SIDBI’s Initiatives for Sustainable

Development in MSMEs

Rajiv KumarDeputy General ManagerEnergy Efficiency Centre

SIDBI, New Delhi

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SIDBI – Background Constitution Set up in 1990 – SIDBI Act Authorised share capital – Rs. 1000 crore Paid-up share capital -- Rs. 450 crore Shares held by Govt. of India & 33 GoI owned/controlled Banks,

Insurance Companies and FIs

National Presence 15 Regional Offices More than 85 Branches across all the states

Mandate Promotion, financing and development of MSMEs and to co-

ordinate the functions of institutions serving the MSME sector.

Energy Efficiency - Potential India – 3rd largest energy consumer, after USA & China. MSME sector consumes almost half of the total energy

consumption by industrial sector. Many MSMEs are highly energy inefficient due to obsolete

technology/processes. Potential for energy efficiency in MSMEs by 10- 25%.Barriers Other pressing priorities (Mktg., Production, Receivables, etc.) Limited awareness / information on Energy Efficiency (EE) Limited technical & financial capacities Reluctance to avail technical services ESCO market is still underdeveloped in India

SIDBI’s Initiatives Objective – to enhance energy efficiency, reduce CO2

emissions and improve profitability of MSMEs.

Created a dedicated team of experts housed at “EnergyEfficiency Centre” for focused approach for promoting &financing clean & EE investments in MSME sector.

Entered into strategic partnership with BEE, TIFAC, WorldBank, DFID, JICA, KfW, GiZ , AFD, TERI, etc.

Introduced schemes for financing Energy Efficiency (EE) &Cleaner Production projects in MSME sector.

Providing developmental support to MSMEs including WB-GEF Project, 4E scheme, PRSF, etc.

Two-pronged Approach Financial Assistance through focused Lines of Credit

Concessional finance for sustainable development projectsin MSMEs

Objective : to enhance energy efficiency, reduce CO2emissions and improve profitability of MSMEs.

Developmental Support to MSMEs Cluster focused Awareness & Capacity Building Programmes

for MSMEs, Industry Associations, Banks and otherstakeholders.

Awareness workshops in more than 100 industrial clusters.

Technical support for energy audits, implementation, etc.

SIDBI‘s sustainable financing schemesActivities covered : Energy Efficiency – equipments, green building Renewable Energy –solar, hydro, bio mass, wind power Cleaner Production

Highlights : Financial Assistance of Rs.6000 crore to over 7500 MSMEs. Savings of 1043 Million units of electricity. Thermal energy

savings of 650,000 million kCal. Reduction of 909 kilo tons(kT) of CO2 annually.

SIDBI – EE Financing : Sectoral Distribution

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Platics & Polymers10%

Packaging2% Electrical

4%Transport Equipment

2%

Food Processing3%

Machinery & Equipment12%

Mini Iron & Steel Plant

4%

Auto Component11%Leather

1%

Metal Products19%

Textile16%

Pulp & Paper2%

Ceramics2%

General Engineering Works4% Rubber

2%

Printing4%

Others 3%

Information Dissemination : Booklets & Posters

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Awareness & Capacity Building activities

WB GEF Project – Financing EE at MSMEs

Objective: to increase demand for energy efficiency investments in micro, small andmedium enterprise clusters and to build their capacity to access commercial finance.”

Capacity Building & Awareness

•Marketing & outreach efforts, capacity building of MSMEs and IAs

•TA to energy professionals•Support to FIs•Vendor Outreach

Activities

Increased Investment in EE

•Energy Efficiency project development support

•Performance Linked Grant

Knowledge Management

•Knowledge Portal•Helpline•Success Stories / Videos•Policy Papers

Project Components & Targeted MSME clusters

Dehradun

Delhi-NCR

Mumbai-

Thane

Varanasi

Ludhiana

Tirunelveli

AnkleshwarPuneKolhap

urFarida

bad

First project wherein such large scale actual implementations of EEmeasures by MSMEs have taken place.

Pilot project in 5 MSME clusters (extended in another 5 MSME clusters)

Energy Audits completed in more than 2000 MSMEs

Implementation of EE measures in more than 600 MSME units.

Third party M&V through CII reported excellent results (10% - 25% energycost savings).

Expected Results from the project are as under:

EE Investment : INR 150 Crore Energy Cost Saving : INR 125 Crore Total Energy Saving : 22500 TOE / Yr CO2 Reduction : 1.50 Million tCO2

WB GEF Project – Financing EE at MSMEs

End to End Energy Efficiency(4E) Solutions

• To help the MSME units to adopt energyefficient practices by providing them

• technical consultancy / advisory services atresonable cost with assurance of quality.

• 4E would include the following services :• Detailed Energy Audit (DEA)• Support for implementing the energy saving

measures• Training & quantification of actual savings.

