Vakrangee Ltd Management Discussions.


Economic Overview

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers over the next 10-15 years, backed by its mature democracy and well established global trade partnerships.1 The Indian economy started the fiscal year 2018-19 with a healthy 8.2% growth in the first quarter on the back of domestic resilience. Growth eased to 7% in the subsequent quarter due to rising global financial volatility; normalised monetary policy in advanced economies; externalities from trade disputes; and investment rerouting. Despite softer growth, the Indian economy remains one of the fastest growing and possibly the least affected by global turmoil.2

Unique Features and Advantages of Next Gen Kendra

Vision of $5 Trillion Indian Economy

Currently, India ranks as the worlds sixth largest economy. Over the medium term, the projections of growth remain encouraging and optimistic for India. The fundamental strengths are indicative of the countrys potential to achieve a $5 trillion economy by 2025. The current structure of the economy and the emerging dynamics provide grounds to realise 1 trillion dollar from agriculture and allied activities;

1 trillion from manufacturing; and 3 trillion from services.3


Industry Overview

With growing digitisation and preference for convenience stores gathering momentum in India, businesses are today focusing on becoming an omnichannel by integrating different methods of services available to consumers at one single point. On the same idea, Vakrangee Kendras are multipurpose "Digital Convenience Stores" located across rural, urban and "difficult to reach" areas of India. These Kendras enable every Indian to seamlessly benefit from Financial Inclusion, Social Inclusion, Digital India, Skill Development, Employment, Government programmes and a wider access to basic goods and services. Vakrangee is Indias consumption enabler, which is selling a host of products and services, thus fostering Financial & Digital Inclusion by involving greater access to Banking, ATM, Insurance, Financial Services, e-Commerce, e-Governance and Logistics.

Financial Inclusion in India

Financial Inclusion refers to universal access to a wide range of financial services at a reasonable cost. These not only include banking products but also other financial services such as insurance and equity products. It is the process of ensuring access to affordable financial services and adequate credit, needed by vulnerable groups such as weaker and low-income sections of the society. The essence of financial inclusion is to ensure delivery of financial services, which include bank accounts for savings and transactional purposes; low cost credit for productive, personal and other purposes; financial advisory services; insurance facilities (life and non-life); amongst others.5

Importance of Financial Inclusion in India

The Government of India has been making concerted efforts to promote financial inclusion as one of the important national objectives of the country. Some of the major efforts made over the last five decades include nationalisation of banks; building up of robust branch network of scheduled commercial banks; co-operatives and regional rural banks; introduction of mandated priority sector lending targets; lead bank scheme; formation of self-help groups; permitting BCs and BFs to be appointed by banks to provide door step delivery of banking services; zero balance BSBD accounts amongst others. The fundamental objective of all these initiatives is to reach the large sections of the hitherto financially excluded Indian population.6

a) Financial inclusion, in an economy, broadens the resource base of the financial system by developing the culture of savings among large segment of the rural population.

b) In the process economic development, financial inclusion plays a crucial role by unleashing the untapped potential of the bottom-of-pyramid section of Indian economy.

c) Financial inclusion protects the wealth of the low-income groups in trying times by bringing them within the perimeter of formal banking sector.

d) Financial inclusion also mitigates the exploitation of vulnerable sections by the unreasonable money lenders by facilitating easy access to formal credit.

Governments Initiatives towards Financial Inclusion

The Government of India has had a vision to enhance financial inclusion in the country. To that end, the government has taken several initiatives such as Jan Dhan Yojana, Direct Benefit Transfer (DBT), affordable Micro Insurance schemes such as Atal Pension Yojana, Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana. There is a clear focus to achieve financial and digital inclusion across the country.

Government key focus areas: Financial and Digital Inclusion

India has witnessed the largest improvement in access to financial services over the past few years. The government has been focusing on financial inclusion of Indian rural and semi-rural areas primarily for three most important pressing needs that is, creating a platform for inculcating the habit to save money, providing formal credit avenues and plugging the gaps and leaks in public subsidies and welfare programs.

