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C luster _ D evelopment __ I nitiative

C luster _ D evelopment __ I nitiative. December 2006. Index. IL&FS-Cluster Development Initiative The Need Vision Approach & Methodology Bouquet of Services Our Footprint The Organogram Our Team Why Us?. Index. IL&FS-Cluster Development Initiative The Need Vision

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C luster _ D evelopment __ I nitiative

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  1. Cluster_Development__ Initiative December 2006

  2. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  3. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  4. MSMEs: Integral Part of India’s Growth Strategy • Significant contributor to Indian economy • Employs more than 28 million people and accounts for over • 40% of gross industrial value addition • 35% of direct exports • 15% of indirect exports “Ensuring the competitiveness of small scale sector is important as it would help in overall growth of Manufacturing Sector as also the National Economy” - NMCC The Need

  5. Sub-Sector Engagement Is the Key for MSMEs Development Programme “Certain sectors emerge in the forefront of growth and employment because of the unique opportunities they enjoy at the present time. Textiles & Garments,Leather & Leather products, Food Processing, Auto components and Drugs & Pharmaceuticals, select them selves at this point in time”-NMCC The Need

  6. Textiles : Emerging Growth Story Value in USD Billions Burgeoning domestic markets and favourable international trade climate in the post quota regime offer significant opportunities for the Indian textile industry to grow rapidly The Need

  7. Increasing Market Share of Indian Clothing in US Market Post Quotas Before Quotas The Need

  8. Leather & Leather Products:significant Turnaround and Growth Value in USD Billions The Need

  9. Agro & Food Processing: ……. Value in USD billion Emergence of organized retail chains in India and increasingly urbanizing lifestyles offer a strong opportunity for SMEs to participate in supply chain as well as food processing segments The Need

  10. Auto Components…….. Value in USD Billions The Need

  11. Handicrafts: Growing Market for Ethnic Products Value in USD Billions The Need

  12. Exploiting the Emerging Market OpportunitiesChallenges & Constraints • Global free trade regime - survival of the fittest • Policy and fiscal rationalization within the country - lower protection and increased competition • Increasing technology benchmarks • Lower turnaround time • Compliances - trade and legal • Lowering cost of manufacture and improving quality The Need

  13. ……..Challenges • Factors adversely affecting competitiveness of MSMEs • Limited size and scale • Outdated technology • Non-availability of finance • Traditional marketing systems • Inability to meet environmental compliances • Poor infrastructure The Need

  14. MSMEs & Clusters • Most of the MSMEs are located in 388 industrial clusters across the country • 490,000 firms • 75,00,000 employed • Rs 157,000 crores of annual output The Need

  15. ….Some of the Prominent Clusters The Need

  16. Cluster: Definition & Principle Definition: Geographical concentration of units producing similar products and facing similar threats and opportunities Principle: Collaborating while competing The Need

  17. Why Cluster Based Approach? • Offers critical mass for customization of interventions • Economies of scale in operation • Better access to technology, information • Greater access to customers, channels • Cheaper access to inputs, raw materials “Cluster approach should be the preferred route for improving the manufacturing competitiveness. New and innovative approaches to cluster development should be adopted”- NMCC The Need

  18. 1 2 3 4 Some Benefits of Clustering Economic Benefits Social Benefits Commercial Benefits Environmental Benefits • Sharing & Pooling of resources • Sharing Business Development & Operating Costs • Access to New Technology • Employment generation • Compliance to trade related barriers • Ensures enhanced security during the start up phase • Enhanced chances of securing larger contracts • Greater bargaining power with customers • Greater presence in the market place • Guidance from experienced larger companies with shared risks • Aids in decongesting units from urban areas • Ensures that environmental safety standards are maintained • Various forms of pollution always under check The Need

  19. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  20. IL&FS Cluster Development Initiative Vision , Goals and Objectives Vision IL&FS would be the preferred service provider to MSMEs and the Government for developing clusters across the country Approach PPP driven & ‘Concept to Commissioning’ Development Goal Contributing to creation of 1 million jobs by 2010 Commercial objective Rs 1 billion annual revenues by 2010

  21. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  22. Our development approach in addressing critical gaps to enhance sustainability Not for profit Commercial Critical Infrastructure Soft Inputs Marketing, Credit Association SPV (Company) Approach & Methodology

