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

Ladies and gentlemen, good day, and welcome to Q2 FY '24 Earnings Conference Call of Radiant Cash Management Services Limited, hosted by Antique Stockbroking [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sohail Halai from Antique Stockbroking. Thank you, and over to you.

We welcome you all to 2Q FY '24 Earnings Call of Radiant Cash Management Services and at the outset, I would like to thank the management for giving us this opportunity to host the call. Today, we have with us Mr. Colonel David, CMD, Mr. Venkataramanan, our CFO; Mr. Alexander David, GM Operations; and Mr. Muthuraman, Director, Adviser, Strategy and Investor Relations to address your queries. So without further delay, I would like to hand over the call to David, sir for his opening remarks. Over to you, sir.

Thank you very much, Sohail. And good afternoon, ladies and gentlemen. Thank you for joining us today for Radiant's investor call. I am pleased to share with you some exciting updates about our company's growth plans and performance. Consolidation and driving transformational growth will be our two watch works this year. As it take strong measures for the next 3 to 5 years in perspective. As we have several new investors in our shareholding, I'm taking the liberty or reiterating some of the key highlights of the company. Radiant is a leading cash logistics company operating predominantly in the retail cash management space. We have established a strong presence of the market serving approximately 70% of the total pincode and servicing around 55,000 retail outlets. Our Pan-India network is deeply entrenched in Tier 3 plus cities, where we cater to approximately 81% of the country's population. A 21% of our workforce and leadership is from the ex-services community. Two-thirds of our retail touch points and 63% of our revenues comes from these Tier 3 plus cities, reflecting our strategic focus on this high financial segment. In consolidation our business model is leveraged to growing retail market footprint. India has almost 20 million retail outlets and the entire retail cash management industry is currently servicing less than 2% of the retail outlet. I'm talking about the overall retail outlets in the country, which leaves us with a massive untapped market. We're also focusing on growing our dedicated cash plan business from this year onwards. Looking ahead, we are committed to expanding our footprint and capturing a larger share of the retail outlook to FY '24. Our strategic focus on the Tier 3 plus cities and our expertise in handling cash logistics put us in a unique position to unlock significant growth potential. Our performance for the 6 months ended September 30, 2023, was understandably a bit muted. Lower growth rates of few key end customers and e-commerce logistics and NBFC sector was the key reason for the muted revenue growth. Higher costs due to the recent foray into the Diamond, Bullion and Jewelry segment revised pricing model with few customers to volume-based pricing as against fixed price per coin were the key reasons for the temporary drop in our margins. The details of all this will be given by our Head of Strategy, Mr. Muthuraman. In transformational changes besides Diamond, Bullion and Jewelry Logistics, we have a definitive agreement for acquisition of majority stake in Aceware Fintech Services Private Limited, Acemoney, a leading Kochi-based fintech firm. Acemoney specializes in providing comprehensive state of the art digital banking solution in the rural areas, targeting rural retail outlets, rural cooperative banks and cooperative society. With this acquisition, Radiant will be able to provide a full range of complementary offerings in GST plus locations where it has a strong footprint for its cash management services. This partnership will provide significant growth opportunities for Radiant including providing cash replenishment to micro ATMs in the rural areas, providing retail cash management services to end customers of cooperative banks and cooperative societies and leveraging the digital wallet services of Acemoney for more efficient fulfillment of cash management services. This strategic move helps in diversifying our portfolio of services and also aligns perfectly with our vision to drive sustained growth and deliver value to our stakeholders. Our recent expansion into Valuable logistics and this acquisition are expected to create new avenues for revenue growth at both our overall market position. We are excited about the journey ahead and the potential for growth and success and also to see the considerable shareholder interest and the number of shareholders to increase from the retail community week-on-week. As always, we remain committed to providing transparent updates on our focus and answering any questions that you may have. With that, I now hand you over to Muthuraman, our Head of Strategy.

