In an era where India is growing its manufacturing prowess by leaps and bounds, one thing that stood out in JSW Steel’s quarterly results was the numbers for JSW One Platforms. The business has shown steady growth, with GMV growing from INR 610 crores in Q1 FY'24 to INR 2,549 in Q1 FY'25, a multiplier of 4.2X. These numbers validate its recent press release that mentioned JSW One Platforms crossing US $1 billion in gross merchandise value for FY24, growing four times from the previous year.
Over 70% of their business comes from repeat orders, so their seamless customer journey has become their moat. With more customers going digital, first-time buyers have doubled, and the registered user base has grown to over 58,000 across India.
For the uninitiated, JSW One Platforms was launched in July 2021 to address the challenges MSMEs face in sourcing quality raw materials in the manufacturing, building, and construction industries. The business includes two key verticals, each addressing the core needs of its target segment: JSW One MSME and JSW One Homes. They have also forayed into the private brands business with JSW One TMT.
Riding India's infrastructure boom
India is well on its way to becoming the third largest economy by 2030, and the central nerve of the Indian economy, accounting for 30% of the GDP and employing over 114 million people, are India's MSMEs (Micro, Small and Medium enterprises). Manufacturing is steadily gaining ground, accounting for 17% of the GDP. Government initiatives like "Make in India" attract foreign investment and foster domestic manufacturing capabilities. At the same time, incentives like the Performance-linked Incentives (PLI) scheme have revolutionised manufacturing in 14 strategic sectors, leading to an increase of 76% in FDI in the manufacturing sector.
Moreover, GoI's infrastructure push is visible everywhere. India is finding ways to move men and materials ever faster, levelling the often unfair advantages of geography and distance and creating a level playing field. The combination of these factors should mean that the best providers would rise to the top on the strength of their product or service, irrespective of their location.
The core challenges of MSME manufacturing in India
In practice, however, the MSMEs in India, particularly those in the manufacturing sector, have to grapple with the realities of sourcing materials from a fragmented market characterised by a lack of transparency and trust. Often, MSMEs need more volume to order directly from manufacturers, forcing them to deal with intermediaries. This means they are still determining the quality of the materials received or whether they'll comply with the specification ordered, adding remediation, which adds to their timeline and costs.
Of course, this is for obvious defects. For a flat grey material like steel with no physical identification concerning source or grade, it's impossible to tell where it comes from and whether it conforms to the quality standards. This results in them losing opportunities as they are still determining whether their products will pass muster on the quality checks their clients undertake.
JSW One Platforms Limited: Democratising access to quality materials
In the same way that e-commerce has revolutionised how consumers shop for their needs, the JSW One MSME platform is turning the tide on how MSME manufacturers in India can procure quality materials without intermediaries and the inherent lack of transparency, thereby creating predictability in terms of on-time delivery and quality.
In addition, the company also ensures that specific customer needs in terms of dimensions and physical and chemical properties are well understood, including detailed metallurgical aspects, and ensures the same is fulfilled through a tech-led platform. For quality assurance, each delivery, for example, includes a test certificate indicating individual properties and tolerances across several parameters. This backward traceability gives MSMEs the confidence to go after big projects and clients, enabling them to make in India and sell to the world, confident that their well-made products will pass exacting standards and quality checks.
Unsurprisingly, the JSW One MSME platform has seen resounding success. JSW One has built a moat that includes early adopters and traditional businesses on a strong tech platform. What's truly impressive is that this growth and customer loyalty has come about on a platform without credit on offer.
Given the lack of transparency in traditional procurement processes, credit terms are insurance against poor-quality materials. Capital rotation enabled by credit is another historically observed trend, as is the inflationary effect of credit on materials costs and the terms offered for payments and delivery.
MSMEs' forgoing these credit terms and paying upfront for materials is a testament to the trust and transparency that the JSW One MSME platform has built within the MSME manufacturing and construction community. Buyers now have access to a wide range of products nationwide.
A commitment to growth
The introduction of branded products in this space is another large step towards building a stronger manufacturing and construction ecosystem. Branded building and construction products can help lift the output of MSMEs in these sectors and those looking to construct their homes with quality materials.
One key challenge with materials like steel and cement is that their freight costs become untenable over long distances, creating underserved pockets devoid of quality products. Through their private brand, JSW One TMT, they seem to be building a means to bridge the gap between quality and performance.
Available through its online and offline channels, JSW One TMT is democratising access to quality construction materials to end consumers as a strong lever that can help fulfil India's ambitions.
Pioneering the path forward
The groundwork laid through investments in infrastructure, private investment, and the GoI facilitates India's explosive growth, creating an environment ripe for developing infrastructure-adjacent businesses. As part of India's manufacturing and construction ecosystem, JSW One Platforms is well-placed to enable this growth through its offerings.
Their pursuit of an NBFC license to provide credit solutions will amplify growth for JSW One and its customers. Beyond these ventures, reports indicate that JSW One is fortifying its growth and governance structures in preparation for an IPO within the next two years. With each new milestone, the company inspires optimism among MSMEs in the manufacturing, building, and construction industries, promising a future of shared success and innovation.
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