SBI Projects Robust Loan Growth for FY25, Driven by SME and Corporate Lending, Expanded Deposits, and Strategic Network Expansion

The State Bank of India (SBI) is set to achieve above-average loan growth of 14-16% year-on-year (Y-o-Y) for FY25, significantly higher than the banking industry’s projected 13% growth. This surge will be largely fueled by the SME, agriculture, and corporate sectors, where SBI has a robust corporate credit pipeline estimated to grow from Rs 4 trillion to Rs 6 trillion.

In addition, SBI’s Xpress Credit, a real-time personal loan system for salaried customers, has regained momentum with high turnover rates and an average loan tenure of 14 months, further supporting growth. Complementing the credit push, SBI is focusing on deposit mobilization to sustain lending capacity, expecting deposit growth to surpass 10% Y-o-Y through expanded customer outreach and branch networks.

Recent reports by Nuvama Institutional Equities and Motilal Oswal indicate that SBI’s strategy will be bolstered by re-engaging business accounts, reducing reliance on government accounts, and prioritizing current accounts (CA) and savings accounts (SA). The bank recently reported a strong 28% Y-o-Y increase in Q2 net profit, primarily driven by non-interest income gains, though NIMs dipped 8 basis points due to rising funding costs. To stabilize margins, SBI plans to adjust MCLR loan rates, which represent 42% of its lending, cushioning NIMs at 3.3% moving forward.

This loan growth strategy positions SBI as a leader in SME and corporate financing while expanding its branch network to attract a broader customer base.

November 27, 2024

Rising Incomes and Digital Adoption Drive Growth in Rural India’s FMCG Market

Rural India’s FMCG market is experiencing a transformative shift, with the average basket size growing by 60% over the last two years, as noted by a recent Group M and Kantar report. This increase from 5.88 in 2022 to 9.3 in 2024 is largely attributed to rising incomes and the popularity of convenience products like ready-to-eat foods and beverages. The Rural Barometer report emphasizes the significance of diverse income sources, as 81% of rural consumers have multiple revenue streams, contributing to greater financial stability and larger FMCG baskets. In contrast, those relying solely on agricultural income—19% of the population—face higher financial stress, with 82% expressing concern about their financial situation.

Geographically, states like Jammu & Kashmir, Maharashtra, and Odisha have seen moderate growth in basket sizes despite fewer financial challenges. Media consumption habits in rural areas are also shifting, with 47% of the population now using a hybrid model that combines traditional and digital media. The trend is particularly noticeable in areas with stronger digital infrastructure, though states like Bihar and Jharkhand remain less connected.

Ajay Mehta, Managing Director of GroupM OOH Solutions in India, highlights rural India as a “digital frontier ripe with opportunities,” as online engagement grows in areas like payments, e-commerce, gaming, and lifestyle content. The report reveals that 42% of rural internet users engage in digital payments, and 23% in e-commerce, showcasing rising digital and financial inclusion.

To leverage this momentum, brands are encouraged to use hybrid media strategies that combine traditional outreach with digital channels, meeting rural consumers where they are. The growing interest in lifestyle content reflects changing aspirations and presents an ideal opportunity for brands to connect with rural India’s evolving preferences.

November 12, 2024

Festive Season Boosts Indian Auto Sector with Strong Growth in Two-Wheelers and Mopeds, Signs of Recovery in Passenger Vehicles

The festive season in India has provided a significant boost to the auto sector, with various segments showing promising growth in sales during the second week of the festive period (October 10-October 16). According to a report by BNP Paribas India, two-wheelers (2Ws) registered mid-single-digit growth compared to the same period last year, while mopeds experienced a notable double-digit increase. Although passenger vehicle (PV) sales declined, the drop was smaller compared to previous weeks, indicating signs of recovery.

Three-wheeler (3W) registrations saw a minor decline in low single digits, while tractor sales fell by mid-double digits. However, the week-over-week improvement in sales across various segments was better than historical averages, suggesting a strong recovery trend. If the current momentum continues, year-on-year (YoY) growth during this year’s festive season is expected to reach 13% for 2Ws, 19% for mopeds, 6% for PVs, 15% for 3Ws, and a decline of 6% for tractors.

The report also highlighted a moderation in e-commerce sales growth, which rose by mid-single digits in the second week, down from the 49% growth seen in the first week. This suggests that urban markets may be stabilizing after the initial surge in online festive shopping.

In the broader context of FY25, two-wheelers experienced strong double-digit growth in the second quarter, and three-wheelers grew by high single digits. However, the original equipment manufacturers (OEMs) reported mixed results in terms of revenue and margins for the July-September period, with two-wheelers outperforming other segments. In September 2023, domestic PV sales were slightly down compared to the same month last year, standing at 3,15,689 units, according to SIAM data.

