Saurabh Lal, AGS’s chief financial officer, and Vinayak Goyal, the head of the payments business, represented the management. Goyal’s father, Ravi Goyal, the chair and managing director, had set up AGS in 2002.
“It was a surreal call. The management kept trying to pitch a payments story,” the investor told Mint on condition of anonymity.
“Our channel checks showed that the company faced serious liquidity problems, like non-payment of salaries and vendor dues,” the investor said, adding that AGS denied any issues with liquidity or borrowings. “The management said they were doing a capital-raising exercise to shore up the balance sheet.”
Also read | Unpaid salaries, defaulted dues: How a cash crunch at AGS hit banks’ ATM ops
AGS Transact informed stock exchanges on 16 December that it was looking to sell up to 20% of its cash logistics business, Securevalue India Ltd, 26% of its payment business, and its overseas business, Novus Technologies Pte. Ltd.
“We were to talk for an hour, but our chat ended in 25 minutes, and I was not convinced,” said the investor, who declined to put his money in AGS, which ended with ₹1,508 crore in revenue last year.
However, the problems faced by AGS Transact became public during an earnings call of CMS Info Systems Ltd, the largest manager of ATMs in the country.
“The ATM base for many large banks was disrupted in Q3 due to instability in operations at a key industry player,” Rajiv Kaul, vice-chairman and chief executive officer said, as part of his opening remarks in a post-earnings interaction with analysts on 6 February.
Four days later, AGS finally acknowledged to the stock exchanges that a cash crunch had forced the company to default on bank loans, statutory payments and staff salaries. To be sure, Crisil and India Ratings had downgraded some of the borrowings of AGS to default on 4 February.
According to seven executives that Mint spoke to, including three former employees, at the heart of AGS’s problems lies the company’s aggressive and poor capital allocation that landed it in a cash crunch. One of them said the business of ATM management is quite capital-intensive, and banks would only pay after a particular mandate to set up ATMs on their behalf has been completed to satisfaction.
Also read | Why ATM solutions company CMS Info Systems is looking for a queen
Estimates peg the average cost of setting up an ATM at ₹6 lakh.
“The company aggressively bid for ATM mandates from state-owned banks and had to put in a lot of money into capital expenditure that would only come as recurring revenue later,” said the person cited above.
AGS Transact earns fees from banks for managing ATMs.
While 67% of its ATMs and cash recyclers earn a fixed monthly fee from banks, the rest have a transaction-based fee arrangement.
A spokesperson for AGS Transact said the company acknowledges stakeholder concerns regarding recent disclosures to the exchanges and their business and operational impact.
“The management is committed to implementing corrective measures to address these issues and restore confidence,” the spokesperson said in an emailed statement.
According to the spokesperson, “the company raised funds through the issuance of preferential warrants to the promoter group, and other investors at a price of ₹79.25 per share. The promoters subscribed to a significant portion, with a substantial part converted into equity, to infuse capital into the company in December 2024 and January 2025.”
“The promoters remain committed to the company’s long-term growth and stability.”
Also read | ATM supremacy in a cashless economy
AGS’s three-year journey since going public is a cautionary tale for investors, involving unpaid salaries to its nearly 9,000 employees.
Mint spoke to four former employees who claimed they were not paid for at least six months.
“I left the company in the summer of last year as my salary for the previous six months was not paid. Additionally, my gratuity and leave reimbursement were not paid either. All put together, AGS is still to pay me ₹25 lakh,” said an executive, who left the company after working with the firm for 12 years.
This employee claimed that the problem of unpaid salaries began in January 2024.
Another 44-year-old employee said he had not received his dues for five months.
About 35 staff members visited the company’s Mumbai headquarters in Lower Parel last week. One employee said he and the others met Goyal and the company’s executive director, Stanley Johnson, but they did not get any clarity regarding when their pending salaries would be cleared.
“I have a family to manage, and it is quite difficult if salaries are pending for so long,” he said.
Two other employees said they were present at the meeting between staff members and the two key executives last week. Meanwhile, 27-year-old Bapina Panda from Bhubaneshwar, who was a third-party employee for the company–not on the rolls of AGS Transact–said he quit his job and has not received salaries since October. Panda, who worked as a field engineer maintaining the cash dispensers managed by AGS Transact, said he did not even get his local conveyance payments for many more months.
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“How can I work for free? Now I have no work and about ₹2.5 lakh in pending salaries,” said Panda.
AGS went public in 2022, raising about ₹680 crore from investors. All proceeds went to the promoters, who sold about 34% of their shares as part of the offer for sale.
According to two executives, much of this money was given to financial institutions, which had earlier loaned money to the Goyal family to buy back 42% of the shares owned by private equity investors TPG Growth and Actis.
At the end of January 2022, the Goyal family owned 66% of AGS Transact. The promoters did not sell any shares for the next 33 months.
Then, between October and December 2024, Goyals sold 6.62% of its shares, reducing its holding to 59.45% at the end of December 2024.
Meanwhile, shares of AGS Transact have more than halved since the beginning of the year: From ₹64.75 a share on 1 January to ₹31.7 a share on 14 February.
The promoters’ share sale came even as they assuaged investor concerns after the company, in an interaction with analysts, declared its second-quarter earnings in November.
Also read | AGS Transact Tech IPO opens tomorrow: GMP, key things to know before you subscribe
Lal, the CFO, assured analysts on 4 November that the management does not see a “challenge concerning the credit risk” when at least three analysts quizzed the company on the rising receivables. Trade receivables are money a business is owed by customers for goods or services provided but not yet paid for.
Johnson even said that the second half of the current fiscal year would be better than the April-September period as more banks rolled out ATMs in that period.
“We did due diligence and considered investing in the company before it went public in 2022. But we did not,” said a second executive, a Bengaluru-based investor. “Simply because my impression was that the promoter liked taking on debts. I was not convinced of the overleveraged model, especially when we saw both the ATM and the number of ATM transactions coming down.”
As more customers took to digital means, the number of ATMs has shrunk. Between December 2023 and December 2024, the number of ATMs reduced by 5,484 to 214,398, according to RBI data.
At AGS, the number of ATMs managed has also reduced over time. For instance, its portfolio included managing 47,569 cash dispensers at the end of FY21, 45,000 in FY22, 42,426 in FY23, and 38,418 in FY24, as per data from a report by Elara Securities on rival ATM manager CMS Info Systems dated 7 October.
At the end of September, AGS had 32,151 ATMs and cash recyclers.
Also read | Baring Asia marks successful exit from CMS Info Systems
Six of the seven executives maintain that the company’s road ahead looks challenging, especially as there is uncertainty over the running of the over 32,000 ATMs. Mint learns from two private sector banking executives that banks are looking to hand over the management of running these ATMs to other ATM Managers, including CMS Info Systems.
On Friday, 14 February, the company announced the resignation of four officials. These included independent directors Sivanandhan Dhanushkodi and Jhuma Guha, company secretary and compliance officer Sneha Kadam, and Shailesh Shetty, the managing director of AGS’ cash management company Securevalue India Ltd.
AGS Transact also said it has approached the company’s lenders to voluntarily restructure the loans it and Securevalue India have availed of.
The auditors also flagged several concerns in their statement to the board, released alongside the company’s December quarter financial results. “These conditions indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern,” it said.
