1. Bombay Stock Exchange Ltd. BSE SME Platform-Corporate Presentation

2. Section Contents Page Table of Contents (1 of 2) 2 A About SME Industry4 B SME Exchange-SEBI Guidelines 8 C Eligibility Criteria10 D Migration from SME Board to Main Board13 E Benefits of Listing 16 F Key Statistics18

3. Section Contents Page Table of Contents (2 of 2) 3 G Eligibility Criteria 21 H Institutional Trading Platform-Introduction 23 I Listing of Specified Securities 27 J Exit Options 33 K Thank you 35

4. About SME Industry 4

5.  Micro, Small and Medium Enterprises (MSMEs) contribute - 8% of the country's GDP - 45% of the manufactured output - 40% of our exports  Provide employment to about 7.5 cr. people through 4 cr. enterprises.  The Micro Small and Medium Enterprise (MSME) sector forms the largest generator of employment in the Indian economy.  The MSME sector forms a major portion of the industrial activity and produce 7000 different products. About SME Industry 55

6. 6 SMEs rely on informal sources of capital Adequate access to finance is crucial for SMEs to survive and eventually grow beyond their SME Status “ In India, the reality is that SMEs have poor access to finance” “the average SME relies mostly on its own capital and/or informal borrowing from friends and family members for start-up funds and working capital”

7. 7 SME universe is diverse. No one size fits all solution Poor information, fragile systems, weak control/corporate governance Apart from Capital, lack of management resources and bandwidth Institutional funding sources typically target process driven scalable opportunities Difficult to assess and analyse via a template approach/standard format Institutional funding sources not equipped to address. Low return on effort for pure debt financing Formal SME financing in India presents hosts of challenges Consequently banking institutions gravitate towards collateral based financing

8. Need for SME Exchange

9.  Provide the SMEs with equity financing opportunities to grow their business – from expansion to acquisition  Equity Financing will lower the Debt burden leading to lower financing cost and healthier balance sheet  Expand the investors base, which in turn will help in getting secondary equity financing, including private placement  Enhance company’s visibility. Media coverage can provide SME with greater profile and credibility leading to increase in the value of its shares  Incentives for greater venture capital participation by providing an exit option thus reducing their lock-in period Need for SME Exchange 9

10.  Greater incentive for the employees as they can participate in the ownership of the company and benefit from being its shareholders  Encourage innovation and entrepreneurial spirit  Capital Market will help distribute risk more efficiently by transfer of risk to those, who are best able to bear it  SME sector will grow better on two pillars of Financial system i.e. Banking and Capital Market Initiating a dedicated Stock Exchange for SMEs’ will lead to mobilization of the diversified resources of finance and build a bridge between the SMEs, Private Equity and the Venture Capital by providing an exit route. Need for SME Exchange 10

11. SME Exchange-SEBI Guidelines 11

12.  Issuer with post issue face value capital up to Rs.10 crores shall be covered under the SME Platform, Issuer with post issue face value capital between Rs.10 – 25 crores may get listed at SME Platform and Issue with post issue face value capital above Rs.25 crores has to necessarily listed at main board of the Exchanges  Suitable provisions for migration to/ from main board  The minimum application amount as well as minimum trading lot shall not be less than Rs.1,00,000/-  All existing Trading Members would be eligible to participate in SME exchange without any further registration  100% underwritten issues and Merchant Banker/s shall underwrite 15% in their own account  The Merchant Banker to the issue will undertake market making through a stock broker who is registered as market maker with SME Exchange. The Merchant Banker shall be responsible for market making for a minimum period of 3 years SME Exchange – SEBI Guidelines 12

13. Eligibility Criteria 13

14. 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. Otherwise, the networth shall be at least Rs 3 Crores. Eligibility Criteria 14

15. 4.Other Requirements The post-issue paid up capital of the company shall be at least Rs. 1 crores The company shall mandatorily facilitate trading in demat securities and enter into an agreement with both the depositories. Companies shall mandatorily have a website. There should have been no change in the promoters of the Company in the one year preceding the date of filing application to BSE for listing on SME segment. 5.Certificate from the applicant company / promoting companies stating the following: 6.a.The Company has not been referred to the Board for Industrial and Financial Reconstruction (BIFR). Note: Cases where company is out of BIFR are allowed. b.There is no winding up petition against the company that has been accepted by a court. Eligibility Criteria 15

