sidbi schemes for sme's
TRANSCRIPT
8/6/2019 SIDBI Schemes for SME's
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A PRESENTATION
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Overview of Indian MSMEs Contribution to Economic Growth, employment
creation, Poverty Reduction.
Entrepreneurship & Innovation wave.
Professionals becoming MSME entrepreneurs
Rural Development, balanced Regional
Development
Outsourcing, linkages with large units/ MNCs
increasing vertical integration. Growth of service sectors
Innovative, flexible, quick to adapt.
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MSME - Contribution to Indian
EconomyNumber of Enterprises 13.4 million
Employment Generated > 32 million persons
Share in Manufacturing 39%
Share of total Exports 31%
Products > 8000
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MSME Sector in Gujarat MSMEs - Strength of Gujarat¶s economy. As per GIDC, over 3,20,000 MSMEs in Gujarat. Generation of 700,000 jobs in the last decade (1996 -
2006).
Home to about 48 recognised clusters. Major clustersare: Ceramic Industry, Morbi Dye & Dye Stuff Industries, Ahmedabad Engineering Cluster, Rajkot Pharmaceutical cluster in Ahmedabad/Baroda
Gems Jewellary, Surat Textiles, Surat & Ahmedabad Brass parts, Jamnagar
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Opportunities for MSMEs in present
scenario Explore new markets/ customers
Implement cost cutting and quality
improvement measures Improve energy efficiency
Improve long term competitiveness
Consolidation opportunities for wellperforming units by mergers/acquisitions.
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Outsourcing
Opportunity for MSMEs Large corporates (domestic and offshore) would look
for increased outsourcing options in present downturnto cut costs.
Big Opportunities to MSMEs in following areas: Components/ subassemblies for manufacturing units
IT/ IT enabled services
Product research & development/Testing facilities
Services like
Customer management, Security services,Administration (salary, travel, HR, etc) and other Backoffice operations
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Outsourcing :
Challenges for MSMEs Outsourcing involves greater integration and
association between corporate and MSME vendor.There is greater dependence of customer on vendor.
Key requirements for MSMEs to develop long term
relationships with outsourcing customers are: Operational capabilities Financial strength Adequate Physical infrastructure Corporate governance/ transparency in dealings Managerial capabilities Capability to innovate & offer alternate solution to
customers. External ratings.
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Business development :
Marketing strategy MSMEs need to focus on following points for evolving
their marketing strategy :
Who are their existing/ potential customers?
What are their current & future needs How can they satisfy these needs?
Can they offer a new product/service that customer willvalue
Can they offer a competitive product/ service or costreduction proposition
Why should the customer buy from them Identify your USPs and find synergy with customer
needs
Should look for cluster based marketing strategy
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Marketing for MSMEs : Issues Issues which will be critical for MSMEs in marketing
products and convincing customers Quality of products After sales service
Ability to service sudden large orders R&D capabilities Brand building Credibility (in terms of stability and financial
standing)
Various approaches possible Cluster approach Common facilities Consortium approach in Branding & marketing External ratings
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Importance of finance for
business development In dynamic & globalised business environment several
opportunities are there for MSMEs. However, to utilise the opportunities, MSMEs may
have to
Arrange finance at short notice. Raise finance which is not in the form of conventional
products like secured term loans and WC limits. Arrange finance for intangible investments, MSMEs may not have assets to raise further loans.
MSMEs thus need to be well abreast of variousfinancial products and their sources.
Understanding of these products would also enableMSMEs to go for business development in a moreconfident manner.
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We Empower MSMEs
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SIDBI : MissionSIDBI : Mission
SIDBI : Vision³To emerge as a single window for meeting the financialand developmental needs of the MSME sector to make itstrong, vibrant and globally competitive, to positionSIDBI Brand as the preferred and customer - centricinstitution through modern technology platform andsetting up of institutions and funds to meet the variedcredit, equity and developmental needs of the MSMEsector.´
³To empower the Micro, Small and Medium Enterprises(MSME) for economic growth, employment generationand balanced regional development of our country.´
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Indirect
AssistanceDirect
Assistance
Through
over 1000
PLIs with70,000
branches
Through
network of
SIDBI¶s 79
offices
covering 500
MSME
Clusters
SIDBI¶s Financial Assistance
We are Serving 46 Clusters inGujarat through 7 SIDBI Branches ±
One of highest in any state
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PRODUCTS & SERVICESPRODUCTS & SERVICES
REFINANCE
WORKING CAPITAL
FINANCE
RECEIVABLE
FINANCE
MICRO
CREDIT
PROMOTIONAL &
DEVELOPMENTAL
ACTIVITIES
TECHNOLOGY
UPGRADATION,
CLUSTER
DEVELOPMENT
RISK
CAPITAL
DIRECT
FINANCE
SIDBI
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SIDBI :Overview of assistance Indirect assistance ± Augmenting
resource base of PLIs to extendassistance to MSMEs
Direct assistance to MSMEs
Micro Finance
Promotional & Developmental initiatives
Funds committed to Gujarat under theabove schemes till date ± over Rs. 9,000crore
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SIDBI :Direct finance products Term loans & working Capital
Special schemes ± Energy saving, DG set etc.
