Delhi-based LPG cylinder-makers SM Sun Power was facing difficulty in identifying the right suppliers for their MRO (maintenance, repair and operation). It needed a company that provided quality materials at competitive rates. “Moglix acted as a one-stop solution for our MRO supplies and helped us procure raw material at competitive prices. As a result, we have achieved more than 10 per cent savings in the procurement cost,” said Sanjay Gupta, director, SM Sun Power.
Founded by Rahul Garg, Singapore-headquartered Moglix, which gets about 80 per cent of its revenue from India, is a B2B e-commerce platform for industrial products. It recently raised $60 million in Series D round of funding led by Tiger Global. Sequoia India and Composite Capital also participated.
“Moglix is building two unique assets — physical infrastructure and a direct-to-enterprise distribution — simultaneously to re-imagine indirect procurement in India. Sequoia India has been tracking the company for a while and is inspired by its commitment to this space,” said Tejeshwi Sharma, principal, Sequoia Capital India Advisors. The company’s current investors include Accel Partners, Jungle Ventures, IFC, Venture Highway and Tata Sons’ Chairman Emeritus Ratan Tata. So far, it has raised five rounds of funding.
Procurement and industrial distribution across India have been broken and remained manual for decades. Moglix has identified a few key pain points in the space of indirect procurement. These pain points include poor quality of data with no spend analytics, fragmented supplier base and brands, GST non-compliance, lack of alternate products, and lack of inventory optimisation.
Moglix — with its e-commerce platform for industrial products and more than 50,000 stock keeping units, besides 45-plus product categories — is covering more than 20,000 pin codes in the country. It is catering to the needs of about 1,000 large manufacturing companies
and more than 500,000 SMEs. The company recently launched its SaaS business with the contracting product called iCAT, kicking off with Unilever.
It also extends its expertise in the supply chain to solve problems related to digitisation of supply chain, as well as making it GST compliant.
“Moglix’s uniqueness stems from its ability to integrate technology with its domain expertise in manufacturing and supply chain, building digital technology into the sales channel, and procurement functions of manufacturing units for large corporates, as well as MSMEs. All of these are being achieved on the back of its SaaS-based platform,” said Garg, founder and CEO, Moglix.
Rahul Garg, Founder of Moglix
The Indian indirect purchase market is currently worth over $50 billion and estimated to grow to $100 billion by 2025. “Today, Moglix is leading the transformation in the space of indirect purchase,” he said. The company aims to grow 10x in the next three to four years.
Moglix is starting an innovation garage called “Moglix Innovation Hub (MIH)” for B2B commerce and supply chain. This initiative is to focus on areas pertinent to the procurement domain, advance technology, SaaS platforms, fin-tech, and logistics to name a few. Moglix will continue to invest in young and dynamic EIRs (entrepreneur in residence) to execute these ideas and has set aside $5 million for MIH.
“We work on a transaction model. We have grown by more than 11,000 per cent (CAGR) over the last three years and were named the fastest-growing company in India by Deloitte Fast 50. We have strong unit economics, and we plan to break even over the next two years,” Garg said. The fresh funds will be deployed in creating industrial distribution centres across India to cover all 25 major hubs by May 2020
Area of Business: B2B e-commerce
Funding: $60 mn in series D round, so far, 5 rounds of funding
Investors: Sequoia Capital, Composite Capital, Accel Partners, IFC, Ratan Tata and others
Better user experience should be in focus
K.I.Mani, Advisor/mentor (MSMEs/start-ups) and former CGM, SIDBI
Despite multiple classified platforms, such as IndiaMART and TradeIndia, being largely visible for trades, transaction-based platform Moglix in the B2B space is benefitting a large number of MSMEs making use of technology.
To overcome major challenges emanating from large players like amazonbusiness.in with deep pockets, Moglix — through continuous investment in supply chain technology, IoT and machine learning, complemented by its continuous offline support services — should try to improve the user experience for increasing its market share. It needs to work on giving a 3D experience in the selection of products to help improve its repeat customer base.
Given the digital initiatives of the present government, it should also try to synergise its operations with various portals like Government e-Market Place.
India added 2,300 (from 900 to 3,200) entities in the B2B start-up space in the last five years, supported by an increased number of corporate accelerators, as per the NetApp-Zinnov study done a few months back; most are operating in the fin-tech, logistics and SaaS spaces. Backed by marquee investors like Tiger Global and Sequoia, continuous investment in technology and offline services would catapult Moglix in the manufacturing space, to greater valuations matching B2C firms.