While India is making its presence felt in the global market, there is a very real danger of Indian SMEs getting left behind due to a lack of support with their many challenges. In this blog, James Varghese elaborates on the solution he has created to address this dilemma.

It has always been a passion of mine to help small and medium enterprises with their financial structures as a consultant.

I would spend a detailed amount of time examining their balance sheets, financial statements, cheques, and other relevant documents to create a structure around their business practices for better leverage. And in case of dire circumstances, I would help them obtain the maximum support from banks and other government channels.

Following these proactive steps, it was always a joy to see their business operations run smoothly.

A great example of a small enterprise thriving following a few timely interventions was an engineering company in Mumbai. I had the opportunity to work with them 3 decades ago. They manufactured helical and bevel gears. This was an extremely niche market, so they didn’t have as much competition. They had a solid customer base who would repeat orders, and their product was of excellent quality. They also had good profit margins from their sales.

However, the nationalised bank that they worked with was not giving them the support they needed. In those days, a lot of power rested with the managers when it came to granting loans. If the manager was not happy with you or your company, you received a raw deal at the end of the day.

This company found itself in a fix. They had 20 people working for them on the shop floor and they were able to keep a good flow of orders going. Despite all of these factors in their favour, they kept hitting walls with their bank. Be it documentation or negotiation of the terms of the loans, there was a lot of back and forth with no resolution.

This is where they asked me to step in and help them.

I worked through their financials and helped them make a number of changes to strengthen their case with the bank. I advised them on what needed to be corrected in their balance sheet for the next financial year, clarified the equity they needed to show, and transferred their personal loans to the company as equity to strengthen it. These steps raised the equity of the company. We created provisional accounts, and I took them to my friend who worked at a cooperative bank in Mumbai. This bank was headquartered in Mumbai, so it was easy to directly get in touch with the top management.

Once we submitted the proposal, it was approved in a matter of 45 days!

The company got a working capital limit, a new term loan for new machinery and non-finance, non-fund limits also. In other words, using for guarantee and LC, they were granted a letter of credit which ensured that the loan from the nationalised bank could be rolled over and refinanced with the help of the cooperative bank.

This is how we were able to take timely steps to help the company get funding through an alternate source, so that the business was not affected. Had he not gotten that timely loan, he would have had to heavily borrow from lenders with high interest rates. This would have eventually bled his company dry. We just barely averted the negative, far-reaching effects on the financial operations of the company for the next 2-3 years.

Limitations that Hold SMEs Back

My wonderful stint with an Impact and Philanthropy Network has given me a wide range of similar opportunities to help raise funding for SMEs in India. We mainly worked with small enterprises whose annual turnover was around INR 2 Crores and who had high-potential products that could easily find customers in the overseas market.

India is brimming with potential for growth in enterprise and innovation. Unfortunately, it is a common occurrence that small businesses are unable to scale because of the lack of timely support during a crisis in any vertical of the business.

What are some of the limitations that they commonly face?

Here are just a few of them that I have observed during my experience of working with SMEs for the past few decades:

1) Their manufacturing systems and processes needed to be upgraded

2) Their growth stagnated over the preceding few years

3) They needed managerial hand-holding and expertise

4) They were in immediate need of working capital

5) They were unable to break into the global market

There is a myriad of other challenges that SMEs face in their day-to-day operations that could be mentioned. With an eye for optimism and vision, we asked ourselves a question:

What was the best approach to proactively help SMEs with their challenges, as wide as they may be?

Arthaverse - Tapping into India’s Potential, One SME at a Time

Arthaverse was our answer to this question.

We envisioned an emerging business eco-system that comprised of value-driven, trusted and scalable businesses and upper management professionals from across India. The end goal of this eco-system is to create an organically symbiotic network that facilitated growth for all its members.

At ArthaVerse, our mission is to partner with our member companies to help them overcome structural challenges, rapidly capture market share and grow 10X by giving access to a verified pool of networking channels and capital, human and technology resources.

We are in the process of on-boarding companies with a diverse segment of products and services from all across India, who have revenues ranging from a couple of hundred thousand dollars to a billion dollars.

How Arthaverse Intends to Inject Growth in the Eco-system

Anticipating the complexity of a synergistic self-sustaining eco-system, we have kept our business model targeted and straightforward for greater effectiveness.

Our initial steps would consist of building and connecting a large base of SMEs and professionals. Once that is accomplished, we will leverage the network resources to enhance B2B lead generation in Asia, North America and Europe while simultaneously tapping into the network to increase each company’s visibility on social media and search engines, especially with the focus on B2C and D2C lead generation. After that, we will provide these businesses and professionals access to a team of a pool of top-notch business and technology coaches and mentors as well as local and global financial resources (equity investments and debt). Finally, we aim to provide strategy consulting along with other premium services in the area of digital transformation, market research, leadership development, hiring, ESG and compliances, etc.

Much like the engineering firm in Mumbai that saw breakthrough, many more SMEs are waiting in the wings, stagnant and stranded, looking for support to move to the next level.

We believe that Arthaverse will be an answer to their scaling and operational problems.

In this ‘The SMEs of India’ blog series, we will explore the wide range of unique strengths that Indian SMEs have to offer in the national and global markets. Stay tuned for more

If you want to learn more about Arthaverse, reach out to us at <connect@arthaverse.com> for an in-depth conversation.