Q4 20/21

May 7, 2021

Ladies and gentlemen, good day and welcome to IISL Finance Limited Q4 FY 'twenty one Earnings Conference Call. 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. Please note that this conference is being recorded. I now hand the conference over to the management. Thank you, and over to you. Good afternoon, everyone. On behalf of team IFL Finance, I thank all of you for joining us on this call. I'm Rajesh Patel, Chief Financial Officer, accompanied by Mr. Nirmal Jain, our Chairman. Also on this call are Mr. Manu Rachra, AFL Home Finance Mr. Venkatesh Sen, Managing Director, Samartha Microfinance. I'll hand over to our Chairman to comment on the macro environment and the group's Thank you, Rajesh. Good afternoon, Brent. We are really living through hard times With March social and health crisis and the 2nd wave of COVID has been a really cruel for India. All of us are some low ones affected by and going by the pandemic history, The steeple the rise, the steeple the fall of virus spread should be. So we hope and pray that with not much damage this passes us by quickly And we get back to our normal lives. So we have everything possible for our employees as they have dealt with those challenges valiantly. And our message to our employees is also clear to have compassion for the customers as well. The energetic, understanding, flexible In handling customers, we are genuinely impacted. In our previous call, I actually had confidence about the V shaped recovery, And I do hope that this wave is a blip and things will get better soon. We have done this to be cautious in certain spec about the impact of pandemic. At Arthel, fortunately, our product mix is dominated by Home Loan and Gold Loan, and both deals are fully backed by safe consultants. This will also help us maintain superior asset quality and our overall GMPA and NNPA are below 2% and 1%, respectively. But at the same time as lockdowns affect livelihood and income in our portfolio, microfinance and unsecured business loans are most affected segments. And considering the headwinds in near future, we have aggressively taken write offs and provisions, particularly in unsecured portfolio of microfinance and business loans. Our business loans, 2 thirds of business loans are secured and our 3rd is Thank you all. And therefore, during this quarter also, we have loan losses and provisions which are significantly higher than the long term norms that we had since last year. We started the process of transferring real estate loans to an alternate investment fund so that we can refocus our business model shortly on detailed note. The COVID affected the fees working on it during the last 2 months and caused some delay, but now the process is on track And Erez SSV Singapore Fund has signed the contribution agreement. And the first grant, which will be about A third of the proposed portfolio that is to be transferred will move to the fund in next few days, maybe in a week, and the remaining assets will move in a few weeks Thereafter. Now coming to financial performance, I'm happy to report that our profit before tax across the milestone of INR 1,000 crores and the quarter post tax profit was INR 248 crores, which generates an annualized ROE of over 30%. Our costincome ratio has fallen steeply from 52% last year to 35% this year with higher volumes as well as higher margins and cost control. Our capital adequacy for the listed NBFC is now over 25%, which leaves adequate margin for future growth. Our loan AUM is a little short of INR 45,000 crores but grew 18% last year against all odds of lockdown and liquidity challenges. Our strategy to participate with banks as well as FinTech is on track and yielding expected results. We continue to invest in technology and people and we launched first of its kind app which is called My Money For Paperless, instant digital business loan with Property Technology. During the last quarter, we expanded our branch network, The things are looking much better in terms of the likely impact of COVID. And we added 135 branches and hired or added About 1800 people to Ironman Park. We'll wait for some time and once things get normalized, probably we'll Expand our branch network further. So to sum up, we look at environment with cautious optimism cautious because we don't know when When this pandemic ends, I'm optimistic because we know it will end sometime soon. Now these times call for extraordinary dynamics. If things get more challenging, we should be adequately cushioned. And if pandemic eases and credit demand occurs, we should be prepared to seize the opportunity. Thank you. Now I hand over to Rajesh to give you business information, please. Thank you, Mr. Jain. I'll just take you all through our business and financial updates in brief. During the quarter, IACAL Finance's total comprehensive income was INR 4.70 crores, which was up 17% on a quarter on quarter basis and up 3 92% on a year on year basis. We recorded our highest ever pre provision operating profit of INR 650 crores during the quarter, which was up 6% on a quarter basis and 85% up on a year on year basis, driven by higher volumes, better margins and cost optimization. Our loan AUM at INR44,688 crores was 6% higher than the previous quarter and 18% higher than the same period last year. Our core segments, in fact, grew faster at 21% year on year to reach INR 39,790 crores. Our disbursements for all core products, Except business loans continue to surpass pre COVID levels. Retail loans, including consumer loans and small business finance, constitute 90% of our loan book. A strong characteristic of our loan book is a large proportion of loans that are compliant with RPIs, priority sector lending norms, PSL. Aggregate, nearly 36% of our loans are PSL compliant. Gold loans are not deemed to be PSL compliant. The large share of retail and PSL compliant loans of significant value in the current