Converting SME to MNC

Financing Strategy for Internationalization of Small & Medium

Enterprises
Towards partial fulfilment of thesis submission
for post graduate program in
Masters of Business Administration 2013-15 from **College !une"
#ummer $nternship %eport
&ema 'ar !ur(a)astha
Masters of Business Administration
*
th
Trimester
1 | P a g e
Acknowledgement
2 | P a g e
Project Abstract
#mall and Medium +nterprises ,#M+s- are .riti.al for the e.onomi. and so.ial
de/elopment of emerging mar(ets" The) pla) a ma0or role in .reating 0obs and
generating in.ome for low in.ome people the) foster e.onomi. growth so.ial
stabilit) and .ontribute to the de/elopment of a d)nami. pri/ate se.tor"
#mall and Medium +nterprises pla) a predominant role in most de/eloped and
de/eloping e.onomies not onl) be.ause of their number and /ariet) but also due to
their in/ol/ement in all segments of the e.onom)"
The new e.onomi. world order has opened up se/eral opportunities for dis.erning
#M+s to e1pand its business be)ond the national borders" 2lobali3ation is in.reasing
and with the world e.onom) going through an almost te.toni. shift .ompetition is
more /igorous than e/er" 2lobal .ompetiti/eness is .onsidered b) all e.onomies to be
a prere4uisite for maintaining high le/els of in.ome emplo)ment and sustainable
growth" $n order to enhan.e the global .ompetiti/eness #M+s are meeting the e/er
growing .hallenges in the international trade arena" The latent potential to grow bigger
signifies one thing .learl)5 the #M+ se.tor .an and will pla) a .ru.ial role in the
e.onomi. growth of $ndia
As su.h a..ess to finan.ial ser/i.es is /ital in de/eloping a /ibrant #M+ se.tor in an)
e.onom)" $n man) emerging mar(ets howe/er a..ess to finan.ial ser/i.es for #M+s
remains se/erel) .onstrained"
This paper fo.uses on anal)sing the finan.ing strategies that ma) be used to .on/ert a
small and medium enterprise to a trul) global multi-national entit) whi.h in-spite of
being a small enterprise .an le/erage the enormous e.onomi. benefits of
globalisation"
3 | P a g e
Contents
#"6o" Chapter !age 6o"s
1" $ntrodu.tion
2" The $ndian #M+ 7ands.ape
2"1 2o/ernment 8efinitions as M#M+ A.t
2"3 %ole and $mportan.e in the +.onom) of our .ountr)
3" The M6C Ad/antage
3"1 The nature and ad/antages of an M6C entit)
9" Transition from #M+ to M6C
9"1 Ad/antages and moti/es for an #M+ to be.ome M6C
9"2 :a.tors ne.essitating the transition
5" Arranging :inan.ing for #M+;s going global
5"1 +4uit) :inan.ing
5"1"1 $nitial !ubli. <ffer on B#+ #M+ platform"
5"2 8ebt :inan.ing
5"2"1 :inan.ing wa)s- Term 7oan = >or(ing Capital
5"2"1"1 Term 7oans
+CB ,+1ternal .ommer.ial borrowing- route"
:oreign .urren.) loans- :CCB;s et."
5"2"1"2 >or(ing Capital
7etter of Credit and Credit 7ines
Bu)ers .redit = #uppliers Credit
5"9 :inan.ing $nstitutions
#$8B$ +?$M Ban( +C2C"
*" Case #tud) 1- :inan.ing through e4uit)
Anisha $mpe1 6ew 8elhi
Case #tud) 2- :inan.ing through 8ebt
#enr)sa Te.hnologies 'ol(ata"
4 | P a g e
@" Con.lusion
A" Bibliograph)
1. Introduction
The new e.onomi. world order has opened up se/eral opportunities for dis.erning
#M+s to e1pand its business be)ond the national borders" 2andhi0i on.e said the poor
of the world .annot be helped b) mass produ.tionB it .an be a.hie/ed onl) through
produ.tion b) the masses" $f large number of produ.ers were to e1ist for wider
mar(ets the entities that produ.e should ne.essaril) be small"
The ma0or ad/antage of the Mi.ro #mall and Medium +nterprises ,M#M+- se.tor is
its emplo)ment potential at a low .apital .ost the se.tor emplo)s an estimated 5A"C
million people in 2*"1 million enterprisesB labour intensit) in the M#M+ se.tor is
estimated to be nearl) four times that of large enterprises" >ith this huge potential
ba.(ed up b) strong go/ernment support, $ndian #M+s .ontinue to post their growth
stories" &owe/er despite this strong growth there is still a huge potential amongst
$ndian #M+s that remains untapped
5 | P a g e
, dear hema pl3 s.ribble sum .rap about the wonderful wa)
ahead for $ndian smes goin global rest u dont need to tou.h at
all-
2. The Indian SME Landscape
The 2o/ernment has ta(en se/eral initiati/es and measures for enhan.ing the
.ompetiti/eness of #M+s in the present global en/ironment" The most important
among them is the ena.tment of the DMi.ro #mall and Medium +nterprises
8e/elopment A.t 200*; whi.h aims to fa.ilitate the promotion and de/elopment
and enhan.e the .ompetiti/eness of #M+s"
6 | P a g e
2"1- Government Definitions as per MSME ct!
