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

Hello, everyone. I'm Ankit Kanodia from Smart Sync Services, a SEBI registered investment advisory firm. Welcome to the fourth episode of MissioN SMILE, Leaders ka Falsafa. Leaders ka Falsafa is an initiative from MissioN SMILE, where we call promoters or top management of listed businesses in India and learn from their journeys, struggles and victories. For those who are watching this for the first time, MissioN SMILE stands for Making New Stock Market Investors Learned through Engaging Research. [Operator Instructions] We'll take the most relevant questions at the end of the session. So let's begin. In our fourth episode of Leaders ka Falsafa, we have Mr. N. Muthuraman, who is Director Strategy and Head of Investor Relations in Radiant Cash Management Services. Incorporated in 2005, Radiant Cash Management Services is a market leader in retail cash management services for banks, financial institutions, organized retail and e-commerce companies in India. The company offers a range of services under this segment consisting of collection and delivery of cash on behalf of its clients from the end user. As a responsible SEBI registered investment advisers, we at Smart Sync Investment Advisory Services would wish to make this disclosure before the start of the event. I and my family are invested in the business of Radiant Cash Management and we at Smart Sync Services have recommended this business to our HNI and retail customers to buy. Second, we have received no compensation from the management of Radiant to conduct this session. So please consider this discussion as an opportunity to know more about the business, and nothing we discuss today should be constitute as a recommendation to buy or sell the business. With the important disclosures out of the way, I would now let Mr. Muthuraman to do the talking. Thank you, sir, for agreeing to do this for the investor community.

Good morning, Ankit, very happy to be here and talk to you and your like-minded investors. Will be happy to provide as much details, keeping in mind that we are in a silent period, so no unpublished prices and information shall be disclosed in this call. But we'll be happy to provide details about our operations and our journey and our business and et cetera, and address any questions that you or your investors may have.

Thank you so much, sir. So as I promised to you, we'll not ask any questions related to quarterly guidance or what is going to be in this Q4.

So I straight away go -- go to the first question. So Mr. Muthuraman, please take us down memory lane to 2005 when the company got started, I guess Deutsche Bank was the first bank to give us our first contract or order. Tell us a little bit about the early days of struggles, achievements and opportunity landscape until we became a Pan India player in the year 2010 with about 10,000 service points.

Okay. Yes. So I'm actually speaking here on behalf of Colonel David Devasahayam the Founder, Chairman and Managing Director of Radiant Cash Management. I am associated with the company for the last 6 years. So obviously, I was not there on the day when the business started, but will definitely provide you with the details how it all started. I think in -- Colonel joined Army, in 1980. So straight for 25 years, he served in -- a most difficult of terrains, including Northeast and in Kashmir and several other places. And in 2003 or 2004, he got posted in Bangalore upon his request to commander training center. And then due to some family circumstances, he took a voluntary retirement. And -- so Army has this practice of -- those who have committed to -- the full pension requirement, they provide what is called as a resettlement course. So where they arrange various industry leaders to come and talk to those who are opting from -- to -- for civilian service, what are the opportunities available for these Army retirees. So there was one such event, where somebody from Reserve Bank of India came and spoke about -- spoke to the retirees for resettlement. And usual practice for Army Veterans is to start a manguarding company, security services company. So this person spoke about this thing saying that security companies, we have enough and more but there is another emerging segment, which is retail cash management, where there is hardly 1 or 2 players at that point of time. and RBI needs a lot more people in that segment, and it is a reasonably lucrative segment of the cash management -- this thing. So -- Colonel caught on to that and took more details from him and consulted several subject matter experts and realized that this is a fairly lucrative segment within the cash management industry. And yes, he started the company with the 10 lakhs of his retirement savings. And like you said, yes, Deutsche Bank was the first client and in Coimbatore, for I think -- Tata Tele or -- Tata Tele this thing, cash collections, just 2 points in Coimbatore and Tiruppur. So from that point, this thing, the biggest constraints or challenge at that point of time is that banks will ask for a 100% bank guarantee for the every amount that they collect because at the end of the day, is a start-up company. So how will you trust large volumes of cash without a corresponding banker. So his constraints for growth at that point of time was largely the margin money that he has to pay towards bank guarantees. So he had used his -- this thing and some friends and relatives and some external borrowings, et cetera. And that's how it started from 2005. And -- because this service is nascent and it is offered by select multi-national banks only to their privileged customers as a value-added service. So business was continuing to come, and he is able to take up only to the extent his capital allowed him to. And he scaled it up reasonably well from 2005 to 2010, where we had -- already had a Pan-India presence but a very sparse presence. So at that point of time, he decided that he needed a management education. He couldn't -- other than in sense is -- he wanted to strengthen his awareness about best business practices, financial analysis, financial practices, profitability, all of that. So he did advanced management program at Harvard Business School, it's a 3-year program. And while running the business. Okay. So in U.S. daytime classes and nighttime managing the India operations. And once he completed that, he realized that, obviously, even before he knew, but he realized that institutional funding is the one -- that institutional equity funding is what is needed at that point of time to scale up the company. So he appointed PwC and PwC got Ascent Capital as a private equity investor. As the business was growing well and profitable at that point of time as well. So there's enough interest from PE players. Ascent Capital was chosen because the founder of Ascent Capital is Mr. Raja Kumar, who is formerly with SEBI. And he in his tenure at SEBI he had approved 1,000 DRHPs. So he promised that one day he will take the company public, and that tilted the choice and favor of Ascent Capital. Ascent Capital took 37% stake in January 2015. And then that helped the company scale further.

Thank you, sir. That was very helpful. So before I come to the investment of Ascent India funding in 2015. So I wanted to know more about the period between 2010 and 2015 because that was also a period where there was many things happening in the industry. How were we placed at that time? And what were the main focus during this period before the funding infusion happened?

Yes. So that was a period of fairly high growth for the company. The -- I think at that point of time, 2010, the turnover was roughly about INR 50 crores or so. As in -- that is the minimum eligibility that you have to be a founder of a $10 million company to be a -- to enroll into Harvard Management Program. So at that rupees -- INR 50 per dollar. So INR 50 crores was the turnover, but business was rapidly growing because the banks -- as in the foreign banks first and the new age private sector banks, that is your ICICIs and Axis and IndusInds of the world. They were also growing rapidly and jostling for market share among privileged customers. So they are offering this as a value-added service to multiple banks. And for some reason, as in the competitors, we're not as aggressive or as active in this market. At that point of time, there are only 2 players. I think Brinks and CMS, they are not as active in this segment because each of them have a -- for them, it is one of the other businesses, multiple businesses. So that gave a significant opportunity for Radiant to do, increase its market share within this segment. So yes, he did really sort of capital -- as in debt capital at high cost as well at that point of time. But with a single point focus of increasing the route density. So he realized that at that point of time, as in that sense, adding points is one, but adding points in an existing routes to improve the density determines profitability. So focused business development for every contract he himself personally will sit and this thing. So that helped in scaling up the business in a very profitable manner. And yes, so that is the focus. As in there is no distraction. Retail cash management is the single binded focus for the company from 2005 to 2015.

Yes. Thank you, sir. That was very helpful again. So as you mentioned that in 2015, we received an institution investment for the first time, and it was the Ascent India fund, which invested in our company. And in the same year, you acquired the ATM business from Checkmate. So I have a 2-part question to this situation. So first, the general understanding among the investor community is that when an institution invests, it not only gives you capital but also gives you strategic input to running the business and the areas to focus on growth. So my 2 questions are, what were the expectations of institution when they invested in our business, number one. And number two, was buying ATM business of Checkmate also was a suggestion from their end or it was our call to go ahead with it -- to begin with?

