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C & M KSEDM

Circular No. KFC/CIR08/CD01/2013-14 Dated 08/04/2013 Sub: KSEDM – Reorienting Based on Past Experience Pages 1 of 7

Initially when the Mission scheme was launched in December 2011, the response was good and about 10,000 prospective entrepreneurs representing about 4000 enterprises had registered under the Mission by January 2012. Subsequently the inflow of registrations have come down substantially and in many districts, the inflow is so little that we are not able to arrange a meeting of selection committee and a session of training. Even from the selected candidates, many have not come forward to attend training. Even trained and certified promoters are not coming forward with applications forms for implementing their project ideas. Branches have been analysing the situation periodically, informing the Head Office the possible reasons and suggesting ways out. To make the scheme a success, both in quantitative and qualitative aspects, we need to elicit more interest, among the target groups, in the Mission. This will enable us to select good projects from capable prospective persons, thus leading to quality output. The enterprises set up will flourish and go in for expansion / diversification. Thus the Mission will achieve its noble objectives. Based on these, the Mission scheme has been reoriented and modus operandi altered. The changes are listed out in the following sections. Relaxation in Scheme Parameters It has been decided to incorporate the following changes in the Mission scheme parameters to make it more attractive and to bring more capable persons into it:

a. Reducing the lower level of eligible age from 21 to 18. b. Doing away with the stipulation that the unit has to be set up in the local body of

at least one of the promoters c. Doing away with the minimum area requirement.

The General Instructions of the Mission scheme has been accordingly modified and the modified version is posted in the website of the Corporation. The modified version, both in English and Malayalam, are provided as Annexure IA and IB to this note. It has to be ensured that only latest version of ‘General Instructions of the Mission Scheme’, as available in the web portal, is considered. Doing away with Registration at Local Bodies The present practice of prospective promoters taking print out of the registration form, getting it approved by the local body and submitting the same to our Branch is modified and the registration of the enterprise at local bodies is being done away with. Hence forth the prospective promoters need only register online. They will be called before the selection committee based on their registration online.

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Reducing Waiting Time between Registration and Selection Because of the registration at local bodies and intermittent submission of registration forms at the Branches, we have to wait till a sizable number of applications are received before convening a meeting of the selection committee. Since the committee has seven persons from different departments / bodies, organizing a meeting also takes time. To do away with this and to reduce the time between registration and selection, the following procedures are ordered:

a. The Branch Manager will contact all members of the selection committee and fix a date of the meeting of the Committee, the first meeting preferable in first half of May 2013, and intimate the same to the Head Office. There should be a minimum gap of three weeks between the intimation to the Head Office and the date of meeting.

b. The Head Office will release advertisements, twice or thrice before the actual date of selection committee in the prominent newspapers of the area.

c. The Branch Manager has to intimate the prominent papers in the area along with the intimation regarding fixing of date of selection committee.

d. The advertisements will make public the date of meeting of selection committee and will also invite walk-in appearance before the committee.

e. Branch Managers will have to make provisions for systems at the interview site to enable the prospective promoters walking-in to register online there before being invited to appear before the selection committee.

f. The selection list has to be finalised immediately as per formats in Annexure IIA, IIB and IIC and as per procedure listed out in earlier notes in this regard dated 02/01/2012 (No 29) and 23/01/2012 (No. 192).

g. The list of candidates selected has to be posted in the website of KSEDM on the same day.

h. Since the Director of RSETI is a member of the selection committee, a firm date for start of training can also to fixed during the meeting of the selection committee and the same can be posted on the website and intimated to the selected candidates immediately.

Kindly refer to Note No. 29 dated 31/12/2011 on ‘Procedure for Selection of Prospective Entrepreneurs’. The members of the Selection Committee at the District Level, as approved by the State Level Apex Committee at its meeting on 27/12/2011, are as follows:

1. Representative of Finance Department 2. Deputy Director of Panchayaths 3. General Manager, District Industries Centre 4. Lead District Manager 5. Director, Rural Self Employment Training Institute 6. Industry Representative, Selected by KFC 7. Branch Manager, Kerala Financial Corporation, who is the convener too.

The District Finance Inspecting Officers located at the District Head Quarters, has been nominated to represent the Finance Department as per Letter No. 2582/PU-A1/12/Fin dated 11/01/2012. Finance Department has also directed that copy of the communication, convening the meetings of the selection committee at the various districts, has to be sent to the Additional Secretary, Finance (PU-A) Department, Government Secretariat, Thiruvananthapuram, sufficiently in advance.

