In a big step towards realising Prime Minister Narendra Modi's dream for a cashless India, country's most profitable and third largest retail chain - defence canteens, are turning fully cashless from March 1 across the country.
"The canteen stores department (CSD) and the unit run canteens under it have been asked by the services to turn cashless from March 1 as they will sell goods only using plastic money," sources told Mailtoday here.
The CSD has almost 1.2 crore direct customers in form of serving and retired personnel along with their families and had a turnover of over Rs 13,000 crore last year. In the army, orders were issued by the adjutant general's branch to canteens that they have to turn fully cashless from March 1 and the local formations have been asked to spread the message among the serving and retired personnel, the sources said.
The local formations have issued advisories to the retired personnel that they should arrange credit or debit cards by March 1 as the canteens are turning cashless, the sources said. For military personnel, its easy to turn cashless as all their personnel get their salaries in their bank accounts and have already been issued debit cards by their respective banks long time back, the sources said.
The pensions of the retired soldiers and officers are also disbursed through banks and they have also been given the plastic cards. Sources said exemption of paying in cash would be given only in the rarest of the rare cases but it would be discouraged for serving personnel.
The CSD has around 3,900 stores across the country from Ladakh in north to Andaman and Nicobar Islands. The CSD stores sell over 5,300 products on discounted rates as they are exempted from sales tax imposed by the local state governments on the goods sold by them. After the VAT came into being, state governments also exempted the CSD from them.
Buying a car from a CSD canteen, costing `10 lakh in a local city showroom, can help in saving at least `80,000-90,000 due to exemption on payment of sales tax depending upon the model and make of the vehicle. Last year, the profits of the CSD exceeded that of the Future Retail and Reliance Retail as it earned `236 crore while other chains were far behind it in terms of profits.
The transaction in the canteens can be done only through using smart cards. The demonetisation drive had also seen a dip in sales of the CSD as many unit-run canteens did not have card swiping machines and were transacting only through cash.
The real impact of the drive on the canteens would be seen only after the sales figures of the nonprofit organisation are released. CSD's operating margin is one percent and the CSD that it is the lowest or any retailer in the world