No. See, the biggest value add that Ascent brought to the table was a significant focus and investment in our technology platform. Since Ascent had made several new age tech business investments, including BigBasket, et cetera. So they had rich experience, which helped us to focus and make investments in the technology platform, okay? So in the early years, it was still fairly manual. But then as the scale up -- scale up of operations happens, it becomes extremely difficult and it's -- through technology in this business, cash management business, works both ways. One is for improving the productivity and operating efficiency. And the other side of the coin is stringent risk management. So on both sides, technology helps. So Ascent focused more on -- bringing focus more on implementing a strong technology platform. So every aspect of Radiant's operations, was as an automated or tech-driven from its earlier manual days. The decision to expand into ATM was a -- it's not just a single -- this thing. It's a Board decision. More importantly, it was also from many of our customers. So customers also suggested that we do enter into that adjacent segment. And so it is actually not the same year. It is almost 1 year later. Jan 2015 is when Ascent came in, Jan 2016 is when we acquired the Checkmate. So but we acquired about 3,000 ATMs of Checkmate. The -- in fact, the price paid was only for the assets that we got, that is the vehicle assets, et cetera, vehicles and vaults and cash counting machines and that kind of -- it's practically -- a just an asset purchase along with contracts, business contracts. So 3,000 ATMs as in -- within a short period of time, the company realized that the ATM business, just like in the retail cash management business, the profitability determines on route density. Okay. So we had 3,000 ATMs at that point of time. If all the 3,000 were in Tamil Nadu, that business would have been rolling in money. Unfortunately, it was not. It was spread Pan-India. So it was loss-making from the time we acquired and after 12 to 18 months of running that business and understanding that, there is very limited scope for improving the profitability except through aggressive business growth. And aggressive business growth can come only through undercutting the competition, whereas the retail cash management is continuing to grow at a verily -- fairly healthy pace. So the management decided -- the Board decided that -- to exit that business But exiting that business did not mean that we sold that business. We just stopped taking fresh ATM contracts, served notice to all the banks and redeployed those assets, basically it's just vans and computers and people. So all of those were redeployed in the faster-growing retail cash management business. So there is no write-off or loss or anything like that. Yes, some small debtors in business was written off at that point of time because when you stop the business, some old disputes and et cetera, some small amount of debtors were [indiscernible]. But otherwise, the acquisition price that we paid for, boss, was mainly for the vans and computers and things like that. Those were redeployed in our retail cash management business. And we stopped the business in January 2019.

Yes. So sir, it's good that you clarified this because I remember reading in either your DRHP or maybe CMS Info DRHP where it was mentioned this business was sold at a loss. Now that you have clarify...

No, no, it was sold because it was loss making. That's what we had [ addressed ]. It was sold because it was loss making. The acquisition price to selling price, there was no loss.

Okay. Sold in the sense you said, you didn't sell the business it was at that...

No there was no sale, that is not sale. Close of business, close of business as we deployed the assets into our retail cash management business.

Yes. This is something new I'm learning today because in the DRHP it is mentioned that this business was sold at a loss. So now it becomes more clear. Yes. So now when we look at -- look back to that business, would you say selling the business help us get more focus back in our organization to cater to the fast-growing retail cash management space?

Yes. So it was a good decision even today. If I have to rewind and take a decision, would have been this thing as in. Better would have been to rewind to 2016 and not do that acquisition at all in the first place. But the second best would have been to exit at the same time because see -- as in, we have explained this earlier as well route density remits profitability. And in retail cash management -- in added complication in the ATM segment is that there is a managed service provider that comes between the bank and the service provider. So the MSP takes charge of the entire ATM operations from appointing a security guard, to maintaining the air conditioned, to maintaining that machine and providing first level support, to replenishment of cash, to the switches and software and alerts and everything. Okay. So the MSP's mandate from the bank is to reduce the cost of operations. Okay. So they, in turn, obviously, will squeeze all the vendors, including the cash replenishment guys. So there were times when I think initially when ATM replenishment started, as in I think per ATM per month rates were, I think -- I'm presuming this thing then as in based on market information. It was in the range of INR 35,000, INR 40,000 per month. Today, it is less than INR 10,000 per month. Okay. So the -- that is -- obviously has come about by efficiency that has come about through route density. And it has also come about through the MSPs squeezing the service providers and ensuring that sustainable level profits are allowed, but not supernormal profits. Okay.

Got it.

To contrast that with the retail cash management business, so when I go through a route of picking up cash, I pick up first outlet through ICICI Bank and second outlet through Deutsche Bank, third outlet through Standard Chartered, forth outlets to State Bank of India. ICICI, couldn't care less where else I am going next. Deutsche bank couldn't care less how many more points I am -- this thing, I'm picking up. As long as he's -- within the time during the day, the cash reaches their bank account. That's all their expectation is. So if I could have multiple banks and I service multiple banks points in that same route, my profitability improved substantially. Obviously, if I'm doing for only one bank, the price that they charge will never be able to cover even my direct costs of that manpower and fuel. I'm able to multiplex that assets through -- to service multiple banks outlets. And hence, there is no direct correlation between the cost and revenue as well as individual client is concerned. That is not true in the case of ATM. So the MSPs will know, this is your cost of vehicle. This is your cost of driver. This is your route, this is the kilometers. This is your fuel consumption rates. And this is your margin. So that kind of transparency in costing to pricing is there in ATM, which, in a sense, limits the amount of profits that you can make, whereas in retail cash management, that linkage is broken between cost and price. So they are able to -- so that is why retail cash management segment is among the more profitable segments in the cash logistics industry.

This was very interesting. So just for the benefit of our users who are watching us live and probably, will watch us -- watch the recording as well. If I understood it correctly, in case of ATM business, what happens is that if you are taking, say, ICICI Bank's money, you have to first finish the work related to that bank. And then only you can move to the other bank, right? You cannot do it simultaneously. But in case of retail cash management...

