Small and medium-scale enterprises (SMEs) in the country now have options and possibilities to raise capital from the market or to provide exit option to a large investor in their firm and the National Stock Exchange (NSE), which has launched the Emerge platform for the SMEs, is looking at providing a range of financial products for this sector, according to Chitra Ramakrishna, managing director and chief executive officer, of the NSE.
Ms. Ramakrishna was here on Saturday to speak at a meeting on “Enigma of Funding” organised by the Young Indians and Entrepreneurs Organisation.
The NSE started the Emerge platform for SMEs with equity. “We have broadened to currency offering. We want to build an ecosystem among our offerings to SMEs,” she said. It includes currency, debt, and interest rate hedging. “We believe that comprehensive engagement with SMEs will bring down the financial cost for SMEs.”
Ms. Ramakrishna said that while there was diversity among SMEs, their problems were “common and recognisable.” There were very few firms that were able to raise money from the market, awareness among these units on the opportunities to fund differently was close to nil and most of them wanted to focus on their core business. They were apprehensive that the cost to raise funds from the market would be high.
The NSE had been experimenting with some solutions on the Emerge platform for the last two years. In an effort to reduce the cost of raising funds, it used the broker members and existing infrastructure of the exchange. Usually, huge amount spent on raising capital was to convince institutional investors. As an exchange, the NSE reached out to PSU banks and institutions that funded SMEs and had come out with a format of due diligence for potential companies. While credit rating was voluntary, it increased the willingness of banks and institutes to invest in companies that went in for the rating.
The platform focused on manufacturing companies as service sector firms were able to raise funds from different sources, she said.
In some SME clusters, the NSE had also encouraged and created merchant bankers who could understand the investors and enterprises in the region, she said.
