Dear Experts,
Please clarify:
1. Can one have two manufacturing units (Pvt Ltd companies) in the same premises?
2. Can we get a factory license and a trade license for the second company also for the same premises legally?
3. Can we have a Leave & License agreement covering the whole premises for both companies?
Further Inputs:
1. These two units are separate Pvt Ltd companies with common Directors.
2. Both have separate registrations with GST, PF & ESI.
3. One company (30 years old and established) caters to Government orders, and the second company is about to start production.
4. Both companies have similar products to manufacture.
Thank you.
From India, Chennai
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1Please clarify:
1. Can one have two manufacturing units (Pvt Ltd companies) in the same premises?
2. Can we get a factory license and a trade license for the second company also for the same premises legally?
3. Can we have a Leave & License agreement covering the whole premises for both companies?
Further Inputs:
1. These two units are separate Pvt Ltd companies with common Directors.
2. Both have separate registrations with GST, PF & ESI.
3. One company (30 years old and established) caters to Government orders, and the second company is about to start production.
4. Both companies have similar products to manufacture.
Thank you.
From India, Chennai
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The department will not grant you 2 factory licenses in the same premises. Instead, you should look at one company doing manufacturing and the other doing trading or giving the production on job-work to the first one.
The government will give trade license to the same premises to different companies because I don't think they check anything before issuing the trade license. But it depends on the local laws. You will need to check the regulations to ensure you do not get into trouble later for false declarations.
Lease and License to 2 companies for the same area is possible but not legally correct. It may get into a mess if you have a dispute with your landlord at a later date. The existence of 2 agreements overlapping in space will show the authorities (and the courts) that you intended some kind of fraud.
Common directors make little difference here as the companies are separate legal entities.
From India, Mumbai
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The government will give trade license to the same premises to different companies because I don't think they check anything before issuing the trade license. But it depends on the local laws. You will need to check the regulations to ensure you do not get into trouble later for false declarations.
Lease and License to 2 companies for the same area is possible but not legally correct. It may get into a mess if you have a dispute with your landlord at a later date. The existence of 2 agreements overlapping in space will show the authorities (and the courts) that you intended some kind of fraud.
Common directors make little difference here as the companies are separate legal entities.
From India, Mumbai
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Thanks a ton Saswata Banerjee.Very useful tips, Will Pollution Control Board will give consent to manufacture (for the 2nd co) and continue to operate for then first co Tnak you once again
From India, Chennai
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From India, Chennai
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It is possible to get two factory licenses under one premises. It will be required to have proper demarcation for the two different factories. Please speak with the Local factory directorate for better clarification. There are examples in WB of such conditions.
It appears from the submission that both organizations are, in the true sense, separate, and hopefully, they have different Balance Sheets as well.
The Pollution Control Board will also give consent if the new factory fulfills all the norms as per PCB.
Both factories may have the same leave rules, and there are no legal issues.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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It appears from the submission that both organizations are, in the true sense, separate, and hopefully, they have different Balance Sheets as well.
The Pollution Control Board will also give consent if the new factory fulfills all the norms as per PCB.
Both factories may have the same leave rules, and there are no legal issues.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 skb@usdhrs.in USD HR Solutions – To strive towards excellence with effort and integrity
From India, New Delhi
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I am not sure whether the PCB will give two consents for the same plant and equipment. This was probably not considered when the rules were framed.
After you get your license, you can go and speak to the local PCB office. They are quite helpful in general. Normally, a factory will have only one consent, so I don't think it will work for you.
For instance, there is a specified limit for water consumption. If multiple licenses were allowed, everyone could acquire three licenses and obtain three times the water consumption permitted under the act or discharge three times the effluents. Therefore, I really doubt that you will receive multiple consents.
From India, Mumbai
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After you get your license, you can go and speak to the local PCB office. They are quite helpful in general. Normally, a factory will have only one consent, so I don't think it will work for you.
For instance, there is a specified limit for water consumption. If multiple licenses were allowed, everyone could acquire three licenses and obtain three times the water consumption permitted under the act or discharge three times the effluents. Therefore, I really doubt that you will receive multiple consents.
From India, Mumbai
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Dear Colleague
For understanding whether there can be 2 Factories in the same premises we need to understand what Section 4 of the Factories Act 1948 says:
Sec 4. Power to declare different departments to be separate factories or two or more factories to
be a single factory.—The State Government may,[on its own or] on an application made in this behalf by an occupier, direct, by an order in writing [and subject to such conditions as it may deem fit that for all or any of the purposes of this Act different departments or branches of a factory of the occupier specified in the application shall be treated as separate factories or that two or more factories of the occupier specified in the application shall be treated as a single factory:] [Provided that no order under this section shall be made by the State Government on its own motion unless an opportunity of being heard is given to the occupier.]
Hence it is quite possible to operate 2 Factories in Same Premises if the State Government is convinced on this. In practicality there should be no connection or mix-up in the MANUFACURING PROCESS between the 2 factories.
- The initial process till packing should be separate,
-Accounting to be separate,
-packing to be separate,
-boundaries of the 2 factories to be clearly demarcated,
-Assets and Machinery are separate,
-Manpower is separate and Factory 1 workers should not work in Factory 2,
-separate Factory Manager,
-Separate Occupier,
-separate EB connection for HT Lines,
-separate List of Directors ( HERE ATLEAST 1 DIRECTOR SHOULD BE DIFFERNT IN BOTH COMPANIES and you can not have same List of Directors)
- Separate Entry and exit gates
- Separate Factories Registers
-Distinguishing Uniforms to employees
- No common or shared facilities except those which are specifically allowed under Factories Act
- Separate Books of Accounts and Production Accounts, Sales Accounts
Separate Consent Order is possible provided you have 2 separate Factory Licenses and 2 EB Connection Documents as well as only when you have separate set of AIR, WATER POLLUTION CONTROL SYSTEMS in Place. This may call for a huge investment I guess.
