Listing – Dutch Uncles

The 5 P’s Of Listing Process On BSE SME

Aakash Sharma — Thu, 12 Aug 2021 03:35:08 +0000

The BSE SME is a trading platform created by the Bombay Stock Exchange (BSE) that provides an investor-friendly environment in which small and medium-sized enterprises (SMEs) can be listed as trading companies. Through this platform, SMEs under the unorganised sectors across India can access regulated and organised sector benefits.

BSE SME offers enormous opportunities for the following market parties:

Entrepreneurs: It increases capital for the development and expansion of their SMEs in a cost-effective manner.

Investors: It allows investors to locate and invest in excellent companies in the early stages and on the way out.

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Small and medium-sized enterprises are the backbone of the national economy. SMEs in India employ 106 million people through 63 million companies, 40% of the Indian workforce.

Listing Process on BSE SME – the 5 P’s

Planning

The issuing company consults and appoints commercial bankers as advisors.

Preparation

Commercial banks prepare the documents to be submitted according to the following points:

Perform due diligence on the company, viewing all financial records, including related contracts, regulatory approvals, sponsor information, etc., and

Planning the Initial public offering (IPO) structure, equity issuance and financial needs.

Process

The application procedures include:

Draft Red Herring Prospectus (DHRP) Submission – These documents are prepared by commercial bankers and submitted to the exchange and Securities and Exchange Board of India (SEBI) upon request.

Verification and Site Visit – BSE verifies and processes documents. Exchange managers visit the company location. The organisers are invited to a meeting with the management advisory committee.

Approvals – The BSE issues in-principle approvals based on the committee’s recommendations, provided that the issuer meets all requirements.

Filing of RHP/Prospectus – Commercial Banks shall send these documents to the Registrar of Companies (ROC) stating the date of issue and the start date. After approval by the ROC, they shall provide information on the exchange date and the necessary documents.

Public Offering

The IPO is opened and closed as planned. After listing and trading, the company sends documents to the exchange to complete the sales base according to the checklist.

Pillar Listing

At the end of the allotment, the BSE issues a notification of the import transaction. After entering the BSE SME exchange, the existing exchange participants can participate in the SME platform and trade SME shares. However, trading on SME exchanges is limited by the size of the counterparties.

COVID crisis and the existential plea of Indian SMEs

During the COVID-19 crisis, the BSE-SME exchange halved to Rs. 1.5 crore, which is the net tangible asset requirement for SMEs planning to list on the platform. During the first COVID-19 wave, the Ministry of Finance changed the companies’ ability to be listed on the stock exchange.

Of the compulsory three years of operations, a company was eligible to list if it had combined positive cash accruals (earnings before depreciation and tax) in any one year under the new rules. Previously, they had to show money deposited for three years.

How can small businesses benefit from the BSE SME Exchange?

The damage to the financial cash flow from COVID is unprecedented and has resulted in dramatic changes in the SME sector. At a time when commercial banks were reluctant to lend due to concerns about NPAs, the relaxation in eligibility norms for SME listing enabled leveraged SMEs to explore the capital market and survive an economic downturn.

Using the BSE SME Exchange, SMEs can step into the threshold of the BSE SME Platform and foray into the world of finance for further growth and development. BSE SME helps these SMEs raise their own resources for growth and expansion, thereby helping them to become mature companies. It also enables them to take part in the Main Board of BSE under the applicable rules and regulations.

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Start-ups Taking IPO Route: How Many have Turned Profitable?

Anju Nambiar — Mon, 26 Apr 2021 03:35:04 +0000

A whole bunch of Indian start-ups are now ready for IPO and some of them like Zomato and Barbecue Nation have already listed. India is clearly trying to create its own Nasdaq. Some of the earliest tech companies in India like MakeMyTrip and Yatra were listed in Nasdaq years ago.

We need to know what happened to these companies.

MakeMyTrip’s profits after IPO

MakeMyTrip was hailed as the industry leader of the travel and ticketing sector.

MakeMyTrip has seen a decrease of 60% revenue year on year. The decrease in revenue is mainly because of the ongoing impact of Covid since travel demand significantly reduced last year.

MakeMyTrip made a dream debut on Nasdaq and enjoyed a fairy-tale listing.

After the IPO, it was seen as one of the best companies to work for.

The company was growing at 50% p.a, and 2000 transactions were happening in a day for MMT. It had raised 320 crores on the Nasdaq when it went public in 2010. The IPO was clearly a success and MMT was profitable up until Covid broke out.

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The Happiest minds listing was stellar, and the company is reporting a net profit of rupees 45.3 crore which is up by 7.4% quarter on quarter.

JustDial profits after IPO listing

Justdial went public in 2013 and the IPO was one of the biggest of the year.

It earned more than 200 crore rupees by selling shares to Goldman Sachs India equity fund, HSBC Mauritius ltd, Birla Sunlife Trust co. Pvt. Ltd., and Deutsche securities Mauritius ltd.

