BSE SME Exchange and NSE EMERGE Exchange Platforms in India and a Comparison between them

Abstract: Small and Medium Enterprises (SMEs) in India play a very important role in enhancing the potential and opportunities of entrepreneurs in India. But funding creates various hurdles in its path for the growth. Banks are reluctant to provide loans to them because of the various reasons like information asymmetry, moral hazard or adverse selection effects which create various challenges in front of SMEs to generate funds. To overcome this problem, government of India, with the help of SEBI, launched two platforms, BSE SME platform and NSE EMERGE platform for the listing of SMEs. But after more than three and a half years of their launch, there is a need to compare their various characteristics. In this study, the various characteristics are compared between both the SME platforms. The SMEs and ITP companies of both the boards are compared which would help to find out where and by which characteristic a board is lagging behind. The various characteristics include the share prices, market capitalization, market turnover, PE ratios and proportion of companies reporting losses. In this study, we will study about both the SME platforms with their listing requirements, benefits of listing various challenges existing for the entry in exchange and also to provide some suggestions to overcome those challenges.

 The data structure for the study is based on the official publication of annual reports, and other reports like daily trading reports, ITP bhavcopy, financial reports of the companies listed on the exchanges and the share prices of the listed companies from the official websites of both the platforms. For the data collection the census method has been adopted where all the SMEs and ITPs are considered. Simple tabular approach has been used for the analysis of the data.

The findings indicate that BSE SME exchange has well diversified companies on the basis of market cap and most of the companies listed on it are healthier in general. Whereas, most of the companies on the EMERGE platform are reporting losses. But even after that its market turnover has improved in the recent year than that of its rival exchange. Moreover, the BSE SME companies have lower share prices in general.

This research has focused on the Indian SME Exchange platforms and analyzed the various dimension on these platforms both quantitatively and qualitatively and on different levels. It will create awareness among the entrepreneurs, SMEs and investors and will help them to choose the best platform according to their needs.

Key words: Small & Medium Enterprises, Bombay Stock Exchange, National Stock Exchange, Institutional Trading Platform.

Read Full Length Paper