Thanks, Colonel. Good afternoon, everyone. Thanks for joining us on this investor call today. I'll present the latest update on our company's financial performance and key performance indicators for the quarter and half year ended September 30, 2023. Our extensive presence spans over 13,800 PIN codes across 6,300 locations, giving us a unique competitive advantage. The vast network allows us to efficiently serve a large number of clients. We continue to have a strong growth in gross addition of points, which enabled us to further entrench ourselves in the retail cash management business. In terms of business performance, during the first half of the financial year, we handled INR 0.82 trillion of cash, representing 11% growth over same period last year. During the quarter, we added 16 new clients, 27 new end customers and 1450 new retail touch points. While strong growth was witnessed in small finance banks, organized retail, e-commerce and petroleum sectors, the net addition to the points were lower than full year trend on account of churn in a few customers in the e-com logistics and NBFC sector. Some of this was part of the consolidation exercise by the company to read out low profitable routes. Specific measures are being taken by the management to address this churn, including developing end customer-specific tech plug-ins. Our recent field tech decision will also help in this initiative in a big way. Coming to the financial performance for the quarter. The total revenues for Q2 FY '24 was INR 954.2 million. The growth is less than the historical average growth rates on account of, A, slower growth in net additional points, resulting in lower growth in total cash handle. And revised pricing model for a few customers to volume-based pricing as against fixed price point. This will be beneficial to us in strong quarters like Q3 and Q4, but had some negative impact in Q1 and Q2. The festive season has started off on a very good note. So we do expect that the growth in revenues to restore to mean in the coming quarter. In terms of margins, the EBITDA margins were muted for this quarter as compared to the previous quarter. This is on account of the following: A, increase in employee count by almost 200 people, a majority of which is for the Diamond, Bullion and Jewelry business, which is yet to start yielding meaningful revenues. We have also incurred some costs in building the team for direct sales, which is picking up gradually. The cost of cash executives has marginally increased, but with better revenue growth, this cost rate is expected to reduce gradually in the coming quarters. The vehicle, gunman and driver expenses have increased significantly in this quarter. The reasons are we have 50-plus vans today, along with guards and drivers deployed in the Diamond, Bullion and Jewelry business, which are not fully utilized. Additional vans deployed during the quarter in the cash on operations segment, which are yet to yield full quarter revenues and muted revenue growth has impacted the margins and the cash pickup and delivery segment. As I said, Diamond, Bullion, and Jewelry is steadily growing and is likely to cover its costs by the end of the financial year. So as you can observe from the recent cited expenses in Diamond, Bullion, jewelry and cash van operations and direct sales are the nature of investments and prerequisites for strong future growth of the company. The change in revenue model for select clients from fixed to variable will also help in better margins in healthy quarters. In terms of business verticals, cash on operations witnessed healthy growth of 46%. Two key drivers for our business in coming years are one is cash van operations and other is direct clients. Both of these have grown fairly well. Cash van operations have grown by 46% in this quarter over same quarter last year. And revenue from direct clients grew at 66% in this quarter over the same period last year. Revenue from other segments reported growth in line with the overall revenue growth. Coming to the specific end user, end customer segments. The petroleum sector, which saw a slowdown in FY '23 has recovered to a large extent during the quarter. Though the number is still 20% lower than the March '22 levels. So we expect the growth momentum in this subsector to continue, and it will grow at a higher than average levels in the past in the next two quarters. BFSI and organized retail continue to report robust growth of 21% and 16% year-on-year, respectively. E-commerce Logistics showed negative growth as some clients in the sector shifted to the composite revenue model linked to volume of cash and some clients were also lost in the churn. However as the volumes tick up in festive quarters, we expect healthy growth to continue from these 2 sectors. In terms of return ratios, return on capital employed on an annualized basis for the 6-month period was 26%. It has dropped from 30% in the past on account of lower profitability from core business as discussed now and also on account of investment in 100 plus cash vans during this period, which are yet to be deployed to lean operations. The return on equity for the half year period is 21% on an annualized basis. So in conclusion, though the quarter is muted in terms of revenue growth, the underlying profitability profile is well intact. Significant investments in manpower and assets have been made during this period, and we see momentum building over the next 2 quarters into the festive season, and we remain confident of delivering a healthy performance in FY '24. With the new initiatives, the CMD just highlighted in his remarks, we are building new long-term levers for growth with a more diversified revenue profile and more robust profitability. I now hand over the floor to Mr. Alexander David, who will be the Executive Director on the Board of Directors of Acemoney our recent acquisition. Over to you Alexander.

