OUR VISION IS NOW SET TO CREATE THE WORLD'S LARGEST FRANCHISEE- BASED DISTRIBUTIONCHANNEL IN INDIA. OUR JOURNEY FROM FY2018 TO FY2019 MARKS THE BEGINNING OF OUR EFFORTS TOCONVERT OUR NON-EXCLUSIVE KENDRA NETWORK TO THE NEW ADVANCED FORMAT THE NEXT-GENVAKRANGEE KENDRA.
For Vakrangee FY2019 was a year of transformational rejuvenation. During the year wetook many of our old format Vakrangee Kendras to a standardised and highly recognisable"Next-Gen" format. They each became branded stores for delivering a consistentconsumer experience and well-defined service levels. During the year under review wesuccessfully launched 3504 Next-Gen Vakrangee Kendras spread across 19 states 366districts and 2186 Indian postal codes. Out of our 3504 outlets 200 outlets are inLeft-Wing Extremism (LWE) districts and 476 in tribal districts. It was the year in whichwe resoundingly fulfilled our stated objective of transforming our Kendras into India'sbest version of multi-service outlets in terms of infrastructure ambience andconvenience. It was also a year in which we enhanced our services portfolio significantlybringing the widest range of options to our customers while giving our franchisees a muchfaster path to breaking even and profitability. As we move forward to expand our new breedof Kendra across India I believe that our growing network will benefit immensely from aregimented degree of standardisation and consistency in terms of the quality of ourfacilities and in terms of the service levels we offer our customers.
Indeed FY2019 was also a remarkable year in terms of our achievements on the ground.We were recognised on a global level by Guinness World Records for the most storeslaunched simultaneously at multiple locations across India on 14th January2019. We launched 1107 Next-Gen Kendras across the country at precisely 11:07 AM on thesame day. Vakrangee has also been awarded as the best 'Financial Services Retailer of TheYear' at the Indian Retail Awards 2019 for achieving excellent growth and customersatisfaction.
Empowering the Indian Economy through Financial Inclusion
The Indian Government since 2014 has maintained an uninterrupted focus on financialinclusion. Towards that end many key initiatives such as Jan Dhan
Yojana Direct Benefit Transfer of subsidies into the bank accounts affordable microinsurance schemes amongst others have been proactively initiated and developed by theGovernment. With a strong second-term mandate of the incumbent Government one canconfidently look forward to a re-energised strategy towards achieving even greaterfinancial and digital inclusion across the country.
To ensure that financial inclusion permeates within the Indian rural and semi-ruralareas one needs to focus on the three most crucial needs - namely inculcating the habitof saving money; providing formal credit avenues; and plug gaps and leaks in publicsubsidies and welfare programmes. To achieve these objectives one needs to focus onmaking financial services widely available to all sections of society. These includeservices such as basic savings bank account; access to need based credit; remittancesfacility; insurance and pension products.
The central government newly released key focus areas include multiple strategiestowards achieving financial inclusion in the country. It propounds wide accessibility tobanking within a distance of 5 kms of every individual. The focus is also on furtherpromoting digital transactions and enabling the digital delivery of government services.As the rural and semi-urban population of India remains highly underserved alleviatingfinancial exclusion is essential to the overall growth of the economy.
To that end Vakrangee's business model and growth plans are truly in sync with meetingthis critical need of the nation. Our business model is specifically designed to cater tothe requirements of the unserved and under-served sections in the society. Today ourVakrangee Kendras have become multi-purpose convenient stores located across urban ruraland 'difficult to reach' areas of India. We offer a world of convenience just around thecorner creating an environment for the ease of urban dwelling to reach the doorsteps ofrural dwellers. Through our 'one stop shop' outlets we are making banking insurancefinancial services ATM assisted e-commerce e-governance and logistics that is allbasic necessities accessible to the Indian citizens at their doorstep.
With India's majority population being concentrated in the rural and semi-urban areasthis market stands to be a buoyant opportunity for your Company. Our stakeholders can takegreat pride in knowing that while we make our journey ahead a rewarding one in terms ofvalue and wealth creation we are doing so by fostering greater financial social anddigital inclusion for India's people and its economy.
