Ladies and gentlemen, good day, welcome to the Shriram Finance Limited Earnings Conference Call for the Q4 and Full Year Ending 31st March 2023. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Umesh Revankar, Executive Vice Chairman, for his initial remarks. Thank you, over to you, sir.
Yeah. Thank you. Good evening, friends from India and Asia, and warm welcome to all of you who joined this call. Greetings to those who have joined the call from western part of the world. Today with me, we have Mr. Chakravarti, the Managing Director and CEO. We join my own director and Mr. Parag Sharma, Mr. Sunder, Mr. Sudarshan Holla, Nilesh Odedra, and Singh Maan. We also have Ravi Subramanian, MD & CEO of Shriram Housing Finance, and Sanjay Mundra, our IR Head. Let me first give a update on the merger. At the conclusion of financial year 2023, the merger of both Shriram Transport Finance and Shriram City Union Finance stand completed.
On the operation front, majority of the branches of Shriram Finance now offer at least one product more than they were handling before the merger. The IT and HR functions have fully integrated. Let me come to the growth in Indian economy. The Shriram Finance, our activities are closely linked to economic activities. I shall start to give a metric on the latest economic scenario. The Indian economy grew at 4.4% in the quarter ending December 2022. Recent report by ADB, among others, indicates that economy would have grown 6.4 for the full year 2023.
While pace of growth may have somewhat moderated on the account of easing of pent-up demand of post-COVID, still India would continue to grow and likely to be the fastest growing major economy with expectation of visible growth around 6.5% in coming years. On the Union Budget, which was presented in the 1st of February, the government have termed it as Saptarishi. The seven stages in the name of seven stages. Their seven major announcements are inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential of the country, green growth, youth power, and development of financial sector. These are the seven areas on which government is focusing in the budget.
The budget also reiterated the importance of infrastructure with investment plan of INR 75,000 crore on the major, including INR 15,000 crore from private sector, on the major transport infrastructure projects for last mile connectivity for port, coal, steel, fertilizer, and food grain sectors that others good for our segments. Government also revamped the Credit Guarantee Scheme for MSME to take effect from April 1, 2023 with infusion of INR 9,000 crore in the corpus. This scheme will enable additional collateral-free guaranteed credit of around INR 2 lakh crore and reduce the cost of credit to MSME by around 1%. The government also announced in the budget the entity digital locker that is set up for exclusive use of MSME and the distributors to store and share documents online for ensuring ease of credit flow.
On inflation, the CPI in India dropped to 15-month low of 5.66% in the month of March as compared to 6.95% a year ago. In the March, rural inflation stood at 5.51%, while urban inflation stood at 5.89%. Other market policy committee, MPC, in its meeting on April 6, kept the repo rate unchanged. Repo rate thus continues to be at 6.5%. On agriculture and rural economy, agriculture for long has been one of the pillars of Indian economy. Union Budget for the financial year 2024 has been cognizant of this and announcing the measures to bolster the agri sector.
Some of the measures mentioned and taken in the budget are setting up of Agricultural Accelerator Fund to encourage agri set up by any entrepreneur to rural India, creating digital infrastructure for agri, developing massive decentralized storage capacity to help farms. Farmers store their produce and realize mandatory price through the sale of at appropriate time, promoting cultivation of high nutrition cereals such as millet among others. The government announced that total food grain production in the country is estimated for this crop year at 328 million, which is 4% more than the record food grain last crop year, that's 2021-2022. This is significant because the dependent of rural economy on agri and with increased MSP that augurs well for rural economy. It also helps in controlling the inflation for the overall country.
As regards to monsoon production, the India Meteorological Department has forecasted normal southwest monsoon this year. This again, despite some doubts on El Niño impact, this announcement really gives relief. On GST collection, it continues to be good for financial 23. In the March INR 1.6 lakh crore was collected, being second highest GST collection ever. The total GST collection in financial year 23 were to the extent of INR 18.1 lakh crore, a growth of 22% over previous year. Coming to the auto industry. The January to March quarter 23, the total three-wheeler sales grew by 11.6% compared to Q4. The quarter saw 278,878 units being sold against 249,806 units corresponding year last year.
