Ladies and gentlemen, thank you for waiting, and we'll begin with the call shortly. Ladies and gentlemen, good day and welcome to the CMS Info Systems Limited Q2 FY2026 earnings conference call hosted by Asian Markets Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Sona l Ghandhi. Thank you, and over to you, ma'am. Mr. Trisha, good afternoon, everyone. On behalf of Asian Markets Securities, I welcome the management and thank them for this opportunity. We have with us today Mr. Rajiv Kaul, Executive Vice Chairman and CEO, Mr. Pankaj Khandelwal, CFO, Mr. Anush Raghavan, Chief Business Officer, and Mr. Puneet Bhirani, Chief Operating Officer. I shall now hand over the call to the management for the opening remarks. Over to you, sir. Thank you, Sonal. This is Rajiv. Good afternoon, everyone, and thank you for joining our Q2 FY2026 analyst call. Many of you would have attended our second analyst day in Mumbai on September 30th, wherein we shared in detail the industry landscape, H1 trends, some surprises and challenges, and also the opportunities for FY2027 with potential for FY2030. Our youngest and fastest-growing tech solutions business is growing rapidly, generating significant momentum. The Securance acquisition has closed, and the teams are now working together on both the go-to-market and the synergy implications. Our retail solutions and currency logistics business has had an impact in H1 from subdued consumption levels and extended rains, which affected rural income significantly. Our ATM management solutions business is going through a period of transition and churn, which has a bearing on growth and profitability in H1, but our competitive position, strong business fundamentals with consolidation, will deliver growth in H2 in FY 2027. Order wins for the quarter are at INR 500 crore, most of which are fixed-price contracts in nature and from leading private sector banks. October is off to a good start with positive news, and with this, I would like to now hand over this to Anush, our Chief Business Officer, to give you a more detailed business update. Thank you, Rajiv. Good afternoon, everyone. You know, the second quarter was a transitional quarter for us. The industry is still recalibrating after last year's consolidation, and that has temporarily affected deployment cycles and network utilization. Several large private sector banks have rationalized their offsite ATMs due to lower transaction levels, while the rollout of new BLA ATMs under PSU contracts slowed as some MSPs have faced funding constraints. Taken together, about 4,000 ATMs were temporarily inactive within our portfolio, which, along with weaker ATM transaction volumes due to extended rains, have led to a revenue impact of INR 15 crore. Post the AGF issue, banks had reduced credit limits and exposure to certain MSPs. This has impacted the working capital cycles and increased our DSOs. We have taken a prudent provision of INR 10 crore in this quarter, a proactive step to maintain balance sheet hygiene while continuing to ensure we significantly improve collections and cash flows in H2. On the cost side, two factors come into play. First, people costs increased due to long-term rate settlements in key regions. We had to be extra watchful that these negotiations did not cause any adverse ops impact. These multi-year agreements are now complete and will be offset through productivity norms over time. Second, operating costs were higher as we had maintained our full network during the quarter since the large PSU bank cash outsourcing contract closure was still pending. The RFP has since then concluded. As a result of both of these, our EBIT was impacted by lower network capacity utilization and the temporary cost overhang. Productivity drives and pipeline growth should bring our margins back to prior levels over the next two quarters. Coming to H2, there are positive developments. The large PSU bank cash outsourcing RFP has closed after extensive negotiations and represents an INR 500 crore incremental revenue over 10 years for CMS. Further, banks have reallocated volumes across MSPs to ensure better traction on RFP rollout. This gives us visibility of getting to 74,000-75,000 ATMs in our cash business by March of this fiscal year. Another major BLA tender for 4,500 ATMs, which are mostly an expansion and not replacement, was bid at prices which are very close to interchange levels. This is a clear sign of improving pricing discipline in the ecosystem. At CMS, we're also targeting a 6% improvement in pricing and realizations in our ATM cash business by March. In our retail business, volumes were softer during Q2 but recovered strongly in October with a 20% increase on a month-on-month basis. This is the highest since the pandemic. Our investments in gig operating model continue to scale very well and should expand to cover 20% of all retail points by March, strengthening both cost agility as well as rural reach. With clarity on deployments, new PSU contracts, and ongoing cost initiatives, we expect sequential improvement in both revenue and margins through Q3 and Q4. With that, I'll hand over to Puneet, our Chief Operating Officer, for an update on our Hawkai business and operations. Thanks, Anush. In our tech and payments business, we already demonstrated our tech prowess and solutions at the analyst day. We welcome all of you to come and visit our tech center at MahaPay in Navi Mumbai. On our Hawkai Remote Monitoring platform, it continues to grow rapidly and is on track to reach 50,000+ sites by the end of the year. This started at around 30,000 sites at the beginning of FY2026. On the enterprise side, our non-BFSI portfolio continued to expand. We have successfully implemented 1,300-plus dark stores for a leading quick commerce player and received an additional order for 500 sites. The pipeline for this business is growing strongly across NBFCs, insurance, Gold Dawn, logistics, diagnostic chains, and others. In October, we achieved a significant milestone for a critical unified build-and-operate project at a PSU bank covering approximately 2,000 branches with extensive AI use cases. This represents one of the first large-scale integrated surveillance transformations in India and positioned CMS strongly for large PSU branch monitoring RFPs in FY 2027. As we speak, multiple banks are expected to roll out these solutions at their branches in the next two years. The RFPs for over 35,000 branches are being formulated by the banks. This itself represents a huge INR 3,000 crore plus revenue opportunity for the industry. This makes us confident of achieving our Hawkai target of 80,000 sites by FY 2030. Shifting gears to the operations side, we are doubling down on four key areas to drive transformation and bring about significant automation and cost synergies. First. Rewiring our core operating systems to leverage machine learning to design routes and tips across the network. Second, carving out a