So, as you would all be aware, on Friday we had the great pleasure of announcing the acquisition of Tata Communications' payments division, which we have acquired. It gives us some great strategic highlights. For us, it's an immediate white-label ATM license is delivered. Tata has a fully operational white-label license, and on completion, that license automatically transfers to us. It also delivers for us a fully operational payment switch in India, which is a key piece of infrastructure that we would have had to have built ourselves for our own white-label operations if we were to do this without the Tata acquisition. And this is a very high-quality switch that has been used for a number of years and highly regarded in the Indian market. And this will drive, for us, significant increases for our FindiPay margins as we will no longer require third-party acquirers.
It also delivers for us a low-CapEx, high-margin franchise model, and we'll go into that in a little more detail in the later slides from Deepak. It also delivers us the second-largest white-label ATM business in India from day one, with significant scope for further ATM rollouts from the 3,000 stored ATMs that Tata has, as well as the 3,912 State Bank of India ATMs that we will be repurposing as we roll out the brand new 4,250 ATMs for that new contract that we won late last year. I'll now pass on to Deepak just to talk through the snapshot of the financials of what we've acquired and the key strategic rationale of what Tata and our white-label strategy will deliver for us in 2026 and beyond.
Thank you, Nicholas. Hi, this is Deepak Verma, MD and CEO for TSI. This acquisition that we did was largely hovers around our objective of going deeper in terms of our reach to the rural area. While we are already present through a FindiPay merchant, we felt that, yes, A, what we are not enabling the merchant is with a product, and that's where we felt that, yes, white-label is the right product for rural India, and this acquisition was in line of that philosophy that, yes, with this acquisition, what we will get really is three, we tick off three Cs. One is the coverage, that, yes, our coverage will get enhanced more to rural area. Second is the capability, as Nicholas said, the payment platform that comes with it, the payment switch. I mean, it is the first white-label network ATM in India when it was deployed.
The switch is very robust, being tested through multiple times and has gone through multiple RBI audits. That's why we relied on the switch. It gives us that capability that we were missing. Of course, it is very commercially viable in terms of what we are paying for the deal and what comes as a revenue to us in terms of roughly AUD 25-30 million that we expect in the next year, 2028-2030, then going towards an EBITDA of AUD 5-7 million with an impact of AUD 2-4 million. On that basis, we felt that, yes, it is a good value buy, and therefore it meets the third C also. Coverage, capability, and good commercial are the three Cs basis which we did this deal.
The other element for us as well is there is a significant tax depreciation benefit as part of the acquisition. So we actually get AUD 32.9 million for that. So for us, that will be material in valuation for us as we lead up to our IPO, where that AUD 32.9 million will get utilized quite quickly as we continue to deliver very profitable growth for 2026 and beyond. So I'll get Deepak now just to talk through the broader white-label business that we're looking to deliver for FY 2026. Deepak, can you just mention ATM numbers, rollout strategy, capability, and scale that your team has been working on to be able to deliver this FY 2026 forecast number?
Sure. Thanks, Nicholas. So, a, what we are acquiring is more than 4,600 Indicash ATM network, and there are roughly 3 to 4,000 ATMs which are being warehoused. Yeah, that requires a little bit of tweaking in terms of upgrade and all that. That's not material amount, but that after that upgrade, they will be capable of deployment. We have another 3,900 ATMs. We won the largest State Bank of India contract, which is L1. So those ATMs can now be redeployed. Again, an upgrade would be required to that to make it happen. So we easily get towards an 11,500 ATM network by end of 2025, 2026 financial year. So that is the first milestone that we get. And most importantly in that milestone is it is not that, yes, we have to source sites.
With this FindiPay merchant base that we have, will help us identify where the existing footfalls are and how we can deploy these ATMs at my FindiPay merchant location. So there is already a quasi-footfall that we have built in the form of merchant acquiring. We just need to offer this as a new product to them and start monetizing it from day one onwards.
Yeah. And just to add to that, on the current FindiPay base of 45,000 locations, we've identified approximately 5,000 of those to be suitable for White-label ATM locations, which is the large bulk of our rollout for 2026 already has identified sites.
Yeah.
