BSE announces guidelines for SME listing

The Bombay Stock Exchange (BSE) has stipulated eligibility norms for listing on SME Exchange. This exchange was unveiled in March this year. 

 

AS per the circular on BSE SME website, the eligibility rules are - 

1.Net Tangible assets of at least Rs. 1 crore as per the latest audited financial results

2.Net worth (excluding revaluation reserves) of at least Rs. 1 crore as per the latest audited financial results 

3. Track record of distributable profits in terms of sec. 205 of Companies Act, 1956 for at least two years out of immediately preceding three financial years and each financial year has to be a period of at least 12 months. Extraordinary income will not be considered for the purpose of calculating distributable profits. Other wise, the networth shall be at least Rs 3 Crores.

4. Other Requirements
· The company shall mandatorily facilitate trading in demat securities and enter into an agreement with both the depositories.
· Companies shall mandatorily have a website

Read more on: http://news.indiamart.com/story/bse-announces-guidelines-sme-listing-158863.html

Microsoft brings on board Avnet, Redington for SMB space

Software company Microsoft India has roped in Avnet and Redington as its Value-Added Distributors (VAD) in India with aim to develop an enhanced level of service for partners and also customers in the small and medium enterprise (SMB) sector on the basis of recent technologies.

 

The value-added distribution role is developed on a unique business model with a specialised resource portfolio optimised for raising adoption along with market development of specialty solutions.

According to this collaboration, Avnet will offer complete solutions to Microsoft's value added resellers for 'Virtualization and Management and Identity and Security', while Redington will address the demands for 'Unified Communications, Security and Cloud Services'.

Read more on: http://news.indiamart.com/story/microsoft-brings-board-avnet-redington-smb-space-158700.html

India's handicraft exports climb 17.5% to $2.7 bn during FY12

Country's handicraft export advanced by 17.56 per cent to $2.7 billion during the financial year 2011-12 as compared to the same period in 2010-11, as informed by the nodal body of handicraft exports today.

 

The country witnessed the growth despite the sluggish demand in major importing markets like the US and Europe. 

The US and Europe together account for more than 60 per cent of the country's total handicraft exports. 

During the financial year 2010-11, the exports stood at $2.3 billion, as per the figures of the Export Promotion Council for Handicrafts (EPCH). In the last fiscal, the growth was mainly driven by growing demand in new markets like China and Latin America. 

Read more on: http://news.indiamart.com/story/indias-handicraft-exports-climb-175-27-bn-during-fy12-158365.html

Govt's five major schemes push for SME growth

Micro small and medium-sized enterprises (MSMEs) play a vital role in the growth of a nation. It is often said that small units are highly responsible for driving innovation and competition in various economies. Presently, the sector is accounted for 17 per cent in Indian GDP, which is expected to grow to 22 per cent by 2012.

Indian economy gets 45 per cent of manufacturing output and 40 per cent of exports from the SMEs as per the ministry estimates. Not only this, the sector employs 60 million people, creates 1.3 million jobs every year and caters to both national and international markets with the production of more than 8000 quality products.

Having been the key growth driver of the country economy, the MSME sector lacks the required cooperation from the government which in turn confines the growth of the sector in the domestic and global markets.

However, there is a slew of government schemes and sops offering enhancement and support to the business activities of the small units, but a majority of small traders fail to avail them due to lack of mindfulness and awareness about the schemes.

Here are five key financial assistance schemes being offered by the government to intensify the growth of the small scale units.

1. Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE)

The Ministry of MSME and Small Industries Development Bank of India (SIDBI) have instituted a trust named Credit Guarantee Fund Trust Micro and Small Enterprises (CGTMSE) for the implementation of Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGMSE), which was formally launched on 30th August, 2000 and became operational from 1st January, 2000.

The scheme is aimed at providing collateral-free credit to both existing and new micro and small enterprise (MSE). The plan covers term loans and working capital facilities of up to Rs 100 lakh per borrowing unit and can be prolonged without any collateral security or third party guarantee to a new or existing MSE.

In case those units covered under this scheme go sick due to the factors beyond their control, the scheme also allows the lender to stretch the rehabilitation assistance. If the credit facility surpasses Rs 50 lakh, it may still be covered, but the guarantee cover will be extended for credit assistance of Rs 50 lakh only.

2. Credit Link Capital Subsidy Scheme for Technology Upgradation

Credit Linked Capital Subsidy Scheme (CLCSS) provides technology upgradation assistance to the SMEs primarily in the small scale industries (SSI). All entities, including sole proprietorship, partnership, cooperative, private and public limited companies, are eligible for the scheme.