RBIs steps towards Financial Inclusion

Financial Inclusion is a cherished policy objective for RBI and its economic policy has always been driven by an underlying intent of a sustainable and inclusive growth. RBI has been pursuing the goal of financial inclusion for a long time. Its financial inclusion efforts can be traced back to the 1960s when the focus was on channelising of credit to the neglected sectors of the economy and weaker sections of the population. This role encapsulates the essence of renewed national focus on Financial Inclusion, promoting financial education and literacy and making credit available to productive sectors of the economy including the rural and MSME sector.

Deepening of Digital Payments in India

The high-level committee on deepening of digital payments, led by Nandan Nilekani, has recommended a reduction in costs to widen the acceptance infrastructure and improve digital financial inclusion.

The panel reviewed the existing status of digitisation of payments in the country, identified the current gaps in the ecosystem and suggested ways to bridge them, and assessed the current levels of digital payments in financial inclusion.


The Committee recommended that features of ATMs should be enhanced merely from being a cash dispenser to support the gamut of banking facilities including Cash Deposit, Bills Payment, Funds Transfer, Tax Deposits, Mobile Recharge amongst others. In addition to customer support and grievance reporting so as to act as a complete Digital facilitation point.

Business Correspondents:

The Committee recognises the key role that business correspondents and agents play in extending the reach of the banking system to the common man. The business correspondent industry is large, with a few lakh agents spread around the country. They are the face of banking to a large part of the population. They are treated as banking outlets and governed by the contracts that they have with the banks. The SLBC/ DLCC/ BLCC need to ensure that no user is more than 5 kms away from a banking access point. Looking into the difficulties being faced by farmers, the committee recommended that the efforts, which are being made to convert KCCs issued by banks into RuPay cards should be completed on priority basis and adequate acceptance infrastructure should be put in place where KCC holders can make transactions digitally for their agriculture procurements using KCC cards. With the objective of promoting financial inclusion, the committee recommended that spending on digital financial inclusion, including setting up payment facilities, education camps amongst others for this purpose must be allowed under the CSR budgets.


Card Payments - POS:

In order to ensure that small merchants continue to accept digital payments, the committee recommends that the Government continue the current scheme to refund the Merchant Discount Rate for small value transactions (under 2,000) beyond December 2019 for another two years. The Committee recommends that current import duty of 18% on POS machines be reduced to Nil for a period of three years to facilitate adequate expansion of acquiring infrastructure in the country. The Interchange on card payments be reduced by 15 basis points (0.15%). This will increase the incentive for acquirers to sign up merchants.

The RBI setup a standing committee to review the MDR and interchange on a periodic basis to ensure equitable growth of the market for digital payments. The committee must include a balance of stakeholders - issuers, acquirers, merchants, and academics. In order to ensure that a willing customer is able to do financial transactions digitally, the committee recommends that each merchant support at least one digital mode viz BharatQR, BHIM UPI

QR, or Cards. Accepting payments through QR code allows a merchant to accept payments with very low fixed costs, and this can serve the basis for a large growth in acceptance.

Aadhaar Enabled Payment System:

APBS and AEPS are the medium to cater to large number of users, the committee recommends that AEPS, and the Micro ATM must be reimagined to meet the growing needs of users. It must be rearchitected to allow more services to be delivered to users through the BC network, and Aadhaar Pay POS devices. The committee recommends that complete support must be provided for off-us transactions by all banks that receive DBT transfers. An interchange of 1% may be charged to the issuing bank, and delivered to the BC agent, so that the agent is compensated fairly, and that the user has a choice to use a BC agent close to their location. With a view to streamline usage of accounts that receive DBT transfers through business correspondents, banks who receive DBT payments may be required to support Off Us transactions through AEPS.