  23. Cluster based PPP Model where we play a pivotal role in bringing the stakeholders together SMEs Government Banks/FIs Other Institutions Approach & Methodology

  24. Methodology entails handholding the stake holders from “concept to commissioning” Concept Need Assessment Capacity Building Project Development Project Financing Project Execution Commissioning Approach & Methodology

  25. Cluster Common Infrastructure Physical Infrastructure Technology Infrastructure Marketing Infrastructure CETP CFC Display centres Power Supply Design Studio e-commerce Water Supply Testing Centre Exhibitions With specific focus on Common Infrastructure in the Cluster Approach & Methodology

  26. Not forgetting the Social Capital which is a prerequisite for SME common infrastructure • Awareness creation • Sensitization • Trust • Organization • Capacity building • Competitive reliance on one another Approach & Methodology

  27. 1 2 Why are Cluster Parks different - A comparative analogy Industrial Estates Cluster Parks Focus on the enterprises and their needs Owned and managed by user enterprises Pre-marketed Customised infrastructure Homogeneous units with strong linkages and collaborative behavior Focus on real estate No involvement of user enterprises Post marketed Standard infrastructure Absence of collaborative behavior Approach & Methodology

  28. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  29. CDI Infrastructure Finance Capacity Building Technology Market Access CLUSTERS Pharma Textiles Agro Leather Artisan Bouquet of Services Bouquet of Services

  30. Our Services are encompassing • Structuring of the Special Purpose Vehicle (SPV) • Proposal Preparation for funding from Central/State Govt • Financial Closure through syndication of debt funding requirements • Detailed Engineering/Procurement process including • Layout, design, detailed engineering • Preparation of cost estimates of the infrastructure facilities • Preparation of bid documents • Selection and appointment of contractors/consulting firms • Monitoring and supervision of implementation • Assistance in establishing systems and contractual structures for O&M Bouquet of Services

  31. With Value Added propositions such as : • Capacity building of the SPV/members • Assistance in selection of appropriate technology/ machinery • Facilitating marketing tie-ups • Creating Brand concepts • Facilitating compliances: • Corporate Governance • Legal compliance • Social compliance • Environmental compliance Bouquet of Services

  32. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  33. Focus Areas and Current Mandates New Industrial Clusters (Induced) Existing clusters-Infrastructure improvement Textiles Leather Pharma Skill Development Agro Processing Policy Advisory Growth Poles Artisan clusters Focus Areas and Current Mandates Our Footprint

  34. Commencing with formulation of the Scheme for Integrated Textile Parks (SITP) • Addresses infrastructure constraints of textile industry on cluster basis- sectoral and cluster approach • Targets growth potential clusters- 26 parks, Rs.13,126 Cr investment, Rs.19,529 Cr Annual production, 5 Lakh employment • Critical mass of entrepreneurs- cluster • SPV led by entrepreneurs to own, develop & manage park- sustainability • GoI as facilitator – 40% of project cost not exceeding Rs. 40Cr as grant/equity- improving viability and need based • IL&FS as Programme Manager – for handholding support from “concept to commissioning”-proactive project development Our Footprint

  35. Small footsteps has resulted in 26 Park Projects being approved so far under SITP Our Footprint Our Footprint

  36. Expected Techno-commercial impact due to development of Textile Parks * The number of shuttle-less looms (20,188) out of this initiative will be 2/3rd of the existing shuttle-less weaving capacity (32,000) in the decentralized sector ** Includes yarn processing, fabric processing as well as texturizing, converted into million meters ** The modern processing capacity (3416 million meter) out of this initiative will be 35% of the existing modern processing capacity (6,000 million meter) Our Footprint

  37. Industrial Textiles – 26 Chemical - 3 Steel – 2 Pharma-1 Light engineering-1 Foundry- 1 Leather-2 Chemical-1 Agro Bamboo - 1 Fisheries- 1 Rubber-1 Craft Art Metal-ware -1 Stone Carving - 1 Zari -1 Bamboo-1 Our footprint has been covering more sectors ever since - > 40 clusters Our Footprint

  38. Project Development Process - A Snapshot Identification of cluster Interaction with industry associations and other representatives Identification of potential Entrepreneurs Need assessment and capacity building Assessment of Common infrastructure, amenities & factory buildings for the park Establishment of SPV Identification of Land Procurement of Land Preliminary layout plan Preliminary Costing Vetting by SPV Detailed Engineering & Procurement Preparation of DPR Award of contract GoI Approval Construction & Supervision Financial closure Operation & Maintenance Our Footprint