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Since the selection of the prospective entrepreneurs is based on the General Instruction and Scheme Guidelines, posted in the website, a copy of the same has also to be appended along with the communication convening the selection committee. Copy of the Grading Sheet, indicating the details of the group appearing for the interview, has also to be provided to each of the committee members. This will facilitate effective use of the time the members of the selection committee spends on the process. A revised format Grading Sheet is provided as Annexure IIA to this note. After the submission of the Grading Sheet, the Tabulation Sheet can be prepared by incorporating the marks given by each of the member and finding the average of the marks provided. A revised format for the Tabulation Sheet is provided as Annexure IIB to this note. Immediately after the finalization of the Tabulation Sheet, the Ranking List can be prepared. A revised format for the Ranking List is provided as Annexure IIC to this note. While preparing the ranking list, the following points have to be taken care of:

1. Only enterprises getting more than 5 marks out of the maximum of 10 appears in the ranking list.

2. The enterprises have to be listed according to the marks obtained, with that having highest marks listed at the top.

3. In case there are more eligible enterprises than can be accommodated in the training session proposed immediately, then the selection should be made ensuring that more and more local bodies are represented. For this the highest ranked case in a local body must be given a superscript ‘1’ at the end of the name, the second one given ‘2’ and so on. The ranking list will have to be reoriented, again according to marks obtained, with all enterprises with superscript ‘1’ appearing first, then that with ‘2’ and so on.

4. Promoters of enterprises must be called for training according to the order in the Ranking List.

Please note that uniformity has been brought into the formats in Annexure IIA, IIB and IIC so as to minimize the work of typing, as the initial list prepared in Annexure IIA can be suitably modified for use in the other formats. It need not be emphasized that the documents created for registration and selection are very important ones and needs to be maintained in the safe custody of the Branch Head, or any other person authorized by him. Reduction in Period and Reschedulement of Training Programme The duration of training has been reduced to 13 days from the existing one month and the scheduled revised. The revised training module is provided as per Annexure III. As part of training, the following shall be strictly adhered to:

1. At the selection stage itself, the prospective persons must be made aware about the duration of training and the fact that certificates will be issued only to persons who complete the training by attending all classes on all days, doing market analysis and the group making presentation of having satisfactorily understood the market situation for the proposed product / service.

2. On the last day of training of each batch in the District, a get-together of beneficiaries who have been selected earlier has to be arranged by the Branch at

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a suitable location and interaction arranged with the persons under going training then.

3. The Branch Manager, Nodal Officer and the Project Manager have to compulsorily attend this meeting.

4. Interaction has to be arranged with the beneficiaries to get their feedback, especially on additional training inputs required as part of continual education.

5. The Project Manager has to send a report to the Chairman & Managing Director covering the details of persons who have completed training successfully on that day, summary of suggestions received at the interaction session and full list, in prescribed format, showing details of all beneficiaries selected under the Mission scheme till then, etc.

Publicity Measures to Reach more Prospective Persons among Target Groups The success of the Mission scheme largely depends on bringing in better and viable projects from promising youngsters into the fold. Because of the publicity done in the initial phase, the available mix was vast and we could select quality ones from them. To ensure that the same continues in future too, we have decided to go in for more publicity measures, as indicated below:

1. Printing Brochures of different types for use at different occasions and purposes. We will have to arrange meets at different institutions from where the flow of prospective entrepreneurs is likely to be high.

2. Participate in different events where in industrial development could be the theme

and hold special sessions to highlight the benefits of the Mission scheme to prospective entrepreneurs.

3. Make available copies of brochures on KSEDM at all offices / institutions in the

District where large number of people frequent regularly.

4. There is no better publicity than showcasing of success stories. In KSEDM portal, a special section is being designed to give details of enterprises that have started commercial operation. That part is being developed by Mr. Hariharan, AGM in consultation with the service provider Invis Multimedia, Thiruvananthapuram

5. Printing of success stories in periodicals.

More Financing by the Corporation Because of limited availability of funds to cater to the enterprises set up under the Mission, considering that the requirement is of the order of Rs 2,000 crores in five years as per original estimate and considering limitation of SFC’s Act, we have been refraining from funding projects under the Mission. We have been forwarding proposals to the commercial banks along with prescribed covering letter and copy of scheme guidelines. It is quite sad that the commercial banks have not risen to the occasion and come forward to work along with the Government in encouraging self-employment ventures although there were many benefits accruing to the Banks and listed out in our covering letter.

