Radiant Cash Management Services Limited (RADIANTCMS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Radiant Cash Management Services 1Q FY '24 Earnings Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sohail Halai from Antique Stock Broking. Thank you, and over to you, sir.

Thanks, Devin. I welcome you all to 1Q FY '24 Earnings Call of Radiant Cash Management Services. And thanks Parmeshwar and team for giving us this opportunity to host the call. Let me introduce the team. Today, we have with us Mr. Col. David, CMD; Mr. Venkataramanan, CFO; Col. Benz Jacob, Director Operations; and Mr. Muthuraman, Director, Strategy and Investor Relations. Without further delay, let me hand over the Col. sir for his opening remarks. Over to you, sir.

Good morning, and thank you very much, Sohail, for the introduction and for having organized this. Good morning, ladies and gentlemen. Thank you for joining us today for Radiant's Investor Call. I'm pleased to share with you some exciting updates about our company's performance and our vision for the future. Radiant, as you all know, is a leading cash logistics company operating predominantly in the retail cash management space. We have established a strong presence in the market, covering approximately 70% of the total PIN code and servicing around 54,000 retail outlets. Our plan in the network is deeply entranced in Tier 3 and Tier 4 cities where we cater to approximately 81% of the country's population. 2/3 of our retail plus points and 63% of our revenues come from the Tier 3 plus cities. Reflecting our strategic focus on the high potential segment. Our business model is leveraged to growing our retail market footprint. We currently service the 2% of the addressable retail outlets in the entire country, which leaves us with a massive untapped market. Looking ahead, we are committed to expanding our footprint and capturing a larger share of the retail outlet through FY '24. Our strategic focus on Tier 3 and Tier 4 cities and our expertise in [ Radiant ] cash logistics puts us in a unique position to unlock significant growth potential. We have made a stable start to the year in what is a seasonally slow quarter for our business. Revenues have grown by 12.7% to reach INR 950.9 million. Our EBITDA margins have also remained strong at 21.6%. This performance validates our ability to capitalize on our market positioning effectively. I also want to share with you that there is some exciting news that will start the course of Radiant's future growth. We are still to announce on a strategic expansion into diamonds, bullion and jewelry market. This significant move has led to the formation of Radiant's valuables logistics dedicated division within the Radiant Cash Management Services with Lt. General [ ST Upasani ] as the Chief Executive Officer. The [indiscernible] logistics sector witnessing steady growth with organized players gaining prominence, presents a great opportunity to read in to create a large profitable business, leveraging our proven expertise in handling high-value cargo with [indiscernible] and security requirements we are confident in our ability to excel in this domain. Quite a large number of drillers in the country are all the clients of ours in the retail cash management segment. Our retail cash management and DPD Logistics businesses exited substantial synergies with both segments demanding a robust network, extensive experience in handling valuable cargo and a strong process orientation, the quality of our logistics and the last-mile connectivity that we have with over 14,000 PIN codes makes us a very strong contender. Radiant's excellence in these areas also grants us a competitive advantage as we enter the valuables logistics market. This strategic move not only diversifies our portfolio, but also aligns perfectly with our vision to drive sustained growth and deliver value to our shareholders. The expansion into valuables logistics is expected to create new avenues of revenue growth and bolster our overall market position. In conclusion, Radiant's entry into diamonds, bullion, and jewelry logistics business through RVL marks the transformative moment for our company. We are excited about the journey ahead and the potential for growth and success. As always, we remain committed to providing transparent updates on our progress and answering any questions that you may have. But before we come on to the questions, I'll request Muthuraman, our Head of Strategy, to further fill you in with the technical details of the first quarter performance.