$n a..ordan.e with the pro/isions of Mi.ro #mall = Medium +nterprises
8e/elopment ,M#M+8- A.t 200* the Mi.ro #mall and Medium +nterprises are
.lassified5

,a- Manufacturing Enterprises- The enterprises engaged in the manufa.ture or
produ.tion of goods pertaining to an) industr) spe.ified in the first s.hedule to the
industries ,8e/elopment and regulation- A.t 1A51- or emplo)ing plant and
ma.hiner) in the pro.ess of /alue addition to the final produ.t ha/ing a distin.t
name or .hara.ter or use"
The Manufa.turing +nterprise are defined in terms of in/estment in !lant =
Ma.hiner)"
,b- Service Enterprises5 The enterprises engaged in pro/iding or rendering of
ser/i.es and are defined in terms of in/estment in e4uipment"
The limit for in/estment in plant and ma.hiner) E e4uipment for manufa.turing E
ser/i.e enterprises are as under5
Manufacturing Sector
Enterprises Investment in plant & mac"inery
Mi.ro +nterprises
8oes not e1.eed twent) fi/e la(h rupees
#mall +nterprises
More than twent) fi/e la(h rupees but
does not e1.eed fi/e .rore rupees
Medium
+nterprises
More than fi/e .rore rupees but does not
e1.eed ten .rore rupees
7 | P a g e
Service Sector
Enterprises Investment in e#uipments
Mi.ro +nterprises
8oes not e1.eed ten la(h rupees5
#mall +nterprises More than ten la(h rupees but does not
e1.eed two .rore rupees
Medium
+nterprises
More than two .rore rupees but does not
e1.eed fi/e .ore rupees
2"3- $ole and Importance in t"e Economy of our country! #mall = Medium
+nterprises i"e the #M+s pla) a /ital role for the growth of $ndian e.onom) b)
.ontributing 9@ per.ent of industrial output 91 per.ent of e1ports emplo)ing *5"A
million people .reating 2 million 0obs and produ.e more than @5*0 4ualit) produ.ts
for the $ndian and international mar(ets"
3. The MN Ad!antage
Multinational .orporations ,M6C- or multinational enterprises ,M6+-

are
organi3ations that own or .ontrol produ.tion or ser/i.es fa.ilities in one or
more .ountries other than the home .ountr)" :or e1ample when a .orporation
is registered in more than one .ountr) or has operations in more than one
.ountr) it ma) be attributed as M6C"
8 | P a g e
Fsuall) it is a large .orporation whi.h both produ.es and sells goods or
ser/i.es in /arious .ountries" $t .an also be referred to as an international
.orporation or a Gtransnational .orporationG or perhaps best of all as a
Gstateless .orporationH" M6Cs pla) the most important role in globali3ation"
%&'( dvantages of an MNC!