So usually mixing up of cash of 2 different banks is not permitted in the ATM segment. But as in the retail cash management that is always done. There is no way you can service only one bank's point. You have to service multiple banks' points in a same boat. Ankit? Vikas, can you hear me? Yes, let's wait for Ankit to come back. So one of the questions that has come up is that is there a possibility of a future regulation for retail cash management where we cannot mix cash of one to the other? Very unlikely because the unit economics will still not work out at all. And in fact, the regulatory environment is quite benign and supportive of retail cash management because the regulator views this as an essential service. Even during COVID, for instance, retail cash management has been declared as an essential service. So what happens is, RBI calls this process as mop up. So the -- when the cash -- the forward movement is from the RBI mint to RBI vault to bank vault to bank branches or to ATMs. It's a forward movement. These are bulk movement of cash. And then either through bank teller or through ATM, it reaches the body public. From body public, it should come back to the bank. That is the role where retail cash management and Radiant provides its service. So when we do that, we process that cash. So we identify soiled notes, cut notes, counterfeit currencies. We sort them into ATM-ready bundles. We sought the coin separately, low denomination is dealt separately. So it gets processed before it reaches the bank. So that processing helps improve longevity of the currency. So RBI has something called as a Clean Note Policy. So this fits in very well with the Clean Note Policy, where the -- RBI by mandate of the government, RBI has a Clean Note Policy where every note with the body public should be of acceptable quality. So they do a lot of reprinting, et cetera. So this helps in improving the longevity of notes and also identify counterfeit notes, et cetera. So our regulator views this segment very benign. So that is point number one. Point number two, our service starts from as low as INR 2,000 per point per month. So if it is a pharmacy, for instance, in a Tier 1 location, it's -- well our service starts for as far as INR 2,000 per point per month. So which means that to visit that outlet 26 times a month with the armed guards and driver and security and with all the IT features and everything, that is like INR 75, INR 80 per visit. If the bank -- if the pharmacy has to do it on its own, it won't even cover the fuel cost for the person to go and deposit in the nearest bank. So we are able to offer that kind of pricing, accommodative pricing because we are able to multiplex these assets across multiple banks. So if a regulation comes where you cannot allow this multiplex, then you have to charge that much more, which will mean that this business will -- as in, individual outlets will not be able to offer it, which will mean that this much amount of cash doesn't get processed. So I don't expect any regulatory surprise -- negative surprise at all for this segment. If anything, it has been, as I said, very positively viewed with the benign regulation on this front by regulators, yes. Okay. So while we wait for Ankit to join, one of the common questions that people -- that we face from many investors, prospective investors, both institutional and individuals is that what is the future of cash with the UPI growing at a breakneck speed, will cash even remain at all? And if cash goes out, what happens to your business? So natural question anybody to expect. So I will foot -- answer this with some data points to put things in perspective. India has 2 crore retail outlets. Okay. This -- you can just Google up. This was 1.2 crores about 10 years back. Today, this -- the number of retail outrages 2 crores. Our own estimate is that about 25% of this will be organized, some form of organized, which is -- which will be eligible to use a service of this nature. So that is 50 lakh outlets. We service about 75 -- 70,000 outlets now, roughly. The entire industry services less than 1.5 lakh outlets. So where is 2 crores and where is 50 lakhs, which is eligible to use a service of this nature and the entire industry is servicing only on a 1.5 lakh outlets. This is a very nascent industry in India. It's a 100-year old industry elsewhere in other developed markets. It's a very nascent industry. So the growth opportunity for us is going to come from more and more outlets, not more and more volume from existing outlets. So the same store sales growth, we are not anticipating any big numbers, but adding more stores will drive our growth for a long period of time to come. That's point number one. This is corroborated by other fact. So the -- at the time of demonetization, the currency in circulation was about INR 16 lakh crores of which INR 14 lakh crores got demonetized. Today, the currency in circulation is INR 32 lakh crores, double of that. Okay. So government realized that as in despite demonetization and all of that, India has the reason [indiscernible] economy based on cash, and you cannot -- we cannot erstwhile reach -- at this time in between 2016 to '24 this is [indiscernible] growth digital payments as well [indiscernible] so this INR 2 lakh crores growth is -- there is a significant role that cash will [indiscernible]. The third point at [indiscernible] of currency, roughly the velocity of money is about 5x, [indiscernible] INR 175 crore transactions happen in the year -- we handled [indiscernible] crores of cash last year [indiscernible] and will be handled less than INR 4 lakh crores. So where is INR 170 lakh crores versus where is [indiscernible] 4 lakh crores. So it's about 2% or so [indiscernible] by penetration or by volume of cash handled penetration in terms of number of stores or volume of cash handled. Retail cash management is really in the nascent stage. The -- this business, retail cash management or the industry parlance, the banking use it has doorstep banking. This is a service that was started in India by foreign banks. Then later, new age private sector banks adopted this, then the old private sector banks started adopting this. Now a few small finance banks and a few cooperative banks have started adopting it. The biggest elephant in the room, which is public sector banks except SBI, none of them offer this as a service to their clients yet. If you are a customer of Canara Bank, Canara Bank expects you to come to the bank branch and deposit your cash, they won't come to your doorstep to pick up cash either directly or through a service provider. So that is a huge market that is waiting to be tapped either by these public sector banks start offering this as a service because of competitive pressures or providers like us providing service to those customers directly. So that provides for a long-term growth opportunity. Yes, digital banking -- penetration of digital banking will have an impact in terms of the currency and circulation may not grow as fast. But as I said, that is a worry for 50 years down the line because at this point of time, our penetration is less than 2%, and the number of stores that are eligible to use this service is very large. And more importantly, no store is going to go 0 cash as in and yes It will have all the payment mechanisms and still some part of it in every store will have cash element, and that need to find its way to the bank. And hence, there is a scope for service for Radiant. U.S. is like 62% -- 68% digital, this thing. But still, it is a fairly large business for Brinks and Loomis to provide retail cash management service or Deutsche banking service in U.S. So developed markets still have this as a service, and we are nowhere near that kind of digital penetration. So we believe there's a significantly large scope for growth. And more important, about 67% of our revenues come from Tier 3 plus towns and cities. So the digital penetration is still fairly high in Tier 1 and Tier 2, but still very low penetration in Tier 3 plus locations. So all of this will mean that it's going to provide a significant runway for growth for [indiscernible]. Vikas or somebody should we check if Ankit is back. So -- while we wait for Vikas, we will just take a few more questions in the chatbox. [indiscernible] lower denomination currency be good to business see, during the demonetization, actually bringing in the new currency and phasing out the old currency provided a [indiscernible] business. So there is no big increase or drop in our business volume extraordinary because of demonetization. But yes, lower denomination is practically phased out, and it is [indiscernible] only 500 is the highest denomination, it's good for our business, as in a sense, more volume of cash to be handled. And hence, some of our [indiscernible] charges are actually based on the number of notes. So like cash processing, it's based on number of notes that we process, et cetera. So that improves our business to a marginal extent. But otherwise, there is no big -- major impact. The next question is what would be the entry barriers for new entrants here or existing competitors like CMS Info, et cetera, not to take the market share. So there is an entry barrier. There's a regulatory entry barrier. RBI through its regulation in 2018 has mandated that a minimum net worth of INR 100 crores and a minimum fleet size of 300 vans for any player to provide this service. The -- because large volumes of [indiscernible] RBI wants only the regulated players to provide this service. So we are not regulated directly by RBI, but RBI regulates banks that they cannot outsource this activity to players who do not meet this criteria, minimum net worth of INR 100 crores and a minimum fleet size of 300 vans. So that is not the biggest entry barrier. The biggest entry barrier is the nature of this business. Like I said how we were listed third in ATM segment, and we are never able to be profitable and we exited that business. So likewise, for any new player to achieve a route density is going to take time. And until such time, it is going to be business is going to be bleedy. So the nature of this business is like the natural oligopoly like any other utility business. if there is one player who is providing that service and second player who's providing that service in that route has limited business for the third player to come and get pick up -- more stores in that same route, or it will take time for the third player to achieve profitability in that route. So as it is the pricing per customers are really low, as I said, we start with that close to INR 2,000 per month. So unless somebody reaches that a adequate route density -- Hi Ankit.

Hi, sir, sorry for the glitches you can continue...