Thank you, Col. Good morning, everyone. Thank you for joining us on this investor call today. I'm pleased to share with you a latest update on our company's financial performance and KPIs for this quarter. Our extensive presence spans over 13,700 PIN codes, across 6,200-plus locations giving us a unique competitive advantage. This vast network allows us to efficiently serve a large number of clients. We continue to grow the network, which enables us to further enhance ourselves in the retail cash management business. Coming to the financial performance for the quarter. Total income for Q1 FY '24 was INR 950.9 million, representing a 12.7% growth on a year-on-year basis. We'd like to highlight here that Q1 FY '23 had a strong bounce back from COVID, representing 41% growth over Q1 FY '22. The base effect of this and the fact that Q1 has been traditionally a weak quarter is reflected in this performance. The EBITDA margins for Q1 FY '24 stood at 21.6% as compared to 25.9% in Q1 FY '23, representing a drop of 420 basis points year-on-year. The drop in margin is on account of the following 3 aspects: a, increase in employee costs. As the company has hired 125-plus employees including a senior management team for it's yet to be launched DBJ business that [indiscernible] just spoke about. This business is yet to start generating revenues, which is expected to scale up from Q3 onwards. The second reason, significant scale of operations in the cash van business that was witnessed in Q1, including acquiring 101 vans. These assets are yet to be fully deployed, though the cost of driver and gunmen are incurred upfront for this period. Three, the cash executive costs have increased by 14%, comprising 7% increase in count and a 7% increase in cost per fee. As the revenue growth is less than this 14% in this quarter, this has affected margins to some extent. As can be observed, each of the above are in the nature of initial expenditures akin to an investment for a strong future growth of the company. And these expenses are necessary prerequisites for the planned growth of the company. Profit after tax for the quarter was $142.5 million or about 15% of revenues as against 17.5% for the full year, and the drop is because of the reasons cited above. Coming to the business performance. During the first quarter of financial year '24, we handled INR 0.4 trillion of cash. representing 10.7% growth over same period last year when we handled INR 0.36 trillion. During the quarter, we added 16 new clients, 43 new end customers and 1,552 new retail points. While the gross additions of retail touch points are well in excess of 1,000 points per month. The net addition to the points were lower on account of rationalization of some points due to inactivity or route level profitability. These are routine in nature, and we expect past trends to have growth in net agents to continue in future. On the business verticals, our key business verticals, cash pickup and delivery has seen a nominal growth at 6% year-on-year to $623 million in Q1 FY '24. This segment contributed about 67% of our revenues in the first quarter. The second largest segment is Network Cash Management, which registered 18% growth over the same period last quarter. The company also witnessed a sharp growth of 49% in cash van operations segment, although from a small base. We see this vertical as an important driver of growth in the medium term. In terms of end customer segment analysis, petroleum sector, we saw a slowdown in FY '23 has recurred to some extent during the quarter. Though the current levels are lower than March '22 levels by well over 30%. So we expect the momentum of growth to continue, and this segment will grow at higher than average levels over the next 2, 3 quarters. Organized retail continued to report robust growth of 25% year-on-year. Direct clients reported almost 3x jump in revenues, though from a small base quarter year-on-year over first quarter of last year, and is now accounting for 4.1% of our revenues. We have strengthened the team here and expect this segment to outpace other verticals steadily over the coming quarters. In terms of operations, as of June, we have a total of 852 cash vans. This does not include the 101 vans, which has been capital working progress and a staff strength of close to 9,500 including 2,245 employees and 7,248 contractual workers. Importantly, 21% of our staff come from the armed forces, which has significantly contributed to minimizing cash flows. I'm very happy to inform that, thanks to our robust risk management system, there was zero cash loss incurred during the first quarter. Our return ratios continue to be robust. Return on capital employed was 30.4% for the quarter, a marginal drop over the last year is on account of 100-plus cash vans during the period, which are yet to be deployed fully. Return on equity for the quarter was 23.3% on an annualized basis. In conclusion, the year is off to a stable start given the seasonally slow quarter. Our significant investment in manpower and assets have been made during this quarter, we see momentum building over the next few quarters into the festive season and remain confident of delivering a strong performance in FY '24. With the new initiatives highlighted by CMD in his remarks. We see FY '24 sharing another year where we will deliver strong revenue and earnings growth as well as building new long-term levers for growth. I'll now hand back the call to Sohail for moderating the Q&A.

[Operator Instructions] The first question is from the line of Vikas Kasturi from Focus Capital.

And first of all, I would like to congratulate the entire team of Radiant Cash Management for creating this wonderful business. Sir, I had a few questions regarding the business part of it. So one is, other than Radiant, and say, CMS info systems, are the other players like brings, adding the points in the retail cash management? And how easy or difficult is it to add points.

I think I'll take the question as to how easy or difficult it is the last point. The essence for retail cash management is the network that you have. Now as I've said that we are present in over 70% of the nation's PIN codes. So when it's a large customer with a multi PIN code presence when he comes up and then the feasibility is us for from different service providers. The pricing is by and large stable and we already have an existing contract with where we collaborate have already been finalized. But the feasibility depends on the best of your penetration, and the idle capacity that lie within the network, which we use as a kind of operating leverage to immediately come back with a strong feasibility in a very speedy turnaround. And normally, the client is unwilling to wait for long, and therefore, by and large, the service provider, which comes back with the fastest turnaround with the maximum feasibility is awarded the contract. So therefore, your presence and your strong network across the country which we have built now and a very dense network. That is the key for getting a contract. And that's where we find that we are normally able to match any client environment in terms of the deployment across the country.

I would just like to add a couple of points to this. So our point addition come from multiple sources. One is that many of our existing clients continue to expand as they expand that additional points will come to the existing service providers. So a good part of our growth comes from those existing end customers, take Amazon or you take Reliance Petroleum or you take Reliance Retail or you take More Retail or any of these. They will all have their own growth plans as the end customers grow the additional points coming. The second growth -- the second stage is that, this service is an extremely underpenetrated sector. India has 1.2 crore retail outlets. We estimate about 30 to 40 lakh outlets are eligible to use the service of this nature, but the entire industry is catering to [ 100 ] lakh outlets. So which means extremely underrated sector, so banks continue to offer this as a service to more and more end customers and more, and more banks start offering this as a service to their end customers that continues to keep giving us more points. And third is where we have our own direct contract with end customers and offers it as a direct service. And that is also robustly growing. As I said, today, 4.12% of our revenues are direct customers, and we expect that to continue. Hope this answers your question.

