“We have completed the listing of 196 companies, which have raised about Rs 1,500 crore using the BSE platform over the past five years,” he said. The companies have a diverse background: about 16 per cent of them are in the construction and engineering sector, 15 per cent are from distribution and trading segments, while about 7 per cent are from the IT and technology industry. The current market capitalisation of all the listed entities is Rs 17,585 crore.
The SME platform came up five years ago. It was aimed at helping companies lower their debt burden and expand their investor base, while also enhancing their visibility. And this could be done without their having to go through the more expensive process of listing on the main board of the BSE; additionally, the SME board has lower capital requirements and a more relaxed compliance mechanism as compared to the main board. The BSE has 75 to 80 per cent market share in the SME platform business, Chauhan said.
Still early days
Given the size of the SME market in India — there are an estimated 50 million plus enterprises — these numbers are not very impressive. Conceding that it was still early days even after five years, Chauhan said, “Everyday we have about 30 to 40 companies in the pipeline. But given India’s size, we need many more companies to list.”
Entrepreneurs, he said, have a number of fears about listing: some of them are wary of being taken over; others fret about scandals. “We have to assuage their feelings by encouraging them to look at their peers who are prospering after listing,” he added.
Listing makes small companies disciplined, pointed out Chauhan. “They grow up and they benchmark themselves with larger companies. They are able to expand faster.”
He noted with satisfaction that many of them have become larger and 33 companies have migrated to the main board, which has more stringent compliance procedures. The companies were moving in the right direction, Chauhan said, and expressed confidence that these SMEs would draw good response from investors.
Source: The Hindu Business Line