On behalf of team IIFL, I thank you for joining us on this call. I am R. Venkataraman, managing director. I am accompanied by Nirmal Jain, our group chairman, Sumit Bali, CEO, IIFL Finance, Karan Bhagat, managing director, IIFL Wealth Management, Monu Ratra, CEO, IIFL Housing Finance, Balaji Raghavan, head, Real Estate Finance, and Kaumudi Vyas, our financial controller. I now ask Nirmal, our chairman, to comment and give an overview of the group strategy and plans.
Thank you, Venkat, and a warm welcome to all of you. First, a bit of backdrop on the macro environment. We are passing through volatile times that everybody knows, and globally, there are worries about China-U.S. trade war escalating and its consequent impact on interest rate currencies and also the risk appetite for emerging markets. In that background, we also have elections where uncertainty is looming large because nobody has clarity on what is the final outcome, but it is just a matter of few days. During the last year, as we sit down to review, we had quite a few interesting and challenging times and the liquidity squeeze in NBFC is something that everybody is very keenly watching and curious about.
In that environment, I think we are very happy to report good performance and maybe as all of you know that we have three businesses, they are getting reorganized. Just a quick update on that. Board has already approved the demerger of IIFL Securities and IIFL Wealth. The record date, if I must take note, is set on 31st May. What that means is that the IIFL Holding shareholders as on 31st May, will get shares of IIFL Securities and IIFL Wealth. IIFL Wealth in the ratio of one share for seven shares and IIFL Securities, one for one. After the record date, therefore, the listed company primarily will represent NBFC because the holding company will not have any significant business left. It will have a step-down subsidiary company which is NBFC and which has two more subsidiary companies, which is housing finance and microfinance.
The two companies, IIFL Securities and IIFL Wealth, will get listed in due course. This process has started last year and now is consummating. As I say now that within maybe a month or two, we will have three listed entities separately. I mean, just to complete the process. Our plans are to merge NBFC with the holding company, and that will require us to seek RBI's new license for NBFC in the holding company and then merge the NBFC into holding, although holding company will be more like a shell company after the transfer of these businesses. That is how the process will run. Coming to performance for last full year. IIFL Finance has reported 55% post-tax profit growth.
If we adjust for exceptional item, which is gain on slump sale of commercial vehicle financing business, then IIFL Finance profit after tax has been INR 633 crore, which represents a 36% year-over-year 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. The numbers have to be understood from a like-to-like basis. When we look at our loan AUM growth in FY 2019 vis-à-vis FY 2018, the growth is 29% if you exclude CV financing business because that business is now sold. If you exclude from FY 2019, it doesn't exist on 31st March FY 2019 because the deal consummated just before that.
If you exclude in FY 2018 as well, comparatively we have a 29% growth in loan AUM, which is corresponding to 30% increase in interest income and similar increase in interest cost 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 small ticket, detailed granular loan book, comprising primarily of four segments, home loan. Again, we are an affordable home loan segment because our average ticket size is INR 18 lakh. We are significantly present in Tier 2 and Tier 3 cities for our home loan business. 85% of our branches in number are also in Tier 2 and Tier 3 cities. The first, home loan. The second segment of business is business loan, which comprises the small ticket business loan of INR 4 lakh-INR 5 lakh, largely unsecured.
Larger loans above INR 50 lakh are compulsorily secured against property as per our internal policy. The third segment of business is gold loan, where our book was around INR 6,200 crore as at year-end. The fourth segment of business is microfinance, which also has grown well, and we were INR 2,300 crore. The business loan is about INR 8,100 crore, and gold loan is over INR 10,000 crore. These four are the core growth drivers for the company. Other than this, we also have the construction and developer financing or construction real estate development developer loan, which in aggregate is INR 5,000 crore. It comprises INR 3,500 crore in NBFC and INR 1,500 crore in HFC.
I'm sure that there are lots of questions about this, therefore, we have Balaji Raghavan here with us for the first time analyst call. He has been heading this business for more than ten years with IIFL, and he will talk more about this business segment, giving you more granular details of how we do this business and what is the portfolio like. 85% of retail loan assets that we have, they are easily sellable to banks. Banks are always willing and eager buyer for that because most of that would meet their priority sector requirement as well as even with non-priority, the retail assets, they are always willing to buy. This is the performance of our IIFL 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. Besides, in last two quarters, approximately we have raised about INR 2,000 crore in each quarter from long-term sources such as external commercial borrowing or refinancing by MHAI, and so on. We are planning to raise money by way of ECB in various forms, whether it can be donor bond or a bilateral multilateral institutions funding. A few months back, we had raised from CDC, who is also an equity investor in IIFL Finance, and we plan to further diversify our sources of funding. You are aware that we had a successful public issue also of INR 1,200 crore in the previous quarter.
Having covered IIFL Finance in terms of our performance as well as liquidity, I move on to IIFL Wealth. We also have Karan Bhagat on the call who will answer your questions and give you more details. This business has ended the year with 4% YOY growth and the quarter with 10% YOY growth. Given that we changed our accounting as well as business model, 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 sticky and sustainable regardless of the environment. Last quarter, we had discussed this that we have moved to advisory model in terms of the way we do our accounting because it is more on accrual basis, and also the kind of products and services and offerings we are trying to encourage our customers to move to.