Cash In Cash Out Network:

With a view to increase digital transaction and provide a safety net of a robust Cash In Cash Out network (CICO), specially at Tier III, IV, V and VI (Semi Urban to Rural) centres, the committee recommends strengthening of Business Correspondent infrastructure, besides empowering small merchants to provide cash at POS to the customers to meet their immediate requirements. The RBI must ensure a healthy CICO network such that every user has access to a financial institution, such as a cooperative, or a bank branch within 5 km for banking needs. All users must have access to ATMs or Business Correspondents within 3 km radius for cash management needs. The primary use of cash is for transactions, and hence, the officials must ensure that all local markets - including the weekly markets have adequate facilities for cash-in and cash-out. The customers must be supported by a bank branch within a range of 5 kilometres for cash management needs.

Automatic Teller Machines (ATMs) in India

Over the years, ATMs have changed the landscape of the Indian Banking industry. An ATM is the oldest of the alternative banking channels and enjoys the highest level of acceptance amongst consumers. Apart from cash withdrawal, ATMs offer other enhanced banking services. One of the major priorities of the Reserve Bank of India (RBI) has been the installation of ATMs to ensure financial inclusion. With this the Government is extending financial services to the large and unserved population of the country.


India ranks at 148 in the world in terms of ATM density. As on March 2019, the country has approximately 2,42,000 ATMs.

Need for ATMs in India

However, despite the popularity and wide-scale usage of digital payments, people have not done away with carrying hard currency. Data released by the Reserve Bank of India (RBI) shows an increase in cash withdrawals from ATMs. There is also a surge in the number of times debit cards were swiped at ATMs across the country. Per day transactions at ATMs and the average ticket size of each withdrawal has gone up. ATM withdrawals are likely to go up further with growth of the economy and with more cash in circulation. This is being supported by the demand for withdrawals in rural India in order to access Direct Benefit Transfer (DBT) funds which are being put into the bank accounts of the poor by the Government.

White Label ATMs

The model of White Label ATM was conceived to drive financial inclusion and to ensure more geographical reach and financial inclusivity. The ATMs under this model are not owned by any bank but are the property of a non-banking entity. The penetration of ATMs in India has not been the best. The government, by inviting more private institutions to invest in building ATMs, is catering to the masses living in the age of digitalisation.7

There is a low ATM penetration in Tier III, IV, V and VI cities, which poses as an opportunity for White Label ATMs to bridge the gap between urban and rural India.

White label ATMs in India have a major acumen in rural areas as government is encouraging nonbanking entities to install white label ATMs in order to reduce the shortage of financial services in rural areas of the country.

At Vakrangee, every Next Gen Kendra has a white label ATM installed. 68% of our outlets are located in Tier V and VI locations. With our current strategy in place, we have set our target to become the largest white label ATM network by 2020.

The e-Commerce Scenario

E-Commerce has transformed the way in which business is done in India. The Indian e-Commerce market is expected to grow to US$ 200 billion by 2026, from US$ 38.5 billion as of 2017, according to a report by India Brand Equity Foundation (IBEF). The growth of the industry has been triggered by increasing internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase


Indias total internet use base to 829 million by 2021. The timely and effective implementation of programs such as Digital India, Make in India, Innovation Fund amongst others, will support the e-commerce growth in the country. The growth in e-commerce sector will also accelerate employment, increase revenues from export, and provide better products and services to customers in the long term.3

Trend point: The e-commerce market in India is expected to increase at a CAGR of20.09 per cent from US$ 39 billion in the end of 2017 to US$ 200 billion by 2026.

Source: IBEF

Growth of e-Commerce in India

The e-Commerce segment in India is well-equipped to drive the next level of Indian consumer growth in 2019, despite the regulatory challenges surrounding the sector. The e-commerce marketplace is poised to grow to $1.2 trillion by 2021 from the current market of $200 billion. The sector is currently progressing at a CAGR of 32% and would, further, rise due to increasing penetration of internet.9

A fast-growing economy and robust demographics provide a positive outlook to the consumer businesses in India, according to a report by Deloitte India and Retail Association of India. The factors will fuel the growth of retail market in the country, making India the third-largest retail market in Asia and fourth largest in the world. The retail market is expected to grow to $1.2 trillion by 2021 from $795 billion in 2017. Further, as the internet penetration in the country increases and with more international retailers operating in India, the share of organised retail market is expected to amplify from 12% in 2017 to 22-25% by 2021. Given the strong retail and consumer outlook, the country is expected to witness redefining trends

in the consumer market, which will shape the future of the retail industry.10 This will encourage more online window-shopping and therefore enhance assisted e-commerce.

