MSMEs may soon go public

TIHC to sign MoU with BSE and NSE to help units tap equity market

July 29, 2017 11:43 pm | Updated August 02, 2017 04:33 pm IST - HYDERABAD

HYDERABAD, TELANGANA, 20/07/2017: B.Yerram Raju, Advisor, TIHC & MSEFC, Government of Telangana during a press meet in Hyderabad on July 20, 2017. 
Photo: K.V.S. Giri

HYDERABAD, TELANGANA, 20/07/2017: B.Yerram Raju, Advisor, TIHC & MSEFC, Government of Telangana during a press meet in Hyderabad on July 20, 2017. Photo: K.V.S. Giri

Telangana Industrial Health Clinic Ltd (TIHC), formed by the Government to revive and revitalise the micro, small and medium enterprises, will be signing a memorandum of understanding with the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) to help the units go for public issues and tap the equity market.

Even as the newly formed organisation awaits the permission from the Reserve Bank of India (RBI) for transforming into a non-banking financial company, said to be the first of its kind in the country on these lines, it has already initiated talks with the bourses to allow them to be listed on their respective SME platforms.

"We have had talks with them and in principle they have agreed to help our units on the stock market. TIHC will help fund upto Rs 50-lakh to help MSMEs get listed on bourses and go for public issue. So far, only a single unit from here has been listed,” says B. Yerram Raju, Economist and advisor to the TS Government.

The Clinic, which came into existence last month, has been formed for the express purpose of reviving the MSMEs which have fallen sick for a variety of reasons as the Government has recognised that these could be vital for employment generation and keep the economy going.

The Industries Department had identified 7,200 of MSMEs as sick in TS and while 130 of them are under various stages of revival with the help of various financial institutions including banks, the vast majority are not yet out of the woods which the new NBFC plans to “handhold” and get them back on the working mode.

Cascading effect

The Government had thought of this new venture as it has realised that the MSMEs are also vendors to the medium and large scale firms, hence their sickness has had a cascading effect plus the “prevailing Acts and rules were not working”. However, “we will be only supplement and not supplant the existing institutional mechanism working closely with the financial institutions,” Dr. Raju hastens to add.

“We have already done a case study of 100 such enterprises. Most of them have been shut due to paucity of funds, lack of technology updates, partnership woes and so on. With the help of consultants in our panel, we will have a round table consultation with the banks involved to find out a solution,” he explains.

It includes spending ₹50,000 for a techo-economic valuation study and ₹5 lakh with a nominal interest of 3% as bridge finance and facilitate another ₹25 lakh loan from financial institutions. “In a way we will be mentoring, co-financing, partnering and helping provide equity to revive the entrepreneur,” Dr. Raju avers.

MSMEs too can invest anywhere from ₹10,000 to₹ 2 lakh into the TIHC set up with a corpus fund of ₹Rs.100 crore made of contribution from the Centre (₹50 crore), State government (₹10 crore), financial institutions (₹35 crore) and industrial units (₹5 crore). TIHC plans to help at least 10 units annually and also go totally online linking up with the member MSMEs facilitating a payment gateway also.

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