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How Maneet Gohil digitised the Indian textile eco-system & scaled a side-hustle to ₹200cr ARR ( Lal10)
196 Plays1 year ago
Maneet Gohil, started Lal10 as a side hustle while in college and after a roller coaster journey of multiple pivots, scaled it to a ₹200cr ARR business.
Lal10 is an asset light manufacturer. Think of it as an Oyo Rooms model for Indian craft manufacturing. They build the market connection and generate demand, and in the back end, digitize small scale factories to manufacture, thereby helping Indian handcrafted textile suppliers to make their inventory available on global platforms.
He talks about:
- How to scale a side-hustle successfully
- How the ‘Jugaad’ culture works in the Indian creative manufacturing sector and how to use it to make a profitable ‘dhanda’
- How to sell in dollars and spend in rupees
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Transcript
Introduction to Manith Gohil and Lalton
00:00:00
Speaker
Hi Akshay, thank you for having me here. My name is Manith Gohil. I am CEO and co-founder of Lalton. At Lalton we are bringing lights in the life of all the fragmented MSMEs in the textile space spread across the country.
Business Model: Comparing Nalten to OYO Rooms
00:00:25
Speaker
In this episode of the founder thesis podcast, I'm speaking to Manit Goyal. Manit Goyal is the founder of Nalten. Let me set some context to help you understand what Nalten does. So, just like OYOROMS is a hotel chain which doesn't actually own any hotels. Similarly, Nalten is a manufacturing company which doesn't actually own any factories.
00:00:52
Speaker
The broad thesis behind this is that there is a large move towards making an endeavor towards manufacturing, towards creating jobs through manufacturing. The reason why that has been a little slow to take off is because Indian manufacturing is fragmented. There are a lot of small manufacturing jobs, very few large giants of which China has.
00:01:18
Speaker
An excellent way to solve this problem is the oil rooms model. This is what oil rooms did to the hotel industry, which was again a fragmented industry. They ensured quality, consistency, and they were responsible for demand generation. And this is what Lartain does. They ensure quality and consistency of the product. They help the factories come up to the learning chain and ensure demand generation by going out and getting export orders.
00:01:41
Speaker
Manita is an amazing founder with a ear to the ground and a real sense of tanda. And I hope you enjoyed this conversation. Thank you for listening to the founder thesis podcast.
00:02:02
Speaker
Okay, so, Manith, let's talk about how you became a founder first.
Manith's Entrepreneurial Roots
00:02:08
Speaker
Take me through a little bit of, like, you know, a broad overview of that path towards becoming a founder. Sure, Akshay. Maybe, Akshay, I can dig deeper into my childhood and I think from where I come from. I come from Gujarat, a small town called as Bhavnagar. My grandfather had a small shop, thoroughly enjoyed sitting in his shop.
00:02:31
Speaker
whenever I used to go in summer vacations, winter vacations, and got an opportunity to be there. And then I realized at that point in time that I want to do this only. So I wanted to have my own shop like my grandfather, actually. That was like the fun because I could see him meeting a lot of people, traders, and showing his products to his customers and all. And also whenever he used to come back from his tours,
00:02:59
Speaker
basically he was manufacturing kurtis and sardis and then he will take these kurtis and sardis to nearby towns which were like Ajamnagar, Rajkot or Ahmedabad, Surat or up till Mumbai and whenever he used to come I would like literally be it was a fanboy moment I would ask him what all he did, whom all he met, how was his travel, how did he travel and all
00:03:27
Speaker
And unfortunately, my father never pursued what my grandfather was doing because my grandfather financially struggled to meet ends. So my father became the first engineer in our entire family and I became the second engineer. And my father did a very, I would say not very cool or very boring job throughout his entire tenure. He was working in a public sector company for most of his years as working.
Connecting Rural and Urban Markets
00:03:54
Speaker
And then as I became an engineer, I realized that my passion was to do something which was
00:04:02
Speaker
like a shopkeeper right so and i since i come from a hill from a small town i had a lot of empathy understanding of these people what they look like what they behave what they talk what they eat and all right and there was a huge opportunity which i realized that lies in rural india also because of my father's job he we actually i shifted almost around nine schools during the tenure of
00:04:27
Speaker
first 15 years of my schooling life and during those time we have always been in small towns like Baruch or Guna or Angkleshwar or Bhoj and even places like Oraya in Uttar Pradesh. So I've always throughout the first 22-23 years of my life I've been in small towns in itself.
00:04:49
Speaker
And realize that there's huge opportunity to be done. These guys are creating something for their own economy. They are consuming their own products in their own economy. And I think while the largest of the brands like an HUL or a PNG or something like Nestle would have reached out to the down remote areas. But there's a lot of production which other ways it's a reverse production which happens in small towns which can actually
00:05:15
Speaker
not only be consumed in small towns but can be taken to different urban cities actually and if the opportunity lies then why wouldn't they sell these products cross-border?
00:05:27
Speaker
from India to the world. And I think that's where it all started this entire idea. And to be very honest, if I look last six years of my journey, if I would have been known earlier that the sector has been so tough to deal firstly dealing with rural India and secondly, dealing in terms of the textile space.
00:05:48
Speaker
Both of it is extremely challenging being an engineer who was only passionate of doing and knowing what to do, but not how to do it. Actually, I think I might maybe double think over it. I think it has taken a long course of journey for us to I think understand the sector and the problems it has because being a
00:06:10
Speaker
fairly demographical and geographical challenges which India has to offer spread across the country. It becomes very interesting to tackle how you need to reach out to these rural parts and then understand what these guys are manufacturing. But I think one very important core lever of value which we have between us like we, I'm going to say me, myself and
00:06:32
Speaker
My other co-founders is that we all come from small towns, have a very strong empathy towards them. So while we have been on net, there has never been a second thought to us that they can be a larger, different problem which can help us get more funds or scale much faster and stuff.
00:06:54
Speaker
But there has always been a plan for us and which was this. Let's take their products to different
00:07:06
Speaker
parts of the country what they are only consuming in their local ecosystem and possibly if an opportunity comes, then why cannot we alter the product, bring in relevant value addition so that the products can be taken to international markets actually. So yeah, I think that's where it all started from the town of Bhaunagar where my grandfather is. My company is also called as Bhagwandas Retail Private Limited. So Bhagwandas was my grandfather's name.
00:07:34
Speaker
And I thought that, yeah, I think I didn't wanted it to be like a handicraft or a textile export in internet private limited, something like that, because I always also coming in from a small town, I think I also wanted it to be a very traditional name, actually, of the private limited entity.
00:07:58
Speaker
And I think there have been enough like when I was growing up people like I think Dhirubhai Ambani and all these guys have been reading about them how these like they were also normal people like us right and like I would say not even as a
00:08:16
Speaker
Fortunate like us like they were even under unfortunate and stuff financially and and then they have made their things Moving across the streets in Gujarat and then to different parts of the world and then setting up their larger organizations in India So I think there's an opportunity which we also realized and I think from
00:08:36
Speaker
The very small when I was a kid, I thought that I would always be a businessman. Maybe if it's a small shop or if it's an organization. How many did you start with and what did you use that? Yeah, so I think very interesting actually. So I started this journey in 2014 actually.