delivery model for customers who value premium services. Third, given the large opportunity in retail, we are scaling up our gig operations with automation and control to provide cost flexibility and growth. Last but not the least, extensively leveraging AI agents and bots to automate workflows and customer service to deliver significant cost savings. I'm excited about the impact these initiatives will have in supporting our growth and margin aspirations. With this, I would like to call upon Pankaj, our CFO, to talk about financial performance of Q2. Thanks, Puneet, and good afternoon, everyone. Our consolidated revenue this quarter declined by approximately 3%, from INR 627 crore to INR 609 crore on a sequential basis, primarily due to a temporary dip in our ATM cash logistics volume. From a segmental revenue basis, managed services and tech revenue increased by 5% sequentially from INR 258 crore to INR 271 crore. Cash logistics revenue dropped by 5% from INR 417 crore to INR 395 crore, linked to a drop in ATM count and retail cash volume per point. Our PAT for the quarter was INR 73 crore, reflecting a 20% decline compared to INR 94 crore in the previous quarter, with PAT margin at 12.1%, a contraction of 280 basis points from the last quarter. This was driven by the flow-through impact of the revenue dip, temporary lower realization from the largest PSU bank customer, and higher provisioning due to increased AR on account of reduced credit availability to the MSP ecosystem post-AGS. We are actively engaging with these customers to streamline the payment cycle within H2. In addition, there is an impact of higher wages due to signing of long-term wage settlements, which are renewed every three to four years. While we could have focused on reducing our network cost in H1, linked to the delay of the contract and the business volume, we have to be careful that employee engagement remains positive and harmonious. In terms of our H1 performance, overall revenue saw a growth of 1%, while service revenue grew by 5% year-on-year basis. Driven by the performance of the service component of our managed services and tech business, which had an annual growth of 18%. The PAT for the first half of the year stood at INR 167 crore compared to INR 182 crore in the same period last year. As part of our broader cost rationalization efforts and considering H1 performance, the performance-linked ESOP will not vest, and incentive payment will not accrue to the leadership team in this financial year, as these are directly tied to PAT performance. This decision is consistent with our culture of accountability and ensures that the leadership rewards are aligned with the business outcomes and shareholders' interests. As we project go live this year for our tech investments, CapEx spent in H1 is INR 175 crore. Fully estimated at around INR 300 crore. You will remember we had deferred and curtailed CapEx in last year, FY 2025. On cash flow. H1 is seasonally weak in the terms of collection and DSO, resulting in the lower OCF in the first half of the year. The AR net of provision was INR 959 crore as on 30th September 2025, which is lower than September 2024 of INR 990 crore. Our temporary decrease in account receivable by INR 70 crore resulted in a negative OCF. Our historical five-year OCF EBITDA has been averaged 70%, with the majority of it accruing in the second half of the year. Our cash balance remains strong at INR 687 crore, in line with last H1 despite higher CapEx, increased dividend payout, and payout for the Securance acquisition. We expect to return closer to our FY2025 PAT margin level by the end of this fiscal year, supported by incremental revenue from new contracts and network cost optimization initiatives. With that, I would like to invite Rajiv for his closing remarks. Thank you, Pankaj. Let me summarize the key points for all of you. The State Bank of India cash RFP has concluded, and contracting and final approvals are under progress. As this project goes to live status, revenue from this outsourcing contract is an incremental INR 5,000,000,000 opportunity for us over the next 10 years. More importantly, this also creates a very good reference point for other PSU banks to outsource more bank-owned ATMs directly for cash management. With With strong companies. ICICI Bank is on track to become our second-largest customer. Post-AGS, the bank shut down almost 3,000 off-site ATMs in H1, but they are working with us to rapidly deploy currency recyclers to bring back the network to earlier levels. With just these two contracts going live in H2, the ATM management solutions business should get back to growth in H2 and deliver double-digit growth in FY 2027. Three other large bank RFPs across both private sector and public sector are expected to conclude in the next six to nine months, which gives us further opportunities for growth for FY2027 to FY2030. The short-term pain in the last year, the collapse of an industry player, and the credit taps being tightened for some MSPs are eventually going to help the ATM industry consolidate faster. This is also creating a better pricing environment for upcoming RFPs. In the retail business, October has seen a strong jump in cash volumes, and we hope these positive consumption trends will sustain and continue in H2 with GST-driven reforms and demand. Our Hawkai platform scale-up is massive. I want you to reflect on this business, which was created post-IPO in 2022. This business has gone from a size of zero crore to INR 100 crore in its first three years, and is now likely to go to INR 250 crore revenue in the next two years. We do see smaller players unable to compete, leading to consolidation. We will, on our part, continue very aggressive investments in the Hawkai tech platform to drive this high 50% growth CAGR opportunity, and for this to become a large part of our revenues. Tech investments are also higher and needed to transform our core operations, to reduce physical operating costs, and to create a strong tech moat to help in sustaining margin profile and give us more agility. Looking back at the beginning of the year, while we knew FY2026 will be a softer year between FY2026 and FY27, H1 threw up surprises at the macro and industry level, which we have explained in enough detail. While these are unpredictable, our team has solid experience in handling worst situations. FY2016-2017, we dealt with demonetization, and FY2021-2022, we dealt with COVID. Each time, we have prevailed, come out stronger, leaner, with higher market share to deliver strong growth. As a team, we are aligned with our stakeholders and shareholders. Pankaj has already detailed the non-wasting of performance ESOPs for FY2026, as well as non-accrual of performance-linked compensation for the year. From a key near-term metric, the H1 services revenue of INR 1,125 crore should grow by 9% to INR 1,225 crore in H2. This will mean an overall FY2026 services revenue