JANUARY 2011
CO NNECT Initiated by Small & Medium Business Development Chamber of India
Empowering SMEs For Better Growth Inaugural Issue Includes
A C T I V I T Y R E P O RT 2 0 1 0
SMALL & MEDIUM BUSINESS DEVELOPMENT CHAMBER OF INDIA (SME Chamber of India)
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Starting from Miles Ahead... Dear Entrepreneur,
Panel of Advisors Mr. Chandrakant Salunkhe Mr. A. Rameshkumar Prof. Sanjay Chordiya Mr. Sai S. Madhavan
It gives me immense pleasure in communicating with you through this magazine “SME CONNECT” which is dedicated for the development of Micro, Small and Medium Enterprises.
Mr. Girish Bhagat Mr. Gurdeep Singh Mr. V. K. Venkatachalam Publicity and Marketing Mr. Hemant Salunkhe (Director) Bricks Marketing & Promotion Pvt. Ltd. Layout & Graphics Mr. Gandhi Gajelli Printed & Published by
Small & Medium Business Development Chamber of India (SME Chamber of India) and its associate have been rendering support services to the MSME Sector for more than 15 years. So far these services as well as opportunities to participate in our activities were limited only to our members. As India is marching ahead to become a major player in the world economy, we thought it better to reach out to the entire MSME Sector which is the back bone and driver of the economy.
Mr. S. Maheshkumar
Through this inaugural edition we bring to this vibrant sector a wealth of useful information related to entrepreneurship, finance, marketing, manufacturing, exports, imports, technology and other matters concerning business developments. The Chamber and its associate offer a variety of free and cost effective services to suit the individual requirement of an entrepreneur. SME CONNECT Includes Activity Report of SME CHAMBER OF INDIA for the year 2010 and some important activities of the year 2008- 09.
Printed at HINDUSTAN PACKAGING 1, Ground Floor, Kembros Ind. Estate, Sonapur Lane, Off L.B.S Marg, Bhandup (W), Mumbai - 400 078. Maharashtra, India. © SMALL & MEDIUM BUSINESS DEVELOPMENT CHAMBER OF INDIA (SME CHAMBER OF INDIA). The above concepts, activities and events have been designed by us and are exclusively the property of SMALL & MEDIUM BUSINESS DEVELOPMENT CHAMBER OF INDIA (SME CHAMBER OF INDIA). No part of the titles and contents or images should be used, reproduced, stored in a retrieval system or transmitted, in any form or by any means or discussed with any third party without prior written consent of SME CHAMBER OF INDIA.
Inaugural Issue, January 2011
It is my earnest desire that every entrepreneur takes advantage of this magazine in order to enhance and update knowledge as well as to improve skill sets required to compete effectively in domestic, regional and international markets. I request you to become a part of our initiatives to realize the dream of our former President Dr. A. P. J. Abdul Kalam, to make India one of the economic super powers by 2020.
Chandrakant Salunkhe Founder President Small & Medium Business Development Chamber of India 01
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SMALL & MEDIUM BUSINESS DEVELOPMENT CHAMBER OF INDIA Empowering SMEs for Global Competitiveness OBJECTIVES Identify emerging business opportunities
Empowerment for Competitiveness
Entrepreneurship Development
Imparting knowledge and Education
Connectivity with Global Market
Interface with the policy makers
ACTIVITIES Ü Ü Ü Ü Ü Ü Ü Ü Ü
Export & Trade Promotion Bank Finance, PE/VC and Investments Technology Upgradation Joint ventures and technology transfers Contract manufacturing tie-ups International collaborations and alliance Marketing, Branding and Promotion Connectivity with potential business partners Survey and Research
OUR INITIATIVES
Ü Ü Ü Ü Ü Ü Ü Ü
Mergers and Acquisitions Set up new Enterprises in India and abroad Conference, Seminars, Workshops and training programs Exhibition, Trade Fairs, Display Centres Delegation and Trade Missions Redressal of issues and problems with concerned authorities Rehabilitation / Revival of Sick Units Recognition and Appreciation Awards
BI-LATERAL TRADE PROMOTION DIVISIONS
Ü Europe - India SME Business Council (EISBC)
Ü India – ASEAN SME Council
Ü SME Export Promotion Council
Ü India – China SME Council
Ü SME Business Management Institute
Ü India – GCC SME Council
Ü Indian Young Entrepreneurs Forum
Ü India – Korea SME Council
Ü Indian SME Knowledge Forum
Ü India – USA SME Council
Ü Industrial and SME Research Centre of India (ISRCI)
Ü India – Canada SME Council
Ü SME Technology Development Council
Ü India – UK SME Council
Ü SME Connect - Magazine and Portal
Ü India – Turkey SME Council
Ü SME Business Club
Ü India – Zambia SME Council
Ü SME Grievance Forum
Ü India – Malaysia SME Council
FOUNDER & PRESIDENT CHANDRAKANT SALUNKHE Tel: +91 - 22 - 6150 9800 / 6667 4444 | Fax: +91 - 22 - 2825 0414 / 2927 1750 smechamberofindia@vsnl.net | smechamber@vsnl.net | smechamberofindia@gmail.com | www.smechamberofindia.com
Registered & Head Office 3, Upper Ground Floor, Samruddhi Venture Park, Marol MIDC, Industrial Estate, Andheri (E), Mumbai:- 400 093. Regional Offices: Delhi, Bangalore, Ahmedabad, Pune, Chandigarh, Hyderabad, Chennai and Indore Representative Office: USA, UK, France, Turkey, China, Malaysia, South Korea, South Africa, Dubai, Singapore, Hong Kong and Mauritius The Chamber is a Private Organisation and Registered Under Section 25 of The Indian Companies Act, 1956.
ADVISORY BOARD OF SME CHAMBER OF INDIA (2011 - 2014)
MR. CHANDRAKANT SALUNKHE Founder and President Small & Medium Business Development Chamber of India (SME Chamber of India)
MEMBERS
Mr. A. Rameshkumar MD & CEO, Asia Pragati Capfin Pvt. Ltd. Chairman, Northern Region
Mr. Sanjay B. Chordiya Founder President & Chairman, Suryadatta Group of Institutes Chairman, Pune Region
Mr. Sai Madhavan Director, Nishtha Technologies Pvt. Ltd. Chairman, Sourthern Region
Mr. Prashant Nagre Chief Operating Officer Fermenta Biotech Ltd.
Mr. Girish Bhagat Director India Nivesh Ltd
Mr. Matej Merljak Chairman, Europe - India SME Business Council (EISBC)
Mr. Ravindra Kumar Senior Banker and Regional Adviser Standard Bank PLC
Ms. Sangeeta Modi Founder & Managing Partner Access Asset Managers
Ms. Aslesha A Gowariker Partner Desai & Diwanji
Mr. V. P. Singh Partner Mavenvest Capital Partners LLP
Mr. H. P. Shah CEO Value Plus - The Family Office
Mr. Ashok Sangolli Project Consultant
Mr. Ajit Shah Executive Consultant K-Connections
Mr. S. Hemant Kumar Director Geoptech Solutions Pvt. Ltd.
Mr. Pankaj Bhandula Senior Vice President Lavasa Corporation Ltd.
Mr. V. K. Venkatachalam Advisor SME Chamber of India
Mr. S. Maheshkumar General Secretary SME Chamber of India
Ms. Saakshi Kulkarni Director SME Chamber of India
Ms. Neera Inamdar Deputy Secretary General SME Chamber of India
Dignitaries Blessed Our Activities
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Inaugural Issue, January 2011
Advisor to the Prime Minister, Public Information, Infrastructure and Innovation, Govt. of India addressing at SME IT SUMMIT
“SME Stock Exchange – New Opportunities For Growth” Mr. C. B. Bhave Chairman, SEBI
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“How to Identify Joint Venture and International Alliance Partners?” and “Technological International Alliances Challenges &Opportunities”
Single Window Clearance for MSMEs Mr. Rajendra Darda Hon’ble Minister for Industry, Maharashtra
Mr. Jagat Shah Founder and Mentor Clusterpulse
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Exclusive Interview with Dr. Rashid Al Leem Director General of Sharjah Department of Seaports and Customs and Hamriyah Free Zone Authority
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ADDRESS BY Prof. Suresh Tendulkar Director, Central Board, RBI and Former Chairman, Economic Advisory Council to Prime Minister
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62 ‘Policy Package for Stepping up Credit to SMEs'
Address by
Mr. Montek Singh Ahluwalia Dy . Chairman, Planning Commission Govt. of India
Dr. C. Rangarajan Chairman, Economic Advisory Council to the Prime Minister
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IN - CONTENT
Dr. Sam Pitroda
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SME CHAMBER OF INDIA ACTIVITIES
SME FINANCE & INVESTMENT SUMMIT 21st December 2010 | Hotel InterContinental The Lalit, Mumbai
Mr. M.D. Mallya – Chairman and MD, Bank of Baroda is inaugurating the SME FINANCE & INVESTMENT SUMMIT organised on 21st December 2010 at Mumbai. Other Dignitaries from (L to R) Mr. K. V. Srinivasan – CEO, Reliance Commercial Finance, Mr. A. Rameshkumar – MD & CEO, Asia Pragati Capfin Private Limited & Chairman, Northern Region, New Delhi, SME Chamber of India, Mr. A. K. Pandey – General manager, Reserve Bank of India, RPCD, Mr. Chandrakant Salunkhe – President, Small & Medium Business Development Chamber of India (SME Chamber of India), Mr. N. S. Srinath – Executive Director, Bank of Baroda, Mr. D. R. Dogra – MD & CEO, Credit Analysis & Research (CARE) Limited and Mr. Jay Gupta – MD, The Loot (India) Pvt. Ltd.
ADDRESS BY CHIEF GUEST Indian SMES are quite capable of contributing substantially to achieve double digit economy growth from the present 8 to 9 % and will emerge globally competitive, observed the Chief Guest, Shri Mallya.
Mr. M. D. Mallya Chairman and MD, Bank of Baroda
We are aware that SMEs face many challenges and expect a lot from the banking sector. The banking sector is also providing information support to its customers to offer better service. We are also mapping our strength and weakness and resort to research and training the staff. The SMEs should acquire the ability to deliver the right products and services to its customers and making them available at affordable prices. They should build a capital from their own equity contribution, subsidies and financial institutions. The banks are fully aware of the needs of the borrowers and trying to effectively deploy the required funds. Apart from finance, the entrepreneurs should also concentrate on areas such as marketing, technology upgradation, and quality. This will enable them to create vibrant units with properly utilised resources. The banks are proactive in lending a helping hand to the viable units and cater to the needs in their difficult periods.
In order to obtain sufficient finance from the banking sector, SMEs should prepare themselves to meet the rating requirements expected of them by the Banks, said Mr. Mallya. For this purpose every SME Unit should be able to meet the loan compliance requirements so that it will become very easy for the banks to sanction the loan within the shortest period of time. Not only Bank of Baroda but almost all public sector banks are looking for SMEs as their partner to support and provide them all required information and financial support wherever genuinely required provided the SMEs comply with the requisite terms and conditions of the banks. It is also very necessary to fulfil all the clearance required from statutory and government agencies so that no difficulty is faced in this regard.
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WELCOME & INTRODUCTORY ADDRESS Mr. Salunkhe, President, SME Chamber of India in his introductory speech emphasised and reiterated the role played by the SME Sector towards Nation development. They face numerous problems mainly regarding access to finance from Banks, FIS, and PE/VC Funds to raise capital and for their working capital requirements. They are also not well aware of the various formalities to be complied with for obtaining funds. In order to create awareness and to educate the SMEs on the above, this Summit has been organised, said Mr. Salunkhe. Though SMEs located in rural areas possess good skill and knowledge and are capable of producing quality products, they do not get the required education, attention, support and assistance for getting timely finance, marketing, exports, technological upgradation, innovation, expansion and diversification. Therefore, it is inevitable that they should be given full attention and support for their growth from all concerned. He suggested the need for deputation of branch level fully trained bank executives to take care of their requirements and solve
their financial problems. They are also not aware about various policies of the Government and other regulatory authorities, banks and financial institutions. Hence, it is imperative that all concerned should initiate appropriate action to see that all SMEs especially located in rural areas are educated properly to avail of various facilities available for their business needs and growth.
restructuring. Mr. Salunkhe requested and emphasized the need for due consideration in this regard. He also mentioned the need for granting loans without insisting for collateral to SMEs on the guidelines of Government of India and RBI.
He mentioned that the world is looking at India and our SMEs are very capable to meet the global standards and therefore let us empower the SMEs in all respects with the support of Banks, FIs, Government Agencies and other regulating agencies. Another important aspect put forward for the consideration of the banks and other concerned authorities is that of CIBIL interference on petty issues while approaching the banks for loans. Untold delays and miseries being faced by SMEs need to be addressed on top priority. Another area where serious attention and immediate action is required is that on NPA
Mr. Chandrakant Salunkhe President, SME Chamber of India
KEYNOTE ADDRESS SMEs of South Asean countries are very process oriented. Indian SMEs are creative and innovative, but they are not systematic, observed Mr. Srinivasan at the inaugural session of the Summit. The SMEs should focus on process oriented approach if they want to succeed. They should possess sound knowledge in order to scale up the activities and integrate all the systems. Another important aspect is that SMEs should be able to meet the compliance requirements of lenders in all respects at the time of applying for loan besides tax compliance and record keeping.
Mr. K. V. Srinivasan CEO, Reliance Commercial Finance
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Planning succession is very important to get
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the finance support. Since most of the SMEs are individual or family owned, one should be able to plan its successor after a gap of 20 years or so, so that the investor will be able to evaluate the future growth and accordingly support it. It is very important how one presents the case in a systematic and acceptable manner with all required materials and documents. Since the fund requirements vary significantly there is no template approach by the finance companies and each case is considered for a tailor made solution. The SMEs should be flexible in their approach to attract investors.
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ADDRESS BY DIGNITARIES c r e d i t g u a ra n t e e s c h e m e, c l u s t e r development programme, entrepreneurial and management development programme. The poor access to risk capital has been the most severe constraint for the sector. Due to its high risk perception, historically high default rates, unstructured information flow and low availability of collateral, banks and financial institutions have found it difficult to lend to MSMEs. The contribution of MSMEs to India's GDP is expected to increase to 30% by 2019-20 from its present level of 8% and this would not be possible without addressing the funding constraint.
Mr. D. R. Dogra MD & CEO, Credit Analysis & Research (CARE) Limited Recognising the importance of the MSME Sector to the Indian economy, the Government has taken various policy decisions to support its growth. The Ministry of MSME has initiated various schemes such as credit linked capital subsidy scheme,
Mr. Jay Gupta MD, The Loot (India) Pvt. Ltd
and can help lenders, borrowers, regulators and policy makers to realign their current practices in line with the new Basel -III norms making it a win-win situation. Besides bank loan ratings, CARE ratings also provide other rating products like the SME Ratings and NSIC – CARE – SSI Rating targeted specifically at the MSME Sector. Internationally, studies have found that MSMEs exhibit slightly different credit characteristics relative to large corporate entities and hence the approach towards credit evaluation of this segment has to be modified from the traditional credit evaluation purpose.
The growth of the MSME Sector can get hampered if Bank becomes more risk averse due to regulatory norms. The credit rating agencies are doing good job in bridging information gap that existed between lenders and the MSME borrowers. However, in light of the new norms, ratings targeted towards MSME Sector can have a much bigger role in Indian financial system
With this the enterprises which get a lower credit rating on the bank loan rating scale can get a higher rating on the SME Rating scale due to relative assessment feature.
Mr. Jay Gupta highlighted the various problems being faced by SMEs in the retail sector with the banks. The banks charge exorbitant rates to this sector when compared to their corporate counterparts. The procedures are not well understood and the interest rates work out to about 18-20%. He also elaborated numerous problems faced by the Retailers about other statutory requirements and taxation, octroi etc., which needs immediate attention of the concerned authorities.
There is lot of hurdles even for raising funds through IPO. Banks should consider a soft approach towards MSMEs by understanding their genuine problems and guide them in obtaining the required funds at affordable interest rates quickly.
As regards SME finance is concerned, collateral poses the greatest challenge as they go for expansion. Many of the retailers operate on rented premises which hamper their ability to provide additional security.
Credit rating would continue to increase its presence in the MSME domain and this would certainly augur well for the financing needs of the sector, concluded Mr. Dogra.
He suggested to the banks that the sanction of loans should be on time bound basis for exporters otherwise they may lose out to their competitors. Due to procedural delays at the bank level disbursement of loan take considerable time. He strongly recommended the avoidance of unwanted multiple taxes, multiple returns and other statutory requirements which is not only time consuming but also confusing.
Delegates at the Summit
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Mr. M.D. Mallya – CMD, Bank of Baroda
Mr. K. V. Srinivasan – CEO, Reliance Commercial Finance
THEME PRESENTATION Mr. Rameshkumar explained the importance of this Annual Summit. Although there have been growth, competitiveness and new opportunities, there is something which is not disappearing with regard to SME problems. These needs to be continuously highlighted and better solutions are to be found. Are SMEs getting the proportionate share?, definitely no, observed Mr. Rameshkumar. Statistics reveals that they are not getting half of their share in comparison to their contribution towards value addition to the economy. It means there is some thing is lacking and this bottleneck is to be removed for the real growth of SME Sector. SME's share of financial resources is really disproportionately less compare to their significance and lending provided to corporate and other big companies. SMEs financial problems arise both from demand side and the supply side. The lenders constantly insist on disclosure on the financial status, governance practices, better business planning etc. and these are to be addressed in the right earnest. Debt finance from the bankers and risk finance from the PE and VC should be available to them for their growth without much difficulty and they should be educated properly on this. There is inconsistency in accessing the credit Mr. A. Rameshkumar information system and credit reporting of SMEs by the lenders. This is to be MD & CEO, Asia Pragati Capfin Pvt. Ltd. and Chairman, Northern Region, New Delhi, made easy to enable them to get the finances. Standardised credit scoring system for SMEs is essential to understand and create awareness about their SME Chamber of India eligibility for credit worthiness. To be competitive in the globalised world, SMEs need to be more and more competitive. The regulations and polices need more transparency and flexibility so that SMEs would be able to get finance easily from the banks. This is to be addressed properly by the CEOs of the Banks, Regulators and concerned authorities.
OTHER EMINENT DIGNITARIES
Mr. A. K. Pandey
Mr. N. S. Srinath
General Manager, Reserve Bank of India, RPCD,
Executive Director, Bank of Baroda
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SME CHAMBER OF INDIA ACTIVITIES
Mr. Chandrakant Salunkhe – President, SME Chamber of India felicitating with flowers for supporting the Summit
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SME CHAMBER OF INDIA ACTIVITIES
ADDRESS BY SPEAKERS Mr. Lakshman Gugulothu
Mr. Sachin Pillai
OSD, Bombay Stock Exchange
Group Business Head, Reliance Commercial Finance
“SME Stock Exchange – New Growth Opportunity”
“The Role of Reliance Commercial Finance for SME growth”
Mr. Gugulothu deliberated various aspects of the proposed SME Stock Exchange. The key players involved are Venture Capital Funds, Banks, Qualified Sponsors, Registrars, Merchant Bankers, Market Makers, Advisors and SME Companies. The purpose of promoting the exchange is to have a Target Clients, Attracting Investors, Target Locations, Attracting Promising SMEs, Marketing Activities and Marketing Channels. The Exchange will also serve for setting up efficient, affordable and easy to use platform to create visibility for these companies, Ensure liquidity in this segment and Dedicated Index SEBI has issued a final circular on May 18, 2010 for setting up a stock exchange / a trading platform by a recognized Stock Exchange having nationwide trading terminals for SME. The necessary amendments have been made in the various SEBI's Regulations. Model equity listing agreement has been notified. BSE is eligible for setting up SME exchange and is in the process of finalizing the various documents/ procedure for launch of SME exchange. The target locations of the exchange are Mumbai: Focus on Ancillary Companies, Surat: Focus on Diamond Exporting Companies, Cochin: Export and Import Companies, Delhi : Marketing Companies, Bengaluru & Hyderabad: IT Companies, Pune: IT and Auto Ancillary Companies, SEEPZ: EXIM Companies, Kolkata : Various small Corporates, Ahmedabad :SME Companies. The Exchange will offer service such as, Special Cell for interacting with the members –Technical and Non-Technical queries, Accepting suggestions/feedbac k and implementing the same, Time-to-time mock trading, Coordination between various departments, Advice to the companies on listing rules and regulations, Assisting the companies in preparing their Balance Sheet and filing it on proper time, Assisting the companies in filling all the listing requirements, Assisting the companies in offering process whether IPO or Private placement.
While speaking about the Role of Reliance Commercial, Mr. Pillai elaborated the various aspects through a presentation. Reliance Commercial finance is the lending arm of Reliance Capital. It concentrates on Asset based financing, predominantly with manufacturer tie-ups that is for Printing Industry, Medical Equipment, Educational Institutions, Loans Against Property, Commercial Vehicle Finance, Loan Against Securities, Inventory Funding, Lease Rental Discounting, Operating Lease Solutions, Financing primarily revenue generating assets and existing entities going for expansion in the same line of business. Cash flow based evaluation approach, flexible Secondary Collateral Options – Equipment, Land & Building, Shares, Mutual Fund Units, Insurance Policy, Bank Guarantee etc. are given due consideration. The company have built up expertise in TL funding, identified a clear gap to cater to the manufacturing industry and Genesis - Supply Chain Finance. Supply chain and non-fund facilities are aimed at catering to the working capital demands of SMEs, Working Capital Gap Funding, Bill Discounting, Factoring, Debt Syndication, Escrow, Letter of Credit, Bank Guarantees. Mr. Pillai explained about various challenges involved while lending to SMEs. Due to their poor profitability and lack of access to formal capital markets and institutions there is a heavy dependence on alternative financing channels by SMEs. Relatively opaque financial model due to higher reliance on alternate funds and off - balance sheet transactions enhances risk perception from a lender's perspective. No access to summary proceedings or debt recovery tribunal/SARFESI in the event of exposure going bad leads to higher risk provisioning & impacting the pricing. No effective industry wide platform for data sharing on companies and legal and regulatory constraints on assignment/refinancing of such loans are available. SMEs can interact with our dedicated relationship team (SMs and channels) and utilise the support of our call centre and website.
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Ms. Sangeeta Modi
Mr. Parag Patki
Founder Member, Access Asset Managers
CEO, SME Rating Agency of India Ltd. (SMERA)
“Introduction to Venture Capital and Private Equity Funds”
“Importance of Credit Rating for SMEs”
In her presentation and speech she explained in detail about introduction to Venture Capital and Private Equity Funds.
Mr. Parag Pakti spoke about the importance of Credit Rating for SMEs and dealt with many important aspects on the topic through speech and presentation. He elaborated the various reasons for low financial lending to SMEs. They are, absence of reliable credit information, lack of sufficient market credibility, poor historical performance of loan portfolios (High Non Performing Loans (NPLs) / bad debts in the MSME segment), High Risk perception, hence insistence on collateral-based lending, Weak credit appraisal and risk management/ monitoring tools. This will result in low level lending to SMEs and higher cost resulting in higher interest rates charged by banks.