Good afternoon, everyone. Thanks for joining this investor call. I'm Alexander David, General Manager of Operations at Radiant Cash Management. I'm sure all of you would have read about our announcement yesterday regarding the acquisition of Acemoney, a leading fintech company. I would like to provide the rationale for this acquisition. As well as our vision for the growth plans of Acemoney and the synergy benefits this brings to Radiant. Radiant has one of the strongest network of retail touch points in the country and a response network of over 7,000 cash executives in the Tier 3 plus locations across India. We were looking for a fintech platform that can help us leverage the strong network to offer a wide range of products and services to the retail outlets in these remote locations besides retail cash management. Acemoney is perfect fit for our requirement as it also had a strong presence in Tier 3 plus locations in Kerala and Tamil Nadu and a comprehensive fintech platform, offering a wide range of services. Through this acquisition, our vision is to enable millions of customers who have recently entered banking system to avail digital banking services that urban counterparts enjoy. Through Acemoney, we are also looking at expanding the micro ATM footprint, which will provide strong growth opportunities for both Acemoney and Radiant. This synergy benefits of this unique digital, physical plus digital platform would include cash and digital payment options to rural retail outlets, cash replenishments to micro ATMs, retail cash management services to end customers of cooperative banks and cooperative societies and leveraging the wallet services of Acemoney for more efficient fulfillment of our retail cash management services. We are quite excited about the strong growth opportunity, and we'll be providing investors with periodic updates on the progress over the coming quarters. I will now hand over the floor to Sohail for moderating the Q&A session. Thank you so much.

[Operator Instructions] We'll take our first question from the line of Vikash Kasturi from Focus Capital.

Congratulations sir, on a great quarter. I had a couple of questions. So the first one is on Slide 23 of the investor presentation. I wanted to know, under, so you have shown your cash movement in cash burial number for half yearly one. But I think it's a printing mistake. I think it should be quarter 2. Is that correct, sir? Because when I compare it with Q1, the increment is really small for quarter 2. So I think it should be quarter 2 and not half?

Yes, my apologies. That number is for quarter 2. Quarter 1, we had separately done in the previous presentation. My apologies we will get it corrected.

All right, sir. Sir, I just wanted to know what is the difference between cash movement and cash burial, sir?

So the cash movement is the total cash that we handled during this period. Cash burial is where the cash that we collect from the outlets, we deposit in our own account and then transfer it electronically to the concerned bank accounts. So this is an additional value-added service that we provide for which we earn certain additional income. Net income also the share of that income is separately disclosed in our segmental revenues. So the network cash management and cash burial, we used interchangeably. They are one and the same.

So are these -- the cash movement and cash burial, so is cash burial subsegment of cash movement.

That's right..

Sir, second question was sir about the Acemoney, so will we be partnering with some NBFCs or any other such institutions to take the Acemoney services and offer it to the end customers like some of the other fintechs do?

I think I will currently take this on. The idea of acquiring Acemoney is because it is a very synergized platform with the retail cash management that we are currently doing. Now where do the synergies lie? The synergies lie in the fact that we have a presence across over 14,000 PIN codes which goes on to Tier 3, Tier 4, Tier 5 locations. And therefore for us to recruit new banking correspondents and place important digital banking solutions like micro ATMs or Aadhaar payment enabled services or providing QR code can be done using our own resources across the hinterland. So, this is very different from most of the fintech on standalone and they don't have any feet on street here, we have got a full-fledged and dense network presents across Tier 3, Tier 4, Tier 5 locations. And also it is going to be very cost effective because as we have subsidized some of it. So, with this in mind, this is the reason why because there is complete synergy. Then again if we want to provide immediate cash to some smaller clients, we can make Use of the digital wallet that is available with the Acemoney platform. So, these are the synergies That you see and it is really going to further enhance and support our own operations and our Own activity in the hinterland.

We have the next question from the line of Saurabh from Multi-Act.

Yes. This is Rahul Picha from Multi-Act. So my first question is on the investment that you have made in the DBJ business. So can you quantify that?

The challenges that we do have some common resources between both, so we are not able to give a in a sense consciously could not give a separate segmental revenue. But at a broad level since inception, we would have spent a little less than INR 2 crores on that segment.

Anything you would like to add on that Venkat.

No.

So this INR 2 crores is including the employee cost as well as the cost incurred on the vans and the security guards that are deployed for this segment, right?

No, asset purchases, these are expenses broadly.

Yes. So I just wanted to understand the P&L cost itself. So like you said that roughly there are 50 vans and security guards that are currently being used for the DBJ business. So cost pertaining to that is also included in this INR 2 crore or?

Yes, it does.

So the INR 2 crore number is for the quarter, right?

No, no. Since inception, I think we started almost about mid-May, we started and some leadership were recruited even before that. Its including all of this.

