The Sector Is Bustling With Opportunities Both In The Business Domains And On The Stock Exchanges

Small-scale manufacturing, the backbone of Indian manufacturing sector, has been rightly identified as the source of employment generation and a nurturing ground for entrepreneurship and innovation. The SME sector is a significant contributor to the country’s GDP. The sector, making up about 95 per cent of the total industrial units in the country, employs over 106 million people and contributes over 45 per cent of the total Indian industrial output and 40 per cent of the total exports of India. 

The sector comprises of about 6.11 per cent of the manufacturing GDP, 24.63 per cent of services GDP and about 33.4 per cent of the country’s total manufacturing output. The sector is flying high on the back of government initiatives, including the implementation of Public Procurement Policy, Pradhan Mantri MUDRA Yojana, Make in India, Skill India and Startup India. The growing impetus on the sector and the buzz around it has further pepped up its growth projections. Contributing about 8 per cent to the GDP presently, the sector is expected to comprise nearly 15 per cent of the GDP by 2020. 

Battling with the lingering effects of the GST, the sector is catching up on its growth momentum on the back of dedicated policies of the government for the benefit of the MSMEs, increased infrastructure and defence sector spending and a spurt in foreign direct investment in the existing and emerging businesses in India. The SMEs are also well-positioned to leverage from the growing investments in India for global market requirements. 

The traction in the MSME sector is not only restricted to its growing financial prowess and profitability, but also to its presence in the Indian stock market. The SME stock exchange platforms established in 2014 have crossed over 200 SME listings till now. Despite a mandatory minimum lot size or trade value ranging between Rs 1 lakh and Rs 2 lakh for investments in SMEs, as per SEBI orders, the SME IPOs are increasingly drawing attention, with some of the IPOs attracting massive oversubscription. 

In 2017, the SME IPOs raised a record Rs 1,785 crore from the market, which was three times the fund raised by SMEs in the preceding year. The sector witnessed IPOs such as the Zota Healthcare raising Rs 58.50 crore and Euro India Fresh Foods raising Rs 51.26 crore. Some of the listed SMEs such as Meera Industries, Prime Customer Services and Trident Texofab have provided multibagger returns within a year of their listing. Although the SME stocks are volatile, these have been moving steeply upwards in recent times, in step with the Indian stock market rally. 

The SME stocks listed on the BSE SME platform or NSE Emerge platform have an option to shift to the main board of BSE or NSE, once the paid-up capital of these companies cross Rs 10 crore. Till now, BSE has witnessed migration of 44 stocks to its main board, whereas NSE has recorded migration of two SME stocks to its main board. While some of the SMEs that got listed on the main board in 2017 are yet to begin their upward stride, stocks such as Oceanaa Biotek, Akme Star Housing Finance, Mishka Exim, Karnavati Finance and Atishay have exhibited a striking upward trajectory since their listing. 

The sector is bustling with opportunities both in the business domains and on the stock exchanges. Despite the havoc wreaked by demonetisation and implementation of the GST, the SMEs have continued to remain a key segment by contributing significantly towards the growth of the Indian economy. The sector will benefit from a more convenient taxation system, improvement in ease of doing business and reduced operational costs and is, therefore, all set to capitalise on new business opportunities and reap the benefits of incremental sales and profits and attain greater heights in future. 

AJAY KUMAR THAKUR 
HEAD, BSE SME 

"SMEs Have Given Returns Of Over 19 Times!"

How many SMEs have been listed so far on your SME platform and how are they faring on your platform? 

There are 228 companies listed on SME platform till March 5, 2018. We have launched SME IPO Index on December 14, 2012 with 100 as base. Today, it is quoting at 1936. It means that SMEs have given returns of over 19 times. 

What have been the key reasons behind the phenomenal success of BSE SME platform? 

The key reasons behind the success of BSE SME platform are:
1.Mass awareness programme across the country along with various industrial and professional associations at the local and national levels.
2.Awareness through print and news media.
3. Deliberation with the promoters on one-to-one basis and also in group.
4. Transformation in the business and unlocking the value of the company post-listing motivates other promoters to come forward for listing. 

How many companies you expect to get listed on SME platform in 2018? 

We are expecting approximately 100 companies to get listed in the calendar year 2018. 

Under what conditions does an SME company migrate to the main board? How many SME companies have managed to do so? 

The companies can migrate to the main board two years after listing on to the SME board, subject to following conditions:
1.The post-issue paid-up capital of the company should be more than Rs.10 crore, subject to the approval of two-third non-promoter shareholders.
2. The market capitalisation of the company should be more than Rs.25 crore.
3.In case after two years the company's post-issue paid-up capital crosses Rs.25 crore, then the company has to compulsory migrate to the main board. 

Globally, is there any comparable SME platform ? 

Globally, there are many SME bourses, viz., AIM of London. KOSDAQ of South Korea, Chi Next from Shenzhen Stock Exchange are some of the examples. 

What are the common rejections faced by SMEs while attempting to get listed on the BSE SME platform? 

BSE has already defined the eligibility criteria for listing, which are as follows: 

1.Post- issue paid up capital should be minimum Rs.3 crore.
2.Net worth of the company should be minimum Rs.3 crore with a profit track record of two years out of three years, and in case it doesn't have a track record of two years of profit, then a net worth of Rs.5 crore.
3. Net tangible assets of Rs. 3 crore. 

PANKAJ KARDE
HEAD- INSTITUTIONAL SALES & SALES TRADING SYSTEMATIX SHARES AND STOCKS 

"There Is Growing Interest Among Institutional Investors In Sme IPOs"

How will you compare BSE SME platform and NSE Emerge with other global SME exchanges? 

SME exchanges have been pioneers for small companies throughout the world. Due to new Basel III capital requirements, smaller companies find it difficult to access bank finance. Improved access to finance was the important reason for listing on SME platform. The major difference between Indian bourses and global bourses is this reason. For instance, Indian companies list because it enhances creditworthiness, diversified the investor base and lowered the cost of funds, whereas other global companies list to position the firm for growth, improve brand and reputation and also lower the cost of funds. India SME market capitalisation is less than 0.5% of market capitalisation of the main bourse. The average market capitalisation of Indian stocks listed on SME exchanges are less than USD 20 mn. Globally, market capitalisation of some exchanges ranges between few million to few billion USD. India has multi-sector listings, with sectors listed such as construction, trading and financial services. Kosdaq, the largest SME exchange, on the other hand, has more than 60% of the companies engaged in IT, biotechnology and cultural technology. Indian SME exchanges allow graduation to main bourse after two years of post-issue capital is above ₹10 crore and a special AGM resolution is passed. For Kosdaq, for instance, there is no provision for graduation to main exchange. If SME companies meet the criteria of the main bourse, one needs to delist and get listed on the main bourse. Overall, Indian SME exchanges are still smaller in size and will grow only with time. 

What are the key concerns that SMEs have while getting listed on the SME platform 

The major issue is that SME promoters are not aware of the benefits of listing on the SME platform. They believe that one can get listed after the company reaches a specific scale on the main exchanges. The promoters are averse of compliance and they believe that SME requires lot of compliance, which is not the case. The promoters feel that they need huge networth to get listed. Now, any company having post issue face value capital between Rs. one crore to Rs.25 crore, with a net-worth of Rs. three crore and net tangible assets of Rs. one crore can get listed on SME exchanges. 

What sort of EPS growth are delivered by SMEs as per your research? How does their EPS growth compare with the small-caps? 

EPS growth depends on sector to sector and from company to company. But in broader sense, the EPS growth is upwards of 20% due to low base effect and access to growth capital. EPS growth is above average in most of the fundamentally driven companies. But I do not have data on cumulative growth numbers of SME listed companies. 

Should the retail investors invest in SME IPOs? 

Retail investors should treat the SME IPO as any other IPO. There are some companies which have excellent businesses, but are trapped for growth capital and are available at extremely cheap valuations. These companies bought today will go on to list on the main bourse in 2-3 years' time. Investors with a holding period of 2-3 years should definitely invest in SME companies. But one should do proper study of the company and the business it is in. Peer comparison with companies listed on the main bourse would help them analyse the valuation discount available. 

Are you seeing more and more investors enquiring about SME investing opportunities? 

I personally deal with institutional investors and I have seen growing interest within a set of these investors in SME IPOs. More and more institutional investors are now evaluating issues, specifically that are of the size of Rs.30 crore and upwards. The companies having established business and are in growth sectors are seeing investments by institutional investors.

MAHAVIR LUNAWAT
GROUP FOUNDER & MANAGING DIRECTOR PANTOMATH 

"SME Platform Provides Liberalised Framework To Tap Capital Markets For Growth Capital"

How many SME companies have you assisted in getting listed and, post-listing, how are they performing? 

