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

MSMEs want Centre to offer access to sufficient credit: FISME

Indian Micro, Small and Medium Enterprises (MSMEs) have requested Centre to offer access to sufficient credit, which is important for survival and growth of SME production. 

 

The Federation of Micro, Small and Medium Enterprises (FISME) in the budget proposal to the Union Finance Ministry has stated that the venture capital and private equity funds are required by the SME sector to commence new ventures and surge the current ones.

The securitisation of trade receivables is likely be introduced to allow the bond market to develop and also lure funds in large volumes and at concessional rates in the interest of MSMEs.

Moreover, FISME has said that Non-Banking Financial Companies (NBFCs) can help to offer finance to the micro and small enterprises, but they are required to be actively boosted via supportive policies.

Read more: http://news.indiamart.com/story/msmes-want-centre-offer-access-sufficient-credit-fisme-156338.html

How to Generate Cost Effective Web Traffic?

Online marketing is slowly transforming the success scenario of many SMEs and providing them with new, potential arenas. It can greatly contribute in providing them with a larger status and put them in the same league of larger firms.

Website traffic can be increased by developing online partnerships whereby various concerns host each other’s web links and connect every user to the other’s web page and also advertise their own wares. The traffic can also be boosted by promoting search engine listings.

What Does the Customer Look For?

An SME needs to understand the way in which customers rely on search engines and the way they pick up keywords in a particular content. Search engines such as Google, Yahoo, Bing, etc. are potential platforms for customers, existing and new ones, to search for a particular product and service. They work as effective channels to guide users towards a particular site. One can choose between paid listings or organic listings as per their convenience. Generating back links or link building is vital for a website to have a higher position on the listings.

SEO or Search Engine Optimization is fast becoming a favored option for SMEs who are realizing the power of the World Wide Web. SEO involves the process of promoting the visibility of a particular webpage or website through unpaid search possibilities. Initially the search algorithms depended on information provided by the websites such as keywords which was later converted based on the keyword density. Presently, each search engine has their own criteria for listing a particular website. Many of them employ crawlers which browse across various pages of a website and seek out keywords and content elements. SEO can be planned according to the various kinds of search including image search, video search, academic search, news search, among others.

Where & Why to Invest

Many SMEs invest in SEOs as part of their internet marketing strategy and they are incorporated in their website design. SEOs are expected to bring optimum return on the amount invested. Search engines change their algorithms or search criteria and thus websites can suffer a loss in the visitor counts. Thus, SEO-responsive material needs to be updated from time-to-time. SEO could practically include a variety of materials including website designs, content management systems, videos, images, shopping carts, and elements which are programmed for search engine exposure.

SMEs can also boost the prominence of their web page by cross linking which consists of multiple links on various pages to bring the reader/user in connection with some important pages on the site.

Another form of ensuring free web traffic is the mode of free articles. An SME should publish a lot of articles which are themed along their products or services. They can involve their subject of expertise and offer their customers tips and guidelines which can make for an informative read.

You can also start a newsletter that can easily carry a variety of experts on the subjects together. The SME can be also part of online communities and forums where they can share their information and expertise with their potential customers.

So, be everywhere without shelling extra pennies and attract extra web traffic to your website.

NIESBUD partners with International Finance Corporation for MSMEs

The National Institute for Entrepreneurship and Small Business Development (NIESBUD), which is an autonomous institution under the Ministry of micro, small and medium enterprises (MSME) has collaborated with the International Finance Corporation, which is a member of the World Bank Group, for undertaking various projects in regard to entrepreneurship development in this country.

A memorandum of understanding (MoU) has been inked and NIESBUD will partner with the IFC in conducting training of the trainers (TOT) programme for boosting the training skills of the MSME trainers.

For more information: http://news.indiamart.com/story/niesbud-partners-international-finance-corporation-msmes-155248.html

The Merger Benefit for SMEs

The Indian economy is bubbling and along with that are the big players. Pleasantly, this time round a lot of SMEs are also joining the bubbly bandwagon. A primary reason for this growth is the way smaller enterprises are taking to business decisions like mergers and acquisitions.

The Pretty Picture
A burgeoning number of Indian SMEs are entering into mergers and acquisitions with various players from India and worldwide. The numbers have nearly doubled over the last two years alone. At this juncture, one needs to thoroughly understand the advantages of mergers for a particular SME. With a merger, an SME can acquire a greater set of resources for itself which can include manpower, machinery and other innumerable assets. In turn, this can boost its efficiency which can lead to an increase in its output and also lead to a reduction in the cost of producing a particular product or services. This reduction in the expenditure and improvement in the output can convert to better business growth for the enterprise. 

