Strategic partnerships

Meanwhile, Goyal launched svit, as a 100 per cent subsidiary of AGS TTL, dedicated to cash-in-transit for banks, financial institutions and corporate clients. It offers end-to-end ATM solu­tions for its customers, “svif provides complete line management (clm) services for ATMs, right from replen­ishment of cash to cash forecast­ing, monitoring and maintenance et al.” says Ankur Sharma, senior vp, finance, AGS TTL. “The company has key strategic partnerships with vari­ous banks. It offers first line mainte­nance and second line maintenance services to its customers too. Usually, such services (maintenance of atms) are outsourced to other companies, which provide only first line mainte­nance services. Banks, financial insti­tutions and corporate clients avail sviL’s services for complete line man­agement services at their ATMs. The company provides vaulting and dis­tribution of cash processing and cash sorting on behalf of various banks and retailers, thereby providing saf­est cash management solutions,” he adds.

SVJL’s cash management services include cash pick-up, cash-in-transit, cash vaulting and cash processing services for ATMs managed by AGS TTL and by other operators, svil replen­ishes a daily average amount of ¥300 crore in the managed ATMs.

To further integrate, AGS TTL also provides transaction switching ser­vices, where it integrates a variety of payment channels, including inter­net payment gateways ?and several mobile payment systems, to route, switch and process electronic trans­actions. “This gives us the ability to cater to the needs of banks and other financial institutions across the payment transactions value chain, including assisting banks in the issu­ance of new cards, migrating their existing card base and the autho­risation of cards,” says Goyal. The in-house switch development soft­ware team also develops customised switching 42 solutions for the cus­tomers. Launched since 2011, this service has picked up steam, cur­rently processing a daily average of 56,000 switching transactions.

Adding up

2013 2014 (¥Cr)
Revenue 636 951
Operating profit 66 133
Margin (%) 24.4 14
Networth 431 417
Total loans 166 368

 

In June 2014, ags ttl was autho­rised to function as a white label ATM operator in India which, Goyal believes, will enable the company to further grow its presence while maintaining branding and opera­tional flexibility. According to the global atm market and forecasts to 2019 for India, the white label sector is considered a key growth area of the Indian ATM market and is expected to represent about 30 per cent of the installed ATM base by 2019 – up from 1 per cent in 2014. The report states that 140,000 white label ATMs are anticipated by 2019, as new com­panies enter the sector and existing ones build up their atm portfolios. In fact, the report expects the RBI to relax its requirements, increase interchange fees or remove licences from underperforming deployers, if growth falls below expectations.

By 2013, AGS TTL had moved on to overseas turf. It started offer­ing banking automation solutions and payment solutions to banks and financial institutions in Singa­pore, Cambodia, the Philippines and Indonesia, besides looking at further expanding into high-growth Asian countries through its Singapore sub­sidiary, Novus Technologies. The Asia-Pacific is expected to have an installed base of about 900,000 ATMs by 2019.

Like most successful Indian start­ups, Goyal has also managed to gain attraction from private equity play­ers. TPG had already invested about $40 million in ags for which it got close to 26 per cent stake, in June 2011. “We invested because of the company’s leadership position in what is a fast-growing industry,” says Varun Kapur, partner & MP, TPG Growth. “The company has ramped up its ATM deployment business well, benefiting from the atm outsourcing happening at banks. What started as a private bank’s opportunity has expanded rapidly into psu banks as well, as more banks realised the ben­efits of outsourcing to specialist ven­dors, who provide faster roll-out, better economics and higher up time – this task is difficult for banks to do in-house at scale”.

After tpg’s investment, Kapur has joined the board of AGS. “The government’s desire to take bank­ing to the un-banked has expanded the total addressable market for ATM usage significantly,” adds Kapur. “All of these provide strong tail-winds to the business of AGS TTL”. After TPG, Mauritius-based Oriole has put ¥170 crore into the company for a 16 per cent stake.

However, private equity players will soon be exiting the company through the jpo route, when ags TTL would be floating a ¥1,350 crore public issue, of which ¥950 crore is offer for sale from the private equity players and Goyal (who holds 55 per cent), while the balance go towards retiring debt, thus deleveraging the balance sheet.

♦ bANCEJ-QT JOSEPH [email protected]

 


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