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SME LISTING - A 1 Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company Sarthi Capital Advisors Private Limited Bridging the Gaps Privileged & Confidential SME LISTING - A PRIMER

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  • 1Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Sarthi Capital Advisors Private Limited Bridging the Gaps

    Privileged & Confidential

    SME LISTING - A PRIMER

  • 2Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    AGENDA

    • SME Listing - Background • SME Listing - An Overview of Key Requirements &

    Eligibility Norms

    • Key Benefits of SME Listing

    • SME Listing - Coming up in a BIG Way…

    • Sarthi – Partner in Process

    • Annexures

  • 3Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing - Background

    BSE and NSE launched

    their respective

    platform for SMEs; MCX

    too is gearing up

    for SME Exchange

    The move aims at

    providing an opportunity

    to SME entrepre- neurs to

    raise growth capital and

    reap benefits of listed

    space

    Both BSE & NSE leverage their existing

    ‘equity platform’ for

    SME exchange platform

    As per estimate of

    SME Chamber of India, over 5000 SMEs

    have the potential for

    listing

    A facilitative framework

    for SME listing

  • 4Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing – Evolution…

    5-Nov-08

    •SEBI lays down broad framework for SME listing platform

    Jan-10

    •PM Task Force recomm- ends SME listing exchange

    26-Apr-10

    •SEBI circular on Guidelines for market making

    17-May-10

    •SEBI Circular rolling out model listing agreement for SMEs

    18-May-10

    •Amend- ments in SEBI Regulations (ICDR, Merchant Bankers etc.

    31-Dec-10

    •SEBI Master Circular on SME exchange & Market Making

    27-Sep-11

    •SEBI approval to BSE SME Exchange

    5-Oct-11

    •Amend- mends in Listing Agreement

    14-Oct-11 •SEBI

    approval to NSE SME Exchange

    21-Feb-12 •SEBI

    circular standardiz ing lot size for SME exchange

    13-Mar-12 •BSE SME

    Exchange launch

    19-Apr-12 •BSE

    Eligibility Norms for SME listing

  • 5Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing - An Overview of Key Requirements & Eligibility Norms

  • 6Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing - Key Requirements & Eligibility Norms

    Post Issue Face Value Capital Listing Platform Up to 10 crores SME Exchange 10 crores to 25 crores SME/ Main

    Board More than 25 Crores Main Board

     Capital threshold for listing :

     Minimum application amount / trading lot of Rs. 1 lac  100% underwriting (MB to underwrite 15% in own account)  MB to undertake market making  through Exchange-registered market makers  for minimum 3 years

     Public Shareholding  Min. 25%  Min. 50 investors required; No post-listing continuous requirement

     Provisions for migration to / from Main Board from / to SME Exchange

    SEBI NSE

    BSE

    Offer Doc not

    subject to SEBI vetting

    Refer Annexure

    for key norms of SEBI ICDR

  • 7Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing - Key Requirements & Eligibility Norms

    Post Issue Capital (FV)

    • Max : Rs.25 crore • Min : Rs. 1 crore

    Track record

    • Net Tangible Assets : Rs. 1 crore (as per latest audited results) • Net Worth (excl. Rev. Reserve) : Rs. 1 crore or 3 crore, if no track record • Track record of distributable profits for at least 2 years out of preceding 3 completed

    FYs

    Other requirements

    • Mandatory facilitation of trading in Demat securities • Certificate that no winding petition or reference to BIFR • Mandatory corporate website • Promoters to attend to interview with Listing Advisory Committee

    BSE NSE

    SEBI

    Refer Annexure

    for key norms of

    LA

  • 8Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing - Key Requirements & Eligibility Norms

    Post Issue Capital (FV)

    • Same as BSE

    Track record

    • Track record of at least 3 years • Positive cash accruals (EBDT) from operations and positive net worth for at least 2

    FYs preceding the application • In case the above conditions are not fulfilled, Exchange Authority (MD & Joint MD) to

    decide

    Other requirements

    • Same as BSE • Additional certification / disclosures on litigation etc.

