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Vakrangee Softwares Limited
Creating Value by Empowering Rural India with Financial and Social Inclusion
INVESTOR PRESENTATIONA u g u s t 2 0 1 3
Vakrangee Softwares Limited
This presentation and the following discussion may contain “forward looking statements” by Vakrangee
Softwares Limited (“VSL”) that are not historical in nature. These forward looking statements, which
may include statements relating to future results of operations, financial condition, business prospects,
plans and objectives, are based on the current beliefs, assumptions, expectations, estimates, and
projections of the management of VSL about the business, industry and markets in which VSL
operates.
These statements are not guarantees of future performance, and are subject to known and unknown
risks, uncertainties, and other factors, some of which are beyond VSL’s control and difficult to predict,
that could cause actual results, performance or achievements to differ materially from those in the
forward looking statements. Such statements are not, and should not be construed, as a
representation as to future performance or achievements of VSL.
In particular, such statements should not be regarded as a projection of future performance of VSL. It
should be noted that the actual performance or achievements of VSL may vary significantly from such
statements.
Safe Harbour Statement
2
PROJECT:
AADHAAR (UIDAI)
?KNOWDO YOU
VSL is the leader in all three categories namely
number of Aadhaar cards generated
data uploaded
number of residents enrolled (over 30 million till date).
Vakrangee Ltd. Swathy Smartcards
Ltd.
Wipro Ltd.24
25
26
27
28
29
30
31 30.4
27.8
26.5
• UIDAI's mandate is to issue every resident a unique identification number linked to the resident's demographic and biometric information.
• Vakrangee has been empanelled in the highest category i.e. T3F4 category permitting it with pan-India enrollment activity.
Vakrangee Softwares Limited 3
No. of Aadhaar Cards generated (In Mn)
The Inclusive agenda of the Government consisted of enrolling eligible population into the electoral rolls, thereby enabling them to participate in the election process and governance.
across
PROJECT:
ELECTORAL DATA FOR UTTAR PRADESH
?KNOWDO YOU
of the state of Uttar Pradesh.and Delhi.
gram panchayats38,475million people95
VSL has managed unprecedented success in the collection of electoral roll data of around
Vakrangee Softwares Limited 4
Registrar Offices
168million20
PROJECT:
INTERNATIONAL E-GOVERNANCE PHILIPPINES
?KNOWDO YOU
VSL has Successfully completed dematerialization of 20 million land deeds for 168 Registrar of Deeds offices across the nation of Philippines.
Philippines
To dematerialise land deeds and introduce paperless digital record keeping for 168 Registrar of Deeds offices across the nation of Philippines.
Vakrangee Softwares Limited 5
In February 2012, RBI allowed non-banks to setup, own and operate White Label ATMs (WLAs) which would provide ATM services to customers of all banks.
PROJECT:
FINANCIAL INCLUSION
?KNOWDO YOU
VSL has been granted “In-Principle Authorization” by RBI for setting up WLAs in India.
VSL will setup, own and operate
Vakrangee Softwares Limited 6
VSL will be entitled to receive transaction fee from the banks for the use of VSL ATM network by the bank customers.
Additional Revenue through advertisement and other value added services as per the regulations.
under its own brand in
years across the country3minimum WLAs15,000
RBI, Ministry of Finance & GoI wanted to expand the Bank Branches to the unbanked regions in the country as part of Financial Inclusion Initiative, allowing the banks to appoint BC & BF to extend their outreach of financial services in the rural areas.
plus Branches are already up and Operational !!
3,000PROJECT:
FINANCIAL INCLUSION
?KNOWDO YOU
Exclusive mandate to set up & manage 50,000 bank branches (Ultra Small Branches) for the states of Maharashtra, Rajasthan and Delhi.
Allowed to Offer G2C as well as B2C services at these Branches, thus resulting into an Exclusive Rural Retail Outlets.
Vakrangee Softwares Limited 7
Vakrangee Softwares 8
VSL - RURAL RETAIL MODEL
• Exclusive• Scale without Capex• Economy of Scale & Scope• Negative Working Capital
Vakrangee Softwares Limited 8
Vakrangee Softwares 9
WHY UNIQUE ?TRADITIONAL
RETAIL MODELVSL
RETAIL MODEL
CAPEX HIGH LOW
HUMAN CAPITAL HIGH LOW
WORKING CAPITAL HIGH -VE WORKING CAPITAL
FOOTFALLS VARY ASSURED FOOTFALLS
RETAIL CATEGORY MAINLY PRODUCTS MAINLY SERVICES
INVENTORY HIGH JUST IN TIME
Vakrangee Softwares Limited 9
YOU
KNOW
DID
Vakrangee Softwares 10
EXCLUSIVITY
Exclusive Mandate to offer Banking services at 50,000 outlets.
Exclusive Portfolio of G2C services where VSL is empaneled as an enrolment agency.
Strong Back end already created for processing several B2C services.
Vakrangee Softwares Limited 10
YOU
KNOW
DID
Vakrangee Softwares 11
SCALABILITY
Expansion - 16x from 3,000 outlets at Q1FY14 to 50,000 outlets by end of FY15.
