Why this solar energy business migrated from SME platform to NSE main board

Ease of Doing Business for MSMEs: SMEs need to be on the Emerge platform for at least two years before applying for the mainboard.

Emerge entities must have been listed on SEBI’s Innovators Growth Platform for at least a year before shifting to mainboard. (Image: pixabay)

Ease of Doing Business for MSMEs: Ahmedabad-based Zodiac Energy has been in the solar energy space since 1992. Founded by Kunj Shah, the company has installed solar power plants for companies across sectors including Adani Group, Torrent Power, Gujarat Energy Development Agency, Reserve Bank of India, Indian Oil and others so far. After 25 years of operation, Zodiac Energy got listed in 2017 on National Stock Exchange’s NSE Emerge platform for small and medium enterprises (SMEs) and startups before it migrated to the main board NSE in December 2021. Shah opined listing to be the go-to route particularly for small businesses who often suffer due to lack of credibility and trust among customers and investors.

“Growing our brand was the main motive behind listing back in 2017. Since then, we have seen increased acceptance of our work across business segments by our stakeholders, be it investors, suppliers, customers, or employees. Shifting to the main board is expected to enhance that further as the visibility of our business is set to multiply among investors and customers. While listing on SME platform initiates transparency process for your business but migrating to main board puts you in the league of all size of businesses and that makes you much more credible as an entity,” Shah told Financial Express Online.

While migration was smooth for Shah after four years at NSE Emerge but he cautioned SMEs of the stringent compliance levels on the main board. For many entities with limited size and bandwidth, it might be overwhelming. SMEs need to be on the Emerge platform for at least two years before applying for the main board. “Two years provides the companies necessary time frame to get accustomed to regulatory compliances and test their companies’ growth, financial discipline, adherence to corporate governance norms, etc.,” Rachana Bhusari, Vice President, Primary Markets – Equity and Debt, NSE had earlier told Financial Express Online.

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Businesses are also required to have paid-up equity capital not less than Rs 10 crores and the capitalisation of the equity to be less than Rs 25 crore. Also, Emerge entities must have been listed on SEBI’s Innovators Growth Platform for at least a year. Further, it should have a minimum of 200 shareholders, profitability for three years, or have 75 per cent of its capital held by Qualified Institutional Buyers on the date of application for migration, minimum promoters’ contribution of 20 per cent locked in for three years, among others. However, it is optional for SMEs to stay on Emerge or migrate. 

“The compliance level is much more stringent on the main board compared to the Emerge platform. So, the mindset has to be there if you want to migrate. We spent four years on Emerge to get familiar with the practices and how to stay compliant along with necessary processes to ensure our investors have trust in us as investment is not the only thing you look at with your financials in the public domain. We have been able to attract more talent, customers, and suppliers and we are certain this would grow further after moving to the main board. It is a win-win situation and would help strengthen the brand,” added Shah.

NSE Emerge and BSE SME were launched back in 2012. According to the available data from respective platforms, 93 SMEs have migrated from NSE Emerge to NSE while 127 SMEs have switched from BSE SME to its main board so far. Zodiac Energy had reported Rs 2.33 crore profit for the half-year ended September 30, 2021, down from Rs 3.25 crore for the half-year ended March 31, 2021. Its FY21 profit stood at Rs 4.41 crore.

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