The maximum limit of eligible loan for SMEs under the scheme is Rs 1 crore. It comprises a subsidy rate of 15 per cent.

The scheme was first launched in October, 2000 and was revised in September 2005. Under the revised scheme, the admissible capital subsidy is calculated with reference to purchase price of the plant and machinery.

3. Mini tools room and training centre scheme

In an endeavour to assist the manufacturing sector, the Government of India provides assistance to the state governments in setting up the tool room facilities, the backbone of the manufacturing sector as they create dies, tools, moulds, jigs, fixtures, gauges and precision components which are the essential elements for the operations of the production units.

Read more on: http://news.indiamart.com/story/govts-five-major-schemes-push-sme-growth-158127.html

Technologies That SMEs Must Invest In

How to implement Six Sigma?

Being a Small & Medium Enterprise (SME), you have to adopt new technologies for making progress in a highly competitive environment. Technology is redefining the modes of business, and fast growing SMEs have to adopt technology to herald their growth and development. If you are wondering about the technology which has boosted the growth of industry leaders such as Motorola, GE, then you need to know more about the six sigma and its unique advantages.

What’s Six Sigma?

Six Sigma focuses on the improvisation of process outputs through the identification and removal of defects or errors and minimising the variation in manufacturing procedures. Six Sigma has its origins in the manufacturing process with 6 and Sigma being references to the statistics-based model of manufacturing. A six sigma process refers to a method where the manufactured products have a 99.9996% defect-free content and the defects are reduced to 3.4 per million entities generated.

How to implement Six Sigma

For implementing Six Sigma, your SME has to go through a phased process with the first step being the training of the staff. The team would have to be divided into different categories with the Executive Leadership at the top which would comprise top management. They are the ones responsible for preparing the vision of the process. The next category consists of Champions who implement it across the enterprise. Master Black Belts (MBBs) form the next section which work like in-house trainers for the process. Black Belts work under the MBBs and apply the Six Sigma methodology to come up with the results. The final section consists of the Green Belts which are responsible for implementing the process along with other tasks of the organisation.

The second step is to identify an opportunity. You would have to decide the most important requirements of your customer and collate detailed information relating to the process. Based on this data, one can estimate the performance of the process. This would also involve understanding the parameters which were adopted for the process. Six Sigma training equips the team to use various statistical tools to examine and analyse the data. Following this, your team can forward solutions to be implemented based on the findings from the analysis. The improvements can then be crosschecked to understand the progress. These steps can be repeated till a steady rate of success is achieved. It is a time taking process so you would have to be patient with the process.

Types of methodologies

Primarily, there are two project methodologies in Six Sigma. They are based on Deming’s Plan-Do-Check-Act Cycle and consist of five phases of processes. For improving an existing business process, DMAIC is used. Whereas the creation of a new product or service requires the implementation of DMADV. You can choose your options as per your preference. 

 

The Trick of Six Sigma

For implementing Six Sigma, you have to be deeply committed to the project. It involves all levels of the management and utilises managerial and financial resources. A set of policies need to be established and training programs need to be conducted for the staff. There are various agencies which conduct Six Sigma training which can be contacted for the purpose. You can even hire a Six Sigma professional to implement and train staff for a continued input from time-to-time. Six Sigma has been the forte of large companies with more than 500 employees but soon it could be your handy partner which can take you into the big league.

Is lending a good idea for MSMEs?

As a Micro,Small & Medium Enterprise (MSME) head you would be worried for options every time you plan for expanding the business or conducting new processes in the organization. These MSMEs are one of the most important contributors in employment generation, promotion of entrepreneurship, wealth distribution and backward area development in India. However, they face a lot of hurdles due to their limited resources in manpower, finance, infrastructure and reach in the market. So where can the MSMEs generate or borrow funds from?

A Mix of Challenges and Opportunities
MSMEs face competition both from internal as well global competitors in times of globalization. Investments in technology & innovation often vie for an extra investment which needs to be provided from time-to-time. Having an extra amount for expansion and development could be a vital difference in the company’s future. There are a number of capital lending agencies working in India which could include banks, financial institutions, private investors, money lenders, etc.

How to approach these Agencies
Traditional finance agencies such as banks rely on documented sources of information, interviews, visits along with the knowledge and expertise of the individual managers in assessing and monitoring a certain business.