For the full year, the overall growth was 34.3 over the financial year 2022. The sales stood at 962,458 units against 716,566 units in the financial year 2022. Sales medium M&HCV in Q4 grew by 25.3%, with 117,710 units being sold against 23,974 units. For the full year, it grew by 49.2% over the previous year, with the sale of 359,003 units against 247,507 units. Sale of light commercial vehicles grew by 3.4% over the previous quarter at 151,158 units compared to 155,832 units.
For the full year, LCV grew by 26.8% over FY22, with 6,03,455 units against 4,75,989 units. Two-wheeler sales grew by 6.3% in Q4 versus previous quarter. Sales amounted to 36,04,593 units against 33,89,792 units. For the full financial year, the two-wheeler sales grew by 15.9% over FY22, with 1,58,62,000 units against 1,35,70,008 units. The domestic tractor sales grew by 8.1% in Q4 over Q4 2022. Quarterly sales aggregating 2,22,910 units against 2,06,263 units in the same quarter last year.
For the full financial year, tractor sales recorded 945,318 units compared to 842,266 units in FY22, a growth of 12.2%. The construction equipment sales in FY23 grew by 25% over the last year. Again, because of the infrastructure spend and the road building activities. The MSME sector comprises of nearly 63 million enterprises, which contribute 30% of GDP, Indian GDP and 45% of manufacturing and 40% of exports, which provides the employment for 113 million people as per the government data. Also as per the IFC, the International Finance Corporation, the credit need of sector that says gap is 32.5 lakh crore.
Despite this huge demand, less than five million MSMEs have access to formal credit. I'm very happy to say that all the segments which Shriram Finance represent an industry leader and have significant presence, have seen healthy growth. We expect with the recent price of vehicle equipment and property being robust, that will create better credit demand plus which will also help in credit costs significantly. In this year, we also have gone through the, we have done the structure since we have integrated the two companies and we have multi-productWe also have gone through, done the stress test, and the results will also have that in factor. Now I hand over Mr. Chakravarti to go through the operating performance. Thank you very much.
Thank you, Umesh. Welcome all to our Q4 and Financial Year 2023 Earnings Call. We have declared our results for the quarter and year earlier today. I trust you had an opportunity to look at the related investor presentation. It gives us pleasure to report that the merger process has been concluded successfully. As Mr. Revankar has already mentioned in his opening remarks, the process, IT and workforce integration stands completed. The rolling out of additional products across integrated branches has commenced. We are on track with regard to the introduction in phases of these products. Before I start my commentary on key performance areas, I would request you to note that the corresponding previous year's figures are not comparable as the effective date for the merger is April 1, 2022.
On the performance metrics in Q4 FY23, we have registered disbursement growth of 6.19% over Q3 FY23. Our disbursements in Q4 FY23 were INR 31,054.10 crores as against INR 29,245.26 crores in Q3 FY23. Our disbursements in Q4 FY22 were INR 25,054.08 crores. For the full year 2023, our disbursements were INR 1,11,848.44 crores, while in FY22, we had disbursed INR 87,948.67 crores worth of loans.
Our AUM as on 31st March 2023 grew by 4.61% over Q3 FY23. It now stands at INR 1,85,682.9 crores as against INR 1,27,040.8 crores at the end of FY22. Our net interest income in Q4 FY23 grew by 0.41% over Q3 FY23. Our net interest income for the Q4 stands at INR 4,445.89 crores as against INR 4,427.88 crores in Q3 FY23. For Q4 FY22, we have registered a net interest income of INR 2,627.82 crores. For the full financial year 2023, our net interest income was INR 16,963.07 crores.
Our net interest margin was 8.55% against 8.52% in Q3 and 6.96% in Q4 FY22. Profit after tax for the Q4 grew by actually de-grew a little over Q3 FY23. Our PAT for Q4 FY23 stands at INR 1,308.31 crores compared to INR 1,776.97 crores in Q3 FY23. PAT for the full financial year was INR 5,979.34 crores, while in FY22 it was INR 2,707.93 crores. Our earnings per share stood at 34.94 as against 47.46 in Q3 FY23 and 40.15 in Q4 FY22.
As regards asset quality, gross Stage 3 in Q4 FY2023 declined by eight basis points, and net Stage 3 decreased by one basis point over Q3 FY2023. Accordingly, gross Stage 3 stood at 6.21% compared to 6.29% in Q3, and net Stage 3 stood at 3.19% compared to 3.20% in Q3. Our gross and net Stage 3 figures as of Q4 FY2022 were 7.07% and 3.67% respectively. The credit cost for the current quarter stood at 2.24% as against 1.75% for Q3 FY2023. Our credit cost at the end of Q4 FY2022 stood at 2.03%.
