Shikhar Aggarwal, Chairman
Dear shareholders
I am pleased to present the maiden Annual Report of the Company
following its listing on BSE Limited and National Stock Exchange of India Limited.
This is a momentous occasion for the Company in its endeavour to
enhance stakeholder value and a milestone for the sector, enhancing its visibility and
maturity as a fundable segment.
T H E S U CCE S S F UL I P O
The credentials of the Company and the prospects of the sector were
validated in the overwhelming response to the IPO, as the issue of equity shares by the
Company was oversubscribed by almost 162 times, indicating the confidence and conviction
in the Company's business model and sectorial direction.
We believe that this successful IPO represents a catalyst in the
Company's growth direction, empowering it to graduate to the next level. The proceeds
of the IPO of around H300 Crore will be progressively deployed in strengthening the
Company's technology infrastructure, consolidating existing platforms, creating the
financial foundation to commission over 1500 BLS stores, and creating a war chest to fund
complementary acquisitions. The IPO has done to more than merely enhance the availability
of financial resources. It was done to empower the Company to create an identity outside
that of its parent, and pursue an independent growth trajectory in keeping with the
growing potential of its sector.
We believe the IPO has come at the right time – not just for the
Company but also for the sector. The extent of subscription validated what we had always
believed: that the business of the Company was pitched at a vast and growing addressable
market, that this market represented the basis of enhanced life convenience for millions
of rural and semi-urban Indians, and that this represented the basic assurance that any
government would provide to its citizens.
The IPO also validates that for most governments with finite service
expenditure budgets, there would be a premium on moderating their cost structures,
reducing their direct staffing, and enhancing their service delivery through responsible
outsourcing – lower cost in exchange for enhanced service outcomes. We believe that
the IPO has given this business the visibility it requires to approach more government and
non-government agencies to prospect multi-year service engagement opportunities. In view
of this, the IPO is not just an outcome in enhancing stakeholder value but a catalyst in
the value-creation process.
R I G H T P LACE , R I G H T T I ME
At BLS E-Services, we are in the right country at the right time.
The Indian government is deepening the e-governance environment, where
public services can be provided at speed, ease, and convenience. The Department of
Administrative Reforms & Public Grievances formulated the National e-Governance
Service Delivery Assessment (NeSDA) in 2019 to catalyse a culture of e-governance and
drive digital government excellence. Some 56 mandatory services were assessed for every
State and Union Territory, while 27 services were assessed for Central Ministries. As per
the NeSDA report for States and Union Territories in March 2023, government departments
provided 15,601 services, of which 12,561 (80.5%) were provided online.
Besides, around 65% of India's population is rural, putting a
premium on financial inclusion. To promote financial inclusion, the Reserve Bank of India
permitted banks to engage Business Correspondents to deliver banking and financial
services. Financial institutions were encouraged to implement Financial Inclusion Plans to
achieve sustainable improvements, with progress monitored through metrics such as the
number of branches and business correspondents. These business correspondents act as
agents who provide banking services outside of traditional branches or ATMs, and these
have been playing a key role in promoting financial inclusion and generating employment.
This model, which has expanded more rapidly than traditional branches, offers services
such as savings accounts, remittances, and subsidies.
BLS E-Services is working with 15 banks and extending banking services
to remote areas where traditional banks have limited or no presence. By providing diverse
financial services through these business correspondents (including opening savings
accounts, facilitating remittances, disbursing subsidies, providing micro-loans, and
enabling insurance and investment products), we provide a critical intermediary's
role between banks and customers.
We believe that the IPO has given this business the visibility it
requires to approach more government and non-government agencies to prospect multi-year
service engagement opportunities.
Besides, our business correspondents network is instrumental in the
distribution of government benefits. Our business correspondents facilitate digital
banking services, promoting cashless transactions. In view of this, we are playing a
critical role in taking rural India ahead.
