Analysts like Ankur Bisen, Senior Partner and Head (Consumer, Food & Retail) of Technopak pegs the market opportunity in this segment in India at a much higher level. “This can easily be in the range of $40-50 billion today,” he specifies succinctly. The assumption of the enterprise supplies business being a multi-billion-dollar opportunity stems from the fact that the government created Government-E-Marketplace (GeM), to facilitate the procurement by government agencies of all kinds of goods and services from qualified vendors, and is talking of tapping $100 billion worth of transactions annually in the country. This includes procurement by the railways but excludes defence procurement.

“If you talk about the private sector procurement ecosystem in the country, a long credit period is a defining element where offline players (often small) have long been reliable partners of all kinds of enterprises,” observers Akshay D’ Souza, CMO, Bizom while emphasising that a clutch of technology-based platforms has begun making some preliminary marks with solutions more aligned to post-GST realities.

It is in such a scenario that Moglix, after its arrival in 2015, is trying for a higher jump. Garg, who spent five years with Google Asia where he launched the Advertising Exchange and was responsible for sales strategy (he was exposed to markets like China, Singapore and Japan) was convinced that India would soon be ready for niche B2B e-commerce verticals like enterprise supplies even as there were only initial but strong signals of the beginning of the juggernaut called the consumer e-commerce market in India around 2014.

“Immediately after I came back, Flipkart received a large funding round of $700 million that signalled that the quantum leap trajectory may have begun playing out in the Indian ecommerce consumer market. I was sure about a similar opportunity ultimately evolving in B2B though it would no longer be in the form of just being a classified platform as was the preference for many players then,” he adds. The result was the initiation of a platform which also got into the complicated supply chain or inventory management practice from the early stages, making swift corresponding changes with the disruptions caused by demonetisation, GST or Covid in the years ahead.

Starting mainly with tools and equipment suppliers to industries and manufacturing units, the company has significantly broadened its portfolio over the years and today boasts of over 700,000 SKUs in 50-plus categories across MRO, packaging and infrastructure. It has over 5 lakh SME units as part of its ecosystem and it manages 35 warehouses across the country. “70-80 per cent of our backend logistics requirements is taken care of by our own team. We partner with players outside of the company mainly for long-haul transportation,” Garg maintains.

The company claims to be supplying to 3,000 plants across auto, pharma, chemical, metals, FMCG, and other sectors and serving the top 700 manufacturing companies in the country. It is the first B2B commerce firm (aligned more with manufacturing plants) in the country which has touched the unicorn mark after nearly half a dozen rounds of funding, has a prestigious list of noted names on board and investors that include Falcon Edge Capital, Harvard Management Company, Accel, Jungle Ventures, Tiger Global, Sequoia Capital India and Venture Highway.

Among the individual investors, Ratan Tata, of course, is the biggest name. However, there are also other leading names from different streams of businesses like Kalyan Krishnamurthy, CEO Flipkart; Vikrampati Singhania, MD, JK Fenner and Shailesh Rao (ex-Google).

Adding new growth drivers 

Moglix, with its network and operational strength, had turned heads when the delta variant of Covid was raging last year, by ensuring supply of oxygen concentrators and other equipment from China in large numbers. However, recent years have also seen Moglix make its platform robust by way of new additions. For instance, to bring more focus to infrastructure and PSU clients, it has created a dedicated vertical. According to a company note, this is a dedicated business arm that enables supply chain solutions for the procurement of raw materials, consumables, and made-to-order parts to EPC companies in India and the Middle East (where Moglix has recently made a foray).

Claiming complete ownership of the source-to-site supply chain for EPC construction projects and business, it serves some of the largest infrastructure and construction companies, energy companies, and oil & gas producers. “We decided to launch the vertical in 2020 because of the demand from customers. Most infrastructure sites are geographically dispersed and in non-metro locations. The firms working in those locations want reliable partners for the regular needs of their engineering and design teams working on site,” says Abheet Dwivedi, Director (Infra & PSU), Moglix, while adding that the company wants to make the most of the capex push from the government vis-à-vis infrastructure. Technology entities like Infra.Market are also believed to be growing at a brisk pace in this segment.

In yet another critical move which largely panned out last year, Moglix first announced its foray in the supply chain financing space with the rollout of its digital platform Credlix. “Manufacturers have come to us saying they would like to scale up capacity but are stuck because of working capital issues. That gave us the idea of Credlix for entire supply chain financing,” says Garg. And later in November, it opted for inorganic scaling up when it acquired fintech start-up NuPhi (founded in 2019).