The other element to point forward here is obviously we're expecting revenues for white-label to be in the order of AUD 55 million for FY 2026, which will deliver on a conservative basis AUD 15 million of EBITDA and a net profit before tax of AUD 10 million. Now, the one element that I think that needs to be highlighted here is the cash generation from franchise fees under this model, under this CapEx-light higher margin model for us. So we expect to generate just under AUD 60 million, AUD 58.3 million in franchise fees. And as Deepak mentioned, the ATMs in warehouse and the redeployed ATMs from the SBI contract will require a modest amount of CapEx to have them deployable. And then also our actual distribution cost of delivering those ATMs are estimated at AUD 10.8 million.
So a net position for us in the order of AUD 48 million of cash to be generated, again, far in excess of the cash consideration that we have paid for that Tata acquisition.
Yeah. So this makes the strategy really robust that, yes, A, in the recent past or the last decade, ATM has been seen more with the lens of the capital that it's a capital guzzler. So what this franchisee enables is a CapEx light where it is being funded by someone who sees as an opportunity. So it is more a return on their capital and not the whole capital that earlier we used to invest. So that way it is a self-funding model where we continue to acquire merchant, continue to go and deploy these ATM wherever feasible. And in the whole process, merchant will take part of the interchange and will make some part of that interchange. So it's a good self-funding model that we did.
Correct, and the other element as well that we need to address is the potential interchange fee increase. Deepak himself actually sits on the RBI review committee on that process at the moment, so we know firsthand that it is actively under review, and we can only talk about publicly available information, and that publicly available information is the review is underway and that they are reviewing between INR 19 and INR 23 as the market range that that interchange fee could increase by, and per our modeling and the forecast for FY 2026, if there is an INR 2 increase, which is in line with the same increase that they did previously in 2021, where they increased from INR 15 to INR 17, we believe an INR 17 to INR 19 increase is the most likely.
That will impact FY 2026 numbers on a full year basis positively to the tune of just under AUD 7 million NPAT increase. So a fantastic position if that can come through in the coming months. I'll just get Deepak now to talk through in a little more detail what you have already touched on, this new franchise model and how it is CapEx-light and the types of costs that we don't have to incur as a result.
Sure. So A, the existing brown label, let me first spell out what is brown label. It's a bank-branded ATM. In a bank-branded ATM, the typical process is you source a site, then you work with the landlord of that particular location to sign a lease agreement. Then you make sure that, yes, the electricity, the meters are being installed properly. Then you work with a cash logistics company to make sure that ATMs get replenished in time. You work with a housekeeping agency for the upkeep of that ATM site, repair, maintenance, the doors of the ATM and like that, the ambience of that ATM. And then finally with the OEM, who is the machine manufacturer, to continue to do maintenance of those ATMs. Now, that is a typical brown label model. Now, all the nuances of this.
So effectively what we were running is a typically fixed cost model because your leases are fixed, your power consumption is largely the same because A, all the ATMs, batteries, assets, UPS that's being deployed is the same. The cash logistic cost, you know that, yes, how much it takes. So largely we were operating an 80% fixed model from a costing standpoint, which franchisee now suddenly this white-label, everything becomes variable because we have to do a payout to the franchisee on a per transaction basis. And if he delivers, say, at least 50 transactions, he will be able to make up for the rental power cost and also make some money in that process.
So I think the key shift really is from a bank-branded to a white label is conversion of a fixed cost to a variable cost, which is very, very essential in a business which is driven by a cash demand. So if the demand for any reason goes down, then this variable cost will also come down. So that is a key strategic shift in the company from a unit economic standpoint that now we will start looking at it, everything from a variability standpoint. So as we said, the franchisee model, it is CapEx-light. It will be funded by the franchisee. Then the franchisee can continue to scale. It is not that, yes, currently we are limited in a geography that, yes, we can deploy one ATM. If there's a bank branch, then we can't deploy in one kilometer. However, franchisee is not fixated by that.
If franchisee sees a footfall, he may want to deploy two ATMs, three ATMs, ten ATMs. He wanted to capture that territory and say, "Okay, he's exclusive for that territory." We are happy to work on those models. So a lot of flexibility has come in with this franchisee model. So that's how we are seeing it in terms of the funding. Roughly AUD 500,000, INR 500,000, which is roughly AUD 9,000 being paid to us, of which roughly 200,000 goes towards the Capex and 300,000 goes towards the cash, which is being loaded in the ATM. So that's the kind of security deposit that comes in. And we continue to provide the full support to that. So here, the franchisee has a skin in the game.
In a bank-branded model, there was no skin in the game from the bank except the cash that they provide because all risks are being borne by a managed service provider like us. So that's the franchisee model.
Thank you very much for that, Deepak. I think now we'll just talk through how the awarding of, or the white-label license for Findi and the existing brown-label business and, most importantly, our FindiPay business, how it all comes together for the combined ecosystem or marketplace, as you like to call it. Would you like to just talk through that for the?
Yes. So, the combined ecosystem, what we are evolving to is really a financial service marketplace at a merchant location. So what we are building is, we have enabled the merchant with all FindiPay products and services like domestic money transfer, biometric withdrawal, booking of railway tickets, booking of train tickets, airplane tickets, enabling them to have their tax identity cards. We have already created that. Now, what we are saying is, "Okay, this merchant has a defined footfall. Now, how I can augment more footfall to them?" That's where the white label story comes in, where we'll provide this white label ATM as a product to them. Once we give them this product, he will be able to connect a full ecosystem with himself.
So the merchant will be enabled with a cash withdrawal machine in the form of an ATM or a biometric withdrawal, even if they wanted. They can offer basic banking services that are required as we are a business correspondent to Airtel Payments Bank currently and talking to other banks. So that merchant location will become a quasi-banking point in time to come. So that's what we are building. And the BLA business has given us a strong base because we are already present in almost all large districts of India from an ATM-based standpoint across east, west, north, and south. That has enabled us to continue to improve the WLA business because then now the staff or the overheads that I need is not in proportion to the BLA business that I have incurred.
So at each incremental deployment of an ATM, the unit economics will continue to improve and each merchant will continue to get more revenue because at the end of the day, if merchant on the ground is making more revenue, eventually the company will get benefit by that.
Fantastic. Thank you very much for that. And we'll just continue on. So we've given forecasts for the FY 2026 year. And I think it's important to look at the mix and type of ATMs we're going to have deployed as well as the growth in our FindiPay merchant base. So as we've told the market, our current base is at 45,000 merchants onboarded. Our target is to have 60,000 merchants by the end of this financial year. Conservatively, on an organic basis only, we're targeting to have 120,000 by the end of financial year FY 2026. We have also told the market very openly as recently as last month that we had three acquisitions on the go. One of those acquisitions was in white label, which is the Tata acquisition that was announced last Friday.
One of those acquisitions is in brown label, which is a brown label operator with between 8,000 and 12,000 ATMs, and then one of those, the final acquisition is also in the digital or FindiPay side of the business, and that would be looking to add somewhere between 100,000 and 150,000 merchants to that, so we're hoping by the end of this financial year to have those two further acquisitions announced to market, and that would be in addition to the numbers that are on this page right now, so organically, we're targeting by the end of FY 2026 to be at that 120,000 merchants, which is teetering on the edge of cash flow break even for that part of the business. That is our target by FY 2026, and that's somewhere between 100,000 and 150,000 merchants depending on the product mix.
We've spoken about BC Max and additional products and services that we're looking to drive through that. As we get more higher margin products, the number of merchants to break even reduces. Just to be very clear, the FindiPay business unit has a very modest capital investment from us at the moment in the order of AUD 2-3 million per annum. It's not a significant drain on the business, but it is a great opportunity for us moving forward, especially as we move to integrate white-label ATMs with FindiPay locations. As Deepak said, making these financial service hubs, which then will play into our payments bank strategy, which we'll talk to on the next slide. From an ATM network position, we currently have 8,000 brown-label ATMs that we own.
Then we are planning to have by the end of FY 2026, 21,000 owned ATMs, of which we will have 45% brown label or 9,500 and 11,500 white label ATMs. So very significant growth in our ATM business over the FY 2026 year, which Deepak and the team are excited about and are ready to scale for. Deepak, would you like to just take us through this banking payments bank strategy that we're wanting to deliver on?
Eventually, I mean, you have seen that what we have built. Stage one is a Brown-label ATM network that has given us a good distribution across all geographies. Stage two, now with this acquisition of White-label and FindiPay put together, we have been able to get to a substantial mass in the rural area. Eventually what we are saying is, "Okay, now I am already being there, offering all banking products and services, offering our brand of White-label, which will be Findi in time to come." Now, we ended up what Nicholas shared in the earlier slide. Roughly we see a clear trajectory of 20,000 to 21,000 ATMs in 12 months. We accelerated to 30,000. And from a merchant standpoint, we are looking at a couple of acquisitions, which will take us to 200,000 merchants.
Now, even if we convert 10% of that, that means another 20,000 of such locations can be enabled for a white label, which means we will be crossing 40,000 plus ATM base, moving towards a 50,000 base. Now, with that kind of a base, I am already being there doing all the financial services. Now, if we add more stack to it, it can be an insurance stack that comes with it because the merchant can offer insurance. Then is a wealth stack that comes with it, which is more in terms of distribution of mutual funds, equity, SIPs, all those things. And then what we have recently doing a pilot on the credit card applications and the lending lead generations. So we have started generating leads for credit products. Once those leads get converted, we get paid. So effectively, we are building an ecosystem of financial services.
That is what we were calling financial services marketplace. Now, once we are available at 50,000 locations, it becomes easy to go and file an application for a banking license starting with a payment bank. I mean, in the absence of any other, we are not aiming to be a full-fledged bank immediately. We start with a payment bank and see that, yes, how do we grow? But we certainly are aiming to be a financial services institution as we go.
Thank you for that, Deepak. That concludes the actual presentation itself. We will go through to Q&A. We've received a number of questions from people online, so thank you for those. The first of which is, what do the financial metrics look like for the Tata acquisition, assuming all 7,000 ATMs are fully rolled out? What we will do there is we'll just point you back to the presentation whereby we talk about the delivery for FY 2026 for white label as a whole, noting that Tata is the key that unlocks those additional ATMs to be deployed from our SBI contract that we're redeploying as well as the ones from the Tata warehouse itself, and that's approximately AUD 55 million in annual revenue for the year, AUD 15 million in EBITDA and AUD 10 million in NPAT as we go through, so that's on that side.
We have the next question coming through. Do those who acquire the franchise dedicate their daily lives to maintaining the ATM? Can an average time be established for the franchisee to recover their investment?
Yes. A, very good question. You have to look at it. What is an opportunity cost that he's missing out on? Either he's keeping this money in a savings bank deposit account, which fetch roughly 5%-6% annually, or in a fixed deposit, which fetch roughly 7%-8% annually. Here we are giving an opportunity to him to monetize his space. And on the deposit that comes in, I have an opportunity to earn 2% on a monthly basis. So A, it is very, very accretive to the earnings of the franchisee. And that's where I was telling in the last 12 months, a lot of franchisees have got into this business.
Yeah. Does Indicash use cash recycling ATMs? No, they don't. They use the same ATMs as we do at the moment, which is an NCR ATM for deployment. Then we've got here, are we aware of the average age of the warehouse ATMs and what are their remaining useful life? Yes, we are. With the small refurbishment costs that we've factored in for the deployment of those ATMs, we're expecting a useful life of seven to eight years as we go through. So still significant life in those assets. Let me just go through the next question. The SBI deal signed last year suggested EBITDA would be AUD 25 million per year based on that contract. Is there a reason EBITDA is now AUD 15 million while including the additional Tata ATMs? I think that there's been a misread on someone that's gone through that presentation.
25 million was for the SBI under the new contract on their 4,250 ATMs, which we're deploying from the start of December. Then there was a separate announcement that spoke of an incremental AUD 7 million from white label from the redeployment of those 3,912 ATMs. You'd have to go back and check those too. The guidance that we've got here for FY 2026 is the white label business in its entirety, which factors in those ATMs being redeployed. All right. With a 50% margin improvement, do you foresee FindiPay becoming a profitable segment this financial year? No. As we've just gone through in the presentation, we're targeting FindiPay to be profitable by the end of FY 2026. We need to break past that milestone of between 100 and 150 locations depending on product mix.
Who covers the cost of insurance of white-label and brown-label?
The company will cover the cost of insurance for white-label and brown-label. We have our insurance policies in place. Any incidents reported get claimed. As we speak, in the last five years, track record is to gain almost 90% of the claims.