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The promoters have been facing difficulties in convincing the Banks to fund their projects to the level required for the concern and in time. Many of the promoters had to spent enormous amounts in rent of leased premises, etc. for some months before they could start implementing their projects. In comparison, there has always been demand from the prospective promoters for funding by KFC and those that had availed funds from us are highly appreciative of the services received by them from us. Now Corporation has to come out in a big way to fund the projects under the Mission scheme. The modus of operation for funding with simplified appraisal methods have been provided earlier vide Circular No. 19 dated 17/07/2013. The same has been modified to include rented / leased premises and working capital finance also under CGTMSE scheme. The revised format for appraisal of request for financial assistance under KSEDM is provided as Annexure IV to this note. Separate Branch-Wise Targets have been fixed for funding of projects under the Mission scheme. The same is available in the Table below:

Branch

Monthly Target for Each Branch for Disbursement of Funds to Enterprises set up

under the Mission

Annual Target

Amount in Rs Lakhs

No of Enterprises

Amount in Rs Lakhs

No of Enterprises

Thiruvananthapuram 100 8 1,200 96 Kollam 75 6 900 72 Pathanamthitta 50 4 600 48 Kottayam 100 8 1,200 96 Alappuzha 75 6 900 72 Ernakulam 100 8 1,200 96 Perumbavoor 100 8 1,200 96 Thodupuzha 75 6 900 72 Kattappana 50 4 600 48 Thrissur 75 6 900 72 Malappuram 100 8 1,200 96 Palakkad 75 6 900 72 Kozhikode 100 8 1,200 96 Wyanad 50 4 600 48 Kannur 75 6 900 72 Kasaragod 50 4 600 48

Total 1,250 100 15,000 1,200 In cases where the prospective promoters have a preference for other financial institutions, then the application has to be forwarded to the preferred agency with a covering letter. The format for the covering letter has been modified, based on changed situation, and is provided as Annexure V to this note. Please ensure to put a copy of the latest General Instructions is attached along with the application.

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While forwarding a copy of application form to the cell at Head Office, only the copy of the application form and bio-data of promoters need to be attached. The name and branch of Bank to which the application is forwarded be indicated on the copy of the application form. This will greatly help in reducing wastage of valuable paper. Copy of these papers, of applications being considered by KFC, has also to be forwarded to Head Office cell for documenting the same. Decentralisation of Payment of Interest to Banks At present, demand notices from Banks who have funded enterprises under the Mission, are being received by the concerned Branches since the applications are forwarded to the Banks by the Branch Manager. The demand notices along with copies of sanction communication and statement of accounts for the period are forwarded to the Head Office, from where the interest is determined manually and paid to the concerned bank account directly through RTGS. Now it is proposed to decentralize this operation considering the following reasons:

1. The payments are being made for over four months now from the Head Office and the system has stabilized.

2. Necessary accounting procedures have been developed for automatic tabulation of data and other data capture.

3. With the number of enterprises being funded by Banks on the rise, the work is becoming voluminous, when done by a single office at Head Office.

4. There is additional delay because of the transmission of statement of accounts and demand from Branches to Head Office.

5. Better coordination with the Banks is possible since the Bank and Branch is located in the same District and clarifications, if any, can be obtained conveniently on interest calculation, entries in the statement, repayment schedule, rate of interest, etc.

The procedure for payment of interest to Banks, as is being done at Head Office now, is enumerated below:

a. It has to be ensured that the limit sanctioned is within the upper limit fixed for the Mission.

b. Interest has to be calculated at Base Rate of the Bank for Term Loans. c. The Base Rate of the Banks changes from time to time and this will have to be

ascertained from the website of the Bank. d. The interest has to be calculated based on a daily basis with the amounts

disbursed out of the loan amount. e. Other debits by the Banks need not be considered for interest calculation. f. The interest will have to be calculation based on 366 days for leap year and 365

days for other years. g. With the start of repayment, the same will have to be considered for interest

calculation by reducing the principal amount in accordance of repayment schedule.

h. Advance remittances made by the beneficiaries have to be considered and interest calculation has to be accordingly adjusted.

i. In Cash Credit accounts, if the rate of interest applied by the Bank is above the Base Rate, then the interest charged by the Bank has to interpolated to find the interest at the Base Rate.

j. Generally Banks give Cash Credit facility on a continuous basis. But the Mission scheme insists that the amount has to be repaid in five years.

