Ashneer Grover and BharatPe A business case study

The story of Bharatpe.

Today we see Ashneer Grover as a successful businessman and an amazing Shark Tank’s shark.

But do you know how he reached here?

BharatPe’s controversy is everywhere.

Everyone is saying -Uninstall BharatPe.

After doing all this what Ashneer Grover got is – Pure Hate.

BharatPe back story

Whereas on the other side, BharatPe started in 2018 and within 3 years it is more than 20,000 Crs company.

So the question is what is BharatPe’s and Ashneer Grover’s reality?

Many fewer people know but BharatPe from which Ashneer got their name, money, fame etc.

But actually, Ashneer Grover didn’t start it.

So the story starts in 2018 when 2 guys from IIT – Sashvat Nakrani and Bhavik Koladiya.

They both identified a huge market gap in the digital payment market.

The gap was for any digital payment, the vendor had many QR codes.

For example, you use Paytm but the vendor has a PhonePe QR code then in this scenario you can’t make any digital payment.

UPI Payements in India

in 2018, very less people knew about UPI payments.

And most painful, all Payment Merchant Companies like GooglePay, PhonePe and Paytm,

They charged 1.5% of their transaction from vendors as commission.

Suppose shopkeeper sold a 200 Rs product on which he gets 20Rs profit,

So in this case these companies will charge 1.5% i.e. 3Rs as commission.

So now the shopkeeper gets only 17 Rs profit.

In 2018, it was 2 years from the time Jio was launched and the whole nation was adopting digital payment methods.

And to make benefit from this, PhonePe, Paytm and GooglePay started ruling the digital payment market.

PLAYERS DIGITAL PAYMENT SECTOR

So the question is when there was already so much saturation in Digital Payment Market,

Then how BharatPe defeat big companies like PhonePe, Paytm and GooglePay and dominated the market?

And if everything was going amazing, Ashneer Grover forged the company to new heights and why did he quit BharatPe?

With the motive to solve problems in the Indian Digital Payment Market,

When Sashvat Nakrani and Bhavik Koladiya started BharatPe they went to Ashneer Grover for some funding.

Ashneer Grover who worked in American Express and was also ex-CFO of Grofers, liked Sashvat’s idea a lot.

And as BharatPe’s model was amazingly designed that in future it can become a large-scale profitable business.

Ashneer Grover

Seeing this Ashneer gave funding to BharatPe.

And from when Ashneer Grover entered the company, the fate of the company completely changed.

Firstly, BharatPe solved the problem of multiple QR codes by bringing a single QR code.

Customers use Paytm, PhonePe or Google, merchants can easily take payments from just one single QR code.

And most importantly, all payment merchants were working on a commission model.

BharatPe decided to keep it free for all.

Merchants did not need to give any money as commission.

And for customers, it was always free.

And due to this merchants joined BharatPe without thinking b’coz it was a NObrainer for them.

BharatPe New Model

Payment Merchants like Paytm and PhonePe used to take 2 days to settle payment, BharatPe introduce same-day settlement.

And bcoz of this many merchants shifted to BharatPe.

You would be thinking if BharatPe is giving everything free, then how this company makes profits?

And what’s so special about this company that within 3 years of starting, it is now a 20,000 Crs+ company?

As BharatPe was not able to make money through the commission model,

To solve this problem BharatPe used their Artificial Intelligence system.

It observed that many businesses run in high cash flow but with fewer margins.

So they can’t take commissions from them.

But many of these merchants need short-term loans and these loans they can’t take from banks.

B’coz banks don’t give loans without collateral.

And taking a loan from the bank is a long and hectic process.

And BharatPe solved this problem for every merchant.

BharatPe developed a Merchant Lending System for every merchant.

A Bank from BharatPe

And bcoz of this, these merchants can take short-term loans for their operational charges without any collateral.

I know you would be thinking that how someone can give loans without collateral?

Isn’t it too risky?

And at this place, BharatPe’s amazing algorithm comes into play.

When any merchant receives payment through BharatPe, BharatPe gets lots of data.

Through this payment data, BharatPe gets to know many things.

They come to know about merchants’ cash inflow and outflow.

That means how much money is coming into the business and how much much money is going from business.

On average how much inventory is left with the merchant?

Also, they know how much profit the merchant is making and how much he is saving.

All data is with BharatPe.

After analysis of this data, BharatPe decides its repaying capacity.

On this basis, BharatPe gives loans to merchants with 2% interest without any paperwork.

You will get shocked to know that BharatPe’s loan recovery rate is 96%.

The question is how is this possible?

So banks or any other financial instruments take monthly instalments from you for loan recovery.

And due to this, you feel stressed to give a huge amount every month.

But BharatPe doesn’t do this.

Instead of taking high instalments, BharatPe deducts a small amount from every transaction for loan recovery.

Suppose you went to a grocery store where you did shopping of 10,000Rs.

And that grocery store owner has taken a loan from BharatPe.

BharatPe will deduct some amount from it as a loan recovery amount and the remaining amount is credited to the merchant’s account.

Due to this BharatPe recovers loans on an everyday basis and the shopkeeper also doesn’t feel stressed.

Ashneer Grover has taken BharatPe to huge heights that today BharatPe is processing loans more than 300 Crs each month.

Not only this, All in one QR Code, 12% Club, PostPe, PNC collaborations and with banking licence –

BharatPe is now India’s most powerful Payment Merchant Platform.

The question is After doing all these things for BharatPe,

Why did Ashneer leave BharatPe?

This story is very interesting.

19 Jan 2022

Ashneer Grover and his wife Madhuri Jain Grover are sent on a long holiday.

But the controversy started in October 2021.

When Ashneer Grover approaches Kotak Mahindra Bank for securities.

Ashneer Grover wanted this loan to invest in Nykaa’s IPO.

But due to some reasons, this loan was not processed.

And due to this, a bitter abusive conversation happened between Ashneer Grover and Kotak Mahindra Bank’s Wealth Management employee.

Unfortunately, this call gets recorded.

Problems

in January 2022, Ashneer Grover comes into Shark Tank India as a shark.

At that time, this recording gets leaked.

Now Ashneer Grover was rich as well as famous.

But after the leak of this call recording, everything changed for Ashneer Grover.

After the leak of this call, a big Corporate Governance issue also came.

And to investigate it a separate firm was appointed.

And interestingly, this firm’s report gets leaked before reaching BharatPe’s office.

In that, they came to know that Ashneer Grover and his wife Madhuri Jain Grover are highly involved in false payments and false recruitments matters.

It was also found that a lot of money from BharatPe was removed through Shell Companies – the companies which exist on paper and do not perform any operations.

Where the money went and to whose pocket it went is still unknown.

After this incident, Ashneer Grover had to constrainedly resign from BharatPe.

But Ashneer Grover is still telling that – Buy my 4000 Crs stack and I am more than happy to leave the company.

The matter is still under investigation.

Who is right and who is wrong is still unknown.

But on one thing we should agree that Ashneer Grover left BharatPe but within 3 years what he did for the company was incredible.

 we should learn many things from this.