Our cost-to-income ratio was 28.29% in this quarter as against 22.23% recorded in Q3. The cost-to-income ratio at the end of Q4 FY 2022 was 20%. Regarding our subsidiary of Shriram Housing Finance, our subsidiary registered disbursement growth of 16.43% year-on-year and 29.98% over Q3. Disbursement in Q4 FY 2023 were INR 1,301.1 crore as against INR 1,117.6 crore in Q4 FY 2022, and INR 1,001 crore in Q3 FY 2023. For the full financial year 2023, disbursement growth was 51.36% over FY 2022.
FY 2023 disbursement aggregated to INR 4,145.96 crores versus INR 2,739.2 crores in FY 2022. Shriram Housing's asset under management as on 31st March 2023 grew by 50.26% year-on-year and by 12.1% sequentially. AUM at the end of FY 2023 stood at INR 8,046.6 crores. As against INR 5,355 crores at the end of FY 2022, and INR 7,178.2 crores as at Q3 FY 2023. Their net interest income in Q4 FY 2023 showed a growth of 3.84% year-on-year, and 44.62% quarter-on-quarter.
Net interest income for Q4 FY 2023 was INR 105.3 crores as against INR 72.8 crores in Q4 FY 2022, and INR 101.4 crores in Q3 FY 2023. Their net interest income for the full financial year of 2023 grew by 54.98% over FY 2022, having come in at INR 387.7 crores in FY 2023 versus INR 250.1 crore in FY 2022. They have registered a profit after tax growth of 68.19% year-on-year and 2.1% quarter-on-quarter. PAT for Q4 FY 2023 came in at INR 37.1 crore versus INR 22.1 crore in Q4 FY 2022 and INR 36.3 crores in Q3 FY 2023.
PAT for the full financial year 2023 was higher by 71.45% over FY 2022. The figures being INR 137.7 crores and INR 80.3 crores respectively. Their earnings per share stood at INR 1.14 against INR 0.78 in Q4 FY 2022 and against 1.12 in Q3 FY 2023. Shriram Housing's gross stage three for Q4 FY 2023 stood at 0.39%, and their net stage three was at 0.69%. These were 1.72% on gross basis and 1.32% on net basis in Q4 FY 2022, and at 1.15% on gross basis and 0.87% on net basis in Q3 FY 2023. The company is investing.
The Shriram Housing Finance is investing in the expansion of its distribution through the addition of across identified key focus states. The company has added 19 branches to its network in the H2 of FY23, taking the total branch strength to 131 as on March 23. Shriram Housing Finance Limited is now a dominant player across southern states and Gujarat and plans to expand distribution in selected focused geographies. I shall now request our Whole Time Director and CFO, Mr. Parag Sharma, to brief you on our fundraising activities and other liability related matters as they have evolved in the quarter. After that, our Joint Managing Director, Mr. Sunder, will give his commentary on accounting and regulatory aspects. Over to you, Parag. A few numbers on the liability side.
Total liabilities stand at INR 1,57,906 crores. 23% through retail deposits, which is close to INR 46,140 crores. Capital market borrowing of INR 44,768, which is close to 22% of liability. Bank loans and institution loan of INR 41,000, which is close to 26% of liability and securitization of INR 22,106 crores, which is 13% of liability. Rest is offshore borrowing in the form of loan and bonds, which is close to around 13% of liability. The cost of funds have gone up from 8.77 in the previous quarter to 8.82 now. The RBI policy increase, rate increase on 8th of February by 25 basis point, which has led to increased borrowing costs.
Borrowing for the quarter was INR 20,000 odd crores, and this is being borrowed at close to around 9% through different sources. Liquidity on balance sheet is close to around INR 17,659 crores, which is good enough to take care of more than three months of our liability repayment, which is INR 16,000 crores. LCR is at around 209 against regulatory requirement of 70% there. Debt equity is at 2.65 versus previous quarter of 3.61. The ALM buckets have been positive and cumulative up to positive by INR 20,000 crores. With this, I will hand it over to Sunder for his opening remarks.