Amazon in India

In India, Amazon empowers small and medium-sized businesses to reach millions of customers with a number of programmes that help enhancement of their revenue, reach and productivity. Its ambition in the country is to become everything for everyone.

In the long-term, India will be a material-driver for Amazons growth.

Indias e-commerce growth has accelerated. Amazon Indias initiatives in infrastructure, financing, launch of Hindi version, and start of Amazon Easy Stores in small towns helped improve the shopping experience for customers. A growing number of people in Tier II and III cities and towns are now familiar with online shops. Amazon is, further, going all out to serve the nest 100 million users that it believes will come from Tier II and III markets.11


How Assisted E-Commerce is addressing the challenges in rural India

1 The customer in a rural town walks into a neighbourhood retail store

2 The retail store will have a kiosk, which is an online platform

3 The store will showcase thousands of virtual products

4 The store person assists the customer in checking out the products

5 The store person assists the customer in placing the order and making payment

6 The product arrives at the retail store, which is then passed onto the customer

Business Overview

About Us

Vakrangee Limited is one of the largest franchisee- based, multi-service retail network, offering a broad spectrum of services across different sectors to offer a "one stop shop" solution for all its customers. We are focused on creating Indias largest network of last-mile retail outlets at every postal code in India to enable Indians to benefit from financial inclusion. Vakrangee, as a technology company provides banking,

ATM, insurance, financial services, e-governance, e-commerce, and logistics services. With over 25 years of consistent experience, we have evolved from being an e-Governance projects system integrator to a unique technology-enabled retail-led franchisee model. We provide multiple services to the underserved and unserved population across India through our Vakrangee Kendra outlets set up in 19 states of India.

Our Services

With a transforming landscape of India and rapidly accelerating digitisation, Vakrangee has developed its Next Gen Kendra model to keep pace with the advancing economy. Our Next Gen Kendra outlets are a technology intensive retail distribution platform for last-mile touchpoints, delivering services across Banking, ATM, Insurance, Financial Services, E-Commerce, E-Governance, and Logistics services to domains on a real-time basis to potential customers across the under-served rural and urban India.

A. Banking:

Vakrangee offers an advanced platform for real time, paperless, inter-operability banking, which provides a unique service experience to citizens.

Banking Transactions:

• Bank Account Opening

• Cash Deposits, Withdrawals, Money Transfer

• Fixed and Recurring Deposits

• Balance Enquiry, Statement of Accounts

• Disbursement of money under Direct Benefit Transfer

B. ATM Services:

Vakrangee owns the license from RBI to set up and manage White label ATMs, enabling realtime cash withdrawals from all the banks. We have a network of co-located ATM in urban and semi-urban branches to cater to the holistic banking needs of customers while optimising cost of operations. Our ATMs are much more profitable compared to any standalone ATM. As our ATMs are located within the Kendra, there is no incremental store rental, no requirement of a security guard as well as no cash refilling charges, as the franchisee himself refills the ATM. The presence of ATM inside the Kendra further proves to be beneficial for the storekeeper as it improves footfalls, optimises the cost of operations of the store and also enhances the revenue stream.


Operating Cost Vakrangee Peers
1 Rent Expense X
2 Civil Work & Interiors
3 Internet Connectivity
4 Cash Management Charges X
5 ATM Operational Costs
6 Security Guard X

C. Insurance:

Vakrangee is the corporate agent of Life Insurance Corporation of India, HDFC Standard Life Insurance Limited for life insurance; and with Tata AIG General Insurance Company Limited, Reliance General Insurance Company Limited, and HDFC Ergo General Insurance Limited for general insurance. We also have tie-ups with


Cigna TTK Health Insurance Company Limited, Religare Health Insurance Company Limited, and Aditya Birla Health Insurance Company Limited for health insurance. Furthermore, we provide insurance under the Atal Pension Yojana, Jeevan Jyoti Bima Yojana, and Pradhan Mantri Suraksha Bima Yojana.