IIFL Wealth 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. IIFL Securities, as all of you are aware, we ended the year with 8% decline in post-tax profit, primarily because investment banking revenue was significantly lower. Investment banking, as all of you know that our strength is the ECM, equity capital market, comprising IPO and QIP. There, I think number of these were significantly fewer in last year.
Hopefully, if there is a stability on political and economic front, there is a lot of pent-up demand for equity capital there and number of these are in pipeline and hopefully things should recover in this year. Everything put together, our consolidated profit is INR 1,253 crore, 23% YOY growth. After minority interest is INR 965 crore, which is 22% YOY growth. With this now I hand over to Kaumudiji for taking you through the details line by line of our profit and loss account and balance sheet for all the businesses, and then we will also have Balaji to talk about their businesses. Thanks.
Hi. Good afternoon, everyone. To take you through the details of the numbers. For the year, the group net profit was INR 1,253 crores, which is up 23% year-on-year, and net profit after minority interest was INR 965 crores, which is up 22% year-on-year. For our NBFC business, the loan AUM was INR 34,904 crores, up 29% year-on-year and 7% quarter-on-quarter. These numbers are excluding the CV AUM, which was divested in March 2019. Profit after tax for the quarter, excluding the exceptional items, grew by 13% year-on-year and 56% quarter-on-quarter to INR 169 crores. Our full-year profit after tax is at INR 634 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 172% year-on-year, coming off a very small base. On the other hand, construction and real estate finance, LAP and capital market loans will continue to have declining share in our portfolio. In home loans, our focus remains primarily on small ticket loans and affordable home segment to both salaried and self-employed sections with average ticket size of INR 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 on 31st March 2019, we had over 9,000 approved housing projects, up nearly 1.5 times from 6,200 approved projects a year ago. 57% 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. IIFL Home Finance has been a significant player in PMAY CLSS scheme. Till 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% 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 loan, 54% of our LAPs, 44% of our SME, and nearly all of our MFI loans are PSL compliant. In aggregate, nearly 41% of our loans are PSL compliant. The large share of retail and PSL compliant 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 nine 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 a healthy 7.2%, 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 scope for the share of high yielding and unsecured assets to go up.
We currently have 1,947 branches primary for our HFC, gold, and microfinance businesses. Consolidated GNPA and NNPA recognized as per RBI's prudential norms and provision as per expected credit loss method prescribed in Ind AS stood at 1.95% and 0.62% of loans respectively. Under expected credit loss provisioning under Ind AS, 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 ten-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 six 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 5 products. Moving to our wealth management business, IIFL Wealth PAT, profit after tax, computed as per Ind AS was at INR 84 crore, 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 INR 1.69 trillion.
IIFL Wealth offers a broad range of product and services to participate in a larger 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 seven major geographies. Net new money collected in fourth quarter full year 2019 was INR 5,377 crore. AIF assets grew 33% year-on-year to INR 15,661 crore. IIFL Wealth Finance, which offers loans against securities to high-net-worth clientele, has a loan book of INR 4,798 crore as at March 2019. Moving to our capital markets business, IIFL Capital Markets, which largely comprises retail broking, institutional broking, and investment banking businesses, saw its net profits for the quarter decline to 36% year-on-year to INR 38 crore and 8% year-on-year to INR 171 crore 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 1,239 crore versus 1% quarter-on-quarter growth in exchange cash turnover. Our average daily total turnover, including F&O, was up 5% quarter-on-quarter to INR 17,134 crore. 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, IIFL Markets, has had over 2.6 million downloads. Presently, about 52% of our retail broking clients trade through the mobile app. We completed more than 15 transactions across various products and investment banking in the year to date, including three IPOs, four QIPs, and one real estate IPO despite the market volatility, REIT. We will now open the floor for question and answers.
Thank you very much. We will now begin the question and answer session.
Sorry. Maybe before we start, I'll have Balaji Raghavan, who's head of our
Sure, sir.
Okay. Maybe we just take our question and answer. We can take it as a part of question and answer, no worries. Okay. Start the question and answer then.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question, you may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Hello.
Thank you. The first question is from the line of Viral Shah from Credit Suisse. Please go ahead.
Hi, sir. Thank you.
Hi.
I have four questions.
Yeah.
One is, I'll start with the NBFC business.
There was a quarter-on-quarter meaningful margin expansion. What drove that? If you could highlight that.
One is that CV business is taken away from this, which has relatively lower margin compared to other businesses. Two, the entire growth is driven by high-margin retail products. If you really notice, the growth is significantly there in business loan and gold loan. Both the products are yielding 18%, 19% and 20%, 21%. These two factors have resulted in margin expansion. The base effect because of the CV business is out, is also to be adjusted there.
Right, sir. If I adjust for that also, I am getting a quarter-on-quarter increase of nearly 180 basis points in the margins.
Yes. Also, the GNPA. What happens is, if you see our last quarter, GNPA had spiked. When the GNPA is higher, then you can't take the interest income also. The GNPA resolution also has resulted in expansion. As I said, the CV is out, which has relatively lower expenses. The microfinance disbursement is significantly up, which is about INR 860. Microfinance is a high-yielding product, gold loan, business loan. If you see the last quarter growth, is primarily in these three segments. Microfinance itself is up from INR 1,750 to INR 2,285. About INR 550 crore rupees of AUM growth is from microfinance, which is a high-yielding product. All these factors are combined.