Our Journey Ahead
Our vision for the next few years is set to create the world's largest franchisee-baseddistribution channel offering a plethora of products and thousands of services to thelargest under-served consumer market of India. Our journey from FY2018 to FY2019 marks thebeginning of our efforts to convert our non-exclusive Kendra network under the newadvanced format the Next-Gen Vakrangee Kendra. The journey of this transformationhas not been easy as reaching the milestone of launching 3504 Next-Gen Vakrangee Kendrashad its own challenges. However I am glad to inform you that we are now well positionedto face any obstacle and are comprehensively focused on delivering our goals. Our plannedtarget is to have a last mile presence across all postal codes covering each and everyGram Panchayat in the country. We have set ourselves the goal to reach 25000 Next-GenKendras by FY2020 and 300000 Next-Gen Kendras by FY2025. Our aim is to become India'slargest consumption platform.
I am pleased to report to you that despite a year of major transformation and Kendraupgradation your Company attained a commendable total revenue of '1588.20 crore andProfit After Tax (PAT) at '25.23 crore. Naturally these numbers are materially lower thanthe previous year since we entered a major transformational journey requiring thewholesale morphing of our old-format non-exclusive Kendras into our Next-Gen Kendras. I ampleased to inform you that early indicators show encouraging financial performance comingout of the new format Kendras. Operating under two different models- 'Gold' and 'Silver'both these new Kendra models come with advanced technological capabilities and arecrossing
I BELIEVE THAT OUR GROWING NETWORK WILL BENEFIT IMMENSELY FROM A REGIMENTED DEGREE OFSTANDARDISATION AND CONSISTENCY IN TERMS OF THE QUALITY OF OUR FACILITIES AND IN TERMSOF THE SERVICE LEVELS THAT WE OFFER OUR CUSTOMERS.
break-even points well within 18-24 months of starting. The profitability of theseKendras has also improved significantly due to the service levels extended through thesemodels; greater foot falls; and higher customer satisfaction. Overall we attained a countof 3504 operational outlets as of FY2019 with approximately ' 9.5 billion monthlythroughput (as of April 2019) based on close to 4 million transactions taking place on amonthly basis on our Next-Gen platform. Due to an increase in the footfalls in the outletsand upgraded quality of services these franchisees are reaching their break-even pointvery quickly as compared to the old format Kendras.
Our franchisee-based network is founded on an asset-light model and we are adequatelyresourced to scale our network without the support of any new debt. We are leveraging onour efficient model to be the most trustworthy physical as well as online conveniencestore and financial service aggregator across India. As a debt-free company with a healthybalance sheet running on an asset-light business model your Company is comfortablyplaced to fund its expansion plans through its own accruals going forward. As we expandour operational Next-Gen Kendra outlets significantly over the next financial year Iwould expect our top and bottom lines to also improve commensurately over the current andensuing financial years.
Compliance and Regulations
In 2018 we were subjected to a series of unfounded rumours that created unwarrantedconcern and confusion in the marketplace. Pursuant to these events several audits andinvestigations were conducted by authorities and regulators. I would like to inform youthat we have received an update on the inspection report from the Ministry of CorporateAffairs which clearly states that pursuant to the inspection of Books of Accounts forthe last three years there are no irregularities to be found in our Company and there areno further actions pending pertaining to Vakrangee. Furthermore the Securities andExchange Board of India (SEBI) had investigated the trading activities in Vakrangee'sscrip and no findings or instances of any stock manipulation by promoter or promoter groupentities were observed.
In addition we have also received a clean chit from the office of Economic OffencesWing (EOW) to whom we had provided all the satisfactory replies along with supportingdocuments to the gueries ^ that were raised by them. Upon completion of their ^investigation the office of EOW have communicated that they have not found any substancein the price P or volume manipulation complaint and closed the enguiry. Apart from thesefindings I am pleased to inform you that we have always remained up to date with ourtaxes and statutory obligations. As before we endeavour to continue to be responsive andtransparent to our stakeholders. Despite an extremely testing milieu we remain on trackto achieve our larger business goals and deliver long-term and sustainable value to allour stakeholders.
In closing I would like to welcome on-board Mr.
Anil Khanna the new Managing Director and Group Chief Executive Officer of Vakrangee.With over four decades of proven business track record he has the right combination ofwealth of knowledge leadership and business acumen to propel our Company to new heights.I believe that his rich experience will prove to be highly beneficial for the long-termgrowth and success of the Company. I am sure that under his leadership and guidanceVakrangee will be able to broaden its strategic focus and achieve exceptional businessresults. We look forward to working with him and have faith in his ability to steerVakrangee to become a highly respected Indian corporate.
I would like to take this opportunity to thank our shareholders and employees for theircontribution and support. We also thank our franchisees and business partners for theirperpetual support and faith in realising Vakrangee's dream.
|Warm Regards |
|Dinesh Nandwana |
|Executive Chairman |