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k. Some Bank Branches have agreed to reduce the limit by 20% with each passing year. Then the process of interpolation as indicated above will be sufficient.

l. In case the banks do not reduce the limits with each passing year, then the interest payable has to be interpolated to find that applicable at Base Rate and then reduced by 20% for second year, 40% for third year, 60% for fourth year and 80% for fifth year.

m. Interest has to be paid directly to the account of the beneficiary through RTGS. Utmost care has to be taken to ensure that the loan account numbers of the beneficiary and IFSC code of the Bank are mentioned correctly in the request for RTGS.

n. Interest has to be separately paid through RTGS in cases where the beneficiary has both term loan and cash credit facility.

o. Payments have to be effected from the code 20800226 (This will be confirmed through a separate note by Accounts section in due course).

p. While accounting the payment, the bank code has to be indicated as sub-account code. Till date we have been paying interest to 14 Banks and sub-account codes of these banks is given as Annexure VI to this note (The Accounts Department will keep updating the sub-account codes as and when required and intimate the Branch about it).

q. As and when more Banks come into the Boat, additional codes have to got allotted by the KSEDM Cell at Head Office.

r. To facilitate easy reconciliation, name of the beneficiary, type of account (TL/CC) and name of bank in abbreviated form have to be indicated in the description.

s. Monthly reports of the transactions under the account head have to be generated, verified, authenticated and forwarded to the KSEDM cell at Head Office for record purposes and verification at that end.

t. Audit will be got done through the KSEDM cell at Head Office on a half yearly basis for all beneficiary accounts. The statement of account generated by the Bank for all beneficially accounts for the period have to be obtained and sent to the cell at Head Office during the first week of April and October for the purpose of audit.

u. To get details on payments effected from the Head Office in a beneficiary account and for any further clarification in the modus of operandi of the system, Mr. V S Prakash, Assistant Manager, Head Office, KSEDM Cell may be contacted.

All are requested to implement the scheme will full earnestness to ensure that we:

- Purposefully serve the society - Fulfill the purpose of our existence - Do quality funding - Create a larger and diversified clientele base

Sd/- Chairman & Managing Director

To Chief / Branch Managers Copies General Managers

Heads of Departments Zonal Managers

Project Managers in charge of KSEDM Encl: Annexure IA, IB, IIA, IIB, IIC, III, IV, V and VI. Approved for Issue Deputy General Manager (C&M)

Annexure IA

KERALA STATE ENTREPRENEUR DEVELOPMENT MISSION (KSEDM) General Instructions

Eligibility Criteria Groups / Individuals who satisfy the following criteria will be eligible for registration under the Mission:

-­‐ The promotion of the enterprise has to be done by a group, preferably five in number. However a smaller group (minimum 2) can be considered for a viable project.

-­‐ Technocrats can set up enterprises individually. For the Mission, a technocrat is defined as any one of the following:

(a) Graduates in Engineering (b) Diploma Holders (three-year) in Engineering (c) Doctors in all streams of medicine, including veterinary doctors, for setting up

enterprises in their fields of specialization (d) Chartered Accountants and Cost & Management Accountants (e) Post Graduates in Management (MBA) from reputed institutions

-­‐ The group must have identified an enterprise for setting up. -­‐ To encourage regional and distributed development, the enterprise has to be set

up in the local body where at least one of the promoters resides. However, considering the techno-economic feasibility aspects, the District-based selection committee is empowered to allow relaxations in this.

-­‐ The promoters have to establish viability of the project in all areas – technical, infrastructural, commercial and financial.

-­‐ The promoters can set up enterprises in the premises owned by them or taken on lease/rent. The area must be adequate for the proposed activity.

-­‐ The promoter group has to be a very cohesive one and they should have formed / should form a partnership firm.

-­‐ All the promoters have to be first line entrepreneurs. -­‐ All of them must be aged between 18 and 40 on the date of registration. In case

of widows the upper age limit will be 45 years and enterprises promoted by widows will get preference for selection.

-­‐ All of them must have passed higher secondary course or successfully completed a vocational course approved by Government.

-­‐ All of them have to provide details as per Know Your Customer (KYC) norms. -­‐ None of them must be members of any other group under the mission. -­‐ None of them should be permanently employed elsewhere. -­‐ None of them should have availed concessional finance under any other scheme

of the central/state government. -­‐ While applying for loans, the selected/trained candidates will have to comply with

all conditions relating to appraisal and sanction and provide all documents necessary for appraisal. Sanction of loan will be subject to norms and conditions of the funding agency concerned.

Eligible Activities

-­‐ New projects being set up under micro / small enterprises sector and eligible for registration with Directorate of Industries & Commerce.

-­‐ Good Agri-based projects like integrated dairy farms, poly-houses, etc. -­‐ Trading, transport, farming and fishing are not eligible.

Financial Assistance

-­‐ The eligible maximum loan amount will be Rs 10 lakh per technocrat promoter and Rs 4 lakhs per non-technocrat promoter, subject to a maximum of Rs 20 lakhs per enterprise.

-­‐ Maximum repayment period is five years, including a maximum moratorium period of one year.

