-end Compliance Management

13. 13A simple, fast and inexpensive compliance management tool designed for small and medium business
Plan out a compliance map for
contingent events
Documentation and Preservation
of Records
• All the compliance activity revolving around
contingent events that is to be carried out in
a particular year needs to be assessed
beforehand.
• A review of whether the contingency has
occurred has to be conducted as frequently
as one apprehends the contingent event to
occur.
• It is of utmost importance to keep a proper
record of the filings done and registrations
obtained along with all the documents relating
to compliances.
• Law mandates every license, permits, registers,
books of account be kept at a proper place in
the office of the person concerned.
• Documents must be kept in order so that there
are no hassles during inspector visits and
preserved for the period as prescribed under
the various laws.
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14. 14A simple, fast and inexpensive compliance management tool designed for small and medium business
• Periodical audits of all operating units.
• Discussions with the stakeholder on
gaps observed.
• Correction of those gaps.
• Report generation to the top
management/ board of directors.
A CoE can help by:
• Continuously monitoring and identifying non-
compliance.
• Ensure these non-compliances do not recur by
augmenting or creating new policies and
procedures.
• Training and creating awareness across various
teams on the processes being followed to ensure
compliance.
Ongoing compliance monitoring:9
Having Centers of Excellence (CoE) 10

15. 15A simple, fast and inexpensive compliance management tool designed for small and medium business
Fully-automated
compliance
solution
Simple
Quick
Inexpensive
Comprehensive
Compliance Checklist
Central
State
Municipal
For Small &
Medium
Businesses
Efficiency
Penalty
Avoid
Surprises
Critical
Compliances
across modules
HR
Tax
Corporate
Environment
Industry-
specific
Hassle-free
Updates & Task
Management
Email
Reminders
Calendar View
Generate
Reports
About Komplify
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16. 16A simple, fast and inexpensive compliance management tool designed for small and medium business
• Know the applicable
critical compliances
online
• Move up or drill down the
applicable compliances
by various variables
• Real-time compliance
status of your organization
• Generate customized
compliance reports
• Slice and dice reports basis
your requirements
• Get online compliance
certificates
• No complicated workflows
• Easy to allocate
compliances through quick
links, bulk allocation, etc.
• Get email alerts well
before compliance date
• Get compliance alerts
from your calendar
• Stay updated about
regulatory amendments
Identify laws
online
Easily manage
compliances
Ahead-of-time
alerts
Management
by exception
How Komplify can help MSMEs ?

17. 17A simple, fast and inexpensive compliance management tool designed for small and medium business