growth of 8%. That run rate in H2 of annuity revenue will provide us with a very good base to hit our FY2027 services revenue target of INR 2,700-INR 2,800 crore, which is a 15%-19% growth goal. With that, thank you so much, and we'll move to Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchscreen telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Baidil Sarkar from Unifi Capital. Please go ahead. Rajiv, hi. Good morning. Tough quarter, and thanks for the detailed background and context setting. A couple of questions. Just so that I got your last comment right, did you call out that the combination of cash management services and managed services revenue would be about INR 1,225 crore in H2? This is excluding the hardware component. I'm sorry if that's a repetition. Yes. I think, Baidil, if you reflect back on both the analyst day and the way we said businesses are merging into each other, we sort of are focusing on the annuity and services revenue. Services revenue will cut across all our business lines and will not include the product revenue. Right. Right. No, that's interesting. Thank you. The SBI RFP that we've closed this quarter, right? At the base case, that amounts to about INR 70 crore-INR 150 crore revenue potential per annum. I also understand that you're already billing a part of that for services that we're doing by measure of goodwill before the RFP was finalized. My question, Rajiv, here is what's the incremental revenue at stake here? Or is the entire INR 50 crore-INR 70 crore likely to be incremental? Baidil, I am not sure. I think if you look at the commentary that we've shared in the presentation as well as in the call now, the INR 500 crore that we're talking about is only purely reflective of the incremental revenue opportunity. Okay. Incremental. Got it. That's interesting. Some very interesting comments on the gig model, Rajiv. Could you please flesh that out more and what that does from a fixed cost savings perspective? Point number one. Secondly, on the employee cost reduction that we've seen in Q2, how should we read this going forward? If we just call out the cash, non-cash component, is this a one-time reduction? I understand a part of the ESOPs do not lift, and probably you've added back some part of the incentives that would have accrued. How are you thinking about this kind of item going forward? Baidil, I'm not sure. I'll take the first part of the question on the gig and revert to Pankaj for the comments on the second part. The gig is really, if you go back and think about what we're trying to do on the retail opportunity, is to really sort of try and expand the market, which is to go beyond just the urban, semi-urban, and expand it from the current 200,000 outsourced market to closer to a 500,000 market. All of this, of course, needs investments on the business side and being able to create the new use cases using technology and solutions to integrate with retailers. From the operations and service delivery, it also needs us to create a certain agility in creating service delivery models in places where our network perhaps doesn't exist, or the density of business points do not justify a large fixed cost network operations. The gig serves as a very useful way to drive growth into some of these under-penetrated markets. What Puneet spoke about in terms of using a lot of machine learning algorithms is to also constantly keep evaluating our network operations, looking at the density, and deciding on a very frequent basis, almost on a weekly, fortnightly basis, what are the best sort of resources to deploy for the different types of business points. Gig becomes a very useful, almost edge case scenario for opening up these markets. As they mature over a period, we'll evaluate what are the right ways to do it in four-wheeler routes and what type of routes, for example. I just want to add to that. Very quickly, the gig would probably be applicable just for the new business cases and not existing centers of cash, cash pickup. Is that right? I think overall, what we will have to examine is based on the risk profile and what amount of money we have to handle and the network density and reach, we will start having more of our operations in remote areas on a gig-based model, where we do not need to deploy the entire crew and all. I think just step back a little bit again. I just want to add to what Anush said. If I go back two to three years, many times when you talk to a large, we are working with banks only, right? When you walk directly to a retailer or an NBFC or a gold loan company, you cannot go and pitch a solution and say, "You know what? I can only do 600 branches where I have presence. The remaining you'll go figure it out. I think for us, the idea is to say, "Accept whatever the entire network, and then figure out how will we deliver it. For that, we have invested in creating gig capacity." That gig capacity will not always be profitable or will not function fully in the first three, six, nine months, but at least gives comfort to our direct-to-retail clients that we will support them end to end. Over time, we need to get faster in how we see how to make this network operationally profitable. That is why the investments in ML and R are going in, to be able to tailor our ramp-up, ramp-down in line with how we take business points. Okay. On the employee cost reduction bit, is this a one-off? I mean, how are you thinking about this going forward? I understand your comments on the ESOP and the incentive bit, but how should we model this, say, perhaps the next year and onwards? I think the employee cost reductions which you're seeing in Q2, especially linked to the two things we talked about, are one-off. Therefore, they won't obviously be cut. You won't see that in Q3 or Q4. However, as Puneet and Anush both talked about, I think we are driving very significant productivity. Also, sorry, there's also employee cost increases which are in terms of more longer term through our LTS agreements. I think we've already started off fairly intensive productivity and cost optimization efforts, which in H2, what happened only in Q3, should help us make up for this. Quantitatively, what does that mean? I mean, do we revert to our run rate of INR 900 million a quarter, or will it be between INR 800 million and INR 900 million a quarter quantitatively? Baidil, I don't know that answer to that question right now. I think we don't have a—we also will not be able to forecast Q3, Q4 line-by-line costs right now. We'll tell you end of Q3, but I think our goal is to make sure that our EBIT and PAT margins are trending back to normal by the end of the year. Okay. Just the last two questions, Rajiv, thanks for bearing with me. The provisions that we've taken, is there incremental stress in H2 as well? Are we scaling down that business? How should we read that? On provisions, Pankaj. In addition to our usual risk provisioning, we had taken incremental