It is erroneously believed that small and medium scale industries, businesses survive on cash transactions. In fact, many of them did have to close shop post demonetisation which was imposed on November 8, 2016. However, on the contrary, those who conducted their business with integrity and sincerity survived the onslaught and moved on to make more while providing jobs and increasing the scale of sustainability for their businesses. But this too needed a propeller and a support system and this vacuum was filled up by timely intervention with great persuasion by the Bombay Stock Exchange Small and Medium Enterprises (BSE-SME) wing.
Following which, with the smashing of hammer on a silver gong in Goa, Mac Hotels Limited became the first all-Goan company to be listed on BSE-SME. The company, which has been promoted by the Cotta family, has been in existence for last 25 years and owns three brands – Hotel Miramar, Hotel Park Avenue and Hotel Village Royale. The company had floated 10,000 shares at Rs 24 each. Hopefully, many other Goan companies will tread their foot trail.
When one is into business the first and foremost major challenge is to arrange for capital to establish the business and then arrange for funds to run it. Usually, to run a business, a loan is either taken from a bank or any financial institution, which does carry a high rate of interests and this interest is not linked to the success or failure of business and it remains constant.
The other option is to get listed on a stock exchange and raise the fund through shareholders. For the medium and small enterprise sector, Bombay Stock Exchange has been doing so for nearly half a decade and there are over 285 companies which have listed themselves on BSE-SME so far.
The Small and Medium Enterprises (SMEs) play a catalytic and a critical role in the development process of the economy as they constitute a major part of the industrial activity in these economies. This is reflected in the form of their increasing number and rising proportion in the overall product manufacturing, employment, technical innovations and promotion of entrepreneurial skills.
The contribution of SMEs in the development of Indian economy has been significant, both in terms of contribution to GDP and creation of employment opportunity. They are the largest generator of employment MSME account for 80 million plus jobs. In India, SME sector is the second largest employer, after agriculture sector. With the Indian economy growing, the need of SMEs to raise capital is becoming increasingly critical.
Equity markets and the capital markets in general, are becoming more robust and competitive. Capital market regulations in India are among the best in the world. As the investor base keeps widening, it becomes inexorable to provide investors with a greater choice set of investments. Thus, the creation and conservation for SMEs becomes inevitable. Therefore a specialised capital market segment needs to be in place that can provide risk capital for promising entrepreneurs, promoting innovation crucial for sustainable economic growth.
BSE Ltd very well understands the importance of Small and Medium Enterprises (SME) towards the growth of economy and in order to strengthen them decided to launch SME Platform. BSE Ltd has become the first Exchange to launch its SME Platform on March 13, 2012. The guidelines have been kept simple and any company having post-issue face value capital up to Rs 25 crore with three crore of net tangible assets with two years of profit can get listed on SME platform. The post listing compliance has been also simplified and kept it on half yearly basis.
This has yielded positive result and as on January 22, 2019 when 282 companies got listed and another 50 companies are in pipeline resulting in a total amount of funds raised to approximately Rs 2,855 crore with market capitalisation of about Rs 19,000 crore.
BSE SME platform has become an alternative engine for growth of SME companies by offering a great opportunity to entrepreneurs to raise equity capital for expansion and acquisition. Goan companies have the opportunity to take full advantage of it, not only to raise their stakes in the market but also share their wealth creation and generate more jobs for the common people.