SIDBI

For Private Circulation only
Offer Document FOR SHELF REGISTRATION
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (Established under the Small Industries Development Bank of India Act, 1989) Head Office: SIDBI Tower, 15, Ashok Marg, Lucknow - 226001 Tel (0522) 2288546-50 Fax (0522) 2288541 Mumbai Office: SME Development Centre, G Block, Plot No. C-11, Bandra - Kurla Complex, Bandra (East) , Mumbai 400051 Tel (022) 55531100 Fax (022) 55531282 Website: www.sidbi.com Private Placement of Unsecured, Redeemable, Non-Convertible Bonds Issued for FY 2005- 06
GENERAL RISKS: Investors are advised to read the Risk Factors carefully before taking an investment decision in the offering. For taking an investment decision, investors must rely on their own examination of the Issuer and the Offer including the risks involved. The Bonds have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of investor is invited to the Risk Factors in the Offer Document. ISSUERS ABSOLUTE RESPONSIBILITY: The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Offer Document contains all information with regard to the Issuer, and the Issue, which is material in the context of the Issue, that the information contained in this Offer Document is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document or any of such information or the expression of any such opinions or intentions misleading in any material respect. CREDIT RATING: CARE AAA from CARE. Instruments carrying this rating are considered to be of the best quality, carrying negligible investment risk. The rating(s) are not a recommendation to buy, sell or hold securities and Investors should take their own decisions. The rating may be subject to revision or withdrawal at any time by the assigning Rating Agency on the basis of new information. Each rating should be evaluated independently of any other rating. LISTING: The Bonds are proposed to be listed on the Stock Exchange, Mumbai (BSE). DEBENTURE TRUSTEE: UTI Bank Limited has been appointed as Debenture Trustee. OPENING AND CLOSING DATES FOR EACH BONDS SERIES WILL BE INTIMATED IN THE RESPECTIVE TERM SHEETS
TABLE OF CONTENTS PART I I GENERAL INFORMATION II CAPITAL STRUCTURE OF SIDBI III TERMS OF THE ISSUE IV BANK, MANAGEMENT AND PROJECT V OPERATIONAL & FINANCIAL PERFORMANCE OF THE ISSUER AND MANAGEMENT DISCUSSION VI FINANCIALS OF GROUP COMPANIES VII COMPANIES UNDER THE SAME MANAGEMENT VIII PROMISE VIS-A-VIS PERFORMANCE IX OUTSTANDING LITIGATION /CRIMINAL PROSECUTION, DEFAULTS AND MATERIAL DEVELOPMENTS X RISK FACTORS AND MANAGEMENT PERCEPTION ON THE SAME XI DISCLOSURE ON INVESTOR GRIEVANCES AND REDRESSAL SYSTEM PART II I GENERAL INFORMATION II FINANCIAL INFORMATION (Annexure I XIV) III STATUTORY AND OTHER INFORMATION IV EXTRACTS OF RELEVANT PROVISIONS OF SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA ACT, 1989 IV EXTRACT OF SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (ISSUE AND MANAGEMENT OF BODNS) REGUALTIONS, 1990 V MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION PART III ANNEXURE A : LIST OF OFFICES OF SIDBI ANNEXURE B : FORM OF DISCHARGE FOR THE BONDS HELD IN THE FORM OF ENTRY IN THE ACCOUNT ANNEXURE C : FORM OF TRANSFER OF BONDS IN THE FORM OF ENTRY IN THE ACCOUNT ANNEXURE D : RATING LETTER AND RATING RATIONALE FROM CARE
PAGE NO. 1 4 6 11 35 40 40 40 41 45 50
51 57 79 81 88 92 93 96 97 98
PREAMBLE Small Industries Development Bank of India (SIDBI) Private Placement of Unsecured, Redeemable, Non-Convertible Bonds issued in FY 2005-06 in one or more tranches. SIDBI has filed this Shelf Offer Document for the Private Placement of Unsecured, Redeemable, NonConvertible Bonds. For each new Bond Series opened under this Shelf Offer Document, a Term Sheet giving all the salient features of the particular Bond Issuance will be given as an Annexure to this Shelf Offer Document. The investors are requested to take note of this Annexure for details relating to Issue Structure, Tax Benefits, etc.
Small Industries Development Bank of India
Shelf Offer Document
Abbreviations and Glossary of the Terms Used Act / SIDBI Act Small Industries Development Bank of India Act, 1989 (39 of 1989), as amended under Small Industries Development Bank of India (Amendment) Act, 2000. Small Industries Development Bank of India Unsecured, Redeemable, Non-Convertible Bonds Credit Analysis & Research Limited Central Depository Services Limited The Stock Exchange, Mumbai (BSE) Department for International Development, U.K. Exchange Rate Fluctuation Fund Government of India International Fund for Agriculture Development National Securities Depository Limited Reserve Bank of India Small Industries Development Bank of India (Issue and Management of bonds) Regulations, 1990, as amended by Small Industries Development Bank of India (Issue and Management of Bonds) Amendment Regulations 2001. Swiss Agency for Development and Co-operation Securities and Exchange Board of India SEBI (Disclosure and Investor Protection) Guidelines 2000 along with subsequent amendments South Asian Enterprise Development Facility Small Industries Development Bank of India State Industrial Development Corporations State Financial Corporation
Bank Bonds CARE CDSL Designated Stock Exchange DFID ERFF GoI IFAD NSDL RBI Regulations
SDC SEBI SEBI (DIP) Guidelines SEDF SIDBI / Issuer / Bank SIDCs SFCs
SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (Established under the Small Industries Development Bank of India Act, 1989) Head Office: SIDBI Tower, 15, Ashok Marg, Lucknow 226 001 Tel (0522) 2288546-50 Fax (0522) 2288541 Mumbai Office: SME Development Centre, G Block, Plot No. C-11, Bandra - Kurla Complex, Bandra (East), Mumbai 400 051 Tel (022) 55531100 Fax (022) 55531282
Website: www.sidbi.com
PART I I GENERAL INFORMATION Shelf Offer Document for Private Placement of Bonds issued by SIDBI in FY 2005-06. General Disclaimer This Offer Document is neither a Prospectus nor a statement in lieu of Prospectus. It does not constitute an Offer or an Invitation to the Public to subscribe to Redeemable Non Convertible Bonds issued by Small Industries Development Bank of India. This Offer Document is not intended for distribution and is for the consideration of the person to whom it is addressed and should not be reproduced / redistributed by the recipient. It cannot be acted upon by any person other than to whom it has been specifically addressed. Multiple copies hereof given to the same entity shall be deemed to be offered to the same person. Apart from this Offer Document, no other document has been prepared in connection with this Bond Issue and that no document in relation to the Issuer or this Debenture Issue has been delivered for registration to any authority. This Offer Document has been prepared in accordance with the disclosure requirements of Chapter VI of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (as amended) and the Listing agreement with the designated Stock Exchange, to give information regarding SIDBI to investors proposing to invest in this issue of Bonds and it does not purport to contain all the information that any such party may require. The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Offer Document contains all information with regard to the Issuer, and the Issue, which is material in the context of the Issue, that the information contained in this Offer Document is true and correct in all material aspects and is not misleading in any material aspect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this document or any of such information or the expression of any such opinions or intentions misleading in any material aspect. Potential investors are required to make their own independent valuation and judgment before making the investment and they are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in the Bonds. It is the responsibility of potential investors to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe for, and purchase of the Bonds. Potential investors have not relied on any advice given by the Merchant Banker in connection with their offer to subscribe for and purchase the Bonds and acknowledge that the Merchant Banker does not owe them any duty of care in respect of their offer to subscribe for and purchase of the Bonds. It is the responsibility of Potential investors to ensure that any transfer of the Bonds is in accordance with this Offer Document and the applicable laws, and ensure that the same does not constitute an offer to the public.
Potential investors should also consult their own tax advisors on the tax implications of the acquisition, ownership, sale and redemption of Bonds and income arising thereon. General Information SIDBI CAPITAL GAINS BOND are being issued by way of private placement as Long Term specified assets within the meaning of Explanation (b) to sub-section (3) of Section 54EC of the Income Tax Act, 1961. Those desirous of availing exemption from capital gains tax under Section 54EC, may invest in these bonds. Capital gains arising from transfer of long-term capital assets can be invested in these bonds within a period of six months from the date of transfer of the asset for getting exemption from the capital gains tax. The bonds will be made available for investment as unsecured bonds during the period the provisions of Section 54EC remain in force, unless SIDBI decides otherwise. Authority to float The present issue of SIDBI Capital Gains Bond is made under Section 15(1)(a) of SIDBI Act, 1989 as amended under SIDBI (Amendment) Act, 2000. The issue of Bonds is also authorised by way of Resolution passed by Board of Directors of SIDBI at the meeting held on May 26, 2005. Objects of the Private Placement The proceeds of the issue will be utilised by SIDBI for its business in terms of Section 13(1) of SIDBI Act, 1989 as amended under SIDBI (Amendment) Act, 2000 including financing of Medium Enterprises project in the service sector as well as Infrastructure projects. Credit Rating CARE, vide its letter dated March 24, 2005 has assigned a 'CARE AAA' (Pronounced "Triple A") rating to the proposed unsecured borrowing programme of Rs.1,250 crore. Instruments carrying this rating are considered to be of the best quality carrying negligible investment risk. Debt service payments are protected by stable cash flows with good margin. While the underlying assumptions may change such changes as can be visualised are most unlikely to impair the strong position of such instruments. Minimum/Maximum amount to be raised SIDBI would be free to retain entire amount received by it as subscription received for Bonds. Allotment of Bonds Firm allotment will be made to all the eligible Applicants whose applications are found complete in all respects. Future Borrowings SIDBI reserves its rights to raise further loans and advances and other kinds of financial assistance in whatever form as also issue Debentures / Bonds and other securities having such priorities or securities or guarantees as may be decided by the Board. Listing The bonds are proposed to be listed with the BSE, Mumbai. Credit Rating during previous three years The various long-term credit ratings obtained by SIDBI from CARE during the last 3 years are as follows:
Year 2004-05 2003-04 2002-03 Trustees to the Debentureholders UTI Bank Limited has been appointed as Debenture Trustee.
CARE CARE AAA CARE AAA CARE AAA
Issue Management Team

Auditors for the Bank from 14/08/2000 to Trustee to the Bondholders 18/06/2003 M/s Kirtane & Pandit UTI Bank Limited Chartered Accountants Central Office, SANGATI, Bhakti Marg, Maker Towers F Off Law College Road, 13th Floor, Cuffe Parade Colaba, Mumbai 400 005 Pune 411 004 Tel: (022) 22189196-9 Tel: (020) 5433104, 5438764 Fax: (022) 22162467 Fax: (020) 5447603 Email: kpca@vsnl.com Auditors for the Bank from 18/06/2003 to Auditors for the Bank from 18/06/2004 18/06/2004 onwards M/s V. P. Aditya & Co., M/s Bansilal Shah & Co., Chartered Accountants, Chartered Accountants, 15/198-A, Civil Lines, 6, New Jagruti, 1 st Floor, Kanpur - 208 001 227 S.V. Road, Bandra (W), Tel :- (0512) 2306882 Mumbai - 400 050 Fax :- (0512) 2306508 Tel :- (022) 26516836 Email: yatindra@usa.net Fax :- (022) 26551145 The details of Arrangers, Bankers to the Issue and Registrar for each Bond Series will be given in their respective Term Sheets. Compliance Officer Name Designation Address Mr. Samir Kumar Deputy General Manager SME Development Centre, 4th Floor, G Block, Plot No. C-11, Bandra - Kurla Complex, Bandra ( East) , Mumbai - 400 051 022 - 55531288 (Direct) / 55531100 022 - 55531282 samirkumar@sidbi.com
Telephone Fax no E-Mail
The Investors can contact the Compliance Officer in case of any Pre-issue / Post-issue related problems such as non-receipts of Certificate of Holdings / Bond Certificates / Refund Orders etc. II CAPITAL STRUCTURE OF SIDBI
3
The capital structure of the Bank as on March 31, 2005 is as follows: (Rs. in Crore) (A) Authorised Capital Equity Capital 75,00,00,000 Equity Shares of Rs.10 each Preference Capital 25,00,00,000 Redeemable Preference Shares of Rs.10 each (B) (C) (D) Issued, and Paid-up Capital 45,00,00,000 Equity Shares of Rs.10 each Reserves, Funds and Surplus Present Issue to Investors through the Offer Document 450.00 450.00 4309.39 250.00 1,000.00 750.00
Notes to Capital Structure:

1. As per the restructuring exercise carried out by Government of India and Reserve Bank of India in respect of borrowing out of the National Industrial Credit (Long Term Operations) Fund, SIDBI issued 8% coupon bonds maturing on March 29, 2022 for an aggregate amount of Rs. 2,172.80 crore to Government of India in lieu of the loans taken out of the NIC (LTO) fund of RBI. The Bonds are treated as Tier I Capital, not exceeding 33% of the total Tier I Capital of the Bank at any point of time. 2. The Promoters, Directors and the Bank have not entered into standby or similar arrangements for these Bonds. 3. SIDBI has not raised any Bridge loan or any other similar financial arrangement, the amount of which would be repaid out of the proposed Issue. 4. SIDBI being a Financial Institution is in the business of raising resources and deploying them on an ongoing basis. Therefore, SIDBI may borrow in the form of Bonds through On-tap private placements, Deposits, Notes, CP and Foreign Currency borrowings in its normal course of business, subject to necessary approvals. 5. As on March 31, 2005, shares of SIDBI were held by thirty six institutions / Public Sector Banks / Insurance companies owned or controlled by Central Government with Industrial Development Bank of India (IDBI) , State Bank of India (SBI) and Life Insurance Corporation of India (LIC) as its three largest shareholders.
1. Share Capital History of SIDBI, along with any lock-in period

Sr. No Date of Allotment No of Shares (Face Value of Rs.10 each) Total Paid Up Capital (Rs.) Issue Price (Rs.) Consider ation Remarks / Allotment (Name of Shareholder)
First FY of Inception
450,000,000
4,500,000,000 10
Cash
Industrial Development Bank of India
Shareholding Pattern (Top Ten Shareholders) (as on Sep 30, 2005) (a) As on date of filing of the offer document with BSE
SNo. Name of the Shareholder No of shares held % of Holding
1 2 3 4 5 6 7 8 9 10
Industrial Development Bank of India State Bank of India Life Insurance Corporation of India Bank of Baroda Punjab National Bank Canara Bank National Bank for Agriculture & Rural Development Bank of India Central Bank of India Oriental Bank of Commerce
86,450,000 66,700,000 64,950,000 19,800,000 18,200,000 16,700,000 16,000,000 15,100,000 12,700,000 9,500,000
19.21 14.82 14.43 4.40 4.04 3.71 3.56 3.36 2.82 2.11
(b) 10 days prior to date of filing of the offer document with BSE
1 2 3 4 5 6 7 8 9 10
86,450,000 66,700,000 64,950,000 19,800,000 18,200,000 16,700,000 16,000,000 15,100,000 12,700,000 9,500,000
19.21 14.82 14.43 4.40 4.04 3.71 3.56 3.36 2.82 2.11
(c) 2 years prior to date of filing of the offer document with BSE
1 2 3 4 5 6 7 8 9 10
220,000,000 42,000,000 40,000,000 12,500,000 11,500,000 10,500,000 10,000,000 9,500,000 8,000,000 6,000,000
48.89 9.33 8.89 2.78 2.56 2.33 2.22 2.11 1.78 1.33
1. In accordance with the provisions of Section 4B of Small Industries Development Bank of India (Amendment) Act, 2000, GoI approved the transfer of 23 (Twenty Three) Crore (51.11 per cent) equity shares of SIDBI subscribed and held by IDBI to Public Sector Banks, Life Insurance Corporation of India (LIC), General Insurance Corporation (GIC) and other institutions owned or controlled by Central
5
Government. GoI, vide its notification dated September 25, 2001, specified the proportion in which IDBI would divest 23 Crore SIDBI shares in favour of 35 institutions / Public Sector Banks / Insurance Companies owned and controlled by the Central Government. Further GoI vide its notification dated May 17, 2004 specified the proportion in which IDBI would divest 12 Crore 61 lakh equity shares of SIDBI in favour of the existing 35 Banks / Institutions from March 31,2004. 1. SIDBI has not made an initial public offering within the immediately preceding two years and equity shares of the Bank are not listed. 2. None of the Promoters or Directors have directly or indirectly undertaken transactions in the securities of the Bank during the last six months. III TERMS OF THE ISSUE a) Face Value b) Issue Price c) Instrument Structure Rs.10,000 Rs.10,000 Structure I Tenure : 3 years from the deemed date of allotment Interest Payment : Annual / Cumulative Structure II Tenure: 5 years with PUT & CALL Option at the end of 3 years from the deemed date of allotment Interest Payment : Semi Annual / Annual /Cumulative Once an instrument Structure (Structure I / Structure II) is specified it shall be irrevocable. In case no Structure is specified, the application would be considered under Structure I. Similarly, once an interest option is exercised (Semi Annual / Annual payment of interest / Cumulative) it shall be irrevocable. In case no interest option is specified, the interest would be paid annually. d) Minimum Subscription Amount e) Mode of Subscription f) Tap Period g) Date of Allotment h) Deemed Date of Allotment i) Rate of Interest on Bonds Lock in period - 3 years for all the Structures Rs.10,000 and in multiples of Rs.10,000 thereafter 100% on Application Throughout the year, till the issue is closed. The date of realisation of Cheque / Draft in the account of SIDBI The last day of the month of the Date of Allotment The rate of interest shall be made known to the investors before the acceptance of application. However, the rate being offered to investor is subject to change from time to time. The rate once announced will continue till it is changed.
j) Payment of Interest
Semi-Annual Option i) Interest will be paid on 1st June and 1st December each year ii) Interest in respect of investors whose date of allotment is between April 1 to May 31 and October 1 to November 30 will be paid along with the next interest due Annual Option Interest will be paid on 1st June every year. The first interest payment will be made in the next Financial Year from the date of the allotment upto 31st May for all the investors whose date of allotment is upto 31st March. In respect of investors whose date of allotment is between April 1 and May 31, the interest for the period upto May 31 will be paid along with the interest payable on June 1 of the following year. The last interest payment will be made at the time of redemption. Cumulative The entire interest will be paid at the time of Redemption. Interest warrants will be mailed by Registered Post / Under Certificate of Posting / Courier to the holder at the holders risk. If the due date of interest payment falls on a day which is not a business day in Mumbai (business day being a day on which Commercial Banks are open for business to the public) then payment of interest will be made on next business day but without any liability for making payment of interest for the delayed period. Payment of Record Date for payment of interest shall be 30 days prior to each interest payment date and 60 days prior to the date of maturity. Interest payment on the bonds shall be made to the registered bondholders recorded in the books of the SIDBI and in case of joint holders, to the one whose name stands first in the books of SIDBI on the record date. In the event of the SIDBI not receiving any request for notice of transfer along with the necessary documents before the record date for payment of interest, the transferee(s) of the Bonds shall not have any claim against SIDBI in respect of interest so paid to the registered Bondholder(s).
k) Record Date for Principal and Interest
l) Calculation of Interest.
Calculation of interest in respect of all the cases will be done on the basis of 365 days a year and in case of a leap year the month of February would be considered to be having 28 days only. In case of cumulative option, the first compounding will be done on the interest accrued upto May 31 every year from the date of allotment and thereafter compounding for subsequent years will be done on interest accrued annually. The interest payment for the first and last year or part thereof ending with the date of redemption shall be proportionate on a 365 days a year basis as indicated above and all interest on bonds will cease on the date of redemption. In the event of exercise of PUT/CALL option and on maturity, the interest for that said period (upto Put / Call period or maturity date) shall be calculated on the basis of 365 days a year. m) Payment of principal and Payment by way of ECS would be available at select centres viz. interest amount by way of ECS Ahmedabad, Bangalore, Bhubaneswar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, Delhi and Thiruvananthapuram. Investors who wish to receive the payment by way of ECS facility at the aforementioned centres may indicate the same in the application form at the appropriate space and also attach a xerox copy / cancelled bank Cheque leaf with the Application form. n) Issuance of Duplicate Interest / Duplicate interest / Redemption warrant /Cheque will be issued Redemption Warrants / Cheque atleast 15 days after the expiry of the validity period of the Warrant / Cheque upon furnishing of such indemnity as would be prescribed by SIDBI for such purposes. Any expenditure for this purpose will be required to be borne by the investor. o) Certificate of Holding / Demat SIDBI shall maintain the bonds in the form of Entry in its Books of Account. SIDBI would issue a Certificate of Holding evidencing the holding of bonds in the form of Entry in its Books of Account. SIDBI proposes to make arrangements to issue the bonds in Dematerialised form to all investors requesting for this facility. Such request should be forwarded by the investors along with the Certificate of Holding through Depository Participant (DP) to the Registrar. p) Transferability During the first three years from the deemed date of allotment, the bonds are non-transferable, non-negotiable and cannot be offered as a security for any loan or advance. The bonds are transferable after 3 years from the deemed date of allotment under Structure II provided no Put/Call option is exercised by investor/SIDBI. q) Redemption On maturity, the bonds shall be redeemed at par at the completion of 3 years / 5 years from the deemed date of allotment under Structure I / Structure II respectively. If the due date of payment falls on a day which is not a business day in Mumbai (business day being a day on which commercial banks are open for business to the public) then payment of redemption amount will be made on the next business day but without liability for making payment of interest for the delayed period. r) Mode of Redemption The Certificate of Holding along with Form No. XIV (as provided on the reverse of the Certificate of Holding) may be
8
s) Right to update/ revise/ close the bond issue
t) Put & Call Option
submitted for redemption at least 60 days before the date of maturity to Datamatics Financial Software and Services Limited, the Registrar & Transfer Agent. The instructions and other details contained in the application form will be updated from time to time. Any investment made will be governed by terms and conditions applicable on the date of acceptance of application. SIDBI reserves the right to close/revise the issue terms and conditions at its sole discretion without assigning any reason. In case of Structure II, both SIDBI and the Bondholders will have the option for early redemption of the bonds at the end of 3 years respectively from the deemed date of allotment. Put Option: Bond holders who wish to exercise the Put Option will be required to give notice to SIDBI, along with Certificate of Holding and Form No. XIV, so as to reach SIDBI at least 60 days prior to the Put Option date. Call Option: In case SIDBI decides to exercise the Call Option, it will send a notice to this effect to the investors 60 days prior to the Call option date
Tax Deduction at Source No Tax will be deducted at source from the interest amount payable to resident investors as SIDBI Capital Gains Bonds have been notified for the purpose of the clause (iib) of the provisio to the section 193 of the Income Tax Act, 1961 (43 of 1961) vide notification no. 263/2002/F No. 275/60/2002-IT (B) issued by Government of India on September 11, 2002 and published in Part II - Sec. 3(ii) of the Gazette of India on September 28, 2002 vide S.O. No. 3059 (Annexure D). Tax will be deducted at source at applicable rates in respect of interest payable to Non Resident Investors / PIOs. Dispatch of Certificates of Holding Certificates of Holding will be dispatched by Registered Post to the address as indicated in the Application Form. Rejection of Applications SIDBI reserves the right to reject any application in whole or in part, without assigning any reason there of. Application which is not complete in all respect is liable to be rejected. Mode of Transfer During the first three years from the deemed date of allotment, the bonds are non-transferable, nonnegotiable and cannot be offered as a security for any loan or advance. In case of Instrument at Structure II with tenure of 5 years, the bonds are transferable after 3 years from the deemed date of allotment. At the end of 3 years from the deemed date of allotment the bonds will be transferable by execution of an instrument of transfer in Form XIII at Annexure A along with the submission of Certificate of Holding. The transferor in such cases shall be deemed to be the holder of the Bonds to which the transfer relates till such time the name of the transferee is entered in the books of the SIDBI.
Nomination The holder(s) of the Bond may nominate any person or persons to whom, in the event of death of the holder(s), amount of the Bond may be paid. When the Bond is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. The nomination shall be made in the prescribed form available on request. Succession In the event of the demise of the single holder of the Bond for the time being where no nomination has been made, SIDBI will recognise the title of such person(s) to the bond who produce the requisite legal representation in accordance with the provision of the Small Industries Development Bank of India (Issue and Management of Bonds) Regulations 1990 as amended by Small Industries Development Bank of India (Issue and Management of Bonds) Amendment Regulation, 2001. Mode of Refund In case of rejection of the application, refunds without interest will be made by Cheque drawn on a Bank branch at the place where application was accepted. WHO CAN APPLY Applications can be made by: a. Resident Indian individuals in their own name or in the name of their minor children as natural legal guardians; b. Hindu Undivided Families (HUF) through the Karta of HUF; c. d. e. f. g. h. i. j k Administrators of Provident Funds, Superannuation Funds and Gratuity Funds; Companies and Body Corporates, Societies registered under relevant laws in force in India; Partnership Firms; Commercial Banks, Regional Rural Banks, Cooperative Banks; Financial Institutions, Statutory Corporations; Insurance Companies; Mutual Funds; Trusts which are Authorised to invest in the bonds; and NRIs / PIOs on Non-repatriable basis only.
Note 1: Foreign Nationals and others not mentioned above are not eligible to invest and no Bonds shall be issued to Pakistani / Bangladeshi / Sri Lankan nationals. Note 2 : The funds from the investors as indicated at (k) above, for investment in these bonds should be remitted in Foreign Exchange by way of Inward Remittance from abroad or Debit to the NRE/ NRO Accounts of the NRIs, after obtaining the necessary certificates such as FIRC, Bank Certificate etc. from the Authorised dealers. Note 3: Reserve Bank of India has accorded its in-principal approval for investment by the investors as mentioned at (k) above under the Foreign Exchange Management Act 1999 for acquiring the fully paid bonds of SIDBI on non repatriation basis. Therefore these parties are not required to obtain separate approval from the Reserve Bank of India for investment in these bonds.
10
Application by Corporate Bodies / Companies / FIs / Statutory Corporations The application should be accompanied by certified true copies of (i) Memorandum and Articles of Association / Constitution/Bye-laws, (ii) resolution authorising investment and containing operating instructions, and (iii) specimen signatures of authorised signatories. Application by Partnership Firms The application should be accompanied by certified true copy of (i) Partnership Deed, (ii) Documentary evidence of authority to invest in the bonds and to receive the money on redemption, if the same is not provided in the Partnership Deed and (iii) specimen signatures of authorised signatories. Application by Banks The application should be accompanied by certified true copies of (i) Power of Attorney, and (ii) specimen signatures of authorised signatories. Application by Primary Co-operative Banks The application should be accompanied by certified true copies of (i) Government notification/ certificate of Incorporation/ other document governing the constitution, (ii) Board Resolution authorising the investment and containing operating instructions, and (iii) specimen signatures of authorised signatories Application by Regional Rural Banks (RRBs) The application should be accompanied by certified true copies of (i) Government Notification / Certificate of Incorporation / Articles and Memorandum of Association / Other documents governing the constitution, (ii) Resolution authorising investment and containing operating instructions, and (iii) specimen signatures of authorised signatories. Application by Provident Funds, Superannuation Funds and Gratuity Funds The application should be accompanied by certified true copies of (i) Trust Deed / Bye-laws / Resolutions, (ii) resolution passed by the competent authority authorising the investment and containing operating instructions, and (iii) specimen signatures of the authorised signatories. Application by Mutual Funds The application should be accompanied by certified true copies of (i) SEBI registration certificate, (ii) resolution passed by the competent authority authorising the investment and containing operating instructions, and (iii) specimen signatures of authorised signatories. IV BANK, MANAGEMENT AND PROJECT Brief History, Background and Genesis of the Issuer Small Industries Development Bank of India (SIDBI) was established on April 2, 1990 under Small Industries Development Bank of India Act, 1989, an Act of Parliament, as a wholly owned subsidiary of Industrial Development Bank of India. Consequent upon the SIDBI (Amendment) Act, 2000 with effect from March 27, 2000, SIDBI was delinked from IDBI and 51% of the stake held by IDBI was transferred to Public Sector Banks, the General Insurance Corporation of India, the Life Insurance Corporation of India and other institutions owned and controlled by the Central Government. Further GoI vide its notification dated May 17, 2004 specified the proportion in which IDBI would divest 12 crore 61 lakh equity shares of SIDBI in favour of the existing 35 Banks / Institutional shareholders from March 31, 2004. The Charter establishing it, envisaged SIDBI to be the principal financial institution for the promotion, financing and development of industry in the small scale sector and to co-ordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector and for matters connected therewith or incidental thereto.
11
Shareholding Structure SIDBI has been incorporated with an authorized share capital of Rs.1,000 crore comprising equity capital of Rs.750 crore and preference shares of Rs.250 crore. It has been established with a issued capital of Rs.450 crore. Entire issued capital was subscribed by IDBI. Consequent upon the SIDBI (Amendment) Act, 2000 with effect from March 27, 2000, SIDBI was delinked from IDBI and 51% of the stake held by IDBI was transferred to Public Sector Banks, the General Insurance Corporation of India, the Life Insurance Corporation of India and other institutions owned and controlled by the Central Government. GoI, vide its notification dated September 25, 2001, specified the proportion in which the stake would be divested. Further GoI vide its notification dated May 17, 2004 specified the proportion in which IDBI would divest 12 crore 61 lakh equity shares of SIDBI in favour of the existing 35 Banks / Institutional shareholders from March 31,2004. Mission of the Organisation SIDBIs Commitment SIDBI is committed to developing a strong, vibrant and responsive SME sector. This commitment is to be achieved through a variety of means. Principal amongst them is finance. Alongside finance, SIDBI provides appropriate support in the form of promotional and developmental services. SIDBI has been built up as a financially sound, vibrant, forward looking and technically oriented institution and, it intends to sustain this orientation in future. SIDBI intends to provide quality services to its clients, devoid of any systemic and procedural difficulties. Operational Emphasis SIDBI, in its operational strategy, emphasizes: Enhancement in the flow of financial assistance to SME and Enhancement in the capabilities of SME at all levels, with focus on adoption of improved and modern technology. It has been a matter of policy in SIDBI to identify the areas of gaps in credit delivery system and fill them through devising appropriate new schemes and implementing them. SIDBI's assistance now broadly covers: Term loan (Domestic and Foreign Currency) Working capital Term loan Bills Discounting Refinance The purposes for which SIDBI's assistance is provided include new projects, expansion, diversification, technology upgradation, modernization, quality improvement, environmental management, marketing (domestic and international) and rehabilitation of sick SMEs. Pursuant to announcement by Govt. of India, SIDBI has structured an SME fund of Rs.10,000 crore and rationalised the rate of interest both on direct assistance as well as refinance. Under the Fund, direct assistance is being provided to SMEs at a rate of interest 200 basis points below the Banks PLR . Promotional Activities Besides financing, SIDBI provides developmental and support services to SMEs under its Promotional and Developmental (P&D) schemes. The focus of such assistance is to ensure: Enterprise Promotion Human Resource Development Technology Upgradation
12
Environmental and quality management Information Dissemination and Market Promotion The P&D initiatives of SIDBI have crystallized over the years and are now oriented to serve Rural entrepreneurs and youth, particularly women through programmes to empower them and motivate them to undertake entrepreneurial ventures.
Offices
SIDBI has its Head Office at Lucknow with 49 Branch Offices located at major cities of the country, along with 5 Zonal Offices, 1 Regional Office.
Regulation and Supervision

