Here is my first thread on this fantastic forum. Checking out this forum is really my first step in researching a company (much like how Team-BHP is, when I want to read up everything worth knowing about a car). I have learnt a lot about how to study a business, and shall continue to do so.
I came across this exciting SME called Veefin Solutions and was surprised to not find a thread here, though some of our members have aluded to it on other threads. Hence I thought of posting a thread myself and start a discussion to pool our thoughts and opinions. My first time, so please be kind :-)**
So here goes:
Veefin Solutions Limited is a technology company specializing in supply chain finance (SCF) and digital lending solutions. It offers a comprehensive, end-to-end platform designed to help financial institutions manage their lending and SCF operations. Veefinโs solutions cater to a variety of clients, including banks, non-banking financial institutions (NBFIs), fintech firms, B2B marketplaces, and large corporations.
Business Lines and Revenue Share:
-
Supply Chain Finance (SCF): Veefin provides a complete suite of SCF solutions, encompassing customer onboarding, underwriting, transaction management, and collections. This includes:
-
A platform for managing program and configuring products for both buy and sell sides of corporations.
-
Capabilities for tailoring both pre-shipment and post-shipment products.
-
Automated invoice approval and financing features.
-
Dynamic risk assessment using real-time data.
-
A platform where suppliers can upload invoices, request financing, and track their status.
Special note: I have watched multiple interviews/talks of the CEO Raja Debnath and the one thing he keeps emphasising is deep chain supply chain financing which they according to him is the real game changer, and that Veefinโs SCF solution helps facilitate that.
Think of how beneficial it would be for not just a supplier to, letโs say Maruti, have access to SCF, but also an MSME supplier to a supplier of Maruti to have access to SCF. As per Debnath, enabling this would be a real game changer and would need proper means to conduct due diligence and verification. Per him, Veefin lets its clients do that.
-
Digital Lending Solutions: Veefin offers a digital lending solution that allows financial institutions to customize their lending portfolios, optimize risk, and speed up processes. This includes:
-
A Loan Origination System (LOS) that is low-code, no-code, and product agnostic.
-
A Loan Life Cycle Management System for managing loans from application to collection.
-
Transaction Banking: Veefin is developing cash management and trade finance products.
Note: I am a bit apprehensive of their probability of success in this space since there are already well established players like AurionPro who are strong in India and South Asia.
- PSB Xchange: This platform aims to create a large supply chain finance ecosystem connecting lenders and small businesses in India.
Note: This looks to be an interesting proposition. If it takes off, can be a really big platform. However, maybe due to inertia typical of PSBs, hasnโt got much traction till now.
- Other Solutions: Veefin offers various other solutions, such as an API gateway for fraud and risk services, digital transformation and custom solutions for banks, and a no-code business process management platform.
Revenue Share:
-
In the fiscal year 2024, Veefinโs domestic revenue was โน1197.90 Lakhs, while export revenue was โน878.08 Lakhs. This represents a shift from the previous year, when exports accounted for a larger share of the revenue. In FY 2023, domestic revenue was โน455.18 Lakhs, and export revenue was โน848.66 Lakhs.
-
In FY 2024, domestic revenue accounted for 57.70% of total revenue and exports accounted for 42.30%.
New Business Lines and Ventures:
- Veefin Capital: This subsidiary is an NBFC focused on trade receivables securitization. The goal is to create a trade securitization market in India that unlocks working capital for SMEs.
Note: This again seems to have a large TAM, but the question is how much of it can they capture.
-
GlobeTF: This subsidiary focuses on transaction banking, building out cash management, and trade finance products.
-
Estorifi Solutions: This subsidiary houses the PSB Xchange program.
-
Infini System: This subsidiary focuses on fraud and risk management. It also includes Nityo Tech which focuses on digital transformation for banks.
-
Ezee.AI: A newly acquired company that provides a no-code business process management platform that allows for the development of loan origination and collection management systems.
-
Deep Tier Supply Chain Finance (DTSCF): Veefin is one of the few companies with a fully productized DTSCF solution that integrates with existing banking systems, enabling corporations to extend credit to their Tier 2, Tier 3, and beyond suppliers.
Growth Prospects:
-
SCF Market Growth: Veefin is well-positioned to benefit from the projected growth of the Indian supply chain finance market, which is expected to reach USD 100 billion in 3 years, up from USD 24 billion in 2024. The company aims to bridge the credit gap for MSMEs through its SCF solutions.
-
Global Expansion: Veefin has been expanding into new markets in Southeast Asia, the Middle East, Africa, and Latin America. This expansion is supported by the companyโs Global Country Director program, which helps with entering new territories.
-
Product Innovation: The company continues to innovate and launch new features and improvements to its solutions, including transaction banking.
-
Strategic Alliances: Veefin has formed alliances with system integrators and consulting firms to broaden its reach.
-
SaaS Model: The companyโs SaaS model eliminates the barrier of upfront costs for financial institutions, which will help it expand its reach in the market.
-
Financial Performance: In FY 2024, Veefinโs total revenue grew by 72.59% compared to the previous year, with a profit after tax of โน739.35 Lakhs. This suggests strong growth potential.