Because the pricing for each outlet is really low for a new -- that serves as the biggest entry barrier. So for a new player to offer at this -- that level of pricing and still be able to sustain and make -- achieve the level of profitability or route density is going to take a long period of time. So we don't expect any big new players to come and offer this service. Yes. So this is -- because I'll just take those one question and then we can -- Ankit sorry, I'll just take one question and then we can get back to the Q&A. So this is a follow-up to my statement just now I made. What is the reason that the industry has only done 1.5 lakh outlet out of 50 lakhs possible outlets? Is it because viability of adding more outlets is low and adding more outlets will come at a lower profitability? No. Adding more outlets will come at incrementally higher and higher profitability for us because the cost of servicing an outlet in an existing route is practically 0. Incremental cost is practically 0 for adding a new outlet. So adding more outlets will only improve our profitability significantly. The -- why it is only 1.5 lakh outlets out of 50 lakh outlets. Just now I told you public sector banks, excluding SBI probably is about 60% of the assets under management in banks. So which means out of this 50 lakh outlets, if you also apply a thumb rule, 30 lakh out are probably banking with Canara Bank and Dena Bank and Punjab National Bank and Bank of India and Bank of Baroda, none of whom offer doorstep banking as a service. But then just think of it other way. Who would have thought a pharmacy will come to your doorstep 5 years back. Who would have thought you order a lipstick or you order, this thing, specs and then it comes to your doorstep 10 years back. But today, everything is happening there, as in your groceries and ultra short deliveries and everything. People expect everything to come to their doorstep today. Sooner or later, these retail outlets will also expect the banks to come to their outlet. And the competitive pressure will force public sector banks also to start offering this as a service. So that is when it will be a floodgates open for this industry. Otherwise, it has grown organically as banks offer this as a premium value-added service to their privileged customers. So from that premium to start offering this as a service to everybody, as in the pricing is not premium at INR 2,000 per outlet is really low, as a starting point, I'm just saying from INR 2,000 to INR 25,000, the pricing is low. But the offering of this service at your doorstep is being positioned -- was positioned by foreign banks as a premium service and by new private sector banks as a premium service. But it is becoming more and more mass market. As you can see, we are adding more outlets and more and more clients are expecting that bank come to their doorstep and to pick up the cash. So that's the reason, and it's a nascent industry as I told you. But then it will have a long way to go for reaching the levels of penetration. We understand that the penetration levels of doorstep banking in developed markets are in the range of 60%, 67%, 70%. So 70 out of 100 outlets will have a bank coming and picking up the cash from the outlet. So as organized sector improves in India grows at a faster rate in India than the rest of the markets. And we do expect -- and as public sector banks start offering this as a service, we expect a substantial growth opportunity for us over a long period of time. Yes, Ankit your next question.

So apologies for that technical glitch. So I move on to the next question. I think you have already covered the question related to the cash circulation and UBI, right?

Yes.

So I'll move on to the next question. So there is no debate on the fact that retail cash management is the most lucrative and high-growth area in the whole cash management value chain? Our competitors have also highlighted that in their commentary. It would be great if you could give us a detailed commentary on how this business can grow in the next 3 to 5 or maybe 10 years. We're not asking for a specific guidance. Rather, our focus is to understand what aspect of this market we focus on in the past. What are we focusing now and what all other segments in the retail space can [ mature ] in the future, which nobody is even talking about?

Yes. Some part of this I have answered in the previous question as well. The big picture is that the penetration levels are low. Public sector banks are not yet offering this as a service. From a retail outlet perspective, it makes a compelling case. So you just take, for example, a mall with 100 outlets. Today, each of those 100 outlets are sending one person with the bag without any security to the nearest bank that guy stands in queue for half an hour or whatever it is, deposited that cash and comes back. And if he doesn't come back in half an hour, the blood pressure of the owner is going to go up. Okay. And it is not a question of if, it's a question of when one day, that guy is going to lose that bank, due to an accident or a theft or something like that. Compared to that, the service that we offer at 2000 -- let's just take a case of midsized electronics outlet with a 1 lakh daily limit. He'll be paying is probably INR 3,500 or INR 4,000 per month. If in 1 day, if that guy -- guy who deposits loses that cash, that is equivalent of 4 years of fees that he pays to us. Okay. So the economics -- and say, I'll put it slightly differently also. We handled INR 1.6 lakh crores of cash last year. And our revenues were roughly about INR 360 crores. So that is about 20 to 25 basis points. Compared to that, for the same outlets for credit cards, they will be paying 2% MDR that is 400 basis points. So our charges are like 1/8 or 1/10 of what the credit card charges are. And it saves a substantial amount of manpower time and peace of mind to the individual outlets. And for larger outlets, chain of outlets, it gives MIS, it provides a lot of -- in fact, we have developed plug-ins for players like Amazon or Instacart, et cetera, who do detailed analytics by outlet, by product segment, by volume of transaction, et cetera. So our technology solution is able to provide them with all the details for them to do those analytics as well. So for a retail outlet, there's a compelling economic case to opt a service of this nature. Today, as in their bank is probably not offering this as a service because they are small or they're starting with public sector banks. Whereas over a period of time, if we are able to -- as in we are banking fairly big on direct sales as well, where we go and offer this as a service to the retail outlet, if the bank is not offering that service to them. Yes, our mainstay is banks today, 95%, 96% of our revenues come through banks. And we prefer to deal through banks because there is no -- there is no debtors, there is no collection worries, there is no KYC, all of that is the bank's responsibility. But as if we go directly, he has to trust me who hand over such large volumes of cash. So he's going to ask who is Radiant? What if you run away? What if your guy runs away with the cash, who's responsible? Will you be insuring this cash, et cetera. All that I need to do concept selling to him to explain that, yes, the moment he hands over the cash to me, it is as good as deposited in the bank. The entire risk gets transferred to me. He gets an SMS just like the way you deposit money in a cash deposit machine you get an SMS immediately. So like that, you will get an -- the outlet will get an immediate SMS, and that is proof enough that the cash has been handed over, and it is entirely our responsibility to handle that cash and every part of our business is completely insured. So we pay over INR 4.5 crores, INR 5 crores of insurance premium in a year. Okay. So every part of it is insured for fidelity, for theft, for accidents, for force majeure, for every kind of possibility, for storage of cash, et cetera. So from a retailer perspective, it makes imminent sense. The second -- so one direct growth area for us will be -- the one big growth area over a longer period of time will be customers of public sector banks availing the service, either through the bank or through directly. The second big growth area is we have launched Radiant Insta Credit, which is -- which is providing instant credit for small amounts of volumes, instant credit for the retailer, for the cash that he hands over to us at a slightly higher price than otherwise you would have -- you will be getting the cash the next day in his account. So Insta Credit is instant credit, there is no -- we are not taking any credit risk or renting or anything like that. The Insta Credit means, the guy gets instant credit in their bank account within -- it's like IMPS, as long as we give the cash and immediately he will -- his account will get credited for a slightly higher fees. And so that is also a high-growth area. So where all that risk of who is Radiant, what is your credibility, all that doesn't matter, he gets instant credit and then I move on. So for the retailer, it doesn't matter what is my credibility, what is my balance sheet, what is my net worth, et cetera, so no concern to them. So that also is a fairly high growth area. And then the moment we do that, it is not that eligible outlets that 2 crores to 50 lakh eligible outlets becomes our market, 2 crores becomes our market. It could be the smallest of outlets also. For him, he's getting insta credit, he's handing over that cash, bank is coming to his doorstep. So a 2 crores becomes our potential market for that. So that could be a high growth area for us. As we have said in our earlier quarterly calls, et cetera, valuables logistics is a high-growth area. There are two players in that market, but there are -- India has 1.3 lakh registered jewelers registered with BIS for hallmarking. And so -- whereas the existing service providers, as we understand, service hardly some 10 -- 8,000 to 10,000 jewelers. So the rest of it are dependent on unorganized market, et cetera. So there's a significant opportunity for us to grow in the valuables logistics segment. So these are a few high-growth areas that could propel our growth over a longer period of time. Our Chairman had indicated -- given an indication, a longer-term growth rate of 18%, 20% revenue growth for the company as a whole. We maintained that.

So sir, it's good that you mentioned about the direct -- approaching the customers directly. I think it would be very helpful if you can share an example where probably a certain sector of the market, which probably you have not yet touched today but could be a potential customer for you directly. If you can give some examples, that would be very helpful to everyone.

