Market cap of listed SMEs crosses Rs10,000 cr for first time on BSE

The market capitalisation of small and medium enterprises (SMEs) crossed Rs10,000 crore on Friday for the first time in the nearly three years since the Bombay Stock Exchange launched a separate index for them.

The market capitalisation of the 82 listed SMEs was Rs10,118.90 crore on Friday, BSE data shows.

Both BSE and the National Stock Exchange of India Ltd (NSE) launched their SME segments in March 2012. The BSE has 82 companies listed on its SME platform, while NSE has six.

The market capitalisation of the six companies listed on NSE's SME segment called Emerge is nearly Rs410 crore.

While the BSE has 82 companies listed, not all are traded on a daily basis. On Friday, only 28 companies saw their shares being traded on the exchange, out of which 10 saw their prices gain and 16 saw a decline. Share prices of two companies remained unchanged.

The SME segment has been gaining steadily in terms of listings, Ashishkumar Chauhan, managing director and chief executive officer of the BSE, said in Mumbai. Another 16 companies are in the process of getting listed, he said. The NSE declined to comment.

According to regulatory norms, companies that wish to be listed on the SME index need to file a draft document only with the stock exchange and not with the Securities and Exchange Board of India (SEBI). This has made it easier for smaller firms to raise capital via the platform and also familiarize themselves with the regulatory requirements for listed entities in a staggered way.

The Mint newspaper reports Uday Patil, director, investment banking, Keynote Corporate Services Ltd - an investment banking firm which has helped three companies list on SME platform – as saying the segment is a good avenue for companies to get used to the disclosure, corporate governance and regulatory requirements, which will help them to migrate to the main segment.

However, since some of these companies can be high-risk bets, SEBI has kept small retail investors out of the segment by pegging the minimum trade value at Rs1 lakh – restricting it mainly to wealthy individuals, domestic financial institutions, private equity firms and venture funds.

The capital market regulator has also made merchant bankers more accountable by making them underwrite 100 per cent of the offer, apart from compulsory market making for a period of three years post-listing.