ECL provisioning due to elongated payments from certain MSPs. We are working closely with them to streamline the payment. We expect that the normal risk provisioning plus ECL provisioning to be in the range of 4% revenue in line with our historical trend. I think overall, our MSP—from some of these MSPs, the revenue stream is about 8%-10% overall revenue. I do not think we are looking to, right now, tailor it down, but we will control exposures. H1, generally, I think, is just always seasonally very weak from payment cycles from banks to vendors to MSPs to us directly. H2 things always pick up. This year has been a little bit more tighter, I think. As I said, some of the credit offtakes have been lower, but we are working closely to get this under control. Yeah. And just so that I know how bad this is, I mean, what's the aging year? Have we crossed six months on this INR 10 crore worth? What's the rough aging count there? No. We provide on the basis of expected credit loss and risk provisioning what we do for our cash business. This is based on the—it is not only the MSP. Overall, the. I appreciate that policy, sir, but just so that we're a bit more quantitative, I just would like to understand how bad is this? I mean, is this beyond four months? Is it beyond six months? Just a rough cut will do. I don't need the exact day count. No, no. I'm saying the DSO level, Baidil, in H1 this year is the same as it was last year at this point. In September last year at this point. I mean, gentlemen, for this specific pool of INR 10 crore, I mean, obviously, this is stressful. If it's beyond six months, if it's beyond a quarter, what's the quantitative breakup of that? This INR 10 crores is basically between Q2 and Q3. Q1 and Q2, what is the incremental provision we have made for cash business that this INR 10 crores represents that. And largely, it is because of the MSPs' additional. I think six to nine months would be the pool of time if you're talking. Yeah. That's what I'm—yeah. That's what I'm coming for. Just lastly, if I just got one of your comments right, INR 3,000 crore of RFPs in pipeline. Did I get that right? How should we imagine this going down to CMS? No, no. Let me—I think Anush or Puneet will explain this. If you specifically look at Hawkai, Hawkai has a subvertical opportunity where bank branches are going to move to this level of technology for surveillance, security, whatever they need to do. We had a very intensive project which is going live right now. We know there are many banks which are coming up and working on their RFPs. These are technologically fairly high-end. All of them have consulting firms helping them come up with RFPs. The pipeline of these RFPs will be roughly 30,000-35,000 branches. That will present an opportunity of an INR 3,000-crore revenue size for those banks, just for those 30,000-35,000 branches, to whichever companies are able to win in that. I think it is specific to branch-level remote monitoring solutions where Hawkai is a leading contender. Cool. I got it. Just a very last question before I get back into Q. What's the scale of our payments business today, and what's the playbook here? Specific payments business today. I think from the payments business right now, our payments business is limited to specifically what we do in our card management and card personalization solutions. However, if you go back to what we talked about in the analyst day, I think we are making very aggressive and active efforts through M&A to look at B2B, fintech, and payment-type firms to see how do we expand our range of services to both banks and to NBFCs. Right now, it is limited to what we do through our card personalization services, which is roughly the revenues are reported separately anyways in our P&L. You can have a look. In future, we hope this will grow through more technology and payment companies which will be part of our overall network. That's helpful, Rajiv. Thank you. Is it possible to quantify what the hardware part of our business might be in H2? I mean, because you've already called out the services part. I think hardware businesses roughly, I think as a trend line, are in the 10% zip code each year. The timing of this is not usually under control, but 10% of revenue roughly. Maybe we are overall, Baidil, I think we are looking to have this as a lower percentage, so maybe 7% of overall revenue in this year. All right. Got it. Thank you, Anush. Thank you. Thank you. The next question is from the line of Vikrant Bandekar from ASHOK CORP INVESTMENTS - F amily Office. Please go ahead. Hi, sir. Good afternoon, everyone. My question was regarding the three segments that you have, right, for ATM cash management solutions, retail cash, retail solutions, and technology solutions. How are the profile margins, profitability profile margins defined in each sector, right? Because the businesses are completely different. Like the cash logistics business, you have operational efficiency needs to be on top, and cost leadership is important to grow that business. However, if you look at the technology side of business, the innovation part, the product differentiation comes into play. How is the profile margin defined between these segments? If anyone can take up that. I think, first of all, the three segments we talked about, we will start reporting revenues by the segment by end of the year. We've just finished our large ERP refresh, and we end of the year will give you revenue by the three businesses we explained to you in the analyst summit. Coming to profitability, I think it's not just profitability, also return metrics, ROCs. I think for us, every business. If you look at our overall 25% ROC, I think there'll be some businesses a little higher, some businesses a little lower. Our overall aim is to create these three platforms which can self-fund their growth and therefore need to have and sustain good margin profiles and good return metrics. As a principle, we don't normally invest in any project or business unless we are able to see a minimum IRR of 18% or 20% in the business and ROE in the 18%-20% range or ROC in the 20% + range. We today cannot give you detailed profitability metrics by business simply because the entire network runs together. By then, hopefully, we should have almost 80% of the network running independently linked to that business. There'll still be 20% which will be shared, but at that point, we'll have a better sense of each business's operating metrics at that level. Yes. Just on that, just expanding this question, how do CapEx is defined across these three segments? Is the management focusing more CapEx on the technology side of business going forward as it is a growing business and needs to scale up accordingly to the management estimate of around INR 80 crore side? So is the CapEx going towards more of it and other return profiles matching with that for the technology business particularly? Yeah. Yeah. I