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Tag: SME

SEBI Takes Action Against SME for Alleged Financial Manipulation

Sebi Takes Action Against SME for Alleged Financial Manipulation

On Monday, the Securities and Exchange Board of India (Sebi) issued sanctions against 12 entities, including Add-Shop E-Retail, a listed company, and several members of its promoter-management team, for purportedly manipulating financial statements.
According to the Sebi order, the company engaged in fictitious transactions, including fake sales and purchase entries in its accounts. Over the past three financial years, more than 46% of reported sales were found to be fictitious. Furthermore, significant related-party transactions were conducted without audit committee approval.
Add-Shop E-Retail was listed on BSE’s small and medium enterprise (SME) platform in September 2018 and later moved to the main board platform in October 2020. The promoter stake in the company decreased to 27.2% by December 2023, down from 62.99% in April 2020.
This regulatory action coincides with increased scrutiny on SMEs for potential manipulation and heightened monitoring due to concerns about fraudulent activities in the sector.

May 7, 2024
Extended Season of Down Rounds for Indian Startups

Extended Season of Down Rounds for Indian Startups

The trend of down rounds in the startup ecosystem is persisting and expanding. Nearly 20% of the major venture capital deals in 2023 and up to April this year involved significant reductions in valuations. This marks the highest proportion since 2015, according to data from Pitchbook.
Before 2023, the highest incidence of down rounds occurred in 2017, when 17% of VC deals were executed with valuation cuts following the exuberance in funding observed during 2015-16. Analysts anticipate this trend to continue throughout the year, spelling challenging times for startups ranging from large unicorns to growth and early-stage ventures.
Deepak Gupta, General Partner at WEH Ventures, explains, “Down rounds may continue for some time as the inflated valuations from 2020-21 have yet to align with company performance, and growth stage deals remain subdued compared to historical levels.” Gupta suggests that many founders who postponed fundraising in 2023 will now need to seek funding, potentially leading to down rounds.
Of the 20 venture capital deals this year, primarily focused on growth and late-stage rounds, four have occurred at reduced valuations. In 2022, out of the 84 deals in growth and late-stage funding, 17 were down rounds.
Recent funding rounds illustrate this trend. PharmEasy, an online pharmacy retailer, secured $216 million in a deal led by Ranjan Pai’s Manipal Education and Medical Group, valuing the company at $710 million — significantly lower than its $5.6 billion valuation in 2021. Similarly, Udaan raised $340 million in December 2023 at a valuation of approximately $1.8 billion, down from its peak of $3.2 billion in 2021.
Indian startups witnessed a funding slowdown in the first quarter of this year, raising $1.9 billion compared to $2.2 billion in Q4 2023. This downturn followed consecutive growth quarters in 2023, with total funding amounting to $8.4 billion for the year, significantly lower than the $25 billion raised in 2022 and the lowest in the past five years, as per Tracxn data.

May 6, 2024
Banks Extended Rs 24.6 Lakh Crore Credit to MSMEs in March: RBI Report

