This document provides an overview of SME platforms in India for companies seeking to raise funds through an initial public offering (IPO). It defines SMEs and outlines the eligibility criteria for listing on SME exchanges from SEBI, BSE, and NSE. Key points covered include the benefits of SME listings, the IPO process, ongoing compliance requirements, examples of recent SME IPOs and their subscriptions, and a checklist of eligibility criteria for a sample company.

1. • BSE / NSE Platform
• by CS Nimisha Verma

2. • What is SME
• Lifecycle of SME Platform
• What is SME IPO and Why SME listing
• Benefits of SME Listing
• SME IPO Process
• SEBI Regulation
• BSE Criteria
• NSE Criteria
• Migration to SME / Main Board
• Compulsory Market Making
• Compliance Checklist
• SME IPO Updates
• Recent SME IPO's
• Eligibility of a Company

3. WHAT IS SME
As Per Micro, Small & Medium Enterprises Development (MSMED) Act, 2006
Enterprises Investment in plant & machinery
Micro Enterprises Does not exceed Rs. 25 lakh
Small Enterprises More than Rs. 25 lakh but does not exceed Rs. 5 crore
Medium Enterprises More than Rs. 5 crore but does not exceed Rs. 10 crore
Enterprises Investment in equipments
Micro Enterprises Does not exceed Rs. 10 lakh
Small Enterprises More than Rs. 10 lakh but does not exceed Rs. 2 crore
Medium Enterprises More than Rs. 2 crore but does not exceed Rs. 5 crore
Manufacturing Sector
Service Sector

4. Lifecycle of

5. SEBI lays
down broad
framework
for SME
listing
platform
5-Nov-08
PM Task
Force-
recommends
SME listing
exchange
Jan-10
SEBI
circular on
Guidelines
for market
making
SEBI
Circular
rolling out
model
listing
agreement
for SMEs
17-May-10
Amend-
ments in
SEBI
Regulations
(ICDR,
Merchant
Bankers etc.
18-May-10
SEBI
Master
Circular on
SME
exchange &
Market
Making
31-Dec-10
BSE
Eligibility
Norms for
SME listing
19-Apr-12
BSE SME
Exchange
launch
13-Mar-12
SEBI
circular
standardizin
g lot size
for SME
exchange
21-Feb-12
SEBI
approval to
NSE SME
Exchange
(Emerge)
14-Oct-11
Amend-
mends in
Listing
Agreement
5-Oct-11
SEBI
approval to
BSE SME
Exchange
27-Sep-11
SME Listing –
SEBI
circular on
Guidelines
for market
making
26-Apr-10

6. WHAT IS SME
Small and Medium Enterprises (SME) who wish to go public,
SEBI has devised a IPO (Initial Public Offer) route exclusively
for SME's where the enterprises with post-issue paid up
capital (face value) up to Rs. 25 Crore can raise funds from
market.
Companies with post-issue paid up capital (face value) between
Rs. 10 crore and Rs. 25 crore have the option of migrating
to the main board.
For accessing capital markets easily, improved credibility and
visibility locally as well as internationally a dedicated stock
exchange is set up in the form of BSE SME & NSE Emerge in India.
SME
Exchange
option of SME
or Main Board
Main board
10 Cr
25 Cr
PostIssueFaceValueCapital
Paidup Capital threshold
for listing
The initial public offer (IPO) is one of the means of
financing and it is an important residuary method to
raise funds for any corporate aspiring growth.
3 Cr

7. WHY SME IPO
To fund new projects/ undertake expansion, marketing
expenditure
Enhance Company's visibility
Lowers debt burden leading to lower financing cost
Greater incentive for the employees as they can
participate in the ownership of the company and benefit
from being shareholders

8. SME's potential
SME
Financials People Business
Proven
Track
Record
Strong
growth
forecast
Dynamic
Management
Talent
pool
Differential
business
model
Scalable

9. Benefits of
• Easy capital & fund
availability
• Avoid diminution in
value of business
• M&A Currency
• Better liquidity – entry
& exit platform
• No tax on LTCG
• STCG Tax applicable @
15% - reduced rate
• No tax on equity
infusion in the
company
• No tax on ‘distress
business’ purchase
• Enhancing worth
• ESOPs – Talent
retention tool
• Visibility – Profile
building
• Governance - Internal
systems
Core
Advantages of
Listing

10. SEBI Regulation
SEBI
Migration to SME
exchange –
companies with
post issue paid up
capital less than
Rs. 25 Crores
Min
application
size - 1
Lakh
No further
registration for
existing members
for trading
Suitable provisions
for migration to main
board for Company
PuC > Rs. 10 Cr. & <
Rs. 25 Cr.
Underwriting
100% of issue.
MB
underwriting
15% in their
own account
Market
making
– for 3
years
Filing offer
document
with
exchange &
no need of
SEBI approval
Min no.
of
investor
50
Issue lot
size / no.
of shares
depending
on IPO
price band
post issue FV <
Rs. 10 Cr. OR
post issue FV >
Rs. 10 Cr. &
upto Rs. 25 Cr.
Due Diligence
Certificate by MB
to SEBI along with
Offer doc
No need
to file
draft
offer
letter
with
SEBI.
Offer doc not
subject to
SEBI vetting

11. COMPULSORY
Benefit of Market making
 Provides liquidity for existing investor to exit
 Encourages new investors to enter the market
MB shall not subscribe to issue under except for fulfilling obligations
Promotor holding not eligible for market making
MB shall file undertaking to SEBI that issue has 100% underwritten -1day b4 opening

