India has become an emerging global manufacturing hub. Driven by favorable policy measures, the availability of talent, low-cost manufacturing capabilities, and global buyers de-risking their supply chains, India is now a key player in the building materials export segment and a leader in several subcategories. For example, India’s exports of ceramics and glassware hit a record of $3.2B last year and grew by 16 percent over the last five years. This growth has opened new opportunities for India’s many small manufacturing and construction businesses.
However, India’s micro, small, and medium-sized (MSME) building material manufacturers remain largely analog. They rely on a complicated and inefficient supply chain to procure raw materials. MSME manufacturers struggle to attract top-notch sales talent, limiting their access to global buyers. They also face difficulties in securing working capital, which limits their ability to efficiently plan their production, resulting in poor capital efficiency and sub-optimal production levels.
For India to realize its potential as a global manufacturing hub, MSME manufacturers must be equipped and empowered to make export-ready products. At Accion Venture Lab, we are excited to partner with Magma, a business-to-business (B2B) platform that enables small and medium-sized manufacturers in the construction material sector to procure raw materials and access demand from global buyers. Through the company’s flagship products, Factory App and Supplier App, small manufacturers can:
- Purchase raw materials at highly competitive prices;
- Discover from global buyers through AI-based lead generation tool;
- Access credit products for inventory and trade finance; and
- Digitize and optimize day-to-day factory operations.
We’re excited to support Magma as they:
Tackle the obstacles facing MSME construction manufacturers
Small-scale manufacturers need to keep their production costs low and prices competitive in order to compete for buyers in the global market. In addition, they need sales and marketing capabilities to reach these global buyers. Magma’s platform helps MSME manufacturers to procure low-cost raw materials and digitize their daily factory tasks which helps reduce their production costs. The platform also provides these manufacturers with buyer leads and access to new potential customers, helping them to grow their business and optimize their production.
Connect small manufacturing businesses to credit through a B2B platform
Access to working capital for raw material procurement remains a challenge for MSME manufacturers as most financial institutions won’t lend to small manufacturing companies. In addition, without access to formal post-shipment financing, they have to wait 45-60 days to receive payment from their customers. These reasons cause poor capital efficiency and sub-optimal capacity utilization, often resulting in the manufacturers failing to meet their buyer’s lead-time requirements.
Through Magma’s closed-loop ecosystem, the company offers credit products in a contextual and timely manner. Trade finance continues to be underpenetrated due to the challenges and risks associated with underwriting. By leveraging its relationship and understanding of the MSME manufacturers and their global buyers, Magma’s platform offers a unique solution to solve these challenges and makes credit accessible to MSME manufacturers.
Enable small manufacturers to compete globally
Magma’s platform helps MSME manufacturers digitize their factories, reduce their procurement costs, improve their revenue-earning potential, and access the finance needed to catalyze their business growth. Magma also aims to assist MSMEs on their platform in standardizing their systems and processes and delivering consistent quality products within agreed-upon timelines, enabling them to compete with large corporations in the global trade market.
Construct a better future for small businesses
Global supply chains are undergoing tremendous change, but with the right set of digital tools, networks of global buyers, and access to financing, small construction businesses will be well-poised to succeed in this new reality. We’re excited to welcome Neal Thakker and the team at Magma to the Accion Venture Lab portfolio. We can’t wait to see where they will go from here.