Q4 18/19

May 15, 2019

On behalf of team ISL, I thank you for joining us on this call. I'm R. Venkka Cohen, Managing Director. I'm accompanied by Wilmer Chen, our Group Chairman, Sumit Tali, CEO, ISL Finance, current budget, Managing Director, ISL Wealth Management, Muru Ratra, CEO, ISL Housing Finance, Balaji Radovan Head Real Estate Panel and Kamu Viviani, our financial controller. I now ask a our Chairman to comment and give an overview of the group's strategy and plans. Thank you, Ankit. I'm a warm welcome to all of you. 1st, a bit of backdrop on the macro environment. So we are talking to volatile times where everybody knows. And globally, there are worries about China, U. S. Trade more escalating and its consequent impact on interest rate currencies, and also the risk appetite for emerging markets. And in that background, we also have elections where uncertainty is doing large because nobody has clarity on how, what was the final outcome, but it's just a matter of few days. Also, during the last year, as we sit down the review, we had quite a few interesting and challenging times than the liquidity in NPSC is something that everybody is very keenly watching and curious about. That environment, I think we are very happy to report good performance and maybe as all of you know that we are seeing businesses, they are getting reorganized. Board has so just a quick update on that. Bod has already approved the re merger of IFRS securities and actual wealth. And the record date, if I was to take notice set on 31st May. So what that means is that the dial from holding shareholders as on 31st May We'll get sales of IFL securities and IFL Wealth. IFL has been the ratio of 1, say, for 7 sales and IFL security is 1 for 1. And after the record date, therefore, the listed company, primarily will continue or will represent MBSC. Because the holding company will not have any significant business left. It will have stepped out of Century Company, which is NPSC. And which has 2 more subsidiary companies, which is Housing Finance And MicroFinance. And that 2 companies IFS Equity and IFS best will get listed in due course. So this process has started last year in Navios Consulting. So as I've seen now that within maybe a month or 2, we'll have 3 different entities separately. Hence then, the will, I mean, I mean, just to complete the process, the holding company, our plans are to merge MPFC with the holding company and that will require us seek RBS new license for MBS in the holding company and then merge MBS into holding, although boarding company will be more like a cell company after the transfer of these businesses. But that's how the process will run. Coming to performance for the last full year, as well as finance has reported 55% post tax profit growth. But if we adjust for an assessment item, which is a gain on slump scale of commercial vehicle financing business, then after finance profit after tax has been 6.33 crores, which represents a 36% buyback growth. More important in last quarter alone, our loan AUM or as the total loan assets grew by 7.6% which is almost around 30% annualized growth. Now there are some, the numbers are to be understood from a life like basis. So when we look at our loan AUM growth in FY2019, we have FY18, The growth is 29% if you exclude CV financing business because that business is now sold. So if you exclude from FY2019, it doesn't exist from 31st March FY 'nineteen because the deal consummated just before that. So if you exclude in FY 'nineteen, FY 'eighteen as well, then, comparatively, we have a 29% growth in loan area, which is corresponding to 30% increase in interest income and similar increase in interest costs and so on. And which basically has given the profit growth by 36%. A few things about our business, 85% of our loan book is Swar ticket, GateL granular Chromebook, comprising privately of 4 segments, home loan. Again, we are an affordable home loan segment because our average ticket size 18 lakh rupees. We are significantly present in Tier 2 And Tier 3 Cities for our homegrown business. 85% of our branches in numbers are also Tier 2 SD Cities. So the 1st home loan, the 2nd segment of business is, business loan, which comprises the smart ticket business growth of 45 lakh rupees for the larger sector and larger growth of our popular rupees are purposely secured against property and for our internal policy. And then the 3rd segment of business is Goldone. Where our book was around 6200 crores and at year end. And the 4th segment of business is microfinanced, which also has grown well and we were 2300 crores. The business loan is about INR800 crores, and bottoms loan goes. Now these 4 are the core growth drivers for the company. Other than this, we also have, the construction and development financing or a construction real estate development, which in aggregate is 5000 crores. It comprises 3500 crores in NPSC and 1500 crores in HFC. I'm sure that there are lots of questions about this and therefore, we have Balaji Radbourne here with us for the first time analysts call. But he has been heading this business for more than 10 years with the IFL. And he will talk more about this business segment giving you more granular resheets of how this business and what is the portfolio like. The 85% of retail loan assets that we have, they are easily suitable to bank. Banks are always bidding an easier time for that because most of that would meet their private sector requirements as well as even in non priority, the retail assets, they're very they're always willing to buy. So this is the performance of our IFL finance. The fact that our loan book grew at almost around 30% annual growth rate in last quarter shows that liquidity is not a concern for us because We are able to sell down our assets to banks as we generate them. And besides in last two quarters, approximately we are able to improve in each quarter from long term sources such as external commercial borrowing or refinancing by MHEI and so on. We are trying to raise money to by way of ECB in various forms, whether it can be dollar bond or a bilateral multilateral institutions funding, a few months back, we are raised from CDC who's also an equity investor in FFFinance. And we plan to further diversified sources of funding. As you're aware that we had a successful public issue also of 200 crores in the previous quarter. So having covered asset finance in terms of our performance as well as liquidity, I'm going to have a well. We also have current product on the call who'll answer your questions in you more details. This business has ended the year with 4% RevPAR growth sorry, 4% buyback growth in the quarter by 10% buyback growth. Given that we change our accounting as well as business model, I mean, this growth is very satisfactory because if you look at our top line, more than 50% of it is annuity and fee income, which is very Ticky and sustainable regardless of the environment. Last part of we have discussed is that we have moved to a advisory model in terms of the way we do our accounting because more than good basis and also the kind of products and services and offerings we are trying to encourage our customers to move to. And I feel 1 is the primary driver of that, where we are trying to move away from the transaction based fee to advisory fee, which is more transparent. And which in a way is win win for the customer as well as the wealth manager for the customer because the charges are lower and transparent. And from the first point of view, it builds and fosters long term relationship. IFRS securities as all of you are aware, head to headwinds, the year ended the year with 8% decline in post tax profit, primarily because investment banking revenue was income was significantly lower. And investment banking, as all of you know, that our strength is the ECM. Equity capital market are comprising IPO and QIP. And there, I think, a lot of these were significantly fewer than last year. Hopefully, if there's a stability on political and economic front, there's a lot of pent up demand for equity capital there. A number of deals and pipeline and hopefully things will recover in this year. So everything put together, our consolidated profit is INR 12.53 crores. 