KredX to disburse Rs 2,000 cr in working capital for MSME sector

Tier-two cities expected to have 35% growth in demand for such financing compared to last year, says firm

KredX, a supply chain finance platform, said on Tuesday it will disburse Rs 2,000 crore in working capital to serve the working capital demand of businesses before the three-month festive period starting September.

The announcement is part of the company’s ‘KredX Spark’ initiative.

“We see a very surge in demand from the consumers. This had led to everybody on the business side to ramp up their supply chain and inventory, so that they can sell more products during the festival (months),” said Manish Kumar, KredX’s founder and chief executive officer (CEO).  

Also Read: Franklin Templeton planning to enter private credit industry in India
 

KredX last year disbursed more than Rs 1,500 crore as working capital to 650 micro, small, and medium enterprises (MSMEs) across various sectors.

“We are partnering with multiple companies to ramp up their supply chain and build up their inventory in this period. This year, we are hoping that we will cross more than 1000 MSMEs,” said Kumar.

KredX said its study showed an average consumer durables business generates 40-50 per cent of its annual sales in the festive period. An apparel business gets about 35-45 per cent of its annual sales during the same time.

Tier-two cities are expected to clock a 35 per cent growth in demand for working capital compared to last year, said the study. Demand in tier-one cities will grow by 20 per cent.

Also Read: Amit Mitra highlights countrywide GST frauds, urges FM to call Council meet

“Demand in terms of fashion, consumer durables and electronics has increased a lot on the tier-two side … as disposable income has increased (in these places). Moreover, MSME clusters are not placed in metro towns but are in satellite or tier two towns. That is why we see a demand on the tier two side,” said Kumar.

Maharashtra, Tamil Nadu, Gujarat, Karnataka, Andhra Pradesh and Telangana are expected to make a majority of the working capital demand.

Only around 5 per cent of India’s total exports get financing. “There is a huge scope to make credit available faster and cheaper and it will spur manufacturing and export activities,” he said. 

Also Read: Rupee continues to remain stable in July, ends flat at 82.25 a dollar