Founding Lalton: A Creative Start
00:08:53
Speaker
So I maybe I'll give a quick background actually. So I did my engineering. My father was an engineer. I had to be an engineer. So did my engineering from Delhi College of Engineering post which worked in consulting. I got three offers and then realized here consulting is the one.
00:09:08
Speaker
which will give me a person to travel and I wanted to travel actually. So, joined that for a couple of years and then got into an MBA like every engineer would want to do an MBA so that his or her pay scale increases and stuff. So, Roadcat didn't got into IMs but got into NITI which is in supply chain operations in Mumbai. Now, it's called as IM Mumbai, the college but
00:09:35
Speaker
That is when in 2014, while I was doing my MBA, I realized I'm just wasting my money, my father's money, my time and everything into just doing education, which I didn't want it to. And I've always fairly been a mediocre kind of, I would say an average kind of kid, even in engineering, I would just barely study to pass. And even in my MBA, it was not, I was not having a lot of fun in the education stuff, right.
00:10:02
Speaker
So then I thought here I'll do my business let's say and I didn't tell my parents actually and my mom was supportive so I told my mom that I need to start a private limited entity and I need two directors so one of it you only become it so so basically we became directors and she didn't do anything she didn't know about what's going to happen and stuff so registered the entity and
00:10:28
Speaker
I didn't have any money actually at that point in time because the only source of money was the pocket money for mess fees and other things which used to happen. But interestingly, my college fee was around three and a half odd lakh rupees a year. My father paid that amount. And while I was coming after paying my first year fees, I had the slip in my hand, a fee slip. And in front of my mess, there was a Canberra bank kiosk
00:10:57
Speaker
And these guys were saying that since you guys are from a good college, we would offer education loans if you would submit your these things, fees, slips and stuff. And that was three and a half lakh rupees, some discount on that. I think three point two five lakh rupees they wanted to disburse. So I double checked with them that where this money would go. They said that it will come to where whatever account you will give, not like it can be yours, your parents and stuff.
00:11:23
Speaker
and I did ask them what kind of consent and signatures do you want and at that point in time they said that we are fine that whatever you guys you yourself can fill it and stuff so I gave all of my submitted all of my college documents to them for that years
00:11:40
Speaker
curriculum fees and stuff and then they immediately dispersed within 10 days. So that was an IIT Bombay, Canberra bank because the IIT Bombay native were adjacent colleges and they gave me the three and a half like this. That became my first seed fund actually because that's what so I would say Canberra bank was first I would say investor in the company then.
00:12:04
Speaker
and then use that capital for fairly around one and a half years until I got out of college. I use that capital. Another good interesting thing was here there were a lot of private limited companies registered acting as startups or maybe startups back in 2014. No one has heard their names and trying to get hold of students in our college calling it as in weekend projects or internships and stuff.
00:12:32
Speaker
and we and kids were like like very competitive right anyway it's a good college people are also very competitive and then they would this random companies no one has heard about people would fight for getting an internship in these companies and they companies would eventually hire the best of the cream of the
00:12:53
Speaker
college and one of the companies, I don't remember, I think that company's name, it goes into sports e-commerce. So that the founder came in from US or he was still in US and he hired 5-6 of us from NITI as interns. He didn't pay us anything. I think we were very happy with the certificates he was giving us. Then I realized that this is really awesome.
00:13:13
Speaker
but if i registered my registered startup and a company getting into an internship in my own college people will give no fish to it right here we know this guy and like this is like i think random stuff going around so what i did is that i registered my company as a private limited entity with my mother my mother as the other director there and
00:13:35
Speaker
I went literally to all the campuses across the country, either I am Ahmedabad, Bangalore, Calcutta, then several NIFs, NID, and some of the NITs actually, and then did the same thing there. Kiar went to the place comp, told that I need internship students, and this is my idea. I want to basically work with rural India and then take their products and create a platform for them to sell.
00:14:01
Speaker
And in a span of a couple of days to three days, I got almost 450 odd CVs from students across Andawat Bangalore, Calgata, Nifts and all of these places. And I couldn't actually wait. And I didn't know which one is the right guy, which one hired, not too hired and stuff. So what I did is that I had a bunch of, I've always been a little extrovert and social person in the college as well. So I had a lot of friends in my lobby,
00:14:30
Speaker
my wing and I distributed this 400 odd series across 40 of my friends. So 10 of the series to across all of these guys and they had to interview them and these guys were also having fun because they're interviewing kids who were also in Ahmedabad Bangalore Calcutta which are little superior colleges but on behalf of
00:14:51
Speaker
And in a span of like 10 days, we hired like 22 people. The intent at that point in time was to understand the supply market actually.
00:15:02
Speaker
Here, where are these? Because see, my understanding has predominantly been only for Babnagar because I've stayed there. Actually, I understand how people look like there, what they make and stuff, right? But I do not know what are the other manufacturing clusters across the country. So intentionally, and maybe you can say a little racist, but we want to, we went ahead to hire kids which belonged to particular states and had some empathy level into understanding what their local manufacturing is.
00:15:31
Speaker
So for instance, when we went to Calcutta, there were a couple of, I am Calcutta, there were a couple of students who were also from the West Bengal region.
00:15:41
Speaker
They understood and have heard about their families or family members traveling to Shantipur, Folia, Murshatabad. And these are the belts where manufacturing happens. So again, Bhagalpur and Bihar and stuff. And similarly, we reached out to NIT, NIFT Jodhpur where the kids could travel to places Santil, Udaipur or you can say Jodhpur and eventually Jaisalmer where a lot of other craft manufacturing was happening.
00:16:10
Speaker
and similarly the Hindabad kids could travel up to North until Karch and stuff and so that's how we penetrated deep across the country without any capital and still got a lot of feedback in terms of the voices of manufacturers either they were very nano size or micro size or a small size across all of these belts and I think first I would say until I was out of college I realized that
00:16:39
Speaker
This is a huge opportunity. This is literally the largest employment generation sector across the country, which is creative manufacturing after agriculture. In India, 70% of India is in rural India. Like we are sitting in urban India, we never realized.
00:17:00
Speaker
But actually India is something else. India is 70% of the people which are sitting in rural belts across the country. And they do creative manufacturing.
00:17:10
Speaker
And creative manufacturing is like the largest employment generation sector in the country after agriculture. This is a huge sector. This is literally a, I would say, a national emergency, I would say, in terms of right now wherein we need to skill these guys and make them relevant for the world. I think maybe we can talk about it later. But yeah, in a matter of those that period onboarded and understood all of these guys and
00:17:37
Speaker
I had to go to college and travel to all of these kids because I had to give some reimbursement, travel reimbursement to all of these kids and stuff. And then Phil College of Placement was here. And my parents also got to know that I was sure that I was going to be here. My heart was here. So my soul was there actually with Lalton.
Balancing Lalton with a Corporate Career
00:18:05
Speaker
And somehow my father convinced Kiara, you do get a job and then you do a couple of years, get some cash flows and then you can start off your own business. So he has always been, I would say, a little bit conservative like so. So he has never, he didn't want to take a lot of risks throughout his life. He has only been working in one public sector company. He didn't shift and stuff. So he wanted it to be plain simple and vanilla.