think the return profiles on the technology business are very good. They are already very good and strong from what we can gauge from the numbers we look at. That is what drives the investment case for us to approve it and for the board to approve it for us to keep investing in that. I mean, you look at the growth, right? I said 0 to INR 100 crore, INR 100 crore to INR 250 crore is the target. That will need investments. However, I think those investments are starting to pay off for itself. On the second point, I think for us, when you think about any capital allocation, whether it is in CapEx or any other area, I think we are looking at it. I do not think there is a priority on a particular area. There is not a one business gets a little better approach. I think it is simply we compete. We look at what our capital allocation policy is. We also look at the project should fend for itself. If you think of it in the last one year, we had opportunities for, let's say, having higher growth because in some of the ATMs which companies won and they could not deploy, certain banks came to companies like us to come and take up that project to deployment, and we evaluated it. We had the opportunity to get that business and growth, but we didn't think it would be sustainable in a three to five-year period. Therefore, we didn't take that up. We sacrificed and we let go of growth, but we weren't confident of the return on the project, let's say, specifically for the BLA segment. Nice. I think for us, each project has to meet a threshold, has to have a margin of safety. I think all of our business lines are delivering good return metrics, so we're not concerned on this count. Just to know that, are you considering going forward over the next year period? Do you see the technology business covering most of the rather significant portion of your revenue mix? No, no, no. It cannot. No. I mean, if you look at our overall numbers we've talked about in the analyst deck, I think the overall technology sector we're saying should contribute by this year into roughly 10% of revenue. Can we—I mean, you have to keep in mind that we do 70,000-75,000 ATMs in cash management, right? That's a huge revenue stream out. There's almost INR 1,000 crore. Technology can't become INR 1,000 crore overnight, right? No, no. Just it is 7%. Can it go to 15%-20% over the next period of five years? Just wanted to know that. It is a recent business around 2022, and it has scaled up to around 7% in around three years. How are you looking over—will it go to 15%-20%? We are looking at it to cross 10% by FY 2026-2027. If we get that going, I think the opportunity for it to hit 15% in the next three years is quite high. You have to keep in mind. I have said this from the last three years, our core businesses around ATM and cash also have been growing at a very good CAGR. Right. Therefore, the contribution of these high-growth businesses just starting from zero cannot be—they can't become 30% because the other core businesses also are growing well. And we. There's double-digit growth in that also. Correct. We do forecast them to also grow reasonably well. Right. Just on the part of this Virginia business, because it has a large STAM around INR 8,000 crore, as mentioned by you, the BFSI segment, you guys have experience over 15-20 years in the BFSI segment. The customer acquisition becomes easy in that. The management is now targeting non-BFSI sectors and already is in contracts with commerce and even industries. How are the customer acquisition costs different? What are the major problems that management is facing in acquiring those non-BFSI targets? Is the cost and benefit—cost benefit is aligned with that? Just wanted to understand that. First of all, I think for us, in a technology-led business, there is a platform-building cost which is amortized over all customers, not specific to any sector. Then there is solutioning cost, which is client-specific, right? You customize solutions for a particular client. We will only customize—and there is investment in that. Some investments work out, some do not work out. I think for our overall tech business, these are investments you keep making because you are building the toolkit, you are building AI use cases. They will come in handy in other industries also. I think for us, we are only right now able to tackle or cater to clients where there is a large footprint. Smaller clients, we cannot even go after. Unless somebody has 500,000 locations, 2,000 locations, we do not even have the technical people available to build a solution case for them. Neither do we want to focus on it, right? We want to focus on large clients. I think a large client needs CMS. Smaller clients do not need CMS. I think they will have other companies they can work with maybe more effectively. I think the cost for us, because it is a horizontal approach, are—I mean, think of it—there may be some use cases different, but a lot of the platform cost is fungible across sectors. Right. Is there differentiation that makes this business go across? Makes the switching cost higher for the customer, or what is the case for that? The use case I'm talking about for the Virginia. I think it's a good question because a technology-led business, you can get disrupted significantly, surprisingly with some people. I think the way we do this is because there is capital involved. We only work with clients where there is significant lock-in periods, right? We at least have five to seven years. Now, having said that, I think we have come ourselves are disrupted people here, right? Because we are the last to enter the sector in 2021. I can't say that there won't be somebody else who can't do this. Tech businesses across any platform have that risk, and you have to live with that risk. What you can do is keep investing and innovating so that your solution sets are leading, are strong, are delivering value to the clients. I think what is important for us here isn't only just the tech. Is that. Think of supposing you and I want to set up this business tomorrow, right? We have a VP who gives us INR 150 crore. We go and start building this platform. We compete. What we both want to have with a CMS is a company present in 250 locations, have 1,000 engineers in the field to fix things when things go wrong, which happens all the time. Many people deploy stuff, but nobody knows what will happen to the deployment and how do they go fix it when the last-mile issues come up. I think our moat remains our network reach, client management, and also, frankly, the brand for large NBFCs and large banks to trust. Right. Just regarding that, the actual consolidated balance sheet, we can see that there's a significant increase in intangible assets and in cash flow. There has been an increase in purchase of PPEs and intangible assets. Is it regarding majorly towards this technology business, or is it spread across the three segments that you