Yes, sir. I also had a question where I asked, are you seeing players like [ Brink's ] adding points.

I'm afraid I'm unable to answer any question on the competitor. I'm not aware of the thing.

Okay, sir. Sir, moving on to the second question. Is that, my understanding of this industry based on your conf calls and CMS conf calls, is that banks are unlikely to give 100% of their retail cash management business to any 1 player. As it is, the number of players are shrinking in this market, that's my guess from the DRHP. And therefore, we are unlikely to give 100% of their business to any 1 player? Is my understanding correct, sir? And the related question is, how do you plan to add more bank clients.

Yes. It depends on individual bank strategy. We do have 100% wallet share with a few of our bank clients. But predominantly, what you say is right. But the industry structure is like that. There are only 6 qualified players, operationally 2 players who have a strong pan-India presence. Whereas, there are 39 banks who offer this as a service to their end customers. So irrespective of whatever bank gets it, it's only these 2 service providers who are likely to get the final mandate to service those end customers. How do we add banks? This is -- in waves, we have seen this industry growing. It started, first wave was by foreign banks who started offering this as a service. Then the new age private sector bank started offering it as a service. Now the old private sector banks as well as these new finance banks, your Equitas and Utkarsh and those all of them are started offering this as a service. Government sector banks are yet to offer this as a service in a big way, except State Bank of India. We expect that way also to continue to come in the next -- in the medium term which will continue to provide growth, which at as I said, direct customers also will provide growth for us.

The next question is from the line of Aravind R from Sundaram Alternates.

My question might have been answered before, but what I wanted to understand is why the revenue has been muted this quarter.

Yes. I addressed this part. I can see the 12.7% total income growth is actually a little -- 12.7% is a little misleading because we had a base effect of last year where there was a 41% growth. So that is one part of this thing. The second is that we have not yet fully recovered the full growth on the petroleum sector. it is still lower, almost 30% lower than our March '22 level. And yes, we took some tough call on rationalization of some of the points because of inactivity and route level profitability. But that's a routine in nature, we expect the trend line to continue. And as it is, first quarter is a little lower season quarter for us every year.

I mean, like, is there any specific reason petroleum activity has been picked up.

We had explained this in the past also. As lastly, the petroleum segment for this industry is from private sector, private sector players, not the PSU petroleum outlets. And private sector petroleum outlets are using the ongoing Ukraine war situation to capitalize on an arbitrage opportunity to export rather than supply to the domestic markets. So the volumes of those players, the volume of fuel dispensed in private sector outlets have sharply reduced correspondingly our revenues. This is a temporary phenomenon, it is coming back slowly. We expect it to probably restore in the next 2, 3 quarters.

And are we planning to add any -- I mean we'll be, like plan in any like major bank networks like others.

That's an ongoing continuous effort. So Aravind, we have been adding new banks and new end customers also. So this quarter, we added 16 new clients. Of hand I don't have how many of them are banks, but we have been continuously adding. The bank addition is a long-run process. It takes because they handle they entrust us with a huge volume of cash on a daily basis. So they go through a thorough diligence before adding a service provider. But then once they do that, that relationship is like strong relationship for us.

The next question is from the line of from Dixit Doshi Whitestone Financial Advisors Private Limited.

My first question is regarding, so as you mentioned that some of the new age banks have started providing retail cash management and PSUs are yet to come. So recently, some of the midsized PSU banks are also indicating that they wanted to start this business, this service. So are you seeing any tenders being floated from the mid-size PSU banks?

Just for your information. With all the major PSU banks we already have an agreement in place. So the agreement has already been done. But except in the largest PSU bank, the others have still not started. All of them have started in a small manner, but it's not compared to the volume of work, which they can give, it's a very small and miniscule exposure that we are having with these banks. But I think in the medium term, we're going to see large-scale growth in this segment.

Okay. But so we had registered with them and we have the agreement? Is it just the volumes are very low right now.

Absolutely right. Yes.

Now second question was in terms of touch points. So as you know earlier, you were mentioning that we plan to expand 1,000 touch points per month. And at the gross level, we have done it. But at net level, it is low. So net-net, what kind of touch point addition we can expect annually?

Touch point wise, we are still focused on 1,000 to 1,200 points per month. But now having listed, we are looking back. We are actually doing a detailed analysis of the existing touch point that we are doing. And based on route analysis, I suppose it's not making sense, financial sense. All if it is inactive for a long period of time. Now those are also being periodically removed from my list of touch point. So compare the number of points are growing, but the numbers which have been removed from that is what is showing the lesser number than 1,000 points per month. We're still focused on that, and we will be able to achieve and exceed that every month.

