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

Yes. So we've kind of -- we've spoken, I think, in February last year, so you kind of looked at Radiant before. We've a few more questions. It's been about a year. But just kind of -- before I get into that, you've any -- would you have any questions for me? Mr. Muthuraman or.....

No, no, nothing particular, [ Shantanu ], we can get to the Q&A directly.

Sure, sure. So what would be kind of a little bit helpful is if you could just maybe very, very briefly kind of just give us a very sort of just a big picture view of Radiant. I mean we kind of know the segments and kind of have questions. So kind of if people start from there, that would be kind of helpful for us.

Okay. Sure. You want me to explain the business model from that side onwards? Or how our performance has been. And...

We're familiar, but if you could just kind of go behind network cash and you kind of enter into the bullion segment as well, kind of a high level, that would be very useful.

Sure. Yes. I'll give you the big picture. So 95% of our business comes from banks. So we -- banks offer doorstep banking as a value-added service to its customers. And in turn, outsources that activity to Radiant. So we sign long-term contracts with banks for providing this doorstep banking services. And bank in turn offers this as a value-added service to various customers. And these customers can be in organized retail. It can be in BFSI. It is an e-commerce, e-commerce logistics, petroleum, railways and a whole host of other segments. Okay. Just -- I'll just give -- explain with an example. You order something in, say, Flipkart online, and you pay the delivery boy with the cash on delivery, right? So the person who collects the cash from you will deposit that cash with -- in a dark store or a warehouse from where he collects these goods. And Flipkart wants this cash from its various dark stores, warehouses, hubs, whatever it is. We collect it on a daily basis, say it interests that responsibility, hypothetically assume they give this mandate to Axis Bank. So Axis Bank in turn gives Radiant the mandate to pick up from, say, 600 pickup points, PAN India on behalf of Flipkart and collect it and deposit in the nearest Axis bank. So our team with a -- it will be a crew of armored vehicle, armed guard driver, custodian. They will visit the outlet at a fixed time on a daily basis on every bank working day, pick up that cash and take it in a secured manner to the nearest Axis Bank branch and deposit that cash. So this is the core service that we offer for which we charge Axis Bank a fixed amount per point per month. And that prices could be from as low as INR 2,000 per month to as high as INR 25,000 per month. On an average, we realize about INR 5,000 per outlet. And -- so our -- the pricing, whether it is INR 2,000 or INR 25,000 depends on our 2 dimensions. We enter into a long-term pricing metrics with the Axis Bank decision. The pricing metrics will be, what is the daily cash limit for that outlet? It could be INR 1 lakh to -- it can start from as low as INR 50,000, INR 1 lakh, INR 2 lakhs, INR 3 lakhs, INR 5 lakhs, INR 10 lakhs, INR 15 lakhs, INR 25 lakhs, INR 50 lakhs, INR 1 crore. So this is the full range, and the prices will increase as the daily limit increases. Correspondingly, the categories at any point has -- in 3 categories, within city limits, beyond city limits, or far off locations. The pricing will be lowest in -- for within city limits and highest for beyond city limits. So this pricing -- just to reiterate, we don't decide based on individual point wise, what is the distance, what is the kilometers, what is the nearest branch, et cetera. This pricing is common given to Axis Bank, which they offer to their customers. The Axis may or may not have a markup to this pricing, most likely they -- in most instances, they'll have a markup to this and offer this as a service to their customers. So then our team will pick up on an everyday basis, and we provide a lot of other value-added services to them in terms of daily monthly MIS for each point, et cetera. We've other technology-related value-added services like plug-ins to their ERP system. Bank can real-time track where the cash is, all that additional features that they get for the same price, all these switches are all part of the basic offer. Okay. So this is cash pickup and delivery segment. And this is -- this constitutes almost 60% to 63% of our overall revenues.

Sure, sure. And just a question on this. The points are decided purely, let's say, in this case, by Axis Bank, like Axis Bank will tell you, okay, service, whatever, 1, 2, 3, 4 points. And rather my question is what is kind of the lowest level? Like do you also service like, say, like a Karyana store? Or are we kind of not there yet? Or...

No, no. So number of points per end customer can be from 1 to 2,000. But we -- to a Karyana store, we don't go and sell. The Axis decides to offer this service to its set of customers. So usually, it will be typically from 5 onwards. As an individual outlet for the bank, also the acquisition cost of the customer could be high, so they may or may not be willing to offer to individual customer. But even individual customer, if it's a large outlet, they may be willing to offer this. So imagine if there's a patrol bunk, which access banks, and they want to offer their service to a patrol bunk with the daily volume is high. It could be individual point also.

I see. I see. So this is something where the basically like a bank kind of directly goes and offers this service. And of course, I mean, we're the service providers. And of course, that depends on whether kind of it's economical for them or not. Got it. Yes. Please go ahead.

