In India, SMEs or Small and medium scale enterprises comprise a major portion of the manufacturing output of the country. It is also a major source of employment in the nation. Though due to a lack of progressive technologies and machinery, these enterprises are not able to optimize their work and productivity. This is why the Bombay Stock Exchange or the National Stock Exchange has come up with special investment platforms for these SMEs.
BSE SME or NSE’s EMERGE is the platform dedicated to the SMEs investment. SMEs can raise funds from the public by IPO and their stocks can be traded like any large scale industry and companies.
What is SME IPO?
If you are wondering what is SME IPO and how it works, or how it is different from an IPO, then you will find your answers here. SME- IPO is similar to regular IPO but the stocks of the SMEs get listed in the SMEs platform of BSE or NSE as we discussed above. This is a very popular means of raising capital for SMEs for their growth of the business and expansion needs.
The investors who invest in these SME-IPOs, generally end up making a lot of profit from these investments. Since the growth potential is huge for these SMEs provided proper infrastructure and capital requirements get filled, the share prices roar once the enterprises expand.
There are certain criteria that the SMEs need to fulfill to issue their IPO and get listed on BSE and NSE. Though the basic criteria are the same there are certain specific criteria that these two exchanges follow while listing the IPO of SMEs in India.
BSE- SME IPO Criteria
- The company needs to be a public limited company when it applies to the IPO listing on the BSE SME platform. The firm needs to convert to a public limited firm from partnership/proprietorship/private limited firm.
- The net worth of the firm needs to be three crores or more in the latest financials of the company and it needs to be an audited one.
- The tangible asset of the firm needs to be at least three crores in the financials of recent times.
- The post paid-up capital of the firm needs to be with the bracket of 3 crores to 25 crores.
- Out of the preceding three years, the company must have distributable profit margins in at least two years.
- The company’s financials must be on the company’s website.
- It needs to sign agreements with the depositories of the country – CDSL and NSDL. It must facilitate the Demat trading of the shares and securities.
- The company must have not applied for winding up to the court.
- The IPO issue of the SME must be underwritten and 15% of the underwritten shares must be held by the underwriter itself.
- At least 50 allottees are required for the SME to get itself listed on the stock exchange after the IPO is done.
- The lot size (minimum) which is required for application and trading needs to be Rs. 1 lakh.
- The firm must not be referred to the Board of Industrial and Financial Reconstruction. Then it cannot issue IPO.
NSE- EMERGE IPO Criteria
- The SME applying for IPO and listing must be a registered company by the Indian Companies Act 1956 or 2013.
- Similar to BSE, the post paid-up capital of the firm cannot exceed Rs. 25 crores.
- They must have made enough to distribute profits in the past two years out of the last three years. ( distributable profit)
- They must have a five year long future business plan on paper with all the financial projections
- The fir must be having the last three years annual reports and all the financials
- The promoter of the company must be having relevant expertise and experiment in the domain
- No winding-up petition must have been filed with the court
- Must provide Demat trading facilities by getting into the agreement with the Depositories. This is mandatory.
- The company needs to show that the auditor has cleared the promoter and the promoter doesn’t have any default payment of interest.
- If there is any case of litigation against the promoter, or the company itself or the other companies held by the promoter then it needs to be disclosed with all the details.
- They also need to disclose if there are any criminal cases filed against the direction. The nature and the status of the case and investigation need to be disclosed.
- Finally, the SME would require fifty allottees of the shares for getting itself on the NSE EMERGE platform.
Benefits of SME IPO in India
SMEs in India can be benefitted a lot by issuing an IPO and getting itself on the stock exchange’s SME platform. The crucial benefits of SME IPO in India are –
- It helps the firm to raise and arrange for capital and fund easily.
- It creates and raises the brand value of the company and gives the company a platform to get recognized in the market.
- It also helps to motivate other SMEs to grow and expand
- The shareholders of the firm can easily liquidate their holdings when the company is a listed one on NSE or BSE
- It also helps the firm attract venture capitalists and angel investors to invest in them.
- The firm also gets recognition amongst the employees and can create a great environment for them.
- When it is listed, it needs to disclose its financials and other business data with the shareholders which increases transparency and also reduces the risk of fraud.
Thus, SME IPO is a great platform for the SME as well as the investor who invests in the IPO of the SME. It provides a monetary benefit to both of them and also the security of their investments and it develops the SMEs in the country which is the primary source of production, employment in a country like India.
No IPO found
|Issuer Company||Exchange||Issue Open|
|Yes Bank Ltd FPO||BSE, NSE||Jul 15, 2020|
|Rossari Biotech Ltd IPO||BSE, NSE||Jul 13, 2020|
|Reliance Industries Ltd. (RIL) Rights Issue||BSE, NSE|
|Antony Waste Handling Cell Ltd IPO||BSE, NSE||Mar 4, 2020|
|SBI Cards and Payment Services Ltd IPO||BSE, NSE||Mar 2, 2020|
|ITI Ltd FPO||BSE, NSE||Jan 24, 2020|
|Prince Pipes and Fittings Ltd IPO||BSE, NSE||Dec 18, 2019|
|Ujjivan Small Finance Bank Ltd IPO||BSE, NSE||Dec 2, 2019|
|CSB Bank Limited IPO||BSE, NSE||Nov 22, 2019|
|IRCTC Limited IPO||BSE, NSE||Sep 30, 2019|
|Issuer Company||Exchange||Issue Open|
|Billwin Industries Ltd IPO||BSE SME|
|Nirmitee Robotics India Ltd IPO||BSE SME||Mar 31, 2020|
|DJ Mediaprint & Logistics Ltd IPO||BSE SME||Mar 26, 2020|
|Laxmi Goldorna House Ltd IPO||NSE Emerge||Mar 20, 2020|
|Cospower Engineering Ltd IPO||BSE SME||Mar 17, 2020|
|RO Jewels Ltd IPO||BSE SME||Mar 12, 2020|
|SM Auto Stamping Ltd IPO||BSE SME||Mar 3, 2020|
|ICL Organic Dairy Products Ltd IPO||BSE SME||Jan 31, 2020|
|Chandra Bhagat Pharma Ltd IPO||BSE SME||Jan 31, 2020|
|Tranway Technologies Ltd IPO||BSE SME||Jan 27, 2020|