23% YY growth. After minority interest, the 965 growth is 22% YY growth. With this, now I hand over to Kumar for taking you through the digits line by line of our profit and loss accounts and balance sheet for. And this business, for all the businesses, And then, then you'll have to meet and Bharaty to talk about that. To take you through the BQ through the numbers, for the year, the group net profit was INR 12.53 crores, which is up 23% year on year. And net profit after minority interest was INN9.65 crores, which is up 22% year on year. For our NTFC business, The loan AUM was INR 34,900 and 4 crores, up 29% year on year and 7% quarter on quarter, These numbers are excluding the CDAUM, which was divested in March 2019. Profit after tax for the quarter, excluding the exceptional items, grew by 13% year on year 56 percent quarter on quarter to be 6.34 crores, which is up 37% year on year. Our Tier 1 car stands at 16% and total car at 19.2%. The primary drivers of our AUM growth are small ticket home loans which grew by 42% year on year. Gold loans, which grew by 53% year on year, small ticket, MSME loans, which grew by 18% year on year, and microfinance loans, which grew by 1.72% year on year, coming off a very small base. On the other hand, construction and real estate finance lab and capital market loans will continue to have declining share in our portfolio. In home loans, our focus remains primarily on small ticket loan and affordable home segment to both salaried and sales employee sections with average ticket size of rupee 13 lakhs. Our small ticket home loan product is especially designed to support the informal income segment in fulfilling their dream of owning a house. As of 31st March 2019, we had over 9000 approved housing projects, up nearly 1.5 times from 6200 approved projects a year ago. 57 percent of home loans were made through these approved projects. We expect that this approach will reduce our operating costs and credit costs going forward for our housing finance company. ISL Home Finance has been a significant player in Prime in PMA Y CLS scheme. To date, it has benefited over 29,800 customers and disbursed subsidies of more than INR 690 crores. In the near term, we plan strategic deeper penetration in certain geographies and further innovations in our digital processes to grow a granular book and ensure healthy portfolio quality. Retail loans, including consumer loans and small business finance, constitute about 85 percent of our AUM. Another strong characteristic of our loan book is the large proportion of loans that are compliant with RBI's Priority sector lending norms. About 57% of our home loans, 54% of our labs, 44% of our SME and nearly all of our MFI loans are PSL compliant. In aggregate, nearly 41% of our loans are PSL compliance. The large share of detail and PASL compliance loans are of significant value in the current environment where we can sell down these loans to raise long term resources. Our average cost of borrowings rose by 9 basis points year on year and 59 basis points quarter on quarter to 9.1% in fourth quarter full year 2019. Our NIM was at healthy 7.2 percent, mainly driven by our granular retail portfolio. 85% of our AUM comprises loans that are secured and about 50% of our loans are unsecured. We believe our AUM mix is well balanced with some Coke collar share of high easing and unsecured assets to go up. We currently have 19.47 branches primarily for our SFC, Gold And Microfinance Businesses. Consolidated GNPS and NNPS recognized as per RBS credential norms and provision as per expected credit loss method prescribed in NDS stood at 1.95% and 0.62% of loans, respectively. Under expected credit loss provisioning under NDS, Provisioning coverage on NPA stood at 139%, which is including standard asset coverage. Our return on assets for full year 2019 was at 2.2% and return on equity at 18.3%. Our funding mix is well diversified, including 18% from NCDs, 5% from subordinated debt, 38% from bank term loans and NHB refinance 26% from securitization assignment and 12% from commercial paper. Following the 10 year subordinated bonds raised from CDC, we have initiated discussions with other institutions to raise long term funding. We have a positive ALM whereby inflows and undrawn bank line covers are exceeded expected outflows across all buckets. On the asset side, our loan book has a relatively short maturity pattern with 25% of loans having maturity of less than 6 months and 39% of loans having maturity of less than 12 months. From the analytics perspective, We continue to drive the use of credit scores and automated decisioning across products and strengthen our risk mitigation processes by developing and deploying behavioral collection and fraud scorecards. There is continuous focus on cross sell and win back with our analytically driven gold loan win back generating strong volumes for both gold business as well as group fight products. Moving to our wealth management business. I also built, but profit after tax computed as per NDS was at INR 84 crores, which was up 10% year on year. Our assets under advice management and distribution have grown 5% quarter on quarter and 28% year on year to reach rupees 1,690,000,000,000. IFS well offers a broad range of product and services to fit in the largest share of the client wallet. This includes financial products distribution, advisory, brokerage, asset management, credit solutions and estate planning. We now have presence in 33 locations across 7 major geographies. Net new money collected in 4th quarter 5370 7 crores. The IFS grew 33% year on year to INR 15,661 crores. IFL Wealth Finance, which offers loan against securities to high network clientele has a loan book of INR 4798 crores as at March 2019. Moving to our Capital Markets business, ISF Capital Markets, which largely comprises retail broking, institutional broking and invest and banking businesses saw its net profits for the quarter declined to 36% year on year to repeat 38 gross. And 8% year on year to INR171 crores for the year ended March 2019, mainly due to market volatility. During the quarter, our average daily cash turnover was up 5% quarter on quarter to INR 12.39 crores versus 1% quarter on quarter growth in exchange cash turnover. Our average daily total turnover including SNO was up 5% quarter on quarter to INR 17,134 crores. Our NSE market share in the cash segment was around 3.5%. We are continuously enhancing our offerings on digital and mobile platforms for retail customers in our broking business. Our mobile trading app, IFL market, has had over 2,600,000 downloads, presently about 52% of our retail brookings line straight through the mobile app. We completed more than 15 transactions across various products and investment banking in the year to date including 3 IPOs, 4QIPs and 1 PRS state IT, despite the market volatility, REIT. We will now open the floor for Maybe before we start, I'll have Balaji. Sure, sir. Can we just take our question on this? We can take it as a part of Krishna. I don't know what it's okay. Okay. That's a question I'll do then. Thank you. We will now begin the question and answer session. You. Hello? Thank you. The first question is from the line of Viral Shah from Credit Suisse. Please go ahead. Hi, sir. Thank you. I have four questions. Yes. So one is, basically, I'll start with the NVFC business. There was a quarter on quarter, meaningful margin expansion. So what basically drew that, if you could highlight that? So what is that CV business is taken away from this, which has relatively lower margin compared to other businesses to the entire growth is driven by high margin retail products. So if you really notice, the growth is significantly there in business loan and gold loans, both the products hitting 18%, 19% or 20 21%. So these two factors basically have resulted in a margin expansion, but the base effect because of the CV business in house is also to be adjusted there. So right, sir, if I adjust for that also, I am getting a quarter on quarter increase of nearly 180 basis points in the margins. And also, the GMP, what happens is if you see our last call, the GMPs by So when the GMPA is higher than you can't take the interest income, so the GMPA resolution also has rejected in the expenses. As I said, the series out, which has relatively lower, exit this. Yeah. As a microfinance, the development is significantly up which is about 860. So microfinance and high yielding product gold loan business. So if you see the last part of growth, is primarily in these three segments. So microfinance itself is up from $17.50 to $20 to $85.00. 