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Building a Tech OS for the Physical World of Manufacturing | Amrit Acharya (Zetwerk)
461 Plays2 years ago
"The idea is to create a... boringly predictable company."
In a startup ecosystem that fetishizes disruption, Amrit Acharya’s goal for Zetwerk is refreshingly different. In this episode, he explains why in the chaotic, high-stakes world of global supply chains, being "boringly predictable" is not a lack of ambition; it is the ultimate value proposition and the most profound form of disruption.
Amrit Acharya is the Co-Founder and CEO of the global manufacturing platform, Zetwerk. Starting the company in 2018, he scaled it to a unicorn in just three years, with Zetwerk now commanding a valuation of over $2.7 billion. Under his leadership, the company achieved over ₹11,400 crores in revenue in FY23 and has become a pivotal force in the global "China Plus One" supply chain shift. An alumnus of the prestigious IIT Madras and UC Berkeley's Haas School of Business, Amrit's journey is a masterclass in identifying deep-seated industry problems and building a technology-first solution to solve them at a global scale.
Key Insights from the Conversation:
- The Power of the Pivot: Zetwerk's success was built on two rapid and critical pivots in its first year—first, from a SaaS tool to a B2B marketplace, and second, to a full-stack "managed marketplace" that takes complete ownership of manufacturing outcomes.
- Asset-Light, Technology-Heavy: Zetwerk's core model leverages a global network of over 10,000 manufacturing partners without owning the factories, providing "virtually unlimited manufacturing capacity" powered by its proprietary software.
- The "Manufacturing OS": The company's moat is its integrated technology stack—a central operating system that manages the immense complexity of transforming digital designs into physical products across hundreds of suppliers and projects simultaneously.
- Solving for Predictability: The biggest challenge in Indian manufacturing isn't a lack of quality but a lack of predictability. Zetwerk tackles this by providing its suppliers with software.
Chapters:
(00:00) Introduction
(03:40) The Genesis of Zetwerk: Solving a Personal Pain Point at ITC
(06:58) The Initial Idea: Building a Software to Digitize Manufacturing
(10:15) The First Pivot: Why the SaaS Model Failed in the Real World
(13:41) The Second, Game-Changing Pivot: From Marketplace to Managed Marketplace
(18:02) Why a Pure Marketplace Model Doesn't Work for Indian Manufacturing
(22:47) Solving the Supply-Side Puzzle: The Power of Financing & Software
(28:17) How Zetwerk's "Manufacturing OS" Simplifies Complex Production
(49:04) The Biggest Challenge in Indian Manufacturing Isn't Quality, It's Time
(52:48) Zetwerk's Big Bet on Electronics Manufacturing in India
(57:14) The Playbook for Profitability and a $2.7B Valuation
(59:44) Why Scale is the Ultimate Moat in the Manufacturing Business
(01:01:25) Zetwerk's Global Vision: Built in India, for the World
Hashtags:
#FounderThesis #StartupPodcast #AmritAcharya #Zetwerk #MakeInIndia #Manufacturing #B2BMarketplace #SupplyChain #StartupIndia #Unicorn #VentureCapital #Entrepreneurship #MadeInIndia #Leadership #BusinessStrategy #TechStartup #SupplyChainManagement #DigitalTransformation
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Transcript
Introduction to Amrit and Zbook
00:00:00
Speaker
Hi everyone, my name is Amrit, I'm co-founder and CEO at Zbook.
00:00:16
Speaker
I remember during my India days, which is about two decades back, there was a rough conversation about how India has leapfrogged the manufacturing phase of development and gone straight to services. This was exemplified by companies like Infosys, Vipro, TCS, which were bringing in millions of dollars of service-led export revenue.
India's Economic Transition
00:00:36
Speaker
Typically the way most countries develop is they are first largely an agrarian economy, and then they become a manufacturing economy, and then
00:00:44
Speaker
finally services become a dominant part of the GDP. But India never really had a very strong manufacturing base or a strong contribution by manufacturing to its GDP. But this is changing. Today there is a lot of interest about manufacturing in India. Part of it is because of common initiatives like Make in India and
00:01:10
Speaker
but there is a bigger global reason for it and that is that countries and companies find having only China as their dominant manufacturing setup to be high risk and India is the natural choice to
00:01:26
Speaker
de-risk themselves from the China exposure. And the infrastructure in India to enable companies to set up manufacturing has vastly improved over the last two decades.
Zwarp's Manufacturing Model
00:01:37
Speaker
Within this kind of a macro setup comes a company like Zwarp. Zwarp is probably one of the fastest to unicorn kind of companies out there. They became a unicorn within three years of starting up.
00:01:48
Speaker
And Zwork is essentially an asset light manufacturer. Now, when you think of a manufacturer, you think of somebody who owns plants and runs plants. But what Zwork does is it works with hundreds of curated manufacturing partners, and it gives them software, it gives them technology, it gives them business, and it gives them funding to manage the cash needed to run business. And it is responsible for fulfilling the client orders.
00:02:18
Speaker
This is a uniquely Indian way of tech disruption. Most tech disruption in the West tends to be about removing the middleman. But I really think in India, the entrepreneurial energy, the existing infrastructure built by the small businesses needs to be leveraged. And this is the way to go about it.
00:02:38
Speaker
empower the small businesses instead of trying to eliminate
Amrita Charya's Career Journey
00:02:41
Speaker
them. Amrita Charya, the founder of Zetwork, spent four years in a manufacturing setup within ITC after finishing his engineering from IIT Madras. After that, he went abroad for an MBA, had a stint in McKinsey as a consultant before coming back to India to disrupt manufacturing.
00:02:59
Speaker
And the rest of the journey is full of twists, which I will not give away. But Amrit has had an amazing journey of discovering the right way to build manufacturing-led business in India. Listen on to my conversation with Amrita Charya about building network and the evolution of manufacturing in
Founding Zetwerk and Ideation
00:03:19
Speaker
India. You're listening to the Founder Thesis Podcast, and I'm your host, Akshay Dutt.
00:03:31
Speaker
Tell me about your process of IDSN through which you finally reached to the network idea. When I came back in January 2018 and then started,
00:03:45
Speaker
I decided in December itself, so I started talking to people. And the first person I called, in fact, was Srinath, who's my co-founder today. Srinath and I had gone to undergrad together. We had worked at ITC together. We knew each other for 10 years also. It was a very high trust relationship. And when I came back, I think, I mean, I was talking to a few people. I was exploring a few ideas. But I think by February of 2018,
00:04:10
Speaker
it became reasonably clear that Srinath and I are going to start a company together. Now, what is that company? We don't know yet. But to me, that was, again, the step one, because I don't know, even if I'm doing the same idea, whether I would have started it by myself. I felt I needed a co-founder who was part of that journey. And after Srinath, we got a few other co-founders, Vishal and Rahul. And that to me was step one, that, okay, we are going to do something together.
