Benefits of Listing on bse

Listing provides an opportunity to the corporates / entrepreneurs to raise capital to fund new projects/undertake expansions/diversifications and for acquisitions. Listing also provides an exit route to private equity investors as well as liquidity to the ESOP-holding employees. Listing also helps generate an independent valuation of the company by the market. Listing raises a company's public profile with customers, suppliers, investors, financial institutions and the media. A listed company is typically covered in analyst reports and may also be included in one or more of indices of the stock exchanges. An initial listing increases a company's ability to raise further capital through various routes like preferential issue, rights issue, Qualified Institutional Placements and ADRs/GDRs/FCCBs, and in the process attract a wide and varied body of institutional and professional investors. Listing leads to better and timely disclosures and thus also protects the interest of the investors. Listing on BSE provides a continuing liquidity to the shareholders of the listed entity. This in turn helps broaden the shareholder base. Companies listed on BSE generally find that the market perception of their financial and business strength is enhanced.

Benefits of Listing
A premier marketplace The sheer volume of trading activity ensure that the impact cost is lower on the Exchange which in turn reduces the cost of trading to the investor. NSE's automated trading system ensure consistency and transparency in the trade matching which enhances investors confidence and visibility of our market. Visibility The trading system provides unparallel level of trade and post-trade information. The best 5 buy and sell orders are displayed on the trading system and the total number of securities available for buying and selling is also displayed. This helps the investor to know the depth of the market. Further, corporate announcements, results, corporate actions etc are also available on the trading system.

Largest exchange NSE is the largest exchange in the county in terms of trading volumes. During the year 2010-2011, NSE reported a turnover of 35,77,412 crores in the equities segment. Unprecedented reach NSE provides a trading platform that extends across the length and breadth of the country. Investors from 191 centres can avail of trading facilities on the NSE Trading Network. The Exchange uses the latest in communication technology to give instant access from every location. Transaction speed The speed at which the Exchange processes orders, results in liquidity and best available prices. The highest number of trades in a day of 11,260,392 was recorded on May 19, 2009. Short settlement cycles The Exchange has successfully completed more than 2800 settlements without any delays. Broadcast facility for corporate announcements The NSE network is used to disseminate information and company announcements across the country. Important information regarding the company is announced to the market through the Broadcast Mode on the NEAT System as well as disseminated through the NSE website. Corporate developments such as financial results, book closure, announcements of bonus, rights, takeover, mergers etc. are disseminated across the country thus minimizing scope for price manipulation or misuse. Trade statistics for listed companies Listed companies are provided with monthly trade statistics for all the securities of the company listed on the Exchange. Investor service centers Six investor-service centers opened by NSE across the country cater to the needs of investors. Nominal listing fees The listing fee charged by the Exchange is much lower compared to the listing fees charged by other exchanges.

Advantages

A listing on the stock market has considerable benefits and opens many doors and opportunities for companies.

Listed companies must prepare comprehensive audited financial statements and publish annual reports

Potential capital growth By listing on the stock exchange, a company can raise additional resources to finance business activities and its expansion plans; for instance, to fund research and development, purchase machinery and set up new offices. Upon going public, a company can also issue new shares via a rights issue to raise additional funds. Thus, raising capital from the listing exercise enables the firm to raise public equity without having to make periodic interest payments to creditors i.e. banks and other financial institutions is one of its major advantages. Institutional investment It is also easier for a public listed company to attract institutional investment without having to go through the hassle of negotiations.

Through listing on the stock exchange, a company gains market exposure to a wider network of the financial community which includes market makers, buyers, sellers, institutional traders, as well as mutual funds and possible hedge fund managers. Enhanced corporate profile and improved valuation Listing adds value to the firm and greatly elevates the corporate profile since the IPO garners a great amount of publicity for the firm. An elevated public profile will most likely enhance and increase business opportunities as there is an added element of trust and credibility gained from a successful listing exercise. Additionally, the listing amplifies brand and product awareness, and increases liquidity and valuation of the firm which in turn, projects the performance and market perception of the said firm. Employees shareholding scheme Another benefit of an IPO is that it provides the company with an opportunity to implement share option schemes for its employees. Such a scheme is able to boost employee morale, retain long-serving and loyal employees, as well as attract first-rate employees. Furthermore, the scheme increases employee productivity since employees are aligned to work as a collective to ensure improvements in the companys profitability, whilst working towards increasing the value of the firm. Profitable exit strategy

Going public is one of the many exit strategies for business owners as it provides a mechanism for them to nurture and expand the business, working towards improving the listed entitys share price performance and selling their shares prior to an exit, as it offers the highest potential payout. Disadvantages However, there are also several potential drawbacks of going public that owners have to be aware of. Loss of control and exposed to takeovers One of the main disadvantages is that business owners will have to share ownership with other investors, and shareholders now have a voice in policies that affect company operations. Even the CEO is answerable to the board which comprises both elected and appointed independent directors to ensure a system of check and balance. Control of the company can also be taken away from the existing management if a dissident investor or group of investors obtains majority control. Higher reporting requirements Going public means additional obligations and reporting requirements as public companies have to comply with a wide range of regulatory requirements and meet accepted standards of corporate governance. For instance, listed companies must prepare comprehensive audited financial statements and publish annual reports; consequently, higher costs will be incurred due to high level of reporting requirements.

Accountability to public shareholders There is also an increase in accountability to public shareholders. Independent shareholders may be critical of the performance of the company if actual trading results do not match the shareholders expectations. As such, when running the firm, company owners will have to consider the interests of the shareholders which may differ from their objectives. Loss of privacy A company will also suffer a loss of privacy as a result of media interest and full disclosure requirements regarding its operations and plans; for instance, compensation of officers and directors, details regarding stock option plans, details of significant contracts such as lease agreements, as well as information about the business operations such as sales, cost of sales, gross profits, net income, borrowings and plans for the future. Additionally, the bourse will require the firm to reveal sensitive information on an on-going and timely basis to protect investors, prevent insider trading and maintain transparency. High cost of listing Another disadvantage is the high cost of planning and launching an IPO. The process is tedious and requires the involvement of many parties, including issue managers and underwriters, solicitors, investigating accountants and other professional advisors.

For example, spending about RM2mil to list on the ACE Market to raise say RM10mil may not be deemed as an ideal way to raise funds. In conclusion, business owners need to be mindful of their intentions to list on the stock exchange and carefully weigh the pros and cons of doing so. Discussions with professional advisors are vital for them to decide whether an IPO is an ideal way forward for the business and relevant stakeholders. Other factors that affect the success of a public offering include timing, profits, reputation and expectations. Going public adds a new layer of financial administration that requires extra effort, staffing and expenses. Furthermore, firms need to comply with the full disclosure requirements, tight regulation policies and is subject to a loss of privacy. Conversely, it could also be the fastest way to raise equity to grow the business. The listing could also propel your business to new heights, providing the platform for opportunities to be realised. Here, knowledge of market forces, pre-IPO planning, having a clear strategy and execution of the plan is key to a successful listing. Girish Ramachandran is executive director of RSM Strategic Business Advisors. He is of the opinion that it is nice to list ones company but we must always do it for the right reasons.