Good evening, everyone. The employee count as on 31st March was 64,052 as against 60,918. The cost to income has, was higher at 28.29%, primarily because of we taking a hit of INR 302.58 crores on account of amortization of the intangibles, which we had created on account of the merger. The PD of stage one was 8.04%. PD of stage two was 18%, and LGD was 42.27% for the quarter ended. As Mr. Revankar had mentioned in his opening remarks, we had performed a stress testing on the entire portfolio post-merger. The stress testing was done by a Big Four, and the impact of the same was INR 295 crores in current quarter.
It is a one-time hit which we have taken on the report. Hence, the credit costs for the year has gone up above 2%, which is 2.01% against 2.01%. There will be some fair valuation differences when we, the standalone numbers of Shriram Finance and the standalone numbers of Shriram Housing, if you add 1 plus 1 will not be equal to 2, it will be slightly different. There's a difference of INR 23 crore on the PAT numbers for the quarter four. That is primarily on account of the fair valuation that we have done. For the full year, it is higher by INR 32 crore, again, on account of fair valuation.
It is more of an accounting comment than, yeah. With this, we open the floor for questions.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 Avinash Singh from Emkay Global. Please go ahead.
Yeah, hi. Good evening. A few questions. First one will be a data keeping, if you can just provide segment and disbursement number for the quarter and for the year. The second question on your intangible amortization that you have taken for around INR 295 crore for the quarter, and it relates to mostly the branch asset and you see life. Now roughly around on INR 1,500 crores, you have taken close to INR 300 crores. Is it like, going to be a first quarter one-time or it's like a kind of a INR 300 crore kind of a, you know, amortizer run it on an annual basis?
Lastly, if you can explain the elevated credit cost, I mean, particularly considering that you have dipped close to INR 580 million overly and still that credit cost is on the higher side. If you can explain. These are my three questions. Thank you.
On the disbursement side, on the, this quarter, commercial vehicles was at INR 12,182.3 crores, passenger vehicles at INR 5,592.1 crore, construction equipment at INR 1,945.7 crores, farm equipment at INR 623.3 crores, MSME, INR 3,572.8 crores, two-wheeler, INR 2,339.50 crores, gold, INR 2,523.3 crores, personal loan, INR 2,250.1 crore, and INR 25 crore revolving loans.
On the intangible, we had created an intangible of INR 1,513 crore on account during the merger on account of the network which we had acquired of SCUF. We are amortizing it to a period of five years, and the hit for the current year has come to INR 302.58 crore. Going forward, in the next few years, four years, it will be INR 75 crore per quarter, meaning INR 300 crore per annum. Coming to the credit cost, as we mentioned, we had performed a stress testing on the entire portfolio, loan portfolio. The additional hit on account of it comes to INR 295 crore. Consequently, due to this the credit cost goes at 2.01%.
Despite the fact that, okay, we have reduced our COVID-related positioning to INR 1,100 crores from the earlier INR 1,650 crores. This, as we have been guiding you earlier, that this is being utilized for giving waivers to the customers who were impacted during COVID times. Thanks.
Okay, thank you.
Thank you. The next question is from the line of Abhiram Iyer from Deutsche Bank. Please go ahead.
Hi, sir. Congratulations on a good set of results. I wanted to talk regarding your cost of funds. You mentioned that it was currently around 8.8% with potential 20 basis points increase coming through. Given that your cost of funds all in would be somewhere around 9% right now, what are your fundraising plans going to be moving forward? You've done a recent private placement of a USD bond. Is the gap between INR funding and, you know, onshore, offshore funding now sufficient enough for you to test the waters in the USD market again?
Incremental cost of fund has been slightly high, I don't expect the full 25 basis point RBI policy increase to be there for us for next quarter. There will be at least 10 basis point increase in the cost of funds for sure from the current level. When it comes to the dollar bond, what we have done is loans as of now and one private placement of a bond. As of now, we are not envisaging issuing a dollar bond in the immediate future. That is maybe not for sure in next month or so because lended cost is still continue to be higher than what we have done through the loan format. We'll continue to look at opportunities at loan rather than looking at bond market.
Which until and unless markets are sufficiently successful, increase, rates come down, we will not be able to tap it. Onshore liquidity continues to be good, that is what we will focus upon, both in the form of retail deposits and the domestic capital market.
