It looks like knitwear manufacturers in Tirupur are not interested in raising capital through the equity market route. Perhaps, that is why SME-friendly dedicated trading platform Emerge has had no takers. Apparently small and medium enterprises fear loss of administrative control. Stigma relating to dilution of ownership and ignorance on the benefits of raising fund through an IPO is preventing Tirupur entrepreneurs from getting into stock market.
Emerge is an exclusive Initial Public Offering window which has been made available through the National Stock Exchange. Under Emerge, the minimum dilution of shares is only 25 per cent and hence owners or promoters can hold the majority stakes. Moreover the listing is aimed at enhancing the accounting practices and image of the company in the market and facilitating institutional lending easier at later stages.
Not a single SME manufacturer who has a registered office in Tirupur has been listed on the Emerge platform though it extends relaxed norms for an SME sector entrepreneur to make a stock market launch vis-à-vis the stringent norms in place for listing in the main board at the stock exchanges.
Equity market entry has not taken off yet in the Tirupur cluster. The IPO route of raising funds for expansion needs to get popularised in the cluster.