-­‐ Minimum promoters’ contribution is 10 percent. -­‐ Will be provided by Banks / Financial Institutions and the choice of the funding

agency is left to the promoter group. The Financial Institution will be at liberty to recall the assistance in case of misuse or misutilisation. The financial assistance will be sanctioned after following due appraisal and sanction procedures based on the lending policies of the funding agency. Security

a) Mortgage/hypothecation of land and all assets of the enterprise. b) Personal guarantee of all members. c) Additional security in the following manner.

(i) Personal guarantee of two or more solvent sureties, outside the promoter group. The surety’s liability will be apportioned / fixed according to their number. (OR)

(ii) Coverage under CGTMSE. (OR)

(iii) Collateral security, covering 25% of the Principal Amount sanctioned. Procedure

-­‐ Registration Forms are available in the KSEDM portal in the website of KFC www.kfc.org

-­‐ Registration Form has to be filled up on-line. -­‐ Eligible groups will be called to appear before the District-based selection

committee for scrutiny of their proposal and the entrepreneurial trends in the persons promoting it.

-­‐ Members of selected groups are to undergo two week training on entrepreneurship arranged specifically for Mission beneficiaries.

-­‐ After training the promoters have to submit applications for financial assistance in prescribed forms, format available in www.kfc.org, and submit them to the Branch of KFC for forwarding to the funding agency of the choice of the promoters.

-­‐ Interest at the Base Rate of the funding agency will be paid by the Government / Nodal Agency (KFC) on a monthly basis from funds provided by Government for the purpose based on the claim made by the funding agency along with copies of statement of accounts and sanction details.

-­‐ Interest will not be paid in the case of enterprises that default continuously and are declared as incapable for servicing the loan.

Annexure IIA

KERALA STATE ENTREPRENEUR DEVELOPMENT MISSION (KSEDM)

GRADING SHEET

Selection Committee held on -------------- at -----------------------------------------------------------------

Name of the Member:

Sl. No.

Details of the Enterprise Details of the Promoters Marks *** Awarded (Scale 1-

10)

Located Local Body* Name**** Activity

Proposed Name Age** Qualification Local Body of Residence

* To encourage regional and distributed development, the Mission Scheme stipulates that enterprise has to be set up in the local

body where at least one of the promoters resides. However, considering the techno-economic feasibility aspects, the District-based selection committee is empowered to allow relaxations in this.

** Age is the completed age as on the date of interview before the selection committee. *** Marks have to be awarded in the scale of 1 to 10 after assessing the quality of the project proposal and the entrepreneurial traits

in the promoters in the group. **** Chief Promoter may be indicated against the name, wherever applicable. Place: Date:

Signature of the Member

Annexure IIB

KERALA STATE ENTREPRENEUR DEVELOPMENT MISSION (KSEDM)

TABULATION SHEET

Selection Committee held on -------------- at -----------------------------------------------------------------

Sl. No.

Details of the Enterprise Details of the Promoters Marks Awarded by Members(Scale 1-10) Located Local

Body Name** Activity Proposed Name Age* Qualification 1 2 3 4 5 6 7 Av

* Age is the completed age as on the date of interview before the selection committee. ** Chief Promoter may be indicated against the name, wherever applicable. Place: Date:

Signature of the Convener

Annexure IIC

KERALA STATE ENTREPRENEUR DEVELOPMENT MISSION (KSEDM)

RANKING LIST

Selection Committee held on -------------- at -----------------------------------------------------------------

Sl. No.

Details of the Enterprise Details of the Promoters Marks Awarded (Scale 1-

10)

Located Local Body Name** Activity

Proposed Name Age* Qualification Local Body of Residence

* Age is the completed age as on the date of interview before the selection committee. ** Chief Promoter may be indicated against the name, wherever applicable. Place: Date:

Signature of the Branch Head

Annexure III

Training Module  

Day  1  

FN  

Registration  Inauguration  of  Training  Explanation  of  Programme  Objectives  Micro  Lab  –  Rapport  Building  and  Unfreezing  

AN  

Entrepreneurship  -­‐ A  Better  Career  Option  -­‐ Charms  and  Challenges  -­‐ Characteristics  of  Entrepreneur  –  Matter  of  Attitude  &  Skill  

Day  2  FN   Internalising  of  Entrepreneur  Competencies  –  Thematic  Appreciation  Test  

(TAT)  

AN   Team  Building  –  Broken  Square  Leadership  –  Tower  Building  Game  

Day  3  FN  

Role  Setting  and  Risk  Taking  Behaviour  –  Ring  Toss  Game  Emotional  Stability  and  Stress  Management  

AN  Communication  –  Types,  Effectiveness,  Barriers  Interpersonal  Relations  –  Transactional  Analysis  &  its  application  

