Editorials

by Rajen Kumar

No Escaping Social Media

Running a magazine concentrating on issues of small and medium enterprises and managing with limited resources is a like living life on the edge. In this rush of meeting deadlines,...

Special Reports

Apr 2012

EMRC, Brussels Associates with SME WORLD as its New Media Partner

EMRC has promoted business partnerships with the developing world and has organised dozens of business forums in key decision-making cities, such as Amsterdam, Rome,...

SME Exchange

A Vision on Wealth Creation

Lakshman Gugulothus, CEO, BSE SME Exchange
Sep 2011

BSE has a vision on wealth creation by the SMEs through inclusive economic growth. We are working with a mission to provide the world class platform for the SMEs and the investors to come together and raise the equity capital. BSE SME Exchange provides a great opportunity to the entrepreneurs to raise the equity capital for the growth and expansion of SMEs. It also provides the immense opportunity to the investors to identify and invest in the good SME companies at early stage. It will help unleash the valuation of the company and in the process create wealth for all the stakeholders including all the investors, besides considerable long term capital gains tax benefits and facility to exit at any point of time.

There is huge benefit for the SMEs, if they are listing and raising equity capital on BSE SME Exchange. The debt and equity ratios will improve and the balance sheet will look much healthier. The listed SMEs will get better visibility among the investors. The investor base of the SME company improves for the listed companies. The repose of faith by domestic and international investors will be high, and will help in getting large secondary market investments. Transparency and corporate governance will improve manifold. Listed company will have easy accessibility to alternate funding options. The tax benefits are also immense. The long term capital gain tax on listed company is zero.

Listing process on SME Exchange is shortened to facilitate raise of equity capital by SMEs in 2 to 3 months. The recurrent cost of compliances will be reduced substantially for listed SMEs. 100% underwriting of the IPO will ensure the guarantee of listing for SMEs and there is provision for migration to main board in future. The liquidity for SMEs will be ensured with the mandatory market making support for three years by the merchant bankers.

BSE is leveraging the existing equity platform and existing 'BOLT SYSTEM' is customised for trading in listed SMEs. Listed SMEs will be in 'M' and 'MT' Groups. No separate infrastructure is required by members for trading. We have created cost effective platform for the BSE SME Exchange and trading of listed SMEs in secondary markets. BSE SME Exchange is an integrated platform with the BSE main board and hardly there is any risk for the listed SMEs, unlike OTCEI model. We have kept fees as low as 50% compared to main board to encourage more and more listing by the SMEs.

We are educating the SMEs by conducting Seminars across the country and also through visual and print media. SMEs need medium to long term capital support. Change of attitude on the part of investors is necessary and they should have medium term outlook instead of short term returns. We are trying to synchronise the requirements of SMEs and investor outlook. As the SMEs grow big, they will do wealth creation for the investors along with promoters.

Though the market making and minimum investment of one lakh rupees pose some challenge, we are hopeful that they will not be a roadblock in successful launch of the SME Exchange.

Lakshman Gugulothus is a CEO,

BSE SME Exchange

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