Aavas Financiers Limited (AAVAS) Earnings Call Transcript & Summary

Dear shareholders, good afternoon, and a warm welcome to all of you to the 12th Annual General Meeting of Aavas Financiers Limited for the financial year 2021, '22 through video conferencing and other audiovisual means. [Operator Instructions] Now Mr. Sharad Pathak, Company Secretary and Compliance Officer of the company, will continue with the proceedings of the Annual General Meeting.

Thank you. Good afternoon, everyone. Myself Sharad Pathak, Company Secretary and Compliance Officer of your company, welcome you all to the 12th Annual General Meeting of the company for the financial year '21 to '22. As per the relaxation provided by Ministry of Corporate Affairs and SEBI through various circulars, this meeting is being held through video conferencing facility. Before we start the proceeding of this meeting, I would like to inform that Mr. Manas Tandon, Promoter Nominee Director of the company, is not attending this meeting due to his preoccupation. Now I request all the Board members to kindly introduce themselves.

This is Sandeep Tandon. Good afternoon, everybody. I'm Chairperson Independent Director of the company and Chairperson of the Stakeholders Relationship Committee. I'm attending this meeting from Mumbai. Thank you.

Good afternoon, everyone. I'm Sushil Kumar Agarwal, Managing Director and CEO of the company. I am attending this meeting from Jaipur, our head office.

Good afternoon, everyone. I'm Kalpana Iyer, Independent Director and Chairperson of the Audit Committee. I'm attending this meeting from Mumbai. Thank you.

Good afternoon, everyone. I'm Soumya Rajan, Independent Director and Chairperson of the Nomination and Remuneration Committee. I'm attending this meeting from Mumbai. Thank you.

Good afternoon, everyone. I'm K.R. Kamath, Nominee Director, attending this meeting from Bangalore. Thank you.

Good afternoon. This is Vivek Vig, Nominee Director, attending this meeting from Mumbai. Thank you.

Good afternoon, everyone. I'm Nishant Sharma, Promoter Nominee Director of the company. I'm attending this meeting from Mumbai. Thank you.

Good afternoon, everybody. My name is Kartikeya Kaji, Promoter Nominee Director and Chairperson of the CSR Committee. I'm attending this meeting from Mumbai. Thank you.

Thank you. Thank you, sir. We also have our Chief Financial Officer, Ghanshyam Rawat.

Yes. Good afternoon, everyone. I'm Ghanshyam Rawat, Chief Financial Officer of the company. I'm attending the meeting from Jaipur corporate office.

Thank you all. Thank you, shareholders. We -- for this meeting, we also have our statutory auditor, Mr. Mukul Rathi, Director Partner, M/s Walker Chandiok & Co LLP and scrutinizer and the secretarial auditor of this meeting. The scrutinizer for this meeting, Mr. Shashikant Tiwari, Partners, Chandrasekaran Associates. Dear shareholders in terms of the Article of Association of the company, Mr. Sandeep Tandon, Chairperson of the company will be presiding as Chairperson of this meeting. Now I request Mr. Sandeep Tandon, sir, Chairperson, to grant the permission to carry the proceedings of this meeting.

Permission granted.