Highly evolved business model - Technologically driven real-time rural connectivity till the Gram Panchayat Level.
No Major Capex requirement as Expansion mainly through the Franchise Model and Resources already in place at the Grass Root Level…
Economy of Scope – As more New services are added under the same Infrastructure benefiting from High Operating Leverage.
Vakrangee Softwares Limited 11
We are the last-mile link that connects rural citizens with India’s modern ecosystem.
Vakrangee Softwares Limited
About Us
Current Profile
Evolution & Transformation
Advantage Vakrangee
The Market Opportunity
Understanding Business Model
Summary Outlook – Next 3 Years
Annexure
Discussion Summary
Vakrangee Softwares Limited 13
About Us
Pedigree & Execution Capability
Strong Financials
• India’s largest E-Governance player with 20 years of E-Governance focus.• In-depth experience of handling various E-Governance projects including
Election Automation, PDS, UIDAI, CSC, FI, IGRS and many more.• Strong track record of delivering time-bound mission critical projects having
large foot-print across geographies.
• Revenues, EBIDTA & PAT for FY13 are Rs. 15,558 mn, Rs. 3,912 mn, & 1,093 mn and have grown at a CAGR of 53.7%, 69.7%, & 66.9% respectively over last 3 years.
• Current FY13 ROCE stands at 27.0%. Total debt is around Rs. 4,309 mn resulting into Net D:E at 0.8x.
Credentials
• Part of all Mission Mode Projects (MMPs) over the last 2 decades i.e. MCA 21, RSBY, Passport Seva Kendra, UIDAI etc.
• Largest Single System Integrator (SI) for all the Key Government Projects upholding the Largest Democracy.
• Empanelled in the highest category i.e. T3F4 category for Select Government Projects i.e. UIDAI - Adhar.
• CMMi level III organization, ISO 27001, ISO:IEC 20000 Certified• Included in CNX 500 & BSE 200/500 & Mid-Cap Index.
Business Transformation
• BFSI - Exclusive mandate for 5 + 2 years to setup & manage 50,000 bank branches in the states of Maharashtra, Rajasthan, and Delhi.
• RETAIL - Allowed to provide B2C as well as G2C services at these Outlets, Thus resulting into Exclusive Rural Retail Marts.
Vakrangee Softwares Limited 14
About Us – Strong Management
Dinesh Nandwana Chairman & Managing Director
Chartered Accountant with 22 years experience in overall Management, Operations, Finance & Corporate Affairs.
Has led the evolution of Vakrangee since inception by ensuring continuous advance and improve e-Governance solutions leveraging world-class technologies, processes and people
Santosh DashCEO – Retail & BFSI (Global)
An IT veteran with an MBA gold medalist and B.Tech. More than 18 years of experience in blue chip organizations like PwC, IBM and ICICI and expertise in BFSI, Agri, Retail and Govt business
Pradeep KumarCEO – Government Business
Ex IRS officer with a MBA and B.Tech in telecommunications, has 18+ Years experience in Global business development and execution of large public sector IT projects.
Dr Nishikant HayatnagarkarDirector – R&D
PhD in Computer Science from I.I.T. (Mumbai), with experience of 24 years in the field of software and chip designing, Leads the SI LOB for Vakrangee.
Vakrangee Softwares Limited 15
About Us – Financial Overview
FY11 FY12 FY13
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
8,903 13,578 15,558
15.7%18.1%
25.1%18.9%
23.5%27.0%
Revenues (Rs. Mn) % EBITDA Margin % ROCE
Last 3 Year Financials As on 29.7.13 (BSE)
Market capitalization (Rs. Mn)
33,220
Price (Rs.) 66.05
No. of shares outstanding (Mn)
502.96
Face Value (Rs.) 1.00
52 week High-Low (Rs.) 85.90 – 38.25 Key Institutional Investors % Holding
Life Insurance Corporation of India
6.45%
Pro-moter39%
FII0%
DII7%
Public54%
Shareholding Pattern – June 2013
Vakrangee Softwares Limited 16
Evolution & Transformation – Phase I - 1990-2011
Computerization of Central Election Commission
1993
MCA 21 – Ministry of Corporate Affairs2005
Land Record digitization in UP2007
RSBY – Smart Card Project - UP. Haryana & Rajasthan
2008
Passport Seva Kendra Project CSC Punjab
2010
UID Enrolment – ALL INDIA ProjectUID linked Haryana PDS Project
2011
• Over the Last 2 decades, VSL has built a strong portfolio of several G2C services.
• VSL has been handling several stand alone government projects in e-governance space.
• Have created the backend for assimilating and processing data related to citizens, and government to citizen interactions.
Strong portfolio of G2C services
• Over 22 years of E-Governance Focus - Created Last Mile Infrastructure & Connectivity to deliver Mission Mode projects (MMPs) at the Grass root level.
• Overcome On – Ground Complexities in Rural Regions – Flexible Timings, Power & Connectivity Issues, Manpower Training
• Expertise – Have Built strong expertise from Data digitization to Technology Management
Grass Root Level Execution Expertise
Dynamics of Rural Consumer Insight• Track record of Implementing several Government to
Citizen services till the Gram Panchayat Level.• Gathering & Understanding the Rural Consumer
behavior since being the part of their Eco-system for over 22 years.
