BLSE Services’ COO Loknath Panda shares insights on how the company is expanding digital access across India through banking, e-governance, and assisted services. With a tech-driven model and pan-India reach, BLSE continues to bridge the last-mile service gap. Tune in to the whole conversation.
Mubina Kapasi: India runs on digital, from our payments and purchases to even availing government services. Today on Small Cap Spotlight, I have with me a tech-enabled digital company that provides services from banks and the government to individuals at the grassroots levels. I have with me the Chief Operating Officer of BLSE Services, Mr. Loknath Panda.
Thank you so much, Mr. Panda, for joining us. And there are a variety of services you provide as a business correspondent, as somebody who provides e-government services. Could you break down your company a little bit and share with all of our viewers your business model and what exactly is it that your company does?
Lokanath Panda: See, we are a digital tech-enabled company at BLSE Services and we are providing services in three broad verticals.
One is serving the banking industry through a system called Business Correspondent and Business Facilitator in banking. Second is we are providing services to citizens for government services through a vertical called Government to Citizen Service vertical, G2C vertical. And the third service is Assisted E-Services, which is a lot of business to consumer, business to citizen services, which include things like issuing a PAN card or providing a, you know, IRCT ticketing system or, you know, courier or other essential services, insurance and so on and so forth, right? So, these are the three broad verticals that we provide services.
All of these are done through a digital backbone. So, everything that we do has to be recorded on a real-time basis in a digital system. So, we do not do any manual work, right? And we provide these digital services through a digital model, which means there is a physical person who is there as an entrepreneur in the local area, which is providing the service through this digital platform to the consumers.
Mubina Kapasi: Let’s start with the Business Correspondent service that you provide for banks. And I’m sure it’s a growing business because of Jan Dhan and the various government schemes that have come in to ensure financial inclusion. Could you tell us what kind of agreements you enter into with banks and financial services companies to increase their reach and penetration?
Lokanath Panda: See, you know, if you look at the Indian banking system, you know, we have very large banks, which are in the public sector domain.
There are very large banks in the private sector domain. There are banks in the regional space called regional rural banks. And, you know, then there is a cooperative segment.
So, there is a large setup of banking ecosystem in the country. However, the banks are running their business through branches, you know, and there are not so many branches because it is very expensive for banks to set up branches and run them, right? So, Business Correspondent model allows banks to extend their services through a digital platform to the citizens of the country in the far-fetched locations, including the rural, remote, hilly areas, as well as in the semi-urban areas where banks are unable to reach. So, we have agreements with, as of today, we have agreements with about 18 banks, starting with the largest PSU bank and the largest private sector bank in the country to the regional rural banks, right? So, we have a segment of all banks across and for them, we provide the Business Correspondent services in almost large part of the country in almost all districts in the country, right? Again, that is provided through an agent model where we engage somebody in the local area as an entrepreneur, train them and digitally enable them to provide the banking services to the citizens.
Mubina Kapasi: Who are your key customers in the banking industry?
Lokanath Panda: My key customers are central government agencies like EYDI and National Health Authority on the governance side. My key customers in the state governments are Uttar Pradesh, Karnataka, Gujarat, West Bengal and Punjab for state government-related government procedures and services projects. In the Business Correspondent domain, my key clients are State Bank of India, Punjab National Bank, Bank of Baroda, SDFC Bank, Portak Mahindra Bank, Karur Basia Bank and about five regional banks and several other PSU banks and private banks.
So, we have a total of 18 banks in the banking domain. Then we work with key insurance players like SBI General Insurance and others. We work with agencies for issuing bank cards like NSDL.
We work with IRCTC for providing ticketing services and so on. So, these are on the assisted e-services domain.
Mubina Kapasi: So, what’s your current reach like? How many towns, union territories, villages etc. Do you have presence in and is there any plan to expand that reach further?
Lokanath Panda: We want to become totally pan-India. We are already pan-India but we want to also cover all the pin ports in the country. We have reached over 60-70% of the pin ports now and we want to go to each and every pin port in the country.
Currently, we are already working in 660 districts in the country which is the majority of the districts. We are working in all states, all union territories except for Lakshadweep as of now. So, it’s a totally pan-India setup and we are in the deep end of the country including the border areas, including Himalayas, including the deserts of Thar.
We are in the left-wing affected areas of Chhattisgarh, Maharashtra and Odisha and a lot of north-eastern locations. So, we are there across the country and we want to further deepen this to all pin ports in the country.
Mubina Kapasi: You mentioned you also work as a partner with the government and you essentially bring government services to the customer.
