Chapter 2: Classification of Business Activities

A cotton shirt hanging in a shop has already passed through many hands. Cotton was grown on a farm, spun and woven into cloth in a mill, and stitched into a garment in a factory. It was then carried to a warehouse, stored until the season demanded it, insured against damage in transit, advertised to buyers, and finally sold across a counter. Not one of these steps could have delivered the shirt on its own. This chapter deals with the way all such activities are grouped. Business activity is divided into two broad heads: the activities that produce or process goods and services, and the activities that store, exchange and distribute them. The first group creates the product; the second carries it to the person who wants it. Each depends on the other, and a student of business must be able to place any given activity correctly under one head or the other. The chapter explains what industry is and how industries are classified by activity and by size, what commerce is and which obstacles it removes, the branches of commerce, and how industry, trade and commerce depend on one another.

Figure

Fig. 2.0-1 — Goods Moving Through The Chain Of Distribution Photograph of cartons being loaded from a warehouse platform onto a goods truck.

2.1 Classification Of Business Activities

Business covers every activity connected with the production, purchase and sale of goods and services carried on with the object of earning profit. It also takes in activities that assist production and exchange indirectly, such as banking, transport, insurance, warehousing and advertising. Taken together these activities are too varied to be studied one by one.

A classification is therefore needed. Grouping activities by the function they perform allows a firm to see which part of the chain it belongs to, which services it must buy in from others, and where a break in the chain would hurt it. On the basis of function, business activity falls under two broad heads.

Industry — all activities concerned with the raising, producing, processing or fabrication of goods and services. Industry creates the product.
Commerce — all activities concerned with the storage, exchange and distribution of goods and services. Commerce carries the product to the person who wants it.

Commerce is itself divided into trade, which is the actual buying and selling of goods, and aids to trade, which are the supporting services that make buying and selling possible. The structure is set out in FC 2.1.

Flowchart

FC 2.1 — Classification Of Business Activities Business Activities → Industry, Commerce; Commerce → Trade, Aids to Trade

The two heads are not rivals but partners. Goods that are produced but never distributed satisfy no want, and goods cannot be distributed unless they are first produced. Every chapter that follows deals with one branch or the other of this single structure.

Try Yourself

Name three business activities carried on in your locality and place each one under industry or under commerce.

2.2 Industry: Meaning And Characteristics

Industry is that part of business which is concerned with raising, producing, processing or fabricating goods and services. It covers every activity that results in a want-satisfying product: the growing of crops on a farm, the extraction of coal from a mine, the processing of raw cotton, and the manufacture of finished articles in a factory.

The essential test is conversion. A material that exists in nature, or a part-finished material bought from another producer, is changed in form or shape so that it becomes fit to satisfy a want. This change of form is described as form utility, and it is the contribution industry makes to business.

Definition

Industry Industry refers to those economic activities which are concerned with the raising, producing, processing or fabrication of goods and services, thereby converting materials into a form fit to satisfy human wants.

Consumer Goods And Producer Goods

Goods produced by industry are not all meant for the same user. Where the goods are made for ultimate use by the buyer who consumes them, they are called consumer goods — cloth, soap, biscuits, a television set. Where the goods are made to be used in producing something else, they are called producer goods or capital goods — machinery, steel, cement, industrial chemicals.

The distinction matters because the two are sold in different ways. Consumer goods are bought in small quantities by a very large number of buyers and depend heavily on advertising, while producer goods are bought in bulk by a small number of industrial buyers whose decision turns on cost and technical fitness.

Do Not Mix Up

Consumer Goods And Producer Goods Consumer goods are bought for final use and leave the production chain. Producer goods are bought to make other goods and stay within it. The same item may be either, depending on the use to which it is put.

Characteristics Of Industry

The nature of industry may be understood through the following features.

Economic activity — industrial activity is undertaken with the expectation of money income, which is then available for the further creation of wealth or assets. An activity carried on without this expectation, such as a household growing vegetables for its own table, is not industry.
Production of goods and services — industry represents the productive side of business. It applies human labour and machinery to materials, and produces both consumer goods and producer goods.
Wide scope — the field of industry keeps enlarging, because advances in science and technology create products and processes that did not exist before. Information technology and electronics are industries of recent origin.
Part and parcel of business — industry is not a separate world from trade. Industrial activity is what gives rise to trade and to the aids to trade, since goods must first exist before they can be bought, stored, carried or insured.
Creation of utility — by converting materials into useful products, industry creates form utility and so makes want-satisfaction possible.
Contribution to economic development — industries use natural and man-made resources productively, generate employment, add to national income and earn foreign exchange, and thereby quicken the pace of development.