Yes. So let me just take one petrol bunk in Thane. a Bharat Petroleum, petrol bunk in Thane banking with Canara Bank. So Canara Bank has not offered him a doorstep banking service. He handles large volumes of cash. And today, he is sending his own person to go and deposit in that bank. So we go and knock that petrol bunk and say that we will offer the service at a -- this price. That price is less than the cost of one employee that he is deploying for doing this service with all the attendant risk management and all of the additional features. So he says that, okay, I will have avail the service. And because, for example, he may be giving a INR 10 lakh cash to us in a day, for instance. So he has to take a fairly significant counterparty exposure on us. So he will ask who is Radiant. I will give him my credentials, I'm a listed company, market cap is INR 1,000 crore plus, et cetera, et cetera. I'll give those details. But then I'll also offer him, okay, I'll give you -- your daily limit is INR 10 lakhs. So I'll leave you a INR 10 lakh bank guarantee. So if at the end of the day, my guy doesn't deposit your cash, you encash your bank guarantee, your risk is fully covered. So with that, we will be able to convince that again and get that client onboarded and it adds to our existing route. And we deal it in the same way like we deal with the bank customer, and we collect the cash and deposit. So this way, I can add -- say, for example, the next door to that petrol bunk is a jeweller. Imagine he is banking with Bank of India. As you know, jeweller's -- jewelry as -- a lot of people buy jewelry in cash. So the early cash collections are fairly large, they can onboard him with the same way. So just to put things in perspective, today, we deal with, say, 70,000 outlets. Just one segment petrol bunks alone, India has 85,000-plus petrol bunks. Because that one segment is more than our entire business today. Second, jewelers, as in, I said, 1.3 lakh jewelers. Between them, they have 3 lakh jewelery outlets. So that's that one jewelery segment alone is 4x our existing business. right? Mall outlets, high streets, Tier 3 locations. So the growth opportunities in each of these where if you offer direct sales or and Insta Credit is fairly large for us to be optimistic about our future goals.

Yes. So good that you brought in the point of petrol pump. So I have a question -- a follow-up question here. See, in case of petrol pump, one of these IOC and BPCL and HPCL petrol pump are basically -- run in a manner where the end guy, who is a petrol pump owner, is handling the cash on his own. It is not being done through the BPCL of the ICI agency, right, correct. So when you approach each one of them individually, it becomes -- your customer acquisition cost will go up because right now, all your business comes directly through banks, right? But when you approach these people, so do you have any strategy there where you can control your cost of acquisition or you have no option but to go to them one by one and ask for this?

No. So even today, we service certain outlets of IOC, BPCL, et cetera. These are COCO, that's company-owned, company-operate outlets. We use -- we service them. And we service other private sector petrol bunks, [indiscernible] petrol bunks et cetera. Like what you said, our public sector patrol bunks other than COCO, it's all -- the [indiscernible] makers are individual petrol bunks. Yes, we have multiple strategies to do that. One of them is to offer special pricing for associations. So there is a South India, IOC petrol bunks or petroleum dealers association. So approach those associations offer some special pricing, et cetera. We also do individual door-to-door this thing for high-value customers. Okay. So for a pharmacy for me to go onboard an individual single pharmacy, the cost of a customer acquisition could be high. But for this thing, for high-value customers like a jewelry or petrol bunks, even individual outlets makes more sense to onboard them directly. It's not that we are going to have a huge battalion of sales team to do this. We have -- we already have almost 8,000 cash executives who pick up cash from 65,000, 70,000 outlets daily. The cost -- the cash executives job typically ends in 4 hours from 10 a.m to 2 p.m., at best 3 p.m., by even after which the banks don't accept cash deposits, during banking hours only they accept cash deposits. So he is free to do what he wants after 3 p.m. So we are incentivizing our cash executives to onboard high-value customers and provide them certain monetary incentives if these -- they are able to successfully get it. We already launched a company-wide scheme for our cash executives, and we are getting early leads. So at the time of IPO, our direct sales was 2%. Today, it is already more than 4%. We expect it to reach as in a significantly higher share over the period to come.

And a higher share of direct sales would lead to margin expansion as well?

Sir, every new point that we add, irrespective of the route will add to margin expansion, whether direct, Insta Credit or buying through banks. Every new point will add to our margin expansion because the cost of servicing is the same in that route.

Got it. So my next question is not from us, but from someone who posted it on Twitter. So to our Twitter handle, SmartSyncServ, we asked our Twitter family to share their questions. We picked just one out of them, which I believe is very important. So he asked if you can throw some light on your capital allocation process, that is why you chose to focus on the DBJ and owning vans when the competition is focused on a much larger and fast-growing monitoring and automation opportunity in a capital light fashion? So if you can throw some light on that, that would be very helpful.

Yes, yes. So Radiant as a practice has been very frugal at the time of going for an IPO, we were at INR 300 crores, INR 320 crore turnover, and our net block was just INR 10 crores. And the two vehicles for branch managers, regional heads and office equipment and interiors, we did not even have a single van in our books at the time of going for an IPO. One of the purpose of going for an IPO was to add about 220 vans with an outlay of about INR 25 crores. Asset risk management measure. So that in case there is a disruption from third-party vendors, leased vehicles, et cetera, we have some vehicles at our disposal to ensure that the continued business -- business continuity and servicing is done. Okay. Then these are strategically placed in all the locations so that some own vehicles are available at any point of time. Okay. But for this onetime, using of IPO proceeds to buy our own vans, we don't have any plans to buy any more vehicles. It will be through lease route only, operational lease where the entire lease cost is already absorbed into a above [indiscernible] below -- before EBITDA. The DBJ business entry also, it's a frugal entry, as in we have not acquired any assets, the initial space expansions are mainly towards people. So we needed 25-plus branches. We need to provide adequate coverage of locations for the jewelers to interest the parcels to us. We cannot say that I will do only in 2 locations, 3 locations. So we need to have a reasonable coverage of PIN codes for us to provide the service. And so because it's a high value over -- this thing, minimum -- branch will have a minimum of 3, 4, 5 people, a branch manager, a night incharge, a loader, somebody to book those, this things, et cetera. So that is what has resulted in our cost. There is no CapEx. It's all OpEx only. Even for the RVL, we call it RVL, that Radiant Valuable Logistics. There are no very minimal fixed costs that we have done. So our capital allocation is fairly clear. The cash flow from operations roughly, about 20%, 25% will go towards incremental working capital because our collection cycles from banks are fairly large because of the intensity of the processing mode. And we have highly -- paid a high healthy dividend payouts in the past, which we intend to continue in future as well. And rest is discretionary. There is no significant CapEx that we have planned for us to absorb our cash flows.

Yes. So sir, you have answered part of the question as to why DBJ and why owning vans, made sense and how you are looking at capital allocation. But the second part of the question was that the competition is looking at larger and faster-growing monitoring and automation opportunity. So would you want to do something, why we have...