00:04:38
Speaker
I trust this, they trust me. And we don't know what exactly we will do, but we will figure it out.
Digitizing Manufacturing Processes
00:04:43
Speaker
But amongst the things we were looking at me and Shina, we were looking back at our past again. And for me, I came back to my journey at ITC building in this factory. And I thought about it, like the way I had done it, I was managing hundreds of vendors.
00:04:58
Speaker
looking at 300, 400 kilos of spent. I was doing it all on Google Sheets. I was doing it in a very, not a very systematic, organized way. And when we pinned our friends at ITC back at the other industry, nothing had changed. We were still doing these things in the exact same way. And I loved manufacturing through that journey of ITC. And I felt that there is a big gap of a software stack that can
00:05:23
Speaker
digitize that entire journey and unlock a lot of efficiency. And it felt like a white space. We got attached to the idea very quickly. And it also had that Sheena, his family business was into manufacturing. So his father and a small manufacturing unit and that was his family business for manufacturing.
00:05:39
Speaker
So he was basically a steel fabrication vendor for companies like BHCL and NT. Srinath's father is an archetype of some of the suppliers we work with today, where there would be these large companies who would give designs for machines or machine components. And Srinath's father had a factory who could convert that design into a finished product. And it would be something as simple as like the steel beam to something more complex like a machine component. But it would be for one or two customers only. These customers are also, in case of Srinath's father,
00:06:07
Speaker
all these previous employers. So that's how this relationship started. Srinath's father worked for L&T, BHEL for many years. And then when we set out and opened the shop, they were his first customers. And that is very representative of the typical SME manufacturer in India today. They're all engineers. Some of them are professionals who have become entrepreneurs.
00:06:28
Speaker
And they are discoverers also because India has traditionally not been a very open, high-dressed economy and new customer is equal to risk. New customer is not equal to opt. So we converged on this gap in the market through our collective experience. And I know what we do is very niche and esoteric to outsiders, but to us, it felt like a complete insider problem. This is something we were so familiar with over many years of tackling it professionally. And it felt a very natural fit to work on it as a business.
00:06:58
Speaker
I just want to clarify what is the idea here. You're talking of digitizing the system of setting up a new manufacturing plant. Basically, if you look at it, it starts with setting up a new plant or some machine is broken and you want to order a replacement.
00:07:19
Speaker
the way it works is who should i get it made from let's say i want to build a door let's take a simple example you can't go to a shop and buy a door no there's no shopping in there which will sell you a door they will ask you what is the size of the door you want
00:07:34
Speaker
What is this paint? What color should it be? And then what are some of the aesthetic features you want? There's a lot of specs that go into ordering something even as simple as a door. Now take that and extrapolate it to machines, which are highly complex or in parts of infrastructure. So there is a lot of input that I want a machine which can do XYZ. And then there are people who say, okay.
00:07:57
Speaker
I can make it for you. So that is the industry we are addressing. It's custom manufacturing. And the idea of Zatwork essentially is we work with these companies who want to get products made.
Zetwerk's Marketplace Evolution
00:08:08
Speaker
We partner with these companies at the design phase. When these products are either conceptual or there is some software like an autocad file behind it, or there is people are still figuring it out. And we take that input. It can be something as simple as a hand-drawn sketch to something as complex as a very sophisticated design.
00:08:27
Speaker
And we bring it to life into a product we can touch and feel. And we do it by working with lots of SME manufacturers slash contractors who can understand that design and convert it into a finished product. The role we play as a business is matchmaking. Once we get a design, what is the best way to get it? A door can I can go to vendor A for an aircraft engine component. I can't go to the same vendor. I need to go to somebody else. So we underwrite that who is capable of making what.
00:08:57
Speaker
Second thing we do is pricing because these are all custom. There's no MRP concept. I'm not buying a laptop. I'm not buying a machine. It's not a mass produced thing. Yeah. I'm buying a machine with somebody's making for me. So I have to figure out pricing for every transaction. We have to do that.
00:09:13
Speaker
And lastly, we solve for fulfillment, which is, of course, the logistics of shipping the product from supplier to buyer, but also giving the customer real-time visibility, like when you order food on Zomato. You can see the whole thing. And that's a 30-minute cycle. Imagine a three-month cycle.
00:09:31
Speaker
where the customer has no idea. That is the world we are digitizing, where we bring complete tracking that, okay, your supplier has received the order. They've started manufacturing. They're in five steps of manufacturing, then step one, step two, step three. Here's so many photos that are showing the work in progress. Finally, the product has been loaded onto a truck. Here's a tractor from the supplier's location to your factory.
00:09:54
Speaker
There is so much black box that is there in this industry and we are throwing sunlight on it. Okay. Fascinating. Is this something which you understood from day zero that this is what we want to do? Or was it an evolution that you started with a simpler, more basic service and then it evolved into what you are describing? It started with much more humbler kind of aspiration. Initially we wanted to build just software.
00:10:22
Speaker
for people like me who were buying custom products to interact with various subnets and we wanted to build a SaaS product for the manufacturing industry. So then what right now happens through tenders so you were essentially building something which would
00:10:39
Speaker
make the tendering process easier when there would be a portal where the company would upload every time they had a requirement and then vendors could log in, see requirements, place a bid and then as the procurement manager you can see all the bids at one place and then you can compare and like something like that. Have you seen our pitch deck? No, I have a very close friend in the manufacturing setup and we do very regular calls about his business and so I've just
00:11:06
Speaker
This is what it is, what exactly our seed pitch. We will build this software, which does all the things you mentioned and a few other things. And that is how we raised our first one million dollars of seed from K and Sequoia. We built the product, we went to market. Why did you need seed money? Because it doesn't sound like it's a software which needs heavy investment. Yeah, you're right. We could have gone either way. But that is where I think some of these decisions of
00:11:36
Speaker
See, these are all very personal journeys. For me, I had come back from the U.S. My parents, I was getting married. My father was saying that I need some proof of success. Otherwise, I can't introduce you as near my unemployed. And also, I had a decent amount of student debt. You want my abroad.
00:11:56
Speaker
My co-founder, Sheena, also was in a similar but different life phase. So we felt that a little bit of capital can give us the cushion to take bigger bets. And of course, there's a lot of fixed costs involved in building software before you can monetize. There's a combination of those two things, honestly. But you're right. Like, as two first-time co-founders, was it easy to raise the money or did you have to listen to a lot of noise before listening to a yes? Yeah, raising money, honestly, never gets easy. Of course.