-
Focus on Product IP, Revenue, and Profit: Veefin is focused on product intellectual property, revenue generation, and profitability. It is committed to continuing its acquisition strategy to further enhance its offerings.
-
Emphasis on SMEs: Veefin is focused on offering supply chain finance solutions to SMEs, which they view as the safest form of lending.
-
Technology Adoption: Veefin expects that the increasing adoption of digital technologies will present opportunities for innovation in the supply chain finance sector.
In summary, Veefinโs business is centered around providing technology solutions for supply chain finance and digital lending, with a growing focus on transaction banking, risk management, and embedded finance. It is experiencing significant growth in both domestic and international markets and expanding its offerings through strategic acquisitions and new product development. The company is also focused on creating a platform that can be used by a wide range of clients, which sets it apart from other fintech companies.
Organizational structure of Veefin Solutions and its subsidiaries, and related parties.
Veefin Solutions Limited (Holding Company)
-
Formerly known as Veefin Solutions Private Limited
-
Listed on the BSE SME platform
-
Subsidiaries:
-
Veefin Solutions Limited โ Dhaka, Bangladesh
-
Incorporated on November 16, 2021
-
Engaged in developing flexible and integrated software solutions to enable banks to create and offer supply chain financing services
-
Veefin Solutions FZCO โ Dubai, UAE
-
Established in Dubai
-
Engaged in developing flexible and integrated software solutions for banks to provide supply chain finance
-
100% owned by Veefin Solutions Limited
-
FinFuze Software Private Limited
-
Incorporated on December 3, 2023
-
73.49% stake held by Veefin Solutions Limited
-
GlobeTF Solutions Private Limited
-
Incorporated on December 8, 2023
-
73.96% stake held by Veefin Solutions Limited
-
IDVee Digital Labs Private Limited
-
Incorporated on December 11, 2023
-
73.98% stake held by Veefin Solutions Limited
-
Other Group Companies (as defined by related party transactions)
-
Infini Systems Private Limited
-
Provides end-to-end sales support in signing up new corporate and SME clients for banks
-
Wholly owned subsidiary of Infini Systems Private Limited
-
Chain Fintech Solutions Limited
-
A group company of Veefin Solutions Limited
-
Does not have a separate website and hosts its financial information on Veefinโs website
-
Estorifi Solutions Private Limited
-
Acquired a 50% stake in Walnut AI Pte. Ltd
-
A subsidiary of Veefin Solutions Limited
-
Other entities of interest:
-
Walnut AI Pte. Ltd
-
Estorifi Solutions Private Limited acquired 50% stake consisting of 27,778 Equity shares of SGD 9.54 each of Walnut AI Pte. Ltd on December 12th, 2024
-
Walnut AI Pte. Ltd has an authorized and paid up capital of SGD 530,000 and a turnover as of 2023 of SGD 1.17 Million
-
Veefin Capital
-
An NBFC factoring company
-
A subsidiary of Veefin Solutions, and will conduct securitization of trade receivables
-
Veesuite Solutions LLP
-
Brightin Digital LLP
-
Has been struck off
-
Alta Vista Food Technologies LLP
-
Templeton Solutions FZE
-
A proprietorship of Raja Debnath
-
Cogence Labs
-
Partnership of Raja Debnath and Ruchita Gautam Udani
-
Pooja Dye Chem
-
A proprietorship of Amishi Paras Kapasi
-
Gautam Impex
-
A proprietorship of Rajendra Mahendra Doshi
-
Laboni Media Solutions LLP
-
Partnership of Tina Amitabh Banerjee
Risks/ Concerns:
-
Valuations are CMP are Rs 1364 cr with TTM revenues of Rs 35 cr. Valuations are obviously with very high growth expectations. It is to be seen if the company is able to justify these valuations.
-
The market is very competitive.
-
AI will be a game changer and the winners would be those who are able to harness AI to their advantage. From that perspective, I will keep an eye out on how AurionPro will utilise the Arya.ai acquisition to enhance their offerings.
-
The management is aggressive and believes in inorganic growth. I hope they are very cautious in making the right kind of acquisitions since a large and wrong acquisition can totally spoil the game.
-
Multiple subsidiaries and related parties make me a bit uncomfortable. (See above)
Discl: Invested. I know it is high risk. What attracted me is their ambition and aggressive growth plans. It seemed like an SME with large ambitions. Since valuations are high, I have not scaled up my investment yet. Would like to keep monitoring their progress.
This platform ๐ฐ๐ข๐ฅ๐ฅ ๐๐๐๐จ๐ฆ๐ ๐ญ๐ก๐ ๐๐จ๐ฆ๐ฆ๐จ๐ง ๐ญ๐๐๐ก๐ง๐จ๐ฅ๐จ๐ ๐ฒ ๐๐ซ๐ข๐๐ ๐ for public sector banks, private sector banks, and NBFCs to source and provide supply chain finance and small business loans.
This Unified platform is a ๐๐ฅ๐จ๐๐๐ฅ-๐
๐ข๐ซ๐ฌ๐ญ, that will connect Fintechs, B2B marketplaces, Accounting Service Providers, new-age data providers with the core banking systems of multiple Lenders.
