1 / 27

SME Primer

SME Primer. Privileged & Confidential. Outline. SME Listing – Background. SMEs – The backbone of Indian economy. Nation’s 1.3 million SMEs account for 40% of India's total exports. At 48 million, India is second to China in number of SMEs.

adin
Download Presentation

SME Primer

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. SME Primer Privileged & Confidential

  2. Outline

  3. SME Listing – Background

  4. SMEs – The backbone of Indian economy Nation’s 1.3 million SMEs account for 40% of India's total exports At 48 million, India is second to China in number of SMEs SMEs employ close to 40% of India's workforce & contributes 45% to India's manufacturing output SMEs are expected to drive the next-level growth of Indian economy provided they have enabling platform and avenues Source : Ministry of Micro, Small and Medium Enterprises, GOI This problem can be tackled through Capital Market SMEs face major problem of capital inadequacy

  5. Lifecycle of SME Valley of Death Less risky Very risky Pre seed Seed/Start up Early growth Expansion Funding Options

  6. SME Listing Background… • The move aims at providing an opportunity to SME entrepreneurs to raise growth capital and reap benefits of listed space • As per estimate of SME Chamber of India, over 5000 SMEs have the potential for listing • BSE and NSE launched their respective platform for SMEs; MCX too is gearing up for SME Exchange • Both BSE & NSE leverage their existing ‘equity platform’ for SME exchange platform • A facilitative framework for SME listing

  7. SMEListing– Evolution… • 5-Nov-08 • Jan-10 • 26-Apr-10 • 17-May-10 • 18-May-10 • 31-Dec-10 • SEBI lays down broad framework for SME listing platform • PM Task Force recomm-ends SME listing exchange • SEBI circular on Guidelines for market making • SEBI Circular rolling out model listing agreement for SMEs • Amend-mentsin SEBI Regulations (ICDR, Merchant Bankers etc. • SEBI Master Circular on SME exchange & Market Making • 19-Apr-12 13-Mar-12 • 21-Feb-12 • 14-Oct-11 • 5-Oct-11 • 27-Sep-11 • BSE Eligibility Norms for SME listing BSE SME Exchange launch • SEBI circular standardizing lot size for SME exchange • SEBI approval to NSE SME Exchange • Amend-mends in Listing Agreement • SEBI approval to BSE SME Exchange

  8. SME Listing - An Overview of Key Requirements & Eligibility Norms

  9. SME Listing - Key Requirements & Eligibility Norms Offer doc not subject to SEBI vetting Capital threshold for Listing Main board 25 Crores SME/Main Board Post Issue Face Value Capital 10 Crores SME Exchange Refer Annexure for key norms of SEBI ICDR

  10. SME Listing - Key Requirements & Eligibility Norms • Max : INR 25 crore • Min : INR 1 crore Post Issue Capital (FV) • Net Tangible Assets : INR 1 crore (as per latest audited results) • Net Worth (excl. Rev. Reserve) : INR 1 crore or 3 crore, if no track record • Track record of distributable profits for at least 2 years out of preceding 3 completed FYs Track Record • Mandatory facilitation of trading in Demat securities • Certificate that no winding petition or reference to BIFR • Mandatory corporate website • Promoters to attend to interview with Listing Advisory Committee • No change in promoter in preceding 1 year Refer Annexure for key norms of LA Other Requirement

  11. SME Listing - Key Requirements & Eligibility Norms • Same as BSE Post Issue Capital (FV) • Track record of at least 3 years • Positive cash accruals (EBDT) from operations and positive net worth for at least 2 FYs preceding the application • In case the above conditions are not fulfilled, Exchange Authority (MD & Joint MD) to decide Track Record • Same as BSE plus additional certification / disclosures on litigation etc. Other Requirement

  12. BSE SME vs. Main Board “SME Exchange has a winning edge over Main Board”

  13. Core Advantages of SME Listing

  14. Core Advantages of Listing • Easy capital & fund availability • Avoid diminution in value of business • M&A Currency • Better liquidity – entry & exit platform Others Tax Benefit Funding Convenience Core Advantages of Listing • No tax on LTCG • STCG Tax applicable @ 15% - reduced rate • No tax on equity infusion in the company • No tax on ‘distress business’ purchase • Enhancing worth • ESOPs – Talent retention tool • Visibility – Profile building • Governance - Internal systems

  15. SME Listing – Coming up in a BIG way…

  16. SME LISTING - Coming up in a BIG Way… So far, 50 Companies have been listed on BSE SME Exchange and 4 on NSE Emerge Exchange BSE SME Index Return of 229% in 2013 * Closing Price as on June 2, 2014

  17. Pantomath – Companion in Process Listing Assistance 4. • End-to-end assistance • and • hand-holding • by • expert & dedicated • Team – TEAM PANTOMATH Preparation of Offer Document Offer Management 2. 3. Pre-IPO Capital Restructuring and Preparation 1.