00:12:24
Speaker
a little bit of familiarity with you and the business. And at some point today, the metrics and the cap table and the brand speaks for the business before you have the first meeting. But when we are using at the seed stage, we are using raw data. Right. We are using raw theory and it is very esoteric. Like people, if my pitch today is, let's say, there's not a resonating U.S. equivalent that you can say we have built X for India.
00:12:52
Speaker
There's no equivalent and honestly, I was first time pitching. I was also not great at pitching. I've also become better at explaining what we do over a period of time. So we had a lot of no's. I think the whole process, I think took us three months due to four months, which I understand is not the worst. Sometimes it can take much longer.
00:13:11
Speaker
But ultimately and at the seed stage, really like you're looking for founders, you're looking for investors you click with, and the investors you're looking for founders you click with. It is something like that. We ended up pivoting the business, but our investors are still big fans of us and all of that. We actually pivoted the business.
00:13:30
Speaker
Before our seed down had completed, we got the term sheet in April 2018. Our money came
Investor Confidence in Zetwerk
00:13:39
Speaker
in August, but we pivoted the business in July. So we went back to K and Sequoia saying, Hey, look, I know you signed up for a software business, but we want to pivot to a marketplace because of XYZ. And they were completely online because ultimately they felt that there was trust between them and most.
00:13:52
Speaker
And at that preferred stage, you're really just betting on founders, not the idea. So I guess that would have been the approach. What made you favorite? Did you build and launch and get some market feedback? No, sir. We built the product. It took us like a couple of months from April to basically June. We built the first version. We're pretty fast and went to market. We went to the same customers who had told us it is a great idea on theory. We invited them saying, look, we have
00:14:17
Speaker
Actually, we did. We need to use it now. And then we started taking newer problems. The customer said, I didn't like it, but I'm not an addition maker. My IT is an addition maker. And then we went to IT in India. Sometimes they said, I'm not an addition maker. My IT in US is an addition maker. That happened in case of GE. They said, oh, I'm happy to introduce you to my CIO who's sitting out. And then we also realized it's a long, long cycle. And we were not prepared as a business for a long cycle.
00:14:41
Speaker
A, in terms of getting feedback from the market whether what we're doing is the right thing, and B, as founders, are we the most patient founders? I would say we are not. And at the same time, all these customers were asking us, can I use your software to discover new subnets? Like that came up enough times that they were not asking us in a very explicit way that bill just for me.
00:15:01
Speaker
but in terms of feature requests we were getting this seemed like a very common request and that's when we realized that we can actually solve that first and go back to software later and we pivoted the business to a marketplace business where we started introducing lots of new suppliers and then just picked up like a rocket like you know
00:15:19
Speaker
Yeah, true rocket ship. What were you trying to sell it at? The SaaS product. We didn't care about pricing at all. We just wanted people to use and we were happy even if somebody used it for free and then we discovered what other product features we need to build. We were in that mind space. But when we started offering the marketplace offering, it came with monetization on day one because marketplace businesses are easier to monetize because there's a tick rate.
00:15:46
Speaker
which people are willing to pay because both buyers and suppliers are better off after using your marketplace than without. The question becomes how much can you monetize? And that becomes a function of how sticky the product is, et cetera. But we started generating GMV on day one. We started with around one crore in the first month of operating. And then we went to 10 crores a month within six months. And that kind of growth shocked us also. We had definitely
00:16:13
Speaker
not seen or expected. And even our investors, they were also pretty positively surprised. So our series A kind of happened automatic. It was led by Accel and Sequoia one week before my wedding. Nice wedding. And how much was the series A? We ended up raising 9 million, co-led by Accel and Sequoia.
00:16:34
Speaker
So when you pivoted to marketplace, was it like an artwork kind of a place where people, their portfolios are there that this is my business and this is my portfolio and these are my ratings? Was that how you designed it? Yeah, see, basically the approach was if you look at the small manufacturer, there are a lot of parameters.
00:16:56
Speaker
that go into a decision making, starting with what machines they have, what products can they make, what customers have they worked with before. These are the quality certifications they have, basically, technical underwriting of what can they manufacture. And some of the information is already there offline in the form of a digital brochure. Like all of these SMAs, if you go to any of the factories, there are these brochures, which is what the user's marketing collateral, when they go and talk to an LMT, saying these are all the things I can do, and these are all the things I've done before.
00:17:26
Speaker
We just digitized it that was so we created like this virtual work profile of a lot of these guys who didn't have website even like that and that was the offering like we just showed we went to a we went with the catanoga hundred vendors organized in a very systematic way with very
00:17:40
Speaker
Rich detailed data which was not available anywhere else. This would have been like Zobato's version one where all he did depend on was to put menus online and so instead of looking for menus offline you can look at menus online but nothing else. You did anything else you can say that.
00:18:00
Speaker
No, that's how it started. Actually, we are technically today not a pure marketplace business. We are what we call a managed marketplace where the customers give us the order and we figured out where do we get it manufactured from. That is not how we started. We started with a pure marketplace where the customers selected the suppliers directly, we took a commission and we kind of moved on. But that approach also started hitting its ceiling because ultimately in India,
00:18:27
Speaker
You take any business which is good, like even a zomato that you mentioned. The business is not constrained because of demand. The business becomes constrained because of supply. In the zomato example, can you deliver food reliably day in day out with the timelines that you promised and no spillage, etc.
00:18:44
Speaker
Same thing goes for us. Customers really like this, but somewhere are suppliers and making mistakes. And we had to step in with a lot of software layer, with a lot of high touch, low touch operational layer that ultimately solved for
00:19:00
Speaker
our customers getting product, what they wanted on time and with weight quality. So that's when we made our second pivot to a more managed marketplace, where to the customer, we had the supplier on record, they're working with us. And we in turn executed by hundreds of thousands of suppliers in the backend.
00:19:16
Speaker
So we raised our CDJ and we ended up raising it from Excel and Sequoia. And I remember like a seed round was extremely hard, like it felt very difficult. By contrast, our CDJ felt like a work in the bar in some way, because there was so much inbound interest. I think there was word that spread that we had it onto something. We ended up losing our CDJ term sheet in like 10 days, whereas our seed had taken like much, much longer, three to four months.
00:19:39
Speaker
But at this time, the business was doing well. We were getting a lot of orders from customers and we were operating as a pure marketplace. And what I mean by that is we connected demand with supply and we took a commission from the supply and we moved on. Largely like Amazon, where you facilitate the transaction, maybe you do some services, which we didn't do even there. But we were just acting as a connecting agent. That was the bulk of that. You were like in your art, basically.
