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Finance and Investment Opportunities in Renewable Energy Projects - Future Market

Directions

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SIDBI – towards sustainable financingAbout SIDBI

SIDBI was set up in April, 1990, under an Act of theParliament to serve as the Principal Financial Institution for

Promotion Financing Development of MSME sector & Co-ordinate the functions of similar institutions

New Mission Statement:“SIDBI shall work towards filling the gaps, both in Financial

and Developmental Services, in the MSME Eco-system, to makethe MSMEs more vibrant and Globally Competitive.”

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SIDBI – towards sustainable financingSIDBI - Major RolesOffer niche products to MSME sector complementing the role of Commercial Banks –

Equity Funding, Mezzanine finance and Risk Capital

Financing Sustainable Development - Energy Efficiency projects (EE) & Cleaner Technologies

Financing Service Sector Projects

Receivable Finance/Promoting Factoring services

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SIDBI – towards sustainable financing

Venture funds / equity supportSIDBI started providing risk capital / quasi equity to MSMEsthrough a specialized product called Growth Capital & EquityAssistance Scheme for MSMEs (GEMS).Under this scheme, SIDBI provides risk capital assistance toMSMEs by way of Equity, Preference Capital, Sub-Ordinate Debt,Optionally Convertible Debenture, Optionally Convertible Debt,etc.Government of India set up India Opportunity Venture Fund of Rs5,000 crore with SIDBI.- As on March 31, 2013, total commitment of Rs 404 crore

made under the Fund.MoU with NASSCOM to channelize growth capital / equity to theMSMEs in the Information & Communication Technology space.MoU with KfW, Germany for “Innovation Finance Programme” tofoster an environment conducive to the development & diffusionof innovation.

SIDBI- Major Schemes

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SIDBI – towards sustainable financingSIDBI- Major SchemesReceivable Finance

Receivable Finance Scheme addresses the issue of DelayedPayments to MSME suppliers, when supplying to large Cos./OEMs/Marketing Organizations.Outstanding portfolio under RFS as on March 31, 2013 increased by63% to Rs 4509.93 crore.More than 5000 vendors have benefited from the scheme.

Service SectorContributes around 60% of GDP.But share in MSE financing by banks at around 50%.Specific schemes being drawn for various segments of the service sector.Signed MOU with select industry associations for mutual co-operation

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SIDBI – Sustainable Financing

Objectives :Focused lending schemes to

improve energy efficiency,protect environment and mitigate adverse impact of climatechange by reducing CO2 emissions andenhance profitability of Indian MSMEs in their long run.

Benefits :Concessional FinanceCapital subsidy for EE technology up gradationLower power and fuel billQuicker and higher returnNo collateral / third party guarantee upto Rs 1 CroreEquity/ Quasi equity/ Risk Capital assistance as per eligibility

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SIDBI – towards sustainable financing

ACTIVITIES COVEREDEnergy Efficiency – EE equipments, green building

Cleaner Production -Waste Management –agro waste, industrial wasteFuel Switching- diesel/petrol to CNG/LPG, coal to oil/gas based furnaceCDM- Jodhpur steel rerolling cluster has been registered under UNFCC

ESCOs – Energy Service CompaniesRenewable Energy –solar, hydro, bio mass, wind power

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Renewable Energy 

Renewable Energy – “any sustainable energy source that comes from natural environment.”

Some Aspects of Renewable Energy

It exists perpetually and in abundant in the environment

Ready to be harnessed, inexhaustible

It is a clean alternative to fossil fuels

Major Renewable Energy SourcesHydro Energy ,Wind Energy, Solar Energy, Biomass Energy,Tidal Energy,

Geothermal Energy,Wave Energy ,Bio-fuel, Bagasse

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Renewable Energy

. India’s installed capacity in power sector is around 211,766 MW of whicharound 67% of power has been generated by the thermal energy sources (Coal,Gas & oil) followed by renewable energy sector (hydro, wind, solar, biomass etc)of 31 %.

The country faced a huge power deficit of over 12,000 MW during the peak hoursin the last financial year, according to a report by the Central Electricity Authority(CEA).