i- !resen.e a.ross multiple geographies
ii- 7arge pool of suppliers sellers and bu)ers"
iii- 7e/erage e.onomies of s.ale a.ross national boundaries"
i/- &arbingers of the wa/e of globalisation"
A M6C ,Multi 6ational Corp- usuall) has offi.es in different .ountries but .an
still be .lassified as an #M+ depending on its si3e and s.ale of operations"
Thus essentiall) a #mall and Medium +nterprise .an be turned into a Multi
6ational +ntit) b) strategi. finan.ial initiati/es"
". Transition #rom SME to MN
)&'( dvantages and motives for an SME to *ecome MNC
+arlier most #MBs were .onfined to their lo.al or regional mar(et and the) were
.omfortable that wa)" But with the help of te.hnolog) espe.iall) the >eb and mobile
their growth has trans.ended geographi. barrier and toda) man) are going outside of
their home mar(et to a..elerate growth The .lear thrust of the new wa/e of
globalisation of #M+;s initiati/e has been three fold5 enhan.e .ompetiti/eness through
en.ouraging an inno/ati/e ethos amongst firms and being 4ualit) .ons.ious in.rease
lin(s with multiple sta(eholders with a /iew to benefit from networ(s both nationall)
and globall)"
9 | P a g e
)&+( Factors necessitating t"e transition & t"e c"ange drivers!
)&+&'( ,ec"nology & Net-or.ing!
$ndian #M+s are in.reasingl) wa(ing up to the reali3ation that te.hnolog) is going to
pla) a .ru.ial role in the sustainable de/elopment - a (e) fa.tor in sta)ing .ompetiti/e
in a fast pa.ed global s.enario" $n/esting in new te.hnologies should be a top strategi.
priorit) as #M+s rema(e their businesses for the global mar(etpla.e" B) in/esting in
emerging te.hnologies su.h as business management software data anal)ti.s mobile
so.ial media and .loud .omputing these businesses .an .reate strong .ustomer
relationships a.ross the world" Man) business de.ision ma(ers in the #M+s are
in.reasingl) .ollaborating with other firms through online business networ(s and
platforms to help dri/e inno/ation and growth" 7atest re/olutions in .loud .omputing
Io$! and +%! pa.(ages are bound to streamline the fun.tioning of #M+;s enabling
them to mo/e global"
)&+&+( Macro Economic Initiatives/
$nitiati/es ta(en b) >orld trade organisation and $M: towards lifting of trade
barri.ades towards a flat e.onomi. mar(et all throughout the world ha/e moti/ated
the #M+;s to thin( of .rossing the national boundaries" %egional trade unions li(e the
B%$C# et. are tr)ing hard to in.rease a/enues for .ross border trade for better and
stronger e.onomies" The #M+;s are bound to ta(e part in this entire e.onomi. wa/e"
10 | P a g e
$. Arranging %inancing #or SME&s going glo'al
0&'( E#uity Financing
0&'&'( SME / Initial 1u*lic 2ffer
B#+ 7td has set up the B#+ #M+ !latform as per the rules and regulations laid
down b) #+B$" B#+ #M+ !latform offers an entrepreneur and in/estor friendl)
en/ironment whi.h enables the listing of #M+s from the unorgani3ed se.tor
s.attered throughout $ndia into a regulated and organi3ed se.tor" The (e) benefits
of the B#+ #M+ platform are5
Easy access to Capital
B#+ #M+ pro/ides an a/enue to raise .apital through e4uit) infusion for
growth oriented #M+;s"
En"anced 3isi*ility and 1restige
The #M+;s benefit b) greater .redibilit) and enhan.ed finan.ial status leading
to demand in the .ompan);s shares and higher /aluation of the .ompan)"
Encourages Gro-t" of SMEs
+4uit) finan.ing pro/ides growth opportunities li(e e1pansion mergers and
a.4uisitions thus being a .ost effe.ti/e and ta1 effi.ient mode"
11 | P a g e
Ensures ,a4 5enefits
$n .ase of listed se.urities #hort Term 2ains Ta1 is 15J and there is absolutel)
no 7ong Term Capital 2ains Ta1"
Ena*les 6i#uidity for S"are"olders
+4uit) finan.ing enables li4uidit) for shareholders pro/ides growth
opportunities li(e e1pansion mergers and a.4uisitions thus being a .ost
effe.ti/e and ta1 effi.ient mode"
E#uity financing t"roug" 3enture Capital
