What does AGS Transact Technologies do?
AGS Transact Technologies, which listed on the bourses in 2022, is a provider of digital and cash payments solutions. It is an integrated cash and ATM management solutions provider. It provides cash management services through its subsidiary Securevalue India and is establishing its presence in digital payment solutions wherein it provides merchant solutions (POS terminals), switching services and other value-added services. It manages a network of 26,000 ATMs and is the second largest player in the segment after market leader CMS Info Systems.
What has gone wrong with the company?
AGS Transact has defaulted on payment of dues to its lenders. Last week it said in a filing to exchanges that it and its subsidiary had defaulted on payments of ₹5.76 crore, to lenders. As on February 12, the total debt obligations of the company and its subsidiary was ₹726 crore.
It also said it and its subsidiaries Securevalue and India Transact Services have delayed the payment of certain statutory dues and salaries because of a delay in collection of amounts due from customers and in invoicing of certain unbilled amounts. GST registrations granted to AGS and its subsidiaries have also been cancelled or suspended on account of non-filing of returns.
The default in payments to lenders had resulted in the company and its bank facilities being downgraded to default category by India Ratings and Crisil Ratings.
What are the nature of its borrowings and who are its lenders?
The company has taken term loans, and also availed of external commercial borrowings, vendor finance and lease facility. It has taken term loan from Hewlett Packard Financial India, SBI, IndusInd Bank, and Bandhan Bank. It has availed ECB from Investec, vendor finance from Canara Bank and lease finance from Karur Vysya Bank, Hinduja Leyland Finance, Vivriti Capital, Hewlett Packard Financial, Siemens Financial Servies and Incred Financial Services.
Its subsidiary Securevalue has taken emergency credit line guarantee from Axis Bank and Tata Motors Finance, vehicle loan from Axis Bank, Kotak Mahindra Bank, Tata Motors Finance and YES Bank and vendor finance from Bank of India
How has this state of affairs come about?
AGS Transact has said lower revenue in the December quarter had an impact on liquidity and operations.
In the nine months of FY25 the company’s losses widened to ₹165 crore from ₹75.6 crore year ago. Revenue during the period fell to ₹901 crore from ₹1121.5 crore year ago.
In its note on the company Crisil said the delays 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.”
Its auditors said the company and its subsidiaries have provided for expected credit loss of ₹167.5 crore in relation to trade receivables outstanding, but it had not recognised trade receivables worth ₹194.5 crore that were outstanding.
The auditor pointed to the significant decline in revenue in the December quarter, and the group’s liquidity position and operations being affected by continuing delays in collections from and invoicing to customers.
What is the company doing to address the default ?
Last December the company had said it was evaluating selling small stakes in three subsidiaries – Securevalue, India Transact and Novus Technologies and utilise the proceeds of the stake sales to improve its balance sheet and prepay loans.
On Monday it said it was implementing corrective measures to address concerns swiftly and restore confidence. It has started discussions with lenders for restructuring of loans and said these were in progress and lenders were reviewing it. Negotiations for stake sale in subsidiaries to improve cash flow are ongoing. It has strengthened ongoing efforts to collect outstanding trade receivables.
What has been the effect of its financial woes?
Its shares have crashed 76 per cent from their highs seen last year. It has been rated junk by ratings agencies. According to reports its customers are moving to its competitors.