We, at Pantomath have lead managed more than 70 public offerings on SME bourses, which is the highest by any merchant banker in the SME space, thereby capturing single largest market share. Notably, we have raised highest funds of approx. Rs.1,000 crore on SME bourses. SMEs listed by us represent diverse industry base, such as manufacturing, textiles, engineering, agro-based, chemicals, food processing, media and entertainment, construction materials, medical consumables, pharmaceuticals, IT & ITes, etc. based out of remotest areas of India. 

Talking about post-listing performance of SMEs, it is noteworthy that out of 133 companies listed in 2017, 39 companies closed at 20% upper circuit filer limit on the first day of listing. 

Since inception in 2012, SME markets have been gradually growing. S&P BSE SME IPO has clocked a CAGR of approx. 43% on a consolidated basis. Pantomath SMEX—30 has clocked returns at the rate of 83% CAGR for the last four years. A comparative analysis of market indices shows that SME companies have delivered highest returns. Various SME stocks delivered handsome returns, including Majestic Research Services & Solutions Ltd, Lancer Containers Lines Ltd, Shrenik Ltd, Lexus Granito (India) Ltd etc. (Based on past price performance. No futuristic interpretation or investment advice is construed). 

Some of the listed firms in the SME platform have migrated onto the main board. Most of them have taken themselves to the next level of growth like diversification, mergers and acquisitions, among others. This has created greater degree of awareness and interest among their peers. Additionally, superior returns posted by most of listed SMEs have led to large fund houses and HNIs adding them to their coverage universe. 

What are the key challenges in getting the SMEs listed on SME platform? 

One of the major challenge is the ceiling on post-issue paid-up capital. Currently, the issue paid-up capital of the company listed on SME platforms shall not exceed Rs.25 crore. The average size of SME IPOs is increasing with more number of larger IPOs coming on the SME platforms. Now-a-days, mid-size companies grown to some scale explore tapping SME capital market. It is heartening to witness IPOs of above Rs.50 crore on SME platforms. Several such companies have paid-up capital of more than Rs.25 crore, which are constrained currently as they may not command valuation of a typical main board issue. Even companies with paid-up capital of around Rs.20 crore may not find it feasible to explore SME IPO as their post-issue paid-up capital would be close to the capital of Rs.25 crore and it could be difficult to raise further capital until they migrate on to main board.

Another concern is for considering track record of company converted from non-corporate entity like proprietorship firm. SEBI ICDR Regulations are silent on continuity of non-corporate entities for the purpose of IPO disclosures. The benefit available to partnership firms for track record is not available to proprietorship firms that corporatise their businesses. This causes hardship for such businesses and discourages them from tapping capital market. The SME space in India is mainly occupied by proprietorship firms. Large number of sole proprietorships are unable to mine the advantage of IPO and listing. Proprietorships could avail the benefit of SME capital market if the benefit of track record can be extended to them. Qualitatively, conformation to accounting standards and consequent recasting of financial statements would provide an adequate check. It will also further the ‘Ease of Doing Business' campaign. 

What are the key concerns raised by the SME players who want to list their companies on the bourses? 

SME IPOs, by definition, are of small size and brought at relatively lower valuation considering the fact that most of companies are in the emerging stage. The SME entrepreneurs are required to dilute a significant proportion of at least 25% of their equity through initial public offer (IPO) and maintain the minimum public shareholding on a continuous basis. Due to the initial point of inflection at which the SME companies lie, such companies typically require growth capital at various levels post-IPO. A substantial dilution of equity capital pre-IPO and during IPO would limit the ability of the company to raise further capital. Therefore, it becomes critical for SMEs to balance between their funding needs and ownership pattern. Low promoter holding would reduce the confidence the investor would have in the company, considering the stage at which an SME company is. Further, low promoter holding would make the company vulnerable to potential takeover attempts. At present, in order to comply with minimum offer size/MPS norms, SMEs are compelled to dilute 25% of post-issue capital, even though they might not be in immediate need of funds of that magnitude. This indeed discourages many progressive companies from tapping SME capital markets. 

Another apprehension companies have is the threat of takeover by someone post-listing. India has robust takeover norms in place and no company can be acquired in a hostile manner generally. Moreover, for IPO and listing, the promoters are required to dilute minimum 25% stake and, therefore, they continue to own significant stake in any case. Therefore, promoters have some apprehension of hostile takeover post-listing. 

Often, entrepreneurs and management of emerging companies perceive that listing involves hefty compliances — both at IPO and post—IPO levels. Listing is perceived to be a costly affair, that too with humungous administrative hassles. A close look at the compliances for listing on SME exchanges as also postlisting compliances, however, reveals that SME listing compliances are significantly relaxed to facilitate more and more number of SMEs. At the same time, listing enables SMEs to lay down a minimum level of governance framework, professionalising their business affairs and thus providing sustenance to their business model. The compliances that involve cost such as preparation and publication of quarterly results in newspapers, circulation of annual reports in physical form, e-voting facility, etc. are exempted, very thoughtfully for SMEs. 

Are you seeing more and more SMEs approaching you for getting listed on the SME platform? 

Yes, till date close to 351 companies have been listed on SME bourses, out of which 133 companies got listed in 2017. Surpassing all previous records, a record number of 133 companies got listed in the calendar year 2017 as compared to 66 companies in 2016. This bears significance in the sense that the number of companies filing and getting listed on SME platforms increased substantially. SMEs collectively raised Rs.1785 crore in 2017, which is thrice the amount as compared to 2016. The average SME IPO size has increased by 1.64 times as compared to 2016, i.e. the IPO size increase to Rs.13.42 crore in 2017 from Rs.8.18 crore in 2016. 

Growing SME capital markets have addressed several myths and lent a lot of confidence to growing entrepreneurs. Although the SME businesses are at the initial stage of their business life cycle, the SME platform provides a much relaxed and liberalised framework enabling growing businesses to tap capital markets for growth capital. Intermediaries like us indeed play a pivotal role in the whole process of listing of shares on the SME exchange. It is the merchant banker who, along with other intermediaries, provides blueprint to the company for issuing shares on the SME exchange. 

With companies listed on SME platform becoming more established, investor base is also getting broadened. Moreover, with increasing number of SME stocks and greater returns thereon, more and more investors are getting attracted towards SME investing. Yet, investor participation in SME stocks has not reached the desired level, rather it has merely scratched the surface of the potential SME capital market possesses. 

As a concluding note, I would like to mention that SMEs will have to embrace the digital economy to explore the benefits accruing in the form of enhanced competitiveness, improved productivity, credit based on transaction history and greater transparency in their businesses. 

Post-GST, the unorganised and smaller businesses had to transform their business models, for good. Also, reduction in corporate tax rates for SMEs would further incentivise them to streamline their businesses. The unproductive tax planning structures have now given away and have converted to efficient business models resulting in increased output. 

 AMOL KSHIRSAGAR
VICE-PRESIDENT MERCHANT BANKING DIVISION ARIHANT CAPITAL MARKETS 

"SME Companies Offer 'Value Investing' Opportunities"

We are seeing that more and more SMEs are getting listed on SME platform, especially on the BSE SME platform. Why should investors look at SME stocks when there are so many quality listed stocks available on the main board? 

SME platform is a new listing platform available to companies that are not currently fulfilling eligibility criteria for listing on the main board. Like main board, the SME platforms of both BSE and NSE also have few high quality companies as well as other set of companies. In fact, many of the companies getting listed on SMEs could have been able to list directly on the main board, but for the changes in eligibility criteria brought about in 2012. The SME exchanges have seen listing of smaller but quality companies from across the industries, which are available on the main board and also ‘OEM' or ‘back-end supplier' companies to large companies. So, if an investor wants to be part of a growth-oriented story of a quality company, SME companies offer ‘value investing' opportunities. SME companies are not much researched or followed and this benefits a value seeker. However, one has to be very careful in his/her own research of the business and the quality of management of a company for the very SME platform has a history of about 4-5 years. However, of late,
there is a surge in the number of offerings, increase in average
size of issue and increasing investor participation. Accordingly,
only recent IPOs are considered for analysis which is summarised
belowsame reason of the company being under-researched. 

The reputation, history and credibility of the intermediaries associated with the IPO and the quality of disclosures in the Prospectus can be useful pointers in decision-making. The market dynamics or euphoria around IPO subscription/listing time may often lead to incorrect judgement. An investor in SME IPOs needs to consider the fundamentals of the business, growth prospects, integrity and ethics of management, balance sheet strength, objects of the issue and pricing as touchstones, instead of relying entirely on ‘market's word of mouth'.

Since most of the high quality companies aim to migrate to main boards in about two years' time and would become available for trading like any other main board listed company, SME platform should not become a deterrent if the company otherwise fits the investment criteria for an investor. 

Who should invest in SME stocks and SME IPOs? 