environment where we can sell down these loans today's long term resources. In line with our capital optimizing strategy, 33% of our AUM is assigned or securitized as of March 2021, up from 31% as of March 2020. Our cost to income at 35% was significantly lower than 52% of FY 2020. In fact, for quarter 4, our cost to income was 33%. Annualized return on asset based on quarter 4 results is 2.8% and return on equity was 20.7%. Our Tier 1 capital adequacy stands at 17.5% against the minimum requirement of 10% and total capital adequacy at 25.4% against the statutory requirement of 15%. Our average cost of borrowings declined 13% on a quarter on quarter basis and 56 basis points on a year on year basis at 8.8%. Consolidated GMPA and NMPA at slightly below 2% and 0.9% of loans, respectively, is much lower compared to 2.9% and 1.5% respectively in quarter 3. The collection efficiency for most products continues to be on a rising trend. Our provision coverage, including standard assessed provision under India's norms on Stage 3 assessed was 186% as of March 2021. Moving on to liquidity updates. During the quarter, we We waived INR3889 crores through term loans and refinance from banks, including debentures. In addition, loans of INR 3,189 crores were securitized or assigned during the quarter. Our public issue of unsecured subordinated debt March 2021, it was highly successful as we raised INR 6.70 crores, more than 6x the base issue size. Cash and cash equivalents and committed credit lines from banks and institutions at INR 5,275 crores were available as on March 31, 2021. We continue to have real exposure to commercial paper. We have a positive ELM in all buckets whereby inflows cover or exceed expected outflows. During March April 2021, we bought back USD 9,000,000 nominal value of our MTN issue, which we had done last year to the open market. This is as per the maximum permissible amount that can be bought back currently under RBI regulations. A brief update on our digital focus. We continue to focus on digitization and analytics to improve customer experience and enable a convenient one stop shop for customers' credit and investment needs. We have completely digitized our business loan journey right from customer onboarding to underwriting, disbursements and collections. We are collaborating with the Fintech ecosystem to further enhance our platform and customer experience. We have recently launched My Money app for paperless, instant, unsecured business loans. We have enabled digital top up for our high quality secured MSME loan customers, wherein the entire journey is paperless, right, from communication for sanction letter and e agreement is sent to eligible customers via SMS and the disbursement is automatic with no manual intervention. Jatpatt Home Loan app is a pan India product for instant home loans, helps all the stakeholders in the housing finance industry, be it individual home borrowers, developers and the company, they get a loan in an instant manner. Our home loan disbursed by Jephart loans has gained significant traction. After the total home loan disbursed in the month of March, 99% was sourced through Jetpack loans. The corresponding percentage in March 2020 was 54%. In addition to digital top up and renewal of gold loan launched earlier, during the quarter, we have launched a facility for customers to avail gold loans directly from their home The loan officer visits applicants' home or office and the entire process is tablet based from onboarding sanctions to disbursing. IFL Loans app is being increasingly used for various transactions by customers and has been especially beneficial during COVID lockdown times, giving customers ease and convenience of access. This app has been downloaded more than 6,000,000 times till now, and we have more than 2.5 LAC active users on the app for the month of March 2021. With this, we bring an end to the update. We can now open the floor for questions, please. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue The first question is from the line of Prashant Sreedhar from SBI Mutual Fund. Please go ahead. Yes. Good afternoon, sir. Hope I'm audible? Hi, we can hear you. Hello? Yes, please go ahead. Sir, if you could just tell us as of now how much of one time restructuring and the DCCO extension is done? So one time restructuring, we are done with about INR 500 crores and DCCO, we would have done, we have said, about INR 2,400 crores. Okay. And how much of this DCCO would move into the real estate fund once that comes in? So I think because almost when I say 2,400, It's almost half the real estate book and DCC has been done only in real estate portfolio. So most of it will move to the fund. Sure, sure. Thanks. And the second question was, when we look at disbursements, Especially in the MFI and business loan space, over the last two quarters, how much would have been disbursed to an existing customer Or to a customer under some sort of stress, maybe 0 plus if that's a metric? So in business loan, the Existing customers would have got under the GOMA scheme. What is the amount there? INR45 crores. In case of microfinance, We don't have the data, but a good number of customers will have got a top of blue depending on their track record. Okay. And what would be the filters we applied there sir before we do a top up loan? Yes. Good question. So Basically, we look at the loans should be current. It shouldn't be an NPA. And we look at the check record of the customer with us, how long the customer has been and what has been overall check So in case of business loans, you are getting I mean, we have more or less restricted only to Who are eligible for this GECL scheme on the garment and focus on that. Sure, sure. Thank you so much, sir. I'll come back in the queue. Your concern is valid actually in terms of how the Because there's always a fear of ever bringing on the boot, and we are quite cautious