Radiant Cash: We hope to sustain annual y-o-y growth of 22-24%: David Devasahayam, Radiant Cash
There is a lot of operational risk that is attached to the company, can you just tell us a little bit more about your risk management framework.
Well this is public money that we are handling and it is a large volume of money of around Rs 400 to Rs 500 crores that we handle on a daily basis from over 13,000 pin codes of the county.
The country has got 18,000 pin codes so over 13,000 pin codes our cash custodians are collecting cash on the public, trusting hands over their money to us for logistics management. So risk management is an important aspect of this.
To give an example, last year we moved a lakh and thirty thousand crores and the gross cash loss was only about 2.76 crores. So post insurance what actually impacted the profit and loss was then a crore.
During FY20 to 22 your revenue and your profit clocked in a CAGR of 7% and 2% respectively which has been fairly tepid so what could be now the re-rating drivers, do you think that you can pick up on this growth?
Yes absolutely. I like to point out in the last two years we were impacted by COVID. What we are seeing now in the first quarter is that we are now touching an EBITDA of about close to 26% and a PAT of nearly 18% and this is the future that I would like to predict for the company. It is financially very strong company. It is a dividend paying company to its shareholders. Last year about Rs 57 crores have been paid as dividends and we intend to retain this track record.
Tell us a little bit about your expansion plans, the growth projections, etc, going forward.
As I mentioned the growth is dictated by the number of outlets that we grow year on year. So at the time of filing the DRHP we were at 42,000 outlets. Today we are at 55,000 outlets so there has been a growth of 13,000 outlets. So that means approximately we are growing by about 1100 outlets every month and we intend to retain at least 22% to 24% growth year on year and we also have great operational leverage in this business.
The other aspect is that it is an annuity business, means it continues, like the customers who signed up with us in 2006 are still our customers. So with regards to operational leverage I will give you an example just outside in Maharashtra there was one petrol bunk in 2014 one vehicle was going and collecting the cash from there and coming back, today the same vehicle is going and collecting the cash from that outlet from the petrol bunk but we have 29 points on both sides of the road. So the infrastructure remains the same but this is the operating leverage that we have that the ideal capacities that lie within the network are what is going to now impel our very good returns in the future and it is all going to translate automatically into a stronger bottom line.
How is 2023 going to be different from your previous year for the business?
Well 2022 as we mentioned was impacted by the Covid second wave but there was not complete lockdown so therefore that impact was not there. this is why you will find that the revenue numbers of the first quarter of year 2022 was about Rs 58 crores and now we are at Rs 84 crores in the first quarter.
Now we are back to the way it always was and seeing the strength of the Indian economy and all the Indian businesses we do feel the cash collection is visible and it is having an immediate positive effect on our company. We look forward to sustaining this 22-24% annual growth year-on-year.
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