SIDBI being a statutory organization is governed by the Small Industries Development Bank of India Act, 1989. The functions and business of SIDBI are regulated by the SIDBI Act. In addition, SIDBI, being a Public Financial Institution is subject to regulatory supervision by RBI. Section 45L of the Reserve Bank of India Act, 1934 empowers RBI, inter alia, to call for certain information relating to the business of SIDBI and give directions relating to the conduct of its business. RBI had set up a Board of Financial Supervision (BFS) in 1995 under the chairmanship of the Governor of Reserve Bank of India. Under the guidance of BFS, the Department of Financial Supervision of the RBI supervises Financial Institutions and Commercial Banks. The Department of Financial Supervision also undertakes off-site and on-site supervision over Financial Institutions. As part of such surveillance, the RBI carries out periodic inspection of SIDBI. The RBI has been issuing detailed guidelines to Financial Institutions on Asset Classification, Income Recognition and Provisioning, Capital Adequacy, Asset Liability Management, Resource Raising etc. from time to time. SIDBI adheres to all such guidelines and submits necessary information to RBI as per the guidelines.
Corporate Governance
The Bank attaches high importance to attaining the Corporate governance standards of international level. The crucial ingredients of good Corporate governance standards viz. clean division of responsibility throughout the organization, checks and balances, disclosures and transparency are being followed by the Bank in their true spirit. SIDBI is committed to protecting and enhancing the shareholders value.
Board of Directors
The general superintendence, direction and management of the affairs and business of SIDBI is vested in the Board of Directors which exercises all powers and does all acts and things which may be done by SIDBI under the SIDBI Act. As per the SIDBI Act, the Board of Directors can have maximum 11 members, consisting of a Chairman and a Managing Director appointed by Central Government, two whole time director appointed by Central Government, two directors who shall be officials of Central Government nominated by Central Government, three directors to be nominated in the prescribed manner by the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government and three directors, including one director from the officials of the State Financial Corporations, nominated by the Central Government. The composition of Board of Directors as on November 30, 2005 was as follows: Bio-Data of Directors
13
SNo.
Name, Occupation and Address of Directors
Date of Representativ e Appointme (Organisation) nt
Shri N. Balasubramanian Shri Satyananda Mishra
Chairman and Managing Director
Small Industries 30/12/2004 SIDBI Development Bank of India, SIDBI Tower, 15, Ashok Marg, Lucknow-226 001 Additional Secretary Ministry of Small Scale 30/12/2004 Appointed & Development Industries, Nirman Bhavan, by Commissioner (SSI) New Delhi 110001 Government of India 28/11/2002 Appointed by Government of India 30/03/2005
Industrial Development Bank of India
Additional Secretary Government of India, Ministry of Finance, Department of Economic Affairs [Banking Division], Jeevan Deep, Parliament Street, New Delhi - 110 001 Shri G.M. Legal Advisor Industrial Development Ramamurthy Bank of India, IDBI Tower, Cuffe Parade, Colaba, Mumbai Shri Ashok K. Kini Managing Director & State Bank of India, Group Executive Corporate Centre, State (National Banking) Bank Bhavan, Madame Cama Road, Nariman Point, Mumbai 400 021 Shri Retd. ED, LIC of Old No. 19/A, New No. 12, V.Vaidyanathan India Lloyds Lane (Avvai Shanmugan Lane), Royapettah, Chennai - 600014 Smt. Gauri Singh Managing Director Managing Director, Madhya Pradesh Financial Corporation, "Finance House", Agra - Bombay Road, Indore-452 001 Shri Arun Agarwal Chartered B/142 Shivalik, Malviya Accountant Nagar, New Delhi 110017 Shri Satya Pal National VicePresident Ex-CMD, PNB Laghu Udyog Bharti Plot No.53, Sector 6 Faridabad 121 006 J-170, Rajouri Garden New Delhi-110027 R-202, ATRIUM, No.22 Kalakshetra Road, Thiruvanmaiyur, Chennai 600 041.
14
Shri Vinod Rai
09/06/2004 State Bank of India
24/06/2002
Life Insurance Corporation of India
16/05/2005 Appointed by Government of India 09/08/2005 Appointed by Government of India 09/01/2002 Appointed by Government of India 23/02/2002 Co-opted by Board of SIDBI 01/03/2004 Co-opted by Board of SIDBI
10 Shri S.S. Kohli
11 Shri P.V. Rajaraman Ex-Chairman, TIIC
Sub-Committees of the Board

A. EXECUTIVE COMMITTEE
1) 2) 3) 4) 5)
Shri N. Balasubramanian - Chairman Shri Satyananda Mishra Shri. Vinod Rai Shri. P.V.Rajaraman Shri G.M. Ramamurthy
Roles & Responsibilities of the Executive Committee This Committee formed in 1999, presently comprising of 5 Directors including the Chairman and Managing Director of SIDBI, deals with sanctions and assistance and other operational matters. All project proposals for sanction and assistance above the threshold limits applicable to Central, Zonal and Branch Credit Committee are dealt with by the Executive Committee. Operational matters relating to credit proposals and the like are considered by the Executive Committee in respect of large proposals. Further where the Credit Committee needs any guidance or direction, the matter can be referred to the Executive Committee. The Executive Committee also decides on matters relating to Business Plans, Resource Mobilization, Investments, Capital; Expenditures, Risk management Systems, assessment of performance against goals, initiating corrective measures etc.
B.
AUDIT COMMITTEE
1) 2) 3) 4) 5)
Shri. V. Vaidyanathan - Chairman Shri. P.V.Rajaraman Shri G.M. Ramamurthy Shri S.S. Kohli Shri. N. Balasubramanian
15
Roles & Responsibilities of the Audit Committee The Audit Committee presently comprises of 5 directors including. Senior Executives of SIDBI are invited as and when considered necessary. The Audit Committee acts as an interface between the management and the statutory and internal auditors overseeing the internal audit functions. The functions of the Audit Committee are as follows: 1. To provide direction and oversee audit functions of SIDBI. 2. To review periodically financial statements before submission to the Board of Directors focussing primarily on:
-Any changes in accounting policies and practices -Major accounting entries on exercise of judgment by management -Qualification in draft Audit Report -Significant adjustments arising out of the credit -Compliance of accounting standards -Compliance with legal requirements concerning financial statements -Any related party transactions i.e. transactions of material nature, with promoters or the
management, their subsidiaries or associates etc. that may have potential conflict with the interests of SIDBI at large. 3.Review with management, external and internal auditors, adequacy of internal control system. 4.Discussions with internal Auditors. 5.Review action taken on inspection reports of RBI and Statutory Auditors Report. 6.Review action taken on major findings of internal audit/concurrent Audit Reports. 7.Such other matters as may be delegated by the Board of Directors.
C. EMPOWERED SUB-COMMITTEE OF THE BOARD FOR MICRO FINANCE (ECM)
1) 2) 3) 4) 5)
Shri N. Balasubramanian - Chairman Shri Satyananda Mishra Shri Vinod Rai Shri Satya Pal Shri PV Rajaraman
Roles & Responsibilities of the Empowered Sub-Committee of the Board for Micro Finance (ECM) This Committee will give strategic direction to the operations of SIDBI Foundation for Micro Credit, take policy decisions, relating to sanction of loan, grant, equity and any other matter delegated by the Board related to micro finance. The ECM is to approve financial sanctions for Equity investment and loan assistance and exercise concurrent power with EC in regard to sanctions of assistance
16
Domain of Service The Small and Medium Enterprises [SME] sector occupies an important place in the Indian economy in terms of its contribution in generation of employment, output and exports. SSI sector comprises industrial establishments having investment in the core plant and machinery within the stipulated limit of Rs.100 lakh. In some select sub-sectors of the SSI sector viz., garments, the upper limit of investment in plant and machinery has been enhanced to Rs.500 lakh. The SSI sector including tiny units comprises the domain of SIDBI's business. The Medium scale sector comprises of industrial establishments having investment in plant & machinery up to Rs.1,000 lakh. Besides, the projects in the services sector with total project cost upto Rs.250 crores are also eligible for availing assistance from SIDBI. The Bank also finances Infrastructure projects for the development of SME sector. Pursuant to announcement made by Govt. of India, SIDBI has structured an SME fund of Rs.10,000 crore. SIDBI is lending directly & through refinance route to the SME sector. Channels of Assistance and Products and Services SIDBI's financial assistance to SME sector has three major dimensions; Direct assistance Indirect assistance through primary lending institutions (PLIs) Development and Support Services
Direct Assistance
SIDBI provides direct financial assistance to Small and Medium Enterprises by way of Term loans (both long and short-term loans), working capital term loan in Rupee and Foreign Currencies though its 49 Branch Offices spread across the country. SIDBIs range of direct financial services includes: Financial assistance for setting up of new industrial units in SME sector and service enterprises such as hotels, hospitals/nursing homes, multiplexes, cinema theaters. ISO-900 certification Schemes at SIDBI's prime lending rate or sub-PLR Sector specific funds for technology upgradation and modernisation in Textiles, Tanneries etc. Capital subsidy on loans advanced to SSI units in select product/sub-sectors for technology upgradation under Credit Linked Capital Subsidy Scheme. Govt. of India has appointed SIDBI as Nodal Agency for channelising short term loans to State Electricity Boards to facilitate their purchases from SMEs and effect payment in time. Providing marketing related finance for setting up of show-emporia, trade/exhibition centres, marketing complexes, etc to increase the marketability of SME products. In addition, intangible activities such as advertising, branding, participation in trade fairs/exhibition, product upgradation and standardisation,, sales promotion tours, are also financed by SIDBI. Forex Assistance To encourage SME to raise finance at internationally competitive rates to fulfill their export commitments, SIDBI offers credit facilities in USD and Euro Currencies. Assistance in Rupees is also considered, independent of foreign currency limits. SIDBI has a license to deal in Foreign Exchange as a Restricted Authorised Dealer to carry out those transaction which are permitted by Reserve Bank of India. SIDBIs foreign currency assistance includes: Foreign Currency loans to import equipment by existing export-oriented SME units and new units having definite plans for entering export markets. To execute confirmed export orders assistance given by way of Pre-shipment credit / Post-shipment credit in foreign currency Pre-shipment and Post-shipment Credit in Rupee terms to SMEs engaged in exports for greater flexibility. Export bills financing in Foreign Currency. Opening of Letter of credit for Import of Capital Goods.
17
Receivables Finance To encourage bills culture as a method of working capital financing so as to ensure timely payment, SIDBI offers Receivable Finance Scheme through which Medium and Short-term finance is provided for the benefit of the units in SME sector. This credit facility is available to manufacturers of indigenous machinery, capital equipment, components sub-assemblies etc, based on compliance to the various eligibility criteria, norms etc as applicable to the respective schemes. Indirect Finance Refinance In addition to the Direct Finance credit facilities, SIDBI also offers Refinance facilities to enhance the credit flow to SSI sector. The bank provides refinance facilities to PLIs against the term loans granted by them for: Settting up of new SSI projects and for expansion, technology upgradation, modernisation, quality promotion, diversification by existing units and rehabilitation of sick SSI units. Meeting the gap in prescribed minimum promoters contribution under National Equity Fund (NEF) and Mahila Udyam Nidhi (MUN) schemes. Small Road Transport Operators (SRTO), qualified professionals for self-employment, small hospitals and nursing homes, cyber cafes, marketing related activities industrial infrastructure and hotels and tourism-related activities. SIDBI also extends Financial Support (Short Term Loan) to scheduled banks in respect of their outstanding portfolio relating to SSI sector against which no financial support has been availed of from other institutions. Development and Support Services The Bank extends development and support services in the form of loans and grants to different agencies working for the promotion and development of SMEs and Tiny industries. Over the years, the initiatives of SIDBI under promotional and developmental activities have crystallised into the following important areas: Enterprise Promotion with emphasis on Micro Credit and Rural Industrialisation. SIDBI has made considerable progress in this field since 1994. SIDBI launched a SIDBI Foundation for Micro Credit (SFMC) on November 27, 1998 to accord focused attention for increasing flow of funds to the poor through sustainable micro finance institutions (MFIs). The foundation, presently functioning as a department of the Bank, commenced its operations in January 1999 with an initial corpus of Rs. 1 billion. The mission of the Foundation is to create a national network of string, viable and sustainable micro finance institutions from the informal and formal sectors to provide micro finance services to the poor, especially women. The foundation has entered into an agreement with International Fund for Agricultural Development (IFAD), Rome for upscaling its operations. Earlier, SFMC had signed an MoU with Department for International Development (DFID), UK for grant support for financing various capacity building intitiatives of the Foundation as well as MFIs. The foundation has drawn up a comprehensive action plan with a view to mainstreaming the micro finance and providing capacity building support to the micro finance instututions. To provide impetus to rural development by creating sustainable industrial and service enterprises in rural areas, leading to higher employment generation and effective utilisation of local skills and resources, SIDBI has designed and executed Rural Industries Programme (RIP) in various clusters in various states through Non Governmental Organisations, Technical Consultancy Organisations and development professionals. Bank also supports capacity building programmes for the RIP implementing agencies. As at the end of March 2005 the programme
18
was being implemented in partnership with 41 agencies in 77 Districts spread across 25 states across the country. As part of the programme, support is provided for diagnostic study, development of modern tool kits and demonstration projects, other technical inputs, the setting up of common facility centres as also for strengthening of NGOs/cluster change agents etc. Human Resource Development in the SSI sector through organisation and conduction of Small Industries Management Programme (SIMAP) and Skill-cum-Technology Upgradation Programme (STUP)
Besides, the bank undertakes various development programmes for Technology Upgradation, Quality and Environment Management in select industrial clusters, and various initiatives for dissemination of information etc. Details of Major technical and financial collaboration International Fund for Agriculture Development (IFAD), Rome: SIDBI has entered into a Loan Agreement with the International Fund for Agriculture Development (IFAD), Rome on February 18, 2002 for financial assistance of SDR 16.35 million. for meeting the onlending fund requirements of its Micro Finance Programme being implemented by SIDBI Foundation for Micro Credit (SFMC). The loan was declared effective by IFAD w.e.f April 01, 2002.The loan carries a service charge of 0.75% p.a. and would be repaid in 60 equal semi-annual installments of SDR 272,500 beginning November 01, 2010 and ending on May 01, 2040.As security for the loan, the Government of India (GoI) has entered into a Guarantee Agreement with IFAD for unconditional guarantee of repayment of principal, interest payment and other charges, if any. SIDBI is required to pay a guarantee fee @ 1.2% p.a. to GOI on the guaranteed amount outstanding from time to time. As per the Agreement, the funds from IFAD are available to SIDBI on reimbursement basis based on net incremental credit. So far, SIDBI has received SDR 5.80 million (equivalent to Rs. 32.13 crore) in two tranches. Department for International Development (DFID), U.K: SIDBI has also entered into collaboration with the Department for International Development (DFID), U.K. for grant support of GBP 16.51 million to be used for the capacity building initiatives of SFMCs Micro finance programme. The collaboration between SIDBI and DFID formally came into effect on April 01, 2000. As per the MoU signed between SIDBI and DFID, the funds from DFID are available to SIDBI on reimbursement basis. So far, SIDBI has received USD 4.26 million from DFID. Southasian Enterprise Development Facility (SEDF): A Memorandum of Understanding was signed on September 30, 2002 between SIDBI and Southasian Enterprise Development Facility (SEDF), an agency established by the World Bank and International Finance Corporation. As part of the MoU, SIDBI and SEDF will undertake reconnaissance missions in the North East to identify sectors with potential for growth. The missions will enable, SEDF and SIDBI to initiate detailed techno-economic feasibility reports for each of the sectors with potential for fuelling growth in the region. The feasibility reports will be drawn by bringing in the expertise of IFC and by engaging international consultants having expertise in the respective sectors. These feasibility reports will form the basis on which potential entrepreneurs will be invited to set-up industries, for which financing will be arranged from Banks in the region. An integral part of the intervention will be training and support service to entrepreneurs, bankers and other stakeholders. The ultimate objective of the exercise will be the economic development of the North Eastern region of India. SIDBI and GoI have a collaborative arrangement w.e.f.. March 2004 wherein GoI would extend financial support of about Rs.6 crore during the 10th Plan period to the Bank for creation of a Portfolio Risk Fund (PRF). The fund would be partly meeting security deposit requirement of the MFIs in respect of loans extended by the Bank under the Micro- Credit Scheme (MCS).
19
GoI and SIDBI had signed a Memorandum of Understanding (MOU) on November 27, 1998 for operating TREAD programme in the country. Under TREAD scheme, the NGOs that fulfill certain eligibility criteria with respect to micro credit are provided a mix of loan and grant. As per the MoU , while the grant portion is to provided by GoI, the loan would be extended by SIDBI. Third KfW Line of Credit to SIDBI: Kreditanstalt fur Wiederaufbau (KfW), Germany has agreed to extend third line of credit to SIDBI viz. SIDBI III - Environmental Credit Line, to be utilised for funding investments in Cleaner Production (CP) measures in select industrial sectors and Common Effluent Treatment Plants. The Loan and Financing Agreements along with the Separate Agreement for the Portion I of the Line was executed between SIDBI and KfW on February 25, 2003. The Guarantee Agreement between KfW and SIDBI was executed on May 7, 2003. 1. Aggregate Amount 2. Phase - I Loan Grant Loan Grant - EURO 15.24 million. - EURO 0.61 million - EURO 7.57 million - EURO 0.61 million
The agreement has been signed for the first phase of assistance to be implemented during 2003-2006 and the second phase of assistance of EURO 7.67 million would be extended subsequent to evaluation of success of the first phase. The loan is to be repaid in 30 years after initial moratorium of 10 years, in equated semi annual installments.
Sanctions and Disbursements along with Scheme-wise breakup