And one more question regarding this new business of DBJ, diamond, bullion, jewelry, what kind of CapEx we will have to do? And does the same win can do the business? Or it will require a completely separate network.

With regards to the diamond, bullion, jewelry business, we're extremely excited because even as we speak about 1,000 outlets of different dwellers across the country, and some -- even some of the major players, we are already doing their cash pickup. So there is already an existing synergy with these outlets. So it's a natural -- it require the same secure cash plans. We require the same walls and safes. We require the same type of logistics mechanism, and the same software configuration. So it is a very natural alignment that we found with this. And secondly, the market itself has been looking for because they are -- they're just 2 major players here, and this market is expanding very rapidly. Also, we have registered jewelers are about 135,000 and currently we saw services being offered only to about 10,000 of them. So it's, again, a very large market opportunity and we found an alignment with that. And therefore, we have got into this segment. And we are looking at also differentiating on the quality of logistics, that will be on offer.

Just clarification, you mentioned that we are already doing cash management for 1,000 of such outlets.

That's right.

The next question is from the line of from Athreya Ramkumar from ithoughtpms.

Yes. So I just wanted to understand more about the investment into the bullion space. So you quantified it saying that around INR 4 crores would be invested in the first year of operations. So is this more of a capital expenditure and what would this for presenting.

This will not be in capital expenditures. This will be mainly for investments in rental deposits for buildings and deposits for capital expenditure in this regard.

Okay. And with respect to the year-on-year growth in other expenses, you had given 2 to 3 reasons. So would you be able to quantify what percentage of the INR 9.5 crores jump is with respect to the new segment that is entry into the bullion segment.

See, individually, as I said, that the employee cost data is there in the website and the disclosure itself. There's almost, I think, around that 4.2% drop out 1.2% drop is directly coming from employee costs. Okay? A good portion of that employee cost is because of our addition of over 125 employees in the DBJ business. The second is the drivers and gunmen that is reflected in that other expenses are in that substantially accounts for the balance of it. The third, the balance drop in profitability. The third reason is that cash executives that you have added, so the cost of cash has grown by 14%, our revenues have grown by 12.7%. So there's a marginal impact of that on the profitability. So it is mainly the guards and drivers costs for the cash van operations expansion and the 125 employees addition in the DBJ. These are the two reasons -- two main reasons for drop in [indiscernible].

Initially, when we have to invest into a new business line, there will be a gestation period, and that will be reflected the numbers. But we are looking at the site quarters and the impact that will have. So that's the reason that you see that.

Thank you for the detailed explanation. And I was just wondering, why is the Q1 quarter generally seasonally slow? Is there a particular reason?

Yes. See, it is for us. Historically, Q3 has been the best quarter because it is a festive season. Okay. Then followed by Q4. Q4 for whatever reason because of the fiscal year ending, a lot of the spend or depreciation claims, et cetera, happens in Q4. So after a large spend in Q3 and Q4, Q1 tend to be low probably for the budgets for the new year for corporates are yet to be in place and things like that. So Q4 -- sorry, Q3, Q4, Q2 and Q1. This has been the order in which the share of revenues has contributed. It has been historically slow.

Sure, sir. And I had noticed -- I think you had also touched upon it about the lower touch point additions this quarter compared to our target of adding at least 1,000 a month. So you had mentioned that this is because of rationalization. So one, first question is, is the rationalization almost over and was the revenue growth also kind of impacted by the rationalization of these outlets?

No. Revenue growth has not been impacted because of this rationalization. As I said, these are either in active or low profitability because of low revenue kind of points. And largely completed, yes, this is the fact, yes.

We'll move on to the next participant, which is Darshan Shah from Multi-Act Equity Consultancy.

I have a few questions. First, with respect to the newly started business. So I just wanted to know what would be the quarterly run rate of expenses for this newly started business, let's say, break it up between employee and other expenses.

We have not given guidance on individual segment level. It's a very nascent business. We are -- so difficult to put out numbers depending on how the business scales up, we may have wide variation. So we've not given specific guidance on the individual verticals.

So in Q1, how much was that in Q1?

So 125 people is the strength that we have added in that segment. And I'm sure you can get the sense on average cost per employee from the data that we already have there.

And can you elaborate on the economics of this business, let's say, margin profile? And there would be already existing players would be catering to the jewelers that we are targeting then how do it differentiate when we are pitching for this business?

