Virtual Galaxy Infotech highlighted its journey from a small Nagpur-based startup in 1997 to a listed AI-led software product company serving the BFSI sector. The company shared how its homegrown banking, digital payment and governance solutions are helping financial institutions accelerate digital transformation across India and emerging global markets.
Hello everyone and welcome to SmallCap Spotlight. I’m Mubina Kapasi and today the company that we’ll be speaking with is in the business of providing software products and IT solutions specifically for, unsurprisingly, the BFSI sector. But they also cater to manufacturing and enterprises with their ERP systems.
They also have e-governance platforms. Let’s speak then with the Chairman, Executive Director and CFO of Virtual Galaxy Infotech, Mr. Avinash Shende and we also have the Managing Director and CTO of the company, Mr. Sachin Pandey. Gentlemen, thank you so much for joining us today on SmallCap Spotlight.
Mubina Kapasi: Mr. Shende, first I’ll pass it over to you. Could you walk us through what exactly Virtual Galaxy Infotech’s array and gamut of services provided are? Is it just services or is it products as well? And roughly what the journey has been like for the company?
Avinash Shende: Thanks. Thanks for the introduction. So, Virtual Galaxy is basically formed 28 years ago in 1997 by myself and Sachin. We both are the co-founders of the company and we are a first generation entrepreneur. We don’t have any background.
We are a typical Marathi family where businesses have not happened. So, in that era, we started the business and when we started the business at that time the software was in the early stage, we can say it was a dis-cooperating system kind of a system we are working on that. In that era, we have started at Nagpur and we started developing software for various co-operative banks, co-operative societies and from where our journey begins with getting an order from one of the co-operative bank in locally based at Nagpur.
And then the journey begins and then a lot of clients has got added because our services are and products are very good and mainly we are a product-based company, we are not a service company. So, we already have all our products are homegrown and all IPRs are with us only. So, it is specifically it is a product-based company and now we are integrating all AI functionalities to each and every product of us.
So, now we are moving towards the AI-first company where all products are AI-based products. So, the idea basically while engaging in this business like immediately after our engineering graduation, we started this business and in 97, we convert this company to a private limited one. During that phase, we initially also started with the way Avinash told that the disc operating system based or novel based systems in which there is a COBOL based and BITFIELD based product initially launched.
But quickly we had converted this to a new technology-based product where there is a power builder as a front-end and back-end Oracle, we started the journey. So, quickly change ourselves to the latest technology which is basically a relational database back-end and front-end which is a rapid application development tool. So, it is a application software development in which we started our journey.
And then to the various cooperative banks, there are various sections of the cooperative bank in which we expand our footprints like there is an urban cooperative bank, then there is a district centre cooperative bank, there are state cooperative banks. All those banks which functions although in cooperative manner, but the way they handle the system are a little bit different. Those variations are also addressed.
Someone gets governed fully by the RBI, the other one is get work under the umbrella of NABARD. So, there is a priority-based lending which has to be dealing with. Lot of compliances are there, those compliances regulatory activities, lot of departments which are engaged with this like your income tax, now the GST are a little bad, the FIU where the fraudulent things should not be done.
So, all those things should be covered under the one umbrella which is a product which records, it gives the response to the customer based on various business intelligence they want from which they can increase their business by getting that info, intelligent info as well as giving compliances to the concerned department to prepare themselves as a transparent kind of business unit. So, there we have taken the lead and because of which we got a very good response from the market and then we further expanded our wings by adding another product in the figure which is a core banking software which works on the browser based in various browser. It is a browser agnostic which runs on various browser that time, the latest technologies which are ASP.NET then further get added with the MEAN which is basically from the Google.
So, it is node.js. There are actually the technologies things which I am explaining you and background again on the back side there is a robust database which is basically Oracle through which we launch the product and core banking got a very good response and in limps on bound we got the business from across the India. We also got the business then because of the new technology and the product robustness from the emerging market from African side. So, those are get added.
Further to add that we added a lot of other products within the same ecosystem wherein the digital expansion was very much needed and anything which is reach out to the customer digitally you can manifold your business. If you see our punchline also in our business you will find maximise the opportunities. So, maximising the opportunities are basically through digital way only you can approach and quickly engage the customer and there can be a large number of customer base which can experience a good set of services from you and it will be a long lasting relationship because you are approaching the customer first.
