Radiant Cash Management Services Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS Global Economy Overview

The global economy In 2024 exhibited strong recovery trends from the multifaceted disruptions caused by the COVID-19 pandemic, geopolitical tensions, and prolonged supply chain issues. According to the International Monetary Fund (IMF), global GDP growth is projected to grow at 3.2% in 2024 and 3.3% in 2025, driven by robust consumer demand and a resurgence in trade activities. Advanced economies are expected to experience a growth rate of around 1.7% in 2024 and 1.8% in 2025, while emerging markets, including India, are anticipated to grow at a more dynamic rate of 4.3%. This growth Is fuelled by Increased Investment In Infrastructure, technological advancements, and a rebound In manufacturing and servIce sectors.

Indian Economy in FY24

Indias economy continued its strong recovery trajectory, with a GDP growth rate of 7.6% for FY24. The key drivers of this growth include substantial government spending on Infrastructure projects, a robust performance In the agricultural sector, and a resurgence In manufacturing and servIces sectors. The digital economy and financial services have also significantly contributed to Indias economic growth, positioning the country as a key player In the global market. The governments focus on structural reforms and fiscal consolidation has further strengthened the economIc outlook for IndIa.

Cash Management Systems in India and Globally

Globally, the cash management Industry Is evolvIng wIth increasing integration of technology and digital solutions. In India, cash remains a significant mode of transaction despite the growing adoption of digital payments. The Reserve Bank of India (RBI) has been promoting digital transactions; however, cash continues to dominate, especially in rural and semi-urban areas. The IndIan cash management market Is characterised by high demand for secure and efficient cash logistics solutions. ThIs demand Is driven by a large Informal sector and the cultural preference for cash transactions. The organized retail sector is also growIng at a healthy rate annually and only less than one- thIrd of these are currently outsourced for cash management servIces.

Business Segments and Industries

The Company primarily operates In one busIness segment - Cash Management ServIces. Further, there Is no reportable GeographIcal segment

The break-up of operational revenue across the business verticals of the Company is given below:

• Cash Pick-Up & Delivery: 66% of revenue.

• Network Currency Management: 19% of revenue.

• Cash Processing: 5% of revenue.

• Cash Van Operations: 8% of revenue.

• Others: 2% of revenue.

Strategic Pillars

1. Consolidate and Grow the Core Business:

o Focus on growth In organIzed retaIl, BFSI, and e-commerce segments.

o Increase direct sales channels to 10% of revenue.

o Diversify client base and grow cash vans to 8% of revenue.

2. Establish New Adjacent Businesses:

o AEPS-based micro ATMs and digital cash solutions.

o Valuables platform for secure delivery of diamonds, bullIon, and jewellery.

3. Move Up the Value Chain with a Phygital Platform:

o Secure physIcal network across 14,370 pIn codes. o Develop a robust fintech platform.

4. Strengthen Geographic and Technological Footprints:

o Expand digital capabilities and roll out Radiant Insta CredIt (RIC).

Recent Initiatives

1. Acquisition of Aceware Fintech Services: RadIant Cash Management Services acquired a majority stake in Aceware FIntech ServIces Pvt. Ltd., enhancIng Its dIgItal banking capabilities.

2. Launch of Radiant Valuables Logistics: ExpansIon Into secure transportation of high-value items like diamonds, jewellery, and bullIon.

3. Expansion of Service Network: Added 911 pIn codes and 6,514 retaIl touchpoInts In FY24, enhancIng servIce coverage.

OPPORTUNITIES AND THREATS Opportunities:

• Rising Demand for Retail Cash Management: As

organIsed retaIl expands In IndIa, the need for retaIl cash management servIces Is IncreasIng.

• Cash Logistics for E-commerce: WIth the rapId growth of e-commerce In IndIa, there Is a rIsIng need for cash logistics services to facilitate cash-on-delivery (COD) transactions

• Outsourcing Opportunities: Banks, financial institutions, and busInesses IncreasIngly outsource theIr cash management operations to specialised service providers.

• Geographic Expansion: The Company has added 911 pin codes and 6,514 retail touehpoints during the year, leading to further penetration into rural and semi-urban markets,

• New Business Ventures: Expansion into valuables logistics and fintech services creates opportunity to provide innovative service offerings.

