Role of Financial Support Services at SMEDA

Internal Sector Teams

FSG assists all the internal sector teams in analyzing their respective sectors and evaluating and valuing their strategies. The work involved in doing so entails:

Financial /Economic Analysis

Financial and economic analysis is carried out for various sectors being studied internally at SMEDA, specifically covering the following:

• Past industry performance.How the relevant sector has performed overall in terms of its financial viability and economic value addition historically?
• Competitive analysis. What are the various cost structures and value addition processes within a sector across the individual players in it?
• Analyze financing modes currently available to the industry. Source of financing? Does it have access to formal capital or not? Is it pre-dominantly equity financed or bank rolled?

Financial Modeling

After the past performance is analyzed, using SMEDA's analysis template, the Sector Teams form a complete turn around strategy for the sector, which may include recommendations for review of regulatory policies, training, up-gradation of the existing technologies/processes or setting up of new projects. What ever the strategy may include, its financial viability and sustainability has to be proven prior to its implementation. To ascertain this financial feasibility, FSG prepares extensive financial projections using comprehensive models. Such models require extensive technical understanding of the industry, which is obtained from the sector teams. The models prepared by FSG are "live" models giving extensive flexibility to the user to evaluate the viability of the strategy under numerous scenarios.

Marketing / Co-ordinate with Investors

Once the financial viability and sustainability of the strategy is established, it needs to be "sold" to investors. Such investors include:

• Banks
• Corporate equity investors
• Individual equity investors

FSG works very closely with the Sector Teams to market the strategy to potential investors by highlighting and explaining in detail the financial feasibility of the project.

Assistance / Guidance in Preparation of Selling Documents 

A very important part of marketing strategy includes the compiling of "selling documents" in the form of information memoranda, financial feasibility or project descriptions. FSG coordinates with internal sector teams and with banks for preparation of such documents.

External SME Walk-ins

FSG has started providing financial consulting and advisory services to Small and Medium Enterprises which require such services. Such services entail:

• Financial analysis to detect problems / requirements of SMEs
• Assistance in the preparation of a business plan
• Assisting the SMEs in negotiations with banks,

Rs. 10,000 will be collected upfront which is the cost of business plan development. If financing is also to be arranged then 1% of financing arranged minus the 10,000 already paid will become payable upon financial close. If 1% of the financing amount is lower than 10,000 then Rs. 10,000 is the only amount payable.