As I mentioned earlier, there are only two major players, and there are small regional players who are there. So as I said earlier, we already are doing cash pickup. So we can always provide this as an composite option where we do not only the jewelry management at the moment of bullion and jewelry, but we can also do their cash pickup. So that is an added advantage that we have, where we can provide these contiguous services simultaneously. Then the other aspect that we have is that the largest player in the segment is functional out of some 83 locations, while we already have a presence in over 6,000 locations across the country. And as we know that these shops and the last-mile requirement is right up to Tier 3, Tier 4 location. So we already have an existing network and excellent last-mile connectivity and we don't have to outsource to anybody else to do the work, and it is part of our own integral network. So these advantages have already been observed by the larger players in this market, and they feel it's a place where we can definitely help them out in a more composite manner.

Sir, can we use the same van, let's say, for picking up the cash and bullion from the jewelry store?

Yes, we can.

We can -- the same vehicle let's say can utilize it. And we have always have various cash vans available with a manpower on call duty. So these can be utilized, whether for picking up from jewelry and bullion consignments or they can go for cash for [indiscernible] duties. So there is a lot of alignment on this.

Intracity movements, we can use the same facilities. Intercity, we will have dedicated vans. This is part of our van addition at this point of time.

Sir, my next question is on the e-commerce logistics revenue. We have seen a sharp drop in Q1 this quarter. So what led to such a sharp drop.

So it is just that after the end of the fiscal year, the e-com logistics segment is always impacted drastically balance. And that's the only reason why we are seeing this. But at the same time, a direct clients were in very [indiscernible] moving into direct relationships with some of the e-com players, logistics players. So that we'll see the revenue impact in the coming quarters.

No. So I am comparing it on a Y-o-Y basis. So on a Y-o-Y basis, e-com logistics revenue is down by around 35%, 40%.

Not 35%, 40%. It will be up 30%, up in about 26% of e-com logistics separately. And see the, on a small base, like I said, there is the post-COVID recovery that we saw in first quarter of last year, that as an [indiscernible] that did not sustain. But in terms of Q-on-Q, if Q4 to this year, we have not have seen a very sharp difference. Having said that, the other important development is a couple of players are transiting to become a direct customer to us. So it's a transition phase that also had some marginal impact on the revenue from that sector, but we don't expect e-comm logistics will continue to be about 20%, 22%, 23% of our revenues that will continue to be there.

And so we disclosed two separate segments in the sense of e-commerce and e-com logistics. Sir, can you elaborate on what comes under which head basically what type of service.

The nature of service that we provide is exactly the same for e-commerce and e-commerce logistics. The classification that we do is that those who are directly provide e-comm like your Amazon, Flipkart, Myntra, et cetera, will be e-commerce players. Whereas third-party e-comm logistics providers like Delhivery, Ecom Express, XpressBees, Shadowfax, all of these are classified under e-comm logistics segment. Just to give the thing that the -- there's no difference in nature of service that we provide between these exactly the same.

Okay. And my last question is on the cash pickup and delivery revenue. So we have seen the growth in the cash pickup and delivery revenue was around 6.4% in Q1, and when we look at the cash pickup touch point, it has grown by 17% on a Y-o-Y basis. So why is it that the touch point growth is not translating into the revenue growth?

See, okay the 6% revenue growth, I would prefer you look at this with -- together with the network cash management business. Because that will give you a better sense on what we get from per point revenue. Okay. So if you see my first point revenue as in for full year FY '23 to the current year, in fact, both put together networks cash management, plus this thing put together. We have actually grown. It is 4,066 per month per point to 4,096 per point per month. They've definitely grown from FY '23 to first quarter, including network cash management. So the 17% growth year-on-year is a bit recreating because we have a wide variety of points. Some of them are [indiscernible] some of them are [indiscernible] some of them are [indiscernible] The point is whether we have serviced that point during the last 12 months, a trailing 12-month period. So that number is a continuous cumulative number. So adding that growth on that translating into growth in revenues is not a right metric to look at.

Okay. But when you look at network cash management business, which is more linked to the volume, right, and cash pickup and delivery revenue is linked to the touch point addition. So if we -- yes, so it would be both -- if we add both the things, then it is, I mean, we are comparing like-to-like only for cash pickup and delivery.

See, the cash volume will increase only if we add points. We don't do offer network cash management as a standalone. It is always on top of cash pickup and delivery, right? I cannot do a network cash management without having provided the base cash pickup service.

The next question is from the line of Adityapal from Motilal Oswal Financial Services.

Wanted to ask the same question that the previous participant asked. Are we facing pricing pressure from our clients for cash pickup and delivery?

No, not really, Aditya. Just now I read out that this thing, right? Per point for months, my prices have only -- my revenue has only increased.

Because even when I do price per pickup point, I actually see a dip on that side as well. So that is why this question came.

No, that's not for, say, for if you see only cash pickup, that number is 3,223 versus 3,199, very small 1% drop. That could be even because of us removing some of those lower value-added points, et cetera. But cash pickup plus network cash management, these are better metrics to see what is the effectiveness of per point. That has only increased from 4,066 to 4,096.

And sir, how much did we do in network cash management this quarter as a percentage of our cash movement.