Got it. Just some quick clarification. This is more of a sort of a technical question. you've given in your presentation that the NIM on AUM has slightly increased to 8.55%, despite, you know, net interest income on an absolute terms being pretty much flat quarter-on-quarter. Your AUM actually growing by about 4.5% quarter-on-quarter. Am I understanding this correctly on how the NIM on AUM is calculated? Because it seems that this should, like, go down with the higher denominator.
We do an averaging on a daily basis and hence, on an absolute number it's very difficult for you to compute.
Got it.
Opening plus closing by two will not work out. It will be a day-based averaging and hence there will be some difference by what we've committed, what we will be getting.
Got it. Suffice to say there were chunky disbursements, I mean, one or two days where disbursements were much higher towards the end of the month, which-.
That should be end of the quarter it will be.
End of the quarter normally, yes.
Got it. Got it. Thank you for it.
Thank you. The next question is from the line of Samir Desai from JM Financial. Please go ahead.
Yeah. Hi. Thanks for the opportunity. Just wanted to understand more about this one time hit. What led to this higher PD on the portfolio? How could one see credit costs for FY24, especially when we have guided for a potential 3% less kind of an ROA? Thanks.
The PD have been again recalculated based on the current year's, up to December, and we have removed the 50-year which was we are using there. Hence, there will be some shift. This is an yearly activity that we do. Because of that, there has been some changes in the PD. Also the mix of the portfolio also will have an impact on the PD and NVD numbers.
See, basically, when we do the stress test, what happens is depending upon the inflation, the interest rate, interest rate changes, overall liability cost changes. The people who prepare it, this, they also give a weightage to the kind of segment which you are lending to. Definitely it will be little conservative in the way we account it. The PDs will be normally little higher, elevated. We take it in our stride because it is a very conservative and it's good for us to be conservative in this environment. Even though the economic activities are good, the trade cost will actually come down. To be conservative and having a stress test, calculated and taking it account helps us for preparing for the worst.
Fair enough. That is helpful. Secondly, on the MSME and personal loans piece, just wanted to understand, given that SCUF historically, probably did not grow as fast, what gives us confidence that these two segments can meaningfully pick up then, SCUF has historically grown, especially in these two segments? That's it from my side.
See, the basic thing is, MSME we have been growing. It's not that we have not grown, but what gives us confidence that we will be able to grow it faster is the availability of, number one, network. Number two, of availability of people with vintage within the group, where we will be, the idea is that, we should be able to leverage on these two. So that means your, since we have access to lot more locations and with MSME being a focused product for the for the organization, we are, we feel confident that we will be able to grow it.
Okay, sir. Thank you and all the best. That was from us. Thank you.
Thank you. We have the next question from the line of Gaurav Kochar from Mirae Asset. Please go ahead.
Yeah. Hi. Good evening, sir. Thank you for taking my question. Few questions. Firstly, if I look at the credit costs for this quarter, while you mentioned you've changed the PD assumptions and all, the write-offs were elevated at INR 629 crore, if I just calculate the differential in provisions. Going forward, what is the sort of steady state credit cost? Because 2% is what you had always guided for. Taking cues from that and given that we are in a kind of benign environment, does this PD assumptions change that? The overall guidance, I think Samir alluded to earlier at 3% ROA, does this have any bearing on that number?
The credit cost, if you look at it, is 2% for the year ended March, for the full year. I think our guidance of credit cost at 2% will continue to remain.
Okay. going ahead also, the guidance is 2% despite the PD-.
Yeah. That will, yeah, that will remain.
Okay. Okay. Sure. Sure. For the margin, sir, if I look at this, last quarter there was a 138 crore because of the accounting changes that we had done for acquisition or during merger, that related 138 crore was there on the NII line. In this quarter, was there 109 crore, you know, positive impact on NII in this quarter?
It is INR 145 crores in the current quarter.
Sorry, how much is it?
1 4 5.
145. Okay. Just removing INR 145 crore from current quarter and removing INR 138 crore from previous quarter, on a core NII if I were to just compare the two, the NIIs have actually declined and AUM has grown by around INR 8,000 crore. Net-net, the NIM on AUM, on average AUM, would have declined. What would explain that, sir?
