Large enterprises face several problems including inventory cost, connecting with vendors, Improving supplier management, streamlining procurement creating supply chain hurdles. This impacts the performance of the enterprises as well as logistical delays, giving a gap to players like ProcMart, an Indian business-to-business (B2B) ecommerce and supply chain company involved in procuring and supplying safety items.
Anish Popli, Chief Executive Officer (CEO), Procmart, sees this B2B Indian market size in trillion dollars. He added, “We are talking about a very huge market. Even if we look at the e-commerce penetration that is likely to be 200 billion dollars in India by 2030.”
Talking with BW Businessworld, Popli discussed the company’s growth and expansion strategy, including its focus on the B2B market and diversification into sectors like biofuels and sustainable packaging. He also highlighted challenges in India and shared insights into issues like regional regulatory hurdles, specifically in states like West Bengal.
As you look to diversify beyond MRO consumables into sectors like biofuel and packaging, what factors are guiding your entry into these new markets?
We have chosen a category which is basically for the industrial manufacturing companies. When we talk about an MRO category, maintenance repair operation of a manufacturing organisation, it's a very niche category. We are working with large enterprises and making their transaction much easier, and less tedious and giving them a b2c kind of experience. So, our target market as such is very fixed.
We are into a very fixed kind of model where the target audience and our category both are very niche. Even when I talk about this category and this target audience of clients, we are talking about a 30-billion-dollar industry.
Despite a threefold increase in GMV, you've seen a decline in profit. What do you attribute this to, and what steps are you taking to ensure sustainable profitability moving forward?
We are profitable and decreasing profit is not something to be bothered about. Because as I said, we are trying out a lot of things. There are things like new categories that we have started this year like biofuels and packaging. So once you start this category, it takes time for you to mature and gain profit out of that.
Initially, you have to put resources, you have to put people out there to make sure that you succeed in that category. So as we were dealing with the new categories, initially, you require some resources mapped to it. And obviously, it gets productive after six to nine months. So the burning is all about gaining capital, creating capital.
What measures are you implementing to ensure sustainability moving forward?
As we were working with large corporates like Unilever, and PepsiCo, we realised that they have a problem with achieving carbon neutrality. So, sustainability again is becoming very important all over the world, right, for large corporates to make sure that they achieve it.
So, here we come and collaborate with them on the solutions that can be provided to them and the two areas that we felt that we could contribute to them was biofuel which was used mainly as a used in their boilers. So, earlier coal and diesel were the main ingredients that were used. So, how it can be replaced by a briquette or pallet, right, which is created from renewable resources, right, the waste of the agricultural land?
Similarly, we were working on packaging with them, right, where we work with them, looking for a sustainable solution that we can provide, where we can replace, and how we can replace and provide them with biodegradable material. So, these are the areas we are working with the organisation and frankly, this is for us it's an MRO plus category where it is the extension of what we provide and how we solve the problem for the climate.
Is there any plan in Europe and America to expand?
No, we do not think that Europe and America are our markets.
How do you choose exactly the market?
As a concept, if I talk about it as a business idea. This is somewhat in North America and Europe started somewhere in 1990. We are 25-30 years old. The concept was there, it was working beautifully and it was they have some large corporates doing this. But in India, there was a gap. We see a market in Southeast Asia. In terms of technology, India is a go-to for them. And secondly, in Southeast Asia, there is no other player. So we don't find any competitors out there. We are going step by step and our next destination after Southeast Asia will be Africa. And that's why we are opening in UAE as an entry point to the Middle East and Africa.
If I ask about the Indian perspective, is there any policy gap you feel when you operate or any challenges you feel on an administrative level or a policy level?
India is currently at 71 in ease of doing business. We have improved a lot. But having the top five position in the economies of the world, I think that we need to make sure that from 71 we come to around at least the first 10.
In your view, where are we lagging? Explain it with an example.
As far as the ideas are concerned, all the technologies concerned, we are good at it. But when it comes to execution and implementation India is a very big and diverse country. So whenever an economic policy or something on the regulations comes up, that each of the states to execute and implement it, it is a challenge. Though, I have seen that even the administration and the police are very friendly to businesses.
But then there are areas in India where it's not like that. If I talk about West Bengal, still doing business there, is a little bit difficult. In terms of how the administration and government treat you. I think these are the challenges, but slowly and gradually we all are improving.
To clarify, what specific challenges have you faced in states like West Bengal regarding issues such as land acquisition or administrative approvals? As you're operating in 25 states, how do these challenges vary across different regions?
As we are backwards integrating, we are doing that. So let's say buying land or renting land for manufacturing, should be as simple as getting a GST registered there. It again has all the technology that is there. You can just upload it and all that. But after doing that also, some things had to be done manually to make sure that you were on paper. So all these things are happening. Four years ago, things were done very differently compared to today. While we've established a clear pattern and process, there are still challenges to overcome. I would not complain about it, but still, there is a challenge.
Navigating different regulations and compliance requirements across various regions can be challenging, especially for international transactions. How does Procmart deal with it? Can u give any example?
When we talk about the geographies, different geographies, and geographical expansion outside India, see, we have our consultants, and we have those resources available with us, which makes sure that we get into all the compliance requirements of a new country. And these countries actually are very, in the ease of doing business, they are better than India. So, the one thing is their rules and regulations are far more relaxed.
But at the same time, we make sure that we do all the compliance when we talk about these countries. And similarly, go for the expansion after having a full understanding of what we are going to deal with.
What strategies are you using to promote inclusivity in your marketing, manufacturing, and workforce, particularly for diverse cultural and linguistic backgrounds? Also, could you share the current gender diversity status at Procmart?
We are 35 per cent female and 65 per cent male. There is a huge gap when it comes to a manufacturing setup because we require people who have been on the shop floors in manufacturing and most of our employees are people with manufacturing. Large corporates are taking action in that area. We are also making sure that whatever new trainees and new interns are joining this year around 60 per cent are women.
With the sensitive financial and business data you handle, how do you ensure its security against data breaches and cyberattacks? What safeguards are in place to protect this information?
We are not dealing so much with critical information. Again, as I said, it's a non-core product for any organisation. Secondly, we take it very seriously. Even if it's a non-core for an organisation, it's the data of a very large organisation. So there are compliance requirements for large corporates that we are following as compared to standards and we are making sure that we are using cyber security and we are using the servers that are in India and tracking them.