Yes. Okay. So I think the example that I gave you of Flipkart that the end customer categorization, this will fall under e-commerce. So like that e-commerce, delivery -- e-commerce logistics is there like delivery e-commerce for Xpressbees, Shadowfax and tech operation. There's a set of guys who provide e-com logistics. And then we've BFSI. So in BFSI, several NBFCs are our end customers. So banks offer this service to several NBFCs. So NBFCs, they get -- their loan repayments are made by customers in cash. So that cash is picked up. So gold loan companies, regular NBFC, every insurance, every LIC brands, for instance, people pay insurance premium in cash, then just all the GIC in the life and nonlife, private and public sector insurance companies are our end customers. So that will come under BFSI. NBFCs will come under BFSI, micro financial institutions will come under BFSI, gold loan companies will come under BFSI. So BFSI is a fairly large segment for us. The largest segment is BFSI, I think it's about 32%, 33% of the overall revenues come from BFSI. The second -- then organized retail. Every large organized retail chains are our customer as in this could be like...

Like a Shoppers Stop or....

Shoppers Stop brands retail, Aditya Birla retail, Tanishq, Croma, any of these. Any organized retails, these are our customers -- end customers. Okay. Then you've railways, we pick up from over 1,400 railway stations for Indian Railways across various -- across India. This is signed by each region as in South and Southern Railway, South Central Railways, Northern Railway, Northeastern Railway, all of those are our individual customer -- individual end customers, but all of them come under the railways part. So then petroleum. Petroleum, we do largely only the private sector petroleum place that is Reliance Petroleum is our large customer. The public sector, yes, we do offer to BP, et cetera. But they're all only the COCO units, that's the company owned company operated units. Because otherwise, individual petrol bunks of public sector, that's a fairly large number, 85,000 petrol bunks are there in India. But those are all the cash management is left to the individual. These are all franchised patrol bunks. And the individual petrol bunk owners will decide how to manage that cash. And we do deal with individual petrol bunks also, like I said, both through banks as well as through directly. So that is petroleum. I explained petroleum, I explained railways, I explained organized retail, I explained BFSI, e-commerce, e-commerce logistics. I think we've covered most of the segments. Then there is Others. Others is a fairly large segment that will cover almost 25% of my revenues. So this Others will include a wide range. It could be courier outlets. It could be travel agents. It could be schools and colleges. It could be -- so wherever -- this would be government outlets. As in, for example, there's something called as a Mee Seva and eSeva and the common service centers, et cetera, run by the government, even government liquor outlets. So a whole host of them fall under the Others segment. Wherever there's a cash, we can pick up those cash on a daily basis. So these are the end customer profile. And the core services that we offer, the first one I said is doorstep banking. There is a cash pickup and delivery. So I explained about the cash pickup example. We also do cash delivery. But within that cash pickup and delivery, cash pickup is 90% and cash delivery is only 10% or around. Yes. So we do deliver cash, say, for example, a microfinance wants cash for disbursement of loans, we'll be -- as in Standard Chartered asks us to deliver INR 50 lakhs to Equitas Microfinance, we'll deliver that. And then the next day, Standard Chartered will reimburse us. Okay. So this is -- cash delivery is not done on a daily basis. It is only done on request and based on our availability of cash at that location on that day. Okay. So this is the core business, cash pickup and delivery. The second revenue segment is called as Network Cash Management. So Network Cash Management, we also -- in industry parlance, we also use the word called cash burial. So this segment is where we pick up this cash from the outlet, but we deposit that cash in our own account, Radiant's own bank account and electronically transfer it to the concerned bank the next working day.

I see. And is the price based on metrics? Or.....

No, no, no. This is purely volumetric. This is purely -- the pricing is purely based on volumetrics. So it would be X rupees per INR 1,000.

I see. And what would that be of an indicative range?

Yes, you can compute it yourself. We give data on the actual volume this thing. It will be roughly in the range of about INR 1.30, INR 1.40 per INR 1,000.

I see. And sorry, this is the cash burial revenue you've started putting out. Sorry.

We disclosed both the revenue from cash burial as well as the volume of cash burial that we've done.

I think this was the -- whatever, the 9-month figure is some INR 43,000 crores. Is that the.....

Crores. Yes. Yes, that's right. In a full year, it will be at about INR 60,000 crores. In 9-month, it will be at about INR 43,000 crores. Yes.

I see. I just had a question on this. I mean, if you look at the -- I mean, maybe correct me if I'm wrong, but for Q1, this figure was for INR 40,000 crores. For the second half , it was...