5.50 crore rupees of EM growth is from microfinance, with the high yielding product. And, so all these factors are combined. Exit of CV business, microfinance, gold loan and business loans, and that is how our margin has expanded on the total business. And the GMP And Adhibitions, because when the JMPA had spike, then you can't book interest on that, basically, it depresses your interest income as well. Okay. If you could correct my understanding, so under India's, you can recognize interest on G And P or not? You can recognize which can be better, but send it to. So under NDA from an interest accrual cost we can recognize the interest and you can correspondingly create an easier provision on it. Okay, right. So my second question was on actually the same NPAs. So your reported NPAs did come down. But seems like your provisioning absolute provisions have also reduced. So as a result, it was largely because of write off if you want, no, the CV business has taken away. So there was almost about 150, 200 crore rupees of provision component for CV alone. Okay. So if you see now and so one of the things, one is the series out and also there have been resolutions of NPA. So both things put together And there are certain fully provided for SS will write it off. So then you see that our total ECL has come down rate and it grows. Right. But see, if you notice last quarter, CVR almost 8.5% GMPA. Okay, right. Which are screening our average in terms of everything. So if you take that away, then all these numbers are in place. All right. Thank you, sir. Thank you. I have 2 more questions actually on Wealth Management, if I can Yes. So there was actually a sharp decrease in the employee expense and the overall OpEx expense in the wealth management. So this is something which we have been seeing for last couple of quarters. And this a time when our number of bankers have actually increased. So what is driving that and how sustainable is this? So currently there in the line on the Karen? One minute, because I think Karen also, if he's available, he'll answer that. Anna, is there? Give me a minute. Okay. I think I don't have that But what had happened is the variable component of our ethyl cost has gone down significantly, because this year, if you notice, then with the change in business model, the fee income also has changed. And actually, that is what is showing in the lower freight costs. Right. And what how should we look at the trend going ahead? Then going forward, I'll even stabilize. So there's a new number. So again, or a period of time, relatively to increase, but I think the base that you're seeing is now the certain numbers that we are seeing is more like the base. Right. And one question on the yield. So basically I was trying to calculate the retention yield for the full year, which is, the net commission income that you have disclosed. So it is different, it is coming different from what we have in the presentation. So I'll tell you. Out of 1,000,000 or even 1000 crores per year. So this yield is a net of that. The challenges on the call But I just read in the other office. I'm just trying to connect Okay, hello. So, yields, if you see, now then the I think 85 basis points that we are seeing is based on x-ray assets. So out of our FCC,000 or approximately $31,000 or a custody asset. So if you do the numbers with that, then I think you'll get the correct number. But if you guys wait, I'm just trying to pass in current, but it also is a give you a minute. If we can move to the next question, he'll just as soon as he's in, he'll take more questions on that. Sure. Thank you. Any more questions. Thank you. The next question is from the line of Shiv Kumar from Unifi Capital. Please go ahead. Yes. Thank you for the opportunity. Sir, my question is with regards to the construction finance loan segment. There, instead of for a GMV of 4.4%, you have provided fully and you have a net NP of 0%, which is very good. But going forward, what is your strategy? We'll continue to fully provide for whatever GNPA is there in the construction finance business and what is your outlook going forward in that business? Or stress? So, this is Balaji here. I hit the real estate, the construction parent business. So essentially to answer your question, yes, we did fully provide. And of course, we also had some resolutions, which had happened in the last quarter, which resulted in this. And, going forward to answer your question, we will review each transaction on a case to case basis. And see whether it is necessary to fully provide or whether there is a resolution, which is possible, which covers the entire exposure that is there. Like, so can you do more granular data on the resolution? Like how much was the DNP at the beginning of the quarter and how much was resolved during the quarter? So at the beginning of the quarter, we had 118 growth, which was there, which we had recognized. And out of which about 214 is what we managed to resolve. So basically, these were the resolutions which had happened is where we had initiated certain surface reactions and so on. And we had taken possession of the land And during the quarter, we managed to recover these lines and therefore, we resolved them. And what will be the number of accounts, sir, when this started the quarter 480 crores, what will be the number of accounts as These are all, larger ticket sizes. So this would be, I think, about 4 or 5 accounts and now it would be probably left at maybe 2 or 3 accounts. So That is how, the sizes are, the ticket sizes are. The ticket sizes are, I believe, the range of, I think, around 80 to 90 gross. And what's your outlooks are going forward? Do you think you're done with the recognition of stress and you or do you still expect some stress to come on board? So I think we are done with the recognition of the stress because I think the most stressful time is what we saw was between November March. And The reason for this, of course, was a multiple, one of course is that we saw much lower sales because of the GST impact and the announcement of reduction of GST and so on. Plus, of course, we saw liquidity issues at the beginning of the third quarter where there was a strength on this person of home loans and so on and so forth and construction finance. So I think that what we have seen in the last about two quarters or I would say a little over two quarters was probably the worst of times. And I think going forward, we don't see an issue at all. So one question for the wealth business, I don't know whether you already clarified on this. The retention yield on ex custody assets was 84 bps for FY 2019. What was it for Q4 specifically and what is your guidance going forward? Now that you have moved to advisory mode of Hello? It's coming there. Sure, sir. I'll unmute his line. Just give me a minute. Okay. Sir, Karen is in top mode. Okay. Can you just take that? Mr. Karan Bago, Sorry. I think so. Hello? Hi, Karen. We can hear you. So I'll quickly answer all the three questions. So the employee expenses were rated, like Nirmal rightly pointed out only to the extent of the variable provisions. Otherwise, the fixed component more or less remains, in