In 2023, DAI Asset Management invested $8 million in Kinara Capital, a Non-Bank Financial Company (NBFC) in India that specializes in providing loans to small businesses. Kinara is an MSME-focused finance company, founded by Ms. Hardika Shah in 2011 and now has 120 branches across South and Western India. Kinara’s core product is an unsecured, working capital loan to small SMEs that is disbursed within 2 days. Its customers are generally first-time entrepreneurs and small-scale manufacturers, ~50% of who are working with the formal financial sector for the first time. This product is hugely impactful as it provides capital to a hard-to-serve, but vibrant market segment that is often neglected by the formal financial sector.
Banks and NBFCs are generally unable to assess the credit risk of small SMEs due to their lack of credit history and collateral. However, the microfinance sector is unable to cater to them due to the size of their capital requirements. So, they fall into a credit gap. Kinara has been successfully meeting the capital needs of this market segment for over a decade. In doing so, it has built a credit model and operating strategy that enables it to cater to this specific market segment. DAI-AM’s investment in Kinara will help this dynamic and innovative company address different credit constraints SMEs in India face. In doing so, they are helping SMEs grow, increase employment and contribute to their communities. They are also helping their proprietors and those around them build better lives MSMEs business, breaking down the problem of lack of information that has been a barrier to MSMEs financing.
“Nobody was interested in giving us a loan in the early stages of the business except for Kinara. With the loan, we bought an imported machine, which helped us get new buyers and exporters and establish ourselves in our field.”
Vaishnavi and Karthik Babu scaled up their textile business from having 1 machine and 3 workers, to having 5 machines and employing 45. They decided to apply for working capital loan to ease cash flow issues and ease new material purchases. Vaishnavi shared, “we wanted to replace our old machines, so we applied for an asset purchase loan from Kinara and got Rs. 20 lakhs. We also added a Japanese machine, which helped us get more buyers and exporters. We have reached a good position in the embroidery field thanks to Kinara.”
Divya is the owner of Brookwoods Technologies, a manufacturing company that produces auto components. Her business faced significant challenges due to the aftermath of the pandemic, hindering her ability to expand operations. As a new entrepreneur, Divya was uncertain about securing financing from lenders. However, she learned about Kinara Capital through a friend and was delighted to receive a HerVikas loan, which provided her with an upfront discount as a woman entrepreneur.
Divya utilized the loan to purchase raw materials and double her workforce, substantially increasing production. She was pleasantly surprised by Kinara’s end-to-end digital loan application and disbursement process, appreciating the transformative power of Kinara’s services and the HerVikas program. Kinara’s intervention not only supported Divya’s business growth but also boosted her morale and confidence, especially after overcoming a difficult period. As a startup seeking funding, she leveraged Kinara’s financing support to turn her business around. The loan enabled her to invest in raw materials, machinery, and expand her workforce, significantly boosting production.
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