  39. Growth Pole Projects • Integrated development of a sub-district (about 1000 sq kms) with economic potential that would become growth engine with in the region • Cluster of clusters • Enterprise development with PURA (infrastructure and linkages) • Projects are being formulated by GoI (SSI) through National Commission for Enterprises in Unorganised Sector (NCEUS) • IL&FS has been mandated to prepare the DPRs to begin with Our Footprint

  40. Eco – System For Sustainable Employment and Incomes Attracting New Investments Existing Enterprises & Clusters Promotion of Potential Clusters Factor Conditions Policy Initiatives Capacity Building Market Skills Business Dev Services Technology Prod. Infrastructure Infrastructure and Linkages (PURA) PPP Institutional Framework The Growth Pole Concept Our Footprint

  41. Growth Pole: Evolution and Development Enabling Policy Framework Public STAGE I Business Development Services Existing and Potential clusters Capacity Building: Skills and Micro Finance Inst. Organisations (Formed with Common Interest Groups/SHGs) Production Inputs: Technology and Design Advisory Group/ Project Manager Market Linkages Market Cluster / Sector Development STAGE II PPP SPVs Finance Infrastructure and Linkages Technology Upgradation Demand for employees and migrants Private STAGE III ULB Social Infrastructure Retail Services Housing Our Footprint Growth Pole

  42. Skill Development – a precursor to industrial growth “If Indian manufacturing sector has to grow at a rate of 12% per annum, it will be necessary for the education and training system to produce at least 1.5 million technically skilled people every year” - NMCC Our Footprint

  43. Manpower Development for Apparel Industry • Apparel – fastest growing segment in the textile value chain • In need of skilled manpower at various levels • Lack of trained manpower has been adversely affecting volumes, quality and productivity • Demand-supply gap of 1.9 Million persons by 2010 • Limitations of the present initiatives: • Current training capacity (govt & private) is only 40,000 per year • Quality of training does not match with the industry requirement Our Footprint

  44. The Strategy • Demand driven and placement assured programme • To train 1 million persons over a period of six years • Leverage the infrastructure of existing institutions like ITIs, PSCs, ATDCs, and private/NGO vocational institutions. • Bring in innovative multi-media based teaching methodology and market oriented curriculum • Driven by SPV with industry participation • Government to provide one-time capital support Our Footprint

  45. APPTEX Manpower Development Company Limited (SPV) Advisory Committee MoRD • Assistance towards • Equipment • Content development • Teaching aids • O&M expenses • Provide equipment • Content development • Train the trainers • Certification • Placement Assistance Training Partners Training Centres (Polytechnics/ ITIs/PSCs/ ATDCs/NGOs/ Private Entrepreneurs • Provide Land & Building • Conduct programme • Placement Feedback Trainee The Approach Our Footprint

  46. Identification of Prospective Employer Assessmentof manpower requirement Identification of Potential catchment area Identification of BPL trainees as per GoI Norms Screening by SPV representative with respect to suitability for training Selection of trainees Sending the trainees to nearest training centre by SPV Training by the SPV through training partner Examination & Certification by training partner under supervision of SPV Placement by SPV The Process flow Our Footprint

  47. IL&FS Anchoring the Initiative • Concept developed and presented to major stakeholders • SPV has been incorporated • Content development is in progress • Training partners have been identified • Ministries of Rural Development and Textiles have agreed, in principle, to support the programme • Industry has agreed to be part of SPV and the programme • To be launched by Feb 2007 Our Footprint

  48. Index • IL&FS-Cluster Development Initiative • The Need • Vision • Approach & Methodology • Bouquet of Services • Our Footprint • The Organogram • Our Team • Why Us?

  49. CEO SME Policy Experts Legal Experts Industry Technical Experts Marketing Experts Architects Engineers Brand Developers COO Project Finance Experts Project Management Experts Infrastructure Planners Environment Engineering Experts Cluster Capacity Building Expert Cluster Capacity Building Expert Cluster Capacity Building Expert Cluster Capacity Building Expert Our operating framework : Organogram

  50. Project Finance SPV Capacity Building Engineering Domain Expert Legal Environment Specialists With emphasis on adding value to our clients by providing Multidisciplinary inputs Organogram

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