Threats

• Operational & Security Risks: Cash management services involve inherent security risks, including theft, robbery, and pilferage. Operational risks such as cash counting errors, mismanagement of funds, system failures, or transportation delays can impact service quality and customer satisfaction

• Cyber security threats and data breaches: Cyber security or data breaches can affect our ability to service our customers, and conduct and manage our business, as well as our reputation with our customers.

• Competitive Pressure: Competition from existing players in cash management can result in pricing pressures, reduced margins, and needs continuous innovation to differentiate our services.

• Change in trend and market fluctuations: Emerging competition from digital banking and decline in cash usage can have an impact on the cash logistics business of the Company. Economic downturn and fluctuations in banking industry can also affect the Companys business.

• Regulatory Changes: Potential changes in regulations / guidelines applicable for cash management services,

RISK & CONCERNS, RISK MITIGATION

Operational & Security Risks

Risk Mitigation: Radiant Cash Management Services has put in place strong measures to address operational and security risks:

• By implementing rigorous security protocols, utilizing advanced technology, and following well-established processes, the company effectively minimizes the risk of theft, loss, or operational disruptions.

• Our framework is regularly audited by foreign banks, ensuring alignment with business continuity plans and operational procedures.

• With a team of 91 risk managers and 66 supervisors, including former military personnel, we maintain a nationwide network that responds swiftly to any incidents.

Cybersecurity Threats and Data Breaches

Risk Mitigation Radiant Cash Management Services has taken comprehensive steps to guard against cybersecurity threats and data breaches:

• Secure IT Infrastructure: The Company invests in advanced cybersecurity infrastructure, such as firewalls, encryption protocols, and intrusion detection systems, to

protect sensitive customer data and prevent unauthorized access,

• Ongoing Security Audits: Regular security audits and vulnerability assessments are conducted to proactively identify and address any potential weaknesses in our systems,

• Employee Training: Radiant Cash provides thorough cybersecurity training to all employees, increasing awareness of potential threats like phishing and promoting best practices for data protection, thereby reducing the likelihood of human error and enhancing overall security,

Competitive Pressure

Risk Mitigation: Radiant Cash Management Services has developed a range of strategies to combat competitive pressures:

• Enhanced Service Offerings: The Company offers a wide array of cash management services that set it apart from competitors, including innovative solutions, cutting-edge technology platforms, and tailored service packages.

• Targeting Untapped Markets: The Company is focusing on direct clients from the underserved customers in nationalized banking sector, combined with the launch of Radiant Insta Credit (RIC) and the acquisition of RadiantAcemoney allows the company to leverage the digital payment ecosystem and expand its market for cash management services,

• Building Customer Loyalty: Through the establishment of long-term partnerships with key clients and delivering exceptional customer service, the company fosters loyalty and mitigates the risk of losing clients to competitors.

• Proactive Market Research: Regular market research is conducted to identify emerging trends, competitor strategies, and shifting customer preferences, enabling the company to stay ahead by adapting its offerings accordingly,

Changes in Trends and Market Fluctuations

Risk Mitigation: Radiant Cash Management Services employs several strategies to mitigate the impact of economic downturns and market fluctuations:

• Client Base Diversification: By maintaining a diverse portfolio of clients across various industries and sectors, Radiant Cash reduces its dependency on any single client or industry, thus minimizing the effects of market fluctuations.

• Expanding Market Reach: A strong focus on acquiring direct clients, particularly those who are note services by the nationalized banking sector, combined with the launch of Radiant Insta Credit (RIC) and the acquisition of Radiant Acemoney, allows the company to leverage the digital payment ecosystem and expand its market for cash management services,

• Market Trend Monitoring: The Company closely monitors economic indicators, market trends, and

customer demands, enabling proactive adjustments to business strategies and the identification of new growth opportunities.

• Cost Optimization: Radiant Cash continually assesses its cost structure, identifying opportunities for optimization, such as streamlining operations, negotiating better vendor contracts, and implementing cost-saving measures without compromising service quality.

Regulatory Changes

Risk Mitigation: Radiant Cash Management Services has implemented thorough measures to manage regulatory challenges;

• Dedicated Compliance Team: A specialized team is in place to monitor and ensure compliance with all relevant regulations and guidelines, conducting regular audits and reviews to quickly identify and address potential noncompliance issues.