A value investor is an ideal investor for SME IPOs or SME stocks. The SME companies seek to accelerate their growth through public equity. These companies offer value but the realisation of that value may be a slower journey due to factors like inexperience of management about investor communication, difference in pace of execution of growth plans against high investor expectations; and most importantly, low liquidity scenario keeping away certain set of investors who value ‘high liquidity' as one of the important investment criteria. 

To summarise, investors who have the ability of stock picking, are looking for multibagger opportunities and willing to sit through their investments for 2-3 years should consider SMEs as their preferred investment destination. SME platform is now entering its next level where a lot of established companies of repute are raising decent amount of capital in their quest for accelerating their growth journey and could turn out to be an exciting place for investors. 

What are the benefits of getting listed on SME platform for the SME companies? 

There is a limitation of raising shareholders' funds and external debt beyond certain limits for every company. Public equity provides the company with growth capital, eases raising of further debt, and also as a listed entity, the company has many opportunities of raising further equity capital. As explained earlier, most of the SME companies, including high quality companies, may not meet the stringent eligibility criteria of listing on the main board. In such a situation, either the companies have to wait for significant period to achieve the eligibility threshold and continue with their existing pace of growth or to list on SME platform and take a big leap forward. 

By listing on SME platform, the company is able to advance its growth journey and this offers the value investors an important entry point in the initial phase of the company's growth journey. As such, these listings offer an attractive proposition for SME companies as well as SME investors.

What is the trend that you observe in SME sector, in terms of profitability, growth and RoEs ? 

SME platform has a history of about 4-5 years. However, of late, there is a surge in the number of offerings, increase in average size of issue and increasing investor participation. Accordingly, only recent IPOs are considered for analysis which is summarised below: 

SME platform is now entering its next level where a lot of established companies of repute are raising decent amount of capital in their quest for accelerating their growth journey and could turn out to be an exciting place for investors

Summary 

It can be seen that companies on SME platform offer value and have delivered superlative returns over the past one year. The average RoE and PAT margins are decent, but differ a lot on a case-to-case basis. Also, the performance and valuation parameters as reflected by the SME indices is superior than the main board small-cap indices. The above does lead to a conclusion that SME IPOs and SME stocks deserve a serious consideration by investors and stock-picking will be the key to wealth creation.

VINOD KUMAR JAIN
MANAGING DIRECTOR, SRG HOUSING FINANCE 

"We Are Aiming To Reach Rs.1,000 Crore Loan Book By 2022"

SRG Housing Finance is India's first company to migrate to the main board. How has been the journey from SME platform to the mainboard? 

It has been wonderful. This is just the start of the journey as I believe we have a long way to go. We listed the company at a very small size and we believe that it has turned out to be the best decision for the company. In the very first year of getting listed, we were felicitated by the BSE as one among the Top 3 Performers on the BSE SME platform. Post the IPO, we are being recognized in the market and also we are able to create value for the employees. Getting listed definitely has increased trust of various stakeholders in the company, be it NHB or our lenders. Recently, in the month of February 2018, the company has been awarded with "Fastest Growing Housing Finance Company of the Year" by ET Now BFSI Awards. 

SRG posted phenomenal Q3 results with over 416% increase in PAT. What has led to such impressive growth? 

Demand was always there in housing finance segment and it is still there. However, we were not able to meet the demand earlier as raising fund is a tedious task when we have small size and net worth. The raising of equity in fiscal 2017 doubled our net worth and helped us in raising debt from various lenders on favourable terms. This helped us in increasing our loan book by adding multiple sources of finance, along with increased number of branches and thereby increasing our profits. Although on a small base, the growth has been robust and we hope to continue the momentum in the years to come. However, the area of focus has been and will always be the quality of underwriting and not growth, just for the sake of it. 

The company's loan portfolio has increased 134% to Rs.155.07 crore in the December quarter. Do you think the company can grow at similar rate in the coming 2-3 quarters? What do you think your loan book will look like at the end of the year? 

I believe that we can grow even at a faster rate. The systems are in place, we just have to continue doing what we have already been doing. Without any aggressive expansion, we can grow the book multiple times. I expect the loan book to reach Rs.200 crore by end of this year. 

The housing finance industry has been doing well in recent years. What is your future growth outlook of the housing market? 

Housing finance sector is one of the safest segments in today's scenario. People are very attached to the house where they live, therefore, there is a low rate of default. We try to keep our loan-to-value (LTV) ratio minimum to avoid any sort of risk in real estate price correction. We are expected to continue in the same LTV range, along with small ticket loan of Rs.10 lakh. We are aiming to reach Rs.1000 crore loan book by 2022. 

What is your strategy for branch expansion? Do you plan to expand your presence outside north-west India? 

Our strategy to expand the branch network involves a thorough due diligence and market research done by our internal risk assessment team as well as our credit team. Although we are planning to expand at the pan-India level, we believe that current market segment where we are operating, which is Rajasthan, Madhya Pradesh, Gujarat and Maharashtra, have sufficient potential for growth. From these states itself, we hope to grow our loan book to Rs.1000 crore in the next 3-4 years. We will be expanding in other states only when we will see a potential market and/or to develop the market to cater future expansion plans of the company.

Raman Morzaria
Promoter & Whole-Time Director Karnavati Finance 

"The Company Got Huge Market Recognition After Listing On BSE Platform"

The company has been operating for over 30 years. Can you outline the journey of your company since you took over the reins in 2001? Also tell us about the challenges encountered while launching your SME IPO in 2015. 

KFL is the NBFC that was taken over by our group in April 2001. The company has since then aimed to become the foremost financial services organisation. Under Vraj Group's philosophy of nation-building, KFL aims to play a key role in inclusive growth by focusing on supporting medium and small enterprises through capital and industry best practices. Before our takeover, the company was operating in Mumbai alone having very limited customers. We have started our branches in the state of Gujarat and other parts of Maharashtra. We were fortunate to have a positive growth since takeover and had a smooth sailing for our IPO in 2015. 

The company has witnessed a turnaround in financials in the last one year. What were the steps taken to achieve the turnaround? 

After getting listed on the BSE platform, the company got a huge market recognition. People became aware about KFL and its business and we got excellent response in the area where we were not operating pre-IPO. The fund raised through IPO helped us in expanding our business. After entering into securities market, we have increased focused on our internal management and also formulated various business policies and frameworks to have a healthy growth. 

Please help us understand your growth strategy and expansion plans. 

To assess the market potential, KFL has adopted some approach such as conducting market assessment of products such as unsecured loans, loans against property, office equipments, vehicles loans, channel financing — based on market size, growth, profitability, competition intensity and ability of client to differentiate, and identified the focus products based on overall attractiveness. 

We are in the process of developing fintech model and our internal rating system will help us to enter the untouched market of the industry. Our core team has already started working on this platform, where some features will be linked to social media, banking habits, company management, etc. 

What are your internal growth targets and what are the key challenges to achieve them? 

We, as a core team at NBFC or in any ventures of Vraj Group; have always focused on costumer satisfaction and on long-term relationships. We are exploring new opportunities in domestic and international markets and have planned to establish international standards to take KFL to a different height. Our team is working efficiently on it and we are happy with the progress. 

What are the key advantages of getting listed on SME platform? 

The SME exchange is a platform made by the BSE in 2012. It is a phenomenal framework for the entrepreneurs. It is a popular concept worldwide where venture and angel investors can invest in an SME if it is listed on the exchange. 

SME platform has opened our door to get listed on the main board, and now, we are proudly part of the top 5,000 listed companies.

Mafatlal Jethabhai Patel
Chairman, Mangalam Seeds

"SME Listing Has Helped Us Achieve Great Credibility And Prestige In The Market"

Can you throw some light on the future expansion plans of your company? 

Mangalam Seeds Limited has launched new field crops and vegetable products and is planning to launch many more products. The new varieties are to be launched in fodder Jowar, fodder maize, castor, green gram, soyabean and wheat. 

The new varieties in vegetables include, hybrid okra, hybrid bitter gourd, hybrid bottle gourd, carrot, coriander, hybrid muskmelon, hybrid watermelon, cluster bean and cow pea. 

How has the company's listing on the SME platform impacted the company's growth? 

SME listing has helped us achieve great credibility and prestige in the market and enhanced the financial status leading to demand in our shares and higher valuation of MSL. It has also given us the opportunity for growth and expansion. 

Equity funding has helped us in planning to start a new state-of-the-art seed processing plant and plant tissue culture laboratory at Valad, Gandhinagar. This plant will help us to provide quality seeds and planting materials on time. This plant will have processing capacity of 5 tonnes per hour. MSL intends to purchase a land of approx. five lakh sq ft to cater to the growth expectation. 

What were the major challenges faced by the company during listing? 

The company had appointed reputed merchant bankers "Pantomath Capital Advisors Private Limited" and thus the listing process was a smooth experience for MSL. There are many challenges during listing such as wide disclosure requirements and financial reporting, the directors and top management are more regulated and face certain restrictions. 