Try Yourself

Look at any five articles in your school bag and state, for each, whether it is a consumer good or a producer good.

2.3 Types Of Industries

Industries differ from one another in what they do and in how large they are, and a single classification cannot capture both. Two bases are therefore used. Classification on the basis of activity shows where an industry stands in the chain that runs from natural resource to finished product. Classification on the basis of size shows the scale on which the unit operates, and it is this second classification that decides which government benefits and concessions a unit can claim.

2.3.1 On The Basis Of Activity

On this basis industries fall into three groups, each supplying the next. The full classification is set out in FC 2.2.

Flowchart

FC 2.2 — Industries On The Basis Of Activity Industry → Primary, Secondary, Tertiary; Primary → Genetic, Extractive; Secondary → Manufacturing, Construction; Manufacturing → Analytical, Synthetical, Processing, Assembling, Integrated

Primary Industries

Primary industries are concerned with the extraction and production of natural resources and with the rearing of living organisms. They stand at the head of the chain because they supply the raw materials on which all later industries work. They are of two kinds.

Genetic industries — these breed plants and animals for further reproduction. Seed and nursery farms, cattle breeding farms, poultry farms and fish hatcheries belong here. The output is itself a living thing meant to multiply, which is why the group is named after heredity.
Extractive industries — these draw out what already exists in the earth, water or air. Mining, quarrying, lumbering, hunting and fishing belong here. Their products cannot be reproduced by the industry itself, so extraction is limited by the natural stock available.

Do Not Mix Up

Genetic And Extractive Industries Genetic industries multiply living things and can renew their own supply. Extractive industries take out an existing natural stock and cannot replace what they remove.

Secondary Industries

Secondary industries process materials that have already been produced at the primary stage. The mining of iron ore is a primary activity; converting that ore into steel is a secondary one. Secondary industries are of two kinds, manufacturing and construction.

Manufacturing industries convert raw materials into finished goods, and most industries in the ordinary sense of the word fall here. They are further divided by the way the conversion is carried out.

Analytical industries — one basic raw material is separated into several useful products. An oil refinery separates crude oil into petrol, diesel, kerosene and lubricating oils.
Synthetical industries — two or more materials are combined to make one main product that none of them was before. Cement, soap and paint are produced in this way.
Processing industries — a single material passes through a series of stages, each adding to it, until the final product emerges. Cotton is spun, woven, bleached, dyed and printed to become cloth.
Assembling industries — ready-made parts are bought from other producers and put together into a complete product. The manufacture of cycles, watches and televisions works in this way.
Integrated industries — all the activities relating to one product, from raw material to finished article, are carried on by the same unit. Integration reduces dependence on outside suppliers but calls for very heavy investment.

Construction industries are engaged in creating fixed structures — roads, bridges, dams, flyovers and buildings. Their output cannot be moved to a market once made, and is therefore sold before or during production rather than after it.

Business Example

Analytical Working In Petroleum Refining A petroleum refinery receives crude oil as a single raw material and separates it into liquefied petroleum gas, petrol, diesel, kerosene and lubricating oils. One input yields many marketable outputs, which is the defining mark of an analytical industry.

Tertiary Industries

Tertiary industries provide the services that support primary and secondary industries and make trade possible. They produce no goods at all. Transport, banking, insurance, warehousing, communication, packaging and advertising belong here. Because these services assist the smooth movement and exchange of goods, they are treated as part of commerce as well.

2.3.2 On The Basis Of Size

Size is measured by the money put into the unit and the business it does in a year. In India the classification of micro, small and medium enterprises is laid down under the Micro, Small and Medium Enterprises Development Act, 2006 and is applied through a composite criterion: an enterprise must stay within both the investment ceiling and the turnover ceiling of its category. If it crosses either one, it moves up to the next category. The ceilings in force are given in Table 2.1.

Table

A large industry is one whose investment and turnover exceed the medium ceilings. Large units require heavy infrastructure, a wide manpower base and a continuous inflow of capital, and they usually enjoy the cost advantages that come with producing on a large scale.

The classification is not a matter of description alone. Priority sector lending, subsidies and several government schemes are open only to registered micro, small and medium units, so the category an enterprise falls into affects the terms on which it can raise money and grow.

