Excl: Payments solutions firm Oxigen buys 51% in mobile-based rural product distribution startup United Villages

13 Aug, 2012

Oxigen Services India Pvt Ltd, a payments solutions provider, has acquired 51 per cent stake in Jaipur-based United Villages Network Pvt Ltd for an undisclosed amount, a top company executive told Although the deal was struck earlier this year, the transaction was not made public.

According to Chintan Bakshi, founder of United Villages, the existing management team would continue to operate the firm although Oxigen has appointed a few board members as its nominees.

Talking about the synergies, Bakshi said that post-acquisition, Oxigen has a platform to reach deeper to rural retailers for selling its mobile-based recharge and payment services. On the other hand, United Village is planning to use Oxigen's mobile-based wallet system to enable online mobile-based payment solutions for its rural consumer goods distribution business, thus increasing the scalability of the business.

Last year, Oxigen picked a minority stake in United Villages. For more details, click here.

United Villages is a mobile-based distributor of goods operating in rural markets. It links large wholesale retailers to its logistics partners who pick up the products from retailers' warehouses and deliver the same as per the orders picked by the company's mobile-based platform or its sales team.

The company claims to be servicing 4,500 retailers across 1,000 villages or so in Jaipur and Kota region in Rajasthan. Retailers can order their products either through their GPRS-enabled phones or through salesmen who visit them on a weekly or fortnightly basis.

United Villages Network was earlier a subsidiary of US-based United Villages Inc, a firm which had raised funds from a bunch of investors including Gray Matters Capital (through Gray Ghost DOEN Social Ventures), Omidyar Network and Accion International.

Set up in 2006, United Villages started as a rural communication service provider. It enabled the villagers in developing countries to gain access to products and services using its patented, store-and-forward Village Area Network technology. The company's mobile access points were installed in vehicles, providing access to Wi-Fi-enabled kiosks along the roads. The firm sold prepaid cards to village kiosk operators and local sales agents who resold those to users, thus providing a human interface for products and services such as sending & receiving voice mail & e-mail, purchasing products such as medicines and books, accessing services such as job searches and travel bookings besides browsing locally relevant websites.

"We realised that there was limited demand for these services, even though our prices were very low, especially with proliferation of cellular networks and mobile-based Internet connectivity in rural areas," said Bakshi.

"Right now, we are taking orders via mobile phones and getting help from Oxigen to enable payments through mobile phones. In fact, we are creating an entire mobile phone-enabled eco-system in rural India, so that the entire value chain of ordering, invoice notifications, dispatches, deliveries and payments can be handled on a single mobile platform," he added.

Oxigen, started by IIT-Roorkee graduate Pramod Saxena and South African firm Blue Label Telecom in 2004, kicked off with the mobile recharge business. It has evolved to add other payment services such as booking airline/rail/bus/movie tickets, games, donations, etc. through its platform. The firm had earlier raised investments from private equity firm Citigroup Venture Capital International, which exited the investment by selling its significant minority stake to IT giant Microsoft in January 2008.

(Edited by Sanghamitra Mandal)