Power2SME is able to increase SME profit margins by 3-5 per cent per month by providing raw material to SMEs at competitive price points.
Power2SME, India's first 'buying club' for Small and Medium Enterprises (SMEs), has inked an agreement with non-banking financial company (NBFC) Vistaar Financial Services Pvt. Ltd., to finance procurement transactions of Power2SME's SME clients.
The tie-up is in its first stage and the pilot project is already underway in West India, with SME clients in Pune and Nashik hailing from the manufacturing sector. This first stage pilot project for NBFC funding will upto a credit limit of up to Rs 25 lakh.
Power2SME, now in its third year of operation is committed to addressing the SMEs capital and cash flow issues and its tie up with Vistaar is a step in that direction.
The tie-up will be particularly beneficial for SMEs seeking to scale up but lacking the wherewithal to do so. With handholding from Power2SME as required and a competitive funding option from Vistaar, SME clients will be in a position to expand their business faster.
Raw Material costs for Manufacturing SMEs ends up amounting to about 80 per cent of their recurring cost. With a registered user base of 30,000 SMEs, Power2SME is able to increase SME profit margins by 3-5 per cent per month by providing raw material to SMEs at competitive price points. The company has grown 50 per cent by the quarter with 70 per cent repeat buying behaviour.
Power2SME buys various materials (inks, chemicals, additives, polymers, textiles, steel, paints, cement, wood, electrical, etc.) from principal manufacturers and sells them directly to SMEs at competitive prices via its website and dedicated call center. This helps SMEs increase profitability by reducing prices and boosting business efficiencies, since it offers information and tools that enable SMEs to compete on an equal footing with larger entities.
Commenting on the tie up, R Narayan, Founder & Chief Executive Officer, Power2SME, said: "With
Power2SME aggregating purchases on behalf of numerous SMEs, bulk buying ensures immense discounts and lower rates, which are passed on to SME clients. The tie-up with Vistaar will boost the number of annual transactions by facilitating faster and easier funding thereby providing an impetus to resolving cash flow related issues of SMEs."
Elaborating on the partnership, Brahmanand Hegde, Managing Director & Chief Executive Officer - Vistaar, said: "With finance and cash flow problems, SMEs need more financial channels that create lending solutions for SMEs. The segment possesses tremendous potential to help fulfil the Government's 'Make in India' campaign, provided adequate financing is available to them. This is the gap that the Power2SME-Vistaar tie-up will strive to fill."