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Online lender Aye Finance’s profits grew 10x at INR 250 mn in FY19

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Sanjay Sharma, MD, Aye Finance

Aye Finance Private Limited (Aye Finance) is among the few in the Indian online lending space that has been posting profits for the last two years. The company, which provides micro-financial services, has reported a net profit of INR 250 million during fiscal 2019, a 10x increased from INR 23 million net profit a year ago.

Backed by Capital G (formerly Google Capital), Aye Finance also witnessed a 165 per cent jump in its revenues at INR 2.18 billion compared to INR 0.82 billion in fiscal 2018, according to the company’s financial data filed with the Registrar of Companies. IBS Intelligence accessed this financial data on business intelligence platform Tofler.

However, the growth came at a cost as the company’s total expenses for the financial year 2019 grew by 2.3x at INR 1.85 billion that included employee benefit costs and other finance costs.
Founded in 2014, the Delhi-based FinTech that focuses on the MSME (micro small and medium enterprises) had raised around INR 800 million in debt funding in September this year to grow its lending portfolio. Before that in August, it had raised INR 550 million from DCB Bank.

Within a short span of 5 years, Aye Finance has transitioned from a start-up to a mid-sized company. Last financial year it closed two equity rounds – Series C and D, raised INR 3.8 billion from CapitalG, Falcon Edge and MAJ Invest.

“I believe the turmoil currently underway in the NBFC Sector will separate the sustainable and sound business models from the rest. Aye has remained unaffected and continues to find support from investors in India as well as globally in its mission to transform micro-enterprise lending,”  Sanjay Sharma, Founder and Managing Director, Aye Finance had said in a statement.

The company claims to have disbursed over INR 2.2 billion loans to about 1,50,000 micro-enterprises. In the last 6-8 months,  it has opened 67 new branches and expanded its presence to 171 offices in 18 Indian states to further ease micro-enterprises’ access to affordable credit.

Armed with its unique “Cluster-Based Credit Assessment Methodology” and a variety of alternative data analysis techniques, the FinTech lender, claims to continue on its growth trajectory in the current fiscal as well. The banking regulator RBI has featured the online lender in its recently released list of 268 systemically important NBFCs in India.

Aye Finance also claims to have disrupted the MSME lending by innovatively adopting the industry-clusters approach for credit assessment of the unbanked micro-enterprise segment. The strategy gives Aye Finance a peek into various alternate data sources like the typical cash-flows, seasonal fluctuations, and the strength of the ancillary network, which has helped it make accurate risk selection even in the absence of traditional business documentation and credit histories.

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