Aditya Birla Capital Limited (ABCAPITAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Aditya Birla Capital Limited Q3 FY '20 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I now hand the conference over to Mr. Ajay Srinivasan, Chief Executive, Aditya Birla Capital. Thank you, and over to you, sir.

Thank you, and good evening, everyone. Thank you for joining this third quarter earnings call. I'm joined, as usual, by my senior team here, and we'll be happy to take any questions that you have at the end of the presentation. I hope you have a copy of the deck. We're going to run it slightly differently this time. What I want to do is just run through some of the initial slides in -- as they are in the deck. And then I'll give you an overview of each business, but not walk you through slide by slide, which would hopefully give us enough time for questions at the end of the session. So let me first start with the highlights for Q3, which is set out in Slide 3. As you know, it's been a fairly challenging business environment that we've been operating in, and I think we are happy to see that we've actually been able to deliver reasonably consistent profits as a result of the diversification strategy that is underpinning Aditya Birla Capital. Our consolidated Q3 PAT at Aditya Birla Capital level grew by 17% year-on-year. And year-to-date PAT for the 9 months has grown by 27% year-on-year. Talking about our life insurance business, our individual APE YTD grew by 14% year-on-year. And our net VNB margin, which is what we've been talking about in all our calls, actually improved by 340 basis points year-on-year. So significant improvement in profitability in the life insurance business. Our health insurance business continues to show very strong growth. Our Q3 GWP grew by 67% year-on-year to about INR 230 crores with a very strong retail mix at 74%. Interestingly, we now have about 6.5 million lives covered under this business. And I'll talk a little bit about that when I get into the detail of the health insurance business. Our asset management company -- we have now an equity mix, which is at 37% of our total AUM (sic) [ AAUM. ] And our YTD PBT as a percentage of AUM (sic) [ AAUM ] is now at 28 basis points. Last year was at 25 basis points. So again, a significant improvement in profitability in the asset management company. Our Q3 AMC PAT increased by 19% year-on-year, with a consistent improvement in YTD ROE to 37%. So our ROE about 2 years ago was 32%. That's now increased to 37% showing the strong profitability trajectory of the asset management company. Our NBFC Q3 NIM expanded year-on-year at 41 basis points to 5.24%, largely driven by this change in mix that we've been talking about for some time. Our retail loan book grew by 30% year-on-year, much in line with the plan that we've been talking about in prior calls. Our NBFC YTD PAT, ex the impact of our DTA asset, grew by 15% year-on-year, and our YTD ROA is at 2%. Housing finance company Q3 PAT, again excluding DTA impact, grew by 31% year-on-year and the YTD ROE there is at 9.9%. Prior year, you would recall it was about 5.4%, so a significant improvement in ROE there. And again, the retail mix here is strong at 95%. So between our HFC and our NBFC, we actually got a very strong retail presence and retail book in the lending business as well. Our lending businesses raised long-term funds of INR 11,000 crores year-to-date December '19. As you're aware, this has been a big issue for a large part of the industry. Raising money and ALM has been a key issue. And I think we've been successfully able to raise fairly large quantum of money in the 9-year -- 9-month period ending December '19. Our ARC business is a relatively newer business. As we said, it started quite new. And our ARC AUM at the end of the quarter was INR 2,900 crores just within a year of our operations. So across the board, I would say there's been a fairly strong drive to build both top line as well as significant improvement in profitability. If you look at Slide 4, it gives you the Q3 financials. As you'll see from the slides there, 13% improvement in our revenue and a 17% growth in profitability. But I just want to call out a couple of points from the right-hand side of this slide, which is there in the table. You'll see that our interest cost has come down from last quarter to this quarter, almost by half. That's as a result of the equity raise at Aditya Birla Capital level. As we raise the balance amount of equity that we're in the process of raising post the DA approvals, this number should come down even more. And if you see this -- the other item I'd like to call your attention to is what is called others, which is our other businesses, the businesses we've not covered in the main deck. That again has almost come down -- the loss there has come down by half. So a combination of reducing the drag from the loss-making businesses as well as growing the profitable businesses has actually paid off as well for us. So a 3% growth in PAT at the business -- at the profitable business level actually translated to a 17% growth in PAT at the consolidated level. The 9-month numbers are there on Slide 5. These numbers are visible, the 12% growth in revenue and a 27% growth in PAT. The same theme will hold out on the right-hand side of this slide as well. Let me now, therefore, jump into each of the individual businesses and very quickly give you a sense of what's happened and where we are headed in each of these businesses. I'll start with our NBFC. So while clearly, systemic credit growth has been low, I think it's clearly affected overall growth and affected our overall book, but we