I think it is fair to -- so in -- we did INR 145,000 crores. Yes. Cash come total was INR 400,000 crores. No, no, no, sorry, INR 40,000 crores and INR 14,570 crores. INR 14,570 crores is cash variable out of -- and the total cash movement is INR 40,000 crores.

So INR 14,575 crores is what we did in NCM.

That's right.

And also just wanted a quick breakup in terms of other expenses. How much will be a service charge expense? And how will we -- how much will be our bank expense and charges this quarter?

The service charge expense this quarter is about INR 244 million. And bank expenses is about $41 million. Bank expenses about $41 million, and service charge expenses was INR 244 billion for the current quarter.

And the new plan that we added, [indiscernible] plans, all are direct, some are direct and some are banking clients.

I think a couple of them are banks, but most are direct clients. As we see the direct client share is steadily increased, and that will provide us for -- in the long term, that is going to be a big growth.

We are looking at direct clients in a very large manner, because as Muthu had earlier pointed out, the banks are doing only about 1.5 lakh outlets. While the available opportunity 30 lakh outlets. So it's a huge portion of opportunity. And we also established a very strong sales force across the country to directly tap into these direct clients who are coming up.

The next question is from the line of Kunal Mehta from Equirus Wealth.

This is actually an industry question. We saw recently, Hitachi Payments acquired Writer's cash management business. And Writer's saying that it was into cash pickup and ATM cash replacement with 40,000 touch points comprising ATMs and then retail outlets across 25 states. Sir, any condos on the deal? And what will and it's a reflection on the industry, if you could share because we don't know the financials that will happen there.

No, we are aware of the fact that have been in the market for a long time, and now we read about the Hitachi acquisitions. But we don't have any further details on that as of now. So the [indiscernible] were not a big player in retail cash management.

Sir, and Hitachi is mainly into ATM, right, sir?

Yes. Yes. Hitachi is an MSP. And so now this is another trend that we are finding that the MSPs are getting a captive player like to have their own captive facility for focusing on their ATM servicing. So I am feeling that they will largely now move into that segment in a more focused manner.

The next question is from the line of Shirish Wazi from Moneylife Advisory Services.

My question largely pertains to our new segment of DBJ. So we have -- as of now, we serve around 13,710 crores and about 65,000 touch points. So of this, what percentage of Fincos and touch points do you see having the potential for this new business line?

I think the entire ambit of workable jewelers and outlets are there, they all would fall within our existing routes and service lines that we have already established, accepting a few which may be in the extreme Tier 4, Tier 5 locations. Otherwise, everybody else would fall within the ambit of this. So this gives us an opportunity to not only offer the diamond, bullion and jewelry movement, but finally also combined -- suppose we are not doing the cash pickup, but to also combine that and provide that as an additional service to them as an integrated service for both these important components of movement and their daily valuables logistics. I hope that answers your question.

Yes, sir. So my second question is primarily about the customer profile for this segment. So would it be largely large organized jewelers or also -- do you also see smaller stand-alone jewelers sort of using this service?

Well, at this point, we are agnostic to the size of the jeweler. We have separate understanding or we have separate arrangements for smaller jewelers who can be more like walk-in. They're not suppose they require service, and they require that support. We are in a position to provide that for them. Then we have a medium level market where we have direct suitable agreements with all of them. And there, the method of movement is per gram cost so that we have worked out of that. Probably, we can give them a little advantage as compared to the competition. And the larger players are those like Tanishq or CaratLane, the larger players where there, they're listed entities. So with them, we are looking at a very integrated service, both for cash as well as for jewelry movement. So it is in the midst of the gestation period right now and the initial consignments are just starting. So we see this as a very -- I mean, the existing players are very profitable or doing well. So obviously, this is a segment that with the operating leverage that we have in our existing business, I think we should be able to provide a very high value-added service to our esteemed customers.

And, sir, the last question pertains to the margin that we see in this business. Once our full scale up is complete. So what is the kind of operating margins that we are targeting in this business?

Yes. So the industry is again, similar to RCM, it is a high operating leverage business. So invest in the route infrastructure. And as the volume picks up, margins improved significantly. So the crucks of that the key success of that industry is getting clients and getting adequate volumes in each route for us to improve that profitability. But because individual customers. I mean we can -- like in the case of RCM, where we aggregate cash of multiple customers. Here also, we can aggregate and put valuables of multiple customers and optimize on the route costs. But as individual, each individual customer, they're paying probably the full fare for it. So to that extent, as in the operating leverage is fairly healthy. So we can expect healthy profitability. But after, we see a breakeven level.

The next question is from the line of from Ridhima Goyal from Acquaint Bee Ventures. The current participant seems to have dropped from the queue. We will move to the next question, which is from the line of Aditya Shroff from InCred Asset Management.