I'll tell you -- no, no see, we -- our services as it is extremely technology-intensive, and we have, over a period of time, probably would have made 30, 40 -- INR 30 crore, INR 35 crore plus of investment in our technology, but all of which is absorbed operating costs, and there is no capitalized software solution, technology, et cetera, within our balance sheet. But at the same time, don't -- as in a sense, we are unique in the sense that our entire business is only retail cash management, plus our -- substantial portion of our business is only retail cash management. So whereas the peers that you're comparing with, we'll be offering a whole host of other services. Like I said, value of just cash replenishment in an ATM could be less than INR 10,000, but the total value of -- for a managed service provider in an ATM could be upwards of INR 30,000, INR 35,000, the salary for security guard, the rent that you pay for the premise, the air conditioned and its maintenance, the ATM machine maintenance, the software switches, all of that adds to the overall value, even -- what is the margins in each one of those, is a different debate, but the revenue -- that revenue opportunity that a single ATM will provide compared to just the cash replenishment is very different. Yes, we do have, over a period of time, a longer-term perspective, where we can offer a much wider services to our retail customers, but they are fairly longer term in the future. At this point of time, the retail cash management is the lucrative segment within the cash logistics. Our intention is to go far deeper by offering this service to more and more and more customers rather than stretch ourselves into other services to the same customers because we feel -- we believe, I think we are playing in a small corner of a big ground and offering the same service to 50x larger number of client base is where our salvation or longer-term growth is in rather than providing more and more service to the same existing clients. That has been the philosophy at this point of time. Yes, there are enough and more opportunities that we can provide being a security services company. We can provide guarding services to the same customers. We can provide overall risk management, including integrating security cameras and alerts and things like that, et cetera. But those are in a sense, in our mind, ancillary businesses with relatively lesser margins over a longer period of time. The bigger growth plan is adding more points and there's endless growth opportunities for us.

Great. So it makes it more clear as to how we are focused only on the retail cash management and how our focus continues to be in adding more points, adding more customers and trying to serve those customers directly rather than through banks, right? So you mentioned...

Both banks as well as the that. Our predominant dependence on banks will continue to be so, today 95% of revenues are from banks. And we hope it continues because we are happy to provide the service through banks, it is lot more easier for us in terms of customer acquisition, bank does the business development for us. There's no collection challenges. Banks does the collection, and we have to just collect it from the banks, we've never had any bad debt experience with banks, et cetera. So it is a lot more operationally convenient and smoother if we deal through banks. But then if you're a customer and you're banking with Canara Bank or Dena Bank or a Punjab National Bank, you don't even have an option. So we want to provide that optionality to that customer so that they can avail a service of this nature. So that's why our focus will be on the direct sales.

Right. So moving on the same topic of focusing on growth in the current segment of the market where we are in. You shared a little bit about Insta Credit, but for the benefit of our viewers, I would want you to further expand on it, what is the purpose, the value it provides, the current scale at which you are in the product and where do you see it in the next 5 years? If you can be in more detail in your answer, that would be helpful because many of our viewers -- they don't understand what is Insta Credit...

I will have to take a rain check on this particular question. It is highly competitive information at this point of time. We have just recently launched this. I don't want to give too much this thing, and we ourselves are fine-tuning our technology, systems, risk management, all of that in that. So we don't have a publicly disclosed the target of where this Insta Credit will be. But all I can say is that at this point of time, it is restricted to small volume cash. Daily limits are very low and small volume cash where -- because it is expensive. So petrol bunk can never imagine to get an Insta Credit of INR 10 lakh in a day because the cost will be prohibitively expensive for them. Rest smaller outlets can avail the service who don't mind paying a slightly higher cost if they are able to get that consultant. Okay. So I'll leave it there as in -- because it is too early for us, we just recently launched. So we have to see how the market accept this and how it grows because we can give any longer-term projection on this. Yes, we are betting big on it, but don't want to commit any numbers at this point of time.

Sure, sir. So keeping the projections aside, just wanted to understand who is the target customer in case of Insta Credit, Who are you serving? On what is the market there?

Yes. Like I said, all smaller outlets where daily collections are low. Who -- otherwise -- as an instance our regular business, our daily limit starts at INR 50,000 for our regular retail cash management business. And it will be lower than that. Okay. It could be INR 10,000, INR 20,000, INR 25,000, some of that trains, daily collections are there. So where they can get Insta Credit which will add incrementally to our revenues without adding much to the costs and improve our route density and thereby the profitability is what our expectation is.

And the customers are willing to bear that extra cost?

Yes. any outlet when they are offering you a credit card service, they are willing to bear 2% cost.

Right.

This is like 1/8 to 1/10 of that. So there is no unit economics always, we make sure that our unit economics for the customer -- for the end customer is always highly in favor. So they don't think twice before availing our service.

And for us also, incrementally, it will not hurt our margins?

No. Because the cost of servicing that, as an instance, is in the same route. So incremental cost of servicing will not be very high.

Got it. So moving on, sir, so tell us about our fintech acquisition of Acemoney. As in through that, please touch upon your view on the micro ATM market in India, the competitive intensity. And most importantly, about the RBI's Payment Infrastructure Development Fund, PIDF, and the advantage Radiant has by being 1 of the 12 vendors approved under this thing.

Yes. Big picture, like I said, 2 crore outlets are there. Total number of outlets that accept some form of payment infrastructure today is 85 lakhs. So RBI publishes this data regularly, which means roughly about 45% penetration, 55% outlets don't have any form of payment infrastructure at all. Okay. So you imagine this as Tier 3, Tier 4 far off locations, Northeast, Jammu and Kashmir, Chhattisgarh, as in, you can think of those kind of outlets where the payment infrastructure has not yet, this thing. So the -- obviously, the government wants to improve the digital payment -- digital payment infrastructure in every possible outlet. So there is a scheme called PM SVANidhi, which is even the street vendor should have the facility to accept -- should avail credit. For that, they need to have be part of system and should be able to accept digital payments as well. Okay. So several initiatives are being done. our focus in the acquisition of Acemoney was to offer as in a sense, we capture the retail outlets that are otherwise not part of our retail cash management, offer them this additional service as well. And this micro ATM are -- as in the micro ATMs, which is -- it's a simple low-cost machine where that can even function as a banking outlet or a micro ATM outlet, where the -- the user can use any credit card -- credit/debit cards or even their thumb impressions through [indiscernible] enabled payment systems to withdraw cash or deposit cash in any retail outlet. Okay. So for a small fee. And the fee is charged across the entire spectrum of -- including the outlet and to the service provider like Radiant Acemoney and the bank, okay?, It is shared across this hierarchy. So we believe the number of ATMs in the country is not growing as much, that is stagnating at 1% to 2%. But the micro ATMs already, we have, I think, 16 lakh micro ATMs in the country. Okay, and that number could be in, I think the RBI target that number should be 50 lakh or 1 crore or something like that, very large number. So that every outlet, every retail outlet is practically a bank. So you can go deposit cash, wtihdraw cash from your account, with your credit card or your Aadhar card. And you are not dependent on bank branches, bank branch opening, too. This is the larger part of the financial inclusion scheme of the government. So we do see a fairly good opportunity there. So government through RBI provides a subsidy for providing -- to bring an outlet for the first time into the infrastructure -- in the payment infrastructure space. So it could be digital, which is just adding a QR code or physical, which means providing a point-of-sale machine or a micro ATM machine through which you can do card transactions. So PIDF, I think the scheme is fairly detailed and it is available in public domain for anyone to see, but we see a large growth opportunity. The Acemoney, the company that we acquired has a fairly strong software and relationships and already well established in Kerala market. And our idea is that with our acquisition and our Pan-India network, we will be able to scale up that Pan-India. And so -- there is some set of synergies with the retail cash management as well, which is that -- see today micro ATM probably in a busy area will run out of cash by 10 o'clock or 11 o'clock, 11:00 a.m. Because in micro ATM the cash is paid from the till of that outlet. So the -- from the cash -- this thing, from the cash register. So if he doesn't have cash, he cannot give the customer what he asks. Okay. ATM, any time money, anybody should be having -- it should be available to a customer whenever the store is open. If the customer is not to [indiscernible] the label -- reliable point where you can get the cash that he wants. So we will be providing cash replenishment to these micro ATMs as a service. We have a fairly large amount of cash in the interline and we can use that to replenish these ATMs within our cash. So that will help us in generating revenues for the replenishment as well as reduce our cost of depositing that cash in other ways in the bank. So that is the synergy that we see for Radiant. And so fairly large growth of opportunities. But again, early days of our acquisition. And so we'll wait to see before we can give specific guidance or longer-term guidance.