So roughly for 5, 6 months?

Yes. 4.5, 5 months.

Okay. And the second question was, you also said that you have...

I just want to add as you speak this is a new business, so it is rapidly growing, so what we incurred in first month is what we incurred in the 6 months will be very different, so just want to highlight that aspect.

Yes. And again, on the same point, like going forward from here as well, do you expect this cost to go up or right now it's stabilized?

No, it is in a growth mode. We are expanding and that is the nature of this business. We need to Establish the network and then the business will come. And as I said in my opening remarks, we Expect to cover our costs by end of the year.

Okay. Okay. But when I look at the margins sequentially and the drop that has happened on the operating profit level, even if I adjust for the INR 2 crores, it seems that the drop is largely being driven from the core business. So can you provide some more insights into what is driving the decline in the profitability in the core business?

So, as I had mentioned that the first layer is the lower growth in revenues. As we had highlighted in the past, it is a high operating leverage business, so if the revenue growth is muted, that will have a little more disproportionate impact on the profitability. Likewise on the other side as well when the revenue grows healthy, the impact on profitability is disproportionately higher. Because that is the nature of the business. A good part of our costs are fixed costs and so the muted revenue growth has a disproportionate impact on them, and I had explained the other costs as well as in we have a marginal increase in cost [indiscernible] and the vans deployed in that cash van operations has also not yet earned full year revenues, we are growing that segment, that segment grew by almost over 46% in this quarter. So, as we deploy more vans, it will earn full quarter revenue only in the subsequent quarter, so both of these are also added to the muted revenue growth that we saw and the DBJ segment.

Okay. So the cash van operations, that particular segment for the quarter could be loss-making is what you are trying to imply. And as and when the utilization making there?

Not loss-making, would be lesser profitability than the core business here.

Okay. Because when I'm adjusting for the numbers that you have provided, it seems that the margin for the current quarter, even if I add back the INR 2 crore expense, which is for a period greater than the quarter, but even if I added to this quarter's operating profit, the current margins for the core business seems to be around 16%, 16.5%, which is significantly lower than the run rate we used to clock last year. So that is what I'm trying to understand.

Yes, that is what I explained, there are four parts to it, now you are adjusting only one of them, The revenue growth, lower revenue growth, slightly higher cost of cash executives, then the cash van operations and also the employee cost has 3 components, and then there is the DBJ business and the direct sales as well, you build the team for the direct sale. So, there also as in direct sales is growing, but then it is still small and we are making investments in that segment. So, to that extent, all these 4 parts have their impact on the profitability.

So what would be the investment into building the team for targeting direct space, like if you can quantify that as well?

So, that is very difficult to put it that way. We are incentivizing our existing team to get more direct clients other in the sense the execution part of it will be done by the same team. Because the nature of our business, it is not difficult to give profitability by direct sales versus bank sales versus user segments like that.

No sir. I was not asking for profitability of the direct sales business, but I was just trying to understand what is the incremental cost that we would have incurred for targeting more direct sales? Because that is one of the reasons that you are kind of highlighting for the top in margin.

I don't have that numbers ready, but yes that is a vertical where we are getting big.

We don't have the exact numbers, but see now when you are looking at direct clients and earlier also specified that approximately 28 lakhs outlets are there out there. So, for us a major objective. So there have been large amount of business commercial outflows that is one. And then we have set up a marketing sales force with slightly higher price higher in place and that has also had an impact. The point I want to make right now is that when one looks at only 3 months of this company’'s trajectory, it may look as if that there is a difference or a dip, but essentially what are we doing this year as I said in my opening remarks, this is a time for consolidation and for transformational change, I am not so much looking at the bottom line right now or the EBITDA. I am sensitive to them, but that is not my priority right now. Now just to invest wisely and strengthen the platform, so that we can look at all four areas and when I am saying 4 areas, I am Talking about retail cash management, about cash van operations, about Diamond, Bullion and Jewelry, Logistics and now fintech operations. All are humongous and I am standing at the Threshold of a huge universal of opportunity. And though we appear once in 3 months, but this Is a little long term and there is a gestation period. And that is the reason why there have been These outsourced. I think I would like to highlight that any further details on this side Muthuraman can bring in if you would like to add on anything.

Yes. Got it. Sir, secondly, on -- in this process of weeding out the less profitable roots. So where are we in that process now? Is that largely done or we should expect?

Its largely done. It is largely done at this point of time.