about it. Yes, yes, sure. Thank you. The next question is from the line of Rajeev Malhotra from Canada Investments, please go ahead. Hi, good afternoon, everybody. I have a macro kind of question. In a time when a lot of people would be looking from corporates, especially in the finance of acquiring or setting up banking. Is there any long term plan of IFL for that? Long or short term plan? Yes. So banking is something that we are Very well. So at this point in time, there's nothing on hand, but what we plan to do is let's set up a team internally and maybe Some consultant will figure out that what is the feasibility of becoming a bank and what is the cost And what does it mean for all the stakeholders? So we maybe next couple of months, we do propose to undertake an internal study with the help of some A consultant question is required. Okay, okay. That sounds good. Thank you, sir. Thank you. The next question is from the line of Bhrirapodhar from Sapphire Capital, please go ahead. Hello? Yes. Yes. So I just wanted to understand now given the second wave and uncertainty, is there any thought process you can put on the credit cost that we might want to Kind of in FY 2022? See, our unsecured portfolio of microfinance and business from footwear is just about 15% of Credit cost actually, so last year was definitely a quite exceptional year and Our credit cost in terms of lower losses and provision has been significantly higher than the historical 10 years, if you see before that. So currently, if you really look at it, it may be as bad as last year or better now Because given the fact that cold is there and nobody has a clue that what's second place, third place and how good it pan out ultimately. So worst case scenario, in my opinion, will be what was there last year, but most likely probably we'll be better off and that will have a better credit cost and provisions as compared to last year. Yes, understood. And in terms of growth So even if so even if your organic growth, As much as last year, which is exceptionally high in terms of the provisions, if you look at our balance sheet of our profit margin for 10 years. But then also I think we are fairly good. I mean in terms of whatever profit we have, we can maintain the normal growth there. Okay. Normally, that like 20% is what we kind of have been doing, right? Sorry, can you repeat? So in terms of growth, like 18%, 20% growth is what we have been doing. So is that what we want to target this year as well? Yes, I think, yes, that's a good target to have. Last year also we grew 18% and last 5 years as our compounded average is in the same range. So 18%, 20% is a good volume growth target. Okay. Thank you. Thank you. The next question is from the line of Chetan Koleira from Pragya Equities Private Limited. Please go ahead. Yes. Hi, congratulation for good set of numbers. Can you hear me? Thank you. Thank you. Yes. I just wanted to understand that CRE asset transfer, what will be the impact on The Palencik as well as P and L, is there any? Yes. I mean, it's a good and large discussion. So the assets which are transferred will basically release the cash flow and capital to that extent, But it is 1 third of the book so 1 third of the portfolio, which is there right now will become will be classified as investment, At least one part of the portfolio and the remaining basically so the rate happens is that we got all these divestitures which we sell it through a fund, fund buys it And FOD gives you the units in return, and those who are buying units, they give cash. So basically, what we expect is That's about 2 thirds of money you should get back in our hands. And the remaining one time that remains should basically attract No, the capitalization also 100%. So at least whatever portfolio we transfer, 2 thirds of that will get released in terms of capital and in terms of cash flow also. It can be a little less than 2,000,000 also because 100 is the minimum that we need to keep. But at the same time, what it does is that there are Couple of things that happened which are also very interesting to understand how this works. So what is happening is when there are large books and supposing 1 quarterly payment is delayed and it becomes MCA. And the project may require some last line funding because what cash flow they forecast and the actual bookings are less, but still you think project is good. That is really difficult for an MBSE to support something which will become an NPA. But in front, because you don't have a quarterly payment structure or whatever, and we are providing for Liquidating the funds, so that the last mile completion will be passed and none of the projects will get stuck for last mile cash. So our plan broadly is that INR 3,000 crores portfolio will be transferred and INR 600 crores will be kept as cash out of the total INR 6 single crores. So the portfolio that we are transferring should get executed very fast and should generate the cash flow, so that it gets it pays the external as well as that. Now our investment will be valued on the basis of fair value by maybe rating agencies. So depending on the cash flows of the project, We may not be able to accrue much on the portfolio that we are holding. So the cash that we get If we are able to deploy it in our other businesses like homeroom, go to loan, then it reduces our need to borrow and start generating that kind of return. But immediately what NIM received, which is about 14, 14.5% in the net debt portfolio, that goes away. We'll be able to approve on our 1 third portfolio depending on the fair valuation. The remaining 2 thirds or whatever cash which we get, we're going to deploy that in the business. So that is 1. But what it does that incrementally we won't require provision on this portfolio because if you see last 4 quarters then given The stress in the overall sector is trying to be conservative because the portfolio is going