!ro/ides an in.enti/e for Ienture Capital :unds b) .reating an +1it %oute and
thus redu.ing their lo.( in period"
Efficient $is. Distri*ution
Capital Mar(ets ensure that the .apital flows to its best uses and that ris(ier
a.ti/ities with higher pa)offs are funded"
,"e 6isting 1rocess on 5SE SME
1lanning
The $ssuer Compan) .onsults and appoints the Mer.hant Ban(erEs in an
ad/isor) .apa.it)"
1reparation
The Mer.hant Ban(er prepares the do.umentation for filing after .ondu.ting
due diligen.e regarding the Compan) i"e .he.(ing the do.umentation in.luding
all the finan.ial do.uments material .ontra.ts 2o/ernment Appro/als
!romoter details et." and planning the $!< stru.ture share issuan.es and
finan.ial re4uirements
1rocess
Appli.ation pro.edure5
#ubmission of 8%&!E8raft !rospe.tus - These do.uments are prepared b) the
Mer.hant Ban(er and filed with the +1.hange as well as with #+B$ as per
re4uirements"
12 | P a g e
Ierifi.ation = #ite Iisit - B#+ /erifies the do.uments and pro.esses the same"
A /isit to the .ompan)Ks site shall be underta(en b) the +1.hange offi.ial "The
!romoters are .alled for an inter/iew with the 7isting Ad/isor) Committee"
Appro/al - B#+ issues an $n !rin.iple appro/al on the re.ommendation of the
Committee pro/ided all the re4uirements are .ompiled b) the $ssuer Compan)"
:iling of %&!E!rospe.tus - Mer.hant Ban(er files these do.uments with the
%<C indi.ating the opening and .losing date of the issue"
<n.e appro/al is re.ei/ed from the %<C the) intimate the +1.hange regarding
the opening dates of the issue along with the re4uired do.uments"
1u*lic 2ffering
The $nitial !ubli. <ffer opens and .loses as per s.hedule" After the .losure of
$!< the Compan) submits the do.uments as per the .he.(list to the +1.hange
for finali3ation of the basis of allotment"
1ost 6isting
B#+ finali3es the basis of allotment and issues the 6oti.e regarding 7isting and
Trading"
"
$e#uisite Financials for listing on 5SE SME 1latform
1ost Issue 1aid up Capital
The post-issue paid up .apital of the .ompan) shall be at least %s" 1 .rore"
Net/-ort"
6et worth ,e1.luding re/aluation reser/es- of at least %s"1 .rore as per the
latest audited finan.ial results"
Net ,angi*le ssets
At least %s"1 .rore as per the latest audited finan.ial results"
13 | P a g e
,rac. $ecord
8istributable profits in terms of #e.tion 205 of the Companies A.t 1A5* for at
least two )ears out of immediatel) pre.eding three finan.ial )ears ,ea.h
finan.ial )ear has to be a period of at least 12 months-" +1traordinar) in.ome
will not be .onsidered for the purpose of .al.ulating distributable profits <r the
net worth shall be at least %s"3 .rores"
0&+( De*t Financing
0&+&'( ,erm 6oan & 7or.ing Capital!
Ban( term loans fund the e1penditure made for a.4uisition of fi1ed assets while
wor(ing .apital funding is pro/ided to a firm to fund its li4uid in/estments towards
.urrent assets"
0&+&'&'( ,erm 6oan!
Ban(s e1tend term loans for 2reenfield pro0e.ts as well as .apa.it) e1pansion of
firms" The term loans to #M+ se.tor is a priorit) se.tor lending b) the ban(s and is
offered in .on/enient terms and .onditions to the aspiring entrepreneur pro/ided the
.onditions are satisfied"
:or #M+ /entures loo(ing to e1pand globall) ban(s ma) offer foreign .urren.) term
loans /ia +CB route"
E4ternal Commercial 5orro-ing!
An e1ternal .ommer.ial borrowing ,+CB- is an instrument used in $ndia to
fa.ilitate the a..ess to foreign mone) b) $ndian .orporations and !#Fs ,publi.
se.tor underta(ings-" +CBs in.lude .ommer.ial ban( loans bu)ersK .redit
suppliersK .redit se.uritised instruments su.h as floating rate notes and fi1ed rate
bonds et." .redit from offi.ial e1port .redit agen.ies and .ommer.ial borrowings
14 | P a g e
from the pri/ate se.tor window of multilateral finan.ial $nstitutions su.h as
$nternational :inan.e Corporation ,>ashington- A8B A:$C C8C et."
