Securities and Exchange Board of India (Sebi) today announced conditions for listing on the SME (small and medium enterprise) exchange, reports Biz2Credit. As part of the plan a model SME equity listing agreement for the purpose was also announced.

 SEBI stated that the SMEs need not send full annual report to investors and can submit half-yearly financial results in place of quarterly results. It will also allow SMEs to put their financial results on website and do away with publishing the same.

 In November 2009, Sebi had allowed existing stock exchanges to set up a separate trading platform and relaxed the criteria for their listings. As per Sebi norms, only those company’s whose paid-up equity was maximum Rs 25 crore were eligible to list here. If the paid-up capital of a company rises above Rs 25 crore after the issue, they will not be eligible for using the SME platform.Sebi had also mandated that the companies will have to come out with issues with a minimum size of Rs one lakh.

Tags: SEBI, Securities and Exchange, SME equity listing, SMEs
Other related topics Small Business News | 2 Comments »

Yes Bank, the new generation private bank, is increasing its lending focus towards a small & medium enterprises (SME). In the current year YES Bank is allocating about Rs. 4,000 crore. Till the end of March, 2010, the private sector lender had lent around Rs 1,500 crore to smaller firms.

“We have seen significant increase in demand from the SME sector as the economy comes out of the downturn and have lent as much as Rs 500 crore to this segment in the January-March quarter. We plan to focus more on this space and increase our market share,” said Sanjay Agrawal, president (corporate finance & development banking) of the bank.

Till October last year, YES Bank has been disbursing SME loans only from 13 branches. But it has started such operations from 33 locations. By the end of the current year, at least 50 locations would be equipped to disburse SME loans, helping the bank access more customers. YES Bank is expanding its SME business only in those places which have a strong industrial base, such as the industrial towns of Ludhiana and Coimbatore.

Besides this Yes Bank is also looking at using online platforms to reach out to specific  SME industry clusters according to Industry sources.

Tags: SME, SME loans, Yes Bank
Other related topics Small Business News | No Comments »

The Greek debt crisis which has been unfolding for last 2 months has started looking like having a contagion effect on other European economies like Spain, Portugal and Ireland.The recent down grade by S&P for Greece to junk status and Portugal from A+ to A- looks like starting a contagion effect. A massive rescue package announced by European Central Bank this morning will have a calming effect on the markets as well as the countries’ abilities to service their debts in short to medium term range.
The key issue is will this crisis have a fundamental effect on the European Union as well as Euro.Since EU is the largest trading partner for India and also destination for a large no. of Indian Small and Medium Enterprise (SME) exporters the next 6 months will be critical.
While the rescue package amounting to around USD1 trillion looks like a massive response to the problem, the fundamental economic issues which started this problem still remain the same. The economics of countries like Greece, Spain, Portugal and Ireland are over leveraged, have massive amount of  high cost debts, high wages coupled with low productivity. Since these countries do not have any leverage about pricing their goods and services, it is very difficult for them to control their fiscal deficits.
The Indian exporters need to be cognizant of these issues and need to be aware of the direction in which euro will move.
In our analysis Euro will keep getting weaker over next 1 year as European countries will have higher debt  and an increasing pressure to restructure their economies. Thus hedging rupee – euro will be critical as euro is seeing a minor rally after announcement of the rescue package. This is good time to lock into  forward and future contracts as euro pricing will see a large amount of volatility in the coming months.
The standing of Euro being the second reserve currency in the world is over. Thus the dollar will gain more and get stronger against
the rupee over next 6 months.Coupled with a fast recovery in US, the exporters who pre dominantly export to Europe need to look at the US markets again. Exporters can wait to lock into any rupee dollar forwards and futures as dollar will get stronger.
What the Indian exporters need to look at critically is the way rescue package is implemented in Europe as unlike US, the former is politically dis united where rich countries like Germany etc do not want to fund weaker economies for an indefinite period. In case the market feels that rescue package is not being implemented with all the political will, the euro will go into a tail spin.