Banks Extended Rs 24.6 Lakh Crore Credit to MSMEs in March: RBI Report

According to the latest data from the Reserve Bank of India (RBI) on sectoral deployment, banks provided a gross credit of Rs 24.67 lakh crore to micro, small, and medium enterprises (MSMEs) under priority sector lending in March this year. This credit deployment witnessed a notable growth of 19.2 percent from Rs 20.69 lakh crore deployed in March 2023.
The total bank credit to MSMEs under priority sector lending in March represented 15 percent of India’s non-food credit, amounting to Rs 164.11 lakh crore during the month.
Breaking it down segment-wise, credit deployment to micro and small enterprises (MSEs) surged by 20.1 percent to Rs 19.76 lakh crore in March 2024 from Rs 16.45 lakh crore in the corresponding period of the previous year. Similarly, credit to medium-sized businesses grew by 15.8 percent to Rs 4.90 lakh crore from Rs 4.23 lakh crore during the same period.
Despite the upward trajectory in bank credit to MSMEs, non-banking financial companies (NBFCs) remain at the forefront of credit support to MSMEs. According to a banking sector performance report in December last year, NBFC loans to MSMEs exceeded three times the loans extended by banks.
Comparing the year-on-year growth in MSME credit by banks and NBFCs, as of March 2022 and March 2023, NBFCs demonstrated a robust growth rate of 21.2 percent and 42.4 percent, respectively, surpassing the growth rates of banks at 12.7 percent and 12.4 percent during the same periods.
As of March 2023, services MSMEs held a dominant 66.6 percent share in NBFC credit to MSMEs compared to 33.4 percent for MSMEs in industries.
However, one of the persistent challenges for MSMEs remains the lack of access to credit. A report by Lighthouse Canton, a global wealth and asset management company, highlighted that the development of digital public infrastructure (DPI) for digital products and services in a country has the potential to address nearly half of the credit gap faced by MSMEs in low and middle-income nations. Furthermore, the adoption of DPI could facilitate credit access for an additional 16-19 million MSMEs in these countries.

May 3, 2024
CRISIL SME Tracker: Positive Shifts for Chemicals MSMEs

CRISIL SME Tracker: Positive Shifts for Chemicals MSMEs

The outlook for the domestic chemicals industry is improving as demand rebounds and inventories stabilize.
In the previous fiscal year, factors such as oversupply from China, weak demand in developed markets, and inventory adjustments led to subdued revenue growth.For the current fiscal year, Crisil Research expects the industry to rebound by 7-9% from a lower base.
While certain segments like dyes and pigments, discretionary industries, and agrochemicals continue to face challenges, these are seen as temporary obstacles, and the medium- to long-term outlook remains optimistic.
This positive outlook is particularly beneficial for the 292,856 micro, small, and medium enterprises (MSMEs) that constitute 30% of the domestic chemical industry (according to Ministry of Chemicals & Petrochemicals data), with significant clusters in Thane, Mumbai, and Ahmedabad. Nearly half of these enterprises are engaged in organic manufacturing, while others focus on dyes and pigments, soaps and detergents, with agrochemicals making up 8%.
Among industry segments, specialty chemicals, representing 19-21% of the domestic industry, are expected to see margins rebound by 200-300 basis points this fiscal year after facing erosion last year due to high-priced inventories and lower product realizations.
Within specialty chemicals, agrochemicals are projected to achieve 10-12% revenue growth this fiscal year after experiencing degrowth last year due to low prices and weak demand caused by El Niño and subsequent deficient rainfall. Agrochemicals margins are expected to normalize from the second quarter due to destocking of high-cost inventories.
Colourants, another significant segment of specialty chemicals, are forecasted to achieve 4-6% revenue growth this fiscal year, driven by expectations of interest rate cuts in Europe and the US boosting discretionary spending. This follows a decline of 1-3% last year due to recessionary pressures and inflation affecting market sentiment.
Overall, domestic producers may still face margin pressures as prices of key bulk materials could remain depressed due to ample supplies and the commissioning of newer capacities.

May 2, 2024
How Micro, Small, and Medium Enterprises (MSMEs) Can Harness Comprehensive Retail Solutions

How Micro, Small, and Medium Enterprises (MSMEs) Can Harness Comprehensive Retail Solutions