Insurance Services:

• Corporate agency tie-up for Life, General, and Health Insurance

• Micro Insurance schemes under Atal Pension Yojna, Jeevan Jyoti Bima Yojana, and Pradhan Mantri Suraksha Bima Yojna

D. Financial Services:

• Lead generation for Loan Products- Consumer, Housing, and SME loans.

• Domestic Money Transfer Services

E. e-Governance:

We have over 25 years of experience for providing various Government grass-root level services. We offer Government-to-Citizen services such as utility bill payment, and other G2C services based on state to state from our Vakrangee Kendras spread across India.

e-Governance Services:

• Payment of Utility Bills, Taxes, Levies, Certificates, Hall tickets, and Exam Fee Payments

• Alliance with IRCTC for offering railway E-Ticket booking

• Bharat Bill Payment System (BBPS) platform to deliver wide range of bill payment services

• Other G2C services based on state to state

• Online Form Filling

F. E-Commerce:

Our e-Commerce segment offers various Business-to-Customer services such as mobile and DTH recharge. We have an alliance with Amazon India to facilitate sale of various goods and products; with Redbus for offering bus ticketing services; with Augmont for sale of gold products; and with Reliance Jio for the issuance of mobile sim connection and mobile handsets.

e-Commerce Services:

• Telecom- Mobile Recharge

• DTH service- Recharge, bill payments

• Assisted e-Commerce Model

• Alliance with Amazon to facilitate sale of products

• Alliance with Reliance Jio for issuance of sim connection and sale of mobile handsets.

• Alliance with Redbus for offering bus ticketing services

• Alliance with Augmont for offering gold and jewellery products

• Alliance with Netmeds Marketplace Limited to offer medicines and other health products

• Alliance with Zee5 and Dish TV India Limited for distribution of subscriptions and recharges.

G. Logistics:

At Vakrangee, we are leveraging the presence of our Kendra to enhance the reach of our courier booking services. Our vast network of Vakrangee Kendra outlets across India enables us to provide last-mile delivery and distribution of products - using the Hub-and-Spoke model.

• Alliance with FedEx Express, Delhivery and Aramex India for courier and logistics services (Forward Delivery as well as Reverse Pick Up services)

About Vakrangee Kendras

Over the years, Vakrangee has built a vast franchisee network of over 3,504 Vakrangee Kendras across 19 states in India. Our network is established on an asset-light franchisee-based model. These are technologically advanced retail distribution platforms for last mile touchpoints delivering services across Banking, ATM, Insurance, Financial Services, e-Governance, e-Commerce, and Logistics services on a real-time basis to potential customers across the underserved rural and urban India. Today we have created an enviable presence in the marketplace, albeit with a variegated level of service across the network. Our Kendras are essentially multipurpose "Digital Convenience Stores" located across rural, urban and "difficult to reach" areas of India. Vakrangee Kendras enable every Indian to seamlessly benefit from Financial Inclusion, Social Inclusion, Digital India, Skill Development, Employment, Government programmes and a wider access to basic goods and services.

Evolution of Vakrangee Kendras

The Evolution

The initial Vakrangee Kendra was a non-exclusive Kirana store model where the franchisees would add a counter in their existing store or in a place provided by the government within the Gram Panchayat office. The primary reason for a non-exclusive model was low viability on standalone basis due to a single line of services. Over the next few years, Vakrangee kept on adding more services across verticals such as Banking, E-Commerce, E-Governance, Insurance, ATM, Logistics, and Financial services, which kept on developing and improving the viability of the store. Finally, the Vakrangee Kendra evolved into an Assisted Digital convenience store with multi line of services and with an exclusive store model due to enhanced feasibility.

