12 Feb 2018 19:11 IST

When sharing makes good business sense

Shareconomy BL on Campus Entrepreneurship

B2B platform Shareconomy connects seekers of industrial capacity to owners with some to spare

A chance meeting with Patanjali Ayurved founder Baba Ramdev triggered a transformational idea for Jayesh Desai. When the guru visited Surat for a yoga camp, Desai, Founder and Chairman of Rajhans (Desai-Jain) Group, took him to visit the group’s new chocolate plant.

The Baba asked if Desai could produce milk chocolate for Patanjali using cow’s milk. “There was no reason to say no, and it struck me that this could be the first instance of one company using the spare capacity of another,” recalls Desai, adding that this led to the idea of Shareconomy.

  “In India, a country with a young working population, capacity utilisation has always been a challenge. In a sector with high capital inflows, such under-utilisation not only leads to loss for an individual but for the nation as well. This led to the idea of establishing a platform like Shareconomy,” says Jayesh Desai, its Founder, who heads strategy and planning for the Rajhans (Desai-Jain) group.

Starting with a small edible oil factory in 1996, the Surat-based Rajhans (Desai-Jain) group is a ₹6,500-crore business house with operations across the realty, entertainment, confectionery, hospitality and textile sectors. In November 2015, it launched Shareconomy, a B2B e-commerce platform to bridge the wide gap between the availability of industrial capacity and the demand for it by connecting industrial capacity owners with capacity seekers.

Value-added services

“As we progressed, enquiries from users showed us the platform need not be limited to capacity identification and match-making. We now help improve business operations across sectors by advising on company formation, financial and technical due diligence, product development and quality audit. We have developed four or five modules to monetise this opportunity and will expand these over time,” says Desai.

In an effort to benefit both the seeker and owner, the group offers different revenue models including subscription fees, premium memberships, corporate profiles and affiliations with large business conglomerates. The price tag could vary from as little as ₹6,000 to a few lakh rupees, depending on the type of listing and services rendered. Industry experts on board advise companies transacting big business volumes so as to ensure proper due diligence.

“There are various means of generating revenue, and pricing is built in a way that is affordable, as much for micro industry players as for the giants who need our services at a reasonable price,” says Desai.

MSMEs are the premium target customers as many of them cannot raise funds from the market to expand operations. MSMEs log on to the website and create an account, which is free of cost. Shareconomy then provides them a list of capacities, from which they shortlist those that suit them. Capacity seekers/MSMEs, in turn, post their needs and choose the best option from the registered pool of capacity owners. The B2B site also provides expert guidance to MSMEs that require such services.

Benefits, safeguards

Asked what the benefits are and how patented technologies are safeguarded when, say, an SME or MSME uses a bigger player’s facility, Desai explains: “If you look at the trend, manufacturing management for big companies is an expensive affair; it’s easier to get it outsourced. Be it food, pharma, garment, apparels, consumer durables or automobile industry, everybody is opting for outsourcing.”

The advantages, he says, are that people can start without capital investment. They avoid building up overheads and save on logistics and inventory management by having plants at different locations.

Giving the example of snack products, he says: “One truck can accommodate only 3-5 tonnes of material. Transporting this quantity from Gujarat to, say, Delhi becomes unviable, so it makes sense to have the facility close to the market to avoid such costs.”

And though the connection between owner and seeker may happen online, the relationship doesn’t end with one meeting or interaction. Both parties spend substantial time defining and agreeing on the work contract, and it is vetted by their quality assurance, technical, financial and legal experts to build in the required safeguards. Only then is the work awarded.

Overseas clients

How come overseas clients use these services? Is it cost-competitive for them to Make in India? Desai says the cost of skilled manpower in any developed nation is still several times that in our country.

“When India became a global leader in IT services, the key aspect was cost, followed by quality and service. In manufacturing too, Indian companies have plants with state-of-the-art equipment requiring high-level skill-sets to operate them. This makes it possible to develop a component or product exactly matching international standards and specifications, but at cost-effective rates. This is why Baker Perkins UK shortlisted and approved a vendor in Pune to manufacture machinery components for them; they are now looking for a few more vendors for other products as well.”

Alan Woodbridge, of Baker Perkins, says: “It saves time and energy and helps us do business with peace of mind. This really is the best gateway for international industries to associate with Indian industries to achieve healthy business objectives”.

Says Sachin Shinde, Precise Systems: “My company manufactures control panels, and we invested in a new plant in Pune in 2011. It was more like a small-scale unit. But that changed as British-based food-processing equipment company Baker Perkins found Precise Systems on Shareconomy and chose us to make control panels and electronic enclosures. For now, we have offered one-third of our plant’s capacity to Baker Perkins. If things go as planned, we expect huge volumes from the British company. We may gradually go on to 100 per cent capacity allocation and shift production to our Satara units, which are bigger.”

Sectors, expansion

Shareconomy is present in dozens of segments, including dairy, paints, agriculture, and games and toys, with key potential in automobiles, engineering, garment and apparel, food, pharma and electronics. Some of the companies it is associated with are: Chitale Dairy, Global Consumer Products, Baker Perkins UK, Top Gear, Shakti Bhog, Ace Micromatic and Ghodawat Consumer Products.

Vishwas Chitale of Chitale Group, says: “Small enterprises teach us things that make a lot of sense to a 75-year-old business group. The SME partners that Shareconomy helped us find may not provide volumes, but they’re still attractive. For us, it’s not about mere economics but also about helping buddies grow.”

On advertising, Desai says: “We still believe in one-to-one connects, in addition to advertisements in business and in-flight magazines. We conduct small seminars and industry association meets, participate in exhibitions and technical seminars. This is more impactful because you get to have personal discussions with business owners and understand their requirements better.”

Shareconomy is operational in Pune, Mumbai, Delhi, Bangalore, Surat and Hyderabad and is in the process of expanding across India. It plans to expand operations internationally in the US, the UK and Singapore.