Prayaan Capital Private Limited

Background

Prayaan Capital Private Limited, established on December 10, 2018, is a Chennai-based non-banking financial company (NBFC) dedicated to providing financial services to micro, small, and medium enterprises (MSMEs) in India. The company's mission is to bridge the significant credit gap faced by MSMEs by offering tailored financial products and services, thereby integrating them into the formal financial ecosystem. The name "Prayaan," meaning "journey," reflects the company's commitment to partnering with entrepreneurs throughout their business growth trajectories.

Key Strategic Focus

Prayaan Capital focuses on addressing the unmet financial needs of MSMEs, particularly those in the manufacturing, trading, and services sectors. The company targets the "missing middle" segment—businesses too large for microfinance institutions yet too small for traditional banks. By leveraging a combination of physical branches and digital tools, Prayaan Capital aims to facilitate the digitization of small businesses and enhance their access to credit.

Financials and Funding

In February 2020, Prayaan Capital secured a $1.2 million seed investment led by Accion Venture Lab, aimed at expanding operations and investing in technological infrastructure. In March 2023, Sub-K Impact Solutions acquired approximately a 25% stake in Prayaan Capital to further accelerate credit access for MSMEs. As of March 31, 2024, the company reported an authorized capital of ₹15.50 crore and a paid-up capital of ₹12.78 crore. The company experienced a 2.14% increase in total revenue and an 18.57% increase in profit for the financial year ending March 31, 2023.

Product Offerings

Prayaan Capital offers a range of financial products tailored to the needs of MSMEs:

Loans without Collateral: Short-term loans based on the borrower's creditworthiness, secured by hypothecation over current assets, designed to meet immediate business needs without requiring collateral.

Secured Loans: Long-term loans secured by mortgages on commercial or residential property or non-agricultural vacant plots, offering larger amounts with flexible repayment schedules to support business growth.

Technological Platform and Innovation

Prayaan Capital integrates technology into its operations to enhance service delivery and customer experience. The company employs digital tools for customer engagement and back-end processes, facilitating efficient loan processing and management. This technological approach enables the digitization of small businesses, improving their operational efficiency and access to financial services.

Leadership Team

G. Madhan Mohan: Managing Director & Chief Executive Officer

With over 21 years of experience in the MSME sector, Madhan has held various roles in credit policy, underwriting, collections, operations, sales, and strategy. He has been instrumental in setting up and expanding MSME verticals for institutions like RBL Bank and Swadhaar Finserve Pvt. Ltd.

Akash S. Chelvam: Whole-time Director & Chief Operating Officer

Akash brings over 15 years of experience in banking and insurance, specializing in human resources and learning & development. He has been part of core teams setting up new geographies and business lines, including roles at RBL Bank and RBL Finserve.

Tharasree Amarnath: Chief Technology Officer

Tharasree has over 20 years of global experience in the IT industry, delivering large-scale projects across banking, telecommunications, and manufacturing sectors. She leads Prayaan's technology initiatives, focusing on digital transformation and system development.

Parthasarathy S: Chief Financial Officer

With over 20 years in accounts and finance, including nine years with large NBFCs, Parthasarathy manages fund raising, asset and liability management, regulatory compliance, and taxation. His previous roles include positions at Varam Capital Pvt. Ltd. and Samasta Microfinance Pvt. Ltd.

Sujatha M: Head of Collections

Sujatha has experience in collections, customer service, sales, and business development, with previous roles at Amazon Development Centre and TCS eServe Limited. She oversees Prayaan's collections strategy and operations.

Competitor Profile

Market Insights and Dynamics

The MSME sector in India faces a substantial credit gap, estimated at $400 billion, presenting significant opportunities for financial institutions. The market is characterized by a diverse range of small businesses requiring tailored financial solutions.

Competitor Analysis

Key competitors in the MSME lending space include:

Lendingkart: A venture capital-backed company based in Ahmedabad, India, specializing in providing working capital loans to MSMEs through a digital platform.

Bharat Financial Inclusion: Formerly PE-backed, this Mumbai-based company focuses on financial inclusion by offering microfinance services to underserved populations.

Satin Creditcare Network: A New Delhi-based corporation providing microfinance services, including income-generating loans to rural and semi-urban women entrepreneurs.

Manappuram Finance: A Thrissur-based corporation offering a range of financial services, including gold loans, microfinance, and SME loans.

SMFG India Credit: A corporate-backed entity in Mumbai, providing retail and corporate financial services, including personal loans and SME financing.

Strategic Collaborations and Partnerships

Prayaan Capital has formed strategic partnerships to enhance its market position and service offerings:

Accion Venture Lab: Led a $1.2 million seed investment in February 2020, providing capital and strategic support to expand operations and technological capabilities.

Sub-K Impact Solutions: Acquired a 25% stake in March 2023, aiming to accelerate credit access for MSMEs through combined technological and distribution strengths.

Operational Insights

Prayaan Capital differentiates itself through a hybrid model combining physical branches with digital tools, enabling efficient service delivery and customer engagement. This approach allows the company to effectively serve the "missing middle" segment, which is often overlooked by traditional financial institutions.

Strategic Opportunities and Future Directions

Prayaan Capital aims to expand its reach by leveraging digital channels for sourcing and deeper customer engagement. The company plans to invest further in technology to streamline operations and enhance customer experience. By focusing on the underserved MSME segment, Prayaan Capital is well-positioned to capitalize on the growing demand for tailored financial services in India.