16. Migration from SME Board to Main Board 16

17.  The Compliance norms are simplified. Half yearly compliance is required instead of quarterly compliance.  The abridged version of the annual reports need to be sent to the investors instead of the entire annual report and posting the soft copy of the report on the website is sufficient.  The issue expenses will be minimal on the marketing and stationery. However, the issue will be charged for underwriting, sub-underwriting and responsibility of three years market making.  Market making is compulsory for 3 years, unlike on main platform.  Listing fees on BSE SME platform are minimal compared to the main board.  The SMEs with the paid up capital between Rs. 10 crores and Rs. 25 crores has the option to get listed either on main board or on the SME Exchange. How different from Main Board ? 17

18.  Any SME on BSE SME Platform having a paid up capital more than Rs. 10 crores can move to the main board provided that the special resolution is passed in the AGM in favor with at least two third of the number of votes cast by shareholders other than promoter shareholders and then apply to BSE SME.  The SME migrating to the main board has to comply with all the main board norms like minimum 500 investors, pay main board listing fees and do the quarterly compliance etc. Migration from SME Platform to Main Board 18

19. Benefits of Listing 19

20.  Facilitate capital raising by small and medium enterprises including start-up companies which are in their early stages of growth  Provide easier entry and exit options for informed investors like angel investors, VCFs and PEs etc., to and from such companies  Encouragement in innovation and entrepreneurial spirits in addition to facilitating growth through Mergers and Acquisitions  Relaxed compliance and cost effective listing  Equity Financing will lower the Debt burden leading to lower financing cost and healthier balance sheet  Expand the investors base, which in turn will help in getting secondary equity financing, including private placement  Enhance company’s visibility. Media coverage can provide SME with greater profile and credibility leading to increase in the value of its shares Benefits of Listing 20

21. Key Statistics 21

22.  Number of companies listed so far =79,  No. of companies where approval has been given – 10/ No. of companies where DRHPs have been filed and waiting for approval – 9  Total funds raised by 63 companies – 630Crores  Total Market Capitalisation-9700 Crores  Number of Market Makers registered with BSE SME – 86  SME IPO index launched on 14 th December 2012 with 100 as base (Value as on 3rd December 2014 –1100)  Research reports are being published once the company gets listed Statistics 22

23. 23 Sectoral Distribution of the Companies

24. Institutional Trading Platform-Introduction 24

25. SEBI has notified the guideline on ITP on 8 th October,2013 and came out with the circular on 24 th October, 2013 Applicability (106 W)  Apply to small and medium enterprises which do not have their securities listed on any recognised stock exchange and which seek listing of their specified securities exclusively on the ITP Definition(106 X)  Institutional Trading Platform means the trading platform in SME for Listing and trading of Specified Securities of Small and Medium Enterprises for Informed Investors  “Small and Medium enterprise" means a public company including start-up company, that complies with all the eligibility conditions specified in regulation 106Y.” Introduction BSE-SME Institutional Trading Platform 25

26. Eligibility Criteria-Institutional Trading Platform 26

27. Eligibility Criteria(106 Y)  Company/promoter/group Company or Director not to be in the defaulters list of RBI/CIBIL  No winding up petition against the company by a competent court  Company/Group Companies/Subsidiaries not to referred to BIFR within 5 years  No regulatory action against the company/Promoter/Director by SEBI, RBI,IRDA,MCA within last 5 years  The company has not completed a period of more than ten years after incorporation  Revenues not exceeded 100 Crores in any financial year.  Paid up Capital not exceeded 25 Crores in any financial year.  atleast one full year’s audited financial statements. BSE-SME Institutional Trading Platform Qualitative FactorsQuantitative Factors 27

28. In addition,Any one of the following criteria:  Minimum Investment of 50 Lakh in Equity Shares by either AIF or VCF or other category of Investors Approved by the Board or Angel Investor(Member of Any Angel Association or group).  The company has received finance from a scheduled bank 3 years back and funds so received have been fully utilized.  Minimum Investment of 50 Lakhs in equity shares by a registered merchant banker or QIB locked in for 3 years from the date of Listing.  A specialized international multilateral agency or domestic agency or a public financial institution as defined under section 4A of the Companies Act, 1956 has invested in the equity capital of the company. Eligibility Criteria-Contd. BSE-SME Institutional Trading Platform 28

29.  The Company shall satisfy at least one of the following criteria as on date of application:- Net Tangible Assets of minimum Rs. 1 Crore. (Net Fixed Assets plus Net Current Assets) OR Net income* (excluding extraordinary and other income) of Rs. 50 Lacs as per the latest audited financials. *(Net income = Sales – Purchases)  There has been no change in the promoters of the Company in preceding one year from date of filing application to BSE for listing on ITP segment.  Mandatorily signing tripartite agreement with both the depositories. Exchange Criteria 29