00:20:08
Speaker
We were like India. And then we moved on. And then what happened was a lot of suppliers took orders, a lot of customers gave orders, and then execution was completely broken. Suppliers took orders and we're not able to fulfill. And customers came back to us saying, hey, you've given us such a bad supply. This doesn't work. We'll never work with that though again. Even though we had given our customers all the information they needed to take their own decision.
00:20:31
Speaker
but they still felt that we were responsible for that mistake. And I'm not saying we had zero responsibility, but that was also largely variables outside of the control at that point in time.
00:20:43
Speaker
But that's when we realized that, okay, this is going to be a permanent challenge because ultimately, while there is a lot of intent to do this, we went back to our suppliers saying, hey, why are you delaying? And they came up with a bunch of reasons. Oh, my previous customer has not failed me and hence I'm not able to start the new order. There's some labor strike. I'm not able to arrange a truck in time and the product. All kinds of operational issues, largely. We felt that if we want to go really deep and this is a business we believe in,
00:21:11
Speaker
We ultimately have to solve for these execution issues. We cannot walk away from them and tell our customers, look, it was your fault. You picked a bad supply and we told you all the information that you needed. And that's when we pivoted to going. The second pivot was from being a pure marketplace business to being what we call a managed marketplace that we take responsibility of the execution. So it's so for a customer, they are giving us the order or getting a certain product made.
00:21:37
Speaker
And we make sure that the product is made as per spec, as per quality, as per timelines. And we come into that and we in turn run it through a marketplace model. But we are offering a truly differentiated experience to customers. We have to solve for all these problems. We have to solve for working capital for suppliers. We have to solve for logistics. We have to solve for software for a lot of the entities. And hence, we are like a very strong business partner. If you ask any of our suppliers, they will not say we are a
00:22:08
Speaker
We're not an agent. They will say we are the customers because we are doing, we are such a strong business partner to these suppliers that a lot of them today become independent and co-dependent on us and vice versa. When we find great suppliers, that is 50% of the problem solved for us. And today when a supplier joins the Z work ecosystem, they get so many other benefits beyond just getting new orders from new customers.
00:22:38
Speaker
with the executionals and that they become very integral to us and we become integral. But how the beauty lies in the details, like how do you solve problems of small manufacturers?
Tackling Supply Chain Challenges
00:22:51
Speaker
And this is such an unorganized sector and you would have had to do a lot of first principles thinking around building solutions. I want to hear that process of how you solve these problems to make the supply smoother.
00:23:07
Speaker
Yeah. See, it is a qualitative and a quantitative approach. A lot of times you have to talk to someone. And then similar to how we heard from our customers that they wanted to discover new suppliers, our suppliers also told us what they wanted. They wanted, the number one thing they wanted was predictability of revenue. If you talk to a typical small manufacturer in the industrial sector, profile these entrepreneurs. So Srinath's father was one of them. He ran a fabrication unit in Trichy.
00:23:34
Speaker
and his customers were PHEL, Srinath is my co-founder, PHEL and L&T. How did he get PHEL as a customer? Because for 10 years, he was an employee at PHEL. And then when he quit and set up his own shop, you know, BHL was his only customer. And over the next 10 years, he got L&T as another customer. But there are only two customers, and their fortunes go up and down, depending on how these customers are going. And hence, what you will see is a highly concentrated business.
00:24:03
Speaker
the capacity relations of 40-50%, but it is not 40-50% slats through the year. Some months it is 100%, some months it is 0%, because the same guy is winning new sales, winning new orders and executing these orders. And these are all fundamentally also engineers. When you talk to them,
00:24:22
Speaker
Then say, sir, this is all waste of time. All I want to do is spend my time on the shop floor. I want to convert this design into a product. I don't like to go to customer, follow up for payments. I don't like to do logistics. I don't like to do all these ancillary things. I'm fundamentally a builder or an engineer.
00:24:40
Speaker
and an engineer turned entrepreneur. And so that's what we recognized. Okay. Let us provide all these services to them. So they can focus all their energies on their core, which is turning the design into a physical product, organizing for labor, organizing for machines.
00:24:57
Speaker
and to enjoy what they do. This is why they had decided to become entrepreneurs and we helped them achieve that dream. Quantitatively what we saw was if you break a manufacturing process into many steps, step 1, 2, 3, 4, 5, 80% of the delays happened in step 1, which is that a supplier has to buy raw material.
00:25:20
Speaker
And then he can push it into the manufacturing process. And they delay in buying raw material because they don't have money. Why do they don't have money? Because their previous customers not paid them.
00:25:31
Speaker
And hence what they do is they buy that material on credit, or they buy it, they try and get a loan from a bank. All these things take time. And they do it only if they've got an order. So they won't do it as a parallel process. When they get an order, that's when they'll start mobilizing money, material, et cetera. And that whole thing can take a month. Because they will want to optimize for the rate. If they've got an order for 100 rupees, they will buy a raw material for, let's say, 70 rupees. They will not buy it for 75, even if it is faster.
00:26:00
Speaker
So they're happy to wait. And we realized that was a big delay. Once they bought the material, they've already put in their capital, their insectivise to turn it around. But they will wait as much time as they can to wait for that person.
00:26:14
Speaker
And that's when, okay, let us solve that for you. And that's when we, today, that's what I meant by providing all these services for these. We help them with buying that material faster. You have a FinTech division. You get them like a, yeah, it is, you can, we haven't formalized it in those languages yet, but we offer, we have partnered with various banks and financial institutions.
00:26:37
Speaker
so that tomorrow, if any of these manufacturing entities require working capital, they can be provided that on the click of a button, so to speak. All the underwriting has been done ahead of time, and that work is the anchor. This is the strength of the anchor, which is us. A lot of financial institutions are willing to work with small manufacturing entrepreneurs. And we have so much transaction data. We have so much volume of business that they have already done.
00:27:06
Speaker
that this is data that otherwise is not available to them. If you ask a bank, how do you fund this SME? They will say, I will take the three years bank balance sheet, or best I take the GSE returns. It is not enough. Over and above, we're providing so much history that yeah, nine out of 10 times, there's been no quality issue with this supplier.
00:27:26
Speaker
And that one out of 10 times, it has been a very small, minor issue. These are very rich, important information. And that helps with underwriting these kind of books. You know exactly what is the value of the order, the amount of loan that he needs can be like auto approved in the system. We also know who is the customer. We know that the customer is, let's say, Tata Steel. It's a big customer. They are going to pay.