Day  4  

FN  Business  Plan  Preparation  Establishment  of  an  Enterprise  –  Systematic  Approach  Legal  Formalities  for  Setting  up  Enterprise  

AN  Managing  the  Enterprise  –  Operation,  Quality,  Materials,  Time  Costing,  Pricing,  Break  Even  Analysis  &  Profit  Management  Accounts  &  Book  Keeping  

Day  5  

FN  

Marketing  Management  -­‐ Marketing  Strategy  -­‐ Sales  Techniques  -­‐ Customer  Management  

AN  

Market  Research  -­‐ Market  Survey  -­‐ Need  for  Research  -­‐ Applicability  -­‐ The  Process  -­‐ The  Tools  -­‐ Preparation  of  Report  

 Day  6  

Full  Days   Market  Survey,  including  the  week  end  days  of  Saturday  and  Sunday  Day  7  

Day  8    

Day  9  

FN  

Financial  Literacy,  Resource  Mobilisation  &  Supporting  Systems  -­‐ Entrepreneurial  Support  Scheme    -­‐ Sensitisation  of  Schemes  of  Government  -­‐ MSME  Act  and  Filing  of  EM  Forms  

AN  

Financial  Literacy,  Resource  Mobilisation  &  Supporting  Systems  -­‐ Banks  as  Support  Institutions  -­‐ Schemes  of  Financing  -­‐ Security,  Insurance  and  CGTMSE  -­‐ Loan  Application  Form  

Day  10  FN  

Project  Report  Preparation  -­‐ Technical,  Legal,  Commercial  &  Financial  Viability  -­‐ Bankable  Projects  

AN   Working  Capital  Management  Development  of  Cash  Flows  

Day  11  FN  

Local  Body  Clearances  Pollution  and  Electricity  

AN  Sales  Tax,  VAT,  etc.  Labour  Laws  

Day  12  FN  

Sustainability  of  an  Enterprise  –  Precautions  Needed  Crisis  Management  –  Preempting  and  Avoiding  

AN   Enterprise  Growth  –  Product  Diversification  and  Expansion  

Day  13  FN    &    AN  

Presentation  of  Market  Survey  Results  Interaction  with  Successful  Entrepreneurs  Feed  Back    Valedictory  Function  Distribution  of  Certificates  

   

Annexure IV

FORMAT FOR APPRAISAL OF REQUESTS FOR FINANCIAL ASSISTANCE UNDER KSSEDM

A INTRODUCTORY DETAILS OF THE PROJECT AND PROMOTERS

1 Name of the Enterprise

2 Full Postal Address of the Enterprise Phone no.

3

Full Postal Address of Registered / Administrative Office Phone No.

4

Name of Local Body (Panchayat, Municipality, Corporation) and District of Location of Enterprise

4

Constitution of the Promoting Entity, Details of Registration / Incorporation and List of Promoters

5 Activity Proposed

6 Additional Employment Likely to be Generated

 B  VERIFICATION  OF  SATISFACTION  OF  ELIGIBILITY  CRITERIA    Sl  No  

Eligibility  Criteria   Suggested  Documents  by  which  satisfaction  can  be  verified  

1  Enterprises  have  to  be  set  up  by  a  group  of  minimum  two  persons.  Technocrats  can  set  up  projects  individually  

Based  on  Information  in  Application  Form    

2  The  group  has  to  be  a    cohesive  one  and  must  have  formed  a  partnership  firm.  

Partnership  Deed  

3   All  promoters  have  to  be  first  line  entrepreneurs  

Self-­‐Declaration  

 

4

All promoters must be aged between 18 and 40 on the date of registration (45 for widows)

Birth Proof

5

All promoters must have passed higher secondary course or a vocational course approved by Government

Certificates

6 All promoters have to provide details as per KYC norms

Documents like Ration Card, Driving License, etc.

7 No promoter is to be member of any other group under the Mission

Self-Declaration

8 No promoter is to be permanently employed

Self-Declaration

9

No promoter must have availed concessional finance under any other scheme of the central / state government

Self-Declaration

10

The project has to be a micro/small enterprise approved by Directorate of Industries & Commerce or Good Projects in the Agri-Sector, subject to eligibility for funding under SFCs Act

MSME Registration

11 The project has to be viable – commercially, technologically and financially

Based on Financial Appraisal

12

Maximum eligible loan amount is Rs 10 lakhs per technocrat and Rs 4 lakhs per non-technocrat, subject to a ceiling of Rs 20 lakhs per project