While approaching a lending agency, a good credit rating, secure financial statements and stable collateral could work towards your advantage. Many small business lenders often rely on personal credit history of the proprietor while giving the loan. So, the conditions can vary amongst various lending agencies. Risk assessment in a MSME varies greatly from a bigger company as the owner’s assets can also be listed as part of the SME. They often operate in the informal manner and thus listing their financial history can prove to be quite difficult. Keeping a strong financial process within the enterprise could benefit you in getting easy finances. Some lending companies may also demand for shares in your enterprise or prefer an internal agreement for a percentage of the company profits which can be negotiated at your end depending upon your need for the money.

With the advent of credit rating, getting your enterprise rated would also prove to be a good move. The credit rating agencies often have a list of banks and financial institutions on their panels. Getting a good rating would automatically make you eligible for a loan and that too at a reduced interest.

All’s Going Well
Today, as a MSME you have a better chance to avail finances with the launch of the new SME Exchange. You can enlist the organization on the Exchange and avail equity from the market. The latest budget has also provisions for an exemption on capital gains tax for property sales which are focused towards investments in MSMEs. The government has also set aside 5000 crore rupees to establish an India Opportunities Venture Fund along with SIDBI to offer easy equity to MSMEs.

One has to understand that companies such as Microsoft also started as a typical MSME and have reached an important milestone of being the richest enterprise presently. MSMEs can easily collaborate, merge and develop into larger organisations without much complications regarding documentation and thus prove to be perfect vehicles for instant growth. Thus, a gap in financing should be the last problem on your list with a variety of options for you.

Savvy enough to enjoy ETF purchasing?

The Indian economy has seen a rapid flux in recent times and the role of SMEs cannot be negated in this situation. As an SME, you have to be ahead of the rest with some wise decisions in an investment-centric environment. If you are looking for a safe bet, then focusing on gold exchange-traded funds (ETFs), a traditional choice of enterprising individuals and households, could be a solution for you.  

What it does

ETFs work like shares except for the fact that they are backed by physical holdings of a commodity. Similarly, gold ETFs enable buyers to own gold without any physical possession. ETF purchasing assures the SMEs who can use them to hedge gold commodity risk. It can also work as industry ETF and help the SME in gaining exposure to the gold mining industry. Gold ETFs can also be useful as a hedge for regional risk or be supportive in gaining foreign exposure.

Gold ETF

From where you can buy ETF

India has over 10 ETFs which are backed by various mutual funds which are supported by financial institutions and banks amongst others. Some of the popular ETFs included Benchmark Gold ETF Gold BeEs, HDFC Gold Exchange Traded Fund, ICICI Prudential Gold Exchange Traded Fund, KOTAK GOLD ETF, Religare Gold Exchange Traded Fund, Axis Gold ETF, etc.  All ETFs charge an expense ratio and management charge for their services. These could vary from 1 per cent to 3 per cent depending upon the asset management company. You can read the offer document of each of the companies and make a decision for yourself. The trend in India is upstream against the global situation where gold has witnessed an all-time drop in their demand for gold ETFs. 

The ETF advantage

ETFs are expected to witness a surge in the coming times. Thus, as an SME, you can easily earmark part of your profits, without worrying about the duration of the investment – long or short. You can easily hedge a part of the portfolio and gold ETFs prove to be a viable path in the presence of pressing inflation. Gold, especially guarantees financial insurance for many investors. Even the first month of the New Year has reflected an explosive growth for gold funds. You can make purchases in small denominations with the smallest ETF unit being one gram of gold. Also, since there is no physical delivery of gold, hence one need not worry about quality of the gold. You are also not bothered about storing the gold as there is no physical entity. The ETFs can easily be resold or traded on the exchange. 

ETFs – the other side

On the other hand, as an investor, you may be required to submit long term or short term capital gains tax on gold ETFs when you make a profit. The asset management company is in charge of your gold ETFs and hence a mistake on their decision to invest could lead to losses for you. Also, there is a possibility of tracking error between the gold price and gold ETF which may lead to deductions. Another threat is the liquidity which may result out of lack of volumes in the gold ETF trade. 

The numbers as they stand today

India’s investment in ETFs has risen to whopping 30tonnes in 2011 as compared to 15tonnes mark in 2010. SMEs have invested in large numbers with 50 per cent of total ETF purchases reported by companies. As per the experts’ opinions, gold, despite its vagaries and fluctuating volatility is still presumed to be a viable option for companies that want to boost their investment portfolio. It is also considered as a safe bet by many Indians and good protection against inflation which has been dictating the Indian economy for quite some time.