No, no, no. Even INR 40,000 crores is the total volume of cash that we handled. See, in a year, last year, for example, I'll give you, last year, we handled INR 160,000 crores of cash of which roughly about INR 60,000 crores is network cash management or INR 57,000 crores is network cash management. Okay. Roughly about 39% to 40% of the total cash that we handle goes to our account. Okay. So that is the second revenue segment. The third revenue segment is cash processing. So to the each end customer, we've offered them a choice whether to pick up the cash on a -- in a sealed back or you want us to count and verify at the point of time itself. So if they choose to -- if they choose for a cash counting and verification, we charge them extra on per INR 1,000 basis, that could be roughly about INR 0.40 or INR 0.50, something like that per INR 1,000. So that is an incremental -- that is a third revenue segment. And so this is -- this segment accounts -- so network cash management, I think, should be accounting for about 18%, 19% of our revenues. And the cash processing will be about 5% of our revenues. You followed that. I'll tell you the fourth segment is cash and operations. So cash and operations is actually bulk movement of cash by the bank. Okay. So the -- whatever the first 3 segments that we spoke about, this is actually reverse logistics. Reverse logistics in a sense that you see when the cash is printed in a mint, from the mint it goes to RBI vault, from RBI vault to bank vault, from bank vault to bank branches. And from bank branches, it comes to the body public either through the bank branch teller or through the ATM machine. So up to this ATM machine or bank teller, this is a forward movement of cash. So once it reaches body public, body public spends it in various retail outlets. And from retail outlets to, it has to reach the bank. And that is the reverse logistics. That is the segment that we do as doorstep banking or a cash pickup segment. Okay. But this fourth segment that I'm talking of cash and operations is actually using the vans, same set of vans, armed guard, driver, armored van, et cetera. is used for the forward movement, that is bulk movement of cash from the RBI vaults to bank vaults, bank vaults to bank branches, one branch to other branch, et cetera. So that business that is actually where we provide just the crew on hire. Okay. This is providing the entire van on hire. There is armored van, armed guard, driver, cash custodian. It's 2-armed guards and 2 custodians. It's a 5-member crew that we offer to banks for bulk movement of cash. We're not privy how much cash that they're moving, et cetera, in the branches. So that is -- probably they may be using it for movement of coins, movement of documents, movement of locker items or anything that they can use. Okay. So this, we provide on -- typically on a long-term lease with a monthly fixed amount. So per van per month, we're getting about INR 1.5 lakhs or INR 1.6 lakhs per month.

Per van per month. I see.

And we may be -- as in a sense, costs are there correspondingly for the cost of guard, driver, van rent and this thing. And the profitability is more or less comparable to the overall profitability of the company.

I see. So these are just basically, I mean, the same set of vans that, say, like whatever banks want to move, whatever cash or bullion or whatever in their branches. They kind of use this. And this is -- again, this is just a fixed basis, it doesn't matter on the -- I mean, you get...

Yes. We get extra hours and extra kilometer charges we get. It's 8 hours per day and 2,000 kilometers per month will be the base this thing, until they extent the use for extra hours and extra kilometers, there is a charge that is payable.

I see. So I think that kind of covers all the segments.

Yes. The last is a very small miscellaneous. We do -- we've vaults in various locations. We rent those vaults for banks to use surplus cash, et cetera. We also would do something called as MBC, there is man behind counter, where we supply manpower for high-volume, high-traffic retail outlets. Our trained manpower is stationed at that location to collect cash from body public, counting and processing before handing it over for cash pickup and delivery. Okay. So man behind counter, vaults, some reimbursements, et cetera, comes under this last 2% of the revenues.

Sure. Sure. That makes -- sure. So Mr. Muthuraman, how does the pricing for the -- rather, how does the pricing, say, like increment or decrement work for kind of all the 3, 4 different segments? I mean, I guess you mentioned for the cash and if it's long term, but for your other, for your network cash...

For the remain -- for all these first 3 segments, which is the -- first 3 as well as the fourth segment, is on long-term pricing. There is no individual -- point wise pricing is never discussed. We signed long-term contracts. It could be typically 3-year contracts or in some cases, 1-year contract with the auto renewal of that. So thereafter, after 3 years, the contracts get renewed. So during that renewal, we -- sometimes we get some price increase, but most times, we don't get any price increase. If there is an increase in cost of manpower, if there is the increase in cost of fuel, et cetera, is to our account. But at the same time, as in their argument will be that they're giving us more points. Okay. And so additional points for which there is very minimal additional incremental cost. So we did get a 10% price cycle from all the banks in FY '21 before that probably in FY '16 or something like that. So long-term per point price increase will be 1%, 2% per annum. We're not banking much on the growth based on the pricing increase. So prices have remained fairly static for long period.

I see. So just to kind of get a sense for us to kind of grow the number of points we cover, we're directly dependent on banks. Maybe just correct me if I'm wrong, but so of, say, the -- how many points are being -- is this segment completely outsourced as in our players like us only doing this? Or do banks services themselves?

No, no. Banks cannot send their own staff to go and collect cash. They cannot hire -- see hiring an armed guard is a complex process. You need to get something or let's say PSARA license, Private Security Agency Regulation Act. A gunman -- company hires a gunman, it has to have a PSARA license. And PSARA license is an individual state level this thing. And it has to be renewed periodically, et cetera. So banks doesn't want to get into registering itself as a security agency. It's a Private Security Agency Regulation Act. So anybody who hires a gunman is treated as a security agency. So no bank want to be registering themselves with the state government as a security agency, so it is always outsourced. And on top of it, there is a regulation that had come up in 2018, which mandated the banks to outsource it to only to those, who qualify certain criteria.

Yes, yes. I think of INR 1 billion...

The minimum net worth of INR 100 crores and the minimum fleet size of 300 vans.

I see. I see. And so rather my question is, how do we -- so how dow we grow our points like kind of it's directly dependent on the, say like the banks, et cetera. They're kind of....

Okay. So I've explained to you, 95% of our revenues are from banks. So which means for this 95% of that segment, our business development did depend on how fast the banks want to grow the business. So if you trace the growth history of this particular industry, as in initially, it was started only by foreign banks, Citibank and Deutsche Bank and HSBC were the initial, this thing. So then it moved to new private sector banks, ICICI, Axis, HDFC, and Kotak and all of that. Then it moved to old private sector banks, City Union and Federal and all of them. It has never taken off in a big way in public sector banks. Okay. So public sector banks accept sole exception is SBA. Other than SBA, none of the other public sector banks offer this as a service to their end customer. So if you're a chain of retail outlets in Chennai and your banking with Canara Bank, you've no choice to avail a service of this nature. You've to depend on -- the bank expects you to come to its bank branch and deposit the cash. That's all.

So Mr. Muthuraman, I understand the only other, say, alternative, if I'm, say, like a retail outlet to kind of get my kind of cash in the bank is either through a service like this or I kind of go the traditional way and employ it in like the -- is there any other service or any alternative that's out there? Or...

There's a very, very recently emerging new trend is there with these payment banks. So they're offering very limited volume as in they cannot handle very large volumes. In a limited volume, their payment banks are offering service, where they pick up cash and give instant credit to their wallet. So banking correspondents will have some wallet balance, from that wallet balance, it is debited and credited to the merchants wallet. But at a much higher price as in much higher price and so because of the pricing, this is limited to very small outlets. But even that is very nascent. But I'll say that the doorstep banking itself is a nascent industry in India. It's a 100-year-old industry elsewhere. It is 20 years old in India, 20, 25 years old in India. And it is -- the penetration levels are ultrasmall as in 2% kind of penetration. So India has -- by some account, India has 2 crore retail outlets. Okay. And our own estimate is that about 25% of these outlets will be eligible to use the service of this nature. That is 50 lakh outlets. We're catering to about 70,000 outlets. The entire industry is doing 1.5 lakh outlets. So which means out of the potential target of 50 lakhs, 1.5 lakh outlets is 3%. Potential out of 2 crore outlets, 1.5 lakh outlets is less than 1%. So there is kind of -- so the volume growth -- sorry, the points growth across these outlets is the growth driver for Radiant and other place in this industry got a long period to go.

Right, right. That makes sense. So Mr. Muthuraman, just kind of another question as for -- I think we were in the ATM segment, but I think we exited that. So...

Okay. We had a very small presence -- go ahead, go ahead, please.

I had a more specific question, I think kind of last time you explained why is -- maybe correct my understanding if I'm wrong, but do these -- how does the ATM servicing work? I mean my question is if we already have -- I mean, this business is run by route density. And if we've an opportunity to service a few ATMs that are kind of just on that route, would it not make sense to go there?

No, no, no. It doesn't. No, it cannot. It doesn't work like that. It doesn't work like that. So as I explained to you, ATM is forward logistics. The retail cash management is reverse logistics. Okay. So -- and in an ATM, you load -- a van can be loaded up to a maximum of INR 5 crores by regulation, Ministry of Home Affairs Regulation, a van cannot carry more than INR 5 crores. So a most efficient ATM replenishment guy will load INR 5 crores, go across 25 ATMs or 30 ATMs, keep filling each of these ATMs and come back empty. But as retail cash management, we'll start the van empty, go to the first outlet, collect INR 50,000, go to the second outlet, collect INR 2 lakhs, go to the third outlet, probably collect INR 7 lakhs, fourth outlet 0 cash, they'll get a no cash receipt, fifth outlet, we'll collect INR 2.5 lakhs, something like that. And after the collections are done, then we take it to the bank and deposit that. In terms of just pure risk management itself, when I'm carrying a INR 5 crore cash to stop my vehicle at a retail outlet to pick up a few thousand, I'm putting that entire INR 5 crore at risk. Okay. And the second is in ATM by contract, by strict terms of that contract between the bank and the ATM service providers, you cannot mix the cash of one ATM with anything else. So not even other bank ATM cash. So which means that if I pick up cash, I'll go around, fill 20 Yes Bank ATMs and come back. And if I'm able to come back by a good time itself, then I can load it and do 20 Standard Chartered ATMs or 10 Standard Charted ATMs like that. I cannot collect the cash of Yes Bank and Standard Chartered and go on and fill and come back. This is how these -- by contract terms, this is how it's supposed to be. So whether they're collecting it of multiple banks in remote locations at least, we don't know.

Since we cannot service at one time more than one ATM. Like it cannot even have like, say, an Axis and, say SBI's cash in the same van at the same time.....

Yes. That's how the contracts are worded. In practice, how it is adopted, we don't know. When we were there in that segment, that's how we used to do.

I see. Got it. Got it. So -- I see. So, I mean, I guess...

See, the other thing is that, see, the entire operations is time bomb. Because our cash collection is between 10 a.m. to -- by 3 p.m., we've to reach the bank and deposit the cash. Okay. We cannot deposit cash after 3 p.m. In some branches, they accept up to 4 p.m., but most branches, it's up to 3 p.m. Okay. So that 10 to 3 is the only operating time that we've. So we need to maximize as many retail outlets as possible within that time. So that is as in a sense, ATM loading is not -- this thing both operationally as well as from a risk management perspective, it doesn't make any sense.

Sure, sure, sure. That kind of makes sense. The next sort of set of questions I had Mr. Muthuraman is just on kind of the overall just the cash industry, like how do we think of it? Kind of what are kind of like a kind of what rate -- I mean, rather what are the metrics we used to use, cash in circulation or cash velocity? How do we kind of think of it?

No, see, the point is cash in circulation at the time of demonetization was INR 16 lakh crores, today it is INR 33 lakh crores. Velocity is more or less the same, probably it's about 5x in a year, it changes hands. Okay. So that is about INR 33 lakh crores. We had an INR 165 lakh crores of transactions in a year. I told you we handled INR 1.6 lakh crores last year. The entire industry handled less than INR 4 lakh crores. So that roughly about 2%, 2.5% of the total cash transactions is what the cash management -- retail cash management is handled.

2% to 2.5% is what the total cash management industry...

Handles out of the total cash transactions in the country.

I see. Okay. Got it. So the -- I mean, I guess, that amount is INR 33 trillion x in velocity, which is -- and then...

INR 165,000 trillion -- INR 165 trillion and we handled INR 4 trillion. As Radiant, we handled INR 1.6 trillion. The entire industry will be handling less than INR 4 trillion. And country -- and we've analyzed across countries, the cash in circulation, it's anywhere between 8% to 14% of the GDP. Very few countries are below 8%, very few countries are outside of 14%. Carrying circulation is surplus near GDP. So we're at the higher end, 14%. It could, as in a sense, as the GDP grows and as our digital transactions grow, this 14% could come down to 12%, 10%, et cetera. But still it won't as in a sense, there's -- as the GDP grows, the cash in circulation has to grow. So there's the lesson that the government had derived from the demonetization exercise entirely. That is why it has moved from INR 16 lakh crores to INR 33 lakh crores during a period where there has been a astronomical growth in UP.

Sure. Sure. Yes. I mean -- so I guess, overall, cash handled has just grown at about...

The cash in circulation itself has grown -- see has doubled in 7 years. That's about 10% per annum.

Yes, you're right, 10%. I see. I see. I see. And just another thing, kind of globally, this is kind of like a 2-player market. Are we -- is there any kind of scope for consolidation? I know India has about 5 or 6 players across the space.

No, no, no, no. In India also, it is fairly consolidated. As in PAN India, there are only 2 players, us and CMS. So then there's a distant third, Writer Safeguard and then other 3 players are insignificant in retail cash management. So there are only 6 players who qualify for that minimum INR 100 crore network criteria. CMS, Radiant, Writer Safeguard, SIS Prosegur, AGS Transact and Brinks. Okay. Brinks, SIS and AGS are very small in retail cash management. Writer is a distant third. And it is -- as per our information, Radiant is a market leader in this segment, retail cash management.

I see. I see. Is there -- I mean, given that Writer Safeguard, Brinks and SIS, they're all kind of global players. Is there any kind of sort of any reason why they haven't scaled up or kind of why they're not focused on India? Or is that kind of...

No, no. Actually globally Brinks is a large player. And -- but Brinks had their India strategy wrong, as in they were beset with a lot of labor issues, crippling labor strikes, et cetera, in their early days. So the U.S. management didn't show keen interest to make significant investments to grow the business, it's for understanding. Okay. Loomis is the other largest -- large player in -- globally. They don't have a presence in India. And then there is G4S. G4S has a presence in India, but only in the manned guarding segment, not in the retail cash management. Then there is Garda...

Manned guarding?

Yes, security services.

I see. I see. I see. And no thanks I think that really sort of give some good color. Now kind of just Mr. Muthuraman is kind of coming to a little bit of our own business. Could you maybe sort of just add a few questions on kind of the DVJ segment that we've kind of -- so my understanding is that kind of the assets -- I mean, the vans are basically the same. And do we need -- like how big is the market? Do we've to -- will we need any additional CapEx for this? Who are our competitors?

No, no. As a general, pretty simple, we don't invest in any CapEx of our vans. Till the time of IPO, we didn't have -- own even one single van and all the vans are on lease, operating lease, which means the lease payments are above EBITDA itself. During the IPO, we did a small primary and one of the stated purpose of the primary was to add 220 vans. That is as a risk mitigation measure. I just explained, like Brinks went through a serious crippling unions, these things, et cetera. So we don't want any situation, where we're at risk of any vendor, not this thing, et cetera, not able to provide vans on time, et cetera. So we wanted to have about 20% of the total fleet in our own books so that -- as a risk mitigation measure. That was a onetime CapEx that we chose to do. And thereafter, then, we don't intend to buy any vans. So whether it is DVJ business or Cash Van operations, dedicated cash vans or our own doorstep banking business, other than this 220, we don't intend to add any more vans in our assets. So the logic for entering the DVJ business is that the operational -- operations, the -- in a sense, the revenue model and the operating leverage and the skill sets of handling high value, risky cash valuables, this thing, just like cash, valuables movement, et cetera, there's a fair degree of understanding that we've by handling large volumes of cash, which we can superimpose on this valuable segment as well. So globally, also, other players -- the names that I just now mentioned, Brinks, Prosegur, et cetera have fairly large valuable logistics segment. So it's an adjacent market, doesn't mean that they say -- we can use the same assets. So the van is used for cash management, very difficult to use the same van for jewelry pickup. But there's some scope for synergy benefits because cash -- retail cash management is largely a daytime operation between 10 to 3 versus jewelry market is largely an evening operation as in it is collected from various manufacturers and shipped either overnight or shipped by air in the night and the delivery in the next day. Okay. So to some extent, we can multiplex the same assets between our doorstep banking and RVL or the available logistic segment.

Sure. So -- sorry, so I mean, just to kind of understand, we'll be needing our vans for this? Or it's kind of like a mix like what is the -- I mean, what is the service or kind of.....

Can you repeat?

Yes. So my question is, we'll be using our vans for this? Or will we just kind of be the organizers to kind of just -- I mean, like...

No, no. See, just like in doorstep banking. See, today, we've 800 vans, of which we've taken delivery of only 160 vans so far. 160 vans should come in this quarter. So 220 vans will be our own. Balance, 580 will be on lease -- will be taken on lease. Okay. So that -- this 800 -- it doesn't matter whether it is our own or lease, say, it is the same asset and it is used for the same purpose whether it is used for doorstep banking or for dedicated cash vans fans or for RVL.

I see. I see. And just kind of how big would this market be? Who would be the competitors? What is any kind of......

So there are 2 big players in this segment at this point of time. Sequel Logistics and BVC Logistics.

That is Sequel?

Yes. And BVC Logistics? These are the 2 large players. Other than that, rest are all insignificant in this space.

I see. And I mean, maybe correct me if I'm wrong, but would the -- I guess, the location-wise, most of the -- most of this would be kind of Maharashtra, Gujarat? Or is it kind of....

No, no, no, no. So there are 2 legs to it. One is, say, the gold gets imported -- the gold is imported and from the ports, it reaches the various manufacturing units. The manufacturing units could largely be in Surat and Ahmedabad and Bombay and Zaveri Bazar, places like that. So then that -- it gets manufactured. And from there, the consumption is PAN India. I mean, Joyalukkas, Senco in Kolkata and Tanishq all over the country. And this -- so it is PAN India. Kalyan Jewellers and LKS and Thangamayil Jewellery. There are several listed players themselves are there and several other names are there. So India has 1.3 lakh jewelers, who are registered with BIS for Hallmarking. Between them, they've over 3 lakh jewelry outlets. So the smallest of town also will have a jewelry outlet. And jewels have to reach them. So it is a PAN India. It is like a courier operation with the high-value consignment.

I see. And just kind of maybe the last question on this is, what were kind of -- any kind of guidance in terms of revenue or margins that we kind of see? I know this is -- we've just -- it just started, but kind of....

There is some press articles. CMD has given at the time of RVL launch, but we've not given any other guidance. You can just Google up on that. CMD has given some guidance in -- a 3-year guidance of where it could be. So we remain -- maintain the same.

I see. And just the next question I had was this Acemoney acquisition. Could you maybe -- sorry.

No. Repeat. Go ahead.

Yes. I was saying just a couple of questions around this. I mean, I was just reading this article. I mean, we're planning to launch 1 lakh micro ATMs kind of -- can you just maybe touch upon this, and there's some RBI subsidy as well. What are the economics of each micro ATM? How would we procure it? How does -- what's the business model for this? I think you've kind of covered the strategy as to why in the recent con call, but just wanted to understand this. And also, who are the other shareholders, I think we own about 57%. Is that right?

Yes, yes. So it was a fintech start-up company, founded, I think, some 5 years back. And we acquired 57% through a combination of primary and secondary. So we paid INR 11.2 crores for 57% stake of which INR 2 crores were secondary to the original founders. And balance INR 9.2 crores was primary into the company. So the -- for INR 11.2 crores or 57% makes an enterprise value at INR 17 crores of which the primary infusion itself is INR 9 crores. So that means that we acquired that company at a pre-money valuation of INR 8 crores. And we already had -- the company already had a paid up capital of INR 6 crores. Equity itself is 36%. So an attractive investment. They've developed a fantastic fintech platform, which provides for at least 12 different services. Okay. That is point of sale transactions, micro ATMs, other enabled payment systems, domestic money transfer, then utility bill payments, then other financial services like insurance offerings. About 12 different services are there that it can -- that platform can provide to the customers. So they had -- initially at the time before our acquisition, they were largely operating in Kerala. So they had 2, 3 different products. One is that offer this -- see, the -- between 2017 to '21, some 50 crore people got on to the banking services. So that Jan Dhan accounts. But then less than 5% or 10% of them would have got on to the mobile banking services or the digital banking. So this 50 crore are all physical banking as in bank account open, enter into the branch and then do whatever they want to. As they're -- so they had to get into the digital banking network. Many of the banks, smaller banks, cooperative banks, et cetera, did not have digital banking solutions. So these people used to provide, Acemoney, used to provide white-label digital banking solutions. Okay. So that is their original business model. So the -- as in post our acquisition besides that solution -- that services also is continuing to be offered to more and more cooperative banks in -- beside they were primarily concentrated in Kerala, we wanted to expand it outside of KerAlameda to various other segments as well, other markets as well. So the -- that is one revenue stream. But as we acquired and entered that business, understood that business more we saw a much bigger opportunity, again, regulation driven. So there is a scheme called PIDF that is Payment Infrastructure Development Fund. Just to Google up about the PIDF Scheme, the scheme is fairly simple and interesting. So the basic principle is like this. I don't know if you remember, there used to be a small INR 1 cess on every liter of petrol and diesel. That cess will go to NHAI. And NHAI use that to build the Golden Quadrilateral and other highways, right? So that is physical infrastructure. This payment infrastructure is doing exactly the same. There's a small cess on every digital transaction every bank has to pay to RBI. Fund is dedicated to this PIDF, Payment Infrastructure Development Fund and RBI gives this to a set of qualified players, who are enabling merchants to get on to the digital banking services. So if you just add -- if you in a Tier 3 location, there's an outlet -- merchant outlet and you put -- you go and give him a QR code. You'll get a INR 300 subsidy from PIDF. But -- if the same guy, you give him a point-of-sale machine and/or a micro ATM and allow him to do card transactions, debit cards, credit cards, the RuPay cards, and the QR code. And okay, if you do that, then you can get a subsidy of up to INR 10,000.

Up to INR 10,000?

Yes. So that -- what exact amount each service provider has to submit their costs and this thing to RBI. RBI will witness and approve certain amount. And then once that amount is approved, based on your cost, they'll reimburse up to 75% of your costs. And then that cost -- yes. And then out of that, they'll pay 75% of the 75% immediately upon proof of installation. And balance 25% is paid after 1 year provided that outlet uses -- that demonstrates at least 50 transactions in the quarter. So Radiant's strong network in hinterlands, see, this 75% of subsidy goes up to 90% in the case of Northeast, in the case of Jammu and Kashmir and in the case of other -- few other designated backward areas.

This goes up to how much?

90%. If it is done in Northeast and in Jammu and Kashmir and in the few other designated areas. We've a strong presence in 3 Tier, 4 plus locations. Particularly in Northeast, we've a fairly strong network, et cetera. So we thought that we can leverage Radiant's strong network and a strong technology platform of Acemoney to offer these POS machines or micro ATMs to various outlets. Okay. So one of the conditions for the subsidy eligibility is that, that outlet should not have been terminalized before. So they should not have had a previous -- any form of a noncash, this thing, card acceptance or QR code, et cetera. If they had a QR code, but did not have a physical, you can offer physical. If they did not have both, you can offer both QR and physical and claim the subsidy. Okay. So there is a lot more nuances to this. I think I'd suggest you read up that, just to Google up on the PIDF Scheme, you'll be able to get those. The rest of it, there's highly competitive information, yes. Then RBI has very large plans to roll out micro ATMs so that every retail outlet becomes a bank ATM. So you don't need to install this dinosaur machines of these ATMs, et cetera and maintaining those ATMs and refilling those ATMs and all this risk of ATMs getting vandalized and things like that. So every retail outlet becomes an ATM and accepts any of these Jan Dhan cards, RuPay cards, et cetera, so that it becomes a part of the financial inclusion objective of.....

I see. I see. Just -- I mean, I understand maybe it's early, you may not kind of be able to disclose much. Just one question -- sorry.

No, no. Sorry, go ahead.

Yes. No, no. Just maybe my only question was if it's possible, would the CapEx for this -- for these micro ATM be born by us or kind of how would that work? Or -- and just maybe......

Repeat the question?

Yes. So for setting this up, would -- say if you want to set up like a micro ATM, I mean, would this CapEx be born by us? Or how does -- how would that work?

No, no. The machine cost is reimbursed, no.

Okay. So the subsidy was for the machine cost?

No, not only machine. Machine costs, the software costs, the distribution costs, the training costs, all of that put together is covered in the subsidy. Already too much competitive information is disclosed.

Sure, sure. I understand. I understand. Just maybe kind of moving to maybe the last kind of set of questions that I had. Mr. Muthuraman just a couple of questions around your -- around the OpEx. So for FY '23, in the OpEx, we see van leasing about INR 20 crores or so. So this is the lease cost for the 580 vans. Is that right?