to get transferred. We've been making provisions in this portfolio quite aggressively. How much will it be though? But it will also reduce the provision in damage that we have. So this won't be a there won't be a one time effect. It will be like slowly, slowly effect will be there for the Unlike some others, what we have done is that we have been writing down the portfolio as required, but there won't be any one time impact because The transfer is more or less at the current value. It will be a small impact, but it will be significant. Okay. And the second question is we have Various businesses, what is the eventual game plan? There will be a different 2, 3 companies out of this IFM Finance or You will be going to be buying or something, what is cost given to your game plan? To gain plans for asset financing? Sir, we have microfinance business. We have a home loan finance structure. You can have a different company for each sector. It's the whole sector, each sectors are very large. Yes, because the size of these businesses now It is in a way sometimes closer to some of the companies I had in yesterday. But at this point in time, so there are 2 alternatives. 1, that somebody asked us whether We can become a bank, we want to evaluate that. If you become a bank, then there is no point in listing these companies separately. The other alternative is that we decide not to become a bank. And at what point in time we should basically get the receipt separately? I don't know. I think that nothing in near future. So as of now, The most likely scenario we continue as we continue as 1 entity with 2 wholly controlled or wholly owned subsidiaries, more or less wholly owned. It may be 99% of sales in case of microfinance. But that I will continue. But we are open. I mean, different. The business is I think the typical size and we find that they can be good investor and it makes sense for all the stakeholders to separate them, We can look at that. So historically, if our group, you see them, we separated wealth and these businesses and we had high quality investors and gave the critical mass and they could affect a separate set of investors. But in this business at this point in time, there is no plan. Thank you. We would request the current participant to please come back in the question queue for any follow-up questions as we have several participants waiting for their turn. The next question is from the line of Mahesh Varma from Citigroup. Please go ahead. Thanks and congratulations on a good set of numbers. I had 2 key questions. First one was regarding the recent complaint which came out against you and apparently which has been which is being investigated by Ministry of Corporate Affairs. I know your response has been there in the public domain as well, but I would I want to get some clarification about how you are thinking about how this thing proceeds and is there anything that we should be worried about? I know you have mentioned about the background of the portion as well, but at the same time, just your thoughts And how it progresses, so we'll appreciate that. And the second will be with respect to The disruptions, the potential disruptions to your business in light of the impending lockdowns everywhere, I know there is no national lockdown, but Regional lockdowns and disruptions to business is likely which is going to have an impact on your earnings. So how do you think about that? And how should we think about the impact On your financials as a result of this. Thank you. So thanks. So the first way I complain now, now This gentleman who was a borrower earlier, but now we don't have any exposure to him. So he has defaulted to suppliers And there are many customers who have bought from ICILS from his dealer company and some of them have taken him to NCLP also. There are quite a few consumer companies. Now, Gerhard of NCFT, he decided to sell his project to a builder, that is far more reputable builder with a very good tech record, Which is Saia and Saia's the company name is Saia. And their promoters also have given personal guarantee when they have taken over this project. Yes, financially, we are concerned. We don't have any exposure to this person who is making who has logged All good, given this inputs to the new part of new story in the electronic media. Now as we have said in our Response which was on the given to the exchange, we have talked about Ministry of Corporate Affairs complaint, but we have received no communication And there has been no inspection by Ministry of Corporate Affairs till now. And we also do not know that on what ground He is seeking inspection by the history of corporate affairs. So unless we hear something from NCA, we really can't comment on that. Having said that, the other as I said, the financing, we don't have any exposure, but there are a lot of criminal companies which are doing well against this gentleman. But after this story that is coming, we'll also take legal action against them and try and get an injunction to avoid him spreading All must be without any evidence or without any dates. So we'll take some incorrect election there. So does this answer your first question? Yes, broadly. But at the same time, he in the complaint, There are definitive points which have been raised about how the trail has worked. And apparently, that is what he is alleging. So from your perspective, are you planning to come up with a point by point kind of rebuttal to those? Or would you leave it as is and just go for a Regal action against him? Yes. So we'll go against on Regal action. They are completely baseless point because what you have said, I. E. Down tripping or evergreening, which again is There are a lot of contradictions in what he has given. We have given our response to the Media also which, you know, the partially carried the partially did not carry some of the responses there in this article. But his entire