2.4 Commerce: Meaning And Characteristics

Goods produced in a factory are of no use to anyone while they remain in the factory. Between the producer and the consumer stand distance, delay, risk, ignorance and shortage of funds, and unless these are dealt with the goods will not reach the person who wants them. Commerce is the branch of business that exists to deal with them.

Commerce includes all those activities that are connected with the transfer of goods and services from producers to ultimate consumers. It covers the buying and selling of goods, and equally the services that make buying and selling possible — transport, banking, warehousing, insurance and advertising. This is why commerce is described by a simple equation.

Commerce = Trade + Aids to Trade

Trade is the exchange itself, the act of buying and selling. Aids to trade are the supporting services without which the exchange could not be carried out over any distance or any length of time. Neither half is complete on its own.

Definition

Commerce Commerce comprises all those activities which are concerned with the transfer of goods and services from the producer to the ultimate consumer, and includes both trade and the services which assist trade.

Characteristics Of Commerce

Economic activity — commercial activities are undertaken to earn an income. Goods produced by industry reach the consumer only because someone finds it worth his while to move, store and sell them.
Part of business activity — commerce is not separate from business but one of its two branches, and its aim is to see that the right goods reach the right persons at the right place and at the right time.
Profit motive — the expectation of profit is what induces traders and service providers to take on the trouble and risk of distribution. An activity carried on without that aim, such as free relief distribution, is not commerce.
Exchange of goods and services — commercial activity always involves a transfer between two parties. Where there is no exchange, as when a producer stores goods for his own later use, there is no commerce.
Creation of utilities — industry creates form utility, but goods must also be available where and when they are wanted, and ownership must pass to the buyer. Commerce creates place utility through transport, time utility through warehousing and possession utility through trade.
Continuity of transactions — an isolated deal does not amount to commerce. A person who sells his old scooter once has not entered commerce; regular dealing is essential.

Try Yourself

Choose one item you bought last week and list the services that were needed to bring it from its producer to the shop.

2.5 Functions And Importance Of Commerce

The basic function of commerce is to make the exchange of goods and services simpler and easier. It performs this function by removing the obstacles that stand between the producer and the consumer. These obstacles are called hindrances, and each of them is met by a particular commercial service. Six hindrances are recognised.

Hindrance of persons — the person who produces and the person who consumes are usually strangers to each other and are rarely in touch. Wholesalers and retailers bring them together, so that the producer need not search for buyers and the buyer need not search for the producer.
Hindrance of place — goods are made at one place and demanded all over the country and beyond. Transport by road, rail, sea and air carries them from the centre of production to the centre of consumption, and so removes the obstacle of distance.
Hindrance of time — production and consumption seldom coincide. Crops are harvested in one season but eaten through the year, and factory output is made in advance of demand. Warehousing bridges this gap by storing goods safely until they are wanted.
Hindrance of knowledge — a consumer cannot buy what he does not know exists. Advertising and sales promotion inform buyers about a product, its uses, its quality and its price, and so remove ignorance about what is available.
Hindrance of risk — goods in transit or in store may be lost by fire, theft or accident, and the loss would fall on the trader. Insurance transfers this risk to the insurer against payment of a premium, which allows trade to be carried on with confidence.
Hindrance of finance — a trader must pay for goods, wages and expenses long before he recovers money from his customers. Banks and financial institutions supply credit, discount bills and settle payments, so that a shortage of funds does not stop the flow of goods.

Business Example

Cold Storage And The Time Gap Apples ripen in the hill states over a few weeks of the year but are eaten across India in every month. Growers move the fruit into cold stores after harvest and release it steadily through the year. Warehousing here does not change the fruit at all; it only removes the hindrance of time.

Importance Of Commerce

Because it removes these hindrances, commerce makes goods produced in one district or one country available to consumers everywhere. It allows a producer to make on a large scale for a distant market instead of only for the buyers around him, and it allows a consumer to choose from goods he could never have reached on his own. It also creates a very large volume of employment in transport, trade, banking, insurance, warehousing and advertising.

Case Snippet

Case 2.1 — Reaching A Distant Market Vasant Foods packs pickles at a single unit and has so far sold only within its own city. It now plans to supply retailers in four states. It appoints a transporter for despatch, hires space in a warehouse near the new market, takes a policy covering goods in transit, and places advertisements in regional newspapers. Q. Name the hindrance removed by each of the four steps taken by Vasant Foods.