So I have two questions. So first is, now with the addition of the new diamonds vertical from Q3. What kind of growth are we expecting in the revenue for the whole year. And secondly, on the margin front, sir, vertical will start fully from Q3. Can we expect that the margins to remain subdued for Q2 as well? And since we were also guided that there is some incremental on part coming to contain.

Sorry, Aditya you were muffled. Can you speak little away from phone and slowly. Sorry, we couldn't hear you.

Okay. Is it better now?

Yes, it is. It is much better.

So sir, the first question is now with the addition of the new diamond and bullion vertical from Q2, what kind of growth in revenue are we expecting in FY '24? And secondly, on the margins front, are they expected to remain for Q2 as well because the new vertical is expected to start fully from Q3.

Yes. First question, as it is a blue sky of opportunity as in that the industry size is, in fact, diamond, bullion and jewelry industry size is, in fact, bigger than our time. And almost 60%, 70% of that segment is unorganized. So it is our ability to get the new customers. So at this point of time, our ambitions are modest. It won't be a meaningful share of our revenues for us to even comment. It will be low single digits is what we expect in current year. But opportunities are fairly large. So to that extent, it depends on how we scale it up and how well our team is able to deliver, which we are confident of but then you have to see how it pans out. In terms of second question, so the DBJ will start from Q3 onwards. But the cash on operations will continue to kick in from Q2 onwards. So it may not be -- all 3 impact will not continue in Q2.

Sir, so as you mentioned in the last conf call that we can expect an improvement in margins on an annual basis -- so do you think that will still given that we have added a new vertical.

So no, the -- we won't exactly be able to put a number on how the new vertical will come out. As I said, it's also a high operating leverage business. And so I mean in a sense of what the guidance you have given of high teen revenue growth and better EBITDA margins and PAT margins we maintain that stance.

Yes, we'll be maintaining our existing PAT margins. And that's what we expect to retain, because currently, we are something say about 1/3 because on new expenditures, 1/3 to a little more than that 40%. The rest of it is coming as available facilities or available operational infrastructure is already in place for the logistics. So we are going about it intelligently, and we hope that it will have a positive impact, both on the top and bottom line.

The next question is from the line of Mukul Garg from Motilal Oswal Financial Services.

Col., two quick questions from you and then one from Muthu. Are you still seeing the kind of elevated competitive pressure in the space you have alluded to in the past. But you still seeing some predatory pricing going on, which is kind of impacting profitability for you guys? And secondly, if you look at the Y-o-Y growth over last 5 quarters, growth has been constantly moderating down. Qualitatively, how should we see growth recovery play out? Is that something which will end up more of a second half phenomena given that we don't have kind of control over what is happening at petroleum, and hence, things maybe improve more gradually? Or should we expect growth to pick up on what steps you are kind of undertaking to kind of accelerate the growth.

Well, Mukul, for us, the listing was a watershed moment, and there were many ideas that we had before and now that stability has happened and we are focusing on growth. And that's the reason why we also now investing into a new and continuous division like that so with regards to your question, if it's an enormous opportunity, and therefore, there's no question of any competitive enter coming on to us in any way. It's -- the opportunity itself is very large. And with regards to the other aspects with regards to the last 5 quarters, I'll ask Muthu answer your question.

Mukul. Yes, the petroleum was, in a sense, has taken off the share of our growth in the last 3-plus quarters. It is improving steadily, but as I said in my initial thing, we are still 30% short of what we were in March '22 on this segment alone. So which means that there is still significant -- and it is steadily improving. So to that extent, this segment will grow at a faster pace than we initiate the company as a whole. We are getting reasonably big on direct sales, which has actually -- if you see, say, quarter-on-quarter, it has tripled on a very small base, but still triple, today, it is 4%. We expect that share of direct sales to continue to increase. And we are definitely seeing good growth in sectors like organized retail. We did about 26% year-on-year growth in organized retail. And the -- see the growth got tempered because of, one, because of this, as I said, is a transition phase in the e-comm, and this petroleum segment is what has seen a slightly muted growth, but full year guidance, we definitely -- we are on the high teens growth trajectory. We have value on cost on that. So I don't see any challenge to meeting those growth targets.

Great. And also on the investments we have undertaken during this quarter. Is it fair to assume that those would be the ones which has started -- not started at monetizing, would be in the range of INR 2.5 crores, INR 3 crores or was the investment a bit higher?

You see capital working profits [ INR 5.5 crores ]. So it is more like INR 9 crores or so. It's a INR 2.5 crores fixed asset addition and INR 5.5 crores of capital also, right.

So I mean taking more from a consumer perspective, like what would have been through the kind of cost put on P&L?

See, the CapEx for the current fiscal year, it should be in the range of about INR 20 crores. For the cash funds, what we have at partly purchased and what we'll be purchasing the rest of the quarters. So the depletion impact on our front office poor should be about INR 2 crores during the current fiscal year.

Finally, on the employee cost side, it obviously has seen an increase because of the investments. You said last quarter alluded to the fact that you would like it to go to 15.5% range. Is that a kind of fair number to assume by the end of the fiscal year?

