Tata Sons to commit more funds for growth of B2B digital unit

Tata Sons has renewed the focus on its B2B digital growth platform entity, Tata Business Hub, which offers business solutions under the Nexarc brand to small and medium enterprises to scale up their operations.

While there were ambitious plans around it when the business was incorporated in 2020, it had not attracted very high attention initially. However, an upswing in business volumes from SME players has caught the Tata Group holding company's eye, executives close to the development said.

The entity is led by veteran Tata Consultancy Services executive Venguswamy Ramaswamy, the global head of TCS Ion, who has been able to significantly scale the business in this segment, they said.


Other directors of Tata Business Hub include Aarthi Subramanian, Modan Saha and Indroneel Dutt.

The company had noted some attrition initially but has hired more employees as the business gained traction. "There is huge scope for growth here and Ramaswamy has been able to get business scale in this sector," an executive said.

Tata Sons did not comment.

Tata Nexarc offers procurement solutions, affordable logistics services with wide coverage, and access to business loans for SMEs to meet working capital needs and requirements for government tenders.

"Several small companies are not able to access credit or good technology or proper marketplaces to showcase their products. This will be a platform to enable that,” said an executive close to the company.

India has more than 60 million small and medium enterprises, of which only a fourth have exposure to the country’s $1 trillion commercial lending banking system, according to the Indian Software Product Industry RoundTable. The gap in lending to SMEs is $250-500 million with many small companies unable to access capital for growth.

According to the Ministry of Statistics & Programme Implementation, the share of MSME gross value added in India’s gross domestic product has shown a fluctuating trend over the last three years. In the fiscal year 2019-20, the share was 30.5%, which declined to 27.2% in 2020-21 but rebounded to 29.2% in 2021-22. The share of MSMEs in Indian manufacturing accounted for 36.2% during 2021-22.

Also read | Economists see MSME sector to be worth Rs 1 trillion by 2028

While SMEs were already migrating to digitise themselves, the business has grown multi-fold after the pandemic. Several large B2B startups like OfBusiness specialise on connecting buyers and suppliers across sectors like manufacturing and infrastructure for the purchase of metals, chemicals, agricultural commodities and building materials.

This leads to the need for capital on both sides where platforms through their own non-bank finance companies or partner banks lend to the SMEs and earn an income. For instance, Oxyzo is now a separately run fintech arm of OfBusiness.

"The growth even on a large scale can be over 100% as we are seeing in our business now. There would be more M&A across the buyer and supply sides. Loan books are steadily expanding in line with top-line growth," a senior entrepreneur in the B2B commerce space said.

Meanwhile, Jio Platforms and Amazon have been investing heavily to digitise small firms and get them to do business on their platforms.