believe there are segments which continue to present very good opportunity. We've been focused on growing in these segments, and that's reflected in terms of how our book -- loan book itself has evolved in this quarter. So although our overall book has remained virtually flat, we've actually seen an improvement in the segments in which we want to grow. So we've continued our focus in reshaping our portfolio by growing in segments with higher margin and growth opportunity in line with our stated strategy. Our retail loan book has grown by 30% year-on-year. Our core SME segment, such as the secured term loan, WCDL, that we've been focused on, has grown about 17% year-on-year. We've also launched small ticket secured loans, small ticket unsecured loans and products for specific segments to allow us to continue to grow in the retail and SME segment. Our corporate book has actually reduced by about 11% year-on-year. That's about INR 2,800 crores in absolute amount, of which the structured book alone is down by about INR 1,750 crores. That's about 50% reduction year-on-year. So we have taken calls where required to bring down exposures and focus in sectors that we believe are worth focusing on. We've also been driving increasing granularity with reduction in our average ticket size across all customer segments and all product groups. So you'll see in the main deck of our presentation, we've actually reduced our ticket size in SME by about 27% year-on-year, retail by about 27% year-on-year and even in the LAP portfolio by about 26% year-on-year. So across the portfolio, there's a significant reduction in the average ticket size, largely by design, because we want to build a much more granular portfolio. We aim to expand our footprint to tap new markets, and our plans are that we open 150 to 200 lean branches over the next 18 to 24 months. This will give us a geographic footprint to continue to build both our retail and SME businesses in the smaller towns as we expand. From a profitability perspective, we maintained our profitability in what was a fairly challenging market environment and a specifically challenging quarter. Our Q3 NIM expanded by 41 basis points year-on-year to 5.24%. In Q3, our cost of borrowing is actually reduced by about 9 basis points Q-on-Q, and we believe we continue to have one of the most optimum cost of borrowing in the industry. Our CAR has remained under control even while we continue to grow our retail business. In spite of the book actually being down over the last year, our focus on growth in the chosen segments has led to a pre-provision operating profit year-on-year growth of 9% for Q3 and 23% for the 9 months ended FY '20. Our YTD PAT, as I mentioned earlier, ex DTA, grew by 15% year-on-year and our YTD ROA is at 2%. Our ROE is impacted a little bit simply because our leverage has come down to about 5.2 levels because the book growth itself has not been realized. Our PAT was slightly down for the quarter, largely driven by increase in credit costs because, as I said earlier, our PPOP has actually grown. We expect this credit cost to be range bound in Q4 as well. So our full year PAT expectation for '20 is probably roughly the same as it was last year. Moving on to the quality of assets, gross stage-3, excluding IL&FS, increased to 2.26%. There was an increase of about 0.83%, specifically due to 3 corporate accounts. These 3 exposures are: one, to a real estate-focused NBFC; second, to a large power system manufacturer; and third, to a large textile and plastic manufacturer, all of which, I think, has been in the news sometime or the other in the last few months. All the exposures are secured with adequate collateral, and we made a provision of about INR 80 crores in the above 3 accounts. In all 3 cases, resolution is ongoing. So we should see something coming through in the future. Moving on to the -- to our fund raise that I spoke about at the beginning. We have raised long-term funds of about INR 8,400 crores year-to-date from various sources. We've got now adequate liquidity to meet our growth requirements. We have an undrawn cash credit and WCDL of about INR 4,000 crores -- just under INR 4,000 crores and additional ECB sanction as well, both of which are not considered in the ALM numbers that are in the main deck. We further got another INR 2,200 crores of loans sanctioned in January 2020. So in that sense, I think we've got a fairly strong pipeline of liquidity to be able to fund future growth. With this balance sheet strength, we believe we are well positioned for FY '21. We will continue to grow in the chosen segments aided by the increase in capacity that I spoke about through the branch increase, which should lead to a resumption in book growth. Our PPOP, therefore, is expected to grow faster as a result of this, and we expect credit costs should normalize, so that should lead then to a more normal set of numbers from FY '21. Moving on to our housing finance business. We have continued to deliver on our long-term business targets despite, again, a challenging business environment, which is true across all our businesses. Our loan book grew year-on-year by 13%. We have followed here a systematic approach to build a healthy portfolio mix with our retail mix actually now being about 95% of our total book. Our affordable loan book continues to maintain its momentum. In fact, that has grown by 1.8x year-on-year. And our construction finance book has actually reduced to about 5% of the total book. Last year, same time it was about 7%. And we have no stage-3 account in this portfolio, so we have a good quality book on -- in our housing finance business. We've seen a strong growth