00:27:53
Speaker
Whereas when a financial institution does not have that information, they look at only paper and an underwriting system. Okay, amazing. Okay, so this is one unlock. That's step one, which is the biggest hurdle in smooth supplies, which is getting them access to capital so that they can buy things quickly. You said you also did some workflow automation, ERP kind of tools for these suppliers. We have pulled them out. Like it starts with something as simple as
00:28:21
Speaker
When like in India, in a lot of these B2B transactions, you will notice that there is a lot of paperwork involved. For example, every time supplier has to load a truck, right? They have to make a document called a packing list, which will basically say what all is the contents of that truck. The truck has 20 items XYZ. And because they're making huge volumes,
00:28:48
Speaker
They have to do it manually only. They have to see that, okay, these are the items that are going into this truck. That activity itself can take six to seven hours because these are big volume products. There's so much lying in their yard. They're not sophisticated systems to keep track of what is there, where. We have been software that can do it in one minute.
00:29:12
Speaker
Because we know that this is a product that is being made. This product has so many components. And hence, when you are loading this truck, this is the items that are going into the truck. So this is just one example. This is more on the technical side. Similarly, when a supplier has to raise an invoice, along with the invoice, they need five to another dollar. They need proof of movement of goods. They need actual weight of the product that was shipped.
00:29:39
Speaker
Some of them are statutory and regulatory in nature. Some of them are more because companies want this information. And again, we have provided all of this access where you can just print it because it's all there in one photo. It is all linked to one project. Think of our software as similar to email, where instead of every row being like a new email,
00:29:59
Speaker
Every row is one project that they're working on. And all the context of that project is in that image, starting with who are the customer, who is the, what kind of product it is, what are the documents, all attachments, everything there is in one place. So they don't know, hunt around looking for all of this. And it simplifies payments.
00:30:18
Speaker
because the model customer can't say XYZ document was missing and hence I'm paying you endlessly. It's missing. It's all digitized in one place. For the customer, who's the vendor on record? Like the voice goes from Z12 or the voice goes from Z12?
00:30:36
Speaker
Okay. So basically you are totally owning quality of the product, timeliness of the delivery and
00:30:53
Speaker
To really own it, you need to make sure that your supplier works. I mean that you have as much information visibility as you would have if it was your own plant. Like in your own plant, you would always have. That is a nutshell. You're running thousands of factories through software versus owning these thousand factories and running them in the old-fashioned. That is the summary of all these things.
00:31:15
Speaker
I need to know our suppliers better than they know themselves sometimes.
Future Technological Applications in Manufacturing
00:31:22
Speaker
So try to go as deep as possible. Are you also looking at using machine vision and IoT and these kind of tools to further automate and to give you more information?
00:31:36
Speaker
The way I understand them, the more information you have, the better you'll be able to control quality. And so some of those kind of tools like IoT or Machine Wizard could give you even more information.
00:31:50
Speaker
We have run a few pilots. I won't say that we have anything at scale yet. See what happens is businesses ultimately are simple. 80% of the value comes from 20% of the features. And we have discovered that organically and inorganically. Now, yeah, of course the remaining 20% is also important. And that's where some of these cutting edge frontier technology comes in.
00:32:14
Speaker
They learn a lot of examples. For example, we would love to know how much electricity our suppliers are using because that gives us a sense of that productivity. And that is a classic example of an IOD use case. And you can further slice it. You can do it at the entire factory level or you can do it at the machine level also to see what does the uptime of a specific machine versus historical residence.
00:32:40
Speaker
No, all of these things, I would say at this point in our company building journey are good to have. They are not critical or must have, so they are not in an immediate priority. But we see enough and more examples that we would love to do when we have department. So what is the immediate priority?
00:33:03
Speaker
When we started the business, the first priority from a software point of view was to build for transparency.
00:33:13
Speaker
A, who is the supplier who is working on an order? B, what stage are they at? C, what kind of timelines are there for and things like that. That was the number one thing. You need to be able to predict that when it is the customer receiving their product and we can't give a half hour answer. We have to be very detailed. Basis these forecasts and basis these are the suppliers of working. You can expect your product next week or the week after.
00:33:40
Speaker
That's the number one problem we solved. Next thing we've solved for quality. Is the product that we're shipping, is it the best possible quality? And what are the checks that have been done? The customers have said, I want these 10 things to be checked before the product is shipped. Have those 10 things been checked? Then there are modules on shipping. Then there are modules on customers to supply communication. So VR.
00:34:03
Speaker
building that operating system which ensures that a design gets converted into a product and what all are the steps that are required in that process, how much ever can be digitized over a period of time.
00:34:16
Speaker
Now what happens is once you get this digitization, we start getting a lot of data. And one example of how we use this data is the packing list example I mentioned, something that used to take six hours. Can we do it in one minute? A lot of it is through intelligence and data with the software gen.
00:34:34
Speaker
So that is our approach. Phase one, build that infrastructure, convert analog to digital. Phase two, build intelligence to convert digital into knowledge. Can you give me an example of an order which comes from a customer and then that whole lifecycle of that order?
00:34:53
Speaker
Sure, sure. So one of our customers is Tata Steel, which is a large steel making company in India. So they are building a new factory in Kaligananda. They are building a new steel factory. For that, they need a lot of machine components. I give one simple example. There is something called a conveyor conveyor structure.
00:35:13
Speaker
You have seen a conveyor belt, which is where in an airport, luggage moves, but in a lot of factories, material moves on these conveyor belts. For example, in a street plant, you will get iron ore from the mine to the plant. Below that conveyor belt is a steel structure, which is holding that conveyor belt in place. That is an example of a product we will be asked to make. That steel structure below the conveyor belt.
00:35:39
Speaker
We will get a design, let's say 10 crores worth of design. We will upload it onto our software, where we have, and that design 10 crores will have 1000 drawings, 1000 AutoCAD files. Each file will be like a part. Then out of those 1000 files, there will be at least 5 to 10 suppliers who will be identified through, again internally, through software and some part of it is manual. And who are the 10 suppliers we want to work with on this order.
00:36:06
Speaker
These drawings, 100 drawings each will be assigned to these 10 suppliers. So there has to be no overlap because one mistake we had made as a company in year one was the same drawing sometimes went to multiple suppliers. So they made 2x the product, which ultimately we had to... These are the tiniest details that go wrong in manufacturing.
00:36:28
Speaker
when the process is done manually. Then for each of these 10 suppliers, these are the 10 steps we need you to follow. Step one is buy raw material. Step two is cut the raw material into the shapes that we want. Step three, you weld it. Step four, blah, blah, blah. Finally, you paint it. And then ultimately, you load it onto a truck.
00:36:46
Speaker
These 10 steps are uniform across product categories. We have designed recipes that when we get a certain type of product, we say that, OK, this is the closest fit recipe that is involved in converting this product from a digital to a physical equivalent. And once at the recipe level, there is no change. But there are probably close to 100 recipes within the company.
