UGRO Capital: Transforming MSME Lending With Data And Technology

Ugro Capital: MSME Lending

UGRO Capital Limited, established in 2018 by Mr. Shachindra Nath, is a pioneering DataTech NBFC committed to bridging the credit gap for India’s Micro, Small, and Medium Enterprises (MSMEs). With a sector-specific, data-driven approach, UGRO leverages advanced analytics and a proprietary underwriting model, GRO Score 3.0, to deliver tailored credit solutions based on borrowers' banking, credit bureau, and GST records. The company has identified eight key sectors, including Healthcare, Education, Chemicals, FMCG, and Auto Components, among others, to provide focused financial support, while also catering to micro-enterprises as a distinct segment.

UGRO’s innovative methodology combines technology, deep sectoral insights, and an extensive distribution network to offer cash flow-based lending solutions designed to meet the unique needs of MSMEs. Backed by substantial capital infusions from both national and international entities, the company champions the idea of "#MSMEAcchaHai" by promoting financial inclusion and empowering businesses across India. UGRO Capital’s dedication to data-driven innovation and sector-focused strategies positions it as a catalyst for growth in the MSME ecosystem.

Board Of Directors Of Ugro Capital Limited

• Mr. Satyananda Mishra – Non-Executive Chairman and Independent Director 
• Mr. Shachindra Nath – Vice Chairman and Managing Director 
• Mr. Karuppasamy Singam – Independent Director 
• Mr. Rajeev Krishnamuralilal Agarwal – Independent Director 
• Mr. Karnam Sekar – Independent Director 
• Mr. Hemant Bhargava – Independent Director 
• Ms. Tabassum Abdulla Inamdar – Independent Director 
• Mr. Manoj Sehrawat – Non-Executive (Nominee) 
• Director Mr. Chetan Kulbhushan Gupta – Non-Executive (Nominee) 
• Director Mr. Rohit Goyal - Non-Executive (Nominee) 
• Director (Appointed wef April 25, 2024)

Source: Ugro Capital Annual Report FY’24¹

Products Offered By Ugro Capital Limited

UGRO Capital offers a diverse range of loans tailored to meet the unique needs of Micro, Small, and Medium Enterprises (MSMEs) across various sectors. Their offerings include:

1. Secured Business Loans

• Loans Backed by Property: These loans provide funding up to INR 5 crores, with flexible tenures up to 180 months, secured against immovable property. They are designed to support various business needs, offering a loan-to-value ratio of up to 80%.
• Educational Institutes (EDI) Loan: Specifically crafted for educational institutions, this loan offers up to INR 5 crores with a repayment tenure of up to 120 months and a loan-to-value ratio up to 60%. It assists schools and colleges in meeting their financial requirements.
• Loan Against Bank Guarantee or Fixed Deposits: Businesses can avail loans up to INR 3 crores by providing a bank guarantee or fixed deposit as collateral, with loan amounts up to 125% of the BG/FD value and tenures up to 180 months.
• Secured Loan Against Property with Cash Rental Income: Aimed at MSME borrowers with additional rental income, this loan offers financing up to INR 50 lakhs with tenures up to 120 months, considering rental income for eligibility.

2. Unsecured Business Loans

• Business Loans Without Collateral: Designed for MSMEs, these collateral-free loans range from INR 1 lakh to INR 50 lakhs, with repayment tenures up to 36 months, facilitating business expansion and operational needs.
• Doctor’s Loan: Tailored for medical professionals, including doctors and dentists, this loan offers amounts between INR 10 lakhs and INR 25 lakhs, with flexible repayment options from 12 to 60 months, supporting professional development and practice expansion.

3. Specialised Financing

• Machinery & Equipment Finance: Enables businesses to acquire new or used machinery and equipment, enhancing operational efficiency and productivity.
• Retailer Finance: Provides working capital solutions to retailers, assisting in inventory management and business growth.
• Rooftop Solar Finance: Supports businesses in adopting sustainable energy solutions by financing the installation of rooftop solar panels, promoting environmental responsibility.
• Supply Chain Finance: Optimizes cash flow for businesses by allowing them to extend payment terms to suppliers while offering suppliers the option for early payments. Loan amounts range from INR 25,000 to INR 300 lakhs, with tenures up to 12 months and invoice tenures up to 90 days. Source: Ugro Capital²

Source: Ugro Capital Annual Report FY'24¹

UGRO Capital's comprehensive suite of financial products is designed to address the diverse needs of MSMEs, fostering growth and financial inclusion across India's business landscape.

