Power2SME: Empowering Manufacturing SMEs

In a series of Articles where we will be reviewing various startups & companies in the SME segment which are here to make a difference for the good of SMEs. We are planning to cover some startups and companies which are actively helping SMEs on a large scale.

This is the first of that series of articles and here we are talking about Power2SME which claims to be the first ‘Buying Club’ for Indian SMEs that aims to empower and propel them on the fast lane to growth.

Power2SME was started in 2011 with a noble aim to empower the SMEs by increasing their bargaining power. The Founder & CEO R. Narayan says that there used to be a huge difference between the quotations provided to an SME and to a large enterprise for the same items. SMEs being small do not require big quantities of any product or raw materials on a large scale. The SMEs are independent entities and each of them purchase goods and raw materials independently thereby making them weaker when it comes to bargaining or lobbying whether it is raw materials like steel, plastic or other materials. 

He came up with a simple solution where he started collecting SMEs to club their orders together. Then he would place a collective & big order on their behalf thereby getting a better bargaining position due to the shear volume of the purchase. Then he would distribute this among SMEs taking his fixed cut in the profits. So the company started by grouping together the manufacturing industries with similar needs. They were focusing on steel, plastics & polymers as they were the biggest consumption. Placing order in bulk helped them purchase at lower rates and it became a win-win situation for both SMEs & the suppliers. Manufacturing industries & SMEs are sticking to the model because they are getting better rates, faster deliveries and better control over quality even though they are purchasing the same amount of raw materials.

The response of SMEs to them has been quite good till now. This is quite obvious when we look at the revenue it has been generating over the years. In 2012–13 it was 18 Crores, in 2013–14 it was INR 64 crores and reached 137 crores in 2014–15. This year they have set a high target of around INR 400 crores. They have partnered up with Essar Steel, JSW, SAIL, LG Chem, Asian Color Coated Ispat Ltd(ACCIL), Indian Oil, Lotte Chemical and a few more. They are also in talks with Tata Steel and other companies. So from the first look it is very clear that they are focusing primarily on Industry supplies & raw materials like steel, plastics, polymers. But now they are expanding their domain to other metals also like copper, aluminium and products like paints & ball bearings etc. 

Right now, they have around 30,000 SMEs registered with them and they are expanding fast. Apart from that, they are trying to increase their presencee in the southern states like Karnataka, Andhra, TamilNadu and also smaller industrial area like Jamshedpur. They have also raised 4 rounds of funding totaling to more than INR 250 Crores.

Talking about the business model now, it’s good and the way they are presenting it makes it even better. Although they say that they are empowering the SMEs by clubbing their orders but taking a critical point of view, they are acting as a middlemen by being a link between supply & demand and taking their own share of profit. The figures of revenue & sales seem to be good but they are not actually too good as they are in B2B segment where the average size of deals are bigger. But whatever the critics say all is good till it is a win-win situation for both SMEs and suppliers.

Anyway, Team CoreLogs wishes them all the very best for the future and hopes that they keep on empowering SMEs which have long been at the receiving end of the economy. The next 10 years of development of India depends on the manufacturing segment and the SMEs. If Power2SME is able to help them along with building a big business with itself, it’s impact on the development will be substantial.

PS: SMEs can connect to Power2SME by visiting www.power2sme.com.