The agriculture sector is expected to pick-up in 2018. What is your outlook on the sector for the coming quarters? 

We are closely associated with the Indian farmers and we are keen to be a part of the mission to double farmers' income. For that, we have increased our presence in India by starting business operations in northern and southern states of India. 

To cater to the demand of new areas having varied climatic conditions and thereby varied crops and varieties, we are focused on research activities to evolve novel varieties that will suit the new business areas. We have also planned expansion of our processing facilities accordingly. 

The company has a strong marketing channel in Gujarat and Rajasthan. How are you planning to expand it across India? 

MSL has strong network for marketing in Gujarat and Rajasthan. During the year, we have appointed various marketing teams and C&F agents at six new states to broad-base our business and operations, namely, Indore-Madhya Pradesh, Hubli-Karnataka, Sirsa-Haryana, Lucknow-Uttar Pradesh, Delhi, and Guntur-Andhra Pradesh. MSL is also planning to expand operations on a pan-India basis and across the globe. 

The company's profits have steadily increased over the years. What are your internal growth targets for FY18? 

We are expecting to close FY2017-18 with turnover of Rs 34 crore, with an increase of more than 13 per cent. With increase in area and products, we are targeting growth of 20 per cent in the next financial year.

Rohit Gupta
Managing Director Sarveshwar Foods

"We Are Expecting Very Robust Growth For Both Our Businesses"

Your business is working capital intensive and insufficient cash flows or inability to borrow funds may adversely affect your business and operations. How does the company manage this risk? 

Paddy needs to be aged before being processed and from manufacturing till final despatch, it operates with larger working capital cycle. We are working in two directions, first focusing on fast growing steam rice products with lesser requirement for ageing the paddy, which will shorten our overall working capital cycle and therefore there would be no need to infuse additional large funds into the business. 

Secondly, the company has also forayed into organic business of rice and other products, viz., dry fruits and nuts, pulses, lentils, flours, porridge, spices, garam masalas and super foods like chia seeds, flax seeds, quinoa seeds, etc., which do not require any ageing or longer inventory holdings. Therefore, in future growth, the company's overall working capital cycle will improve and so will the margins. 

How is the market for your organic products growing? 

Organic products across developed countries are growing rapidly. In India, the organic market is at a nascent stage of the overall food market and, therefore, the scope of growth for the organic products is quite huge. At present, our organic products are growing at about 30% per annum. 

The company exports to the US and countries in the Middle East and Europe. Which region is your biggest export market? How do you plan to further increase your presence abroad? 

The US is our main export market. We are also penetrating into European markets, as the demand for organic products is very high. Since we have started doing marketing of our organic products very aggressively, we are adding more countries to our business operations and that will eventually take our overall export turnover to the next level in a very short span of time. 

Sarveshwar has the distinction of being on of the few Indian companies with presence across the entire rice value chain. What is your growth forecast for the company in the next 3-5 years going ahead? 

We have started this entire rice value chain in the year 2007 when we put up our first mega rice-processing unit at Seora, Jammu, with capacity of 6 MTS per hour. The process was continued with set up of second unit at SIDCO Jammu, with capacity of 8 MTS per hour. After that, we have never looked back and grown our business in all the direction, with expansion in overseas countries for export business and forayed into organic business as well. 

We are expecting very robust growth for both our businesses, i.e. conventional rice business and organic business. Our estimates are that we will grow about 20%-25% CAGR in the next 3-5 years from hereon, with the added tonic of equity funds we have just received from our initial public issue.

Ashok Kumar Agrawal
Chairman & Managing Director RMC India

"Once All Our Products Kick-Off, There Will Be No Looking Back"

What is your outlook on the Indian electrical equipment industry? Is T&D expected to reflect higher growth than the generation equipment?

 Presently,the Indian government's push on Infrastructure development will have a significant impact on all the related industries and energy will not remain untouched by it. Out of the 13,523 villages electrified in India, only 1,089 villages have got household connectivity (as on end of May 2017). This tells about the scope of the electrical equipment industry in India. 

Assured availability of quality power at a reasonable cost is not only a catalyst in the social and economic development of the country, but also increases the global competitiveness of the industrial sector leading to enhanced employment generation and per capita income. 

For example, with the drive of "Make in India" campaign, our government is trying its level best to enhance manufacturing capabilities in India,but without quality power, there will be no growth. 

Apart from the above, there are some direct schemes like IPDS for strengthening the currently laid lines and DDUGJY for providing power to the small villages and we are working to ensure power to all by 2020. But, according to me,the target will be achieved by 2030. 

It gives us pleasure that our government has done a commendable job by providing quality power as compared to the other developing nations and it is progressing by leaps and bounds. The Indian electrical equipment industry is currently seeing its best time since inception.

Transmission and distribution (T&D) are definitely expected to touch higher levels of growth than generation, because we are lucky that our nation is able to produce more power than the demand. So, definitely, the government will emphasise more on transmission and distribution.

Which are the major export markets for your company? 

Thanks to the consumption of our capacities in the domestic market, we haven't really focussed on exports till now. However, we have enquiries from many countries which are looking to tie up with us. We may target Africa, Middle East and South-East Asian countries, apart from neighbouring Bangladesh and Sri Lanka in the near future. 

Who are your big clients and how dependant are you on these big clients for revenues? 

Our clients include the state utilities and the turnkey contractors and there is no dependence on a few clients for the business. The revenues are evenly spread amongst various states. But yes,we have presence in almost 20 states in India and we are currently working with almost all the turnkey contractors who have undertaken jobs of the various government schemes. 

It is worth mentioning that with our vast product range and supply capabilities, our company is one of the essential names to be on the vendor list of any state utility or any turnkey contractor. 

Which are your star products that are in high demand? How is the demand for SMC enclosures in today's market? 

Basically, we are the pioneers in enclosures and we are the only one in the country to offer enclosures in all types of materials like SMC, deep drawn,polycarbonate and fabrication. Since we manufacture customised enclosures as per the technical specifications of our customers, we don't have any star product, but we have a dedicated tool room and R&D Centre where we design the product with our most efficient engineering techniques and develop the product as per the customer's specifications which makes us a "star partner". Our USP is large quantities at reasonable prices with a complete basket of solutions. 

How are various government initiatives helping your company grow directly or indirectly? 

We are dependent on both Central and state government schemes and initiatives. Over the past 10 years, the Government of India is emphasising on the growth of the power industry by introducing various schemes like RAPDRP and RGGVY, which was renamed to IPDS and DDUGJY. They have recently initiated the Saubhagya Scheme, which will definitely help our company to grow multi-fold in the coming years. 

We expect good numbers this year and in the coming years and we expect a CAGR of 30%-40% as compared to the industry standard of 20%.

Which are the fresh opportunities that your management is actively seeking to monetise? 

Recently, we have diversified into a new business line in the infrastructure industry under the brand name of "Lamina", where we have started manufacturing new products like PVC marble sheets. We will be among the handful of companies to manufacture solid acrylic surfaces in India, which is currently only imported from China and Korea and some western countries. As an organisation, we are dedicated to the government's initiative of "Make in India". In our power sector division, we would be soon announcing our new venture which will change the level of our company. 

What are the key risks for your industry? 

The way our industry is becoming more capital intensive by the day, I feel the availability of low-cost capital is a great challenge. Apart from this, there are always compliances and regulatory risks from various authorities when you run an industry in India. I strongly believe that the political intervention is also too much when it comes to the promises of demand and supply of electricity without any proper infrastructure. I would also like to emphasise on the lack of talent available in this industry. Lack of skill development policies also hamper the strong growth of this industry, which needs to be taken care of as early as possible. 

"Since we manufacture customised enclosures as per the technical specifications of our customers, we don’t have any star product, but we have a dedicated tool room and R&D Centre"

How has been the EPS growth for your company in the three previous years? 

Luckily, we are able to achieve steady growth. Our EPS in 2014-15 was Rs 4.28, in 2015-16 it was Rs 0.51 and in 2016-17, the EPS was Rs 3.50 (the number of shares were increased in 2016-17) 

What are your internal growth targets in terms of revenue and profitability? 

We are confident of achieving 30 to 40% CAGR in the upcoming 10 years and once all of our products kick-off, then there will be no looking back.

Sachin Sridhar
Founder & Managing Director Starlit Group 

"The Company Is Targeting Triple Digit Growth In The First Few Years"

What is your outlook on lead-based product manufacturing in India? What are the growth challenges faced by the industry? 

The battery Industry is on an upswing. With greater usage of storage power (batteries) for mobility, cars, e-rickshaws as the primary fuel replacing petrol, diesel etc., the Industry is bound to see great growth. Additionally, the growing usage of solar power is adding to the demand. The prospects of lead, which is the primary raw material for batteries, will improve accordingly. For a company like Starlit Power Systems Ltd (Starlit) which is an integrated unit manufacturing lead, a raw material, and batteries, a finished product, the prospects look even better. That said, the growth in the industry is also seeing alternate battery technologies coming into play. That will be a growth challenge and in order to respond to it, the battery companies will have to be very technology flexible . Keeping this in view, Starlit has also started making forays into lithium batteries. Our overseas JV partner Dynavolt, which has a large state-of-the-art lithium battery plant and R&D unit in China, is extending the required support to take the transformation to newer areas of storage power forward. 