• Collaboration: Radiant Cash works closely with

legal experts and consultants to stay informed about regulatory changes and ensure full compliance with legal requirements, helping to minimize the risk of penalties and legal issues.

• Employee Training & Awareness: The Company conducts regular training sessions and workshops to educate employees on regulatory compliance, ethical practices, and data privacy, ensuring that all employees are well- informed and compliant with required standards.

Risk Management

The Boards Risk Management Committee supervises the implementation of the risk management policy and assesses the effectiveness of the risk management systems. The company prioritizes operational risk management to ensure the security and reliability of its cash logistics. By combining human oversight with technological solutions, the company minimizes risks. Security is further enhanced through regular audits, realtime tracking, and a dedicated risk management team, which includes former armed forces personnel.

Internal Financial Control Systems and Adequacy

The Company has implemented effective internal financial control systems to ensure reliable financial reporting and compliance with relevant laws and regulations. These internal controls are appropriate for the Companys size and the nature of its operations. They are designed to provide reasonable assurance regarding the recording and reliability of financial and operational information, compliance with applicable statutes, protection of assets from unauthorized use, proper authorization of transactions, and adherence to corporate policies. The current internal checks and controls are comprehensive and offer sufficient assurance to management.

ASA & Associates, Chartered Accountants, the Companys statutory auditors, have audited the financial statements included in this annual report and have provided an attestation report on the Companys internal control over financial reporting, as defined in section 143 of the Companies Act, 2013.

The Company has appointed Menon & Pal, Chartered Accountants, to manage and conduct internal audits of its activities. The audits are carried out according to an Internal Audit plan, which is reviewed annually and approved by the Audit Committee. The Audit Committee also reviews the Internal Audit report on a quarterly basis.

OPERATIONAL HIGHLIGHTS

Review of Operations

Radiant Cash Management Services Limited (RCMS) has maintained its leadership position in the retail cash management (RCM) segment. The company covers 14,370 pin codes and 69,934 touchpoints across India, operating from 8,276 locations. Radiant CMS handled a total currency movement of 71.67 trillion in FY24, emphasising its crucial role in the financial ecosystem. Revenue growth was primarily driven by its extensive network and strong client relationships in Tier 3+ cities.

Key Highlights for FY2024:

• Extensive Coverage: Covered 14,370 pin codes and 69,934 touchpoints across India.

• Operational Footprint: Operates from 8,276 locations, facilitating seamless cash logistics nationwide.

• Financial Strength: Managed a total currency movement of 71.67 trillion in FY24.

• Revenue Sources: 61% of revenue derived from Tier 3+ cities.

• Resources: 870 fabricated armoured vans and 9,890 staff members and service providers.

• Client Acquisition: Added 64 new clients and 104 new end customers during the FY24.

• Business Expansion: Expansion into Valuables Logistics operations for handling high-value items such as diamonds, jewellery, gold, and precious metals.

• Acquisition: Acquired Aceware Fintech Services Pvt. Ltd., enhancing digital banking capabilities.

Financial Performance

The Company reported total revenues of 73,903 million for FY24, reflecting a 9% year-on-year growth. EBITDA stood at 7691 million, with a margin of 17.7%. Profit After Tax (PAT) was 7454 million, indicating a PAT margin of 11.6%. The company maintained a strong return on capital employed (RoCE) at 22.1% and return on equity (RoE) at 17.9%.

Key Financial Metrics:

Metric	FY23	FY24	% Change
Revenues (7 mn)	3,574.82	3,902.67	+9%
EBITDA (7 mn)	896.94	691.19	-23%
PAT (7 mn)	627.27	454.41	-28%
RoCE (%)	33.0%	22.0%	-33%
RoE (%)	27.3%	17.9%	-34%

Summary of Operating Results:

Standalone Rs. in Millions

Particulars	2023-24	2022-23
Revenue from Operations	3 ,845.42	3,549.06
Other income	57.25	25.76
Total Income	3,902.67	3,574.82
Total Expenditure	3211.48	2,677.88
Profit Before Interest, Depreciation And Tax (PBIDT)	691.19	896.94
Finance Cost	12.08	9.26
Depreciation/Amortization	61.44	44.56
Profit Before Tax (PBT)	617.67	843.12
Provision for Tax	163.26	215.85
Profit After Tax (PAT)	454.41	627.27