So, that we have incorporated using the another product called VPay which is a digital platform through which there is a business engagement of the customer. Then a lot of things like billing then you are making the payment receiving the payment and getting the information all those things digitally whatever possible. So, apart from the internet banking mobile banking there is another channel which we have made available because lot of banks who are not capable enough to launch their own digital banking features.
So, this get a helpful tool for them to be in the market at par with the bigger banks. So, that was the idea and then we launch. So, now you see there is a lot of products and then combining it becomes a solution.
So, for the BFSI we are having a solution company although a product company combining these products together giving them a total solution and that solution is encompass and offer it as a hybrid integrated SaaS model. Now it is a AI led SaaS model which we can say because we also launched the AI products. Now if you talk to the in brief about the BFSI segment you will find there is eBanker core banking software then there is which comprises the internet banking mobile banking everything and various other products which are there in the specifically in the gamut of eBanker.
Apart from that there is a loan originating system then for digital we just discussed this WePay is there. Then now the banks also require to have a separate product for auditing being this everything is digital the audit activity is also happened in a digital manner. So, there is internal audit concurrent audit even information security audit all this can be done with the a hub of audit which is a audit flux software which we have developed and offered to various banks.
There is a FinFlow which is basically a software which in line and tune with the open banking platform for the MSMEs and other kind of you know the customers which are emerging customers and the corporates wherein they can quickly get the lending by getting a transparent cash flow and other details connected with the core banking system of the bank. So, that way the relationship is very close bank is knowing everything about the customer and they can fund them quickly. So, most of the MSME their challenge is basically the funding which is required outpost important while they are expanding their business and this is very helpful product which we would like to highlight.
So, there are AI related products now if you see there are products which is called virtual Vani for the conversational AI in which now this agent itself sits and talk to the customers and resolve lot of you know their service areas like you know explaining about the availability of I mean when the EMI needs to be paid how much you can get the you know payments in terms of the lending etc. Lot of activities in which this can be utilised and there is a secure AI which is a secure view AI which is basically through computer vision we have done. So, these are all helpful you know in the BFS segment also there is a separate product line which we have for the e-governance in which we address the government and their departments which can be completely transformed using digital transformation in which there are products which are there for them like the ARP product which they usually wants to have and apart from that there is a AI base and the another is basically the latest which is called as the blockchain based product in which there is a forward contract type of arrangement and there is a backward traceability kind of arrangement which is called immutable data whatever data chain you know get generated it is not going to be tampered.
So, there creates a specific transparency which is required in the government. So, that kind of things are available with us being it’s a nuanced technology based company I hope there will be a definite future in the market.
Mubina Kapasi: So, I guess in a way what you know cooperative banks which might be smaller in size which most definitely are smaller in size than your regular schedule banks y’all are digitising all of their operations in a way and y’all are providing that sort of IT support that they need to be able to provide the same kind of services to their customers that you know any other regular bank would provide you know.
You know but before I go forward and ask you about your expansion plans etc I you know there’s something that struck me what you said and that is that at a time when you know you guys wouldn’t even think of starting a business y’all did. So, I just want to fast rewind again back to the 90s about both of y’all and how did y’all meet and what actually inspired y’all to go the entrepreneurial way and start a company like this.
Avinash Shende: So, basically we met after our 10th we did and then we do met in college engineering polytechnic college initially we done the engineering diploma and then engineering.
While doing that the things are like that we want to go for an enterprise we want to do the business. So, job is never the option. So, we never opt for any job when neither we prepare our resume at any point of time.
So, immediately we started our business while doing the engineering also we are doing some small small jobs as well and that is a stepping stone into the business and once the engineering is completed we jump into the full-fledged jump into the business definitely there are a lot of challenges we don’t have capital we don’t have contacts we don’t have any kind of access to a business or a business decision makers. With those difficulties we started the business and that is why we chosen a cooperative field where the local decision makers are there. So, we then tap them we have we done various surveys where we can pitch the product.
So, cooperative was the right sector for us to enter into and those days this product is not there for the cooperative banks and cooperative societies as well. So, we enter into it. So, a lot of it’s a journey of a lot of difficulties a lot of hurdles and that both of us has successfully conquered and now reached to such a stage where now we are a listed company proudly a listed company.
