• Dependency on credit sales: Apon Wellbeing Ltd. allows its customers to buy products on credit. Their main customers (factory workers) find this opportunity very attractive. As most of them have to maintain a tight budget, they feel a bit relieved by the credit-purchase opportunity. In case of any significant missed payments from the customers, the cycle of the business will be hampered.
  • Apon’s strategy: The business coordinates with the payroll section of the industrial factory they run their shop in. This allows them to avoid mispayment issues. As a result, selling on almost fully secured credit allows the business to grow robustly and drives in significant revenue. Therefore, their credit sales strategy is a win-win for all the relevant parties.  
    
    
• Thin profit margin: Margins on grocery items and FMCG goods are generally lower than most other items. Apon Wellbeing Ltd. also offers special discounts to its customers which helps the workers. However, this cuts out a layer of margin from the profit.
  • Apon’s strategy: The business is able to source many grocery items such as soybean oil, mustard oil, flour, salt, FMCG products, etc. at a very lucrative rate from the producer. They also receive international grants to manage their operational expenses, which is why they can operate at a low profit margin. They also work at scale, a single shop serves thousands of workers, which makes a thin profit margin viable. 
    
    
• Inflation and macroeconomic issues: Industries have started to suffer the crisis caused by the price hike of raw materials and the cost of operations. According to many experts, there is a chance that the factories may start laying off workers in order to survive the recessionary blow. This will affect the sales of Apon Wellbeing Ltd. because industrial workers are their main customers.
  • Apon’s Response: Apon Wellbeing works with the most compliant factories, who are export oriented and need to maintain certain standards to receive international certifications. At the same time, they manufacture basic necessity products, which are always expected to have production demand (unlike luxury goods). These companies usually have healthy cash flow and balance to sustain. 

Possession of Assets: biniyog.io will buy the products on behalf of investors first and secure ownership. The products will then be handed over to Apon Wellbeing Ltd.within a very short time frame.

Apon Wellbeing Ltd. would have the right to reject the products due to quality etc. The risk is expected to be minimal since Apon Wellbeing Ltd. themselves will be choosing the items before biniyog.io buys them.

This is a necessary risk to ensure Shariah compliance of the transaction.

• biniyog.io has done in-house analyses of the projected returns of the business and they are expected to be able to repay on time, if not hugely impacted by macroeconomic issues.
  
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Please note that the business may be given an incentive in the form of a discount on early repayment, which can only come in effect if the investors agree.

Following example is an illustration:
If the business repays within 4 months, the markup profit can be 6% (instead of 7.5%). This benefits both parties – the business has to pay back less and investors get their money back faster at a higher annual rate of return (e.g. 6% in 4 months means 18% per annum)

Apon Wellbeing Ltd. will share instalment cheques with biniyog.io. A personal guarantee security cheque will also be kept from the business owner.