00:18:33
Speaker
So, I then somehow got lucky. So, I got placement to make IKEA. So, since I was doing this, I was participating in some B-Blend competitions and winning those competitions also. So, some newspapers covered us and then some seniors who were working at Flipkart.
00:18:53
Speaker
They realized here, I'm this guy and I'm in NITI right now. They were also coming to NITI to take for placements. So my placement eventually happened on a minus one day because the date used to start a day earlier in the evening. And they told, so they were two, three companies, Amazon, Snapdeal and Flipkart. And of this, two of them offered me and
00:19:14
Speaker
I wanted to get into Flipkart because then it was here. These guys were like demigods for aspiring entrepreneurs. So I took Flipkart and then got into Flipkart.
00:19:37
Speaker
And it was very interesting because my role was not into supply chain management, which my college was famous for, but my role was into more like a strategy and design in customer experience, which was also a wing under Sachin. And it was more like a chief of staff kind of experience in terms of understanding and directly working with a team which used to work under him.
00:19:58
Speaker
So, first day of November, Sachin Bini were there in the orientation. They were like literally 70-80 of us from different MBA colleges across the country joined as management trainees. And I think it was literally a fanboy movement because they are like a con logo.
00:20:18
Speaker
And I think that's how very granularly it all started. And then realized here, I wanted to do something of my own. I told Sachin, and I have this dream. And he wished, because flipkart anyway was a very big engine, he wished me good luck and
00:20:44
Speaker
And I think despite the pedigree was so premium at Flipkart, I think everyone literally were better than me in the office. And I think it's a lot of learning opportunity from everyone. And my senior directors and VPs would also encourage when I used to tell them that, see, I have this side hustle going around. And they would say that you should jump into doing it if you solely feel about it.
00:21:09
Speaker
So last day I told... Your side hustle was active? Were you actually doing training? So see, it was active, but it was also very exhausted because during the day, so I have always been a person which would not do something half-heartedly, right? So even if I was at Flipkart, I would give my soul to it.
00:21:29
Speaker
And I was doing my day job there. And then after coming, I would do the night job. And until morning hours, I would work for talking to all of these interns, which are still in the colleges and working as my team. So there was a team of almost around 20 to 25 people, which was always there as interns for us.
00:21:48
Speaker
And back, yeah. And what was the business doing? Like you were doing training, like you would procure from tier three, whatever interior locations, and then you would sell it. So, so it would be like. And this was sold through retailers or sold to, like sold through online, like through a website. Yeah. So, so everything actually, we tried to do everything actually. So, see,
00:22:15
Speaker
see business model or i would say i think we were fine with it so we actually listed ourselves on alibaba we listed ourselves on india mart we listed ourselves on trade india we were like taking all of these goods and running on the streets of bangalore giving it to aunties and
00:22:40
Speaker
in Bangalore or then our aspirations also increased. So we are now working with John players and ITC Builds lifestyle, fab India and some of these. So but it was pure play trading as a side hustle which was happening and it was predominantly
00:22:56
Speaker
what the local artisans would always do. They would pack their bags, and we always have seen people from Kashmir going house to house, right, with their shawls, or people from Gujarat coming in with their sarees, right, or we have been to the exhibition centers like a Delhi heart or a Kalagoda or a Chitra Kalaparisha, right, in Bangalore and stuff. So, we have always seen these people.
00:23:21
Speaker
So now what we are trying to do is we are looking at the lucky or few creamy layers of exhibitions. But 98% of the artisans are trying to do it. We are looking at photos, videos, and photos recorded. We are looking at the site and we are looking at sales offline.
00:23:48
Speaker
So literally for that almost 15 odd months after leaving Flipkart
00:23:57
Speaker
uh Sanchit I and Albin so now like Sanchit and Albin my co-founders joined us so joined me really very fortunate because uh I think they have been my first partners I would say like I I can literally preempt Sanchit or Albin when I have to fight with them I can never preempt my wife I know her since last 12 years but I spent so much of time with Sanchit and Albin that I know what's going around in their head and we complement our skill sets I think they are very much
00:24:26
Speaker
Composed and in like their they had joined us like they were like and I we were batch mates in engineering we were batch mates and nitty and We were also at Flipkart and staying together actually
00:24:41
Speaker
and Sanchit knew that I started this in Nitti and then he knew it whenever we were staying together and he comes from Aligarh. His parents were into metal trading. Aligarh is known for metal trading actually.
00:24:59
Speaker
And that's when he and I like we just like he also got excited and I was also alone actually doing this. So that's when we both started it. And then Alvin is my third co-founder. He was my school junior in Kendra with the Allan Oida and he went to IIT Madras. And then he then came. He was working as an early employee at Avanti which was into education and then he came to Bangalore and we all three started doing this together actually.
00:25:28
Speaker
So and this all started simultaneously when we left Flipkart like on sorry that was 26th of January we left Flipkart that was a holiday and that day decided
00:25:40
Speaker
And literally, we didn't sleep actually for almost around 18 odd months. Our health also got spoiled and eventually then we realized that sales was a lot of motivation actually for us.
00:26:04
Speaker
What was the trajectory of sales? Like when you quit, how much were you doing monthly? See, so annually I can tell, so when we, when it was a side hustle, we did roughly around a crore kind of business in that year, 1.2 crores. And what was the margin? The margin at backpack in those days would be close to around 22%, which we did on the side hustle thing.
00:26:30
Speaker
But all of that would also go on to reimbursements and other things. So we didn't make any money out of it actually. When we moved out of Flipkart, we had enough savings between Sanchez and Albin had some savings because he had a small tenure of work at Avanti. So that helped us as a seed money again.
00:26:51
Speaker
Another thing was that winning competitions was fairly a good cash flow for us because whatever competition we would go, we would win that. These are like we plan competitions across the country in colleges, right? So, that became one of the things that we were able to do. Actually, OpEx, we were able to get a rent or a salary or a job or something like that.
00:27:15
Speaker
So we literally went to, you can say, every single college is like IIT Madras, Delhi College of Engineering, ISB Idea, or I am Indore, Narsi Munji, or I am Ahmedabad, and IIT Bombay, Eureka, and we won literally around 18 lakhs worth of cash prizes. Because we have planned competitions in our college.
00:27:39
Speaker
And then there would be a group of panel who would basically judge you and then you can win. We were like clear winners everywhere.
00:28:05
Speaker
So, you can say that our capital in our bootstrap journey for the first 18 months after we left. So, you said once a year annual when you were at Flipkart. So, we were at around 2.8 crores in that year.
00:28:35
Speaker
And that was primarily all bootstrapped actually because you were three of us and then some bunch of interns who were working with us and doing stuff. Yeah.
00:28:47
Speaker
And this was an inventory-led model, right? Like, you would purchase the inventory on your books
Challenges in the Textile Sector
00:28:52
Speaker
and then you would... Not really, actually. So, we were more like intermediaries or aggregators for these MSMEs or artisan folks who were selling sardines and dupattas and stuff and take their products and eventually sell it to booties or aunties and everywhere here, there. And basically, you have to sell it to them.
00:29:31
Speaker
They used to trust us because we have been to their villages and stuff and so they used to trust us. We stayed with them.
