BUSINESS LEADER IN FOCUS
The unflagging leader and entrepreneur par excellence Shachindra Nath has created a unique imprint on the Indian financial services business right from the start, his leadership has been a nurturing one for even those who have only listened to his story.
Hailing from the country’s spiritual capital, Mr. Nath grew up in a nurturing environment in Varanasi. Having Banaras Hindu University as his alma-mater, Mr. Nath is a university rank holder in law education. Shachindra Nath initiated his professional beginnings as a commercial trainee and contributed many years of advancing in the carpet industry. His professional journey led him to travel across rural India and observed it’s routine. Later, changing the gears, Mr. Nath altered his professional journey towards the financial service industry and learned everything he could, while finding loopholes and addressing them by building a fintech business and transforming it into a global brand.
Embracing unwavering passion as a Techpreneur
Hoisting a diversified portfolio in his financial service experience, Mr. Nath has chaired various roles across multiple financial services startups and reached a leadership role. Mr. Nath has been instrumental in setting up Insurance, Global Asset Management Businesses, Capital Market and Lending Institutions.
Well, there’s more to this leader’s all-inclusive briefcase!
Mr. Nath has been the chief architect in establishing two insurance companies, a large asset management company and an NBFC. In addition to these he also established new business verticals alongside foraying successful joint ventures and partnerships for the group.
Defining Benchmarks and Entrepreneurial Beginnings
Mr. Nath’s one of the most endearing characteristics- his openness to ideas and viewpoints has earned him great respect. After spending nearly three decades into his professional career, Mr. Nath plunged into the entrepreneurial world with the acquisition of small listed NBFC, in 2018 and rebranded it as U GRO Capital. U GRO simultaneously raised capital of INR 9500 million, which arguably is one of the largest institutional capital raising feats for an NBFC.
After gaining insight, we were intrigued to learn more about it from the exemplary leader. More than just addressing the loopholes of the lending process, Mr. Nath is also weathering the distress of the country’s MSME Sector by addressing the sector’s credit gap of $330 billion.
Mr. Nath shares his journey, current plans of U GRO Capital and the plans ahead.
What inspired your entrepreneurial decisiveness?
During my visits to different rural areas of the country… I understood the underlying problem of lack of finance for micro and small businesses was a common trait. It is spread all over the rural, semi-urban & tier3-6 map, slaughtering small businesses every day This colossal problem needs to be addressed and communicated by creating an institution that aims to solve this problem, no matter what. That was the beginning for U GRO Capital, and the rest is history.
How would you define U GRO Capital as a Fintech disruptor?
U GRO Capital is committed to solving the unsolved credit needs of the SME sector. MSMEs today contribute around 30% of India’s GDP and this but naturally & positively impacts the economic status of the country. The growth of small businesses in India is strongly associated to their access to credit footprint. A small business with entrepreneurial spirit does not have the same level of capital support as mid-level and large-scale corporates.
India’s MSME financing is now at an inflexion point, lending is moving from Collateral to Cash Flow. We believe that in next 5 Years MSME would be able to avail on tap financing similar to consumer financing in India. Today, any consumer who has a good bureau footprint can avail financing at the point of purchase itself, however for an MSME to get a working capital to fulfill an order can take anywhere between 15 days to 3 months.
This is changing because the emergence of The Data Tripod of GST, Banking and Bureau, this coupled with OCEN network is the UPI moment for MSME financing in India. We are disrupting the MSME lending by creating a platform which has an ability to combine the power of data coupled with our deep sectoral analytics platform.
MSMEs are a non – homogeneous class, a casting and forging business cannot be compared with an electrical component manufacturer, or a dentist cannot be compared to an IVF Clinic, a play school cannot be compared to a K12 School. We have built both the digital and physical infrastructure to address the need of small business which is tailor made for them.
