SMEs, or small and medium-sized enterprises, employ approximately 460 million people in India and account for approximately 30 percent of the country’s GDP.

The sector of Micro, Small, and Medium Enterprises (MSMEs) contributes significantly to the country’s socioeconomic development. The sector has grown in importance in India as a result of its contribution to the country’s GDP and exports. The sector has also contributed significantly to the growth of entrepreneurship, particularly in India’s semi-urban and rural areas.

Micro, Small, and Medium Enterprises (MSME) are divided into two categories under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006: Manufacturing Enterprises and Service Enterprises.

The companies are further classified based on their equipment investment and annual revenue.

SMBs and SMEs have grown in India over the last few decades as a result of digitization, which is leveraging technology with various business opportunities.

Geographical boundaries have blurred as a result of digitization and widespread use of technology. That is, someone sitting in Kolkata can distribute his content globally, just as someone in Delhi can sell products to someone from another state.

OfBusiness is one such startup that is making raw material procurement easier and more convenient, as well as making loans more accessible.

OfBusiness is a raw material collector and provider of procurement financing. The company collaborates with banks to provide loan lines to small and medium-sized businesses with annual sales of more than $3 million. The platform gathers data on user behaviour, which it then uses to insure loans to businesses that use the OfBusiness platform to obtain raw materials and bids.

Non-Banking Finance Companies (NBFCs) have played an important role in the Indian financial system, supplementing and competing with banks while also improving the effectiveness and diversity of financial intermediaries. In terms of operations, heterogeneity, asset quality and profitability, and regulatory architecture, NBFCs have come a long way.

NBFCs are expanding into Tier-2, Tier-3, and Tier-4 markets, distributing loans across multiple client touchpoints and establishing a linked channel experience that provides an omnichannel seamless experience with 24/7 sales and service.

Introduction:

OFB Tech (OfBusiness) is a digital platform that enables small and medium-sized enterprises (SMEs) in the infrastructure and industrial sectors to source raw materials and secure financing. It incorporates technology into SME purchasing behaviour to provide clients with better products at lower costs and faster turnaround times, as well as extensive online and offline support. Metals, chemicals, polymers, agricultural commodities, petrochemicals, and construction materials are all essential.

OfBusiness, through its NBFC ‘Oxyzo Financial Services,’ provides cash flow-based financing to SMEs for raw material acquisition. BidAssist for new growth opportunities is one of the company’s many digital services for SMEs.

Small and medium-sized businesses in the industrial and infrastructure sectors can use the platform to obtain financing from local distributors and lenders, allowing them to meet their financial obligations. SMEs can obtain institutional loans from OfBusiness (both secured and unsecured). They accomplish this by aggregating a variety of raw supplies, obtaining funding from local distributors and financiers, and then passing on the majority of the aggregation benefits, such as bulk discounts from manufacturers, to the SME.

OfBusiness enables SMEs to obtain credit lines for a variety of raw materials, including industrial steel (structures, plates, and coils), electrical goods, cement, bulk polymers, chemicals, building materials, and solar systems, in the manner described above. The raw materials selected by SMEs from different clusters and ordered directly from the manufacturer are then aggregated through OfBusiness.

The Start-up

SMBs and SMEs are the foundation of the Indian business ecosystem. The B2B sector was largely untapped in 2015, so the founders of OfBusiness tapped into that unexplored B2B market and launched their own tech-enabled raw material procurement platform and financing.

Born in India’s Cuttack district Asish Mohapatra has always wanted to do something big, and he knew he had the potential and patience to cause disruption in the business ecosystem.

His potential was accelerated while pursuing his undergraduate degree at IIT. IIT has played a significant role in Asish’s life.

All Co-Founders signed their resignation letters, gave up their positions, and took the leap of faith, and thus OfBusiness was born in Gurugram in 2015. The startup has come a long way, and it now carries the Unicorn badge of honour.

The co-founders hoped to create a large B2B platform to help small and medium-sized businesses in industries such as manufacturing and construction. The fact that B2B was largely untapped in 2015, during a significant B2C boom, propelled it.

OFB Tech (OfBusiness) is a technology-enabled platform that assists small and medium-sized enterprises (SMEs) in purchasing raw materials and obtaining loans, with a focus on the infrastructure and industrial industries. It integrates technology into SME purchasing behaviour to provide clients with better products at lower prices in shorter time frames, as well as complete online and offline support. It makes it easier to obtain essential raw materials such as metals, chemicals, polymeric materials, agricultural commodities, petrochemical products, and construction materials.

Business and Revenue Model

SMEs in India face three major challenges. One is a working capital constraint; because it has few assets to sell to banks, banks only meet 30% of their total working capital requirements. For the remaining 70%, it must rely on NBFCs, local money lenders, and traders/distributors.

The second issue is raw material pricing, which is exorbitant and opaque. Because it is a small business, it lacks access to large manufacturers for raw materials. Finance and small quantities are frequently required, neither of which are provided by large manufacturers. As a result of the obscurity and significant price gap, the SME’s overall profitability suffers.

Third, they have a limited number of markets in which to sell their products. Because they lack the resources to market/sell their products, they frequently operate at 40-50 percent capacity utilisation.

OfBusiness is attempting to address each of these issues while also providing a plethora of technological goods that help these SMEs improve their efficiencies. The firm combines the strengths of commerce and finance.

It finances raw material purchases for SMEs, as well as assisting in the aggregation and fulfilment of these raw materials through partnerships with large and small raw material manufacturers, and it claims that the majority of the pricing benefit is passed on to end consumers.

According to OfBusiness, it is on track to triple its revenue in commerce year over year. According to the company, OfBusiness has been successful for the previous four years, with technology at the heart of recruitment, servicing, and productivity.

OfBusiness, through its NBFC ‘Oxyzo Financial Services,’ provides cash flow-based financing to SMEs for raw material acquisition. BidAssist for new growth opportunities is one of the company’s many digital services for SMEs.

While commerce accounts for 55% of total net revenue for the company, loans and SaaS account for 43% and 2%, respectively. Lending is the largest contributor to earnings, followed by trade.

It has a lending vertical through its non-banking financing firm and a SaaS business in addition to its primary commerce operation in the B2B raw material supply chain arena. Oxyzo, the company’s lending vertical, has a loan book of around $280 million, making it the company’s second-largest business vertical. The SaaS vertical facilitates online tender procurement for SMEs in the Indian and global industrial and infrastructure industries.

Growth and achievements of OfBusiness

The launch of its NBFC unit, OXYZO, in 2017 was a watershed moment for the company. With a loan book of around $200 million, the unicorn’s lending vertical is the unicorn’s second-largest business vertical. According to the company, it is growing four times faster than the industry average.

According to the developers, the fundraising function has driven the startup’s development to this point, and this is a true watershed moment for the company. Normally, the firm receives margins of 5-10%, but (mergers and acquisitions) may help OfBusiness increase margins to the early teens, eventually approaching 20%.

OfBusiness boasts over 700,000 registered SMEs, over 100 product categories, and promises the lowest raw material prices. Furthermore, OfBusiness operates in over 24 Indian states.

In India, the organisation currently serves 3000+ SMEs and has previously served 4500+ SMEs. It also has over 50 funding partners. OfBusiness has recorded disbursements in excess of 10,000 crores to date.

Competitors:
OfBusiness’ main competitors are:

Funding Circle
Moglix
OnDeck
Zetwerk
Avant
Capital Float
InCred
SMEcorner
Infra Market
Black Knight