How Mergers Help
Mergers can help an SME in covering/removing its weaknesses in the long run. For example, any SME that is lacking in its R&D is advised to merge with an agency with strong R&D skills which can boost the productivity of both enterprises. Similarly, in the global context, mergers assist SMEs in penetrating new markets. Any Indian SME can also partner with agencies from foreign countries to facilitate retail for both their brands within India. Besides bringing a host of new technology and products into the country, it would also introduce better management, practice and culture to the agency. Both the agencies stand to gain from merger and it provides foreign SME with the know-how about Indian market and its demands for the coming times. Also, while SMEs go into mergers, they get into some fruitful partnerships regarding proprietary rights for products which can benefit the end user. IT sector is a clear example for such mergers where SMEs combine to offer a variety of products for the user. This also opens new markets for the SMEs and also contributes to innovation and propagation of a particular merger.

Reverse Mergers
In many cases, mergers also help SMEs in rising out of debt and works as effective exit strategy for many companies. Many SMEs can also enter into reverse mergers whereby a private company can merge with a public enterprise and form a public entity with a control exerted by the private company. With a reverse merger, private companies can exert better control on an existing public company and still run an enterprise with a public existence. There are a number of examples in India itself where an SME has acquired a larger status through its timely merger with another SME. Most of these mergers are found to be from the manufacturing sector although service sector is also joining in this process. The option of  leverage buyout financing and acquisition funding process which is supported by private equity houses prove to be some of the reasons for the sudden spurt in mergers amongst SMEs. Mergers prove to be one of the best ways for an SME to grow and expand. With the advent of globalization, it has become a more opportune growth for SMEs.  

Expert Speak: Mr. GK Pramod

Back to Basics to Achieve Profitability for SMEs

With the ever changing demand and supply dynamics of the markets, SMEs do feel pressurized to meet the requirements. The major challenge which they came across is to sustain and fulfill the requisites without hampering enterprise's profitability.

After covering two 'Sutras' for effective business growth - Scalability and Sustainability, we will have a session on third Sutra – Profitability in this blog. By understanding its various aspects, you can imply them practically and make them instrumental to accomplish organisational growth.

Profitability
A Microlevel organization is said to be Profitable when it makes enough profit to take care of its employees, customers, investors and the Microlevel Entrepreneur in a satisfied manner.

Importance of Profitability

• Profitability plays an important role in motivating the Microlevel Entrepreneur in the right direction
• If the profitability is not in there in the business, it becomes extremely difficult for a Microlevel Entrepreneur to continue in the business

Do’s

• Make sure the business unit makes profit from day one of its operation
• Cut down all unnecessary expenses
• Make sure that the Microlevel Entrepreneur focuses on the core business

Dont’s

• If the existing unit is not making profit, first make sure that it becomes profitable
• Don’t open up a new business unit if the first unit is not profitable
• Don’t spend extra money on additional resources

Case Study:

Case Study-1: (Product Business)

Ms. Usha is a Microlevel Entrepreneur from Mysore in Karnataka. She is selling natural fresh juice. The details of Ms. Usha’s business organization unit are as follows:

1) Name of the entrepreneur:               Ms. Usha
2) Name of the organization:                Sushruta Fresh Juice Centre
3) Nature of business :                         Sale of Natural fresh juice

4) Details of turnover for the past 3 years:

Let us understand the analysis regarding Profitability factors for Ms. Usha’s business (Product Business):

• Ms. Usha’s business has made 30%, 35% and 40% profit in the past 3 years
• She is making good profits
• As the turnover is increasing, she is also able to increase the profit margin
• This is a good, profitable business

Challenges in Profitability

• Uniformity in production and  packaging. 
• To create awareness among their customers that natural fresh juice will provide good health.

Case Study-1: (Product Business)
 

Mr. Charan Singh is a Microlevel Entrepreneur from Jalandhar in Punjab. He is selling fertilizers. 

                                                                                                                 
The details of Charan Singh’s business organization unit are  as follows:
1) Name of the entrepreneur:                  Mr.Charan Singh
2) Name of the organization :                  Guru Gobind Agro
3) Nature of business :                            Selling fertilizers, Seeds and Chemicals
4) Details of turnover for the past 3 years:

The analysis regarding Profitability factors for Mr. Charan Singh’s business (Product business) suggest:

• Mr. Charan Singh’s business has made 10% profit in the Past 3 years.
• He is not making good profits.
• As the turnover is increasing, he is not able to increase the profit margin.
• This is not a profitable business.   

Challenges in Profitability

• Mr. Charan Singh is making a large turnover but less profit.
• The challenges for Charan Singh are to increase his profitability along with his turnover.

Key Points to remember:

• Make sure that the existing business unit is profitable. Increasing the profitability doesn't necessarily mean, you may have to open up more units. You can increase the profitability either by increasing the price for your products/services or increasing the customer base.
• Once the existing unit becomes profitable, a Microlevel Entrepreneur can think of opening new business units.