See, it depends on how the DBJ business pans out, Mukul, we have 125 people hired for that business, depending on how we are able to scale up in Q3 and Q4, that number could be higher or lower. But if -- for our current target modest target of revenues, the percentages will tend to hit where we were last year is what our expectation is.

Col., just a follow-up on this part. Obviously, you guys have made some upfront investments. But how are you kind of visualizing the margins which peaked out in Q1 of last year and has been on a moderating trend how do you kind of see the trajectory of investments? Is that something which will kind of see going forward also? Or this was more of a reactionary impact because of the [indiscernible] go down in the business. And hence, you had to undertake these investments despite margins impact being an adverse event in the near term?

Mukul, there's a new area that we're investing in is a onetime investment. It's not something that's going to continue in the same way. And we are doing about it to extremely intelligently let me assure you. Wherever possible, we are leaning on to the existing interest action. So that advantage we have. And I think that is how we are looking at it being profitable right from day 1 as we contract.

Margins, we expect it to as in this is a onetime in nature and over the next couple of quarters, we expect it to restore back to the previous levels, Q1 level.

The next question is from the line of Imran from Longbow India Capital.

Sir, my question is on your growth. So if you can help us understand what percentage of your growth is coming from existing customers and vis-a-vis new customers, new customer addition?

Okay. So the -- as I said, new customer additions a good part of it is actually from direct customers. So there you have seen good growth year-on-year. But still that numbers are still very small. A substantial portion of our growth is coming from and will continue to come from our existing clients. In terms of end customers, both existing end customers as well as new end customers. So we've added a fairly decent number of end customers, if you see in this quarter as well. So particularly new end customers. So that should provide us the second layer of growth.

Sir, my next question is on the same line. See, if your existing customers are giving you growth -- so I mean, you are largely dependent on your existing customers to grow even in the future going forward, right? I mean at one hand, we are talking about a shift from unorganized to organized, where basically, we think you will get business from unorganized players. And then on the other hand, you're only growing through your existing customers. So it's a little bit of a divergence.

No, no. The short term is growth coming from existing customers. The longer-term deliverance for us is 30 lakh outlets available to tap versus banks are taping only 1.5 lakh. So the rest of it, we need to reach out either through new banks like public sector banks who start offering this as a service. But more importantly, as the direct customers who are in the service actually from us. So that is going to be a longer-term sustained growth provider. But immediately, I mean if you talk of next Q2, Q3, Q4, our direct is where it will grow at a much faster pace than the company as a whole, that will still account for a smaller share of the revenues.

Sir, I'm talking about the last, let's say, 3 or 5 years, I'm not talking about future. Even in the last 3, 5 years, you are still growing with your existing customers. I mean the majority of the growth is coming from that area, right?

No. If you see our -- say, 2019 to 2023, we have added here from 2,600 end customers, we had moved to 3,300 end customers. So that 700 new end customers that come in. So if we see our historical, say, 5-year revenue CAGR, half of it would have come from new end customers, half of it would have come from existing end customers. We had only 1% at our direct customers at the point.

Perfect. Perfect. And sir, my second question is on your guidance of adding about 1,000 touch points every month. You're also counting DBJ business in this? Or do you think separately.

No, we are not counting DBJ yet.

Perfect. And my last question is on your economics of a cash van, if you can share it, what kind of revenues you can generate or you are generating from a cash van in a year.

Yes. We have given the cash van operations this thing if you see the -- our segmental KPI segment. That cash van segment has grown substantially, almost 49% growth over same period last year. But still in the current year, out of INR 93 crores, about INR 7 crores is from cash vans.

How many cash vans do we have as of now?

So see, our total fleet size is 852, of which roughly about 12%, 13% is used only for dedicated cash vans. The rest of it is used for our retail cash management business.

Ladies and gentlemen, we will take that as our last question for today. I would now like to turn the conference over to Sohail Halai for closing comments. Over to you, sir.

Yes. Thanks, Ravi. Thank you, Col. sir, and team for sharing valuable time with us to explain the quarter and the future outlook. We wish you all the best for the quarters ahead, sir. And finally, I would like to hand over the call to Col. sir for his closing remarks. Sir, if you want to add any closing remarks?

Well, thank you very much, It's been a very interesting session and some great questions that were asked today. And I can only hope that we could put sincerely answer these questions. All we can say is that as investors, you can be assured that we are well positioned to capitalize on the growing retail market footprint and the continued relevance of cash transactions in India. Our group aligns perfectly with the market dynamics, enabling us to tap into the vast unserved market and well sustained growth by also looking at aligned areas like diamond, bullion and jewelry. I want to express my gratitude for your continued support to Radiant. We are confident that our focused approach and strong performance will yield promising results for our shareholders. Thank you all for your time and your continued interest in our company. Thank you very much.

Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.