Ladies and gentlemen, good day, and welcome to CMS Info Systems Q2 FY 2024 conference call, hosted by Antique Stock Broking. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sarvesh Gupta . Thank you, and over to you, sir.
Thank you, Sagar. Ladies and gentlemen, good afternoon, and thank you for joining us on the post-results conference call of CMS Info Systems Limited. It's my pleasure to introduce the senior management team of CMS, who are here with us today to discuss the results. We have with us Mr. Rajiv Kaul, Executive Vice Chairman and CEO, full-time Director; Mr. Pankaj Khandelwal, President and CFO; and Mr. Manjunath Rao, President, Managed Services. We'll begin the call with opening remarks by the management team, and after that, we'll open the call for a Q&A session. I would now like to hand over the call to Mr. Rajiv Kaul to take proceedings forward. Thank you, and over to you, sir.
Thank you, Sarvesh. Good afternoon, everyone. Thank you for taking the time to attend our Q2 FY 2024 earnings call. With a revenue growth of 15% and an adjusted PAT growth of 25%, it's been a very good quarter. This makes it the sixth consecutive quarter for us with 20% YoY earnings growth. The strong, consistent performance highlights the growth as well as the formalization opportunity in both the banking and retail sectors. We are increasingly seeing more banks which are focusing on expanding and refreshing their physical infrastructure. We are also witnessing strong growth in organized retail and e-commerce, and we expect the sector to lead the overall growth for our cash business. Our Managed Services and Tech Solution s business has achieved critical mass, and we have strong wins.
Our expansion in this category now has the potential to cross 40% revenue contribution by FY 2025. In terms of our execution focus, our quality of service is very robust, thanks to our strong tech platform, and this has helped us maintain a very robust margin profile. Our Q2 margins have in fact expanded despite this being a fairly high inflation environment. Based on our current momentum at half of this year, we feel confident of achieving our FY revenue, FY 2025 revenue target of doubling our revenue on a FY 2021 basis, from INR 1,300 crores to a range of INR 2,500-2,700 crores. Our CFO, Pankaj, is now going to take you through the Q2 financial highlights.
Thank you, Rajiv. Our consolidated revenue has grown by 15% to INR 554 crore, with Managed Services and Technology Solution now contributing around 38% of the total revenue. For this quarter, we have recognized ESOP expenses to the tune of INR 10 crore for the ESOP granted in 2023, as per the approved policy. Our margin data is adjusted to reflect for the same. Our adjusted EBITDA has also grown 15% to INR 157 crore, and our adjusted EBITDA margin profile is 28.9%. Adjusted PAT has grown 25% to INR 92 crore, making it the tenth out of last eleven quarters with greater than 10-20% PAT growth. Adjusted PAT margin 17% compared to 15.7% in Q2 of FY 2023.
These strong financial metrics are the testimony to our market leadership and execution of our order book. Both our business segments have delivered strong results. My colleague, Manjunath Rao, will take you through the respective business highlights.
Oh, thank you, Pankaj. Our revenue in Cash Logistics business has grown by 11% year-on-year to INR 361 crore in Q2, with an EBIT growth of 18% to INR 95 crore. The EBIT margin has expanded by 160 basis points year-on-year to 26.4% in Q2. Our business network has further expanded in the quarter, and we currently service 129,000 business points, a 12% year-on-year growth. This was the first quarter where we crossed 5 million activities on our Cash Logistics network in a single quarter. Our overall cash handle growth has been 6% year-on-year, and in our ATM channel, currency dispensation has grown faster in metros by 10% year-on-year basis.
On the compliance front, our network in 150 cities has been upgraded, covering 70% of our business points. On the ATM cassette swap process, as per RBI, IBA and CLA consensus, phase one rollout has been completed and phase two is underway. We expect 25%-30% of our ATM network to be cassette swap compliant by end of FY 2024. I will now share with you an update on our Managed Service s and tech solution business. Our Managed Services and Tech Solutions business, business revenue grew 26% year-on-year to INR 206 crore in Q2, with an EBIT growth of 23% to INR 39 crore. Our EBIT margin stood at 18.8% in the quarter, marginally down from 19.2% in Q2 FY 2023, due to business mix.
In the last earnings call, we had indicated that we expect to see key PSU RFPs get concluded this year. I'm happy to report that we have won INR 500 crore of new orders in Q2, taking the new wins in H1 of FY 2024 to INR 650 crore. These wins are across our Banking Automation , and ATM-as-a-Service business lines, and all of these wins are asset light in nature and should help us maintain a strong growth momentum. Thank you for your support and attending this call. We can now move to the Q&A.
Thank you so much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Balaji, from IIFL. Please go ahead.