  18. SME Listing – Way Forward… 1 • Appointment of Merchant Banker • Restructuring of capital 2 3 • Due Diligence & Pre-IPO preparation Preparation of Offer Document 4 5 • Marketing Strategy Appointment of other intermediaries 6 7 • Filing of Offer Document with BSE & Others • Issue Pricing & Allocation 8 9 • Listing & Market Making

  19. Let’s Take It Forward…. CAPITAL ADVISORS PRIVATE LIMITED SEBI Registered Category I Merchant Bankers Progress with Values Corporate Office 108, Madhava Premises Co-operative Society Limited, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. Landline:(022) 26598690-91, Fax:(022)26598690 www.pantomathgroup.com Disclaimer All data and information is provided for informational purposes only and is not intended for any factual use. It should not be considered as binding / statutory provisions. Neither Pantomath Capital Advisors nor any of its group company, directors, or employs shall be liable for any of the data or content provided for any actions taken in reliance thereon.

  20. Annexures Pantomath’s End-to-end Services

  21. Phase- I: Pre-IPO Capital Restructuring & Preparation • Under the phase, we shall assist you in preparing for IPO and listing on SME Exchange. The services under this phase shall include the following : • Assistance in devising appropriate capital restructuring plan; • Assistance in statutory compliance management and setting up minimum corporate governance practices expected by a listed company from the perspective of the following rules / regulations : • Companies Act, 1956 • Listing Agreement applicable for SMEs • BSE listing norms • SEBI ICDR Regulations; • Assistance in appointment of market intermediaries and other parties including the following; • Underwriters • Market Makers • Registrars to Issue • Bankers to Issue • PR Agency, Printer etc.; • Assistance in devising a complete IPO plan and strategy including the likely post-issue shareholding distribution pattern.

  22. Phase- II: Documentation Preparation • We shall assist you in drafting of IPO Offer Document and other important agreements, documents and resolutions necessary for an SME IPO process. An indicative list of important documents is as under for easy understanding : • IPO Offer Document, • Tripartite Agreement with NSDL, CDSL and Registrar to Issue, • Underwriting Agreement, • Market Making Agreement, • Agreement with Bankers to Issue, • Agreement with Registrar to Issue, • Board / Shareholders’ Resolutions, • Certificates, Letters of Representations etc, • Draft of public advertisements, notices etc, • Forms / Applications to be filed with BSE, ROC and other regulatory office.

  23. Phase- III: Offer Management • Once all pre-IPO preparations would be over including meeting the eligibility criteria, appointment of other market intermediaries, and drafting of offer document, we shall initiate the actual process of IPO. Our services under the phase shall include end-to-end IPO activities : • Filing of IPO Offer Document with BSE and other regulatory offices like SEBI and ROC; • Follow-up with BSE and ROC for their approvals; • Coordinating and assistance in interview with SE Listing Advisory Committee, • Assistance in execution of agreements with other market intermediaries; • Assistance in launch of IPO and coordinate with other parties including PR Agency, Printers for adequate public advertisement, distribution of application forms as required statutorily; • Monitoring the flow of applications and keeping a real-time discussion with the management of the Company; • Coordinating with bankers and registrars for deposit of application moneys and finalization of allotment list in consultation with the stock exchange .

  24. Phase- IV: Listing Assistance • Finally, post IPO closure and finalization of allotment, we shall initiate the activities for listing of equity shares of the Company on SME Exchange. Our scope of services under this phase shall include the following: • Assistance in completing allotment of shares to the successful allotees, • Preparing listing application , • Filing of listing application with Stock Exchange(SE), • Follow-up with SE and obtain listing approval, • Assist in trading formalities and obtain SE’s trading approval, • Assist in making required public disclosures as required statutorily, • Coordinating for continuous market making for 3 years.

  25. Annexures Some Key Norms of Listing Agreement & SEBI ICDR

  26. SEBI ICDR As Applicable to SMEs • SEBI ICDR applies to SME listing with specific relaxations • Offer document requirements and eligibility norms relaxed • Appointment of Merchant Banker, and other intermediaries required • Lead Merchant Banker to the issue, • Rights , obligations and responsibilities relating to disclosures, allotment, refund, and underwriting obligations • Book building or fixed priced issue permitted • Lock-in conditions apply • 20% of post-issue capital to be locked in for 3 years; balance promoter shareholding to be locked in for 1 year • Non-promoter pre-IPO shareholding to be locked in for 1 year with exception to ESOP shares and shares held by VCF or FVCIs for more than 1 year pre IPO • Locked-in shares permitted to be transferred inter se promoters incl. new promoter(s)

  27. SME Listing Agreement • All SMEs getting listed need to enter into Listing Agreement (LA) with the relevant stock exchange. • BSE and NSE has adopted model LA released by SEBI. • Key Requirements include the following : • Half-yearly results (Audit / limited review) • Half-yearly shareholding pattern • Advance notice of Board meetings with specified agenda (e.g. dividend, bonus, buy back etc.) • In-principle approval for any further issuance of shares • Disclosure of price sensitive information • Annual report containing inter alia full financials, consolidated financials, related party disclosures etc. to be uploaded on corporate website • Full annual report to be emailed; Abridged annual report to shareholders not on email ids • Compulsory migration to main board after the cut- off ceiling

More Related