Thank you, sir. With the permission of Chairperson, I confirm the presence of requisite quorum to video conferencing to conduct the proceedings of this meeting. As per the circular issued by MCA and as per Section 103 of the Companies Act, the participation of shareholders through video conferencing is being identified for the purpose of quorum. As the requisite quorum is present, hence, with the permission of Chairperson, I call the meeting to [Audio Gap] thank you. Dear shareholders, please note that the facility for joining this meeting through videoconferencing or other audiovisual means is made available for the shareholders on first come first serve basis. The register of directors, register of KMP, register of contracts, arrangements and secretarial auditor certificate on ESOP Scheme has been made available electronically for inspection by the shareholders. Shareholders seeking to inspect such documents can send an e-mail at [email protected]. As the AGM is being held through video conferencing facility, the facility to participate in [indiscernible] or proxies by these shareholders is not applicable. The shareholders who have registered themselves as a speaker shareholder till July 15, 2022, will be allowed to express their views and ask question during the Q&A session. I would like to inform that your company has provided its shareholders with a facility to cast their vote electronically through e-remote facility provided by NSDL on all the resolutions as set out in the AGM notice. The e-voting facility started from July 16, 2022, at 9 a.m. and was ended on July 20, 2022 at 5 p.m. Further, the shareholders who have not casted their vote yet and are participating in this meeting will have an opportunity to cast their vote during the meeting as well as through the e-voting system provided by NSDL. Shareholders can click on e-remote tab on the media conferencing screen to avail this feature. The scrutinizer will scrutinize the vote casted through e-remote e-voting and to be casted at the AGM and will submit its report to the Chairperson and any other person authorized by him for declaring the results. Shareholders can post their questions on communicate section on the videoconferencing page during the meeting. Shareholders are requested to keep their questions brief and specific. To avoid repetitions, the answer to all the questions will be provided within 7 working days from the conclusion of this meeting. Now I request the Chairperson, Mr. Sandeep Tandon, to commence the proceedings of this meeting.

Thank you, Sharad. Dear shareholders, I warmly welcome each one of you to the 12th Annual General Meeting of your company. It's always a pleasure to connect with all of you. Although virtually, it's a privilege to host you today. On behalf of the Board of Directors of the company, I want to thank you for making the time to join us. Your trust and support over the last decade has given us the confidence to push ourselves past challenges and complexities and to deliver consistent performance and value for you year after year. It is appreciable that the company is emerging stronger and healthier and is scaling new heights. Your company has distinguished itself by creating a best-in-class housing finance company under professional management of Mr. Sushil Kumar Agarwal. He has more than 21 years of versatile experience in the areas of retail finance, business development, financial management, administration and manpower management. Our Board as a whole, comprises individuals of respect and standing who provide a distinctive business direction. The Board as a whole believes that is well-equipped to take the company's growth journeys forward by adhering to the highest governance standards. I must emphasize the fact that the Board's contribution to this nominal growth has been immense. We at Aavas are the lender of choice for first-time homeowners. Like our vision statement says, "Sapne Aapke, Saath Hamaara", we are focused on being a partner to that nation-building journey. Aavas has always taken a proactive role in working with communities and people at the ground level. We have embarked on our digital initiative, which will transform the way Aavas works. Our digital goal is to enable ease of use for our customers, making the processing cost the lowest in the industry and ensure that no one gets left behind in his or her journey to home ownership. The company's annual report for financial year ended March 31, 2022, along with the director's report and audited annual accounts have been circulated to you. And I seek your permission to take it as read. I again thank everyone for being present here at the 12th AGM of your company. Now I'd request Mr. Sushil Kumar Agarwal, MD and CEO, to present the performance of the company for the financial year '21/'22.

