Pune start-up Source.One changes distribution in petro chem sector, pares monopoly

Disrupting the age-old distribution methods, Pune-based start-up Source.One has begun unlocking India’s petrochemical distribution system by immediately meeting demand and reducing the chances of any monopoly in the sector. 

Launching its operations in 2018, Source.One does its business throughWhatsApp business API and focuses mainly on the polymer side of the petrochemicals sector, a $25-billion industry in India. Polymer is converted and processed to make plastic products.

Ending inefficiencies

“What Source.One has done is that it has created a pan-India platform where even if there is a shortage of material, say in Chennai, we will get you the material from elsewhere,” said Arun Singhal, Founder and CEO of Source.One.

There are many intermediaries involved in the chemical sector. This creates inefficiencies in the system. “The idea of source one is to bring everyone on the same stage so that these inefficiencies can be removed,” he said.

Arun Singhal, Founder and CEO of Source.One

One of the inefficiencies that Source. One can remove in the system is ending monopoly. For example, a firm in Chennai could decide to hold its material because it expects prices to rise over the next couple of months. But it is not possible today as Source.One will get the material from Hyderabad or Pune or some other city. 

“We have completely democratised information that is converted into transactions. We tell people that we have the much-required material at say X price for delivery at the factory gate. So, if the order is placed on our platform, the delivery is done in 24-48 hours,” he said. 

Buying in non-traditional way 

This makes it practically impossible for any person to manipulate the local market due to some reason, say the closure of a port in Chennai. “We’re the most competitive in 60 per cent of all districts because of our network,” said Singhal, who began his career dealing with foreign exchange.

The startup is able to be competitive as it has over 15,500 or 97 per cent of the Indian manufacturers as its suppliers and it needs to get one of them to quote the lowest offer price.  “We have a network of thousands of suppliers competing against one another, Singhal, who has been dealing with commodities for over 12 years, said. 

A boot-strapped firm to a large extent, Source.One does not focus on port locations, the traditional place for the procurement of commodities. “We go inland wherever there’s an excess inventory or even if some end-user manufacturer has an excess inventory that’s our potential supply source. If there is an extensive entry line somewhere, we will pick it up and that’s been the game changer for us.,” the start-up’s CEO said and added that procurement is 10 times more difficult than sales.  

Not matchmaker

What is unique about the Pune-based company is its business model. “We do not own warehouses, we do not own stocks and do not have any inventory. We are a complete asset-light distribution model. We liquidate excess inventories in different factories super fast to the best buyer or nearest buyer. So, our supply is not dependent on import or ports,” he said. 

Singhal said his company is not a matchmaker. “We are not a matchmaker or  commission agent or a platform. The whole transaction happens end-to-end on Source.One book,” he said.

The company buys in its own invoice and books. It then does every sale transaction, transports, and offers credit. “The buyer and seller do not interact with one other at all in the journey of this whole chain,” the Source.One Founder and CEO said.

Source.One helps in an efficient supply chain by reducing the cost of procurement, discovery and logistics through a “single Whatsapp message” by aggregating the inventories, including excess ones, and processing them across the country. This will, in particular, benefit medium and small enterprises. 

Expansion plans

Source.One’s objective is to be “one single source for all liquidation, all consumption and everything to do with the chemicals industry”. “It is not related to only buying and selling. It is also an ecosystem play that we’re working on. It is an information arbitrage,” Singhal said.

On working with 97 per cent of the Indian manufacturers, he said about 20 per cent of them have had at least one billing with the company in their life over the last four years. “Some of them are super dependent on us. On the supply side, the potential base is close to 2,000 people with excess inventories throughout the year,” the founder and CEO said.

The company, which raised a “small amount” as funding in January, plans to expand to bulk chemicals, particularly specialty chemicals, Singhal said. Source.One plans to have a hybrid kind of platform between WhatsApp and mobile apps. 

“Till 2021 it was all WhatsApp. From this year onwards, it has slowly shifted towards mobile app.  WhatsApp remains our mode of communication and the mobile app will become an effective tool for transactions,” he said.

Source. One, which has a network of 800 transporters, has a 2.5 per cent market share and the company is of the view that it can easily garner 15-16 per cent of the polymer market share, having mapped 97 per cent of the pin codes in the country. The $20 billion polymer industry’s 13 per cent phenomenal annual growth is the main reason for the company’s optimism.

The start-up has begun incorporating a lot of artificial intelligence (AI) and machine learning (ML) in its communications, processing and matchmaking, which helps transporters to speed up supply. “But AI and ML will make our communications automatic over the next 6-8 months,” Singhal said, adding that Source.One currently clocked ₹1,600 crore in 2021-22. 

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