Whatever complaint is given is completely baseless and it's too frivolous to respond to. But our legal action against FIM is For damages that is causing by much cleaning, giving false information. But We have responded, but I don't think it merits point by point rebuttal. Nonetheless, any investor has any that you want to know more about any of the points that he has, he will be happy to I'll give you the clarification on more details about the details. Okay. Got it. Yes. So I if anybody is more interested, then you can take out the point from that and then Shriykar will give you the details. Coming to the lockdown impact, as of now, as we speak, lockdown impact is minimal because Most of our branches and most of our operations are still live because these lockdowns have exempted the financial services, not only capital market, But all the financial services from including NBFCs and banks, so we are able to operate. Many people are working from home. But At least now we have a playbook because we passed through the entire pandemic last year. So more or less business is not impacted much. If it is impacted in terms of collection efficiency and listing over a period of this quarter, we'll discover that and we have prepared for that. The volume growth may slow down particularly in business growth, but that is intentional because we also want the environment to become clear before we are able to do much. There will be some impact because some of the branches are closed. Now I don't have Precise number, but maybe all over the country about 3%, 4% of our branches may be shut down because of lockdown and the conditions in those micro regions. But the impact as of now appears to be minimal. And from a collection point of view, are you Seeing any difference in the past month as compared to the previous month? Or so far it has been relatively unchanged? So there is a margin decline in the month of April as compared to March. But many times these things pick up in the last month of the quarter as well as end of the quarter. But in the 1st of April, when we look at our collection efficiency, there is a marginal decline as compared to the previous month. Right, right, right. Okay. And the final thing is with to your plan to sell your assets, the loan portfolio, for real estate to SSG and a few other investors, which have been mentioned in the public media. How should we See this in terms of your overall portfolio getting impacted. I think your real estate exposure, if I'm not wrong, was Something like 12% to 13%. So what is the change going to be after this transaction? So already real estate portfolio has come down to 9.5% now. When you look at our March numbers of the year end and the last year end, so the 9.5% will become insignificant. So as I said, there are about INR 3,000 crores portfolio we are moving. The portfolio that we are not transferring is either Yes. Are the loans which you get over very soon because of the cash flow? Or they are very small ticket loans, the 5 crores, 10 crores, 20 crores where And many of these are 2 are already cannot come in for construction only. So that is not the portfolio that we want to transfer. But I think once we get done, the 9.5% will come much below 5%, I guess, will become relatively insignificant. Thank you. We will request the current participant to please come back in the question queue for any follow-up questions as we have 7 participants waiting for their tone. The next question is from the line of Hello? This is Veena Mayesh from Deutsche CIB Center Pelt Limited. Please go ahead. Hello, Mr. Jin. Thank you for comments and congratulations on a good set of numbers. I had a couple of questions. One was more in terms of Housekeeping, the gross and net NPA numbers that I mentioned, the 2.1% and 1.0%, these are Before taking into account the Supreme Court suspension, right, these are not comparable to the 1.6% which was given for last quarter Yes, you are right. So the last quarter numbers would be Significantly higher when we look at the comparable number. So on the pro form a GMPA as of December was 2.87. So the right way to look at it would be 2.87 has come down to 2%. Got it. Got it. Thank you. Just wanted to confirm that. The other question that I had was, if you're targeting a growth of, say, 18 you mentioned that you're targeting growth of, say, 18% like in the previous years for the portfolio. Do you mind letting me know whether you'll be tapping the capital markets to facilitate this growth, either The offshore bond market or even the equity markets? So not really. We don't need to because our cannibalization is 25%. And internal accords will also be part of this growth. So at this point in time for 18%, 20% growth, we really don't need to tap the capital market. Got it, got it. And the cash It's not a driver for the CapEx, cutting capital market, but it's not the weak for capital. Got it, sir. And the cash that you will receive on the AIF transaction, the duality transaction, that would be That would go towards growing the other parts of the business? Or would you be using that to grow sort of the AIF itself and Grow real estate transactions smoother, and No. But as we said that we want to focus purely on retail. Okay. So there's no question of putting that money back in real circumstances, sir. Got it, sir. Got it. Thank you. I'll get back in the queue, sir. Thank you. Yes. Thank you. The next question is from the line of Amit from 2.2 Capital. Couple of questions. One, this quarter, the collections that have been provided including arrears, So can you provide comparable numbers with last quarter, which were excluding years for home loans, business loans and microfinance? So we have provided numbers for 4 quarters. So basically, they are on like to like basis. So you can look at that entire chart. We'll give you quarterly numbers actually. Yes. So if you can give us what are the collections excluding