No Pressure about loans, TTK’s new recipe

BANGALORE, INDIA: Despite a ginormous landscape for SME lending market in India, it keeps popping as an under-served category and that itself should explain the recent spurt of interest by many players to give a new spin to this category using technology-boosted aggregation and analytics platforms.

When TTK Prestige joined hands with Innoviti recently for trying out a SMElending platform, the idea was to link credit-related data flows between TTK Prestige, lending partner – Kotak Mahindra Bank and the dealers. Soon enough, partnership plans touched expansion vision for all 500+ TTK Prestige PSKs nationwide in a phased manner. George K G, Senior Vice President - Retail at TTK - Prestige Limited helps to understand what spurred this radical way of augmenting dealers on the actual, on-ground struggles and whether/how is this strategy paying off.

Tell us about the triggers of this idea and the pilot?

We started ambitiously growing with exclusive touch-points in 2013 itself and today the penetration area has grown by leaps and bounds to 500. The growth has also manifested in working capital requirements and with a new-product range focus as well as distribution of a full-range of goods. We started thinking how to better support our network in terms of working capital. We mulled a lot of ways and the aspect of Collateral kept recurring as a challenge. We had a peek into Innoviti before, so we had discussions with them, learnt about how retail majors were toying pre-approved finance ideas and considered a new alternative.

The conversation started a year back. Using Innoviti’s role to provide a unique channel financing solution for TTK Prestige dealers, this was piloted successfully in Bangalore. These dealers form the last mile of the distribution chain for large manufacturers and are often in need of such short term loans.

How well did testing the waters go?

This option was targeted at the Prestige Smart Kitchen (PSK) exclusive brand outlets and provided the merchants easy 30-day pre-approved, collateral-free loans which they can use for their trade ordering cycles with TTK Prestige. There is surely an uptick in the number of stores and the amount transacted month by month also grew considerably. We are looking at expanding this into more geographies. The post-deployment results are difficult to quantify at this stage - it is still work in progress.

George K G

Any challenges that emerged?

Such pilots always entail many learning curves and practical issues to be navigated. One has to, for instance, ensure that the franchise is available when product is delivered. Tackling high interest rates is also another area. Thankfully, the financial players in the industry are reinventing for the new set of needs and challenges. But we need more banks and players to ride with such platforms.

What changes, picked from the pilot stage, might follow in the expansion phase?

The terminal at the dealer point to app is under development which will also serve as a payment gateway for franchisee. Then there is the aspect of integration with TTKPL ERP so that unpaid bills appear on the SME lending app / terminal.

How do such loans tackle the usual issues that BFSI and NBFCs have been dealing with in this area already: Like: credit-worthiness-assessment, bad-performing loans, notorious collection mechanisms etc. How is experience of doing this in the post-Demonetization environment?

Well, for one, CIBIL score is a qualifying criterion. As TTKPL is bearing the interest cost, franchisees have been very cautious and have never willfully defaulted to date. TTKPL also keeps a tight watch. Plus, Blank cheques are always available while transacting - it is mandatory area.

What next? Would analytics be tapped into too?

It is still early days for analytics until the quantification part is covered adequately. We do feel a rise in receivables and rotation of stock. App is the next exciting part certainly and it will cover SME lending and payment gateway will ride with that. Lots of new ideas and products are under consideration now. Ease of transacting is the biggest advantage that comes with technology and we can look into backward integration and outstanding bills with much better precision and agility perhaps.