Mubina Kapasi: Yes. All right. Now you know if I just look at the IT sector in India they are obviously very dependent on exports but from the way I’m gauging your story I think you are one of those unique IT software companies that’s actually more domestic looking and more India you know orientated I’m assuming since it’s cooperative banks most of your customers are Indian.
So, I just like to understand a little bit about your customer profile. I know banks are a big chunk but would you all also be looking at catering to other industries or if you could give us like a rough breakup of where your revenue comes from.
Sachin Pande: Sure but I mean just want to address this what you just mentioned. We do have a large chunk of business from the BFSA particularly from the cooperative banks that is true but we are expanding in the African market also. If you see in the cooperative I already discussed with you that there’s a state cooperative bank two state cooperative banks are our clients. 11 district central cooperative banks are with us as a client out of 300 DCC banks which are there and specifically 13 Maharashtra out of which 11 we have already received.
Then there are urban cooperative banks around 1500s of that and we got 50 plus something like that and 150 odd such clients are right now engaged with us and what we are doing is expanding it. Expanding in the other countries like in the emerging countries of Africa wherein there is a Tanzanian bank which is basically a DCB bank in Tanzania which is a commercial bank scheduled commercial bank and they basically listed in their stock exchange as well. Then there are a lot of cooperative societies kind of you know stuff who also extend the loan takes the deposit but either they are not handled directly by the you know central banks.
However, the state governments of those corresponding states in the countries you know control controls them and monitor them. So, there is a suppose or credit unions which are also our clients in the Africa. Then you have other countries in African side where there are the development corporations which are basically lending the funds to various MSMEs and you know emerging companies where they would like to extend them the credits so that the overall economy should get the improvements that is what the idea and for that the orders we have received where the World Bank funding you know sort of projects where we bid and we got based on our quality to the two countries one is this you know Malawi and the other is Botswana.
So, similarly there is a huge scope immense scope in the emerging market developing countries wherein you can offer these services solutions and products to them in which why they choose us because we are having a complete solution which is reliable AI based enabled and along with the latest technology it’s a reliable and compliant with all the regulatory authority and bodies. So, with this it is a cloud ready platform quickly rolled out these are all the advantages what we have because of which we are getting a good traction from that market also. Apart from that India is a good story big story now on the fintech side it’s a you know a lot of things are happening.
So, on the fintech side you are actually extending the business kind of you know branch to the specific bank why your technology solution. So, there also we are getting good traction and we are also trying to get the other markets particularly from the NBFC sides now because what happened that the RBI is now insisting NBFC is that instead of simply putting LOS LMS separately you should have a combined core banking product for the NBFCs which are at least having 10 or more than 10 branches. So, they want a transparency there also and you see lot of regulations are happening for the good things for the customer in which these core banking platforms are preferred rather than having the individual silo kind of you know products which right now running there in those particular segment.
This is what I am telling you where we would like to expand. Going forward on the e-governance side also is customer centric rather than citizen centric things and internal you know monitoring and transparency kind of things which are required by the government. For that we have a e-governance product and we are also expecting a good chunk of business in near future.
This is what actually we are doing right now.
Mubina Kapasi: So, as I see there are two big changes that will keep happening going forward as well. One like you mentioned that you’re becoming an AI first company.
I think that’s already in the process and the second is that you’re expanding into outside of India markets. Now, these are new markets, there are different regulations, there are different operations and you know principles etc that are running. So, in the midst of these two how are you looking at your workforce because for IT talent has obviously been a very big thing but with AI that’s changing and the fact that you’re entering a new market again it may make your look at how your talent is also ready to cater to that external you know that new market.
So, keeping these two things in mind I wanted to see how you’re looking at your talent pool today.
Sachin Pande: Yeah, so you see the product pool what exactly it is? It’s a generation of you know the outcome of the experts, their domain experts and the technical expert together. Combining this you are delivering this product to the customers.
Now, we are having a talented pool of the domain experts which are called product experts who actually analyse the requirement of the customer maybe it is Indian or the you know outside and what best feature which are basically makes us a differentiator kind of thing that also they analyse. Based on that we have a good talented resources of the technical side wherein the fusion happens and you get a product which is ready up and ready along with the you know requirements and the compliances and certain features which are required by the specific country and based on that the products are rolled out. So, the advantage is being the advantage is being we have a you know combination of best people from the domain and product side as well as from the technology side mixing them and generating and creating a indigenous product which generally has got the ability to deliver a robust product along with the nuanced technology because of which you know we are there in the market and getting good traction the way I told earlier also.
