On the opportunities from big-ticket projects and tier-II, tier-III transformations

Year 2022 will be a complete game-changer in the infrastructure sector. There will be a plethora of mega projects in the National Infrastructure Pipeline. The planned expenditure on the National Infrastructure Pipeline over the next five years stands at USD 1.5 trillion. The 35 percent CAPEX spending hike is historic. With the PM Gati Shakti Master Plan, both the financial and digital project monitoring frameworks will be in place, pushing immaculate planning and agile execution.

Role of your platform towards bringing in the desired change for infra space

Large EPC companies in the infrastructure sector that work on turnkey projects face a significant pain point in calibrating actual project costs to the estimated project costs. They get orders on a fixed-price model. The delays in the execution phase lead to fluctuations in sourcing: both costs and availability along with the offline approval workflow gap. This is where technology integration in the infra supply chain space can help.

Moglix helps large EPC companies increase their adoption of a digital supply chain solution to make project management seamless and efficient. Further, the digital procurement solution offers intuitive insights into hidden pockets of efficiency that have enabled the EPC company to consolidate its supplier base.

Goals set for the year 2022

Moglix’s goal for the year 2022 in the infrastructure sector is to partner with EPC companies that are building India by enabling their supply chain through four levers. These levers include (i) thrust on expansion into core construction material categories, (ii) fostering innovation in new material development, (iii) digital procurement transformation, and (iv) promoting the adoption of sustainable construction materials, processes, and practices.

Moglix is the first industrial B2B e-commerce platform to enter the unicorn club. Set up in 2015, we have grown at 500% for three consecutive years now. With 7 lac SKUs across 50+ categories of MRO spanning a price range of INR 50 to INR 1 crore, Moglix offers the largest and widest range of industrial goods in India. 

We pioneered GST compliant e-invoicing required for audit trail and input tax credits at all levels in the B2B supply chain. We have enabled RFQ placing for getting quotes on bulk procurement. We also offer consultative selling for customers to improve performance and reduce product costs and the total cost of ownership. We enable suppliers to promote their brands and build equity with MSMEs and direct customers, offering discounts and product updates for customers under our loyalty program.

In the last 6 years, we have grown four to five times in terms of top line. We have enrolled 5,00,000 MSMEs and 16,000 suppliers into India’s digital economy and created jobs for our 1000 strong workforce. We have 35 locations in India, Singapore, UK and Middle East and we have expanded our global sourcing portfolio to a very large extent. We believe that India will be going through the same rush in the B2B e-commerce segment as the B2C segment. With deeper penetration of smartphones among rural and suburban users and digital financing, India has an opportunity to revel in the benefits created by the  digital economy. In the next 5 years, we are looking at a 20X growth of the SME business.

“With the inception of the National Infrastructure Pipeline, India’s investment in the infrastructure sector as a percentage of the GDP is now at 8.5%, which is quite phenomenal when you look at historical trends of our infra spending.”

Abheet Dwivedi, Senior Director, Infra & PSU

Moglix is into the supply of materials; every material that is needed in the infra value chain. Abheet Dwivedi, Senior Director, Infra & PSU was in conversation with ET Infra for the podcast “The Future of Supply Chain in India”. During the conversation, Abheet Dwivedi shared his perspective on a range of questions concerning the infrastructure industry vertical and how Moglix is disrupting the infrastructure supply chain space for EPC companies with a unique offering of a digitally integrated suite of supply chain solutions. Here are the excerpts of the conversation: 

Interviewer: So, let me begin by asking you about the long-term spending by the infrastructure companies say in the next five years under this national infrastructure pipeline, what do you make of this?

Abheet: Thank you…. So, firstly, if you look at historical spend perspective, from the 2000 onwards all the way up almost 2016 -17. With the NIP, national infra pipeline coming into the picture, this spend has actually more than doubled to in the current budget to almost 3.5%. we are spending close to eight and a half percent of our GDP on infra which is quite phenomenal compared to the levels we had historically seen….

Interviewer: And what about the digital project management under the ambitious PM Gati Shakti plan, which was unveiled by the Prime Minister in October?

Abheet: ….One thing that has historically been missing is “how efficiently are we spending the infra budget”, right. We have started measuring this more coherently now. I would like to mention four major initiatives….

‘Moglix’ may sound like an unusual name for a company. But if you suspect that it has been derived from the iconic character in Rudyard Kipling’s Jungle Book, you will have scored ten on ten. The founder of the Noida-headquartered start-up, Moglix, dealing with regular supplies to enterprises, infrastructure projects and now also supplying chain financing (basically B2B retail play) is clear in his mind: his business should eventually have the universal appeal of a character like Mowgli.

“It had taken me more than two months to finalise this name. I was looking for a name which can readily establish our brand identity. Alibaba and Google are great brand names. And everybody knows Mowgli,”

Rahul Garg, CEO & Founder, Moglix

Since the beginning of its journey in 2015, the company has been in the news for having the legendary Ratan Tata supporting it individually as an investor which Garg says has been a huge blessing.