What are the expansion plans of your company? 

The company has dual objectives. One is the maximum utilisation of its existing capacity of lead and battery manufacturing facilitiy. Second is to set up a new lithium-based packing and R&D unit so that the company has a head start to welcome the new era of mobility which the government is promoting energetically. Our international tie-up with Dynavolt gives us the edge in this field. With growing electrification, all vehicle manufactures will need help in battery design, help in product validation and the product itself with requisite features, warranties and service. We are readying ourselves for that, and with this, the company for the next few years has made a plan to achieve triple digit growth. 

How has the SME listing impacted company's growth over the years? 

The SME listing has helped us by making sure that our internal processes are of requisite standards. It has given the company the visibility and also kept our corporate governance at a very professional level. Going forward, it will help us in scaling up and in resource mobilisation. The disclosure mandated for listed companies also give comfort to the technology and overseas partners to invest and participate with the comapny.

 What are the company's internal growth targets for the coming fiscal? 

The company is targeting a triple digit growth in the first few years as we utilise the capacity fully and enter into newer cutting-edge areas. The low base effect of an SME also helps us to achieve the targets and be on a high growth trajectory.

Kaushalkumar S. Gupta
Chairman & Managing Director Bansal Roofing Products

"The Market Share Of Bansal Will Increase Substantially In Coming Years"

How has the company's SME listing impacted its operations over the years? 

Due to the listing of company on the SME exchange, the image and reputation of the company improve in the market. The trust of client is increased and the company has got more customers in India and abroad. It is now easy to deal with financial institutions because the compliances are complete and the required documents are available on the shelf. The employees of the company also feel proud to be a part of a listed company and a fine staff is with us. We now have the habit of doing work systematically and a discipline at all the levels has been established. 

We also feel that now we have to perform and prove ourselves. While taking decision, we have to consider the benefit of hundreds of shareholders who trusted the company. Now, the company belongs to many and not to one and decision makers feel more responsible than earlier. The net worth of the company increased substantially and this gives us boost to perform better. 

What have been the significant growth drivers for your company? 

The significant growth drivers are: From Rs 171.5 mn in FY13, the sales turnover is expected to increase to Rs 320.9 mn in FY18. This could be achieved because of wide range of quality products. Bansal is a company which manufactures almost 95% of PEB products in-house and has no dependency. The company has good brand image, timely supply and excellent service after sale. It has extensive and cost effective manufacturing facility and is a one stop solution for all roofing products, pre-engineered building. The company is rated as MSE-2 by CRISIL which shows high operating performance and highest financial strength. It participates in national, international exhibitions to promote products and continues innovations in PEB and other products. 

How is the roofing industry expected to perform in the coming quarters? What are the major challenges faced by the industry? 

Growth in infrastructure is the base of any economy. Our product, namely, pre-engineering building and roofing products are infrastructure products. These products will always be in demand, either in the replacement market or a new development. The expected demand of our product is approx. 1.5 mn tonnes per annum in the state of Gujarat only. In the coming quarter, Bansal's performance will be much better as we have spare capacity to utilize. No capex is required in the short term. We are giving full attention on growth only. 

The implementation of the GST and demonetisation were major challenges which are now over. The company's performance was slightly affected because of this, but it recovered as it was accepted well by the industry overall. Other challenges are volatility in raw material prices. The steel prices are continuously getting tight. We hope and trust that it will become stable at some price now or else infrastructure growth will be hampered. 

The company has also forayed into pre-engineered buildings industry. What is your opinion on the prospects of the industry in India? 

Making pre-engineering building was the dream of Bansal, which has come true. We have completed more than 25 buildings since we started manufacturing of PEB. This includes warehouses, processing industries, showrooms, manufacturing units, marriage halls, etc. 

What has been the EPS growth of your company over the past three years? 

The EPS growth of the company over the past three years, i.e. from 2014-15 to 2016-17, is approx. 48.53%

Rajesh Bhatwal
Managing Director, Nitiraj Engineers

"Rural India Is Set To Emerge As A Potential Demand Source For Weighing Machines"

The company has seen tremendous growth over the past 10 years. Kindly share with us the journey to getting listed and the benefits derived from it. 

The journey has been really great in terms of our growth and social responsibilities. We are now primarily engaged in the manufacture and sale of wide range of weighing scales. Our product portfolio range caters to both industrial and domestic consumption. Our company now produces more than one lakh scales per year and have more than 10 lakh customers. We have been catering to customers' evolving needs effectively and have a wide product range with well-connected sales and service network of 13 branches and over 430 dealers. Domestically, though we face competition from several Indian manufacturers. We believe that there are no listed companies in India which are engaged in the same business with an equivalent product mix comparable with that of our company. We are going to start a new manufacturing plant in Dhule to be well-supported because of IPO. So, getting listed on the exchanges has been a great experience and we believe we get the benefits from improving brand equity and market exposure. 

What is your outlook on the weighing machine industry for the coming fiscal? 

The outlook for the weighing machine industry is very positive for FY19. The government has allocated total budget expenditure of Rs 52,800 crore for FY19 for health and family welfare, which is about 11% increase over the last year's budget target for the segment. The expenditure towards Centrally sponsored schemes, which account for over 60% of the government's total health budget, stands at Rs 32,130 crore for FY19. Weighing scales have an important application in government programmes like Integrated Child Development Services. There is a significant scope for enhancing healthcare services in rural areas considering that healthcare spending as a percentage of GDP is very low as compared to other countries. Rural India, which accounts for over 70% of the population, is set to emerge as a potential demand source for weighing machines. 

The company has largely benefited from the increasing demand of weighing machines at Aanganwadis.? 

The demand from Aanganwadis has been really encouraging and the outlook looks promising for the period going ahead. Integrated Child Development Services is a welfare programme by the government which provides food, pre-school education, and primary healthcare to children under six years of age and their mothers. These services are provided from Aanganwadi Centres established mainly in rural areas. As these Aanganwadis lack proper measures to weigh infants and children, the government aims to replace all the manual weighing scales with the electronic weighing scales, and also other products like Infantometer and Stadiometer which we are going to manufacture. With Aanganwadis being set up in small villages and towns, this will lead to a rise in the number of Aanganwadis and generation of good demand for electronic weighing scales. We are developing special model for PDS (Public Distribution System) and agricultural market committees. We look forward for business growth in this segment during the next fiscal. Apart from different categories of weighing scales, we are present into special application indicator machines, currency counting machines and taxi and rickshaw fare meters. 

What has been the driving factor for the growth so far and what is your growth outlook for FY19? 

Obviously, increasing awareness in terms of obesity and malnutrition in rural and semi-urban areas have been one of the key driving factors for our growth. Apart from the government support and focus in healthcare area, our focus on marketing strategies have also helped us in our growth. We have increased our geographical reach by entering new states, appointed additional dealers and agents in developing markets, increased our participation in local trade fairs, exhibitions and other such events, enhanced brand image through increased spend on advertisements and other promotional activities. We supply our products under the brand "Phoenix" through our large network of dealers to our customers in India as well as abroad.

Soumen Chaterjee
Director, Guiness Securities 

"Smaller Size And Entrepreneurial Passion Enable SMEs To Be More Productive"

What are the risks of investing in SME stocks? 

The first point that an investor sees before investing is the promoter of the company. Investors view SMEs as risky investments because they lack information about these companies- its promoters, business model and credit history. Listing on the SME exchange increases the visibility and coverage, which enables more credible information available to investors. SME platform also provides immense opportunity for investors to identify and invest in good SMEs at an early stage. Meanwhile, the lot sizes of SME stocks are huge, so every investment has to be worth Rs 1 lakh and its multiples, which mostly keeps retail investors away. Moreover, there is less liquidity in this platform, so one may has to wait to get good returns for a long period. 

Are you seeing more and more SMEs willing to get listed on the bourses? In your view, what is the reason behind such optimism? 

The SME platform of exchanges is a new platform for small and medium-sized companies with high growth potential. SME platform provides an efficient route for SMEs to increase their worth more than just capital plus reserves. Listing provides an opportunity to the corporate entrepreneurs to raise capital to fund new projects, undertake expansions, diversifications and for acquisitions. There are many tax benefits available on listing, like there is no tax on equity infusion in the company, on distressed purchase of shares and on buyback of shares. 

Apart from easy access to capital and financing opportunities, SME also benefits from business branding--indirect coverage/ advertising for both the company and its goods and services. 

How does one benchmark SME investments for performance evaluation? 