In the recent years of solid and rapid growth, we have ascended our network responsibly and cost- effectively. We developed a vast number of Kendras made up of an assorted basket of large, small and micro outlets. These have progressed from being non-exclusive stores offering a single line of services termed as Common Service Centres; into an e-Governance player and a Banking BC Point model; into a multi-specialty store model; and finally, into an exclusive next-gen, assisted multi-specialty, exclusive digital convenience store, with a multi-line of services. During the year under review, to work towards the upgradation of the outlets, Vakrangee focused on rebranding its existing outlets by advancing the Kendras not only in terms of look and feel but also well-equipped technological features.

Growth of the Kendra Model:

1. Number of outlets - We have 3,504 outlets as on 31st March 2019, with a 2020 target of 25,000 outlets.

2. Number of services- More services were introduced in the current outlets. As we keep on doing newer tie-ups, more services kept getting added to the outlets.

3. Maturity of existing services- Maturity of the existing services provided to our customers will lead to growth. A mix of all these drivers which will give effect of future growth.


Performance of Our Next Gen Outlets

Average No. of Daily Transactions- ATM Approximately 40-50 Transactions Per Day
Average Total Banking and ATM Throughput- Transaction value Approximately 7-8 billion Per Month (Cumulative for all Next Gen Outlets)
Avg. No of Bill Payments, Ticket Bookings, Courier, Money Transfer Approximately 40-50 Transactions Per Month Per Outlet

*The above figures are the average data for the month of April 2019

Product-wise Performance

The Companys activities predominantly comprise providing various services through Vakrangee Kendra. Considering the nature of the Companys business and operations, there is only one reportable operating segment that is Vakrangee Kendra.

Upgrading Kendra Network

Vakrangee Kendras offer a broad spectrum of services across different sectors to deliver a One Stop Shop solution to its customers. We have upgraded our outlets and have enhanced them as our Next Gen Kendras. As of 31st March 2019, we have launched over 3,504 Next Gen Vakrangee Kendras pan India. These outlets are spread across 19 states, over 366 districts and 2,186 postal codes of the country, out of which approximately 68% outlets are from Tier V and VI cities. These Next Gen Kendras offer a comprehensive range of products and services across banking, insurance, ATM, assisted e-commerce, e-governance, financial services, and logistics. The outlets are based on an exclusive digital convenience store model providing access to multiline of services. The Next Gen Kendras reflect a modern and standardised format with a uniform look and feel in all the outlets aimed towards building consistent service levels and uniform consumer experience.

Our introduction of improvised Next Gen Vakrangee Kendras is receiving an enthusiastic response from the existing franchisees, most of whom are opting to upgrade to the advanced franchisee model. We have a planned target to reach 25,000 Next Gen Vakrangee Kendras by FY2020.

Impact of Upgradation to Next Gen:

Vakrangees Next Gen Kendras will lead to a better brand visibility and enhanced profitability.

• Store Exclusivity

The outlets will have enhanced store visibility and brand awareness. It will further enhance efficiency and productivity.

• Service Availability and Consistent Branding

The Next Gen outlets will provide consistent service level and customer experience.

• Technological Features

The Kendras are equipped by CCTVs and digital signage for centralised monitoring and promotional campaigns. Advancement in outlets with respect to technological upgradation will enable all kind of payment mechanisms.

• Sales and Profitability Impact

Next Gen Vakrangee Kendras will generate enhanced revenue streams and footfalls via installation of ATMs.

Financial Performance

Financial Summary

In financial year 2018-19, the total Income of your Company stood at Rs 15,279.07 million as against Rs 64,131.38 million in the previous year. The EBIDTA stood at Rs 490.33 million in FY2018-19 as against Rs 10,140.05 million in the previous year. The PAT stood at Rs 201.79 million in FY2018-19 as against Rs 6,626.21 million in the previous year. The EPS (basic) for the face value of Rs1 stood at Rs 0.19 in FY2018-19 as against Rs 6.26 in FY2017-18*

Operational Summary

Vakrangee currently has 3,504 Next Gen Vakrangee Kendras spread across 19 states, 366 districts and 2,186 postal codes. More than 68% outlets are from Tier V and Tier VI cities and out of 3,504 Next Gen Vakrangee Kendras outlets 200 Next Gen Kendras are in LWE Districts and 476 Next Gen Kendras are in Tribal Area Districts.

