Also in the letter:
■ EV parts makers attract funding
■ World Cup win drives q-commerce sales
■ Zomato gets Rs 9.5 crore tax demand
Top fintechs dial NBFCs for secured credit partnerships
Fintech startups, having built trust as unsecured loan providers, are setting their sights on the secured credit market. Companies like PhonePe, Cred, and Paytm are collaborating with non-banking financial institutions (NBFCs) to facilitate these secured loans.
Current biz: For unsecured loans, fintechs play a large role in the process, from underwriting to quick approvals. However, in the secured loan business, they currently act only as sourcing channels. The fintech players are just lead-generating agencies, with the lending partner managing the rest, given the level of complexity in assessing the underlying assets.
Scouting customers: Industry insiders said this move is still in the early stages. Secured credit requires a more in-depth evaluation compared to unsecured lending, where borrowers might be pre-approved or assessed quickly.
“For us, fintechs are another sourcing channel; after all, prime customers are using these platforms extensively. For us, our D2C channel is low. So, we are looking to source good-quality customers from these fintechs,” said Sudipta Roy, chief executive at L&T Finance.
Fintechs’ foray:
- PhonePe was the first to formally launch secured loans in partnership with a bunch of lending companies, including Tata Capital and L&T Finance.
- Paytm has experimented with gold loans and is looking at micro-loans against property (LAP).
- Peak XV Partners-backed Cred, which has a major business in consumer credit, is also looking to get into secured products, ET reported on June 11.
Also read | Fintechs may take a hit as most banks stay away from BBPS
Indian IT companies move into New Jersey to stay close to their clients
Top Indian IT companies are zeroing in on New Jersey as their hub, with their top executives and a majority of Indian-origin engineers who work in the US making the city their base.
Driving the news: India is New Jersey’s second-largest foreign direct investor and a majority of New Jersey’s immigrant population hails from India.
- The new CEO of Wipro, Srini Pallia, Sandeep Kalra, CEO of Persistent Systems and Sudhir Singh, CEO of Coforge, are based out of New Jersey.
- HCLTech opened its East Coast headquarters in New Jersey in June.
- Over the last two years, three of the top six Indian IT firms expanded their operations in the state.
- Firms like Cognizant, Coforge, and CitiusTech are headquartered in New Jersey.
Pecking order: Top IT hubs in the US for IT companies are New Jersey, San Francisco, Chicago, Dallas, and Atlanta.
“Because New York is a very expensive place, people coming from India and even IT companies find their home in the Newark area. Also, if they are nearer to New York, they can cover all of the US because of superior flight connectivity from New York. A lot of the leadership of IT companies is also based in New Jersey,” Avinash Vasishtha, an IT and technology globalisation expert, and chairman of Tholons, told ET.
Also read | IT firms chasing acquisitions to enhance their topline and skills
VCs chase auto parts makers to hitch a ride on EV journey
Smaller component makers for electric vehicles (EVs), many of which started with other businesses before pivoting to their current business mainstays, are increasingly attracting interest from venture capital firms amid a boom in EV sales.
Changing landscape: The boom in EV sales, as demonstrated in the sales of passenger EVs jumping 91% and of commercial EVs tripling year-on-year (YoY) in FY24, has meant that the demand for parts has also soared, opening up the space that large manufacturers like Sona Comstar and Sterling Gtake have traditionally dominated.
Big pivots: The increase in demand has led to multiple firms pivoting into the EV parts business. Gurugram-based Indigrid started with the manufacture of TV set-top boxes before starting to make EV parts six to seven years ago. Another firm, Matel, started as a solar water pump manufacturer in 2016 before starting EV parts manufacturing in 2020-21.
Variety of offerings: Indigrid, for instance, makes MCUs, VCUs, BMS, and DC-DC converters, among other components. Matel makes parts like the motor, the MCU, and transmission parts like gears and casings. The newer firms also try to provide full-stack solutions, right from the design of parts and many iterations to their manufacturing. Due to their small teams, these firms can provide multiple iterations of products at a much quicker turnaround time, something that is expensive and time-consuming for traditional auto component giants.
F&B, quick commerce log 40-50% sales jump on T20 final night
India’s nail-biting final match with South Africa on June 29 and the eventual historic victory drove up sales and revenues of food and beverage (F&B) companies as well as quick commerce firms.
Winning shot:
- Merchant checkout network Simpl said it witnessed a 40% surge in consumer spending on its platform during the final.
- Virat Kohli’s one8 Commune restaurant was fully sold out in Mumbai.
- Rahul Singh, founder and CEO of The Beer Cafe, said the chain saw its highest single-day revenue since its inception 12 years ago.
- Outlets of popular eatery Social across India also saw massive turnout for match screenings on Saturday.
Insider information: Simpl founder and CEO Nitya Sharma told ET that Indians’ support and celebration were quite evident in their online spending patterns, with a nearly 40% jump in quick commerce spending as against last year’s 50-over World Cup final. Guneet Singh, F&B manager at Sesame, Hyatt Centric Juhu, said he saw a 15% increase in revenue from the bar.
Also read | Food Inc eyes quicker commerce on match day
Other Top Stories By Our Reporters
Deepinder Goyal, CEO, Zomato
Zomato gets Rs 9.5 crore tax demand, company to appeal against order: Listed food delivery and quick commerce major Zomato said in a regulatory filing that it has received a tax demand, along with interest and penalty, aggregating Rs 9.5 crore from the Karnataka commercial taxes authority.
Hyderabad esports event makes itself heard amid World Cup din: At about the time that the country was absorbed by the nail-biting T20 World Cup final on Saturday, a 1,000-strong audience cheered for esports champions at the Battleground Mobile India (BGMI) series event at Hyderabad. This signifies the increasing popularity of such pursuits even in a cricket-crazy nation like India.
Why the Digital Competition Bill has started a debate in the tech industry: India’s Digital Competition Bill has turned previous foes in the tech industry into unlikely allies and sparked a polarising debate on market practices. On February 27, the Committee on Digital Competition Law (CDCL) submitted its report to the Ministry of Corporate Affairs (MCA) after working on it for more than a year.
Ola Electric to invest $100 million in gigafactory: IPO-bound Ola Electric plans to invest $100 million (about Rs 834 crore) in the first phase of building its gigafactory for producing lithium-ion battery cells, founder Bhavish Aggarwal said on Saturday. He added that Ola’s electric scooters will feature locally-produced battery cells as early as next year.
Global Picks We Are Reading
■ Fisker goes bankrupt. What do its EV owners do next? (Wired)
■ Big Tech investors should be paying more attention to EU’s regulatory strikes (FT)
■ What global investors need to know about funding Pakistani startups (Rest of World)