Okay. And on this pricing pressure aspect that you briefly mentioned in the presentation, can you elaborate a bit, like what kind of pricing pressures are we witnessing right now?

No, the pricing model has changed for a few clients from fixed to variable, so in which case in good quarters where the volumes of cash handle is healthy, it will make up for the lower than average growth in the lower quarters like Q1 and Q2.

Okay. So any particular segment in this would have happened or?

No, we did have de-growth in e-commerce Logistics segment and like I said, the churn in points also in that segment. We are taking specific measures, some the Acemoney acquisition will help us in fulfillment in Tier 3, Tier 4 plus locations much faster and some direct tech plugins we are working on for a few clients, so to improve the stickiness of those clients, so should help us Bring that sector back to steady growth. Other than that, like I said, the petroleum, organized Retail, BFSI, all of them are growing at fairly healthy rate.

We have our next question from the line of Arvind R from Sundaram Alternate.

Sir, I would like to understand also like what kind of investments it would be needed to synergies operations with Acemoney? That is one thing and sorry I joined a bit late, but like if this question has already been asked, so what kind of impact on like the P&L we can expect from the investment in DBJ business or cash on operations because in the last conference call you mentioned like INR. 2 crores depreciation for cash van operations this year and would it be the same for the subsequent years also? And what would be the depreciation or other expenses for DBJ business? And similarly, what would be the investment requirement for Acemoney in Integration?

So, the Acemoney transaction as we had discussed in this thing, we have paid about INR 11.2 crores of which INR 9 crores is directly into the company which means that in our own estimate that should be sufficient for the next 18 months to 24 months of scaling up of operations of that entity. And in terms of your DBJ business, as in the sense see the vans whether we are taking it on our roles and in our books, those vans are being deployed in DBJ or it is a hired vans, we don't make a distinction between the two. So, for the company as a whole as the IPO proceeds we will be completing the 220 vans that we have that depreciation impact in the balance sheet. For INR 22 crores, I think the full year depreciation impact will be INR 2 crores. INR 22 crores is the total van [indiscernible]. So this full year depreciation impact will be about INR 4 crores. That is whether that pertains to DBJ business or RCM rate that business is difficult to earmark between the 2. In terms of otherwise Asset addition, there is no major capital investment required in that DBJ business or nature of Revenue expenditure only. Capital expenditure is fairly small in nature. Some few rental deposits Here and there that is all.

In the upcoming quarters, can we expect our revenue to grow faster than expenses, especially the other expenses have been growing faster obviously, we are investing in all the new businesses?

Q3 has historically been our healthiest quarter every year and here as the festive season has started off on a very good note, so we do expect it so.

Any guidance on net touch point addition like growth for the medium term?

See, medium-term growth, we are still maintaining about 1,000 touch points per month. Net addition.

And just asking like I have 2 more queries, so the vans for DBJ, would it be like requiring significantly higher investment than the normal cash van operations? That is one thing and if you can little bit elaborate on how the merchants and other touch points would be actually synergistic for both Radiant cash management physical business and Acemoney’'s digital infrastructure.

So, the first question I can answer, as in the vans, we used it interchangeably between retail cash Management and DBG. There is no special extra modification or anything that is required for Handling the DBG business. Can you just repeat the second question a bit more clear?

Yes. I'm just trying to understand like how this synergy will play out like either our own retail touch points or the merchants who look for our cash management services, like how would they be beneficial by using Acemoney's?

Absolutely, Alex here. So, how this would be beneficial would be is if you look at most fintech companies today, they are not standalone tech companies based out of Bangalore or Mumbai. They have to depend on another partner called a super distributor what they use in fintech terms Essentially to distribute their products to kirana stores, outlets, all over the network. So as a result of this, the distributor takes a lion's share of the revenue. So, our partnership with this fintech company, because of our feet on the street and because of our massive presence in 14,000 PIN Codes, we will be able to capitalize on this distributor share. This is one way of looking at it. Second, this is very beneficial to the fintech platform. How is it beneficial to us, as a cash Logistics company? Today as we are growing more and more and as you have been seeing there has been a slight de-growth in our e-commerce side, our customers have been wanting some more technology based products they have been wanting in handling their cash and we felt that if we added a fintech partner that would enable us to provide that and we have to move a little ahead of the curve, so that is how we are seeing a lot of mutual synergy over there.

