What is the SME IPO in India? – All you need to know

SME IPO in India (Small & Medium Enterprises Initial Public Offer). The SME sector plays a crucial role in propelling India’s Economy. SMEs account for around 45% of India’s GDP and 40% of India’s export. It is also one of the largest employers in India. Hence, SMEs are vital to India’s development. 

Although SMEs are so crucial for India’s development, they face several issues and challenges.

These issues include:

  • Lack of an efficient workforce
  • Lack of cutting-edge technology
  • Lack of robust infrastructure
  • Lack of a powerful marketing platform

The core issue behind all these problems is an In-sufficient Fund. This is the biggest challenge faced by almost every SME in India when they face severe competition from wealthy Multi-National Companies. 

To tackle these problems, NSE(National Stock Exchange) launched NSE Emerge, and BSE(Bombay Stock Exchange) launched BSE-SME. These platforms are launched to help SMEs raise necessary funds for their operations.

Let’s Understand, What Is SME IPO in India?

SMEs can raise funds by releasing IPOs(Initial Public Offerings) on NSE Emerge and BSE-SME. IPOs are very popular among SMEs as they can quickly expand their thriving business using the funds raised by IPOs. IPOs released by SMEs are called SME IPOs.

Eligible Criteria for SME IPO Process In India

SMEs have to satisfy specific criteria before they can launch their IPO. Let’s take a look at some conditions that SMEs need to fulfill:

  • The paid-up capital of an SME planning to launch SME-IPO must be between 3 crore and 25 crores. A company with paid-up capital more than 25 crores cannot be listed on SME platforms of NSE and BSE. They must be listed on regular platforms 
  • Net worth and tangible assets should be at least three crores.
  • SEBI guidelines mandate that the minimum trading lot must between 100 to 10,000. It will depend on the price band of the issue. 
  • There must not be any pending or accepted a wind-up application by the company.
  • Financial statement and a Website is mandatory for listing on NSE Emerge and BSE-SME.
  • The minimum numbers of the allottee must be 50 for when the IPO is listed. 
  • As per section 124 of Companies Act 2013, a company must have distributable capital for at least two years out of the preceding three years.
  • The promoters who are promoting the IPO must have experience of a minimum of three years in the same field.
  • The applicant company should enter into a written agreement with NSE and BSE along with the compulsory facilitation of DEMAT trading. 
  • A mandatory auditor’s certification is required stating that the promoter or any of his/her holding companies has not defaulted in payment of interest.
  • Details of litigation cases filed against any promoter, director, or companies held by the promoter must be declared while applying.

SME IPO Vs Main-Board IPO

ParametersSME ExchangeMain Board
Post-Issue Paid UP CapitalsMin Rs.1 Cr ; Max Rs. 25 CrMin Rs. 10 Cr
Minimum Allotees In IPO501000
IPO UnderwritingMandatory
(100% Underwriting with Merchant Banker underwriting 15%)
Non Mandatory
Track RecordRelaxed Track Record NormsStaight Track Record Norms
Offer Document vettingBy Stock ExchangeBy Sebi
IPO Application SizeMin Rs.1 LacRs. 10000- Rs.15000
IPO Time Frame3-4 Month6-12 Months
Reporting RequirementsHalf YearlyQuarterly

SME IPO Top 5 Best & Worst Performance in 2019

Top five best performance SME’s Listed in 2019

CompanySectorReturns in %
against Issue Price
Evans ElectricsTrading299
Artemis ElectricalElectrical Equipment116
VR Films & StudiosFilm Productions,
Distribution & Entertainment
Parshva EnterprisesTrading80
Jonjua OverseasIT-Software67
*value as on 1 October Closing

Top five worst performance SME’s listed in 2019

CompanySectorReturns in %
against Issue Price
Suich IndustriesTelecommunication Equipment-64
Gleam FabmatTrading-66
Ashapuri GoldTrading-67
Gian HealthcarePharmaceuticals & Drugs-70
Mahip IndustiesPaper & Paper Products-80
*value as on 1 October Closing

Also Read: What is Cut-off Price in IPO?

What are the Benefits of Investing in SME IPO? 

SME IPO Investment benefits in Indian market

As discussed earlier, SMEs are a vital part of the Indian Economy. The government takes many steps to help them grow. So if an investor invests in a good SME after thorough research, they can earn a substantial profit through SME IPOs.

If you need any more information about Upcoming or latest SME IPO in India, you can reach us anytime on our website!

Note: We will help you out with investment in SME-IPOs too! Pls Write your Query In Below Comment Area.

More Article on IPO

What is IPO Allotment Status?
Difference Between IPO and FPO
IPO Performance Tracker
How to Buy an IPO in India
What is IPO Grading in India?

SME IPO in India Small and Medium Enterprises Initial Public Offer

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