The exit of CV business, microfinance, gold loan, and business loan, that is how the margin has expanded on the total basis. The GNPA resolutions, because when the GNPA has spiked, then you can't book interest, and that basically depresses your interest income as well.
Okay. If you could correct my understanding. Under Ind AS, you can recognize the interest on GNPA or not?
You can recognize on which can be standard by standard 2.
Under Ind AS, from an interest accrual perspective, we can recognize the interest, and you can correspondingly create an ECL provision on it.
Okay. Right. Sir, my second question was on actually the same NPAs. Your reported NPAs did come down, but seems like your absolute provisions have also reduced. As a result, it was largely because of write-offs.
No, the CV business is taken away. There was almost about INR 150 crore, INR 200 crore of provision component for CV alone.
Okay.
If you see now. Both the things, one is the CV is out, and also there have been resolutions of NPA. Both things put together, and there are certain fully provided for assets will be written off. Then you see that our total ECL has come down to INR 800 crore.
Right.
See, if you notice last quarter, CV had almost 8.5% GNPA.
Okay. Right.
Which was skewing our average in terms of everything. If you take that away, then all these numbers fall in place.
Right. Thank you, sir.
Okay. Thank you.
I have two more questions actually on wealth management.
Go ahead.
If I can ask.
Yeah, please.
Yeah. There was actually a sharp decrease in the employee expense and the overall OpEx expense in the Wealth Management. This is something which we have been seeing for last couple of quarters, and this at a time when our number of bankers have actually increased. What is driving that, and how sustainable is this?
Karan is there on the line. Karan? One minute, because I think Karan also, if he's available, he'll answer that. Hello, Karan, are you there? Give me a minute.
Yeah, sure.
Has Karan been joined the call or no? Karan, can you hear me? Okay, I think Karan is not there. What has happened is that the variable component of our employee cost has gone down significantly. This year, if you notice, then with the change in business model, the fee income also has changed. Actually, that is what is showing in the lower employee cost.
Right. How should we look at the trend going ahead?
Trend going forward, I think we've stabilized. This is a new normal. Again, over a period of time, gradually it will increase. I think the base that you are seeing, the quarter numbers that you are seeing is more like the base.
Right. One question on the yield. Basically, I was trying to calculate the retention yield for the full year.
which is the net commission income that you have disclosed.
It is coming different from what we have in the presentation.
I'll tell you. Out of INR 163,000 crore, INR 31,000 crore are custody assets. This yield is net of that. Karan is on the call, he's in the other office. I'm just trying to connect. Karan. Is he not allowed? Is he on mute or Okay. Hello. Yield, if you see, I think the 85 basis points that you're seeing is based on ex custody assets. Out of INR 163,000 crore, approximately INR 31,000 crore are custody asset.
Okay.
If you do the numbers with that, then I think you'll get the correct number. If you guys just wait, I'm just trying to patch in Karan Bhagat also. Give me a minute. Okay, we can move on to the next question. As soon as he's in, he'll take more questions on this.
Sure. Thank you.
Any more questions?
Thank you. The next question is from the line of Shivkumar from Unifi Capital. Please go ahead.
Yeah. Thank you for the opportunity. Sir, my question is with regards to the construction finance loan segment. There, for a GNPA of 4.4%, you provided fully and you have a NNPA of 0%, which is very good. Going forward, what is your strategy? Will you continue to fully provide for whatever GNPA is there in the construction finance business and what is your outlook going forward in that business for stress?
This is Balaji here. I head the real estate, the construction finance business. 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. 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.
Sir, can you give more granular data on the resolution? How much was the GNPA at the beginning of the quarter and how much was resolved during the quarter?
At the beginning of the quarter, we had INR 480 crores, which was there, which we had recognized and out of which about INR 214 is what we managed to resolve. Basically, these were the resolutions which had happened is where we had initiated certain SARFAESI actions and so on, and we had taken possession of the land. During the quarter, we managed to dispose of these lands and therefore we resolved them.
What will be the number of accounts, sir? When you started the quarter, INR 480 crores, what will be the number of accounts?
I think these are all larger ticket sizes. These would be, I think about four or five accounts and now we would be probably left with maybe two or three accounts. That is how the ticket sizes are. The ticket sizes are roughly in the range of, I think around INR 80 crore-INR 90 crore.
What's your outlook, sir, going forward? Do you think you're done with the recognition of stress or do you still expect some stress to come on board?
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 and March. The reason for this, of course, was 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 stress on disbursement of home loans and so on and so forth and construction finance. 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. I think going forward, we don't see an issue at all.
Right. Sir, 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 basis points for FY 2019. What was it for Q4 specifically and what is your guidance going forward now that you have moved to advisory mode?
Karan. Is Karan there?
Sure, sir. I'll unmute his line. Just give me a minute.
Okay.
Sir, Karan is in talk mode.
Okay. Karan, can you just take that?
Mr. Karan Bhagat? Sir, I think so.
Hi Karan. Yeah, we can hear you now.