Non fund products ( LCs and BGs)
Receivable finance schemes for mitigating the receivable
problem of MSMEs About 5000 MSMEs benefited
Cash flow based assistance
Companies with firm future income like hardware rentals/license fee/ membership fees/ AMC.
Assistance against carbon credits and other intangibles.
Risk Capital Assistance Mezzanine assistance not linked to security
To complement promoters equity and secured loans
Equity assistance
to companies with niche products/ scalability potential
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Receivable Finance
Scheme
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Receivable Finance Scheme
Covers bills arising out of purchase of indigenouscomponents / parts / sub- assemblies / accessories /intermediates manufactured by MSMEs and servicesector activities like Job work / Road Transport /Advertising / Software etc.
SELLERS - MSME manufacturers / Service providers.
PURCHASERS - Corporate entity - good financialposition & track record
An innovation from SIDBI in early ninties
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The Process
MSME
Supplies / Raises Bill
Purchaser
Accepts and
forwards to SIDBI
Discounted at SIDBI
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A step further [NTREES]
[NSE Trade Receivable Engine for e-discounting Services]
Purchaser Uploads the Bill / Invoice over a
secured Platform [NSE]
Authentication
Discounted by SIDBIProceeds credited through RTGS
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MSME financing
Most MSMEs funded by
Own equity limited. External equity difficult due to Limited exit options in smaller companies.
Investments turn illiquid even in performingcompanies. Lack of corporate structure/ lower corporate
governance. High cost of monitoring and enforcing contract
provisions.
High return expectation of equity providers. Reluctance to dilute ownership by promoters.
Secured loans restricted due to DER and security norms of Banks.
Lack of adequate collaterals with MSMEs.
own equity + ploughed back profits + secured loans
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Gap in MSME Finace
Gap when available promoters resources and securedloans not available to meet the growth requirements of MSMEs.
Gap could be in
Capex and working capital for different categories of MSMEs
Intangible investments R&D, marketing, IPR, brand building, training,
corporatisation expenses, etc
Inorganic growth requirements, acquisitions, etc.
Gap in technology, new economy projects.
Gap could be in different stages of growth.
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Risk Capital Not provided on the backing of
assets.
Security coverage not a factor inproviding risk capital assistance.
Equity Capital
Mezzanine/ quasi equity financial
products which have features of bothdebt and equity.
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Risk Capital : Concept
EQUITY
Preference capital
Sub-ordinate debt
Convertible debt
SECURED DEBT
RiskCapital
Low
High
Ownership
Risk
Return
Security
High
Low
Mezzanine
capital
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Eligibility :
The enterprise should be an MSME unit
Existing SIDBI customer / new (on selectivebasis).
Minimum borrower rating of SME4
In case of new customers, Overall Companyrating (under RAM) should be at least SME3.
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Quantum of assistance minimum Rs.100 lakh
maximum Rs.1000 lakhTenure :
Upto 7 years
The repayment could be structuredflexibly based on the cash-flow of theenterprise.
Moratorium upto 4 years could be
provided for principal payments. For equity investments, the exit should
be proposed within the above period.
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SIDBI Associates :SIDBI Associates :SIDBI Venture capital LtdSIDBI Venture capital Ltd
SIDBI set up SIDBI Venture Capital Co Ltd. (SVCL). Itoperates operates two funds aggregating to Rs 600crore.
Rs 100 crore National Fund for Software & IT (NFSIT)
Rs 500 crore SME Growth Fund. Proposed Rs 1000 crore India Opportunities Fund
SIDBI also Pioneered venture Capital for MSMEsthrough ³Fund of Funds´ and Direct assistance.SIDBIis core investor in 13 regional funds of MSMEs & 17 All
India funds for support to MSMEs.