2.6 Branches Of Commerce

Commerce has two branches. Trade is the exchange itself and stands at the centre; aids to trade are the services that surround the exchange and make it workable. All commercial activity falls under one or the other of these two heads.

2.6.1 Trade And Its Types

Trade means the purchase and sale of goods and services for profit. It is the nucleus of commerce, because every other commercial activity exists only to support an act of buying and selling. Trade is classified by where the two parties are situated, as shown in FC 2.3.

Flowchart

FC 2.3 — Classification Of Trade Trade → Internal Trade, External Trade; Internal Trade → Wholesale Trade, Retail Trade; External Trade → Import, Export, Entrepot

Definition

Trade Trade is that branch of commerce which deals with the sale, transfer or exchange of goods and services between a buyer and a seller for a consideration, carried on with the object of earning profit.

Internal Trade

Internal trade, also called home trade or domestic trade, is the buying and selling of goods within the geographical boundaries of one country. Payment is made in the home currency and no customs formalities arise. It is of two kinds.

Wholesale trade — the wholesaler buys in large quantities from the manufacturer and sells in smaller lots to retailers. He usually deals in one line of goods, holds a large stock and buys for cash while selling on credit, which is why wholesale trade needs a substantial amount of capital.
Retail trade — the retailer buys from the wholesaler and sells in small quantities to the final consumer. He keeps a wide variety of goods rather than depth in one line, and maintains personal contact with his customers. Retail trade is the last stage of distribution.

Do Not Mix Up

Wholesale And Retail Trade The wholesaler sells to another trader for resale; the retailer sells to the consumer for use. The test is who the buyer is, not the quantity sold.

External Trade

External trade, also called foreign trade, takes place between traders belonging to different countries. The market is far wider, but payment involves foreign currency and the trader must comply with licensing, customs clearance and other regulations. It is of three kinds.

Import trade — goods are purchased from another country and brought into the home country, usually because they are not produced at home or are available abroad more cheaply.
Export trade — goods are sold to buyers outside the country of origin. Exports earn foreign exchange and allow a producer to use spare capacity that the home market cannot absorb.
Entrepot trade — goods are imported from one country and re-exported to a third country without any processing at home. It includes both an import and an export, and is undertaken where a country’s ports and shipping links make it a convenient point of transfer.

Table 2.2 sets out how internal and external trade differ.

Table

2.6.2 Aids To Trade

Aids to trade, also called auxiliaries to trade, are the services that assist trade by removing the obstacles that arise between production and consumption. They do not themselves buy or sell; they make buying and selling possible.

Transport and communication — transport moves goods from the place of production to the place of demand, and also carries raw materials and labour to the factory. Communication carries information between producers, traders and consumers, so that orders can be placed and terms settled without the parties meeting.
Banking and finance — banks supply working capital, discount bills of exchange, collect and pay cheques, issue drafts and arrange payment in foreign currency. Because a trader recovers his money long after he has spent it, this credit keeps the flow of goods unbroken.
Insurance — insurance covers losses arising from fire, theft, accident and similar causes, in return for a premium. It does not prevent the loss but shifts its burden, so a trader can take on business he could not otherwise afford to risk.
Warehousing — warehouses hold goods between production and sale, protect them from damage and pilferage, and release them as demand arises. Storage also allows a producer to manufacture steadily instead of only when orders come in.
Advertising and publicity — advertising informs consumers about a product, its uses, its quality and its price, and so creates demand at a distance from the seller. Space in the media is paid for by the advertiser, which distinguishes advertising from publicity obtained through general public relations.

Try Yourself

Visit a nearby shop and find out from whom it buys its stock. State whether that supplier is a wholesaler or a manufacturer.

2.7 Interrelationship Between Industry, Trade And Commerce

The three terms are often used loosely as though they meant the same thing. They do not. Industry produces, trade exchanges, and commerce covers trade together with the services that support it. Trade is therefore one part of commerce, while industry and commerce are the two branches of business itself.

Although distinct, the three are complementary and none can work alone. Industry cannot continue unless what it produces is sold, and it is trade that finds the buyer and brings back the money needed to buy the next lot of raw material. Trade in turn has nothing to deal in unless industry produces, and it cannot move, store or protect what it deals in unless the aids to trade are available. Commerce depends on industry for goods, and industry depends on commerce for a market. A break at any point stops the chain: an unsold stock idles a factory, and a factory that has closed leaves the trader with nothing to sell.