• Offering citizens an end to end solution by integrating a front end that was connected to the government systems.Vakrangee Softwares Limited 17
Evolution & Transformation – Financial Inclusion Project
Bank Branch Outsourcing:
Bank Branch Outsourcing: As the “Brick & Mortar” model of banking is not sustainable in rural regions, under the “Financial Inclusion” initiative –
• RBI set the guidelines allowing banks to appoint common BCs to reach unbanked regions in India.
• Government has decided to transfer the entire scheme benefit scheme worth more than 3 Trillion per annum through bank account only.
• Direct Benefit Transfer is a big driver for Branch opening at the sub tier-III cities in India.
Exclusive Banking Common BC Branch Outlets – In 2012, RBI divided all the states into 20 different Clusters and allotted Exclusive BC Based Banking Branches for a period of 5 + 2 years .
Government has permitted all the BC Banking Branches to also offer G2C as well as B2C services at their Outlets.
Resulting into Exclusive CSC Outlets offering Banking, G2C as well as B2C services.
Vakrangee Softwares Limited 18
VSL – Allotment of Financial Inclusion Project
Allotment of Exclusive BC Based Banking License
• VSL has secured an exclusive mandate for 5 + 2 years to setup & manage 50,000 bank branches (Ultra Small Branches) in the states of Maharashtra, Rajasthan, and Delhi.
• RBI permits 80:20 Rural : Urban ratio for opening the bank branches.
o Rural – 40,000 Branches
o Urban – 10,000 Branches
• VSL plans to open an Rural Branch at each Gram Panchayat Level in the states of Maharashtra, Rajasthan and Delhi and the rest to be opened in Urban Regions –
o Maharashtra – 27,000
o Rajasthan – 9,900
o Delhi – 1,100 Branches
Offering of G2C & B2C Services
• The 50,000 branches have also been permitted to extend the G2C and B2C services transforming them into India’s first Rural Multi-Retail Outlets
Vakrangee Softwares Limited 19
Evolution & Transformation – Phase II 2011 - Current
OFFERING A WIDE VARIETY OF SERVICES AND PRODUCTS ACROSS THE SAME TARGET CONSUMERS
AT THE GRAM PANCHAYAT LEVEL.
Portfolio of G2C services
Exclusive Banking BFSI
Services
Strategic Alliances for B2C
Services
VSL Rural Retail
Model
Natural Extension into Standalone Retail chain offering three sets of services across Government, Banking BFSI and Consumer domains – G2C, BFSI & B2C
Strong Rural Distribution Channel to deliver B2C services – FMCG, Auto, Telecom, Insurance
Vakrangee Softwares Limited 20
Advantage India - Advantage Vakrangee
PRESENCE & REACH TILL GRAM PANCHAYAT LEVEL
Proven track record of delivering time-bound mission critical projects having large
foot-print across geographies including PDS, UIDAI, CSC, IGRS and many more.
UNPARALLELED EXECUTION CAPABILITY & STRONG BOUQUET OF SERVICES
OTHER EXCLUSIVE G2C SERVICES
EXCLUSIVE BANKING SERVICES
STRONG TECHNOLOGY
EXPERTISE
G2C Services BFSI Services B2C Services
Vakrangee Softwares Limited 21
$1million consumers700
trillion market
Vakrangee is the only Organized Retail Player in this market
The Rural Advantage - 700 million consumers,US$1 trillion market, 56% of India’s income,25% of disposable income
The Rural OpportunityIn India
An opportunity so large, one might call it a ‘movement’….
Vakrangee Softwares Limited 22
Indian Rural Market: An Untapped Opportunity
The Indian rural market has emerged as an important growth engine of the Indian economy.
The rural market (rural villages + small towns with <25,000 population) has today become the largest consumption market for FMCG and consumer durables.Rural India is ready to drive Consumption Growth
Higher Government Spending
Continuous Bumper Harvest
Rising MSPs
Rural Budget Allocation
(Rs. Billion) FY12 FY13 YoY
(%)
Bharat Nirman 580 710 22%
MGNREGS 400 400 0%
Housing (IAY) 100 152 52%
Education (SSA) 210 273 30%
Health (NRHM) 178 210 18%
Total Rural Outlay 2,661 3,171 19%
Food grains
Milk
Wheat (‘000)
Rice
Sugarcane
0 50 100 150 200 250 300
236
122
86
95
24
245
126
88
102
26
FY13
FY12
Production MT
Paddy
Sugarcane
Wheat
0 500 1000 1500
1000
139
1120
1110
145
1285
FY13
FY12
Rs. per Quintal
Note: MSP – Minimum Support Prices for farm produce
Rise in annual household income from Rs. 75,000 to Rs. 88,000 in FY2013. Rising disposable income leading to higher spending power
Vakrangee Softwares Limited 23
Indian Rural Market: An Untapped Opportunity
Indian Demographics
Urban Rural
30%
70%
44%
56%
% Population % Income
Per Capita Income per annum
Rural Income Rural Expenditure Rural Disposable Income
-
5,000
10,000
15,000
20,000
25,000
16,492
12,644
3,848
19,274
14,418
4,856
2011 2012
Rural India moving up the income pyramid
Share of Rural Wallet
2010 20200
20
40
60
80
100
5639
14
17
10
17
610
5 55 54 7
Education & Enter-tainment
Health
Clothing
Others
Transportation & Communication
Housing & Consumer Durables
Food
Vakrangee Softwares Limited 24
0.4 0.8
12 12
4.8 6.1
41.449.9
12.988.2
Rural
Urban
Rural
Urban
Rural
Urban
1.2 2.1
2.1 3.4
43.911.2
26.379.7
7.766.3
72.5
4 29.1
57.937
79.2 13.9
43.8 6.1
Globals>1,000
Strivers 500-1,000
Seekers 200-500
Aspiers 90-200
Deprived < 90
No. of House holds (In Millions)
Year 2010 Year 2015 Year 2025Income Classes In ‘000Rs
The Changing Landscape of Rural India
FMCG• Higher rural growth of 12% vs. 7% in urban FMCG consumption in 2012.• Increasing preference for new product categories, personal care
products, packaged products etc.