Great. I'll quickly answer all the three questions. The employee expenses variated, 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 one year to the extent of 5%-7%. Otherwise, it's pretty much going to be around the number. The trend is to continue. On the margins and the yields, like Nirmal again pointed out correctly, apart from the INR 31,000 crores, the INR 84,000 crores is 85 basis points calculated on the ex-custody assets. In quarter four, the retention on the assets excluding the custody assets would be slightly lower. It will be in the region of 70 to 75 basis points.
The new normal, because of the revenue recognition on all our distribution products, 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 three to six months as we move clients to advisory. Given our experience over the last three to four 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 IIFL Securities and IIFL Wealth?
As I said, the record date is 31st May. If you're a shareholder on 31st May, you get the shares of IIFL Securities and IIFL listing. The procedure of exchange can take up to 45 days. I would think that it can happen by not later than July 15, but depending on how exchanges approve and process, it can happen anywhere between June end to mid-July.
Right. Thank you, sir, and all the best.
Thank you.
Thank you. The next question is from the line of Saptarshi Chatterjee from Centrum Broking. Please go ahead.
Yeah. Sir, thank you for taking my question. My question is again on the developer finance. Around we had 4.4% of the GNPA and out of INR 480 crores, INR 240 crores we have resolved, but the rest INR 240 crores, which is roughly around 2.2%, we have written off. 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. To answer the first part of your statement, we have not written off INR 240 crores, as in all these are in the process of resolution and disposal of the assets and so on. You will see a further reduction here onwards. There is I think barely anything that we will end up writing off. That is the first part. Second, coming to 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.
If you see over the last about eight to nine months or even a little bit more, the liquidity as well as the sales velocities have been fairly low as far as the entire sector is concerned. The sales velocity was low as there was an 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. For a good about five to six months or so, there was barely any buying or purchasing which was happening in the sector. Secondly, also is that post September, about at least I think about two months or so, most of the housing finance companies had slowed down dispersals in this segment because of liquidity issues. Again, there were cash flow issues.
I would say that the last eight, nine months were more of environment rather than anything else. Of course, we also saw one or two odd delays, which also happened because of certain regulatory approvals, et cetera, which were delayed beyond a point, which eventually of course came. I think, see, as far as the learning is concerned, I would say is that as far as the underwriting process is concerned, we have been robust, and we continue to strengthen the underwriting process. In fact, now we have external independent directors also on the investment committees that we are taking calls on any transaction that we are doing. Other than that, I think most importantly is that we have really strengthened our asset management capability.
We have now got dedicated teams in order to take care of asset management on a day-to-day basis, where we have in fact physical presence on all the project sites. 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 know well in advance whether there is going to be sales or not.
Okay. In terms of-
Also other than that-
promoter side.
Yeah. Other than that, as far as the sector is concerned, we have always been focused on the mid-market and the affordable residential segment. I think we are one of the few players who have never ventured out into any of the high-end premium residential projects. Therefore, probably we see one or two quarters of lower velocities and so on and so forth. Otherwise, given the depth of demand in this segment in this country, I think we are fairly all right as far as the segments that we are operating in continue to be growth segments. So as I said, temporarily, we do see issues like what we saw in the two quarters in the past, overall, I don't see an issue which is there as far as the future of this segment is concerned.
If I look at the portfolio mix, which is also given, I think in the presentation, is that. If you look at the areas in which we are operating, if I look at Bombay, for example, we would be operating in places like Dahisar, Borivali, Panvel, Thane, and those kind of places, where the unit price itself is fairly low. 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. Over 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.
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. Even though, let us say, we might have temporary situations of maybe six months, 12 months, however, given the kind of covers that we have, we always have viability in all these projects, therefore, to come back to the first statement, we do not end up writing off anything.
Okay, sir. In terms of going forward dispersals, out of the three geographical zones, 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 the balance sheet, as far as the sector is concerned. Our proportion will probably either remain same or be reduced. As far as geographies are concerned, we still believe that the depth of markets do exist in NCR, some parts of Tier 2 cities in the north. To some extent, I would say not in central south Mumbai, but if you go to the far suburbs, et cetera. Pune, for example, is low today. As far as future strategy is concerned, to answer your question, this is something which is a review which we do strategically where to invest, not to invest or lend every quarter or so.
For example, one quarter we might find that there is an opportunity and the markets are doing well in, let's say, Pune. 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 stayed away from Hyderabad for a good many number of years. However, we have started looking at lending transactions and we are doing them in the last one and a half years after the political stability has come and the demand has picked up again. These are things which are, I would say, dynamic in nature and do keep changing over time.
Okay. Thank you. I know all that.
Thank you. The next question is from the line of Anitha Rangan from HSBC Asset Management Company. Please go ahead.
Yeah. Hi. I just had one question. In terms of your business loans, your NPA actually has gone up, and lastly your net NPA is also around 2.3. In your developer book, while you are able to resolve what is the kind of asset quality you are seeing here?
Sorry, come back. Can you repeat your question? Where is the NPA gone up?
In the business loan segment.
Okay.
Here your net is also 2.3 versus your developer book where your net NPA is 0. Here, you have kept your net NPA around 2.3. What is the status of resolution here, and if you can give some clarity here? My second question is on the developer segment. Will your loans actually be exclusive to the developer? Is he actually facing any underlying liquidity and how you are handholding some of the developers? Because if they are low ticket size, I'm sure they will also be facing some kind of a liquidity from other sources as well, liquidity pressure. How you are handholding them and supporting them in this point in time?