So, tell us a bit about that part of the business.
Lokanath Panda: Typically, there are two types of government to citizen services. One that central government provides.
So, there are agencies of central government like UIDI which is creating the Aadhaar ecosystem. There is National Health Authority which is creating the Ayushman Bharat ecosystem. So, these are the central agencies which are taking their services to citizens and there are state government agencies.
So, we work with state government agencies for digital inclusion. We work with state government agencies for land records. We also in certain cases work with state government agencies for their customer enrollment for Aadhaar.
So, various types of government departments come into it because close to 850 type of services that are being provided by the government to citizens. They are being taken through this model to the doorstep of the person. So, the person doesn’t have to come to a government office.
Government services are closer to him and he can come to a trusted agent of this network and avail these government services.
Mubina Kapasi: So, what states or government bodies do you currently work with and how do you work on bringing more such contracts into your ambit and work with more such government bodies? As I said, we are working on the central government agencies like UIDI and National Health Authority. Similarly, at the state level, we work with the state health authority.
We work with an Aadhaar registrar entity. We work with the e-governance means of the state government for providing services like land, services like revenue, services like people’s birth certificates or their education certificates or their character certificates, stuff like that. So, there are various departments that we work with within the state government as well as in the central government.
The fact that you work with multiple states and multiple government bodies offering a variety of different services means that there are different rules and regulations and lists of compliances that you have to work with. So, how do you ensure compliance with all of these diverse regulatory requirements? We are, you know, VLSI services are a long-term player and, you know, VLSI services build very strong guardrails for providing customer data security, cyber security, and privacy protections, right? And we being an intermediary system for the government and the banks, you know, we do not hold the customer data at all in our system, right? These data belong to the respective bank or the government entity, right? So, anything that flows through us, passes through us is thoroughly protected, right? And, you know, our digital systems ensure that, you know, the integrity is maintained at all times. Let’s talk a little bit about business expansion.
How do you plan to manage your operational costs while scaling your services? Because it’s important that that bit is managed without blowing up your cost too much, otherwise it may hamper your profitability. While we are operating across, we are also very frugal, right? And we are very, very technology-driven operation, right? So, you know, if I am operating in a district, I would have one person to kind of manage the operation in the district and that person is enabled with all types of, you know, monitoring tools. And so that the monitoring of the agent network happens very effectively, right? And similarly, we would have teams sitting in the back end, our contact center and, you know, various wings of our activity to provide effective service to consumers through these networks.
And there’s a lot of monitoring that happens through tech, right? So, we are able to keep it very competitive, right? And able to manage a good profitability margin in this. You know, while you’re serving a lot of underpenetrated areas in India, in a way you’re doing a great social good as well. Are there any challenges you encounter, especially as somebody who’s basically working a lot on digital and by that extension, the internet? Most of these areas may not have a stable internet connectivity either.
So, challenges like that or any other challenges you may encounter? The challenges are twofold, right? One is the physical infrastructural challenges that you have. There may be a challenge in reaching there, you know, it can be a broken road, it can be a landslide in a Himalayan territory, right? It could be internet connectivity at certain states. So, if there is no broadband, then we will operate on a mobile network.
Then there are digital literacy, financial literacy issues, right? So, the first part is hard infrastructure, the second part is the soft infrastructure, right? But both the challenges are met through regular interactions and, you know, managing to run the operation through low bandwidth also, right? Most of our services can work on a mobile network and mobile network by and large is covering most part of our country today. Similarly, you know, we conduct trainings, whether online or physical, to ensure that the agents that we engage in the network, they are well trained to cater to these services of the citizens. So, between all the different services you offer, could you tell us which is the fastest growing, which has the highest incremental contribution to your bottom line? And how do you essentially allocate your resources, financial, human, etc.
to all of these different services? See, financial services are the largest across the spectrum of things that we do, because, you know, people need to access their money, people should be able to save, people should be able to remit, people should be able to, you know, get their money in time, and so on and so forth. So, financial services segment is the largest in the growing segment, amongst everything else. See, the resources are allocated to the most used service category first, right? So, whether it’s a, you know, the government service or whether it’s a financial banking service, accordingly the resources are allocated.
The assisted e-services is cross-sale, right? So, it works on top of the core service, whether it is a government to citizen service or a banking service. So, that’s how it is, right? The cross-sale helps us to retain certain margins and help the project, and also help sustainability at the last mile. You know, we’re seeing some innovation come from your end, we’ve seen the launch of something called as the Iris scanner, you have the BLS store mobile application.