Thank you, Sandeep. Dear shareholders, good afternoon to all shareholders that are joining in. Welcome to the 12th Annual General Meeting at the Aavas Financiers Limited. I hope all of you and your family are safe and healthy. It has been a very challenging yet enlightening journey of 11 years for Aavas in the business. As I reflect on the last 11 years, I am filled with the sense of satisfaction in the way Aavas has consistently delivered strong results and achieved milestones, countering the various challenges in its way. At the outset, I must communicate that it is gratifying that our FY '21, '22 disbursements have surpassed the pre-COVID level. This spirit of outperformance has rippled across our operations. So result is that we finished the year under the review with an encouraging momentum that enabled us to exit IND 11,000 crore asset under management. It would be an understatement to measure the year's growth only through the financial [indiscernible]. The qualitative growth in terms of technological reboot, automation, robust capacity building will further enhance efficiency and resilience. [indiscernible] increasing customer base stands testimony of the fact that Aavas is the lender of choice for first term homeowners and is gaining reputation of customers' preferred housing finance partner. During the year under review, the company has been consistent in delivering its operating metrics with profit after tax growth of 23.1% on a year-to-year basis while maintaining growth of Stage 3 and net Stage 3 at 0.99% and 0.77%, respectively. And giving return on assets and return on equity, up 3.6% and 13.7%, respectively. Key achievements during the year under review. Certified as a Great Place to Work during the year FY 2021, 2022. First NBFC to list its Social Masala bond of 3,600 million on NSC IFSC, GIFT City. Head office certified with LEED-Gold Certification, awarded with FE-EY Best Bank 2021 award under NBFC category. Now I'm coming to key parameters as of 31 March, 2022. Total number of live accounts stood at 150,837, 20% year-on-year growth. Total number of branches was 314, 34 new branches added in last 12 months. Permanent employee count of 5,222, 20% year-on-year growth. Asset under management grew 20.1% year-on-year, INR 11,350.2 crores as on 31 March, 2022. Product-wise breakup, home loan, 72.1%; other mortgage loan, 27.9%. Occupation-wise breakup, salaried 40% customers, self employed 60% customers. Disbursement increased by 35.6% year-on-year to INR 3,602 crores on FY '21, '22. As on 31 March, 2022, average borrowing cost of 6.88% against an average portfolio rate of 12.65% resulted into a spread of 5.77%. Borrowings. Access to diversified and cost-effective long-term financing, a strong relationship with development financial institutions and all large private and public sector banks in India. Overall borrowing mix as on 31 March, 2022 is 37.9% from term loans, 22.9% from assignment securitization, 21.5% from NHB and 17.7% from debt capital market. Asset quality and provisioning. 1-day past due stood at 4.47%, gross stage 3 stood at 0.99%. Net stage 3 stood at 0.77% as on 31 March, 2022. Gross stage 3 0.99% includes 0.31% of up to 90 [indiscernible] asset, which has been categorized as GNPA following RBI's notification dated 12 November, 2021. Total ECL provisioning including the COVID-19 impact as well as resolution framework to stood at INR 64.32 crore as on 31 March, 2022. Profitability. PAT increased by 23.1% year-on-year to 3,575 million for the financial year 2021, '22. Return on assets was 3.6% and return on equity was 13.7% for FY '21, '22. As on 31 March, 2022, we are well-capitalized with a net worth of 28,086 million. Our book value per share stood at 355.8. When we started 11 years ago, we seeded the ethos of compassionate service. We support our customers with the same respect today. We provide services with a human touch. We make a difference to people's lives. We have evoked customer trust, emphasized by our Sapne Aapke, Saath Hamaara slogan. Looking ahead, we do not expect 2022, '23 to be easy. Economic, geopolitical unrest, inflation, pandemic and climate change will continue to challenge business, including Aavas. In the past, we overcame these challenges successfully. And I'm optimistic that future continues to be ours to shape if we preserve the integrity. We feel confident that with better utilization of manpower, increased business from newer branches and continuous use of technology and data analytics, we will be able to support our growth while improving the operating efficiencies, driving the shareholder's return. Finally, I take this opportunity to thank all of our shareholders, customers, partners, industry colleagues, bankers, financial institutions, regulators, Aavas employees and their families for their sustained confidence in Aavas. I state for the Board of Directors and myself that it is a privilege to be on this journey. Serving the community has been an intrinsic part of our Aavas philosophy. Being a social responsible business organization, your company continue to push the bar higher by giving back to the society where it operates. Thank you so much for your time. Back to you, Sandeep.

Dear shareholders, the notice of AGM is already circulated through electronic mode. The statutory auditor's report on financial statements and secretarial audit report, which are also circulated are unqualified in nature. Therefore, with the permission of shareholders, the notice of the 12th AGM Board's report and the auditor's report has been taken as read. We now take up the resolutions as set forth in the notice. Following the ordinary business to be transacted to -- #1, to consider and adopt the audited financial statements of the company for the financial year ended March 31, 2022, together with the reports of the Board of Directors and the auditors thereon hand. The auditor's consolidated financial statements of the company for the financial year ended March 31, 2022, together with the report of the auditors thereon. Point #2, to appoint a director in place of Mr. Ramachandra Kasargod Kamath, who retires by rotation, and being eligible, offers himself for reappointment. Point #3, to appoint a director in place of Mr. Manas Tandon, who retires by rotation, and being eligible, offers himself for reappointment. Point #4, to consider and appoint -- consider an approved remuneration of statutory auditors of the company for the financial year '22, '23. Moving further, being interested in special business -- item #5, with the permission of all directors and members present, I would request Mrs. Kalpana Iyer, Independent Director and Chairperson of the Audit Committee to Chair Item #5 to be transacted. Kalpana, over to you.

