After crossing $1 bn in valuation, Moglix plans to expand globally

The industrial B2B startup for manufacturing plans to tap emerging markets such as Middle East, Southeast Asia, Africa and countries such as Bangladesh, Sri Lanka and Nepal

Moglix, the industrial business-to-business startup for manufacturing, which recently crossed a $1 billion valuation after a funding round is planning to expand globally, making it the first Indian B2B e-commerce firm to do so amid the pandemic. The Noida-based firm is planning to tap emerging markets such as the Middle East, Southeast Asia, Africa and countries such as Bangladesh, Sri Lanka and Nepal.

“We are definitely looking at emerging markets. We see our template being applicable across most of the emerging markets,” said Rahul Garg, founder and CEO, Moglix. “We will start to do it this year. The speed is dependent on how the pandemic enables us from a travel perspective.”

Moglix is India’s largest and fastest-growing B2B commerce platform in the industrial and MRO (maintenance, repair and operations) procurement space with a clear first-mover advantage. Moglix, which was founded in 2015 by IIT Kanpur and ISB alumnus Rahul Garg, provides solutions to more than 500,000 SMEs and 3,000 manufacturing plants across India, Singapore, the UK and the UAE. Garg who founded Moglix after leaving his job at tech giant Google pegs manufacturing and infrastructure as over $500 billion market and about 25 per cent to 30 per cent of India’s gross domestic product (GDP). He expects this market to grow to about $1.5 trillion if India becomes a $5 trillion economy in the next few years.

“It is a very fragmented and offline market,” said Garg. “You walk into Delhi’s Chandni Chowk, Lohar Chawl in Mumbai and Parry’s Corner in Chennai, there are wholesale markets across categories such as electrical tools, safety hardware, packaging, cement and steel. We continue to build to truly organising the unorganised segment.”

Besides offline market players, Moglix competes with players such as IndiaMart as well as e-commerce firms such as Amazon and Flipkart in some of the segments. During the Covid-19 pandemic, Moglix’s business has grown 3x over the last one year or 200 per cent year-on-year growth as the users don’t want to step out of their home to purchase industrial and manufacturing products from the crowded markets.

“They are preferring to order them online and get them delivered,” said Garg. “I think this shift would continue to increase ( amid the second covid wave). We have seen it for restaurants and groceries.”

But the evolution of B2B e-commerce for industrial and MRO is still nascent. Garg expects Moglix would lead the transformation in the sector in the next five years.

This month Moglix raised $120 million in a funding round that valued the firm at $1 billion. The Series E funding round was led by Falcon Edge Capital and Harvard Management Company (HMC). Existing investors, Tiger Global, Sequoia Capital India and Venture Highway participated as well. The funding round takes the total funds raised by Moglix to $220 Million. Leaders from start-up and manufacturing communities such as Kalyan Krishnamurthy, chief executive officer of Flipkart, and Vikrampati Singhania, managing director at JK Fenner, have invested in Moglix. The funding would help the firm to scale up its operations and tap the international markets.

“We continue to have almost 100x headroom in India,” said Garg. “We continue to double dive and build infrastructure technology in the country. This is a massive space to continue to grow.”

Several manufacturing majors such as Hero MotoCorp, Vedanta, Tata Steel, Unilever and PSUs such as Air India and NTPC procure indirect material through the Moglix platform. Moglix has a supply chain network of over 16,000 suppliers, 35 warehouses and logistics infrastructure. With close to 500,000 SKUs (stock keeping unit), its marketplace is the largest e-commerce platform in the industrial goods category in India.

Global FMCG giant Unilever uses the platform for about $30 billion of material spend annually in over 70countries. Moglix recently launched Credlix, a supply chain financing platform for suppliers and manufacturers and expects to power Rs 1000 crore of financing in the coming year.

The company is still a couple of years away from going for an IPO (initial public offering). Garg said most of the firms take about 15 years to go public and for IndiaMart, it took about 20 years.

“We definitely want to do it faster,” said Garg. “Our goal would be within 10 years since the inception of the firm.”