Objective :

To invest in projects promoted by entrepreneurs in North-Eastern Region having sound business ideas with potential for high growth and more than normal returns on investment.
 

Broad Investment Criteria

Key criteria for project selection shall be combination of the following factors :

1. Strong and committed core team : The businesses should be managed by a person or team with a demonstrated performance track record, commitment and energy.

2. Growth potential : The businesses should have potential for sustainable high growth.

3. Long-term competitive advantage : The business should have innovative business operations with a sustainable competitive advantage.

4. Viable business plan : The applicant should have a viable business plan which offers above average profitability leading to attractive return on investment.
    

Mode of Investment

1. Equity Capital or Partly / Fully Convertible Debentures. In case of investment in the form of convertible debentures, the interest rate shall be stipulated at the time of sanction.
    

Areas for investment

An indicative list of areas / sectors is as under :

1. Units based on natural resources of NE Region
    
2. Units set up in the region in the field of IT, Biotechnology or uses other frontier technology which have strategic importance in the region.
    
3. Commercialization of indigenous technologies including technology innovation leading to quality up-gradation /cost reduction.
    
4. Green Business and ventures involving protection of environment
    
5. Agri-horticulture processing
    
6. Other Food processing
    
7. Energy (especially generation of green energy)
    
8. Healthcare
    
9. Logistics, Distribution and Transport
    
10. Life sciences
     
11. Light engineering
     
12. Information technology
     
13. Infrastructure related services
     

Extent of Investment

1. Investment in a single project would range from Rs.50 lakhs – Rs.300 lakhs
    
2.  Assistance under the scheme will be available for financing the items normally included in the cost of a project, startup working capital and selectively for core current assets during commercial operation.
    

Promoter’s contribution

1. In case of assistance in the form of Equity, the Promoter’s should hold at least 60% of the paid up equity capital of the company / Unit, which means assistance under this scheme shall be to a maximum of 40% stake in the target company / unit.
    
2.  In case of assistance in the form of Convertible debenture the maximum Debt-Equity ratio in the project shall be 1.5 : 1.

Security

1. Security to be taken against sanction of assistance under the fund shall be advised by the sanctioning authority.
    
2. In case of investment in the form of debentures, the security that could be considered are mortgage of fixed assets and hypothecation of movable assets of the assisted unit and / or also pledge of shares of the promoters and personal guarantee of the promoters.
    

Period of Investment & The Exit Option

The investment shall be for a minimum period of 5 (years) after which the Corporation shall have the option of exiting from the investment.

The exit shall be by way of share buy-back by the Promoter(s) or IPO or by sale to a strategic or a financial investor or such other mode which the Corporation may deem fit.

During exit, the value of Corporation’s investment shall be taken as the highest value which may be arrived by calculation in any of the following manner:

1. No. of shares held by the Corporation multiplied by book value of the share as per last audited financials of the company.
    
2. Investment amount plus minimum interest for the investment period at the rate of average PLR of the Corporation during the investment period.
    
3. Value of investment calculated on issue price of the share in case of an IPO.
    
4. Price as negotiated with a strategic of a financial investor as the case may be.
    
5. Any other method as approved by Director’s Committee, at the time of exit.
    

Other conditions :

If need be, the Corporation will seek Board representation and other rights as may be negotiated at the time of investment.