NBFC U Gro Reports Profits In First Year For SME Lending Business

SUMMARY

The company says it disbursed loans worth INR 1K Cr in Q3

U Gro has launched a direct-to-consumer lending platform, GRO-Direct

U Gro raised INR 100 Cr from Sachin Bansal and Poonawala family in 2019

Mumbai-based non-banking financing company U Gro Capital, which started loan disbursals in January 2019, announced that it has achieved profitability within the first year of operations. U Gro managed to convert its INR 3.3 Cr loss in the second quarter of FY20 to INR 6.9 Cr profit after tax in the third quarter.

U Gro also recorded a 15.4% growth in its income from INR 20.5 Cr in Q2 to INR 23.7 Cr in Q3. In addition, the company announced that it disbursed over INR 1K Cr in the third quarter itself. U Gro claims that it’s the first fintech to achieve profitability in the first year of commercial operations.

“Q3 FY20 saw a continuation of the accelerated technological aspirations and conservative underwriting strategies we implemented in Q2, with excellent results.” Shachindra Nath, executive chairman and managing director of U GRO Capital.

U Gro also announced that it launched a beta version of a direct-to-consumer lending platform, GRO-Direct. Customers can apply for loans from GRO-Direct service in two ways. First, filling an online form, similar to a traditional loan application. Second, a chatbot, which collects users information by having a conversation with the customer.

BSE-listed U GRO Capital is a technology-focused lending platform for small and medium businesses. The lending tech company focuses on providing customised loan solutions to small businesses operating in eight sectors — healthcare, education, chemicals, food processing or fast-moving consumer goods (FMCG), hospitality, electrical equipment and components, auto components, light engineering.

In FY20, U Gro noted the following:

It has INR 753 Cr worth assets under management (AUM) across 7,512 loans, as of December 31, 2019.
U Gro’s loan book is 67% secured and the largest sectoral and geographical concentrations stand at 18% and 21%, respectively.
U GRO’s has a partner network of 311 direct selling agents (DSAs). The company registered a 34% hike in its partner network in Q2 of FY20.
In Q3, it added 21 ecosystem partners and 26 banking, financial services and insurance (BFSI) partners.

In October 2019, U Gro raised INR 100 Cr ($14.11 Mn) from Flipkart cofounder Sachin Bansal and the Poonawala family. The deal was reportedly set in two separate securitisation and bond deals. U Gro has done the first securitisation transaction with Poonawalla Finance, part of the Poonawalla family. Further, Bansal entered into a non-convertible debenture deal with U Gro.