In my previous article on VAKRANGEE Ltd., I had mentioned that I am estimating an Average Revenue per Month of about Rs.2,00,000/- from all the Next Gen VAKRANGEE Kendras, after a few months of operations. Some readers have raised questions/doubts about this figure. So let me present some explanations:
1) As per VAKRANGEE's March'18 result, the company generated a little over Rs.1600 crores in Revenues for the quarter from it's Kendra business. Assuming the company having all 45,000 Kendras active throughout that quarter, we can divide Rs.1600 crores by 45,000 to arrive at Average Quarterly Revenue generated by each Kendra, which comes to a figure close to Rs.3.60 lakhs. Dividing this number by 3, we get an Average Monthly Revenue per Kendra to be around Rs.1.20 lakhs. Obviously, not every Kendra will be generating this kind of Revenue. Some of the larger & older ones, could be generating in excess of Rs.2 lakhs or even Rs.3 lakhs per month. Whereas there could be many smaller ones, doing only Banking Correspondent business, generating less than Rs.50,000 per month. Since each Next Gen Kendra will be offering the entire bouquet of services, the Average Revenue per Month could easily cross the Rs.2 lakhs mark after a few months of operations. Obviously, the Average Revenue from an Urban Next Gen Kendra will be higher than that from a Rural one. VAKRANGEE shares nearly 75% of the Commissions/Fees earned from a Kendra with it's respective Franchisee, which is then accounted as a Cost by the company.
2) Consider Amazon booking business: Amazon offers VAKRANGEE a commission of between 2% to 8%, depending on the product category. Let's consider the Average commission to be 4%. Today one can buy almost everything via Amazon, right from a toothbrush upto an LED TV or from shoes to Caps. Many people, even from rural areas, have started buying stuff like Mobile phones, shoes, Laptops, clothes, even stuff like Mixer-Grinders or TVs or Coolers, etc. Online as it offers them a large variety of products to choose from. If each VAKRANGEE Kendra does an Average booking of goods worth just about Rs.50,000 per day on AMAZON, the Kendra generates a Commission of about Rs.2000 per day, translating into about Rs.50,000 per month, considering 25 working days in a month. Many of the Kendras, having larger population density around them, can do much higher amount of AMAZON business. Remember that most of the VAKRANGEE Kendras are located in areas where people do not have a proper Postal address. Hence it is convenient for both, the customer as well as AMAZON, to do business via a VAKRANGEE Kendra.
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3) Courier Booking/Delivery & Reverse Logistics for eCommerce Companies: Many of the VAKRANGEE Kendras, doing AMAZON business, were already handling Parcels. This provided VAKRANGEE the experience & opportunity to offer full fledged Courier Booking/Delivery services for many leading Courier Companies. How this works is: These Courier Companies will handover Parcels/Packages to VAKRANGEE's District Master Franchise, who in turn will be responsible to reach those goods to the respective local Franchises, depending on Pin Codes covered. With more & more people across the country making Online purchases, the demand for efficient Delivery mediums is on the rise. These eCommerce companies also need Reverse Logistics services to handle product-returns. VAKRANGEE intends to offer this service through it's network of Next Gen Kendras. Even if each VAKRANGEE Kendra handles on an average about 50 parcels per day, it can easily translate into Average Revenues of about Rs.25,000 per month from each Kendra. The demand could easily go higher in the coming months/years.
4) ATM Service: Most of the Next Gen VAKRANGEE Kendras are being setup in locations which have a large number of people from lower middle class residing nearby. Most Banks do not prefer to setup their ATMs in such locations. Standalone Bank ATMs have much higher operating costs as they need exclusive outlet with AC, Guard, Lights, Internet Connectivity, and also Cash replenishment tie-up with a service provider. All these things take the Fixed Costs of a Standalone Bank ATM to anywhere in the region of Rs.20,000 to 40,000, depending on the Rural or Urban location. Hence the break-even for Standalone Bank ATMs is around 50 transactions per day. In case of VAKRANGEE's ATM at it's Next Gen Kendras, most of the Operating Costs are saved as it doesn't need Exclusive outlet (for ATM) or a guard or separate AC/Lights. Even Cash replenishment is handled by the Kendra staff. Hence the ATM-specific Fixed Costs are very low and even those are borne by the Franchises. Every transaction at such White Label ATMs earns VAKRANGEE a fee of about Rs.25 or 30. Even if the Average number of ATM transactions per day is just 50 per ATM, it translates into about 1250 transactions in a month with 25 working days. Hence the ATM alone can earn in excess of Rs.30,000 in fees from the various Banks in a month on a conservative estimate.