It is, it is difficult to compare between the December quarter and the March quarter, primarily because, in December quarter you have two additional days, whereas in, March quarter you have 31 days in, January and March, but 28 days in February, and hence there is an impact of two days and it is substantial. That also you need to factor.
Okay. Okay. Okay. Sure, sir. That would be. Still, I mean, the difference is even if I adjust for that, the difference is large because you've grown, the AUM has grown by around INR 8,000 crores. Unless the bulk of the growth came in the last week of March.
Yeah. We have the reconciliation. You can contact Sanjay tomorrow, and then he will show it to you.
No. You also understand that in the last quarter and last few days, normally the, you know, booking, the loan booking is very high. That also need to be factored.
Okay. Okay. Probably I'll take this offline.
The loan will look very high because of that.
Okay. Sure, sir. I'll take this offline probably. Lastly on this goodwill, or the intangible write-off that you've taken, can you tell me what is the outstanding balance of this intangible, of which INR 300 crore or INR 295 crore has been marked down? What is now the balance which is left?
We had 1,513 minus 303. It is 1,210 is outstanding.
1,513, it could be over five years.
Okay. This INR 300 odd crore will come every years?
Correct.
Every year.
For four years it will come.
This will be like a Q4 phenomenon or it'll be like INR 75 crore each quarter?
It will be spread over each quarter. Every quarter we get 75 point something.
The last quarter we did not take it at that time, therefore it has come together.
Full year.
Full year. Full year we have marked it now. The impact of the full year has come in this quarter. Next year onwards, every quarter it is INR 75.
Sure. Sure. On the goodwill front, that impairment is still-
That will be tested for impairment, but, it should be done every year-end and it's unlikely to have an impact in the next few years at least. That's what we are continuing to believe.
Okay. What's different between, a goodwill impairment versus the intangible impairment that we have done now? Sorry, I joined the call late, maybe if you would explain.
No. The intangible is primarily has been created to get the benefit of tax. Goodwill, as you are aware, it will be developed by the tax department and there will be an impact of tax on that. Whereas the intangible, so you get a tax break, so this can be claimed as an expenditure and income tax allowed there.
No, no. My question was the logic of writing this off and not writing goodwill off, given that the entire acquisition was done as a one transaction.
Yeah. The intangible has been created for the usage of the network of Shriram City Union Finance branches. We have taken an independent valuer's opinion, wherein he say we have feel that the usage of these branches will be for five years and it needs to be amortized over the life of the useful asset.
That is the thought. Whereas the goodwill will be tested for impairment and there, we again, this year also we tested for impairment, it was not impaired. Next year again we will go and test for impairment, and we need to take a call at that point of time. The accounting treatments for both are different.
Right.
Basically, as we've explained, the goodwill, you don't get a tax break. Impairment on intangible, you get a tax break.
Yeah. Yeah. Sure. Sure. My question was more on the treatment, not on.
Yeah.
I'll take that also offline, I guess. Just final question, sir, on growth. This quarter we saw a strong growth in AUM. For next, let's say, couple of years, while you maintain 15% growth guidance, but given that the merger synergies will play through in the next two years and slowly and steadily we'll see more and more branches, you know, doing more disbursements of each other's loans, Shriram City Union's branches selling transport loans and transport branches selling car loans. Taking that cue, do you see any sort of improvement in the loan growth guidance that we have given at 15?
No. Right now we are committed to the 15%. The other point is, Shriram City Union Finance branches may not be very accurate to for the commercial vehicle business because, in fact, if you look at it.
Shriram Transport has much larger network than Shriram City Union Finance, Shriram City Union Finance. It will be actually the retail side which will grow faster because of the erstwhile Shriram Transport branches.
Sure.
Barun, the focus will be to improve on the net profits, bottom line rather than the top-end growth.
Right. Perfect. Perfect, sir. Thank you so much. All the best.
Thank you. The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.
Thank you for this opportunity. I just wanna stress on the liabilities again. Have you done any kind of prepayment of ECBs? If we have, how is the bond market looking at us? What kind of domestic bond issuances are we looking at in this fiscal? That's the first. Second is on, again, you mentioned on the growth driver. Are we to look at some amount of product mix change going forward in 2024, 2025 as the retail is being more dominant? The second and third is just a data keeping question. If you can just tell maybe two-wheeler disbursement again, sir. Thanks.