SIDBI has provided Rs 46 crore to venture capital andinnovation funds for MSMEs in Gujarat.
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SME Rating Agency of India Ltd. (SMERA)
Set up along with D&B and Banks.
First dedicated rating agency in India for MSMEs.
So far, rated more than 2344 MSMEs
Rating of 19 clusters and individual facilities
SIDBI awarded prestigious international award by ADFIAPin 2007
SIDBI Associates :SIDBI Associates :SME Rating Agency of India Ltd (SMERA)SME Rating Agency of India Ltd (SMERA)
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SIDBI Associates :
India SME Technology Services Ltd. (ISTSL)
Technology matchmaking & transfer
Carbon credit / Clean Development Mechanism
Energy Audit
Bundling of Carbon Credits for sale to KfW CarbonFund
Planning energy efficiency programmes inBrass cluster of Jamnagar and Rajkot, steelrolling cluster in Ahmedabad and forging
clusters in Saurashtra. ISTSL already working with some MSMEs in
the state of Gujarat
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Micro CreditMicro Credit-- An Instrument of Financial InclusionAn Instrument of Financial Inclusion
PioneeringPioneering thethe conceptconcept of of MFIMFI--SHGSHG LinkageLinkage
DevelopmentDevelopment & & SupportSupport forfor institutioninstitution buildingbuilding of of MFIsMFIs..AssociatedAssociated withwith overover 115115 MFIMFI partnerspartners
IntroducedIntroduced thethe conceptconcept of of ratingrating of of MFIsMFIs
BenefitingBenefiting moremore thanthan 55 mnmn personspersons
ExtendExtend Grants/TransformationGrants/Transformation LoansLoans
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DEVELOPMENTAL INITIATIVESDEVELOPMENTAL INITIATIVES
EnterpriseEnterprise PromotionPromotion RuralRural IndustriesIndustries ProgrammeProgramme [RIP][RIP]
ImplementedImplemented inin moremore thanthan 100100 districtsdistricts inin 2424statesstates
Cumulatively,Cumulatively, almostalmost 3030,,600600 unitsunits promotedpromoted;;CapitalCapital formationformation of of overover RsRs.. 985985 millionmillion andandEmploymentEmployment generationgeneration of of moremore thanthan oneone lakhlakhpersonspersons..
EntrepreneurshipEntrepreneurship DevelopmentDevelopment ProgrammeProgramme (EDP)(EDP)
OverOver 26802680 EDPsEDPs / / OverOver 6666,,000000 participantsparticipantstrainedtrained.. SmallSmall IndustriesIndustries ManagementManagement ProgrammeProgramme (SIMAP)(SIMAP)
2121 SIMAPsSIMAPs supportedsupported.. 70007000 trainedtrained..
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DEVELOPMENTAL INITIATIVESDEVELOPMENTAL INITIATIVES
Enterprise Strengthening
Skill-cum-Technology Upgradation Programme (STUP)
STUPs supported ± 1429.
Corpus support to 14 Institutions
(Including 3 IITS).
Cluster Development Programme (CDP)
Intervened in more than 55 MSME clusters
Marketing, technology, permanent exhibition centres,CETPs, common facility centres, etc.
North-East Initiative Micro enterprise loans, MFI activities, Project profiles
and RIPs
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Development initiatives in Gujarat Over 156 EDPs sanctioned for the state of Gujarat
targetting over 7800 potential entrepreneurs.
Rural Industries Programme sanctioned in thedistricts of Kutch, Surendranagar, Kheda, Anand
Integrated EDP for Ceramic Products at SurendraNagar
Over Rs.2.7 billion committed so far through MFIsbased out of Gujarat state
Rs.50 million committed to National InnovationFoundation, Ahmedabad for promoting grass rootlevel innovations
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Cluster initiatives of SIDBI
Assistance for common testing facility atJamnagar to benefit 2000 Micro brass units.
Assistance to ceramic units for switching togas fuel in Morbi.
Assistance to diamond units in Gujarat understructured arrangement.
Assistance for upgradation of industrial estates.
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Cluster initiatives of SIDBI
SIDBI¶s interventions in following
clusters in Gujarat :-
Rajkot (Engg.)
Ahmedabad (Dyes & Chemicals)
Morbi ( Ceramics )
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