Venture Capital Fund for Scheduled Castes is being set up by IFCI under SEBI Venture Capital Funds Rules. Government of India contributes initially Rs. 200 crore to the fund. Additional subscriptions will be made in future budgets.
To promote entrepreneurship among Scheduled Castes in India
Risk Capital up to Rs. 15 Crores through:
(a) Equity & (b) Equity linked debt instruments.
It is a Government of Initiative
Investment Manager
IFCI Venture Capital Funds Limited
Email: funds@ifciventure.com
http://www.ifciventure.com/Venture%20Capital%20Fund%20For%20Scheduled%20Castes
The Fund was inaugurated on 16 January 2015
Source:
http://pib.nic.in/photo//2015/Jan/l2015011661208.jpg
The Minister of State for Social Justice & Empowerment, Shri Vijay Sampla addressing at the launch of the Venture Capital Fund for Scheduled Castes, in New Delhi on January 16, 2015. The Union Minister for Social Justice and Empowerment, Shri Thaawar Chand Gehlot, the Minister of State for Social Justice & Empowerment, Shri Krishan Pal and the Secretary, Social Justice & Empowerment, Shri Sudhir Bhargava are also seen.
Terms for Providing Equity Finance + Project Finance
1. Purpose of the Scheme ; To provide concessional finance to SC Entrepreneurs.
2. Investment focus Investments in projects / units being set up in manufacturing and
services sector ensuring asset creation out of the funds deployed.
3. Nature of Financial Assistance
1. Equity/ Optionally/ Compulsorily convertible preference shares
(maximum up to 25% of the corpus);
2. Equity linked debt instruments such as:
Compulsorily convertible debentures;
Optionally convertible debentures;
Non-Convertible debentures, etc;
3. Debt / Subordinate Loans;
4. Tenure of Financial Assistance: Up to 6 years in a company.
5. Moratorium on Principal
On case to case basis but not more than 36 months from the date of investment. Interest payment shall commence from date of investment in the company at a regular interval determined by the
Investment Committee (defined at Sr. No. 13).
6. Investment Size: Rs. 0.50 Crore to Rs. 15 Crore. Aggregate assistance not more than
two times the current net worth of the company
7. Expected Returns through Investment
- Equity instruments may yield returns at 15% p.a.
- Debt/Convertible Instruments may carry returns at 10% p.a.
8. Funding Pattern Investment under the fund will be categorised as follows:
1. Financial assistance upto Rs 5 Crore - Investment under this category shall be funded maximum upto 75% of the project cost and the balance 25% of the project cost will be funded by the
promoters;
2. Financial assistance above Rs. 5 Crore –
a. Investment under this category shall be funded maximum upto 50% of the project cost. At least 25% of the project cost has to be financed by bank/other institutions. Balance 25% of the project cost will be funded by the promoters.
b. The proposals forwarded by Banks or other financial institutions with sanction of 25% of the total project shall be considered. In this case, the projects shall have to be compulsorily appraised by the Banks or other financial institutions.
9. Exit Mechanism - Exit through payments out of operations, buyback/ redemptions by
promoters / companies, strategic investments, listing at Stock Exchanges or any other exit process.
10. Security The following securities may be envisaged during the investment:
The assets of the project being funded/ assisted under the
scheme shall be charged for security. The project assets will
include land, building, plant & machinery and rights on licenses/
patents.
Pari-pasu charge on assets with the Banks/FIs in case of the
companies applying for assistance of more than Rs. 5 Crore.
2nd charge of the assets created out of the investment where the
1st charge in held by the Bank/FIs.
In addition to the charge on assets, post-dated cheques and promissory notes shall be taken.
Personal guarantees of the promoters along with buyback agreement shall be entered.
Pledge of Shares held by promoters and forming atleast 26% stake and upto 51% of the Issued and Paid up capital shall be taken. However, the percentage of pledged shares would be decided on case to case basis.
In case no mortgage is available, the borrower may arrange collateral and corporate guarantees from family / friends / associates / group companies.
11. Time limit for completion of the project
a. The time for completion of the project would be as envisaged at the sanction stage, subject to maximum of 24 months period from the date of disbursement of the first instalment of
assistance under the scheme which may be extended by a further period of 3 months, if reasons for delay are considered justified by the AMC.
b. In case of non-compliance to the implementation schedule, the further balance disbursements of sanctioned amount would be subject to approval by Investment Committee.
12. Selection process Any Proposal under the Scheme shall pass through two Committees and four stages:
a. Screening Committee (Preliminary Stage): The proposals shall be put up before the screening committee for initial analysis to see whether the proposals are meeting the Eligibility Criteria & Preliminary Appraisal Parameters as mentioned in SCHEDULE I. After the clearance by the
screening committee, the proposal shall be taken up for detailed appraisal, negotiations and structuring.
b. Investment Committee (Final Stage):
The detailed proposal as mentioned in SCHEDULE II
prepared by the AMC shall be considered by the
Investment Committee for sanction in case of eligible
proposals.
The proposals appraised by the financing Bankers/FIs
may also submit their appraised proposal for references
to AMC.
The quantum of assistance shall be decided by this
committee.
c. Legal Documentation Stage: After the sanction by the
Investment Committee, Letter of Intent along with the terms
and conditions of sanction shall be issued to the investee
company. The necessary legal documentations shall be
prepared and executed by the AMC.
d. Disbursement Stage: After the completion of above
process the disbursement shall be made as per the terms and
conditions of the sanction. The disbursement to the investee
companies would be in tranches. For Companies with
sanctioned assistance of above Rs. 5 Crore, the money
released by the fund would be in proportion to the loan
tranche released by the Bank.