On the buyback of offshore bonds, we have not done anything in the current quarter. We did it in the previous quarter. In fact, previous two quarters we did close to around $230-odd million, which was well received by the investors. In fact, the secondaries also performed well. Current quarter we have not done anything. We have maturities in the month of July and August, and that is what we are looking at. When it comes to the other data points, be it two-wheeler disbursement and growth. Two-wheeler disbursement, you know current. Actually that's one point that I missed out in my statement. We have disbursed nearly close to 1.2 million two-wheelers in the current financial year.
We expect this to grow by about. See, we are actually more focused on the number of two-wheelers funded rather than on the amount. The target to the team is also on the number of two-wheelers. We expect it to grow by about between 10%-12%, depending on how the industry is faring. See, one thing in this is the south is not. I would say the south markets, there is a degrowth in the south markets. The growth is coming from Bihar, UP, Madhya Pradesh, Rajasthan. These are the. Plus some of the northeast and like West Bengal. These are the states that the market is growing at a faster pace. Going forward, we will see the growth there.
From the any bond issuances are we looking at in this particular year, FY 2024? What's the quantum, sir?
Domestic or offshore
Domestic. Domestic.
Opportunities? domestic we do keep doing the regular private placement, which will be continuing.
Right. Okay, thank you.
Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal Financial Services. Please go ahead.
Yes. Good evening, everyone. Thanks for taking my question. Again, going back to the margin question, sorry to bother you with it again. I mean, if we look at the reported margins, we're really not seeing any compression in the reported margin. As a matter of fact, on a sequential basis, it's expanded by three basis points. If we look at the accretion to the interest income, again, I'm just looking at the last three quarters, from Q2, Q3, and Q4. I mean, last quarter also we added close to, I would say, INR 8,100 crores in AUM. This quarter also broadly similar number. While we accreted INR 300 crores in interest income last quarter, we've not seen the same accretion in interest income this quarter.
Are there any one-offs in the interest income in the form of any interest income reversals?
See, we'll do one thing. Okay, you contact Mr. Sanjay. He'll be able to forward it tomorrow morning. We don't have the number right now. We'll forward it in the morning.
All right, sir. Again, one last question. While we have done that stress testing, and like you suggested, taking a one-time hit of INR 295 crores, if you could help understand, this one time hit is in the nature of higher provisions driven by higher PDs or these are in the nature of, I mean, write-offs of about INR 295 crores that you have taken during the quarter? Also a related question. In which particular product segments, I mean, were these more pronounced, the stress testing? I mean, what was the outcome of that? Are there any particular product segments which were relatively more stretched than the others?
The stress testing when it was performed, apart from the PD, AGD, what the company has been taking into account based on the historical data.
The consultants also looked into macroeconomic factors like GDP, CPI and bank lending rates. This is that he had performed his test case and the numbers was elevated for marginally elevated for almost all the products, whatever we are into. They had come out with a number and whatever was the differential provision. See we were, let us say, we were holding INR 11,000 crore of provision in our books, and they were saying it INR 11,295. The differential INR 295 was taken as an provision and not a write-off. In case you ask us the product-wise GNPA, okay, maybe we'll try to extract that and then try to give it. As of now, we don't have it right now.
No problem, sir. Sir, again, excuse me, one last question in the interest of time. I mean, the effective tax rate that we've seen this quarter, was elevated. I mean, was it anything to do with this impairment of intangible assets?
No, not to do with this. It was more to do with the benefit that we had taken over past few years. This tax rate will be elevated for the next couple of years. That is what we want to guide. We are preserving the ECL provision, which we have already claimed in the previous years, so that we are, required to pay and hence the impact is coming on the tax front.
Sir, if I kind of, I mean, understand you right, you have taken some benefits on ECL provisions in the prior years.
Yeah, it was. Earlier it was, we used to maintain separate set of books few years back, and we used to claim it as an expenditure, and the department was allowing it. Once the India AS came into picture, we started moving out of maintaining two sets of books for income tax and the shareholders. Whatever benefits we got in those years, now we are required to. It's more of a timing difference. It will be next couple of years at least that tax rate will be at around 30%, I would say.
Sir, I mean, essentially for the next few years, the effective tax rate is now going to be at 30%.
It's couple of years, yeah.
Got it, sir. Thank you so much, sir. I will maybe come back with the questions to you and wish you and your team the very best.