00:29:41
Speaker
ate with them these guys are literally very warm so these guys are literally
00:30:17
Speaker
We also comprehended and correlated that actually. So that was a, I would say an undue responsibility for us as well, while the others were trusting us.
00:30:37
Speaker
And so you would, like, would you create a catalog and all that? Yeah. Yeah. But like, would you like everything that you had to sell, like a photo, like an online upload? So we had a camera, we would take photographs of all of these products. Like I still remember, Albin would hold us, hold us a box or whatever, study like that.
00:31:07
Speaker
I have a photo of Rob in the box. I have a photo of him in the box. I remember that he was the first paid intern to come here. He was the first one to come here. He was the first one to come here. He was the first one to come here. He was the first one to come here. He was the first one to come here.
00:31:34
Speaker
So he was shocked to see three guys in boxers and trying to do something on their laptops. And he was shocked to see three guys in boxers and trying to do something on their laptops. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked to see three guys in boxers. And he was shocked
00:32:05
Speaker
I think it has been a great journey since then because I think very fortunate that we have been very patient actually in terms of building what we wanted to do. Firstly, actually, the more tough the problem is, the stronger differentiator you create to be in the market.
00:32:29
Speaker
They have been large corporates like a reliance or someone else, right? They have been putting in so much of capital to get hold of understanding how these people are and stuff and it literally is not possible with capital because it takes time to build trust and relationships with these people, understanding who they are, what they want to hear.
00:32:56
Speaker
I think that creates a very strong leverage to grow. And I think, yeah, I think fortunate to have a very strong manufacturers because we are very strong in terms of our supply and supply constraints sector. So we are very. Yeah. What is what is it that you're selling? Are you selling?
00:33:27
Speaker
hundreds and thousands of unique products, or is there some sort of like, say, a sari with a specific pattern which has hundreds of prints of it? Because when you tell me that these are MSMEs and these are creative products, so I want to understand what is the level of, is it like one SKU has X number of inventory in it, or do you have thousands of SKUs and each one has a handful?
00:34:01
Speaker
So maybe I can take you through our journey in terms of how it has been in terms of products and in terms of our markets as well. See, so we are in the textile space. So textile means anything, any product which is made out of textile, either it can be a home, soft home furnishing, like a cushion cover, a curtain, bed sheet, or a table linen comforter, right? Which are soft home products.
00:34:24
Speaker
or it can be an apparel which can be women's wear, men's wear, kids wear, typically these forms. Our journey started in 2017 as a post tab entity. So at that point in time we were only adding value as a trader for the goods which the rural India was manufacturing. So these would be typically a dupatta or a saree or a kurti.
00:34:50
Speaker
And India is a fairly a kurti manufacturing country. So India may, there are a lot of kurtis which are being manufactured and stuff. So that was what we would be trading.
00:35:04
Speaker
Until 2009, this was mass produced. What was the volume per SKU? And SKU stopped keeping units. So basically one particular design or whatever. So you would say that the depth in per SKU was not much because every product would be one of it kind. And the kind of people we were selling it to also wanted a large assortment of SKUs for themselves.
00:35:33
Speaker
So this would be like 50 varieties of saris they would want or they would want 200 varieties of kurtis and stuff because these are typically offline retail outlets like a boutique or people who would generally want it to become resellers and sell it right. That's that's awesome. Okay. So largely one of its kind. So cataloging must have been so hard if you actually had to click photos of each and everything that you were selling. Wow. Okay.
00:36:02
Speaker
So that would have been a challenge, but the primary source of selling products was not also online. It was offline.
00:36:09
Speaker
So you did not do catalogs. You don't need catalogs. And online we were taking affiliate channels like Alibaba, India Market, India where you do not need to put every SKU actually. You just need to put limited SKUs which can show the assortment varieties and strengths for you as a manufacturer and all the product types.
00:36:39
Speaker
And similarly, in parallel, varieties of the colloquia are strength. So catalog was in a B2B's limited actually. Got it. Okay. And the way you would sell would be like cash on delivery or cash after like say 90 days or something. So it was a domestic market and we didn't have a lot of working capital money kind of stuff as well. So it was cash on delivery. And now you take the products and give us all the money.
00:37:07
Speaker
So that was how it was. And would you offer returns? Like Kushnayi Bhikavar? Like Unsold inventory? Not really, because all of that. I still remember we worked with Mentra and Reliance AGO in the beginning and they had some things where they would want to return if it doesn't sell.
00:37:25
Speaker
So some stuff like that, but that happened for fairly a period of around a year at that point in time. And then we didn't do it because we didn't also envision to sell in a domestic market and doing this. But gradually what happened is that we started to reach out to urban brands like a fab India and fab India already had access to all of these products. But then we realized here, why only fab India have access to it?
00:37:51
Speaker
So, I think one proof point which worked out was, but then other things we realized here, why should they have all the fun in sourcing these products? And let's take these products to different people who aspire to have a fabulous supply. Like someone like a W, Biba, Nita Dongare, West Side, Pantaloons and all of these domestic large retailers like a Shoppers Stop and all, right? So, I think the next aspiration became,
00:38:28
Speaker
And that become very interesting journey pre pandemic because for the two, two and a half odd years we did sell to these large brands. We understood how these guys think in terms of quality in terms of production timeliness right in terms of a lot of other things and three engineers who do not have a background of textiles. We literally burnt our fingers left right center into doing everything and understanding ourselves.
00:38:43
Speaker
Right? And if the value adds to the brand, it will be better for the business.
00:38:53
Speaker
I will tell you that the beauty of our country, the beauty of our country is that manufacturing is the opportunity for us to be able to be a professional. So, we have to be able to be able to be able to be able to be able to be able to be able to become a professional.
00:39:19
Speaker
But it's not that bad. So people try to cut corners to make goods in India. Right. And that's how that's how Indian manufacturing has struggled throughout the many years. And it has not been at far to, let's say, even Bangladesh or Sri Lanka or Cambodia, let away like China, the body of it. Right. In terms of these organized manufacturing. So that they can get a China.
00:39:53
Speaker
You guys are looking good to us. You guys are genuine guys.
00:40:23
Speaker
So this was what really we learned in the two and a half odd years in 2019, in 2020, 2021, where we thought we had Indian manufacturers cut corners to make product, right? And our understanding in terms of how the big brands think in the domestic market also evolved.
00:40:45
Speaker
And three engineers doing this, I think we learned literally every single thing which a guy sitting in NIFT or in an ID would be knowing about, or even buyers or merchandisers in the textile space and large companies would know about it. So that's how it all evolved. And then the journey changed fairly, very interestingly, because in India, the pandemic was stuck.
Pandemic Pivot to International Markets
00:41:13
Speaker
A lot of big brands didn't know that there was no inventory in the inventory. So they didn't know that they could sell the inventory. Actually.
00:41:23
Speaker
And this is where the future group also collapsed. Future group also made like one big retail customer. Yeah, so future was one of our buyers as well. So we were giving it to Big Bazaar also, right? And Mahapar and we couldn't imagine because like we had all of this hard work and earned money and it got stuck somewhere actually, right?
