Dugar Finance Raises $5 Million in Pre-Series A Funding

Chennai-based non-banking financial company Dugar Finance has successfully secured $5 million (Rs 45 crore) in a pre-Series A funding round led by HegdInvst, a Category II AIF that emphasises growth equity investments. Previously, the NBFC raised $18 million (approximately Rs 160 crore) in a debt funding round organised by Swiss investor Symbiotics, which saw participation from notable Indian banks including Union Bank of India and Karur Vysya Bank in December last year. Additionally, in June, the company received $3 million from the $75 million Green Basket Bond issued by Symbiotics Investments.

Use of New Funds

The fresh capital will be allocated towards four primary areas: enhancing technological infrastructure, advancing analytics-driven underwriting processes, establishing centralised risk management systems, and recruiting senior professionals across crucial functions, according to a company press release.

About Dugar Finance

Headed by Ramesh Dugar, Dugar Finance is an impact-driven, non-deposit-taking NBFC that operates in various states throughout India, with a robust presence in tier 3 and tier 4 markets. The company focuses on secured MSME and commercial vehicle financing aimed at income generation. It aims to support micro-entrepreneurs, small enterprises, and first-time commercial vehicle drivers who are often overlooked by traditional credit systems.

Expansion and Growth Plans

Traditionally rooted in financing commercial and passenger vehicles, Dugar Finance is now broadening its focus within secured MSME lending, seeking to establish a more well-rounded and varied loan portfolio across both sectors. Presently, Dugar Finance operates in six states and has plans to expand to ten states within the next three years. The company is aiming for Rs 2,000 crore in Assets Under Management (AUM) over the next 3-4 years, while targeting a Gross Non-Performing Asset (GNPA) rate below 2% and a Return on Assets (RoA) within the 4-5% range.

Furthermore, the company intends to gradually create a more balanced mix between secured MSME and commercial vehicle financing, enhancing its resilience throughout various credit cycles.