• India SME Technology Services Ltd. (ISTSL), anassociate of SIDBI is implementing the 4EInitiative.

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4E Financing SchemeParameter Norms

Purpose For implementing the Energy Efficiency measures asrecommended in the DPR

Minimum Assistance

Upto 90% of the Project cost with minimum loan amount of Rs.10 lakh and maximum loan amount not to exceed Rs.150 lakh

Interest Rate Between 8.10% - 9.90% p.a. for C1 – C8 rating

Repayment period 36 months for loans upto Rs.10 lakh and 60 months forloans beyond Rs.10 lakh

Eligibility Criteria • Applicant unit should be in operation for atleast 3 yearsand should have earned cash profit in the last 2 years ofoperation.

• The unit should have undergone the process of DetailedEnergy Audit (DEA) through a BEE certified technicalagency / consultant.

SMILE(SIDBI Make in India Soft Loan Fund for MSMEs)

To provide soft loan in the nature of quasi-equity and term loan onrelatively soft terms to MSMEs.

Term loan upto 75% of projects cost

Soft Loan - 10% (Max. Rs. 20 lakh) and 15% (max. Rs. 30 lakh) forwomen / SC/ST/PWD entrepreneurs.

Concessional rate for first 3 years (Soft loan – at present 9.35%)

On expiry of 3 years the O/s soft loan with any dues thereon shall beconverted into secured term loan and the entire loan shall carryapplicable rate of interest as per internal rating of the borrower.

JICA-SIDBI MSME Energy Saving Project –Phase III

Objective: to provide assistance for energy saving capital equipment /production processes improvements / Cleaner Production technologies/ Renewable Energy Projects / Green Buildings and Health sectorProjects.

Eligibility: Both new and existing MSME units with 2 years net profit outof previous 3 years at concessional rate (75 bps lesser than theapplication lending rate as per the credit rating).

Minimum 10% energy saving.

An exhaustive Energy Saving Equipment List (ESEL) and a list of healthsector projects are available in www.sidbi.com

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ENERGY EFFICIENCY & ESCO ESCO Energy Services Company (Registered by BEE)

ESCO is a company that offers energy efficiency services to a Hostentity.

Typical there are two types of ESCO models viz. (i) Shared Savingsand (ii) Guaranteed Savings.

• To kick-start market for EE projects implemented byESCOs through performance contracting

• To provide partial guarantees to Banks / FIs forloans extended for Energy Efficiency Projects beingimplemented by ESCOs

Project Components:

Guarantee Fund - USD 37 Mn

SIDBI

TA - USD 6 MnSIDBI & EESL

Partial Risk Sharing Facility for Energy Efficiency (PRSF)

PRSF – Guarantee Product Details

Eligible Host / sectors

• Large industries (excluding thermal power plants)

• MSMEs • Municipalities• Buildings

Eligible EE Loan

• Loan to ESCO or host entity falling under Micro & Small Category

• Min. 75% of loan towards EE investment

Eligible ESCOs

• BEE-Empanelled ESCO• JV / Consortium

allowed• Other entities are also

eligible subject to grading by rating agency

Extent of Coverage

• 75% of loan or O/s• Min Loan – Rs. 10

lakh • Max Loan – Rs. 15 cr.• Max exposure to

single ESCO – Rs. 45 cr.

Guarantee Tenure

• 5 years or loan tenure, whichever is lower

Guarantee Fee

• Slab wise & based on Grading of ESCO

TIFAC-SIDBI Revolving Fund for Technology Innovation (Srijan Scheme)

To support MSMEs for up-scaling andcommercialization of innovativetechnology based project at flexibleterms & interest rate.

Preference accorded to sustainabletechnologies / products.

Soft term loan with an interest of notmore than 5%.

Awards & Recognition• ADFIAP Award 2012 - under the category of Environmental Development for:

– CNG Taxi Financing Scheme, CNG Auto Rickshaw Financing Scheme andEnergy Efficiency Lines of Credit.

• ADFIAP Award 2013 - Under the Environmental Category for– World Bank GEF project: Financing Energy Efficiency at MSMEs Project– pCDM Project at Jodhpur Stainless Steel Re-rolling Mills Cluster

• National Energy Conservation Award, 2015 – First prize under the categoryof Financial Institutions.

• Recognition of SIDBI’s initiatives in the paper submitted by GOI “INDIAINDC TO UNFCC”

• SIDBI, the only Indian Institutional member of International DevelopmentFinance Club (IDFC) promoted by KfW . Presently, there are 23 members ofIDFC across the world.

Rajiv KumarDeputy General ManagerEnergy Efficiency Centre

SIDBI, New Delhi

E-mail :rajivkr@sidbi.in