00:41:46
Speaker
It was. And then we realized, we are in India, we can't do anything, we can't do anything. But let's go international. One quick question before international. Once you started working with like say a future group kind of large setups, then you would need depth in SKU. Like one-of-a-kind SKUs will approach one each other because they would approve a design and then they would ask you to supply 100 or 1000 or something like that.
00:42:25
Speaker
Correct. So not only future, I would say, but all of these retail brands, right? Like an Anita Dongre's grassroots, or let's say, ITC Wells Lifestyle, Fab India, Whom all we worked with, these guys were large B2B guys. So I think that's what we also learned in manufacturing. I think that's what we also learned in manufacturing. I think that's what we also learned in manufacturing. I think that's what we also learned in manufacturing. I think that's what we also learned in manufacturing.
00:42:38
Speaker
So how did you achieve that then? Then you would give order to your manufacturing partners.
00:43:14
Speaker
So, my grandfather did a business of 2-3 odd crores in a year but
00:43:46
Speaker
So it become easier to do B2B business in depth with particular SKUs.
00:44:15
Speaker
I'm not sure what's going on in Bangalore or Delhi. We cannot know what's going around in Bhagalpur. What's going around in Shantifur. These guys are generally good. But you need to have eyes and ears in these places. And that's when it all started. We started hiring micro-entrepreneurs in these places.
00:44:20
Speaker
in these, these.
00:44:43
Speaker
ITC is a model of ICHOPAL. ICHOPAL is a model of ICHOPAL. In the early 90s, they started aggregating farmers, creating an ecosystem with farmers. We had feedback from farmers saying, I have a feedback, I have a fertilizer, I have an output.
00:45:02
Speaker
and they would use to granularly monitor things so that their production would be in line with what they are thinking and what farmers could deliver. So eventually they were running. I think they would also start selling the input like the fertilizers and all that. Correct, exactly. It would become a commerce place. And then they would buy the output from the farmer also.
00:45:20
Speaker
Correct, correct. So, Hamari learning the IIT. So, from ITC only. So, ITC, Mr. Chandr Das, he was one of the CEO at ITC and he was a judge along with Prasanth Prakash from Maxwell at IIT Bombay, Eureka.
00:45:58
Speaker
and I think we can learn a lot from this guy so so he
00:46:06
Speaker
he handheld us in terms of how Ichopal happened and it was on the back of a lot of ground force which were not ITC employees but people or villagers in itself which became micro entrepreneurs for ITC. So, we then had micro entrepreneurs across the country on the back of the Ichopal model.
00:46:43
Speaker
Not micro-entrepreneurs were primarily suppliers, but they would be the kids of either artisans or who would be aspiring to go to a BPO in a Pune or in a Delhi, right? And then still wants to continue to work in his own village and stuff. So they were hired by us because we traveled everywhere and they became our eyes and everything on the grounds.
00:47:03
Speaker
Which were villagers? These people would be like your kids.
00:47:08
Speaker
You're calling them entrepreneurs, which means they're not getting a salary, but they're getting a margin, right? I would say they were getting some fixed salaries from us actually. So their salaries would be in the range of around 15 to 25,000 rupees. And if we had to do some work here and there, then we would give them some bonus or variables also.
00:47:30
Speaker
That's how it evolved. Got it. So this was essentially your field force then. These are all payroll employees. Villagers were sitting in that village and making the manufacturing happen. That's how that Jogad helped us figure out the domestic Indian supply.
00:47:59
Speaker
And very interestingly, we also figured out here our up coin in the manufacturing the whole to see a Joe Hamara. Ask you date me boss wrong. I mean I can say literally that we are the largest aggregator of textile MSM is in the country and make them create goods which are relevant for them actually, right? So for running the factories throughout the year and Hamara vision be here. We will be the largest exporter in the textile space from India.
00:48:25
Speaker
on the back of and the strength of all of these manufacturers, which we have been working for many years now. But it all starts from also building an ecosystem revolving around these MSMs. In MSMs, the ecosystem actually has to be built. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way. It has to be built in a zero-day way.
00:48:55
Speaker
I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money, I have a lot of money,
00:49:21
Speaker
So it's building a very strong ecosystem revolving around these manufacturers, which revolves around from also helping them source raw materials, helping them source the right finance, helping them get the understanding of creating the right design.
00:49:38
Speaker
giving them the right merchandising of creating a good for export quality so that they are at par to a guy sitting in a china vietnam
00:49:57
Speaker
But India make a key these guys cannot do it themselves. So India may full stack by manufacturing platform is a road and we are the largest full-time manufacturing platform because we help them source everything by an ecosystem revolving around all of these values which they need and a toolkit for making goods which they should create for the world. So now coming to the product type Hamada product domestic markets of international markets of togia.
Supporting MSMEs for Global Competitiveness
00:50:23
Speaker
We were doing everything now, which is soft homes like SMT, JMAX, Burlington, Ross, OSGL, Marshalls, Ensepco, Hamlok, Bedlin & Curtains, Koshankawas, Subdetek and Inki factories. For the first time in India, these factories have been giving goods to these large big box retailers in the US. Similarly, there have been factories which have been creating goods for buyers in the Middle East or in Japan.
00:50:51
Speaker
So India manufacturers close to 282 billion dollars worth of textiles. The rest 240 odd billion is consumed domestically. Which is of no purpose actually.
00:51:12
Speaker
and that's where you want to create a dent and be like literally 10 times for Shahi exports or 20 times for Gokul Das exports or like two times of PDS and become the largest exporter from our country because India's backbone is its manufacturer's only which are MSMEs.
00:51:30
Speaker
Okay, got it. So, what all did you create on your platform? Then you mentioned that a toolkit for manufacturing, you mentioned input like maybe selling them the thread itself, and you mentioned financing, working capital financing. Just take me through what all you built. So see, it all starts by giving Dandar to these people. So, we trust and develop it. So, how do you develop it? How do you develop it? How do you develop it? How do you develop it? How do you develop it? How do you develop it?
00:51:57
Speaker
I don't have any financials already. So it starts by building relationships one step at a time. Once you start giving them business, no matter how domestic or international, which we have been doing across different business models in the last five, six odd years, like fellow domestic, unorganized retail, domestic urban, organized retail, or up exports, they have that trust here is companies.
00:52:25
Speaker
So, when it comes to Japan, it comes to Japan. When it comes to Japan, it comes to literally everything. So, it's not a good idea to buy a book. It's not a raw material company, actually. Or a commodity trading company. So, we do not get it on our books. But we facilitate to buy from our
00:53:04
Speaker
Number one. But you're doing collective bargaining, basically. Exactly. So, for instance... Do you make a margin here? By giving them MSN customers. Correct. Not by selling, because it doesn't come to my book. But eventually I earn margins because I consolidated my entire supply chain, actually, on the back end. So, Jahan, if you're not selling, you're going to sell 92 rupees. Because you're a middleman.
00:53:19
Speaker
trade partners where we tell we have partnerships with mills and young companies.
00:53:33
Speaker
And we see the factories out there, because we have consolidated our demand. And that gets passed out to you, the cost benefits, some of it. Exactly. So, we are going to have to have a substantial quality, let's say, in the next year. But we are going to have to have a substantial quality. Got it, interesting. That's where we squeeze our margins as well on the supply side, number one. Now comes finance. So, finance may be onboarded a couple of NBSC partners with 90 of our MSM's in last year.
