SEBI gives reasons for SMEs to cheer

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Bikky Khosla | 10 Nov, 2009
Two developments will probably dominate the rest of the week - one, SEBI's decision not to go in for a separate exchange for SMEs and second, the Commerce and Industry minister's statement that exporters still needed support and that there were no plans to withdraw sops.

SMEs which depend on loans and other means of finance will now get a chance to list their stocks and raise money from the public. Although the Securities and Exchange Board of India (SEBI) has ruled out a separate exchange for SMEs as part of its efforts to encourage SMEs to go public, the country's market watchdog has relaxed them from the usual eligibility norms applicable for initial public offerings (IPOs) and follow-on public offerings. From now on, SME stocks will be listed on a separate trading platform of an existing exchange.

The entire process will bring in more transparency, with SMEs having to disclose their financial results to the exchanges on a half-yearly basis. This relaxation, unlike the larger companies who have to report their numbers on a quarterly basis, is indeed a good move.

With a horde of other relaxations for SMEs to get listed, SMEs will perhaps have one headache less when it comes to raising money for their operations.

Meanwhile, the government's decision not to withdraw the stimulus package for exporters in the near future is a positive move considering the fact that there are not many signs of exports rebounding soon.

Although experts are of the opinion that exports would rebound from the last quarter of this fiscal, a relook at the status of the sops then would be more rational. Continuing with the stimulus packages in the current juncture is perhaps the need of the hour considering that exports have tanked since October 2008, dipping by 13.8 percent in September.

So, two good developments this week will perhaps give SMEs some reason to cheer.