Key Financial Ratios
Particulars FY2018-19* FY2017-18* Reason
1 Debtors Turnover 1.13 6.02 There is decrease in the revenue due to up-gradation of the old format outlets to New standardized Next Gen Vakrangee Kendra format. Also the realization of receivables from legacy e-Governance projects was pending.
2 Inventory Turnover 128.08 22.13 There was no major inventory in FY2018-19. Due to which the inventory turnover is low.
3 Interest Coverage Ratio N.A 128.29 The Company is a Debt Free Company and there is no borrowings. Hence, due to which there is change in interest coverage.
4 Current Ratio 24.22 7.18 There has been decrease in the current liabilities due to payment made to the sundry creditors. Hence, due to which there is change in the current ratio
5 Debt Equity Ratio N.A N.A The Company is a Debt Free Company and there are no borrowings. Hence Debt Equity Ratio is not applicable.
6 Operating Profit Margin (%) 6.12 20.51 Revenue has been materially impacted as outlets undergo up-gradation process. However, There are Fixed costs due to which Operating Profit Margins have been impacted.
7 Net Profit Margin (%) 1.39 10.39 Revenue as well as Profitability has been materially impacted as outlets undergo up-gradation process.
8 Return on Networth (%) 0.78 28.54 Revenue as well as Profitability has been materially impacted as outlets undergo up-gradation process.

Business Outlook

Moving ahead, we are focused on leveraging the uniqueness of our business model. Vakrangee is the only Company offering such a diverse range of services, all under one roof. We also have the deepest market reach in the business as we are catering to rural, semi-urban and urban areas of the country. Moreover, we have an aggressive target of reaching a mark of 25,000 outlets in the current financial year. We further plan to reach a target of 3,00,000 outlets by FY2025. Additionally, the Next Gen outlets are expected to be more profitable, as these stores have all the services available under one roof, accelerating the speed at which each Kendra reaches its breakeven point, and produces free cash flows for Bothe the Franchisee, and the Vakrangee. These Kendras are exclusive stores with consistent branding with the incremental addition of new revenue streams, such as ATMs, assisted e-commerce and Logistics. Consequently, this would generate superior revenue and profitability per store as compared to earlier outlets. At Vakrangee, we believe that the key to success is convenience and we will strive towards this by embracing advancement in technology to simplify the lives of our customers at every touchpoint. We are aspiring to be the most trustworthy physical as well as online convenience store across India, positively moving towards Vakrangee Kendras new brand philosophy of Ab Poor Duniya Pados Mein

Opportunities and Threats Opportunities

The Indian Government is focusing on financial inclusion for a long time. Vakrangees business model is in sync with the current Governments objective to encourage financial inclusion across the country. It also goes in line with the aim to enhance digitisation in India. The Next Gen Vakrangee Kendras extend their reach to the last mile, thereby connecting the most underserved regions of the country. We are also adding new services such as PAN card, GST services and lead generation of various other loan products. In addition to that, the Company aims to leverage its deep presence by being an enabler for the EV charging facility through its network of retail outlets. The electrical vehicle space stands as a growth opportunity in the years to come. Vakrangee continues to focus on expanding the bouquet of services available at its Next Gen Vakrangee Kendras.



Increasing penetration of smartphones in India can possess to be a threat to the business model of Vakrangee. As more and more people adopt smartphones, it gives them access to several services directly. However, our Vakrangee Kendras act as a technology intensive, retail distribution platform for last mile reach. We also act as a physical Cash In Cash Out network that gives every user an access to a financial institution.


Risk and Concerns

a. Swiftness in Government Policies: The

Companys business is dependent on Government policy towards financial inclusion stand and the speed of implementation.

Thus, any change in the policy framework and restrictions on the transaction may affect the profitability of business.

b. Rapid Changes in Technology: Financial sector is undergoing rapid technological changes. Hence, the new technologies may change all the existing business models. The Companys margins may hit due to new cost-effective disruptive innovations.

c. Heavy Dependence on Franchisee model:

Though franchisee model enables aggressive expansion, the risks associated with the franchisee model still persist. Any reputation loss in single franchisee may suffer the brand name. Moreover, the margins on franchisees are less and legal issues may disrupt the smooth operations.

