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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.