Establishing a robust distribution and retail network is vital for business growth, demanding access to modern technology, reliable partners, and skilled employees. However, many MSMEs lack the resources and capabilities to develop and manage such networks, especially across vast geographies like India. Fortunately, specialized retail and distribution solution providers offer a lifeline to these businesses.
According to Sundeep Holani, Co-founder and co-CEO of Channelplay, companies specializing in retail and distribution solutions can deliver turnkey offerings that leverage existing networks and capabilities, enabling MSMEs to expand their reach reliably and with lower risk.
These comprehensive end-to-end sales solutions provide small businesses with a distinct competitive advantage by optimizing the entire value chain—from procurement and inventory management to order fulfillment and final delivery. This optimization enhances operational efficiency, reduces costs, and elevates the overall customer experience.
Aman J Jain, CEO & Co-founder of Doodhvale, highlights the significant advantage of real-time analytics and data-driven demand forecasting embedded within these solutions. This capability minimizes waste, reduces operational expenses, and ensures timely processing, addressing common challenges faced by small businesses. Furthermore, such solutions offer invaluable insights into consumer behavior, purchasing trends, and market dynamics, empowering MSMEs to make informed decisions and customize offerings to outmaneuver larger competitors.
Industry stakeholders emphasize that modern retail solutions enable MSMEs to deliver seamless omnichannel experiences akin to established brands, enhancing efficiency and competitiveness. Raghunandan Saraf, CEO and Founder of Saraf Furniture underscores the efficiency gained by integrating inventory management, order fulfillment, and customer relationship management systems, allowing businesses to respond dynamically and anticipate market trends.
Moreover, by outsourcing non-core activities like logistics and payment processing to trusted partners, MSMEs can focus on essential functions, fostering sustainable growth and market differentiation.
Ankit Agrawal, Director of Mysore Deep Perfumery House (MDPH), highlights the amplified advantages when MSMEs adopt end-to-end retail solutions encompassing merchandise planning, finance, warehousing, and point-of-sale operations. This integrated approach keeps MSMEs updated on critical aspects such as sales, distribution, and product popularity, empowering them to adapt swiftly to market dynamics and gain a competitive edge in the retail landscape.

April 30, 2024
India Focused on Bridging Infrastructure Gaps to Become Global Manufacturing Hub

Siemens Executives: India Focused on Bridging Infrastructure Gaps to Become Global Manufacturing Hub

According to senior executives at German manufacturing giant Siemens AG, India is actively addressing infrastructure challenges that have historically hindered its manufacturing growth, positioning the country to emerge as a top global manufacturing hub.
Cedrik Neike, a member of Siemens AG’s managing board and CEO of Digital Industries, emphasized India’s strategic importance, highlighting the country’s imminent rise as a significant global player. “It (India) has always been important, but it’s on the brink of being an absolute major player, and we will do everything we can to support India’s growth and success,” Neike told ET.
Sunil Mathur, managing director and CEO of Siemens India, pointed out India’s substantial capital expenditure (capex) commitments, with approximately 60% expected from the public sector and 40% from the private sector in the coming years. “There are not too many countries in the world that are spending $1.2 trillion of capex, so you will get the entire world coming in wanting to participate in India’s growth story,” Mathur stated.
Siemens is actively engaged in discussions with leading entities like the Tata group to design supply chains for semiconductor manufacturing. Additionally, Siemens is exploring partnerships with other firms for the design of semiconductor and battery factories, as well as product and production process design.
Neike highlighted India’s robust talent base, particularly in AI-centric development, emphasizing the country’s significance beyond being merely an “extended workbench” for Siemens. He underscored the pivotal role of Siemens’ Pune software center, which is globally recognized for its integration and innovation.
Neike also discussed the broader economic landscape, noting the importance of efficiency and sustainability in driving businesses towards artificial intelligence (AI) solutions. Siemens is leveraging AI internally to enhance efficiency, simplify products, and harness its extensive data for industrial and energy sectors.
In the context of global investments, Neike emphasized the significance of semiconductor manufacturing amid the AI revolution and geopolitical shifts. He also highlighted key focus areas for Siemens, including advancements in pharmaceuticals towards personalized medicine and the transition from internal combustion engines to electric vehicles in mobility.
Despite global economic variances, Neike highlighted India’s resilience in the discrete manufacturing segment and emphasized the energy sector’s growth driven by sustainability efforts and electrification needs, positioning mobility for a sustained upward trend.