Thank you.
Thank you. The next question is from the line of Bunty Chawla from IDBI Capital. Please go ahead.
Thank you, sir. Thank you for the opportunity. All my questions are answered. Just a data point, if you can share. Write-offs for the full year and write-off for the Q4 FY23.
The write-off for the current quarter is INR 805 crores, and for the full year is INR 2,615 crores. The provision, including the one-off provision of INR 295 crores is INR 379 crores. For the full year, the provision is INR 1,545 crores. The pre-cost for the quarter is amount which is 805 plus 379 is INR 1,184 crores. For the full year, 2,615 plus 1,545 is INR 4,159 crores.
Thank you, sir. Thank you. That was very helpful.
Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead.
Yeah, hi. Thanks for taking my question. Just a couple on, you know, personal loans and gold loans. You know, personal loans is what really gives us the confidence to grow so fast, you know, in an unsecured product. Can you give us some more color on this business in terms of, you know, are these cross-sell customers? What is the average ticket size? If there's any bureau data of these customers? Secondly, on gold loans, you know, our plan was to scale it up in the last analyst meet when we met. Gold prices are also up, but, if we look at, the book, it's been flat in the last two, three quarters. Just your thoughts on that.
Yeah. Yeah. On the personal loan, we are now almost done with our legacy book, which is a market where we were doing personal loans in the market. Today, it's entirely the in-house database of our existing customers who have either completed a cycle or who have completed at least 75% plus percentage of their loans. One. Two is average ticket size is around INR 50,000-55,000 today. This is also because there are also a lot of customers where who have serviced these loans a couple of times, two, three times, and they are small businessmen where we give them up to 1 lakh loan. The average is about INR 55,000 today, and the average tenure is about 20 odd months.
The confidence is that we have mined about close to 5%, 4.5%, 5% of the eligible database of our customers so far. The idea is to go ahead and mine it a little more aggressively. As I said earlier, now that we also have the support of the erstwhile SCUF team and the branch network, we will be able to service our these customers. That's one. The other point on the gold loan is, on the gold loan, yes, we will scale it. We are in the process of scaling it up. For starting, setting up a gold loan, one is you need to set up the infrastructure and also train people.
See, we do not, have, we do not, have appraisers on contract basis. We go with our own team. We train our people on appraisal, appraising the gold. Second is we need to provide a secured room, you know, CCTV camera. All this infrastructure, which we are doing on a phase-wide basis. Probably by the end of the year, you will see the impact of the all the new branches, adding to the disbursement of gold. Does that answer your question? Hello?
The line for the current participant has disconnected. We will proceed with the next question from the line of Aswin Kumar Balasubramanian from HSBC Asset Management. Please go ahead.
Hi. Just wanted to understand in terms of the liquidity policy. Prior to merger, you know, Shriram Transport used to carry about, you know, INR 17,000-18,000 crore of cash and bank balances, and SCUF used to carry about INR 5,000 odd crores. Now the total currently there are about INR 16,000 crores. It come down a little bit. Just wanted to understand, is there any thought process in terms of as a proportion of the balance sheet, what is the liquidity that you would like to maintain?
I think we always had a policy of maintaining three months of liability repayment as liquid as cash. That has not been changed. Only during COVID period, we enhanced that liquidity buffer from three months to close to around six months. As of now, what we have is INR 17,600 odd crores. I said the debt which is maturing for next three months is INR 16,000. That is good enough to take care of three months of liability repayment. That policy has been there for last I think more than 15 years. That we are not going to dilute, but there has been a constant demand that why we are carrying a higher liquidity buffer and not reduce it.
We said we will always maintain three months, and that continues. As of now, what we have is for three months of repayment, which is close to INR 17,000 crores. In case liabilities goes up, this will be further increased, but not going to be diluted for three months of liability repayment.
Thank you.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Umesh Revankar for closing comments. Over to you, sir.
Yeah. Thank you for participating in this call. As I was telling you, we are in, our economy is doing well, and our segment which we are in are growing. We feel that the growth will continue and as we've given guidance for three years, 15% AUM growth, will continue, will be our focus. Also as the underlying focus will be to grow more on the bottom line and improve our profitability. Thank you very much for participating again. Again, we'll meet again in the next call. Thank you.
Thank you. On behalf of Shriram Finance Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.