MSMEs Seek Succour In Public Markets

Despite the Budget's booster dose, equity market is likely to remain the go-to option for small and medium units.

- V. KESHAVDEV

PRATEEK SRIVASTAVA has created a record of sorts by taking India's first drone company public. However, 58-year-old Rajiv Chawla is mystified by the record subscription bids for Pune-based greenhorn DroneAcharya Aerial Innovations, whose ₹34 crore issue was oversubscribed a record 243 times, with the retail book being oversubscribed 331 times. The three-year-old Pune-based company's annual revenue stood at ₹3 crore on a similar-sized asset base with ₹72 lakh in profit. Following a sensational public market debut, the company is now valued at ₹384 crore (February 6), with its stock trading at 161, nearly three times the offer price of ₹54. "Investors are more enamoured about the potential of drones rather than the fundamentals of the business," says Chawla, who runs a ₹100 crore auto component business under the JaiRaj Group.

For someone who ventured out at the age of 21 with a ₹10,000 credit limit from Syndicate Bank, the ease with which new-age companies are raising money prompted Chawla to follow suit. "I recently received an order from an EV maker to supply plastic dashboards. The irony is that despite being a Tier-II supplier with an impeccable track record, I have been asked by my banker to create fresh collateral of ₹15 crore for a capex loan of ₹10 crore. I have not created that many assets that I can pledge with my banker," rues Chawla.

The only viable alternative left for him is to go public. Even as Chawla is preparing the ground for a listing in 2024, as the founder of IamSMEofIndia Association he has nudged more than a dozen small and micro units to go public. "We held an orientation workshop for our members on the pros and cons of listing. There is a growing acceptance among MSMEs that parting with a fraction of their ownership is a better option for raising growth capital rather than debt," explains Chawla.