Hence you may have detailed discussion with your State Industrial Safety and Health Department Officials in writing as well as with the Pollution Control Dept Official (in writing) well in advance before proceeding to either call.
Kindly have a SWOT done by a Team along with TOP management on what are the benefits and advantages as well as demerits and then proceed whichever is the best advantage for the Company as such.
From India, Chennai
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For understanding whether there can be 2 Factories in the same premises we need to understand what Section 4 of the Factories Act 1948 says:
Sec 4. Power to declare different departments to be separate factories or two or more factories to
be a single factory.—The State Government may,[on its own or] on an application made in this behalf by an occupier, direct, by an order in writing [and subject to such conditions as it may deem fit that for all or any of the purposes of this Act different departments or branches of a factory of the occupier specified in the application shall be treated as separate factories or that two or more factories of the occupier specified in the application shall be treated as a single factory:] [Provided that no order under this section shall be made by the State Government on its own motion unless an opportunity of being heard is given to the occupier.]
Hence it is quite possible to operate 2 Factories in Same Premises if the State Government is convinced on this. In practicality there should be no connection or mix-up in the MANUFACURING PROCESS between the 2 factories.
- The initial process till packing should be separate,
-Accounting to be separate,
-packing to be separate,
-boundaries of the 2 factories to be clearly demarcated,
-Assets and Machinery are separate,
-Manpower is separate and Factory 1 workers should not work in Factory 2,
-separate Factory Manager,
-Separate Occupier,
-separate EB connection for HT Lines,
-separate List of Directors ( HERE ATLEAST 1 DIRECTOR SHOULD BE DIFFERNT IN BOTH COMPANIES and you can not have same List of Directors)
- Separate Entry and exit gates
- Separate Factories Registers
-Distinguishing Uniforms to employees
- No common or shared facilities except those which are specifically allowed under Factories Act
- Separate Books of Accounts and Production Accounts, Sales Accounts
Separate Consent Order is possible provided you have 2 separate Factory Licenses and 2 EB Connection Documents as well as only when you have separate set of AIR, WATER POLLUTION CONTROL SYSTEMS in Place. This may call for a huge investment I guess.
Hence you may have detailed discussion with your State Industrial Safety and Health Department Officials in writing as well as with the Pollution Control Dept Official (in writing) well in advance before proceeding to either call.
Kindly have a SWOT done by a Team along with TOP management on what are the benefits and advantages as well as demerits and then proceed whichever is the best advantage for the Company as such.
From India, Chennai
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Is it not possible to get the licenses purely on basis of their credentials and Co EXIT/ COHABIT with a "ARM LENGHT AGREEMEBNT" Would love to get opinions
From India, New Delhi
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From India, New Delhi
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It is possible to have two factories on the same premises. Factory inspector approvals with plans are needed, with complete demarcation of activities. Separate electric supply from the electricity board is required. Pollution control board approval is necessary if one company with an effluent treatment plant grants consent, then consent can be extended to another company. An agreement has to be drawn up for such operations for better clarity.
Milind Prabhune
Elantas Beck India Ltd, Pune
From Japan
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Milind Prabhune
Elantas Beck India Ltd, Pune
From Japan
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Anju,
Can you build 2 buildings on the same plot, and I mean the same plot, not 2 parts of the same plot. In the same way, you cannot have 2 factories in the same place.
The law allows two separate factories to be in the same physical compound. However, the OP is clearly stating that both factories will be covering the entire area. How exactly will that work? Please tell me.
From India, Mumbai
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Can you build 2 buildings on the same plot, and I mean the same plot, not 2 parts of the same plot. In the same way, you cannot have 2 factories in the same place.
The law allows two separate factories to be in the same physical compound. However, the OP is clearly stating that both factories will be covering the entire area. How exactly will that work? Please tell me.
From India, Mumbai
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Sir,
My take on this is different. We had 11 separately registered factories in the same premises. I am told in Bhilai Steel Plant there are 50 factories on its premises, all individually registered. The demarcation into separate factories is possible as long as the manufacturing process is carried out in both premises and employing 10 persons in case power is used; otherwise, there are twenty people working in each such premise. Registering them as separate factories has a lot of disadvantages. Compliances like canteen, rest room, ambulance, Welfare Officer, Safety Officer, etc., the Factory Inspector would insist individually for each factory, and the returns and formats have to be sent in both cases. This is not a mean task.
As regards leave and license, it is possible to have a common agreement with the landlord for running both firms with a clear mention of both legal entities.
From India, Mumbai
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My take on this is different. We had 11 separately registered factories in the same premises. I am told in Bhilai Steel Plant there are 50 factories on its premises, all individually registered. The demarcation into separate factories is possible as long as the manufacturing process is carried out in both premises and employing 10 persons in case power is used; otherwise, there are twenty people working in each such premise. Registering them as separate factories has a lot of disadvantages. Compliances like canteen, rest room, ambulance, Welfare Officer, Safety Officer, etc., the Factory Inspector would insist individually for each factory, and the returns and formats have to be sent in both cases. This is not a mean task.
As regards leave and license, it is possible to have a common agreement with the landlord for running both firms with a clear mention of both legal entities.
From India, Mumbai
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