Huge potential for listing on BSE SME Exchange: CEO Gulugothu

Indicating that banks are able to meet only about a fourth of SMEs’ funding requirements, CEO of the first SME-focused exchange in the country, Lakshman Gulugothu said a lot of awareness needs to be mobilised among SMEs, market intermediaries and investors about the BSE SME Exchange

Amritsar: Small and medium enterprises have huge listing potential once the BSE SME Exchange commences operations, reports PTI quoting the CEO of the first SME-focused exchange in the country, Lakshman Gulugothu.

“The Indian small and medium enterprise (SME) sector will have a huge listing potential in the coming years,” the BSE SME Exchange CEO said during a seminar on ‘Raising of Equity Capital and Listing of SMEs on BSE SME Exchange’, which was organised by the PHD Chamber and BSE here.

Mr Gulugothu said the BSE has undertaken various activities to create awareness about the likely benefits for SMEs on listing.

“So far, there have been only debt-financing options, without any access to alternate equity options,” he noted.

There is a general lack of awareness among SMEs about equity capital, stock market and funding options other than banks, he said.

Indicating that banks are able to meet only about a fourth of SMEs’ funding requirements, Mr Gulugothu said a lot of awareness needs to be mobilised among SMEs, market intermediaries and investors about the BSE SME Exchange.

Outlining the need for an SME Exchange, he said equity financing will lower listed companies’ debt burden, leading to lower financing costs and a healthier balance sheet by providing SMEs with equity financing opportunities to grow their business from expansion to acquisition.

It would also enhance a company’s visibility.

Earlier, RS Sachdeva, the co-chairman of the Punjab Committee of the PHD Chamber, said, “We understand that the introduction of the SME exchange would provide the much-needed opportunities to SMEs to access and avail the capital market easily.”

It would also help small and medium enterprises resolve the serious start-up issue of a lack of initial liquidity, he added.

PHD Chamber regional director Dalip Sharma said the BSE SME Exchange would provide a great opportunity to access equity financing to grow business and lower debt.

“It would definitely encourage innovation and entrepreneurial spirit,” he said.

In September, the Securities and Exchange Board of India (SEBI) had granted permission to the BSE to launch the SME Exchange.

The basic criteria for listing on the bourse would be a minimum of 50 investors and Rs50 lakh post-initial public offer (IPO) paid-up capital.

For companies with Rs50 lakh to Rs10 crore paid-up capital, listing would be compulsory, while in the case of companies with paid-up capital of between Rs10 crore and Rs25 crore, they would have the option of listing on either the SME Exchange or the main board.

“We have waived off the three-year profit-making criteria of the main board. The listing process has been simplified and SEBI involvement has been made minimal,” Mr Gulugothu added.

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MCA initiates investigation into books of Devas Multimedia

The company came on the ministry of corporate affairs’ radar because of sharp rise in the value of shares of private investors in Devas Multimedia after signing the deal. The ministry is going to look into valuation of shares, high premium on issue of shares and dilution of shareholding of Devas Multimedia

New Delhi: The ministry of corporate affairs (MCA) has initiated an investigation into the books of Devas Multimedia, embroiled in the controversial S-band spectrum deal with Indian Space Research Organisation’s (ISRO) commercial arm Antrix, for alleged irregularities in its shareholding pattern, reports PTI.

“The MCA is going to look into valuation of shares, high premium on issue of shares and dilution of shareholding of Devas Multimedia,” a senior MCA official told PTI.

The Department of Space has asked the ministry for information on these issues, the official added.

The MCA has formed a three-member team to look into the matter, which is under the jurisdiction of Registrar of Companies, Bangalore.

The investigation has been ordered under Section 235 of Companies Act, 1956, the official said.

Despite repeated attempts, the company could not be reached for comments.

The official added that the company came on MCA’s radar because of sharp rise in the value of shares of private investors in Devas Multimedia after signing the deal.

In September 2009, the company’s board increased the share capital to Rs20 lakh from Rs17.5 lakh.

The Bangalore-headquartered company has been under the scanner for its deal signed with ISRO’s commercial arm Antrix Corporation Pvt Ltd in January 2005.

The space agency had earlier said that “no competitive bidding” was followed for the deal.

As per the deal, Antrix was to provide the crucial S-Band wavelength, which is primarily kept for strategic interests of the country, to Devas for running its digital multimedia service by leasing 90% transponders on two satellites—GSAT-6 and GSAT-6A.

The company had to pay Antrix a total of $300 million (about Rs1,500 crore) over a period of 12 years.

Antrix had signed the contract and got the sanction of the Space Commission and the Union Cabinet for the two satellites at the cost of nearly Rs400 crore without informing them that bulk capacity would be leased to Devas.

In December 2009, ISRO ordered a review of the deal and, subsequently, the Space Commission recommended its annulment on 2nd July, last year.

Last month, a five-member high-level team appointed by the prime minister had completed its probe into the deal.

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ONGC FPO date after appointment of independent directors

The government had planned to conclude the ONGC share sale by the third quarter this fiscal, but had to postpone it because of weak stock markets and failure to meet the norms on the required independent directors

New Delhi: The finance ministry will decide on the date of the follow-on offer of Oil and Natural Gas Corporation (ONGC) after the government appoints independent directors for the state-owned company, reports PTI.

“We will file draft papers again once the requisite number of independent directors are appointed on ONGC board,” a finance ministry official told PTI.

The government had planned to conclude the ONGC share sale by the third quarter this fiscal, but had to postpone it because of weak stock markets and failure to meet the norms on the required independent directors.

As per clause 49 of the Securities and Exchange Board of India (SEBI) regulations, half of the company’s board should comprise independent directors.

Three of ONGC’s independent directors—S Balachandran, SS Rajsekar and Santosh Nautiyal—retired on 10th November after the three-year term.

The official said the Department of Disinvestment (DoD) is awaiting approval of the Cabinet Committee on Appointments (ACC) for the new independent directors on the ONGC board.

The DoD is understood to have asked the ministries concerned to fast-track appointment of independent directors, so that they can move ahead with the stake sale programme.

Last month, ONGC withdrew the draft prospectus filed with market regulator SEBI shortly before the 90-day deadline. ONGC had filed the FPO prospectus in September.

The government plans to sell 5% stake, or 427.77 million shares, in the company. The government’s holding is expected to come down to 69.14% from the current 74.14% after the sale.

The post of independent directors is also lying vacant in other disinvestment bound PSUs—BHEL, RINL, Hindustan Copper and NBCC.

BHEL, which has already filed draft papers with SEBI on 30th September for a Rs4,000 crore follow-on public offer (FPO), needs two more independent directors on board.

Besides, Rashtriya Ispat Nigam (RINL) needs three more independent directors, while HCL needs five to meet the listing norms to meet the SEBI requirement.

As against the disinvestment target of Rs40,000 crore in the current fiscal, the government has so far raised only Rs1,145 crore.

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