00:37:13
Speaker
And this would be a mapping process of deciding what is the beef, its product. But eventually you would have it. Largely doesn't change. Next time you get a conveyor, it is the same. It is the first time you're doing a new product. That is when the manual step is high. Next time you do it, it goes through pretty routine process. Like you spoke of that cycle of converting data to intelligence. So that would happen. Okay. Yes.
00:37:42
Speaker
Then for each step, we have, so let's say step one, there are 10 steps. For each step, our software says, this is how much time we think it will take. Step one will take five days, step two will take 10 days, step three will take another. And the software does this based on past similar orders. Yes, yes. And software knows this, this is past similar orders. And the final step is we have people on the ground or project managers who have mobile apps.
00:38:10
Speaker
they will get a notification that today at SupplierX, MilestoneY is due. So we would like you to go and check. And they go and check and see that MilestoneY has happened or not happened. And since they're there, they take a photograph. And that photograph is what gets sent to the customer, saying that this is the real-time status of your order today. And so much has happened. So that's the end-to-end flow. And again, I'm solving for just timeline.
00:38:39
Speaker
There are layers of quality, there are layers of shipping logistics, there are layers of another step for production planning, where a customer has given us 10 orders. We want order 1 to be done first, order 2 to be done second, blah, blah, blah. That is, there is an entire module which supersedes this module of tacking.
00:39:04
Speaker
There's a lot of software, they all follow up. A lot of it we had to build in-house, completely built in-house. Because while you could find modules of quality, modules of this thing, but we wanted to build like an integrated system which runs end-to-end smooth, completely smooth, and that did not exist. And that is what we are doing. There's fascinating that you have these quality inspectors, like these traveling quality inspectors, who is it?
00:39:26
Speaker
the various suppliers and ensure quality. So that is the primary tool to ensure quality. These inspectors would be taking photos and these photos would go to the customer also so that he sees what is the promise and amazing.
00:39:42
Speaker
So at the core essence, you are a data company. The ability that you have to give a predictable timeline to a customer to ensure the product reaches on time. All of that comes from the past data, which you have collected, which lets you judge what recipe to use, how much time will it take, and am I correct with that?
00:40:04
Speaker
Yeah, if you look at us as entrepreneurs, we are generalists. I didn't spend a decade at Tata Steel figuring out how to make this conveyor build structure. But the way we do it is you can completely process driven, data driven, and technology driven. And that is what has allowed us a lot of scalability. Over a period of some may say that we are a
00:40:24
Speaker
technology company who happens to be in manufacturing and could have chosen something else. Not that we love what we do, but that the essence of the business is process, data, and people. These three things combined to deliver the experience to customers that they felt was missing. What do you mean by people here? Are you talking about your own role, employees or the vendors you work with?
00:40:46
Speaker
Yeah, it is actually like a combination. The suppliers, of course, are the heart of our business. We find a good supplier. 50% of our work is done. Because they are doing the actual hard work. Let's not forget that. That they are doing the actual hard work of building this product. We are their business partner. And we can, our suppliers become more successful than what they would have been without us. If we're not able to fulfill that promise, then our business does not exist. Because at some point it won't catch up.
00:41:10
Speaker
somebody may want to work with you temporarily, but if they're not seeing value over a period of time, then they will outgrow us. The second part of our business is having a strong talent pool employee base within the company because we are not a 100% digital company and we are completely open to it. It's something that we own.
00:41:33
Speaker
And what I mean by that is that example that you said earlier, that recipe has to be chosen manually. So there are parts of the business which will be a combination of being done digitally and non-digitally. A combination of being done in a sense of manner or path. Of course, over a period of time, more and more things would be set, but presently in that journey. And hence, building the
00:41:54
Speaker
Very strong engineering first company was very important for us. And engineering for us is not just software engineering. Engineering for us is actual hardware design engineering. So I think almost 60 to 70% of our headcount.
00:42:07
Speaker
are engineers in some form or the other. Even our salespeople are also engineers who have become salespeople. They're not generalists because they need to understand what the customer is ordering. Like from that perspective, they should be able to talk the same language as the buyer. Yes. So we are a very engineering oriented business and software engineering, of course, very important part of it.
00:42:32
Speaker
But there is a whole unseen element of how to make a product work the way it does. We are into so many categories when we are into consumer electronics. We need to understand how does a speaker work so that we can add value to the whole design and manufacturing layer.
00:42:48
Speaker
over and above just being a vendor who gets the product made. So we understand how a speaker works. We also understand how an aircraft engine works. That is the diversity that is there within our business because we touch into so many different markets. What categories do you cover?
00:43:05
Speaker
So almost half of our business is what we call industrials, where we serve customers in oil and gas, aerospace, automotive, medical devices, infrastructure, oil and gas. This would be like machinery, which would help them in their manufacturing. Yes. What you told me, an air belt example, a similar thing. It could be a medical device itself. We have a few medical device customers for which we are making the actual medical device.
00:43:34
Speaker
The aircraft engine component is a real example where we make machine components which are ultimately going into a Boeing or an Airbus. Some of them we also make in an aircraft the plastic tray on which you keep the food. That is also a product category we do. So it's very eclectic that way. In oil and gas, we do a lot of work for the fineries and we do a lot of work for pipelines.
00:43:58
Speaker
That is our industry's portfolio. Our consumer portfolio is we do a lot of work in apparel. We do home decor. We do electronics. It's a big thing for us. We're like speakers. We're saying this now. Yeah, speakers, obvious, not affluent, but other brands. Wearables. Wideness, hardness, wearable, wearables. That's the range.
00:44:20
Speaker
Okay. There is this broad trend of manufacturing like companies wanting to diversify beyond China. And India traditionally is not seen as a favorable destination for manufacturing because of quality issues and labor issues and things like that. What's your take on this? Do you think that there are obstacles here that US network can solve and attract more global companies to shift their manufacturing base to India or
00:44:48
Speaker
Are there ecosystem issues which need to be solved at a broader ecosystem level? Yeah, the answer to your question is all of the above. So if we look at China actually is ideal in terms of how they build their own manufacturing system. If you want to get a speaker built as an example, you will find everything you need in a 100 kilometer radius of lipstick, Shenzhen, or a city like Ningbo.
00:45:16
Speaker
You don't have to go beyond that. You want the speaker itself. You want the plastic chassis. You want the electronic component PCBs. You want the board on which to do soldering. Everything you will find within that 100 kilometres that it is. And that they have built over decades. India, that ecosystem does not exist. Firstly, India does largely assembly. The components you still have to import from China. And even the components that you have to import, you have to import from different places. You can't go to one
00:45:45
Speaker
one entity and say, solve all of this thing. That ecosystem does not exist. Hopefully, that will happen with our country over the next 10, 20 years. And things like we and I, which are incentivizing the creation of domestic manufacturing, are very helpful towards solving that problem. Now, in the interim, so in the short run, China has a huge advantage over India or any other country when it comes to manufacturing.
