How OfBusiness is nailing ₹15,000 Cr revenue & ₹463 Cr in profits?
Specific nuances that has helped ofBusiness nail ₹15,000 Crores in FY23.
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Onto the OfBusiness ₹15,000 Cr story.
OfBusiness did an annual revenue of ₹15,000 Crores in FY23 with a PAT of ₹463 Crores. A tech-enabled platform that allows MSMEs to source raw material with a credit cycle through a tech-enabled platform.
They are one of the most unique companies in the ecosystem. Be it the fact of being a profitable unicorn or bringing tech into the unsexy B2B industry - everything makes them stand out
Asish Mohapatra, an ex-VC is on his way to disrupt India’s humungous but traditional B2B industry. How in 9 years, he has changed the way the game is being played?
But first, what does the B2B space look like?
Out of all the sectors in the country, the sector that fascinated him the most was the MSME B2B sector. MSME refers to the micro, small, and medium enterprises that have a revenue of less than ₹250 Crores and contribute a massive 30% to India’s GDP. This sector also gives employment to 1/3rd of India.
But, what makes the Indian B2B raw-material chain interesting is the number of intermediaries involved and the way transactions take place.
The entire ecosystem runs on credit cycles - the old-school “dhandha” way of buy now & pay later. No-one wants to deploy cash right away before being able to sell the goods in market. Plus, multiple players in value chain make the stuff expensive.
So what did OfBusiness crack, really?
1. It genuinely solved for the ecosystem.
OfBusiness removes intermediaries like distributors, traders, and retailers from the chain and connects suppliers directly with MSMEs. Before OfBusiness, both faced a 3 major problems -
What did OfBusiness do?
Solved for financing with standard 30-day credit cycles & right prices. Next, it fixed the quality using quality testing reports pre-shipment. And last, solved for real-time deliveries with app support to track deliveries. Voila!
Plus, it solved for suppliers using timeline payment with upfront cash payments, order consistency through the volume advantage & lastly built complete visibility by removing traders - yes removing traders.
2. Cracking Non-Performing Assets (NPAs)
NPA is a loan subject to late repayment or is unlikely to be repaid by the borrower in full. OfBusiness has mastered the art of collection & underwriting.
This now gets interesting. The company is obsessed with lending money to only those who can pay it back. They don’t lend to companies who don’t have a minimum annual revenue of ₹20 Crores.
The result? OfBusiness & Oxyzo have achieved a NPA rate of less than 1%. For the record, the industry NPS is at ~5%. Oh & did we tell you “Oxyzo itself is a $1 Billion startup inside OfBusiness group”.
3. Cracking ₹0 Customer Acquisition Cost.
Super-focussed on profitability since Day 1. It was a conscious choice to not go into B2C route as it had insane burn with expensive marketing & the profitability path seemed distant.
They created a full-fledged customer acquisition tool called BidAssist. A freemium tool that scans all the government tenders, making it easy for MSMEs to hunt bids at one place and to know the probable success rate of them getting it.
The insight behind BidAssist?
In India, everyday, roughly 12K-17K government tenders are flown daily. As more MSMEs signed up on BidAssist, more lead details came to OfBusiness which their sales team cross-selled for onboarding onto OfBusiness account “Yaha Sasta Maal Milega with unsecured credit” - this scaled to acquire 20 Lakh customers.
4. Becoming Amazon of B2B
Yes, you heard it right. They built the Amazon Basics of B2B. Let me explain - there are 4 ways to earn money in B2B.
After getting lending and aggregation rights, they entered manufacturing & processing - purely to increase margins.
Initially, they began with processing - shaping or packaging raw materials to meet custom requirements. Eventually, they delved into manufacturing as well to address demand when suppliers struggled to scale.
This move made customers stickier to the platform. What's truly genius is how they pulled it off through acquisitions, including some subsidiaries they now own.
That’s not all, we also got Asish onto the latest episode of GrowthX wireframe & he gave us so many insights you should tune into.
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Thanks for sharing this detailed analysis on Ofbusiness.