Yeah. So we've got here, how do you get confidence on achieving your 120,000 FindiPay merchants by March 2026? Well, that's very easy from our side. We'll be hitting 60,000 merchants by 31 March 2026. And then we expect to have a growth trajectory. At the moment, we're delivering between 2,000 and 3,000 merchants every single month. We expect that to accelerate now that we have opened up an additional six states. We're in 12 states now. We expect to see that number, Deepak, accelerating to how many per month?
We are taking towards 5,000 merchants per month.
Yeah, and we expect that to be the exit rate for us at the end of this financial year and growing from there. So that's why we're very confident of hitting 120,000 merchants by March 2026. Let's just get the next question. Can we throw some light on the estimated advertising revenue through these WLAs and how the revenue is shared between the TSI and the franchisee?
At the moment, it's not that significant, but that's an avenue. People have tried and explored, but we have seen it has not been able to grow beyond 1% of the total revenue. So at the beginning of the year for FY 2025, 2026, this will be not a strategic focus point, but we will do along the way.
Yeah. Then we've got here, what sort of time horizon for becoming a payments bank? As soon as we can complete the current transactions that we have in front of us, we'll be starting that application process. We expect that to be a three-year time horizon for us to deliver on that strategy. Congratulations on the recent purchase and delivering on what you may be saying you'll do. My question is regarding the cost metrics for payment switching that you currently use. Is there a long-term contract in place for which you switch that off and move straight into the FindiPay switch software?
So currently, the Brown Label do not require us to make a switch. We rely on a banking switch. The White Label ATM is where the switching and the FindiPay products require switching. So that now from a capability standpoint, we got it now, which was not there with us. So from here onwards, the margin on all the products that we launch on a financial switch will continue to be accretive.
Okay. Next question. Do Indicash ATMs have the same level of security as the ones managed by Findi already?
Yes.
There we go. Very, very confident answer there. When do we expect the interchange fee decision to be announced? As I say, if I knew this, I would buy a lotto ticket. We expect there to be a decision within the next six months would be a reasonable time horizon from our side. It was last done in late 2021. And if you go on the same time horizon, late 2024 would be the three-year anniversary. But we say within the next six months, we are hopeful of a decision. Whether that'll be '19, '21, or '23, we do not know, but hopeful in the next six months. Okay. Can you touch on the timeline now for the new SBI ATM deployment and redeployment of SBI ATMs?
Can we speak?
Yeah, so we can talk through that we are expecting the rollout of SBI ATMs to be started from 1 December.
100%.
Yeah. So that'll be done over a three- to six-month period for all 4,250 or so ATMs. And then we will be redeploying white label ATMs subject to RBI approval, hopefully in the month of January. We're targeting 31 December sign-off for the RBI, but it is all dependent upon their approval of the transfer. It could take longer, but we're hopeful of 31 December. And then we have other inorganic acquisition opportunities of similar scale to Tata Deal. And was this your most ideal acquisition?
Deepak. So A, if I see in the.
Yeah. So I'll answer in a quick fashion. I'll get you to add to it. In short, that this was our preferred acquisition because it unlocks a lot of potential for our FindiPay. It also unlocks our white-label deployment strategy sooner. And it's also been done in very advantageous terms. This is 4,600 ATMs with another 3,000 capable of deployment. So we have been able to buy this business on a net basis cheaper than replacement cost of the ATMs, which is great. And when you take into account the tax benefit we have, we've effectively been paid AUD 10 million by Tata to acquire their payments division, which is a fantastic transaction for us. The other opportunities that we're looking at in the ATM space are between 8,000 and 12,000 brown-label ATMs.
Correct. And just to add to that, I think in any of the acquisition opportunity, because it is spread out in rural, it is very difficult to ascertain A, what kind of asset is there, it is there or not there in terms of accounting and everything. So with a brand name like Tata, it comes trust is where we felt that, yes, they have the right auditors. And therefore, the degree of governance that we were looking at for this business was right. That is where it makes it an ideal opportunity.
Perfect. Now we're just getting on time. We do have a number of more questions, but we'll try and get through as many as we can. Question here, do you still see a positive outlook for cash usage? I see a lot of news about digitization of the economy. What is your perspective of this today? Deepak, would you like to talk about that directly?