00:46:13
Speaker
But what has happened in the last one, two years? COVID and tariffs have exposed the concentration of China as a single manufacturing destination for Western countries. In the last month itself, like last quarter, we do not look at example a month, year back, last quarter, there was a huge, China had a big buildup of COVID cases and the country was practically shut.
00:46:40
Speaker
and use more than impact from across supply chains. Yeah, exactly. Iphone shortages, iPad shortages. Hip shortages, iPhone shortages, solar panels were not able to be manufactured, and the entire industry was shut almost a quarter. So people have realized that we can't depend on one country for all of our needs. Now, I bet that shift becomes 100% to 10%, 20%, or whatever it is, that is up for debate.
00:47:09
Speaker
But definitely that trend is there. If you talk to customers in the US, the number one strategic priority is how to diversify into what they call a China plus one strategy. China will still be the dominant country, but there is one more country at least, which shares the load. The first move was to Vietnam, which has a lot of similar advantages to China. Vietnam is a small country. It can only absorb so much demand.
00:47:35
Speaker
Like Vietnam has that ecosystem, like you can get all the components domestically. Not to the same way as China, but it is a fairly sophisticated ecosystem compared to India. But of course, it is challenge of scale. It is only as big. So the first wave of China plus one went to Vietnam. The second wave of China plus one is coming to countries like India.
00:47:56
Speaker
because India ultimately is the only at-scale market which can absorb that kind of payment. If you look at our example, we have 20% of our revenue coming from the US and these are cost companies who are largely first-time buyers of India. They had never bought through India and the problems that you mentioned are there. Working with an Indian pipeline is not easy.
00:48:20
Speaker
There is so much diversity in India, supply in North India is completely different for supply in South India. Sometimes they speak the language the customers want. There are all kinds of cultural and technological and market issues. We are doing a bit to solve for that access for business companies. Okay. Okay. So 20% of your revenue is US exports, like your exporting products for US company. Okay. Yeah. 15% is US, 5% is Europe, 20% overall internet.
00:48:50
Speaker
Amazing. Okay. So you are then essentially acting as a layer to solve the quality issue, which a vested company would otherwise face if they were to directly work with the Indian manufacturers. Yeah. See, I will again take a step back. So quality of course is extremely important, but quality is table stakes to do business. Okay. The biggest challenge with India quality has been an issue, but biggest challenge has been time.
00:49:18
Speaker
like people in India we're used to or committing in other countries. So, you know, that culture cascades down to the last point. And that has been the biggest problem because at least in the West, people value predictability a lot and to the extent they're willing to pay extra for that predictability, which is what China enjoys. China is a highly predictable market till two years back. Last two years, China has also been as unpredictable as that has been the biggest problem. It's not been a quality problem.
00:49:48
Speaker
People are not moving outside of China because they're unhappy with quality. They're moving away because they're unhappy with the pre-tipping. There is this whole factory of the future vision of like robotic arms, building everything and those robotic arms and programmable to build whatever you want to. So you no longer have all of those labor issues which manufacturers face. Is that something which has your future for you to be running factories, those kind of
00:50:14
Speaker
robotic factories. Yeah, I mean, it's definitely the trend. Now, again, the double click of that is it lends itself well into categories which are technically very sophisticated to make.
00:50:27
Speaker
like an automobile or a robotic robot, as you said, or even an aerospace component. These are categories where, at least in our lifetime, I can guarantee that the process will become more automated than it is today. But when you look at some of the lower margin categories or the most sophisticated categories, like you take apparel, a t-shirt still has to be made the whole session way. There are people on the shop floor who take fabric, and of course, parts of it are automated, but they still have to stitch the product.
00:50:56
Speaker
Even the conveyor belt calorie example, you have to weld it, it is robotic welding. But for a conveyor belt structure does not make sense to get it done in an automated way. It's still far cheaper to do with them. So my prediction is that at least
00:51:11
Speaker
Volkov north of 60-70% of manufacturing will still stay as is over the next 10-20 years. There are higher margin, more sophisticated components which are in the process of being automated and more efficient.
00:51:27
Speaker
But do you see yourself owning that manufacturing process even more, like instead of outsourcing to a vendor? We are open to it. Our general thesis has been, look, there is a lot of depth of manufacturing in India. That is why we exist as a company. Because if manufacturing it, and now by extension Southeast Asia, we are expanded our supply base.
00:51:47
Speaker
But there is a lot of depth of manufacturing and we don't believe that when something exists, you created again just for the sake of getting it. You can tap into existing resources. That is the preferred approach. But you do run into situations where you try the hardest and you still find supply does not exist.
00:52:08
Speaker
like the consumer electronics in India is a very good example. Because India was importing everything from China, there is hardly any local supply man ecosystem to speak of. Now we can say we will wait 10 years for this ecosystem to get created or we as a company can catalyze the creation of this ecosystem. And we have in these situations, we will choose the second one where we will play a more active role. We will create supply. Supply does not exist.
00:52:35
Speaker
But wherever supply exists, we don't want to create a fresh one. We don't want to compete with any of our suppliers. We want to be their business partners of choice. But at the same time, we recognize that there are gaps in the market.
00:52:48
Speaker
So tell me about Z-Town. Does this come into that category of creating?
Introduction of Z-Town
00:52:52
Speaker
Z-Town is that example. Z-Town is a great example of that second one. What is Z-Town? Z-Town is a highly integrated facility for manufacturing hearables. It's a great facility that has been set up in Noida. It's one of its kind in India. It's an example of product that gets made there. Are these earphones that we're listening to?
00:53:19
Speaker
9 out of 10 earphones in India are imported from China, or even maybe 10 out of 10 are imported from China today. We have so many local brands here, brands like Port, brands like Noise, we have completely homegrown brands, but they still have to depend on importing of products because
00:53:38
Speaker
It's just very difficult to make products like this is very seamless. I love this tweet to buy Elon Musk manufacturing is hard. People don't appreciate how hard it is to actually make and there was still that down. If you wanted to get it done in India, there was no.
00:53:54
Speaker
Today with Zetton, if you want to get products manufactured in India, you have at least one option. Hopefully this will create an ecosystem of its own, catalyze more such plants or even we are not worried about competition at all because we only do it in areas where the market is so big. Like you're talking about the 5000 crore market in which all of it is imported.