The 8+A ,8epartment of +.onomi. Affairs- Ministr) of :inan.e 2o/ernment of
$ndia along with %eser/e Ban( of $ndia monitors and regulates +CB guidelines
and poli.ies" +CB;s .an be obtained b) two routes5
1- Automati. route
2- Appro/al route as per %B$ guidelines
The funding re4uirements of an #M+ .an be easil) met /ia the Automati. route
where in no spe.ial appro/al will be re4uired b) the borrowing entit) and ban(
from %B$"
The all in .ost .eiling for an +CB arranged b) a ban( for an #M+ is as per
following slabs5
Tenor of 7oan All in Cost Ceiling of +CB pri.ing
%epa)ment Tenor from 3-5 )ears 7$B<% L 350 bps
%epa)ment Tenor abo/e 5 )ears 7$B<%L500 bps
*7$B<%- 7ondon $nterban( offered rate"
Bps- Basis points"
SME/FCC58s 9Foreign Currency Converti*le 5onds(!
%eser/e Ban( of $ndia in .onsultation with Ministr) <f :inan.e 2o/ernment <f
$ndia is preparing the road map to introdu.e #M+-:CCB;s to enable the .ountr);s
#M+ to issue .on/ertible bonds to foreign in/estors and le/erage the strength of
their business and balan.e sheet" The new guidelines are e1pe.ted to be introdu.ed
b) the ne1t finan.ial )ear 2015-1*"
FCC5/ Foreign currency converti*le *onds ,:CCBs- are a spe.ial .ategor) of
bonds" :CCBs are issued in .urren.ies different from the issuing .ompan)Ks
domesti. .urren.)" Business entities issue :CCBs to raise mone) in foreign
.urren.ies" These bonds retain all features of a .on/ertible bond ma(ing them /er)
attra.ti/e to both the in/estors and the issuers"
15 | P a g e
These bonds assume great importan.e for multinational entities and in the .urrent
business s.enario of globalisation where .ompanies are .onstantl) dealing in
foreign .urren.ies"
0&+&+( 7or.ing Capital Financing!
Ban(s offer a /ariet) of wor(ing .apital funding options to enable .ross border
international trade and business" #ome of the most important /ehi.les of wor(ing
.apital finan.ing are as under5
Foreign 6etter of Credit 9F6C(! A letter of credit is a do.ument issued b) a
finan.ial institution or a similar part) assuring pa)ment to a seller of goods or
ser/i.es pro/ided .ertain do.uments ha/e been presented to the ban("G7etters of
CreditG are do.uments that pro/e the seller has performed the duties spe.ified b)
an underl)ing .ontra.t ,e"g" the sale of goods .ontra.t- and the goodsEser/i.es
ha/e been supplied as agreed" $n return for these do.uments the benefi.iar)
re.ei/es pa)ment from the finan.ial institution that issued the letter" The letter of
.redit ser/es as a guarantee to the seller that it will be paid regardless of whether
the bu)er ultimatel) fails to pa)" $n this wa) the ris( that the bu)er will fail to pa)
is transferred from the seller to the letterKs issuer" The letter .an also be used to
ensure that all agreed standards are met b) the supplier pro/ided that these
re4uirements are refle.ted in the do.uments des.ribed in the letter of .redit"
7etters of .redit are used primaril) in international trade for transa.tions between
a supplier in one .ountr) and a pur.haser in another"
5uyers and Suppliers Credit5 5uyer:s credit is short term .redit a/ailed to an
importer ,bu)er- from o/erseas lenders su.h as ban(s and other finan.ial
institution for goods the) are importing" The o/erseas ban(s usuall) lend the
importer ,bu)er- based on the letter of .omfort ,a ban( guarantee- issued b) the
16 | P a g e
importerKs ban(" :or this ser/i.e the importerKs ban( or bu)erKs .redit .onsultant
.harges a fee .alled an arrangement fee"
Bu)erKs .redit helps lo.al importers gain a..ess to .heaper foreign funds that ma)
be .loser to 7$B<% rates as against lo.al sour.es of funding whi.h are more
.ostl)"
5"9- Financing Institutions!
