About BLS E-Services Limited:

Incorporated as a subsidiary of BLS International Services, BLS E-Services Limited focuses on providing digital governance services. The company works closely with state and central government agencies to offer e-governance solutions, including utility payments, Aadhaar enrollment services, and various citizen-centric initiatives. Its wide network and partnerships enable access to a diverse set of services, streamlining public access to government schemes.

Business Strategy:

BLS E-Services Limited leverages technology to ensure efficient delivery of public services. Its business strategy is centered around:

Partnerships with Governments: The company collaborates extensively with government agencies to deliver digital services, particularly in rural and semi-urban areas.

Expanding Digital Services: BLS E-Services is working towards enhancing its portfolio of digital services, particularly around e-governance, digital payments, and citizen facilitation services.

Scalability: Its business model allows it to rapidly scale its services across regions, improving its footprint and accessibility.

Focus on Automation and Innovation: The company continues to invest in technological innovations like Artificial Intelligence (AI) and cloud computing to streamline operations and service delivery.

Business Model:

BLS E-Services operates a service-based model, providing essential e-governance services through its own outlets and partner networks. Its revenues are derived primarily from commissions and fees for processing various transactions. By collaborating with state and central governments, the company ensures a stable source of revenue while promoting public-private partnerships.

A) Business Correspondent Services : The companies acting as Business Correspondents offer services such as account opening, cash deposit, cash withdrawal, fund transfer, term and recurring deposits, balance inquiry, AePS, etc.

B) G2C Services: The services related to Aadhar, pension schemes, PAN cards, insurance, passports, and other government schemes are covered under this segment.

C) Other Services: This segment includes services related to PoS, ticketing, assisted e-commerce, bill payments, skill development, telemedicine, tele agriculture, etc. These services can be further expanded to include retail and digital education businesses to ensure last mile delivery.

Board of Directors:

Shikhar Aggarwal – Chairman and MD
Sanjeev Aggarwal – Director and Co-Founder
Prateek Aggarwal – Director
Dinesh Kumar – Independent Director
Rajiv Aggarwal – Independent Director

Shareholding Pattern (as of September 2024):

Promoter & Promoter Group: 68.89%

Foreign Institutional Investors (FIIs): 1.42%

Domestic Institutional Investors (DIIs): 0.01%

Public Shareholding: 29.68%

Strengths:

Strong Government Partnerships: The company’s collaboration with multiple government agencies gives it a competitive advantage.

Extensive Service Network: A well-established network across India ensures wide access to its digital governance services.

Stable Revenue Stream: The company’s long-term government contracts provide a reliable and steady source of revenue.

Weaknesses:

High Dependence on Government Projects: Over-reliance on government initiatives may pose risks if these projects slow down.

Geographical Concentration: While the company has expanded its footprint, a significant portion of its business remains concentrated in certain regions.

Opportunities:

Growth of E-Governance: The increasing demand for digital governance services presents opportunities for expansion, especially in rural areas.

Technological Advancements: The adoption of emerging technologies can improve efficiency and open new revenue streams.

Threats:

Regulatory Changes: Any shift in government policies or regulations could impact the company’s operations.

Competition: The increasing number of private players entering the digital governance space adds competitive pressure.

Disc- Invested 2% of my portfolio

This took a while but played out. Did you hold all the way?

I think this has been the general assumption made on this vertical so far based on what I have seen in the AGM and concall transcripts. I think its fair considering the absolute lack of expertise in this vertical.

What we however should keep in mind is that bulk of the capital for this is from a US venture fund $15m (125 Cr) and another $13m (100 Cr) from promoters.

Nobody puts in this kind of money without clarity. The diworsification we are worrying about isn’t coming from internal accruals but from external capital and that’s a pretty big difference.

With that assumption I dug in a big deeper and here are the findings.

Key leads comes from the SAST disclosure

and the fund raise doc

Its clear from one of the earlier disclosures that Rare CP is also same ultimate beneficiaries Raisoni and Mehta

The people who are investing are Tarun Raisoni and his wife Rashi Mehta. What are their credentials? They co-founded Rahi and built it to a $400m revenue business (3200 Cr) in 10 years between 2012-2022.

The company was then sold to Wesco for $217m and Rahi became Wesco data center solutions.

Rahi’s capabilities?

So this is where Ceinsys’ data center capabilities are going to come from. From an investor who has built a 3200 Cr revenue company in 10 years and sold it for $217m and has then gone on to found Gruve in Feb of this year (Around the same time Ceinsys announced pref allotment). Gruve has since then done two acquisitions in SecurView and Netserv (both Pune based companies with around 100 Cr revenues).

Ceinsys has also hired the ex-CFO of Rahi who was instrumental is building Rahi alongside in the APAC market

So I think we can lay all apprehensions of lack of expertise in data center business to rest. Now the team is coming in with capital and expertise and we can only hope they repeat what they did at Rahi with Ceinsys. What would be even more amazing is if Ceinsys is involved in some way with Gruve which has people with serious skillsets – from the two guys that built Rahi along with Tarun Raisoni, the guys that built SecurView and Netserv and also a person who built a successful networking and virtualisation startup and sold to Google Cloud. I would be surprised if that happens but at the very least we should have a strong data center vertical in the next couple of years.

This too should now add up. I don’t think management’s guidance that pvt. sector revenues should be 50% in the next 2-3 years is completely baseless. Let’s see how it plays out

Disc: Invested since Oct ’23 and no recent transactions