The major PE funds in India are Canbank, Ventureast, GVFL, Acumen, Seed Fund, Accel, BTS, Birla, Avigo, Tano, Zephyr Peacock, SIDBI Venture, Milestone-Religare, Lighthouse, Motilal Oswal, Mayfield, Gaja, Banyan Tree, Access, Reliance, Tata Capital, Kotak Venture, IL&FS Ventures, India Value Fund, Barings, New Vernon, Sequoia, Blue River, UTI Ventures, Fidelity, ICICI Venture, Standard Chartered, JP Morgan, HSBC PE, New Silk Route, Greater Pacific Capital, Citibank, Chrys Cap, Carlyle Pvt Equity, CLSA Private Equity, Morgan Stanley, Carlyle Buyout, General Atlantic, Blackstone, Warburg Pincus, Actis, IDFC, 3i Capital, Olympus, Temasek, Capital International, TPG, Bain, KKR, Advent, Apollo and Apax.
He also explained with facts and figures about decreased financial lending to SMEs. Commercial bank credit to SMEs, as a percentage of net bank credit, has declined sharply since the late 1990s and access to adequate, timely financing on competitive terms has been a major deterrent to growth and competitiveness of SME.
She explained in detail about opposite pyramids effect of Demand for PE Capital and supply of capital.
About Indian experience to SME banking, he said that SMEs are vulnerable, Information about SMEs is scarce, SMEs are geographically dispersed and SMEs are transaction intensive.
Regarding mapping the Indian PE market and exit track record, she said that overall, the industry has seen a limited number of exits across categories. Strategic sales and secondaries are consistently achievable across economic cycles.
Hence the need for credit rating agency for SMEs arises. Rating process are customized to suit MSMEs in building expertise, creating databases & research studies in the MSME / lending sector, providing self marketing avenue for MSMEs. Trusted third party opinion on the units' capabilities and credit worthiness enable access to quicker and cheaper credit.
The large number of 'sales via public markets' in 2009 represent exits from listed investments by funds. Given market recovery, a large number of PE Investments done over the past 4 years focus on IPOs for exit. There are significant challenges on exits for many of these transactions, she said.
SMERA is the only Rating Agency dedicated for Micro, Small and Medium Sector with MOUs with 36 banks covering a large section of Indian banking sector, with 13 Banks extending interest rate benefits to well rated SMERA units. The company has completed 5 years of operation & more than 9000 Ratings. It has been empaneled under the Central Government Performance and Credit Rating Scheme (NSIC) - 75% subsidy for Micro/Small Units, technical assistance under the World Bank/DFID led multi-lateral SME Financing & Development Program.
As regards the investor's profile, there are Typically 10 to 20 investors like offshore investors, institutional and HNI. Institutional Investors will comprise of Endowments, Pension Funds, Insurance Companies and Developmental Finance Institutions. HNIs are largely NRIs and NRI families. Domestic Investors are largely Banks and Insurance Companies
If has offices at 12 locations and Expanded to over 120 associates having SME focus across functions. SMERA products and services include Micro and Small Scale unit Ratings under NSIC, SME Ratings (non-SSI), Green Field/Brown Field Grading, Micro Finance Institutions Rating, Maritime Institute Rating and Green Rating. It is independent, comprehensive and transparent. Delegates at the Summit Inaugural Issue, January 2011
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Mr. S. R. Rao
Mr. Saji Cherian
President, Global Procurement Consultants Ltd. (GPCL)
Head, Corporate Services and Market Development, MCX Stock Exchange
“Supporting International Competitiveness of SMEs and Procurement Governance”
“Regulations & Challenges – SME Stock Exchange.” MCX promoted India's No. 1 commodity exchange, FTIL – a leading technology company in India and MCX-SX which is the largest Currency Futures Exchange in India (49.09% Market Share – November 2010). Presently Trading pairs on MCX-SX CDS Platform: USD-INR, EUR-INR, GBP-INR, JPY-INR . Average Daily Turnover for the month of November 2010 is Rs.15,821 crores . MCX-SX will launch Interest Rate Futures, Cash Equities, F&O, Debt Products and SME segments on its platform, subject to regulatory approval.
Mr. S.R. Rao, dealt with the topic on “Supporting International Competitiveness of SMEs and Procurement Governance” through his speech and presentation. He said that Globalization of the world economy has increasingly drawn the Small and Medium Enterprises (SMEs) into global value chains. Globalization facilitates access to global markets which is now an important part of business strategy for many outwardlooking SMEs. Access to global markets for SMEs can offer a host of business opportunities such as access to larger and new markets help prospective high growth firms realize their potential, possibilities to exploit economies of scale and technological advantages, upgrading of technological capability, lowering and sharing of cost including R&D costs. Globalisation can also pose challenges and threats to SMEs during their exposure to international competition.
Quick facts of MCX Stock Exchange are - 700+ members (incl. 28 banks),500 + geographical spread across cities and towns, 400 + education programmes across India, Shareholding of public and private Sector banks & Financial Institutions - 84 % and IL&FS Financial Services 5%. He also emphasised the need for good governance in SME Sector. The governance issues are, Ownership, Lack of time, Reluctance to give up ownership control, succession planning and rules for conflicts of interest, Lack of balanced and diverse Board and Need for increased usage of Information Technology. However, it is very essential to adopt good governance by SMEs for crating a good image to the investors and while entering into global markets. He suggested various steps to be considered while developing Corporate Governance such as identify value of business, draw up a code of ethics, and communicate the code and corporate governance as per clause 49. This includes quality and innovation of services, reliability and efficiency, integrity and transparency and fairness, clearly demarcate 'spirit' of business, Provide guidance to staff, Make a public statement and Communicate throughout the organization.
SME play vital role for Economic Development, Balanced Regional Development, Better Resource utilization, Generation of Employment, Entrepreneurship Development, Industrial Growth, Contribution to Industrial Output, Supply of intermediates to Large Enterprises, Exports and ability to adapt to changing environment. In OECD countries, SMEs account for over 95% of firms and 6070% of employment. SMEs have propelled the growth of leading Asian economies. SMEs in Asian economies account for around 4060% of capital investment, 60% of employment and 50% and 35% of output and exports respectively. Mr. Rao touched upon the various challenges faced by SMEs Access to adequate financing: value chain financing, access to technology, managerial capabilities, productivity, regulatory issues, brand value and good governance. He has suggested various measures to get over and adopt the required innovative methods for sustained growth.
Employees must be aware of organizational commitments and ethical behaviour expected from Board of Directors, Audit Committee, Subsidiary Companies, Disclosures, CEO/CFO Certification and Report on Corporate Governance.
SMEs are extended export marketing finance to implement strategic export marketing plans aimed at entry into new markets and term loans for supply side upgradation, generation of significant exports to new country markets. These facilities offer potential for many of these companies to become large companies with high export orientation
Benefits of SME Stock Exchange to SMEs include raising funds, improves visibility, platform for trading, exit option for investors, Participation of Venture Capitalist / PE funds / Financial Institutions, and ensures better Corporate Governance and transparency. He also elaborated Indian International scenario about SME Stock Exchange. SME Stock Exchanges encourages potential unlisted companies to tap funding opportunities through the capital market, interact with SMEs with focus on all aspects involved in getting recognised and listed, conduct practical training and education programmes on various products traded on the Exchange, spread the message of Environmental, Social & Corporate Governance amongst SMEs, educate compliance norms with deadlines and recent regulatory changes.
About financial management he said that weak financial management practices pose serious fiduciary risks and hence there is need for well structured Financial Management, Disbursement Arrangements, disclosure of information and good governance.
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Inaugural Issue, January 2011
Mr. Bhairav Kothari
Advisor, Business Development, and Assets Reconstruction, International Asset Reconstruction Co. Pvt. Ltd.
Founder & CFO Partner, Super CFO Services Pvt. Ltd.
“Role of CFO for better Financial Management ” and “Importance of Business Ethics and Good Governance for SMEs”
“Restructuring of Stressed Accounts” The reasons for industrial sickness are - outdated technology, weak and fragile sales network, late collection of trade receivables, shortage of Working Capital, power shortage, deficient management expertise, labour problem, lack of risk management expertise and absence of its tools etc. Various stops for the rehabilitation of NPA are – Rescheduling, Re-phasement and Restructuring of account, Under BIFR scheme, Under CDR scheme, Merger and Acquisition (M&A) with healthy unit, Nationalization of the unit or settlement of account (OTS), securitization of loan (Sale Of Assets to ARC's), filing of suit in account ( LOK ADALATS/ DRT's AND DART's) and Write off the accounts. The general guidelines on rehabilitation of NPA are -Unit should be viable at the end of the rehabilitation period, Scheme should be in compliance with the guidelines of RBI, State Govt., Central Govt., in respect of relief, concessions, sacrifices, promoter's contribution, IRR, DSCR, DER etc. All the participating institutions should agree to the scheme in toto and potentially viable units may be assisted by restructuring or sanctioning additional finance after satisfying about the viability of the unit. For debt restructuring mechanism for SMEs, RBI has issued guidelines on 8th Sept. 2005. SSIs with Investment in Plant and Machinery up to Rs.1Cr. (except. in certain industries up to Rs. 5 Crs) and Medium Enterprises- Investment up to Rs.10 Crs are eligible for restructuring. For all non corporate SMEs- Any level of dues and for all corporate SMEs Funded and Non Funded Outstanding upto Rs.10 Crs (under consortium/multiple banking arrangement), For outstanding above Rs.10 crore separate guidelines issued by R.B.I will be applicable. Accounts involving willful default and fraud are not eligible.Cases classified as Loss Assets are not eligible for restructuring. Prior approval to be obtained in BIFR cases and Account should be viable in 7 years and repayment period for restructured debt should not exceed 10 yrs. Issues regarding restructuring of NPAs by bank include Implementation of Bank's policy and internal rules and regulations, apathy to take sympathetic view, timely and adequate financial help, non agreement of terms and conditions amongst consortium member Banks for restructuring, inability to bring additional funds by promoters and Incipient sickness not identified early. Inaugural Issue, January 2011
Mr. Kothari explained in details the utility and necessity of a CFO in an organisation especially in SMEs. They include Strategic Planning, M&A Support, IPO Management, Corporate Governance, Cashflow /Cost Management, Business Plan and Fund Raising. SMEs can hire the services of CFO on part time basis as most of the SMEs cannot afford a full time CFO. CFO also plays a vital role in mergers and acquisition, to deal with Planning & Researching, Due Diligence, Risk Assessment and Safeguards, Integration Strategy, Funding Requirement – Upfront & Ongoing, Unbiased Assessment to the BOD and M&A Cost Containment. The services of a CFO helps to implement robust accounting system, ensure timely and complete statutory compliances, cash flow forecasting, receivables etc. It also helps funding / structuring - Debt vs. Equity, Structured Finance, Costs vs. Repayment Tenure, Arbitrage, Valuation, Fund Raising Strategy , Smart Deployment of Funds and Assessment of Real Requirement. On the importance of business ethics and good governance for SMEs, Mr. Kothari explained in detail with presentation. Corporate governance is concerned with holding the balance between economic and social goals and between individual and communal goals. The governance framework is there to encourage the efficient use of resources and equally to require accountability for the stewardship of those resources. The aim is to align as nearly as possible the interests of individuals, corporations and society, said Mr. Kothari. He also explained the requirement of Board of Directors and the basic requirements such as appointment, induction, training, responsibilities, composition and conduct of meeting. Key roles of the Board of Directors are Managing & Disclosing Risks, Evaluating Board Effectiveness, Ensuring Compliance with Laws, Assessment & Approval of Related Party Transactions, Appointment and Certificate of Independence – Auditors, Whistle Blowing Policy and Secretarial Audit Compliance.
SME CHAMBER OF INDIA ACTIVITIES
Mr. Mohan M Gadgil
Significance of Good Governance include - share holder interaction, minority shareholder interests, internal controls, non- executive director discussions, separation of chairman and CEO roles, independent directors, audit committee, compensation committee, nomination committee etc. 13
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Ms. Dipti Mehta Partner, Mehta & Mehta Advisory Services Pvt. Ltd.
“Statutory and Due Diligence Processes” Ms. Mehta explained the various aspects involved in the statutory and due diligence. The objective of the due diligence is to collect material information from the target company, conduct SWOT analysis, improve bargaining position depending on SWOT analysis, take informed decision about an investment, withdraw the deal if required to provide desired comfort level in transaction, to ensure complete and accurate disclosure, bridge gap between the existing and expected return, take reasonable logical action / decision and to enhance confidence of stake holders. Various aspects of due diligence are business due diligence,
legal due diligence and financial due diligence. Important factors while conducting due diligence are objective and purpose, type of industry and life span of the organisation. The process involved are planning and the schedule – forming a team, steps to be followed in due diligence process, areas to be checked, aspects to be checked in each area, information and other material to be requested from the seller, negotiation for time, risk minimization (double check the information), creation of data room etc. Due Diligence Report is a valuable tool for the new owners of the business in providing an overview of the business, identification of areas of weaknesses and threats. Each Due Diligence review is unique but the overall aim is to provide the investor with sufficient, relevant and timely information in order to assist in the investment decision. The successful performance of Due Diligence is dependent upon the scope, planning, co-ordination and use of a highly skilled team. The cost of preparation of a quality due diligence is insignificant when compared to the cost of a bad acquisition.
Mr. Manish Gupta
Mr. Rammohan Bhave
National Head (Sales), IndiaMART InterMESH Ltd.
Founder, Consult IFRS Pvt. Ltd.
“The Key Success Factor for SME Growth” Mr. Manish Gupta emphasised the need for internet connectivity to every SMEs because it is most economical with global reach, having endless life, 24 x 7 accessibility, real time speed, unlimited space and very dynamic. Internet is to be used for the purpose of creating content, website, blog, catalogue and to further distributing to market places, online directories and social media. He elaborated in detail the need for latest and innovative technology for the sustained growth of SMEs.
“SME Growth Strategy” Mr. Ram Mohan Bhave, spoke on various strategies on growth of SMEs. Mr. Bhave said that SMEs should concentrate on financial management. Even though they can not afford to have a CFO, they should outsource the CFO activities if they want to progress. CFO services are very essential for an SME as it assists in identifying areas to control costs, leverage the excess funds, deploy the funds efficiently and to bargain with the lenders and banks. This will ultimately lead to increase profits for the SME. Other areas need special mention are new business ideas, business models, Process optimization and Marketing.
EXHIBITION OF FINANCIAL PRODUCTS & SERVICES AT THE SUMMIT
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Theme: Leveraging Information Technology and Innovation for SMEs Growth Friday, 12th November 2010 | Hotel InterContinental The Lalit, Mumbai
Dr. Sam Pitroda – Advisor to Prime Minister, Public Information, Infrastructure and Innovation, India inaugurating the Summit. Other Dignitaries (from left to right) Mr. Joseph Massey – MD & CEO, MCX Stock Exchange Ltd, Mr. Chandrakant Salunkhe – President, SME Chamber of India, Dr. Vijay Bhatkar – Chairman, ETH Ltd and Architect of PARAM series of Supercomputers and Dr. Sanjay Chordiya – Chairman, Pune Region, SME Chamber of India and President, Suryadatta Group of Institutes, Pune
LAUNCHING OF
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SME CHAMBER OF INDIA ACTIVITIES
SME IT SUMMIT
Dr. Sam Pitroda – Advisor to Prime Minister, Public Information, Infrastructure and Innovation, India Launching the “SME CONNECT - MAGAZINE & PORTAL” Other Dignitaries from left to right Mr. A. K. Bansal - Executive Director, Indian Overseas Bank, Mr. Chandrakant Salunkhe – President, SME Chamber of India, Dr. Vijay Bhatkar – Chairman, ETH Ltd and Architect of PARAM series of Supercomputers, Mr. Joseph Massey – MD & CEO, MCX Stock Exchange Ltd, Mr. Virendra Jhamb –Chairman, SME Technology Development Council and Dr. Sanjay Chordiya – Chairman, Pune Region, SME Chamber of India and President, Suryadatta Group of Institutes, Pune Inaugural Issue, January 2011
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ADDRESS BY CHIEF GUEST transparency and accountability we can de-centralize government functioning. Under Unique Identification Authority of India (UIDAI), Multipurpose National Identity Card or Unique Identification card (UID Card) will be issued to citizens with one number allotted to one individual carrying name, address, photo, finger prints etc. Yet another initiative is to map all buildings, streets, roads etc. for quicker access and identification. Government offices, panchayats and Food distribution centres would be connected for efficient distribution of commodities and management.
Dr. Sam Pitroda - Advisor to Prime Minister, Public Information, Infrastructure and Innovation, India addressing the delegates at the inaugural
Another platform will connect Defence, police and Intelligence agencies.
At the outset Dr. Pitroda emphasised and appreciated the role of SMEs in national development. He firmly believed that SME have been playing very important role in job creation, economic growth, innovation and exports. They constitute the large base of ancillary units to cater to the needs of corporate, multinationals and Government organizations.
A payment platform will connect banking services to unbanked section of people to facilitate electronic transfer of funds through mobile phones. This will also be integrated with merchant shops, sales counters, credit cards etc.
Today it is very difficult to draw a line between communication Next generation infrastructure will bring in a lot of changes. and information. Both have merged into a single pervasive SME should acknowledge changes to create technology called Information and Communication employment, wealth, technology with reduced cost technology (ICT). ICT finds applications in every and increased efficiency. “IF SMEs aspect of life - manufacturing, Government, DO NOT education, health, infrastructure etc., said Mr. “If SME do not change , Nation does not change” Pitroda. It is necessary that we should try to analyse declared Dr. Pitroda. If SME do not change in tune CHANGE, the impact of this connectivity available today and with the developments around the world, the begin to do things differently. There are 7 million circumstances outside we will force them to do so. NATION mobile phones in use in India. They should start using ERP and CRM packages in DOES NOT their businesses. We are thinking at the Government level to CHANGE” propagate ICT and setting up 6 different platforms. Innovation is not about products, packaging and An Open platform for broadband with 100 laboratories but is about broad spectrum in all megabytes so that we can connect millions of people with high walks of life - family relations, schools and colleges, hospitals, speed internet access. industry, Government etc. With innovative spirit we can achieve 10 to 15% growth, lift millions of people from poverty and He also explained about major programmes at Government attain inclusive growth. “Innovation is the fuel to growth”. level like “National Knowledge Network” to connect universities, R &D institutions and major libraries. The idea is to It should be the endeavour of every SME to convert innovative increase collaboration amongst various entities. With this a ideas and translate them into commercial ventures to attain lecture by a professor in Chennai can be seen in 500 colleges. It growth. Innovation and improvement will go hand in hand. There will revolutionanise the education and the role of teachers will should be both State and Central level Innovation Councils to change to attain a student – teacher ratio of 20:1. 50 years guide and help the SME Sector. Government has identified 20 later students will say “I have learnt” and not “I have been clusters for development and in all these clusters the seed of taught”. innovation will be incorporated. Another platform is about the way Government offices will function in future. Persons may change and the system will work. 25000 panchayats will be connected across the country with optical fibre. We have to democratize the infrastructure because nobody wants to exchange knowledge. With RTI, CO NNECT
A nation with 50% of the population below the age of 25, it must be our aim that we should have innovative approach in all our activities and the ICT will be a more useful tool in achieving this objective.
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ADDRESS BY DIGNITARIES
Dr. Vijay Bhatkar – Chairman, ETH Ltd.
Mr. A. K. Bansal
and Architect of PARAM series of Supercomputers.
Executive Director, Indian Overseas Bank
The progress of Indian telecommunication can be traced to first telephonic exchange in 1950s. The invention of Microprocessor in 1971 has revolutionized the way the data are stored, processed and retrieved. The electronic revolution has much more greater impact than the industrial revolution. The incorporation C-Dot has fueled the spread of information technology. Today from Governments to Corporate to SMEs information technology is the driving force behind the operations of the enterprises.
The most important requirement for a successful and long lasting relationship between a bank and its customers is the “TRUST” emphasized Mr. Bansal. While the banks are willing to extend all possible assistance to SME sector it is equally important that the SME entrepreneurs should be transparent in their accounting procedures and dealings. They should win the confidence of their banks. This will pave the way for quicker disbursal of funds by the banks to SME to meet their various needs like going in for latest technology, capital assets, expansion, diversification and exports.
First generation entrepreneurs start an enterprise with least capital. The electronic companies like ECIL and Instrumentation Ltd. helped augment the economic progress. The four pillars of the SMEs are – Marketing, Finance, Management and Information Technology. Since the importance of IT is not fully understood by the SMEs it is very important to organize separate Seminar called SME ICT SUMMIT.
IOB has already been extending necessary assistance to SMEs as well as educating them to understand compliance requirements which are essential to process the applications and offer appropriate services. According to him, it is very necessary for the SMEs to adopt IT solutions so that they can transact with banks effectively, quickly and inexpensively as most of the banks have already advanced IT systems in place for on-line banking transactions.
Mr. Chandrakant Salunkhe - President, SME Chamber of India Mr. Chandrakant Salunkhe emphasised the urgent need for the SMEs to be innovative in all their activities. SMEs should also look for new avenues of obtaining finance like venture capital and private equity rather than depending on bank and financial institutions alone. They should resort to joint Ventures, technology transfers, Contract Manufacturing tie-ups and business collaborations to enhance growth. Any SME who does not invest in IT solutions will be left behind in the race.
Mr. Joseph Massey – MD & CEO, MCX Stock Exchange Ltd. Size is very important to go in for listing in a stock exchange observed Mr. Massey. Investors will also always hunt for good industrialists. Global expansion is difficult with own resources and hence raising funds through the stock exchange is a sensible option. While big companies can resort to stock exchange, the SMEs are not fortunate enough to do so. In Canada there are SME Exchanges which are event allowing the SMEs with simply innovative ideas without any capital. These exchanges ensures that good ideas are converted into a fundable project.
He explained the role played by the Chamber for helping the SMEs to adopt latest IT solutions and technology and ensured that Chamber will organise various events in future for educating SMEs to adopt the best and most cost effective IT solution Inaugural Issue, January 2011
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SME CHAMBER OF INDIA ACTIVITIES
Mr. Chandrakant Salunkhe – President, SME Chamber of India felicitating with flowers for supporting the Summit
Mr. Jay Gupta – MD, The Loot India Pvt. Ltd.
Mr. K. R. Kanojia – AGM, Bank of Baroda
ADDRESS BY EMINENT SPEAKERS Mr. Bimal Shah
Prof. Sujata S. Rao
Head, SMB Architecture, TATA Consultancy Services Ltd.
