In September 2021, Rajiv Kaul, vice-chairman and CEO of CMS Info Systems, faced a challenging audience. Investors questioned the future of his cash management business amidst the growing wave of digital payments. CMS, India’s largest cash management company, depended significantly on the circulation and movement of physical currency—at a time when digital payments seemed to dominate headlines.
However, Kaul, a seasoned leader with experience as Microsoft India’s former CEO, remained steadfast. “During demonetisation, they said cash would die. During the pandemic, they said cash was dying. How many times can it die?” Kaul recalled saying. Yet, his investors wanted more than a confident retort—they needed a long-term vision.
Kaul presented one: the company was investing in remote monitoring systems for ATMs, a service designed to oversee automated teller machines and reduce operational inefficiencies. Additionally, CMS was exploring new ventures such as debt collection services and bullion logistics.
Financial Resilience in a Changing Market
Despite investor concerns, CMS’s financial performance remains robust. In FY24, the company reported an operating revenue of ₹2,265 crore and a consolidated net profit of ₹347 crore—marking consistent growth from ₹168.5 crore in FY21. Even with digital payments growing exponentially, CMS has managed to maintain a healthy reliance on cash.
India’s digital payment ecosystem has transformed dramatically, with retail transactions increasing 90-fold in just 12 years. According to the Reserve Bank of India (RBI), the Unified Payments Interface (UPI) alone handled over 16.6 billion transactions in October 2024. PwC’s India Payments Handbook, released earlier this year, revealed that India now accounts for 46% of global digital transactions.
This shift toward digitalization might appear detrimental for a company like CMS. But Kaul and his team are betting on two things: the enduring role of cash in India’s economy and their ability to diversify into emerging revenue streams.
Betting Big on Remote Monitoring
CMS’s foray into remote monitoring began in earnest with the acquisition of Hemabh Technology in 2022. This technology allows CMS to oversee ATMs and detect unusual activities such as intrusions, glass breaks, or smoke using AI-powered video analytics. The move aligns with an RBI directive encouraging banks to adopt e-surveillance mechanisms to reduce dependence on on-site security personnel.
Elara Securities, in a report from October 2024, noted that over 60% of ATMs and bank branches in India are yet to adopt advanced AI-driven monitoring systems. This leaves a significant opportunity for companies like CMS to capitalize on the growing demand. Analysts estimate the total addressable market for ATM and bank monitoring solutions to be between ₹6,000 and ₹9,000 crore annually.
Expanding Horizons: Debt Collection and Bullion Logistics
Diversification efforts don’t stop at remote monitoring. CMS has begun exploring debt collection services for non-banking financial companies (NBFCs) and bullion logistics.
In the debt collection space, CMS aims to focus on overdue payments while avoiding controversial bad-loan recovery practices. The latter has tarnished the reputation of many collection agencies. “We don’t want to enter areas that involve aggressive pressure tactics,” Kaul said, explaining the company’s cautious approach.
Bullion logistics, on the other hand, offers last-mile delivery solutions to jewelers, traders, and bullion companies. This niche service caters to a growing market, providing a potential revenue boost.
Challenges Ahead
While CMS’s efforts to reduce reliance on cash are commendable, challenges remain. ATM expansion by banks has slowed. Between October 2023 and October 2024, the number of ATMs across India fell by 2%, with public and private banks reducing their networks. Moreover, CMS faces increasing competition from companies like Hitachi Payment Services, which recently acquired Writer Corporation’s cash management business.
Kaul acknowledges these hurdles. “Our focus is on profitable growth and market leadership, but not at the cost of efficiency,” he emphasized.
The Role of Cash in India’s Future
Interestingly, cash in circulation in India continues to grow, defying predictions of its demise. As of November 15, 2024, RBI data showed currency in circulation at ₹35.6 trillion, nearly double the amount during the demonetization era. Analysts attribute this trend to India’s GDP growth and the slower-than-expected adoption of digital payments in certain sectors.
Bhavik Hathi, managing director at Alvarez and Marsal, explains, “India’s business volumes are growing at 6–7% annually, and cash in circulation naturally increases alongside. Digital adoption is expanding, but not at a pace to completely replace cash.”
Conclusion
CMS Info Systems stands at a crossroads, balancing its historical reliance on cash management with its ambitions for diversification. As digital payments surge and new competitors enter the market, CMS’s ability to innovate and adapt will be critical. With Rajiv Kaul at the helm, the company is poised to embrace transformation while staying rooted in its core strengths.
The road ahead is fraught with challenges, but if CMS successfully navigates this transition, it could emerge as a leader in India’s evolving financial services landscape.
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