Overall, the festive season is proving to be a key driver for the Indian auto sector, particularly for two-wheelers and mopeds, as demand continues to recover.

October 21, 2024

India’s tea exports up over 23% in January-July period

India’s tea exports saw significant growth in the January-July 2024 period, with a 23.79% increase year-on-year. The Tea Board of India reported that the country exported 144.50 million kilograms of tea, up from 116.73 million kilograms during the same period in 2023. This 27.77 million kg rise reflects positive momentum in the export market, even though the average price per kilogram slightly declined to Rs 256.37, compared to Rs 264.96 in the previous year.

The Indian government’s Commerce Ministry has approved a Rs 664.09 crore scheme for the development and promotion of the tea industry. The funds, allocated for the 2023-2026 period, will focus on plantation development, quality improvement, market support, technical research, and welfare measures under the Tea Development and Promotion Scheme.

Despite this export success, India’s tea industry faces ongoing challenges, including sluggish domestic consumption growth, rising food inflation, and the impact of the COVID-19 pandemic on exports. As the second-largest tea producer globally, with an output of about 1,350 million kilograms annually, India remains a leading black tea producer, meeting both domestic needs and export demands. The country is the fourth-largest tea exporter, consuming about 18% of the world’s tea production.

October 11, 2024

Recordent Launches Zoho Books Connector to Streamline AR Management for SMEs

Recordent, a leading accounts receivable (AR) automation platform in India, has launched a Zoho Books Connector, aimed at enhancing AR management for small and medium enterprises (SMEs). This integration allows businesses using Zoho Books, a popular accounting ERP platform, to benefit from Recordent’s advanced AR tools, improving cash flow management and collections processes.

Building on the success of its Tally plug-in, the Zoho Books Connector enables real-time data synchronization of invoices, payments, and customer details, minimizing manual errors and providing automated payment reminders. The integration also supports better credit risk management, helping businesses assess customer creditworthiness and take proactive steps, such as issuing legal notices for delayed payments.

This integration aligns with Recordent’s mission to equip SMEs with innovative financial tools, fostering resilience and enabling sustainable growth in a competitive environment. Through this connector, SMEs can streamline their financial workflows, improve collection efficiency, and gain comprehensive visibility over their receivables, ensuring stronger financial health and operational success.

October 9, 2024

Subam Papers Debuts on BSE SME with 6.6% Discount Amid Ongoing Expansion and Sustainability Focus

Subam Papers made its stock market debut on the BSE SME platform with a 6.6% discount, listing at ₹142 compared to the issue price of ₹152. This debut comes as the company continues its expansion in the manufacturing of Kraft Paper and Duplex Board. The initial stock performance indicates market caution, despite the company’s positive growth trajectory.

Subam Papers, founded in 2004, started with paper cones and later expanded to Kraft paper and Duplex board production. Notably, the company emphasizes sustainability, using wastepaper as the primary raw material, avoiding wood pulp, and operating on renewable energy sources like wind and solar power. With two windmills totaling 1.7 MW and a 14 MW solar plant, Subam Papers significantly reduces its environmental footprint, aligning its operations with eco-friendly practices.

In FY 2023-24, Subam Papers had an installed capacity of 300 metric tons per day (MTPD) for Kraft paper and 140 MTPD for Duplex board, reaching 93,081 tons and 43,963 tons in utilization, respectively. The company is currently expanding its capacity and aims to exceed 1,000 MTPD by Q4 FY 2024-25.

For the fiscal year ending March 2024, Subam Papers reported total revenues of ₹497 crore and a net profit of ₹33.44 crore. The funds raised from the public offering will be directed toward investment in its subsidiary, financing capital expenditures, and covering general corporate purposes.

October 8, 2024

Amazon Great Indian Festival 2024: 8,000 Sellers Cross Rs 1 Lakh in Sales Within First 48 Hours

The Amazon Great Indian Festival 2024 kicked off with a strong start, with over 8,000 sellers surpassing Rs 1 lakh in sales within the first two days of the event, which began on September 27. Amazon reported that small and medium businesses (SMBs), including women entrepreneurs, weavers, and artisans, sold more than 1,500 units every minute during this period.

Amazon highlighted the success of sellers from tier 2 and tier 3 cities, such as Moradabad, Saharanpur, Haridwar, Bikaner, and Jodhpur, with more than 65% of sellers receiving orders from these regions. The event also helped 20,000 SMBs double their sales compared to an average day.

The company’s Amazon Business platform saw a 4.5X increase in new customer sign-ups, while bulk orders surged by 12X. Additionally, Amazon Bazaar, which focuses on non-branded and affordable products, witnessed a 50% growth in daily unit volumes.

Speaking about the event, Saurabh Srivastava, Vice President of Categories at Amazon India, said the first two days marked the best-ever opening, with a record 11 crore customer visits and a significant increase in the number of Prime members shopping.