Any different kind of people we need to hire to expand this business. As you said, like we have a presence of -- through Acemoney we have presence in Tamil Nadu and Kerala, what about spreading to other regions? Do we do they need other kind of expertise to offer the services.

No, that is a great thing over here. What the same model which we have seen over here in the South, we can just completely replicate that in other regions as well. Already we have started the process of identifying outlets in North East and we have already started seeing a lot of success over there. So, the same model can be applied over there and the beautiful thing is existing Resources can be used. We just have to train our people a little bit and we have to provide maybe some incentives, small, minor things to persuade them, and we can effectively be a distributor for this fintech company.

Any specific reason to just target on like cooperative banks, will we be looking to target on other kind of segments also?

Well, it is a very blue ocean of opportunity over there. None of the other players are looking and there is a lot of ignorance about retail cash management. So, it opens a very new area of business development for us over there and if we are able to partner up through fintech with these sectors of corporate societies and corporative banks immediately it opens a door as well to provide cash management solutions as well over there. And as we already have an extremely strong presence in Tier 3 plus locations, it goes hand in hand with our strategy.

We have our next question from the line of Aditya Shroff from InCred.

I had only one question, so I wanted to ask since we have more than one vertical now, so what Is the revenue mix that we are targeting in FY25 and say FY26? Like from what are we targeting from retail cash management from DBJ or from fintech solutions? Sir I wanted to understand The proportion of that.

I would like to hazard a guess and at this point of time, but what we have assured and we have said earlier for us to have that definitive growth of 20% from 2025 I think will be completely achievable and will be definitely assured.

But what is the proportion that we can assign to the Diamond, Bullion and Jewelry vertical that We are saying that it would be able to like cover its cost by FY24, so what is the proportion of The total revenue mix that we can expect from the DBJ vertical?

We are trying to target about the 20% of the revenue by 2025 should come from DBJ.

We have our next question from the line of Ganesh Nagarsekar from Research Analyst.

Sir my question was primarily on your move to the volume based pricing, as of now, what percentage of clients have switched to this sort of business model and in the next few quarters do we expect more clients to kind of move to this model versus the fixed pricing model? And I understand that there will be an increase in seasonality because of this, basically Q3 will be a bit higher, but if you look at say the annualized number, are we taking our net revenue rate because of the move from fixed to volume pricing and if yes, could you quantify the amount of it we will be taking there?

See, we are not seeing this as a common trend across sectors. It is in specific sectors, as I told you this is in e-commerce Logistics and a few select NBFCs have adopted this model. At this point of time as in our pricing for that shift is revenue neutral approach. So, we are not expecting for sustained either 12 months on a basis, we are not expecting to take any hit based on the pricing that we currently have.

We have our next question from the line of Tushar, an individual investor.

I have 3 questions in total, my first question is what is the primary mode of transport for cash delivery and pickup? Does the company exclusively use vans for transportation? And also, can You clarify how much staff is employed for each van?

Okay. You have completed your question or you are going to ask the other?

This is the first question only.

So, there is RBI guideline on the mode of transport, and it is being implemented in phases in a particular set of cities. There only cash vans are used for movement of cash. It is roughly about 100 locations out of 6000 odd locations that we currently cater. The rest of the locations based on our own risk management team’s perception and the volume of cash, we use a combination of both vans as well as two-wheelers and that is governed by Minister of Home Affairs guidelines, which allows up to INR. 10 lakh of cash to be carried in either body or 2-wheeler or The rest of it by cash vans. What is the second question?

Okay. How much staff is employed for each sir?

A full crew will include as per RBI, it is a 5 member crew, one driver, 2 armed guards and 2 custodians.

Okay. And my second question is, sir, what exactly is the procedure for awarding contracts for cash pickup services, do banks offer a single contract for all the states or does every state have a separate contract?

No, we sign a long term contract with banks irrespective of to which end customers they offer. We signed long term contracts with banks and then banks in turn offer services to their customers.

Sir, I mean a single contract for older state for a particular bank or?

For all the states. Yes, single contract with the bank. Yes. That's right.

Single contract with the bank. Okay. Sir my last question is, during a particular time period, does the same van do pickup and delivery for multiple banks?

Of course. Yes.

Same vans do pickups and does the bank gain any advantage from being a PAN India company? Also, do bank prefer to work with companies with PAN India network? Your opinion on this?