Yes. I think since demonetization, I'll just take you back to demonetization. Prior to that, the currency in circulation was 13.6 lakh crore in the Indian economy, which dropped to 9.6 lakh crore. Going from there, as we speak, it is 38 to 39 lakh crore in the economy.
In numerical terms, it's gone from effectively INR 9 trillion to INR 38 trillion, or almost a four-fold increase.
From the demonetization time. Yeah.
Yeah. Cash in circulation is still increasing at 15% CAGR. In January of this year, we had the biggest single-month increase in cash in circulation in recent history, which was a single-month increase of 5%. While digital is increasing, and that is one of the main drivers for our FindiPay business, it is increasing in great volumes, but at very low value. The large majority of all digital transactions are done at sub-INR 20, and remembering that the average cash withdrawal for us out of our ATMs is just under INR 4,000 or AUD 80, so significantly higher. So it's different segments in the market, and there has been significant growth on the digital side due to a fantastic infrastructure that's been put in by India. It's a national government scheme, but at the moment, there is no fee charged on that program or that platform.
Everyone that is utilizing that side is actually a loss leader. At some point, the government will have to allow fees to be charged for both the sender and receiver to ensure that that is a viable model in the long term. Then we'll see what that does to adoption rates and volume numbers once there is a fee for service model in there.
Even just to add, if you see the current UPI transaction, which is very popular and what we call in India is digital, that is plateauing out. So they are not growing the way on a month-on-month basis as they were growing in the past. So that has given us confidence to continue to invest in this business.
Okay. Will the current provisional white label license be approved by the RBI, or is it superfluous requirement now that Tata white label license assuming it received consent? Yes. An entity cannot hold two white label licenses. So we have paused the current white label application while we wait RBI consent on the Tata acquisition, which will immediately give us a full white label license and enable immediate deployment of our white label additional ATMs. Let's just go through. Is there a secret to how Findi has the best margins in the industry on ATMs? Just noting that Indicash was not profitable on their reporting. I'll talk to that briefly.
Indicash was a loss-making entity prior, but with the work that we had been doing with Tata and their conversion from a company-owned ATM model to a franchisee model, which is now 100% franchisee model, that business is profitable from day one when we acquire it. And the numbers that we have on a standalone basis are of that business before our optimization and improvements. And Deepak, if you can just talk to why we're the lowest cost operator and our advantage.
Yes. More importantly, we run this entity not like an ATM company. We run this as a retail point, and all the footfall that comes to an ATM are my customers. So like a retailer don't want a customer to go back, we serve with the same agenda to say, if my customer is coming, he should not go back without taking cash. What does that mean? Means I need to have the highest of the uptime of that machine, which can continue to dispense cash, so that's where we don't manage the uptime in percentage. We manage the uptime in terms of number of down hours going into number of days. So as we continue to track the down hours, we improve on hours, not just the machine ability to connect with the switch.
That is a key differentiator what we have created in this industry as a benchmark. Just to give you a broad example of when we acquired in 2016 a large Mphasis portfolio for ATM, that down days of that portfolio was 86,000 down days in a month, which as we speak now has brought it down towards a 10,000 or sub-10,000 down days in a month. That focus and retail mindset is what is key to our success.
Fantastic. And I'll just answer the last three questions as quickly as I can. So Tata acquisition, we become the number two in white label in rural areas. Are there any competition restrictions or concerns? In short, no, there are not. If all M&A is successful, does that mean 150,000 locations added to organic growth, so more than 200,000 plus for FindiPay? That is correct. The numbers that are in this presentation do not include any further acquisitions on either the ATM or the FindiPay side of the business. Anything else would be incremental to that. And then the final question, will Tata brand continue to be used on Indicash ATMs? No.
We have a permission to use only up to 12 months.
Yeah. So there's a 12-month transition of that brand. Everything in India as we head towards the IPO of the subsidiary will be Findi. The Indian subsidiary TSI will be changing its name to Findi. And the market-facing brand and everything will be Findi moving forward.
Correct.
So that's the last of the questions that we've come through. Thank you so much for a long list of questions and for your attendance today. Both Deepak and myself are in Australia for the week. So if you have any further questions or anything, please reach out. We'd be more than happy to answer any further questions. Thank you for your time and have a lovely day.
Thank you. Good day.