00:54:03
Speaker
And this eventually exploded like crazy because ENVRCs were very happy. We are very happy that the MSMEs were very happy. We have a loan at 1.2-1.3% a month. We have a 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have a total of 1.3% a month. We have
00:54:31
Speaker
and we have a full guarantee that the NBSC will be able to default on the default. So, we have to do that.
00:54:40
Speaker
Right? Because you are his customer, so you can withhold his payment when default. So you have that power. Correct. Very interesting. Okay, take it. But what we realized here is that this is huge. This is huge. This is the first time we have registered. This is the first time we have registered. This is the first time we have registered. This is the first time we have registered.
00:55:06
Speaker
And the MSMEs, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know, I don't know,
00:55:45
Speaker
So it's a natural, I would say demand supply gap, which an aggregator like us solves. What helps us? What helps us is a very strong trust and ecosystem which we are building.
00:55:58
Speaker
very similar to an ITC Echopal kind of structure which these guys have built across giving inputs to these people. So that is number one and also optimizing our gross margins. So that is something which has become very interesting and
00:56:43
Speaker
So, what are the advantages of taking them through this? So, there are a lot of companies in India who export their products. In India, there is a product category called HSM, which is the Duty Drawback, ROSTL, or GST. It refers to government benefits, which are in the tune of anywhere between 3% to 7%. So, there are a lot of categories.
00:56:52
Speaker
We have a U.S. entity now.
00:57:09
Speaker
So, if you benefit from it, you will pay for it. The government will pay for it. So, if there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency, you will pay for it. If there is an Indian currency
00:57:38
Speaker
Advantages with a merry cost to men is good cost up in a cost manner gross margin cost of an eye to raw materials go help Kirk a source. Okay, who's the final source? Okay, these are international dollar payment day To have a good job. They'll make a good job. They're so big on the other wall. It's a beast come into a Whatever and saying us maybe up just in the gallo DJ max Ross Burlington is directly
00:58:19
Speaker
So the single rule of retail industry is that if your consumer is offered new assortment of products, that consumer is happy, that consumer will buy more from you, right?
00:58:32
Speaker
So, I have a lot of innovation, I have a lot of IP, I have a lot of product, I have a lot of money, I have a lot of money, right? So, I have a lot of money, I have a lot of U.S. money, I have a lot of Japan money, I have a lot of lab money, I have a lot of U.S. money. Actually, I have a lot of money, I have a lot of money. So, interesting because Japan in itself is investing a lot on this thing.
00:59:00
Speaker
India has a very interesting assortment of products. So this assortment of products is like what? This is an artisan made product. This is an embroidery product. This is what we are looking for. Literally our 18 steps of making a najarak block print through natural dyes.
00:59:26
Speaker
So which happens in Gujarat or a bag block print or a jandani or a tant or a nickel. So India has 80 plus textile hubs across the country, which literally I would say is gold for India. But India export can't say that Tirupuri Road, Coimbatore, Muradabad, Saranpur, Ludhiana, Panipat, Jaipur.
00:59:50
Speaker
Literally, it's not that bad. But in India, it has 80 plus textile belts and the belts are individually removed. So, if you look at it, you can see that there are a lot of turnover. So, you can see that there is a lot of turnover. If you look at it, you can see that there is a lot of turnover. So, if you look at it, you can see that there is a lot of turnover. So, if you look at it, you can see that there is a lot of turnover.
01:00:19
Speaker
So what do you supply to like say Uniqlo? Uniqlo, I've never seen like embroidery or any of these traditional techniques that you're talking about. So now all of these brands are also becoming conscious for interesting assortments which they want, which is not available in other countries. So another thing, India is a spring summer destination.
01:00:52
Speaker
So India has always been a kurti manufacturing country.
01:01:05
Speaker
But India's strength and opportunity is there because that's where we cannot compete for winter wear but we can compete for spring summer seasons for the international market. So now for unique law, we give a lot of embroidery products to them in men's tops, women's tops. We give them an autumn intercollection in wool as well to another sister company called GU.
01:01:36
Speaker
So I think that's very interesting because macroeconomic wise China plus one, China maybe anyway, export incentives have been reduced drastically. The cost of yarn and the cost of fabric is literally hardcore or even cheaper in India than happening in China. So people are also wanting to move. But the only challenge is a GU or a unique look can never operate in India unless they have a licensing office in India.
01:02:06
Speaker
or they would have understanding of big manufacturers, which are like a Shahi Gokuldas and kind of guys like these, right? Then what else?
01:02:22
Speaker
So I think there's a huge opportunity into creating a cloud factory by backward integrating India's manufacturers which are in small towns, giving them a toolkit and an ecosystem so that they can be at par to global manufacturers and creating a full stack platform to enable them and an Isaiah aggregator reach out to global brands.
Scaling and Future Goals
01:02:46
Speaker
My job is to do capability mapping of Indian manufacturers where I have established strong relationships and trust across the last 5-6 years to global brands which wants to jump into India to make things happen.
01:03:10
Speaker
One question, these global brands will give you a product and say you have 1000 pieces or you will show them like say 50 to 100 different products and whatever they like, they will say you have 1000 pieces. How does it happen? So it's a trust establishment, actually game, right? A game between trust between both the entities. I think it's a company that has a lot of trust in its design.
01:03:39
Speaker
But, I don't have any expertise about the capabilities that are required. I have a collection, and I have to select all the items that are in order. The first and third order is the brand collection. The design, the time, the production, the quality, etc. So, I think that's why I have to do this.
01:04:09
Speaker
So it's like these brands have their in-house design teams. Unke designs also start coming to you eventually. Correct. And very interestingly, what happens on the demand side is that we are accumulating a lot of data. If I have to talk about
01:04:31
Speaker
Let's say one of the India's largest exporter, Shahi exports. Unka, they have a turnover of around 8,000 crores, work with almost around 40 brands. Right? So Unka feedback 40 brands. At my skill, I operate at 200 brands, which are smaller than those brands, which Shahi operates. I have a team in Japan. I have a team in US, which are on the field.
01:04:56
Speaker
We have a textile designer in Japan. We have a textile designer in the US, which are Japanese and US citizens. But we have the best of the teams and design here in India. My head of design was the head of designer of ITC Wills. She was there for almost 20-80 years, led their design vertical for many years.
01:05:27
Speaker
So, she foundationally is the best person in design who understands design, but not culturally. So, she has a lot of feedback and feedback data. Those are the brands where the data is designed. So, she also has an autumn winter in Japan, in the spring, in the middle-east, in the US. And that helps me keep wiring better in terms of showing a brand when I go to them and more prepared.
01:05:57
Speaker
So I think that's where that serviceability angle comes in for brands when they work with us. Amazing. This again is similar to what you did when you were hiring interns. You wanted local people who can talk the language of that locality. Same thing you've done for your demand generation also. Correct.