Automobiles• Improving roads & rising incomes are driving personal ownership of
vehicles.• Around 50% of 2-wheeler sales are coming from rural markets.• Demand for 4-wheelers is rising in rural markets - 29% of Maruti
Suzuki’s sales and17% of Hyundai Motor’s sales came from rural markets in2012.
Telecom• 10% growth in mobile shipments to 203.4 million with rising contribution
of rural sales• 29% growth in rural subscriber base to 395 million and 28% growth in
rural teledensity to 36.4% in 2012.• Rising talk time and rising number of sale of recharge coupons.
Housing & Construction
• Aspiration for better living driving demand for pucca houses - 65.3% in 2013 vs. 63.3% in 2011.
• 64% Households reported higher spending on construction despite rising prices.
• Indira Niwas Yojana – 2.72 million of new houses constructed.
Vakrangee Softwares Limited 25
The Changing Landscape of Rural India
Media & Entertainment
• Rising number of rural TV households outpacing the urban growth.• 53% growth in rural DTH households. Out of total 42 million DTH
connections, 26 million (16 million in 2011) are from rural regions in 2012.
• 55% households with higher spend on M&E at Haat / Mela, Cinema etc.
Financial Services
• 20% growth in rural credits to 8.2 million and 18% growth in rural deposits to 14.4 million in 2012.
• 26% growth in disposable income, financial inclusion of GoI, and Direct benefit transfer scheme to further boost the savings & investment trends.
Education• 40% increase in government spending in 2013 over 2012.• Education is becoming a top priority in overall spending; 82%
households increased their spending on tuition fees in 2012.• Aspiration for English medium school, IT training, and private tutors in
villages.
Healthcare
• 16% increase in government spending on healthcare through NRHM.• 80% households increased their healthcare spending in 2012.• Increasing number of hospitals in small towns.• Healthcare market grew from USD 30 billion in 2011 to USD 35 billion in
2012.
Vakrangee Softwares Limited 26
The Rural Push: Indian Government PoliciesNational E-Governance Plan(NEGP): Make all government services accessible to common man in his locality, through common service delivery outlets, and ensure efficiency, transparency, and reliability of such services at affordable costs to realise the basic needs of the common man.
31 MISSION MODE PROJECTS UNDER NATIONAL E-GOVERNANCE PLAN
Central Mission Mode Projects
State Mission Mode Projects Integrated Mission Mode Projects
Banking Agriculture Citizen Service CentreCentral Excise & Customs Commercial Taxes e-BizIncome Tax (IT) e-District e-CourtsInsurance Employment Exchange e-ProcurementMCA21 Land Records EDI fore-Trade
National Citizen Database Municipalities National E-Governance Service Delivery Gateway
Passport, Immigration & Visa Gram Panchayats India Portal
Pensions Policee-Office Property RegistrationPosts Transport
TreasuriesHealthEducationPublic Distribution System
The Mission Mode Projects as a part of NEGP will continue to be implemented in India regardless of the changing political parties and bureaucrats.
Vakrangee Softwares Limited 27
– Rural Retail Mart
Vakrangee’s Rural Retail Mart will act as a bridge between the Rural India and Modern India by providing access to several key Banking, G2C as well as B2C services to Rural India. What is Vakrangee’s
Rural Retail Mart?
One touch point at each Gram Panchayat to deliver all services to the citizens by using cutting-edge technology and focusing on reliability, quality and serviceability.
