The proposed investment (“Project”) consists of up to US$25 million in equity for a minority stake in Supermarket Grocery Supplies Private Limited (“SGSPL” or the “Company”) in order to finance the expansion of the Company’s wholesale distribution and supply business in India.

SGSPL, based in Bengaluru, India, is engaged in wholesale distribution and supply of groceries, provisions, fruits, vegetables and related household products. SGSPL is the principal supplier, and intellectual property licensor, on a non-exclusive basis, to bigbasket.com.

The Company provides its services across 9 cities in India and has plans to expand its services to over 20 Tier-2 cities (about a third of these in low income states) over the next two years. It has already started operations in 1 Tier-2 city in the last 2 months, and intends to keep growing its footprint.

The Project will help (a) increase the availability and quality of grocery products; (b) generate employment, build capacity and improve skill sets in this sector; (c) help develop supply chains and logistics infrastructure including agricultural logistics which are an integral part of developing efficient cities. The Project will achieve this by leveraging Information and Communication Technology (ICT) to manage logistics, and effectively connect farmers and other food and grocery providers to retailers for onward sales to end-consumers; and (d) support the development of small and medium enterprises (SMEs) in the supply-chain. The Project is also aligned with IFC’s regional strategy as it provides strong linkages to the local economy and will promote inclusiveness through direct job creation in urban and semi-urban areas and by developing local supply chains.

SGSPL’s model is focused on improvements in the supply chains for groceries through the following activities:
(i) Procuring fresh fruits and vegetables directly from farmers through its network of collection centers: the Company already has 4 operating collection centers and intends to grow this network to more than 15 centers across the country.
(ii) Setting up best-in-class backend infrastructure: The Company uses technology (such as wireless handheld devices, automated and integrated inventory and warehouse management software), in addition to using optimized warehouse layouts, route and traffic planning, and cold storage and transportation systems to setup its backend infrastructure. This results in higher utilizations, lower inventory levels and lower wastage of raw materials, farm produce and time.
(iii) Capacity building: The Company currently has more than 2,900 employees and third party workers who have been trained and deployed. Of this, more than 75% of staff are blue collar workers, who are deployed across the supply chain in distribution centers/warehouses, buying, merchandising, new facilities setup etc.

The Company has also rolled out a new service where is supplies groceries to kirana stores (mom-and-pop grocers), providing them the benefit of better inventory management and logistics. SGSPL uses its existing supply chain operations to supply groceries to kirana stores more frequently (on a daily or weekly basis), thereby enabling them to manage less inventory and free up working capital, as opposed to traditional suppliers and distributors who supply a kirana store once every 20 to 30 days.