Since its inception, SIDBI has gained substantial momentum in its domain of services and as on March
31, 2005 SIDBI had Cumulative Sanctions aggregating Rs.10,3467 crore and Cumulative Disbursements aggregating Rs.69,700 crore
Particulars regarding sanctions and disbursements for the last 5 years ending March 31, 2005 are indicated in the tables below: (Rs. Crore)
Year ended March 31 Sanctions Disbursements
2001 2002 2003 2004 2005
10,820.60 9,025.52 10,903.60 8,246.28 9,090.60
6,441.41 5,919.33 6,789.41 4,414.15 6,187.80
20
Scheme-wise Break up Sanctions The following tables provide a breakup of SIDBIs Sanctions for various schemes along with figures for major sub-schemes for the last 5 years ending March 31, 2005: (Rs. Crore)
Year ended March 31 2001 2002 2003 2004 2005
Sanctions Of which Refinance (Including STL to Banks) Banks State Financial Corporations Equity Assistance Bills Financing DDS (Equipments) DDS (Components) Resource Support to institutions / Agencies engaged in development of SMEs SFC / SIDCs Factoring Companies Other Institutions Project Financing Project Finance Scheme Infrastructure Development Scheme including IID Scheme Pre-shipment Credit in Foreign Currency / Rupee Export Bills Financing / PSCR Marketing Assistance Promotional Developmental assistance and
10820.60 8087.99 6517.44 1355.25 20.22 880.49 274.73 519.91 792.24
9025.52 6374.97 5199.48 1099.28 54.28 782.39 232.59 504.34 492.00
10903.60 8034.74 7266.42 749.93 54.76 753.35 157.71 521.84 1049.56
8246.28 4250.43 3725.41 518.80 42.67 951.91 188.24 697.80 1302.86
9090.6 4419.19 3495.15
886.39
43.97
1305.94
103.23 1202.71 1603.97
257.00 159.20 46.04 995.64 41.81 119.60
60.00 139.00 200.00 1276.18 54.31 509.39
55.00 199.55 737.56 964.83 51.25 311.73
236.72 95.72 885.42 1619.41 236.10 856.14
375 178.06 940.91 1521.44 502.26 532
253.80
214.12
168.08
93.72
57.39
359.33 159.93 44.02
301.87 135.80 45.70
284.30 91.78 46.36
207.22 74.53 196.09
169.16 6.20 79.00
21
Disbursements The following tables provide a breakup of SIDBIs Disbursements for various schemes along with figures for major sub-schemes for the last 5 years ending March 31, 2005: (Rs. Crore) Year ended March 31 Disbursements Of which Refinance (Including STL to Banks) Banks State Financial Corporations Equity Assistance Bills Financing DDS (Equipments) DDS (Components) Resource Support to institutions / Agencies engaged in development of SMEs SFC / SIDCs Factoring Companies Other Institutions Project Financing Project Finance Scheme Infrastructure Development Scheme including IID Scheme Pre-shipment Credit in Foreign Currency / Rupee Export Bills Financing / PSCR Marketing Assistance Promotional and Developmental assistance 4411.59 3312.44 948.21 16.85 778.63 205.30 506.59 437.54 4144.44 3269.08 811.67 35.96 711.26 176.63 492.02 451.67 4872.10 4275.58 580.16 41.61 703.40 121.14 511.14 660.39 1719.00 1297.19 416.26 37.70 900.14 151.48 684.07 1009.36 2693.60 2070.86 602.18 39.97 1266.48 85.34 1155.48 1041.20 2001 6441.41 2002 5919.33 2003 6789.41 2004 4414.15 2005 6187.33
135.00 133.50 34.04 771.01 30.28 48.68 241.78 301.00 82.91 25.79
70.00 172.00 107.57 550.74 24.66 5.00 175.70 246.54 62.11 25.26
29.95 165.25 431.19 474.87 33.05 9.63 136.00 255.25 2.84 37.04
94.22 10.72 755.41 666.96 78.79 124.04 79.27 236.53 69.82 80.99
125 11499 790.71 994.17 281.29 308.32 54.94 168.77 6.91 152.41
22
Credit Exposure as percentage to capital funds and as percentage to Total Assets The following table provides credit exposure as percentage to capital funds and as percentage to total assets in respect of 10 largest single borrowers for the last 3 years ending March 31, 2005:
% to total assets As on March 31 2003 2004 2005 2003 % to capital funds 2004 2005
The largest single borrower The largest borrowers group The 10 largest single borrowers The 10 largest borrower groups
5.18%
4.82%
5.34%
15.03%
14.98%
15.39%
As large borrowers are Primary lending Institutions, State Electricity Boards etc., the concept of borrower group is not applicable. 24.83% 23.34% 27.07% 72.12% 72.49% 78.04%
As large borrowers are Primary lending Institutions, State Electricity Boards etc., the concept of borrower group is not applicable.
The main business of SIDBI is to extend financial assistance for development of SME Sector in India only. As the activities of SIDBI revolve around this business, credit exposure to the five large industrial sectors as percentage to total loan assets is not applicable.
Investments portfolio
SIDBIs investment portfolio is predominantly of long term and strategic nature. Significant portion of Investment portfolio is in Securities of Central and State governments. Temporary diminution in value of securities arises on account of price volatility due to factors and forces affecting the interest rates, stock markets etc. SIDBI has been classifying its investment portfolio and making appropriate provision for diminution in value as per RBI guidelines issued form time to time in this regard. The investments are classified under the following categories (i) Held to Maturity, (ii) Available to Sale (iii) Held for trading. These investments were valued according to the guidelines in the matter issued by RBI to Financial Institutions. Following table give details about SIDBIs investment as per RBI classification as on March 31 for the last three years: (Rs. Crore) 2003 2004 2005 As on March 31 Held to Maturity Available for sale Held for Trading Total 419.40 1922.71 0.00 2342.11 492.09 3333.54 0.00 3825.63 629.73 2753.77 0.00
3383.50
Asset Classification, Income recognition, Provisioning for Non-Performing Assets Asset Classification In line with RBI guidelines issued from time to time, the asset portfolio is being classified as performing and non-performing assets for the purpose of income recognition and provisioning.
23
Income Recognition While income in respect of the performing assets is accounted for on an accrual basis, income from nonperforming assets is recognized only on cash basis (i.e. treated as income on actual receipt). Provisioning for Non-Performing Assets Assets and other assistance portfolios are classified based on record of recovery as Standard, Sub-standard, Doubtful and Loss assets. Provision is made for assets as per Guidelines issued to financial institutions by RBI, as under: Type of Assets Provisions A global provision of 0.25% on outstanding Standard Assets 10% of loan / Assistance 100% of unsecured portion plus 20% / 30% / 100% of secured portion depending on the period for which the loan/assistance has remained doubtful. 100%
1. 2. 3.
Standard Assets Sub-standard Assets Doubtful Assets
4.
Loss Assets
Asset Classification as per RBI Guidelines: The following table gives a summary of SIDBIs assets in accordance with RBI classification in the last three years: (Rs. Crore)
Gross Assets after prudential write off March 31, 2003 Provisions Net Assets after provisions & write off % to Net Assets after provisions / write off
Standard Sub-Standard Doubtful Loss TOTAL
11835.93 99.20 726.28 66.81 12728.22
29.59 9.92 342.86 66.81 449.18
11835.93 89.28 383.42 0.00 12308.63
96.16 0.73 3.11 0.00 100.00 (Rs. Crore)
Gross Assets after prudential write off March 31, 2004
Provisions
Net Assets after provisions & write off
% to Net Assets after provisions / write off
Standard Sub-Standard Doubtful Loss
9248.80 31.68 721.28 62.11
@ 3.17 523.97 62.11
9248.80 28.51 197.31 0.00
97.62 0.30 2.08 0.00 100.00
TOTAL 10,063.87 589.25 9474.62 @ A general provision of Rs 36.53 crores has been made as per RBI guidelines
24
(Rs. Crore)
Gross Assets after prudential write off March 31, 2005 Provisions Net Assets after provisions & write off % to Net Assets after provisions / write off
Standard Sub-Standard Doubtful Loss
9839.39 8.44 963.20 50.55
@ 0.85 564.08 50.55
9839.39 7.59 399.12 0.00
96.03 0.07 3.90 0.00 100
10861.58 615.48 10246.10 TOTAL @ A general provision of Rs 36.53 crores has been made as per RBI guidelines
It may be noted that the above information conforms to classification norms issued by RBI from time to time. SIDBI has made full provisions in respect of all its non-performing assets as per RBI norms. Net NPAs Details of Assets for 3 years The NPAs of the Bank for the last three years ended as on March 31, 2005:
As on March 31, 2003 March 31, 2004 March 31, 2005
Net NPA (net of write offs and provisions) Net Loan Assets % of Net NPAs to Total Assets
472.70 12,308.63 3.84%
225.82 9,474.62 2.38%
406.71 10246.10 3.97%
Movement of NPAs The movement in NPAs of the Bank for the last three years ended as on March 31, 2005: (Rs. Crore) Balance of NPAs as on 31-03-2002 (after write-off) Less Reductions: i) Recovery (including upgradation and compromise) ii) Reduction by way of write off Add: New additions during the current year Total NPAs as on Marc 31, 2003 (after write off) 30.74 178.47 317.83 892.29 (Rs. Crore) Balance of NPAs as on 31-03-2003 (after write-off) Less Reductions: i) Recovery (including upgradation and compromise) ii) Reduction by way of write off Add: New additions during the current year Total NPAs as on Marc 31, 2004 (after write off) 112.70 25.47 60.95 815.07 892.29 783.67
25
(Rs. Crore) Balance of NPAs as on 31-03-2004 (after write-off) Less Reductions: i) Recovery (including upgradation and compromise) ii) Reduction by way of write off Add: New additions during the current year Total NPAs as on Marc 31, 2005 (after write off) Restructured Accounts as on March 31, 2005 Total amount of standard loan assets which have been subjected to restructuring / rescheduling / renegotiation Total sub-standard assets which have been subjected to restructuring / rescheduling / renegotiation Total assets restructured (Rs. Crore) 25.72 94.58 240.77 542.47 1022.19 815.07
25.72
Maturity profile of Assets and Liabilities The following tables provide maturity pattern of rupee and foreign currency assets and liabilities of SIDBI as on March 31 2005:
Period (t) t <= 1 year 1< t <= 3 year 3< t <= 5 year 5 < t <= 7 year t > 7 year (Rs. Crore) TOTAL
7691 4232 Rupee Assets Foreign Currency Assets (Rupee Equivalent) Dollar 306 0 6 190 Euro Yen 8003 4422 Total Assets 3180 4075 Rupee Liabilities Foreign Currency Liabilities (Rupee Equivalent) 17 156 Dollar 5 15 Euro Yen 3202 4246 Total Liabilities -
3528 32 0 3560 725 0 14 739
2428 0 0 2428 817 2 14 833
4784 0 0 4784 12518 34 163 12715
22663 338 196 23197 21315 209 211 21735
26
Resources raised The table provides the details about the resources raised by SIDBI for the last three years ended March 31, 2005 both domestic borrowing and foreign borrowing:
Year ended March 31 2003 2004 (Rs. in lakh) 2005
Foreign Currency Borrowings DFID, UK * 2.19 Line of Credit Banks IFAD, Rome ^ 4.84 Sub-total 7.03 Domestic borrowings Deposits from Foreign Banks 428.35 Non-Priority Sector Bonds Priority Sector Bonds 388.00 Capital Gain Bonds 572.52 National Equity Fund GoIs contribution 24.15 Others # 152.60 Sub-total 1565.62 TOTAL 1572.65 * Grant from Department for International Development, U.K. ^ International Fund for Agricultural Development, Rome # Others include Term Money Borrowing, Fixed Deposits etc. Subsidiaries / Group Companies of the Issuer
6.30 7.69 13.99 1206.90 768.00 660.60 7.42 330.03 2972.95 2986.94
7.79
20.92
28.71
734.30 1048.00 557.29 15.66 65.01 2420.26 2488.97
SIDBI Venture Capital Limited SIDBI Venture Capital Limited (SVCL) was incorporated on July 19, 1999. The Company was established to carry out the business of setting up, advising and managing Venture Capital Funds. The Company has been appointed to act as the Investment Manager to National Venture Fund for Software & Information Technology Industry (NFSIT). NFSIT was set up in 1999 as a 10-year close-ended Venture Capital Fund, with a committed corpus of Rs.100 Crore, which has been contributed by SIDBI, Ministry of Communications & Information Technology (MCIT), Government of India and IDBI. Investment by NFSIT includes Info-tech sector, software industry and related businesses such as networking, multimedia, data communication, value added telecommunications services and/ or any other related sectors. The abridged Profit and Loss Account and Balance Sheet of SIDBI Venture Capital Limited for the three years period ended March 31, 2005 is given below: Abridged Profit and Loss Account
(Rs. in lakh)
Year ended March 31, Income Management Fee Interest on Fixed Deposits with Banks Misc. Income Total
2003 250 23.18 2.48 275.66
2004 250 21.92 1.12 274.42
2005 409.95 22.33 28.94 461.22
27
Expenditure Establishment & other expenses Total Profit before prior period adjustment Add: Prior Period Adjustment Add: Excess provision for Income Tax written back Profit before tax Less: Provision for Tax & write-off of deferred tax asset Profit after tax
150.85 150.85 124.81 0.43 1.41 126.65 46.03 80.62
145.47 145.47 128.95 0 0 128.89 46.71 82.17
157.39 157.39 303.83 0.21 0.05 304.09
116.56
187.53
Abridged Balance Sheet

(Rs. in lakh) As on March 31 2003 2004 2005
Liabilities Paid up capital Reserves & Surplus Current Liabilities & Provisions Total Assets Net Fixed Assets Current Assets, Loans & Advances Investments Deferred Tax Asset Total Key Financial Ratios
(Rs. in lakh)
100.00 213.20 187.58 500.78 23.96 472.48 4.34 500.78
100.00 267.17 193.55 560.72 18.15 538.93 3.62 560.72
100.00 414.73 408.83 923.56 14.04 906.06 0.10 3.36 923.56
Period ended March 31 Earning Per Share (EPS) (Face Value Rs.100) Net Asset Value (NAV) (Rupees) SIDBIs share in total equity of SVCL
2003 80.63 313.20 100.00%
2004 82.17 367.17 100.00%
2005 80.63 313.20 100.00%
SIDBI Trustee Company Limited SIDBI Trustee Company Limited was incorporated on July 19, 1999. The Company was established to carry out Trusteeship functions in general and for Venture Capital Funds in particular. The Company, at present, is acting as the Trustee for the National Venture Fund for Software & Information Technology Industry (NFSIT). The company has appointed SIDBI Venture Capital Limited to act as Investment Manager to NFSIT.
28
The abridged Profit and Loss Account and Balance Sheet of SIDBI Trustee Company Limited for the three years period ended March 31, 2005 is given below: Abridged Profit and Loss Account
(Rs. in lakh) Year ended March 31 2003 2004 2005
Income Trusteeship Fee Interest on Fixed Deposits with Banks Total Expenditure Establishment & other expenses Total Profit before prior period adjustment Add: Prior Period Adjustment Add: Excess provision for Income Tax written back Profit before tax Less: Provision for Tax Profit after tax Abridged Balance Sheet
(Rs. in lakh) As on March 31 2003 2004 2005
5.00 1.16 0.05 2.25 2.25 3.96 0.10 4.06 1.52 2.54
5.00 0.98 5.98 2.94 2.94 3.03
11.59 1.08 0.01 3.19 3.19 9.49 0.44 0.18
3.08 1.25 1.82
9.23 3.50 5.73
Liabilities Paid up capital Reserves & Surplus Current Liabilities & Provisions Total Assets Net Fixed Assets Investments Current Assets, Loans & Advances Deferred Tax Asset Total 17.09 0.02 17.11 17.51 17.51 24.91 24.91 5.00 8.50 3.61 17.11 5.00 10.32 2.19 17.51 5.00 16.05 3.86 24.91
29
Key Financial Ratios

(Rs. in lakh) Period ended March 31 2003 2004 2005
Earning Per Share (EPS) (Face Value Rs.100) Net Asset Value (NAV) (Rupees) SIDBIs share in total equity of SVCL
50.72 13.50 100.00%
36.38 15.32 100.00%
50.72 13.50 100.00%
Credit Guarantee Fund Trust for Small Industries (CGTSI) Credit Guarantee Fund Trust for Small Industries incorporated on July 27, 2000 was set up by Govt. of India (through the Ministry of SSI and ARI) and SIDBI for operating the Credit Guarantee Fund Scheme for Small Industries (CGFSI). For implementing the scheme, the settlers viz. GOI and SIDBI have committed a corpus of Rs.2,500 crores in the ratio of 4:1 to be released over a period of 5 years or as and when required. Till March 31, 2005, GoI and SIDBI had released an aggregate amount of Rs. 931.55 crore toward the Corpus Fund as per the table given below. (Rs.) 2002 - 03 2003 - 04 2004 - 05 Govt. of India 3416150000 5336150000 7452450000 SIDBI 854037500 1372387500 1863112500 TOTAL 4270187500 6708537500 9315562500 The various activities undertaken by CGTSI include extending Credit Guarantee to eligible Banks, select RRBs, other lending institutions, which have become members of CGTSI against their collateral free lending to SSI / tiny units and Small Scale Service and Business (Industry related) Enterprises (SSSBEs), including Information Technology (IT) and Software Industries. Financial performance: (Rs.) Income Guarantee Fees Interest on Investments Service Fees Interest on Advance Tax Refund Brokerage & Commission Account Others Total Income Expenditure Operating & Other Administrative Expenses Excess of Income over Expenditure before provision Provision for Guarantee claims Excess of Income over Expenditure carried to Balance Sheet Shareholding in Institutions
30
2002 - 03 298,119,633 12,678,634 3,717,943 2,523,376 0 217,700,781 16,005,631 301,033,955 140,000,000 161,033,955
2003 - 04 482,547,553 23,302,623 8,753,932 153,830 2,700,000 317,039,586 21,853,917 495,604,021 200,000,000 295,604,021
2004 - 05
678975188
65784611 20480852 0 0 36771
765277422 18715969
746561453 477100000 269461453
SIDBIs shareholding in institutions other than SIDBI Venture Capital limited, SIDBI Trustee Company Limited and IDBI Bank Limited as on March 31, 2005 is given below: Name Shareholding (%) Sr. No 1 2 3 Canbank Factors Limited SBI Factors and Commercial Services Pvt. Limited North Eastern Development Finance Corporation Limited 20.00% 20.00% 10.00%
Though SIDBI holds shares in above institutions, it neither exercises significant influence nor over-all control in these institutions. Further it does not have a role to play in day-to-day management of these institutions. Promoters Small Industries Development Bank of India (SIDBI) was established on April 2, 1990 under Small Industries Development Bank of India Act, 1989, an Act of Parliament, as a wholly owned subsidiary of Industries Development Bank of India. Pursuant to the Act, IDBIs portfolio relating to the small-scale industrial sector was transferred to it. Consequent upon the SIDBI (Amendment) Act, 2000 with effect from March 27, 2000, SIDBI was delinked from IDBI and 51% of the stake held by IDBI was transferred to public Sector Banks, the General Insurance Corporation of India, the Life Insurance Corporation of India and other institutions owned and controlled by the Central Government. The Banks shareholding is well diversified and shares of SIDBI are held by thirty six institutions / public sector banks / insurance companies owned by controlled by Central Government with industrial Development Bank of India, State Bank of India and Life Insurance Corporation of India as its three largest shareholders. Further GoI vide its notification dated May 17,2004 specified the proportion in which IDBI would divest 12 crore 61 lakh equity shares of SIDBI in favour of 33 banks/institutions ( out of other existing 35 shareholders) from March 31,2005. Key Managerial Personnel: Details of Key Managerial Personnel as on March 31, 2005 are as follows:
Name Designation & Functional area Qualification Exp (yrs) Date of Appt Details of previous employment
Shri N Balasubramanian
CMD
Shri P R Das
Executive Director
(Functional Areas given below)
MSc, Post Graduate Programme in Management from IIMA MSc
33
23-Jan-2003
Bank of Baroda from May 1971 to January 2003
38
24-Aug-1979
Shri Harish Gurbux
Executive Director
(Vigilance) Looking after all areas of Vigilance
BE(Hons), CAIIB
28
15-Apr-2005
Christ College from September 1966 to April 1970. State Bank of Bikaner & Jaipur from May 1970 to August 1979. State Bank of India from 1977 to 2005.
Shri V Chandrasekaran
CGM Southern
BE(Mech), MFM,
31
33
25-Oct-1978
Vijay Tanks & Vessels (P) Ltd from Apr 1971 to Oct
Name
Designation & Functional area
Qualification
Exp (yrs)
Date of Appt
Details of previous employment
Zonal Office
CAIIB-I
Shri V S Rathore
CGM
Board Division, IAD,CAD, Premises, Planning & Budget, Project Monitoring Department, Hindi
B.Com, LLM, FCA, CAIIB, MBA, CS(Inter)
29
25-Feb-1982
1974. Gansons Ltd from Oct 1974 to Dec 1976. Mukand Iron & Steel Works Ltd from Jan 1977 to Oct 1978 State Bank of Bikaner & Jaipur from Sept 1975 to Feb 1982.
Shri R Rewari Shri Dharm Prakash
CGM Northern Zonal Office CGM - On deputation with TBSE, New Delhi CGM ARD, RiMD, DFID CGM Eastern Zonal Office CGM SFMC, P&D, MISD, AIC, Parliament Questions, Govt. Sponsored Schemes
BTech(Mech) MBA, CAIIB BSc(Mech Engg), MBA, Fortran BE(Mech), CAIIB, Dip in Dev Bnkg BSc, LLB, CAIIB, AIMA, PGD in Foreign Trade, PGDM BSc
29 31
25-Jun-1982 29-Jul-1982
State Bank of Bikaner & Jaipur from Sept 1975 to Feb 1982.
Office of Director of Inspection NI Circle from Feb 1974 to July 1979. Engineers India Ltd from July 1979 to July 1982.
Shri N Raman Shri N K Maini
27 27
22-Nov-1983 23-Nov-1983
BHEL from Nov 1977 to Nov 1983. United Commercial Bank from March 1977 to Nov 1983.
Shri A Vikraman
35
08-Dec-1969
Shri S V G Nandagopal
CGM Credit Department CGM Western Zonal Office K CGM(Syste
BBA, CAIIB
31
01-Jun-1984
Operations Research Group from Nov 1973 to Sept 1974. Bank of Maharashtra from Nov 1975 to May 1984.
Shri P Rudran
Shri
MCom, LLB, CAIIB, Cert in Indl Finance BSc(Engg)
34
14-Aug-1970
27
32
28-Jul-1986
HAL from Nov 1976 to
Name
Designation & Functional area
Qualification
Exp (yrs)
Date of Appt
Details of previous employment
Srivastava
ms) (Mech) Information Services Department, Premises & Administrati on of MHO
Mar 1986. Hindustan Motors Ltd from Mar 1986 to Jul 1986.
Functional Areas of Shri P R Das, Executive Director 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. Asset Recovery Department Development Financing Institutions Department (Operations) Credit Department Risk Management Department Human Resources Development Department Internal Audit Department (excluding RBI Inspection) Administration Department Economic Planning and Research Cell Hindi Department Information Services Department Legal Department Premises Department Management Information Systems Department/Associate Institutions Cell Staff Accountability / Branch Expansion Cell
Changes in Key Managerial Personnel in last three years:

Name of Employee Designation Date of Appt / Resigation Reason for Change
Shri V K Chopra
CMD
16-Jul-2003
Shri N Balasubramanian Shri N Balasubramanian Shri R M Mishra Shri P R Das Shri Harish Gurbux Shri Rakesh Rewari Shri Dharm Prakash Shri N K Maini
DMD CMD ED(V) ED ED(V) CGM CGM CGM
23-Jan-2003 30-Dec-2004 28-Jan-2001 24-Aug-1979 15-Apr-2005 25-Jun-1982 29-Jul-1982 22-Nov-1983
Appointed as CMD of SIDBI w.e.f. July 16, 2003 till December 8, 2005. Appointed as CMD of Corporation Bank by GOI w.e.f. December 9, 2005. Appointed as DMD of SIDBI w.e.f. January 23, 2003 till December 29, 2004. Appointed as CMD of SIDBI w.e.f. December 30, 2004. On deputation with SIDBI w.e.f.January 28, 2001 till January 27, 2005. ED w.e.f. Sept 10, 2001 Appointed as ED(Vigilance) of SIDBI w.e.f. April 15, 2005 He was on deputation with SIDBI Venture Capital Limited (SVCL) till April 21, 2004. On deputation with TBSE since June 09, 2003 He was on deputation with Credit Guarantee Fund Trust for Small Industries (CGTSI) till
33
Shri A Vikraman Shri S V G Nandagopal Shri P Rudran Shri R K Srivastava
CGM CGM CGM CGM(S)
08-Dec-1969 01-Jun-1984 14-Aug-1970 28-Jul-1986
April 21, 2005. CGM w.e.f. June 17, 2002 CGM w.e.f. July 01, 2002 CGM w.e.f. Dec 02, 2002 CGM w.e.f. Oct 01, 2001
34
V OPERATIONAL & FINANCIAL PERFORMANCE OF THE ISSUER AND MANAGEMENT DISCUSSION Summary of Past Financial Results Cash Flow Statement The Cash Flow Statement of SIDBI for the last three years, ending March 31, 2003, March 31,2004 and March 31, 2005 is set out below: (Rs. Crore) 2005 Year ended March 31 2003 2004 Cash Flow from Operating Activities Net Profit before tax as per P&L Account Adjustments for: Depreciation Bond issue expenses written off Provision for net depreciation in investments Provision for wealth tax Provision for bad and doubtful debts Profit on sale of investments (net) Dividend Recd on investments Cash generated from Operations (Prior to changes in operating Assets & Liabilities) Adjustments for net changes in : Current assets Current liabilities Bills of Exchange Loans & Advances Payment of Income Tax NET CASH FLOW FROM OPERATING ACTIVITIES Cash flow from Investing Activities Net of Purchase / sale of fixed assets Net of sale/redemption of Investments Dividend recd on investments NET CASH USED IN INVESTING ACTIVITIES Cash Flow from Financing Activities Grants / Gifts received Net Proceeds of Bonds and Debentures Deposits received Repayment of Long Term borrowings
35
315.01 8.85 0.86 0.28 0.06 196.27 (78.56) 442.77
374.46 7.21 0.62 0.00 0.31 195.13 (71.40) 506.33
315.60 9.42 0.70 58.96 0.35 137.00 (75.39) (11.09) 435.55
(266.13) 45.22 882.55 (492.56) 611.85 (115.00) 496.85
(75.92) 235.30 (205.00) 2821.54 3282.25 (149.00) 3133.25
436.18 (427.91) 283.66 (961.73) (234.25) (220.15) (454.40)
(12.93) (87.60) (100.53)
(7.28) (1412.11) (1419.39)
(19.42) 517.52 11.08 509.18
(1.52) (523.73) 99.76 (42.62)
3.38 736.30 745.34 (553.66)
(3.69) 811.13 (441.74) (1558.04)
Dividend on Equity Shares & tax on Dividend Application towards Special purpose funds NET CASH USED IN FINANCING ACTIVITIES Net increase/(decrease) in cash and cash equivalent Cash and Cash Equivalents at the beginning of the period Cash and Cash Equivalents at the end of the period
(99.00) (4.41) (571.52)
(0.00) (31.82) 899.84
(49.61) (7.32) (1249.27)
-175.20 1063.15 887.95
2613.70 887.95 3501.65
(1194.49) 3501.65 2307.16
Balance Sheet The table below presents the summarized audited Balance Sheet of SIDBI as on March 31, 2003, March 31,2004 & March 31,2005. (Rs. Crore)
LIABILITIES March 31, 2003 March 31 2004 March 31 2005
Share Capital - Issued and Paid-up Reserves, Funds and Surplus Reserve Fund Other Funds Reserves Surplus Sub-total Gifts, Grants, Donations and Benefactions Bonds and Debentures Deposits Borrowings From Reserve Bank of India From Government of India From Industrial Development Bank of India From Other Sources In Foreign Currency Sub-total Current Liabilities and Provisions TOTAL LIABILITIES ASSETS Cash and Bank Balances Investments In securities of Central and State Governments In shares of banks and financial institutions
450.00 3278.35 356.07 346.70 3981.12 0.64 4691.76 436.15 1586.05 164.21 150.00 2578.96 4479.21 3574.83 17613.71
450.00 3303.36 377.74 461.70 4142.80 4.02 5428.36 1181.49 906.59 305.00 2713.97 3925.56 4195.19 19327.42
450.00 3331.13 390.92 587.35 4309.39 0.33 6239.50 739.74 855.48 65.00 1447.03 2367.51 4057.28 18163.75
887.95 1722.09 62.12
3501.64 2802.78 82.65
2307.16 2655.33 77.66
36
In bonds and debentures of banks and financial institutions In stocks, shares, bonds and debentures of industrial concerns Others Sub-total Loans and Advances To banks and other financial institutions To industrial concerns Sub-total Bills of Exchange and Promissory Notes Discounted or Rediscounted Premises (At cost less depreciation) Other Fixed Assets (At cost less depreciation) Other Assets TOTAL ASSETS Profit and Loss Accounts
522.41 5.50 30.00 2342.11 11032.52 911.29 11943.81 876.25 185.67 1.13 1376.79 17613.71
608.50 5.04 326.65 3825.62 7945.34 1176.92 9122.26 1081.25 185.79 1.08 1609.75 19327.42
491.62 4.49 154.39 3383.50 8394.67 1689.33 10083.99 797.59 193.87 2.99 1394.65 18163.75
The table below presents the Audited Profit and Loss Account of SIDBI for the years ended as on March 31, 2003, March 31, 2004 & March 31, 2005. (Rs. Crore)
Period ended on 31-Mar-03 31-Mar-04 31-Mar-05
Income Interest and Discount etc. Income from Investments Commission, Brokerage, etc. Net Profit on sale of investments (not credited to reserves or any particular fund or account) Other Income TOTAL EXPENDITURE Interest paid on Deposits, Borrowings, etc. Establishment Expenses Directors' & Committee Members' Fees and Expenses Auditors' Fees Rent, Taxes, Insurance, Lighting, etc. Law Charges Postage, Telegrams & Stamps Stationery, Printing, Advertisement, etc. Depreciation / Amortisation Other Expenditure
37
1105.16 216.38 0.00 78.56
825.44 240.98 0.00 71.40
620.59 227.58 0.00 75.39
5.39 1405.48 984.26 37.19 0.15 0.08 13.97 2.85 0.34 3.26 8.85 39.52
13.57 1151.39 660.91 42.06 0.22 0.10 18.13 1.49 0.27 0.65 7.21 45.87
24.11 947.67 519.27 49.08
0.29 0.09 13.47 0.54 0.23 0.73 9.42 38.93
Total Profit before Tax for the year Provision for Income Tax Profit after Income Tax Deferred Tax adjustment Profit before appropriations Management Discussions and Analysis
1090.47 315.01 96.00 219.01 -11.81 207.20
776.94 374.45 140.00 234.45 8.65 243.11
632.07 315.60 92.00 223.60 1.63 225.23
The following discussion and analysis should be read in conjunction with the SIDBIs financial statements and related notes, which appear on this document at different pages and also under the Auditors Report. Result of Operations for the year ended March 31, 2005 compared with the year ended March 31, 2004 The aggregate sanctions of SIDBI during the financial year 2005 amounted to Rs. 9091 crore as against Rs. 8246 crore during the previous financial year. Disbursements were Rs. 6188 crore as compared with Rs. 4414 crore during the previous year. The increase in the sanctions and disbursements ,is attributed to revival in the industrial sector and continued strong growth in the services sector supported by overall robust growth in the economy The Banks reoriented its strategies with focus on Direct lending, launched a series of innovative products and schemes to help build healthy long & medium term asset. The cumulative sanctions and disbursements of SIDBI since inception aggregated Rs.1,03,495 crore and Rs.69,703 crore. Resources raised by the Bank during FY 2005 aggregated Rs 2449 crore as against Rs. 2987 crore in the previous year. The Banks networth has increased to Rs.4,119 crore as at March end 2005 from Rs.4,071 crore in the previous year. Assets have decreased from Rs.19,327 crore as at March end 2004 to Rs.18,164 crore. The standard assets as percentage of outstanding portfolio were at 96.03% as at March end 2005. The total income of the Bank during the year ended March 31, 2005 was at Rs. 948 crore as against Rs.1,151 crore during the previous year ended March 31, 2004. The total expenditure (including depreciation) decreased from Rs.776 crore for the year ended March 31, 2004 to Rs.632 crore for the year ended March 31, 2005 owing to decrease in interest expenses. The Profit Before Tax stood at Rs.316 crore for the year ended March 31, 2005 as against Rs.374 crore for the year ended March 31, 2004. After making a provision for tax at Rs. 90 crore (current and deferred tax) as compared to Rs.132 crore in the previous year, the Profit After Tax for the year ended March 31, 2005 stood at Rs.225 crore as compared to Rs.243 crore during the year ended March 31, 2004. Result of Operations for the year ended March 31, 2004 compared with the year ended March 31, 2003 The aggregate sanctions of SIDBI during the financial year 2004 amounted to Rs.8,246 crore as against Rs.10,904 crore during the previous financial year. Disbursements were Rs.4,414 crore as compared with Rs.6,789 crore during the previous year. The decline in the sanctions and disbursements, particularly that of refinance was mainly due to surplus liquidity with banks, reduction in refinance portfolio to SFCs, banks reoriented strategies to build long & medium term asset by way of direct assistance etc. The cumulative sanctions and disbursements of SIDBI since inception aggregated Rs.94,404 crore and Rs.63,515 crore. Resources raised by the Bank during FY 2004 aggregated Rs.2,987 crore as against Rs.1,573 crore in the previous year.
38
The Banks networth has increased to Rs.4,143 crore as at March end 2004 from Rs.4,075 crore in the previous year. Similarly, the assets have increased from Rs.17,614 crore as at March end 2003 to Rs.19,327 crore. The Standard Assets as percentage of outstanding portfolio were at 92.00% as at March end 2004. The total income of the Bank during the year March 31, 2004 was at Rs.1,151 crore as against Rs.1,405 crore during the previous year ended March 31, 2003. The total expenditure (including depreciation) decreased from Rs.1,090 crore for the year ended March 31, 2003 to Rs.776 crore for the year ended March 31, 2004 owing to decrease in interest expenses. The Profit Before Tax stood at Rs.374 crore for the year ended March 31, 2004 as against Rs.315 crore for the year ended March 31, 2003. After making a provision for tax at Rs.132 crore (current and deferred tax) as compared to Rs.107 crore in the previous year, the Profit After Tax for the year ended March 31, 2004 stood at Rs.243 crore as compared to Rs.207 crore during the year ended March 31, 2003. Result of Operations for the year ended March 31, 2003 compared with the year ended March 31, 2002. The aggregate sanctions of SIDBI during the financial year 2003 amounted to Rs.10,904 crore as against Rs.9,026 crore during the previous financial year. Disbursements at Rs.6,789 crore as compared with Rs.5,919 crore during the previous year, recorded a growth of 14.70 per cent. The cumulative sanctions and disbursements of SIDBI since inception aggregated Rs.86,158 crore and Rs.59,101 crore registering a compound annual growth rate (CAGR) of 13.40 per cent and 11.40 percent respectively. Resources raised by the Bank during FY 2003 aggregated Rs.1,573 crore as against Rs.1,601 crore in the previous year. The Banks networth had increased to Rs.4,075 crore as at March end 2003 from Rs.3,951 crore in the previous year. Similarly, the assets have increased from Rs.17,640 crore as at March end 2002 to Rs.17,614 crore. The standard assets as percentage of outstanding portfolio were at 93.00% as at March end 2003. The total income during FY 2003 aggregated Rs.1,405 crore as against Rs.1,559 crore as at March 2002. SIDBIs gross profit before tax for the year 2002-03 was Rs.315 crore compared with Rs.405 crore in the previous year. Further, on account of the withdrawal of income tax exempt status of the Bank and consequential tax outgo, the net profit during FY 2003 was Rs.207 crore as compared to Rs.282 crore in FY 2002. The Bank declared a dividend of 10 per cent on equity shares for the FY 2003 as against 12 per cent for FY 2002.
VI FINANCIALS OF GROUP COMPANIES

The financials of group companies have been provided under section Subsidiaries / Group Companies of the Bank. VII COMPANIES UNDER THE SAME MANAGEMENT SIDBI undertakes that except SIDBI Venture Capital Limited and SIDBI Trustee Company Limited, there is no other company under the same management. Details about SIDBI Venture Capital Limited and SIDBI Trustee Company Limited has been provided under section Subsidiaries / Group Companies of the Bank.
39
VIII PROMISE VIS--VIS PERFORMANCE SIDBI has never raised funds through Public Issue during the last preceding five years. All the funds have been raised through Private Placement of Bonds / Debentures. Hence the section of Promise vis--vis Performance is not applicable. IX OUTSTANDING LITIGATION/CRIMINAL PROSECUTION, DEFAULTS AND MATERIAL DEVELOPMENTS Against the Issuer There are no outstanding litigations, disputes, defaults, non payment of statutory dues including disputed tax liabilities of any nature, overdues to banks /financial institutions, defaults against banks / Financial institutions, defaults in dues towards instrument holders like Bond holders proceedings initiated for economic / civil / any other offences against SIDBI except the following: Outstanding Litigations Given below are the cases filed against SIDBI as on June 30, 2005. Category Cases filed by the Borrower Misc. Cases No. of cases 100 9 Amount involved (Rs. lakh) 4329.82 339.92
Suit filed against SIDBI by borrowers as on June 30,2005

Sr. No. Name of the account Purpose
Amount
(Rs.lakh)
3 4 5 6 7 8
Alpine Housing Development Rs.26,84,603 claimed by Alpine Housing Corporation Limited (AHDCL) Development Corporation Limited (AHDCL) towards additional work carried out by them at the time of construction of SIDBI Officers' Apartment at Bangalore viz., Alpine Place. Arvind Finance Co. Pvt. Limited To restore the right, title and interest of the & Inder Chand Agarwal. company in respect of shares pledged and later sold by SIDBI. Brookside Resorts Ltd. Suit for damages Capital Construction Company Deduction for bill for liquidated damages v/s. SIDBI imposed on the Contractor - Construction of Officers flat at Panchkula. Dynamic Logistics Pvt. Ltd. The company approached DRAT challenging the order for interim relief granted by DRT, Pune in favour of SIDBI. Dynamic Logistics Pvt. Ltd. The company approached DRAT challenging the order for interim relief granted by DRT, Mumbai in favour of ICICI. Futura Alloys Pvt. Ltd. .(Kamal One of the mortgagor approached DRAT Kumar Saraf) challenging the order of DRT, Pune. Kowely Polymers Pvt. Ltd. Applications for interim injunction and
40
26.85
107.5 6 207 68.7 480 2,342.91 210 205.19
9 10 11
Maa Nistrani Cold Storage Pvt. Ltd. Mahavir Ice & Cold Storage M/s. Garg Steels
12 13 14 15 16
Punjab & Sindh Bank against Global Magnum Tapes Pvt. Ltd. Sandhu Contractors V/S. SIDBI Sartime Horological Pvt. Ltd. Shri Ejum Karbak Sindh National Foundary
17 18 19 20
Smt. Zulekha Bi South Indian Bank Ltd. against Krishna Indchem Pvt. Ltd. South Indian Bank Ltd. against MPJ Nets Pvt. Ltd. Vaishnavi Polymers Ltd.
21 22
Navoday Castels Pvt Ltd Vs SIDBI Varanasi Development Authority [VDA] Vs. SIDBI (pending before National Consumer Redressal
permanent Injunction were filed by the company against take over action of SIDBI u/s 38. Company has filed a suit for damages for Rs.250.47 Lakh against SIDBI for loss due to delay in disbursement of term loan. Refund of prepayment premium, where SIDBI is first party. Writ petition against PFC & SIDBI with prayer to issue directions to respondents to release the soft loan assistance of Rs.7.50 Lakh under NEF scheme. The relief has been claimed jointly against all the respondents including SIDBI. Claiming second charge on the assets charged to SIDBI on first charge basis. Deduction for bill for liquidated damages imposed on the Contractor - Construction of officers flat at Panchkula. Writ petition filed by Company against TIIC and SIDBI in the matter of refinance. For compensating the damages. This case has been filed against one of our assisted company in which Shri S.K.Sharda, AGM being nominee director has been impleaded as a party. For eviction and payment of arrears of lease rentals in respect of leasehold premises taken over u/s 38 of SIDBI Act. Claiming second charge on the assets charged to SIDBI on first charge basis. Claiming second charge on the assets charged to SIDBI on first charge basis. Civil suit against the take over of assets of the company and for directions to provide interest free loan to rehabilitate the unit or return the money invetsed by the promoters along with interest. Matter before Arbitrator - Dispute pertains to agreement for sale and construction of 58 Officers flats at Indira Nagar, Lucknow. Appeal filed by VDA before the National Consumer Redressal Forum against exparte order of State Commission, Lucknow allowing SIDBIs complaint and directing VDA to pay to SIDBI the cost of the flat amounting to Rs.9,92,453.31 to SIDBI along with interest @ 18% p.a. from the date of respective deposits till date of payment.
250.47 9.69 7.5
48.56 16.28 7.42 46.85 10.37
35.78 138 11.64 92
330 9.92
41
Cases filed by SIDBI

Category No. of cases Amount involved (Rs. lakh)
Recovery applications filed by the Bank against the Borrowers in various DRTs Decreed Cases Complaints filed by the Bank u/s 138 of NI Act Misc. Complaints filed by the Bank before Criminal Courts Misc. cases filed by the Bank before Civil / High Court Winding up petitions filed by the Bank in Company Courts (Inclusive of 28 cases where recovery proceedings are also pending before DRT)
285 90 3 20
55963.96 19535.87 28.17 7201.5
1.Litigations involving Criminal Offences 1.Litigations involving Securities Related Offences 1.Litigations involving Statutory and other offences 1.Litigations involving Civil Offences 1.Overdue interest/principal as on 30th June 2005 1.Others (Please specify)
NIL NIL NIL NIL NIL NIL
No disciplinary action/ investigation has been taken by the Securities and Exchange Board of India / Stock Exchange against the Bank and its Directors. The Company and its Directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. Other than those mentioned above, there are no litigations against SIDBI or against any other Company whose outcome could have a materially adverse effect on the position of investors. Against the Directors: There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of SIDBI. Against Group Companies Against SIDBI Venture Capital Limited NIL NIL
42
Outstanding Litigations There are no outstanding litigations, disputes, defaults, non payment of statutory dues including disputed tax liabilities of any nature, overdues to banks /financial institutions, defaults against banks / Financial institutions, defaults in dues towards instrument holders like Bond holders proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part 1 of Schedule XIII of the Companies Act, 1956) against SIDBI Venture Capital Limited. Against the Directors: There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of SIDBI Venture Capital Ltd. Against SIDBI Trustee Company Limited Outstanding Litigations There are no outstanding litigations, disputes, defaults, non payment of statutory dues including disputed tax liabilities of any nature, overdues to banks /financial institutions, defaults against banks / Financial institutions, defaults in dues towards instrument holders like Bond holders proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part 1 of Schedule XIII of the Companies Act, 1956) against SIDBI Trustee Company Limited. Against the Directors There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of SIDBI Trustee Company Limited. Against Credit Guarantee Fund Trust for Small Industries Outstanding Litigations There are no outstanding litigations, disputes, defaults, non payment of statutory dues including disputed tax liabilities of any nature, overdues to banks /financial institutions, defaults against banks / Financial institutions, defaults in dues towards instrument holders like Bond holders proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (1) of Part 1 of Schedule XIII of the Companies Act, 1956) against Credit Guarantee Fund Trust for Small Industries. Against the Directors There are no outstanding litigations, disputes, defaults, non payment of statutory dues, overdues to banks/financial institutions, defaults against banks/financial institutions, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (I) of Part 1 of Schedule XIII of the Companies Act, 1956) against the directors of Credit Guarantee Fund Trust for Small Industries.
X RISK FACTORS AND MANAGEMENT PERCEPTIONS