Vakrangee Softwares Limited 28
India’s First Organised Rural Retail Mart
Technology Intensive Rural Retail Mart – One Stop Shop
B2C BFSI–Rural Bank Correspondent
G2C
Telecom - Mobile recharge DTH service - Recharge,
bill payments Education Healthcare Market Research Agriculture inputs Automobiles - Dealership
of Tata Motors & Mahindra FMCG Products White Goods
Bank A/C Opening – Savings, Current, Recurring
Transactions–Deposits, Withdrawals, Remittances
Balance Enquiry, Statement of Accounts
Direct Benefit Transfer (DBT)
Pension Disbursement Food Security related DBT Insurance - Life & Non Life,
premium payments Retail loans, ODs, Fixed
Deposits Recovery of loans BSE/NSE Trading Bolts
Enrolments-UID Card, NREGA job Card, Election Card
Land Record Digitisation, Electoral Rolls, E-Stamping
Payment of Utility Bills, Taxes, Levies
Railway Tickets, Certificates, Hall tickets
Exam Fee Payments, Online Form Filling
Election Commission, NREGS, NRHM, Bharat Nirman
PDS, School Books, Food Coupon
From Direct Cash Disbursement and recharge coupons to the poor, as well as delivering luxury items like automobiles or high end consumables to the affluent.
RURAL POOR
RURAL RICH
Services are offered across the entire income spectrum
Vakrangee Softwares Limited 29
– Franchise Model
Franchise Model
To establish the retail outlets using the Franchise Model, where - Franchisee VLE – Owner of the
rural retail mart and manager of the day-to-day operations.
Franchisor VSL – Project management, infrastructure set up, VLE training, access to new services and updating content.
Revenue Streams
Fixed
BFSI- Fixed monthly remuneration from banks (VSL – 100%)
G2C - Fixed monthly subsidies from government (VSL : VLE – 50% : 50%)
B2C - Fixed monthly rentals for OOH advertisements (VSL – 100%)
One Time Transactions – Eg. Account Opening, UID generation
On Going Transactions – Eg. BFSI – Deposit/Withdrawal, Sale of Products & Services
• Agreements signed with 31 PSU Banks including SBI & its associate banks, PNB, BoB, BoI, UBI, CBI etc
• Several B2C Alliances across categories - LIC, GIC, Vodafone, Airtel, Tata Motors, Mahindra & Mahindra and many more.
• More than 3,000 VSL branches are currently operational and running successfully.
Variable (VSL : VLE – 35% : 65%)
Number of Outlets
CURRENT: 3,200
FY 2015: 50,000
Current Operational Update:
Vakrangee Softwares Limited 30
Key Alliance Partners
Vakrangee Softwares Limited 31
Execution Through Franchise Model
Vakrangee requires only minimal additional human resources for incremental setup of retail outlets
Head Quarters
State Office
District Office 1
District Office 2
District Office N
Gram Level Office 2VLE 2
Gram Level Office 1VLE 1
Gram Level Office NVLE N
More than 3,000 Current Operational office locations
Corporate PMO
State PMO
Franchisee VLE
Vakrangee
Independent Project Management audit and
consulting by the Big four
Block Office N
District Office 1
District Office 2
Vakrangee Softwares Limited 32
Robust Technical Infrastructure
Rural Multi-Retail Outlet
Note : PTS – Pass Through Server CBS – Core Banking SolutionV-SAT – Very Small Aperture Terminal
V-SAT
FI Servers of respective
Banks
B2CPartner Systems
G2CPartner Systems
PTS
CBS of respective
Banks
Vakrangee Softwares Limited 33
The rural retail outlet to be based out of the premises of the VLE (franchisee).
Internet Connectivity : VSAT connection provides the seamless
connectivity & integration of the retail outlet with the respective banks through CBS, and B2C and G2C partner systems.
Power Supply : DG Sets to be placed at each outlet to have an un
–interrupted power supply.
Security Specifications : Defined User Policy - Authentication required for
each and every user of the server. Secured and safe transactions.
SSL Certification, licenses digital certificate: Installed for https safe and secure transaction
Security Audit - Quarterly security audit including vulnerability and penetration testing
Capex Requirement – Asset Light Model
CAPEX REQUIREMENT PER RETAIL OUTLETSr. No Item Name
1 Laptop + Charger2 Web Camera3 Printer-Scanner-Copier4 DG Set
5Furniture & Fixture (1 Table, 3 Chairs, 1 CupBoard, 1 Safe)
6 VSAT Connection7 POS Machine*
VSL will act as the project manager, while VLE will operate the retail outlet and bear all the operating costs and capex (except the POS machine).
** Vakrangee will provide the POS Machine to VLE free of cost, however it will be the owner of POS Machine.
CAPEX PER RETAIL OUTLET
Entity Amount (Rs.)
Franchisee – VLE 1,25,000Franchisor – VSL 20,000Total Capex 1,45,000 **
Asset Light Model – No Major Capex requirement
for Vakrangee
Rs. 1,45,000+ taxes
Total Capex Per Outlet
Vakrangee Softwares Limited 34
– Store Economics
VSL – FranchisorPer Retail Outlet (In Rs.)
