Behind the Cash Crunch at AGS

A number of cash dispensers remain shut as India's No. 2 ATM manager struggles to raise money, pay employees and repay debt

- Varun Sood & Shayan Ghosh

In the second week of December, a Delhi-based investor had a call with the management of AGS Transact Technologies Ltd, the country's second-largest manager of automated teller machines catering to over 32,000 ATMs. 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 the 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 the company kept denying any issues with liquidity or borrowings.

"The management said they were doing a capital-raising exercise to shore up the balance sheet," said the executive, adding that it appeared to him that AGS was doing four to five calls a day with prospective investors.

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.