rangSutra
& Yunus Social Business Fund Bengaluru
rangSutra believes that Yunus Social Business Fund Bengaluru’s approach to catalytic capital has driven their expansion and 19% YoY growth.
ENTERPRISE TYPE
Hybrid
INVESTOR
Yunus Social Business Fund Bengaluru
INVESTMENT TYPE
Unsecured Term Loan
Term loans are short-term, medium-term, or long-term loans, usually offered to businesses that don’t qualify for a line of credit, for capital expenditure and expansion. They come with a set repayment schedule and a fixed or floating interest rate.
AMOUNT
₹2 Cr
($250,000)
DURATION
3 yrs
+ 6-12 month grace period
GENDER RATIO
60% - 90%
women
ANNUAL TURNOVER
₹26 Cr
($3.25 million)
NO. OF ARTISANS
3000+
YoY GROWTH
19%
rangSutra is a community-owned handmade social enterprise of over 3,000 artisans who live and work in remote regions of India. rangSutra creates opportunities for inclusive, sustainable growth by acting as a bridge between highly skilled rural artisans and urban markets. Their artisan shareholders are not only producers but also decision makers who actively participate in the supply chain.
By aggregating large numbers of artisans, rangSutra is able to deliver handcrafted products at scale to meet marketplace demands while ensuring compliances and standards.
Each product they make follows fair trade principles, enabling artisans to thrive through equal pay, fair wages, a safe working environment, skills and leadership training, and a flexible #WFH option.
Despite creating and supporting livelihood opportunities for a large number of artisans, a majority of them women, rangSutra struggled to find supportive investors who would finance working capital of ₹2 crores ($250,000) to help them service orders from their B2B clients like Fabindia and Ikea or expedite the expansion of their fledgling retail B2C business. While they have been able to attract equity and grants, working capital through debt (affordable or even expensive) has largely remained elusive.
Working capital, usually required to pay for raw materials, artisan salaries, rent, operating costs is critical to fortify the producer end or supply side of the business. Given the 4-6 month-long production cycles common in the CMH sector, a lack of easy access to working capital puts both the business and livelihoods at risk even for a fairly established enterprise like rangSutra with assured, high-ticket clients.
“There exists a large number of highly skilled artisans and also a high global demand for ethically made hand crafted products. The problem is that supply and demand are not easily matched. rangSutra attempts to bridge this gap and provide large global retail companies with access to well-designed handcrafted products by artisans while also empowering mainly women artisans with regular work where they can use existing skills to earn an income. Our largest need for funds is working capital and to grow at the scale we want to, we need support in accessing markets and building and scaling operations.”
“
— RAHUL NOBLE SINGH, DIRECTOR, RANGSUTRA
YSBFB agreed to front rangSutra an unsecured term loan of ₹2 crores ($250,000) at a 12.5% interest rate. Typically, interest rates for easy-to-access, short-term loans from NBFCs range between 15% - 24% p.a. YSBFB structured the collateral-free debt to serve the enterprise’s working capital and business expansion needs.
YSBFB is an impact investor and a catalytic capital provider, whose core financial product is patient, long-term and flexible debt with low interest rates.
rangSutra continues to be a model social business for YSBFB given their equitable impact value chain, focus on gender, and autonomy and agency afforded to artisans. They are a great investee as they have been able to scale their business without diluting social impact at any point in their journey.”
“
— MANASI PARVATIKAR, GLOBAL IMPACT MANAGEMENT AND MEASUREMENT LEAD, YUNUS SOCIAL BUSINESS
Thanks to YSBFB’s investment, rangSutra benefitted in more ways than one.
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They repaid their loans ahead of time
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Secured a ₹4.5 crores ($562,500) loan from ICICI Bank at a below-market interest rate of 6.9% with Exim Bank stepping in to offer a 100% bank guarantee
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YSBFB offered them additional support and access to networks (markets, suppliers, social impact measurement, grant funding)
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Received support to develop impact management and measurement frameworks, strategy development for the B2C segment and legal/ governance support via partners
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Continued access to funds to top up their working capital needs for short-periods. This enables them to take on large orders to:
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Provide regular work to their artisans
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Ensuring timely payments to vendors and artisans
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“The biggest challenge in our journey has been and continues to be access to working capital, and particularly, funding it through debt. Despite the hype around social impact investing, there's very little affordable or even unaffordable debt available to a lot of craft organisations like rangSutra, especially smaller ones that don't have security to offer. The real and biggest advantage of the YSBFB loans was the speed of processing and the lack of collateral required.”
“
— RAHUL NOBLE SINGH, DIRECTOR, RANGSUTRA
Provide concessionary debt for working capital with non-traditional terms structured to support the HCM mindfully scale its model and its impact.
Features of catalytic capital in this case:
Concessionary + Affordable: Easy-to-avail, unsecured (collateral-free) loan offered at an affordable interest rate that doesn’t burden the enterprise or prevent their ability to deliver growth.
Patient and Flexible: To accommodate the extended production cycles of impact-focused HCMs, repayment options are designed with flexible timelines, allowing for principal moratoriums of up to one year. This ensures HCMs can manage its cash flow effectively, considering that it may take up to six months before receiving payment from buyers.
Purpose-Aligned: Business support and resources offered to scale the model as well as track quantitative metrics in conjunction with other qualitative or anecdotal findings on impact bearing in mind that such HCMs dedicated to livelihood generation and improving quality of artisan life lack time and resources for M&E.