01:06:23
Speaker
Yeah, I think one thing very clear is that there are people who are far better than you actually who can do it. And I think that's what it actually makes things work. So what is your turnover today? See, so we have been growing very aggressively in the last, I would say, one and a half, two years since we
01:06:52
Speaker
try to do export. Now majority of our business is exports actually. And Abhi, the focus entirely has shifted also in terms of enabling our company to become an Abeda positive company because I'll tell you, if you have a brand, you have to have a working capital. And working capital, you have to have equity.
01:07:18
Speaker
business loss making events you have hired some of the best people in the industry working for you and you have international teams, then the business bleeds. But irrespective, there is equity in the market, there is equity in the market, there is no equity in the market, there is no debt in the market. Working capital in the market, there are buyers, there is credit, there is no loss making, right?
01:07:47
Speaker
Now, where we will be moving now onwards is key. We have to turn the company a bit a positive ASAP and show pad positive figures for at least three, four quarters and then try to get our company listed. Okay. Oscar benefit. Oscar benefit. Once you are listed, your debt leverage is not on the basis of your only equity, but also on your market cap.
01:08:15
Speaker
Right. And at that point in time, and they have been very successful stories like a PDS. No one has heard about them, but they are like fairly 10 times bigger than a Google does exports or two times bigger than a shy exports. They are at 11,000 crores. They are also contract manufacturers.
01:08:36
Speaker
And they are a listed company as well. So they leverage a lot on in terms of their working capital as being listed and business on the back of the market cap they have. So I think that's the journey where we are, to be very honest. I think it would have been very easier for us to be on a journey to scale a GMV of 500, 600 odd crores and then keep on burning investors capital. I think we do not think like that primarily because
01:09:05
Speaker
They're a little different. So I don't think it's a long term vision for us also. I think the to raise capital and eventually scale a very large GMV.
01:09:30
Speaker
But I think at a fairly around 150 odd crores in this current financial year. And next financial year we will be around 280 odd crores. In that 280 crores we will be orchestrating a pad positive figure for two, three quarters. And then try to figure out how we can get into the journey of being listed. We have suppliers which are on credits with us. We have suppliers which are
01:10:00
Speaker
Where we have created an ecosystem for them? I love there are almost 180 factories which are run by us actually, but not owned by us Across in the textile space, right? So these guys can easily are the ones just kill a miracle Teens which are so cold at the time. I'm sick or sick now make offs or Factories nature young finance. I'm not a boss wrong way. I'll say so we have already had invested a lot of our money into finance like hiring a good a
01:10:28
Speaker
CFO and like multiple CS in the company getting us wired because how many engineers they are. But now what needs to be done to take the journey towards profitability first and then wired towards listing also. So I think that's the phase where we will be in the next 1-2 odd years.
01:10:54
Speaker
So you want to be bigger than Gokuldas one day, which is at or bigger than Shahi. Eventually your goal is to like, say, reach 10,000 crores kind of a turnover. So are you looking at this like a 20 year journey or do you think you will get there before that? See, so we think that it would not take us 20 years. Because we don't have time for manufacturing.
01:11:24
Speaker
I think we have that edge over a lot of large corporates and even other companies which are new age companies. So I in itself sit on close to around anywhere around 18 to 20,000 crores of production visibility.
01:11:51
Speaker
If you want an average income, then you have to buy two MSMEs. Right? Not to be at a revenue, what you said, I think it would not take us 20 years, but let's say it will take us another 8 to 10 years, because I already have that supply throughput. I just need to replicate the formula of what I've done with 180 MSMEs to let's say 500 MSMEs or 700 MSMEs. And it's a supply constraint sector. Global demand is infinite.
01:12:21
Speaker
And global demand is wanting to jump on to getting orders. Literally, to be very honest, there are orders that can't be created, or predictable revenue created can't be created. Look at this. We have a lot of products that can't be ordered. It's a game's responsibility. And that's why we are very strong, foundationally, because we have a lot of money, actually.
01:12:46
Speaker
domestic brands could be ordered data away, right? Because some teen engineers could put on the textiles. So we understand not from 30,000 feet, but six, six feet literally care, what has to be done needs to be done on the supply side. So, and foundationally, we are very strong in terms of our processes, in terms of SOPs and how these MSMEs are backward integrated to us. So becoming a 10,000 odd company isn't
01:13:14
Speaker
I would say impossible for us I think impossible can we create it the next you can say reliance equivalent kind of multi-billion dollar kind of cooperation in top-line revenues not valuation right so so I think that's something which is impossible which I think which is something we also dream of
01:13:43
Speaker
But I think we are very patient as it happens. I don't see in 8 to 10 years as impossible for a company like ours to do.
01:13:54
Speaker
Very interesting insight. You know, I've interviewed a bunch of founders in this space. And most of them, the very well-funded ones, are solving supply problem. And now I understand why they are the well-funded one. You know, like Fashions are low-cost. All of these are solving supply problems. Now I get it. So what you're saying is, if you solve supply, demand is infinite. Very interesting insight.
01:14:19
Speaker
Okay. So now these 220 MSME factories are like your cloud factories. What are you doing for operating them? You are in a way virtually operating them, right? So do you have like an operating system through which you ensure quality? Correct. See, so we have a very interesting relationship with our suppliers. Most of our suppliers have Alton boards on top of it.
01:14:49
Speaker
They claim that they are a lot in factories themselves. Why? Because they go as a factory on the sole common manufacturer. Produce. Unco actually is a male in a part nine. He may go Germany. He's a straight show me. I'm a New York. I'm a straight show me. I'm a Japan. I'm a trade show me. Unco, you put a solid new factory challenge here. Unco local. The hardy military company. I think you can have a core job here. Best here. You can go on a chain company.
01:15:18
Speaker
That's it. Now, we have definitive MOUs with our suppliers. It backward integrates from our buyers. So, my demand teams plants in advance. Right. So, like literally our industry operates three, four quarters in advance.
01:15:50
Speaker
Now, we have MOUs with a supplier. It is basically capability mapping of these factories to this demand. Number one. Number two, we have set SOPs processes, toolkits across sourcing of raw material.
01:16:19
Speaker
Across all of these levels with the MSMEs and my teams hand hold it on the soft flows of MSMEs. So the factory is owned by someone else, but he probably might not be as literate as to run that factory, but only own that asset, but we run that factory for him. We literally manage his entire P&L. Right?
01:16:43
Speaker
Now all of this is also backward integrated with our internal ERPs. So my third co-founder, Ralbin, he has been with us in the journey for the last six years with a very strong empathy in terms of understanding the suppliers. Traveling across the country, we know what problem to solve. We have created very basic
01:17:06
Speaker
rudimentary level I would say ERP to solve the problems for that and the ERP very interesting is also in vernacular because we have a vernacular ERP actually because we have a vernacular ERP
01:17:32
Speaker
The time and action sheet visibility is only possible on the back of a very strong ERP which is also used by our teams.
01:18:00
Speaker
The bigger challenge across the industry is that we are not using ERP banalaya, but we are using it for local resources. But we are not using it for local resources. What are your problems and then created it? Why? Because we've been doing it for long now. We empathize, we understand the problems from the root of it actually. So we are on top of what needs to be created to
Unique B2B Strategy
01:18:30
Speaker
solve this, right? So I think that's where technology is integrated to make this factories cloud. Okay, got it. Help me understand you versus the other players in this space, you know, so like this, broadly, I said it like a B2B supply, fashion B2B supply space. So like, you know, how are you different from fashion, loco, fast, business, these are three, I've personally interviewed all three founders, so I know of these, there might be others also.