This month-long sale coincides with Flipkart’s Big Billion Days and features a variety of products from SMB sellers who are part of Amazon’s Karigar, Saheli, Local Shops, and Launchpad programmes. The event follows Amazon’s recent reduction in selling fees, which went into effect in September.

September 30, 2024

India SME Forum Launches “Start Exporting in Eight Weeks” Initiative

The India SME Forum (ISF), a non-profit organization supporting Small and Medium Enterprises (SMEs), launched a new initiative titled “Start Exporting in Eight Weeks”. This program, announced at the Business Beyond Borders 2024 Conference, aims to promote ‘Make in India’ products globally. The launch was attended by Minister of State for MSME, Shobha Karandlaje, alongside MSMEs and industry leaders.

The program is part of ISF’s flagship IndiaXports initiative and is designed to enable Indian MSMEs to access international markets within just eight weeks. Working with e-commerce leaders like Amazon and other partners, the program will provide free comprehensive guidance, resources, and networking opportunities to help MSMEs explore global markets and expand their export reach.

During the launch, Karandlaje emphasized the importance of MSMEs in India’s vision of Viksit Bharat 2047 and their role in helping India become a self-reliant and developed nation. She highlighted the need for Indian products to meet export-quality standards in today’s competitive global landscape, while stressing the importance of skilling and upskilling to achieve these goals.

Vinod Kumar, President of the India SME Forum, remarked on the transformative power of e-commerce in breaking down traditional trade barriers. He noted that MSMEs can now reach international customers more easily by leveraging digital platforms, making global trade more accessible.

The “Start Exporting in Eight Weeks” initiative is seen as a crucial step toward making Indian MSMEs more globally competitive and significant contributors to India’s economic growth. By providing MSMEs with the right tools, knowledge, and market access, the initiative seeks to transform Indian businesses into self-sufficient powerhouses on the global stage.

September 30, 2024

Over 25% of Micro and Small Enterprises in Northeast Struggling to Survive: Study

A recent study by the MSME Export Promotion Council (EPC) revealed that over 25% of micro and small enterprises (MSEs) in India’s Northeastern states are grappling with severe survival challenges. The region, home to approximately 74,000 MSMEs, faces multiple crises stemming from lack of affordable finance, rapid technological changes, and inadequate infrastructure.

While releasing the report in New Delhi, Dr. D.S. Rawat, Chairman of MSME EPC, highlighted that although startups in the region have helped generate employment, many remain in crisis due to insufficient support from larger units or institutions.

To address these issues, the EPC proposed a five-point strategy for reviving the struggling MSEs and fostering new startups. Key recommendations include:

State Government Intervention: Establish high-powered committees to prioritize and address the challenges faced by MSMEs in the region.
Conducive Environment: Develop a roadmap focused on skill development, MSME product showrooms, and stronger connections with R&D centers and global marketing agencies.
New Financing Model: Collaborate with the DoNER Ministry, multilateral institutions, and private players to create a more attractive investment environment and encourage entrepreneurship.
Single Window System: Introduce a ‘Single Window’ system to simplify processes for MSMEs and encourage private investment.
Private Sector Engagement: Foster collaborations with innovative companies and institutions, while encouraging private-sector funding through debt instruments with tax incentives.

The study also identified key challenges such as geographical barriers, underdeveloped transport systems, and low private-sector participation. It recommended building networks of development service providers to offer tailored solutions in technology, product development, and marketing, helping MSMEs navigate the difficult landscape.

September 27, 2024

BSE Pushes for Stricter Scrutiny of SME IPO Listings: Report

BSE Pushes for Stricter Scrutiny of SME IPO Listings

Sundararaman Ramamurthy, the CEO of BSE Ltd., has instructed bankers to enhance their oversight of SME initial public offerings (IPOs), following concerns about inflated financial figures in recent applications. According to sources familiar with the situation, Ramamurthy emphasized the need for bankers to carefully vet IPO hopefuls and conduct in-person assessments of company premises.

This initiative aims to raise standards in India’s rapidly expanding SME IPO market, which has drawn increased retail investment but also raised concerns among regulators. In August, India’s market regulator warned investors about potential misrepresentations by certain SMEs and their majority stakeholders.

While BSE Ltd. and the National Stock Exchange (NSE) offer listing platforms for small companies, the demand for these listings has surged, with some IPOs being oversubscribed by up to 400 times. As a result, tighter scrutiny and more robust due diligence are being encouraged to safeguard market integrity.

Earlier reports by Bloomberg News indicated that India’s securities regulator may also be considering additional oversight of micro-cap companies, potentially introducing measures such as monitoring the use of IPO proceeds and enforcing stricter guidelines for bankers handling these deals.

September 26, 2024

Tag: SME