arrears for the home loans, business loans and microfinance category, which was being provided earlier? I can see what happens because many times our past payments and the payment which is it becomes difficult to track that way. But what so we related to the demand versus correction. And this is what if you see the quarter over quarter numbers are confidential. Okay. And so there are INR 11.60 crores of Well, loan losses and provisions last financial year. So just how much of this was from the CRE book? As of 11 crores, how much so this includes write offs as well as incremental provision? Yes. And out of the CRDs close to INR 500 crores. INR 500 crores. Okay. And just on The gold loan business, even this quarter, you have actually grown fairly well. And despite banks having the advantage of almost 90% LTV. And now from April 1 onwards, banks are again back to 75% LTV on gold loans. So how has the competitive intensity now changed versus what it was last 2, 3 quarters when banks had an advantage in terms of being able to give higher loans? So are you seeing improvement in the competitive intensity scenario in the gold loan business? See, Actually, even if you were allowed 90%, probably we still would not go beyond 75%. So if you look at March quarter, then the gold prices fell almost So in a way it's a commodity and that can basically generally create send goosebumps because NTV will go down to or your mark to market even if 1 or 2 months interest is not paid, I will hit more than 100% and then we will panic to Option ourselves, which can be probably a different customer also, because we are here the most in value. So we would like to be conservative and keep it at 75%. So I don't think we are impacted much by that. I don't know whether many banks are also conservative. So their weight per gram, the way they calculate, I don't think they are going Aggressive it was 90%, and if somebody has then probably they will have then there is a significant risk to the portfolio because when you have so many Customers and if you lend a 90% NPV and then some of them default, then obviously you won't be able to recover your entire money because you are more comfortable We below your recoverable amount. So I really don't see that as a challenge. And The competitive intensity has been increasing because banks have become very aggressive in growth over the last 1 year. But you must see this market a little differently because it's a huge market, which is still with pawnbrokers, money lenders, many of these revenue shops will land and there is an unorganized market which is very narrow. So basically, that has to come to the formal channel, which comprises banks and MBSCs. And within that, if the market is very local that your branch has to be close to the customer, Many times customers do repeat business, so they build comfort in the people that are in the branch. So they want to have a very quick turnaround time because many times We don't get repaid and prepaid. So if somebody is borrowing for 2 months, 3 months or 4 months, we really don't bother too much about a few percentage interest Here and there. So if you look at the industry, the organized market is now huge, it's something like 3,600,000,000 or 360,000 crores, that's what I'm seeing the numbers for the industry which is there on Slide 42. And it's also further growing. So the market is very large actually and I believe moving from unaudited to this is organized, I think customer will value all the things. When you are borrowing your home loan, then you are very particular about 0.5%, 1% or 2% because it can make a lot of benefit over 15 years. But it's a short term thing when people say fine, it's a small note, say INR 50,000. Then maybe they don't bother much. But service becomes very important. So they come to the branch, within 5 years they can take their gold back, within 5 years they can get the money, somebody from the branch will remind them about the interest, so we'll talk to them. So all these things matter a lot in the business. Okay. Thank you very much, sir. And now we have started giving home service also. Okay. That is helpful. Thank you very much. Thanks. The next question is from the line of Poon Jin Chang from HBS Investment Partners. Please go ahead. Hello. Hi. Nima, thank you for the call And also congratulations on the good numbers. Most of my questions have been asked and I just want to get a further Clarity on a couple of issues. One is on DCRE loan transfer. You mentioned that about INR 3,000 crores will be transferred out. The and also that you were not pursuing or you're not growing this loan book further. So Over time, this loan book will be this business you're exiting the real estate financing business. Is that correct? Yes. As a group, we do this business through funds, and these funds are right now In our alternative investment fund, which is part of our wealth management subsidiary, so we'll be exiting real estate financing business from the NBFC balance sheet. But in the AIF structure, we may continue. But in the AIF structure, The contribution of NBFC will be either insignificant or very, very small. It can be like 2% or 3% or 5% in case we do this. But you are right that when we look at the NBFC balancing on a company, then broadly, there will be a year to be visible. Great. And then in terms of the impact that we achieved So just one clarification. The existing portfolio that we have will take maybe at least 3 years to fully exist, and therefore, we'll have a team to manage this portfolio. And sometimes from the fund, they will require last month funding. So we are the sponsor of this fund. And therefore, it's managing the existing portfolio And whatever the required will continue. And also in Housing Finance, the consistent finance of the smaller ticket size, that will continue. Got it. And in terms of the you just mentioned the AIF structure will remain. Your