43
The investors should consider the following risk factors carefully for evaluating the Bank and its business before making any investment decision. Unless the context requires otherwise, the risk factors described below apply to Small Industries Development Bank of India only. Internal Factors (a) Debenture Redemption Reserve No Debenture Redemption Reserve is being created for the present Issue of Bonds. Management Perception: Creation of Redemption Reserve is not envisaged for the proposed issue of Bonds. The Government of India, Ministry of Company Affairs has vide General Circular No. 9/2002 No.6/3/2001-CL.V dated April 18, 2002 clarified inter alia that All India Financial Institutions need not create Debenture Redemption Reserve as specified under Section 117C of the Companies Act, 1956. SIDBI has appointed a Debenture Trustee to protect the interest of investors. (b) Credit Risk The business of providing loans carries the risk of default by borrowers. Management Perception: Any term lending activity is exposed to credit risk arising from the risk of default by the borrowers. SIDBI has a systematic credit evaluation process with Risk Assessment and credit rating Module operationalised. Based on the quantum of credit the proposals are evaluated by the credit committees set up for the purpose. Necessary control measures like maintaining a diversified portfolio with industry-wise, promoter group-wise and specific client-wise exposure limits are set to avoid concentration of lending to any specific industry segment / promoter group / company. These limits help minimise credit risk. In order to derisk the portfolio, the exposure limits are reviewed periodically and measures taken based on experience / performance of various segments of the loan portfolio. SIDBI monitors the performance of its asset portfolio on a regular basis and also constantly evaluates the changes and developments in industries to which it has substantial exposure. (c) Market Risk Increased interest rate volatility exposes SIDBI to market risk arising out of maturity/interest rate mismatches. Management Perception: Risk arising from interest rate volatility is inherent to the business of financial intermediation and term lending. This risk is minimised by linking the interest rates on term lending to a base rate PLR, which varies in accordance with overall movement in market rates. SIDBI manages market risks through active Asset Liability Management (ALM), viz. liquidity, interest rate and foreign exchange risk by way of Gap/Duration Analysis so as to optimize matching of the Assets and Liabilities. These measures along with the available hedging mechanisms help moderate the market risk. (d) Financial Risks (Liquidity and Forex Risk) SIDBI may be exposed to Liquidity Risk that is inability of the Bank to provide sufficient funds so as to fully and promptly meet legitimate demands made on Bank and Forex Risk on account of change in foreign exchange rates. Management Perception: The Board has approved limits on Liquidity and Interest Rate Risk and the same are monitored on a regular basis by the Asset-Liability Management Committee (ALCO). SIDBIs ALCO
44
reviews the currency-wise liquidity gap position vis--vis the Board / RBI-approved Prudential gap limits regularly. In respect of Foreign Currency Risk, the Bank undertakes regular reviews of re-pricing mismatches (between rate-sensitive assets and rate-sensitive liabilities) in its Foreign-Currency portfolio and actively resorts to tools such as Interest Rate Swaps (IRS) and Forward Rate Agreements (FRA) to mitigate such mismatches. Various Board-approved limits are in place for open positions on Foreign Exchange transactions. All transactions beyond such limits, if any, are squared off at the end of each day. (e) Exposure to Yen denominated liability As on March 31, 2005, SIDBI has liability of Japanese Yen 30 billion. Any adverse movement in Yen may adversely impact SIDBI. Managment Perception: The JPY liability of 30 billon Yen had been raised with partial disintermediation of GoI and SIDBI maintains an ERFF at the rate decided between SIDBI and GoI. Any liability not covered by ERFF would be borne by GoI. (f) Asset Liability mismatch The maturity profile of Rupee Assets and Liabilities as on March 31, 2005 shows positive gap in the entire segment except in more than 7 years bucket. The maturity profile of Dollar and Euro denominated assets and liabilities as on March 31, 2005 shows negative gap in the more than 5 year and 7 year time buckets. Management Perception: SIDBI had lowered the mismatch by altering its liability profile by prepaying some of the long tenure liabilities / synthetically shortening their tenure by contracting derivatives. The Forex loans raised by SIDBI are long term in nature with maturities of 25 / 30 years. All the Euro loans have been swapped into USD and the same are utilised for funding the Banks Forex operations. The Interest Rate and Currency Risk on these loans is therefore addressed by natural hedge available to the Bank. JPY loans have been converted in to Rupee and the same are being used for the Refinance operations of SIDBI. These loans have been raised with the partial disintermediation of GoI and SIDBI maintains ERFF at the rate agreed between GoI and SIDBI. Any Liability not covered by ERFF would be borne by GoI. (g) Asset Concentration to Small & Medium Enterprises only The main business of SIDBI is to extend financial assistance, directly and indirectly for development of SME Sector in India. SME sector in India is characterized by high level of NPAs and is highly fragmented. Management Perception: As per the statute, SIDBI is required to engage in promotion, financing and development of industries in SME sector. The Bank, besides extending direct assistance to industries in the SME sector, is also engaged in discounting of supply bills of SMEs to medium and large industries, extending Pre-shipment / Post -shipment credit in both Rupee and Foreign currency to SME industries, extending resource support to institutions for benefit of SME sector etc. The Bank also extends assistance to service sector and infrastructure projects mostly in consortium. Pursuant, to the announcement made by the GoI SIDBI has operationalised the Small and Medium Enteprise (SME) Fund of Rs10,000 crores through which the Bank expects to lend to SME sector in FY 2005 & FY 2006. Overall SIDBI has a fairly diversified business portfolio. Further SIDBI maintains a strong focus on the containment of NPA.
(h) SFC/SIDC exposure

SIDBIs combined exposure to SFCs / SIDCs constituted a large portion of its outstanding advances portfolio. Most of the SFCs / SIDCs are financially weak with recurring losses, low recovery rates, high
45
NPAs and low or negative capital adequacy. Further, IDBI who is the major shareholder in SFCs may sell its stake in SFCs / SIDCs to SIDBI. Management Perception: SIDBI being the principal financial institution for the SME Sector is responsible for co-ordinating the activities of the other institutions working with the sector. SIDBI has been trying to restructure the SFCs in co-ordination with Central and respective State Governments. In this context, SIDBI besides making adequate provisioning for NPAs in its SFC portfolio has initiated various proactive measures to improve the health of SFCs and to minimise the default risks, which in turn will help SIDBI to derisk itself against the vulnerable portfolio and consequently prevent the accounts becoming NPAs. (i) Asset concentration to a few large individual borrowers. The largest single borrower accounts for 5.34% of total assets and 15.39% of capital funds as on March 31, 2005. Credit exposure to 10 largest borrower accounts for 27.07% of total assets and 78.04% of capital funds as on March 31, 2005. Large exposures to specific borrower will be impacted by trends in these borrowers. Management Perception: SFCs account for a higher proportion of SIDBIs portfolio. SIDBI had been closely monitoring the health of these SFCs and taking various measures to improve their financial health by restructuring them. This would help SIDBI to protect its interest. For direct lending, Prudential exposure caps have been set up for individual / group borrowers, industry segments / sectors as also product groups with a view to avoid credit concentration and have a diversified portfolio. (j) Non Performing Assets (NPA) Percentage of Net NPAs to net loans and advances has increased from 2.40% as on March 31, 2004 to 3.97% on March 31, 2005. Management Perception: The high level of NPAs are mainly due to incidence of NPAs in the indirect assistance portfolio of the Bank. SIDBI is trying to restructure the SFCs with the support of GoI and respective State Governments to prevent the incidence of fresh NPAs as well as recover the outstanding dues. The Bank has also initiated concrete steps to check the increase in the NPAs in respect of its direct finance portfolio. Various recovery tools viz. relief & concessions to units facing temporary problems, rehabilitation of sick units, one time settlement of dues under the Bank's guidelines and guidelines of the RBI, action under the Securitisation Act 2002, etc. are applied on case to case basis. Due emphasis is also laid on preventive NPA management with the introduction of new asset category of Stressed Asset which is defined as an account wherein overdues are persisting for more than 90 days. Such Stressed accounts are being monitored closely in order to prevent them from turning NPA. (k) Contingent Liabilities As on March 31, 2005, SIDBI had contingent liabilities of about Rs.84.93 crore on account of claims against the Bank not acknowledged as Debts and on account of Guarantees / Letters of Credit issued. Management Perception: The contingent liabilities are administrative in the normal course of business and the amount involved is insignificant compared to the size of the operations. (l) Profit and portfolio size
46
The profit after tax and portfolio size of SIDBI was Rs.225.23 crore and Rs.10,862 crore for FY 2005 as against Rs.243.12 crore and Rs.10,064 crore for FY 2004 and Rs.207.20 crore and Rs.12,728 crore for FY 2003. Management Perception: The overall economic growth had led to increased industrial activity and consequently higher demand for credit. This had resulted in increase in the portofolio size in FY 2005 SIDBI had also restructured its business portfolio and focussing on the direct lending to SME Sector and Service sector Projects. SIDBI also lends for Infrastructure projects. These measures are expected to step up the portfolio in the coming years. (m) Return on Assets (RoA) The return on assets was 1.73% for FY 2005 as against 2.04% for FY 2004 and 1.79% for FY 2003. Management Perception: SIDBI had been restructuring its business portfolio as well as liabilities, which had resulted in change in RoA. With progressive charge in business mix in favour of direct credit carrying higher rate of interest, the RoA in coming years is bound to improve. (n) Investment Portfolio SIDBI had investment portfolio aggregating Rs.3,383.49 crore as on March 31, 2005 which is subject to market, credit and liquidity risk. Management Perception: SIDBIs investment portfolio was predominantly of long term and strategic nature. Temporary diminution in value of securities arises on account of price volatility due to factors and forces affecting the stock market, interest rates, etc. SIDBI had been classifying its investment portfolio and made appropriate provision for diminution in value as per RBI guidelines issued from time to time in this regard. The investments were classified under the following categories (i) Held to Maturity, (ii) Available for Sale (iii) Held for Trading. These investments were valued according to the prevailing valuation norms. External Factors (a) Changes in Government policies may impact the performance of the industrial sector, which may in turn affect SIDBI. Management Perception: Indian industry has demonstrated remarkable resilience in adjusting to the changed environment and competition in the wake of the economic reforms initiated by the Government. Further, SIDBIs diversified portfolio provides a sufficient cushion against any downtrend in a particular industry or sector. (b) Risk of Competition Competition in the financial sector has increased and is likely to increase further with the entry of Commercial Banks and other new players in term lending. SIDBI faces competition both in corporate lending and in raising resources. Management Perception: SIDBI had simplified its systems and procedures and made its various products and services more customer-centric. It had diversified to extending assistance to Infrastructure projects, service sector projects besides core project lending and bill discounting facilities. The uniqueness of SIDBI in terms of providing not only financial services but also Development and support services is unmatched by the competition. Bank is making efforts to position itself as a One Stop Shop for SME sector. General Risks
47
Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, the Investor must rely on his / her own examination of the Issuer and the Issue including the risks involved. The Bonds have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this document. Notes to Risk Factors
1. The Networth of SIDBI as on March 31, 2005 was Rs. 4,119 crore. 2. The Issuer had entered into certain related party transactions for the year ended March 31, 2005 details of which are provided under section Financial Information. 3. In the opinion of the Directors of the Bank, there are no circumstances that have arisen since the date of the last financial statement disclosed in the Offer Document that materially or adversely affect or are likely to affect the performance or profitability of the Bank, or value of its assets, or its ability to pay liabilities within the next twelve months, except as mentioned elsewhere in the offer document. 4. The financial information as contained in the Auditors Report, including the notes to accounts, significant accounting policies as well as Auditors qualifications have been duly certified by the Statutory Auditors. As far as possible, the Audited numbers have been used for computation of or arriving at the other financial information contained in the Offer Document. However, such other financial information contained in the Offer Document except as contained in the Auditors Report has been certified by the management of SIDBI.
XI DISCLOSURE ON INVESTOR GRIEVANCES AND REDRESSAL SYSTEM To ensure that the Investor grievances were handled expeditiously and satisfactorily, the Issuer had appointed Registrars and Transfer Agents (as indicated in the respective term sheet of the Bond issue given as Annexure to the Shelf Offer Document) to effectively deal with investor complaints. In addition, SIDBIs Compliance Officer would also handle all Investors grievances. Compliance Officer Name Designation Address Mr. Samir Kumar Deputy General Manager SME Development Centre, 4th Floor, G Block, Plot No. C-11, Bandra - Kurla Complex, Bandra (E), Mumbai 400 051 Telephone Fax no E-Mail 022 - 55531100 / 55531288 (D) 022 - 55531282 samirkumar@sidbi.com
48
PART II I GENERAL INFORMATION Consents Consents in writing from the Trustees to the Bondholders, Bankers to the Issue and the Registrars to the Issue to act in their respective capacities have been obtained. M/s. Kirtane & Pandit, M/s V.P. Aditya & Company and M/s Bansilal Shah & Co. Chartered Accountants have given their written consent to the inclusion of their report in this Offer Document in the form and context in which they appear herein.
Expert Opinion
Except as stated elsewhere in this Offer Document, no other experts opinion has been obtained in respect of any matter relating to this Offer Document. Changes in the Board of Directors / Auditors during the last three years Changes in Board of Directors in last three years (as on June 30, 2005)
SNo. Name of Director Date of Change / Resignation Reason for Change
1 2 3 4 5 6 7 8 9 10 11 12
Shri S. Govindarajan Shri S.K. Tuteja Shri U.K. Sinha Shri P.B. Nimbalkar Smt. Rita Menon Shri T.M. Nagarajan Shri P.N. Venkatachalam Shri V.K. Chopra Shri Suresh Chandra Shri J.N. Godbole Shri R.P. Watal Shri Jayaraman Iyer
02.10.2002 29.10.2002 27.11.2002 28.02.2003 20.04.2003 23.06.2003 31.03.2004 09.12.2004 29.12.2004 28.02.2005 18.03.2005 29.03.2005
Substitute Director appointed by LIC Substitute Director appointed by GoI Substitute Director appointed by GoI Superannuation Substitute Director appointed by GoI Substitute Director appointed by IDBI Superannuation Appointed as CMD, Corporation Bank by GoI Substitute Director appointed by GoI Substitute Director appointed by IDBI Appointed DG, SAI by GoI Substitute Director appointed by IDBI
Changes in Auditors The Changes in the Auditors of the Bank during the last 3 years are as follows:
Sr. No Name Of the Audit Firm Date of Appointment Date of Resignation / Retirement Reason for Change
1. 2
M/s Kirtane & Pandit M/s V.P. Aditya & Company M/s Bansilal Shah & Co.
August 14, 2000 June 18, 2003
June 18, 2003 June 18,2004
June 18,2004
Retired at the AGM Appointed at AGM held on June 18, 2003 Appointed at AGM held on June 12, 2004
49
II Financial Information AUDITORS REPORT The Board of Directors Small Industries Development Bank of India SIDBI, Tower, 15, Ashok Marg, Luck now - 226 001. Dear Sirs, In terms of appointment for the purpose of certification of the Statement of Accounts to be incorporated in the Offer Document proposed to be issued by the Bank in connection with the private placement of unsecured, Redeemable, Non-convertible Bonds, we report as follows: We have relied upon the audited accounts of the Bank for the year ended 31st March 1999, 2000, 2001, 2002, 2003 and 2004 being the last date upto which the accounts have been made up and audited by M/s. V. Sankar Aiyar & Co., Chartered Accountants, for the years ended 31st March 1999 & 2000, for the year ended 31st March 2001, 2002 and 2003 audited by us and for the Year ended 31st March 2004 audited by V.P. Aditya & Company, Chartered Accountants. The aforesaid financial statements have been prepared in accordance with the Small Industries Development Bank of India Act, 1989 and the guidelines issued by the Reserve Bank of India from time to time. As required by Part II of Schedule II of the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 issued by the Securities and Exchange Board of India (SEBI) on January 19, 2000 in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992, we have examined the following: We have examined the Statement of Profit and Loss and Statement of Assets & Liabilities of the Bank for each of the financial years ended 31st March 1999, 2000, 2001, 2002, 2003 and 2004, being the last date up to which accounts have been drawn & audited and adopted by the members together with the notes to accounts enclosed as Annexure I, II and III respectively to this report and confirm that: The changes in the Accounting Policies from time to time to suit the Legislative and other accounting requirements carry very insignificant impact on the financial status of the Bank. We have, therefore, not adjusted the Balance Sheet figures for the purpose of this exercise as required to be made in accordance with provision of paragraph 6.18.7 of the guidelines. The significant Accounting Policies adopted by the Bank are enclosed as Annexure IV of this Report. We have also examined the Statement of Profit & Loss of SIDBI Venture Capital Limited (SVCL) and SIDBI Trustee Company Limited (STCL), both subsidiaries of the Bank, for each of the financial years ended 31st March 2002, 2003 and 2004 and Statement of Assets and Liabilities and Statement of Significant Accounting Policies of these subsidiaries as at those dates, audited by other firm of Chartered accountants, enclosed as Annexure V to VII to this report. We hereby confirm that the profits and the Balance Sheet figures of the subsidiaries put together reflect a very insignificant financial impact on the Consolidated Balance Sheet. Hence the separate Profit and loss as well as Balance Sheet figures of these subsidiaries are enclosed for information alongwith their Significant Accounting policies.
50
We have examined the Statement of Accounting Ratios of the Bank for each of the five financial years ended 31st March 1999, 2000, 2001, 2002, 2003 and 2004 enclosed as Annexure VIII to this report and confirm that these have been correctly computed from the figures stated in the Statement of Profit and Loss and Statement of Assets & Liabilities of the Bank referred to in paragraph 1 above. We have examined the Statement of Investments of the Bank for the year ended 31st March 2004 enclosed as Annexure IX to this report & confirm that it correctly records the investment appearing in the audited accounts of the Bank in respect of that period. We have examined the Statement of Dividend paid by the Bank in respect of each of the five financial years ended 31st March 1999, 2000, 2001, 2002,2003 and 2004 on the shares of the Bank enclosed as Annexure X to this report and confirm that it correctly records the dividend paid as shown in the audited accounts of the Bank in respect of each of these years. We have enclosed the Statement of Taxation for the years ended 31st March 1999, 2000, 2001, 2002, 2003 and 2004 as Annexure XI to this report. We have examined the Capitalization Statement as at 31st March 2004 enclosed as Annexure XII to this report and report that it correctly records the matters stated therein. We have examined the Statement of Contingent Liabilities of the Bank for the year ended 31st March 2004 enclosed as Annexure XIII to this report and report that it correctly records the matters stated therein. We have examined the Statement of Related Party Transactions of the Bank for the year ended 31st March 2004 enclosed as Annexure XIV to this report and report that it correctly records the matter taken therein. Tax benefit to Bondholders We further certify that the investment of Long Term Capital Gains in Capital Gain Bonds issued by SIDBI will be exempt under section 54EC of Income Tax Act, subject to terms & conditions mentioned therein. This report is intended solely for your information for inclusion in the Offer Document in connection with the proposed issue of SIDBI Bonds and is not to be used, referred to or distributed for any other purpose without our prior written consent. Yours faithfully, For KIRTANE & PANDIT Chartered Accountants Sandeep Welling Partner Place: Mumbai Date : 06th September 2004
AUDITORS REPORT The Board of Directors

