Striding Forward with Vayana's Dealer Financing Solutions

The footwear industry in India, particularly in regional markets, presents unique challenges and opportunities. According to a report by Statista, revenue in the Footwear Market is projected to reach US$119.00m in 2024. Further, revenue is expected to show an annual growth rate (CAGR 2024-2029) of 9.51%, resulting in a projected market volume of US$187.40m by 2029. This is driven by an increasing focus on affordable, durable, and trendy footwear options. Despite this potential, small and medium enterprises (SMEs) in the sector often struggle with cash flow management and access to affordable financing. This case study explores how a regional Footwear Distributor leveraged a strategic partnership with Vayana’s dealer financing program to overcome financial constraints and achieve substantial growth.

About this regional Footwear Distributor

Founded and managed by an ambitious first-generation entrepreneur, this distributor operates from one of the remotest towns in Karnataka, India. Since 2016, it has been collaborating with a well-known regional footwear brand, serving a network of around 100 retailers, each generating less than US$30,000 in annual revenue. Despite their dedication and regional market presence, they faced significant challenges common to many SMEs in the footwear industry. These included:

• Retailer Credit Demands: The cash-and-carry model was at odds with the credit needs of its retail partners, who often required more flexible payment terms to manage their inventory and cash flow.
• Financial Exclusion: Traditional lenders frequently overlooked the distributor due to its regional focus and relatively small scale, limiting access to necessary financial resources.
• Limited Financing Options: The limited options of specialized Supply Chain Financing Solutions hindered the ability to access affordable credit, crucial for sustaining and expanding their operations.
• Industry Constraints: The footwear industry’s low margins and extensive distribution networks made it difficult to secure financing on favorable terms.

Here is where Vayana, India’s largest Supply Chain Finance (SCF) Infrastructure stepped in, with its Distributor Financing Program in collaboration with a prominent Non-Banking Financial Company (NBFC), specifically designed to meet their unique requirements.

The Impact

• Financial Empowerment: Through Vayana’s Digital SCF Platform, the distributor secured an unsecured credit limit of $30,000. This significantly reduced interest costs and improved cash flow management, allowing them to meet the credit demands of their retailers without compromising their financial stability.
• Rapid Growth: Post-partnership, the annual turnover surged by 40%, reaching $500,000. The infusion of affordable credit enabled them to scale operations, improve inventory management, and cater to a larger customer base.
• Market Expansion: With enhanced financial capabilities, they expanded market reach and operational efficiency, solidifying their position in the regional footwear market. The ability to offer better credit terms to retailers resulted in stronger business relationships and increased sales.

Vayana’s Dealer/Distributor Financing Program provided accessible and affordable credit, crucial for overcoming immediate cash flow challenges and driving growth. Additionally, this partnership facilitated financial relief and positioned the distributor for continued success and profitability in the niche market. This underscores the importance of strategic financial support in ensuring the growth and stability of MSMEs.