AS the world steps into a new year, there is a positive climate – and greater appeal – of doing business online. While B2B marketplaces enjoyed growth before the pandemic, there is now a new-found momentum and greater promise of increased transactions, especially when “market makers” are pulling out all stops to drive business on the web.
This will create conditions for expansion of the choices for buyers, and sellers will get wider access to new customers. Above all, transaction costs for all players will significantly reduce.
It is in this environment that L&T is all set to unveil a brand-new digital business on the B2B firmament. Christened L&T-SuFin, it is the outcome of L&T CEO & MD Mr S N Subrahmanyan’s continuing thrust on harnessing technology with business processes and outcomes. It is an integrated B2B e-commerce marketplace for buying and selling industrial products and services. This new business is in line with L&T’s objective of diversifying into areas that harness technology to deliver strong returns.
L&T-SuFin will leverage the parent company’s deep knowledge and capabilities in procurement and logistics, finance and IT solutions. With L&T-SuFin, an entity can get everything that makes the business work – this is the core of what ‘integrated’ means. What will make a ‘win-win’ outcome possible for everyone on L&T-SuFin are:
• Efficient product and seller discovery will enable businesses to digitally and cost-effectively source industrial supplies across India.
• Online transaction facility for trading products and enabling services with payment and settlement mechanisms.
• Finance support to the subscribers from partner banks and non-banking financial companies (NBFCs) for overcoming liquidity constraints.
• Logistical support to create convenience for shipping goods from sellers to buyers.
The seeds of this ‘new age’ business were sown in Mumbai in December 2018 when about 350 senior L&T-ites and external consultants met to identify the technology-driven businesses, particularly in the services sectors, that L&T could venture into as part of its five-year growth strategy. Multiple ideas and business prospects were deliberated at length across several groups before they were discussed with the top management, including L&T Group Chairman Mr A M Naik.
Subsequently, a task force under L&T Finance Holdings Ltd CEO Mr Dinanath Dubashi was set up to explore the business model around fintech and create a minimum variable product (MVP). Soon enough, this was followed by conducting testing of MVP with about 70 buyers and sellers. The test findings were encouraging enough for the management to grant approval in March 2020.
The decision to go ahead led to the establishment of L&T-SuFin e-commerce platform – a finance and supply chain ecosystem for SMEs and corporates. To meet the diverse business requirements of SMEs and corporates, L&T-SuFin is positioned to create immense value for its clients. Some of these are:
a) Request for quotation: a discovery feature for better price realisation and dealing with unknown suppliers through the platform’s digital assistance. SuFin will have a unique RFQ option feature which no other peer platform has. There will be multi-product RFQ on both credit and immediate payment terms. Sellers may also be able to quote for products for the whole or part RFQ depending on availability at their end.
b) Working capital solutions: The platform will provide unsecured financing enabled through a gamut of products such as overdraft, invoice discounting, term loan, dealer and vendor financing by multiple lenders. While other platforms fund at a higher rate of interest through their own NBFCs and only business loans and bill discounting are available, the interest rates by SuFin partners are much lower and cost effective than the rates at which unsecured loans are available in the market or the price increase on account of loading in price if the goods are dealt on credit terms.
c) Distributor financing and digital channels for mid-size corporates: The platform creates a digital channel or digital front for mid-size corporates and enables channel financing solutions for their dealers and vendors.
d) Verification & Trust seals: These features build trust and confidence among unknown entities transacting with each other. This enables buyers to know the qualitative aspects of sellers who on the other hand are kept aware of the buyers’ credit worthiness.
e) Logistics and payment gateway services: Logistics partners on the platform are equipped to handle courier services, part- and full-truck load to ensure timely delivery and convenience to the entities. There will be seamless services of payment settlement between buying and selling entities, enabling mutual convenience.
“B2B e-commerce has been facilitated due to significant trends such as rapid digitalisation with massive internet penetration touching 55% of the population using mobile phone/ computers”, says Mr Bhadresh Pathak, Business Head – SuFin. “Secondly, reduction in cash-based business due to GST linkages is likely to result, by 2025, in doubling internet transactions from the current $170 billion to $335 billion”.
Even as Indian B2B e-commerce is still at a nascent stage, it is likely to witness exponential growth from the current $15 billion to $120 billion by 2027.
“India’s vast MSME population of about 6.5 crore suffers from an inefficient marketplace’s pain points such as lack of market access and trust among dealing entities, inadequate logistics and lack of transaction based working capital financing. L&T-SuFin’s highly sophisticated platform will help overcome them by providing an efficient seller-product-price discovery, enabling digital transactions and payments on cash and credit terms, enabling logistics for delivery of traded goods and providing working capital connected to transactions through established partners,” adds Mr Pathak.
With L&T’s deep knowledge in dealing with industrial and construction goods, L&T-SuFin will start the marketplace with 40 product categories related to construction and manufacturing predominantly comprising MSMEs and mid-size corporates.
With SuFin, an SME or entrepreneur can build a stronger brand for business, capitalise on new opportunities of scaling up sales through e-commerce channel and leverage the platform’s strength to get wider market access and better choice of business partners. Curious to learn more? Visit
https://lntsufin.com/ .