line. I think we'll be able to get a little bit of efficiency there over the next 1 year to the extent of 5 to 7%. But otherwise, it's pretty much going to be around the number. The trend is, to continue. On the margins and the yields like minimal, again, points laid out correctly, apart from the 31,000 crores, the 84,000 crores, 85 basis points calculated on the ex custody assets. In quarter 4, the retention on the assets excluding the custody assets would be slightly lower. It will be at the region of 70 to 75 basis points. The new normal because of the revenue recognition on all our distribution product being in the region of being on a trail basis instead of an upfront basis. I think we'll get our retentions down. We have to discover that over the next 3 to 6 months as we move plans to advisory. But given our experience over the last 3 to 4 months, I think we'll be in the region of 70 to 75 basis points on a gross basis. Pretty much what we've seen in the last quarter. Sir, one last question on the listing part. What are the timelines for listing this IFS securities and IFL Wealth? So as I said, the account date is 31st May. So if you're a shareholder, then, and if you're a shareholder of 31st May, you get the sales of April. Security and alpha listing, then the procedure of vaccine can take up to 45 days. So I would think that it can happen by not later than July 15, but I mean, depending on how exchanges are proven process, it can happen anywhere between June to July and mid July. Great. Thank you, sir. And all the best. Thank you. The next question is from the line of saakarjee from Centem Broking. Please go ahead. Yes, sir. Thank you for taking my question. So my question is again on the developer finance. So around, we had 4.4% of the G and P and out of that, so out of 4.80 crores to 40 crores, we have result, but the rest to 40 crores, which is roughly around 2.2% we have written off. So I just want to understand, apart from the concern in the underlying segment itself. Where did we go wrong and how do we plan to correct in our underwriting skills and what changes we are bringing? Okay. So to answer the first part of your statement, so we have not written off, 240 crore. As in all these are in the process of resolution and the proposal of the assets and so on. So you will see a further reduction here onwards. So there is, you know, I think barely anything that we will end up writing off. So that is the first part. Second coming to you know, what you said is that what have we done to improve. Now, of course, see, one has to also get into a root cause analysis of what was the cause of these issues which came up. See, the issues which had come up mainly were, I would say due to the market and the environment to a large extent. So if you see over the last about 8 to 9 months or even a little bit more, the liquidity as well as these sales velocities have been fairly, low as far as the entire sector is concerned. The sales velocity was low as there was a anticipated reduction in the transaction tax, which is GST, which the government had announced sometime in November. However, it came into effect only in the month of April. So therefore, for a good about 5 to 6 months or so, there was barely any bike or purchasing which was happening in the sector. Secondly also is that, post September about at least sort of, I think about 2 months or so, most of the housing finance companies had slowed down disposals in this segment because of liquidity issues. So therefore, again, there were cash flow issues. So I would say that the last eight nine months were was more of environment rather than anything else. And of course, we also saw 1 or 2 or delays which also happened because of certain regulatory approval, etcetera, which were delayed beyond the point, which eventually approached K. So I think the as far as the learning is concerned, I would say is that as far as the underwriting process is concerned, we have been robust we continue to strengthen the underwriting process. In fact, that now that we now we have, in fact, external independent directors so on the investment committees that we are taking calls on any transaction that we are doing. Other than that, we have, I think most importantly is that we have really strengthened our asset management capability. So we have now got dedicated team in order to take care of asset management and on a day to day basis where we have in fact physical presence on all the project sites. So I think that is one of the most important steps that we have taken in order to ensure that we are, in control of the entire project cash flows and no valid advance whether there is going to be set or not. So, also, other than that, so as far as the sector is concerned, Now we have always been focused on the mid market and the affordable residential segment. So I think we are one of the few players will never send it out into any of these higher premium resend projects. And therefore, we see, so probably we see 1 or 2 quarters of lower velocities and so on and so forth. But otherwise, given the depth of demand in this segment in this country, I think we are fairly alright as far as the segments that we are operating in continue to be growth segments. So as I said, temporarily we see we do the issues like what we saw in the 2 quarters in the past, but overall, I don't see a issue which is there as far as the future of the segment is concerned. Now, if I look at the portfolio mix, which is also given, I think, in the presentation, is that now, if you look at the areas in which are operating. These are, if I look at Bombay, for example, we would be operating in places like Daisar, Borieli, Bandway, and Thane, and those kind of places. Where the unit price itself is fairly low. So we are not really operating in, let's say, Central Bombay where the actual problem is there. We have always stayed away from those segments as a strategy. And, in the last about 10 years, we have also been, maintaining our relationships with a preferred set of developers with a good reputation and track record of having delivered and paid which has actually paid off for us. And most importantly is that in every transaction that we have done, we have always kept a minimum cover of at least about two times as far as the asset value is concerned. So we have, all the even though let us say we might have temporary situations of maybe 6 months, 12 months. However, given the kind of covers that we have, We always have liability in all these projects and therefore to come back to the first statement. We do not end up writing off anything. Okay, sir. And in terms of going forward dispersal, so out of the 3 geographical zones, So what which will be in your focus and which ones you will try to mostly avoid? Well, I would say that firstly is that we are not really focusing on increasing this business in this, in the balance sheets as far as the sector is concerned. So our proportion will probably either remain same or be reduced. We as far as geographies are concerned, we still believe that depth of markets do exist in NCR, some parts of, Tier 2 Cities in the North, in to some extent, not I would say not in Central South Mumbai, but if you go to the far suburbs, etcetera, Pune, for example, is slow today. So as far as future strategies, concern to answer your question, this is something which is a review which we do strategically where to invest not invest or lend every quarter or so. So for example, 1 quarter, we might find that there is an opportunity and the markets are doing well in, let's say, Pune, but after after a certain point in time, we find that the markets are probably not doing well over there because of the oversupply situation. For example, we've stayed away from Hyderabad for a good many number of years, but however, we have started looking at lending transactions and we're doing them in the last one, one and a half years after the political stability has come and the demand has picked up again. So these are things which