A trade finance fintech with particular focus on lending to exim oriented business, NuPhi’s founder Pramit Joshi has been roped in to spearhead Credlix which now has a modest base thanks to the acquisition. It has touched credit disbursal to the tune of $100 million, supporting over 2,500 SMEs. “With the price of raw materials going up, the working capital requirements of enterprises, especially manufacturing SMEs have gone up in the post-Covid phase and that is the domain we are focusing on. We are working as co-lending partners with nearly a dozen banks, and NBFCs and textile, chemicals, auto-ancillary and pharma are major verticals for us,” Joshi adds. 

Meanwhile in July last year, Moglix also ventured in a new direction to further endear itself with manufacturing customers when it acquired Vendaxo (founded in 2017), an e-commerce platform for the buying and selling of used machinery. According to a company note, Vendaxo is a B2B e-commerce platform that provides used machinery liquidation solutions to MSMEs and large manufacturing enterprises such as Siemens, Arvind India, Marico, Raymond, and Torrent Pharma. India’s used machinery market is estimated to be worth close to Rs64,000 crore.

Future scene 

With new growth levers activated, Moglix seems to be all set to tap many growing opportunities. Stakeholders are convinced that the growth of this niche vertical is a foregone conclusion and for the limited few in the fray, the mantra to make it big would be to play one’s cards well. “While the growth in the business would multiply in the coming years, I would expect about a set of half a dozen players to emerge fast and occupy the top rung. They would particularly become popular among companies with over Rs100 crore turnover who would prefer sourcing from top vendors with seamless technology capabilities,” observes Anish of Procmart.

Interestingly, the absence of cutthroat competition or a price war means that existing players are cushioned from any untoward shocks. “There are two reasons for this. There still is an element of sanity when it comes to maintaining margins as the price war is absent. And secondly, we are also not a marketing driven company,” admits Garg.

Analysts, meanwhile, have pointers to suggest that there will be more competition in the market. “I think existing brick and mortar suppliers will add a technology layer to their operations to keep their businesses intact. It will not be too difficult,” says Akshay D’ Souza. Ankur Bisen of Technopak believes that with the impulse buying element of B2C not being an integral part of this line of business, such platforms will take time to establish themselves. However, there will be some special attributes which would define the leaders among them.

“There is no doubt that the segment holds a lot of promise for the future even as the buying decisions here are knowledge based. But the leading players in the segment in the coming years will need to become giant sales agencies for the community of small sellers attached to them. It will put them in a different orbit,” he opines.

Another interesting equation is: what if a giant platform like GeM (refer to our story: Polishing the ‘GeM’ published in Business India, 23 August edition, 2021) after having made a decisive penetration in its mandated turf of ensuring procurement for government agencies, also turns its attention to incorporate the private sector and opens the platform for suppliers to connect with them? An idea for the future which has definitely crossed the minds of GeM top brass. “We are also a provider of products to GeM. It has become a fantastic doorway for us to supply to government agencies as it is a transparent platform. If it also includes the private sector, I don’t know how that would work out,” responds Garg. 

The top brass of Moglix is convinced of a robust growth trajectory greeting its journey ahead given the fact of so many positive triggers for the segment. “In a geopolitical sense, it is going to be India’s decade, with the world opting for China Plus One and India further elevating its position among the top economies of the world. There is so much which will happen in the EV, renewable and semi-conductor space supported by schemes like PLI. Just imagine the opportunity. We can become a five-million SKU company in the not-so-distant future,” says he while adding that specific growth drivers like the fintech arm can well develop a loan book of Rs10,000 crore in the next two-three years.

Despite several rounds of funding by leading PEs and other investors, Garg, as the main founder and his key associates as well as employees still hold equity in excess of 20 (high 20s, he emphasises). And according to Garg, it is well on its way to reach a profitable mark in 12 to 18 months. Refusing to share details on the hard financial numbers, he however maintained that the company will end the fiscal with its revenue going beyond Rs1,000 crore which would mark over 100 per cent growth vis-à-vis the last fiscal’s topline. According to an early report by a news agency, Mogli Labs, the holding company, had reported an income of Rs776 crore in FY21 as against Rs375.82 crore a year earlier. In the same period, its losses inched up marginally – from Rs78 crore to Rs81 crore.

IPO, meanwhile, is a while away. “We are probably a couple of years away from going for the IPO. Becoming profitable is our prime target and we would like to enhance our share in our customers’ online procurement demand. We will not rush into the market,” he says while further explaining that its decision of international expansion too would not happen in a hurry. This preteen Mogli(x) surprisingly, also seems to have learnt not to get carried away by unbridled enthusiasm.