Thank you so much for the detailed answer for this one. Just one thing. I know the PIDF document is well there on the Internet anyone can read. If you can just briefly explain what is the scheme and what the advantage Radiant is getting from this scheme. That would be very helpful, sir.

Yes. So the scheme allows for giving INR 300 to the service provider if they are able to onboard a merchant with the QR code, simply QR code. And it gives up to INR 10,000 per outlet if you are able to onboard him with a physical infrastructure, which is -- is there a micro ATM machine or a point-of-sale machine with software, with payment gateway and connected to any of these payment service providers like Mastercard or Visa or RuPay or things like that. If you're able to onboard them fully with the physical this thing, it is up to INR 10,000. So each is provider has to justify the cost and the cost is reimbursed by RBI, up to 90% in remote locations and up to 75% in other locations. And that is linked -- the payment is also linked to two parts. One is when we -- at the time of installation, 75% of that he get and balance 25% is paid after that outlet has at a minimum number of transactions demonstrated in a period of 12 months. So the -- as in it is funded through a small cess that is levied on every digital transaction just like the way NHAI got funded with a small INR 1 petrol cess, which is -- which helped NHAI create a nationwide highway infrastructure. This is a similar cess that is levied on every digital transaction and that cess is used to fund this PIDF. And that is used for creating the entire highway of payment infrastructure across the country. So that every one of those 2 crore outlets should have a opportunity for the customer to make either a card or a QR code or a digital payment. So that's a huge growth opportunity for us because it's underpenetrated. And -- but that is a way to go because physical ATMs are expensive, capital-intensive. And most banks have lost economic interest in putting -- adding more ATMs. The moment RBI made any bank card can be used in any other ATM for up to 5 times in a month for free, there is no economic incentive for any bank to add any more ATMs, right? So that is why you are seeing a plateauing of growth in the number of ATMs that are getting added and a sharp growth in the micro ATMs that are growing. Today 16 lakh micro ATMs today and expecting it to go to 1 crore or something like that, some crazy number over the next few years. And this PIDF will help in that growth. So we want to capitalize on that opportunity. More than that, onetime is the infrastructure. But once the trajectory is created, this money will be able to get some recurring revenues as well as part of every transaction that is being done in those outlets. So over a period of time, the transaction revenues will far outweigh the initial infrastructure setup costs and hence have a very bullish growth trajectory for Acemoney over a period of time.

Yes. So one last follow-up on this particular point of PIDF, any thoughts on why only 12 vendors are approved under the scheme. Is it...

So there are -- see, generally, there is some set of people, particularly those who are PE-funded and et cetera. They don't want to do anything to do with just a government or a subsidy or anything like that. So either they subsidize themselves. They give that machine for free or they collect a small amount of money from the vendor, which is below the costs and still do. So they are in a hurry to get this outlet -- this thing done. I'm not sure it is 12. It could be about 25, 26 players, or this thing, but more active ones are few that we see in the market. We have taken a call that yes, this is a good scheme, and we need to capitalize on that and help -- particularly help having tremendous success in Northeast, in Jammu and Kashmir, et cetera, where we have good presence, not everybody adds presence in those markets. So yes.

So I'll deviate a little from the business-related questions. Now I'll come to financials and numbers related questions. So from FY '18 to FY '19, our revenues jumped only from INR 195 crores to INR 221 crores.

No, that is a year when we stopped our ATM business and the losses for -- from ATM this thing affected us in both the '17, '18 and not so much in '19 and '20 would have been even further jump. That is because the losses from the core -- the ATM business got abated or removed. And our [indiscernible] secular growth in our core operating business because the margins which were in mid-teens in '14, '15, '16, moved up to 20% plus in the '19 -- in 2021, et cetera, and moved further 25% plus in the last 2 years. That's a purely an operating leverage in [indiscernible].

Yes. if we...

Small period between '16 to '19 levels -- small division in the period '16 and '19 because ATM losses skewed that picture.

Right. No. But if you look at the last 5 years number, our sales have roughly doubled, but our profits have become 10x. So for the benefit of our listener, please explain the reasons for the same as to -- and I'm not asking for a definite guidance, but just directionally, would we continue be -- to be on the same path in the future as well, where a small...

The -- No, small increase in revenue having disproportionate increase in profits. That's not how we present it. What we are saying is that the business has a high operational leverage, which means you need to set up that infrastructure, the cost, the guards, the drivers, the vans, all of that is more fixed in nature. So once you establish that cost, any incremental points that are added in that route, a significantly high share of it translates to gross margin and EBITDA. So as the route density improves, the operating leverage helps us in getting a higher EBITDA from that incremental revenues. So that is an operating leverage. That is the nature of this industry. And in fact, incidentally, that is the similar nature of the industry in that valuable logistics, which triggered us to get into that segment as well because once you cover the basic cost of infrastructure, incremental revenue -- incremental revenues, have a disproportionate share on the profits.

Right. Right. Got it. So moving on to the next question related to these financials and numbers. So at the time of IPO in January 2023, we guided for a 20% to 25% growth in revenue for [ FY '24 ].

Not 25%, definitely not. 18% to 20% is what we had given.

Okay. Sure. So however, our 9-month results proved that even that 20% is difficult to achieve. So can you throw some light there as to what happened?

So we've answered this in the -- in our quarterly calls as well. So the -- our growth in -- initially in the first period, we had a setback in our petroleum sector growth because of the Ukraine, and there is a opportunistic diversion of refining products from catering to Indian markets to European markets. So there is a sharp drop in volumes by the petroleum players that's what directing it to India, particularly our clients not that retail, this thing as I said, we don't have too many public sector clients there. So that was a setback. It is almost come back to normal, still 20% shortfall of our peak revenues on that segment, but still, it has come back to normal. So there is -- otherwise, without this setback, that segment would have given us a higher growth. Today, we are just catching up to come back to the previous levels. So that is one part of -- one impact that we had post-IPO. The second part is that we did face some challenge in the e-com logistics segment, which is where no volume outlets as in, in a sense, found alternate routes or there was churn in our number of points that we serviced. So that actually had an impact on our revenues. We are hoping that our launch of Radiant Insta Credit we'll be able to arrest that decline, and we should be able to recover that. But if you see individual segment wise, our organized retail has grown at more than the guidance level -- our BFSA has grown almost at the guidance level, or e-commerce at other guidance levels, et cetera. Petroleum and this thing, we've had good growth from the small finance bands, et cetera, much higher than the guidance here, whereas the e-commerce, logistics and the petroleum sectors and to some extent, railways also not for any specific reasons as in that is the nature of that business had lower than the guidance growth, which affected our overall profitability. We are taking corrective measures. We expect that the growth trajectory should come back sooner rather than later.

Got it. Sure. So moving on to the next question, sir. So investors in the public market, often dislike companies that show a pattern of a sudden rise in the margin just before the IPO and the margin going down after the IPO. Our operating margin was around 25% in the past, in FY '23, it experienced a big jump 30%. And after the IPO in FY '24, at least, for the first 9 months where the results have been out, it has fallen to less than 20%. So could you explain the reasons as to -- as in -- can you -- do you think we can expect the company to go back to 30% operating margins in the future. I'm not asking for a definite guidance...