I think Sumit can comment on part of the question, but just one clarification that when we look at net NPA, in ECL accounting, now there are 4 types of provision, and only the stage 3 provision is adjusted from GNPA. Or to put it differently, other than this, we have a significant standard asset provision. That's why when we say that I've got 139% coverage, that means that my total provision is 139% of GNPA in aggregate. Out of that, 69% is my provision against specific assets, and the remaining is my standard asset provision. That is also charged to profit and loss account is available as a cushion. Specifically, our strategy for taking various NPAs of business where business loans, Sumit will just take up the question and about your developer, Balaji will back in.
On the business loan, a slight overview, we are about INR 8,100 crore, 70% of the book is collateralized, 30% only is non-collateral. It is predominantly lent to business owners backed by cash flows and collateral. For us, assessment of cash flows is pretty important. If you see the yield, the growth last year has been 10%. If you see the yield on this business is about 15.7% and it is moving up. Therefore, a 2.3% GNPA on this is not a very off number. There is property collateral, which takes time to get resolved. We are pretty confident we will see resolution happening on this.
Overall, given the yield and the kind of growth rate and the movement towards granularity, where we are only looking at incrementally average ticket size of INR 22 lakh onboarding, I think we are in good shape to grow this business.
In this book, what would your mix between SME and business loans and LAP be?
Effectively, these are all medium and small and micro enterprise. 70% is collateralized, 30%-
70% is LAP and 30% is non-LAP.
Yeah.
Okay. Got it. Yeah.
Coming to your question on handholding of developers in times of stress. Essentially, I would put this as a spectrum, right? As you've seen, we have got a fairly robust distribution and branches, which is there, both on the home loan side, gold loan side, and the securities side. We do have various methods by which and processes by which we do quite a bit of process. Wherever we find that there are depressed sales and there is correction required, we have gotten into such projects and used our own distribution in order to accelerate sales in a lot of instances. Which obviously generates cash flows.
Second is, 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 times. That is the second step we have done so far. The third is that we have also had various instances where we have got stronger partners to introduce equity and do some sort of a commercial contract with the existing developer, by which, we are able to infuse equity and take the project forward. By mere strength of brand and financial strength, we are able to carry the project forward.
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. Otherwise, between the first three, we are able to help the developer 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, borrowing more, and we've seen at least about two to three cycles, if not four, with most of these people. Therefore, we believe in handholding. We have done all these three things which I've mentioned.
Okay. Would this be exclusive, like you would be the only exclusive sole lender or this would be like a consortium?
Generally what happens is that, in fact in all the instances, we are the single lender to a project. We might have other projects which are probably mortgaged to others. However, as far as we are concerned, we are always sole primary lenders in our projects that we are funding. We don't share anything.
Okay. Thank you very much.
Thank you.
Thank you. The next question is from the line of Digant Haria from Antique Stock Broking. Please go ahead.
I just wanted to know that we did around INR 2,800 crores of securitization or direct assignment this quarter. What would have been the income generated on that for the quarter?
From an NBFC console perspective, we have an income of around INR 68 crores which has come into our books for this particular financial year as an interest adjustment on the assigned portfolio.
Okay. Most of it is direct assignment, right? Under IND AS, we have to book everything as and when the direct assignment is done, right?
Under IND AS, 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 upfront in the year you do the assignment. The P&L impact for the same is around INR 68 crores across.
You mean on the entire INR 8 or 9,000 crores of assignments that we did in the year, the income effect of that is only INR 68 crores?
That's basically because whatever has been booked in the previous years also gets reversed out and amortized during the year. The net impact into the P&L is INR 68 crores.
After this sale of CV Finance to IndoStar, what is the net worth of our IIFL Finance or our NBFC?
The IIFL Finance, including the HFC and everything, our closing net worth is around INR 4,300 crores.
Okay. Fine. Thanks for this data points. My second question is mainly on this growth front that, actually I see that we have grown our microfinance book pretty fast. I understand that real estate now, we or maybe a lot of other players may not want to grow just because of the kind of backlash that investors would have in the future for this business. Microfinance, we have tripled our loan book in just four quarters. Are we again trying to reduce one segment, which could probably become less risky in the future, which is real estate, and maybe go and grow fast in a segment which is probably going to be risky in the future because we have seen three years of fantastic growth in microfinance and we have seen these cycles definitely come again and again and again.
A good question. First of all, as you rightly said that the real estate might be seeing the trough, we are not exiting the segment and we are not reducing our exposure as a group. What we are doing strategically is that, the new exposure to developer we are taking through a fund structure. Very recently we raised IIFL Affordable Housing Fund, in which even Fairfax has come as a sponsor. DEG, which is Germany's very reputed institution, KfW subsidiary has come
As a partner, we raised about, I think INR 2,200 crore, INR 2,000 crore plus, and we have started deploying that. What we have done as a strategy, we believe that real estate is a good sector, but because you take a lumpy bet, some of them may turn problematic. What you need to do is you need to pull it together, and that's what we are doing. Till now, we have raised seven funds. Three of them are more or less fully exited with a yield of almost around anywhere between 16%-18%. We have a fairly good track record in managing the financing of real estate developers for the last 10 years or 9 years. We continue to grow that, but not through the balance sheet of NBFC as much as through the fund structure. That is your part, question number 1.