Yes, that is our key strength, ours dense network in the industry gives us the right to win any New contracts towards any of the large retailers with PAN India presence would like to have deal with one service provider and Radiant is one of the few who can offer in every district in the country, we will be able to offer a pickup service or a delivery service. So, definitely those with the PAN India footprint and dense network have a strong concrete advantage over others.

[Operator Instructions] We'll take the next question from the line of Shirish Vaze from Moneylife Advisory Services.

My first question is regarding that we have seen loss of some points and clients, so just wanted to understand the competitive landscape currently. Are we facing increased pricing pressure and Competitive intensity? And who exactly are we facing competition from? Is it the large established players or smaller upstarts who are entering this segment?

There are no smaller upstarts who can enter into this segment and offer these services. This is governed by RBI, which mandates the minimum net worth of INR 100 crores and a minimum fleet size of 300 vans for banks to offer outsource cash management services. So, it is an oligopoly market.

In terms of trends of market share that you are observing, so are we sort of losing market share or are we sort of stable over the last half year?

No, there is no loss of any market share. What we are also consciously doing, as I said that this is a year for consolidation. Now post listing, we have been looking at all the points and studying as to their profitability profile and so on. And then a few of them that we find are not profitable then we are weeding them out. That is also happening as of now. So, we are consolidating on the model, we are strengthening the financial model. That is what we are essentially working on At this point of time in this financial year.

Sir my last question is regarding that you have seen a large increase in receivables compared to Q4 last year. So, just wanted to understand your thoughts on the working capital intensity of our operations going forward, we expect receivable deeds to go up from what we have seen in the past or stay at the same levels going forward?

When compared to the previous quarter, this quarter is 75 days of sales we have got in Receivables which has come down from 82 days of sales in June 23. So, on an average, our Receivables is anywhere around between 70 to 75 days of sales.

Okay. Got it. And we expect this sort of number to continue in the future also?

Yes, we expect to control receivables at around between 70 to 75 days. The normal credit period offered is 60 days backed by and large within the 70 days.

We have our next question from the line of Sarvesh Mutha from Antique Stockbroking.

Sir, my question on the clients that we are losing. So, if I look at the industrial breakup we are losing clients in BFSI, we are losing clients in e-commerce, others. In petroleum we are yet to reach our past peak. So how do you see the business landscape going forward.

Mr. Mutha, can you use your handset more, please?

Hello.

Can you repeat the question? What did it say?

So, I wanted to ask we are losing clients in BFSI segment, e-commerce, others, in petroleum we are yet to reach our past peak, we are facing competitive pressure in e-commerce Logistics, so how do you see the business environment going forward for next 2 quarters, 4 Quarters? And what sort of revenue run rate are you building in?

No, no. I think we have not lost any client.

We haven't lost a single client.

So, some points churn happened. Some specific pick up points churn happened, as is the case in any other competitive industry, and we are taking corrective measures like I said, the more efficient fulfillment of cash, tech plugins etcetera, to win back those points and besides that there is no other in the sense as I said, BFSI has registered a 21% growth over last year. Our BFSI Segment revenue same period over last year grew by about 21%. And e-commerce has grown fairly healthy, organized retail has grown fairly healthy, petroleum has grown fairly healthy though it is below the past peak because there is a sharp dip in revenue in last year. It is almost recovered to 80% of past peak, so we maintain our guidance like Colonel just mentioned a longterm revenue growth of about 20% per annum is something that we will definitely be able to.

Okay. And on margins, so this quarter, we had margins of 14%. Now we used to have a run rate of 20%, 22%, 25% margins. But I mean this competitive intensity pricing pressure, is it here to stay? And would margins continue to stay in pressure?

No, as the revenue growth comes back we expect to restore back to previous years.

[Operator Instructions]. As there are no further questions, I would now like to hand the conference over to Mr. Sohail Halai from Antique Stock Broking for closing comments over to.

Thank you, Colonel sir and the team for spending time with us and giving us this insights. Colonel, sir please go ahead

Concluding remarks?

Yes, yes. I was just handing over to him. Colonel sir, please go ahead.

Thank you, Sohail, sorry for interrupting you. Well, 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 approach alliance perfectly with the market dynamics enabling us to tap into the vast un-served market and drive sustained growth. As we have explained now during the course of this chorus call, we are now focused on 4 specific lines for building our growth and revenue in the coming years. It has been a time for consolidation, as also for transformational growth. 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 all Stakeholders. Thank you all for your time and the interest in our company. Thank you very much.

Thank you members of the management. On behalf of Antique Stockbroking Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines