Nurturing entrepreneurs - Seeding working capital


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Nurturing entrepreneurs - Seeding working capital

  1. 1. N U R T U R I N G E N T R E P R E N E U R S ’ S E E D I N G W O R K I N G C A P I TA L
  2. 2. E M P O W E R I N G E C O N O M Y 11.5% Growth Per Year 69 Million Employment 29.8 Mn Enterprises 32.5 Tr Finance Need MSME sector plays a significant role in the Indian economy Catalyst for socio-economic transformation of the country Generates employment, discourages rural-urban migration Helps to build a thriving entrepreneurial eco-system Promotes use of indigenous technologies MSMEs in India Source: IFC MSME Report
  3. 3. Lack of Infrastructure Obsolete Technology Inadequate Market Linkages Lack of Managerial Competence Inadequate Finance Lack of Sound Policies Total finance requirement of INR 32.5 trillion in the MSME sector  INR 26 trillion of debt demand and  INR 6.5 trillion of equity demand R o a d b l o c k s ! Source: IFC MSME Report
  4. 4. Need For Working Capital…
  5. 5. Types of Working Capital Working Capital Basis of Concept Basis of Time Gross Working Capital Net Working Capital Permanent or Fixed Working Capital Temporary or Variable Working Capital Seasonal Working Capital Special Working Capital Regular Working Capital Reserve Working Capital Procuring Raw Material Plant & Machinery Salaries of Staff Pay Expenses Pay Short Term Debts Measure of Liquidity Measure of Future Credit Worthiness
  6. 6. Operating Cycle Of A Typical Company Raw Material Work In Progress Finished Goods Sales Accounts Receivable Cash Accounts Payable Value Addition Working Capital Cycle
  7. 7. Fixed Assets Permanent Current Assets Total Assets Fluctuating Current Assets Time Short-term Debt Long-term Debt + Equity Capital Aggressive Approach to Asset Financing Challenges in Accessing Finance Unavailability of collateral free loan Delayed payments Credit Rating Traditional banking products are inadequate to meet working capital requirements Exhausted OD Limits leads to more requirement of WC
  8. 8. Who We Are
  9. 9. Religare Finvest Limited – About Us Saluting The Spirit Of Entrepreneurship! RFL is committed to providing debt capital to power the growth of the SME’s which constitute as the backbone of India’s economy. The diversified suite of lending solutions include:  SME Working Capital Loans  SME Mortgage Loans  Loans Against Marketable Securities Customized Solutions for SMEs
  10. 10. Success Story Machine Tools
  11. 11. 3 Years of Vintage Initial Capital of 30 Lacs Invested in Product Development, Machinery, Marketing Managed initial years from savings & borrowings from acquaintances Background Disclaimer: Illustrative example of success on our 360 client coverage model. Any resemblance to anyone is coincidental. Aspires to be leader in supplier of mould tool to leading blue chip manufacturing companies Prasanna Naidu: Mechanical engineer from a reputed institute and a post graduate in tool design & manufacture…
  12. 12. Current market Size In India is approximately INR 10236 cr Indian Machine tool industry has around 1000 units Total exports stands at around INR 90 cr Employs a workforce totaling 65000 skilled and unskilled personnel Why Machine Tools Source : User Sectors Automotive Auto Ancillary Electricals & Electronics Ball & Roller Bearings Consumer Durables
  13. 13. Key Challenges Faced By Prasanna Hurdles Faced Financial Need:  Requirement of capital: INR 12 cr  Working capital required for buying machinery  Maintenance, staff salaries Competition  Import of machine tools from China, Taiwan, and Korea posing stiff competition.  Rapid increase in raw material cost and longer delivery times resulting into pressure on profit margins Networking Unable to connect with key buyers
  14. 14. How We Helped
  15. 15. How RFL Helped Future Capability Utilize Religare Eco-System Business Development  Introduced Prasanna to Credit and Investment banking teams  Referred for business transactions to other RFL entities  Introduction to CII mentor programs  Market analysis  Financial plan  Risk analysis  Marketing & Sales plan  Business approach  Future potential  Owners capability  Credit rating
  16. 16. Advantage RFL Brand and marketing strategy Export related consultancy Training support for employees RFL Advantage Revamp of website Communication Packs Senior management team trained by top consultants Development of in house training module  Project exceedingly successful  Market share quadrupled  Religare network advantage
  17. 17. T h a n k Y o u For feedback & suggestions please write to Finvest