The second part of your question is microfinance. This growth, what we are seeing is on a small base. The two ways to look at it, you can say that the book has tripled, and the other is the INR 1,500 crore growth in the book in our overall scheme of things, which is INR 36,000 crore of total AUM. On a small base, the growth may appear in percentage term higher, this is not something which is unwieldy or extraordinary. When we acquired microfinance, 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. Otherwise, it doesn't make sense for us to do the entire effort of acquisition.
Having said that, the risk that has happened in microfinance sector over last few years has been primarily driven by political factors which have been localized in some geographies. What we have done strategically is that when we acquired this company, it was predominantly operating in two states with a very minor presence in another two. Today, we are there in 16 states. That is where the growth is because what we have done is that we have expanded, given the synergies with our network, because in any case, we have other microfinance, we have almost about 1,400 branches. We have synergized with that. We have expanded in 16 states so that geographically we dissipate the risk. We don't try and have concentrated risk. Based on that, I think growth on the lower base will continue, but it's absolutely under control.
Okay. All right. Thanks for the clarification, Nirmal. I have one question-
Digant, sorry to interrupt, sir. If you have any follow-up questions, request you to rejoin the queue, please.
Let him finish it, just a minute. Hello?
Okay, sure.
Yeah.
Let him finish the topic.
Yeah. Even in terms of this SME, we have now clubbed the old LAP portfolio with the small SME. One portfolio was, say, 13%-14% yield, and one portfolio was around 20% yield. Now we are treating that as one portfolio. In that, the old LAP portfolio, how is the credit trends and will we see a reduction in ticket size here? Because I believe we used to do between that INR 50 lakhs to INR 1 crore kind of ticket size there.
No, I think-
Have we changed in focus here?
I think it's a very valid observation and a good question. What we have done is that when we started this business 10 years ago, we used to do INR 7, INR 8 crores worth of LAP as many other players in industry do. Over the last two, three 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. Supposing there are people who are giving LAP at 10%, very exceptional cases of 9.2%, 9.5% or so. We thought it better to do affordable housing finance at that kind of yield. We exited the large ticket LAP, which is, say, between INR 2 crores-INR 10 crores kind of a thing where we were there earlier. That segment of portfolio is running down.
The common characteristic of this portfolio, whether we do little larger ticket with LAP or we do a smaller ticket with unsecured, is that the primary decision to give credit is based on cash flow and not collateral. Even if you have collateral, which we insist for loans above INR 50,000, the primary driver is that the cash flow should meet the repayments and not anything else. When you do cash flow assessment, obviously income tax records are one small part of the whole assessment exercise. In Indian context, you have to have a very finely well-developed method of surrogate income assessment. There are tools available even from credit agencies like CRISIL for estimating turnover and things like that. Incrementally, we are not doing large ticket. Let me put it this way.
Incrementally, we are not doing a big LAP in any case. Even the LAP which is there is a smaller ticket, and the unsecured is even smaller, INR 4.5 lakh, INR 5 lakh or INR 6 lakh ticket size. You can see further decline in the average business loan size, but these are all loans given to business based on cash flow analysis, one. Two, we look for a relationship which is lifelong because the business loans keep getting renewed, and the customer also grows along with you. That is how the business will shape up.
Right. Thanks, Nirmal. Last question, if I may. Your gold loan business has done exceedingly well, so 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 NBFC and the wealth business. Thanks. That's it from my side.
I think as Kaumudi pointed out that our borrowing rate has gone up by 58 basis points on a YOY basis and on a total portfolio basis. I think it's a similar trend in our wealth and our business also. In terms of liquidity, if you look at our wealth, we are out of CPs completely. We have reduced our book size and all the assets are basically they're callable, they're again liquid security. 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. 85% of our loan book, in fact, is something that banks can be willing to buy. I see that we should be able to manage the liquidity phase or so-called crisis well.
Right. Sir. 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.
Yeah. Thank you for the opportunity. My question is on the growth side. For all the three divisions, finance, wealth, and securities, what kind of growth do we see going forward?
I think NBFC 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. More or less, we should try and maintain the trend. Karan is there. He'll just chip in with what his guidance are.
I think on wealth, I think the number to closely track for us would be the growth in assets, and we hope to continue a 20%-25% growth in asset number there. We expect retentions to be potentially in the same region to round about 10% lower. Simultaneously to that, increased productivity of RMs, because the weighted average productivity of RMs has gone up substantially for us. Our weighted average maturity or tenure of RMs with us in the firm is now exceeding more than five 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. 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%-25% going forward.
Okay.
Securities business is a little volatile, it has a higher beta, and it also depends on the market. You know what is happening over the years? We are seeing that even securities becoming resilient to the cycles, because what is that? There are three segments of securities business. Retail, institutional broking, and investment banking. In retail now, significant is moving towards online, so you have a higher operating leverage. Also with the new customers, new millennials, they're looking at not only equities, but in a way, is a mass affluent wealth management. They're looking at multiple products. If you look at our component within the retail, then the non-equity has been rising for the last five years.
Our institutional business, again, the domestic mutual funds contribute lot more now and there's a fairly steady flow of money into domestic mutual funds as compared to foreign investors. There again, therefore, we should see less volatility. Investment banking is dependent on equity capital market, IPOs and QIPs. There again, it's very difficult to guess, as the market become larger, deeper, it should stabilize. As a matter of fact, this business is dependent on capital market cycle.
