Growth opportunities for MSMEs in the near future and readiness to tap those

7th November, 2013

By Smitesh Bhosale & Vishal Surve, Partners - VS Advisors

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It is just a two years back in September 2011 when the “SME exchange”platform was set up by Bombay Stock Exchange (BSE). After BSE, the National Stock Exchange (NSE) also followed to set up “Emerge” an SME trading platform. The BSE SME exchange went live in March 2012 with listing of BCB Finance and just a week back VCU Data Management become the 38th SME Company to list on BSE SME Exchange. More to our surprise the shares have been issued at 150% premium on the face value which is a great inspiration for other aspiring MSMEs.New fund raising options like SME exchanges provides platform to become an engine of growth for “deserving” companies to raise capital in an efficient manner. Further the recent guidelines issued by SEBI in October 2013 would help SMEs and start-ups raise capital from the securities market during their early stages of growth, which is a dire need for the sector.

Listed SME companies have been successful in creating handsome returns on investment for the shareholders and for most of the companies the returns are in 3 digits. Looks Health Services, an SME company has given 655% return post listing.

While currently SME sector contribution to GDP is estimated at 15% by the Ministry, the target is to raise the contribution to 22% of the GDP. This growth will be enabled through provision of quality capital to the sector.

Recognizing the importance of MSMEs in the growth of Indian economy, the Central and State Governments are undertaking several policy measures and incentives as well as implementing schemes and programmes for promotion and development of these enterprises. In India, the Ministry of Micro, Small and Medium Enterprises, is the main central authority which assist the States/UTs in their efforts to promote growth and development of MSMEs. It has been implementing several schemes/programmes and policies so as to enhance the global competitiveness of the MSMEs. Recently, over last one quarter, number of other initiatives have been taken by various Government Bodies, Associations in India and across the globe to foster the growth in the MSME Sector. Some of those are –

While the growth opportunities are immense, the companies in MSME segment need to be “deserving”. To become a “deserving SME”, the companies and their promoters have to ensure that-

Management commitment and holistic implementation of above recommendations will not only ensure that an MSME grows its business in a cost efficient manner and competitive in the market, it will also result into wealth creation from the stakeholders of MSME Companies.