Assistant Professor K.J. Somaiya Institute of Management, Mumbai
“SME and IT Needs – Challenges and Opportunities”
“Using IT & IT Strategies for Sustainable Competitive Advantage for Indian SMEs”
Mr. Shah elaborated the benefits and usefulness of adopting cloud computing by SMEs. It serves as an effective interface between consumers and IT service providers. Cloud computing is very useful for the SME as they need not invest in costly hardware. Moreover the main problem of SME is their inability to select right software solutions which get obsolete so fast. Many times they end up with a unviable one which is not needed for their size of operations. By outsourcing their IT needs to a cloud computing company SME can scale up, add or remove packages as needed, shares a pool of resources to reap economy of scale and tracks usage. They need to pay only for the usage and the data are fully secured. Cloud Computing is one of the latest technology up gradation. For example a hospital having clinics in India and Middle East with 800 employees, Cloud computing can help them manage effectively Clinic-level transactions, aggregated data analytics, Revenue Analysis, Resource Utilization, Customer Satisfaction and New business opportunities.
Prof. Rao explained about various drivers to be adopted for the growth of SMEs. They are thrust on growth on infrastructure with private participation, strengthening of SME clusters, setting up of Industrial Parks and Growth Centres, Liberalised financial and banking sector facilitating assistance to SMEs on competitive terms and Minimum regulatory interventions in the affairs of the enterprises. SIDBI provide various technology related support services, in collaboration with UN-Asia Pacific Centre for Transfer of Technology. SIDBI has also set up Technology Bureau for Small Enterprises (TBSE) in 1995 and TBSE is functioning as a one stop solution provider for all technology related problems of SMEs in India. Other services at nominal rates from SIDBI are - Technology Information, Match Making, Finance Syndication and Business Collaboration. For enhancing competitiveness, SMEs should use a balance scorecard that contains relevant, timely and accurate information. This will keep a management team well informed about their key objectives, said Prof. Rao.
Therefore SME should give a serious thought to identify and adopt suitable, secured and cost effective IT solution at the earliest opportunity to be successful in the globalised market.
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Inaugural Issue, January 2011
Mr. Adarsh Singh
Managing Director, Invigorare Solutions Pvt. Ltd.
GM (Business Development Cloud Computing) HCL Infosystems Ltd.
“Increasing Global Competitiveness of SMEs through IT driven Business TransformationSome Experiences” “We live in a customer driven environment and subjected to competitive forces at all point of time” observed Mr. Choudhary. India is considered the IT major and there are many big companies who have integrated IT systems in their operations. But SME should also increasingly adopt IT in their operations for better interaction with their customers, suppliers and banks. This is very much important because they need to deal with big companies, Government departments and banks who have advanced IT systems in place. Indian SME should not sop simply at delivering products and services but invest in R & D activities gradually. Though it involves cost it will pay back in the long run. Data over a period of 50 years indicates that contribution of service sector to GDP steadily increased, he observed. Hence it is the service sector which needs more IT solution than others. SMEs need to think and act on understanding the needs of the customers, accurate prediction of delivery time, adhering to delivery schedule and reducing total cost associated with delivery of personalized products & services. Wrong commitment and inability to deliver at due dates will be detrimental for the reputation of SME. The new perspective of IT is not to simply Automate processes but to effectively manage the business leading to customer satisfaction to gain benefits. When companies cater to the need of demanding customers there should not be complaints like material shortage, machine broken down, non availability of operators, defective parts, wrong planning and false commitment. It is recommended that SMEs take care of minute details and service customers with appropriate technologies in place.
“How cloud computing can benefit SMEs?” Elaborated about usage of cloud computing in various applications by SMEs in his informative presentation. Cloud is a style of computing where scalable and elastic ITrelated capabilities are provided as a service to external customers using Internet technologies. An overview of cloud computing was elaborated in his presentation and explained every aspect in details. The reason why SME should go in for new solutions is because the traditional systems involve - High CapEx (Hardware, Software), Lower asset utilization (25-55%), Power/Cooling costs Server Costs, Not “Green” (Global Business), and High Depreciation (42-50%). Small companies are more aggressive with cloud adoption than larger SMBs (less than 20 employee SMBs adoption rate is 38%). Companies in emerging markets (Asia-Pacific) are more likely to adopt cloud solutions than those in North America and Europe. Unproven technology and security are the main concern among SMEs that do not plan to deploy cloud solutions. Most companies are looking at the cloud as a viable solution to reducing IT budgets, Verticals such as BFSI, education, healthcare, retail to rely upon cloud services for better reach. Governments' continued focus on egovernance will drive significant adoption of cloud pan India, BPO companies in India too look at cloud services for nonlinear and rapid growth. According to Springboard Research (Jan 2009) SaaS i.e. software as a service in India will register a compounded annual growth rate of 76% in the time period of 20072011.
SME CHAMBER OF INDIA ACTIVITIES
Dr. Chandan Choudhary
Delegates at the Summit Inaugural Issue, January 2011
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Mr. Nandlal Bhatkar
Ms. Chhaya Balachandran Aiyer
CEO, Pyxis Systems Pvt. Ltd.
Founder Managing Director, BC Web Wise
“Forex Risk Management for SMEs - Challenges and Solutions”
“Internet Marketing and Advertising for SMEs”
Enterprises engaged in exports and imports are exposed to the risk of foreign currency exchange fluctuations. Especially SME should analyze this risk, quantify the amount of risk, how to minimise loss by hedging operations and understand thoroughly the methods, procedures and documentations involved in risk management.
The SMEs should develop a customer centric approach and always be ready and willing to talk to the customers to understand their needs, problems and suggestions. There are 70 million internet users and 6 million internet broadband connections. There are various IT solutions available to SMEs to promote their products and services like business portals, mobile portals, ECommerce, ERP, CRM etc.
The key challenges faced by SMEs are non availability of adequate and timely finance, limited capital and knowledge, obsolete technology, absence of skilled labour and dealing with multiple statutory and regulating agencies.
Once IT was considered only for big corporate but with the affordability, the same is within the reach of SMES and they should take full advantage of this technology to grow their business.
He also explained about various IT solutions that can be used for managing risk.
OTHER EMINENT SPEAKERS
Dr. Sanjay Chordiya – Chairman, Pune Region, SME Chamber of India and President, Suryadatta Group of Institutes, Pune
Mr. Virendra Jhamb – Chairman, SME Technology Development Council and MD, GEA Ecoflex India Pvt. Ltd.
Mr. Muralidharan Rajamani
Mr. Vijay Mhaskar
President, IT & Operations, Dhanalaxmi Bank VP, Information Management Group, Symantec
Mr. Girish Bhagat Secretary (India), Euro-India Centre & Director, India Nivesh Ltd.
Mr. Rajesh Huddar - Head-Information Security Practice, Mahindra Special Services
Mr. Vinay Maste
Mr. Surya Chaitanya
Mr. Sukh Dugal
AVP, Zenith Computers Limited
Business Analyst, Knowledge Matrix India Pvt. Ltd
Director, Studio March Private Limited.
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SME EXPORT PROMOTION COUNCIL Connecting Indian SMEs Globally ACTIVITIES & SUPPORT SERVICES Export Promotion Group Marketing and Branding Education & Training on Export - Import
Identify Importers and Buyers Delegation and Trade Missions Products & Services Display Facility
LAUNCHING CEREMONY
“SME EXPORT PROMOTION COUNCIL” was formally launched at the hands of Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission. In picture (from left to right) Mr. Nanasaheb B. Patil, IAS - Principal Secretary, Agriculture & Horticulture, Government of Maharashtra, Mr. Chandrakant Salunkhe - President, SME Chamber of India, Mr. Tamer Taskin – President, Aegean Region Chamber of Industry (EBSO), Izmir, TURKEY, Mr. Anthony J. C. De Sa, IAS Director, UNIDO Centre for South – South Industrial Cooperation, Mr. Joseph Massey - MD & CEO, MCX, Mr. A. Rameshkumar - Chairman, SME Chamber of India, Northern Region, New Delhi and MD & CEO, Asia Pragati Capfin Pvt. Ltd. and Mr. N. C. Vasudevan, IAS - Director General, National Productivity Council, Government of India, New Delhi. CHANDRAKANT SALUNKHE - Founder President Contact for More Information and Membership Central Office 3, Upper Gr Flr, Samruddhi Venture Park, Marol MIDC, Near Hotel Tunga Paradise, Andheri (E), Mumbai - 400 093.
Registered & Correspondence Office 101, Murlidhar Baldev Estate, Near Vikas Estate, Off. Aarey Road, Goregaon (E), Mumbai- 400 063. Tel.: +91-22-6667 4444 / 6677 0218 / 19 | Fax: 2874 3543 | Email: smeexport@vsnl.net | Website : www.smeepcofindia.com (SME Export Promotion Council is a private organisation and Registered u/s 25 of The Indian Companies Act, 1956)
Become a member of the council to start and enhance exports
CONFERENCE ON
PRIVATE EQUITY & VENTURE CAPITAL - OPPORTUNITIES FOR SMEs 22nd October 2010 | Hotel Sahara Star, Jade Plus, Mumbai
ADDRESS BY EMINENT SPEAKERS Mr. Cyrus Driver
Availing the services of an internal or external CFO is very vital as the benefit derived out of his advice is much more than the charges paid to him. A good CFO is often the difference between success and failure in fund raising. It is important to update the investor with financial statements.
Director, Helix Investment Advisers (India) Pvt. Ltd.
“SME funding option – Bank Finance Vs. PE /VC Funds”
The project owners should understand the mindset of the investor with regard to his exit options. It is futile to take a tough stand which may jeopardise the deal. Enterprises dealing with investors are advised to take the assistance of an investment banker who can make the business plan “investor ready”, introduce them to the right investors and get the best terms. Sufficient care is to be taken on fixing the fees which should not exceed 3%.
Mr. Driver explained in detail about the merits and demerits of both the funding mechanisms. The SMEs should approach the right decision making authorities in a PE / VC firm as very few executives have the power to approve a proposal.
One should not overestimate the ability of an investor as they too have limitation. They can add value only in limited areas in which they have expertise and experience. They are extremely useful in M&A, overseas information gathering, future fund raising.
SMEs should have a conservative approach while dealing with an investor. Normally, it takes 6-12 months to complete a deal and in some case it could be faster. The enterprise should have sufficient liquidity to keep running and growing the business. It is prudent to budget for more capital than projecting for less. The valuation has to be realistic; otherwise it is difficult to attract investors.
A few points need to be taken care of to get the best out of the VC / PE investor. All the developments within the organisation good or bad should be brought to the notice as early as possible. The information should be realistic and accurate. The nominee director of the investor should not be embarrassed under any circumstances because he is the most loyal ambassador of the organisation.
Majority of the investors tend to doubt why only they are approached and not others. Therefore it is important to have persistent follow up and at the same time make it clear why this fund is chosen.
Mr. Harish Prabhu
The next major step is to appoint an adviser. In consultation with the Advisor the project owner should decide the most suitable funding which meets the needs.
Director, Orion Equity Advisers Pvt. Ltd
Preparation of Profiling Documents, Industry analysis, industry positioning, market mapping, historical performance, Preparation of Business Plan, Preparation of Financial Plan, Financial modeling based on outlook scenarios and Crystallization of optimum “Corporate Valuation” based on various methodologies are chartered out.
“Introduction to PE / VC and Fund Raising ”
The role of the adviser is to shortlist the potential investor, Advising to select the right one, obtaining detailed information about the investor, arranging initial investor discussions and subsequent client meetings. Thereafter the adviser receives the offer of investment i.e. non-binding Term Sheet. Term-Sheet being the first tangible proof of investor's interest in investing, it is analyzed thoroughly, negotiates the commercial terms with the investor and finalise the best deal to meet the desired objective of the promoter.
Private Equity means Medium to Long-term Capital Investment in unlisted companies with High growth potential. The investor takes substantial Stake in the company and Participate in Management. The investors are of two types – general partners and limited partners. Limited partners are like Public pension funds, corporate pension funds, Insurance companies, High Net Worth individuals, family offices, Endowments, Foundations, fund of funds, etc.
The investors carry out due diligence exercise to understand and ascertain past and present business book, market scope, demand/supply, customers, Financial details (historical, projections, liabilities, reconciliation etc), legal details (History, legal structure, capital structure, ownership etc, book-keeping, regulatory compliance), personal details - promoters' antecedents, referral checks.
For Enterprises to access Private Equity funding, the first step is to assess to own strengths and define short, medium and long term goals. The second step is to strategize about exercising the growth opportunity available in the industry. The third step is to crystallize the optimum resource-requirement including “funding requirement”.
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? Angel Investors ? Venture Capital firms ? Private Equity firms- sector agnostic ? Sector dedicated Private Equity firms ? Country specific Private Equity firms ? Country and Sector specific PE firms ? Corporate Ventures ? MBO or LBO funds ? Distressed/ Stressed funds ? Mezzanine funds ? Offshore and On-shore funds
According to Ventura Intelligence, Private Equity firms invested in India US$ 2 billion across 88 deals during the quarter ended September 2010. This takes the total PE investments in 2010 to US$ 6.6 billion across 231 deals, more than twice the US$ 2.5 billion invested (179 deals) during the same period in 2009. Out of these investments, Real Estate -22%, Manufacturing -8%, IT and ITEs -21%, Logistic-12%, Banking and Finance-8%, Telecom-11 and Energy-18%. The Project owners should appoint a right consultant to advise on – developing an appropriate financial strategy, positioning the company optimally, approaching the right investor, negotiating the best possible terms and conditions, actively managing the entire process and leverage management and time resources.
Mr. Girish Bhagat
2) PRIVATE EQUITY: Usage towards Growth Capital
Secretary (India) Euro-India Centre and Director, India Nivesh Ltd.
Pre requisites for getting PE/ VC investor:
“SME's funding options ”
? Promoters background must be sound ? Business & its model can have sustainability in margins & growth ? Potential of high growth and scalability in business ? Funding only to finance capacity growth ? Transparency in business activities
1) BANK FINANCE: Usage towards Working Capital
? Willingness to professionalize
Pre requisites:
Challenges:
? Strong Balance sheet / Cash Flows
? Valuation
? Adequate Equity funding
? Sharing of management control
? Collaterals of Personal & Business Assets
? Exit route for PE investors
? In absence of credit rating, relationship with the Bank is paramount
Benefits:
? Bank relies of strong trade references
Challenges: ? Overleveraged balance sheet / in adequate equity ? Obsolete technologies
? Access to growth Capital ? Integration in global business models; if PE provided is a global player ? PE investment builds on better perception of the company & its promoters
? Threats from imports or large scale manufacturers
IDEAL FOR BANK FINANCE
? Family run businesses & therefore insufficient professional skills
? Capital Expansion / Diversification
? Mind set issue on accounting practices; affects capital raising
? Imports
? Working capital / Credit requirements ? Contract funding
Benefits:
? To meet foreign / export contract
? Cost effective
? Warehousing Finance
? Equity ownership is not compromised and hence management control
IDEAL FOR PRIVATE EQUITY
? Flexibility of borrowing and repaying
SME CHAMBER OF INDIA ACTIVITIES
Types of Private Equity Investors
? Capital Expansion / Diversification ? Acquisitions ? New Real Estate project ? Contract funding ? One Time Settlement
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SME CHAMBER OF INDIA ACTIVITIES
Mr. Shaji Varghese
Short Listing and Fund Meeting
Vice President, BTS Investment Advisors Ltd.
This process involves listing out the various prospective list of private equity and venture capital firms. Next the company should gather information about the focus of the funds, whether the fund is in investment or divestment phase, the portfolio of the fund and the managers of the fund.
“Procedure and Documentation for PE / VC Funds”
After careful scrutiny a prospective investing fund is short listed. Initial correspondence expressing interest and seeking information is resorted to. After favourable reply a meeting with the funding firm is arranged.
The key highlights of investing companies are that they invest in equity of unlisted and privately held companies. They normally have minority stake in the company. Venture capital is meant for start-up and early stage funding while private equity is oriented towards growth or expansion. Alignment of interest is necessary and critical for success. The companies (Project Owners) look for capital, valuation, fund track record, value adds possibility and compatibility of the private equity fund provider. The investors look for promoter(s) management track record, business plan, corporate governance and transparency, promoter(s) readiness to partner and exit opportunity.
The Process Flow Chart ? ? ? ? ? ? ? ?
Preparing a business plan Short Listing of investor Initial round of discussion Presentation of Investment Opportunity & Fund Meeting Preparation of Term Sheet Due diligence process Finalisation of terms and condition Execution of share subscription and shareholders agreement ? Actual investment
VC / PE investment Pitch The project owners should pitch their proposal in an efficient manner to attract the investor. They should communicate clearly the company's business and future road map. The strength of the company should be highlighted quantitatively & qualitatively. The business plan should take into account current constrains – resources, market restrictions etc. It is imperative to note that the proposal should not hide any weakness of the company and rather address it properly as to how the company will overcome them.
DUE DILIGENCE Business Due Diligence This process analysis the general nature of the business, the competition in the market and the prospects for growth. It also deals with new business opportunities matching with the capabilities of the company. This is normally carried out by fund team or external consultant.
Financial Due Diligence
It is advisable for the SMEs to appoint an investment banker to deal with the investor as they are better equipped to convince the investors to invest in the project.
This analysis the performance and the present financial position of the company. A minimum of past 2 years of the financial statement are scrutinized thoroughly. The dependence of the customers on the products and services of the company, profit margins and cost structure, the major drivers of the business and the past transaction are given due weightage. This is carried out by the audit firm identified by the investor. Maintenance of proper books of account and MIS system are essential.
Business Plan
Legal Due Diligence
This is the first document sent to the prospective investor. It should be a concise, precise and comprehensive document on the company & its business. It should outline the vision and path forward clearly, highlight key differentiator or strengths, if any, viz. market, products, strategy etc. The plan is a tool to capture investor attention. For investor it is a document to understand the company, its business and management. The investment memorandum should contain Company & its History, Current business & Operations, Promoters & Management capabilities, the Industry the firm belongs to, its products and services, business strategies, financial history and projections as well as the exit mechanism etc.
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Legal compliances of the business and statutory compliances are dealt with by this process. The areas covered by this process include – assets, leases, employment contracts, intellectual properties and litigations. It is carried out by a legal firm appointed by the investor.
Finalization of Investment Term ? This document describes in detail about the following: ? Share Subscription & Shareholders' Agreement outlines the terms & conditions of investment ? Promoter(s) covenant – non disposal of shares, management control, non-competes etc. ? Investors Rights – veto power, board representation and information access ? Exit Provisions / Mechanism
Inaugural Issue, January 2011
Mr. Rahul Patwardhan
maintaining quality and reducing cost, need for perpetual R & D, dealing with technology obsolesce and lack of information on intellectual property rights. Fifthly, the human resources risk, which has to deal with selecting and retaining the right employees, formulating continuous training at all levels, pay competitive payments, evaluation and motivation. Attrition is the major problem in highly technical and knowledge based industries.
Vice Chairman and MD, IndiaCo Ventures Ltd
“Valuation Approaches - Discounted cash flow, Relative Valuation etc.�
The investors are willing to fund the SMEs if they have a good management team with experience and expertise in their field of activities, have clear operation, manufacturing and marketing strategies, growing market for the company's products and services, compliance with statutory and legal formalities, effective risk management and good governance.
The Corporate Advisors are engaged in providing corporate advisory services such as - Financial Restructuring, recapitalizing and M&A services, Advise growth, Technology citation, patent analysis for M&A. They are also into investment advisory services like - Invest capital in private and public companies via PIPE/Private equity deals.
There are four valuation methods of an enterprise - Asset valuation method, Capitalization of income valuation method, Cash Flow multiple Method and Multiplier or market valuation method.
SMEs face increased globalization, stronger competition, a high pace of scientific and technological change with limited resources. They need access to increasingly sophisticated innovation tools and tactics – like new technologies, competitive intelligence, partnerships, expertise, sustainable development practices, access to financial resources and international strategies.
Asset Valuation Method ? Asset valuation is used when a company is asset-intensive ? Retail businesses and manufacturing companies fall into this category ? This process takes into account the following figures, the sum of which determines the market value: ? Fair market value of fixed assets and equipment (FMV/FA)
Most of the enterprises cannot meet these complex management decision needs on their own due to lack of adequate Management training. Other problems are Non-availability of a Business plan leading to ad hoc decision making, Lack of Business & Financial discipline, Lack of Forward planning resulting in unforeseen situations, lack of Project management skills, Lack of internal systems and standard operating processes, Inability to attract & retain highly trained manpower, and lack of succession plans and new generation not available for such causes.
This is the price one would pay on the open market to purchase the assets or equipment (less depreciation) ? Leasehold improvements (LI) - These are the changes to the physical property that would be considered part of the property if you were to sell it or not renew a lease ? Owner benefit (OB) - This is the seller's discretionary cash for one year; the enterprise can get this from the adjusted income statement ? Inventory (I) - Wholesale value of inventory, including raw materials, work-in progress, and finished goods or products
SMEs also face other challenges like - Inadequate attention to financial discipline and cash flow control (controllable & uncontrollable) affecting even their very existence, lack of available funds (perpetually caught up in this vicious cycle), inability to pay competitive wages / salaries to trained professional, lack of awareness of IPRs and legal issues (IPRs / Patents / Copyrights /Registrations), Government harassment, and union activities.
Capitalization of income Valuation Method This method places no value on fixed assets such as equipment, and takes into account a greater number of intangibles. This valuation method is best used for non-asset intensive businesses like service companies giving each factor a rating of 0-5, with 5 being the most positive score. The average of these factors will be the "capitalization rate" which is multiplied by the buyer's discretionary cash to determine the market value of the business. The factors are: ? Owner's reason for selling equity - Growth driven or exit driven ? Length of time the company has been in business ? Length of time current owner has owned the business ? Degree of risk ? Profitability ? Location ? Growth history ? Competition ? Entry barriers ? Future potential for the industry/market ? Customer base ? Technology/IPR
But there are also positive developments such as availability of capital for the right projects, new entrepreneurs setting up profitable ventures, availability of qualified and skilled employees, capacity of the market to absorb new products and services and new business opportunities in India and abroad. During their business operation, SMEs have to face many risks. First, Management risks related to general management skills, methods, training the employees, changing the attitude of executives and staff, perpetuation of the organisation as an ongoing concern. Secondly, the financial risk consists of lack of financial plans, adhoc financial decisions, lack of funds and cash flow planning. Thirdly, the marketing risks relate to dependence on new customers, extending the reach, facing the competition and meeting the changing need of the customers. Fourthly, there are also technology risk encompassing scope of production, Inaugural Issue, January 2011
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The Method: ? Add up the total ratings, and divide by 12 to come up with an average value to use as the ? Capitalization rate ? Buyers discretionary - a figure for "buyer's discretionary cash" which is 75% of owner benefit ? Seller's discretionary cash for one year as stated on the income statement ? Multiply the two figures to determine the market value
benefit, and debt service of 25%. The multiplier also takes into account “beta” or the risk associated with the cash flow (discounted similar to depreciation)
Multiplier or market valuation Method This approach finds the value of a business by using an "industry average" sales figure as a multiplier. This industry average number is based on what comparable businesses have sold for recently. As a result, an industry-specific formula is devised, usually based on a multiple of gross sales.