30. Listing of Specified Securities 30

31.  A company that fulfils the eligibility criteria specified in regulation 106Y may apply to a recognised stock exchange for listing of its specified securities on the institutional trading platform, enclosing therewith an information document containing disclosures.  The information document shall be made public by hosting it on the website of recognised stock exchange for a period of atleast twenty one days from the date of such filing.  The recognised stock exchange may grant in-principle approval to the company.  The company which has received in-principle approval from the recognised stock exchange for listing of its specified securities on the institutional trading platform shall be deemed to have been waived by the Board under sub-rule (7) of rule 19 from clause (b) of sub-rule (2) of rule 19 of Securities Contracts (Regulation) Rules, 1957 for the limited purpose of listing on institutional trading platform.  The recognised stock exchange on satisfying that the applicant is compliant with regulation 106Y and its bye-laws may list the securities of the company on the institutional trading platform. Listing of Specified Securities(106 Z) BSE-SME Institutional Trading Platform 31

32. (1)Listing of specified securities on institutional trading platform shall not be accompanied by any issue of securities to the public in any manner. (2) The company shall not make initial public offering while its specified securities are listed on institutional trading platform. (3) The company listed on institutional trading platform may raise capital through private placement or rights issue without an option for renunciation of rights. (4) The private placement of securities by a company whose securities are listed on institutional trading platform shall be subject to the following: a) the company shall obtain in-principle approval from the recognised stock exchange prior to private placement; b) the approval of shareholders through a special resolution under sub-section (1A) of section 81 of Companies Act, 1956 shall be obtained; Conditions on issue of securities and raising of Capital (106 ZA) BSE-SME Institutional Trading Platform 32

33. c) the company shall complete allotment of securities within two months of obtaining such approval. d) the explanatory statement to the notice to shareholders shall include the disclosures regarding: (i) the purpose for private placement. (ii) identity of allottees. (iii) whether allottee is a promoter or belongs to the promoter group and if not the relationship between promoter and allottee. (iv) nature of securities being issued. (v) price at which the security is being issued. e) the disclosures as referred to in clause (d) of sub-regulation (4) shall be made available to the recognised stock exchanges for dissemination, atleast fifteen days prior to the general body meeting where approval of shareholders is being sought for the proposed private placement; Conditions on issue of securities and raising of Capital BSE-SME Institutional Trading Platform 33

34. f) the securities so issued through private placement shall be made at a price not less than higher of the following: (i) the book value of the equity shares as per its last audited financial statement not older than six months; (ii) value of shares as determined in an independent auditor’s or registered merchant banker's report. (5) A company listed on institutional trading platform making a rights issue shall comply with the following: a) there shall not be an option for renunciation of rights; b) the company shall obtain in-principle approval from the recognised stock exchange where its securities are listed prior to a rights issue. c) the company making a rights issue shall send a letter of offer to its shareholders through registered post or speed post or electronic mode and the same shall be made available on the website of the company and the recognised stock exchange. Conditions on issue of securities and raising of Capital BSE-SME Institutional Trading Platform 34

35.  Not less than twenty per cent. of the post listing capital shall be held by the promoters at the time of listing of specified securities of the small and medium enterprise which shall be locked-in for a period of three years from date of listing.  All specified securities of the company shall be in dematerialized form upon listing on institutional trading platform.  The minimum trading lot on institutional trading platform shall be ten lakh rupees.  SEBI(Substantial Acquisition of shares and Takeover) regulations, 2011, will not apply to companies listed on ITP.  SEBI(delisting of Equity Shares) regulations,2009, will not apply to companies listed on ITP Admission process Other Guidelines 35

36. Exit Options 36

37. Exit Options(106 ZD) a) its shareholders approve such exit by passing a special resolution through postal ballot where ninety per cent. of total votes and the majority of non- promoter votes have been cast in favor of such proposal. b) the recognised stock exchange where its shares are listed approve such exit. a) its specified securities have been listed on this platform for a period of ten years. b) the company has paid up capital of more than twenty five crore rupees. c) the company has revenue of more than three hundred crore rupees as per the last audited financial statement. d) the company has market capitalization of more than five hundred crore rupees. BSE-SME Institutional Trading Platform Voluntary ExitGrowth Exit 37

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39. 39 Contact: BSE LTD Ajay Thakur (Head, BSE SME) 27 th Floor, P.J Towers Dalal Street Mumbai-400001 Tel: 022-22728291 Mobile: 9820359932 Email – ajay.thakur@bseindia.comajay.thakur@bseindia.com Parth Shah Tel: 022-22728893 Mobile:9819276244 Email:parth.shah@bseindia.com