For the management team of Chennai-based Matrix Business Services (Matrix), who are chartered accountants (CAs) by qualification, entering the verification business was a conscious decision. “We didn’t want to focus on the conventional regulatory or attestation work,” recalls P.C. Balasubramanian, executive director and president. Their journey started 20 years ago as a CA firm called Gopinath and Sharma, which primarily serviced the FMCG (fast moving consumer goods) and BFSI sectors. The partners, Balasubramanian, Ramesh Sharma, P. Sankararaman and Jayasree Srinivasan, realised that they would not be able to cater to the multinationals in the capacity of a statutory or tax auditor or even consultants as they will be competing against leading firms and will end up servicing only smaller companies. And hence they branched out into verification services, twelve years ago.
The partners were working closely with a startup called Mavis Business Services promoted by G. Viswanathan and R. Swaminathan, an employee background verification services company. Mavis was using their services to carry out address, academic and employee verification to cater to its clients. “Mavis required our services as we had built a network to handle the required verifications simultaneously and within a reasonable turnaround time,” says Balasubramanian. He adds, “We saw a clear synergy as we were also into verification services catering to FMCG and Banks.” Hence, in 2003, the two companies merged to form Matrix. Matrix is an integrated verification company as it handles verification assignments that require both field work and back office work. “Unlike huge BPOs / KPOs that outsource data collection, Matrix’s advantage is that it has a mix of both data collection/validation and back end processing to offer to its customers,” shares Balasubramanian. The company added over 100 customers during 2010-11 and clocked a turnover of Rs. 30 crore for this period (as against Rs. 17.15 crore in the previous year). It has shown consistent growth due to its ability to build and retain most of its customers over the last eight years.
“We have created a new space in the commercial verification sector. Currently, such services are being handled in a fragmented manner by a few CA firms and some market research companies.”
Matrix enables risk mitigation and compliance through commercial, consumer and financial verification. “We have created a new space in the commercial verification sector. Currently, such services are being handled in a fragmented manner by a few CA firms and some market research companies,” says Balasubramanian. Commercial verification (which contributes 31 per cent to the total turnover) is targeted mainly at FMCG and retailing companies to address their risk mitigation requirements at the warehouse, distributor and retail store level. For the front end supply chain management needs of FMCG companies, it verifies data to mitigate both financial and operational risks, enables building better processes and controls, increase transparency and helps in effective management of channel partners. “We help companies to identify if their products are available in the retail shelves and whether they are fresh,” shares Balasubramanian.
Matrix Business Services
Management team: P C Balasubramanian and G Viswanathan
Year of formation: 2003
Funding: Kotak Mahindra Group took close to 30 per cent stake in Matrix in 2008
Staff strength: over 1000
For retailers, Matrix helps with stores compliance reviews, franchisee / dealer audits including pre-engagement due-diligence services and fixed assets verification. The company has also created teams that perform loss prevention audits and stock audits to quantify and monitor the shrinkages at stores. This has helped the retail chains to increase their efficiency and reduce losses.
The company’s consumer verification division (employee background checks – EBC) contributes 53 per cent to its total turnover. Matrix, one of the leading players in this space, has so far screened over six lakh employees and identified around 7000 fake employers. It verifies the address, employee record, character, academic record, criminal record and does database search. While companies from the information technology (IT) sector are its major users, over the last two years sectors like BFSI (banking, financial services and insurance), retail and manufacturing have started using these services.
Under the financial verification division, the company works with the BFSI sector. It does contact point verification, stock and book debts audits, insurance claim investigation, know your customer (KYC) documents verification and handles huge volume of transaction processing. In a month, it processes over 30,000 savings account or loan files, calls more than 18,000 customers and verifies 4000 addresses. On a daily basis, it captures data of around 45,000 cheques and reaches out to 1600 cash pick up points. The company was also in the finance and outsourcing space which it sold in 2009.
Growth through customer retention
Matrix was among the few non-IT companies to be listed as one of India’s 50 emerging companies by NASSCOM in 2009. “We were recognised for the business model and prestigious list of customers,” says Balasubramanian. Matrix has more than 250 customers, of which 25 are in the Fortune 500 list. With branches at Bengaluru, Hyderabad, Kochi, Mumbai, Delhi, Pune, Ahmedabad and Kolkata, it has over 100 locations in the country and provides services in more than 600 towns in India. Balasubramanian says, “There is significant savings on travel and associated costs when they deal with us on account of the capacity we have built across the country.”
In 2008, Kotak Mahindra Group took a 30 per cent stake in the company. Kotak’s investment has largely helped Matrix to fund its capital expenditure and also manage its working capital.
Challenges in the business
“Our execution happens on the field and integrity of information is always a challenge,” says Balasubramanian. The company addresses this through cross verification. “If someone checks 100 outlets, samples from these are verified by another process. It’s like auditing the audit,” he clarifies.
“In case of EBC, dealing with external agencies like police, academic institutions and even prior employers are challenges that lead to delays. It is also a challenge to verify fake companies or employment of those who worked in companies that have shut down,” says G. Viswanathan, executive director and president.
The company works through its own network of branches and associates, who are predominantly CA firms. “It is not easy to deal with 100 plus entrepreneurs with different cultures, capabilities, expectations and attitude on a day-to-day basis,” says Balasubramanian. The company addresses this with many training programs and conferences.
Currently, Matrix is associated with many industries like FMCG, retail, IT, ITES, BFSI, pharmaceuticals and consumer durables, and hence, the business does not rely only on one sector. Apart from capitalising on its strengths in these sectors, as a part of its future plans, the company also plans to enter new verticals like real estate, aviation, education and manufacturing. Also, it may focus selectively on servicing smaller companies, which it has not concentrated on in the past.
“There is a lot of manual intervention in what we do today in EBC,” says Viswanathan. To overcome this, the company intends to invest in the right technology to improve the productivity and reduce costs. The company has developed a software which loads the bio-data into the clients’ end. It then gets posted into Matrix’s system. “We will pick it up directly from our system. This ensures that there is no risk of delays or of losing forms,” he says.
For supply chain verification services, Matrix plans to move reporting to a web-based platform on a selective basis. This is subject to security norms of its user companies. As far as financial verification is concerned, the company plans to automate as much as possible.
Matrix has very little debt in its balance sheet and all its automation plans can be funded internally. With its presence in over 100 locations and the capability to enter academic institutions with ease, it is all set to capitalise on the growing demand for verification services and the efficiency of its own business process.
- Plans to enter new verticals like real estate, aviation, education and manufacturing
- Plans to invest in the right technology to improve the productivity and reduce the cost of servicing