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K V Srinivasan | Profectus Capital

A Financial Maverick – Profectus Capital: The Most Popular First-Choice Lender for MSMEs

Maharashtra has emerged as India’s financial heartland. Along with factors like strategic location, strong infrastructure, skilled workforce, government initiatives, and favourable business environment attracting major corporations, financial institutions, and startups, the major role played by rapidly emerging companies like Profectus Capital that are transforming the small and medium businesses by infusing the sector with a commitment to providing advanced financial solutions, is praiseworthy.

Rising as a prominent player in Maharashtra’s financial landscape, with a focus on providing innovative financial solutions for business expansion, purchase of machinery and equipment and working capital, Profectus Capital is dedicated to helping its MSME clients navigate the complexities of modernisation and capacity enhancement.

Founded by CEO K V Srinivasan in 2017, with a vision to become the leading provider of financial solutions for MSMEs in India on the principles of innovation, transparency, responsibility, integrity and empathy, Profectus Capital aims to empower individuals and businesses to achieve their business goals. The firm combines deep industry expertise with a client-centric approach, ensuring that each solution is tailored to meet the unique needs of its clients.

By leveraging cutting-edge technology and data-driven insights, Profectus Capital has delivered exceptional resultsAssets under Management (AUM) of ₹3,109 crore (September 30, 2024), and Profit Before Tax of ₹21.04 crore.

To understand the story behind such a tremendous success reflected in these numbers, the Maharashtra Review team interviewed Mr Srinivasan, the highlights of which are given herein.

As an emerging company in the business industry, could you take us back to the beginning of your journey? What motivated you to step into this dynamic ecosystem?

Profectus Capital was founded in 2017 with a vision to become the leading provider of financial solutions for MSMEs in India. Inspired by the potential of these businesses to drive economic growth, we embarked on this journey to create a company that would empower entrepreneurs to achieve their goals.

Our early years were marked by significant challenges, such as navigating a competitive market and establishing a strong customer base. However, our unwavering belief in our unique approach kept us motivated. We focused on specific market clusters, including engineering and machine tools, auto ancillary, plastics and chemicals, food processing, textiles and readymade garments, pharmaceuticals, healthcare, education infrastructure, and hospitality. By understanding the distinct needs of these sectors, we developed tailored financial solutions to support their growth.

With a presence in 28 locations across India, this targeted approach has enabled us to build a robust book of over ₹3,000 crore with negligible delinquencies. Our commitment to providing exceptional customer service and innovative financial solutions has made us the first-choice lender for MSMEs in our targeted clusters.

Your company has emerged as Maharashtra’s emerging company. Could you share the guiding philosophy that has propelled your organization’s success?

At Profectus Capital, we’ve adopted a strategic approach to addressing the specific needs of our target market. By focusing on distinct industry clusters, we’ve developed tailored financial solutions that truly resonate with our clients.

This specialized focus has allowed us to gain a deep understanding of the unique challenges and opportunities within each industry. We’ve invested in building the necessary expertise, processes, and resources to serve these sectors effectively.

Our commitment to this targeted approach has yielded impressive results. We’ve successfully built a robust loan portfolio exceeding ₹3,000 crore while maintaining a remarkably low delinquency rate and minimizing credit losses. This achievement is a testament to our ability to provide the right financial solutions at the right time.

The Business landscape is continually evolving. Please brief our audience about your firm’s USPs and how you are currently positioned as one of the best startups.

In our seven-year journey, our unique value proposition has positioned us as a leading player in the MSME financing space.

Our executive team brings a wealth of experience, with a combined experience of over 100 years in the MSME sector. This deep-rooted understanding of the industry allows us to anticipate the evolving needs of our clients.

One of our key differentiators is our forward-looking credit appraisal process. Unlike traditional methods, we take a holistic view of an entrepreneur’s potential, considering factors beyond just their past financial performance. This approach enables us to identify promising businesses that other lenders may overlook.

Moreover, our team’s expertise in sourcing, credit evaluation, and customer service sets us apart. This practical know-how allows us to efficiently identify suitable financing opportunities and provide exceptional support to our clients throughout their journey.

Your inspiring leadership style is often recognized as a driving force behind your company’s achievements. Could you explain your approach to leadership and team building within the organization?

Our company’s success is a direct result of the exceptional culture and the inspiring leadership style we’ve cultivated. I believe that effective leadership is about creating an environment where individuals feel empowered to contribute their best.

At Profectus Capital, our corporate values of Innovation, Transparency, Responsibility, Integrity, and Empathy guide our interactions and decision-making. These values foster a great work culture, which ultimately translates into great customer experiences.

We strive to lead by example, demonstrating the same commitment to our values that we expect from our team. By creating a supportive and inclusive environment, we encourage open communication, creativity, and a sense of ownership among our teams.

Ultimately, our leadership approach is centred around inspiring and enabling our team to achieve their full potential. By fostering a culture of collaboration, trust, and empowerment, we’ve created a dynamic and high-performing organization that is well-positioned for continued success.

The essence of Business lies in innovation, disruptions, and enhancing the end-user experience. How does your company strike a balance between operational efficiency and customer satisfaction?

At Profectus Capital, we believe that true innovation should always be driven by a desire to enhance the customer experience. We strive to strike a delicate balance between operational efficiency and customer satisfaction by leveraging technology to streamline our processes while maintaining a personalized approach.

One of our key innovations is our Digital Onboarding mobile app. This user-friendly platform allows customers to submit their documents digitally, streamlining the onboarding process. By instantly analyzing banking, GST, and bureau data, we’re able to provide in-principle sanctions within minutes, offering a seamless and efficient experience.