Hi, good afternoon. I have a couple of questions. So the first one is on the cash management segment revenue. While your touchpoints have gone up by about 12%, we are seeing that in the last couple of quarters, the revenue has been around 11%-12% in growth terms, and that is despite some tailwinds from compliance also coming through. So, you know, where should, you know, one expect this to settle down? Are we down to these levels, or do you see an acceleration going forward? And my second question is on the remote monitoring business. So, where are we in terms of the number of ATMs and the order book, and you know how is the competitive intensity there?
Because earlier you had mentioned that, the competitive intensity has, you know, can, potentially, catch up at some point in time. So those would be my two questions.
Thanks, Balaji. So let me take the last point first. I think we have been now over several quarters talking about competitive intensity, and I think we have to understand India is a fairly good growth market. There are in different businesses there are different types of competition. We are a player with high quality, high margin profile and fairly choosy on the quality of business which we'll pick up. I think we will foresee strong competition across all of our business lines, including RMS, banking, automation, Cash Logistics , and whatnot. And therefore, maintaining our current revenue and margin profile, I think, is also a testimony to the quality of the platform and our focus on on our execution. In terms of Cash Logistics business, we have seen a growth in the last several years, which was led...
As you know, we have three different types of business in Cash Logistics . We have the ATM Cash Logistics , we have retail cash management, and then we have the currency in transit businesses. Our growth has been led by the ATM cash management for the last 2-3 years. We have indicated that we foresee this. Can people mute themselves? Because I think somebody is typing while we are talking. So, we foresee that the retail business will pick up, and will actually lead the growth in the Cash Logistics sector for the coming couple of years. So when we talk about the growth trend you are seeing right now of 11%-12%, impossible to tell you what the future, what the growth level will be. I think from our side, we have highlighted that we have a diversified business.
Our growth aspiration are in the 15%-17% sort of revenue growth trajectory till FY 2025, and we are on course to do it. In some quarters, some businesses will lead, in other quarters, other businesses will lead. I hope that helps you with both the answers. Sorry, finally, on your RMS business. RMS business, we did indicate that we already hit the INR 100 crore annual run rate. We are about 22,000 sites. We are the largest in the banking sector. We will give you an update on this business in our next, not next, in our annual investor summit. I think that's the right time for us to talk to you about our key developments in all of our new businesses.
Okay, thank you. That is helpful. And all the best.
Thank you. The next question is from the line of Mr. Achal Lohade from JM Financial. Please go ahead.
Yeah, good afternoon, team. Thank you for the opportunity. So my first question is pertaining to the ATMs. Now, we've been hearing about the incremental new orders with respect to ATMs, whether replacement or new ATM 100,000 ATMs, right? Can you update us as to where we are in the cycle? Are you seeing the delay in terms of you know getting through these tenders you know industry-wide? What are those challenges? And till the time, I mean, till now, whatever is given out, what has been our market share? If you could help us understand that.
Yeah. Thank you. The ATM RFPs that we've been, there is still about 51,000 ATM RFPs are likely to be awarded in FY 2024. That's what we had said, about 20% new and 80% replacement. Of this, there is about two-thirds of this are under the Brown Label ATM model. Right? So that as we, I think, we have been insisting on all our calls that we will be selective and opportunistic in our, this particular segment. We have been very, we have been very selective. But, as we mentioned in our call that, we have won in our first half about INR 650 crore worth of orders, it's, it's, we've got both asset-light, Managed Services as well as, our banking automation business in it. There are still some tenders left to go for the, for, the rest of the year, and those are all in the pipeline.
So I think, Achal, overall, you know, I know this was something we mentioned in the last fiscal year, some key contracts got pushed out of this year. We are finally seeing momentum in these moving to the finish line. Of course, RFPs have to close, orders have to be given, they have to be implemented, they take some time. But we feel fairly strong about the growth opportunity, in this helping us lead our, leading to higher growth in our C MS & Tech business.
Sure. Just to get a bit deeper into this, 51,000 is the number or 100,000? So can you, can you clarify more?
No, I think the 51,000 is for this year. The 100,000 is something which you are referring to, which is over a 3- or 4-year period. 51,000, we are thinking specifically, we know that contracts which will get into awarding we likely to get awarded in half, second half of this year.
Right. And just to clarify, of this 51,000, 20% are new ATMs, 80% are replacement. And of this, 51,000, two-thirds is BLA and one-third will be bank-owned, bank operated.
That's it.
Have I understood it?
Yes. Yes.
Yes.
Within this 51,000, how much is already been, you know, given out in last 6 months?
