Developing Hard and Soft Infrastructure in MSME...
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Developing Hard and Soft Infrastructure in MSME Clusters RCM Reddy Managing Director, IL&FS Clusters 22 nd July 2010, New Delhi
Transcript of Developing Hard and Soft Infrastructure in MSME...
Developing Hard and SoftInfrastructure in MSME Clusters
RCM ReddyManaging Director, IL&FS Clusters
22nd July 2010, New Delhi
Hard Cluster Common Infrastructure
Soft InfrastructurePrerequisite to sustainable hard infrastructure
Strengthened institutional structures Robust implementation frameworks Mutual trust amongst cluster stakeholders
Achieved through capacity building, sensitisation and awarenessprogrammes
Approach to Infrastructure DevelopmentGraduation to Commercial Sustainability
Not for profit Commercial
Soft Inputs
Critical Infrastructure
Marketing, Credit
SPV (Company)Association
Infrastructure DevelopmentLack of Sustainable partnerships
Government
Banks/FIs/Other
InstitutionsMSMEs
• Funds through Central / StateGovt Schemes and programmes•Policy environment
•Bank finance/ loans•Private equity•Venture capital•Other developmentalprogrammes •Need
•Willingness
Infrastructure DevelopmentStrong management support to bridge the missing link
Government
Banks/FIs/Other
InstitutionsMSMEs
ProgrammeManagementSupport/ PPP
models
• Funds through Central / StateGovt Schemes and programmes•Policy environment
•Bank finance/ loans•Private equity•Venture capital•Other developmentalprogrammes •Need
•Willingness
IL&FS Models for Infrastructure Development
Interventions across value chain Setting up of Greenfield/ induced clusters Setting up Common Facilities in existing clusters Upgradation of infrastructure in existing clusters
Interventions across Value ChainTripura Bamboo Mission: Case of Micro enterprise cluster
A State wide initiative for Integrated Development ofBamboo Sector in Tripura
Objective: Scale up the turnover from Rs 28 cr to Rs76 cr in 4 years and double livelihoods
Address entire value chain - “Farm to Market” Interventions covering all aspects: infrastructure, skill
training, design support, market linkages, O&Msupport.
Programme management by a professional agency and uniquePPCP frameworks ensuring sustainability of initiatives
Technology Induction Production Infrastructure Market Development
Skill Training Capacity Building Institution Building
Tripura Bamboo Mission:Visuals
Setting up of Induced Clusters:leveraging the competitive advantages of ecosystem
Industrial parks in the vicinity of existing cluster Reasonably self-sufficient clusters• Product specific with units covering the value chain• Need based supporting infrastructure
Public-private partnership-SPV owned by entrepreneurs Making the MSMEs bankable Providing critical mass for customization of services Capacity building of entrepreneurs to create social capital Handholding from concept to commissioning
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Location Palladam, Tamil Nadu
Name of SPV Palladam Hitech Weaving Park
Area 65 AcresActivities Manufacture of cotton cloth on shuttleless looms, pre-weaving, weaving,
post-weaving, made-ups and garmenting unitsUnits 90 UnitsProject Cost Rs 55.42 crores ( Rs. 22.17Cr as grant from SITP of GoI and rest 60% as
SPVs contribution through debt and equity).
ExpectedEmployment
Direct: 2500, Indirect: 3500
ExpectedInvestment
Rs. 160 crores
ExpectedTurnover
Rs. 300 crores per annum
The Park was inaugurated in April 2008
Setting up of Induced Clusters:Palladam Hi tech Weaving Park: A case of scheme supported Infrastructure creation
Handholding of the project from ‘concept to commissioning’ensured successful execution
Park Entrance
Training Centre Training Centre
Main Road
Site Visuals
Garmenting unit Weaving Unit
Hostel Block
Site Visuals
Setting up Common Facilities in existing clusterskanpur BDS programme: leveraging soft support for hard interventions
Setting up Common Facilities in existing clusterskanpur BDS programme: leveraging soft support for hard interventions
• From Industry Association to Formation of Project Development SPV(KLC) with UP Leather Industries as a stakeholder
• From soft interventions as training and skill development to hardinfrastructure related interventions as CETP, testing lab etc
Upgradation of Industrial InfrastructureVatva Industrial Estate Upgradation: Case of unique project structuring
The Project Upgradation of infrastructure such as Road & SWD, Solid Waste Treatment Facility, CETP
Renovation, Center of Excellence
Promoters Vatva Industries Association though an SPV - Vatva Industrial Estate Infrastructure
Development Limited (VEL)
Financing plan ( Project cost ~ 108 Cr) IIUS Grant from DIPP
CIPS Grant from State Government (back ended)
Property tax collection during implementation
Loans from Banks against escrow of Property tax
Beneficiaries 2200 Chemical and Engineering SMEs providing employment to 100000
Unique financing structure where bank provided collateral freeloan against escrow of receivables
Vatva Industrial EstateVisuals: Before and after
Key Factors for Successful Interventions Sustainable partnerships involving community Robust institutional frameworks Strong delivery mechanisms Holistic and Professional management support Government acting as facilitator
