NIRC News July 2011.pmd - Icsi

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huge challenge. The investor base is limited and only the
investors with a minimum investment of Rs. One lakh
are allowed to participate.
We have interacted with the market intermediaries over
the last six months. There were apprehensions of the
SME model in the beginning. After few rounds of
discussions, we see the substantial change in the
perception of the SME platform. Many merchant bankers
are optimistic and the members with market making
experience are positive about the SME Platform. We are
hopeful that the hurdles will not be a roadblock for the
successful take off of the BSE SME Platform.
Q: How equipped is BSE to launch the new SME exchange?
A: The BSE is leveraging the existing equity platform for
the BSE SME. The systems necessary for monitoring the
market making and quote driven systems for the market
makers are made to comply with SEBI Regulations. BSE
is fully equipped to launch the BSE SME platform.
Q: How is an SME exchange going to help smaller firms?
A: There have been a traditional ways of funding available
to the SME Companies. A dedicated exchange for these
SMEs will help them in finding a solution to their financial
requirements and crunching expansion plans. Listing of
a company on the exchange gives better valuation to the
company. The debt and equity ratios will improve and
the balance sheet will look much healthier. The listed SMEs
will unlock their wealth in the medium to long term and
will do the wealth creation for the promoters and the
investors.
The listed SMEs will get better visibility among the
investors. The investor base of the company improves
for the listed companies in medium term. The repose of
faith by the investors – domestic and foreigners in the
listed SMEs is high. Transparency and corporate
governance will improve manifold by listing on SME
Platform.
Listed company will have easy accessibility to alternate
funding options. The banks, P/E funds and other financial
institutions provide them the loans very easily. The fund
raising through ADRs and GDRs become easier. Also, the
company can raise more funds through follow on public
offering. The tax benefits are also immense. The long
term capital gain tax on listed company is zero.
Q: What is the outlook of the Market participants about
the SME Exchange / Platform?
A: A large number of merchant bankers are optimistic
about the SME Exchange/ Platform. The market makers
will get the fees out of the issue expenses, like the
merchant bankers. The members who have the
experience of market making in the past are positive on
the scope of market making in this segment. Investors’
outlook is not yet clear. But the investors who have
medium to long term perspective are optimistic on huge
wealth creation opportunity in this segment. Regarding
the SMEs, the response has been extra ordinarily exciting.
The SMEs are enthusiastic about the opportunity to raise
the equity capital on BSE SME.
The professionals like and Company Secretaries have
an important role to play in educating the promoters of
the SMEs and guiding them in raising equity capital on
SME Platform. The member brokers and the sub brokers
having branches and franchises spread across the country
can play important role in mobilising and educating the
SMEs with their market knowledge and experience.
Q: How do you see the future of SME exchange in India?
A: The SMEs are the backbone of the Indian economy.
The SMEs in India produce about 45% of the
manufacturing output and contribute about 40% of the
country’s exports. They are the largest employment
provider in the country. SMEs are craving for the better
funding sources all along. The BSE SME is going to bring
the entire pool of investors on a single platform and hence
it will be easier for the SMEs to raise the capital through
this platform in a cost effective manner.
The need and the requirement of the SME exchange for
the SMEs to raise the equity capital are there for very
long. The SMEs have responded positively in a big way
and coming forth for the listing. There is a good future
for the SME Exchange, considering the huge demand and
requirement of capital for the growth of SMEs.
Q: How do you propose to reach out to the SMEs across
India?
A: First of all, we had detailed discussions with the market
intermediaries, like the Merchant Bankers, Member
Brokers etc to brief them on BSE SME Platform and also
took their feedback.
Second, we have been conducting the Seminars for
educating the SMEs on the benefits of listing and the
preparations required for listing on the BSE SME Platform.
We have already conducted the Seminars in Maharastra,
Gujarat, Andhra Pradesh, New Delhi, Kolkatta etc and
lined up large number of Seminars to cover other parts
of the country.
Third, we have detailed Marketing plan to reach out to
the SMEs spread across the country. We are tying up with
channel partners which include various institutes and
associations engaged in the development of SMEs so as
to create awareness among the SME companies about
the benefits of listing at this platform. We are also educating
the professionals through the platform of ICSI and ICAI
etc, so that the professionals can play important role in
educating the promoters and management of SMEs.
Q: By when do you expect to start the SME exchange?
A: BSE SME already received the ‘in Principle’ approval
from the SEBI. We are waiting for the final approval of
the SEBI. We intend to create awareness about the BSE
SME Platform among the SMEs and various market
intermediaries, before going live. We are likely to be
operational by September, 2011.
July, 2011 9 NIRC-ICSI Newsletter