Spice exporter Nadar Spices now ships 3 times more containers to customers. here’s how

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India is the world’s largest spice producer and exporter, exporting $4.1 billion worth of spices in FY22, according to the Directorate General of Foreign Trade (DGFT). Earlier this year, Union Trade and Industry Minister Piyush Goyal called on the Spice Council to more than double the industry’s spice exports to $10 billion over the next five coming years.

While the government has launched numerous programs and initiatives to help India’s micro, small and medium-sized enterprises (MSMEs) realize their full export potential, one of the major challenges faced by exporting MSMEs – which represent approximately the half of India’s total exports – is the availability of and access to export credit. In addition, MSME exporters also face other related challenges such as cost of compliance, analysis of export data, additional warranty requirements, and documentation issues, among others.

To be clear, access to sufficient and timely credit remains essential to enable exporters not only to maintain trade momentum, but also to capitalize on new growth opportunities. It’s something
Tamil Nadu based spice exporter Nadar Spices experienced first-hand when the fifth-generation spice exporter was able to dramatically increase shipments and see business volume triple, thanks to better and faster access to credit after leveraging finance solutions unsecured provided by cross trade finance digital platform,
Drip capital.

Like many other exporters, Nadar Spices had previously struggled to secure adequate export financing, which in turn had hurt the company’s ability to take advantage of market opportunities and limited its ability purchase and sales growth during crucial times, such as in 2018 when the cardamom prices reached record highs.

Challenges in accessing credit, long sales cycle

Limited working capital, the inability to pledge more collateral, and cumbersome processes to obtain financing from banks all hampered the company’s ability to profit from the rising international market price. cardamom at a maximum price of $31.96 per kg and an average price of $17.45 per kg in 2018.

“Also, to complete a sales cycle, from buying the goods to shipping them out and booking the next order, it would take about 50-60 days. So we had to wait for the money. Imagine you expecting a hundred thousand dollars from your buyer and then making purchases on receipt to prepare the next order.It’s just not scalable to grow in such scenarios.The nature of export business is that it is Quick cash flow is essential for a business to grow,” said Prem Divakar Venkatesh, Managing Partner of Nadar Spices.

Drip Capital’s Cross-Border Trade Finance Solutions

This is where partnering with digital trade finance platform Drip Capital – which provides unsecured working capital solutions for MSMEs such as export factoring – has helped Nadar Spices not only solve challenges it faced related to limited access to credit, the long sales cycle and saturating its funds, but also conquering new markets, expanding its customer base and increasing its purchase volumes.

Export factoring is one of the fastest ways for exporters to obtain additional working capital. For Nadar Spices – who had not previously worked with any third-party entity other than his bank for the company’s working capital needs – there were initial concerns about the risks associated with factoring and sharing business details. as part of the process.

But soon after gaining confidence in the Drip platform with their first order, the company started increasing shipments and onboarding more buyers to the platform because the whole process is well documented, duly verified and signed by all parties involved. In fact, all orders for its Indian Green Cardamom and Indian Green Coffee from their largest customer in the Middle East are routed through Drip Capital.

Additionally, the Drip platform helps exporters like Nadar Spices with other solutions such as export data analysis and seamless buyer onboarding.

“The best part of Drip isn’t just its platform, but a combination of its technology and people supporting you every step of the way. They complement each other. From the experience of the platform and the disbursement of funds to meeting compliances, deadlines, audits, etc., our relationship manager is always on hand if we need any help and is very process oriented,” said Venkatesh.

“All it takes to access one hundred thousand dollars in funds from Drip is uploading the right documents to a portal and giving online confirmation from our client’s side. Whereas in banks sometimes the bureaucracy would make this process a few months long,” he added.

The impact of drip capital

Indeed, Drip Capital’s cross-border trade finance solutions have helped Nadar Spices secure faster pre-shipment credit close, which has resulted in more savings as it is done well before the due date, without the need to search for extensions with additional interests or missing deadlines. .

With improved access to capital through its partnership with Drip Capital over the past year, Nadar Spices has seen a significant positive impact on the growth of its business and has been able to:

  • Shorten your sales cycle from 60 days to 15 days
  • Increase average invoice value by 36%
  • Enjoy stress-free buyer relationships, which improve synergies with buyers, as Drip ensures that customer payments are made on time, and
  • Tap into new markets in the Middle East, with strong demand for Indian green cardamom

“In the last fiscal year of working with Drip, our business volume has doubled. The number of shipments to our main customer has increased significantly, we are shipping more containers than ever and are able to fulfill more orders with a faster sales cycle. Basically, since the customer has seen that we can ship orders faster, they are ready to place more orders with us. With access to these funds, we can manage at least 2 times more buying volume in a cycle,” Venkatesh said.

Like Nadar Spices, other exporters have taken advantage of Drip Capital’s export factoring services to access funds faster to help them grow their businesses. Under this solution, Drip Capital provides up to 80% of the value of the exporter’s export invoice in advance on the day of shipment, while the remaining 20%, less shipping costs. factoring, are paid once the buyer has made full payment to Drip Capital when the credit period is over.

This not only improves the exporter’s cash flow, but also eliminates the hassle of collecting payments. Exporters can also take advantage of funds available at any stage of the business life cycle to pay for inventory, raw materials, employees, or any other short-term needs.

“Factoring is one of the main growth engines that exporters can use to inject additional working capital into their business. But there’s a general perception in the exporting community that factoring is too good to be true, it’s easy money, and there could be a catch. So my advice for them is to start with one shipment. Think of it like any other loan from a bank, where you only pay the cost of the debt associated with it. The results will speak for themselves,” signed Prem Divakar Venkatesh, Managing Partner of Nadar Spices.

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