How do you plan to stay ahead of the technological trends that keep emerging in the digital services sector? See, if you have to sustain the digital innovations that are happening, whether it is all the DPI that is happening or, you know, the services that we are bringing to the fore, there has to be sustainability at the last mile. You know, the person using these services must have access to these services through a low-cost, affordable mechanism, right? So, BLS store actually creates that form of digital inclusion that, you know, we kind of bring such devices into the fore, right? Which can be used, whether it’s a, you know, biometric device or a Iris scanner or a, you know, a printer or a lamination machine or a, you know, passbook printing machine or a microwave machine, you know, things that are helping these agents to further enhance their efficiency as well as make use of all the forms of available technology in this domain, right? So, plus also to cater to any citizen requirement for any digital products and services, right? So, that’s how the BLS store has come to being. So, this really helps the channel in a very positive way.
You know, you’ve made a lot of complementary acquisitions in the recent past. You’ve managed to grow them well and I think you’re considering more acquisitions too. So, could you tell us a bit about what you’re looking for, the capital you’ve kept aside for that? See, we are growing ourselves, the business is growing based on two strategies, right? One is that we get new clients either by participating in the new RFPs that are coming in and we see a lot of new RFPs coming in with the government stabilizing in this current term and also through, you know, partnerships that we do with businesses, right? So, one is that part, which is getting new business through our business development efforts, right? The second part of the growth comes through the acquisitions.
So, we are always on a lookout for businesses that are profitable. So, they are revenue accretive to us, debit accretive to us, from the profit accretive to us from the day one, right? And they should be adjacent to our business domain, right? So, if you look at the past acquisitions that have happened in BLSE services, ZeroMass was acquired because it was a VC. So, it had adjacency to the service domain of BLSE services.
And then in the recent past, we have acquired Adipidilis, which is in the business of loan sourcing, right? And both these acquisitions where if you see profit accretive from day one, right? And have brought a large network into the play. So, we are growing the network with this, we are kind of bringing more profits to this. So, this journey will continue that we will continuously be on a lookout for opportunities which bring us better network reach, be profit accretive from day one, right? So, that’s the model that we will progress.
And we are looking out for such opportunities all the time. You know, we were looking at the last few financial years and you posted a great revenue trajectory. Could you tell us what exactly contributed to this growth and how sustainable are all of these drivers? Our first goal is to maintain what we have created, right? So, that’s something that we are very, very focused on, right? And then on top of that, if we can get some growth.
So, the first, we are really, really focused on growing our organic business and then look for opportunities. So, first is we will sustain this, right? That’s the first objective, right? And then be on a lookout because of the availability of cash and utilize that for better purposes. And you know, what’s encouraging is that the top line growth is also being coupled by an EBITDA and PAT growth.
So, are there any measures that are being put in place to ensure that any contribution to the top line is accompanied by incremental margin expansion and of course, bottom line growth too? We are now just beginning to work on our cross-sell opportunities, right? We have just recently done tie-ups with SBI General Insurance. We have done tie-ups with a healthcare setup called Meradoc, you know. We have done a tie-up with an agency called Renault for kind of sourcing car sales for them, you know.
And we are continuously on a lookout for cross-sell, right? And cross-sell will bring better profitability while our core services will bring sustainable growth in our top line, right? So, both kinds of interplay will happen. And we are deploying a lot of new tech also for creating predictive analysis, creating better data-driven cross-selling, right? So, that will improve our margin as well. So, what’s next for the company? Any tech advancements, any new platforms that you are developing that are under construction to improve service delivery? And let’s say, if we had to talk five years from now, how different could the company look? See, we are moving, you know, as I said, we are always doing anything that is adjacent to us, right? Which means we are in a domain, we are in the D2C domain, we are in the VC domain.
So, we are looking at adjacent innovations, right? So, if today I have done VC and then loan sourcing business facilitator activity, maybe I look at a little more adjacent to that domains, right? Similarly, the D2C side, if you look at it, we had started with providing D2C services in the states, we looked at the central government, we are providing quality assurance setup for other quality assurance for national health authority. So, these are all adjacent. So, we are on a continuous lookout for technology enabled services, right? Which could both be in the back end, like the QA project or be in the front end, like the channel that we are driving for D2C and VC, right? So, both journeys will continue, right? And will be enhanced over time.
Mr. Pandan, it was an absolute pleasure getting all these insights from you. It’s a very interesting service model that you have and a business that you’re providing to the underpenetrated areas of India. Thank you so much for joining us.
That was BLSE Services Limited on Small Cap Spotlight. Thank you so much for watching. Let us know in the comments about what you think of the company and the industry that it operates in.