CMS Info is a key player in ATM managed services space & has a massive order book: CEO – Economic Times

Baring Asia affiliate Sion owns most of the company and the 34-35% dilution is from their side. It helps the company open up a much broader canvas for growth and that is where all of our new shareholders, the public shareholders will enjoy the companys potential and future," says Rajiv Kaul, Exec Vice Chairman & CEO, Whole time Director, CMS Info Systems.

How do you see the ownership post the IPO, a complete OFS. How do things change? What does the listing help you with?It has been a very difficult year for all of us but it is a year which has humbled us and we are also filled with pride that we have been able to launch an IPO successfully and complete it and also listed on the last day of the year. It is a complete offer for sale (OFS) from our shareholders Baring Asia through their affiliate Sion, which is our promoter. Our company has been profitable for 12 years. We have had cash on the balance sheet and therefore the company does not need capital infusion for growth.

We have been growing very well. Baring Asia through their affiliate Sion, owns most of the company and the 34-35% dilution is from their side. It helps the company open up a much broader canvas for growth and that is where all of our new shareholders, the public shareholders will enjoy the companys potential and future.

What is the market share you are enjoying in the key services that you provide and who are your key customers?We are focussed on the BFSI sector. We are a large B2B outsourcing services company and as India grows over the coming decade. not only will consumption increase but business outsourcing will also increase. We have focussed on working with all the banks in the country. We have a variety of services at a foundational level. Our strongest, oldest business is a very robust network that we have set up for making sure that currency is available anywhere anytime in the country from the largest cities to the remotest parts of the country. It is our cash management business. This is a business where we have a coverage of 15,000 pin codes, a fleet of 4,000 vans and we do almost a million to a million and a half activities every month.

Using this business, we have expanded from being a logistics company into technology solutions. In technology solutions, we have two businesses. We are a key player in the entire ATM managed services space which includes everything from deploying the ATM to managing it to maintaining it to running the software on the ATM. We have a massive order book in that business.

What is the impact seen from PayTM, Google Pay, BHIM and various other apps?India is largely an informal economy. As that economy formalises, that formalisation will have many forms. But if you think of the retail sector, there are lots of small retail shops. We cannot even cater to them. We cannot even work with them. But as they formalise into large established organised retail stores, there will be massive amounts of work. The money in circulation has grown from Rs 14 lakh crore to almost Rs 30 lakh crore. In any large store, you see lines of people wanting to pay in cash.

As a society we are comfortable using cash. I see more digital transactions happening. We are clearly seeing the effects of demonetisation. However, my belief is that a large part of semi-urban and rural India is still looking for bank access, for ATM access. Those modes of commerce will increase and as the formalisation happens, the opportunity for CMS is fantastic because we can hope to reap the rewards when a informal business moves to the formal sector.

What is the growth you see for ATM services? Where do you see this geographical and state wise growth for this?The total addressable market (TAM) for us is about Rs 8,000 crore. It is forecast to go to Rs 21,000 crore by 2027, and that is almost a 2.7x increase which would lead to 17-18% growth in the market. As a market leader, we would hope to aspire to grow at that level or even higher if we can. That is at the high macro level for the industry.

India has got 2.5 lakh ATMs. The semi urban and rural markets are growing more than the metro markets but the metros are also growing. Penetration is not a geographical issue, I think it is a state by state issue. We have penetration in states like Delhi and then Tamil Nadu where there are 35 or 40 ATMs for one lakh people while in large parts of India like Bihar, West Bengal, Odisha, Rajasthan and Madhya Pradesh, the penetration levels will be 7 or 10 or 12 or 14.

From a 10-year perspective, as these states do better in per capita GDP income increase, consumption will increase, people will have more commerce, they will use both cash and digital. They will use more ATM services and that will lead to growth of ATM transactions and hopefully the number of ATMs.

But ATM cash management is part of our business but not the only business. We do a lot of work around the value chain whether it is the software or the deployment or how to keep the site up and running. During Covid, most of us did not have any issue in accessing cash from an ATM because most of us were not going to bank branches but keeping that whole infrastructure running on behalf of the banks is something which CMS and our other industry collaborators do very well for the nation.

What about client mix, new on-boarding of customers? How will the services be expanded?We work with every bank in India. There are a limited number of banks we work with. As more banks are getting licences, we will get more customers.

But when I think of retail, on behalf of banking customers, we work with more than 2,000 retail customers in the country. They could be retail stores, NBFCs, insurance companies and a variety of retail outlets where we work and serve them for the cash management and technology needs.

The remote monitoring business is the latest one that we are starting by launching it for the BFSI sector. There is a massive opportunity for automating and using software to much better manage and monitor and control an ATM site or a gold loan branch or a bank branch. But it is software, it is a SaS play. Once you build this, there is nothing stopping us from being able to go and sell this to jewellery stores, to solar parks, to warehouses, to logistics. So, this is a very exciting business for us where we feel there is opportunity to make it horizontal outside BFSI and get hundreds of new customers over the next five to six years.

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CMS Info is a key player in ATM managed services space & has a massive order book: CEO - Economic Times