Ugro Capital launches 'Gro Micro', aims to support 50,000 small biz by 2022

Mid-sized non-banking lender Ugro Capital, which is focused on supply chain financing, is entering the micro-loan segment with a new vertical to support the unorganised small businesses in non-metro markets, and plans to sell one-third of its credit target from this segment.

To begin with, the new vertical, called 'Gro Micro', will have 25 branches across Karnataka, Tamil Nadu, Gujarat, Telangana and Rajasthan, and hopes to serve 50,000 small businesses with 100 branches by the end of 2021-22, the company said in a statement on Thursday.

The company has a net disbursement target of Rs 2,500 crore for 2021-22 and 30 per cent of this expected to come from the new vertical, Ugro Capital Executive Chairman and Managing Director Shachindra Nath told PTI.

He further said that since June 2020, the company has sold over Rs 750 crore loans which in the first year of operations was only Rs 850 crore and, currently, the active loans or assets under management stand at Rs 1,200 crore.

Ugro Capital lends Rs 50 lakh-Rs 3 crore loans to eight sectors -- healthcare, education, chemicals, food processing /FMCG, hospitality, electrical equipment and components, auto components, light engineering and micro loans. It has disbursed Rs 2,000 crore since its inception in April 2019 and has a live loan book or assets under management of Rs 1,200 crore as of December 2020, Nath said.

He said the company is back to pre-pandemic levels now with the average monthly loan run rate crossing Rs 140 crore now.

He also said the asset quality is also back to the pre-lockdown days with gross non-performing assets (NPAs) trending at 2.3 per cent and net NPAs at under 1 per cent. This is despite the 3.5 per cent of its customers choosing to get their loans restructured after the lockdowns.

Nath said 'Gro Micro' will offer both unsecured and secured small-ticket loans to micro businesses to help them sustain and also to meet working capital or for business expansion.

With the launch of 'Gro Micro', the company aims to reach out to over 5 lakh small businesses across Karnataka, Tamil Nadu, Gujarat, Telangana and Rajasthan, he said.

With 'Gro Micro', the group now has 34 branches across eight states, he added.

'Gro Micro' will cater to small and medium enterprise (SME) borrowers in areas like kirana stores, pharmacies, mess/ restaurants and hair salons.

Ugro has so far raised Rs 920 crore from a set of private equity funds like institutional investors and well-known family offices.