Indore-based logistics startup Maalgaadi raises Rs 2.5 cr funding, to scale up ops 4x

Indore-based logistics startup Maalgaadi raises Rs 2.5 cr funding, to scale up ops 4x

Saturday August 20, 2016,

5 min Read

Indore-based Maalgaadi, a logistics aggregator for loading vehicles, has bagged an angel investment of Rs 2.5 crore from Swan Angel Network, Sachin Khandelwal and other angels. Maalgaadi was founded in 2015 by Anirudh Garg and Saurabh Raj. The platform plans to scale up operations by four times through technology updates in Indore before moving to other cities. It has completed more than 30,000 trips and clocked gross freight value of Rs 1.30 crore, serving more than 2,000 customers in the city.

Maalgaadi team

Tertiary transportation in India is highly unorganised and fragmented. Logistics market is being looked at as a game changer in India. And startups like Maalgaadi are trying to fill the gap that not only cuts costs for businesses drastically, but also brings in significant efficiency, reduce waiting times and make robust processes for delivery. With no efficient supply system, the delivery cost for a point-to-point service for small loads is very high today(ranges from Rs 17 to Rs 25/km). The country’s logistics industry is worth $300 billion and is estimated to grow at a CAGR of 12.17 percent by 2020, according to the ‘Logistics Market in India 2015-2020’ by market researcher Novonous.

Related read: Are startups from non-metro cities still struggling to raise money?

The road ahead

Maalgaadi has brought huge costs saving to the local traders due to its transparent delivery process. At the same time, the daily revenues of such owner-driven commercial three-wheelers have significantly improved after attaching themselves on the Maalgaadi platform. Sachin Khandelwal found immense potential in investing in the market and also felt strongly that Maalgaadi had the right processes and the temperament to make a huge difference to both traders as also driver owners of the SCV category.

Maalgaadi has seen a MoM revenue growth of 25 percent since its beginning. They intend to use the funds to become profitable and make the operations as lean as possible.

Anirudh shares,

We now want to automate administration so we can scale up without having an entire team to manage operations. We have analysed various business model options. And depending on the market whichever variant is more profitable we will adopt that for the new markets.

“There are many things that our customers – who are mostly offline merchants – don’t understand about logistics. We intend to provide better analytics to the customers to enable them to plan better depending on the load patterns,” says Saurabh. One of the angel investors Neelesh Jain, who has over 18 years of experience in the IT sector,is working on the next stage of API’s and user experience improvisations. Maalgaadi’s backend customer panel is now able to inform the entire history of transactions in terms of destination of goods, time of the year or month of these trips, maximum load, etc. This has empowered the customers to know the exact month or week they would need loading vehicles.

Achievements so far

“We have analysed times of the year and day that are peak or slack. For instance, we know that during Diwali we will have volume of trips from merchants selling paints or during summer, electronics merchants will need us more,” adds Anirudh.

This kind of analytics benefits both the customers and the drivers. “Earlier, the drivers had no idea about their monthly income. Now they are able to predict their income and make efforts to increase it substantially, working almost similar working hours. Moreover, we have a clear picture of the entire market. For instance, we found that 11 am to 12 pm is a lean time for drivers. So we asked them to cut down rates during that time, while informing customers of discounted prices. As a result, both got value from slack time, while we were able to get 60-65 percent business even during slack times,” says Saurabh.

“In the absence of an aggregator, the drivers would fear getting low rates even during peak times, while customers wouldn’t know reasonable rates applicable at certain times,” adds Anirudh.

One of the angel investors with SAN Amit Bidasaria, Director at VSN International, says: “Any business which is aggregating the unstructured business into structured business model by implementing the efficiency tools and backed by a digital platform has a big potential. Maalgaadi team’s business model is very cognitive in its approach and in today's time this is the biggest asset.”

Maalgaadi has transformed the lives of more than 200 drivers of loading vehicles. The startup has plans of increasing the fleet size to 500 in the next six months. “Some of our best drivers are taking home as high as Rs 50,000 per month.Whenever a driver earns an incentive, we invite a family member over to collect it so that the driver gets motivation from his family also to perform better. This improves their budgeting and they are able to spend on their children’s education or other critical or unplanned expenses,” informs Saurabh. Maalgaadi regularly organises meetups for its drivers where trainers from institutes such as IIMs, ICAI, etc., hold talks with them.

“Being an early player in the industry, we intend to design supply system to unlock customer value (in terms of higher efficiency and lower prices); quickly scale up across states and eventually integrate inter-city transportation. SAN investors have also been constantly mentoring and guiding us,” adds Saurabh.

Even as logistics players such as Porter, Blowhorn, Shippr expand to more cities, Maalgaadi intends to focus on making its system rock solid before they enter other markets and then possibly explore inter-city logistics. They intend to further raise funds in the next few months for scaling up further.