Artfine facilitates financial inclusion for India’s backbone MSMEs by offering end to end SCF solutions.

Artfine Group is a specialist structuring firm Co-founded by 3 ex bankers TCA Arvind Rangarajan, Saini Rajgopal, and Shantanu Bairagi. Artfine Aims to Democratize Corporate & MSME working capital funding by converting & distributing Supply Chain Finance through issuance of Debt Capital Market instruments (Pass-through-Certificates & Bonds/CP), and thus providing Alternate High yield investment opportunities to Investors. The firm has helped more than 800 SMEs and has arranged and advised INR 1,000 crores as part of its financing portfolio.  CXOToday has engaged in an exclusive interview with Mr. Shantanu Bairagi, Co-founder of Artfine.

What is the Role of supply chain financing for MSME in economic growth?

MSMEs form a critical part of the global supply-chain and are estimated to contribute 27% of India’s GDP. Traditionally, funding to the MSMEs have been very parameterized based on lenders’ preference and not MSME’s requirements. Focus has been more on collateral based funding which is neither scalable nor flexible. Supply Chain finance on the other hand is predominantly backed by  MSME’s track record, its buyers’ risk profile and most importantly without need of any collateral.It also offers flexibility in case there is sudden surge in working capital requirement. From the lender’s perspective, this mode of trade backed funding ensures end-use of the funds and thus cashflow tracking & control.

How has digitization enabled MSMEs to solve their cash crunch problem?

The importance of digitization in supply-chain is a subject in itself.  From improving accessibility, reduction of transaction processing time and cost, bringing transparency etc there are myriad applications and benefits. For example, digitization of KYC through video KYC makes the process shorter and improves reach to entities located in un-banked geographies. Digitization of invoice discounting through online platforms has made it possible for the lenders to provide financing irrespective of invoice amount. Such breakthroughs have improved accessibility of funding thus liquidity to the MSMEs.

Evolution of supply chain financing in the changing landscape post covid.

Covid adversely affected businesses across sectors, the restrictions on movement affected both the buyers and sellers across the world. This led to a delay in payments that devastated the global economy at large. However, if at all we take some silver lining out of the pandemic it has pushed for digitization and remote processing. Businesses have now set-up processes which continue to function unhindered even if there is a disruption at a location albeit with lesser efficiency..

How is Artfine aiding MSME financiers with the help of Securitization?

Artfine enables MSMEs to meet their working capital requirements through  issuance of debt capital market instruments (Pass-through-certificates and Bonds/CP), and thus providing Alternate High yield investment opportunities to Investors.  Debt capital markets instruments broadens the investor base who can participate in MSME funding like Mutual Funds, AIFs, Pension Funds etc.

The firm has helped more than 800 SMEs, and has arranged  INR 1,000 crores as part of its financing portfolio. The group has helped Centrum Finance ( Now Unity SFB)  in acquiring and financing the supply-chain finance portfolio of L&T Finance.

How has Artfine positioned itself in the industry as a viable option for MSME financing?

Artfine has positioned itself as an end-to-end solution for supply-chain finance for MSMEs. While the group’s lending arm Arth Padarth Factors & Finance provides funding, the consultancy firm Artfine Consultancy provides services like supply chain digitization, integration with various TReDs platforms. And our online debt distribution platform Arthavista helps generate liquidity through distribution to various investor segments like HNIs, Family Office, MF etc.

How are alternate debt instruments becoming prominent for investors owing to the current market scenario?

In our country, there has been a dearth of fixed income investment options for a very long time. Most of the investors end up with fixed deposits and debt MF. Moreover, owing to defaults in some of the debt instruments (esp NBFCs papers) a couple years back has pushed issuers to be more conservative and take a narrow product approach. Consequently, the differentiation between returns offered by various instruments has gone down tremendously. In such a scenario there is a large demand for alternate debt instruments which offer good returns with commensurate risk. Point to note is alternate debt instruments come with various degrees of product and risk complexity, so it is important for investors to make an informed decision.

What to expect in the supply chain finance industry, Artfine’s growth journey, and future plans?

India is home to around 63 million MSMEs that accounts for nearly 50% of exports. With time we are expecting better availability of funds for MSMEs through Supply Chain Financing. SCF will start gaining more attention as it can address the core issue of working capital problem.

Artfine is aiming to increase its presence and expand operations such that we are able to provide more inclusion for MSMEs and cater to the needs of their working capital requirements. Artfine envisions to empower 10,000 MSMEs and 100 corporate house by FY 2025