April 29, 2024
Why the SMB Financing Gap in India is an Exciting Opportunity for Fintech Founders

Why the SMB Financing Gap in India is an Exciting Opportunity for Fintech Founders

Small and medium business (SMB) financing in India poses a substantial opportunity for fintech founders, who can harness technology to revolutionize SMB lending. Despite challenges, fintech innovators have significant potential to pioneer solutions across four key themes.
When SMB owners in India seek credit from banks today, they often face hurdles such as lack of credit history, insufficient collateral, and complex documentation requirements. Unable to meet formal lending criteria, many turn to informal sources like moneylenders, contributing to a fragmented market estimated at over $500 billion.
Despite SMBs contributing significantly to the national GDP, they struggle with a persistent financing gap due to challenges faced by formal lenders, including high operational costs (OPEX) and non-performing assets (NPAs) within the SMB segment. Traditional lenders and Non-Banking Financial Companies (NBFCs) have made limited progress in addressing this gap.
However, SMB financing in India presents a compelling opportunity for fintech founders to leverage technology and drive innovation in four key solution areas.
One such solution theme is anchor lending, which involves introducing a credible anchor between lenders and borrowers. Anchors help reduce operational costs and minimize NPAs by sharing risk through mechanisms like First Loss Default Guarantee (FLDG) or providing borrower data for underwriting.
Anchor-led lending leverages established institutions’ credibility to enhance SMBs’ access to finance, particularly in sectors like supply chain financing and education financing.
Another solution theme is embedded lending, where financial options are integrated with non-financial products or services. This approach enhances loan conversion rates and reduces distribution costs by embedding lending services into existing customer relationships.
A third solution, sunrise sector lending, focuses on emerging sectors with high growth potential, anticipating future financing needs not adequately addressed by traditional underwriting processes.
Finally, sachet lending targets small loans (less than Rs 2 lakh) for short durations, making use of digitization to reduce operational costs and enable prompt loan disbursement.
These innovative approaches signify the beginning of a transformative era for SMB financing in India. Fintechs and technology-led NBFCs are poised to drive substantial growth and bridge the financing gap by pioneering solutions tailored to the unique needs of SMBs in the country.

April 29, 2024
Indo-Japanese SME association on the anvil

Indo-Japanese SME association on the anvil

An initiative to forge an Indo-Japanese SME association is underway, aimed at facilitating Japanese small and medium enterprises (SMEs) to enter the burgeoning Indian market with support from both governments. Mehool N. Bhuva, President of the 70-year-old Indo-Japanese Association in Mumbai, emphasized the urgent need for intensified efforts to elevate India-Japan business partnerships to new heights.
Speaking at a conference in Mumbai, Bhuva outlined the vision behind establishing an Indo-Japanese SMEs association based in Mumbai, with members from both countries’ SME sectors collaborating to form partnerships and penetrate the Indian market. However, he stressed that such an initiative requires robust support from the governments of India and Japan, particularly in overcoming language, cultural, and visa-related barriers.
Bhuva highlighted the complementarity between Japanese resources—wealth and advanced technology—and India’s growing market potential, underlining the substantial investments made by Japan in Indian infrastructure projects like the Mumbai Trans Harbour Link. He anticipates further Japanese investments in emerging sectors such as semiconductors, IT, healthcare, and fintech in India.
Currently, around 1,500 Japanese companies operate in India, primarily large corporations with global reach and banks. Bhuva noted that compared to China’s 20,000 Japanese businesses, India offers ample opportunities to attract more Japanese enterprises into its vibrant market landscape.
In his role as the President of Mumbai-based consultancy Nichi Insurance Services Pvt Ltd, Bhuva assists Japanese businesses in navigating the Indian market, facilitating deals and investments that strengthen bilateral business ties. He highlighted the growing demand for IT talent from countries like India, the Philippines, and Vietnam among Japanese firms, underscoring the mutual benefits of fostering closer business collaborations.
The international conference, organized by the US-based Entrepreneurs’ Organization (EO) and attended by delegates from 65 countries, served as a platform to promote entrepreneurship and foster global business connections. Bhuva’s efforts align with the broader vision of enhancing Indo-Japanese business synergies and leveraging each other’s strengths to drive economic growth and innovation.

