Payments’ solutions provider, AGS Transact Technologies, which has defaulted on its payments’ obligations to lenders, said it is taking corrective actions to address concerns of stakeholders and restore confidence.
Last Friday, the company said it was approaching its lenders to voluntarily restructure the loans availed by it and its subsidiary Securevalue India to manage its repayment obligations. Today, the company said these discussions were in progress and “lenders are reviewing the same.”
The company reiterated that corrective steps were being taken to address liquidity concerns, enhance operational efficiencies, and improve financial health. It was also in negotiations to sell stake in its subsidiaries to improve cash flow, while it had strengthened ongoing efforts to collect outstanding trade receivables.
Liquidity challenges
It attributed its liquidity challenges to the delay in realisation of trade receivables and operational challenges. The liquidity challenges resulted in default in interest and principal repayments on certain borrowings mainly on account of impact on cash flows due to collection delays and pending invoicing, it said.
Due to debt servicing delays, ratings agency Crisil downgraded the company to default category. The company said lower revenue in the current quarter had an impact on liquidity and operations. On Thursday, the company reported defaulting on payments of ₹5.76 crore, by it and its subsidiary.
As on February 12, the total debt obligations of the company and its subsidiary was ₹726 crore.
The shares of the country’s second largest ATM operator have crashed from the 52-year high of ₹118.40 recorded in September 2024 to around ₹30 now, with fall in the revenues and delays in receivables severely affecting its liquidity position.
In the nine months of FY25 the company reported a loss of ₹165 crore on revenue of ₹901 crore. In the year-ago quarter, it reported loss of ₹75.6 crore on revenue of ₹1,121.5 crore.
Its auditor, BSR & Co, had flagged concerns in its quarterly results. Referring to the decline in profits, the company’s inability to make payments, delays in statutory dues as well as employees’ salaries, the auditor stated, “Management’s plan to generate cash flows from recovery of outstanding trade receivables, infusion of funds through equity issuance and sale of its stake in its subsidiaries and deferment of future cash outflow by restructuring its borrowings is not supported by sufficient and appropriate evidence.”
It said that these conditions indicated the existence of a material uncertainty “that may cast significant doubt on the Group’s ability to continue as a going concern.”
In its note on the company, Crisil said the delay in collection from receivables was due to AGS not being “able to meet the service level agreements (SLAs) with its customers.”
It also flagged the ‘substantial’ deterioration in AGS Transact’s “liquidity position over the past 2-3 months.”
Three streams
The segmental breakup of the company’s results show that it has three streams of business – payments solutions, banking automation solutions and other automation solutions. The biggest chunk is from the payment solutions revenues from which declined over a fifth in the nine months of FY25, while operating profit dwindled to a negligible amount, while the other two streams of business reported losses.
Three lenders, with whom promoter Ravi Goyal had pledged shares, have invoked the pledge on over 9.13 lakh shares, accounting for 0.7 per cent of the equity.