Investment should be benchmarked and evaluated vis-a-vis 
BSE SME Index 
NSE Emerge Index 
Nifty Smallcap 

How are global listed SMEs performing versus Indian listed SMEs? 

World over, governments have recognised the role and importance of the SMEs in their economy, which have become silent drivers of economic development. The biggest challenge being faced by these enterprises is access to capital. To overcome this, almost all major capital markets have realised the need for a separate exchange for SME segment. More than 20 countries operate separate SME bourses. These markets have tried to create a SME-friendly market architecture supported by effective institutions and forging links to policies that foster a new class of investable equities. 

Which are the top three reasons you think SMEs should list themselves on either BSE SME platform or NSE Emerge? 

Wealth Maximisation: The value of the company gets unlocked as it may rise as much as the price of their share, which enables the opportunity to raise capital for expansion, as well as the possibility of realising some of the investment. In a nutshell, listing provides SMEs with the benefit of greater credibility and enhanced financial status leading to higher valuation of the company. 

Operational Benefits: The listed companies use their shares, as opposed to cash, to make acquisitions. Listing of shares in a stock market contributes to indirect advertising and enhances visibility of the company and its products. 

Reduces Cost of Borrowings: Listed SMEs attract better credit rating and enjoy lower rate of interest which reduces cost of borrowing. 

What are the initial reservations that most SMEs have while getting listed? 

The initial reservations that companies have are interference in day-to-day management, takeover threat and dilution of the management control and increased compliances.

Nirmal Kumar Jain
Founder and Director Akme Star Housing Finance

"Affordable Housing In India Is Set For A Big Boost In Govt Funding"

When did Akme Star Housing Finance list on SME platform? What were the challenges faced while listing your company on the BSE SME platform? 

Akme Star Housing Finance Ltd got listed on the BSE SME platform on March 20, 2015. The company's vision was very clear when it commenced the process for listing as it was a very big opportunity to boost the company's business and expand its investor base at a much lower cost as compared to the main board listing. 

The company did not face any harsh challenge as the BSE norms were not as stringent for SME listing and also, at the time of listing, the documentations, compliances and other processes were smoothly carried out with the help of our merchant banker, resulting into the timely listing of the company onto BSE's SME Board. 

Why did you choose to get listed on SME platform? 

The SME Exchange is a good platform for small and mediumsized companies to raise capital and, in turn, expand its investor base at a lower cost. It is very cost effective to get listed on the SME Exchange instead of the main noard, The SME listing enhanced the company's visibility and helped improve its profile and credibility and further equity financing reduced the debt burden, leading to lower financing costs and a healthier balance sheet. 

SME Exchange helped the company to create a brand identity and boosts the confidence of its stakeholders. The listing leads to better and timely disclosures and thus also protects the interest of the investors, thereby creating transparency in the functioning of the company. The equity listing enables liquidity for shareholders. 

What is your EPS growth in last two years? 

During the year 2016-17, the EPS has been Rs 1.19 and recorded a growth of 23%. The EPS during the last three years is tabulated as under:

During the year 2015-16, the growth in the EPS declined on account of 1:1 bonus issue. However, effectively it is Rs 1.94 and, thus, there has been growth of 28%. 

What are your internal growth targets? What is your view on growth prospects for affordable housing market? 

Till 2015-16, the growth of the company was stagnant. During the year 2016-17, its portfolio increased by 30%. The business performance during the last three years is tabulated below: 

With the increased sentiments in the affordable housing segment, the company has set disbursement target of Rs 42 crore during the current year as against disbursement of Rs 8.85 crore achieved during the previous year. Till Feb. 2018, the company has disbursed Rs 28.35 crore and it is likely to achieve disbursement of Rs 35 crore by the end of March 2018. With the increasing sentiment and whopping demand in the affordable housing segment, particularly in the rural areas, the company has set an internal disbursement target of Rs 54 core during the year 2018-19. 

A lack of affordable housing has become a major issue in countries around the world over the last decade. According to industry estimates, India requires more than 18 million new housing units, with a majority of the demand in the affordable segment. The government has sought to address shortfalls with extra funding and tax incentives. 

To narrow down the demand-supply gap in the affordable housing segment, the Government of India had launched Pradhan Mantri Awas yojana PMAY-URBAN in 2015 (Housing for All by 2022). Based on the demand assessment at the state level, the nation has the mammoth task of constructing about 12 million houses under EWS/LIG groups of the society in order to achieve the goal of housing for all. 

Still India has a long way to go to reach the target, while states have their own plans in place to address the housing shortage, challenges such as controversy around the land acquisition, execution hurdles and regulatory bottlenecks often result in time and cost overruns.

Over the last three years, the Indian government has been targeting growth in the housing supply. Several reforms such as incentives to low income group, conferring of infrastructure tag to affordable housing segment and interest subsidy scheme have resulted in a sharp rise in new housing projects in the affordable segment. 

Affordable housing in India is set for a big boost in government funding, a move that could lead to greater investment in the supply-starved sector. In the Union budget 2018, the finance minister has announced a dedicated affordable housing fund that aims to boost construction, especially in the rural areas. The announcement was aligned with the ongoing government efforts under its ambitious programme of Prime Minister Awas Yojana (PMAY) to provide more abodes for people in the low income category. 

The fund will be utilised to refinance the housing finance companies and banks engaged in the development of affordable properties. With better credit facilities available, more companies developing affordable housing projects could enter the market. 

The PMAY will provide 51 lakh houses during the year 2018-19 exclusively in the rural areas. The government has sanctioned funding assistance to build 37 lakh houses for the lower income group and economically weaker sections. 

In view of the huge demand-supply gap in the affordable housing segment, the priority accorded by the Central as well as the state governments, various incentives are provided to the buyers and builders in this segment by the government. 

The infrastructure status to affordable housing segment would result in lower borrowing rates, tax concession and flow of foreign and private capital. Some of the announcements by the FM that would further facilitate investment in the sector include, among others, profit-linked income tax deduction, relaxation on tax for vacant/unsold units for one year; and counting of the carpet area instead of built up area of 30 and 60 square meters for the affordable housing segment. 

These will be effective in spurring the housing and construction activities providing huge relief to the real estate developers. These would attract private and foreign investments in the housing sector having a positive multiplier effect on the GDP and the labour market. The new funding scheme announced during the budget will go some way to making further gains. The segment is offering a large untapped market in the medium term. 

Tejas Goenka Executive Director Tally Solutions

"SMEs Are Always Ready To Adopt Technology"

Kindly tell us about your product and how is it likely to benefit SMEs improve their efficiency? Any kind of technology brings in efficiency to a business, helping automate repetitive tasks, business processes, analysis, etc. But for the small and medium-sized business, this has not been easy, since most technology is made in a rigid manner – requiring the businesses to adapt to this technology. In the last 30 years, our focus has continuously been to create those technologies that adapt to a business and not the other way around. Our focus has been on building accounting, inventory management, compliance and payroll software to help small business owners work more efficiently and enjoy running their businesses. 

Will it be correct to say that the SMEs are slowly becoming technologically savvy. What can be done to accelerate this process? 

We think SMEs are always ready to adopt technology. The problem hasn't been on the SME front, it has been more on the technology manufacturer's side. If you see the accounting software space itself, almost 90% of those who could run their business better with the software have already adopted such a software, but the same isn't true of the retail PoS space.

Another example is that of the smartphones – this too is now extremely prevalent across all businesses. So the problem isn't about SMEs becoming technologically savvy, more needs to be done to bring in innovation in this area so that the SMEs actually find technologies easy to adapt.

We think SMEs are always ready to adopt technology. The problem hasn’t been on the SME front, it has been more on the technology manufacturer’s side. If you see the accounting software space itself, almost 90% of those who could run their business better with the software have already adopted such a software, but the same isn’t true of the retail PoS space.

In your view, how has the implementation of GST impacted SMEs? 

The implementation of GST has obviously had a huge impact on the Indian SMEs, despite us not having completed one full cycle of GST yet (we have still not completed the invoice matching process yet). We have seen that SMEs are very eager to learn about how GST can positively and negatively affect their businesses. Most have struggled with the process of filing till now, but once these corrections are made and the process is simplified (and a lot has been done in the last couple of months), GST can be very beneficial for all businesses.

Sanjeev Mittal Promoter Director Dhanuka Commercial 

"NBFCs Are Playing A Significant Role By Focusing on SMEs"

How has the company's listing on the SME platform in 2014 impacted its growth and operations over the years?

 Going public has provided the company with equity financing opportunities which led to the growth of business - from expansion of operations to acquisitions. The public issue of shares has expanded the investor base and this, in turn, has helped us to set the stage for secondary equity financings, including private placements. 

It has enhanced the company's visibility as a result of which we are now having a more diversified group of investors. Listing on the SME platform has provided market for the company's shares which, in turn, has increased the market liquidity of the company's shares.