are, I would say, dynamic in nature and do keep changing over time. The next question is from the line of Anita Angan from HSBC Asset Management Company. Please go ahead. I just had one question In terms of like your business loans, your NPA actually has gone up and mostly on net NPA is also like around 2.3. So in your developer book value, you were able to, like, resolve what is the kind of asset quality you're seeing here? Let me come back and can you repeat your question? Where is NT Wala? In the business loan segment? Yes. So, and here, your net is also like 2.3 versus your developer book where your NPA is like net NPA is 0. Here, you'll get net NPL around 2.3. So what is the status of resolution here and if you can give some clarity here? And my second question is on the developer segment. Will your growth actually be, like, exclusive, you know, to the developer? And is he actually facing any underlying liquidity and how you're handholding some of the developers? Because if they are low ticket size, I'm sure they will also be facing some kind of liquidity from other sources as well liquidity pressure. So how's your hand holding them and supporting them in this point in time? So I think to me, part of the question, but just one clarification that when you look at net NPA, so in ECL Accounting, now there are 4 types of provision. And only the State III provision is adjusted from growth in Kesho or to put it differently. Other than this, we have a significant standard asset provision, which is I'm not that's why when we say that I've got 139% coverage, that means that my total provision is 139% of GMP in aggregate. But out of that, 69% is my provision against specific assets in the remaining is my standard as a provision. So That is also charge of profit and loss account is available as a cushion, but specifically our strategy for taking various NPSA business by business loans, Sumit will just take up the question. And how about your developer balance sheet back in? So on the business loan, a slight overview, we are about 8100 70% of the book is collateralized, 30% only is non collateral. It is predominantly led to business owners, backed by cash flows and collateral. So for us assessment of cash flows is pretty important. You see the yield, the growth last year has been 10% And if you see the yield of this business is about 15.7% and it is moving up. And therefore, a 2.3% GMPA on this is not a very off number. There is property collateral, which takes time to get resolved. So we are pretty confident we'll see resolution happening on this. But overall, given the yield and the kind of growth rate, at the moment towards granularity where we are only looking at increment reality ticket size of 22 lakhs onboarding, I think we are in a good shape to grow this business. Between SME and business loans and LAP B? So effectively these are all medium small and micro enterprise, 70% is collateralized, 30% is larger, 30% is larger, 30% is non GAAP. Yes. Okay, okay. Got it. Yeah. So coming to your question on handholding of the repos in times of sale. Now essentially, I would put this as a spectrum, right? So which is starting from, let us say, now as you've seen, we've got a fairly robust distribution and branches, which is there, both on the home loan side, the home loan side and the security side. So we do have various methods, language and processes by which we do quite a bit of cross sell. So wherever we find that there are different sales, and there is directions required. So we have gotten into such projects and used our own distribution in order to accelerate sales in a lot of instances. So which obviously generates cash flows. 2nd is that, if there are instances where we have actually got into the project itself and decided to redesign the product in order to make it more suitable for the micro market, make it more affordable with the changing time So that is the 2nd step we have done so far. And the third is, is that we have also had various instances where we have got stronger partners to introduce equity and take some and do some sort of a commercial contract with the existing developer by which, they are able to infuse equity and, you know, take the project forward and by mere, you know, strength of brand and saying they are able to carry the project forward. And the last, of course, is the least desirable, which is to go the completely legal route and where you need to take over the asset, which we may have done in, let's say, a couple of instances. But otherwise, there's between the first three, we are able to help the developers manage the cash flows and so on, because in most of these relationships that we have, as I mentioned, We have been carrying a lot of these relationships for the last about 10 years where we have seen a lot of these developers returning the money coming back more and more. And we've seen at least about 2 to cycles. It's not all with most of these people. So therefore, we believe in hand holding, we have done all these three things, which I mentioned. Okay. And would this be exclusive, like, it will be the only exclusive sole lender or this will be like a consortium So, so generally, what happens is that in fact in all the instances, we have the all the instances, we are the single lender to a project. So he might have projects which are other projects which are probably mortgage to others. But however, as far as we are concerned, we are always sole primary lenders to end our projects that we are funding. We don't share anything. Thank you. The next question is from the line of Degan Saria from Antti Stoke Broking. Please go ahead. Just wanted to know, that we did around 2800 crores of securitization or direct assignment this quarter. So what would have been the income generated on that? Support? Yes. So from an NDC control perspective, we have an income of around 168 crores, which has come into our books. For this particular year, financial year, as an interest participant on the assigned portfolio. Okay. Okay. And then most of it is direct assignment, right? So we, in under index, we have to book everything as in when the direct assignment is done, right? Yes. So under NDS, in case of a direct assignment, whatever is the excess spread income which you're going to get in the future years, you're supposed to book it up front in the year. You do the assignment. And so the P and L impact for the same is around 68 crores across. So you mean all the entire 8000 or 9000 crores of assignments that we did in the year, the income effect of that is only 68 crores? Yes, that's basically because whatever has been booked in the previous years also gets reversed out on a multi during the year. So the net impact into the P and L is 68 crores. Okay, okay. And after the sale of CV finance to IndoStar, what is net worth of our this IFL finance or our NVFC? Yes, so the IFL finance including the HSC and everything are closing networks is around 4300 crores. Okay, okay. Okay, fine. Thanks for these data points. Now my second question is mainly on this growth front that, let's say, I see that we have, we have grown our microfinance book pretty fast. And you know, I understand that real estate now, we or maybe a lot of other players may not want to grow just because just because of the kind of, backlash that investors would have in the future for this business, but then microfinance, like, we have tripled our loan book in, you know, just four quarters. So are we, you know, are we again, you know, trying to, like, reduce one segment, which could probably become less risky in the future, which is real estate and maybe go and grow fast in the segment, which is probably going to be risky in the future because we have seen 3 years of fantastic growth in microfinance. And we have seen these cycles definitely come again and again and again. Good question. So first of all, as you rightly said that the real estate might be seeing the trough. And so we are not exiting the segment and we are not reducing our exposure as a group. But