This is all going to happen in H2 of this year. So these are already, you know, September, October onwards, RFPs are in various stages of getting closed out or issued out. We— This is our estimate, right? Obviously, we can't talk on behalf of all the banks, but this is our estimate of RFPs, which will conclude successfully in the second half of the year.
Got it. And this INR 500 crore new order wins, you know, that's to be executed same 7-8 year period, right? Have I understood?
No, I think, given the nature of these wins, I mean, I would say that majority of our H1 order book is asset-light. Asset-light businesses, I think you would see an average accrual in a 3-5-year period, not 7-8. 7-8 is usually for asset-heavy businesses. These ones will accrue over a shorter period, which is not short, I mean, it's 3-5 years.
With respect to this INR 500 crore would represent what? 40% market share, 30% of whatever orders were given?
So impossible. Well, I don't know the number. We will wait for the end of the year to see what our market share is. But again, you should, you-- It's not a number we track so much because, as we said, there's a lot of business opportunity in the BLA business. We are not, by nature, very focused on that sector. We will be very selective with a few key banks or deals, and the rest we will not be participating. And therefore, market share, this is not something which we really go rafters on. Market share is something which we are very, very, very focused in our Cash Logistics , RMS, businesses.
Understood. Understood. Just one more question I have.
Mr. Achal Lohade
I'll follow back in the queue. No problem.
Yes, please.
Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference call, please limit your questions to two per participant. Should you have any follow-up questions, you can please rejoin the queue. The next question is from the line of Prithvish Uppal from AMSEC. Please go ahead.
Yeah. Hi, good afternoon, and congratulations to the management on a good set of numbers. So my first question is regarding the working capital. So we've seen an increase specifically coming through, you know, as receivable and receivable days have increased. So I think this was roughly around 90 days, has now gone up by about fifteen, twenty odd days for the first half. Any, you know, just color on that from the receivable side. Second is that, you know, on a CapEx side, we have done about a 40-41 crore kind of CapEx in the first half, with a guidance of roughly around 1,500 crore for this year.
So just wanted to understand, you know, how we are seeing this develop over the second half, and if we, if we think that, you know, we're, that INR 1,500 crore is something that we will actually end up doing, or, or how do you see that? And, if you could also just, you know, give some color on the cash management business in terms of the touchpoint, where the growth has come, you know, from 72,000 ATMs, how has that moved, you know, between retail and ATM? And, what the realization increase, you know, would have been because of cassette swapping. So, I mean, this is the first set of questions, and if time permits, I'll, I'll add some, some more.
Hello. Thank you, Prithvish. So as regard the working capital or the AR increase, see, our business has grown 15% in H1, which resulted the higher working capital with the AR increase. H1 is usually a weaker in terms of collection. Historically, it's weaker compared to the H2. That's the reason that the AR increase, AR is increased, basically. The third, but important thing is that, that in this, last 12 months, we got a lot of large PSU bank projects which was executed, and it takes time to streamline the collection cycle.
The fourth important thing is about the, as an interest, a higher interest rate environment leads to the delay in the payment from the customer. That has resulted in slightly higher, AR, and the working capital is increased to some level. About the CapEx, we have done around INR 40-41 crore of CapEx in H1. We have guided that in, FY 2024, we will do around INR 150-175 crore of CapEx. We estimate that, it, it will be in line to whatever the estimate, the target we have given in the initial period of the year.
Yeah, and on the Cash Logistic s business, you know, touch point-wise, how the growth has been between retail and ATM, and specifically, any kind of realization gain that we have seen, specifically relating to cash?
We, you know, in our earlier calls, we have said that we will share more detailed metrics on each businesses only once in a year. But we do give touch point guidance overall. I think breakdowns we will do only at the end of the fiscal year.
Sure, sure. And just lastly, in you know, our bad debts written off also has increased to about INR 25 crore. And, you know, since 15% of ATMs are now under cassette swapping, so shouldn't this number ideally, you know, decrease? And what has been the reason for the higher bad debt write-off in the first half? Because it was, I think, around INR 50 lakh last year.
Look, so you have to read the provision and bad debts together. Depending upon the reconciliation, finalization with the customers, it has been bad debts or, on the basis of the receipt of any claims, it has been provided. So for right calculation, you have to add both the things. We have guided that our, because of the nature of our business, the bad debts or the provision for bad debts or risk cost will be in the range of 4%-6%. This time it is in line with that, and in past also, it is in line to 4%-6% only.
Understood. Okay. Thank you. I'll join back in the queue.
Thank you. The next question is from the line of Bhavin Shah from Sameeksha Capital. Please go ahead.
Hello, am I audible?
Yes, we can hear you. Yeah, we can hear you.
Yeah. Just one question: So any update on our cash collection pilot that we were doing with 5-6 NBFCs?
Our collections business, I think we said we will use FY 2024, and at the end of the year, we will, we are already incubating the business. It is ramping up. We have hired a fairly strong team from the industry. We are doing, we have projects where we are working with 8-10 large NBFCs already on the ground. However, this will be too early for us to have any determination of how this business will ramp up and is this going to be in line with the way we think the potential is. Towards, I mean, at the end of FY 2024 is when we will give you a full status on what our learning has been, and also guide you on how we think about this business going forward.
Okay.
Right now, this is an investment year and an incubation year.
Okay, understood. Any other business area that we are doing pilots or anything like that you would like to share?
I think whatever we shared at our investor summit, we have the CashX business we talked about. We talked about the bullion business where we are trying to ramp that up. RMS, we have already ramped up, so we have mentioned that. There is nothing new. I think we have enough going on, and we are currently focused on these businesses to see where they head.
Okay, thank you so much.
Thank you. The next question is from the line of Aasim from DAM Capital. Please go ahead.
Hey, hi, team. So first question was on the RCM business. So on your comment that the next leg of growth will come from retail cash for the cash segment, and I presume you mean post FY 25. I just want to know if the anticipated growth is, you know, more touch point led, or is there any pricing growth also in play courtesy compliance?
I think, Asim, let me re-clarify, so that there's no confusion. I don't think the growth is going to be from only retail. I think we see potential growth in all of our key businesses. We feel the higher growth is likely to come from retail, just given the momentum we are seeing post-COVID and what we've seen in the market from a formalization perspective. As of now, that's what we have witnessed in the last 6-9 months. Hopefully, that trend will continue. In the midterm, I mean, actually, in the long term, I think the bigger opportunity here is really going to be from more touch points, right? Because that's a formalization opportunity out there. And also our CashX initiative, we see a lot more opportunity coming in from there.
From a pricing perspective, I think we've sort of told you about our longer-term pricing, trends in this industry. I would say volume, expansion of business points, and then pricing would be the way I would think about this, in that order.
Sorry, sorry, just, just to clarify, I mean, the pricing, so from what I understand, compliance-driven pricing was more an ATM subject, right? Which has not really populated on the RCM front. So maybe on the near term, there should be some catch-up on the retail side as well?
I think on the compliance-led pricing is a benefit we have seen in our ATM business. We will see some of it in retail, but I think retail is really going to be a large driver. The large driver in retail is going to be from formalization and more organized retail touchpoints and which we're having.
Got it. Got it. And the second question, just, just a clarification. So of the 51,000 ATM RFPs you mentioned that would be awarded over H2, I mean, is there any that was already done in H1 that maybe did not come CMS's way because of whatever reason?
No, this is what. So we've already told you about the wins in H1, right? The wins in H1 are obviously come through, basis, somebody buying an ATM or a recycler. So we are not counting that. We are talking about what the pipeline is right now. And again, I will again qualify, 51,000 ATMs, a lot of it is likely to be BLA. We are not a very, highly focused on that sector. We are very selective. But from, automation perspective, we will compete, as aggressively as we can.
Okay, because I think I presumed that of the INR 650 crore order wins you mentioned in H1, almost all of it was from the product automation and this thing, the ATM-as-a-Service bit, not BLA and remote monitoring. That's what my understanding was.
You're right. Yeah, most of it is from the automation side.
Okay, thanks.
Thank you. The next question is from the line of Lokesh Manik from Vallum Capita l. Please go ahead.
Yeah, good afternoon, team. My question was on the leakage in the system in the form of cash reconciliation and cash loss in transit. So what I understand is we are, you know, incurring somewhere around INR 10 crore per lakh crore of cash handling versus our peers who are doing 3-4 crore per lakh crore of cash handling. So I just wanted to understand, where is this issue arising, given that, you know, we've introduced in our softwares ALGO MVS, ALGO OTC. In light of these, we should not be seeing an increase in trend happening, at least on the reconciliation side. And secondly, if you have observed any area of your operation, right, from, you know, picking up cash to overnight vaulting, which segment of the operation is this issue recurring?
If you can just share some details, throw some light on this, would be really great.
Sure. So just for, you know, to educate you and all the other listeners on the call, the comparing the INR 1,200,000 crore to somebody in INR 300,000 crore, unfortunately, is not like to like because of the mix of business. The INR 300,000 crore, I don't know who the company may be, but I suspect it could be just a company doing retail cash management only. We have, we have a business across all sectors. The reconciliation specific losses, right, they occur predominantly in ATM-related activities. It could be in ground-level ATM, it could be in ATM cash management. That's where the large trend line has been till now in the country.
But our overall provisions, which you have talked, which you are maybe referring to, and Pankaj can dive deeper as required, will cover multiple things, including reconciliation, any provisions for bad debts, and any
SLA penalties.
Any SLA penalties which we may be incurring in terms of execution. That's the usual mix. We have said for the nature of our business, and our business mix, 4%-6% is the range we have seen. It was 5.1% at the end of FY 2023. Right now, the end of FY 2024, H1 is about 4.1%. And but we would hope this would trend down as our business mix changes over time, and also bases the reconciliation and governance and compliance now, which RBI is mandating across the ecosystem.
Okay. So it is not on your operational legs, right, from picking up to overnight vaulting. It's not occurring there, you're trying to say?
No, not really. I think this comes more from a customer claims and reconciliation-led losses which happen at the point of transaction. It's not linked to the cash losses, which may happen while you're transporting currency.
Understood. Understood. My second question was a clarification. I've read in the DRHP that, you know, the government does not permit more than 49% FDI in this segment. Our promoter is an FII, so in that sense, have you received some special approval from the RBI in that regard, in terms of any risk on operations from that area?
I don't think this is applicable to us at all. I'm a little confused on as to what exactly in the DRHP you're referring to. But, there is no FDI approval required to be in the sector. I think that's already been sorted and cleared out.
Okay. Got it. Got it. Thank you. That, that's it from my side. Thank you so much.
Thank you. The next question is from the line of Kanav Mehta from ValueQuest. Please go ahead.
Yes, thank you for giving me the opportunity. So my question is about the ESOP expenses. So you mentioned in the notes that we have granted some 8 million options during the first half. So I just wanted more details from you. So first of all, this looks like a pretty sizable number. It's almost 5% of our current equity base. So if you can share with us who all are eligible to get these, you know, options, and what are the conditions and the pricing attached to it? And if I think maybe Pankaj can guide us as to what kind of expensing out will happen in the PNL over the next couple of years.
Thank you, Mr. Mehta. See, the ESOP what we have granted is already disclosed whenever we have granted these ESOPs. There is 2 grants which has happened, and one was in the Q1, and the second one was in Q2. All the ESOPs generally we are granting is close to fair market price. 75% of the new ESOP we have granted were at average weighted average share market price as defined in the ESOP scheme, and 25% of the ESOP issued was only on 10% discount of the market price. We have not given any no deep discount was given on the ESOP, and we have not issued any type of RSU.
Though the ESOP was issued on the fair market price and the option value, as calculated using Black-Scholes methodology, has to be expensed out in the P&L. Second thing is the only 50% of the ESOP we have issued will get vested only in case of a performance criteria, which is defined in the ESOP policy itself. The cost based on the ESOP what is already granted is next three quarters. Next three quarter, we see that the charges to P&L for the option value will be around INR 11 crore, and then it will gradually reduce to INR 6 crore, INR 4 crore and INR 2 crore rupees level.
Next period.
FY 2025, FY 2026, FY 2027.
Okay, thank you.
Thank you. The next question is from the line of Ankit Kanodia from Smart Sync Services . Please go ahead.
Thank you for taking my question, and congratulations on good set of numbers. So, my first question is related to unbilled revenue. So if you can give me some more color into what are these unbilled revenue? Because, what I've noticed over the last three years, our unbilled revenue is growing at a faster space, faster pace than our total revenue. So if you can just give us more color as to what are these revenues and how it is reconciled in the subsequent years, that would be very helpful. That is the first question.
So unbilled revenue, or the different businesses have a different type of unbilled revenue. If I will talk about the cash management business, the last month, generally the month prior to that, it takes time to around 25-30 days to get it reconciled from the customer, and based on that, we bill it. Most of our unbilled are closed, 97%-98% is closed in the next month itself, and 3% is being closed next month. The Managed Services business, the unbilled is related to any of the part execution of the contract or the AMC, wherein the quarterly in arrears or six monthly in arrears are there. So where the 3-6 months, based on the contracts or agreement, is being unbilled. We have no, most of our...
I believe 98%-98% of the unbilled of the last year is already billed for. 1% is pending because of the AMCs, or which is not yet allowed to be billed contract, as per the contract notes.
If you can give me more color into which part of the business has more of unbilled revenue and which has less?
Yeah, both businesses have unbilled revenue. Like, if I will talk of, like, the month, we have provided a, take the example of September. We provided the service in the month of September. So as on 30th September, there will be unbilled related to September month, and some unbilled related to August and prior period as well. But 97% of unbilled in cash business is for the that particular month. In Managed Services business, depending upon the type of business, like BLA is generally for the last month. For AMC's other business, wherein the, based on the agreement terms, it can be 3 months to 3, 6 months of the unbilled revenue.
Thank you so much, sir. That was very helpful. My second question is related to the Cash Logistics business, where we have three subsections. One is the ATM cash, RCM, and the third one is cash in transit. I think it would be great if you can just share the competitive intensity in all these three sub-segments. Where do you see more competition? Where do you see our situation being far more stronger, where the second competitor is be far more distant? And how do you see in the future? I think that would be very helpful.
I think, you know, I, I'll give you a quick philosophical answer. We are in India. Everybody is chasing growth. There is competitive intensity in all of our businesses. We have highlighted that. I don't think we can go away from, dealing with the actual things in market. Both, if I think of our ATM cash or retail or even the cash in transit, each have their own different competitors who are operating at different margin profiles or different growth aspirations. So, I think our competitive intensity, I would say, is usually... Let's take the smallest business in cash, our currency in transit, what we call DCV business.
It is relatively the simplest business, and therefore, it has the highest intensity, because the barrier to entry, I would say, is maybe lesser, and the expectation from the customer set is also lesser. But as soon as we go into something like ATM or retail, which is linked into having a deep network in the country, having a very strong technology platform for reconciliation, I think that's where our advantage of CMS comes into help. So I think ATM is generally the one where we have made the biggest inroads, followed by retail and then by the currency in transit business. A lot of currency in transit business is still done in-house with the banks, and will get outsourced slowly over a period of time.
Thank you so much.
I think, and then we see many more smaller competitors instead of organized players, which you see in the retail cash and ATM side.
Yeah. Thank you so much. That was really helpful. Thank you.
Thank you. The next question is from the line of Aasim from DAM Capital. Please go ahead.
Yeah, I, sorry, Rajiv, just one clarification on the INR 650 crore order wins. You mentioned most of it is bank automation. That's the product business, right?
Sorry, Vatsal, we have a lot of banking automation and services business. Both of they, those are there. This is all, all of this relates to MS & Tech solutions. What-- my point of view was that there are... This is non-CapEx heavy, so we are not investing capital for this, these set of wins. Compared to the wins we had in the last couple of years, I think we are trying to differentiate the two to give you a better idea of why these will- You'll get a sense of the margin profile, you'll get a sense of the CapEx intensity, you'll also get a sense of the accrual period. The accrual period will be there for a little bit less, it will be 7, 8 years. We will accrue this over a 3-5-year period.
Sure. So just, just wanted a clarification, because if most of it is a product, then it should have been seen in margins this quarter itself, and of course, that would not be a recurring thing. That's, that's why I'm asking.
You'll see it, you'll just see it one time in revenue itself, right? Then the revenue would-
Yeah.
have a big bump up, and then it will go down, right? Yeah.
Yeah.
Which I haven't seen right now. Yeah.
Okay, got it. Thank you.
Thank you. The next question is from the line of Divyansh Gupta from Latent Advisors. Please go ahead.
Yeah, hi.
Yes, Divyansh, you are audible.
Yeah. Hey, just wanted to understand the impact of Hitachi Writer's acquisition. Do we have any exposure to Hitachi and its ATMs? And, is there any communication from Hitachi on any transition plans that they have?
So, you know, you know, we can't comment on any speculation about a customer or a competitor, but, I think what we have guided to is that we will see more M&A activity in the sector, given the compliance norms are making the sector more attractive for global companies. Given our market leadership, the infrastructure and branch network we have, we have avoided from doing any extensive acquisition because we have preferred to grow by gaining market share organically in our core businesses. India is a growing market. There is good growth for all various, different businesses. We do expect to see more MNC interest, given the compliance, the regulatory clarity on compliance and also the growth potential.
Are we also in the market for any acquisitions, or right now, we're just trying to build the business organically going forward?
No, so you know, we've said this in prior calls, we will. We are, of course, it's our job to be tracking M&A and looking at companies in our sector or expand in our adjacencies. However, we will not be the right people to be buying businesses at a high price because we already have built these businesses. For us to acquire something to just drive growth is not our strategy. I think for us, the return on capital is far more, we want to be very, very careful about that. And we don't want to buy share or buy market growth unless it is very accretive. So we think it'll be difficult for us to go do transactions in the cash management space. We would rather take that capital and focus on expanding into new sectors.
That's where we think we'll get a bigger return on both our capital and also, build a more diversified business for this.
Hello?
Yeah.
Yeah. Yeah, sorry. Got it. Couple of data point questions. What will be your order book for the Managed Services business, and the number of ATM AIoT sites that are in progress or in the order book?
So our order book for Managed Services is close to now, block order book will be roughly about INR 3,800 crore. Manju? Yeah, INR 3,800 crore. Yeah. I didn't understand the second question. What is the second question?
The AIoT, the remote management.
Okay. Yeah, yeah. Okay, so we are currently... Manju, how many sites do we have totally?
22,000 .
22,000. So we have 22,000 sites live in the banking sector, both across branches and ATMs right now.
Any pipeline or the order book on which we are working on?
There's always a pipeline. There's always a pipeline we are working on. When this comes, we will come and update you. Okay, end of the year.
Got it. Last question.
What?
What was the total cash handled this quarter?
Cash handled, in the cash services business?
Yeah, yeah. You used to give earlier,
Yeah, yeah.
Give us a second. 3.3.
INR 3.3 trillion. 6% growth, year-on-year.
Great. Hello.
Yeah, go ahead.
Yeah. CMS is not, going on the
Sorry to interrupt. Divyansh, we are not able to hear you properly. Your voice is breaking a lot.
Audible now?
Hello?
Audible now?
It's still breaking. May we request you to join back the queue once again?
Sure.
The next question is from the line of Nitin Sharma from MC Pro Research. Please go ahead.
Yeah, hi. Thanks for taking my question. First, we want to understand out of that INR 3,800 crore, the order book, how much has been executed so far? And then I have follow-up.
So out of 3,800 crore rupees order book, we have already executed 2,800 crore order books. To be clear, that these order book is executed, and the revenue of these will come from 5-7 years.
Understood. And just some color on your equipment manufacturing business that you announced before the stack. Some understanding where it is currently and what is the near-term plan for that?
Yes. The, I mean, as we have already told you, that it was, it was to align ourselves with the, government's Make in India policy, and the focus that we wanted to give it to our ATM, banking automation business. And also, this was very important for us, from the point of view, because it gives us more control on the supply chain of the critical banking infrastructure, right? And, so here, as we told you, we have about 2,000 machines capacity per month, I mean, per month capacity, and which can be expanded as we go on. And currently, we have, what we call as we are, we are way to get orders towards the manufacturing part of it, and we are likely to see some in the second half.
There are certifications.
There are certifications going on.
Understood. Thank you.
Thank you. The next question is from the line of Saurabh from Multi- Act. Please go ahead.
Yeah, thanks for the opportunity. I just have one question. Out of this INR 650 crore of new order wins, how much is in the nature of, let's say, products, business, and software and other part of the business?
We don't break down order book wins. What we refer to order book wins always refers to as Managed Service s and tech business. We don't give a breakdown by sub-sectors or sub-business units.
Okay. Thanks.
Thank you. The next question is from the line of Mayur Parkeria . Please go ahead.
Hello. Congratulations on the good pick up numbers. Actually, I wanted some clarity regarding our card services business. We saw in our presentation. So what this business line is about, and how big potential is there in this card services business?
Card business potential. So if you see that the card business during this quarter has grown from 15.47 million, sorry. From INR 8.16 crore to INR 24 crore. And for the half year end, it's increased to INR 17 crore-INR 42 crore. And last year, we have done around 48, 47 crore rupees of the revenue this last year. We got a large, a couple of large orders from the PSU bank and which will help us to maintain the growth momentum during this year.
Okay. What is the market size regarding this card service industry?
I think the total-
Addressable market.
I think the growth in the market, if you think of it, there are 90 crore cards issued in the country. 90 crore cards have been issued, whether it's a mix of credit or debit. This, the growth potential is really linked to two elements. One is, if more bank accounts are opened or more, therefore more cards are issued, whether they're RuPay or what. Or then there is also a recarding opportunity where every two or three years or one year or four years, cards will have to get reissued. So that's where really there is a fairly reasonable size market. There are 4-5 players operating in this market there.
I don't have a per se idea right now, which I can remember offhand the size of the market, but we will take that feedback, and maybe in the next call, we'll give you a sense of the overall market sizes.
Okay. And the next question is regarding our ATM manufacturing. So we are generally, we were in fact, we were in the service industry, mostly. So why we want to go and get this manufacturing on our own? Any thought process regarding that will be helpful from your side.
Sure. So I think it's a very valid question. You know, we were a services organization. I think we've become now a solutions organization because we have both software and high-end platforms. The reason to diversify or integrate into manufacturing is very critical from a competitive perspective. We are seeing a trend line of large contracts, especially from the PSU banks, which are integrated in nature. And when we talk integrated, they are looking at a single company for both supply, maintenance, Managed Services , software management, cash management, remote monitoring. And not having that capability would then become a competitive disadvantage. So what we have done is, as you know, our partners on the automation side are largely Nautilus Hyosung from Korea.
