Ugro Capital pays back Rs 50 cr debt to Sachin Bansal ahead of due date

Mumbai: At a time when every businessman is preserving cash given the massive disruption caused by the Covid pandemic, small-sized non-banking lender Ugro Capital has paid back the entire Rs 50 crore it had raised from a firm floated by Sachin Bansal of the Flipkart fame ahead of due date.

Last October, the co-founder of Flipkart had invested Rs 50 crore into the NBFC by subscribing to its non-convertible debenture (NCD) issue and which was up for redemption on 3 May. But the company paid back the amount on 7 April.

Ugro said the early redemption was on request from the debenture holder, Chaitanya Rural Intermediation Development Services, and the debenture trustee Beacon Trusteeship.

File photo of Sachin Bansal, former co-founder, Flipkart. image courtesy CNBC-TV18.

The decision to retire debt a week before the due date underlines the Ugro's well-capitalised business model and inherent balance sheet strength at a time when most NBFCs are struggling with liquidity stress.

Ugro is focused on lending to small businesses and lends only to select sectors. Following the RBI direction to allow all borrowers to opt for a three-month repayment moratorium the NBFC has allowed its customers to avail of the moratorium.

NBFCs have been down in the dumps ever since IL&FS went belly-up in September 2018, which created a crisis of confidence leading to banks snapping liquidity to them.

Even after the RBI mandated payment moratorium and the mandated 50 percent subscription of their debt by banks through the targeted long-term repo operations, the liquidity scenario has worsened in the sector as they have not received similar reprieve from banks.

"In a challenging market scenario, our ability to honour our liability commitments underlines the strength of our business model. We maintain an extremely conservative asset-liability, mismatch policy with a granular and diversified liability line, which includes multiple term loans from state-run and private banks.

"We also have actively securitised portfolios. All these have enabled us in facilitating the early redemption of NCDs in a very challenging environment,” Shachindra Nath, executive chairman and managing director of Ugro Capital said.

Ugro is one of tech-based small business lending platforms that have received a long-term rating of 'A' with a stable outlook within six months of starting its operations. The company also managed to break even in the first year of operations.