What is your outlook on the NBFC industry? What are the risks and challenges faced by the industry? 

We are having a very optimistic outlook on the NBFC industry. NBFCs have shown increasing growth in the last ten years and the growth is expected to continue in the near future as well.

Recently, both the regulator and government have been maintaining a favourable stance towards the sector,starting with the latest announcement, where SME loans up to Rs20 million by NBFCs will be covered under the CGTMSE guarantee and the government notification, covering systemically important NBFCs under the SARFAESI Act. These measures would further strengthen the NBFCs ability to lend and mitigate loss on account of defaults even while speeding up recovery timelines.

Accordingly, NBFCs are playing their part by meeting the diverse financial needs of the economy. NBFCs have channelised the savings and investments of the customers and have helped in capital formation. By focusing on the small and medium enterprises (SME) sector and stimulating microfinance, NBFCs are playing a significant role. 

What are the internal growth targets of the company for the coming period? 

The management is of the view that the market conditions of the Indian economy are in the improvement phase. The management's anticipation is coupled with innovative ideas and techniques wherein the company is planning to introduce several new instruments and products in the loan segment which can create opportunities to the company in future, including loan against securities, loan against properties and IPO funding. 

(The company is a listed entity and the statements made above are only indicative and made for the purpose of the interview. No reference shall be drawn with regards to the management's commitment) 

The company has made a niche market for itself in loans and advances sector in India. How is the company planning to penetrate newer markets?

We are working in this direction and have prepared an action plan as well. Market research and market analysis is in its initial phases and brainstorming is also in its premature stages. 

The management is not seeking this penetration, with an objective of achievement and acceptance in the newer markets,as a challenge, since wide experience of our directors in the finance and securities market would lend a hand in creating opportunities for the company with the intention to maximize wealth creation in the hands of the stakeholders of the company. 

The experience of the management would certainly be of assistance in making risk mitigation plans associated with the entry in new markets.

Ashish Shah Founder and CEO, Vertoz

"Programmatic Advertising Is The Future Of Advertising"

The company has a rapidly growing presence in the US, UK and UAE markets besides India. Please tell us about your expansion plans and whether you will be entering any new markets in FY19? 

Currently, we are expanding heavily in the US markets. The programmatic advertising market in the US is established and quite stable. Hence, we are going full throttle there. We also have expansion plans in the UK and UAE as a part of our 2018 roadmap. We will be starting expansions soon. In FY19, we have a vision to enter the South-East Asian countries like Indonesia, Malaysia and Singapore as they present very lucrative business opportunities. 

How has the SME listing impacted the company? What were the challenges faced by the company during the listing period? The SME listing has hugely benefited Vertoz. As far as the programmatic advertising sector is concerned, Vertoz is the only company in Asia to be listed so far. This has created more credibility for our brand in the market and has given us an edge over other private companies. This was not easy for us though, as we faced some major challenges. 

As the programmatic advertising concept is quite new in India, it was a real task to educate the people on this novel technology. Everyone, right from the bourses to the investors, had to be educated on the basics of programmatic advertising and briefed on our business model. 

The company posted tremendous growth in its profits in FY17 as against the previous years. What has been the driving force for the growth? 

In its initial days, Vertoz was using third party platforms to provide advertising solutions to its clients. However, this approach had a huge cost and left only marginal proportions of the total revenue at our disposal. However, we now employ our in-house developed platform, called The Ingenious Plex. This has slashed down the previous platform costs and has sent our profits soaring.

Also, the programmatic ad sector has witnessed many positive developments in FY2017. The global mobile advertising spending was $143.54 billion and technologies like DCO (Dynamic Creative Optimization) were widely leveraged. There is greater transparency in the markets now. Self-serve platforms are on the rise. All these factors have been driving growth in the programmatic advertising industry, which has reflected in our profits posted in FY17. 

What is your outlook on programmatic advertising? What are the challenges faced by the advertising industry? 

We believe that programmatic advertising is the future of advertising. It is about to take over television advertising. Programmatic advertising spends are expected to reach new heights. The digital markets are experiencing a great phase right now. Even the government is giving a push to its digital campaign. All this augurs well for the digital ad industry and will reflect positively on programmatic advertising. 

But, like every industry, even the programmatic advertising industry faces certain challenges. Advertisers need to watch out for different types of ad frauds which involve domain spoofing, click fraud, NHT, traffic duplication, etc.

But this has been resolved with the introduction of the simple protocol like ads.txt which has brought in more transparency. There is also the challenge of dealing with intrusive ads, which encourage the use of ad blockers. But, Chrome has recently addressed this problem with its latest update blocking ads which were marked as intrusive by the consumers. Further, it is crucial to keep up with dynamic technologies like AI and machine learning, which are evolving constantly. 

Ajit Jain Chairman & Managing Director Shashijit Infraprojects

"We Are Very Optimistic On The Growth Of Industrial Infrastructure Development Segment"

Kindly share with us your journey from getting incorporated as a private limited company in 2007 to getting listed in 2016. 

Shashijit Infraprojects Ltd started its voyage in 1991 as a proprietorship concern promoted by Ajit Jain. Over the years, the concern did several prestigious construction projects and established itself as a renowned construction company in South Gujarat and Union territories of DNH & Daman. To serve the growing needs of the industry, Shashijit Construction Private Limited was incorporated on November 5, 2007 and continued to serve the longstanding clientele relationships for another span of nine years. Of late, in the year 2016, the constitution of the company was changed to a limited company by converting it into a public limited company with the name Shashijit Infraprojects Limited and getting listed on the Bombay Stock Exchange (BSE) SME platform on October 17, 2016. The company constructs, builds and develops industrial infrastructure facilities, driveways, public utilities, powerhouse buildings, factories and such other immovable properties.

How has the SME listing impacted the company? 

The listing has impacted the company by unlocking the real value of the shares lying dormant and infusion of corporate culture in the organisation, enhanced financial transparency, opened new fund raising options to meet future expansion needs and led to evoution as a brand and creation of goodwill across geographies and area of operations. 

The company has a strong presence in Gujarat, Union territory of Daman and Dadra and Nagar Haveli. How is the company planning to expand its operations in the coming years? 

The company has a longstanding and cordial business relationships will all its clients whom it has served in the journey of 25 years. We have received repeat orders from our clients and have been performing exceptionally well in the geographies we operate in. The company is now more focused on creating an in-house plant and machinery and other equipments set up to meet the desired needs of the growing business. This will further help in bringing the rental costs down and will add to the bottom line. 

Further the company is also willing to foray into government infrastructure projects like roads, bridges, etc. for which the company is already in process of getting various certifications and registrations as required. 

The company is also hiring experienced, talented and qualified senior staff members who will be the core for execution of the proposed new ventures and will bring in more synergies in times to come. The company is looking forward to mark its presence in other geographies as well by exploring better opportunities of business. 

What has been the EPS of the company for the past three years? What are the internal growth targets of the company for the coming period? 

The EPS of the company for the past three years is as under: 

The company has consistently reported positive growth figures in the last two financial years. For the current FY17-18, the company is poised to report growth rate higher than the industry parameters. Due to the SEBI (LODR) regulations, we are not allowed to give our projection regarding the current financial year turnover. 

Hardik Vasa ,
Chairman & Managing Director Vasa Retail & Overseas 

"SME Listing Is An Efficient Way To Unlock Value For The Next Level Of Growth"

What is your outlook on paper and stationery industry?What are the challenges faced by the industry? 

The paper and stationery industry is likely to grow at a compound annual growth rate of 5.9% during the period 2017- 2026. The stationery industry itself is valued at USD 1.5 bn and is projected to surpass USD 2.5 billion by 2026. 

Based on products, the global market for stationery products are segregated into printing supplies, mailing supplies, marking devices, paper-based stationery products, filling products, party goods, writing and marking instruments and others. Major factors driving the global stationery products market include growing level of literacy, globally. Due to increasing number of population receiving education and more number of youth going to school, the demand for stationery products is increasing substantially. 

Business in stationery industry largely focuses on using paper or paper board to create products that can be used in art work, filing, writing and other accomplishments. The stationery industry buys the necessary materials such as uncoated paper and paper board from paper/paper board mills and plants and then proceeds to convert the base paper products into stationery materials like die-cut paper, tablets, office paper, envelopes or a range of stationery pieces. In spite of a number of headwinds, the paper sector outlook in the country is positive and the prices are likely to firm up during the course of the year. The market has been growing steadily at 5-7 per cent annually. 

Paper and paper-related products are tremendously gaining demand in the market. Out of which, paper stationery market over the years has gained immense popularity in the school and office segment throughout the world. 

The Indian SMEs associated with stationery market has witnessed tremendous dynamic changes. In the last decade, the Indian market has increased varieties to be exported in markets and has produced big market percentage. Indian paper stationery industry, which is a part of the huge and scattered Indian stationery industry, has been going through tremendous alteration in recent years. Despite fierce competition from neighbouring markets, its scattered nature and the constantly changing trends, the paper stationery industry makers continue to make every effort, the fruitful results of which are coming slowly and steadily. 