Next is on this interest cost. For the quarter, our interest cost was just 3% up as compared to the last year. Is there any odd occasion why the interest cost went up?
Because you're looking at consolidated number.
Correct.
Maybe the better way to look at it will be Asset Finance separately because what would have happened is that the interest cost in IIFL Wealth might have gone down as the book has gone down, and even in holding our securities business as the margin funding book has also fallen. Our IIFL Finance interest cost has gone up by 24% for the full year. Interest income has gone up by 30%. Again, as I said, our net interest margin has gone up for three, four reasons, 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. You can see those. You know what happened? In gold and microfinance, as we're expanding our network, even our operating cost increases significantly.
If you look at number of branches, that has gone up almost by maybe 500 or 600 over last one year. Almost 50% growth in number of branches of microfinance and gold. Therefore, you'll see their operating cost also has gone up by 57%. This infrastructure should be good for us to sustain the growth over the next few years.
How many branches would be at profits on the operating level?
Very broadly, our branches break even in one to 12 to 18 months time. I would say that at least two-thirds of branches will be above water for sure. From the remaining also, the losses or the deficit will be very marginal.
Okay. That's it from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Nishant Chawade from Kotak 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? Yeah, one second. For the quarter, how much is it?
It was a write-off. It was an amortization of INR 14 crores.
Actually the full year is INR 68 crores, Nishant, in the quarter, actually, there is a negative INR 14 crores.
Sure. If I really look at this, your income has gone up on a quarter-on-quarter basis. Interest income has gone up from INR 1,175 crores, I remove this INR 14 crores, it becomes something like around INR 1,309 crores.
Correct.
It is a fairly large, almost like a 12% sort of rise in interest income. If I look at your reported loan yield, that has just gone up from 14.3% to something like 14.7%. What really explains the difference? If anything, your average loan book for the quarter has gone down. There is something that we are really missing over here.
Yeah. Around 185. I think you are not adjusted for the CV business hive off.
That's not a part of interest income, right? That comes
The CV business hive off happened on 31st March.
Even if I try to look at it, not that there has been a major increase in loan book for us to say that
What has happened is that CV interest income has accrued, but the CV business hive off happened towards the end of the quarter, so you're not seeing that in the loan book.
Can that be the only reason?
One second.
Of that INR 27,000 crore becomes, all that would happen is INR 26,000 crore would have been like INR 29,000 crore or INR 30,000 crore.
INR 135 crore of GNPA releases.
That's a part of interest income?
No, no.
Just to tell you, as I understand your query, it's more on the interest income line, the reason for the quarter-on-quarter increase in the interest income.
Right? From a quarter-on-quarter increase in the interest income, 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. The moment you do a resolution for cases which were in NPA cases, you have an interest recognition coming up into your books. In this particular quarter, because of the resolution of our GNPA cases, we have a significant interest recognition appearing in our books.
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. The moment you classify them into an NPA, you cannot recognize the interest income.
I guess what you also mentioned was that under Ind AS, you would continue to recognize interest income in the interest line item and make a corresponding ECL provision.
Yeah. Under Ind AS, that is what we do. That's the reason I'm saying that if I create an ECL provision, then the net impact on the P&L is zero.
That's right. I'm just looking at the interest income line item. I'm not looking at the overall P&L.
No. Okay, I'll correct myself in terms of saying that when you're saying that an interest income is accrued on our GNPA cases, a 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. For an NPA case, it happens.
ECL is charged off against interest income.
Yeah.
You adjusted with the interest income itself which is the reason.
That's right.
Yeah. That's how the interest will be depressed for the quarter when the GNPA is higher.
Sure. Can you give the ECL numbers on stage 1, stage 2, and stage 3 for third and the fourth quarter? We're just trying to kind of reconcile with the provisioning number.
When you're talking about the ECL number in terms of, you're looking at an overall basis, right?
Yeah. Overall basis.
The ECL provision that we have on stage 1 and as I mean.
At 31st March, we have INR 800 crores, which is broken up.
Yeah. On 31st March, we have INR 800 crores. From a stage 1 perspective, we are at INR 87 crores, which is including principal and interest element. On stage 2, we are at INR 50 crores. We have on the SICR cases, which is around INR 267 crores. On stage 3, we are at INR 469 crores.
you said 87, 50. What is 257?
SICR. Other than stage 1 and stage 2, 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. For March 31st?
This is March 31st only.
No, you said December.
No, this is March 31st.
These are March 31st numbers.
Okay. If you could share a December number so that we just kind of get the reconciliation.
December would be higher because CV has been knocked off, but we will give the numbers.
December, our overall provision was at INR 1,258 crores, which is including the CV business. Stage 1 was INR 239 crores, stage 2 was INR 32 crores. I have an SICR of INR 222 crores and stage 3 of INR 764 crores.
Okay. This is very helpful. 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? Any guidance in that backdrop that you could share with us?
Nishant, very, very quickly, I think just as an overall thing, around about 57%-58% of our overall revenues are annuity-based already, even including the last quarter. Remaining 40% is essentially a function of distribution as well as a little bit of brokerage, but mostly distribution fees, which is recognized upfront. 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%-10% of our income line. 58% plus 10%, 68%-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 around about 15% through the year. In the first quarter, the impact can be slightly higher.