As per %B$ guidelines lending to the #M+;s is a priorit) se.tor of the ban(s
and thus forms the fo.us area for all the $ndian ban(s" :urther the following
finan.ial institutions ha/e a spe.iali3ed set up to deal with the re4uirements of
#M+;s as well as international trade5
SID5I! Small Industries Development 5an. of India is a non-
independent finan.ial institution aimed to aid the growth and de/elopment of
mi.ro small and medium-s.ale enterprises ,M#M+- in $ndia" #et up on April 2
1AA0 through an a.t of parliament" Beginning as a refinan.ing agen.) to ban(s
and state le/el finan.ial institutions for their .redit to small industries it has
e1panded its a.ti/ities in.luding dire.t .redit to the #M+ through 100 bran.hes
in all ma0or industrial .lusters in $ndia" t is the !rin.ipal :inan.ial $nstitution
for the !romotion :inan.ing and 8e/elopment of the Mi.ro #mall and
Medium +nterprise ,M#M+- se.tor and for Co-ordination of the fun.tions of
the institutions engaged in similar a.ti/ities"
E;IM 5an.! The +1port $mport Ban( of $ndia is the premier ban( to
arrange funds for e1pansion of lo.al entities on foreign soil" +?$M /ide its
range of finan.ial funding options enables lo.al le/el entrepreneurs to e1pand
their rea.h in to the international mar(ets"
+1im Ban( has arranged for a .redit line from the Asian 8e/elopment Ban(
,A8B- for pro/iding foreign .urren.) term loans to the M#M+ borrowers in
.ertain spe.ifi. lagging states of $ndia /i3" Assam Madh)a !radesh <rissa
Fttar !radesh Chhattisgarh Mhar(hand %a0asthan and Fttara(hand" These
foreign .urren.) term loans .an also finan.e domesti. .apital e1penditure of
17 | P a g e
the borrowers in $ndian %upees besides meeting their foreign .urren.) .apital
e1penditure re4uirements"
ECGC! The E4port Credit Guarantee Corporation of India 6imited
,ECGC- has been established with an ob0e.ti/e to pro/ide insuran.e .o/er in
respe.t of ris(s in e1port trade" These ris(s ma) in.lude loss of mone) on
a..ount of foreign bu)er be.oming ban(rupt or sudden import or e1.hange
restri.tions resulting in stopping of pa)ments et." The +1port Credit
2uarantee Corporation of $ndia 7imited is a .ompan) wholl) owned b) the
2o/ernment of $ndia based in Mumbai Maharashtra" $t pro/ides e1port .redit
insuran.e support to $ndian e1porters and is .ontrolled b) the Ministr) of
Commer.e"
(. ase Studies
Case Study '/ Financing t"roug" raising E#uity
18 | P a g e
nis"a Impe4 6imited
Anisha $mpe1 7imited is a .ompan) dealing with the import e1port business
of te1tiles and fabri.s" The .ompan) has been re.entl) listed on the B#+-#M+
platform and is being traded with s.rip name NA6$#&A$M!+?H"
5usiness Model!
The Compan) deals with the business of te1tiles and fabri.s" The main
promoter of the .ompan) is #hri #unil 'umar Mali(" The .ompan) is based in
6ew 8elhi and .ondu.ts its business all o/er the world with offi.es in Middle
+ast +urope and #outh Asia"
Need for E4pansion!
The .ompan) wanted to in.rease its retail footprint a.ross /arious .onsumer
mar(ets in +astern +urope and Middle +ast and re4uired signifi.ant
in/estment to .apture the opportunities in the mar(et"
Financing Model!
