Virendra Dugar, Director – Money Samadhan India Pvt. Ltd.
OPPORTUNITY & ADVANTAGE FOR SME COMPANY DURING THIS VOLITILE SITUATION
Due to trade war between US & China and Russia & Ukraine, we have seen the volatile market condition and will remain same in coming 6 months. Government and RBI have given series of guidance, stimulus & financial packages, relaxation in compliance and other benefits to SME sectors. Good news among all is that Finance Minister has given specific relaxation in payment of bank EMI, ad doc unsecured loan, structured short term loan and payment of PF of their employees.
Based on the recent developments in Indian Economy and global situation, there will be lots of opportunity and advantages to MSME and SME sectors due to following factors :
- Make in India concept by our Prime Minister and Second manufacturing hub to replace china by US president this lead to shifting of large manufacturing facility to India and give more opportunity for OEM and material suppliers along with many allied services. Industry plans to set up in India will be Bulk Drugs, Chemical, Electronic and Electrical Appliance, computers, stationery and toys.
- Government incentives such as moratorium period for 3 months for EMI, PF and employees benefits paid by government, Short term loan at lower interest rates to all and stress SME by SIDBI & bank to improve cash flows.
- Equity participation upto 15 % of total equity as Seed Capital and support to list on exchange to raise further equity for business expansion.
- Government plans to provide land and single window clearance to set up manufacturing facility in India.
- Raise fund from capital market by listing on BSE SME and NSE Emerge Stock Exchange. SEBI and Stock Exchange has relaxed listing guidelines for start up and enterprise promoters.
- Equity Fund raising cost has reduced for SME listing due to reduce in listing fees by Stock exchange. Merchant Bankers like Beeline Broking Ltd & Monarch Networth Ltd. has also plans to reduce their merchant banker fees upto 50 % for company plans to get listing by 2020.
To get the advantages in current situation when MNC plans to set up manufacturing hub in India, our promoters need to plan following to achieve the success in competitive environment:
- Create the management team with clear mission, vision & business policy
- Develop the Executives with power to perform and full authority to take decision
- Focus on efficiency and brand creation for quality products and services
- Develop the E commerce plate form and technology for MIS reporting
- To get listed on Stock exchange for more opportunity for JV, growth & visibility
Listing Advantage for SME Company
SME Company can achieve the following advantages by listing:
- Raise fund by Equity issue to part finance the long term business plans
- Unlock the enterprise value of brand, assets & goodwill of experience to promoters
- Retain the professional and key managerial person by offering Sweet Equity & ESOP
- Listing will give sense of compliance and reliability of information for strategic and angel investors
- During the globalization, more visibility and view of company for export, JV tie up and participate in global tender.
- Increase the net worth of promoters and enterprise value which support to raise low cost fund from overseas banks and line of credits from suppliers.
- Promoters equity shall be considered as additional collateral security by bank for loan
- Opportunity for company to get long term equity investment from suppliers, vendors and customers and employees to give sense to business and association.
We have seen that almost 600 companies get listed on BSE SME and NSE Emerges plate form.
Considering the above, there is lots of benefits and opportunity to unlock the networth by listing on SME Stock exchange. This will give competitive strength and power to success in present situation when many MNC and global players looking for opportunity for trade partners, Investment, JV and technology tie up.