what we are doing strategically is that the new exposure to developer we are taking through a fund structure very recently we raised in the housing fund in which even Fairfax has come as a sponsor, EEG, which is a Japanese very rapid institution KMW subsequently has come as a partner and we raised about, I think, 202,000 crore plus and we have started deploying that. But what so what we have done as a strategy, we believe that real estate is a good sector, but because you take a lot of feedback, some of them may done problematic, but no, so what you need to do is you need to pull it together. And that's what we are doing. And till now, we have raised seven funds 3 of them are more or less fully exited with the yield of almost around anywhere between 16% to 18%. So we have a fairly good track record in managing the financing of real estate developer for the last 10 years or 9 years. And so we continue to grow that but not through the balance sheet of MBSC as much as through, the price structure. So that is your prior question, everyone. The second part of the question is microfinance. So this growth, what we are seeing is on a small base. So the two ways to look at it, you can say that the book has tripled And that is one of the standard growth in the book in our overall scheme of team, which is 36,000 crore of total AUM. So on a small base, the growth may appear in percentage of higher, but this is not something which is unwieldy or extraordinary. When the entire hydrofinars, we are very clear that we obviously have to bring it to scale and size so that it becomes a meaningful part of the portfolio. Although it doesn't make sense for us to do the entire effort of execution. Having said that, the risk that has happened in micro sector over last few years has been primarily driven by political factors which have been localized in some geographies. So what we have done strategically is that when we acquired this company, it was predominantly operating in 2 states with a very minor presence in another 2. Today, we are there in 16 states. So, and that is why it's noted because what we've done is that, we have expanded, given the synergies with our network because in any case, we have other microfinars, we're almost about 1400 branches. So we are synergies with that. We are we have expanded in 16 states so that geographically we anticipate the risk. We don't try and get considered a risk So based on that, I think growth on a lower basis continue, but it's absolutely under control. Okay, all right. All right. Thanks, the clarification, Nirmal. I have one question. Sorry to interrupt, sir. If you have any follow-up questions, request you to reach on please. Yes, and in terms of, even in terms of this SME, we have now clubbed the old lab portfolio with the small SME. So one portfolio was, say, 13, 14% yield at portfolio was around 20% yield. Now we are treating that as one portfolio. So in that, the old lab portfolio, like how are the, how is credit trends? And like will we see a reduction in ticket size here? Because I believe we used to do between the 50 lakhs to 1 crore kind of its size there? No, no, I think it's very valid observation and a good question. What we have done is that when you started the business 10 years ago, we used to do 7, 8 crores of life as many other players in the industry do. Then over the last 2 years, we realized that the competitive pressures in this segment have brought the pricing down to a level that risk is not properly priced in. So supposing that people who are getting lapped at 10% very accessible cases of 9.2.9.5% or so. So then we thought there's better to be affordable housing finance at that kind of yield. So we exited the large ticket lab, which is, say, between 2 crores to 10 crores kind of a thing where we were there earlier. So that segment of portfolio is running down. But the common characteristic of this portfolio, whether we do a larger ticket with Labcorp, we do a smaller ticket with unsecured is that the primary decision to keep credit is based on cash flow and not collateral. So even if you have furniture, which we insist for low double 50 bankruptcies, but the primary driver is that the cash flows should meet the repayments and not anything else. And when you do cash flow assessment, then obviously income tax records are one small part of the whole assessment exercise. Because in Indian context, you have a very finely, well developed pattern of service income assessment. And there are 2 services from agents digital agency like Brazil, for estimating turnover and things like that. So this portfolio increasingly see Increulently, we are not doing large ticket. Let me put the same dividers. We are not looking at doing a big lap in any case. Even the last bit is there is a solid ticket and unsecured is even smaller 4.5 lakh or 6.5 gigabytes ticket size. So you can see for the decline in the average business loan size, but these are all loans given to business. Built on cash flow analysis. 1, 2, we look for a relationship with the lifelong because the businesses keep getting renewed and the customer also grows along with you. So that is how the business will scale up. Right, right. Thanks. And your last question, if I may, your gold loan business has done exceedingly well. No questions on that, but just your thoughts on how much liquidity are we holding and what have been the borrowing rates for us both in the NVFC and the Wealth business. Thanks. Thanks. That's it from my side. So I think as Kobi pointed out that our moderators gone up by 58 basis points on a YY basis. And on a total, portfolio basis, I think is a similar trend in our wealth in our business also. And in terms of liquidity, so if you look at our wealth, we are out of is completely, we have reduced our book size and all the assets are basically they're calling against liquid security. So and they're short term. I mean, you can renew them. And as far as our retail assets are concerned, we can sell them down to the bank. As I said in my opening remarks. So 85% of our loan book in fact is something that banks can be willing to buy. So I see that we should be able to manage the liquidity phase or so concrete as well. All right, sir. So thank you all the best. Thank you. Thank you. The next question is from the line of Megha Hariamani from PI Square Investments. Please go ahead. Yes, thank you for the opportunity. My question is on the growth rate. For all the three division, finance and investment securities, what kind of a growth do we see going forward? So I think MPFC sector last quarter trend, if I look at it, because, I really can't make forward looking statement, but I'm saying that if you look at the trend, then we are growing around 25% in volume terms. Last year, we grew about 36% post tax profit, And also, more or less, you know, we should try and maintain the trend. When this current is there, it will just depend with what his guidance or, I think on well, on well, I think the number to closely track for us would be the growth in assets. And we hope to continue our 20 percent to 25 percent growth in asset number there. We expect retentions to be potentially in the same region to around about 10% lower, but and simultaneously to that, increased productivity of RNs because the weighted average productivity of RNs has gone up substantially for us. Our weighted average maturity or tenure of arms with us in the firm is now exceeding more than 5 years as our attrition rate continues to be sub 2%. That's a factor which we believe will drive growth and productivity in a large way. So I think we should be able to in spite of being at a large, asset based number. Be able to maintain our growth in assets in the region of 20% to 25% going forward. And it has a higher beta and it also depends on the mine. But what is happening over the years, we are seeing that your sector is becoming resilient to the cycles because, what is that, the first of all, okay, when we this was a 3 segments of segmented business, retail, our