As Moglix grows in age, its future leaps is getting higher. The company recently saw its valuation more than doubling as it touched $2.6 billion after Series F funding around the end of January when it raised a further $250 million (a total of $470 million has been raised since its inception). 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 adds

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,”

Abheet Dwivedi, Director (Infra & PSU), Moglix

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.

Noida-based Moglix has played a pivotal role in transforming B2B commerce since its launch in 2015. Having achieved the distinction of becoming the first unicorn in the industrial B2B commerce platform in the manufacturing space, the company is experimenting with a slew of technologies to manage data and the spikes between the business cycles while providing a consistent user experience.

“If you look at the 100% of the orders that we process in a month, the first half of the month is slightly leaner, where we would do about 25% of the transactions. Maybe in the next five days, we will do an additional 25%, and during the last 5-10 days, a big chunk of transactions will occur,”

says Puneet Kumar, VP Tech, Moglix

“There is much information moving to and fro between systems, and a lot of them are financial in nature, having very core data from the customer side, the supplier side. So, there is much focus on the security of the systems we take care of really well. As we start transacting with more and more businesses, the volume of data that we are storing is also going up. So, again, efficient cloud models will enable us to scale up those demands,”

Kumar adds.

The company says that it follows security at multiple levels, such as data encryption, which happens at the application and network level, two-factor authentication levels, and making data as granular as possible based on the user’s role. Kumar also talks about how Moglix ensures a consistent and integrated user-centric and cross-channel customer experience.

One of the leaders I have greatly admired is the late former prime minister Shri Lal Bahadur Shastri who was not only a phenomenal global leader but was also known for employing humility and good governance in his playbook to bring many structural reforms in the Indian economy and lead the way for India in times of crisis. 

Every leader has a unique way of handling a crisis – and what differentiates good leaders from others is the way they lead in times of adversity, turn obstacles into opportunities, and navigate the way ahead for their workforce. 

But it’s easier said than done. 

Sometimes in adversity, leadership can be in a crisis too. 

Adapt and Evolve

India, which did not manufacture personal protective equipment (PPE), went from just three lakh PPE kits in January 2020 to becoming the world’s second-largest PPE manufacturer, producing 450,000 units daily within a year. As the demand for PPE skyrocketed, Indian businesses leaned on innovative approaches to repurpose their own production lines to meet this excessive demand and ensure business continuity. While a number of alcohol manufacturers set up labs to manufacture sanitizers, some textile manufacturers repurposed their factories to churn out protective gear. This adaptive approach to leadership displayed by Indian manufacturers allowed them to understand the risks quickly, reduce dependence on external procurement, and emerge profitable. 

Empathize and Nurture

Nurturing employee well-being also became critical to developing workplace resilience. Even when the pandemic ruptured our personal lives and health, proactive leaders were busy developing remote workflows and setting up flexible working environments to create clear and frequent lines of communication. Sharing tales of courage and countless stories of kindness rekindled hope and faith among employees while monthly meetings, informal virtual connect sessions and mental health programs created a positive momentum on overall employee wellbeing in the hybrid working model. 

Building a future-ready business 

Make products that your customers want and will need in the future. Innovation will be key to lead this transformation. For businesses to scale further in the post-pandemic environment, leaders will be required to employ strategic levers which will drive the maximum impact required for the business to thrive. They will need to experiment small and scale big, making sure the budgets are being utilized in the right way. They will have to get creative and explore newer distribution channels, tap into their network, and be unafraid to disrupt or get disrupted. Only then will we emerge stronger and lead the way for a revitalized supply chain business and leadership in 2022.

At 14 per cent, India has one of the highest logistics costs relative to GDP. Similarly, India’s power cost as a percentage of GDP is also among the highest in the world. This has limited the competitiveness of India’s products in the past. For India to be a manufacturing global superpower, infrastructure creation is the foundation.

By connecting India’s upcoming cities to better opportunities for domestic trade it will enable business continuity. Infra-building initiatives like the 100 Smart Cities Mission and the PLI scheme covering 13 sub-sectors will enable Indian manufacturing to widen its footprint into tier-2 and tier-3 cities. 

Infrastructure creation will enable small and large manufacturers in India to connect to EXIM trade opportunities. Robust infrastructure for EXIM trade such as airports, ports, inland container depots, and logistics parks will allow Indian manufacturing to leverage the untapped potential of MSME suppliers through greater local capacity utilisation. Infrastructure creation alone can contribute 4.5 per cent to India’s GDP growth rate every year. 

The lack of visibility into relevant metrics distorts the creditworthiness assessment of MSMEs and slows down the release of working capital. Agile cash flow is the fuel that India’s MSMEs need. A shift from offline to digital credit disbursal can strengthen MSMEs’ balance sheets. 

Digital supply chain financing platforms leverage dynamic metrics like cash flow to make credit approvals safer through more accurate underwriting and enable quick on-demand credit injection into MSMEs’ balance sheets. 

A switch from cash-based offline credit disbursal to digital supply chain financing can add three percent to India’s GDP every year. 

Digital transformation is the multiplier that will bring these together to work seamlessly for us and our partners across the world. The time to make India a manufacturing superpower and create a “community of shared destiny” is now.