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With eBuySugar, the Rs 2-lakh-crore sugar sector is finally going digital

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When the country went into a lockdown in March 2020, the sugar business came to a standstill. However, being an essential commodity, it became imperative that sugar supply is maintained. “That is when people in the sector realised that they have to digitise in some form,” says Uppal Shah, founder & CEO of eBuySugar. “Taking a cue, by April 2020 we launched eBuySugar.com as a digital platform where we could bring buyers and sellers together. Trading began almost immediately. It has been over two years since the platform has been online.”

Uppal’s father Jitendrakumar Shah started a sugar trading business in 1981. The son joined the business in 1997. The family has been in the sugar business for 25 years and Uppal says the trade has remained the same. “Every other commodity has seen a big role in technology and digital solutions, but sugar trading has seen no such advancements,” says Uppal, before going on to explain further. “A trader strikes a deal to buy sugar from a manufacturer over the phone. The trader then subsequently sells it to a semi-wholesaler, again carrying out the entire business over phone calls. Every other commodity has seen a big role in technology and digital solutions, but sugar trading has seen no such advancements.”

Sugar is a government-controlled commodity. The government allocates a sales quota every month to every sugar factory. Sugar factories have to sell, ensure deliveries and then make payments to farmers. For many sugar mills, the math just does not work out and so many farmers have pending dues. This is how sugar factories still continue to function — in a traditional manner.

Expanding on how the sugar business functions, Uppal says if there are, say, 25 sugar factories in Kolhapur, Pune, Solapur and Nagar, they would sell the output to 5-10 big dealers in the nearby districts. These dealers then sell the sugar down the value chain.

Uppal, a school dropout, is now a tech-savvy serial entrepreneur on a quest to liberate the sugar industry from inefficiencies in trade, finance and delivery.

Platform play

“What we have done is get every sugar trader on the platform, and these include the semi-wholesalers. We also got all sugar mills on the platform and told them they can now see participation from many more buyers compared to the 5-10 dealers that they relied on earlier. For the mills, it meant a much better realisation of price for their produce, which means they can pay the farmers better and in a timely manner,” says Uppal.

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Uppal Shah, founder & CEO of eBuySugar.

For smaller traders, it meant they could buy directly from the mills, removing the middleman from the equation. What attracts these smaller traders is the promise eBuySugar makes of taking complete responsibility for the entire process — from sales to ensuring the sugar gets delivered to the buyer. “We have been able to organise the sector on a platform and we even provide logistics and insurance. We have a tie-up with Tata AIG for insurance and ensure we generate an e-way bill for the destination.”

So how successful has the portal been?

The CEO of eBuySugar says they crossed a turnover of Rs 400 crore last financial year. About 1.2 million tonnes of sugar have already been traded and delivered across the country, with zero default and reductions, the company claims.

Uppal says the website has evolved since it was set up. At first, the idea was to only get the buyers and sellers on a platform, but customer feedback meant Uppal needed to carry out some changes. “Payments for sugar are upfront, which means a buyer has to pay first and then the sugar is shipped. Buyers wanted eBuySugar to take care of the entire process — from payments to delivery — which would also enable them to make larger purchases. From April 1 this year, the model has pivoted to a system where every trade takes place through eBuySugar. The buyer pays eBuySugar, and we will pay the manufacturer and, in turn, ensure logistics and delivery,” he says.

What helps the second-generation sugar trader is the decades of experience in the trade and the strong network he enjoys. “Ever since my father set up the business in the 1980s, there is hardly any trader in India that we have not transacted with or not done business with. We have supplied across the country and in every district. That is why both buyers and sellers have no hesitation in doing business over eBuySugar,” he says.

Strength in sugar

Sugar is India’s second-largest agri commodity and is worth about Rs 2 lakh crore every year. The domestic consumption is 275 lakh tonnes. This sugar season, which runs from November to April, India is on track to produce a record 350 lakh tonnes.

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Sugar sector continues to be largely traditional in nature with small sugarcane farmers ensuring bulk of the production.

During the pandemic, Uppal says, a lot of farmers had shifted to sugar cultivation, which led to a bumper harvest this year. India is expected to export 90-95 lakh tonnes of sugar this year without government subsidy. “Last year, India exported about 75 lakh tonnes of sugar with subsidy. The government has announced no subsidy this year, but global prices for sugar have been high and that is why we see an increase in export volumes,” says Uppal.

Despite being one of the largest sugar producers in the world, India has only about 550 sugar mills, and these are largely concentrated in UP and Maharashtra, followed by Karnataka, Tamil Nadu and Gujarat. “One reason the sector could not digitalise is because a majority of these sugar manufacturers were cooperatives with considerable political importance. Manufacturers found it difficult to hop on to the digital bandwagon. But in the last 3-4 years, there have been some changes. About 50% of the manufacturing is now in the private domain, where the younger generation is more receptive to technology,” says the founder of eBuySugar.

In the last 1-2 years, even bulk consumers like ITC and Britannia have introduced their reverse auction platforms to buy everything from wheat to sugar. “The pandemic has changed the outlook for the sector and even cooperative manufacturers are now looking at going digital,” he says.

Addressing pain points

Vishal Nirani, Director of Operations, of Karnataka-based MRN Group (Karnataka), says the platform was appealing since it aligned with the digital era and also made their lives easier. “I am among the largest sugar manufacturers in India and have seven sugar mills. eBuySugar has made it easier for me to widen my buyer range and it has enhanced pricing discovery. Most importantly, the platform has saved a lot of time and allowed prompt sales of sugar, which helps us clear the cane dues to the farmers. The platform has been beneficial in efficiently managing sales of huge quantities allotted monthly by the government through a non-traditional mechanism,” says Nirani.

Buyers are happy that they can purchase sugar from various geographical regions sitting on a computer and by visiting one website. Delhi-based sugar trader Yatin Wadhwana, Director, Gradient Commercial Pvt Ltd, says: “The platform always gives me the opportunity to discover the best prices as there are many prominent sellers on eBuySugar.”

One of the biggest reliefs for traders on either side is the security factor. “With eBuySugar remaining the guarantor of trade and delivery for any sugar purchased, it gives us a relief of not having to face any default,” says Wadhwana. “All my trades are getting secured and insured which is very important for any trader to avoid losses.”

Uppal points out the other benefits of the platform. Because of the eBuySugar app, a manufacturer has real-time data about sales, inventory and price. The platform has about 25 sugar manufacturers and about 1,850 sugar traders.

Uppal — who earlier started a news and information portal on sugar and ethanol industry called ChiniMandi.com in 2018 — says he has made sugar buying so seamless that the days of making phone calls to conduct business are over.

“With Covid cases easing, we are now focussing on meeting traders and manufacturers to educate them about the platform. We plan to grow 5X by next financial year and plan to provide an ERP system that integrates everything from buying and selling to e-way bills in one platform. eBuySugar also plans to provide active tracking of shipments during the logistics process with integration with Google maps,” adds Uppal.