Mumbai: Cash dispenser manager AGS Transact Technologies Ltd plans to clear pending salaries in tranches, and will finalize and share details in 10 working days, chairman and managing director Ravi Goyal told employees in an email, assuring them that the company is not shutting down.
Goyal said that given the disruption in its pan-India operations, business collections have also been significantly affected. Mint has reviewed a copy of the mail sent on 8 April.
In February, AGS Transact informed the exchanges about credit rating downgrades by Crisil Ltd and India Ratings and Research Ltd. A detailed disclosure showed AGS and its subsidiary Securevalue had defaulted on loan repayments of ₹71.6 crore.
Mint reported on 14 February how a cash crunch at India’s second-largest ATM manager began to impact cash dispensers of some of India’s top banks, and eventually led to defaults on bank loans, statutory payments and staff salaries. AGS Transact had 32,151 ATMs and cash recyclers as of September.
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“Given the disruption in our pan-India operations, our business collections have also been significantly affected,” said Goyal.
Goyal said the company is compelled to make some “tough but necessary decisions,” including downsizing operations, which would directly impact the existing teams. However, he did not elaborate on what kind of downsizing the company plans.
An email sent to the company’s spokesperson remained unanswered, while Goyal did not respond to a call and multiple text messages.
“These steps are being taken with the long-term sustainability of the AGS business in mind.” According to Goyal, the situation has been further impacted by the freezing of the company’s bank accounts, “which has unfortunately disrupted the planned disbursement of salaries”.
An employee who received Goyal’s email said he has not received salary for the past six months. “There is no clarity right now but the company is saying they will let us know on salary payments in 10 days. I am awaiting that,” said the employee, who spoke on the condition of anonymity.
Read this | Inside the AGS cash crunch that led to shut ATMs and loan defaults
Meanwhile, Goyal said “AGS is not shutting down” and that the company is “committed to this core area” and is working towards “stabilising and strengthening it further in the coming months”. “We are currently working on a phased salary disbursement plan, which will be finalized and communicated within the next 10 working days.”
The company has seen a flurry of exits at the top. Within days of acknowledging that a cash crunch had forced it to default on bank loans, all four independent directors on its board resigned in quick succession.
These included Jhuma Guha, who resigned citing a “preoccupation elsewhere”; while former Mumbai Police commissioner Sivanandhan Dhanushkodi stepped down from the board citing “personal reasons”. Another independent director, Preeti Malhotra, resigned citing “personal reasons and commitments”, and Subrata Kumar Atindra Mitra resigned the following day, citing “advanced age, health and other priorities”.
Also read | Unpaid salaries, defaulted dues: How a cash crunch at AGS hit banks’ ATM ops
On 1 April, the company informed the stock exchanges that executive directors Stanley Johnson Panacherry and Vinayak R. Goyal resigned, along with chief financial officer Saurabh Lal.
On 3 February, rating agency Crisil had downgraded AGS Transact’s long-term bank facilities to D from A/stable. It listed a slowdown in the number of automated teller machines (ATMs) and risk of proliferation of digital payments as a weakness for the company.
“A structural shift is being witnessed in the Indian payment industry with a strong surge in digital payments,” Crisil said. “This is also having an impact on the number of ATM additions in the country.”
Founded in 2002, AGS Transact has three business segments: payment solutions, banking automation solutions and other automation solutions meant for customers in retail and petroleum. According to its website, the company and its subsidiaries had an employee base of over 9,000—including sub-contracted staff—as of 30 September. According to AGS’ disclosures, the company and its subsidiary Securevalue India had a debt of ₹726.3 crore as on 7 February.
And read | Exodus from cash-starved ATM firm’s board raises questions on role of independent directors