After taking the IPO route, some of the highlights of Justdial’s growth and success were as follows:

In the early part of 2019, Just dial’s revenue was up by 15.9% in the 4th quarter of financial year 2019. It recorded an operating revenue of 2.3k M INR. The number of quarterly unique visitors for just dial applications stood at 31.1 M users.

But as with MMT, even Justdial’s operations were impacted by Covid-19. It’s a quarter to net drop to 38% in October of 2020. During the same time in 2019, it had registered a net profit of 76.94 crores but in 2020 due to the covid impact, profits dropped to 47 crores. This was a 38% decline in consolidated net profit.

Profitable IPOs you need to know

In 2020, more than 10 companies in India have taken the IPO route. Among the best performing IPOs, one of the successes is Happiest Minds Technologies which was listed on the 17th of September 2020.

The IPO of happiest minds came at the right time. It surged by 14% recently and the stock has soared by 96%. Their shares also hit a new high of rupees 675 on the BSE.

The Happiest minds listing was stellar, and the company is reporting a net profit of rupees 45.3 crore which is up by 7.4% quarter on quarter.

Indian travel company Yatra had gone public in 2016. In early 2021 in the month of February, Yatra’s Quarter 3 revenue increased by 70% because India’s domestic travel had regained momentum. This is for the current fiscal year 2020-21. There was a 17% quarter- on quarter improvement. This is a huge difference from other travel operators who were impacted due to the covid-19 pandemic.

Yatra’s adjusted revenue for the quarter stood at $8.3M which is a growth of 60.6% quarter on quarter but there was a fall of nearly 62% year-on-y. This is a common trend with all the travel segment companies.

Earlier this year, airline capacity and loads had improved. Revenues have definitely improved for yatra. This is due to the fact that it is more concentrated towards domestic travel.

The bottom line is that most of the start-ups which have taken the IPO route have been profitable not considering the revenue and operations impact of the Covid-19 pandemic.

What’s in it for me?

It has now become much easier for start-ups to list in India thanks to Sebi. Sebi made a lot of changes to the listing rules on the Innovators growth platform.

A lot of Indian start-ups are going public this year. Barbecue nation has already gone public. Flipkart, Zomato, Ola, Delhivery, Policybazaar, Freshworks, and Nykaa are some of the companies going public in 2021.

Sebi has relaxed the norms for listing of start-ups and there is also relaxing of rules for companies which are seeking to migrate to the main board from the Innovators growth platform. This move by Sebi is encouraging successful Indian start-ups to list in domestic markets since most Indian start-ups want to list abroad. It is paving the path for opportunities for Indian investors.

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Criteria for Startups Seeking Listing

Smruthi Krishnan — Sun, 07 Feb 2021 06:35:03 +0000

As startups start growing and scaling, they look forward to being listed on Bombay Stock Exchange (BSE) Startup Platforms, MSME Startup Platforms, etc. The ultimate goal of any entrepreneur is to make their startup get recognised, listed and push their company to the pinnacle of success. Bigger companies look forward to investing in startups that are listed which also provides Startup entrepreneurs more exposure and often an honourable exit. The following are the criteria to seek listing:

Sector Specifications: To get listed on BSE Startup Platform, startups should be in IT, ITES, Bio-technology and Life Science, 3D Printing, Space technology, E-Commerce, Hi- Tech Defense, Drones, Nano Technologies, Artificial Intelligence, Big data, Enhance/Virtual Reality, E-gaming, Exoskeleton, Robotics, Holographic Technology, Genetic Engineering, Variable Computers Inside body computer technology and other Hi-tech based companies.

Paid Up Capital: The company must be registered as a startup with the Department of Promotion of Industry and Internal Trade (DPIIT). If the company is not registered as a Startup with DPIIT then the venture’s paid-up capital should be a minimum of Rs 1 crore.

Track Record: The company or the partnership must have a combined track record of at least 2 years while filing the prospectus with BSE.

Post Issue Paid up Capital: The face value or post issue paid up capital of the company should not be more than Rs 25 crores. Investments by Qualified Institutional Buyer (QIB), Angel Investors or Accredited Investors for a minimum period of 2 years at the time of filing prospectus with BSE is preferred.

Net worth: The company must have a positive net worth.

Website: It is mandatory for the company to have a website.

Demat Securities: The company must facilitate trading in Demat securities and enter into an agreement with both the depositories.

Change in Promoters: Promoters of the company should not be changed in the year preceding the date of filing the application to BSE for listing.

Migration from BSE the Main Board: Several companies seek migration to the Main Board of BSE to push their success. It is necessary for the company to be listed and traded on the BSE Startup Platform for at least two years. Post this they can migrate to the Main Board according to the guidelines specified by Securities and Exchange Board of India (SEBI) and as per the procedures laid down in the Issue of Capital and Disclosure Requirements (ICDR) guidelines.

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