So, the number of you know team right now we are having around roughly around 400 plus out of which we can say that the product side and the engineering capability side technology side roughly around let us say half of that they are specifically for this particular activity rest are for implementation testing then you are you know support side and system side. So, they are all giving the additional functionalities for offering a combined product services to the customer. So, this is what the arrangement which we have because of which the overall robustness in the product is exhibited.
Mubina Kapasi: So, you all are fully equipped to cater to a small cooperative bank you will have the entire stack ready of sorts you know for a bank that wants to massively expand.
Sachin Pande: Now to be small just want to interrupt. We are capable of handling large banks also being this as a big real-world product. I am telling you that the some banks which are district central cooperative bank having 135 plus bank branches they are using our product. Earlier they were using the Infosys product through the I mean the Wipro as a partner through NABARD you know and there are two banks district central cooperative bank one is Yaukmal DCC and other one is Aurangabad DCC both get shifted to our product based on the features what we offered them and a lot of challenges they were facing towards the quick you know customisation change request acceptance and you know rolling out the different kind of reports which they would like to quickly comply to their governing bank which is NABARD. Although NABARD has given earlier you know product to them they choose to you know replace that with our product that is what something I would like to highlight here.
So, we compete with them we are having enough capability to roll out the product to the bigger large scale. In fact, you see these state cooperative banks are bigger enough they are actually you know expanded to a combined complete one state. So, we are addressing that kind of software also I mean it is a fully capable product wherein if you are having bigger number of branches maybe even thousand or more the product will definitely run smoothly sufficient you know transactions can be recorded at you know at large and quick results and reports can also be generated it has got a capability and we are trying to get the bigger orders also.
Avinash Shende: So, in short we are not the product is started with the small banks and organisations but now it is at the scale now we are very ready to deploy our product at various commercial banks and then various even a bigger bank and for that we are trying into the Africa where the banks are at the national level. So, that is what Sachin is saying that we have a client as a development corporation which are the subsidiaries of their reserve bank basically. So, we are working with reserve bank of Malawi, we are working with Malawi agriculture and industrial cooperative bank then we are trying for various countries like Zimbabwe, Botswana and other eastern African and southern African countries where the banks are commercial banks and offering their solutions and services to the country.
So, it is not like that we are meant for a small client now we are equipped very well equipped with the offering our solutions to the bigger client and at a global scale with the global quality as well that is what I want to add. Well, you have answered my next question then.
Mubina Kapasi: So, now I have another follow-up question the fact that you will have basically been able to take away clients from companies like Infosys and Wipro and Nabad in a way as well.
I want to know what do you think you are bringing to the table why are clients shifting to you I mean what are the reasons roughly that they give you what is that added factor from virtual galaxy?
Sachin Pande: Yeah. So, you see the I am saying those are the bigger companies no doubt they are having excellent product I am not saying denying that fact. However, quick service and the quick customisation which is basically the need of our for those cooperative banks which are districts and inter-cooperative banks there are certain schemes which they usually launch like you know the farmers waiver interest waiver scheme or even complete loan waiver schemes and based on that there are a lot of reports which needs to be addressed quickly and reply those things to the concern compliant body compliance body like Arnabad there they are missing.
So, there is a deviation in the product which needs to be addressed quickly which was not made available those days by the product and through their partner because of which we got the solution ready and the advantage which is there with us and being a company which swiftly manage these changes we got the opportunity and we grab it. Same is the case there in the Tanzania or let us say you talk about the development corporations where we beat even competition with the Temenos which is a very good company European company although I mean they are large and big size companies the procedures and things are okay but moving quickly changing the things according to the customer’s need there they lack. Here the brand India the technical people the pool of technical people aspire to make the changes you know as per the customer’s requirement and that swiftness which makes us different than them and because of which we usually back the order and quickly implement also.
Mubina Kapasi: All right gentlemen we leave it at that. Thank you so much for joining us today and explaining everything about Virtual Galaxy and of course your future plans as well. Thanks a lot.
Thanks a lot. All right well that was the management of virtual galaxy infotech sharing the details about the company and their future plans and ambitions as well but remember this does not comprise investment advice please conduct your own research before taking any investment decisions. Thank you so much for watching and stay tuned to small cap spotlight.