The .ompan) went for an $nitial !ubli. <ffer ,$!<- in terms of #e.tion 32 of
Companies A.t 2013 in :ebruar) 2019 on the B#+-#M+ platform and
infused e4uit) funds into its business to the tune of %s"*"50 Crores ,%s #i1
and a &alf Crores <nl)-" The fa.e /alue of the e4uit) share during issuan.e
was %s10E- ea.h" !resentl) the s.rip is trading %s"19"C0E- ,as on #eptember 3
2019-"
The .ompan) has been able to infuse funds /ia a su..essful $!< listing
managed b) mer.hant ban(ers $n/enture Mer.hant Ban(ers #er/i.es !ri/ate
7imited"
The (e) finan.ials of the .ompan) before and after the e4uit) fund infusion of
the .ompan) are as following5
'e) :inan.ials 31"12"13
,!re $nfusion-
Audited
31"03"19
,!ost $nfusion-
Fn-audited
7iabilities
+4uit) #hare Capital @22 19C2
%eser/es = #urplus 35 92"1A
Total +4uit) @5C 1519
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Term 7oans 0"00 0"00
8eferred Ta1
7iabilit)
@"*0 @"02
Total 6on Current 7iabilit) @"*0 @"02
Total Current 7iabilit) A*3 *50
Total 7iabilit) 1@2@"*0 21C2"02
6on-Current Assets
,:i1ed Assets-
233 9A2
Current Assets 15A5"*0 1*@0"02
Total Assets 1@2@"*0 21C2"02
+!# - -/e
!+ - -/e
#our.e5 $ssue prospe.tus and unaudited results from www"mone).ontrol".om
Financial nalysis/
As refle.ted in the un-audited results the pro.eeds of the $!< issued has been
infused to e4uit) reser/es whi.h ha/e .orrespondingl) in.reased b) %s"*50
7a(hs" The pro.eeds ha/e been utilised to fund .apital e1pansion of the firm
as e/iden.ed b) the in.rease in fi1ed assets e1penditure b) about %s2*0 la(hs"
Although the .urrent assets position has also slightl) impro/ed howe/er the
bul( of the net wor(ing .apital infusion out of e4uit) pro.eeds has been to
redu.e the .urrent liabilities whi.h redu.ed b) around %s"300 la(hs"
The pri.e earnings and earnings per share are in negati/e region be.ause of
negati/e /alue of !rofit after ta1 be.ause of high .apital e1pansion .osts
whi.h .ould not be totall) .apitalised"
Case Study +/ Financing t"roug" raising De*t
Senrysa ,ec"nologies 1rivate 6imited
#enr)sa Te.hnologies 7imited is a pri/ate limited .ompan) based in 'ol(ata
>est Bengal" The .ompan) was in.orporated in 200@ and the in/estment in
plant and ma.hiner) is about %s"2"00 Crores 4ualif)ing it as an #M+ /enture"
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$t is led b) #hri !"' #aha who is a thoroughl) e1perien.ed professional in
field of online pa)ments te.hnolog)"
5usiness Model!
The .ompan) deals with the business of being an ele.troni. pa)ment solution
pro/ider to ban(s and different finan.ial intermediaries" The .ompan)
pro/ides point of sale ma.hines ele.troni. .ards and digital gatewa)s to
pro.ess pa)ment solutions for ban(s in $ndia as well as in M)anmar
$ndonesia and Thailand"
Need for E4pansion!
The firm re.ognised enormous un-tapped opportunities in the #outh Asian
e.onomies li(e M)anmar and $ndonesia" The mar(et for ele.troni. pa)ment
solution pro/ider to ban(s in these #outh Asian e.onomies was targeted b) the
firm for global e1pansion" &owe/er this re4uired huge in/estments in fi1ed
assets in the domesti. base i"e $ndia as well as li4uidit) in the foreign soil"
Financing Model!
The .ompan) a/ailed term loans from #$8B$ while wor(ing .apital was
finan.ed b) #tate Ban( of $ndia" The term loans were a/ailed to a.4uire fi1ed
assets li(e ser/ers networ( support s)stems et. and wor(ing .apital was
utilised to finan.e trade debtors and re.ei/ables"
The following were the terms of the loans5
T)pe of
:a.ilit)
Amount of
7oan
!urpose 8ebt +4uit)
%atio
%epa)ment
Terms
#$8B$-
Term 7oan
F#8 0"2 Mn A.4uisition of
:i1ed Assets
352 #e/en )ears
in.luding
moratorium"
#B$->or(ing
Capital
$6% 0"5 Mn 7etter of
Credit
7imit
20J margin 1@0 da)s line
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#our.e5 !ersonal 8is.ussion with the management team" The balan.e sheet
was not shared"
6oan Facility ,erms!
!rimar) #e.urit)5 :irst pari pasu .harge o/er the .ompan);s .urrent assets and
promoters; personal guarantee"
Collateral5 +4uitable mortgage o/er land and building of the .ompan)"
%ate of $nterest5 7in(ed to Ban( Base %ate and %is( Based Minimum
7ending rates as per M#M+ rating"
Effect!
After ha/ing a/ailed the finan.ing options #enr)sa has been able to mar( a
ni.he for its own self in $ndonesian mar(et as a distin.t pla)er in the pa)ment
solution pro/ider spa.e" The .ompan) is tr)ing to enhan.e its performan.e in
M)anmar and Thailand mar(ets"
C" onclusion
, dear hema pl3 s.ribble sum .rap about the wonderful wa)
ahead for $ndian smes goin global-
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)i'liograph*
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