    NSE BSE

    SEBI

  • 9Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Exchange v. Main Board – Advantage SME

    Parameters Main Board SME Exchange (BSE) Post – issue paid up capital Min Rs. 10 crore Min Rs.1 crore; Max Rs.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 Rs. 5000 – Rs. 7000 Min. Rs. 1 lac

    IPO Time frame 6 months 2 – 3 Months

    Reporting Requirements Quarterly Half yearly

  • 10Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Benefits of SME Listing

  • 11Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Key Benefits of Listing Fu

    nd in

    g Co

    nv en

    ie nc

    e Access to capital & financing opportunities Avoid unlisted space discounting M&A Currency Entry / Exit platform for PE / other investor

    Ta x

    Be ne

    fit s No Long Term Capital

    Gains Short Term Capital Gain Tax at reduced rate of 15% No tax on equity infusion in the company No tax on ‘distress business’ purchase

    O th

    er s Unlocking value

    ESOPs – Talent retention tool Visibility – Profile building Governance - Internal systems

  • 12Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Facilitated Relaxed Listed Platform…

    With the relaxed IPO conditions and quicker processes with reduced compliance costs, listing for SMALL companies is poised to become a BIG platform soon…

    Reduced Compliances & Costs

    Relaxed & quicker listing process

    All benefits of listed space

  • 13Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing – Coming up in a BIG way…

  • 14Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME - Coming up in a BIG Way…

    So far, 11 companies have been listed on BSE SME Exchange & 2 on NSE Emerge Exchange –

    Particulars BCB Finance

    Monarch Health

    Max Alert

    Systems

    Sangam Advisors

    Jupiter Info

    media

    Veto Switch gears

    Bronze Infra

    A. Valuation / Market Cap

    (Rs. Crore)

    Pre Issue Net Worth 11.5 0.8 7.1 4.4 2.0 32.7 17.4

    Issue Size 8.8 7.2 8.0 5.1 4.1 25.0 8.6

    Market Capitalization* 31.1 49.8 84.6 13.5 8.5 83.6 26.7

    B. Price Pattern (Rs per share)

    Issue Price 25.0 40.0 20.0 22.0 20.0 50 15

    CMP (Face Value Rs. 10)* 27.0 83.0 92.0 22.0 24.25 50.15 15.45

    *Closing Prices As on, 3rd January, 2013

  • 15Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Particulars Jointeca Education

    SRG Housing

    Thejo Engineering

    Comfort Commotrade

    Anshu Clothing

    RCL Limited

    A. Valuation / Market Cap (Rs. Crore)

    Pre Issue Net Worth 9.6 4.9 25.8 4.3 12.7 5.6

    Issue Size 5.4 7.0 19.0 6.0 5.1 5.8

    Market Capitalization* 15.8 17.4 64.4 16.0 18.7 12.2

    B. Price Pattern (Rs per share)

    Issue Price 15.0 20.0 402.0 10.0 27.0 10.0

    CMP (Face Value Rs. 10)* 15.8 21.5 375.0 16.0 30.0 9.90

    *Closing Prices As on, 3rd January, 2013

    Companies in the process of listing -

     Sunstar Reality Development Ltd

     Subh Tex (India) Limited

     VKC Credit and Forex Services Limited

    SME - Coming up in a BIG Way…

  • 16Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    SME Listing – An Opportunity to Capitalize

     The relaxation in the requirements of SME exchange encourages SMEs to get listed thereby providing the opportunity to raise equity capital for growth and expansion.

     It will help the company to attain its objective and have transparent valuation through efficient price discovery. In turn this will create wealth for stakeholders with considerable capital gain tax benefits and the facility of entry as well as exit at any point.

     A company with sustainable business model which clearly defines its purpose and demonstrating its value proposition should certainly explore this opportunity to enhance its profile and competencies.

  • 17Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Sarthi - Partner in Process

  • 18Sarthi Capital Advisors Pvt. Ltd. - A Sarthi Group Company

    Sarthi – Partner in Process

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