No, I don't want to give any specific guidance on 30%, or et cetera, Definitely, that's not -- we don't want to give that guidance. But as I said, in the operating leverage is a twin-edged sword. If the revenues were at the same growth rate, just like what we answered just now, if the revenue growth been at that same 20%, 18%, 20% level, our EBITDA would have been far higher than -- disproportionately higher than what you saw. So just like the way incremental revenue has a disproportionate impact on EBITDA, shortfall in revenue has a disproportionate impact on [indiscernible]. That is point number one. So point number two, this was a period when we had significant growth areas as in we did enter it into the DBJ segment. So that is a period where we had to make that investment in terms of branch network, et cetera, today, we have, as in, 50 vans and 100 member crew ,plus 100 member branch people. But incremental revenues from that will take some time. So that's an investment, see we don't have a concept about that, consort of capitalizing any of these. All of those are going into the -- directly through the P&L. So that has had a negative impact on our EBITDA. But I have to see this as an investment in our future growth, long term sustainable growth. We did expect -- we do expect that this is a high-growth opportunity for us. And so I'm looking at it as an investment rather than as a erosion in our profitability. So these are the 2 key reasons for the drop in profitability compared to what we had this thing. IPO has nothing to do with this. It's a conscious management decision to improve our -- to expand into new business areas that had incurred the cost. And nothing -- what happened with the e-commerce logistics or what happened with our petroleum are extraneous factors, nothing to do with that IPO. So no, I don't want to link this to the IPO, pre-IPO, post-IPO kind of scenario. But we do expect that we will revert to mean kind of profitability over the next few quarters. That's what...

Sure sir. So you mentioned about the e-com logistics issue. Just a follow up on that. Have we lost any customers there.

We have not lost any customers. We've lost a few points. Low volume points which they found an alternate route and which we are addressing now. But otherwise, we have not lost any customers. So our customers are banks. Definitely, you've not lost any banks since our inception. Unless a bank goes out of business, there's an RBS Bank was there, just they exited India. That is the only customer we had lost. The end customers also in this segment, we have not lost any end customers. All the end customers continue to do business with us. Just that few points were lost because of the low volume points that we are trying to address.

Yes. Okay. So that was the [indiscernible] again sir. So I'll take a few questions from the chat box now. And we are coming to the end of the session now...

I need to wind in another 5, 7 minutes, blocked till 12:30, next appointment is there.

Sure. Sure. I'll be quick, so one question is by Disha Gandhi. She asks can you please throw some light on different types of contracts you have with your customers. And do you see this converging towards a particular format?

See, our customers are -- as in, our first customer is Deutsche Bank who still continue to be our customer. We've have not lost any customers. Typically, our relationships are fairly long term. With most customers, we signed a 3-year contract, with a few we signed 1-year contract we just -- both of them have an auto renewal clause in this. The process of onboarding a customer, particularly a bank customer is fairly arduous and long, takes 5, 6 months to onboard a customer, a new bank. If tomorrow, a new bank comes in. They will do our audit; process, systems, technology, risk management, all of that financial analysis, all of that before -- because they are interesting huge volumes of cash. To put into perspective, we handle INR 500 crores of cash everyday in a -- on a long week -- Monday, after long weekend, I'll be handling INR 1,200 crores of cash every day. My market cap is not that much, my net worth is not that much. Everyday, I'm doing this. Okay. So they need to have complete confidence in us. So we have actually been in a perpetual mode of audit by our banks. Foreign banks, et cetera, will have their quarterly audits or half yearly audits, private sector banks have their half yearly audits, Public sector banks will have some manual audit, et cetera. So we're perpetually in an audit. So we have long-term contracts. So once a client onboards us very, very costly proposition for them to get out of us -- get out of this contract. Okay, to find an alternate source because then they have to spend the same amount of time and resources in onboarding somebody else. Our contracts are long term and see we add as in 30, 40, 50 points every day. So neither us nor the bank have the wherewithal to sit and calculate how much is the distance to the nearest bank, how much kilometers, what is the fuel rate, et cetera, et cetera. There is no such analysis done for each point. So we enter into a long-term contract with the pricing metrics based on the distance -- a broad distance breakup. And then within city limits, beyond city limits, far off locations. And based on the daily limits, daily limit would be INR 50,000, INR 1 lakh, INR 2 lakh, INR 20 lakh, INR 25 lakh, INR 1 crore, et cetera. So based on the daily limit and the bucket of distance, it automatically fits in these metrics, and we start charging the price from the next day onwards. And this is a fairly what we believe is our contract across banks as well as a particular bank's contract across service products are fairly uniform. There's no -- I think it's not -- there is no big difference in pricing or broad terms between banks for us and between service products for a bank. Hope it addresses Disha's question. Yes.

Yes. So Sir, there are a few questions. And in the interest of time, I may not be able to ask now. But can we share those questions over e-mail so that I can share your response to the viewers later on?

I will just check, as an instance, obviously, we will have our quarterly calls. Most of your investors are most welcome to attend and raise those questions as well. But I don't think I'll be able to do private, one-on-one e-mail exchanges and response to queries.

Appreciate it.

We'll try to address as much as possible in the next few times, yes. I'll be happy to do similar calls after our full year results as well.

Sure, sir. Yes. So thank you so much for answering all the questions patiently and in detail. This was very, very, very helpful for me and my team and also for our members. And I'm sure people who will watch the recording will also find it very helpful. But before we leave you, it would be great if you can share your larger vision and mission for the company in the years to come. And also what are the important risks that can prevent you to achieve your vision and mission. So with this, I think we can end the session.

Yes. I think our Chairman has given his longer-term vision. As in -- the -- want to be the most respected and continue to be the market leader in the retail cash management segment. And our vision is one day -- if you want cash at your home, we should be able to provide, just like you order a Swiggy or Zomato for food, you order cash certain denominations at your home, we should be able to provide it at you home. It's a really longer-term vision, where 140 crore people are our target customers. But at this point of time, our focus is B2B. We will be providing this service first through banks, then through direct customers, then through Insta Credit and over -- eventually to every individual. And similarly, similar adjacent opportunity is where our gold jewelry valuable logistics is also has an immense growth opportunities, we should be able to assume a significant market share in that segment as well on the medium term. And Acemoney is a very important acquisition. Over a longer period of time, the growth in the digital transactions, we will be able to capitalize on that growth opportunity as well through our Acemoney acquisition. So we act as a, in a sense, [indiscernible] mitigant as well. And yes, so risks we have highlighted that in the past, I mean, it is run like other in a sense, Chairman is from ex-Army. Our senior management, a lot of people as in Colonel Benz, colonel Rai, all of them are ex army, army veterans. So the company operations are run like a military discipline. Okay. So our cash losses are the lowest in the industry, you can compare it with any other players, and it is not an happenstance. It has been consistently so for 19 years of our operations and will continue to be so. So that is also a key [ note ] because such large volumes of cash, things would work quickly, all right? I think there's serious amount of cash losses, et cetera. Customer confidence in us could erode and that would be vicious downward spiral. So continuous focus on operations, risk management, et cetera, is very important, and we have demonstrated that in the last 19 years, and we hope we'll be able to continue our operations in a risk-free manner in the long period to come. Okay. Thanks very much, Ankit, for your -- for the opportunity to present the management case.

And thank you so much, sir, for taking time out and sharing everything in detail, and thank you so much for our audience also who have patiently listened to us and asked some really good question. And with this, we come to the end of the presentation. And we'll share the recording link soon. Sir, I'll share it with you separately as well, and we'll share with the audience as well. So thank you so much, everyone, for making this a very informative and knowledgeable session for all the investors in the country. Thank you, sir. Have a nice day, everyone.

Good day. Bye.

Bye.