Cash Flow Multiple Method
This is where some people have trouble with these formulas, because they often don't focus on bottom line profits or cash flow. Plus, they don't take into account how different two businesses in the same industry can be. ? Travel agencies - 0.05 to 0.1 X annual gross sales ? Ad agencies - 0.75 X annual gross sales ? Retail businesses - 0.75 to 1.5 X annual net profit + inventory + ? Equipment
This formula focuses on the enterprise cash flow and is used most often for valuing businesses whose value comes from their ability to generate cash flow and profit. It uses a fairly simple formula - multiply the owner benefit times 2.2727 to get the market value. The multiplier takes into account standard figures such as a 10% return on investment, a living wage equal to 30% of owner
The investors are ready to invest in a small and medium size company depending upon the experiences and capabilities of the promoters and their management team, the quality of the business, the terms and conditions of the deal and the opportunities to exit at appropriate time.
Mr. Gaurav Gupta
Management Team
“PE / VC expectations from SMEs”
Executive Director Decimal Point Analytics
The team should have integrity, Ambition for success, Passion for business, Credibility and experience, Professional organization and Attention to systems and processes.
Exit and Payback of Investment
Quality of the Business The business should have satisfied customers with a potential to grow to attract the investor, high revenue yielding, have sustainable and competitive advantage, easily scalable coupled with a growing market.
The investors take into account a viable time frame for investing in the company, IRR and opportunities for exit through IPO, Strategic Scale and Promoters buy back.
Deal Terms
? ? ? ? ?
Ingredients for Success
The deal document should mention about the valuation of the business, the voting rights, precedent conditions, and earlier milestones.
Developing a sense of trust and comfort Ability to add value other than capital Assistance in developing a robust management team Flexibility on the part of management to fresh ideas Managing relationship with a focus on creating value for all stakeholders
Delegates at the Summit
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Inaugural Issue, January 2011
Mr. Ravindra Kumar – Senior Banker and Regional Adviser, Standard Bank, PLC addressing the delegates on “Preparing the mindset for PE/VC”
Mr. Chaitanya Shah - CEO, CKPP Associates addressing
Mr. Mangesh Pathak – Founder Member, Ambit Pragma
Mr. Rammohan Bhave - Managing Director, Consult FRS
Ventures addressing the delegates on “Understanding Term Sheets & Selecting the Right Investor”
strategy consultants Pvt Ltd addressing the delegates on “The Role of CFO for Business Growth”
Mr. Sushrut Chitale – Director, Infogenia addressing the delegates on “A Guide to Due Diligence ”
Mr. Ajit Anekar – Partner, Kochhar & Co addressing the delegates on “Legal framework”
Ms. Sangeeta Modi – Founder, Access Asset Managers
Ms. Sonali Tipre – CEO, Margin's view Management
addressing the delegates on “Structure of VCs / PEs and their mandate”
Services addressing the delegates on “Preparation of viable Business Plan”
Inaugural Issue, January 2011
the delegates on “Expectations of Investors from Entrepreneurs”
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SME CHAMBER OF INDIA ACTIVITIES
OTHER EMINENT SPEAKERS
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CFO and Financial Advisory Council for SMEs
ABOUT CFO & FINANCIAL ADVISORY COUNCIL FOR SMEs Small and Medium Enterprises contribute significantly towards industrial output, exports and employment generation for the economic growth of the Nation. Finance remains one of the major concerns for the SMEs. Many of the entrepreneurs are technically sound but lack in knowledge and presentation of financial matters. An entrepreneur has to play multiple roles in managing his business right from Planning, Purchasing, Design, Production, Quality Control, Marketing, Finance, Man Power, Public Relations, New business Developments and targeted growth. Due to their small size they cannot afford to appoint highly qualified financial full-time executives to manage their finance, interact with the bankers and regulating agencies as well as comply with the statutory requirements. With a view to provide efficient and cost effective financial management solutions, Small & Medium Business Development Chamber of India (SME Chamber of India), Maharashtra Industrial and Economic Development Association, India International Trade Centre (IITCINDIA) have initiated the division “CFO and Financial Advisory Council for SMEs”. This Council consists of full time of financial experts to provide appropriate advice and assistance to SMEs on-call or regular basis by appointing a panel of members, partners, associates, consultants and advisors-ex banker, retired government officials, CFOs, CAs, Company Secretaries and experts.
LAUNCHING OF THE COUNCIL Prof. Suresh D. Tendulkar - Director, Central Board of RBI and Former Chairman, Economic Advisory Council to the Prime Minister has launched “CFO & Financial Advisory Services for SMEs” initiated by SME Chamber of India and other dignitaries from (left to right)in the picture - Mr. Chaitanya Shah - CEO, CKPP Associates., Mr. Chandrakant Salunkhe - President, SME Chamber of India, Mr. K. R. Sharma - Director, MSME Development Institute, Maharashtra and Mr. Ravi Shankar - Founder Director, Brickwork Ratings India Pvt. Ltd during the Round Table Conclave on The importance of Financial Services for SMEs organised by SME Chamber of India on 4th November 2009 at Mumbai.
SUPPORT SERVICES & ASSISTANCE ü ü ü ü ü ü ü
ü ü ü ü ü ü
CFO Service Preparation of Financial Results and Analysis Preparation of Bank Loan Documentation Strategic Business Advisory Cash flow and Budgeting Analysis Raising Private Equity and Venture Capital Preparation for Joint Ventures & International Collaborations
Business Performance Management Solutions (BPM) Accounting Services as per IFRS Financial and Statutory Due Diligence Preparing SMEs for listing on SME Exchange Mergers and Acquisitions Turnarounds and Debt Reduction
Other Financial & Specialised Services for SMEs as per the requirement: ü ü ü ü ü ü ü ü ü ü ü
Avoidance of NPA Revival of sick units and Restructuring Assistance in availing government schemes and incentives Business performance management Drafting legal agreements and documents Raise funds for expansion, modernisation and diversification Taxation Services – Planning and Preparation Financial Forecasts and Projections Company Secretary Services Research and of listed and unlisted companies Resolve Problem & issues related to banks & other institutions
ü ü ü ü ü ü ü ü ü ü ü
Goods and Services Tax IPO Advisory services Credit Rating Facilities Accounting Software Selection and Implementation Obtaining incentives and financial assistance from govt. agencies Cost Analysis, Cost reduction & liquidity improvement programs Risk Analysis Product pricing Analysis Liaison with for ROC, Banks, PE/VC, and govt. agencies Insolvency and Liquidation Arbitration and re-conciliation
SME Chamber of India is having in-house financial professional & experts in various fields and we are also creating a panel of leading Financial Advisory Firms, Banks, Financial Institutions and retired professionals from Private, Government and banking sectors for rendering expert advisory services to Tiny, Micro, Small, Medium and Large as well as prospective entrepreneurs.
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Inaugural Issue, January 2011
EMPOWERING INDIAN SMEs - VISION 2020 Friday, 9th July 2010 | Hotel InterContinental The Lalit, Mumbai
Mr. C.B. Bhave - Chairman, Securities & Exchange Board of India (SEBI) delivering the keynote address at Roundtable Series-II (on the dias from left to right) Mr. Hemant Shah - Chairman & Managing Director, Ackruti City Ltd., Mr. Chandrakant Salunkhe President, Small & Medium Business Development Chamber of India (SME Chamber of India), Mr. Joseph Massey - MD and CEO, MCX Stock Exchange Ltd., Mr. A. Rameshkumar - CEO & MD, Asia Pragati Capfin Pvt. Ltd. and Chairman, Northern Region, SME Chamber of India and Mr. Madhu Kannan - MD & CEO, Bombay Stock Exchange Ltd.
KEYNOTE ADDRESS ON “SME STOCK EXCHANGE – NEW OPPORTUNITIES FOR GROWTH” Mr. Bhave congratulated the excellent services provided by the SME Chamber of India to the SME Community. While addressing the Roundtable he touched upon many important aspects concerning SMEs in detail. About the proposed SME Stock Exchanges, he said that there were some unsuccessful attempts which somehow failed for various reasons. There was OTC which did not work. Then there were interconnected stock exchanges, an alliance of regional stock exchanges which also did not work due to the advent of new technologies. The investors could trade directly through BSE or NSE. Now there is an attempt initiated by Bombay Stock Exchange, which is under active consideration. It took two years to issue the guidelines after analysing what went wrong. We have to keep on trying. If we fail in our attempts and if we do not try we will fail. We will be taking a conceptive approach. There is a general feeling that the compliance cost is very high for the SME and there is a demand for reducing it. If we think of reducing the compliance cost and do not provide the necessary information to the investors, it is not justifiable. Therefore we need to strike a balance. Since SMEs can not be considered on the same level as that of Corporate, SEBI is putting its best efforts to reduce the compliance clauses as far as possible in SME Stock Exchange. But at the same time safeguarding the interests of the investors and stake holders are important to SEBI being the Regulator.
SME CHAMBER OF INDIA ACTIVITIES
Roundtable Series - II
Small companies are not resorting to good governance because its not practical for them. In our life, we do many transactions without the paraphernalia of a formal contract. Day in and day out lot of transactions get concluded, deliveries made and payments received based on ethical practices. Without ethics these transactions are impossible to happen. The basic foundation of a business is ethics. “My word is my contract” is the principle on which the ethical businesses are run. My suggestion to SMEs is that “do not compromise on good ethical governance to avoid the cost of procedures and paper work. In Indian Stock Exchanges the numbers of transactions are very large while the ticket size is small. We need to set up systems to reduce the cost of transaction which is a real challenge. If we can do so, the world is our market. Inaugural Issue, January 2011
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INAUGURATION H.E. Mr. Paul A. Folmsbee - Consul General, USA, Mumbai inaugurating (left) and delivering the inaugural address (right) at the Roundtable Series-II “Empowering Indian SMEs - VISION 2020”. (Other from Left to Right) Mr. Madhu Kannan - MD & CEO, Bombay Stock Exchange Ltd., Mr. Chandrakant Salunkhe President, Small & Medium Business Development Chamber of India (SME Chamber of India), Mr. Hemant Shah - Chairman & Managing Director, Ackruti City Ltd., Mr. A. Rameshkumar - CEO & MD, Asia Pragati Capfin Pvt. Ltd. and Chairman, Northern Region, SME Chamber of India and Mr. D. R. Dogra - MD & CEO, Credit Analysis & Research Ltd. Mr. Paul highlighted the role played by the SMEs throughout the world and its contribution to the economies of the respective countries. There need to be greater connectivity between SMEs around the world. An SME in US might be interested to contact a SME in India for manufacturing or marketing activities. But we are not seeing that connectivity happening in a big way. There is a good economic tie between our country and the opportunities are abundant for SMEs in both the countries. The export of US goods to India has increased five times from 4 billion USD in 2002 to 19 billion USD in 2009. The last year there have been exports of 40 billion USD of goods and 20 billion USD of services totaling into a 60 billion USD. In 2009 India exported 21 billion USD to USA. The SMEs are the economic backbone of USA and 97% SMEs have less than 20 employees. US Small Business Administration offer counseling and assistance to SMEs to establish business contacts, but a lot need to be done to collect the Indian and US SMEs. Today Washington apples are available in India and Boeing supplies aircrafts to the Indian companies.
H. E. Mr. Paul A. Folmsbee - Consul General, USA, Mumbai addressing the delegates.
corruptions at all levels which hampers the growth. The SMEs should delegate and grow with good governance so that the interest of the family and the other stake holders like banks, suppliers are taken care of which will result in scaling up the profitability. Good governance is an important element when a SME enter into global market. Business ethics enables an SME to access capital. It is my suggestion that Institutions like the SME Chamber of India should be instrumental in pushing the SMEs towards good governance.
In the developing countries like Africa and Middle East the major impediment for growth is the bad governance. Many of the SMEs are family owned and lack transparent business operations and internal management. There are also
ADDRESS BY DIGNITARIES Mr. Shah, who was awarded “Entrepreneurship Excellence Award in “Realty and Infrastructure Sector” in his address said that India is a different country compared to other countries where most of the population are traditionally excellent entrepreneurs. According to him every Indian is an entrepreneur and given the right opportunity and finance they can become world class entrepreneurs. He emphasised the need for concerted efforts from different professionals like CAs, Lawyers, Engineers etc. so that different expertise and experiences can be shared and utilised for establishing world class enterprises and businesses. Indian entrepreneurs have great ability and potential. The only requirement is right atmosphere, opportunity and finance. As per Mr. Shah, this can be achieved through collective efforts.
Mr. Hemant Shah Chairman & Managing Director, Ackruti City Ltd.
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Inaugural Issue, January 2011
Mr. Madhu Kannan - MD & CEO, Bombay Stock Exchange Ltd.
Mr. A. Rameshkumar - MD & CEO, Asia Pragati Capfin Pvt. Ltd. & Chairman, Northern Region, New Delhi, SME Chamber of India
It is a coincidence and interesting fact to note that this Roundtable is organised on the foundation day of the SME Chamber of India which is also the foundation day of the Bombay Stock Exchange. It is difficult to club all the SMEs as an homogenous body because they vary considerably in their capabilities, turn over, technology employed, the variety of products and services etc. Moreover, many of the SMEs are from the unorganized sector. This poses interesting challenges to all concerned. As per the information available from the Prime Minister's Task Force, 1/3 of the challenges of the SME Sector relates to the finance. Timely access to the finance, availability of the finance and the cost of access are the major problems. Banking sector and security market are the two pillars of the economy.
50% of the employment is generated by the SME Sector besides contributing 20% towards GDP. If the Nation is to prosper by 2020 the SMEs should concentrate on ethical business practices and corporate governance and they should aim to get the maximum awards for corporate governance. SMEs have inherent quality to weather adverse conditions and are the potential suppliers to large corporates. Despite these, it is ironical to note that only 30% of the SMEs have access to bank finance. This goes to prove the enormous potential to the banking and other financial sectors to tape the balance 70% of the SME market. Banks should make an attempt to identify and treat good and high performance SMEs in part with the Corporate with regard to charging interest. SMEs also have little exposure to availing fund from venture capital and private equity, which they should explore seriously. All the banking transactions should be made online compulsorily so that the harassment at various levels can be avoided. There is also a need for an active secondary market for the SMEs. It is advisable to have a separate mutual fund focused on SMEs. SME representative bodies like SME Chamber are doing a good job in supporting the SMEs but they should broaden their developmental activities. A special funding should be dedicated for those SMEs engaged in environmental protection. Finally, the SMEs is a strategic sector for the development of the Indian economy and with a proper assistance and guidance they will emerge successful in 2020.
There should be a well organised market mechanism, regulators and exchanges for the growth of the capital market. With the well managed stock exchange the SMEs can highly leverage their capabilities. In UK and USA due to the availability of a separate SME Exchange there are many early stage venture capitalists always ready to encourage the entrepreneurs with innovative ideas. The reason behind this is their ability to exit at appropriate time through the Exchange. “Mother� in Japan and Exchanges in China are also actually supporting SMEs. By listing in the SME Exchange the enterprise can scale up their activities attract good employees and obtain banking loans on attractive terms.
competitive. Most of the SMEs are still not aware about the various incentives and schemes of the Government as well as financial products available for their business growth. Therefore the SME Chamber is committed to take up the cause of this Sector and towards this end has been organising various programmes on different subjects to use new ideas for growth and compete not only in India but globally. He reiterated the need for setting up a SME Stock Exchange without any further delay so that the SMEs can raise capital for their various business needs.
Mr. Chandrakant Salunkhe - President, SME Chamber of India
Importance of Good Governance and Business ethics was also emphasised. Unless the SMEs adopt sound principles of business ethics they cannot be world class entrepreneurs, he said.
Mr. Chandrakant Salunkhe explained the role played by the Chamber for creating awareness amongst he MSME Sector on various aspects to be able to grow and become globally
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SME CHAMBER OF INDIA ACTIVITIES
Mr. M. Narendra - Executive Director, Bank of India The lending of the banking sector to MSME stands at 3,75,000 crore. This has grown 67% in 2008. Due to recession it came down to 21% and again rose to 40% in the current year. Within 4 years, the lending to MSME will touch 8 lakh crore. Many of the banks, realising the importance of the SME Sector have set up separate MSME Department. Banks have their own inherent operational problems and they are sensitizing their employees to minimise the turn around time. Separate SME hubs at zonal level, centralised credit processing cell and simplified forms are being introduced. Banks also offer collateral free loans upto Rs One crore under CGTMSE Scheme. It is also
mandatory not to insist on collateral for loans upto Rs. Ten lakh. Bank of India have assisted 25, 000 MSMEs to the tune of Rs. 1310 crore. The Prime Minister's Task has recommended 60% of the credit to the MSME and Bank of India is already lending 45% to cover manufacturing and service sector. Our bank has started a “rural development training programme� in lead districts under which farmers, micro enterprises engaged in art and craft are trained, provided finance and supported for their marketing activities. The Bank is also adopting industrial clusters and hundreds such clusters have been identified and provided tailor made schemes. The SME Development Centres along with other related SME Agencies should work for the total development of the SME Sector. SMEs with good credit rating are provided with concessional rate of interest upto 100 basis points. The Banks also expect from the SME Customer a transparent dealing, good corporate governance, improved quality of product and services and better management. The SME should graduate themselves from a proprietorship to a partnership to a joint stock company to attract venture capitalists and foreign currency funding.
In order to be successful it is essential that the SMEs should create, enhance and sustain international competitiveness. In international perspective the domestic capabilities and foreign competition in India should be given due consideration. New SMEs who are planning to grow cannot succeed without international engagement. Timely and cost effective finance are the major thrust areas for the SMEs. Exim Bank is offering lines of credit to prime contractors and sub-contractors directly operating in overseas market. These lines of credit are covering 130 countries with a outlay of 4.5 billion USD. There are also other services like factoring and loans for technology upgradation. The Exim Bank in collaboration with Asian Development Bank is creating a special fund for SMEs to cover trade, services and investment. Overseas companies coming to India brings along with them their preferred suppliers and bankers. Indian SMEs operating outside India should also follow the same practice. They should demonstrate their excellence to the industrialised markets. Exim Bank also encourages trade within Asia through a Forum of Asian Exim Bank. The Exim Bank of China is doing a commendable job in this regard.
Mr. S. R. Rao - President, Global Procurement Consultants Ltd. and Former Executive Director, Exim Bank of India There are also development banks in the BRIC countries aimed at SMEs. Exim Bank also supports SMEs towards marketing strategies with soft loans and helps them in establishing linkages and alliances in the emerging markets. The SMEs should also move up in the quality value chain and subject themselves to rigorous examinations. Exim Bank also assist grass root rural SMEs to explore global markets besides assisting sectoral industries like machine tools.
Delegates at the Summit
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Inaugural Issue, January 2011
Ms. Sangeeta Modi – Founder, Access Asset Managers
One cannot expect the SMEs to comply with all the operating norms and procedures of Corporate Governance applicable to the big Corporate due to their limited resources. Most of the SMEs are a single man show and his decision is final in all business matters. It is commonly felt that the smaller companies lack integrity, transparency in their accounts and taxation issues. Apart from the several problems the major one faced by the SMEs are access to adequate and timely finance, poor marketing strategies and obsolete technology. SMEs start their enterprise with the family owned funds and obtain bank credit for further needs. SMEs with better accounting policies and good corporate governance do get better ratings from the credit rating agencies.
During the past 10 years there has been no venture capital funding focused at SMEs. In the last 5 years, there were only 4 or 5 SME focused funds and today it may be around 15 to 20. In Indian context, the demand for funds and its supply represent a triangle and inverted triangle. This shows that majority of the VC funds would like to concentrate on big accounts while the requirement for FC funds is at the lower level. Realising the importance of the SME Sector more and more VC are entering into SME Sector. In the next five years more SME focused funds will be available. As of now SMEs with Rs. 20 crore revenue are favoured and those with 4 to 20 crore are left out. However, by 2020 SMEs will be able to attract more VC funds.
Release of White Paper on”Good Governance & Business Ethics and SME Stock Exchange”
Mr. C.B. Bhave - Chairman, Securities & Exchange Board of India (Centre) releasing the White Paper on “Good Governance & Business Ethics and SME Stock Exchange” at 15th Foundation Day Function of Small & Medium Business Development Chamber of India (SME Chamber of India) on 9th July 2010 at Mumbai. (From left to right) Mr. Bhairav B. Kothari - Managing Director, Super CFO Services Pvt. Ltd., Mr. Hemant Shah - Chairman & Managing Director, Ackruti City Ltd., Mr. Chandrakant Salunkhe - President, MIEDA, Mr. Joseph Massey - MD & CEO, MCX Stock Exchange Ltd., Mr. A. Rameshkumar - Chairman, Northern Region, SME Chamber of India and Mr. Madhu Kannan - MD & CEO, Bombay Stock Exchange Ltd.
SME CHAMBER OF INDIA ACTIVITIES
Mr. D. R. Dogra - MD & CEO, Credit Analysis & Research Ltd.
Mr. Chandrakant Salunkhe - President, SME Chamber of India felicitating for Supporting SMEs
Mr. C.B. Bhave Chairman, SEBI Inaugural Issue, January 2011
H. E. Mr. Paul A. Folmsbee Consul General, USA, Mumbai 35
H. E. Mr. Wang Donghua Consul General, People’s Republic of China
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NDIAN SME
KNOWLEDGE FORUM A Think Tank to enhance knowledge of SME Sector LAUNCHING OF THE FORUM “INDIAN SME KNOWLEDGE FORUM” was officially launched at the hands of Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission of India on 21st February, 2009 at Mumbai. In picture (L to R) Mr. Nanasaheb B. Patil, IAS - Principal Secretary, Agriculture & Horticulture, Government of Maharashtra, Mr. Chandrakant Salunkhe - President, SME Chamber of India Mr. Montek
Singh
Ahluwalia
-
Deputy Chairman, Planning
Commission of India, Mr. Tamer Taskin – President, Aegean Region Chamber of Industry (EBSO), Izmir, TURKEY, Mr. Anthony J. C. De Sa, IAS - Director, UNIDO Centre for South – South Industrial Cooperation, Mr. Joseph Massey - MD & CEO, MCX, Mr. A. Rameshkumar - Chairman, SME Chamber of India (Northern Region) and MD & CEO, Asia Pragati Capfin Pvt. Ltd. and Mr. N. C. Vasudevan, IAS - Director General, National Productivity Council, Government of India.
ADVISORY COMMITTEE (2009 - 2012) CHAIRMAN
FOUNDER PRESIDENT MR. CHANDRAKANT SALUNKHE Founder President, Small & Medium Business Development Chamber of India
PROF. SURESH D. TENDULKAR Director, Central Board of RBI and Former Chairman, Economic Advisory Council to Prime Minister
ADVISORY COMMITTEE MEMBERS DR. ANIL KHANDELWAL
Former CMD, Bank of Baroda
MR. R. M. NAYAK Chairman, Sun Capital Advisory Services Pvt. Ltd
MR. D. R. DOGRA MD, CARE Ratings
MR. RAVI SHANKAR Founder Director, Brickwork Ratings India Pvt. Ltd
MR. A. RAMESHKUMAR Chairman, SME Chamber of India, Northern Region, New Delhi
MR. CHAITTANYA SHAH
CEO, CKPP Associates
For Assistance and Support Services Contact
INDIAN SME KNOWLEDGE FORUM Central Office 3, Upper Ground Floor, Samruddhi Venture Park, Marol MIDC, Nr. Hotel Tunga Paradise, Andheri (E) Mumbai - 93
Registered & Correspondence Office 101, Murlidhar Baldev Estate, Nr Vikas Estate, Off Aarey Road, Goregaon (E), Mumbai - 400 063.
Tel: +91 - 22 - 6667 4444 / 6677 0218 / 6150 9800 | Fax: 2874 3543 Email: info@smeknowledgeforum.com | Web: www.smeknowledgeforum.com
SME CHAMBER OF INDIA ACTIVITIES
Presentation of National Level
SME & ENTREPRENEURSHIP EXCELLENCE AWARDS AND BEST YOUNG ENTREPRENEUR AWARDS Friday, 9th July 2010 | Hotel InterContinental The Lalit, Mumbai
Mr. C. B. Bhave - Chairman, Securities & Exchange Board of India (SEBI) Presented National Level SME & Entrepreneurship Excellence Awards and Best Young Entrepreneur Awards
SME & Entrepreneurship Excellence Award in Realty & Infrastructure Sector Awarded to Mr. Hemant Shah – Chairman, Ackruti City Ltd.
SME & Entrepreneurship Excellence Award for Supporting SMEs to Bank of India. The award accepted by Mr. M. Narendra - Executive Director, Bank of India.
SME & Entrepreneurship Excellence Award in Manufacturing Sector Awarded to Mr. Virendra Jhamb - Managing Director, GEA Ecoflex India Pvt. Ltd.
SME & Entrepreneurship Excellence Award in Infrastructure & Hospitality Sector Awarded to Mr. Vinay Phadnis - CMD Phadnis Infrastructure Ltd.
SME & Entrepreneurship Excellence Award in Education Sector Awarded to Prof. Dr. Sanjay B. Chordiya - Founder
SME & Entrepreneurship Excellence Award in Manufacturing Sector Awarded to Mr. Mahaveer Bafna - CMD, Bafna Pharmaceuticals Ltd.
President & Chairman, Suryadatta Group of Institutes.
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SME & Entrepreneurship Excellence Award in Manufacturing Sector Awarded to Mr. Ajay Mehta - CMD, SMI Coated Products Pvt. Ltd.
SME & Entrepreneurship Excellence Award for Promoting SMEs Awarded to Mr. Rajen Kumar - Chief Editor, SME World Magazine
Best Young Entrepreneur Award in Retail & Marketing Sector Awarded to Mr. Jay Gupta - Managing Director, The Loot (India) Pvt. Ltd.
Best Young Entrepreneur Award in Manufacturing Sector Awarded to Mr. Mahesh S. Deshmukh - CMD, Chetas Control Systems Pvt. Ltd.
Best Young Entrepreneur Award in Service Sector Awarded to Mr. Arvind Agarwal - CEO, Atherstone Investor Communications Ltd.
Best Young Entrepreneur Award in Financial Service Sector Awarded to Mr. Bhairav B. Kothari - Managing Director, Super CFO Services Pvt. Ltd
Best Young Entrepreneur Award in Social Service Sector Awarded to Mr. Anirban Roy - MD, Society for Educational Welfare & Economic Development
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SME & Entrepreneurship Excellence Award in Service Sector Awarded to Mr. Mukesh Shah - Anmol Finsec Ltd.
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INDIAN YOUNG ENTREPRENEURS’ FORUM Networking | Motivation | Education I Empowerment
Activities of the Forum £ The Forum organises activities for the development of existing business, finding new markets, acquiring new technology, finance and equity funding, international collaborations and resolving problems and issues. £ The Forum provides information and guidance on the process of setting up an enterprise, the procedures and documentation for export activities, making a business plan, market study, feasibility reports, project reports, approaching a bank or a financial institution for obtaining term loans and working capital, development of skills pertaining to manufacturing, quality, marketing and human relations, effective communication, export promotion, foreign exchange rules & regulations, international payment settlements, risk management and other related topics. £ The Forum provides a unique opportunity for networking with top CEOs of Corporate and Banks, Government Officials, Technocrats, Industrialists and equity providers. This interaction will be immensely beneficial to the young entrepreneurs in order to understand and learn effective management from experts. £ Showcasing the business opportunities available in India and abroad £ Interaction with Purchase, Marketing and Export Senior Managers and Executives. £ To educate and train young entrepreneurs to compete in markets £ Updating entrepreneurs with the latest trends in their business activities £ Guidance and assistance on financial management £ Assistance for joint ventures, collaborations, contract manufacturing and technology transfer £ Knowledge transmission programs £ Arranging group marketing and brand promotion The Forum will provide guidance and assistance for business development as required by members.
Mr. Chandrakant Salunkhe - Founder President Contact for Membership, Assistance and Support Services Tel: +91 - 22 - 6677 0218 / 6667 4444 / 6150 9800 | Fax: 2874 3543 | Email: youngceoindia@vsnl.net | Web: www.youngceoindia.com Registered & Correspondence Office: 101, Murlidhar Baldev Estate, Nr Vikas Estate, Off Aarey Road, Goregaon (E), Mumbai - 400 063. Central Office: 3 & 4, Up Gr Floor, Samruddhi Venture Park, Marol MIDC, Near Hotel Tunga Paradise, Andheri (E) Mumbai - 400 093. Forum is a private organisation and Registered u/s 25 of The Indian Companies Act, 1956)
Theme
“Empowering for better growth - Synergy and Strategy” Friday, 18th June 2010 | Hotel InterContinental The Lalit, Mumbai
Mr. Rajendra Darda - Hon’ble Minister for Industry, Maharashtra while inaugurating the Summit. (L to R) Mr. A. Rameshkumar – CEO & MD, Asia Pragati Capfin Pvt Ltd. and Chairman, Northern Region, SME Chamber of India, Mr. M. Narendra – Executive Director, Bank of India, Mr. Ramu Deora – Chairman, All India Shippers' Council, Mr. M. K. Nag – Chief General Manager (SME Business Unit), State Bank of India, Mr. Chandrakant Salunkhe – President, SME Chamber of India, Ms. Meera Sanyal – Country Executive India, The Royal Bank of Scotland N.V and Ms. Sulajja Firodia-Motwani – Managing Director, Kinetic Motor Co. Ltd.
ADDRESS BY CHIEF GUEST Mr. Rajendra Darda who was the Chief Guest at the Summit in his inaugural address said that Government of Maharashtra is fully aware of the issues and problems of the MSME Sector and is committed for the development of MSME Sector. Towards this all out efforts are being initiated by his Department. A separate Secretary (SME) has already been appointed, in addition to Secretary (Industries) to take care of the requirements of MSME Sector through a “Single Window Clearance” which will deliver a hassle free service. He assured that from his Ministry all support will be available for SMEs and young entrepreneurs who want to start a venture. He also mentioned that His Ministry is going to revive the DICs which Mr. Rajendra Darda - Hon’ble Minister for Industry, have been non-functional for the last 10 years. Maharashtra delivering the inaugural address He assured that Government will take all necessary measures to develop the MSMEs especially Young Entrepreneurs, who wants to set up an enterprise and industrial growth in Maharashtra by providing all benefits available from the Government. He also assured that he will take up with the Chief Minister the dream of making Maharashtra the number one industrialised State in India as well as an attractive place for investment.
SME CHAMBER OF INDIA ACTIVITIES
YOUNG ENTREPRENEURS’ SUMMIT
Delegates at the Summit Inaugural Issue, January 2011
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ADDRESS BY DIGNITARIES
Ms. Meera Sanyal - Country Executive India, The Royal Bank of Scotland N.V
Ms. Sulajja Firodia-Motwani
She emphasised the need for Vocational Training, Streamline education syllabus to focus on English language and computer skills and Liberalization of Higher education. The next stage of enabling reforms is now needed to provide an impetus to young Indian entrepreneurs, she said.
Ms. Motwani was very optimistic of the future of the young enterprises in the years to come since India is much sought after country throughout the world for business and investment as it has been established that it has great potential in spheres of business. Hence it is the right time for any person who has entrepreneurship desires and qualities to start ventures, since we have stable economy and political leadership and growing market.
Managing Director, Kinetic Motor Company Ltd.
She said that urgent reforms are required in the field of Education, Economic Infrastructureand Environment protection.
The essential need for anybody who wants to start an enterprise is to have a viable project so that the execution of and expansion will be a reality. Since technology is changing day-by-day and great innovations are taking place everywhere it is very necessary to have a thorough study of what one wants to do and how? Since there have been growth during the previous 10 years, there are many avenues available for the young generation which should be exploited and taken advantage of. One should have through knowledge of what is happening in the National and International level for adoption, since in the coming 10-15 years there will be tremendous growth.
The reforms of 1992 paved the way for unleashing the innovation of Indian entrepreneurs and consequently India's growth. She advised the young entrepreneurs to pursue their goals even in the face of difficulties, and convert adversities into opportunities. She also emphasised the need for promoting Self-Help Groups to provide means of livelihood for rural women, Public-private partnership, to reduce Man/Animal conflict through positive efforts at rehabilitating human settlements, Focus on renewable sources of energy, especially, solar, hybrid and biomass and focus on pollution control norms and thereby ensure a green future.
She concluded that to bring about desired developments and opportunities it is necessary to have growth in infrastructure, health and education especially in rural areas. These are huge areas for growth of entrepreneurs. Therefore, it is very essential, that the concerned authorities should come forward to guide, encourage and provide assistance to the young entrepreneurs who have potential and willing to do something so that the status of the State as No. 1 Industrialised State can be retained. He emphasized about the value system and qualities with which any entrepreneurs can achieve success. Risk capital management is another important area which should be taken care of. Another important point he mentioned is about how to overcome various challenges to be successful. He also emphasized the importance for good governance, business ethics and transparency for an enterprise which is the need of the hour to have a very good impression amongst all concerned especially for global interactions and business alliances. One has to be transparent, quality conscious, customer centered and technology savvy.
Mr. M. Narendra - Executive Director, Bank of India Bank of India has been successfully operating for the last 104 years and is one of the major banks which are committed for the growth of MSMEs. Explained about various schemes available for the MSMEs especially for the young entrepreneurs, mentioned that there should a proper project planning for any entrepreneur as to what he wants to do. He explained about the schemes available under the CGTMSE from his Bank. The bank has set up around 100 clusters for SME Development.
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He concluded by assuring all guidance, support and help for entrepreneurs who want to start a really viable project having a good techno-economic feasibility study. 42
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plans so that the Bank can easily evaluate properly and the viability and risks involved can be ascertained. Lending to MSMEs from SBI has increased tremendously. The Bank has also devised various means to mitigate delays. Bank has to take into consideration all quality of the entrepreneur as to what he wants to do, how to do and when to do. The issues involved for financing is first of all a proper concept is required. Hence the proposal of the project should be viable as per norms of the bank to satisfy the internal assessment. State Bank of India is fully committed to develop and encourage the Entrepreneurs, he said. Another requirement for the entrepreneurs is that they should be able to raise capital and proper interaction with the bankers to convince their strength, weakness so that the bank can render proper guidance.
Mr. M. K. Nag - Chief General Manager (SME Business Unit), State Bank of India Mr. Nag while addressing the inaugural session of the Summit said that State Bank of India has many schemes for the Young Entrepreneurs provided they have proper idea as to what they want to do. The project should be very clear and indicate the future
He concluded by saying the SBI is always there to help a genuine entrepreneurs who actually wants to set his enterprise.
Mr. Bhagat explained the India's story. India's ascendancy to emerge as an economic and political global power of 21st century has come despite India not opting to be a colony of any super power; it took aid and created bilateral relations on its own terms. Resistance from the developed world to deprive it of technological advancement; withstood attempts of economic colonization. Mr. Bhagat said that India's economic model is unique and commended upon the vital role played by the MSME Sector toward contribution to Nation development. While explaining about emerging demography and Investment outlays, with facts and figures he projected the potential growth India would have from 2015 till 2030 with the help of vast recourses and educated young population as also the expected increase in the overall infrastructure investment and developments.
Mr. Girish Bhagat – Secretary (India), Euro India Centre and Director, IndiaNivesh Limited. Mr. Bhagat said, what an entrepreneur wants is that the Government needs to create an SME focused Banking Institution like SIDBI or NABARD. For addressing the capital needs the various ways are Securitization of Cash Flow, Explore Hybrid Financial Instruments, Financial Management performance, Venture Capital / Private Equity and act collectively.
According to him the areas that emerge from demographic patters, social & economic investments and global issues will be Urban Housing (Affordable Housing), Higher & Vocational Education, Entertainment & Leisure, Healthcare, Food Processing & Agriculture related, Economic prosperity symbols i.e Automobiles, High Fashion, etc. Environment Sustainability and Security. The essential requirements of Self Enterprise are Planning, Capital, Best Practices, Technology, Acting Collective, Mentoring, Knowledge / Learnings – Adopt, Adapt & Abort, said Mr. Bhagat.
Mr. Bhagat advised the participants to contact SME Chamber of India for Consulting, Advocacy and EuroIndia Centre for Learnings Technology Partnership, Joint ventures, Access to European Market.
Mr. Rajendra Darda - Hon’ble Minister for Industry, Maharashtra felicitating the following successful entrepreneurs during the Summit
Mr. Jagat Shah
Mr. Sai S. Madhavan
Mr. Srikant Badve
Founder & CEO, Global Network Institute and Mentor, Cluster Pulse
Director, Nishtha Technologies India Pvt. Ltd
Chairman and MD, Badve Group of Industries
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SME CHAMBER OF INDIA ACTIVITIES
ADDRESS BY EMINENT SPEAKERS Mr. Srikant Badve
Mr. Mahesh Krishnamurti
Chairman & MD Badve Group of Industries
Managing Director, Resources Global Professionals (India)
“Sustainable Growth – Strategy for Young Entrepreneurs”
“Business Plans and Vision & Mission Statements for Better Growth”
Mr. Badve explained how a entrepreneur can translate his ideas into realities by adopting the three essential requirements that Confidence, Hard Work and Attitude. As a Mechanical Engineer, from humble beginning without business background, he made considerable achievements and Badve group has manufacturing units located at Aurangabad, Renjangaon, Chakan (Pune), Pantanagar (Uttarakhand) and Chennai.
According to him, client relationship is every essential. It is necessary to continually foster world-class infrastructures as well as to quickly create principle-centered sources to meet customer's needs. To meet the challenge it is necessary to assertively network economically sound methods of empowerment so that we may continually negotiate performance-based infrastructures.
To be a successful entrepreneur, according to him, the essential requirements are Providing Quality Technology so as to be world class manufacturer in our field, Serving Customers Efficiently and Effectively, Developing Market needed Products, Providing Employees with a Safe and Pleasant work environment.
The questions to be analysed quite often while making business ideas are What do you know? How will you respond to adversity? How well are you known? Who do you know? Are you realistic? How committed are you? What's driving you?
Mr. Ashish Arora Managing Director, HR Anexi Pvt. Ltd.
“Development of Human Resources for increased productivity” He explained the importance of development of human resources for increased productivity for Strategic Business Management for Sustained Growth. It is therefore necessary that the organisation vision should be communicated and understood clearly to make the journey of each and every employee in an organisation delightful. As per him it is very necessary to motivate the employees to cultivate a belongingness to achieve maximum output as well as help to put their whole hearted talents and stay for longer periods, which will be beneficial for the overall well being of an organisation.He also emphasised the need for thorough reference checks, instead of completely depending on resume while hiring employees as most of the time. SMEs make mistakes in this respect. Also proper care is needed while hiring relations and people referred by friends to avoid family and friendly relations in the workplace which is not healthy due to many reasons. If possible, one should try to hire a jack of all instead of specialist for a particular job. However, young companies need specialist for specific tasks.
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Respect, integrity, communication, and excellence are other important ingredients for success in business. He explained in detail the importance of People (the team), opportunity, context and risk and reward, quantification, direction, motivation (inspiration), Challenge, clarity, action and guidance.
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Mr. N. Prabhakar Rao Regional Manager, LIC of India
“Role of LIC” Mr. Rao in his speech explained about the role played by LIC in every walk of life, which has insured more than 206 million lives in the last 5 years. Also explained about the various polices served in different categories especially for the Young Entrepreneurs and other entrepreneurs. With an informative presentation he gave the facts and figures of various polices for the information of the participants.
Inaugural Issue, January 2011
Director, Nishtha Technologies India Pvt. Ltd
recording, multi-function products, by range of offerings, increase in depth of research resulting in better procedures like adapting to instrument precision, making advancements in genetic engineering, making advancements in agro or food processing.
“Leveraging IT for business growth”
According to him, to meet the increasing competitiveness, one should adopt superior technology, enhance user experience, using marketability tool, JIT, Lean Manufacturing (increased efficiency and value).
Mr. Sai Madhavan, in his address explained various aspects of BPO Services such as – Medical Transcription, Legal Transcription, Business Transcription, Tax accounting, Planning for IT Strategy & implementation, Project Management / Six Sigma, Accounting / Financial, Professional / Corporate Training in the areas of Project Management, Six Sigma, ITIL, Values Based Leadership, Individual Development / Team Building workshops / events.
IT Breaking the Myth because IT is complex and expensive vs. IT for all but adaptable per relevance to business function. It is not a rocket science. It is existing product or principle but increased findings / refinement for varied applications – innovation vs. invention.
According to him what one should expect are not a forum for explaining latest IT products but review of Trends in Technology / Market forces, Understanding IT and it's relevance, focusing on the need for adaptation, Strategizing for adaptation / critical factors and steps in leveraging IT and the guiding principles in leveraging.
Guiding Factors for Leveraging IT are strong business strategy and philosophy, areas of business functions for leveraging: biggest bang for the buck, Careful selection of IT components for leveraging / degree of leveraging, Timely introduction / integration of technology, Training and adaptation, Seamless rollout of initiatives through appropriate level of project management plans and control, Guiding Principles for Leveraging vs. using your own infrastructure and websites for two way communication with the customer.
He also emphasised the need for increase in speed of execution i.e. travel, processing, productivity, supply chain management and increase in accuracy of scientific, medical, bio-medical and aerospace technology. Another important aspects are increase in quality metrics and clarify of products /services in market, customer acceptance, mobile/telecom industry, ISO 9001, increase in coverage of mobility across geographical locations / POS
He also made valuable observation on IT like technology, IT application, adoption, Philosophy for Leveraging IT, Profitability Vs. Growth.
He concluded by saying that IT in Business is for doing the right thing, for the right reasons, on the right elements, with the right people, at the right time, with the right technology, at the right cost, for the right product or service, for the right users or uses.
Mr. Naushad Panjwani
Project is a temporary endeavour undertaken to create a unique product, service or result. Project Management involves application of knowledge, scales, tools and techniques and project activities to meet project requirements. The important aspects involved in executing a project are Project Integration Management, Project Scope Management, Project Time Management, Project Cost Management, Project Scope Management, Project Quality Management, Project Communication Management, Project Risk Management and Procurement Management. He also explained in detail about Project Charter, Project Success Criteria, Stakeholder Identification, Responsibility Assignment, Matrix, Communication Plan, Work Breakdown, Structure & Risk Management.
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Executive Director, Corporate Projects, Knight Frank India
“Strategies and Techniques for Executing & Managing New Projects”
SME CHAMBER OF INDIA ACTIVITIES
Mr. Sai S. Madhavan
It is also very essential to understand the Power Play, Politics, Personal Nuisances and Institutional History. Decision making process is also crucial which includes advocacy and Inquiry.
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Mr. Vinod Nair
Mr. Jitu Mehta
Partner, Grant Thornton
Management Consultant in value creation, Founder Chairman at Valueveda and EX- Executive Director at Hindustan Unilever Ltd.
“Good Governance and Ethical Business Practices for the success of an enterprise ”
“How to grow profitably leveraging outsourcing?”
According to Mr. Nair, governance is about directing and controlling a Company through a set of Systems, Principles and Processes. The primary purpose of good governance is maximizing stakeholder value, Customer, Employees, Investors, Vendors & Society at large.
He said that the world is moving from physical capital and ownership to networks and intellectual capital. Ownership of all assets and resources is not needed for rapid and profitable growth. Economies of speed are getting more important than economies of scale. There is absence of expertise. To overcome this we should use our own expertise since better expertise is available elsewhere. Also it is very necessary to attract good management talent and the same should be accessed on time-share basis, which is useful for both large and small companies for different reasons. For large companies for reasons of cost reduction, flexibility, avoiding internal bureaucracy on capex, trade union problems etc. and for small companies for speed, expertise, cost reduction, capex etc.
The need for good governance is creating long-term trust between companies and investors, promote corporate fairness, transparency and accountability, risk management and monitoring, rationalizing the decision making procedures, efficiency in operations and other business processes. Good governance starts from a Frictionless journey from Ownership to Professional Management of Enterprise, Entity Level Measures, Operational Measures. Good Governance always starts and ends at the Top, said Mr. Nair.
OTHER EMINENT SPEAKERS
The equity level measures of good governance can be achieved by having technically qualified leadership, strong and robust advisory board, code of ethics and conduct documented and implemented, ownership separated from Management, institutionalizing risk management and audit procedures and control environment.
Mr. Deodutta Kurane
Operational measures involved in Good Governance are company-wide policies and procedures documented, delegation of Powers, implementation of internal controls across processes, employee participation and strong systems and controls.
“Responsibility of Corporate to nurture young entrepreneurs”
Mr. Nair also spoke about the evolution of Corporate Governance and indicators of bad governance. The indicators of bad governance are spate of high profile corporate frauds and collapses in the U.S and Europe; executive compensation grossly disproportionate to corporate results; misuse of corporate funds; trading on insider information, particularly by managers exercising stock options; misrepresentation of true earnings and financial conditions of companies; and obstruction of justice by concealing activities or destroying evidence. He concluded that sound business ethics will go a long way in the progress of any organisation.
Mr. Amit Grover
President, Human Capital Management, YES Bank Ltd.
Founder, Nurture Talent Academy and Director, Mumbai Angels
“Venture Capital and Private Equity Funding for Start-up and Expansion” Ms. Devita Saraf CEO, VU Technologies and Zenith Computer Ltd.
“Women Entrepreneurs – A new force to reckon with”
Delegates at the Summit
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SME
SME TRAINING INSTITUTE OF INDIA SEMINAR | CONFERENCE | TRAINING | EDUCATION | WORKSHOP | INTERACTIONS
SME Training Institute of India” was launched at the hands of Mr. Dinesh Rai - Secretary, Ministry of MSME, Government of India on 21st February, 2009. Mr. K. R. Sharma - Director, MSME Development Institute of India, Mumbai, Mr. T. R. Bajalia - Executive Director, IDBI Bank, Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. A. Rameshkumar - Chairman, SME Chamber of India (Northern Region), New Delhi. Mr. M. G. Sanghvi, Executive Director, Bank of Maharashtra Mr. Anthony J. C. De Sa IAS, Director, UNIDO Centre
MAJOR OBJECTIVES & ACTIVITIES Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü
To impart knowledge and skills SME & Entrepreneurship Development Marketing & Promotion Industrial Development Export-Import Documentation Business Process Management Business plans and strategy Self business evaluation knowledge Finance and Investment Technology Upgradation and Industrial Automation Branding and Promotion Strategy HR Management Financial Management Strategy for Identifying buyers and Importers How to avail incentives and financial assistance? Commercial Cooperation Agreements Joint Venture & Technology Transfer
Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü Ü
Private Equity / Venture Capital Funds Contract manufacturing tie-ups Setting up new Industry &, Business Quality Management Production Management Preparation of Business Plans and Project Reports Domestic Market Development Collateral Free Loans and Other Bank Finance Quality Assurance and Productivity Importance and benefits of Credit Ratings Letter of Credit and Payment Settlements Foreign Exchange Management Logistic and Supply Chain Management Lean Manufacturing Competitiveness Program Procedures for Government and PSU Tenders Importance of Intellectual Property Rights for SMEs
For Assistance, Support & Details Contact: Mr. S. Maheshkumar - General Secretary Tel: +91 - 22 - 6677 0218 / 6667 4444 / 6150 9800 | Fax: +91 - 22 - 2874 354 Email: smeinstituteofindia@gmail.com | Website: www.smeinstituteofindia.com Reg & Correspondence Office: 101, Murlidhar Baldev Estate, Nr Vikas Estate, Off Aarey Road, Goregaon (E), Mumbai:- 63. Central Office 3 & 4, Upper Gr. Flr., Samruddhi Venture Park, Marol MIDC, Nr Hotel Tunga Paradise, Andheri (E), Mumbai:- 93.
SME CHAMBER OF INDIA ACTIVITIES
Conference on
“Technology Transfer & Joint Ventures Opportunities for SMEs” Tuesday, 04th May 2010 | SME Chamber of India Conference Hall, Mumbai This Conference was organised to facilitate the SMEs to identify new business opportunities, joint ventures and collaboration arrangements, contract manufacturing tie-ups, transfer of technologies both imports and exports and to understand the procedures, formalities, the legal aspects, methods of identification of business partners, funding avenues for new projects, obtaining government & regulatory clearances and the incentives available from Government Departments and Banks. The delegates had a lively interaction with the eminent speakers as well as networked among themselves. Lot of interest was created to avail the various services available from the Chamber and other organisations towards technology transfer and joint venture arrangements.
ADDRESS BY DIGNITARIES Mr. Chandrakant Salunkhe
Ms. Anna Kalata
President, SME Chamber of India
Former Minister for Industry & International Trade, Poland
“Latest Technology for better growth of Companies”
“Technology Transfer, Joint venture and Alliance Opportunities between Indian and Polish Companies”
Mr. Salunkhe emphasised that the Indian SMEs should produce products of international quality in order to survive and grow the competitive world market. Many of the SMEs are using obsolete machineries, technologies and processes which hamper their ability to produce quality products. They should look for entering into joint venture arrangements with suitable partners as well as import latest technologies to meet their objectives.
Ms. Kalata appreciated the capabilities of Indian SMEs to produce internationally acceptable quality products. Due to her exposure to Indian industry especially with the SMEs, she said that there are many opportunities for technology transfer and business alliances to and from India.
There are also SMEs with state of the art technology which they can think of exporting to other countries especially to the developing countries.
There are good investment opportunities in Poland for the Indian SMEs. She elaborated on how to obtain licenses, opening representative offices as well as investment formalities and taxation details. The sectors wherein technology transfer opportunities available from India to Poland are - Chemicals, Metals, Water Treatment and Environment.
He reiterated the need to attend and participate in National and International Exhibitions, Conferences and B2B Meets in order to identify suitable technologies and partners.
She explained in detail about the guidelines on “Doing Business with Poland” and about the mindset of the polish businessmen about the Indian markets and enterprises which is very positive and promising.
Delegates at the Conference
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Mr. Don-Seok Choi
Dr. Sudarshan Singh
Director General, Korea Trade- Investment Promotion Agency (KOTRA), Mumbai
Chairman, ANT Steel Engineers (Asia) Pvt. Ltd.
“International cooperation through Joint Ventures”
“Joint Ventures success stories of Korean auto majors in India” Mr. Choi mentioned that Korea has made good progress in IT hardware sector while India has emerged as the leader in software technology. Therefore, there exists tremendous opportunities for joint ventures and collaborations in IT and IT enabled services.
Dr. Singh explained the importance of Indian steel industry and ascertained that as the economy grows there would be huge demand for steel. India has increased steel production considerably and achieved remarkable improvements in design and engineering. He emphasised the need for absorption of new technologies to produce steel of high quality with competitive price. This requires the Indian SMEs in steel industries to go in for joint ventures. The major problem in the industry is the non-availability of power at reasonable cost. Government should also take measure to provide all necessary support for joint venture in steel sector with minimum restrictions.
Underlining the common cultural and social similarities prevailing in India and Korea, the SMEs in both the countries should think of increased business collaborations for mutual benefit. Apart from manufacturing industries, the Indian SMEs engaged in services will also find good opportunities in Korea.
Mr. Girish Bhagat
impediment of Indian SMEs. This is not true because there are many overseas investors and Indian venture capitalists ready to invest in upcoming companies in high growth sectors.
Secretary (India), Euro India Centre and Director, IndiaNivesh Limited.
“Collaboration and Alliance Opportunities between Indian and European Companies”
The cluster approach is a good form of cooperative venture around the world. In Europe there are many clusters which are progressing very well. Even in India some clusters like knitted garments in Tirupur, woolen garments in Punjab are successful cluster operations. .
Mr. Bhagat informed that around 2000 SMEs are associated with the Euro India Centre. There is an increased awareness between the SMEs of India and Europe about the necessity to cooperate amongst themselves to increase trade and investment.
India is similar to Europe in its multi regional, multi linguistic and multi ethnic characteristics. Therefore, many of the successful business models in Europe can replicated in India. For example, ash is used to make readymade bricks in the construction industry which will find major applications in Indian low cost housing industry.
Since the European quality standards are stringent, the Indian SMEs should improve their capabilities to produce internationally acceptable quality products as per customer needs. Therefore, there is an urgent need to upgrade the technology in manufacturing industries which can be achieved through technology transfer and collaborations between Indian and European SMEs. There is a general feeling that non-availability of capital is a major
Although technology transfer and joint ventures are attractive options there are many statutory and legal issues need to be understood and addressed. This will avoid future litigations and complications in doing business. While selecting the size of the business partner, the reputation and integrity of the partner should be given due consideration that its size to reap long and fruitful association.
Ms. Poorvi Chothani LawQuest
“Legal Aspects in International Alliances” Inaugural Issue, January 2011
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While entering any sort of agreement especially in joint venture with overseas partners, the SMEs have to be very cautions in understanding the legal implications of the agreements. Mere MoUs will not be enforceable in the court of law in many occasions. For a better understanding and to avoid future disputes, the agreement have to be carefully worded, understood by both the parties and should be enforceable if necessary in a designated court of law. The Joint Venture Agreements should clearly specify the partners duties and liabilities, term of the agreement, legal jurisdiction, market related issues, patents and intellectual property rights and arbitration.
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Mr. Tokio Nishibashi
Mr. Jagat Shah
Senior Advisor, Japan External Trade Organisation (JETRO), Mumbai
Founder and Mentor, Clusterpulse
“How to Identify Joint Venture and International Alliance Partners? ” and “Technological International Alliances Challenges and Opportunities”
“Advantages of adoption of technologies for greater growth” Mr. Nishibashi mentioned that India and Japan are good business partners and there many successful joint ventures already existing, for example - Maruti Suzuki and Hero Honda. Other prominent Japanese companies in India are Mitsubishi Heavy Industries, Bridge Stone, Toyoto, Toshiba and Nissan. He has highlighted about the increasing interest of Japanese Government and companies to partner with their Indian counterparts.
Mr. Jagat Shah of Cluster Pulse projected the various technologies available from Canada for adoption by Indian SMEs.
Delhi Mumbai Industrial Corridor (DMIC) is one such collaborative initiative between the Government of India and Government of Japan to develop a dedicated industrial corridor with world class infrastructure. This will result in setting up of many industries between Delhi and Mumbai as well as create great employment opportunities. The Indian SMEs will have potential for growth by associating with the DMIC Project.
There are four routes for growth of an organisation like organic growth, strategic alliances, joint ventures and merger & acquisitions.
Mr. Jagat said that basic questions like Why, What, Where, With Whom, When and How are to be factored while deciding a collaboration or joint venture or technology transfer or partnership arrangement.
It is to be understood that the joint venture agreements are entered into for a specific task and for a specific period. The best form of joint venture is to have 50:50 stake. There are overseas companies who enter into different joint venture arrangements with Indian companies to cater to Indian markets with 50:50 stake and 70:30 stake to cater to the export markets.
JETRO will identify the SMEs in Japan and India to engage in DMIC and provide necessary guidance and assistance for joint ventures, technology transfers and business alliances.
In some joint ventures, the technology or know how or intellectual property are utilised as equity participation.
The Government of Japan and India are undertaking small community projects which will build eco friendly cities in Gujarat, Haryana and Maharashtra. The feasibility studies have already been started.These cities will create employment and better environment for the people.
He also touched upon the scope of the joint venture which will include duties and responsibilities, the rights of partners, the legal agreements, profit sharing arrangements, organisational structure, non-competitive agreements, intellectual property rights, the procedures for exit etc.
Mr. Shailesh Dungaria - AGM, SIDBI
“Funding for Technology Upgradation Projects by SMEs” He explained in detail about the products and services of the SIDBI aimed at the SMEs.
Through their CGTMSE scheme, they provide collateral free loans to Micro and Small Entrepreneurs through their members banks upto Rs. 1 crore.
Technology Upgradation Fund Scheme for Textile Industries (TUFS) has been launched by SIDBI with a view to sustaining as well as improving the competitiveness and overall long term viability of the textile sector. The scheme intends to provide timely and adequate capital at internationally comparable rate of interest in order to upgrade the textile industry's technology level. The special features of the Scheme is that the SME borrowers can avail either interest reimbursement on the interest actually charged in respect of rupee loan or 12% Credit Linked Capital Subsidy on eligible investment made for modernisation or 20% Credit linked Capital subsidy (CLCS @20%) on machinery cost.
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They also have another division called SME Rating Agency of India (SMERA) which provides ratings to the SMEs which will be useful to them in obtaining loans from the banks at concessional rate of interest. Moreover, these ratings will be useful in enhancing the credibility of the enterprises with their customers, suppliers, importers etc.
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Inaugural Issue, January 2011
Mr. Ashish Arora
Project Management Consultant
Managing Director, HR Anexi Pvt. Ltd.
“Strategies and Techniques of Managing and Executing Projects”
“Adoption of HR Management for Better Growth of SMEs”
The major problem in a project management is the cost and time overrun said Mr. Sangolli during his speech. Normally the project activity pertains to new start up, expansion, modernisation, backward or forward integration, vertical or horizontal integration etc. To avoid these overruns and for the successful implementation of the projects, care should be taken in the areas of planning, feasibility report, project organisation, staffing, financial management, budgets and control, detailed costing of land, building, equipments and utilities, erection and commissioning and consultancy charges from the inception. “Plan the work and work the plan” are the key to the successful implementation of the project. Preparing contingency plans as well as proper closure of the project are the two points which are normally ignored by the project personnel but the same need to be accorded priority.
Prof. M. V. Rane
While delivering his lecture on “Adoption of HR Management for Better Growth of SMEs”, Mr. Arora emphasised that while the employers want to maximise the contribution from the employees, the employees wish to maximise their satisfaction in an organisation through both monetary and other aspects. The success of an organisation therefore depends on the leadership skills of the CEO or the owner through effective engagement with their employees. Building trust through proper communication is the key to success. Identification of the problem areas, take corrective action, understanding the expectation of the employees and reward the efficiency and excellence should be an ongoing process. While the owner is passionate about his venture, it is very important to motivate all down the line to understand the goal of the organisation and ensure their involvement. It is worth noting that the attrition rate is high due to unsatisfactory working conditions and lack of motivation and appreciation more than the monetary considerations. He emphasized that maintaining the human relations of the highest order is very important, as 95% of the Joint Ventures fail or get into problem due to HR related issues.
Mechanical Engineering Department, IIT, Mumbai
Mr. Chaitanya Shah
“Energy Conservation Technologies for SMEs” Prof Rane emphasised the need for saving the energy in all possible ways in every walk of life and utilising the same in other areas for productive purposes. He cited examples for saving energy from the day-to-day utilization of various equipments like Air conditioners, Fridge etc. He explained in detail with technical data about the savings in energy as well as utilization of waste heat into productive purpose. Many of the innovative technologies developed by the students in IIT-Bombay are being patented. Some innovative systems developed by IIT-Bombay can be used for domestic purpose to produce hot water as well as to reduce the power consumption of the AC System. This will be a boon to the consumers as it saves a lot of money in their daily utilities and add more convenience. These can be commercially exploited by the Corporate and SMEs. Inaugural Issue, January 2011
CEO, CKPP Associates
“Arranging and Managing the Finance for better growth and expansion” Mr. Shah mentioned that many SMEs do not appreciate the efforts required to manage the finance effectively and arrive at the financial requirements in a more scientific manner. Moreover, in majority of the cases the owners have to concentrate on many operational matters thus by leaving him with little time to concentrate on financial matters.
SME CHAMBER OF INDIA ACTIVITIES
Mr. Ashok Sangolli
It is therefore advisable to outsource CFO Services to a specialist who can identify the financial needs of the enterprise, advise and guide the owner and the operating staff in raising funds, utilising them effectively and train the staff wherever necessary. 51
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Mr. Sharad Sanghi Director, Texperts India Pvt. Ltd
Mr. Dipak Kujur Chief Manager, Exim Bank of India
“Experiences of Joint Venture Alliances and its Advantages”
“Role of Exim Bank for promotion of Technology Exports”
Mr. Shanghi explained about successful setting up a joint venture arrangement with a local partner in Bangladesh to market products related to textile industry. “Texperts” were distributing LYCRA, an ingredient useful in textiles manufacturing, which is manufactured by their collaborators “Invista”. Invista had a good product but did not have the capability to market them in Asian countries. By partnering with Texperts both the joint venture partners could leverage their respective strengths for mutual benefit. By maintaining quality and timely supply they were able to create a good customer base in Bangladesh as tailoring is a wide spread cottage industry in Dhaka. This has also helped Texperts to supply their other products like cotton and similar items used in textiles by the same customers. This has resulted in increased volume of sales and profit.
Exim Bank is a specialised bank facilitating SMEs in their joint venture collaborations, imports of capital equipments and raw materials and export credits. The bank provides useful information to exporters and importers from SME Sector about the opportunities available in other countries. For those entrepreneurs who undertake project contracts abroad the Exim Bank offers specalised packages of credit. The Bank provides necessary assistance and guidance to encourage the Indian companies to export their technologies. This includes information about the specific country, identification of technology importers, the procedures and documentation and ensuring payments. Due to their worldwide contacts, Exim Bank can assist Indian SMEs to identify the right joint venture partners and also extend credit for imports. Buyers credit and line of credit in developing countries are some of the popular products of Exim Bank which are useful for the Indian small and medium entrepreneurs.
Delegates at the Conference
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Inaugural Issue, January 2011
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INTERVIEW
Hamriyah Free Zone (HFZ) is one of the fastest growing and dynamic free zones in the world, housing over 4,900 companies from 135 countries. Established in 1995 by an Emiri decree it is the first and the only free zone among 5,000 free zones worldwide certified SA8000 for Corporate Social Accountability and OHSAS 18001 for Occupational Health and Safety. Dr. Rashid Al Leem, Director General of Sharjah Department of Seaports and Customs and Hamriyah Free Zone Authority, widely acknowledged as a visionary and thought leader in business, socio-economic, academic and cultural endeavors, is the driving force in transforming HFZ into a strategic commerce hub and empowering thousands of businesses in the region
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View of Hamriyah Port Inaugural Issue, January 2011
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Dr. Rashid Al Leem CO NNECT
SME CHAMBER OF INDIA ACTIVITIES
CONFERENCE ON
VENTURE CAPITAL & PRIVATE EQUITY FUNDING OPPORTUNITY FOR SMEs 18th February 2010 | SME Chamber of India Conference Hall, Mumbai
ADDRESS BY CHIEF GUEST Mr. Abhyankar was the Chief Guest at the Conference beside many eminent personalities from the Private Equity and Venture Capital fund providers and managers. Mr. Abhyanakr highlighted the success of venture capital and private equity funding in US and other countries as well as the necessity for making them available to the Indian SMEs in a big way for their growth. He explained in detail about the various business opportunities available all over the world for manufacturing and service enterprises in India, quoting from his experience as Ambassador and member of many high level Committees. He had quoted that the success of the growth of US Economy is due to the development of the Silicon Valley which revolutionized the information& communication technology. The important fact is that the drivers behind this revolution are the Indian IT professionals. When India made progress in IT Sector, the US had to support and automatically other countries also started recognising India as an emerging economy. Now India has gained respect and businessmen from all over the world are keen to do business with India. He urged the SMEs to take advantage of this favourable condition and take all necessary steps to grow bigger.
Mr. Rajender Abhyankar - Former Secretary, Ministry of External Affairs, Government of India addressing the delegates
INTERACTION WITH DELEGATES
Mr. Rajender Abhyankar - Former Secretary, Ministry of External Affairs addressing the questions of delegates
Mr. Chandrakant Salunkhe - President, SME Chamber of India, addressing the questions of delegates
Delegates at the Conference
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Inaugural Issue, January 2011
ADDRESS BY EMINENT SPEAKERS Mr. Mangesh Pathak
These funds are available for medium and long term requirements. Depending upon the strength of the business plan the fund managers decide the quantum of investment and when to invest. Companies with professional management, transparency And good governance get a good chance to obtain funds. The fund managers also discuss in detail about the exit options as well as the number of years required to exit.
Co-Founder, Ambit Pragma Fund
“Matching the Fund to the Proposition”
As the investors are choosy about where to invest it is also necessary for the companies to select the correct investors. The points need to be considered are :Fund life and the balance of life, the current portfolio regarding the number of investments and the sectors invested, the experience of the team members, who will be nominated on the board, Performance of other portfolio companies, their objectives for investment and the exit preferences.
There are many types of funds for Venture, growth, buy-out and special situations. The funds are also focused on the stages in which the company is in like early stage, growth stage, late stage, preIPO, PIPE. Again there are many sector focused funds and available to suit to the different fund sizes. These funds are available from both Indian and foreign investors.
It is to be remembered that the fund assessment is a two way process and the company should not hesitate to ask for references of the investors.
The fund managers generally look for the revenues profits and cash flows of the borrower. The market segment, the size of the company, the growth potential, market share and the leadership position of the company are given due weightage.
Mr. Mihir Joshi
He reiterated that technology oriented small units find difficulty in raising adequate finance as conventional financing is security oriented. This void is met by the venture capital funds He added that monitoring is most crucial for success of venture investment. Venture Capital funds make considerable value addition through hands on management.
Managing Director, Gujarat Venture Finance Limited
A venture capital fund adds value to the organisation as under:
“The Value Added Role of Investors”
? Strategy Formulation & implementation ? Streamlining internal control systems & processes
Mr. Joshi highlighted the shortcomings and difficulties faced by the start-up companies and companies in SME Sector.
? Networking & Marketing tie-ups
? Small scale start ups have difficulty in raising funds
? Key personnel recruitment & team building
? Debt equity norms are stricter. Institutions want higher equity from promoters.
? Appointment of experts & creation of advisory boards ? Establishing good corporate governance practices
? Track record required for raising money from public.
? Conflict resolutions (at times)
? Operational Issues
? Negotiating for technology transfer
? Team not in place
? Ensure regular accounting and secretarial audits
? No internal Control
? Budgeting & MIS
? Centralized decision making
? Showcasing the companies in various forums
? Geographical Constraints
? Active participation in Board Meetings
? Over dependence on few customers/ suppliers
? Broad basing the board
? Non clarity of Business Model
? Negotiating with strategic investors
? Lack of Networking Inaugural Issue, January 2011
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? Provide Prospective Investors with detailed information & arrange site visits ? Obtain Indications of Value and Terms Or Alternately Definitive Declines. ? Negotiate a Term Sheet or Letter of Intent ? Prepare the Company for Due Diligence ? Organize & Manage the Due Diligence Process ? Continually Track Progress and clarify Open Issues ? Assist Negotiating Business and Financing Issues in the Definitive Agreement ? Stay until the successful closure of the transaction i.e. “Money Hits the Bank”
Mr. Raj Shroff Director, Aaryaa Cross Border Advisors Pvt. Ltd.
“The Role Of A Good Financial Advisor in the Fund-Raising Process” He touched upon the role of a good finance adviser in the fund raising process. The role of Financial Advisor has become all the more important in the present day complex financial world. The success of the financial adviser depends upon specific technical knowledge, bringing out USP, formulating strategies, practical on hand experiences, tracking trends and creating values. Following are the key responsibilities of a Financial Adviser: ? Identification of the Potential Company with excellent growth prospects ? Candidly assess the challenges ? Help the client understand how a Potential Investor will view the Company ? Develop, Validate and Document Historical as well as Projected Financials ? Obtain concurrence of expectations of Value and Terms ? Prepare documentations to market the Company ? Identify Potential Investors ? Initiate contact with Potential Investors & obtain signed Confidentiality Agreements
TARGET RIGHT INVESTORS Investor's preference depends mainly upon 3 S's: Which Sector the company belong to, its size and its stage of growth. The investors look out for Management quality, Market Positioning, Growth Potentials, Sustainability, Profitability, Past and Future, Valuations, Returns and exit options. Constant follow-up is needed to understand the investor's areas of concerns, Address concerns properly, signing of NDA, to explain the assumptions in the model, arranging plant / sight visits and getting the feedback from the investor. Financial Advisor assists the Company in preparations for Commercial and Financial Due Diligence. Legal due diligence should also be conducted through legal experts. Preceding to the closing of the deal the company must ensure that it has fulfilled all the conditions like - Group Structuring – If any, ROC Filings, Income Tax Filings, Secretarial Paper Work, Obtain all the necessary clearances and finally the remittances.
Mr. Sushrut Chitale
Due diligence experts should focus on the following: ? Look beyond a tick and bash checklist approach – understand the deal logic ? Take a focused objective and unbiased approach to the process – give harsh recommendations, if required ? Assess whether business is what it is made out to be ? Qualitative and quantitative analysis on financial performance to get a 'feel' of sustainable / normalised earnings ? Identify hidden liabilities/ onerous clauses in contracts / other exposures Due diligence services are availed for varied purposes: ? Investment by private equity fund in a company ? Acquisition of a company by another company ? Entering in to any joint venture / other commercial arrangement by a corporate entity ? Preparatory work for bidding for various contracts ? Ascertaining creditworthiness of prospective customers before doing business with them ? Periodic business analysis to ascertain areas of improvement How should a company prepare for due diligence? The steps required to be taken by any company depends on the specifics of that company. However, generally, the following points need to be taken care of: ? Management information systems ? Adequate documentation in the form of contracts / agreements ? Agreements with related parties ? In case of customer concentration risk, document quality of relationship with customers ? Pre-approvals from lenders for proposed transaction ? Carry out periodic 'financial-health' checkup
Director, Infogenia Analytics Pvt. Ltd.
“Due Diligence Process and Documentation” ? What is due diligence? Due Diligence is the process through which a potential acquirer evaluates a target company or its assets for acquisition. It is based on the maxim “CAVEAT EMPTOR” meaning “BUYER BEWARE” ? Process is different from audit – level of assurance and the perspective to be used differs. ? Due Diligence is about learning the past with an eye to the future – if we don't learn from the past, we are bound to repeat it. We are bound to fail, if we don't look to the future. ? It is not about finding ways to stop a deal – it is about presenting issues to investors to work around. ? Most importantly, due diligence is about verifying that representations made during course of negotiations are correct.
Due diligence is about applying common sense to identify hurdles and ways around them in a business proposal. Due diligence needs to be focussed on acquirer's expectations from a deal like, What is the deal rationale, What synergies does the deal offer, What is a smooth manner to exit, What premium to pay and what is the walk away price.
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Inaugural Issue, January 2011
Pre-infusion of money involves
Director, Infogenia Analytics Pvt. Ltd.
? Business plan highlights markets, company, expansion plan ? In-depth financial model ? Fund carries out extensive research and business analysis
“Introduction and Eligibility Criteria for Obtaining PE & VC” Mr. Tambe explained about the concepts of venture capital and private equity. Venture capital is a broad subcategory of private equity that refers to equity investments made, typically in less mature companies, for the launch, early development, or expansion of a business. Private equity is equity investment in high growth companies whether listed or unlisted. Investments in private equity most often involve either an investment of capital into an operating company or the acquisition of an operating company (Buyout funds) or purchase of shares of existing investors / promoters In India. PE funds are active across sectors funding both listed and unlisted companies. Funding in listed companies is called PIPE (Private Investment in Public Enterprises). When a bank is reluctant to extend loan to a new venture, a venture capital fund takes a bet on the business model. These venture capitals are suitable for companies who can fully leverage their strengths, the industry in which the company is operating is growing at least 15% and the company has the right strategies to achieve exponential growth.
Ms. Sonali Tipre Founder & Managing Director, Margin'sview Management Services
“Strategy and Planning for Business Growth ”
? Broad valuation parameters and commercials are agreed ? Term sheet highlights in principle agreement to key commercial terms ? External party appointed for financial due diligence ? Valuation adjustment post Due Diligence report ? Execution of shareholder agreement and closure
Post-infusion of money involves ? Create MIS systems and budgeting to formulate and track business numbers ? Private equity fund would monitor business numbers periodically on its own or through external party ? Key business parameters are taken up at Board for discussion
The SMEs should consider resorting to Private Equities due the following reasons: ? Traditional means fund normal growth rate – PE funds can fund above normal growth rate ? Not just Capital – Strategy and professionalism ? Long term partner – successive funding requirements ? Improves perception and valuation ? Creates high entrepreneur drive ? Builds in place systems, processes and MIS reporting
capability to diversify and expand the business activities. The management strategy encompasses financial acumen of the promoter and decision makers. People management is very essential for maintaining the growth of the organisation. While growing, it is important to build a cohesive team of managers. To ensure growth, the promoter should take into consideration the following: ? What is the growth that I should aspire?
Describing about how to write a good business plan she mentioned that growing is less risky than not growing. An entrepreneur starts in a small way and grows gradually into a big organisation.
? Does my organisational business model warrant for equity infusion & exit route?
There are two major strategic issues while growing. One is the strategy related scale of operation the other is strategy related to management.
? Plan for the scenarios – Optimistic as well as pessimistic.
Scale strategy deals with professional attitude of the entrepreneur in managing the business and operational
Inaugural Issue, January 2011
SME CHAMBER OF INDIA ACTIVITIES
Mr. Shrirang Tambe
? How much of a stake is leveragable by the organisation and the entrepreneur? ? Build organisational efficiencies and safeguard your interest. ? Know the risks and opportunities trade off
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SME CHAMBER OF INDIA ACTIVITIES
Ms. Sangeeta Modi
? What is the entrepreneur's ability to grow the business?
Founder Member, Access Asset Managers
? What are the other group companies? Other business interests? ? What is the depth and experience of the existing management team? Normally, the PE Fund's involvement is not limited to board meetings but active participation in growing the business
“Preparing for Private Equity: Steps to be taken by SMEs”
? Relationship is based largely on trust and alignment of interest. There are very few historical instances of PE Funds going to Courts
The private equity investments involve three players namely, investors, fund managers and investee companies.
? Openness to Changes that normally a PE fund may look for :
INVESTORS
? Introduction of corporate governance measures, changing statutory auditors
The investors mostly consist of institutional investors. Normally they do not have decision making say in the operation of the company. They will have access to information regarding underlying investments. They will also use their network wherever possible to help underlying investments.
FUND MANAGERS They take investment decisions and interact with investee companies. They charge fees for their services and also get a significant profit share (normally 20%).
INVESTEE COMPANIES These companies give up a certain extent of ownership in their company and enter into a partnership with the fund managers. There is a significant difference between debt financing by lending institutions and equity financing by the PE Funds:
? Introduction to new markets, evaluation of inorganic growth opportunities ? Changes in Management structures – Hiring external professionals, incentive/ESOP based compensation structures
EXIT OPTIONS The investors would like to exit as early as possible as the partnership is for a limited time from 3 to 7 years. It is not a perpetual relationship. Exit is normally identified with reasonable amount of clarity at the time of investment. They do not rely on business cashflows for exit (except where there is project specific equity, as in real estate or infrastructure). The exit routes consist of IPOs, Sale to strategic investor, and sale to another financial investor.
THE ROLE OF AN INVESTMENT BANKER Characteristics of lending institutions ? Appetite for risk and returns is secondary to the promoter ? As a result, interest is payable irrespective of business performance
? An experienced investment banker brings significant benefits ? Exposure and relationships with multiple funds
? Return is in the form of interest / fees earned
? Helps negotiate the right valuation, the right terms and conditions and helps in future conflict resolution
? Interest must be paid on due date
? Choosing the right banker…. ? See track record of deals closed.
? Thousands of borrowing accounts
? Speak to previous clients
Characteristics of PE Funds
? If it is a large banking outfit … who is the professional handling your transaction? What is his personal track record?
? Returns from third parties ? Risk and return appetite equivalent to the promoter ? Returns are dependent directly on business performance ? Returns are evaluated as multiples rather than IRRs. ? Absolute returns may be more important than multiples or IRR. ? 10- 15 investments over the Fund investment life of 4 years
In India, typically PE Funds look at businesses growing over 30% p.a. and the growth has to be sustainable. The investors consider the following in the investee companies (Promoters):
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It is to be noted that in case of family owned businesses they should choose the right investor and timing rightly even if it takes time. They should be consistent in their approach and practice transparency.
DUE DILIGENCE PROCESS ? Ask for list of information requirements in advance. ? Invite external service providers only once all the information is compiled. ? It is easier if the scope of Due diligence is understood at the time of term sheet itself Inaugural Issue, January 2011
? Representations and Warranties ? Conditions Precedent ? Escrow for shares / share Certificates
Mr. Raju Nanwani Vice President, Legal and Company Secretary, ICICI Securities
(B) Shareholders' Agreement Issues It specifies rules about relationship between the company, investors and other shareholders after investment is made in company. ? Composition of Board / Management ? Dividend Policy ? Liquidation Preference ? Subscription Rights ? Board seats ? Founders lock-up period ? Future participation rights ? Protective provisions ? Non-competition obligation ? Information rights of investors ? Veto rights of investors ? Transfer restrictions (right of first refusal/right of pre-emption) ? Exit provisions namely IPO, Tag along, Drag along, put option.
“Understanding Term Sheets” He explained in detail about the terms sheets. ? A Term Sheet is a document through which the venture capital investors communicate to the promoters their intent of investing money in a company and the terms and conditions under which the venture investor would make the investment. In other words, a term sheet is the beginning of the negotiation process. ? It is generally prepared by lawyers post a limited review of the business and the industry but prior to the detailed due diligence of the company. ? It contains the basic commercial understanding between the promoters, company and investor for a given investment transaction. ? It is put forward by the 'lead investor', who is leading the investment round. If there are other investors, they usually follow along using the same terms. ? Term Sheets are also known by following names: ? Memorandum of Understanding (MOU) ? Letter of Intent ? Bid document ? Term Sheets are non-binding and indicative in nature. ? The signing of the Term Sheet is the pre-ultimate stage of getting financing done. Once the investor and promoters agree on a Term Sheet, the due diligence process starts and assuming all goes well, the money should arrive in the Company.
(C) Procedural and General Aspects ? ? ? ? ? ?
Important Aspects of Terms Sheet ? ? ? ? ? ? ? ? ? ? ? ?
Term Sheet – Objective / Purpose ? To capture the commercial understanding. ? To negotiate and agree on the terms and conditions. ? To fix the key figures and clauses for Investment and shareholders agreements. ? To set out the negotiation procedure (time schedule, exclusivity, costs, etc.) ? In case the venture capital investors agree to invest in the company, the Term Sheet is converted into a Shareholders Agreement.
Veto rights to investors Conditions Precedent Liquidation preference Anti-dilution provisions and Future participation rights Founders lock-up period Protective provisions Board seats Exit options – IPO, put/call options, buy-back, etc Tag-along rights Drag-along rights Validity No Material Adverse Change (MAC)
While negotiating a term sheet the following need to be considered:
Contents of the Term Sheet (A) Investment Agreement Issues
? Don't sign anything that involves personal obligation. ? For example, a clause that says the promoter has to buy back shares with his own money. ? It is necessary to negotiate for more time before the drag-along rights can be implemented. ? Think through the board composition before appointing the representative of the investor on the board. ? Term Sheet should be simple to understand. ? Identify the most important points to be achieved in the transaction agreements and make sure these issues are covered by the term sheet. ? Do not treat Term Sheets as templates as each situation is unique.
It specifies the willingness of the buyer to buy certain stake in the company at a certain valuation. ? Company, Investors, Promoters, Existing Shareholders ? Invested amount / tranches ? Share price and type of shares ? Valuation of the Company ? Anti-Dilution Protection ? Closing and drawdown schedule (No. of tranches & dates on which amounts would be invested by the investors) ? Use of the proceeds from the investors ? Business Plan Inaugural Issue, January 2011
Timing Validity Confidentiality Exclusivity Applicable Law Jurisdiction / Arbitration Clause
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SME CHAMBER OF INDIA ACTIVITIES
CONCLAVE ON
STREAMLINING BANKING FINANCE FOR SMEs 19th January 2010 | SME Chamber of India Conference Hall, Mumbai
ADDRESS BY CHIEF GUEST
Ms. Ravneet Kaur - Joint Secretary (Banking & Insurance Department), Ministry of Finance and Chairperson, Exim Bank of India addressing the delegates
The Banking sector works closely with the SME sector to achieve equitable and inclusive growth. The Government has taken many measures for the development of SME and set up MSME Re-finance scheme and MSME Risk Management Schemes. The guiding factor between bankers and its customers is the Trust. There are many schemes from the banks for export oriented SME.
Credit is the lifeline of a business. The PMO is looking into the problems of SME and monitor the credit flow to this sector. In the round table meeting of OECD, there was emphasis on SME and entrepreneurship financing. The problem of SME is not unique to India but it can be found in other countries. SME face many problems like insufficient working capital which is a global phenomenon. SME complain that banks do not lend adequately and when needed and the banks are reluctant to lending to SMEs due to high risk factor. The rating agencies and the supporting organization like SME Chamber of India should bridge the gap between banks and its SME customers. SME also suffer with insufficient equity capital. VC Fund should come forward to invest in SME. It is observed that many SME are closely held ownership structures with least accountability and transparency. The proposed SME exchange with relaxed listing guidelines will be a boon to the SME to enter into the capital markets.
KEYNOTE ADDRESS avenues for expansion and diversification. An enterprise starts in a small a way and over the period gain sufficient experience, access knowledge and upgrade technologically to become a medium and then to a big company.
Prof. Suresh Tendulkar - Director, Central Board, RBI and Former Chairman, Economic Advisory Council to Prime Minister addressing the delegates There is an urgent need to sensitising the SME and the banks for mutual benefits. The SME supporting agencies should apply pressure on defaulting SME to adopt good governance and ethical practices. Because of a few defaulting SMEs the entire sector is being blamed. SME have a responsibility to the society and to all its stake holders. The enterprises should keep on changing according to the latest business and economic trends and look for
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Today technologies are cheaper and easier to obtain and SME should raise the scale of manufacturing. We can easily achieve a respectable 7.5% growth. Tata's Nano project is a good example of crisis management. SME should think of utilizing venture capital funds for their expansion. It is noteworthy that SME are the major suppliers to corporate, PSU and MNCs. Despite many problems SME contribute significantly to revenue department and it is like a hen giving golden eggs. Therefore the revenue department should be sensitive to the problem of SME. The rule and the procedures of the Government departments and banks towards SME should be streamlined and stabilised. Revenue maximisation and cost minimisation should be the objective of the SME.
Inaugural Issue, January 2011
KEYNOTE ADDRESS manner as in the assembly line of a factory. A proposal is generated by a sales force, referred to a relationship manager, pass through a processing department, approved by consent authorities and the loan is disbursed. The entire cycle has to be completed within 14 days. 37 such loan factories are in operation.
Dr. Anil Khandelwal - Former CMD, Bank of Baroda & Chairman, Baroda Pioneer Asset Management Ltd. addressing the delegates
SMEs should also cultivate the habit of self assessment before approaching the bank to quicken the process. SME gold card is also issued to privileged customers to provide necessary services. The officers are informed to forward their queries at one go so that the customers can respond easily and there is no need for frequent visits to banks. Training is essential for SMEs as well as for the Branch Managers to understand each others requirements. Both should be sensitive to others views. The problem with small enterprises is that it revolves around one man for all managerial decisions and actions.
While dealing with banks the small entrepreneurs are at the mercy of the Branch Manager in majority of the cases. This situation should change and there should be transparency in all the dealings between the banks and its customers. The SMEs should also adopt good governance in their business activities and provide authentic, accurate and relevant information to the banks to gain their confidence.
SMEs require many more support than just finance, like marketing, H.R. Technology, Quality etc. and other service providing agencies should coordinate with the banks in this regard. As per a report on SSI, it is observed that the management contributes the maximum obstacles in the progress of the small enterprises. It should be remembered that the structure should follow the capability.
On the lines of a process industry, the bank of Baroda conceptualized SME loan factory, a dynamic approach employing assembly line concept. The idea is to move the papers in sequential
ADDRESS BY EMINENT SPEAKERS Mr. D. R. Dogra
Mr. Samuel Joseph
MD, Credit Analysis and Research (CARE) Limited.
General Manager, EXIM Bank
“Rating beyond numbers – SME Perspective”
“Economic Stimulus: Measures to Boost SME Growth”
The credit ratings has become more crucial now-a-days than optional a few years back. There are plenty of advantages in obtaining the credit rating from a reputed 3rd party credit rating agency. It enhances the credit worthiness of an enterprise in the eyes of customers, suppliers, bankers, investors, importers, exporters, regulating agencies and the public at large.
Exim Bank offers a variety of products and services for the small and medium enterprises engaged in exports of goods, services and project as well as dealing in imports. The SMEs are greatly affected by the credit crunch and more so by the export oriented units. There should be a concerted effort to contain the slow down which is affecting the business all over the world. Fortunately, India is not affected so much due to a series of quick and appropriate decisions taken by the Government and Reserve Bank of India.
There are special criteria applicable while rating a small and medium enterprise which is different from that of the Corporate. Moreover, the banks also offer concessional interest rates to the rated companies.
Exim Bank offers export finance to SMEs, assist them in finding and exploring new markets and undertake new projects in other countries. With the line of credit arrangements, the SMEs are able to do business with many developed and developing countries.
Overseas businessmen prefer to deal with companies with good credit rating. There are government schemes which subsidies the initial cost in going in for ratings.
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OTHER EMINENT SPEAKERS
Mr. Sangram Dash Deputy General Manager, (Manufacturing), State Bank of India.
“Role of Banking Sector for SME Growth� The Prime Minister's Task Force emphasizes on greater credit flow to MSME Sector. The Indian SMEs face many problems and have a lot of constraints. Fear of loss makes many SMEs to adopt traditional business practices. They are not aware of the many Government schemes and few of them utilize the same.
Mr. Chaitanya Shah - CEO, CKPP Associates
Low scale of activities, obsolete machines, delayed payments from customers, lesser profitability, lack of innovative marketing strategies, inability to attract and retain high quality workforce and limited capital base are a few to mention. Moreover, the SMEs are fragmented and highly heterogeneous in their activities, products, markets, size, operations etc. Many of them become sick due to poor management.
Mr. Deepak Narang - General Manager, Allahabad Bank
With a view to assist the SME Sector, the SBI have a decentralized SME team to establish person to person contact (P2P). Separate processing centres and loan sections are created to receive applications and transact business with SME. SBI charges only 8% for loans upto 5 lakh. Finance is also available for supply chain management. There is a unique scheme in which centrally financed products are available for the SME Vendor, the industry major who buys the products from the SME as well as the dealer of the final products. Separate funds are available for technology upgradation, cluster development and bulk purchases.
Ms. Susmita Das Gupa - Chief Ideator, Smart IdeAS
Delegates at the Conclave
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GLIMPSES OF OUR PAST EVENTS
H. E. Mr. Balkrishna Shetty launched the bi-lateral trade promotion divisions - “INDIA-SWEDEN SME DEVELOPMENT COUNCIL” and “INDIALATVIA SME DEVELOPMENT COUNCIL” on 18th December 2009 at Mumbai. In Picture from (Left to right) Mr. S. Maheshkumar - General Secretary, SME Chamber of India, Mr. Prashant Nagre – Head, Pharmaceuticals, Sterling Biotech Ltd, Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Chaitanya Shah - CEO, CKPP Associates
Mr. R. M. Nayak - Ex Banker & Chairman, Banking & Finance Advisory Committee, SME Chamber of India, Mr. Allen Pereira Chairman & Managing Director, Bank of Maharashtra and Mr. Chandrakant Salunkhe - President, Small & Medium Business Development Chamber of India (SME Chamber of India) during Interactive Meeting on 10th September 2009 at Mumbai. Mr. Pereira visited SME Chamber of India’s office to understand the problems & issues of SMEs related to bank finance and promised that Bank of Maharashtra will support SMEs and the Chamber
Chief Guest Prof. Suresh D. Tendulkar - Chairman, Indian SME Knowledge Forum, Director, Central Board of RBI and Former Chairman, Economic Advisory Council to the PM inaugurating the Work Shop on SIX SIGMA on 7th October 2009 at New Delhi. Other (from L to R) Mr. Paul Joseph - Principal Advisor, MCX-SX, Mr. Chandrakant Salunkhe - President, SME Chamber of India, Mr. A. Rameshkumar – Chairman, SME Chamber of India, Northern Region, New Delhi) and Mr. N. C. Vasudevan – Director General, National Productivity Council , Govt. of India.
Mr. Chandrakant Salunkhe - President, SME Chamber of India presenting the flowers to Mr. Dinsha J. Patel - Hon'ble Minister of State (Independent Charge) Micro, Small and Medium Enterprises during Interactive Meeting on 8th October 2009 at New Delhi
Mr. Chandrakant Salunkhe - President, Small & Medium Business Development Chamber of India (SME Chamber of India), and Mr. Paul Abela - President, GRTU (Chamber of Small & Medium Enterprises), Malta signing co-operation agreement between SME Chamber of India and GRTU, Malta for setting up India - Malta SME Development Council on 24th November 2009 at Mumbai
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Theme: Strengthening Technology and Innovation for SME Development 21st February 2009 | Hotel Leela Kempenski, Mumbai, India.
INAUGURATION OF THE SUMMIT
Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission, Government of India inaugurating the Summit Other dignitaries (L to R) Mr. Nanasaheb B. Patil, IAS - Principal Secretary, Agriculture & Horticulture, Government of Maharashtra, Mr. Chandrakant Salunkhe - President, SME Chamber of India, Mr. A. Rameshkumar - Chairman, SME Chamber of India, Northern Region, New Delhi and MD & CEO, Asia Pragati Capfin Pvt. Ltd., Mr. Tamer Taskin – President, Aegean Region Chamber of Industry (EBSO), Izmir, Turkey, Mr. Joseph Massey - MD & CEO, MCX Stock Exchange Ltd and Mr. Maheshkumar - Director & General Secretary, SME Chamber of India
ADDRESS BY CHIEF GUEST Even a small enterprise in a remote area that does not have a big modern plant or good infrastructural facilities should create an excellent website to show case their capabilities. In the present globalised world connected by hi-tech communication, a good website will enable them to reach out to many prospective customers around the world, observed Mr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission while inaugurating Summit He has also launched the two initiatives of the SME Chamber of India “Indian SME Knowledge Forum” and “SME Export Promotion Council” which are meant for enhancing the knowledge and export potential of the SME Sector. It is worth noting that Prof. Suresh Tendulkar, Chairman, Economic Advisory Council to the Prime Minister has kindly consented to be the Chairman of the “Indian SME Knowledge Forum”. He emphasized that the SME Sector should adopt new technology and innovative methods in order to remain competitive. Further, he said that India, Asia's 3rd largest economy may end up with a growth rate of about 6.5% in the second half of this fiscal year. The Government has provided a refinance facility through SIDBI to provide money to Banks for onward lending to MSMEs. Therefore, Inaugural Issue, January 2011
Mr. Montek Singh Ahluwalia – Deputy Chairman, Planning Commission, Government of India addressing the delegates the Banks should gradually change their risk perception and provide more credit to the SME Sector. He has also recommended to the SME entrepreneurs to ask the Government officials to provide more infrastructure facilities rather than asking for some concessions and grants. The Government is also planning an additional stimulus of around 1% of the GDP amounting to Rs. 60,000/- crores.
SME CHAMBER OF INDIA ACTIVITIES
th
7 GLOBAL SME PARTNERSHIP SUMMIT
Growth is a problem but inflation is not a problem. Compared to many other countries India is reasonably doing well. The fiscal and the monetary measures have enough flexibility to respond to the prevailing economic situation. 69
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SME CHAMBER OF INDIA ACTIVITIES
ADDRESS BY EMINENT SPEAKERS
Mr. Dinesh Rai, IAS
Mr. Anthony J. C. De Sa IAS
Secretary, Ministry of MSME, Government of India
Director, UNIDO Centre for South - South Industrial Co-operation
Mr. Tamer Taskin
Mr. Sharief Habib Al Awadhi Director General, Fujairah Free Trade Zone Authority
President, Aegean Region Chamber of Industry(EBSO)Izmir, TURKEY
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Mr. R. K. Bakshi
Mr. T. R. Bajalia
Executive Director, Bank of Baroda
Executive Director, IDBI Bank
Mr. M. G. Sanghvi Executive Director, Bank of Maharashtra
Head, Business Banking, (GRCB), Barclays Bank PLC.
Mr. Muruga Thambiran S
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Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission, Govt. of India releasing research paper on “Meeting Financial and Risk Management - Challenges of SMEs” jointly prepared by SME CHAMBER OF INDIA and MCX>SX. In picture (from left to right) Mr. Chandrakant Salunkhe - President, SME Chamber of India & IITC-INDIA, Mr. Tamer Taskin – President, Aegean Region Chamber of Industry (EBSO), Izmir, TURKEY, Mr. Anthony J. C. De Sa, IAS - Director, UNIDO Centre for South South Industrial Co-operation, Mr. Joseph Massey - MD & CEO, MCX and Mr. A. Rameshkumar - Chairman, SME Chamber of India (Northern Region) and MD & CEO, Asia Pragati Capfin Pvt. Ltd.
PRESENTATION OF ANNUAL SME & ENTREPRENEURSHIP EXCELLENCE AWARDS - 2008 Mr. Dinesh Rai, IAS - Secretary, Ministry of MSME, Government of India is conferring the Awards in the presence of Mr. Chandrakant Salunkhe - President, Small & Medium Business Development Chamber of India (SME Chamber of India)
Mr. Tamer Taskin - President, Aegean Region Chamber of
Mr Mitin A. Patel - MD, Prima Automation (India) Pvt. Ltd
Industry, Izmir, Turkey accepts the award on behalf of H. E. Mr. Turgut Koyuncuoglu - Hon. Consul General of India, Izmir, Turkey, (Appreciation Award for Supporting Indian SMEs)
Awarded for Excellence in Manufacturing Sector
Mr. Nilesh Badani - MD, Nishotech Systems Pvt. Ltd. Awarded for Excellence in Manufacturing Sector Inaugural Issue, January 2011
SME CHAMBER OF INDIA ACTIVITIES
Release of Research Paper on “MEETING FINANCIAL AND RISK MANAGEMENT - CHALLENGES OF SMEs”
Mr. Shrikant B. Pawar - Proprietor, Top Gear Transmissions, Awarded for Excellence in Manufacturing Sector 71
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Mr. Vasant Phadtare - MD, Kavitsu Transmissions Pvt. Ltd.
Mr. Mahesh Maheshwari - Director, Nimbark Fashions Ltd.
Awarded for Excellence in Manufacturing Sector
Awarded for Excellence in Manufacturing Sector
Mr. Ashok Goyal - Managing Director, BLR India Pvt Ltd.
Mr. Vishnu Varshney - Managing Director, GVFL Limited.
Awarded for Excellence in Service Sector (Logistics)
Appreciation Award for Supporting SMEs
Mr. Vikas Mahtani - Director, Kavis Fashions Pvt. Ltd
Mrs. Thripti Kalra - Director, Kalra Overseas Pvt. Ltd.
Awarded under Young Entrepreneur Category
Awarded for Excellence in Manufacturing Sector
Ms. Sonali Tipre - CEO, Margin'sview Management Services,
Delegates at the Award presentation function
Awarded under Women Entrepreneur Category
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SME FINANCE - Roadmap for SME Growth
SME CHAMBER OF INDIA ACTIVITIES
Conference on
& Global Financial Crisis and Recession - Impact on Indian Economy & SMEs 23rd December, 2008 at Hotel Grand Hyatt, Mumbai
Prof. Suresh D. Tendulkar - Chairman, Economic Advisory Council to the Prime Minister and National Statistical Commission inaugurating the Conference in the presence of (Left to Right) Mr. Chandrakant Salunkhe - President, Small & Medium Business Development Chamber of India, Mr. Jignesh Shah - Chairman & Group CEO, Financial Technologies Group, Dr. Amarendra Sahoo CGM, RPCD, Reserve Bank of India, Mr. A. Rameshkumar - Chairman, SME Chamber of India, Northern Region, New Delhi and MD & CEO, Asia Pragati Capfin Pvt. Ltd., Mr. Maheshkumar - General Secretary, SME Chamber of India, Mr. Rakesh Rewari - Dy. Managing Director, SIDBI and Mr. Joseph Massey - MD & CEO, MCX Stock Exchange Ltd.
ADDRESS DIGNITARIES
Mr. Jignesh Shah – Chairman & Group CEO,
Prof. Suresh Tendulkar - Director, Central Board, RBI and Former Chairman, Economic Advisory Council to PM
Financial Technologies (India) Limited
Dr. Amarendra Sahoo
Mr. Rakesh Rewari
CGM, RPCD, Reserve Bank of India
Deputy Managing Director, SIDBI
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BUSINESS CLUB A Networking Platform
INAUGURATION OF SME BUSINESS CLUB
The SME Business Club was inaugurated by Hon'ble Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister, in the eminent presence of (L to R) Mr. Chandrakant Salunkhe, President, Small & Medium Business Development Chamber of India, Mr. C. B. Bhave, Chairman, Securities & Exchange Board of India (SEBI), Mr. G. N. Bajpai, Member, Advisory Board, Financial Technologies Group and Former Chairman of SEBI Mr. Dinesh Rai, Secretary, Ministry of Micro, Small and Medium Enterprises, Government of India on 3rd May, 2008 at Mumbai.
ABOUT SME BUSINESS CLUB “SME Business Club – A Networking Platform” is initiated by Small & Medium Business Development Chamber of India and India International Trade Centre (IITC-INDIA) to establish contacts and enhance business, trade, exports and provide opportunity to identify business partners and interact with manufacturers, suppliers, buyers, exporters, traders, service providers from various sectors. Ü Unique opportunity to exchange company profiles, business information, domestic trade, export and import enquiries and other requirements. Ü The Club will organise One-to-One and Interactive Meetings to generate trade leads and business opportunity from cross sectors. Ü The Club will provide important information on latest products, services, schemes, advantages, benefits of various sectors. Ü The Club will also assist to source and update knowledge on negotiating skills, business strategies, market trends & awareness, innovations, advanced technologies and management techniques. Ü The Club will resolve the problems and issues related to Industries, Trade, Exports, Imports, Banking & Financial Institutions and Government Departments. Issues which are not cleared within the Club will be taken up by SME Chamber of India for further follow up. Ü The Organisers will provide assistance to the members to enhance their domestic trade and exports by using their contacts worldwide.
Mr. Chandrakant Salunkhe - Founder President For Assistance, Support Services and More Information Contact Tel: +91 - 22 - 6677 0218 / 6667 4444 / 6150 9800 | Fax: 2874 3543 | Email: smebusinessclub@vsnl.net | Website: www.smebusinessclub.in Central Office: 3, Upper Gr Flr, Samruddhi Venture Park, Marol MIDC, Near Hotel Tunga Paradise, Andheri (E), Mumbai - 93. Regd. & Correspondence Office: 101, Murlidhar Baldev Estate, Nr Vikas Estate, Off Aarey Road, Goregaon (E), Mumbai - 63.
Empowering Indian SMEs for 2020 Opportunities and Challenges 23rd August 2008 | Hotel Grand Hyatt, Mumbai
Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission, Govt. of India inaugurating the conclave in the presence of Dr. R. A.Mashelkar - President, Global Research Alliance, Mr. Anil Deshmukh - Hon’ble Minister for Public Works (Public Undertakings), Maharashtra, Mr. Rajinder Singh - Chairman & CEO, Global Absolute Group, Mr. Jignesh Shah - Chairman & Group CEO, Financial Technologies Group, Ms. Malini Shankar - Development Commissioner - Industries, Government of Maharashtra, Mr. Rasesh Kanakia - Chairman, Kanakia Group, Mr. Chandrakant Salunkhe - President, Small & Medium Business Development Chamber of India and Mr. Maheshkumar - General Secretary, SME Chamber of India
EMINENT SPEAKERS
Mr. Anil Deshmukh
Dr. R. A. Mashelkar
Mr. Jignesh Shah
Hon’ble Minister for Public Works (Public Undertakings), Maharashtra
President Global Research Alliance
Chairman & Group CEO Financial Technologies (India) Limited
Ms. Malini Shankar
Mr. Rajinder Singh
Mr. Rasesh Kanakia
Development Commissioner - Industries, Government of Maharashtra
Chairman & CEO, Global Absolute Group
Chairman, Kanakia Group
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SME CHAMBER OF INDIA ACTIVITIES
Conclave on
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ADDRESS BY CHIEF GUEST Again among the infrastructure, the availability of uninterrupted power supply is of prime importance. It is observed that in states were more emphasis is laid on power, there is improvement in the industrialization, promotion of SMEs and increased employment. The demand for energy is going to increase every year. th
During the 10 plan the target for additional capacity power th generation was about 40,000 MW, while in the 11 Plan it is 78000 MW. So there is a very big change in what I would call a pipe line activity as far as power sector is concerned. But something must come out of the pipe line. Frankly, that is what the central & state government and private sector have to make sure.
Mr. Montek Singh Ahluwalia - Deputy Chairman, Planning Commission, Government of India addressing the delegates
On the financial side also the Indian financial system has become more sophisticated over the last 10 years or so. Not only the banks but also markets are developed and there are new products in the market today like Venture Capital and Private Equity operation including investors from abroad getting into this sector which was not the case earlier.
Mr. Ahluwalia said that in both industry and services, a very large percentage of the enterprises are SMEs. Secondly a very large percentage of the employment has also been generated by the SMEs and finally their contribution to exports is also very high. He said that it is not possible to think of a healthy economy if we don't have a vibrant and healthy environment for the Small and Medium Enterprises group. That is being true of all countries. It is true of the dynamic economies. It is a very important sector and the Government is paying a lot more attention on what can be done to address the problems of the SMEs.
Finally a few words on the issue of skill development. He mentioned that a really successful SME Sector would flourish most in an environment that generates sufficient supply of skilled labour. Once again large cooperation can do their own training in skill development. A small organisation relies on ample availability of skilled labour and I think this is a major area where the Government has to do a lot.
According to him, SMEs have many problems. The major ones are infrastructure, credit - not only bank credit but also access to capital, issues relating to skill development in the sense of availability of skills, technology upgradation, human relation and market development. These are all areas in which the Government in the course of 11th plan are formulating and implementing several measures.
The Government has announced recently about setting up of a skill development corporation, which will be put in place very shortly and this is the corporation to which the Government will contribute money, would invite contribution from the private sector and it will be run by a CEO as if it was private Corporation and not like a Government body. The idea is to invite representatives of Associations representing 10 manufacturing sectors and 10 service sectors which we believe have a tremendous scope for employment generation.
The one most important thing to be recognised by us is the deficiency of infrastructure, which are pretty widespread in India. The deficiencies of infrastructure operate in a very asymmetric way. Large organisations can insulate themselves from infrastructure deficiencies because they are large enough to create their own infrastructure. Small enterprises have to rely on the general level of infrastructure or general quality of infrastructure and the fact is that the general quality of infrastructure offer constraints especially to the SME sector. So quite honestly my advice to the SME sector is to insist the concerned authorities to improve the infrastructure facilities.
He appreciated the initiative taken by Mr. Salunkhe for organising this Conclave, which is the need of the hour since SMEs are playing a vital role for the nation development and hoped that all the government departments and banking sector will support the SMEs to compete with world market.
Delegates at the Conclave
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6th International Conference on
SME FINANCING Better Banking Regulations and Integration of SMEs 03rd May, 2008 at Hotel Intercontinental The Lalit, Mumbai
Hon’ble Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister inaugurating the Conference in the eminent presence of (L to R) Mr. T. C. Venkat Subramaniam, CMD, EXIM Bank, Mr. Muruga Thambiran S., Head Business Banking, Barclays Bank PLC, Mr. Rajinder Singh, Chairman & CEO, Global Absolute Group, Mr. C. B. Bhave, Chairman, Securities & Exchange Board of India (SEBI), Mr. Chandrakant Salunkhe, President, Small & Medium Business Development Chamber of India, Mr. Dinesh Rai, Secretary, Ministry of Micro, Small & Medium Enterprises, Govt. of India and Mr. G. N. Bajpai, Member, Advisory Board, Financial Technologies Group & Former Chairman SEBI.
ADDRESS BY CHIEF GUEST also set up a Credit Guarantee Fund to provide relief to those small entrepreneurs who are unable to pledge collateral security. Dr. Rangarajan advised the banking sector to double the credit flow to this sector within a period of five years and support the SMEs through risk and venture capital. To enable the schemes introduced by the Banks to reach the rural areas, bank personnel need to undergo special training to develop expertise to empower SMEs. The Banks should establish specialized SME branches for easy access to bank credit to the entrepreneurs and launch State level venture capital funds for benefit of SMEs. He noted that SEBI is establishing a special stock exchange for SMEs to enable them to raise capital. He lauded the role of SME Chamber of India for the development of SME Sector and empowering SMEs to be globally competitive.
Hon’ble Dr. C. Rangarajan, Chairman, Economic Advisory Council to the Prime Minister addressing the delegates Dr. Rangarajan observed the catalytic role of SMEs as the growth engines in the development of countries. In India they are major contributors to GDP through manufacturing and exports. It is therefore essential to support this sector crucial for achieving the target of 9% plus growth. SMEs being widely dispersed across the entire country also make them a key element from a regional developmental perspective. A major area of concern of our SMEs, particularly the tiny segment, is access to affordable credit. SMEs also lack access to private equity and venture capital and have a very limited access to secondary market instruments. To improve the delivery of credit, the Government has announced a 'Policy Package for Stepping up Credit to SMEs'. The Government has Inaugural Issue, January 2011
While conferring the awards for SME and Entrepreneurship Excellence, he appreciated the initiative of Mr. Salunkhe for instituting these awards and congratulated all the Awardees on their selection and conveyed his best wishes for their future growth and higher levels of achievement. He hoped that the awards will serve to encourage the awardees to strive harder and contribute to the Nation's economic and social development and also motivate more and more of our entrepreneurs to emulate the example set by the Awardees.
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BI-LATERAL TRADE PROMOTION DIVISION opportunities in various parts of the world and entered into agreement of co-operation with select associate organizations.
In order to sustain and grow, companies of all sizes look for new markets. This has resulted in increased co-operation amongst governments, trade promotion organization and individual enterprises.
“SME Development Councils” set up by the Chamber is operating in China, GCC, Turkey, Sweden, Zambia, Malaysia, Mauritius, Bulgaria, Malta and Latvia. We are in the process of adding more countries to this list.
Small & Medium Business Development Chamber of India (SME Chamber of India), as a leading Chamber focused on the promotion of SME Sector set up a separate “Bi-lateral Trade Promotion Division”.
The members can approach the Chamber for any of their business requirements such as exports, imports, investments, sourcing, representative offices, marketing agents etc. We will assist and guide the entrepreneurs by connecting them with our associates in respective countries.
Connecting Indian SMEs with SMEs in other countries for effective interaction and to facilitate mutually beneficial alliances is the main objective of this division. To achieve this, the Chamber carried out elaborate studies about the business
Existing Bi-Lateral Trade Promotion Division India – China Business Development Forum
India – GCC SME Development Council
India – Turkey SME Development Council
India – Sweden SME Development Council
India – Zambia SME Development Council
India – Malaysia SME Development Council
India – Mauritius SME Development Council
India – Bulgaria SME Development Council
India – Malta SME Development Council
India – Latvia SME Development Council
Objectives of the Division £ Enhance bi-lateral trade, services and investments. £ Exchange business leads. £ Encourage joint ventures, technology transfers and contract manufacturing £ Solve the issues related to international business transactions. £ Provide useful information on cooperation, alliances, Government policies, Rules and regulations and taxation. £ Set up permanent products and services display and exhibition centres. £ Organise trade promotional activities - conferences, seminars, B2B meets and delegations.
Activities of the Division £ Assistance for setting up manufacturing units and offices £ Arrange trade missions and delegations, buyer-seller meets,
business match making £ Organise and participate in trade fairs & exhibitions,
catalogue shows £ Find out and source quality products, machinery, equipments &
hand tools as per the requirement of entrepreneurs of both the countries. £ Exchange information on Technology transfer, Infrastructure, Information Technology, Electronics, Biotechnology, Financial Services, Pharmaceuticals & Healthcare, Food & Agriculture, Manufacturing, Telecommunications, Information / Knowledge based Industries, Tourism and other emerging areas. £ Provide information on the newly launched products, high tech products and industry, latest technology, market survey, market research, project reports, project finance, quality products & raw material and best services. Inaugural Issue, January 2011
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CO-OPERATION AGREEMENTS
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Tamer TAĹžKIN President, Executive Board, Aegean Region Chamber of Industry, Izmir, Turkey signing the Agreement in the presence of Mr. Turgut KOYUNCUOGLU - Honorary Consul General of India in Izmir, Turkey and Mr. Maheshkumar General Secretary, SME Chamber of India.
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Michael Chen - CEO, SIEC signing Economic Co-operation Agreement in the presence of Mr. V. Prakash - Consul General of India, Shanghai, H. E Mr. Zhou Wei Qiang Vice Mayor, Suzhou.
Mr. Abdulrahim Hasan Naqi - Secretary General, Federation of GCC Chambers, Mr. Adnan A Al Nueim - Secretary General, Asharqia Chamber signing Co-operation Agreement with Mr. Chandrakant Salunkhe - President and Mr. Maheshkumar - General Secretary SME Chamber of India.
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Andrew Chipwende Director General, Zambia Development Agency signing Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Ms. Sun Yan Yan - Vice Chairman, Suzhou Industrial Park, China signing Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Gagik Vardanyan Executive Director, Chamber of Commerce and Industry of the Republic of Armenia signing the Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Walid Tamim - Director, Afghanistan Investment Support Agency signing the Co-operation Agreement
Mr. Chandrakant Salunkhe and Mr. William Badrock - Chief Executive, Halton Chamber of Commerce and Enterprise, Cheshire signing Cooperation Agreement
Mr. Chandrakant Salunkhe and Mr. Linjun Wang Administrative Vice GM, China International Purchase Centre signing the Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Ju IL Kim - President, Daejeon Chamber of Commerce & Industry signing the Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Colin Koh - President, Singapore Industrial Automation Association exchanging the Co-operation Agreement
Mr. Chandrakant Salunkhe - President, SME Chamber of India and Mr. Avtar Gokhal Chairman, Black Chamber of Commerce & Industries signing the Co-operation Agreement
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INTERACTION WITH DIGNITARIES
Dr. Manmohan Singh - Hon’ble Prime Minister of India, Mr. Sushil Kumar Shinde - Hon’ble Chief Minister of Maharashtra, Mr. Chandrakant Salunkhe - President, SME Chamber of India
Mr. Chandrakant Salunkhe -President, SME Chamber of India with Mr. Pranab Mukerjee Hon’ble Union Minister of Finance, Government of India
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. N. N. Meena - Hon’ble Union Minister of State for Finance, Government of India
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Kamalnath - Hon'ble Minister of Commerce and Industry, Government of India.
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Vilasrao Deshmukh Hon’ble Chief Minister of Maharashtra
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Narayan Murthy Chairman & CEO, Infosys
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Mukesh Ambani Chairman & MD, Reliance Group of Industries
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. John Howard - Hon'ble Prime Minister of Australia
Mr. Chandrakant Salunkhe -President, SME Chamber of India with H. E. Datuk Seri Abdullah Ahmad Badawi - Hon’ble Prime Minister of Malaysia.
Mr. Chandrakant Salunkhe - President, SME Chamber of India presenting a memento to Dr. Sali Ram Berisha - Hon’ble Prime Minister of Republic of Albania
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Dr. Navinchandra RAMGOOLAM - Hon’ble Prime Minister Mauritius
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. HASAN Bin Abdallah Al-Fakhru - Hon’ble Minister of Industry and Commerce, Bahrain.
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Mr. Chandrakant Salunkhe - President, SME Chamber of India with H. E. Mr. Ivailo Kalfin Deputy Prime Minister and Minister of Foreign Affairs of Republic of Bulgaria
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Kemal UNAKITAN Hon’ble Minister for Finance, Turkey and Mr. Richard Ensor - MD, Euromoney Conferences
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Ms. Seri Rafidah Aziz Hon'ble Minister for International Trade and Industry, Malaysia
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Mandisi Bongani Mabuto Mpahlwa - Hon’ble Minister of Trade & Industry, South Africa
Mr. Chandrakant Salunkhe - President, SME Chamber of India with H. H. Shaikh Saud Bin Saqr Al Qasimi - The Crown Prince and Deputy Ruler of Ras Al Khaimah, UAE
Mr. Chandrakant Salunkhe with H. E. Mr. Frank Heemskerk - Hon’ble Minister for Foreign Trade, Netherlands and Mr. Lodewijk Asscher - Vice Mayor, City of Amsterdam
Mr. Chandrakant Salunkhe - President, SME Chamber of India with H. E. Mr. Rama Krishna SITHANEN - Hon’ble Deputy Prime Minister of Mauritius
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Y.A.B. Tan Sri Dr. Koh Tsu Koon - Chief Minister of Penang, Malaysia
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Franklin L. Lavin Under Secretary for International Trade, U.S Department of Commerce, Washington, D.C
Mr. Chandrakant Salunkhe - President, SME Chamber of India with (L to R) Mr. Kürşad Tüzmen - Hon’ble Minister of State of Turkey for Foreign Trade, Mr. R ı zanur MERAL - President, Confederation of Businessmen & Industrialists of Türkiye (TUSKON), Mr. MURAT YALÇINTAŞ President, Istanbul Chamber of Commerce.
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Dr. Sye-Kyun Chung Hon’ble Minister of Commerce, Industry & Energy, Republic of Korea and Mr. Ki-Hwa Hong President & CEO Korea Trade - Investment Promotion Agency.
Mr. Chandrakant Salunkhe - President, SME Chamber of India with Mr. Gabriel L. Kapris Hon’ble Minister of Commerce & Industry, Papua New Guinea and Mr. John Andrias - Deputy Secretary, Department of Commerce & Industry, Papua New Guinea
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INTERACTION WITH OVERSEAS DIGNITARIES
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