stake or your ownership in the AIF structure, what percentage is that? In this particular fund, in which is one fund? Sorry? In this particular fund, And this asset is coming in as an investor will hold at least 33% and onethree percent, not less than that. What's that? What's that? Okay. 33%. Got it. And then you mentioned that it took 3 years to exit to fully fund. So the 3 INR 1,000 crores will take what 3 years to transfer over time? INR 1,000 crores of 1 year portfolio We will now get transferred now to exit because the fund has a tenure of 3 years plus. So the Because the fund will get the cash flow and then we'll get the cash flow for our contribution as well as the residual. So Our exit will happen in next few weeks, but the fund probably will be able to exit in 3 years. Understood. Understood, understood. And in terms of just broad numbers, again, you mentioned 2 thirds of the amount, 2 thirds cash will be released, 1 third will be in terms of capital release. In terms of understanding, in terms of positioning and in terms of your capital adequacy ratios, is there any impact to it? And potentially, is there any reversal of provisioning as a result of this? So I asked as I spoke earlier, in terms of capital allocation, this will help. But whatever assets we are we continue to hold on our balance sheet, even because investment will continue to attract capital adequacy. So that was the kind of decision we require. But if you believe At least maybe about up to 2 thirds of that portfolio is accounted. So somebody regards INR 3,000 crores And INR 2,000 crores taken up by additional by outside investors, then the competitive fee, what we are requiring for INR 2,000 will require only for INR 1,000, Broadly versus this matter. Thank you. The next question is from the line of Prashant Sreedhar from SDI Energy Fund, please go ahead. Yes. I think the call has been very useful. Just if you could explain to us, the fee income growth has been substantial Y o Y. And actually even the interest income growth has been pretty good. So what would drive both of these this year? Yes. So if you see our financials Slide 6, where we give details. So if you see the fee income is 1.53 in this quarter and it was just about 2.7 in the last year and 1.77 in the last quarter. Now this is actually broken up in 2 parts. So one is the salary changes, which is salary changes in investment of property that is estimated. So in India, if you keep values on a fair and fair basis and the gain or loss on accounted for, so that is 63. But the larger component, which is 89.3 And the family change last year, last quarter was negative. So that is why you see a mostly change here. So the family is about 60,000,000 and 90,000,000,000 if we have other income, which is the income that we get by cross selling and also Some expenses that we get on assigned assets and securitized assets, so that comprises of those income And the processing fee for the new loans. So that is a component which is there, which was INR90 crores Of course, INR 90 crores 89.3 in this quarter, which was INR 59.3 in the last year last quarter and INR 77.6 in the Q3, this is the quarter before. So that is a steady stream of income. The fair value changes is more accounting and that can be little more over time. Sure. And the fair value changes come from what kind of assets? So both investments and property which are Not the property that we use, but suppose we acquired something from the Customers were defaulted and the investments that we have. So some of this maybe sometimes we apply the IPO on a as Some of the IPOs we apply as an MDFC. And earlier we had a civil sale which we actually reputed last quarter. So this is primarily investment in property. Okay, interesting. Okay, Sure, sure. That's helpful. And just if you could give us one more data keeping point. If I have to split this restructuring of INR 500 crores, What asset classes would they come from? They are mostly SMEs, yes, primarily or entirely SMEs. No, they are home loans also. So then I'll just give you the break up. Just one second. Yes. So the $575,000,000 is the complete Sure, sure. That's helpful, sir. Just a doubt, so when you say restructuring in the capital markets, That would be what a last kind of product that you've researched? Yes, it's the last kind of product, particularly during last year monitory and time period, that is when we did that. Thank you. We'll take the next question from the line of Abhilah Maheer from Deutsche CID Center Private Limited. Please go ahead. Hi, sir. Just one clarification needed. On the AIF fund, You mentioned that FSG has come in with INR1200 crores of their investment into the fund, which means that our current Contribution would be 2 thirds, right, not 1 third. So 1 third is the minimum limit, right, and we'll be working towards that. Okay. So SSD is taking 1200. Yes. And we there is they are the anchor investors. Yes. So we started the process. Now we are as per our agreement with SLC, we have to hold 1 third, which is INR 700 crores minimum. The remaining portfolio, we can send it down. So we'll be we are talking to some other investors. Okay. So that was basically We will do that. I mean, we'll send it down to some other investments. Got it, sir. And that's in the process. So the work down towards 1 third is in the process. But that may take a little more time. So I think if SCC transition gets completed in this quarter, we expect that transition to slow to next quarter also, quite possible. Got it, sir. Got it. Thank you. Thank you. Thank you. The next question is from the line of Deepak Poddar from Sophia Capital. Please go ahead. Yes? Yes, yes, Bhikar, go ahead. Okay. So I just wanted to understand this transferring of the CRE portfolio that we have been talking about. So already we had some provisioning on it done. So any kind of impact on the provision that we can see because of this transfer