12. Migration to -
Migration
post issue FV
capital less than
Rs. 25 Cr.
Min PuC /
Networth Rs. 3 Cr.
Distributable
profit 3 out of 5
years OR NW > Rs.
5 Cr
Approval by SR
through Postal
ballot
Vote cast in favor
by non-promoter
shareholder >
(2Times) against
Information
memorandum to
Stock exchange

13. Migration to -
Migration
post issue FV
capital more than
Rs. 10 Cr. upto Rs.
25 Cr.
Traded on the SME
platforms for a
minimum period
of 2 years
after fulfiling all
eligibility criteria as
Min PuC / Networth Rs.
10 Cr.
Distributable profit 3
out of 5 years
minimum no. of
allotee - 1000
Min 50% of public
shareholding in
demat form
Approval by SR
(Vote cast in favor
by non-promoter
shareholder >
(2Times) against)
In-principle
approval from
main board
Information
memorandum to
Stock exchange

14. BSE Guidelines
BSE
Net
tangible
assets - Rs 3
Cr.
Net worth (excl
revaluation
reserve) - Rs. 3
Cr.
Distributable
profit for atleast
2 out of 3 FY OR
Net worth of at
least Rs. 5 Crores
Trading in
Demat
facility &
Agreement
with both
depository
No change in
promoters in
last 1 year after
fling the
application to
BSE
Has not
been
referred
to (BIFR)
No winding up
petition and
no liquidator
has been
appointed
Post issue paid
up capital -
Minimum Rs. 3
Crores / Max
Rs. 25 crores
Company
to have
website

15. NSE Guidelines
NSE
Track record of 3 years of Either:
a)Applicant
b) Promotor
c) Partnership firm converted into
Company (not in existence as a
Company for 3 Yrs)
Positive cash
accruals from
operations
(EBDT) for at
least 2 FYs.
Net worth
positive
Has not been
referred to
Board for
Industrial and
Financial
Reconstruction
(BIFR)
No disciplinary
action by stock
exchange or
regulatory
authority against
company in last 3
years.
Post issue
paid up
capital not
more than
Rs. 25 crores
Must be a
Company
incorporated
in INDIA
No
petition
for
winding
up
Disclosure in Offer
Document:
a) No disciplinary
action
b) Defaults in
debenture/bond/dep
osit, banks, FIs
c) litigation record of
promoter
d) track record of the
directors

16. LISTING AGREEMENT -
SME Listing
Agreement
Abridged Annual
Report instead of
sending full
Annual Report
Submission of half
yearly financial
result instead of
quarterly
No need to publish
result in
newspaper

17. Selection of
Merchant
banker
Restructuring
of capital &
valuation
Due
diligence as
part of IPO
SME IPO PROCESS
Offer
document
for IPO
Marketing
strategy
Appointment
of other
intermediaries
SME IPO
PROCESS
Filing of Offer
Document with
BSE & Others
Issue Pricing
& Allocation
Listing &
Market
Making
Effective
communication
of its equity
strenght

18. Eligiblity Criteria -
Criteria

19. Regulatory Requirement for
Parameters Main Board SME Exchange
Post – issue paid
up capital
Min INR 10 crore
Min INR 3 crore; Max INR
25 crore
Minimum
Allotees in IPO
1000 50
IPO underwriting
Non Mandatory
(Under 50% compulsory
subscription to QIB’s)
Mandatory
(100% underwritten with
MB underwriting 15%)
IPO Grading Mandatory Not mandatory
Track record
Stringent track record
norms
Relaxed track record
norms
Offer Document
vetting
By SEBI By Exchange
IPO Application
Size
INR 10000 – INR 15000 Min. INR 1 lac
IPO Time frame 6 months onwards 2 – 3 Months
Reporting
Requirements
Quarterly Half yearly
“SME
Exchange
has a
winning
edge over
Main
Board”

20. Compliance Requirement

21. Compliance Requirement
Requirements SME Platform ITP Platform
Listing IPO mandatory Listing without IPO
also
Market Making 3 years No MM
Min Application Size 1 lakhs 10 lakhs
Underwriting 100% Not Required
Migration to main
Board
After expiry of 2
years
After expiry of 3
years
No. of Allotees 50 200
Listing fee 25,000 - 50,000 Min. 1 lakhs
BSE/NSE platform BSE-SME
NSE Emerge
BSE Hi-Tech
NSE Emerge-ITP

22. SME IPO Update

23. Recent IPOs
Company
Name Issue Size Listing date Subscription
Dev Information
Technology Limited 6.25 Crore
offer period closed
on 6th April, 2017 74.17 times
Focus Lighting And
Fixtures Limited 4.05 Crore
offer period closed
on 5th April, 2017 80 times
Steel City Securities
Limited 26.99 Crore
Friday, February 17,
2017 4.88 times
Maheshwari
Logistics Limited 27.17 Crore
Monday, January
16, 2017 4.53 times
Agro Phos India
limited 12.94 Crore
Wednesday,
November 16, 2016 17 times
Madhya Bharat
Agro Products
Limited 13.89 Crore
Monday, September
12, 2016 7 times
DRA Consultants 2.96 Crore August, 2016 12 times

24. Compliance
Particulars Company's
Eligibility
BSE NSE
Net Worth 1.89 Cr 3 Cr positive
Net Tangible Asset 7.50 Cr. 3 Cr NA
Distributable Profit or Net worth No Distributable
Profit
2 Yr OR 5 Cr NA
Positive cash accruals from operation YES NA 2 FY
Company to have Website No Website Required NA
No winding up petition No Petition No petition NA
Not referred to BIFR Not referred No BIFR No BIFR
No disciplinary action by stock
exchange or regulatory authority
No disciplinary
action
NA last 3 yr
No change in promoters No Change In Last 1 yr NA
Company Incorporate in INDIA YES NA Required

25. CS Nimisha Verma