Key Financial Ratios:

				Significant
Sr. Key Ratios No.	Unit of measurement	Current Year 2023-24	Previous year 2022-23	change compared with previous year i.e. 25% or more	Detailed explanation for significant change
1 Debtors Turnover	Times	5.06	4.65	9	na
2 Inventory Turnover	na	na	na	na	na
					EBIT has dropped by about Rs. 222.63 Mn, whereas finance cost increased by about 2.82
3 Interest Coverage Ratio	Times	52.13	92.05	(43)	Mn during the year. Hence interest coverage ratio has decreased substantially during the year.
4 Current Ratio	Times	5.02	5.26	(5)	na
5 Debt Equity Ratio	Times	0.13	0.13	0	na
Operating Profit Margin					The major reason is losses from Radiant Valuables
7 (%) (EBITDA / Revenue from operations)	%	18%	25%	(29)	Logistics business coupled with margin pressure from few clients
					The major reason is losses from Radiant Valuables
8 Net Profit Margin (%)	0/ %	12%	18%	(34)	Logistics business coupled with margin pressure from few clients

Details of change in Networth:

Details of any change in Return on Net Worth as compared to the immediately previous financial year, along with a detailed

explanation thereof:
Particulars	2023-24	2022-23
Return on Net worth	17.91	27.28

The profit after tax decreased by Rs. 173 Million and Networth increased by 238 million. Hence the steep reduction in Return on Networth

Disclosure of Accounting Treatment

The Financial Statements for the financial year 2023-24 have been prepared by applicable Indian Accounting Standards (IND AS) as prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standard) rules as amended from time to time.

Human Resources:

The Company places a strong emphasis on human capital development. The Company conducted 19 training programs benefiting 545 employees, covering topics like recruitment process enhancement, leadership training, and compliance. The average age of employees across different categories as detailed below, reflects a balanced workforce with diverse experiences.

Employee Distribution:

Category	Average Age
Board of Directors	63 years
Senior Management	56 years
Staff	33 years

Technology Capabilities

Radiant Cash Management Services has significantly invested

in technology to optimize operations. Key initiatives include:

• API Integration: Seamless integration with client ERP systems.

• Mobile Applications: Radmus and Radiant Sandesh for end-to-end reconciliation. “Radiant Insta Credit App”(RIC) to provide a seamless, user-friendly platform for offering Instant Credit Services, enabling quick and easy access cash collection services

• Real-Time Data Tracking: Client view application providing direct access to points and pickups.

• Security Enhancements: Implementation of CPIN/OTP verification and QR code scanning.

Corporate Social Responsibility (CSR)

Radiant Cash Management Services is committed to various CSR initiatives focusing on nutrition, education, and sanitation. Key projects include:

• Ashraya Project: Providing free daily noon meals to elderly and destitute individuals.

• Chennai Roti Bank: Provides nutritious meal at the end of each day to vulnerable groups in Chennai, including children, the homeless, the elderly, the sick, the infirm, and those with mental illness.

• Kalvi40 Project: Revolutionise education in rural Tamil Nadu by creating digital classroom environments

FUTURE OUTLOOK

Radiant Cash Management Services Limited is poised for sustained growth with its strategic initiatives in digital banking, valuables logistics, and geographic expansion. The companys focus on technological advancements, robust risk management, and human capital development will drive more innovation, mitigate potential risks effectively, and cultivate a highly skilled and motivated workforce for a brighter future for the Company..

CONCLUSION

Radiant Cash Management Services Limited has demonstrated resilience and adaptability in the dynamic cash management industry. With strategic expansions into fintech and valuables logistics, coupled with robust financial performance and a dedicated workforce, Radiant Cash Management Services is well-positioned to capitalize on future growth opportunities. The companys comprehensive approach to integrating digital and physical cash management solutions will continue to drive its leadership in the industry.

Cautionary Statement:

Statements in this management discussion and analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Other factors that could affect the Companys operations include but are not limited to, changes in the political and economic environment in India/abroad, tax laws, litigation, labour relations, foreign currency fluctuations, etc.