We have partnered with them with the technology to set up a manufacturing plant here, in which we can manufacture both ATMs and currency recyclers, which is also timed well with the large RFP pipeline in these banks to both refresh and to also expand. So I think that's the investment we made last year. It is already, the investment is already part of the CapEx spends we have done in the prior year. And we are leveraging a lot of the technology know-how from our partners in Korea on this.
Okay. It's great to know about that. And just one more question regarding this.
Mr. Parkeria-
Oh.
May we request-
Okay, then thank you.
Thank you.
Okay. Thank you.
The next question is from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Yeah, thank you, sir, for taking my question. Sir, first question was on the Cash Logistics business. As I understand, there are three parts here, right? Would it be possible for you to even historically give a breakup of the revenue? How much is ATM and how much is non-ATM? Even a historical sense of proportion will also be helpful.
I would say that over the last few years, our ATM side of the business is a larger one, and that would be close to 60% of the revenue. Retail and cash-in-transit businesses will be roughly 40% of the businesses. That's the trend over the last three, four years.
Got it, sir. Got it, sir. And sir, continuing on earlier participant's question on this bad debts, which you were indicating. So, can you just clarify, what do you mean by reconciliation? And as you said, it is not in the transport, it happens somewhere in the reconciliation, and there is a penalty. And what can you specify what exactly is the issue? And is this an industry-wide issue or is this specific to us? And is there a 4-6, which you mentioned, is this a norm that all the people have priced it based on 4%-6% of cost of bad debt?
So let me, you know, maybe this is one of the first calls you're doing, but let me explain this to you. We'll reinforce the fact that this is a combination of two, three factors. The first of it is simply just any, if there is any bad debt. Second is provision for any penalties which you may incur while delivering service, and if the service standards are not met, then you will have some penalties, which you have to incur. The third comes through reconciliation-linked losses. The reconciliation-linked losses are mostly, not all, linked to the ATM channel.
ATM channel, if a customer does a transaction and they don't get the full money or there is some discrepancy in the amount of the money in the ATM versus the actual, then there are some reconciliation-linked losses which get passed to a bank. Bank may choose to pass it on to a service provider like us. You will reconcile to figure out where this possibly could go missing. Was it a fault of the consumer? Was it a fault of the Cash Logistics company, or was it fault of the maintenance company? So these usually take some time to go figure out. We have actually built in a very strong machine learning-based software to be able to sort these reconciliation losses in a quick time. But it is part of the nature of business in an ATM cash management business globally.
In India also, and therefore, if somebody has a larger part of business in ATM-linked businesses, this becomes a larger number. For us, we have said, given our broader business mix, it's 4%-6% of our overall revenue. As our mix changes, this percentage will come down. As the RBI compliance on cassette swap gets implemented, we expect this number to start coming down more.
Got it, sir. Got it. Thank you for your detailed answer, sir. And, just, one question.
Mr. Nigam, may we request you-
Yeah, sure. No, no problem. I'll come back in touch. Thank you. Thank you.
Thank you. The next question is from the line of Divyansh Gupta from Latent Advisors. Please go ahead.
Yeah. I'm audible?
Yes, sir, you're audible, but still the voice is breaking.
Let me try once again. So more specific question. So MS is investing heavily on a side, right? Because it doesn't want to necessarily businesses. As what this BLA business, if you can throw some light on it.
Divyansh, I unfortunately couldn't understand the question fully because, again, of the line quality, but I only heard BLA in the end, so I... If somebody else heard the question-
I'll send a mail, if that's okay.
Yeah. Yeah, please.
Yeah. Okay. That's all from my side.
All right. Thank you so much. As there are no further questions, I would now like to hand the conference over to Mr. Sarvesh Gupta for closing comments.
Yeah. I would like to thank the management team of CMS Info Systems for giving Antique Stock Broking the opportunity to organize this call. Will now hand it over to Rajiv for his closing comments. Over to you, Rajiv.
So, you know, just to reinforce, we have seen a reasonably good half, first half of the year, despite the, there is some sort of slowdown we have noticed in the last quarter in the rural side. Metro consumption demand trends on currency seems fairly robust. We are seeing good growth, thanks to the diversification of businesses, so that, if any business is slackening off in the last couple of quarters, other businesses have picked up the growth. Our pipeline order wins look good. We are very happy at the fact that we are still very focused on high-quality businesses and are able to maintain our margin profile, and feel fairly confident about achieving our FY 25 revenue goal. Thank you for your support. Thank you for your questions. We look forward to talking to you at the end of next quarter.
Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us. You may now disconnect your lines.