The tertiary group of industries shows how closely the two branches meet. Transport, banking, insurance and warehousing are counted as industries because they produce services, and as aids to trade because those services are what carry goods to the consumer.

Table

Table

Business Example

A Vehicle And Its Network Assembling a vehicle at a plant is industry. The dealer who buys the vehicles and sells them to customers is carrying on trade. The transporter who moves them from the plant, the bank that finances the dealer’s stock and the buyer’s purchase, and the insurer who covers the vehicle together complete the work of commerce.

2.8 Summary

Business activity is classified on the basis of function into two branches: industry, which produces and processes goods and services, and commerce, which stores, exchanges and distributes them.
Industry converts materials into a form fit to satisfy wants and so creates form utility. Its output is either consumer goods, meant for final use, or producer goods, meant for use in further production.
The main characteristics of industry are that it is an economic activity, it produces goods and services, it has a wide and growing scope, it is part and parcel of business, it creates utility, and it advances economic development.
Industries are classified on two bases.

On the basis of activity — primary (genetic and extractive), secondary (manufacturing and construction) and tertiary industries.
On the basis of size — micro, small, medium and large, decided in India by a composite criterion of investment and annual turnover.

Manufacturing industries are further divided into analytical, synthetical, processing, assembling and integrated industries, according to the way conversion is carried out.
Commerce covers the transfer of goods and services from producer to consumer, and is expressed as trade plus aids to trade.
The characteristics of commerce are that it is an economic activity, it forms part of business activity, it is carried on for profit, it involves exchange, it creates place, time and possession utility, and it requires continuity of transactions.
Commerce performs its function by removing six hindrances — of persons, place, time, knowledge, risk and finance — through trade, transport, warehousing, advertising, insurance and banking respectively.
Trade, the first branch of commerce, is classified as internal trade (wholesale and retail) and external trade (import, export and entrepot).
Aids to trade, the second branch, consist of transport and communication, banking and finance, insurance, warehousing, and advertising and publicity.
Industry, trade and commerce are distinct but complementary. Industry supplies the goods, trade exchanges them, and the aids to trade make the exchange possible, so that a break in any one branch halts the others.

Flowchart

FC 2.4 — The Spine Of The Chapter Business Activities → Industry, Commerce; Industry → Primary, Secondary, Tertiary; Commerce → Trade, Aids to Trade; Trade → Internal, External

2.9 Key Terms

Aids to trade The supporting services, such as transport, banking, insurance, warehousing and advertising, which make trade possible.
Analytical industries Manufacturing industries in which one basic raw material is separated into several useful products.
Assembling industries Manufacturing industries in which ready-made parts are put together to make a complete product.
Commerce All those activities concerned with the transfer of goods and services from the producer to the ultimate consumer, including trade and the services which assist trade.
Construction industries Secondary industries engaged in creating fixed structures such as roads, bridges, dams and buildings.
Consumer goods Goods produced for final use by the buyer who consumes them.
Entrepot trade Trade in which goods are imported from one country and re-exported to a third country without processing.
Export trade Trade in which goods are sold to buyers outside the country of origin.
External trade Buying and selling of goods between traders belonging to different countries; also called foreign trade.
Extractive industries Primary industries which draw out products already existing in the earth, water or air, such as mining and fishing.
Form utility The usefulness created when a material is changed in form or shape so that it can satisfy a want.
Genetic industries Primary industries engaged in breeding plants and animals for further reproduction.
Hindrances The obstacles standing between producer and consumer — of persons, place, time, knowledge, risk and finance — which commerce removes.
Import trade Trade in which goods are purchased from another country and brought into the home country.
Industry Those economic activities concerned with the raising, producing, processing or fabrication of goods and services, converting materials into a form fit to satisfy human wants.
Integrated industries Industries in which all activities relating to one product, from raw material to finished article, are carried on by the same unit.
Internal trade Buying and selling of goods within the boundaries of one country; also called home or domestic trade.
Large industry An industrial unit whose investment and turnover exceed the ceilings fixed for a medium enterprise.
Manufacturing industries Secondary industries which convert raw materials into finished goods.
Medium enterprise An enterprise whose investment and annual turnover stay within the ceilings fixed for the medium category under the composite criterion.
Micro enterprise An enterprise whose investment and annual turnover stay within the lowest ceilings fixed under the composite criterion.
Place utility The usefulness created when goods are carried from the place of production to the place where they are wanted.
Possession utility The usefulness created when ownership of goods passes from the seller to the buyer.
Primary industries Industries concerned with the extraction and production of natural resources and the rearing of living organisms.
Processing industries Manufacturing industries in which a material passes through a series of stages to become the final product.
Producer goods Goods produced for use in making other goods; also called capital goods.
Retail trade Buying of goods from wholesalers and selling them in small quantities to final consumers.
Secondary industries Industries which process materials already produced at the primary stage.
Small enterprise An enterprise whose investment and annual turnover stay within the ceilings fixed for the small category under the composite criterion.
Synthetical industries Manufacturing industries in which two or more materials are combined to make one main product.
Tertiary industries Industries which produce services supporting primary and secondary industries and assisting trade.
Time utility The usefulness created when goods are stored from the time of production until the time they are wanted.
Trade That branch of commerce which deals with the sale, transfer or exchange of goods and services between a buyer and a seller for profit.
Wholesale trade Buying of goods in large quantities from manufacturers and selling them in smaller lots to retailers.