That's the number which kind of has to correspondingly be made up by the increase in the fee income through the full fourth quarter.
Increase.
Yeah, increase in AUMs, essentially.
Yeah, that's right.
Our increase in AUM on the advisory side on 360 ONE has moved from around about INR 180 crore, INR 200 crore at the end of 31st December to around about INR 7,400 crore odd on 31st March.
Okay. 360 ONE is essentially INR 7,000 crores. Total advisory is around INR 7,000 crores.
At an average fee of around about 48 basis points.
Okay. Just on the net worth of the wealth business, I think you've not shared it this quarter.
It is there in the balance sheet.
There in the balance sheet, around INR 3,000 crores.
4,900.
Sure. On the Wealth Business, what was the investment book? I think that's also something which I did not really see.
The investment book's mostly in liquid funds and a little bit of G-Sec, but otherwise the loan book is INR 4,800 odd crores. Plus we have our own AIF investments, which would make up nearly INR 450-INR 500 crores, where we are acting as a sponsor for our own alternative investment funds.
Net-net the number would be similar to previous quarter, I think it's around INR 1,200 odd crores last quarter.
Yes.
Sure. Just now, just one thing. What are the total number of outstanding shares?
Netted off for liquid funds in the G-Sec investments, yeah. The number would be the same.
For now, IIFL Holdings for the parent, what are the outstanding number of shares?
4.5 crore shares.
Of IIFL Holdings and IIFL Wealth?
No, sorry. Just IIFL Holdings. What are the outstanding number of shares?
Of Holdings.
Yeah.
Of that parent.
IIFL Holdings outstanding shares has not been changed.
32.
32 crores.
Sorry, how many?
I think INR 32 crores. I'll give you precise number, just give me a minute.
31.94.
31.94 crores.
31.94. Okay.
31.94.
How much was the capital infused in the NBFC?
No capital infusion in the NBFC went
During the quarter or during the year you infused something?
No. NBFC, we have 85% is owned by the holding company and 15% is owned by CDC.
No, was there any infusion during the year?
No. There was infusion in housing finance from NBFC, but that doesn't make any difference because housing finance is 100% substitute of NBFC in any case.
Sure. Can you just give us the total share count for the wealth business as well as the securities business? I guess the number of shares for housing will not change as in IIFL Holdings will not-
No, IIFL Securities will not change and IIFL Wealth I think is-
No, Wealth will also not, number of shares will not change.
No change in, no new issues happening.
It's around about 8.85 crore shares on a fully diluted basis. Out of which 52.5%-53% held by IIFL Holdings, which will basically is around about 4.5 crore shares will get allotted to shareholders of IIFL Holdings in the proposed corporate action.
Sure.
Securities?
Securities is 1 to 1 no?
Number of shares will.
31.94 crores I guess, same number of shares.
Same number of shares, right?
Yes.
Sure. Great. Thank you very much.
Thank you.
Thank you.
The next question is from the line of Nikhil Walecha 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 have made in the RM's remuneration, which has resulted into the sharp decline in the OpEx on sequential basis?
No change in RM's 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%-35%. There's a sequential decline because of the component of variable coming down. The fixed continues to be more or less remain the same.
The variable, I guess, how is the variable linked? How is it linked to the top line? I think we were recognizing around 40% of the part upfront. Is it the variable is also linked to upfront purchase trail or how is it?
No. The best way to look at compensation is as a percentage of the top line. If you look at compensation for last year, for example, you had 250 plus 140, which was around about INR 400 odd crores on a wealth income of around about INR 900 odd crores. Okay, that's the broad number, around about in the region of 40%-45%. In the current year, you'll have around about INR 336 odd crores on a top line of around about INR 950 odd crores. Okay, similar number. 40% is the compensation number. Either coming from fixed or variable as a percentage of top line.
Okay. You also mentioned that since 42% of our revenue is still upfront, if I've heard correctly.
No.
I think-
I'll explain again. 55%-60% 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 two components. It could be distribution income or brokerage. At a minimum, brokerage happens in the region of 7%-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. 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 basis.
You said that the impact on the first quarter would be higher.
Right.
Why only first quarter? This would be spread over the full year, right?
The distribution fee starts coming to you on a trail basis instead of coming to you on an upfront basis, right? Effectively, business done in the first quarter and second quarter, in the third quarter, they start coming to you cumulatively as a trail basis. Only in the first quarter, the impact is larger because you're not accounting trail for the ongoing basis. For example, hypothetically, if you let's say do INR 100 crores of distribution business in quarter one, okay, you would have accounted only for round about potentially INR 50 crores if the business has happened through the quarter. You'll only get around about 45 days of trail income. But in quarter three, 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 one as well as in quarter two.
Okay. If I remember it correctly, we had given the breakup of our retrocession trail and upfront. I think retrocession upfront was closer to INR 500 crore in that INR 1,100 crore. 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%-30%, right? Effectively, our top line hit would be closer to INR 200 crore-INR 300 crore. 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 INR 300 crore, right?
240 crore-INR 250 crore.
Okay, fine. Thanks.
Yeah.
That's it from my side.
Thank you. 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 Puja, who's our investor relations manager. Thank you so much and have a good day ahead.
Thank you.