or the haircut or any kind of haircut that we are taking on that? No. So what is happening is that the program will take care of the haircut a little bit this way. So we won't see much impact on the program. Not much impact on the provision. Neither new additional provision nor a revision provision. So we should basically Well, the provision will take care of what we are transferring. And what we want to and the balance footprint in our book also we want to carry some provision. So There is also that. Okay. So the provision that we have taken, the haircut would kind of match each other and you would have not much impact On the provision or either side? Yes, you can say that. Okay, perfect. Thank you. Thank you. The next question is from the line of Sung Ji Chang from HBS Investment Partners. Please go ahead. Hi, Sala. So I'm back on my 2nd round. The other question I have is on your business loans. I see that there was INR344 crores of from the disbursements from the ECLGS. Just want to understand this a little bit. The ECLGS scheme, the disbursements for this, this is for The your customers that for new loans or this is to meet their That obligation is because I'm not able to see or you need to accept No, just for existing loans. So the customers who are good customers and did not have any default As on 29 February 2020 and so they were impacted by COVID. So what Government of India has done is they've given something like 20% additional working capital loans, which is guaranteed by government to make sure that at least the customers that were good and not defaulting, they don't become defaulted. Understood. And this is about 18% of your new your disbursements? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Okay. What happens in 'sixteen, the eligibility criteria are there from the government That the borrowers should not have disappointed. And also in some cases, borrowers should and also we require borrowers' consent. So what happens But even if some borrowers were eligible, so that's why out of INR 6,000 crores portfolio, we only got INR 12 100 crores. But many borrowers may not be willing To take the new loan. So it was both ways that if the borrower is borrower concept is there and borrower is eligible, then we can give this loan. And your customers apply to these schemes through your company or do they apply directly to the government to get access to it? We have to upload the data to certain agencies appointed by the government, but the loans are reversed and monitored to us only. Understood. And in terms of just looking forward then also given because of the second wave of the COVID, How much visibility or pressure do you see in the business loans? And having said that, this scheme has a finite amount. Do you have the ability to How much access do you have to this funding liquidity? And the third question is when I look at your Slide 15 in terms of collection efficiency, Business loan has been lagging the rest of your businesses, Go Home and Microfinance. How is this collection rate trending In Q1 and Q2 given what's going on? So Now actually, we really need to figure out how it will go in future, but as of now things are not as bad. In fact, people are clearly much worse than what reality is. Because many businesses now, unlike, okay, last year, When there was a complete lockdown and there was no activity happening and nobody knew how to handle it, I would say most of the businesses today are able to carry out do some activity. They will be impacted marginally. And now actually, But we don't expect it to work as much, whatever before we get from the ground. Most of the business are able to manage and they are also concerned about their own credit score and The ability to borrow in future. And so they are struggling, but it looks like that it may not be a big damage. Understood. And the LTV of this Like Mumbai, the COVID has already started. The number of cases started for Many areas where we have good exposure. Also, we are seeing that things are getting even better. So the COVID-two has been very bad in terms of the impact It has been very nasty and it has caused a lot of damage. But from the company or business point of view, it has been very quick. So it's like the rise was very Deep and hopefully, follow-up is very steep. So we think that we'll get over this very soon. Understood. Thank you. Thank you very much. Thank you. The next question is from the line of Itamwal from Adesh, SSG. Please go ahead. Hi. Thanks for this call. So I just have one quick question. I noticed that You mentioned you have bought back about $9,000,000 of the U. S. Dollar bond in the open market. Are you able to share At what price would you support that at? Yes. Good to So they were bought back at 6.05 percent dollar yield And we save 4% to 5% of our forex cover also. So effectively, we get about 11%, 11.5% savings in The cost of borrowing that we buy back is dollar bond. So we are able to borrow at around 88.5% locally. And so I think it's a good so whenever we get an opportunity, we would like to buy back because the dollar bonds are still quoting around 6%. 6% in dollars, But as we as I said that when we buy back, I can cancel the equivalent amount of my ForEx cover, which gives me about 4.5% per annum more, Maybe up to 4.5% to 5%. Does this answer your question? Yes, yes, it does. Thank you. Thank you. Thank you. That is our last question. I would now like to hand the conference over to the management for closing comments. Thank you so much. Thanks for everybody for taking the call. And if you have any more queries or questions, we shall be Happy to respond to that. Our investor relations, Anoop Gautis or our CFO, Rajesh Vazhet, you can address them very well. Thank you so much and have a good day ahead. Thank you. On behalf of IISL Finance Limited, that concludes this conference. Thank you for joining us and we will now disconnect tonight.