 "SME platform listing helps small firms tap big clients, better banking")
Listing on the small and medium-sized enterprise (SME) platforms of the BSE exchange and National Stock Exchange (NSE) has in the past year catapulted some small companies in Gujarat and Maharashtra to an altogether new league.
Not only has listing brought in a fresh corporate identity for the SMEs, thereby helping them build brand. It has also opened doors to bigger clients in their industry.
“As an unlisted company, we faced several entry barriers with corporate giants. Dealing with large corporates has now become easy. Our direct clients’ portfolio has doubled after listing. This has not only increased our self-confidence, but also built up trust among our clients,” said Nitesh Vaghasia, managing director of Ultracab, a Rajkot-based power cable manufacturing firm.
As part of its listing on the BSE last year, Ultracab raised Rs 6 crore through the public issue. Today, Ultracab, which offers an assorted range of wires and cable solutions, has as clients the Adani Group, Reliance Industries, BSNL, Essar, the Vedanta Group, the Jindal Group and the Tata Group.
Apart from being able to deal with bigger clients, the SMEs are witnessing smoother functioning with banks, along with a gradual improvement in their corporate governance.
For Bhavnagar-based MD Inducto Cast, listed on the SME platform in July this year, reputation among its clients has grown, which has helped the company expand its business in newer regions.
“Listed companies are taken more seriously and treated with respect. Moreover, transactions with clients have become smoother as listing has created a reputation for us that has helped us in our growth," said Nikhil Gupta, director of MD Inducto Cast, which produces TMT bars under the brand name Rudra TMX.
While it has a strong presence in Gujarat, MD Inducto Cast, which has a capacity of 120,000 billets per annum, is now planning to enter Rajasthan, Uttar Pradesh and Uttarakhand by the end of December.
According to market experts, listing results in improved credit rating, thereby enhancing funds from banks at reduced rates of interest.
“Companies have grown from strength to strength post listing. They now often receive enhanced funds from banks at significantly reduced rates of interest, based on improved credit ratings. Stakeholders, too, have more confidence in the listed company, motivating them to adhere to better governance,” said Mahavir Lunawat, managing director, Pantomath Capital Advisors.
The benefits of listing are drawing more small companies towards the SME platforms of the BSE and NSE. The financial year 2015-16 has seen the number of filings for the Draft Red Herring Prospectus (DRHP) grow on both platforms.
“The success stories have inspired many small companies, which has led to an increase in listings and DRHPs this year,” said Gaurav Jain, director of Hem Securities.
Between April and September this year, 22 companies have been listed on the BSE and NSE platforms, against 15 companies in the corresponding period last year. In terms of DRHPs, 34 companies have filed the prospectus so far this year, against 28 companies in 2014.
The NSE has nine firms listed on its SME platform while the BSE has 109 firms and it expects 30 SMEs to list in three months.
SME platforms are emerging as a simpler way for small companies to raise funds. This is the reason the Mumbai-based Ashapura Intimates Fashion was listed.
"SMEs always face a problem in raising funds as they have limited choices. In such a scenario, this kind of platform provides a better chance for SMEs to raise funds as well as increase their credibility," said Harshad Thakkar, managing director of Ashapura Intimates Fashion from Mumbai.