5) Banking Correspondent Point: This is still the primary business for VAKRANGEE Kendras and is also responsible for propelling huge growth in the number of VAKRANGEE Kendras across the country. Many of the Kendras still continue to operate only as BC Points. These BC Points are mainly located in areas where there are good number of migrant labourers. These labourers transfer cash to their family member's bank account at their native place, after every few days. Most Bank branches take little interest in serving such customers and push them towards a Banking Correspondent. The BC takes care of such transactions and charges a small fee of about 1% of the amount. VAKRANGEE is probably the largest Banking Correspondent license holder in the country. VAKRANGEE's Banking Correspondent in my town, started as a single-person, single-laptop, operation a few years ago. But today has 5 people working there and 3 laptops. Most of the times all the people there are completely busy. Even on a conservative estimate, if each Banking Correspondent/Kendra handles just about 50 transactions in a day with an average ticket size of Rs.5,000/-, the total amount transacted comes to Rs.1,50,000/-, translating into a fee of Rs.1,500/- per day per Kendra. Hence this business alone could take the Monthly Revenue to something like Rs.40,000/- per Kendra.
The Four services that I have discussed above, together have the potential to generate Monthly Revenues of Rs.1.50 lakhs or more per Next Gen Kendra. Apart from these services, there are other services like Rail/Bus ticket bookings, Life Insurance & General Insurance sales, including Motor Insurance, Mutual Fund Investments, Bill Payments & Recharges, etc. All these services together can easily take the Average Revenue per Next Gen VAKRANGEE Kendra per month to over Rs.2 lakhs, after the initial few months of operations.
#VAKRANGEE
1) As per VAKRANGEE's March'18 result, the company generated a little over Rs.1600 crores in Revenues for the quarter from it's Kendra business. Assuming the company having all 45,000 Kendras active throughout that quarter, we can divide Rs.1600 crores by 45,000 to arrive at Average Quarterly Revenue generated by each Kendra, which comes to a figure close to Rs.3.60 lakhs. Dividing this number by 3, we get an Average Monthly Revenue per Kendra to be around Rs.1.20 lakhs. Obviously, not every Kendra will be generating this kind of Revenue. Some of the larger & older ones, could be generating in excess of Rs.2 lakhs or even Rs.3 lakhs per month. Whereas there could be many smaller ones, doing only Banking Correspondent business, generating less than Rs.50,000 per month. Since each Next Gen Kendra will be offering the entire bouquet of services, the Average Revenue per Month could easily cross the Rs.2 lakhs mark after a few months of operations. Obviously, the Average Revenue from an Urban Next Gen Kendra will be higher than that from a Rural one. VAKRANGEE shares nearly 75% of the Commissions/Fees earned from a Kendra with it's respective Franchisee, which is then accounted as a Cost by the company.
2) Consider Amazon booking business: Amazon offers VAKRANGEE a commission of between 2% to 8%, depending on the product category. Let's consider the Average commission to be 4%. Today one can buy almost everything via Amazon, right from a toothbrush upto an LED TV or from shoes to Caps. Many people, even from rural areas, have started buying stuff like Mobile phones, shoes, Laptops, clothes, even stuff like Mixer-Grinders or TVs or Coolers, etc. Online as it offers them a large variety of products to choose from. If each VAKRANGEE Kendra does an Average booking of goods worth just about Rs.50,000 per day on AMAZON, the Kendra generates a Commission of about Rs.2000 per day, translating into about Rs.50,000 per month, considering 25 working days in a month. Many of the Kendras, having larger population density around them, can do much higher amount of AMAZON business. Remember that most of the VAKRANGEE Kendras are located in areas where people do not have a proper Postal address. Hence it is convenient for both, the customer as well as AMAZON, to do business via a VAKRANGEE Kendra.