structural booking and investment banking. So in retail now, significantly moving towards all lines. So you have a higher operating leverage. And also the many the new customers, new millennial And they're looking at not only equities, but it's in a way, it's a mass affluent wealth management. So they're looking at multiple products So you have a fee. So if you look at our component within the retail and the non equity has been rising for last 4 years, 5 years. Our Institutional business, again, the domestic mutual funds contribute to drop more now. And there's a fairly steady flow of money into domestic mutual fund as compared to foreign investors. And there again, therefore, we should see less volatility. Investment Banking is dependent on equity capital market ideas and equities there again, I mean, it's difficult to get, but as the market becomes larger, deeper, it should stabilize But, as a matter of fact, this business is dependent capital market cycles. Okay. Next is on this interest cost. For the quarter, our interest cost was like just 3% up as compared to the last year. So Is there any an odd occasion why we risk cost center? Looking at because you're looking at, you're looking at the solidated number? Okay, maybe the better way to look at it will be as a winner separately because, what would have happened is that the interest cost to natural wealth might have gone down as the book has gone down and even in holding a securities business as the margin funding book has also fallen. But our actual finance interest cost has gone up by 24% for the full year. And interest income has gone up by 30%. But again, as I said, our net interest margin has gone up for 3, 4 regions, which I explained CV business relatively had a lesser interest margin as compared to gold and business loans. The growth has been significantly higher in gold business loans and microfinance. So you can see those up. But what happens in gold and microfinance, and we are expanding our network, even our operating cost increases significant. So if you look at number of brands here, there is significant that is gone up almost by maybe 500 or 600 to last 1 year, so almost 50% growth in number of branches or microfinancing gold. And therefore, you'll see that operating cost structure is down by 57%. But then this infrastructure should be put for us to extend a good step to sustain the growth over next few years. Okay. And how many branches would be at the operation as profits on the operating level? So very broadly, our balance is breakeven in 1 to spread very much time. And, and also the even the rule. So I would say that at least 2 thousand branches will be above water for sure. And many of from the remaining also, the losses or the deficit will be very marginal. Okay, okay. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Nishan Chawade from Cotac Securities. Please go ahead. Hi, this is Nishant here. Just a couple of data keeping questions from my side. First of all, I think if I look at the overall interest income for the quarter, what was the contribution of loan assignment. Loan assignment. Assignment income which sort of tends to be one off. For the quarter, you're saying? Yes, what is it? It was right. It was the right of it was the law. Amortization of 14 crores? So actually, the full year 68 crores in the past, but the in the quarter, actually there's a negative 14 crores. Sure. So if I really look at this, your income has gone up on a quarter on quarter basis, interest income has gone up from 11.70 crores and I remove this 14 crores, it becomes something like around INR 1309 crores. If I look at your it's a fairly large or almost like a 12% sort of rise in interest income. And if I look at your reported loan yield, that has just gone up from 14.3 to something like 14.7. So what really explains the difference. And if anything, your average loan book for the quarter has gone down, so there is some something that we are really missing over here. Yes. So around 185 so to know, I think you're not adjusted for the CV business high vol? No, that's not a part of interest income, right? That But the CV business, I know, happened on 30th March 31st March. But even if I try to look at it, not that the loan book has, you know, not that where there's been a major increase in loan book for us to say that. So what has happened is that CV interest income has accrued, but the CV which has high mark happened towards the end of the quarter. So you're not seeing that in the loan book. But, can that be the only reason because, you know, of that 3000 crores becomes all that would happen is 26,000 crores would have been like 29 or 30,000 crores. So what's 35 crore rupees of NPA release is also in this But that's a part of interest income? No. Just to tell you, as I on your queries more on the interest income line, the reason for the quarter on quarter increase in the interest income, right? So from a quarter on quarter increase in the interest come as also highlighted in the beginning of the call also that there has been quite a few resolutions which we've done in this particular year. So, moment you do a resolution for a cases, which were an NPA cases, you have an interest recognition coming up into your books. So in this particular quarter, because of the resolution of our G and P cases, we have a significant interest recognition appearing in our books. But that would be like penal interest or something, is it? No, not the penal interest, the actual interest on those loans, which have been resolved. So when moment you classify them into an NPA, you cannot recognize interest income. If you resolve those? Yes. What you also mentioned was that under Indes, you would continue to recognize interest income in the interest line item. And make a corresponding e field provision? Yes. So then under NDS, that is what we do. And that's the reason I'm saying that moment I try to if I create a ECL provision, then the net impact on the P and L is 0. That is right. So I'm just looking at the interest income line item. I'm not looking at the overall P and L. No. So, okay, I'll correct myself in terms of saying that when you're saying that an interest income is accrued on our G and P cases, the provision is also created under the same interest income line because I can't instate my interest income and create an ECL provision on interest under the provision line. So for an NPA case, it happens. Yes. You are just sort of with the interest income itself in which you believe? Yes, it's not in the problem. Yes, that's how the interest will be depressed for the quarter and the JPS Sure. Can you give the ECL numbers on stage 1, stage 2 and stage 3 for 3rd and the 4th quarter? We're just trying to kind of, you know, reconfigure the provisioning number. So when you're talking about the ECL number in terms of, you're looking at an overall basis, right? Provision that the increase provision that we have on stage 1 and if I've been So at 31st March, we have 800 crore, which is broken up in Yes. So on 31st March, we have 800 crore from a stage 1 perspective, we are at 87 crores, which is including principal and interest elements. We, on stage 2, we are at 50 crores. We have done on the SICR cases, which is around 167 crores. And on stage 3, we are at 469 crores. So you said 8750, what is 257? So FIC has other than state and state to even if they are performing assets, but if you think there's a significant increase in risk then you can make a provision against those assets. Okay. And for March 31st? You said December, right? It's a March 31st number. It's a March 31st number. Okay. And if you could share the December numbers so that we just kind of get configuration? So December would be higher because CVS is not down, but we'll give you the numbers. Yes. So December, our overall provision was at 1258 crores. Which is including the CB business. So stage 1 was 2.39 crores. Stage 2 was 32 crores. I have an SICR of 222 crores. And Stage 3 of 764 crores. Okay. This is very helpful. Now just