To be assessed by Branch

13 Minimum Promoters’ Contribution is 10%

To be assessed by Branch

14

The maximum repayment period is 5 years including a maximum moratorium of 1 year

To be part of Sanction Conditions

15

The rate of interest applicable shall be 12% per annum on daily diminishing basis and compounded monthly. In case of default penal interest @ 2% per annum will be charged on defaulted amount for defaulted period

To be part of Sanction Conditions

16

The loan has to be secured by mortgage / hypothecation of all primary assets and personal guarantee of all promoters

To be assessed by Branch

     

     

17  

The  loan  has  to  be  additionally  secured  by  any  one  of  the  following:  

1. Collateral  security  worth  25%  of  the  loan  amount.  

2. Personal  Guarantee  of  two  or  more  solvent  sureties  

3. Coverage  under  CGTMSE  with  fee  being  paid  by  the  promoters  

Collateral  security  and  personal  guarantee  as  is  done  for  normal  loans  CGTMSE  fee  to  be  collected    For  this  scheme  alone,  the  following  relaxations  in  the  norms  for  funding  under  CGTMSE  scheme  can  be  considered  by  including  the  following  categories  also  for  covering  under  it:    

a. Enterprises  set  up  in  rented/leased  premises  b. Coverage  of  Working  Capital  also  under  CGTMSE  coverage  

18  Processing  Fee,  as  is  applicable  to  normal  loans  of  the  Corporation,  has  to  be  charged  

To  be  part  of  Sanction  Communication  

19  Legal  Documentation,  as  applicable  for  normal  loans,  shall  be  done  in  these  projects  too  

To  be  ensured  by  Branch  

20  The  loan  will  be  recalled  and  recovery  action  initiated  in  case  mis-­‐utilisation  of  funds  is  observed.  

To  be    incorporated  in  Sanction  Communication  

21  Recovery  action  will  be  initiated  immediately  on  the  account  turning  non-­‐performing.  

To  be  incorporated  in  Sanction  Communication  

 Note:   For  the  Mission  scheme  a  technocrat  is  any  one  of  the  following:    

a. Engineering  Graduates  b. Diploma  Holders  in  Engineering  (3-­‐years)  c. Doctors  in  all  streams  of  medicine,  including  veterinary  doctors,  for  setting  up  enterprises  in  

their  fields  of  specialization  1. Chartered  Accountants  and  Cost  &  Management  Accountants  2. Post  Graduates  in  Management  (MBA)  from  reputed  institutions  

 C  FINANCIAL  VIABILITY          On  the  basis  of  the  financial  analysis,  the  total  income,  operating  profit,  income  tax  and  net  profit  for  the  first  three  years  of  operation  given  below:    

Particulars   1st  year   2nd  year   3rd  year  Sales/Income  (A)        Expenses  (B)        Operating  profit  (C  =  A-­‐B)        Income  Tax  (D)        Net  Profit  (E  =  C-­‐D)        Depreciation  (F)        Cash  Profit  (G  =  E+F)                  

The  Financial  Parameters  are  tabulated  below:    

Sl  No   Ratio   Minimum  Expected  

Ratios  in  the  Proposal  *   Deviations  #  

(a)   DER   9  :  1      

(b)   Projected  DSCR   1.2      

I   Promoters  Contribution   10%      

(d)   BEP  at  installed  capacity   -­‐-­‐      

(e)   Pay  back  Period   5  years      

(f)   IRR  after  tax   Positive      

(g)   Asset  Coverage  ratio  at  full  value  of  assets   1.11        

(h)  Debt  ratio  for  the  firm  =    Total  Debt  /  Total  Assets  (Capital  Employed)  

90%      

(i)   Return  on  investment  (next  3  year)   18%      

(j)   Net  Profit  to  sales  (projected  for  term  loan)   -­‐-­‐      

 Computation  Statements  are  appended.  

*  Interest  on  Loan  is  to  be  considered  as  zero  for  financial  appraisal  purposes.  #  Deviations  are  to  be  explained    D  BENEFITS  UNDER  THE  MISSION  SCHEME    The   Government   of   Kerala   has   assured   to   pay   the   interest   accruing   on   the   accounts   under   the  Mission  scheme,  if  paid  promptly.  The  interest  accruing  in  the  accounts  under  KSSEDM  will  be  paid  from  the  funds  made  available  by  the  Government  for  the  purpose.      The  enterprises,  funded  under  the  mission  scheme,  will  cease  to  be  eligible  for  any  assistance  under  it  if  any  of  the  installments  are  not  paid  promptly.          E  STATUS  REGARDING  REQUIRED  PERMISSIONS  /  LICENSES          F  MINUTES  OF  THE  BRANCH  LEVEL  SANCTION  COMMITTEE          