April 26, 2024
UK Fintech Tide Sets Sights on Indian SMEs with ₹1,000 Crore Investment Plan

UK Fintech Tide Sets Sights on Indian SMEs with ₹1,000 Crore Investment Plan

Tide, a UK-based financial platform specializing in small and medium enterprises (SMEs), is eyeing significant investments in India, targeting ₹1,000 crore by 2026 to expand its presence in the country. Oliver Prill, the Global CEO of Tide, highlighted India as the fintech’s second core market after the UK, aiming to achieve substantial growth within the next five to ten years.
Since its launch in India in December 2022, Tide has already established a strong foothold, with plans to increase its workforce to 1,000 employees by 2026. The company currently operates a product engineering center in Hyderabad, supporting its global operations.
Tide’s focus in India revolves around empowering micro, small, and medium enterprises (MSMEs) to formalize their businesses, addressing the annual inflow of nearly 2 million micro and small units seeking to enter the formal economy. Oliver Prill emphasized that Tide’s competition in India primarily involves moneylenders and informal cash-based practices, which the fintech aims to replace by promoting formalization.
“Our aspiration over the next 5-10 years is for India to become our second core market. This will require significant contributions to India’s development,” stated Prill, underlining Tide’s commitment to supporting India’s journey towards economic formalization.
Despite the vast opportunities in India’s SME sector, Prill emphasized that Tide’s market share aspirations remain modest, focusing on contributing meaningfully to India’s economic development rather than achieving high market penetration.
Tide’s expansion plans in India reflect its bullish outlook on the country’s evolving SME landscape, aligning with India’s rapid formalization and economic growth trajectory. The company’s investments in India extend beyond financial commitments, encompassing substantial support for people-related initiatives and marketing efforts to drive growth in the region.
While Tide faces challenges in its home market of the UK, characterized by a shrinking pool of SMEs, India represents a dynamic market with rapid formalization trends. Tide views India as a strategic hub for internationalization, with recent entries into markets like Germany reflecting the fintech’s global ambitions.
In addition to its investment plans, Tide has launched the Bharat Women Aspiration Index (BWAI) to champion women-led small businesses in India, highlighting the motivations, aspirations, and challenges faced by women entrepreneurs in Tier-II and beyond cities. This initiative underscores Tide’s commitment to fostering inclusive growth and supporting entrepreneurship in India’s evolving SME landscape.

April 26, 2024
Building a cloud strategy for SME
Building a cloud strategy for SME
In the past few years, cloud computing has become a quickly emerging and adopted idea, especially among SMEs. Because SMEs lack the resources to acquire technical competence, this technology is best suited for them. With the help of cloud computing, they may set up a suitable IT infrastructure that helps SMEs effectively compete in the commercial market.
SMEs can build an effective cloud strategy in several ways

Assess cloud computing requirements: SMEs should evaluate their IT needs, such as storage, computing power, and software requirements, and determine which cloud services (IaaS, PaaS, SaaS) best fit their business needs.
Evaluate cloud providers: SMEs should research and compare different cloud service providers based on factors like security, performance, compliance, and cost-effectiveness. They should ensure the provider meets their specific requirements.
Develop a cloud migration plan: SMEs should create a detailed plan for migrating their existing IT infrastructure and applications to the cloud. This includes identifying which workloads to move, managing the transition, and training employees
Ensure data security and privacy: SMEs should carefully assess the cloud provider’s security measures, data protection policies, and compliance with relevant regulations. They should also develop their own security policies and procedures.
Leverage cloud benefits: By adopting cloud computing, SMEs can benefit from increased agility, scalability, cost savings, and the ability to access IT services on-demand without upfront investments.
Maintain cloud governance: SMEs should establish clear policies and processes for managing cloud services, monitoring usage, and optimizing costs to ensure the cloud strategy aligns with their business objectives.

By following these steps, SMEs can build a comprehensive cloud strategy that enables them to leverage the benefits of cloud computing while mitigating the associated risks.
To know more, read further sources here: https://wolfconsulting.com/creating-a-cloud-strategy/
April 23, 2024