guys are doing? No, no. We have acquired one company, Securance, in this period. This is related to that. Okay. Got it. Got it. Thank you so much, guys. Thank you. The next question is from the line of Krushi Parekh from BugleRock PMS. Please go ahead. Yeah. Hi, team. I just want to first understand that this decline in the business touchpoints, is it purely related to the ATMs because of— What is the reason for the shutdown of these ATMs, first of all? Krushi Hanushya, I think we detailed this somewhat in our investor day, but just to briefly summarize, post the AJ situation, many private sector banks both used it as an opportunity, also looking at overall ATMs which were not contributing meaningfully in terms of transactions, they pruned those estates down. Some of the large private sector banks at the industry level shut down large parts of their offsite ATM network, instead wanting to refocus on setting up new recyclers, either mostly in onsite locations. The second reason for that churn that we witnessed has been public sector banks which had awarded RFPs under mostly the brown label ATM contracts in last year to MSPs. Those MSPs, because of, again, the AJ situation, banks which had curtailed the limits and borrowing exposure to some of the mid-sized ones found it difficult to have the capital adequacy to roll out these contracts. Through most of H1, we've sort of dealt with these headwinds. As we come into Q3, two things have happened, which is, rollout of those private sector contracts has started gaining momentum. As Rajiv said, with ICICI Bank, who is soon emerging as our second largest customer for CMS, we are well on track to deploying these solutions for them. The other set of banks who had given orders to some of these MSPs have reallocated that from some of the weaker ones to the other more willing ones, and those who have the balance sheet strength to roll out these orders. That sort of led to that temporary decline of 4,000 ATMs in the last three months. As we have come into October, we started seeing a pickup in momentum on ATMs coming back into activations. By end of this year, around March, we think we should be able to make good the delta and create some growth for ourselves. Okay. So Anush, just to understand. So a good portion of this pruning is behind us now, and we are now looking at the normalized rate of growth in the ATMs again? Yes. Yes. So it. Okay. Okay. Okay. Okay. H2, this is H1 being a 9% growth. All of this is a contributing factor in that. Okay. Okay. Just to continue on this particular point. Now, the thing is that, again, just some certain grapevines and some other conversations in the industry, a good portion of these ATM sites are permanently out of the system is what the sense that I'm getting, we are getting out here. Okay. Now, if, say, for next one year, two year, I mean, we do have some orders in hand, but if, say, for next one year, two year on odd, if the banks are not willing to increase their ATM sites, is it there something that we have some kind of a plan B to ensure that we remain on some kind of a growth track in this? Yeah. I think good points, right? You have to sort of look at there is no one strategy or tactic being adopted by banks. I think it really depends on private versus public sector approach. For the private sector banks, what most of them are seeming to do is to shut down or reduce their exposure to offsite networks. Offsite ATMs were what private banks used to capture transactions on an acquiring basis. That was from debit cards which did not belong to their banks but from other banks. Over a period of time, with the growth of both public sector bank networks and white label networks and the general decline in transactions, they have found this to be not a very attractive proposition. Instead, saying, "We'll use the capital and the bandwidth to refocus and invest into creating much higher quality networks in their onsite networks," which is their branch. If you look at what, just to give you an example, again, ICICI Bank, what they're trying to do is to remove all of the older ATMs that were there in their branch networks and set them up with new recyclers. Our engagement with them on setting up on our software solution of Algo Multivendor solution is also to try and use this branch as sort of a technology demonstrator for multiple activities that can be done beyond cash transactions alone in the coming period. That's a theme that I think we will start seeing happening across other private sector banks. Public sector banks are still balancing between onsite and offsite. There is no goal there to either reduce ATMs or shut down anything. When we look at the last year, year and a half, out of the top five or six banks in India, both private and public, most of the RFPs or these replacements have only happened on two of these largest banks. The next three or four all are going to come out with RFPs either for replacement or growth of their networks in the next 12-18 months. I think to us, that creates enough of a tailwind and opportunity. Also, bear in mind that I think we've addressed this earlier as well, that the CMS portfolio over a period of last few years has had a strong bias towards public sector banks because we were very late entrant to this market and consequently grew that business on the back of RFPs. Today, with private sector banks wanting to redo and refresh their networks, that becomes a very interesting opportunity for us to start engaging with customers who we haven't done so with so far. Okay. Okay. So broadly, from what I understand, we are still largely dependent upon the trends that we have seen. It's a temporary blip, but hopefully H2 or maybe next year onwards, the lethargy in the system corrects, and we start seeing the growth again. Yeah. I'll just go back to what we said. I think there is a very strong growth opportunity within our core businesses. I think Rajiv addressed this, and we also spoke about this in Agnes today, which is when we just look at the ATM market, the fact that most of the public sector bank ATMs are still not outsourced, the refresh pipeline of these ATMs presents itself as a very interesting opportunity. Yes, we had this blip of two. We see those ATMs coming back into circulation by Q4 and also delivering some growth to us. That Q4 performance will give us a very solid base for FY2027. Okay. Okay. And one more question. So this. It's also a very consolidating market, right? That sort of presents itself as a very interesting structural tailwind to us. True. True. Just one thing also on the numbers. This capital WIP of INR 141 crore. So what would be the breakup of this? I think we'll have Pankaj go through that and come back to you if we can sort of take up another question in the meanwhile. Sure. Sure. As of now, I'm done, but I'll be on the call for that particular. Okay. These are the projects under education. We have around INR 1,400 crore of the project under education. These are the WIPs, CWIPs related to those projects which are under development. Education. Yeah. Any particular projects that you are referring to on this? A couple of projects we have already given, like Union Bank of India, etc., like branch Union Bank of India or some of the other fixed price BLA, etc. These projects are part of that. Yeah. I think if you remember, last quarter, we had about INR 1,500 crore of orders which were pending execution. This quarter, we won INR 500 crore of new orders. And the pending order book for us to execute is about INR 1,400 crore. With such large order books which are both being executed and won, there is always an element of work which has been done and pending approvals will translate into revenues. Okay. Okay. Thank you. Any particular word on the, any acquisition side or on the admission side? Work being done. We will obviously update only when we have something to offer. Right now, nothing. Okay. Thank you. Thank you, team. All the best. Thank you. A reminder to all the participants, please restrict yourself to two questions. The next question is from the line of S.K. Debnath, who is an individual investor. Please go ahead. Hello. Good afternoon. Our GNA improved by the effort for maintaining the present for business as it has been seen for the last 12 quarters. I have some personal query which is related to the ATMs only. As I find that with the increase of the digital transactions, how the ATMs expansion by the banks will take place, say, five years from now. And it will impact our currency logistics business and ATM management business. How you plan to address the same? Thank you, sir. I think for us, when we think of the—sorry. I should be audible, right? Hopefully, the call is going on. I think for the currency ATM business, first of all, if you look at both driven by public sector banks needing to access their reach of customers, their availability, banks need to have X number of ATMs available to consumers at all times. We think there will be some steady growth in the installed base. Interchange has increased by RBI in May, and the white label becomes an interesting opportunity where deployers are looking to increase ATM network in semi-urban rural. We are seeing higher usage of ATMs in semi-urban rural, and that's where we think the PSU banks and WLA operators can service us more. The private banks, as cost of technology remains lower and as people costs go higher, we see private sector banks deploying more machines within their branches as they refresh those branches. Now, from an industry today, I think the overall industry at a managed services level will have six or seven players. We do see this reducing to maybe three or four companies over the next three or four years. Therefore, the revenue size and the pool size for companies will go up as smaller or medium players exit. As you have fewer players, the need for the service will remain. The transactions at the ATM may reduce. If you used to go to an ATM twice a month today, you may go once a month or something. You have to maintain and run this network like you need to maintain and run a branch. I don't think that is going to change in the next five to ten years. Therefore, pricing, which you are doing when there are fewer competitors competing, I think will go up. I think the volume growth may reduce in five years' time, but outsourcing from PSU banks and pricing should make up for it to keep continuing this at an 8%-10% growth opportunity. Having said that, this is a business which was, let's say, 60% of our revenue some years ago, is now at about 50% of our revenue. Over time, as a retail business and a technology business grow faster, the share of this business will steadily maybe reduce, which is also the goal, which is to have more business lines which are able to help us drive growth. I think for us, we look at the fact that. We have multiple lines of businesses. We look to expand into other services which we can cater to for our banking, NBFC, and retail clients. As we drive free cash flow out of our current businesses to invest for growth into new sectors, we should be able to maintain a reasonable growth profile. That's fine. Thank you. I just would like to ask a layman's question. That is, how are we utilizing AI in the days to come? Artificial intelligence. Sure. I think it's a great question. I think for us, AI, we started with extensive machine learning and AI use for our Hawkai platform, which is our remote monitoring solution. We have been doing that for the last three or four years and investing more and more because a lot of the security surveillance and all we are doing through our Hawkai solution is by agents and by AI and not with physical eyeball monitoring. I think that learning is now pervading into our core operations. Puneet explained that in his notes, saying a lot of our route network, where we go, what we pick up, how much we pick up, what's going on, how do we keep changing our routes dynamically basis either seasonality or demand, is all being. We are investing in machine learning with algorithms to help us drive the next level of operational framework. I think for a company of our size, this is a big investment, but for a company of our size, given the amount of—we touch 130,000-140,000 touch points, I think it helps us apportion the cost more easily to drive better, I would say, better margins over time. Machine learning and AI is being used extensively in our core operational business. It's also in our BU, our business line on Hawkai. Okay. Interesting. Thanks for sharing the information. Thank you. The next question is from the line of Praveen Kumar from Acutis Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity and a couple of questions. The first one was on the EBIT margin on the cash logistics business. You've attributed the drop to lower, I mean, lower network utilization and the provisioning. Particularly looking at the network utilization part of it, how much of it do you attribute to the convention slowdown versus these temporary factors which you attributed to in terms of some of the network being down currently? Could you throw some light on that in terms of where do you see this heading in the next in H2 and also during FY2027? This was the first question. The second question was on what you referred to earlier about private sector banks and others, particularly looking more at on-site ATMs rather than the off-site ones. How do you see that impacting your. Revenues in your various segments, this movement from off-site to on-site, both in terms of revenues and some broad margin kind of profile of that? Yeah. Thank you. Praveen, Anush, yeah. To your second question first, it's an easier one. I think broadly, the switch from off-site to on-site, we generally view it favorably for the simple reason that it's not so much about where the ATM is, but what is the nature of the outsourcing model. When