2.10 Points To Ponder

Tertiary industries are counted as industries because they produce services, and as aids to trade because those services carry goods to the consumer. Does this double placement weaken the classification of business activity, or does it simply reflect how business actually works?
An integrated unit carries out every stage of production itself, while an assembling unit buys its parts from others. What does a firm gain and what does it give up by choosing integration?
The classification of enterprises by size decides which benefits a unit can claim. If the ceilings are set too high, larger firms crowd out the smallest; if set too low, a growing firm loses support just as it begins to expand. Where would you place the balance, and why?
Advertising removes the hindrance of knowledge, but it is paid for by the seller and presents his own view of the product. Can a service designed to sell also be relied upon to inform?
Online selling allows a manufacturer to reach the consumer directly, without a wholesaler or a retailer between them. Does this make the wholesaler unnecessary, or does it only shift the work he used to do somewhere else?
Entrepot trade adds nothing to the goods that pass through a country. Why, then, might a country find it worth encouraging?

2.11 Objective Questions

A unit buys tyres, frames, chains and seats from other producers and puts them together into bicycles. It is an example of: [1]

an analytical industry
a synthetical industry
an assembling industry
an extractive industry

Read the assertion and the reason given below and choose the correct option. [1] Assertion (A): Warehousing is treated as an aid to trade. Reason (R): Warehousing removes the hindrance of time by storing goods from the date of production until they are demanded.

Both (A) and (R) are true and (R) is the correct explanation of (A).
Both (A) and (R) are true but (R) is not the correct explanation of (A).
1. is true but (R) is false.
1. is false but (R) is true.

State whether the following statement is true or false: A trader who buys goods from Vietnam and sells them to Kenya without processing them in India is engaged in export trade. [1]
Fill in the blank: Commerce creates ______ utility by carrying goods from the place of production to the place where they are demanded. [1]
Match the items in Column A with those in Column B. [1]

Column A	Column B
a. Genetic industry	i. Quarrying of sand and stone
b. Extractive industry	ii. Insurance of goods in transit
c. Construction industry	iii. Poultry farming
d. Tertiary industry	iv. Building of a flyover

2.12 Check Your Concepts

Define commerce and state the equation by which its two branches are expressed. [2]
Distinguish between consumer goods and producer goods, giving one example of each. [3]
Why is a large amount of capital needed in wholesale trade but comparatively less in retail trade? Give reasons. [3]
Explain, with one example each, any four hindrances that commerce removes and name the service that removes each. [4]
‘Industry, trade and commerce are distinct but complementary.’ Evaluate this claim, showing how each depends on the other two. [6]

2.13 Case-Based Questions

Ravindra Alloys buys bauxite from a mine, smelts it into aluminium sheets, and sells the sheets in bulk to utensil makers across three states. The sheets travel by road to the buyers, are held in a hired godown near each market until orders arrive, and are covered by a policy against loss in transit. The firm’s investment in plant and machinery is ₹18 crore and its annual turnover is ₹60 crore.

Identify the type of industry to which the mine belongs and the type to which Ravindra Alloys belongs, giving a reason for each. [2]
Name the two aids to trade being used by the firm and state the hindrance each of them removes. [2]