Per Month
Year1% Gross Margin
Total Revenues1,75,00
021,00,0
0025 - 30 %
BFSI 45 - 50% 35 - 40 %
B2C 25 - 30% 12 - 15 %
G2C 10 - 15% 28 - 30 %
PMS & DMS 10 - 15% 15 - 18 %
Cost of Sales1,25,00
015,00,00
0Operating Costs 1,500 18,000
EBITDA 48,5005,82,00
0% EBITDA Margin 26.0% 26.0%
Working Capital - - -Capex (POS
Machine)20,000
Total Capital Employed
20,000
VLE – Franchisee
Per Retail Outlet (In Rs.)Per
MonthYear1
Total Revenues 1,00,00012,00,0
00BFSI 45 - 50%B2C 40 - 45%G2C 10 - 15%
Cost of Sales43,000
5,16,000
Operating Costs 1,900 22,800
EBITDA*55,000
6,60,000
% EBITDA Margin 55.0% 55.0%Working Capital – 1 month(min - Rs.10,000, max – depending on business volumes)
1,00,000
Capex1,00,00
0
Total Capital Employed2,00,0
00Payback period (months) 4
Note * – EBIDTA Calculation excludes Employee Salary Cost as Franchise to be managed by VLE & his Family.
• 1Gram Panchayat => 1 branch => servicing more than 1,500 household Families.• Both VSL and VLE will benefit from higher transaction volumes. • Economies of Scope to drive Profits of the VLE - As new services are added and Transaction
Volumes increase over a period of time with no major incremental capex & operating costs, benefiting from high operating leverage.
Vakrangee Softwares Limited 35
Operationalisation Process of Retail Outlet
Campaigning to generate awareness and invite applications by circulating leaflets at gram panchayats, banks, haats etc.
Scrutinizing the applications received
Conduct online written test & interview
Verify KYC documents of VLE & Sign Franchisee Agreement with VLE
Vakrangee On-boarding
3 MONTHS 3 MONTHS
VLE On-boarding Go Live Go Steady
Dedicated Settlement Account opening with the VLE branch
Submission of KYC documents along with account number details to Alliance Partners like Banks, Business Partners and Government etc
CIBIL and Police Verification
Branch Code generation and Device ID generation
Deployment of IT infrastructure like hardware, software and VSAT
Commissioning of non IT infrastructure like generator, furniture and fixtures
Training and Capacity Building by Vakrangee and Alliance Partners
Transaction / Enrolment testing of the IT system
Go Live Certificate
The retail outlet attains the operational stability
The retail outlet achieves a target of opening 1000 bank a/c, 10,000 E top-ups, sale of 10 micro LIC policies, and sale of 1 New India Insurance policy.
Go Steady Certificate
Vakrangee Softwares Limited 36
Sample Go Live Certificates from Banks
BANK OF MAHARASHTRA PUNJAB NATIONAL BANK
Vakrangee Softwares Limited 37
Sample Go Live Certificates from Banks
UNION BANK OF INDIA
Vakrangee Softwares Limited 38
BANK OF BARODA
Sample Go Live Certificates from Banks
MAHARASHTRA GRAMIN BANK (MGM)
Vakrangee Softwares Limited 39
STORE LEVEL ECONOMICS - VSL
(Rs.) Per Month Annual Estimate
Revenue per Store
1,40,000 16,80,000
EBIDTA per Store
40,900 4,90,800
EBIDTA Margin %
29.21% 29.21%
– Summary
UNIQUE RETAIL FORMAT
EXCLUSIVITY SCALABILITYLOW CAPITAL
INTENSITY
HIGH OPERATING LEVERAGE
Till Date-Q1 FY14 FY2014 E FY2015 E
No of Outlets 3,200 12,000 50,000
Capex Per Retail Outlet (Rs.) (VSL Share) Rs. 20,000
Till Date -Q1 FY14 FY2014 E FY2015 E
Total Capex (Rs mn.)
60 240 760
• Opex Cost – Franchisee
• Negative Working Capital
Vakrangee Softwares Limited 40
Background:
• 1,00,000 + ATMs are currently operational only in Tier-I and Tier-II urban areas.
• In February 2012, RBI allowed non-banks to setup, own and operate White Label ATMs (WLAs) which would provide ATM services to customers of all banks.
Vakrangee has been granted “In-Principle Authorisation” by RBI for setting up WLAs in India.
Revenue Streams
• Vakrangee will setup, own and operate minimum 15,000 WLAs under its own brand in 3 years across the country.
Fixed Variable
Income from OOH advertisements
Financial Transaction – Rs. 15
Non-Financial Transaction – Rs. 5
Sponsor Bank
Vakrangee WLA
Cash settlement of transactions
Ensure adequate cash supply
Redressal of failed transactions
Vakrangee Softwares Limited 41
Other Key Projects – White Label ATMs
Other Key Projects
PDS (Public Distribution
System)
Computerization of Election
Commission
IGRS(Inspector General of
Registration & Stamps)
UID (Unique Identification
Project, AADHAAR)
Implementation of Biometric Smart Card based PDS in Haryana through computerization of entire PDS scheme.
To create 6 million UID linked Smart Ration Cards.
To install & operate ~9300 Smart Card POS Terminals.
Allocated in FY12 for 5 years
Computerization of the election commission.
Generated ~100 million voters’ identification cards and managed over 100,000 citizen facilitation centers across Maharashtra, Rajasthan, Gujarat and UP
Completed collection of electoral roll data of around 95 million people across 38,475 gram panchayats in UP.
Computerisation of the process of registration of documents and recovery of stamp duty as per the Indian Stamp Act.