Tags: Euro, European Central Bank, Greece Debt Crisis, SME
Other related topics Small Business News | No Comments »

The MSME Ministry has recommended policy draft for PSUs’ to procure 20% of their goods and services from MSMEs.The ministry is discussing the proposal with other ministries under whose ambit PSUs fall as they have raised concerns about the quality and quantity of procurement.

This recommendation is part of the report submitted by  MSME task force constituted by the Prime Minister last year.

The proposed policy will make it mandatory for ministries and PSUs to procure 20 per cent of their annual purchase volume from MSMEs and report the procurement made from MSMEs in their annual reports.

The Cabinet approval is expected some time next month for it be implemented. Defense, power and railways are likely to be key sectors in the government that will procure the most from MSMEs under this policy.

As of now around 4-5 per cent of the government’s total annual procurement is currently from MSMEs.  Raising it to 20 percent will be a big task in next 3 years as stipulated in the draft report.

In case this target is not met due to lack of procurement base, the ministries and PSUs can present their case to the committee, stating the reasons which impede uptake of the stipulated volume.

The policy of preferential procurement from MSMEs is prevalent in the US, UK and Europe to promote the cause of MSMEs. US has to source good and services from minority/ women owned enterprises under it 8(a) programs. (MBE/WBE)  In this program fortune 2000 companies are  given tax breaks to buy a minimum of five per cent of their total needs (products/ services) by value from these MBE/WBE claim tax benefits.

Tags: MBE/WBE, minority, MSMEs, preferential procurement, PSUs
Other related topics Small Business News | No Comments »

National Small Industries Corporation (NSIC) aims at providing credit rating to over 9,000 micro and small enterprises in 2010-11 with the help of leading agencies like SMERA, ICRA etc.
The rating of the company’s financial health helps them get access to credit quicker and cheaper. It also helps in enhancing their acceptability in the market. In last 6 months all the major rating agencies have seen a big up tick in their SME ratings business as the SMEs get more mature, rating adoption will go up manifold times

The MSME sector, which was hit-hard due to the recent global financial meltdown, contributes eight per cent to the country’s Gross Domestic Product, besides 45 per cent of manufactured output and 40 per cent of exports. The Ministry estimates that there are over 2.6 crores MSMEs units employing over 6 crore people in the country.

Tags: Adoption, ICRA, MSME, NSIC, SMERA, SMEs
Other related topics Small Business News | No Comments »

Exim Bank today stated that it is raising USD 100 million from the Asian Development Bank (ADB) to provide funds to eligible SMEs.

The USD 100 million will be help Exim to focus on cluster development  for small and medium enterprises in states like Assam, Madhya Pradesh, Orissa, Uttar Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Uttarakhand,” a senior exim official stated.

The bank intended to extend loans through the development of clusters in different sectors.

The foreign trade development bank had also raised 150 million euros from the European Investment Bank to promote green energy and projects that reduce greenhouse gas emissions.

Tags: Asian Development Bank, Assam, Chhattisgarh, Exim Bank, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, SME, Uttar Pradesh, Uttarakhand
Other related topics SBA Loans, Small Business Loans | No Comments »

With an increased awareness about importance of green energy and lessing the carbon footprint, banks like Small Industries Development Bank of India (Sidbi), HSBC India and Power Finance Corp. Ltd have registered with the Bureau of Energy Efficiency (BEE) for its energy efficiency financing platform.

The platform is meant to create a mechanism that allows mainstream financing of energy efficiency projects by providing instruments such as bankable project reports and other risk-mitigation measures to enhance comfort for lenders towards these projects.

Such projects and energy service companies often find it hard to source funding, according to BEE secretary Saurabh Kumar.

“Essentially, banks have a high risk perception about such unsecure lending. More than a mindset, it requires a skill-set to understand such project reports, which is missing,” said Kumar. “But just to give you a signal on how this is gaining importance, last year the Japan International Cooperation Agency loaned Rs1,500 crore to Sidbi exclusively for energy efficiency in the small and medium enterprise sector.”

BEE has estimated the near- and medium-term energy efficiency market potential to be around Rs74,000 crore, with investments in such programmes recouped in less than five years while increasing productivity.