51
Small Industries Development Bank of India SIDBI, Tower, 15, Ashok Marg, Lucknow - 226 001. Dear Sirs, In terms of appointment for the purpose of certification of the Statement of Accounts to be incorporated in the Offer Document proposed to be issued by the Small Industries Development Bank of India (The Bank) in connection with the private placement of unsecured, Redeemable, Non-convertible Bonds, we report as follows: The aforesaid financial statements have been prepared in accordance with The Small Industries Development Bank of India Act, 1989 and the guidelines issued by the Reserve Bank of India from time to time. As required by Part II of Schedule II of Companies Act., 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 issued by Securities and Exchange Board of India (SEBI) on January 19, 2000 in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992, we have examined the following: 1] We have examined the Statement of Profits and Loss Account and Statement of Assets & Liabilities of the Bank for the financial year ended 31st March 2005 being the last date up to which accounts have been drawn & audited and adopted by the members together with the notes to accounts, enclosed as Annexure I, II and III respectively to this report and confirm that : (a) The changes in the Accounting Policies from time to time to suit the legislative and other accounting requirements carry very insignificant impact on the financial status of the Bank. We have, therefore, not adjusted the Balance Sheet figures for the purpose of this exercise as required to be made in accordance with provision of paragraph 6.18.7 of the guidelines. (b) The significant Accounting Policies adopted by the Bank are enclosed as Annexure IV of this Report. 2] We have also examined the Statement of Profit & Loss of SIDBI Venture Capital Limited
(SVCL) and SIDBI Trustee Company Limited (STCL), both subsidiaries of the Bank, for financial year ended 31st March 2005 and Statement of Assets and Liabilities and Statement of Significant Accounting Policies of these subsidiaries as at those dates, audited by other firm of Chartered accountants, enclosed as Annexure V to VII to this report. We hereby confirm that the profits and the Balance Sheet figures of the subsidiaries put together reflect a very insignificant financial impact on the Consolidated Balance Sheet. Hence the separate Profit and Loss Account as well as Balance Sheet figures of these subsidiaries are enclosed for information along with their Significant Accounting policies.
52
3]
We have examined the Statement of Accounting Ratios of the Bank for year ended 31st March
2005 enclosed as Annexure VIII to this report and confirm that these have been correctly computed from the figures stated in the Statement of Profit and Loss and Statement of Assets & Liabilities of the Bank referred to in paragraph 1 above. 4] We have examined the Statement of Investments of the Bank for the year ended 31st March 2005 enclosed as Annexure IX to this report & confirm that it correctly records the investment appearing in the audited accounts of the Bank in respect of that period. 5] We have examined the Statement of Dividend paid by the Bank in respect of the financial year ended 31st March 2005 on the shares of the Bank enclosed as Annexure X to this report and confirm that it correctly records the dividend paid as shown in the audited accounts of the Bank in respect of the year. 6] 7] 8] therein. 9] We have examined the Statement of Related Party Transactions of the Bank for the year ended 31st March 2005 enclosed as Annexure XIV to this report and report that it correctly records the matter taken therein. Tax benefit to Bondholders We further certify that the investment of Long Term Capital Gains in Capital Gain Bonds issued by SIDBI will be exempt under section 54EC of Income Tax Act. 1961 subject to terms and conditions mentioned therein. This report is intended solely for your information for inclusion in the Offer Document in connection with the proposed issue of SIDBI Bonds and is not to be used, referred to or distributed for any other purpose without our prior written consent. Yours faithfully, For Bansilal Shah & Co. Chartered Accountants (P.R.Majithia) Partner We have enclosed the Statement of Taxation for the year ended 31st March 2005 as Annexure XI We have examined the Capitalisation Statement enclosed as Annexure XII to this report and We have examined the Statement of Contingent Liabilities of the Bank for the year ended 31st to this report. report that it correctly records the matters stated therein. March, 2005 enclosed as Annexure XIII to this report and report that it correctly records the matters stated
53
Date : September 01, 2005 Place : Mumbai
54
Annexure I Small Industries Development Bank of India Statement of Profit & Loss
(Rs Cr)
Particulars Income Interest Earned Interest and Discount on Advances Income on Investment Interest on Balances with RBI and other inter-bank lending Others Profit on Exchange Transactions (Net) Profit on Sale of Investments Miscellaneous Income Total Income Expenses Interest Expended On Deposits On RBI/Inter-Bank Borrowings On Others Payments to and Provisions for employees Rent, Taxes, Insurance & Lighting Printing & Stationery Postage, Telegrams, Telephones etc. Repairs & Maintenance Law Charges Directors' Fees, Allowances, Expenses Auditors Fees & Expenses Other Expenditure Depreciation on Bank's Properties Total Expenses Gross Profit before provision for tax & extraordinary items Less : Extraordinary items Gross Profit before provision for tax Provisions and Contingencies Net Profit Deferred Tax Profit Available for Appropriation Appropriations Transfer to Statutory Reserve Transfer to Revenue & Other Reserve Transfer to/from Investment Fluctuation reserve Dividends Dividend Tax Balance carried to Balance Sheet
Mar-01
Mar-02
Mar-03
Mar-04
Mar-05
1,519.06 114.69 160.98
1,375.10 165.46 243.90
1,094.90 267.43 195.26
897.06 282.98 150.01
615.43 286.71 171.94
2.97 20.68 9.79 1,828.17
1.56 38.96 4.54 1,829.52
0.76 78.56 4.62 1,641.53
-4.31 71.40 17.89 1,415.03
1.44 75.39 22.66 1173.63
26.58 161.70 855.69 39.33 12.29 1.30 0.29 4.77 0.00 0.10 0.05 31.34 8.54 1,141.98 686.19
31.46 160.11 877.88 32.00 12.05 1.29 1.05 3.81 0.08 0.10 0.07 26.26 8.07 1,154.23 675.29
34.18 0.11 949.97 37.19 13.97 3.26 0.34 3.08 2.85 0.15 0.08 36.44 8.85 1,090.47 551.06
76.02 2.54 582.36 42.06 18.13 0.65 0.28 3.22 1.50 0.22 0.10 42.65 7.21 776.94 638.09
45.75 -_ 473.52 49.08 13.47 0.73 0.23 6.33 0.54 0.29 0.10 32.61 9.42 632.07 541.56
0.00 686.19 208.74 477.45 0.00 477.45 314.06 69.00 20.00 67.50 6.89 0.00
0.00 675.29 422.47 252.82 28.92 281.74 157.99 48.00 21.75 54.00 0.00 0.00
0.00 551.06 332.05 219.01 -11.81 207.20 99.11 38.00 25.09 45.00 0.00 0.00
0.00 638.09 403.63 234.46 8.66 243.12 140.01 53.50 0.00 45.00 4.61 0.00
0.00 541.56 317.96 223.60 1.63 225.23 119.77 20.50 33.65 45.00 6.31 0.00
55
Annexure II Small Industries Development Bank of India Statement of Assets & Liabilites
(Rs Cr)
Particulars Assets Cash in hand & Balances with RBI Balances with Bank in India Balances with Bank outside India Money at Call & Short Notice Investments in India Total Investments Advances in India Total Advances Fixed Assets Other Assets Total ( A ) Liabilities Term Deposits From Banks From Others Total Deposits (1+2+3) Borrowings In India Outside India Total Borrowings Other Liabilities & Prov. Subordinate debts Total ( B ) Net Assets ( C = A - B) Represented by : Capital Reserves & Surplus 1. Statutory Reserve 2. Capital Reserve
Mar-01 1.07 811.45 70.83 115.00 876.59 876.59 14,410.12 14,410.12 181.01 623.68 17,089.75
Mar-02 1.19 1,003.65 58.31 50.00 2,175.95 2,175.95 13,160.05 13,160.05 182.72 1,008.33 17,640.20
Mar-03 14.10 864.77 9.08 91.84 2,342.11 2,342.11 12,728.22 12,728.22 186.80 1,376.79 17,613.71
Mar-04 8.59 3,488.06 5.00 139.65 3,825.63 3,825.63 10,063.87 10,063.87 186.87 1,609.75 19,327.42
Mar-05 0.08
2303.05
4.03 20.00 3383.50 3,383.50 10861.58 10861.58 196.87 1,394.65 18163.76
0.00 292.17 292.17 7,760.33 2,367.00 10,127.33 2,608.74 13,028.24 4,061.51 450.00 3,236.25 0.00
0.00 336.39 336.39 5,213.56 2,350.96 7,564.52 3,293.17 2,172.80 13,366.88 4,273.32 450.00 3,394.24 0.00
0.00 436.15 436.15 4,419.21 2,578.96 6,998.17 3,575.48 2,172.80 13,182.60 4,431.11 450.00 3,493.35 0.00
1,174.20 7.29 1,181.49 4,467.16 2,713.96 7,181.12 4,199.21 2,172.80 14,734.62 4,592.80 450.00 3,633.36 0.00
734.29 5.45 739.74 4987.18 1447.03 6434.21 4057.61 2,172.80 13404.36 4,759.40 450.00 3753.13 0.00
3. Investment Fluctuation Reserve

3. Investment Reserve 4. Revenue & Other Reserve 5. Balance of Profit & Loss Account Total ( E ) Total ( D + E ) 84.86 290.40 0.00 3,611.51 4,061.51 106.61 322.47 0.00 3,823.32 4,273.32 131.70 356.06 0.00 3,981.11 4,431.11 131.70 377.74 0.00 4,142.80 4,592.80
110.15
55.20
390.92
0.00 4309.40 4759.40
56
Annexure III Small Industries Development Bank of India Notes to Accounts as on 31 st March 2005 1. RESERVES, FUNDS AND SURPLUS (i) Reserve Fund Balance as per last Balance Sheet Add: Transferred from Profit Account (ii) a) Other Funds National Equity Fund Balance as per last Balance Sheet Add: Received from GoI Less: Provisions made during the year Add: Transferred from Profit and Account Venture Capital Fund Balance as per last Balance Sheet Less: Provisions made during the year Add: Transferred from Profit and Account 3303.36 Loss 27.77
and
3331.13
104.65 36.83 38.98 Loss 20.00
122.50
b)
168.98 6.09 Loss 0
162.89
c)
Marketing Development Assistance Fund Balance as per last Balance Sheet 58.25 Less: Provisions made during the year 0.00 Add: Transferred from Profit and Loss 0 Account Mahila Vikas Nidhi Balance as per last Balance Sheet Less: Utilisation during the year Add: Transferred from Profit Account
58.25
d)
and
17.52 0.02 Loss 0.00
17.50
e)
Mahila Udyam Nidhi Balance as per last Balance Sheet Less: Provisions made during the year Add: Transferred from Profit and Account Staff Welfare Fund Balance as per last Balance Sheet Add : Interest credited during the period Less: Expenditure towards staff welfare
57
9.86 Loss 9.86
f)
18.48 1.80 0.86
Add:
Transferred Account
from
Profit
and
Loss 0.50
19.92
(iii)
Investment Reserve Balance as per last Balance Sheet 131.70 Add: Transferred from Profit and Loss 0.00 Account Less Transferred to Investment Fluctuation 76.50 Reserve
55.20
(iv)
Investment Fluctuation Reserve

Balance as per last Balance Sheet 0.00 Add: Transferred from Investment Reserve 76.50 Add Transferred from Profit and Loss 33.65 Account 110.15
(iv)
Special Reserve created and maintained u/s 36(1)(viii) of the Income Tax Act, 1961 Balance as per last Balance Sheet 330.00 Add: Transferred from Profit and Loss 92.00 Account Surplus Total: -
422.00
0.00 4,309.40
(v)
2.
BONDS AND DEBENTURES a) 13 % Bonds 2007 (I & II Series) b) 14 % Bonds 2005 (VI Series) c) 13.75 % Bonds 2007 (VII Series) d) 12.30 % Bonds 2008 (VIII Series) e) 12.35 % Bonds 2009 (IX Series) f) Happy Returns Bonds (adjusted for discount amortisation) g) Issue 3.18 Price Discount Apportioned 16.54 h) SIDBI Priority Sector Bonds i) SIDBI Bonds issued to GoI j) Capital Gain Bonds Total: Current Liabilities include the following fund balances a) Marketing & Industry Organisation Fund b) SIDBI's contribution to SIDBI- SDC Grant Fund c) SIDBI Disability Assistance Fund d) SIDBI Voluntary Health Scheme e) Provision for Foreign Currency Fluctuation and Reserve Fund
58
330.00 150.00 50.00 50.00 50.00
19.72 1,642.00 2,172.80 1,774.98
6239.50
4.70 10.14 1.14 2.00 1585.61
3.
4.
Contingent Liabilities : a) b) c) d) e)
Claims against the Bank not acknowledged as debts On account of Gurantees / Letters of Credit issued On account of underwriting commitments On account of uncalled monies on partly paid shares, debentures etc. Other monies for which the Bank is contingently liable
75.24 9.69 0.00 0.00 0.00
5. 6. 7. 8. 9. 10.
Estimated amount of contracts remaining to be executed on Capital Account not 0.00 provided for (net of advance paid). Premises include advances towards acquisition of Premises Rs. 0.10 crore and Capital Work in Progress Rs. 23.65 crore. Other Income includes: Prior Period Income (net) Other Expenditure includes : Prior Period Adjustments (net) 7.12 1.00
In respect of foreign currency borrowings from KfW Germany, Foreign Currency Fluctuation Reserves Fund has been created as per the terms and conditions of the Loan Agreement. In respect of foreign currency borrowings of JY 30 billion under line V from Japan Bank for International cooperation (JBIC) (previously known as Overseas Economic Cooperation Fund OECF), Japan, Exchange Rate Fluctuation Fund (ERFF) has been created as per terms agreed with Government of India and included in Foreign Currency Fluctuation Reserve Fund. The difference on account of exchange fluctuation arising on principal account amounting to Rs.276.27 crore has been debited to Foreign Currency conversion Adjustment Account and reflected under Other Assets. Adjustment to the Fund Account if necessary will be made as and when the differences are crystallised. If the balance in the Fund is insufficient, the claim will be on Government of India. The borrowing of Rs. 828.57 crore from Govt. of India under the JBIC IV loan is carried forward in the balance sheet at its historic rupee value since SIDBI's liability towards principal repayment under the agreement, is not expected to exceed the aggregate of the rupee borrowings and the balance in the ERFF maintained for this loan. The balance as on March 31, 2005 in ERFF maintained for this loan is Rs.423.01 crore. The Bank had perceived and identified as inherent risk in one of the categories of Refinance portfolio under Standard Assets. The Management had devised the criteria to assess such risk on a year-to-year basis and necessary provision for perceived risk was being made from March 31, 2002. During the year, the Bank entered into Memorandum of Understanding with certain Refinance portfolio
11.
12.
13.
Keeping in view the recent RBI guidelines for FIs regarding 90 days NPA norm for Asset Classification being made applicable from FY 2006, SIDBI has identified certain stressed assets and certain Refinance accounts which have been restructured. The Bank has made ad-hoc provisions in respect of such stressed assets and restructured portfolio.
59
14.
During the FY 04, the Bank had introduced SIDBI Employees' Voluntary Retirement Scheme. The Bank has paid exgratia of Rs. 0.42 crore in respect of certain employees during the current FY after completion of required formalities. Bank's representation for non-applicability of Tax under section 115-0 (Dividend Tax) for AY 199798 to AY 2000-01 was turned down by OSD (ITA - 2) of Central Board of Direct Taxes (CBDT). The Bank has filed writ petition before the High Court against the order of CBDT for refund of the tax paid The main business of SIDBI is to extend financial assistance for development of Small Scale Sector in India. As the acivities of SIDBI revolve around this business, no separate segment is considered as reportable. Disclosures of details pertaining to related party transactions: a) The gross salary including perquisites paid to the Key Managerial Personnel of the Bank during the year is as under : 1. Shri V. K. Chopra, Chairman & Managing Director (from April 01,.2004 to December 08,2004) Rs. 420889
15.
16.
17.
2.
Shri N. Balasubramanian Chairman & Managing Director ( from December 30,2004 to March 31,2005) Deputy Managing Director (from April 01,2004 to December 29,2004)
Rs. 144162 Rs. 407288

NIL NIL
b) c)
Outstanding balances of loans as on March 31, 2005 in respect of above persons : Interest on loans granted to Key Managerial Personnel during 200405 : 2003-04
18.
Earnings Per Share (EPS) : Net Profit considered for EPS calculation (Rs. Cr.) Number of equity shares of face value Rs. 10 Earnings (Rs.) per share
2004-05
243.12 225.23 450,000,00 450,000,000 0 5.40 5.01
19.
In accordance with the requirements of AS 22- Accounting for Taxes on Income issued by ICAI, the amount of deferred tax asset has been worked out, which amounts to Rs. 1.63 Crore. The same has been grouped in the Other Assets. The major components of deferred tax are as under:
60
Timing Difference a) b) c) d) e) Depreciation Expenditure on Capital Gains Bonds Provisions for Bad & Doubtful Debts Restructuring Premium Others Net
Deferred Tax Asset 0 114.01 6.46 0.00 1.63
Deferred Tax Liability
5.57
0.00 0.00
110.00
0.51
20.
Previous years' figures have been regrouped and reclassified wherever necessary to make them comparable with the current year's figures.
61
Annexure IV 1. (i) Income Recognition Interest income is accounted for on accrual basis, except where interest and/or instalment of principal is due for more than 180 days as on the date of Balance Sheet as per RBI norms applicable to the term lending and Refinancing Institutions. Interest in respect of such loan accounts is taken credit on actual receipt basis. Similarly, interest on overdue bills, penal interest and interest on seed capital/soft loan assistance have been accounted for on actual receipt basis in view of significant uncertainty about their realisability. (ii) (iii) (iv) (v) (vi) Income is shown in the Profit and Loss Account net of provisions / write off / write back during the year for bad and doubtful debts and also other necessary and expedient provisions. Discount received in respect of bills discounted / rediscounted and on Certificate of Deposit is apportioned over the period of usance of the instruments. Commitment charges, service charges on seed capital / soft loan assistance and royalty income are accounted for on accrual basis in respect of standard (performing) assets. Dividend on shares held in industrial concerns and financial institutions is recognised as income when realised. All expenditure except Development Expenditure are accounted for on accrual basis. Development Expenditure is accounted for on cash basis. 2. (i) Investments In terms of extant guidelines of the Reserve Bank of India, the entire investment portfolio is categorised as Held to Maturity, Available for Sale. and Held for Trading. The investments under each category are further classified as i)
Government securities ii) other approved securities iii) Shares iv) Debentures & Bonds v) Subsidiaries/ joint ventures and vi) Others (Commercial Paper, Mutual Fund Units etc). (ii) (iii) (iv) Investments are reflected at cost. Valuation of outstanding investment as on the Balance Sheet date is made on the basis of guidelines issued by RBI. The debentures / bonds / shares deemed to be in the nature of advance, are subject to the usual prudential norms. Investment acquired with the intention to hold till maturity are categorised under Held to Maturity. Such investments are carried at acquisition cost unless it is more than the face value, in which case the premium is amortised over the period remaining to maturity. Dimunition, other than temporary,
62
in the value of investments in subsidiaries/ joint ventures under this category is provided for each investment individually. (v) Investments acquired with the intention to trade by taking advantage of the short-term price/ interest rate movements are categorised under Held for Trading. The investments in this category are revalued as a whole and net appreciation/ depreciation is recognised in the profit & loss account, with corresponding change in the book value of the individual scrips. (vi) Investments which do not fall within the above two categories, are categorised under Available for Sale. The individual scrips under this category are revalued and net depreciation under any of the classification mentioned above is recognised in the profit & loss account. Net appreciation under any classification is ignored. The book value of individual scrips is not changed. (vii) In respect of unquoted investments in industrial concerns under Seed Capital Scheme, full provision has been made. 3. (i) (ii) Foreign Currency Transactions Foreign currency transactions are recorded in the books of account in respective Foreign currencies. Foreign currency assets are matched with foreign currency liabilities in respect of each foreign currency except where arrangements are entered into with the lenders / Governments for managing the exchange risk. (iii) (iv) (v) (vi) (vii) Gains / Losses on Forward foreign exchange contracts entered into to cover client requirements, are accounted for on the settlement date. Foreign currency balances are translated in Rupees at the year-end spot rates prescribed by Foreign Exchange Dealers Association of India. In case of foreign currency swap transactions, the difference arising on conversion of principal amount is carried forward under Other Assets or Current Liabilities. Expenditure by way of swap costs arising on foreign currency swap transactions is written off prorata over the life of the agreement. Differences arising on conversion of foreign currency balances in revenue accounts are recognised in the Profit and Loss Account. 4. Provision for Loans and Advances Assets representing loan and other assistance portfolios are classified based on record of recovery as Standard, Sub-standard, Doubtful and Loss Assets. Provision is made for assets, as per the guidelines issued by RBI from time to time as applicable to the term lending and refinancing institutions as under :
63
i) ii) iii)
Standard Assets : Sub-standard Assets: Doubtful Assets :
General provision of 0.25% of total outstanding standard assets. General provision of 10 per cent of total outstanding 100 per cent of unsecured portion plus 20, 30 or 100% of the secured portion depending upon the period for which the asset has remained doubtful [i.e. one year - 20%, one to three years - 30% and more than three years - 100% depending on the date of NPA. : 100 per cent of total outstanding.
iv) 5. (i) (ii)
Loss Assets Staff Benefits
A separate Pension Trust and Gratuity Trust has been set up. Gratuity liability and Pension liability of the Bank is covered by a group pension and group gratuity insurance scheme of the Life Insurance Corporation of India (LIC). The Banks annual contribution under the group gratuity and group pension scheme is based on LICs actuarial valuation.
(iii) 6.
Leave encashment entitlement is provided for on actuarial valuation. Expenditure / Discount on bond issue The expenses relating to issue of bonds and discounts, if any, are amortised over the tenure of the bonds / over the period after which the earliest redemption option expires.
7. a) b)
Fixed Assets and Depreciation Fixed Assets are shown at cost less depreciation. Depreciation for the full year is provided on : - Furniture, fixture and computer - @ 100 percent. - Building - Written Down Value Method - @ 5 per cent - Electrical Installations - Written Down Value Method - @ 50 per cent - Motor Car - Straight Line Method - @ 50 per cent
c)
Leasehold land is amortised over the period of lease. *******
64
Annexure V Statement of Profit & Loss of Subsidiaries of SIDBI Particulars Mar-03 Income Income earned Interest on Balances with RBI and other inter-bank lending Other Income Miscellaneous Income Total Income Expenses Interest Expended Payments to and Provisions for employees Adminitrative expenditure Depreciation on Bank's Properties Total Expenses Gross Profit before provision for tax & extraordinary items Extraordinary items Gross Profit before provision for tax Provisions and Contingencies 2.50 0.23 SVCL Mar-04 2.75 0.00 Mar-05 STCL Mar-03 0.05 0.01 Mar-04 0.06 0.00 Mar-05 0.12 0.00
4.61
0.00
0.03 2.76
0.00 2.75
0.00 4.61
0.00 0.06
0.00 0.06
0.00 0.12
0.44 0.98 0.09 1.51 1.25 0.02 1.27 0.45 0.82 1.39 -0.01 2.20
0.46 0.95 0.06 1.47 1.28 0.00 1.28 0.45
0.58 0.96 0.04 1.58 3.03 0.00
0.00 0.02 0.00 0.02 0.04 0.00 0.04 0.01 0.03 0.06 0.00 0.09
0.00 0.03 0.00 0.03 0.03 0.00 0.03 0.01 0.02 0.09 0.00 0.11
0.00 0.03 0.00 0.09 0.09 0.00 0.09 0.03 0.06 0.10 0.00 0.16
3.03
1.15
Income Tax
Net Profit Balance of Profit/(Loss) Brought forward Deferred Tax Profit Available for Appropriation Appropriations Transfer to Statutory Reserve Dividends Dividend Tax Balance carried to B/S 0.83 1.83 -0.01 2.65
0.01 1.87
2.28
4.15
0.09 0.25 0.03 1.83
0.09 0.28 0.00 2.28
4.15
0.00 0.00 0.00 0.09
0.00 0.00 0.00 0.11
0.00 0.00 0.00 0.16
65
Annexure VI Statement of Assets & Liabilites of Susbsidiaries of SIDBI Particulars Mar-03 Assets Balances with Bank in India Advances in India Fixed Assets Other Assets Total ( A ) Liabilities Other Liabilities & Prov. Total ( B ) Net Assets ( C = A - B) Represented by : Capital Reserves & Surplus Statutory Reserve Total ( E ) Total ( D + E ) Earnings per Share (EPS) (Rs.) 3.03 0.00 0.24 1.74 5.01 1.88 1.88 3.13 1.00 2.13 2.13 3.13 80.35 SVCL Mar-04 3.49 0.00 0.18 1.93 5.60 1.92 1.92 3.68 1.00 2.68 2.68 3.68 82.04 Mar-05 STCL Mar-02 0.10 0.05 0.00 0.01 0.16 0.05 0.05 0.11 0.05 0.06 0.06 0.11 56.79 Mar-03 0.13 0.04 0.00 0.01 0.18 0.04 0.04 0.14 0.05 0.09 0.09 0.14 50.72 Mar-04 0.15 0.00 0.00 0.10 0.25 0.04 0.04 0.21 0.05 0.16 0.16 0.21 114.61
5.49
0.00 0.14 3.61 9.24 3.69 3.69 5.55 1.00 4.55 4.55 5.55 187.52
66
Annexure VII SIGNIFICANT ACCOUNTING POLICIES OF SUBSIDIARIES OF SIDBI A) SIDBI Trustee Company Limited. I. Basis of preparation of financial statements. The financial statements are prepared under the historical cost convention, in accordance with Generally Accepted Accounting Principles in India comprising the mandatory accounting standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, on the accrual basis, as adopted consistently by the Company. II. Revenue recognition The Company currently derives its income by way of trusteeship fee from National Venture Fund for Software and information Technology Industry (NFSIT) at the rate of 0.05% p.a. Of the aggregate capital commitment as provided in the Indenture of Trust. III. Income Tax Provision is made for income tax annually based on the tax liability computed after considering tax allowances and exemptions, if any. A deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount. Deferred tax assets are recognized only if there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized and are reassessed for the appropriateness of their respective carrying values at each balance sheet date. B. I. SIDBI Venture Capital Limited Basis of preparation of financial statements The financial statements are prepared under the historical cost convention, in accordance with Generally Accepted accounting Principles in India comprising the mandatory accounting standards issued by the Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956, on the accrual basis, as adopted consistently by the Company. II. Fixed Assets and Depreciation Fixed Assets are stated at cost of acquisition / constructions, which include proportionate share of direct expenses. Depreciation on Fixed assets is provided on Written Down Value Method at the rates and in the manner prescribed in Schedule XIV to the Companies Act, 1956. Direct expenses relating to acquisition / construction of group of assets have been apportioned among each asset in proportion of value of each individual asset.
67
Cost of temporary partitions / constructions not removable / reusable as such, in company's leased / rental premises are fully charged to revenue in the year of partition / construction itself. Depreciation on assets whose actual cost is not more than five thousand rupees has been provided at the rate of 100%. III. Income Tax Provision is made for income tax annually based on the tax liability computed after considering tax allowances and exemptions, if any. A deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount. Deferred tax assets are recognised only if there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised and are reassessed for the appropriateness of their respective carrying values at each balance sheet date. IV. Gratuity and Leave Fare Concession (LFC) As regards employees on deputation from SIDBI, the Company accounts for its share in contribution towards gratuity and LFC in proportion to the completed period of deputation and is shown as payable to SIDBI as per the terms and conditions of deputation.
68
Annexure VIII Small Industries Development Bank of India Significant Accounting Ratios Particulars Accounting Ratios Earnings per Share (EPS) (Rs.) Return on Net worth Net Asset Value per Share (Rs.) Other Ratios Gross NPA to Gross Advances ratio Net NPA to Net Advances ratio Interest income/working fund Non-Interest income/working fund Operating Profit / working funds Return on Assets Net profit per employee (Rs. in lacs) Capital Adequacy ratio Tier I Tier II Mar-01 10.61 11.76% 90.25 4.07% 1.23% 10.69% 0.20% 4.09% 2.84% 0.55 28.12% Mar-02 6.26 6.59% 92.09 5.95% 3.00% 10.28% 0.26% 3.89% 2.33% 0.31 45.01% 43.76% 1.25% Mar-03 4.60 4.68% 95.70 7.01% 3.84% 8.84% 0.48% 3.13% 1.79% 0.22 44.03% 42.78% 1.25% Mar-04 5.4 5.47% 98.85 8.10% 2.38% 7.25% 0.46% 3.48% 2.04% 0.27 51.63% 50.38% 1.25% Mar-05 5.01 5.47% 91.54 9.41% 3.97% 5.90% 0.55% 2.97% 1.73% 0.26 50.66% 49.42% 1.24%
69
Annexure IX Small Industries Development Bank of India Statement of Investments as on 31 st March 2005
(Rs Cr) Particulars of Investment Investment in Securities of Central and State Government Invest GOI Sec AFS Investment in T-Bills-AFS Investment in GOI-HTM Investment in GoI-HFT Investment in GOI-HTT Sub Total 21,014,488,625 50,000,000 5,488,832,761 26,553,321,386 20,423,697,446 50,000,000 6,096,335,000 26,570,032,446 607,502,239 607,502,239 (590,791,179) (590,791,179) Book Value Market /Quoted Surplus Deficit
Value/carrying cost
Shares of Banks & Financial Instirutions Inv in Shares of Banks/Factoring Co's Invt in shares of subsidiary cos Invt in shares of State Level Agencies Sub Total 766,135,984 10,498,800 10,000,000 786,634,784 2,889,721,194 10,498,800 10,000,000 2,910,219,994 2,123,585,210 -
Stocks, Shares, Bonds & Debentures of FI's Institutional Bonds/ PSU Bonds Invt in Bonds of SSIDCS/Other Agencies Sub Total 4,338,221,000 568,000,000 4,906,221,000 4,402,318,547 568,000,000.00 4,970,318,547 64,097,547 0 64,097,547 0
Stocks, Shares,Bonds & Debenture of Industrial Concerns Invt in companies Seed Capital Thru SIIC/SIDC Invest ment in Jt. Stock Co's Sub Total Others
70
4,944,001 39,929,000 44,873,001
4,944,001 31,726,443 36,670,444
(8,202,557) (8,202,557)
Mutual Fund units Commercial papers Inv in PSU Bonds * Sub Total
1,438,611,203 105,315,350 1,543,926,553
1,408,149,645 100,549,691 1,508,699,336 (4,765,659) (4,765,659)
(30,461,558) (30,461,558)
71
Annexure X Small Industries Development Bank of India Statement of Dividends Paid Year Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Amount of dividend paid (Rs. (%) of dividend to Share Crore) Capital 67.50 15.00% 67.50 15.00% 54.00 12.00% 45.00 10.00% 45.00 10.00% 45.00 10.00% Outstanding -
72
Annexure XI Small Industries Development Bank of India Statement of Taxation