The Indian stationery industry is highly unorganised and the organised players are estimated to be less than the unorganised sector players, due to which the unorganised stationery players are spread out throughout the industry and control major market share. 

The company is growing its presence in the overseas market through its brand Vasta. What are the expansion strategies of the company? 

The company already has its presence in nine overseas countries and would expand in more countries through both its brand University of Oxford and Vasta through international exhibitions. 

What are the key drivers for the company that led to the launch of an SME IPO?

 IPOs have less stringent regulations as compared to PE/VC investments and they add value through transparency and corporate governance. 

What are the key benefits the company is looking to reap from the SME listing? 

The key benefit would be to move to the main board of the BSE and NSE by attracting serious investors from across the globe. The company would look at this as an efficient way to unlock value for the next level of growth

Dr Ashish Rawandale-Patil
Managing Director , Tejnaksh Healthcare 

"We Are Focused On Excellence In Clinical Services, Diagnostic Facilities And Research"

Tejnaksh has over 25 patents to its name. What are the additions the company is expected to make in the sphere of innovation and patents in the near future? 

Tejnaksh is a leading innovative healthcare providing brand of the country. The company has more than 150 research papers, 23 innovations, 13 patents applied with multiple national and international awards. Today Tejnaksh takes pride in manufacturing and distribution of many of the patented products. Our contribution towards innovations in simulators, simulation labs and medical entrance examinations coaching classes, medical equipments and medicines would increase in the years to come. As you rightly said, we are currently working on more new treatment methods and equipments in the urology segment and we at an advanced stages of their development. 

The company has a growing presence in the academic urology, besides multi-specialty hospitals. What are the expansion plans of the company?

 Tejnaksh started its journey from Institute of Urology, a kidney care centre in Dhule in 2003. We have been an ardent believer of high ethical and professional standards and are focused on excellence in clinical services, diagnostic facilities and research. Currently, Tejnaksh provides quality healthcare services at 13 urology clinics, 4 urology hospitals and 2 dental super-specialty clinics. Going ahead, we are planning to add one hospital every year and doubling bed count to 300 by FY20 from 140 at present. We had bought Tejvedant, a multispecialty hospital at Koperkhairane in Navi Mumbai and we have recently signed with Tarachand Bapa Hospital on operational lease model with a bed count of 65. This hospital is one of the leading hospitals in Sion, Mumbai. 

Going forward, we will adopt operating lease model to add more hospitals to our current number of hospitals. 

What has been the EPS of the company for the past three years? Please share with us your internal growth targets? 

Our net profit increased by almost three times over the period FY15-17 to Rs.1.82 crore in FY17. The growth in profit during this period has been about 75% CAGR. The EPS for the year FY16 and FY17 stood at Rs.11.97 and Rs.16.50, respectively. FY18 is expected to be strong as we expect the revenues to be doubled on a YoY basis. The net profit for H1FY18 stood at Rs.1.52 crore which is already over 80% of the revenues we did in FY17. Going ahead, we expect revenue growth of 60% in FY19 and 30% growth on an annual basis thereafter. 

How has listing on SME platform helped your company? 

Listing on SME platform has obviously helped in terms of increasing brand equity and market exposure and availability of growth capital for expanding our business. This gave us confidence that we can grow by raising further equity in future whenever we need it for our growth. Generally, SMEs have been growing on debt, because of SME Platform, the opportunity to raise equity is available now. We were one of the early adopters of this route in 2015 to tap the markets and we are one of the successful SMEs which have been listed on BSE SME and have delivered good returns to our investors, coupled with good financial performance on the company front. 

What steps are being taken to improve your profit margins? 

As we are doubling our bed count by FY20, we expect operating leverage benefits to come in terms of reduction in fixed costs. We are adding every year more beds, besides adding new revenue segments with high margins like our own manufactured generic medicines for urological problems, selling simulators for doctors training, coaching classes for medical students. As you can see that all these new segments are of high profit contributors and are currently small in size. However, these segments have tremendous potential in terms of growth in the years to come.

Jignesh Raval
Managing Director, Sintercom India

"Our Long Term Expansion Strategy Is To Enhance Customer And Product Base"

OEMs in automotive segment make a significant part of the company's sales. What is your outlook on the segment for the coming quarters? 

The main focus of the company since inception has been to develop and replace various high strength structural components used in various applications by these auto OEMs. We have been fairly successful in converting some of the high-end critical components used by these OEMs from traditional manufacturing process to sintered manufacturing process. The acceptance of this strategy of company can be confirmed from the revenue break-up, wherein approx. 85% of the company's revenue comes straight from major auto OEMs like Maruti Suzuki, Mahindra & Mahindra, Bajaj Auto, Fiat. 

In the coming quarters, we see the auto segment to continue to grow at an average rate of 8-10% YoY. We expect the main growth to come from the eastern part of India, which is seeing some development work with the focus of the Central government in developing this region. 

Which companies are your top clients and how much do they contribute to your revenues? 

Top clients of the company are Maruti Suzuki Ltd. contributing 50% of the revenue of the company, followed by Mahindra & Mahindra contributing approx. 30% revenue. Bajaj's share is approx. 6% to the revenue, followed by Fiat with 4% share. These four customers contribute approx.. 85% of our revenues. In terms of dependency on these customers, it is both way dependent. As we are dependent on them for the business, we are a single source supplier for 90% of our business with these major OEMs. 

Kindly shed some light on the expansion strategies of the company. 

The strategy for expansion for the short term would mean expansion of existing capacity of plant located at Talegaon, Pune. Typically, the order booked for the company is one year's firm order, plus two years' tentative schedule. Based on the order book, we plan to increase the capacity on the compaction press and the sintering process phase-wise. In the current year, we plan to increase the sintering furnace capacity from 1980 MT p.a. to 3600 MT p.a from April 2018. Parallelly, during the year 2018-19, we propose to increase the compaction press capacity to 12 million strokes p.a. from 9.45 million strokes p.a. We propose to maintain average plant capacity utilisation at any given point of time below 75-80%. 

The strategy for the long term horizon is to enhance our customer base and product base with mandate for compliance with BS VI norms by the year 2020 and integration of new technology of metal injection moulding, along with improving functional efficiencies. 

The company has witnessed a significant turnaround in its financial performance in the past one year. What has been the key growth drivers for the company? 

The major growth driver for the company has been improvement in the sales @ 15% YoY during the financial year. The various new development projects with key customers have received approvals and have received schedules for the start of commercial production. These parts have added to the topline. Further, the reduction in the operating costs and special freight costs have contributed to the increase in the profitability of the company. 

What has been the EPS of the company for the past three years? 

The earnings per share have shown an increasing trend over the past three years. The EPS was Rs.0.36 in 2016 and Rs.0.85 for 2016-17, and based on the half-yearly 2018 results, the annualised EPS is Rs.3.02 for FY2018.

Umesh Modi
Managing Director, Jupiter Infomedia

"Listing Benefits SME Tremendously In Terms Of Brand Value Addition"

What difficulties did you face while getting listed on SME platform? Was it easy to get listed? 

For SME listing we had to go through a lot of formalities, filing of DRHP, tying up with agencies. To comply with every legal formality as an SME, it was slightly difficult. However, BSE SME platform greatly simplified the process and made it very convenient. Thus, there was no major difficulties in getting listed. 

What sort of advantages do you see for your company after getting listed?

Once you get listed, the branding and recognition makes a big difference. The small companies such as partnerships or sole proprietorship are devoid of the image that a listed company gains. Especially, the SME benefits tremendously through listing in terms of brand value addition. It is easier to raise finance as a listed company. Otherwise, the small-scale enterprises face a lot of difficulties in raising finance, especially at a premium. This brings down some of the cost burdens of the company contributing towards higher efficiency. 

Post-listing on SME platform, how has the business growth been for your company? 

Post the listing, the company has recorded tremendous growth in e-commerce turnover figures. The volume of operations at all levels have increased. The growth is reflected on the products and projects expansion too. The reach of our portals have doubled. We have an engagement of over 10 lakh users with more than 5 million pages. On the vertical operational level as well, we are developing two more projects. 

What is your outlook on the infomedia sector? 

With an increased impetus on digitisation, the infomedia industry is brimming with opportunities. India is set to benefit the most through the growing inclination towards digitisation as there is a lot of tech talent in the nation available at an economical cost. The cost-efficiency has made India a preferred place for serving the global markets' demand. Moreover, India itself has got a huge market for e-commerce. The industry is at its growing stage and has a large market open for penetration. The sector is likely to see innovation and new concepts in India with the use of cost-efficient talent available in the country. The sector is likely to witness an exponential growth and great value creation..