How Infra Market got to ₹410 Cr profits? 🤯

The dark horse in construction solutions.

Nov 07, 2023

Welcome to the 194th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 94,400+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more

Onto today’s issue 👇🏼

In 2016, an online company started selling cement & sand. In 2023, the company reported ₹6,236 Cr in revenue & ₹410 Cr profit. This is the story of how Infra Market grew 6X in under 12 months selling construction materials.

In simple language, it's a marketplace for construction products. Think of Urban Company for all your construction products. Urban Company handles logistics & service delivery, while Infra Market handles full-stack from manufacturing, and raw materials to logistics.

And what are these margins?
₹410 crore profit is just mad!

Their core insight?
Owning the whole value chain.

Here’s an example. Assume you’re a real estate builder working on a project in Chennai. You get another project in Hyderabad & now there’s no way you can get the same material supplier both in Chennai and Hyderabad.

This means 3 things.
(a) No best pricing on cement/ sand/ others.
(b) You will spend extra on transport.
(b) Spillage/ damage during transport.

So how does “Infra Market” solve this?

It is a single vendor that can provide not just raw material but also deliver it to the construction sites. Best rates, no logistics hassle & top quality. It’s hard, but Infra market does a few things right.

1/ Lease vs Own manufacturing
To standardize supply across the country, you need manufacturing facilities across different parts of India. And these locations need to be closer to major demand sites. Instead of buying facilities, they leased them.

2/ Solve the ROI of each plant
Not every standalone cement facility runs at 100%. They can't maintain demand across the year. Infra.Market has well-distributed demand across B2B, retail & consumer. They can match supply <> demand, the core defensible moat of the marketplace model.

3/ Strategic acquisitions
Infra market got controlling stakes in established companies like Shalimar Paints (Paint manufacture) & Equiphunt (construction equipment rentals). It allowed them to consolidate & cross-sell like anything.

4/ Picking a boring market
Both founders are veterans of the construction industry. B2C had thin margins and complex demand generation. They chose to go & grab large-scale infrastructure projects with the Indian government, airports, NHAI & metros.

5/ Owning the entire value chain
Since they owned a supply of sand & aggregates, they were able to create concrete & sell it at a higher margin. Acquiring stakes in Shalimar paints also allowed them to use the same chemicals produced for other purposes.

But this is only half of the story.
The demand side is beautiful.

→ Grabbing government contracts.
→ Using their own construction relations.
→ Creating sub-brands (this one is smart!)

What's next for Infra.Market?

The government of India upped spending on construction to 3.3% of GDP, which translates to 10 lakh crore. This is 3X compared to 2021. This will drive the next wave of $$$ for the construction tech giant. That’s it for this piece.

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