(Rs. Crore)
Year ending Book Profit Tax on Book Profit Adjustments: Difference Between Tax depreciation and book depreciation Other adjustments Net adjustments Tax saving thereon Total taxation * SIDBI was exempt from Income Tax till FY 2001 Particulars Book Profit Tax Rate (%) Tax at actual rate of profit Permanent Differences: Net Permanent Differences Timing Differences: Net timing differences Deferred Tax Adjustments * SIDBI was exempt from Income Tax till FY 2001
Mar-01
Mar-02 281.74 100.58 12.54 17.14 4.60 1.64 102.22
Mar-03 207.20 76.15 4.65 19.23 14.58 5.36 81.50
Mar-04 243.12 87.22 6.27 140.85 147.12 52.78 140.00
Mar-05 225.23 82.42 5.57 75.07 80.64 9.58 92.00
- - - -
Mar-01 -
Mar-02 281.74 35.70 100.58
Mar-03 207.20 36.75 76.15
Mar-04 243.12 36.75 87.22
Mar-05 225.23 36.59 82.42
- -
113.68 -
75.27
122.99
80.98 28.92 -
32.14 11.81
24.13 8.66
4.45 1.63
73
Annexure XII Small Industries Development Bank of India Statement of Capitalisation

(Rs Cr)
Particulars Borrowing Short - Term debt Long-term debt Total Debt Shareholders' funds Share Capital - Equity Reserves & surplus Less: Miscellaneous Expenditure not written off Total Shareholders Funds Long-term Debt/Equity ratio
Mar-01 0.00 10,127.33 10,127.33
Mar-02 0.00 9,737.32 9,737.32
Mar-03 150.00 9,020.97 9,170.97
Mar-04 305.00 9,056.84 9,361.84
Mar-05 799.29 8547.46 9,346.75
450.00 3,611.51 0.10 4,061.41 2.49
450.00 3,823.32 129.39 4,143.93 2.35
450.00 3,981.11 124.39 4,306.72 2.13
450.00 3,765.06 144.51 4,070.55 2.22
450.00 3808.33 139.19 4119.14 2.08
74
Annexure XIII Small Indutries Development Bank of India Statement of Contingent Liabilities
Particulars A Claims against the Bank not acknowledged as debts Tahsildar Kanayannur, Kochi served SIDBI notice to pay building tax of Rs.2,50,500 towards residential bldg at Broadway, Ernakulum, in March 1994. SIDBI appealed against the assessment to Assistant Collector, Kochi. Case was remanded to Tahsildar for ref to GoI for exemption under Sec. 3(1) of Kerala Building Tax Act. SIDBI was asked to make payment of Rs. 62,625/- being 25% of the assessed amount. In case SIDBI's appeal is rejected by the Assistant Collector, SIDBI may have to pay the balance amount of Rs.187,875 with interest @ 6% p.a. Accordingly Contingent liability had been provided for past 8 years with interest. The project of SIDBI's residential flats at Lucknow was delayed due to delay in getting power connection which was the responsibility of the builder as per agreement. As such SIDBI informed the builder that 10% of total consideration of the project payable to the builder i.e. Rs.1,03,80,000 would be adjusted against liquidated damage. The builder went for arbitration. Arbitrator was appointed on February 6, 2003. Accordingly, contingent liability had been provided. M/s Capital Construction Co. had raised a claim of Rs.87,05,115.16 on SIDBI, in the arbitration court, in respect of the construction of SIDBI Officers Apartments, Panchkula. The said arbitration court has since abandoned its proceedings. Fresh arbitration proceedings has been initiated and there is no official communication about the amount the amount claimed by M/s Capital Construction Co. from SIDBI. The Income tax authorities had assessed the taxable income more than the declared income and have raised demand of Rs.3,48,65,778.90 for AY 2003-04 and Rs.58,83,34,166 for AY 2004-05 in excess of provisions made in these respective years. SIDBI has paid entire demand and shown as Advance Tax. SIDBI had also filed an appeal in CIT (Appeals) against the assessment orders. Hence contingent liability of Rs.62,31,99,944.90 was shown. Amount pertains to litigations against the Bank . B. On account of Guarantees /Letters of credit issued 10,380,000 319,026
Amount (Rs.)
8,705,115
623,199,945
109,800,000 752,404,086 96,867,414 Total 849,271,500
75
Annexure XIV Small Indutries Development Bank of India Statement of Related Party Transactions Payments made to Chairman and Managing Director (CMD) and Deputy Managing Director (DMD) during FY 2004-2005 were as follows:
Particulars (Rs.) CMD DMD
Shri V. K. Chopra, Chairman & Managing Director (from April 01,.2004 to December 08,2004) Shri N. Balasubramanian Chairman & Managing Director ( from December 30,2004 to March 31,2005) Deputy Managing Director (from April 01,2004 to December 29,2004) Total
420889
144162 407288 565051 407288
76
III Statutory and Other Information Minimum Subscription As per SEBI circular SEBI/MRD/SE/AT/46/2003 dated December 22, 2003, he provisions of minimum subscription clause are not applicable for privately placed debt securities. Expenses of the Issue The expenses of the Issue payable by the Bank includes fees payable to the Merchant Banker / Managers to the issue, if any, Auditors, fees payable to Registrars and Trustee, Stamp Duty, Listing fees and other miscellaneous expenses including printing. Tax Consultant / Auditors: The fees payable to the Tax Consultant (if required)/ Auditors are as set out in the relevant appointment letters. Registrar to the Issue: The fees payable to the Registrar are as set out in the relevant appointment letters. Trustees for the Bondholders: The fees payable to the Trustees for the Bondholders are as set out in the relevant appointment letters. Other Expenses: The other expenses include fees and reimbursement of expenses towards printing, listing fees, credit-rating fees etc. Underwriting Commission and Brokerage The issue of Bonds under various tranches is not underwritten. Previous Public / Rights Issues SIDBI had not made any issue of Equity Shares / Bonds / Preference Shares by way of Public / Rights Issue since its inception. However SIDBI had been raising funds through Private Placement route by issuance of Capital Gains and Priority Sector Bonds, the details of which for the last three years are as under:
Financial Year
Type of Bond
Amount raised (Rs. Crore)
Interest rate range (%)
Maturity range (years)
2001-02 2002-03
Priority Sector Bonds Priority Sector Bonds Capital Bonds Gain Gain
1224 388 573 661 768
6.75-8.00 5.40-6.00 5.00-7.50 5.00-5.50 4.50-5.00
1-3 years 1-3 years 3-5 years 3-5 years 1-3 years
2003-04
Capital Bonds
Priority Sector Bonds
77
2004-05
Capital Bonds
Gain
557 1642
5.00-5.40 4.25-5.10
3-5 years 1-3 years
Priority Sector Bonds
Issues of Shares otherwise than for cash SIDBI had not made any issue of shares otherwise than for cash. Purchase of Property There was no property which the Bank had purchased or acquired or proposes to purchase or acquire which is to be paid for wholly or partly out of the proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of issue of this Offer Document, other than property: a) The contracts for the purchase or acquisition whereof was entered into in the ordinary course of the Banks business, the contract not being made in contemplation of the issue nor the issue in consequence of the contract; or b) As respects which the amount of the purchase money is not material. The Bank had not purchased any property in which any of its Directors had or have any direct or indirect interest or in respect of any payment thereof.
Revaluation of Assets
SIDBI has not revalued any of its assets during the five years preceding the date of this Offer Document. Terms of Appointment of Chairman & Managing Director / Whole Time Director Government of India in exercise of the powers conferred by sub-section (4) of Section 6 of the Small Industries Development Bank of India Act, 1989 through notification F.No.3/4/2004-IF.1 dated February 09, 2005 appointed Shri N.Balasubramanian, as Chairman and Managing Director with effect from the date of his assuming charge and upto the date of his superannuation or until further orders, whichever is earlier. Payment or Benefit to the Directors and Officers of the Bank Save as otherwise stated in the Offer Document, no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to any Promoters or Officers of the Bank except the normal remuneration for services rendered as Directors, Officers or employees of the Bank. Nature and Interest of Directors No Whole Time Director of SIDBI is interested in the appointment of any of the Merchant Banker, Registrars and Trustee to the Issue. No Director of SIDBI is interested in any property acquired by SIDBI within two years of the date of the Offer Document or proposed to be acquired by it.
78
IV. EXTRACTS OF RELEVANT PROVISIONS OF SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA ACT, 1989. As amended under Small Industries Development Bank of India (Amendment) Act, 2000. Preamble An Act to establish the Small Industries Development Bank of India as the principal financial institution for the promotion, financing and development of industry in the small-scale sector and to co-ordinate the functions of the institutions engaged in the promotion, financing or developing industry in the small-scale sector and for matters connected therewith or incidental thereto. Definitions Sections 2 In this Act, unless the context otherwise requires, "Board" means the Board of Directors of the Small Industries Development Bank of India referred to in section 5; "Small Industries Bank" means the Small Industries Development Bank of India established under subsection (1) of section 3; Corporate Status Section 3 3. Establishment and incorporation of Small Industries Development Bank of India
(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, a corporation to be known as the Small Industries Development Bank of India. (2) The Small Industries Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may, by that name, sue or be sued. (3) The Head Office of the Small Industries Bank shall be at Lucknow or at such other place as the Central Government may, by notification, specify. (4) The Small Industries Bank shall establish offices, branches or agencies at any place in or outside India. Capital Section 4 (1) The Authorised capital of the Small Industries Bank shall be one thousand crore of rupees divided into seventy five crores fully paidup equity shares of rupees ten each and twenty-five crores fully paid-up redeemable preference shares of rupees ten each. Provided that the Central Government may, on the recommendation of the Board, by notification, increase the authorised capital to an amount not exceeding two thousand crores of rupees consisting of such number of equity shares and redeemable preference shares as it may deem fit.
79
Section 4B On such date as the Central Government may, in consultation with the Development Bank, by notification, specify (hereinafter referred to as 'the specified date'), not less than fifty-one percent of the issued capital of the Small Industries Bank which has been subscribed by the Development Bank as on the date immediately preceding the specified date shall, stand transferred to, and vested in, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government in such proportion, manner and on such terms and conditions as may be determined by that Government. Section 4C The issued capital of the Small Industries Bank of four hundred and fifty crores of rupees, immediately before the commencement of the Small Industries Development Bank of India (Amendment) Act, 2000, shall on such commencement stand divided into forty-five crores equity shares of rupees ten each. The Board may, from time to time, increase the issued equity share capital or redeemable preference share capital of the Small Industries Bank by allotment of shares to such persons and on such terms and conditions as the Board may determine: Provided that no increase in the issued equity capital shall be made in such a manner that the Development Bank, the Public Sector Banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government, hold in aggregate at any time, less than fifty-one percent, of the issued equity share capital of the Small Industries Bank. Section 4D 1. The Small Industries Bank may, with the prior approval of the Central Government, by a resolution passed in a general meeting of the shareholders, reduce its share capital in any way. 2. Without prejudice to the generality of the foregoing power, the share capital may be reduced by extinguishing or reducing the liability on any of its equity shares in respect of the share capital not paidup; either with or without extinguishing or reducing liability on any of its equity shares, cancelling any paidup share capital which is lost, or is unrepresented by available assets; or either with or without extinguishing or reducing liability on any of its equity shares, paying off any paidup share capital which is in excess of the wants of the Small Industries Bank. In any general meeting referred to in sub-section (1), the resolution for reduction of share capital shall be passed by shareholders entitled to vote, voting in person, or, where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by shareholders so entitled and voting. Conversion of equity shares into redeemable preference shares Section 4A 1. The Central Government may, at any time after the commencement of the Small Industries Development Bank of India (Amendment) Act, 2000 , by notification, convert such number of equity shares held by the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government, not exceeding twentyfive crores, as it may decide, into redeemable preference shares : Provided that such conversion shall in no case reduce the equity shares held in aggregate by the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance
80
Corporation and other institutions owned or controlled by the Central Government to less than fifty-one per cent. The redeemable preference shares referred to in sub-section (1) shall carry such fixed rate of dividend as the Central Government may specify at the time of such conversion, and neither be transferable nor carry any voting rights. The redeemable preference shares referred to in sub-section (1) shall be redeemed by the Small Industries Bank within three years from the date of such conversion in such instalments and in such manner as the Board may determine. Management of the Bank Section 5 1. The general superintendence, direction and management of affairs and business of the Small Industries Bank shall vest in a Board of Directors which may exercise all powers and do all such acts and things as may be exercised or done by the Small Industries Bank and are not by this Act expressly directed or required to be done by the Small Industries Bank in general meeting. 2. The Board may direct that any power exercisable by it under this Act shall also be exercisable in such cases and subject to such conditions, if any, as may be specified by it, by the chairman and managing director or the whole-time directors. 3. Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles with due regard to public interest. Constitution of the Board Section 6 1. The Board shall consist of the following, namely :a Chairman and Managing Director appointed by the Central Government; two whole-time Directors appointed by the Central Government ; two Directors who shall be officials of Central Government nominated by the Central Government ; three Directors to be nominated in the prescribed manner by the Development Bank, the Public Sector Banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government; three Directors, including one Director from the officials of the State Financial Corporations, nominated by the Central Government from amongst the persons having special knowledge of, or professional experience in, science, technology, economics, industry, banking, industrial co-operatives, law, industrial finance, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in, which would, in the opinion of the Central Government, be useful to the Small Industries Bank; such number of directors not exceeding four elected in the prescribed manner, by shareholders, other than the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government, whose names are entered in the register of shareholders of the Small Industries Bank ninety days before the date of the meeting in which such election takes place on the following basis, namely:where the total amount of equity share capital issued to such shareholders is ten per cent or less of the total issued equity share capital, two directors; where the total amount of equity share capital issued to such shareholders is more than ten percent, but less than twenty-five percent of the total issued equity share capital, three directors; and
81
where the total amount of equity share capital issued to such shareholders is twenty-five percent or more of the total issued equity share capital, four directors : Provided that if the percentage of holding of issued equity share capital with the shareholders, other than the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government, does not permit election of four directors or until the assumption of charge by the elected directors, the Board may, at any time, co-opt such number of directors, not exceeding four, from amongst the persons having special knowledge of, or professional experience in, science, technology, economics, industry, banking, industrial co-operatives, law, industrial finance, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in, which would, in the opinion of the Board, be useful to the Small Industries Bank for carrying out its functions, who shall hold office until the assumption of charge by the elected directors and an equal number of such co-opted directors shall retire in the order of co-option. 1. The chairman and managing director and the whole-time directors shall hold office for such term not exceeding five years as the Central Government may specify in this behalf and any person so appointed shall be eligible for re-appointment. 2. Notwithstanding anything contained in sub-section (1), the Central Government shall have the right to terminate the term of office of the chairman and managing director or the whole-time director, as the case may be, at any time before the expiry of the term specified under sub-section (2) by giving him notice of not less than three months in writing or three months' salary and allowances in lieu of such notice and the chairman and managing director or the whole-time director, as the case may be, shall also have the right to relinquish his office at any time before the expiry of the term specified under sub-section (2) by giving to the Central Government, notice of not less than three months in writing. 3. The chairman and managing director and the whole-time directors shall receive such salary and allowances as may be determined by the Central Government. 4. The Central Government may, at any time, remove the chairman and managing director or the wholetime director, as the case may be, from office: Provided that no person shall be removed from his office, under this sub- section, unless he has been given an opportunity of showing cause against his removal. Every director nominated under clauses (c), (d) and (e) of sub-section (1) shall hold office during the pleasure of the authority nominating him. Subject to the provisions of sub-section (6) every director nominated under clause (d) and (e) of sub-section (1) shall hold office for such term not exceeding three years as the Central Government, or the authority nominating him, as the case may be, may specify in this behalf and thereafter until his successor assumes office, and shall be eligible for renomination : Provided that no such director shall hold office continuously for a period exceeding six years; and every director elected under clause (f) of sub-section (1) shall hold office for three years and thereafter until his successor assumes office and shall be eligible for re-election : Provided that no such director shall hold office continuously for a period exceeding six years. The shareholders, other than the Development Bank, the public sector banks, the General Insurance Corporation, the Life Insurance Corporation and other institutions owned or controlled by the Central Government may, after giving the director a reasonable opportunity of being heard in the manner as prescribed, by resolution passed by majority of the votes of such shareholders holding in the aggregate not less than one-half of the equity share capital held by such shareholders, remove any director elected under clause (f) of sub-section (1) and elect another director in his place to fill the vacancy so caused; (i) A meeting of the Board shall be held atleast once every three months and atleast four meetings shall be held every year and the meetings may be held at such places as may be prescribed; (ii) Notice of every meeting of the Board shall be given in writing to every director for the time being in India, and at his usual address in India to every other director.
82
Subject to the provisions contained in this Chapter, the Board may meet at such times and places and shall observe such rules of procedure in regard to transaction of its business including the manner of adoption of resolutions as may be prescribed. The chairman and managing director, if for any reason, is unable to attend a meeting of the Board, any other director nominated by the chairman and managing director in this behalf and in the absence of such nomination any director elected by the directors present from among themselves, shall preside at the meeting. All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the chairman and managing director, or in his absence, the person presiding, shall have a second or casting vote. Save as provided in sub-section (12), every director of the Board shall have one vote. Disqualitfication of Directors Section 8 1. A person shall not be eligible for being elected as a director under clause (f) of sub-section (1) of section 6, if he had been found to be of unsound mind by a court of competent jurisdiction and the finding is in force; is an undischarged insolvent ; had applied to be adjudicated as an insolvent and his application is pending; had been convicted by a court of competent jurisdiction, of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months and a period of five years has not elapsed from the date of expiry of the sentence; or has not paid any call in respect of shares of the Small Industries Bank held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call. Vacation and resignation of office by Directors Section 9 1. The office of a director shall become vacant if he: becomes subject to any of the disqualifications mentioned in section 8; or resigns his office by giving notice in writing under his hand and the resignation is accepted; or absents himself from three consecutive meetings of the Board without obtaining leave of absence from the Board. Notwithstanding anything contained in clause (a) of sub-section (1), the disqualifications referred to in that clause shall not take effect: for thirty days from the date of the adjudication, sentence or order; where any appeal or petition is preferred within thirty days aforesaid against the adjudication, sentence or conviction resulting in the sentence or order until the expiry of seven days from the date on which such appeal or petition is disposed of; or where within the seven days aforesaid, any further appeal or petition is preferred in respect of the adjudication, sentence, conviction or order and the appeal or petition, if allowed, would result in the removal of the disqualification, until such further appeal or petition is disposed of.
83
Business of the Bank Section 13(1) The Small Industries Bank shall function as the principal financial institution for the promotion, financing and development of industrial concerns in the small scale sector and shall also coordinate the functions of institutions engaged in promoting, financing and developing the industrial concerns in the small scale sector and may carry on and transact any of the following business, namely:-Loans of Central Government Section 4 The Central Government may, after due appropriation made by Parliament by law in this behalf, advance to the Small Industries Bank an interest free loan of such amount and repayable in such instalments and in such other manner as may be determined by the Central Government; and such further sums of money by way of loan on such terms and conditions as may be agreed upon: Provided that the Central Government may, on a request being made to it by the Small Industries Bank, increase the number of instalments or after the amount of any instalment or vary the date on which any instalment is payable under clause (a). Borrowing and acceptance of deposits by the Small Industries Bank Section 15 1. The Small Industries Bank may, for the purpose of carrying out its functions under this Act issue and sell bonds and debentures with or without the guarantee of the Central Government; borrow money from the Reserve Bank repayable on demand or on the expiry of the fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India; against bills of exchange or promissory notes arising out of bona fide commercial or trade transactions, bearing two or more good signatures and maturing within five years from the date of the borrowing; out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934 (2 of 1934), for any of the purposes specified in that section; borrow money from the Development Bank or such other authority, organisation or institution as may be generally or specially [..] approved by the Board; accept deposits repayable after the expiry of such period and on such terms as may be generally or specially [..] .approved by the Board; The Central Government may, on a request being made to it by the Small Industries Bank, guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government. Loans in Foreign Currency Section 19 1. Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1973 (4 of 1973), or in any other enactment for the time being in force relating to foreign exchange, the Small Industries Bank may, for the purposes of granting loans and advances under this Act, borrow, with the previous consent of the Central Government [..], foreign currency from any bank or financial institution in any foreign country or otherwise.
84
2. The Central Government may, where necessary, guarantee any loan taken by the Small Industries Bank under sub-section (1) or any part thereof as to the repayment of principal and the payment of interest and other incidental charges. 3. All loans and advances granted by the Small Industries Bank out of foreign currency borrowed under sub-section (1) shall be expressed in terms of foreign currency as equivalent of Indian currency calculated in accordance with the rate of exchange prevailing at the time of grant thereof, and the amount due there under shall be repayable in equivalent Indian currency calculated in accordance with the rate of exchange prevailing at the time of repayment of such loan or advance. 4. Unless otherwise provided by the Central Government, any loss or profit in connection with any borrowing of foreign currency under sub-section (1) for the purpose of granting loans and advances under this Act or with its repayment to the concerned foreign lending agency, on account of any fluctuations in the exchange accruing during this period within which the loan or advance is repayable by the industrial concern in the small scale sector or the period of actual repayment thereof by the concern, whichever is longer, shall be reimbursed by or paid to as the case may be, the recipient of such loans and advances; after the expiry of the period specified in clause (a),-shall be borne by the Small Industries Bank in respect of normal market fluctuations in the rate of foreign exchange; shall be reimbursed by, or paid to, as the case may be, the Central Government in respect of fluctuations other than the normal market fluctuations in foreign exchange. Explanation -- If any question arises as to whether any fluctuation as aforesaid is a normal market fluctuation or not, the same shall be decided by the Central Government whose decision thereon shall be final.
85
EXTRACT OF SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (ISSUE AND MANAGEMENT OF BONDS) REGUALTIONS, 1990 As amended by Small Industries Development Bank of India (issue and Management of Bonds) Amendment regulation, 2001 Form of the Bond and the mode of transfer thereof, etc. A bond may be issued in the form of ;A promissory note payable to, or to the order of, a certain person; or Stock registered in the books of the Small Industries Bank for which Stock Certificates are issued. (1A) Notwithstanding anything contained in sub-regulation (1) and subject to the provisions of Depositories Act, 1996, every person subscribing to or holding the Bond shall have the option to hold the same with a depository. A Bond issued in the form of promissory note shall be transferable by endorsement and delivery like a promissory note payable to order. No writing on a Bond issued in the form of a promissory note shall be valid for the purpose of negotiation if such writing purports to transfer only a part of the amount denominated by the Bond. 4(a) A Bond shall be issued over the signature of the chairman and managing director or in his absence by deputy managing director and in absence of both by an executive director and/or an officer not below the rank of chief general manager of the Small Industries Development Bank of India which may be printed, engraved, lithographed or impressed by such mechanical or electronic process as the Small Industries Bank may direct. Trust not recognized. 1. The Small Industries Bank shall not be bound or compelled to recognize in any way, even when having notice thereof, any trust or any right in respect of a Bond other than an absolute right thereto in the holder. 2. Without prejudice to the provisions of sub-regulation (1) the Small Industries Bank may, as an act of grace and without liability to the Small Industries Bank, record in its books such directions by the holder of a Bond issued in the form of Stock for the payment of interest on, or of the maturity value of, or the transfer of or such matters relating to the Stock as the Small Industries Bank thinks fit. Provision for holding of bonds issued in the form of promissory notes by trust / trustee Without prejudice to the provisions of sub-regulation (1) of Regulation 4, the Small Industries Bank may, at the request of the applicant and without liability to the Small Industries Bank, issue a Bond in the form of promissory note in the name of a specified trust or trustee(s) of that trust, or, as the case may be, in the personal name of the applicant, describing him as a trustee, whether as a trustee of the trust specified in his application or as a trustee without such specifications. Payment of Interest Interest on a Bond shall be paid by the Small Industries Bank by means of interest warrant crossed account payee, credit to the bank account by electronic clearing service or such other manner as may be specified in the offer document or such other manner as may be decided by the Small Industries Bank.
86
Procedure where Bond in the form of a promissory note is lost, etc. Every application for the issue of a duplicate Bond in place of a Bond which is alleged to have been Lost, Stolen, Destroyed, Mutilated or Defaced, either wholly or in part shall be addressed to the office of Issue, and shall contain the following particulars, namely :Bond No. _______ for Rs. _________ of the _______ percent Small Industries Development Bank of India Bonds, ____________ (year); Last half-year for which interest has been paid; The person to whom such interest was paid; The person in whose name Bond was issued (if known); Whether the Loss or Theft was reported to the police. Such application shall be accompanied by :Where the Bond was lost in the course of transmission by registered post, the Post Office registration receipt for the letter containing the Bond; A copy of the police report, if the loss or theft was reported to the police; If the applicant is not the registered holder, an affidavit sworn before a magistrate testifying that the applicant was the last legal holder of the Bond, and all documentary evidence necessary to trace back the title to the registered holder; and Any portion or fragments which may remain of the Lost, Stolen, Destroyed, Mutilated or Defaced bond. Publication of notice of loss, theft, etc. in newspaper: The loss, theft, destruction, (mutilation or defacement) of a Bond, either wholly or in part, in the form of a promissory note shall be published on behalf of the applicant in a leading newspaper of the area. Explanation: The Small Industries Bank shall decide from time to time as to which of the newspaper shall be deemed to be leading newspaper for the area, under jurisdiction of the Office of Issue. Issue of duplicate Bond and taking of indemnity: If the Prescribed Officer is satisfied of the loss, theft, destruction or defacement of the Bond in the form of a promissory note, he may order issue of a duplicate Bond in the form of a promissory note on furnishing an indemnity bond with one or more sureties: Provided that if at any time before the issue of the duplicate Bond in the form of a promissory note, the original Bond is discovered or it appears to the Office of the Issue for other reasons that the order should be rescinded, the matter shall be referred to the Prescribed Officer for further consideration, and in the meantime, all action on the order shall be suspended. An order passed under this sub-regulation shall, on expiry of the three months referred to therein, become final unless it is in the meantime rescinded or otherwise modified; and Provided that where a Bond in the form of a promissory note lost, stolen, destroyed, mutilated or defaced is of denomination not exceeding rupees fifty thousand, a duplicate Bond in the form of promissory note may be issued on applicant furnishing an indemnity Bond without any such surety; Provided further that where such application is made with respect to a Bond in the form of a promissory note mutilated or defaced, of whatever face value, a duplicate Bond in the form of promissory note may be issued without any such indemnity with or without surety, if the Bond in the form of promissory note is capable of being identified as the one originally issued;
87
the Small Industries Bank shall not incur any liability for issuing such Bond in good faith under this regulation. A duplicate certificate issued under sub-regulation (1) shall be treated as equivalent to the original certificate for all the purposes of these regulations except that it shall not be encashable at an office of issue other than the office of issue at which such certificate is registered without previous verification. Publication of list of duplicate Bonds: The Small Industries Bank shall publish half-yearly in the two leading newspapers or in one leading newspaper and in the Gazette of India in the months of January and July a list of duplicate Bonds issued by the Small Industries Bank. The list shall contain the following particulars regarding the duplicate Bonds by the Small Industries Bank :- (a) the name of the issue, (b) the number of the Bond, its value, (c) the name of the person to whom it was issued, (d) the date from which it bears interest, (e) the name of the applicant for a duplicate, (f) the number and date of order passed by the Prescribed Officer for payment of interest or issue of a duplicate. Person whose title to a Bond of a deceased sole holder may be recognized. The executors or administrators of a deceased sole holder of a Bond (whether a Hindu, Mohammedan, Parsi or otherwise) or the holder of a succession certificate issued under Part X of the Indian Succession Act, 1925 (39 of 1925) in respect of the Bond shall be the only persons who may be recognized by the Office of Issue (subject to any general or special instructions of the Prescribed Officer) as having any title to the Bond. Notwithstanding anything contained in Section 45 of the Indian Contract Act, 1872 (9 of 1872), in the case of a Bond issued, sold or held payable to two or more holders, the survivor or survivors and on the death of the last survivor, his executors, administrators, or any person who is the holder of a succession certificate in respect of such Bond shall be the only person who may be recognized by the Office of Issue (subject to any general or special instructions of the Prescribed Officer) as having any title to the Bond. The Office of Issue shall not be bound to recognize such executors or administrators unless they shall have obtained probate or letters of administration, as the case may be, from a competent court or office in India, having effect at the place of situation of the Office of Issue, provided that in any case where the Prescribed Officer in his absolute discretion thinks fit, it shall be lawful for him to dispense with the production of probate or letters of administration or other legal representation upon such terms as to indemnity or otherwise, as he may think fit. Notwithstanding anything contained in sub-regulations (1), (2) and (3), where the Prescribed Officer in his absolute discretion thinks fit, in any case, it shall be lawful for him to dispense with the production of probate or letters of administration or other legal representation upon such terms as to indemnity or otherwise, as he may think fit. Discharge of a Bond. When a Bond held in the form of promissory note or Stock Certificate becomes due for payment of principal, it shall be presented at the office of the Small Industries Bank at which interest thereon is payable or at the Office of Issue duly signed by the holder on its reverse. When a Bond in the form of an entry in the account or held with a depository becomes due for payment of principal, a duly signed receipt in Form XIV shall be furnished by the holder or beneficial owner, as the case may be, to the Office of Issue. Explanation :- For the purpose of this Regulation, the expression beneficial owner, depository and registered owner shall have the same meaning respectively assigned to them in clauses (a), (e) and (j) of sub-clause (1) section 2 of the Depositories Act, 1996. Exercise of Powers on behalf of the Small Industries Bank :88
The Powers exercisable by the Small Industries Bank under Regulations 4(2), 5(2), 5(7), 6(6) and 8(1) may be exercised on behalf of the small Industries Bank by the Chairman and Managing Director and in his absence a Deputy Managing Director and/or an Executive Director and/or a Chief General Manager of the Small Industries Bank. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The contracts referred to below (not being contracts entered into in the ordinary course of business carried on by the Bank) which are or may be deemed material, have been entered into by the Bank. Copies of these contracts, together with the copies of the documents referred to below, may be inspected at the Mumbai Office of SIDBI between 10:00 a.m. and 12:00 noon on any working day between the date of the Offer Document and the date of closing of the Issue after giving necessary notice. Material Contracts / Documents 1. Small Industries Development of India Act, 1989, as amended. 2. Small Industries Development Bank of India (Issue and Management of Bonds) Regulations, 1990 as amended. 3. Copy of tripartite agreement between SIDBI, National Securities Depository Limited and Registrar and Transfer Agent. 4. Copy of tripartite agreement between SIDBI, Central Depository Services Limited and Registrar and Transfer Agent. 5. Notifications regarding appointment of Chairman and Managing Director and Whole time Directors of the Bank. 6. Certified True Copy of Resolution of the Board of Directors passed at its meeting held on May 26,2005 approving the raising of funds through private placement of Bonds and authorizing certain officials of the Bank to take all necessary steps in the matter. 7. Auditors Report referred to in the offer Document, along with the consent letter. 8. Consent from the Trustees to the bondholders and Registrars to the Issue referred to in this Offer Document to act in their capacities. 9. Annual Report of the Bank for Financial Years 2000-01, 2001-02, 2002-03 , 2003-04 & 2004-05. 10.Copy of letter from Credit Analysis & Research Limited dated March 24,2005 revalidating the credit rating to the Bonds to be issued by the Bank. 11.Copy of the Initial Listing Application made to the Stock Exchange, Mumbai for listing of the Bonds. 12.Reserve Bank of India Circular no DBS.FID No.21/09.01.02/1999-2000 dated June 21, 2000 regarding raising of resources by all India FIs. 13.Notification no. 263/2002/F.No 275/60/2002-IT(B) dated September 11, 2002 issued by Department of Revenue, Ministry of Finance and Company Affairs.
89
PART III DECLARATION The Bank, hereby certifies that disclosures made in Offer Document are generally adequate, accurate and in conformity with the disclosure requirements of Chapter VI of the SEBI (DIP) Guidelines, 2000 (as amended) and the Listing agreement with the designated Stock Exchange. The Issuer accepts no responsibility for the statement made otherwise than in the Offer Document or in the advertisement or any other material issued by or at the instance of the issuer and that any one placing reliance on any other source of information would be doing so at his/her own risk. Authorised Signatory Place: Mumbai Date:
Annexure A: List of Offices of SIDBI