quickly moving on to the wealth business, We wanted to just understand during this quarter, what was the component of upfront fees, which possibly cannot be or may not be recognized next year when you would kind of move more towards the new regime? And any guidance in that backdrop that you could share with us? Nishant, very quickly. I think just as the overall thing, around about 57% to 58% of our overall revenues are annuity based already. Even including the last quarter. The remaining 40% is essentially a function of distribution well as a little bit of brokerage, but mostly distribution fees, which is recognized upfront. The out of that 42%, brokerage, which is part of it, which is a function of equity, real estate, fixed income. That will continue the way it continues, which makes up close to around about 7% to 10% of our income line. So 58+10 percent, 68% to 78% continues as normal. The remaining 30% distribution income effectively amortized through the year more or less falls to, half the number as you build it out through the year. Which therefore makes it down about 15% through the year. But in the first quarter, the impact can be slightly higher. And That's the number which kind of has to correspondingly being made up by the increase in the fee income to the full 4 quarter increase in AUMs essentially. Yes, that's right. So I increase in AUM on the advisory side, on Apple 1, has moved from roundabout 180,200 crores at the end of 31st December to roundabout 7400 odd crores on 31st March. Okay, sir. IFL1 is essentially 7000 crores, so total advisory is around 7000 crores. At an average fee of around about 40 8 basis points. Okay. Just on the network of the wealth business, I think that you've not shared it this quarter. They're in the balance sheet. They're in the balance sheet, but around 3000 crores. 2009. Sure. And on the wealth business, what was the investment book? I think that's also something which I did not really see. So the investment books mostly in liquid funds and a little bit of GSEX, but otherwise the loan book is 4800 odd crores. And plus, we have our own AF investments, which would make up nearly 4.5500 crores, where we are acting as a sponsor, for all alternative investment funds. So net net, the number would be similar to previous quarter. I think it's around 1200 or crores last quarter. Yes. Sure. Just now on the just one thing. What are the total number of outstanding? Net it off netted off for liquid funds in the GSEK investments there. No. So for now, IFL Holdings for the parent, what are the outstanding number of shares? Of Apple Holdings and Apple Wealth? No, no, no, sorry. Just IFL Holdings, what are the outstanding number of shares? Sorry, how many? 31.9. Okay. And how much of the capital issues in the NVFC? In the year, you're in for something? No, no. So in BFC, we have 85% is owned by the holding at the end, 15% is owned by CDC. So was there any infusion during the year? There are housing finance from MBS, but that doesn't make any difference because housing finance is 100% substitute of MBS in any case. And can you just give us the total share count for the wealth business as well as the housing wealth business as well as the securities business? I guess, the number of shares for housing will not change as an IFL Holdings will not change. And I feel this, I think is No, vessel also must. The number of shares will not change. It's not about 8 crore 85 black shares on a fully diluted basis. Out of which 52.53 percent held by Apple Holdings, which will basically surround what 4.5 crores shares will get allotted to shareholders of Apple Holdings in the proposed cooperation. Sure. And securities? Security was 2 months ago. Same number of shares, right? Yes. The next question is from the line of Nikhil Valleja from Sundaram Mutual Fund. Please go ahead. Thanks for taking my question. I had a question on the wealth part. Could you please explain the changes that you made in the RMs remuneration which has resulted in such a sharp decline in the OpEx on sequential basis? So, no change in our compensation. It's a function of If you actually see the fixed plus the variable put together as a function of the revenue, it's more or less constant in the region of 30% to 35%. So there's a sequential decline because of the component of variable coming down. The fixed continues to be more or less remain the same. So the variable, I guess, because we are now So how is that variable linked? I mean, because now is it how is it linked to the top line? Because I think we were recognizing around 40% of the part So is it the variable is also linked to upfront versus trade or how is it? No, so the best way to look at compensation is as a percentage of the top line. So if you look at compensation for last year, for example, you had 250 plus 140, which was around about 400 odd crores on a wealth income of roundabout 900 odd crores, okay. So that's the broad number, roundabout in the region of 40% to 45%. In the current year, you will have roundabout 3.36 odd crores on the top line of roundabout 9.50 odd crores, okay, so similar number. 40% is the compensation number, either coming from fixed or variable as a percentage of top line. Okay. And you also mentioned that since 42% of the our revenue is still upfront if if I heard correctly. Now I think No, no, no. I'll explain again. 55 to percent of our revenues comes in the form of either management fees or advisory or part of our loan syndication fees. 40% is essentially made up of 2 components. It could be distribution income or brokerage. At a minimum, brokerage happens in the region of 7% to 8%. It's a mix of not only equity, but a lot of asset classes. Predominantly fixed income, structured products, equity, and so on and so forth. So round about 70% is a function of 30% annuity income, 10% brokerage, and the remaining 30% is essentially a function of distribution fees from third party products distributed of other manufacturers. That 30% is going to be recognized on a trail basis instead of being recognized on an upfront Okay. And you said that the impact on the first quarter would be higher? So, by only first quarter, I mean, this would be spread over the full year, right? No, no, so the distribution fee starts coming to you on a trail basis instead of coming to you on an upfront basis, right? So effectively, business done to you, business done in the first quarter. And second quarter. In the third quarter, they start coming to you cumulatively in a as a trail basis. Only in the first quarter, the impact is larger because you're not accounting trail for the ongoing basis. So for example, hypothetically, If you, let's say, do 100 crores of distribution business in quarter 1, okay. Would have accounted only for around about potentially 50 crores if the business has happened to the quarter. You'll only get around about 45 days of trail income. But in quarter 3, you'll end up getting the full 3 months of trail income. And the asset size also increases for the distribution business done in quarter 1 as well as in quarter 2. If I remember it correctly, I mean, we had given the breakup of our retrocession trade and upfront, so I think retrocession upfront was closer to 500 crore in that 1100 crore. Now I just want to understand this part of the business. I think from what I understood that this part of the business will reduce by around 25% to 30%, right? So effectively, our top line, it would be closer to 200 to 300 carats. Am I right? Yes. Because of the impact of, recognizing distribution, on a trail basis instead of upfront. That's right. The impact would be 300 to 250 crores. Okay, fine. Thanks. That's it from my side. I would now like to hand the conference over to the management for closing comments. Thank you so much for being patient and being on the call. If you have any more queries, please feel free to send us a mail or get in touch with us. You can get in touch with our investor relations manager. Thank you so much and have a good day ahead. Thank you.