Creating A Long Term Base

As an SME, what are the challenges that you have faced as far as business in general and finances in particular are concerned? 

Basically we are not a company which requires a lot of capital infusion into it as far as fixed assets are concerned. Our business is mainly dependent on liquid assets. Secondly, our business is about margins. Margin in the sense, working capital requirement is high in our case. We get this from the clients themselves. The norms of SEBI are such that we have to collect it from the clients so that we have safety on that front. So there have not been many challenges as far as finances are concerned for our business. We have been in the stock broking business for almost more than three and a half decades. So financing was never a problem for us as an SME. But getting clients was a problem because big corporatized broking houses have a far wider base as far as clients are concerned. So our main purpose for raising funds through this SME platform was to ensure that we get a level-playing field to compete with the big guns. 

You have recently listed on the BSE SME Exchange raising around Rs 12 crore of capital. What has been your experience in that regard? 

As far as raising money was concerned, it was never a problem for us because being in the capital markets for so long and the fact that we have a big client base, even in tougher times raising money has never been a problem. As far as BSE’s support was concerned, they were very good. We got very good guidance from them and they were very prompt in order to facilitate us to get the issue done. So we did not face any problems over there and raising money was easier.

What are the factors that you considered before going public through the BSE SME platform? 

Like I told you previously, we want to create a base for the next 5-10 years which would require a bit of a capital infusion as far as modernisation is concerned or as far as upgrading our systems is concerned or for that matter even for the purpose of opening various branches. So requirement of capital infusion was one factor that we considered before going to the SME platform. 

Lesser control and higher transparency is the paradigm on which public listing is based. Did you ever think about that being a disadvantage for a company like yours? 

No it is not a disadvantage at all. We are unlocking the value for the public at large. So that was never a disadvantage. As it is we are having around more than 51% holding in the company and we being Chartered Accountants, very well know that and hence diluting our stake in the company was not a concern. 

Are you satisfied with what the government is doing for the SME sector? 

As far as my business is concerned, what I have experienced in the last two decades as a broker is that, with the SEBI coming into action we have become more transparent and more advanced, technology wise and the rotation cycle in which we operate is very fast. Atleast for my sector, I can tell you that this is the best place to be in. In any business, there is a three month or four month credit period but in our business there is no credit period. Its a T+1 or T+2 principle that we operate on. So if on a T+2, I have to receive Rs 50 crore from the Exchange, I will receive it at 10.30 and if I have to pay any amount, I have to pay it by 10’ o clock. So, with that sort of discipline which SEBI has brought in our business, we are very much satisfied with how things are functioning. What bothers me is, the absence of retail investors in the market, and secondly the margin in our business. It has shrunk very much. That is why you can see many brokerages shutting their shops. In a way it is good also for the players who can bear the brunt right now. So that when the consolidation takes place, people who will stand up will be the people who will benefit from it. But right now these are the two factors which bother me a lot.