OFFICE ADDRESS TEL.NO.
Agartala Ahmedabad Aizawl Aurangabad
Bijoy Kumar Chowmuhani, Krishnanagar, Harish Thakur Road, Agartala - 799001 Tripura Navjivan Amrit Jayanti Bhavan, I & II Floor, Post Bag No.10, Navjivan P.O. Ahmedabad- 380 014 Mardin', Tulkhuahtlang, Aizwal, Mizoram - 796 001 Jeevan Suman, LIC Bldg, 1st Floor, Plot No.3, N-5, Town Centre, Near CIDCO Office, Aurangabad - 431 003 S.No. 32-36, Basanti Bagh, Sai Road, Baddi, Distt. Solan (Himachal Pradesh) 5th Floor, East Wing, Khanija Bhavan, 49, Race Course Road, Bangalore - 560 001 1st Floor, Landmark Bldg, Race Course Circle, Post Box No. 3711 , Baroda - 390 007 Shikhar Varta Bldg, 3rd Floor, Press Complex, Maharana Pratap Nagar, Zone- 1, P.O.Box No.24 , Bhopal - 462 011 OCHC Bldg, 4th Floor, Near Ram Mandir, Janpath Bhubaneswar - 751 001 1st, 2nd Floor, SCO 145-146, Sector 17C, Chandigarh 160 017 480, Anna Salai, Nandanam, Chennai - 600 035
(0381) 2323320/2311632 (079)27543062 to 27543067 (0389) 2323424 (0240)2472266/ 2472494
Baddi
Bangalore Baroda Bhopal
(01795) 247385
(080) 2207227-30 (0265) 2338679 (0755) 2552491
Bhubaneswar Chandigarh Chennai
(0674) 2404854, 2405278 (0172) 500654/55/56 (044) 24330286, 24330964,243618 93,24342176
90
Chennai-
Ambattur
Coimbatore Dehradun Dimapur Faridabad Gangtok Gurgaon Guwahati
No. 207, AIEMA Tower, 2 nd Floor, Ist main Road, Ambattur Industrial Estate, Chennai 600058
Gowtham Centre, 1055/7, Avanashi Road, Post Box No. 4033, Coimbatore- 641 018, Tamil Nadu International Trade Centre, 2nd Floor, 59/4, Rajpur Road, Dehradun - 248001 IDC House, Kohima Road, Post Box No. 45, Dimapur 797 112, Nagaland NH.5-R/2, Ground Floor, Neelam Badshah Khan Road, N.I.T., Faridabad - 121001 Ragasha Bldg, Nam Nam Road, Gangtok - 737 101, Sikkim Udyog Minar, Vinijya Nikunj,Udyog Vihar, Phase V, Gurgaon. 122001. 2nd & 3rd Floor, IDBI Bldg, Opp. Sentinal Press, G.S.Road, Guwahati - 781005 101, Hermitage Office Complex, Saifabad, Hyderabad 500004 Imphal Urban Co.op.Bank Bldg. M.G.Avenue, Imphal - 795 001, Manipur Commerce House, 1st Floor, 7, Race Course Road, New Palasia, Indore - 452 001 Injos Complex, 1st Floor, VIP Road, Bank Tinali, Itanagar - 791 111, Arunachal Pradesh 1st Floor, Umrao Complex, Sansar Chandra Road,, Post Bag No.46, Jaipur - 302 001 OB-26, Grid Bhawan, Ground Floor, Rail Head Complex, Jammu - 180012 1st Floor, Shantiniketan Bldg, Main Road, Bistupur, Jamshedpur - 831 001 Hotel CentrePoint,BMC Chowk,Jalandhar,144001 Krishna Tower, 15/63, Civil Lines, Kanpur 208 001 (U.P.) Mercy Estate, 2nd Floor, Ravipuram, M.G.Road, Kochi - 682015 11, Dr.U.N.Brahmachari Street, (8th Floor), Opp.La Martiniere Girls School, Kolkata - 700 017
(044)26241055 (0422),2213684, 2210279,2213896 (0135) 2742277 (03862) 225641 (0129) 2414419,
2429467
(03592) 223028 (0124) 2349487 (0361) 2524020,2457102 (040) 23234445, 23210247,232313 44 (0385)2221878,2 446614 (0731) 2435337 (0360) 2214749,2211822 (0141) 2364792, 2363860, 2364614 (0191) 2474306 (0657) 2426140 (0181) 5061241 (0512) 2303069, (0484) 2382493, 2366688 (033) 22801382,228012 28,22404183,224 04228 (0522) 2288546-
Hyderabad
Imphal Indore Itanagar Jaipur
Jammu Jamshedpur Jalandhar Kanpur Kochi Kolkata
Lucknow
SIDBI Tower, 15 Ashok Marg, Lucknow - 226 001
91
50 LucknowBranch office Ludhiana Mumbai Ground Floor, SIDBI Tower, 15 Ashok Marg, Lucknow - 226 001 SCO 16,17, First Floor, Feroze Gandhi Market, Opp. Ludhiana Stock Exchange, Ludhiana - 141 001 SME Development Centre, G Block, Plot No. C-11, Bandra-Kurla Complex, Bandra (E), Mumbai -400 051 Samrudhi Venture Park, Upper Ground Floor, MIDC Road, MIDC Industrial Area, Marol, Andheri (East) , Mumbai -93 1st Floor, Atlanta Building,227,Vinay.K.Shah Marg, Nariman Point, Mumbai-400021 (0522)2288466 (0161) 277576061 (022) 55531261,555312 73,55531266 (022) 28329602
Mumbai Andheri MumbaiMumbai Metropolitin Branch Mumbai Thane Nagpur
(022) 22812330,228444 56 (022) 25391298 (0712) 2553201 (0253) 5607853 (011) 2368247323682475/77 0120-3943494 (0832) 2461900 (0612) 2230053, 2230054 (0413) 2339040 (020) 27463223, (0771) 2523733 (0651)2482761 (0364) 2222639, 2502267 (0261) 2330867 (0421) 2215696, 2215697 (0542) 2223465
1 st Floor, 102 R.M Pride, Rammurti, Road, Thane(W)400602 Gr Floor, National Insurance Building, SV Patel Marg, Nagpur -440001
Nashik
New Delhi Noida Panaji Patna Pondicherry Pune Raipur Ranchi Shillong Surat Tirupur
Pingle Complex, Ist Floor, Opp. Kulkarni Garden, Sharanpur Road, Nasik -422002
Gr Floor, Videocon Tower, E-1, Rani Jhansi Road, Jhandewalan Extension, New Delhi - 110 055 C-60, Sector - 2, Noida, U.P. First Floor, New Horizon,St Marys Colony, Dayanand Bandokar Marg, Miramar, Panaji - 403001 Hotel Minar Bldg, Part II, 2nd Floor, Exhibition road, Post Bag No. 220, Patna - 800 001 I st Floor, 99, Ambalathadagan, Madam Street, Post Bag No. 113, Pondicherry - 605001 Suryakiran Hotel Bldg, 1st Floor, C-8, Mumbai-Pune Road, Chinchwad, Pune - 411019 2nd Floor, Chawla Complex, Sai Nagar, Jail Road, Raipur Chattisgarh - 492001 Arjan Place, 5th Floor, 5, Main Road, Ranchi - 834 001 Morello Building, M.G.Road, Shillong, Meghalaya 793001 303 Meridian Tower, Near Rajkumar Theatre, Udhna Darwaja, Surat - 395002 Block No. 1&2 , 1st Floor, Tirupur Regulated Market Complex, Palladam Road, Post Box No. 375, Tirupur 641604 3rd Floor, Anant Complex, D-64/132K, Sigra, Varanasi - 221 010
Varanasi
92
Visakhapatnam
D.No.47-15-5, 2nd Floor, Gupta Building, Rajaji Marg, Dwarkanagar, Visakhapatnam - 530016
(0891) 2540303
Annexure B: Form of discharge for the Bonds held in the form of entry in the account FORM XIV [See regulation 24(b)] Form of discharge for the Bonds held in the form of entry in the account with the Small Industries Bank or with Depository. To: Manager Bonds Section Small Industries Development Bank of India Mumbai. Dear Sir, Re: ____% Small Industries Development Bank of India Bond(s) ________(_____ Series) Received the principal amount with accrued interest on the date of maturity on Captioned Bond(s) of the nominal face value of Rs. ____ (Rupees ________only) held in the form of an entry in the books of Small Industries Development Bank of India or with a Depository to the Credit of __________________ (Bond holder). * It is certified that the nominal amount of the Bond(s) and the accrued interest as on the date of maturity agree with my/or books. Yours faithfully, Signature(s) of the registered holder(s) beneficial Owner(s)/his/their duly authorized representative . Name(s) of registered holder(s)/beneficial owner(s) .. ** Certified that the name of the beneficial owner(s) is recorded in the register of beneficial owner maintained by us and his signature tallies with the specimen signature available with us. Name of the authorized official Of the depository Date: Place : * Applicable in the case of Bond held in the form of an entry in the books of the Small Industries Development Bank of India.
93
** Applicable in the case of Bond held with a depository.
Annexure C: FORM OF TRANSFER OF BONDS IN THE FORM OF ENTRY IN THE ACCOUNT FORM XIII FORM OF TRANSFER OF BONDS IN THE FORM OF AN ENTRY IN THE ACCOUNT WITH THE SMALL INDUSTRIES BANK We, __________________________________ as the holder[s] of the Bonds in the form of an entry in an account with the Small Industries Development Bank of India do hereby assign and transfer our holding to the extent of Rs. ____________ being the entire / portion of our Bond holding together with accrued interest thereon upto _________ to and in favour of __________________________________________. We, ____________________________________ do freely accept the transfer of the above Bonds to our name, Witness our hand this ___________ day of ________________ 20________ Signed by the above named ___________________________ [Seller] In the presence of __________________________________ Signed by the above named ____________________________ [Buyer] In the presence of __________________________________ Note: To be stamped in accordance with Article 62[c] of the Indian Stamp Act, 1899 [ as amended by the Local Stamp Act of the State in which it is executed].
94
Annexure D: RATING LETTER AND RATING RATIONALE FROM CARE
95
96
97

SIDBI

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

SIDBI

Caricato da

Copyright:

Formati disponibili

For Private Circulation only

Offer Document FOR SHELF REGISTRATION

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

CARE CARE AAA CARE AAA CARE AAA

Issue Management Team

Telephone Fax no E-Mail

Small Industries Development Bank of India

Shelf Offer Document

Notes to Capital Structure:

1. Share Capital History of SIDBI, along with any lock-in period

Industrial Development Bank of India

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

k) Record Date for Principal and Interest

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

s) Right to update/ revise/ close the bond issue

t) Put & Call Option

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Regulation and Supervision

Small Industries Development Bank of India

Shelf Offer Document

Name, Occupation and Address of Directors

Date of Representativ e Appointme (Organisation) nt

Shri N. Balasubramanian Shri Satyananda Mishra

Chairman and Managing Director

Shri Vinod Rai

09/06/2004 State Bank of India

Life Insurance Corporation of India

10 Shri S.S. Kohli

11 Shri P.V. Rajaraman Ex-Chairman, TIIC

Small Industries Development Bank of India

Shelf Offer Document

Sub-Committees of the Board

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India

Shelf Offer Document

Small Industries Development Bank of India