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}3) Courier Booking/Delivery & Reverse Logistics for eCommerce Companies: Many of the VAKRANGEE Kendras, doing AMAZON business, were already handling Parcels. This provided VAKRANGEE the experience & opportunity to offer full fledged Courier Booking/Delivery services for many leading Courier Companies. How this works is: These Courier Companies will handover Parcels/Packages to VAKRANGEE's District Master Franchise, who in turn will be responsible to reach those goods to the respective local Franchises, depending on Pin Codes covered. With more & more people across the country making Online purchases, the demand for efficient Delivery mediums is on the rise. These eCommerce companies also need Reverse Logistics services to handle product-returns. VAKRANGEE intends to offer this service through it's network of Next Gen Kendras. Even if each VAKRANGEE Kendra handles on an average about 50 parcels per day, it can easily translate into Average Revenues of about Rs.25,000 per month from each Kendra. The demand could easily go higher in the coming months/years.
4) ATM Service: Most of the Next Gen VAKRANGEE Kendras are being setup in locations which have a large number of people from lower middle class residing nearby. Most Banks do not prefer to setup their ATMs in such locations. Standalone Bank ATMs have much higher operating costs as they need exclusive outlet with AC, Guard, Lights, Internet Connectivity, and also Cash replenishment tie-up with a service provider. All these things take the Fixed Costs of a Standalone Bank ATM to anywhere in the region of Rs.20,000 to 40,000, depending on the Rural or Urban location. Hence the break-even for Standalone Bank ATMs is around 50 transactions per day. In case of VAKRANGEE's ATM at it's Next Gen Kendras, most of the Operating Costs are saved as it doesn't need Exclusive outlet (for ATM) or a guard or separate AC/Lights. Even Cash replenishment is handled by the Kendra staff. Hence the ATM-specific Fixed Costs are very low and even those are borne by the Franchises. Every transaction at such White Label ATMs earns VAKRANGEE a fee of about Rs.25 or 30. Even if the Average number of ATM transactions per day is just 50 per ATM, it translates into about 1250 transactions in a month with 25 working days. Hence the ATM alone can earn in excess of Rs.30,000 in fees from the various Banks in a month on a conservative estimate.
5) Banking Correspondent Point: This is still the primary business for VAKRANGEE Kendras and is also responsible for propelling huge growth in the number of VAKRANGEE Kendras across the country. Many of the Kendras still continue to operate only as BC Points. These BC Points are mainly located in areas where there are good number of migrant labourers. These labourers transfer cash to their family member's bank account at their native place, after every few days. Most Bank branches take little interest in serving such customers and push them towards a Banking Correspondent. The BC takes care of such transactions and charges a small fee of about 1% of the amount. VAKRANGEE is probably the largest Banking Correspondent license holder in the country. VAKRANGEE's Banking Correspondent in my town, started as a single-person, single-laptop, operation a few years ago. But today has 5 people working there and 3 laptops. Most of the times all the people there are completely busy. Even on a conservative estimate, if each Banking Correspondent/Kendra handles just about 50 transactions in a day with an average ticket size of Rs.5,000/-, the total amount transacted comes to Rs.1,50,000/-, translating into a fee of Rs.1,500/- per day per Kendra. Hence this business alone could take the Monthly Revenue to something like Rs.40,000/- per Kendra.
The Four services that I have discussed above, together have the potential to generate Monthly Revenues of Rs.1.50 lakhs or more per Next Gen Kendra. Apart from these services, there are other services like Rail/Bus ticket bookings, Life Insurance & General Insurance sales, including Motor Insurance, Mutual Fund Investments, Bill Payments & Recharges, etc. All these services together can easily take the Average Revenue per Next Gen VAKRANGEE Kendra per month to over Rs.2 lakhs, after the initial few months of operations.
#VAKRANGEE
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