Computerized registration of marriages, societies, firm, non-trading companies, etc.
Operation of Nagpur zone offices on BOT basis (approx. 144 offices,160) for 5 years.
Enrolments of residents for issuance of unique identification number which will be used for delivery of all government benefit schemes.
Vakrangee is a leading enrolment agency empanelled with UIDAI on pan India basis under Tier T3F4 category.
Highest UID enrolments of more than 30 million residents till date
Vakrangee Softwares Limited 42
Summary Outlook – Next 3 Years
(Rs. Mn) FY13 A
Projects Revenu
e
% of Total
Revenues
EBITDA %
Rural/Retail 4,648 29.8% 15.00 %
UID 1,020 6.6% 37.00%
Other E-Governance Projects
950 6.1% 39.89%
Legacy - PMS/DMS/ Others
8,940 57.5% 27.00%
Total 15,558 100% 25.16%
FY16 (E)
Revenue% of Total Revenues
EBITDA %
67,400 90 % 20-25 %
1745 2.% 30-35 %
368 1% 19-25 %
5000 7% 18-22 %
74,513 100% 20-25 %
• Business Model Transformation – 50,000 Rural Retail Marts to be opened in the next 3 years.
• Rural Retail segment to contribute more than 90% of the Total Revenues by FY 2016. Revenues to grow 4.8x at a CAGR of 68% from Rs.15,558 mn in FY13 to
Rs.74,513 mn in FY16E. EBIDTA to grow 5.2x at a CAGR of 73% from Rs.3815 mn in FY13 to
Rs.19991.6 mn in FY16E.Vakrangee Softwares Limited 43
Summary Outlook – Next 3 Years
Scalability with No Major Capex
Expansion from 3,200 Retail Outlets currently to 50,000 Outlets by FY 2015 e. Expansion is mainly through franchise model.
Vakrangee - Capex per Outlet – Rs. 20,000 per Outlet
Total Capex requirement over next 3 years FY14-16 – Rs.1000 mn.
Strong Operating Leverage
Economies of Scope to kick in as new services are added and Transaction Volumes increase over a period of time, with no major incremental capex & operating costs benefiting from high operating leverage.
EBIDTA Margins set to Improve to 26-27% by FY16E.
Return Ratios to Improve Significantly
No Major Capex required for Expansion and Pay Back period is less than 6 months.
ROCE to improve Significantly as Incremental ROCE is more than 100% in the Retail model.
Vakrangee Softwares Limited 44
Consolidated Financials – Profit & Loss Statement
Consolidated Financials FY2013 FY2012 % Change
Net Sales Income 15471.5 13531.8Other Operating Income 0.15 0.06Total Income from Operations 15471.65 13531.86 14.3%
Cost of Materials 11510.1 10919.8 5.4%Changes in Inventories, Stk in Trade & Finished Goods -291.8 -50.7 475.5%Employee Benefit Expense 285.5 124.7 128.9%Other Expenses 152.5 122.7 24.3%Total Expenses 11656.3 11116.5 4.9%
EBIDTA 3815.35 2415.36 58.0%EBIDTA Margin % 24.7% 17.8%
Depreciation Expense 1570.8 874.4 79.6%Finance Cost 859.6 557.9 54.1%Other Income 52.1 45.3 15.0%
Profit before Tax (PBT) 1437.05 1028.36 39.7%
Tax Expenses 393.65 319.66 23.1%% Revenue 27.4% 31.1%
Profit after Tax (PAT) 1043.4 708.7 47.2%PAT Margin % 6.7% 5.2%Earnings per Share (EPS) 2.08 1.42 46.5%
Vakrangee Softwares Limited 45
Consolidated Financials – Balance Sheet Statement
Particulars FY 2013 FY
2012
EQUITIES & LIABILITIES
Shareholder Funds
(A) Equity Share Capital 502.5 250.2
(D) Reserves & Surplus 4,635.7 3,918.8
Total - Shareholder Funds 5,138.2 4,169.0
Minority Interest 28.5 28.5
Non Current Liabilities
(A) Long Term Borrowings 1,456.8 1,559.6
(B) Deferred Tax Liabilities (Net) 828.8 731.6
(C) Other Long Term Liabilities 78.4 69.9
(D) Long Term Provisions – –
Total - Non – Current Liabilities 2,364.0 2,361.1
Current Liabilities
(A) Short term Borrowings 2,852.2 2,155.9
(B) Trade Payables 1,754.7 1,218.3
(C) Other Current Liabilities 1,281.3 1,014.4
(D) Short Term Provisions 406.9 214.6
Total – Current Liabilities 6,295.1 4,603.2GRAND TOTAL – EQUITIES & LIABILITIES 13,825.8
11,161.8
ParticularsFY
2013 FY
2012
ASSETS
Non Current Assets
(A) Fixed Assets 4,371.2 5,516.2
(B) Non-Current Investments 23.1 14.6
(C) Long Term Loans & Advances
242.8 330.2
(D) Other Non-Current Assets 97.9 47.2
Total - Non – Current Assets
4,735.0
5,908.2
Current Assets
(A) Inventories 537.7 244.4
(B) Trade Receivables 6,527.4 4,454.8
(C) Cash and Bank Balances 318.8 284.1
(D) Short Term Loans and Advances
191.5 196.1
(E) Other Current Assets 1,506.9 59.0
Total – Current Assets9,082.