We are reaching to our targeted customers through our multi-pronged product and distribution strategy built on these pillars of knowledge and technology. Our GRO+ platform caters to our branch led channel caters to tier 1-2 segments through nine branches in top cities of India & via 40 branches in Tier 3-6 locations, which is further slated to reach 100 branches by end of the year. Our GRO – Line platform caters to the need of ecosystem finance of supply chains from the supplier to retailers and Machinery & Equipment Financing through partnership of more than 150+ OEMs in India. Our GRO X-stream platform is powering credit to the FinTech eco system of India through tie-ups with aggregators, e-commerce platforms and other NBFCs with a set of curated credit products. We would soon be launching our GRO Direct digital platform which aims to aims to reach the end customer directly through a customized platform.
Our product suite includes term loans from 5 lakhs to 5 Crores based on cash flow underwriting with wide-ranging collateral coverage, a range of receivable finance solutions based on ecosystem underwriting, and customized credit programs that leverage alternate data from our partner platforms.
What has been the secret ingredient behind the success of U GRO Capital?
Financial Services businesses are built on 3 core tenants – Governance, Capital & People and added today with power of data analytics and technology. We have taken a unique approach in each of these, our company is supervised by a majority Independent Board of Directors which consist of senior industry experts drawn from Private & Public Sectors Bank, Regulators, Development Financial Institutions, Rating and Government. Our key shareholders participate in through their nominated Board Members. Our Management Team consist of entrepreneurial people who are driven by our mission and embedded through a very strong equity option as an equal stake holder and last but not least we are backed by strong equity and debt capital providers in India.
Our data analytics have created our Gro Score platform, which is a set of sector-specific statistical scorecards, from the inception of our business. In the post-pandemic era, we have moved to the second generation of the scorecards – Gro Score 2.0 – which combines repayment history and banking analysis into one scorecard.
We have invested in developing an enabling infrastructure from day one – through having a completely cloud-based and zero-data-loss architecture and a loan origination platform that can produce a decision in 60 minutes and uses digital solutions for all legs of the process. Our onboarding platform hosts our proprietary scorecards and entire policy framework – making is replicable and scalable in newer geographies and segments.
How does the company’s economics look like?
Our mission is to service 1 million customers and have 1% market share of outstanding MSME credit in India by 2025. In our two and half year of operational journey of which we had almost 8 months of complete disruption due to Covid, we have crossed cumulative disbursals of 3500 Cr and Assets under Management (AUMs) of 1900 Cr. We have grown larger and broadened our wings with our presence across 34 locations and covering 2000+ Pin codes. Our employee strength at present stands at 600 employees. While we have been in investment mode, but we have ensured that we do not burn cash and have remained profitable in the entire journey. We are currently at a disbursement run rate of more than Rs. 225 Crores a month and we expect this to accelerate even further in Q4 of the current FY. We intend to double our asset under management every year and deliver return on assets of 4.2% and return on equity of 18%+ by 2025. At that size we would emerge as one of the largest platform for MSME financing in India.
How are leading technologies like ML, AI and blockchain changing the role of fintech players?
Historically, in the banking industry, consumer lending has received a majority of the focus when it comes to data analytics; but with the advent of diverse alternate data and rapid progress in technology, SME lending is on its way to reaching the same level of sophistication as consumer lending. We have already seen major developments in the area of customer onboarding. The application of predictive modeling in credit assessment, OCR of documents, signature matching, and facial recognition during video KYC – are well-known applications. New age participants are relatively unburdened by legacy and are more agile when it comes to innovation – this is fostering collaboration between traditional and fintech players for distribution and revenue sharing. U GRO partners actively with NBFCs and fintech players to widen distribution reach. On the other hand, we have become a co-lending partner with the Bank of Baroda and IDBI – an example where one of the largest PSU banks have partnered with a Fintech like us and has adopted our method and technology for loan dissemination.
What do you feel has been your company’s greatest accomplishments?
Our biggest accomplishment so far has been to combine the power of data for MSME financing without losing the benefit of conventional wisdom in the lending business which exists among our people.
What are the major developments you are planning in recent times?
The underbelly of U GRO is of a FinTech, however we have remained cautious till date. We have done analytical and technology interventions combined with conventional prudence. However, with our GRO – Direct platform in the Q4 of the current financial year would demonstrate that we arrived both physically and digitally equally.
Finally, can you please share some advice or your favorite quote?
Every business should have a heart and soul and be there to solve a unique problem. We are solving the unsolved – problem of credit for small businesses.