Technology And Innovation In Lending At Ugro Capital

UGRO Capital integrates cutting-edge technology and data-driven innovation into its lending process, revolutionizing MSME financing in India. The proprietary GRO Score 3.0 underwriting model evaluates creditworthiness using a comprehensive data tripod of banking, credit bureau, and GST records. This ensures precise risk assessment and faster loan approvals. Leveraging advanced analytics, UGRO adopts a sector-specific approach to understand the unique needs of businesses across its targeted segments. Furthermore, its cloud-based infrastructure, automated workflows, and seamless digital interfaces enable a fully paperless loan journey, enhancing operational efficiency and customer experience. This tech-forward strategy empowers MSMEs with tailored credit solutions while fostering financial inclusion. UGRO Capital employs below advanced technological solutions to streamline and optimize its lending processes:

• GRO Protect: A centralized credit policy engine that allows real-time, no-code policy changes, enabling automated loan application assessments across all UGRO platforms.
• GRO Plus: Supports branch-based business in metro cities, providing a fully digital underwriting process that integrates all conventional credit parameters.
• GRO Chain: A supply chain financing platform enabling real-time disbursements. Suppliers can upload invoices, which are approved by anchors on the module, allowing instant access to funds.
• GRO Line: A retailer financing platform offering quick self or assisted onboarding for invoice discounting. It ensures easy disbursement via web and mobile applications.
• GRO X: Designed for direct, non-intermediated loan applications, this app empowers MSMEs to apply for loans seamlessly through their mobile devices.
• GRO Xstream: A co-lending platform that integrates with banks and NBFCs via APIs, reducing turnaround times and boosting process efficiency. It is set to evolve into a marketplace connecting asset originators with liability partners.

Key Strengths Of Ugro Capital Limited

1. Wide and Reliable Lender Base: UGRO Capital secures funds from 60 financial institutions, including prominent lenders like IFC, ADB, and SBI. By consistently meeting debt obligations on time, the company has built strong, long-term relationships with its lenders. Its borrowing mix includes term loans and working capital loans, which help manage funding costs, liquidity, and asset-liability mismatches efficiently.
2. Advanced Technology-Driven Model: UGRO uses a technology-focused approach with a sector-specific lending strategy, ensuring consistent and efficient service for MSMEs.
3. Strong Distribution Network with Tailored Products: UGRO offers a variety of credit products, such as Loan Against Property (LAP), affordable LAP, micro-enterprise loans, machinery loans, unsecured business loans, and supply chain financing. With multi-channel distribution, the company serves a wide range of MSME clients, from prime borrowers to micro enterprises.
4. Robust Capital Reserves: After a capital infusion of INR 340 crore in Q1 FY24, UGRO's net worth grew to INR 1,404 crore by December 2023. The company maintains a strong capital adequacy ratio of 22.3% and improved its leverage ratio to 2.97x in December 2023 from 3.20x in FY23, with plans to gradually increase leverage as it scales.
5. Sufficient Liquidity: UGRO maintains ample liquidity, enough to cover three months of debt obligations, ensuring smooth operations and the ability to meet disbursement and expense needs on a steady basis.

Financial Snapshot Of Ugro Capital Limited

Source: Audited financial statements of FY’24 and credit rating reports of Ugro Capital Ltd. and management information³.

To arrange the capital, Ugro also offers corporate bonds. These bonds from the company are secured and are rated by the credit rating agencies. On Grip Invest, investors invested in IND ‘A+’ rated bonds of the company that offered fixed returns of up to 11.1%. To invest in similar, rated, regulated and secured corporate bonds sign-up on Grip Invest today and start earning fixed returns:

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References:

1. Ugro Capital Annual Report FY’24, accessed from: https://www.ugrocapital.com/investor-relation#ANNUAL_REPORTS
2. Ugro Capital, accessed from: https://www.ugrocapital.com/about
3. CRISIL Ratings, accessed from: https://tinyurl.com/CRISILreport

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