Our Supply Chain Finance platform is another example of our commitment to innovation. This fully digital platform enables customers to submit disbursement requests online, and funds are transferred directly to their accounts in a matter of minutes.

We also recognize the importance of empowering our channel partners. Our digital channel partner onboarding process allows them to send leads directly to our lead management app, eliminating manual intervention and ensuring a smooth workflow.

By embracing technology and focusing on customer-centric solutions, we’ve been able to deliver exceptional service while maintaining operational efficiency.

Digitalization and technological advancements are crucial aspects of the modern startup ecosystem in today’s business era. How does your company integrate these principles into its core functioning and contribute to a technovative future?

As a modern NBFC, Profectus Capital is committed to leveraging technology and digital innovation to drive our operations and contribute to a technovative future.

Our robust technology architecture, built on a cloud-based foundation, enables us to scale our operations efficiently and deliver exceptional customer experiences. Our integrated platform for loan origination, management, and collection ensures flexibility, speed-to-market, and enhanced customer satisfaction.

Data analytics plays a pivotal role in our decision-making process. By analyzing customer data, banking transactions, bureau records, GST returns, and other relevant information, we assess customer eligibility and predict repayment behaviour accurately. This data-driven approach empowers our credit managers to make informed decisions quickly and efficiently.

Technology also empowers our sales team. Our mobile app streamlines sales activity management, lead generation, customer relationship management, and pre-screening, enhancing productivity and efficiency.

Additionally, our digital onboarding process, powered by mobile technology, provides a seamless and convenient experience for our customers and accelerates the loan sanction and disbursement process.

To ensure proactive risk management, we’ve implemented an early warning system that helps our collection team identify potential challenges early on. By leveraging technology and data analytics, we’re able to optimize our operations, mitigate risks, and deliver exceptional value to our customers.

Profectus Capital has achieved remarkable success. Could you highlight a transformative project or initiative that showcases your company’s commitment to excellence and innovation?

One of our most transformative projects has been the implementation of our fully integrated core lending system. This state-of-the-art platform has revolutionized our operations by streamlining loan origination, underwriting and disbursal processes.

This integrated system has improved our operational efficiency and enhanced the overall customer experience. By providing transparency, flexibility, and convenience, we’ve demonstrated our commitment to excellence and innovation.

The workforce is the cornerstone of any successful organization. How does your company foster a culture of growth, skill development, and empowerment among its employees?

At Profectus Capital, we firmly believe that our employees are our greatest asset. We’re committed to fostering a culture that encourages growth, skill development, and empowerment.

To achieve this, we’ve implemented several key initiatives such as competency mapping, continuous skill development, specialized training on subjects like Climate Finance, and partnerships with leading institutes to offer our team members access to professional development programs.

By investing in our employees’ growth and development, we’re building a highly skilled and motivated workforce. This, in turn, enables us to deliver exceptional service to our clients and drive innovation within the organization.

The COVID-19 pandemic has reshaped industries globally. How has your work navigated these unprecedented times and adapted its strategies to ensure business continuity?

The COVID-19 pandemic dealt a severe blow to India’s Micro, Small, and Medium Enterprises (MSMEs), a sector that forms the backbone of the country’s economy.

The pandemic led to widespread disruptions, forcing many MSMEs to temporarily shut down or significantly reduce their operations.

Key Impacts on MSMEs: Reduced Demand due to lockdowns and economic, Supply Chain Disruptions making it difficult for MSMEs to procure raw materials, components, and finished goods. Financial Strain: The decline in revenue and increased costs due to the pandemic put immense financial strain on MSMEs, leading to cash flow shortages and difficulty in meeting debt obligations.  Job Losses: Many MSMEs were forced to lay off workers to cut costs, leading to a significant increase in unemployment.

Profectus Capital’s ability to navigate the challenges posed by the COVID-19 pandemic and maintain low Non-Performing Assets (NPAs) during this period is a testament to its prudent lending practices, risk management strategies, and strong relationships with its borrowers. What also helped us was our choice and spread across sectors, which helped to mitigate the impact. We have implemented early warning systems to monitor the financial health of our borrowers and efficiently detect signs of distress. This allows us to take timely action to address potential issues before they escalate.

Throughout the pandemic, we remained committed to supporting our customers. We actively engaged with them through online meetings, knowledge seminars and discussions, providing guidance on navigating the challenging economic landscape and extended financial cushions where required.

Our team members played a crucial role in ensuring our continued support during this time. Despite facing personal challenges, they adapted seamlessly to the online medium, demonstrating their dedication to our customers and the company. Their efforts were instrumental in helping our clients weather the storm and emerge stronger.

Looking to the future, what is your vision for your company? How do you aspire to continue making a significant impact on Maharashtra’s emerging business landscape?

Our vision for Profectus Capital is to be a leading financial partner for MSMEs across India, with a strong focus on Maharashtra. We aim to empower businesses in both the state and nationally by providing them with the necessary capital, guidance, and support to thrive and contribute to the country’s economic growth.

To achieve this, we will expand our national footprint, tailor our offerings to regional needs, and foster collaboration and partnerships with industry associations and other stakeholders at both the national and state levels to create a supportive ecosystem for MSMEs. By combining a national perspective with a deep-rooted commitment to Maharashtra and by focusing on key sectors within the state, we believe that Profectus Capital can play a significant role in supporting the growth and development of MSMEs across India. By doing this, we aim to reach an Asset Under Management (AUM) of ₹10,000 crore, demonstrating our commitment to scaling our operations and making a lasting impact on the region’s economy.