Internal Control System and Adequacy

Vakrangee has always focused on maintaining a strong internal control system, which is commensurate withthe Companys size and nature of operations. The Companys internal controls are structured in a manner that ensure reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation and ensuring compliance of corporate policies, laws and accounting standards.

Corruption and Instability

Vakrangee has a Bribery and Anti-Corruption Policy in place governed through a strict code of conduct.

Energy Conservation

We promote town development in harmony with nature by implementing energy-saving and waste control policies. Towards this end, we introduce the latest technologies to minimize the environmental load and create ways to protect the local ecology.

We are taking efforts to preserve the environment and bring about a sustainable society. We have also made use of several energy saving technologies and reducing environmental load at our offices and the Kendras.


Our proprietary technology platform is integrated with Core Banking Server (CBS) of various banks, which delivers real-time and inter-operable banking access. We have a biometric authentication system that enables quick KYC and paperless banking. Additionally, Vakrangee has integrated with all partner systems across e-commerce, e-governance, insurance, financial services and logistics. Besides, we have ensured that technical support is available to our customers at all times. We have trained our human resources to handle day-to-day IT glitches. Furthermore, we have seamless internet connectivity across all our Kendras through V-Sat and broadband internet. For security purposes, we have a defined user policy, which requires authentication for each and every user of the server for safe transactions.

Human Capital

At Vakrangee, our goal is to be an organisation with high levels of performance by investing in the personal and professional development of its people to ensure that they possess the competencies and qualities, which the Company needs to deliver its business objectives. Vakrangees Human Capital Division is responsible for mapping capabilities, assessing training needs and planning, developing and facilitating a broad range of training and development programs for each level of the organisation. At Vakrangee, we recognise and reward good performance, identify training and developmen needs, match employees to positions that make the best use of their skill sets, and identify potential future leaders who should be placed on a fast-tracked career path to management positions.

During the financial year, there has been an increase in the human capital in the organisation from to 1,974 employees in FY2019 (as on 10th May 2019). Besides, we have had a low attrition rate. Our objective is to create an inspiring and satisfying working environment, where employees contribute more to the Company. We use a range of tools to monitor employee satisfaction on a regular basis.

We also believe that a rewarding compensation package can be a key factor in attracting and retaining capable and talented employees. The Company offers a competitive salary as well as a range of benefits and incentives for employees above certain grades. We are, further, committed to an equal and diverse workforce in recruitment, training, career development, and promotion practices. Through this, we ensure that all our employees have equal access tc opportunities, regardless of their gender, age, racial or ethnic background, religion or social status.

Key Initiatives:

1. We have strengthened our field team by hiring new talent to enhance the ground level reach and availability.

2. We have launched attractive incentive schemes for employees, based on targets-

• Incentive scheme to achieve the set target for appointment of franchisees

• Incentive scheme to achieve the set target of Revenue and Gross Margin percentage.

3. We have a clear focus on monitoring and improving the employee productivity through methods such as daily and weekly performance review dashboards and App-based activity monitoring.

Awards and Accolades

1. Vakrangee made history by setting GUINNESS WORLD RECORDS™ title for the Most Stores launched simultaneously on 14th January 2019. Launches 1107 Next Gen Vakrangee Kendra stores across the country at 11.07 Am on the same day. Overall the Company launched 3,300+ stores on a Pan India basis. This is the highest number of stores opened anywhere in the world.

2. Vakrangee has been awarded as the best FINANCIAL SERVICES RETAILER OF THE YEAR at the Indian Retail Awards 2019. The award recognises companys Next Gen Vakrangee Kendras growth and customer satisfaction in 2018-19. The objective of the Indian Retail Awards is to recognise the retailers who are bridging the gap between operational reality and consumer expectations by adopting effective practices.

Cautionary Statement

This document contains statements about expected future events, financial and operating results of Vakrangee Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forwardlooking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Vakrangee Limited Annual Report, FY2019.