35,238.
4
GRAND TOTAL – ASSETS13,817
.311,146
.6Vakrangee Softwares Limited 46
THANK YOU
AMMEET SABARWALContact: +91 9819576873Email: [email protected],Website: www.dickensonIR.com
ABHISHEK SHARMASr. Manager – Finance & Investor RelationsContact: 022 – 67765147, + 91 9167766763Email: [email protected]: www.vakrangeesoftwares.com
ADITYA JANIExecutive – FinanceContact: +91 9167766705Email: [email protected]: www.vakrangeesoftwares.com
Vakrangee Softwares Limited 47
NILESH DALVIContact: +91 9819289131Email: [email protected],Website: www.dickensonIR.com
ANNEXURE
Moving Up the Value Chain
PAST
Sub-Contractor
• Rashtriya Swasthya Bima Yojna (RSBY)
• MCA 21
EVOLUTION PHASE PRESENT
Prime / Lead Player Partner (Consortium Bids)
• Haryana Public Distribution System (PDS)
• Rural Retail Mart – Plan to Open 50,000 Rural Retail Outlets
• All India UID Project - Aadhar (UID)
• National Population Register (NPR)
• Common Service Centre (CSC) in Punjab & Rajasthan
• Maharashtra IGRS
ROLE – SUB CONTRACTOR
SECTOR FOCUS – IT / E-Governance
ROLE – LEAD PLAYER
SECTOR FOCUS – Retail/BFSI/ E-Governance
VSL has over the years Transformed from being an Sub Contracted IT enabler in E-Governance Projects into a Retail House offering G2C, B2C & BFSI services and a Lead Player in E-Governance Projects.
EBIDTA: 10 – 15% EBIDTA: 20 – 25%
Vakrangee Softwares Limited 49
ATM Penetration in India: One of the Lowest
India United States United Kingdom South Africa Brazil China
3,037 2,194 2,536 2,387
1,713
10,428
81
1,738
646 596 1,207
211
Card base to ATM Ratio ATM / million population
The ATM penetration in India is currently as low as 81 ATM per million population compared to 1,738 ATM/million in USA and 211 ATM/million in China. There is huge opportunity for ATM growth through the white label model. It is expected to reach 350,000 ATMs by 2017 in India.
Vakrangee Softwares Limited 50
ATM Market Sizing
BFSI – List of Banking Services permitted at Retail Outlet
Sr. No. BC Activities1 Savings A/C Opening
2 Deposit in Savings A/C
3 Withdrawal from Savings A/C
4 Remittances - A/C to A/C
5 Remittances - Tatkal
6Account Opening at /month/BC for first 5 months
7 Recurring Desposit A/C Opening
8 Deposit in Recurring A/C
9 Withdrawal from Recurring A/C
10 Savings Bank Overdraft
11 Savings Bank Overdraft - Disbursement
12 Savings Bank Overdraft - Repayment
13 Repayment in standard assets - Term Loans
14 Repayment in standard assets - Overdraft
15 Repayment in standard assets - Cash Credit
Sr. No. BF Activities16 Savings A/C Opening
17 Recurring Deposit A/C Opening
18 Current A/C Opening
19 Fixed Deposit (TDR/STDR)
20 Retail Loans - Disbursement
21 Retail Loans - Repayment
22 Over Draft
23 Kisan Credit Card - Disbursement
24 Kisan Credit Card - Repayment
25 Gramin Credit Card - Disbursement
26 Gramin Credit Card - Repayment
27 Insurance
28 Micro Pension
29 Self Help Group Management
30 Joint Liability Group Management
31Recovery in NPA Accounts - Substandard
32 Recovery in NPA Accounts - Doubtful
33Recovery in Loss & Written Off Accounts
Vakrangee Softwares Limited 51
List of Empaneled Banks – Agreements Signed
52
Sr. No.
Name of the Bank
1 Allahabad Bank2 Andhra Bank3 Bank of Baroda4 Bank of India5 Bank of Maharashtra6 Baroda Rajasthan Gramin Bank7 Canara Bank8 Central Bank of India9 Corporation Bank
10 Dena Bank11 Hadoti Kshetiya Gramin bank12 IDBI bank13 Indian Bank 14 Indian Overseas Bank15 Maharashtra Gramin Bank16 Jaipur The Gramin Bank
17Marwar Ganganagar Bikaner Gramin Bank
18 Oriental Bank of Commerce
Sr. No.
Name of the Bank
19 Punjab & Sind Bank
20 Punjab National Bank
21 Rajasthan Gramin Bank
22 State Bank of Hyderabad
23 State Bank of Bikaner & Jaipur
24 State Bank of India
25 Syndicate Bank
26 UCO Bank
27 Union Bank of India
28 United Bank of India
29 Vijaya Bank
30 Vidarbha Kshetriya Gramin Bank
31 Wainganga Krishna Gramin Bank
Vakrangee Softwares Limited
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