With this the journey of understanding the three vital 'Sutras – Scalability, Sustainability and Profitability' for business growth ends here followed up by your actions to implement them practically in the business growth strategies and witness the difference.

We will continue our journey of understanding various 'must know' topics for Small and Medium Enterprises (SMEs) in the subsequent blogs.

The blog has been authored by Mr. GK Pramod, Co-founder, The Second Gear - MBA for Non MBA's Mentoring Module Concept.

To contact the author, e-mail at gk@tothesecondgear.com

Leave your comments and queries here:

RBI asks Banks to acknowledge, streamline MSME loan applications

The Reserve Bank of India (RBI) has directed the banks to compulsorily acknowledge all the loan applications, submitted either manually or online, by the micro, small and medium enterprise (MSME) borrowers. 

 

The central bank has issued the directive after receiving complaints from industry associations/ chambers that banks have not been acknowledging loan applications. The banks have been asked for ensuring that a running serial number is seen on the loan application form and also on the acknowledgement receipt. 

Moreover, the banks are strengthened to commence a central registration for loan applications, said RBI. The same technology is expected to be used for online submission of loan applications for enabling online tracking. 

For the micro enterprises, the simplified application-cum-sanction form, printed in regional language, needs to be unveiled for loans up to Rs 1 crore.

For more information, click: http://news.indiamart.com/story/rbi-asks-banks-acknowledge-streamline-msme-loan-applications-153008.html

Direct to Home: Pune Farmers' Innovation leads to fresh vegetables to consumers

Agriculture is the largest economic sector in India and plays a significant role in the overall socio-economic development. About, 65% of Indian population depends directly on agriculture, and it accounts for around 22% of GDP. India is the largest producer of fruits and second largest producer of vegetables in the world. 

The government supports agriculture by deciding minimum support prices for the major agricultural crops, subsidies and credit schemes. However, there is a lack of required level of investment for the development of marketing, storage and cold storage infrastructure. According to National Bank for Agriculture and Rural Development (NABARD) post harvest losses accounts about 25% to 30% of production in India.

The solution to this problem is advocated through innovation, which is going to change the game for small and emerging businesses related to agriculture. Kudos to Pune Farmers, who not only cut the middleman from the business, but also find a solution to sell their product directly to consumers. This story was recently highlighted by The Economic Times (ET).

A new trend for small and emerging businesses related to agriculture

According to the ET story, Pune is witnessing a new trend where farmers are offering consumers directly with fresh vegetables right at their door step. The idea is to create a self-help group and adopt new technology for payment system, and then approach the end-users directly with their offerings. 

The trend in the case of Pune has recorded three tonnes of fresh vegetables being delivered at the door steps of more than 200 families which has encouraged the spirits of these farmers. The orders get placed online and they are processed in the village itself. To relish the farm fresh vegetables, the customer needs to pay a sum of Rs. 2, 000/- online to their site. The minimum size of the order has been fixed at Rs 150 per delivery. This innovate idea has caught instant attention of working couples and elderly people. The trend has emerged as a real delight for those who are willing to pay a premium for farm fresh vegetables.

Online delivery of fruits and vegetables is not a new trend in India but what makes the Pune experiment different is being driven by farmers themselves. It is an ideal condition for those who are willing to start a small-sized business related to farming. Earlier, a hefty amount was retained by middle-man and there was no direct contact between producer and consumers. However, with the advent of e-Commerce now it is easy to sell their product online. Further farmers have made a deal with large housing societies to sell inside their premises once a week. It would enable them to offer discounts as well.

Small sized ventures have a huge potential in organic farming

A budding interest in organic food is an answer to a potential business venture. There is a growing concern towards healthy living, and consumers are very apt to pay for foods involving natural farming. Organic products usually get a premium of 10% to 20%. Organic farming also cut cultivation and input costs by up to 70% due to the use of cheaper, natural products like manure instead of chemicals and fertilizers.

How SMEs can harvest profit out of it

As per the existing laws in India, markets for agricultural product can be set up at the initiative of State Governments alone and there is still no provision for individual farmers. Recently, it has been recommended that ‘Special Markets’ or ‘Special Commodities Markets’ in any market area for specified agricultural commodities can be operated in addition to existing markets. Growers are permitted to apply for the establishment of new markets for agricultural produce in any area. Therefore, in a market area, more than one market can be established by private persons, farmers and consumers. There will be no compulsion on the growers to sell their produce to existing markets only.

Therefore, a small-sized venture is in a unique position to tap this growing market by adopting new technology and approaching directly to the end-user with their potentially better offering.

Understanding the Long Tail on the Internet: Business Strategy

For Small and Medium business today one of the strongest possible aspects of exploring the market size and the opportunity is the Long Tail. With the Internet spreading across the length and breadth of the country, there are new consumer markets sprouting which requires a new set of product offerings with a supported set of services.