The Screening Committee shall meet on monthly/regular basis to analyse the proposals received.
13. Screening
Committee /
Investment
Committee
Investment Committee / Screening Committee shall consist of representatives nominated by NSFDC, IFCI/IFCI Venture and one expert from outside having sufficient experience.
None of the representative nominated in the screening committee shall be the representative at Investment Committee.
14. Monitoring Periodic visits, inspection shall be carried out by the official of the AMC. The officials of AMC shall also be Nominee Directors on the board of these companies.
15. Alterations On case to case basis, the above conditions terms/structure may vary, may get modified /amended from time to time.
The scheme is catering to various territories, the scheme can be modified, reviewed after 6 months to 1 year.
IFCI Venture Capital Funds Ltd- Documents to be Submitted by the Venture for Due Diligence
I. Statutory documents of company
a) Organization chart
b) Company contracts
(ownership/rental/debt/consultancy/warranty/supplier/client/representation)
c) Shareholding pattern
d) Information on subsidiaries/branch offices
e) JVs, collaborations, tie-ups
f) MOA, AOA
g) Certificate of registration
h) certificate of commencement of business
i) latest telephone bill of company
II. Market & Competition
a) Product description
b) Technology
c) Market/Industry analysis
d) Competition analysis
e) Clients
f) Marketing strategy, distribution network, organization of sales efforts, sales statistics
III. Business model & Strategy
a) Target-performance comparison & evaluation
b) Company profile/ history/ business model & business divisions
c) Sourcing/ purchasing (raw material) , supplier information
d) Product process, R&D activities, subcontractors
e) Export rate, quoted currency, currency risk
IV. Management & Organization
a) Management /board profile & remuneration/ contracts
b) Directors board profile/ Promoters’ Background & Remuneration/ Dependencies/
contracts, PAN No. of promoters, identification proof, IT returns of promoters for
past 3 years.
c) Mindset/ team dynamics
d) Corporate governance, MIS
e) Controlling, internal reporting
f) Project Management, Product management, employee Involvement
(TQM/TPM/CIP)
g) Risk management & Mitigation plans/ Quality Standards
h) Equity, corporate actions, dormant partners
V. Annual reports & Financial Data
a) Accounting software, flowcharts, processes for liquidity planning, depreciation
method & process tools
b) Annual Reports of last 3 yrs including group companies
c) Assets schedule, depreciation intangible assets
d) IP rights, licenses, NDA, disputes
e) Property rights, major assets
f) List of debtors, volume of debt, credit ratings
g) Cash pooling agreements
h) List of accruals, pension liabilities
i) P&L- statement (re-products, clients, business units, regions)
j) Activity Based Costing/ Management (ABC/M)
k) Contingent Liabilities
l) Revaluation of Land, If any
m) Dividends paid
n) Basis of valuation
o) Internal audit reports
VI. Business Plan review
a) Projected Financial plan (P&L, balance sheet, cash flow)
b) Sales plan (products, markets)
c) Product plan
d) HR plan
e) Investment plan
f) Liquidity plan
g) Other, underlying assumptions
h) Time frame for funds mobilization and utilization.
VII. Workforce & Employee Benefits
a) List of employees & remuneration
b) Detailed list of employees with highest level of earnings
c) List of employees with access to company accounts
d) HR contracts
e) Employee benefits programs & costs
f) Downsizing measures of previous yrs
VIII. Others
a) Suppliers, Partners, MOU if any, exclusive rights etc.
b) Insurances
c) Product liability
d) Environment issues/ Pollution level
e) Communication with authorities
f) Important Business Developments
g) Legal disputes/ Allegation/ Charges against company/promoters if any
h) Land lease papers
i) Undertakings on the ongoing legal suits , if any or not
j) Contact references of two people/clients using same technology
k) Any other information, if any
IX. Accounts Inspection
1. System of Accounting (Manually, Tally, SAP etc.).
2. CA Certificate for sources and utilization of funds.
3. Check source/ receipt of funds with bank statement and books of accounts.
4. Receipt of Share application money with bank statement and ledger/ CA
certificate.
5. Share capital accounts (Ledger) to check with Minute book/ROC return and
check share register.
6. Sanction and disbursement of loan: from letter of intent of institution/bank and
disbursement with bank statement/CA certificate.
7. Bank Reconciliation statement.
8. Check cash payment systems.
9. Loan from promoters: secured or not secured.
10. Any other major receipt in the books of accounts.
11. Expenses on land: source, if paid in cash or in lieu of share capital, if share
capital whether share allotted or otherwise.
12. Expenses on land development, expenses on building, boundary wall, road, etc.
13. Paid in advance or in full for purchase of plant & Machinery.
14. Expenses from 9 to 11 to verify from bills/invoices/purchase orders and
payment to verify from books of accounts/bank statement including for
purchases of fixed/moveable assets.
15. Fixed assets Register to verify/check entries for fixed assets.
16. Check preoperative expenses from ledgers, bank statements, vouchers,
supports,
17. Insurance cover for all fixed/moveable assets.
18. Check deduction and payment of all statutory dues, Returns (Income Tax for 3
years, PF, ROC, VAT, Service Tax etc.) (Take a certificate from Company).
19. Internal audit report if available.
20. Balance Sheets of 2/3 previous years, if available.
21. Appointments of Board of Director (for payment of salary/perks to MD, Whole
time Directors).
22. Contingent liabilities, Guarantee given by the company.
23. Suits filed by the company and against the company and Director.
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