To reappoint Mr. Sandeep Tandon as an independent Director of the company with effect from July 27, 2022. Thanks, Sandeep.

Thank you, Kalpana. Thank you, Ms. Iyer, for chairing the meeting for Item #5. Now I will resume the Chair and proceed with transacting of the remaining items. Point #6, to approve increase in the borrowing power in excess of paid-up share capital, free reserves and securities premium of the company under Section 180 of the Companies Act 2013, not exceeding INR 17,000 crores. Point #7, to approve creation of charges on assets of the company under Section 180 of the company's Act 2013 to secure borrowings made -- to be made under Section 180 of the Companies Act 2013, not exceeding INR 17,000 crores. Point #8, to approve issuance of nonconvertible debentures in one or more tranches/issuances on private placement basis not exceeding INR 6,000 crores. Point #9, to approve Equity Stock Option Plan for employees 2022, known as ESOP 2022 of Aavas Financiers Limited for 850,000 options. Now I hand over to Sharad Pathak to take up the proceedings of the AGM further. We are unable to hear, Sharad.

Hello?

Yes, now we can. Go ahead, Sharad.

Now I request the operator to begin with question-answer session.

Thank you. The company provided its shareholders to register themselves as speaker to share their view and ask any question at this AGM, but no request was received from any shareholder. Further, if any shareholder desire to ask any question or provide any suggestion, he or she may do so by clicking on section Communicate appearing on the video conferencing page through text. Shareholders are requested to keep their questions brief and specific. The same will be replied by the company within 7 days from the conclusion of this meeting. Thank you. With this, we conclude the question-and-answer session. Now I hand over to Chairperson.

Thank you. Shareholders may note that the voting on the NSDL platform will continue to be available for the next 15 minutes after the conclusion of this meeting. Therefore, shareholders who have not casted their vote yet are requested to do so. The Board of Directors has appointed Mr. Shashikant Tiwari trailing him Mr. Rupesh Agarwal, Practicing Company Secretaries and partners of Chandrasekaran Associates as the scrutinizers to supervise the e-voting process in a fair and transparent manner and issue the report. Further, I hereby authorize Sharad Pathak, the Company Secretary and Compliance Officer, to declare the results of the voting and place the results on the website of the company at the earliest. I now declare the proceedings of this Annual General Meeting of the company as completed and closed. Thank you. I request Mr. Ghanshyam Rawat, CFO of the company to propose the vote of thanks.

Thank you, Sandeep. Good evening, everyone. It was a pleasure to virtually meet all of you today, for 12th annual meeting of your company. Your company intends to make a decisive investment in new technology platform. This platform will serve digitally assisted or non-digitally assisted customers from various omnichannels as the company's backbone and other customer experience making it possible to scale the business manyfold from the current level. Given this technology support, we expect to roll out new branches and expand our customer base across the new geographical market. We intend to enhance people productivity in a sustainable basis and strengthening our margins. I would like to thank you, our employees, directors, auditors, regulators, authorities, including NHB, RBI, SEBI, MC, debenture holders, bankers, lenders and rating agencies. Stay safe and healthy. We look forward to seeing you in the next general meeting. Thank you.

Dear shareholders, e-voting facility will be available for the next 15 minutes from now. We request to please cast your vote, if not casted yet. [Voting]

Dear shareholders, the time for e-voting has been completed, and the company is of the view that all shareholders who have participated in the Annual General Meeting have been given adequate time and opportunity to spoke -- to vote at the AGM and, thus, we hereby conclude the proceedings of the AGM. Thank you all for participating in the AGM and e-voting.