No, no. In FY '23, we had -- I think 760 vans, all were leased. As and when we're buying these new vans, we're stopping some of those third-party hired vans.

I see. I see. So this is kind of the line item that links to that, right? And the contract charges and guards and drives is basically for the personnel that may be higher. And just maybe one more question for this is now that we've about 200 to 220 of our own vans, will we also -- will the personnel also be outsourced? Or will we kind of have any of that?

No, no, no. So the guards and drivers are always taken from a group company of ours called, Radiant Protection Force, which holds the PSARA license. Okay. That's how it has been even at the time of IPO or pre-IPO for many years now. It has kept specifically like that because once you're registered as a security agency, then foreign investments are restricted in the sector in the company. So just like your Amazon will -- is doing a split between their delivery versus the e-commerce wing, here also, the crew is, this thing is separated from the actual service provider. So the guards, drivers, et cetera, are on the roles of Radiant Protection Force and there's an arm's length plus 9% at which Radiant gets most people, yes.

Sure, sure. Thank you. That's helpful. Just maybe the last 2 questions I've, Mr. Muthuraman. I know we're just about at time is what would our capital allocation be going forward? We've a significant amount of cash on books, any plans to kind of use that? Or....

No, no. So the cash is not -- that entirely is not free cash. We've given details to break up also, you can see in the FY '23 annual report, this thing, how the cash is received. But capital allocation wise, we don't as in the sense, we're extremely frugal on making capital expenditure. About CapEx that is planned, maintenance CapEx only. Only, maintenance CapEx.

What would that be about?

So no, no, that is all towards office, computers, table, chair, interiors and probably cars. Those are very small. You can see what is our typical capital expenditure in the last few years. It will be less than INR 5 crores in a year.

Got it. Right, right. Just maybe the last question is kind of what are the risks that we see for this business? I mean, is it like, of course the operational risks such as theft?

Yes. So operational risks are there. But we enter -- every part of our movement is -- movement and storage of cash is insured for me. So we pay about INR 4.5 crore to INR 5 crores of insurance premium in a year. And yes. So we don't see any operational risks. Our cash losses are the lowest in the industry. You can do comparison with other players. It's the lowest in the industry because it has not happened since...

Sorry, I think you're on mute, Mr. Muthuraman.

Sorry, [ Shantanu ] got an incoming call, so I had to pick that up.

Sure. Sure.

Sorry, I missed the question. I missed the train. Can you adjust with me?

Just the risks, we've bearing at kind of all....

Yes, yes, 100% of it is insured and our cash losses are among the lowest in the industry that you can compare. And it has not happened since. It is founded by Colonel David Devasahayam, who is Ex-Army and 22% of our staff are from Army, including several senior manager persons. Our Chief Operating Officer is Colonel Benz, then Colonel Rai, and this thing across the sector, it is Ex-Army. It is run like a quasi-military operations. So very -- extremely conscious of the risks involved, and we've 120.....

Sure, sure. Thank you. I think that was it. Is there anything else kind of that my questions didn't cover or if you'd like to highlight about the business or something that I missed to ask? If it's not been, we could maybe wrap up.

Yes, yes. So it -- so operational risk is fairly well contained and the numbers showed as evidence. You can compare it, our cash losses with others in the industry. And other risk is that, like you said, that our business development is largely dependent on how fast the bank wants us to grow. Right. So we're addressing that by launching -- by offering our services directly to customers. So at the time of IPO, our direct business was only 2%. Today, it is 4% plus and we expect it to be much higher as we go along. Here also, we're doing it in a strategic manner, where we offer the services to end customers of public sector banks. So that they don't have a choice of availing the service from their bank. So we go and offer this as a service. And we're getting fairly good encouraging responses. So over a period of time, we'd like to -- as in, we're happy to do business through banks only. But if banks are not offering this as a service, those customers are low-hanging fruits for us to offer the service. From an individual retailer perspective, it makes imminent sense for them because it is extremely cheap, say, for example, our pricing starts with as low as INR 2,000 per outlet per month. So that is like INR 80 per day to come and visit every day, right? If they're doing it themselves, it will not even cover their fuel costs of sending somebody to go and this thing. So with armed guards and driver and insurance and technology and protection and everything, it is really economical and attractive for a retail outlet to avail this service. Today, they're not availing because their bank is not offering this service. So when you go and offer this directly, we expect that more and more retail outlets will avail this service, and that will drive our future growth.

Sure, sure, I see. I see. And Mr. Muthuraman, thank you so much. Is there anything my questions didn't cover or you would like to highlight that kind of wasn't covered in our discussion.

No, we're broadly aligned, yes. I think we've broadly covered the most of the aspects.

Sure, sure. So thank you so much for taking out the time. This is a very insightful conversation. I really appreciate it. Let's -- maybe we'll just kind of maybe process some of this and then kind of.....

Okay. Sure, [ Shantanu ].

Sure. Thank you very much.

Thanks, Nitin. Thanks for taking time.

Thank you.