These ex-Googlers handle revenues of $500 M for Yahoo, Microsoft; help them avoid bad debts


Having worked for more than eight years in managing credit risks for Google, Ravi Malhotra saw an acute problem plaguing Indian corporates. His answer was Debt Nirvana which works with 45 clients across Asia to help them with their revenue flows.

It is no secret that a key element to doing all business is credit. Be it an overdraft, a short-term loan or staggered receivables – if you are in business, you are most likely to owe someone money, just as someone would owe you money.

For husband-wife duo Ravi and Shilpi Malhotra, it was this large market opportunity that compelled them to leave their secure jobs at Google India and start up. Having spent close to eight years in Google India, Ravi was handling compliance across the company’s AdWords and other platforms, while Shilpi worked in Software Testing.

Ravi and Shilpi Malhotra, Co-founder of Debt Nirvana

For most of his career, Ravi worked in areas of revenue assurance, credit risk mitigation, and saw an acute problem that plagues the industry, companies big or small. Back in 2012, he realised that more than 85 percent of companies were facing issues of cash flows because of bad debts, and client payments not coming in.

The duo thus came up with Debt Nirvana, a debt collection agency and a platform that helps companies mitigate credit risks. Resigning from their jobs in June-end 2013, Shilpi and Ravi started Debt Nirvana in July and later incorporated the firm in September the same year.

Freedom from debt

As the name suggests, Debt Nirvana helps companies recover bad debts, mitigate credit risk, and handles their end-to-end account receivables.

Ravi adds,

“We basically provide end-to-end solution from a revenue perspective. One of the major problems which corporate India is facing is that they are not able to collect their payments or receivables on time.”

Mitigating risks

Ravi says the best way to avoid risks of late payments is to understand the creditworthiness of companies.

And that’s where Debt Nirvana’s solution comes into play as it analyses the creditworthiness of a company’s clientele based on management operational details, financial statements, revenue growth chart, complete analysis and its standing in the industry.

The platform also analyses and takes into account a company’s social imprint. However, Ravi says what sets Debt Nirvana apart is that as part of its analysis, it makes sure that there is also physical verification done by leveraging its partner network, which is present across 270 cities in India.

“We have helped companies like Yahoo in preventing fraud since the company in question wasn’t present at the same address. So, these small things can make a huge difference.”

Debt Nirvana charges between Rs 1,500 and Rs 4,000 for a single report. However, Ravi says the prices are subjective depending on the volume of business received from a certain company. He adds his company creates between 400 and 600 credit reports on a monthly basis.

Revenue management and debt collection 

The second solution offered by Debt Nirvana is end-to-end revenue management, which takes over from sending invoices to managing receivables. Ravi claims that at present, Debt Nirvana handles more than $500 million per annum in terms of revenues for its major clients including Microsoft, LinkedIn, Yahoo, and InMobi across the Asia Pacific region.

To ensure revenue management, Debt Nirvana charges on a per employee basis, wherein the employees deputed to various clients work at client locations. The founders state that the average ticket size from this solution is close to Rs 75,000 to Rs 90,000.

Apart from revenue management, Debt Nirvana also helps companies collect debts that are at the risk of turning bad. Ravi states,

“The value addition which we provide is that we are a research-based debt engine. During our assessment, we try to track down the key decision makers of these companies and track down the reason for the non-payment.”

This, according to Ravi, ensures higher success rates in the collection of these bad or sticky debts. Debt Nirvana claims to have 58-60 percent success in terms of collection in India. In the international market, the firm has a 75 percent success rate when it comes to collection.

Apart from this, the company also incorporates the standard reminder process as a part of its collection strategy. It allows the clientele in question to pay in successive installments. No doubt that this is the biggest line item for Debt Nirvana, and the startup charges between 10 and 15 percent of the debt recovered on a portfolio level.

According to the company, there are 700-800 new cases of debt collection generated every month. Debt Nirvana works with 45 big companies at present and some of its clients are Schneider Electric, global office space company Regus, and Cinepolis.

The big question, however, is, that with its business, why doesn’t Debt Nirvana target banks and financial institutions to offer its services. To this, Ravi responds,

“Looking at our business model, we are not just about bad debt collection. The reason we didn’t go to banks was because this space was already over-crowded. And targeting an industry which is already over-crowded will not help us in creating our niche.”

The company, though, is now looking to enter the financial sector and is looking to acquire insurance and banking clients. Looking in the future, Debt Nirvana says it will soon make credit reports available online which will allow reducing manual human intervention, and allow clients to get reports instantly. At present, the company takes close to three to four days to create a credit report.

Looking at the other players in the space, Mumbai-based CreditVidya in September raised $5 million in a Series B round led by Matrix Partners. However, CreditVidya is slightly different from Debt Nirvana as it strongly looks at the financial sector with its major customers being banks, NBFCs and insurance companies.

According to data from Thompson Reuters, based on earnings of the last financial year, more than a fifth of large companies in India did not earn enough to pay interest on their loans, and the pace of new loans fell to the lowest in more than six decades. This further creates a market for companies like Debt Nirvana.


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