banks would outsource in the off-site, they generally had a preference to move to sort of move to a transaction-based model simply because the selection of the site was being done by the MSP and not the bank. Whereas when it switches to an on-site, this is more a bank seeking a higher quality of engagement with respect to how a branch ATM should be serviced. They want partners who are able to bring in that resilience, that robustness, and that quality of service of a very different order than what necessarily was being done at an off-site ATM. That can only happen if there is predictability and certainty of revenues through a fixed price model. We generally sort of tend to have a bias for, one, the fixed price over the transaction. Coming to your earlier question on what has caused that dip in the revenue, as you rightly attributed from an EBIT perspective, it's a combination of three things. The first being the impact on our network utilization. Generally, as we've spoken in the past, managing our network capacity utilization through just running a very high quality of productivity management is something that we've been doing for many years now. Q2 created two unusual situations. The delays in the closure of this large PSU bank RFP, which meant that till that time, it didn't get closed out, we had to carry that capacity and consequently the cost. The second being. The temporary dip in ATMs, which basically meant that ATMs which were installed, taken out, and either were being replaced at the same site or being relocated to a different location from off-site to on-site, we knew it was going to happen. Now, the uncertainty was really in the matter of time. It could be a quarter. It could be two quarters. Now, for that short-term period, just trying to reach the network and ramp up and ramp down the network and capacity and incurring restructuring cost is not really worth it. At the end of Q3 and Q2 and Q3, when we speak about this now, we believe we have a far better visibility to be able to make the necessary changes to our network capacity, both through cost reduction, business which comes back into our network, leading to overall margin improvements, and. Getting it back onto track the way it was last FY. You're right. This is on the physical side of business points impacting our network. The dip in the cash collections on the which are more consumption-oriented in Q2 in retail have also impacted revenue. If you look at our total revenue impact of about INR 18-20 crore, about INR 5 crore a month, INR 15 crore is what is attributed to the ATM side, and the rest would be on the retail. As I shared with you earlier, in October, with spending coming back on the retail side strongly in a 20% increase month on month, we think that should lead to a recovery of this business as well. Where do you see the cash logistics, the margin on that heading in the H2 and next year? I mean, some rough sense? As we said, by the end of the year, we hope to recover that back to where we used to be before this. Understood. Understood. Your earlier response on the off-site to on-site transition, one question I had, I mean, a follow-up question on that was that for an on-site ATM, is it possible that a bank might require fewer services and might want to do some of the stuff themselves? Does that lower the pool of revenue that you can attack versus an off-site ATM? Not really. In fact, if anything, it works the other way around. Conventional experiences, data has shown that on-site ATMs tend to attract more number of footfalls simply because these are branches. More people go to transact there for various reasons. Banks are very keen to switch transactions from branch to branch-associated on-site locations. It is extremely expensive for a bank to have people walk into a cash teller and do any sort of a transactional banking activity. It could be cash-related. It could be account-related. A lot of that is what they want to transition to their on-site ATMs and recyclers. The only delta between on-site and off-site is really around rental and electricity, where in an on-site, because it is part of a branch, those are borne by the bank. When you referred that private sector banks are moving more to recyclers versus regular ATMs, how are you positioned in that in terms of the hardware? I mean, do you have, because you have traditionally had more experience on the traditional ATM side versus the recyclers, how do you see that impact? Not really. I think within the industry, the parlance is CDs, cash dispensers for what is traditionally ATMs and recyclers. Outside them, we generally tend to use ATMs as a catch-all phrase to talk about both. We were one of the first initiators and pioneers of bringing recyclers also into the country. I think it was way back in 2015 or 2014 when we won what was then the largest order for currency recyclers to be deployed across State Bank of India network. We have a fairly deep and well-entertained history of going back. We really are a full-stack solution in the space, right from having the right product from our partners, Hyosung, to an engineering team which understands this extremely well and servicing and solutioning. More importantly, when we combine that with the software platform, the Algo, the benefit of that in ways in which a bank is able to use a recycler and provide a whole host of additional services to their customers, including things like account opening, KYC, and various other non-cash-related transactions, that can be a very powerful combination. In fact, I want to add one quick point. If you think of specifically private sector banks, when they think about upgrading their branch networks and adding more recyclers, they are very hardware agnostic, really. They are very service-focused, like service and quality. In fact, we have one or two clients who would like us to not only work with our current hardware partner, but with more to become hardware agnostic, but they would like to prefer CMS to do the work irrespective of which hardware you're working on. Now, I'm not saying that's a trend for the whole sector and the industry, but at least one or two clients have been focused on that with us. Understood. Thanks for the response. Thank you. Ladies and gentlemen, in the interest of time, this was the last question. I would now like to hand over the conference over to the management for the closing comments. Thank you so much for so many detailed questions. We thought we would have a more descriptive monologue from our side, and hopefully, it will reduce the questions, but I'm happy to hear them out and give you better clarity. As we said, October is off to a good start. We hope that trend bores out well for us the rest of the year, and we hope to have a much better H2 to bring us back online for our FY2027 goals. Thank you for your time, interest, and patience. On behalf of Asian Markets Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.