As the choice is increasing for consumers, there are more set of offerings available for the customers to choose from and as businesses are realizing it, there is a demand for products and services which is rising, which previously did not exist, as reaching out to customers in villages etc. was initially not possible.

Example, if we take the music industry, there was a time when people used to listen to radio as a mass medium and that was one way to reach the masses, as a product it could help you listen to your music without really buying discs. But with the Radio, the CD's going ahead came the Internet which changed the game. Internet created music libraries like Rhapsody which has a collection of millions of songs which can be streamed anytime from any part of the world. They have seen trends where customers are buying music which generally would be very hard to find in stores. This is music of the gone era, in cases even a decade old.

This trend shows the demand and consumption trends of a whole new market which now has access to interesting content which was not available before. The volumes of this consumption is so high that even at nominal prices it adds up significantly to the revenue.

What's in it for SMEs?
Many SMEs have strong products and related services which they are reaching out to the market with. Like all businesses they also target the larger segment of the market, where the Price-Demand-Supply ratios help them take their business to the next growth level. But there is stiff competition in the space and hence for small companies to compete becomes difficult.

This is where small companies can innovate and reach out to a new segment of the market which might not have the potential to buy the similar category of products and services, but can afford to buy a new set of customized services and products. There is a fairly large volume of such consumers which the SMEs can target using the Internet which is a low cost medium for companies to reach out to new potential markets and engage existing set of customers.

E-commerce 
SMEs have a major opportunity in terms of E-commerce which they can explore. With the increased access to the Internet and increased buying power, SMEs should leverage online mediums to reach out to such potential customers with specialized set of services which have a lower delivery cost and also can be paid for online.

One can easily set up an E-commerce portal of their own, OR partner with portals like E-bay etc. to set up online stores, from where they can make online transactions. The advantage with these platforms is that they provide the sellers an existing infrastructure which the sellers can leverage to their advantage.

Team IndiaMART Knowledge Services is committed to create new opportunities or SMEs to grow. To know more about how you can leverage the internet and new media technologies, drop in a comment to this post and our team of experts will be happy to help!

Help Your Customers Take Intelligent & Informed Buying Decisions: naaptol.com

Introduction of the internet has changed everything. How businesses communicate and today transact has evolved from being just a one sided conversation to a multi way dialogue which has empowered customers to be well informed of what they are buying. Today if you are going to buy any product you probably have the reviews of the same available online already.

E-commerce helped it all evolve
E-commerce thought is still catching up in India, but with broadband spreading across the country, there is a lot being achieved with people actually making purchase decisions online. There are many e-commerce portals which are empowering the customer with all sorts of information, which is helping them make powerful buying decisions. While it becomes easier for both the customer and the seller to transact online, its also scalable, as, if you are a seller you can simply host your product/ solution/ offering online on an e-commerce platform and the rest is taken care of by the platform. Your product can reach out to target audience which generally you would not have reached out to.

Comparing the products before buying helps: naaptol!
If you are able to compare the product you want to buy with similar offerings in the market OR comparative brands, you are better able to judge, if you are making the best choice or not.

While there are exciting deals on this platform, the interesting part for Small and Medium Enterprises is that they can sell their products on the website, while listing them with their features for the buyers/ customers to have a look at and explore.

As shown in the screen capture above, naaptol allows users to be a seller or a buyer. As a seller you can list your products on the site and be assured that many prospective buyers would be comparing them online. 

How do I list my product?

To create your own e-store on naaptol, all that you need to do, is to create a login to the website, as shown in the screen capture below:

Once you are done, you can start listing your products online with all the various details about them, which you think, the customers would want to know and will help them take a buy decision.

How can customers choose brand and products?

Lets take an example. Lets say you want to buy a hands free for your mobile phone, all you need to do for it to navigate across to the hands free section under mobiles on the website and you will be re-directed to the following screen:

The customers can now choose amongst the various brands existing and can also get a comparative differentiator chart created for the choices they have made. These differences are not just limited to prices, but also features and many other comparison pointers, which are provided by the platform and help customers make an informed buy decision.

How do SMEs benefit?

SMEs which are in the product selling space can actually list their products for free on these e-commerce websites and generate sales. The process pretty much remains similar as it is in the offline world. As you buy from trusted brands and shops/ establishments, you obviously have to create your reputation and credibility in the online marketplace, where your customers have to believe you and place their trust on you monetarily.

Selling online reduces down the cost of sales and also reduces down the sales cycle time and customer acquisition process. Hence for SMEs its more scalable and a far better option to sell online.

There are many such online platforms available, which are benefiting the Small and Medium Enterprise segment. To know more, get in touch with the experts at IndiaMART Knowledge Services. Do drop in a comment to this post to let us know what else would you want us to share about!