01:19:01
Speaker
Sure. Yeah, I think very interesting actually. I think time and again, a lot of people have come across and asked us, but to be very honest, when people come to our office, they understand in the first half an hour how we are very different because we are very, very different than any one of these because and with due respect, every entrepreneur has their own vision and how they would want to build the organization. But I think we are not very similar to any of these.
01:19:29
Speaker
We are very similar to how a PDS Shahi or a Gokul does things. Our margins are very similar to what the P&L would look like for a PDS or a Shahi Gokul does. So that's how we are very different. So while our top line might be a little lesser than these people, but our bottom line may possibly be larger.
01:19:55
Speaker
But there are different spaces also that each of you would be occupying, like in terms of your niche would be different from their niche or there are like overlapping niches. Like I think, for example, Locofast is not into ready to wear products. I think they are more into the fabric. Correct.
01:20:14
Speaker
See, so you are right, actually. So as well as I understand, I think they are into commodities where they are trying to solve the raw material for the local manufacturers. We do not do that, number one. Some of the other companies which are well-funded in the sector, they work with manufacturers in Bangladesh, Tirupuri Road, Coimbatore, and Ludhihana, Panipat, right? So which are already large exporters.
01:20:44
Speaker
So we do not get correct in that sense that we do not cater to that market as well on the supply side, actually. While our products might be very similar on the demand side, which they would be creating and see by far, we feel that there is no problem to be solved for a guy sitting in Coimbatore doing a 50 crore business because he, his father, his forefather has been going to New York, Germany, Japan in exhibitions, working with five of these people, which were buyers.
01:21:14
Speaker
So there is no pain point for him other than capital.
01:21:21
Speaker
Right? So, I think that's one of the key problems that some of the other people solve and with your respect of what they have been able to solve of their own challenges or merits. I cannot comment on that. But I think we have... This should be like Fashionsa. Fashionsa works with more larger players who already are well established. Correct, correct. I see. So, the reason, the problem they...
01:21:45
Speaker
identify and solve is primarily on the capital side with a large guy sitting in Coimbatore or a Bangladesh. So the gross margin profile isn't very interesting because that gross margin profile comes from the back of some value which we bring in by giving operational credit to some of these people and stuff.
01:22:08
Speaker
And I cannot comment in terms of serviceability as well, that how strong they would be in terms of serviceability or what's the churn in terms of our buyers, the buyers they have. I think for us, I can tell you that we are in the business of farming than hunting. I will not be hunting 200, 500,000 brands across the globe, but I would want to hunt only 200 or 300 at a time and then farm.
01:22:35
Speaker
So that I go into their wallet share and like expand. And why can I do that? Fairly simple, because a TJ Max operates, let's example, a Rossix works in a soft home product, like a cushion, curtain, comforter, table linen and all.
01:23:01
Speaker
I have to map a cushion to a factory in India, a curtain to a factory in India, a bed linen to a factory in India, and that's it. And individually, all of this is around two, two, three, three crores worth of wallet shares in a quarter. So sufficiently around 50, 60 crores coming in from Ross in itself, right? With one vendor code, which I have with Ross, right? So from that lens, we are very differently wired. But this is very similar to what a PDS or a Google does also things through.
01:23:31
Speaker
So I think, and we try to solve a tougher problem on the supply side, and I think that's where the differentiator for us comes from. Okay, and I think in case of business, their probably category is more on shoes and they are not doing export, I believe. They are more into domestic retail, I think. See, I think as far as I understand, they are more like Udon, right? And they are across different categories now also. They are in fashion, they are also in accessories and other things, yeah.
01:24:01
Speaker
OK, got it. Cool, cool, cool. So, you know, my just like a wrap up question. So, you know, what's advice that you would like to share with a young aspiring founder?
Advice for Young Entrepreneurs
01:24:13
Speaker
Like, you know, based on what you have learned in your journey, what are some of those lessons that, you know, so that people don't have to learn the hard way? Correct.
01:24:21
Speaker
No, I think I feel that I'm still in the journey, Akshay, to be very honest. So I think it might be like Sotamu Badivat, but I think one of the things which I can totally say that I think it's very important to have a very strong empathy to understand what you're trying to solve, right?
01:24:40
Speaker
I think it's also not a small journey or a short journey. I think it is a long journey and there cannot be a plan B at all. There has always to be a plan A, what you want to solve. And you have to persevere in terms of what you believe into solving, right? And one day or the other, it will come through. And the last thing I will say is that not to be distracted as well.
01:25:04
Speaker
Because see, there's a lot of distraction going around in the market and in the industry, right? Someone will come and they will raise a lot of capital. And and then someone will go as soon as they have come as well, right? Like so. And I don't see that we have to be distracted and stuff. So I feel that that is the most important. And lastly, I would say that you are because of your people in the company.
01:25:31
Speaker
And I think that trust level is very important between you and your people, which are colleagues and employees, to build a culture where they are also heard. And they even contribute more and bring in more on the table. So I think they are the ones which would be with you on a longer journey. And they were the ones who should be the hero when the company eventually goes IPO.
01:25:56
Speaker
So, both financially and non-financially. So, eventually, I think that is the vision journey which you should see along with... And at the end of the day, you need to create a proper Dhandaya. There is no point of that business model to exist. So, I think that something which should evolve with constant improvisations and pivots
01:26:20
Speaker
as there has always been a plan A and you will maneuver through it what you want to do and I think it's a long journey for us as well moving forwards from here because I think we're still constantly learning every single day. We are fairly a small company with high ambitions and slowly and steadily we'll be there.
01:26:37
Speaker
So your first big round of capital was 22, right? About five and a half million dollars you raised. Correct. Which was like after five years of bootstrapping it and like really hustling like through the B-plan competitions and stuff like that. I mean, what changed? Why did you decide, OK, let's raise external capital? And was it an easy process or a difficult process?
01:27:05
Speaker
Yeah, see, so first thing, I think what led us to get into raising capital was also because we wanted to go very large in terms of international markets. By 2021, we realized that we have to get into exports of what we were doing domestic only. And the opportunity was huge. What's going on with China and everyone looking for alternative procurement centers was also becoming very interesting. And we didn't want to lose that opportunity, actually.
01:27:35
Speaker
So now going international in itself for the expensive, having international teams was also expensive, participating in the UB Fairs was also expensive. So I think that was when we realized that we needed to have some capital on the basis of which we can basically scale the demand.
01:27:55
Speaker
And on the supply side also, there has to be done a lot in terms of building that ecosystem and integrating it through technology as well. Because we knew everything what needed to be done, but we couldn't because we were only trying to do it slowly. But, and I think we were not afraid that that was also not possible because the kind of problem we have solved is tough to solve, actually. So if they have to go through us only.
01:28:22
Speaker
or invest another 5-10 years into doing it. So I think that was when we realized here we should raise some capital to build tech ecosystem revolving around supply and go deeper in terms of demand.
01:28:38
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.