To meet the energy demand and to support the country’s growing economy thereis a need for increased investment in Renewable Energy (RE)sector/technologies.India has been consistently ranked among the top five countries globally in termsof its market potential for RE and the recent rank is 4th after China, the US andGermany.India's growing rate of urbanization, rising per capita energy consumption andwidening access to energy, are expected to significantly increase its total demandfor energy.

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Renewable Energy

. The country’s installed RE capacity was around 26000 MW as on August 31, 2012 and plans to double its capacity to 55000 MW by 2017. The total RE investment potential envisaged by 2020 is around US$ 100 billion and an investment amount of US$ 500 million (~Rs. 3000 crore) has been foreseen in this year 2013.

The existing / potential regions for harnessing RE are as under:Hydro Energy- Jharkhand, Punjab, Uttrakhand, Karnataka, Uttar Pradesh, Sikkim, Jammu & Kashmir, Gujarat and Andhra Pradesh.Wind Energy – Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Madhya Pradesh, Tamil Nadu, Orissa, Rajasthan, Kerala and West Bengal.

Solar Energy – Being a tropical country, the solar energy potential is throughout India mainly in south/east coast of India.Biomass Energy/ Bagasse Co-generation - Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu, Punjab, and Uttar Pradesh.In view of immense potential for investment in RE sector and favorable government policies/incentives/subsidies available for the promotion of RE

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SIDBI – towards sustainable financingPresent Installed Capacity of Renewable Energy Sources in India

Renewable Energy Source Present Installed Capacity

Wind 10200 MW

Small Hydro 2100 MW

Bagasse 750 MW

Biomass 620 MW

Solar 2 MW

Total RE Installed Capacity – 13672 MW

Source: Ministry of New & Renewable Energy Sources (MNRE)

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SIDBI – for Renewable Energy Project

Guidelines for covering under Concessional funding:

A minimum of 50% of the power generated using alternative energysources may be utilized directly by the MSME units themselves.

The use of alternative energy sources to generate power and / orenergy may be integral part of MSME’s business.

The installation or commission of the alternative energy sourceequipment or appliances may be inside and / or outside the premises ofthe MSME units

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SIDBI – towards sustainable financing

Information Dissemination: Created websitenamed www.smallB.in to Promote entrepreneurship amongthe youth and availability of relevant information to existingMSMEs on various schemes, etc.- Handholding guidance to new entrepreneurs on how

to set up a business, access to finance, governmentschemes, etc.

- Also guidance to existing entrepreneurs how toaccess market, growth finance, and other relevantinformation to make them grow.

- Total hits 13 lakh.Set up Credit Advisory Centres [CACs] - to

provide free consultancy services to MSMEs in theareas of how to fill up application form, access tofinance, government schemes etc.- 306 clusters covered and more than 2800 MSMEs

interacted with.

SIDBI – Addressing Non-financial Gaps

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SIDBI – towards sustainable financing

PRODUCTSJICA scheme for Energy EfficiencyKfW scheme for Energy EfficiencySustainable Finance Scheme

RESOURCESMain international lines of credit

JPY 30 billion from Japan International Cooperation Agency (JICA).Euro 50 million from KfW, Germany for Energy Efficiency projects inMSME sector.Euro 38.50 million from KfW, Germany for promoting Cleaner ProductionMeasures.

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SIDBI – towards sustainable financingAssociates and SubsidiariesCredit Guarantee Fund Trust for MSEs (CGTMSE)

Credit guarantee for MSE loans up to Rs. 1 crore without collateral /third-party guarantee.

Milestones in FY 2013- Over 2,88,000 Guarantee in a single year- Registered 18% growth in number of Credit approvals and

17% growth in amount guaranteed.- Cumulatively, 10.76 lakh approvals for guarantee coverage

for more than Rs 52,600 crore to MSEs.

97% of credit guarantees for loans upto Rs. 25 lakh.

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SIDBI – towards sustainable financing

SME Rating Agency of India Ltd. (SMERA)

Set up in FY 2006, along with Banks and D&B.First dedicated, independent, third party rating

agency in India for MSMEs.SMERA received accreditation from Reserve Bank of India

(RBI) as an External Credit Assessment Institution (ECAI)under Basel - II norms on September 12, 2012 forundertaking bank loan ratings.

Cumulative ratings as on March 31, 2013 – 21,342 ratings98% ratings for MSEs

Associates and Subsidiaries

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Thank You

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