Annexure V KFC/KSEDM/ /2013 xx.xx.xxxx The Manager -------- Bank ----- Branch Address Dear Sir, Sub: Kerala State Entrepreneur Development Mission – Forwarding of Application for

Financial Assistance – reg. As you are already aware, the Honourable Minister for Finance, Government of Kerala announced the launch of Kerala State Entrepreneur Development Mission (KSEDM) for providing incentives to promising young unemployed persons to set up enterprises of their own, while presenting the State Budget for Financial Year 2011-12. The Mission was formally inaugurated on 02/02/2012 by the Honourable Chief Minister at Thiruvananthapuram on 02/02/2012. The Mission Scheme was approved by the Sub-Committee of State Level Bankers’ Committee (SLBC), Kerala at its meeting held on 23/02/2012 and later by the SLBC at its meeting held on 26/03/2012. From the Banker’s point of view, the Mission scheme has many positive features.

1. The scheme encourages new projects, being set up under the micro/small enterprises sector and approved by the District Industries Centre. As such the projects under the Mission will help the Banks increase its exposure to the industrial sector and micro sector, both of which are priorities of the Central Government.

2. The selection was very objective and transparent. The District Level Selection Committee members included General Manager of District Industries Centre, Lead Bank Manager, Director of RSETI, Industry Representative, Branch Head of KFC, Deputy Director of Panchayats and Representative of Finance Department as Members. The members assessed the proposals, that qualified the eligibility criteria, individually and the average mark was assigned to the entrepreneur group.

3. Efforts are being made to select only viable and innovative projects from enterprising group of prospective promoters and till date only about 20%, of the enterprises that have applied for consideration under the Mission scheme, have been selected.

4. The selected candidates have been trained at Rural Self Employment Training Institutes (RSETIs) for a period of 2 weeks. The training includes a few days assessing the techno-economic-commercial feasibility for the product/service proposed by the enterprise, through extensive field analysis.

5. Only those candidates, who have taken the training seriously, attended classes regularly and made good presentations on the analysis for the product / service chosen, are certified in the training.

6. The non-serious among the selected candidates have thus been eliminated. 7. The interest on the eligible loan amount is being paid by the nodal agency, Kerala

Financial Corporation, from budgetary provisions made by the Government for the purpose.

8. The Mission scheme offers to Banks quality first line entrepreneurs and projects, interest on their accounts at Base Rate, etc. thereby reducing the risk generally perceived to be associated with funding similar projects.

9. The Mission also provides the Banks with avenues for increasing exposure to the micro industrial sector and opportunity to serve the society and the State.

10. This is an ambitious scheme of the Government of Kerala and all Departments under it are committed to make this programme a success.

The guiding principles of the Mission scheme are enumerated in Annexure to this note. A common application format, covering most of the necessary details, has been designed and made available on the website of the Corporation. The promoters of these enterprises have submitted the completed application form to our Branch and the same is being forwarded to you. The other details of the Mission, including the government orders, can be seen posted in the website of the Kerala Financial Corporation www.kfc.org/ksedm Considering the above, we request you to consider the application favourably and sanction need based financial assistance staying within the Mission guidelines. The interest rate and sanction terms may kindly be intimated to us immediately on sanction with all details of the enterprise, the promoters and the financial aspects. Please ensure that interest rate charged does not exceed the base rate and other terms are also as per the eligibility guidelines approved by the Government of Kerala. This will enable us to accept the sanction terms and take immediate measures for timely reimbursement of interest to the Banks, on a monthly basis when presented with the demand along with copy of statement of accounts for the period.

Name Chief / Branch Manager Contact Mobile Number

Encl: 1. Application for Financial Assistance from ------------------(Name of Enterprise) 2. General Instructions of the Mission scheme Copy: The Chief Coordinator, KSEDM – enclosing copy of application form and bio-

Kerala Financial Corporation data of promoters (Other papers need not be Vellayambalam enclosed)

Thiruvananthapuram 695 033  

Annexure VI KERALA STATE ENTREPRENEUR DEVELOPMENT MISSION (KSEDM)

BANK CODE (SUB ACCOUNT NUMBERS)

Sl. No. Bank Code Bank Name

1 000000001 Punjab National Bank 2 000000002 Canara Bank 3 000000003 Syndicate Bank 4 000000004 Central Bank of India 5 000000005 State Bank of Travancore 6 000000006 Oriental Bank of Commerce 7 000000007 Vijaya Bank 8 000000008 South Malabar Gramin Bank 9 000000009 Nadakkal Service Cooperative Bank 10 000000010 State Bank of India 11 000000011 Union Bank of India 12 000000012 Federal Bank 13 000000013 Indian Overseas Bank 14 000000014 Corporation Bank