Energy service firms provide solutions for improved energy efficiency in buildings, utilities and offices, with profits tied to the savings achieved.

Coupled with Green Ratings which have been launched by SMERA in India, this will give a major boost to green projects in India. With SMEs comprising a major chunk of manufacturing space in India, it can help to make the industry greener.

The perform, achieve and trade scheme will make a huge difference in the business of energy service firms as well as small and medium enterprises, according to V. Raghuraman, principal adviser at industry lobby group Confederation of Indian Industry, and chairman of the World Energy Efficiency Association.

Tags: BEE, Energy Efficiency Association, HSBC India, Power Finance Corp, Sidbi, SMERA, unsecure lending
Other related topics Chemicals, Industry Expert | No Comments »

With big players like Google and now even Microsoft promoting Cloud computing technology, it is the next big thing which will transform the way enterprises and individual access IT services. The key question is the way it is going to effect the small and medium enterprises (SMEs) . In all key areas, whether it be IT infrastructure costs, real time collaboration or efficient utilization of the technology manpower cloud computing technology have proved itself useful for the enterprises. But most important contribution of cloud computing lies in the business focus improvement for the enterprise by liberating financial and human resources invested in the IT support and management. This will increase the adoption of cloud computing manifold times in the SME space thus changing the business landscape.

Defining Cloud Computing

Before analyzing the benefits of cloud computing for enterprises and SMEs, , it would be good to know what cloud is computing all about.

Cloud hosting services is a platform formed by the juxtaposition of technologies like virtual computing, distributed computing, and flexible networking processes. Thus IT cloud is better conceptualized as a service architecture where in IT infrastructure, software and even application platforms are offered as an on-demand always on available service. Two core features are: the services can be accessed over the internet and second the client or the end user access the IT infrastructure as a service and pays a small monthly amount to use with no need to sign any long term contracts.

Key benefits of the cloud services are:

Mobility: Cloud hosting enables anywhere accessibility to the application which helps real time collaboration within the enterprise.

Scalibility: IT resources can be increased at short notice to ensure that the time to the market for a business process is very less and there is no risk of IT infrastructure investment for the SMEs. This also enables the SMEs toto adopt the pay as you go model thus lowering the pressure on cash flows.

Maintenance and reliability: Since the SMEs do not have to deal with IT infrastructure maintenance as the process is automated and it is the responsibility of the cloud hosting provider. This leads to lower manpower and training costs as well as higher redundancy ensuring that the network reliability is guaranteed and assured.

How and Why SMEs should use cloud hosting services

Any SME can benefit from the cloud hosting services in the following way:

Local IT infrastructure costs eliminated: SMEs do not need top mainatin any local or onsite IT infrastructure equipment and software as well as personals as the application delivery network comes ready made and always on available service. Hence there is no need install Local Area Network (LAN) as well as Wide Area Network (WAN). Thus there are no huge upfront costs in buying servers, system upgrades or providing for backup and security tools. Since the cloud services are platform independent and it is on the cloud servers that the software is installed and run, the system requirement on the clients side are minimal. This eliminates the need for system upgrades, local backup facility or even network security and monitoring tools.

Outsourced IT management: The cloud hosting services comes with full features IT infrastructure management for the client thus SMEs do not need to have local IT support and management personnel. This helps them to focus better on their core business as well as cut down on their capital as well as working capital costs.

Real Time Collaboration: The cloud computing ensures that the enterprise application are accessible from anyplace anytime on the web from any browser. Further the multi-user real time means that businesses can work from multi locational units without a need to invest in the office infrastaructure.

Market the business process in shortest possible time: SMEs have scsre capital and human resources. During the start up stage being focussed on core business, conserving capital while being able to market the business effectively in a low cost manner is key for business survival. Thus one needs to adopt clould serives where user feedback can be attained quickly and time to marekt is very little.

Thus SMEs should start using some of cloud hosting services like virtual document management services, promoting businesses through social network sites as well as virtual email hostimg services.

In my next article I will talk about issue and challenges for SMEs using cloud computing specially in a country like India.

Tags: Cloud Computing, cloud hosting services, IT services
Other related topics IT, Industry Expert | No Comments »