VAST AD D R E S SABL E MAR K E T
>At BLS E-Services, we believe that we are engaged in creating
engagement pipelines in semi-urban and rural India. These engagement pipelines are our
biggest assets; they make it possible for our services to be extended deep into
geographies. This empowers the Company to provide e-governance services on behalf of the
government or business correspondent services on behalf of banks along with assisted
services. The result is that our single outlet can be used to deliver various services to
diverse customers. This flexibility makes it possible for our Company to amortise fixed
costs across customers and services, enhancing our intrinsic profitability.
Our optimism is derived from the size and growth of the Indian economy.
India is one of the most populous countries with a GDP growing in the range of 7-8%;
however, the rural and semi-urban markets are under-served and under-penetrated in terms
of e-governance. This indicates that a future-facing company like ours will need to invest
aggressively to catch up with prevailing financial inclusion opportunities as well as
increasing demand for various citizen services.
As our parent company is servicing many countries across geographies,
we believe we can replicate our business model. The scale and complexity of the Indian
market are already proving to be a rich learning ground; the Company expects to leverage
this rich experience and extend its e-governance or business correspondent service to
other countries with a similar demographic profile.
ACQ UI S I T I O N S
At BLS E-Services, we are addressing this vast under-penetrated and
under-explored potential within India. We have provided adequate growth capital to grow
our business organically; we are also utilising our financial resources to acquire
competencies and capabilities that can accelerate our growth.
During the last couple of years, the Company acquired Zero Mass Private
Limited and Starfin India Private Limited. These acquisitions were complementary to the
Company's capabilities; they helped the Company enhance scale in a compressed period.
Starfin, acquired in August 2018, is engaged in the business of national business
correspondence for banks, customer services in e-governance, tie-ups with insurance
companies, facilitation of e-commerce, engagement with courier companies, utility payment
services, and other citizen-centric services. Zero Mass, acquired in June 2022, is engaged
in the banking business correspondent segment, operating as the business correspondent
network for banks through active customer service points. BLS Kendras, which is engaged in
the business of providing government-to-citizen services, was acquired in October 2022.
Each of these acquisitions proved business-strengthening and value-accretive, validating
their acquisition.
In June 2024, the Company entered into a definitive share purchase
agreement to acquire a 55% controlling interest in Aadifidelis Solutions Pvt. Ltd. and its
affiliates (ASPL), for an Enterprise Value of approximately H190 Crore. ASPL is one of the
largest players in India in the distribution and processing of loans for corporates and
individuals. ASPL operates through a hub-and-spoke model, with a comprehensive pan-India
presence in 17 States and Union Territories. ASPL comprises a network of 8,600+ channel
partners that sources loan enquiries, which will align with BLSE's portfolio of
Business
Correspondents-led citizen-centric last mile banking services.
ASPL's relationships and empanelment with the majority of the
financial institutions will fortify our network of 21,000+ Business Correspondent centres.
ASPL's asset-light, low working capital and commission-based model will contribute to
the Company's profitability, graduating us towards a new level of financial success.
O PT I MI S M
At BLS E-Services, we are optimistic of the robustness of our business
model. The business provides the Company with opportunities related to value-accretive
cross-sale and up-sale opportunities (assisted e-services). The business model is
asset-light; the Company's pan-India presence through 100,000+ BLS touchpoints and
1000+ BLS stores provides it with a broad-based presence with the potential for repeat
engagement. The business is not excessively dependent on a single revenue stream; customer
acquisition and retention costs are negligible. Going ahead, the Company will strengthen
and integrate technology infrastructure by creating a common services portal and mobile
application to enhance linkability, efficiency, scalability and profitability. It will
grow the network of touchpoints; it will widen cross-sale opportunities and empower
merchants to acquire and retain consumers by offering goods and services from the same
location.
CO N CLU S I O N
On the overall, we see the Company's business at the bottom end of
a long hockey stick curve that is expected to enhance value for the customer, consumer,
community, company, and the country.
| Shikhar Aggarwal |
| Chairman |