00:54:16
Speaker
how you're setting up one factory. You're setting up a factory which can do whatever, a certain amount of business. There is so much business to be shared and hopefully the creation of one unit creates the ecosystem and also creates more units. Ultimately, the pie gets expanded because when the manufacturing is localized, the product becomes cheaper.
00:54:37
Speaker
Some of those savings can be passed to consumers, and hence the market size itself becomes larger. That sort of thing. Zetab is like a fully degraded, company-owned, company-operated manufacturing setup. It is set up as a joint venture. One of the partners and the other partner is Mr. Shannab, who is the Chief Executive Officer, and it is a partnership between us and them. So Shannab comes from a manufacturing background. Yes. So subject matter expertise is a subject matter expertise of these products.
00:55:06
Speaker
No, okay. So the operational efficiency, operational management is that's what he's handling. Okay. Okay. Got it. So for these manufacturing renewables, everything is done in house and you would still need some components that you would either buy domestically or
00:55:23
Speaker
The majority of it still has to be imported, unfortunately. So if you quantify value on a scale of 0 to 100, previously it was 100% China. Today, through us, maybe we have brought it down to 90% or 85% and stand 15% India. So the journey to make it 100% India will take a decade because there are so many bits and pieces involved and it never goes into the details. But unless you start,
00:55:53
Speaker
It will forever be 0% India and that is how we should use that term and there is a lot of opportunity and potential there.
00:56:01
Speaker
But you are hoping a town would be a catalyst where some Indian manufacturer or some Indian entrepreneur would be inspired to start producing something in India so that you don't need to import it between this bite from him and what Bharati did for automotive sector in India. It just fills the baseline tier one. So manufacturing this language, this OEM, who's let's say a Maruti, then the tier one vendor will make let's say the door of a Maruti,
00:56:31
Speaker
then there's a tier 2 vendor will make a door handle and then there's a tier 3 will supply the raw material for that door handle. So that's the integration that is happens over decades. In consumer electronics, we're not even a tier 1. So that is has to be created first. Tier 1s will create tier 2s, tier 2s will create tier 1s. Why do you say you're not a tier 1? How do you define what is tier 1?
00:56:52
Speaker
Well, India is not a tune, I'm saying. But India is not a tune. The techno system does not exist. Got it. For you personally, what are your priorities over the next five
Zetwerk's Future Goals
00:57:04
Speaker
years? What are some goals that you are chasing or what are some of those transformation projects that you want to undertake at Z-Work?
00:57:14
Speaker
Yeah. So it's quickly becoming a large company. And we just recently crossed the thousand employee landmark, which is a milestone that we took our time to get to. There are even though there are companies, we have had an approach where headcount should be taught. Yeah. A thousand is very elite. You are a unicorn. And for the unicorns to have thousand employees is extremely elite.
00:57:36
Speaker
Yes, we look at metrics such as GMV to headcount. And I would say ours would be very efficient if the stack rank as compared to other company has been very thoughtful. We can easily be 5x the headphone. I think there is no challenge with that. But what being thoughtful about headcount has allowed us to be a lean and be not be too worried about what's happening in markets outside. And especially in these kind of situations where you see a lot of stress on balance sheets and profitability. We are profitable last year.
00:58:05
Speaker
Well, okay. So you're saying you no longer need external funding now, like you're at that stage? In some ways, like the business generates cash, but the business does not generate as much cash as we would like to fulfill all of our opportunities. So for example, if you want to make a hundred core investment and the business is generating 10 crores of cash, we don't want to wait 10 years.
00:58:26
Speaker
Sometimes you may need capital. Z-town kind of expansions. Those bets need capital. But the good thing is it's completely our choice. You can choose to do it or not. We're not obligated by any situation. And so that was one goal for us to reach this milestone where we are in charge of our own destiny to whatever extent. And we reached that last year.
00:58:47
Speaker
in a market where it is completely unfashionable to do. It's just, there's too much capital. I think our next big milestone is we are currently doing around one and a half billion dollars of GM and manufacturing ultimately is a scale business. The bigger you get, the more economies are scaled you unlock through various channels. And I think over whatever time period we have to expand that opportunity set from 1 billion to 5 to 10, I think would be important for us because
00:59:15
Speaker
One is purely looking at it financially, but second is with scale, our ability to help our manufacturing partners, our ability to help our customers actually meaningfully. Of course, as companies become larger, the problem is they also become less productive. So we have to be mindful of that.
00:59:31
Speaker
Which is why we look at headcount very powerful even if we can afford does not mean we will spend but at the same time we have to focus on growth because growth unlocks a lot of levels for us and I would say that's the primary. What is growth at luck like how does it make you add more value and like scale as an example as I said but today if we look at we are offering it in industrial category.
00:59:55
Speaker
We are one of the top 10 buyers of STIRI in India and the companies ahead of us in the list would be like all well-known names like L.A.T. or Tata or something. And we have reached this in four years time period. Now, because of that, what happens is when you become such a large buyer of a commodity, you are able to have some influence at the price at which you're able to buy these qualities. And some of these pricing benefits you keep for yourself or the business. But most of it gets passed on to the manufacturers you work with. And hence,
01:00:24
Speaker
If a supplier works with Z work today, their cost of manufacturing is lower than what they would get if they did not work with us. And that becomes a big mode for the business over a period of time. And there's this one example where scale, there's similar other examples around capital and things like that. So growth in general is a priority.
01:00:41
Speaker
And then within that growth, I would say international is also a priority. Today, 20% of our revenue comes from the US. There is no ceiling on that number. It can be anything we would like. Of course, we are fundamental believers of the India growth story, but maybe a year or two from now.
01:00:56
Speaker
our growth in India will reach a phase where we will grow along with the size of the economy. If the Indian economy grows, we will continue to grow and hence we will have to look for newer avenues and international is one such thing. We have not reached that yet. But the third lever is interventional supply, which is what we have started. Today, we have big operations in Vietnam. Vietnam is our second home market from a supply point of view.
01:01:19
Speaker
And that again unlocks a new type of demand, unlocks a new type of supply. It's a very kind of cascading effect. So our approach in general is to be a global company built from India, built for the world. And we will just continue delivering on that. So you can now do like a blended manufacturing where something is getting done in India, something in Vietnam, and it is all getting shipped to the US, for example.
01:01:41
Speaker
We already do that. So there are parts of our business which we try and avoid it because some of these things look good on Excel. Honestly, when it comes to manufacturing, you want to keep it as simple as possible. Find one supplier, not 10 if you can. And within that one supplier, try and do all of it in that one facility. It's just easier. There are situations where you want to mix and match and we are very well positioned to do it.
01:02:05
Speaker
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