Better value for your inventories

Greaves Ltd sold plant and machinery for Rs 4.35 crore this April, through MatexNet. But for MatexNet, Greaves would have realised only 25 per cent of the price.

Recently, Fuller KCP sold MS iron worth Rs 2 crore through MatexNet. But for MatexNet, Fuller would have had to sell it for scrap.

Ucal Machine Tools purchased two generator sets for Rs 9 lakh over MatexNet. In the open market, this would have cost Ucal Rs 14 lakh. More importantly, since 500 KVA generator sets are not available off the shelf, Ucal saved substantially on lead-time by sourcing them on MatexNet.

An increasing number of companies are finding it profitable to follow MatexNet's proffered slogan, "If you are in manufacturing, you need to transact on MatexNet.com."

Long before the world woke up to the B2B portal bandwagon, MatexNet was already operational, providing critical support to industries to manage their inventory and liquidate surplus stock.

Begun as JNN Matex in 1995 (now MatexNet, after it became web enabled in December 1999) by S, Jagan Vasan, ex-IBIS Corporation, ABL and Ford Motors, the exchange helped disseminate information on surplus stock across industries and helped manufacturers obtain better value for their products.

Fresh from his experience at Ford Motors where he worked on an inventory management package, Vasan felt a modified system could help Indian industry get a grip on its inventory and get better value for its stock.

At any given point, he estimates that the Indian industry hangs on to Rs 20,000 crore worth of idle inventory and capital goods. "The build-up of inventories and capital goods is inevitable in any manufacturing system. Most of these goods are in excellent condition, and, in many cases, the items are in virgin unpacked condition, but cannot be used due to design changes, upgradation of plant and machinery, or simply due to excess stocks being ordered," says Vasan.

This is where MatexNet steps in. It operates as a forward and reverse integrator for disposing of inventories and capital goods, where large companies use it as a platform for disposing of excess stock, while small and medium companies use it to sell finished products.

In its earlier avatar the company, headquartered at Bangalore, functioned through its own on-line servers, where clients would dial up, fetch information, and use it to their advantage. Now with the Internet, all this has switched to the web. But a Net- or web-based model alone will not work, explains Vasan; there has to be a physical component to support the virtual component.

Thus, while other portals serve as infomediaries, MatexNet charted out a wider role for itself by shoring up with the requisite infrastructure to see the transactions through: databases, transport services, logistics, inspection, payment gateways, domain knowledge.

The first few years were devoted to strengthening its databases -- companies, products, raw materials, capacities, quantities, specifications. "Databases are crucial for a B2B business like ours," says Vasan. "Especially when the transaction extends to complex items like plant and machinery." Now the company has built up a database of at least 300,000 records.

Next came the support systems to help the transactions through in the physical world: a series of 'alliances' to provide the necessary support to clients to help them carry out transactions to their logical end -- third party inspection agencies, transport services, logistics support, payment gateways, industrial and legal experts including ABT for transport logistic, HDFC Bank for payment gateways (a few more tie-ups with banks are in the offing), Expo Point for expositions and events overseas, and a number of industry experts, among others. As Vasan says, "Brands cannot be built unless you have the deliverables."

This, backed by formidable domain knowledge that the company has amassed over the years sets this manufacturing portal apart from every other me-too portal. And the lead-time it has had in the business.

Thus today, it has an enviable database of 300,000 odd records across 17 industry categories, 417 product categories, and listed surplus stock valued at Rs 300 crore. The company has, during the past 18 months, facilitated trading valued at Rs 17 crore.

Vasan points out that buying or selling stock is not a simple operation. "The act of purchase is not an impromptu activity in any industry, even if it means buying a simple nut worth Rs 100 or a few lakh-worth oscilloscope. There are set procedures and processes. Then there are issues of quality, rating of the product, the source, guarantees, warranties, criticality of the product, delivery schedules, consistency of delivery…All these play an important role in a purchase decision. Over these years, we have understood the different nuances of each purchase and are able to offer the right solution."

Such factors are particularly relevant when you sell surplus stock. "When it is a new product, the company has all the information and specifications readily at hand. But when you deal with excess inventory, the specifications may not be available, or only partly available. At the same time, you have to make sure you are not given scrap, passed for new products," explains Vasan. All this has to be diligently inspected and sorted out.

So much so, MatexNet has become the preferred sourcing point for manufacturing companies. With 300 large companies of the likes of ABB, BHEL, SAIL, Coal India, and 2,500 small and medium companies on its membership rolls, five-year-old Matex has carved a niche for itself on the manufacturers' ken. Recognising its worth, ICF Ventures, based in the US and operating out of Mauritius, has taken a minority stake in the company.

The target is to develop a model providing a dependable solution for 1,000 large companies, 25,000 small and medium companies, and to hold an inventory list valued at Rs 3,000 crore -- all in 12 months from now.

Vasan's aim is to develop into a single window sourcing point for manufacturing setups, transforming the way they do their business, and serve as the inevitable materials solution provider. "What we want to do is not attract the customer for sporadic visits, but for them to change their mindset about the Net and make it their first choice for the materials they are seeking."

In fact, MatexNet has moved further up the value path, and finds itself serving as a consultant to industries. "From being an infomediary to transaction facilitator, we have now moved into the consultancy mode," says Vasan.

Thus, Sandhur Manganese, which wishes to sell off a hydel power plant and a ferrous oxide manufacturing plant, has sought the services of MatexNet to be its consultant for spreading the word, bringing in the right consultants, evaluating and then finally selling its plants as products.

Another area where MatexNet has made its mark is with public undertakings. One example of its efforts paying off is that of ITI, which has given MatexNet the mandate that whatever is not sold on the government of India's Materials Scrap Trade Corporation will be exclusively marketed on MatexNet.

In fact, so entrenched is MatexNet with PSUs that it has now created an exclusive forum for PSU on its portal, so that they can buy and sell among themselves. "PSUs have their own internal audits and rules. So among themselves, if HMT can sell to ITI, the rules are not so rigid. But if HMT has to sell out to some other third party, they have a phenomenally long-drawn process, by which time the buyer may not be interested," explains Vasan.

MatexNet currently has offices in Bangalore (its HQ), Coimbatore, Hyderabad and Chennai. Immediate plans are to open offices in Mumbai and Pune, and then move into the rest of the country in phases.

And now Matex has set its sight on the global market, and is busy putting a few alliances in place. It has tied up with one entity from the Netherlands in the field of machinery, and another out of Jakarta for textiles. A few more in the areas of education, banking, and rating are in the offing.

Says Vasan, "India cannot be our market alone. We will buy and sell globally."