in profitability. We've maintained our NIM levels with stable asset quality. Our cost-income ratio has improved. Q3 PAT grew by about 31% year-on-year. And as I said earlier, our YTD ROE at about just under 10%. So the profitability metrics are looking reasonably strong in the housing finance company. Here again, we've raised long-term funds of about INR 2,600 crores from various sources. We received a sanction earlier from NHB of INR 400 crores. We've now received an additional sanction from NHB of about close to INR 1,500 crores in Jan 2020. In this business too, we will be looking to expand our footprint. We have 65 branches that are currently operational. And what we like to do is actually increase this significantly over the next 18 to 24 months. Moving on to our asset management business. Here, we continue to maintain our profitability track record. PBT margin to AUM (sic) [ AAUM ] at 28 basis points, has actually increased by 11 basis points over the last 5 years. So that's a fairly significant jump in the profitability of the business. Our Q3 PAT at INR 130 crores grew by 19%. And our return on equity, as I said at the outset, at 37%, has seen a significant jump over the last 2 years. A lot of this has come because of our continued focus on equity asset mix and retail assets. Our SIP AUM (sic) [ AAUM ] is at about INR 34,000 crores and our SIP market share at about 10.4%. Our SIP as a share of domestic equity AUM (sic) [ AAUM ] has actually increased to 37%. This used to be about 25% in FY '18. So this is again a significant increase over the last 2 years. We've continued to focus on building our retail book, and our retail market share has actually increased. Our number of investor folios at 7.1 million is actually probably the highest gain in the industry in terms of market share in investor folios over the last 3 years. So really, again, this is a testimony to the retail penetration and the retail growth that we've seen in this business over the last 3, 4 years. B-30 continues to contribute a significant amount of our retail and HNI AUM. We have seen some loss in market share in liquid funds in Q3. But as you know, this money kind of comes in and goes out, and we've already started seeing positive momentum in January 2020 in this segment as well. In our AMC, we continue to build distribution scale. We increased our presence to 310 locations over the last year. We added almost 50 locations in the last year, mainly non-metros. And we're looking at roughly the same number for the next year as well. So again, our footprint expansion will continue in the asset management business as well. We are very focused on customer management in the asset management company and looking to sell more to our existing customers as part of that strategy. We launched something called the Next-best-offer program on our asset management company website, which offers a product to any customer who visits the website that is more suited to that customer's profile. And as a result of that, we're expecting to achieve about INR 1,000 crores of gross sales from this alone in this year. Innovation, again, has been something that has been a part and parcel of our asset management company. We've launched recently a micro ticket size SIP and a 1 Click SIP product, both we think probably the first time in the industry, and we hope to see some traction in terms of customer acquisition through these products. Our asset management company will continue to focus on retail, on equity and on smaller cities, much as we've done over the last few years. Moving on to our life insurance business. Again, here, we've delivered on our stated strategy of profitable growth and improvement in the quality of the business. You can see it in the metrics that I will talk about now. We are on target to achieve double-digit net VNB margins, as we've been indicating through the year. Our net VNB actually doubled to 10.4% versus a number of about 5.2% last year. We're looking at -- we have taken a very opportunistic approach in our group business. So we're no longer looking at this to drive top line, but really looking it to be a value driver, and this business continues to be value-accretive for us. We declared our embedded value at the end of H1 at about INR 5,031 crores. Next disclosure of EV will be at the year-end. But I just wanted to remind you that the business at half year had an EV of about INR 5,031 crores, which had grown about 14.4% year-on-year. We've seen a strong rebound in profits. If you look at our 9-month PAT at about INR 100 crores, that's about 44% year-on-year growth in the PAT of this business. I spoke earlier about quality and our focus on quality. Our 13-month persistency in our life insurance business has now crossed 80%. It's at 81% versus the last year number of 75%. So 600 basis points improvement in 13-month persistency is fairly significant. And we've seen this fairly consistently across both products and cohorts. If you look at our renewal premium, as a result of the persistency improving, you'll see a strong improvement in our renewal premium. Our Q3 renewal premium grew by 33% year-on-year, and our surrender ratio too has actually dropped. There's a strong drive in this business for value-accretive product mix across channels. We've been focusing in our proprietary channels on driving much greater value. Our protection mix in our proprietary channel at 11% is really quite significant and, therefore, has made that channel very value accretive for us. We signed up with Indian Bank during the course of the last few months, and now we've activated about 650 of the 2,900 branches that Indian Bank has. This, again, is an opportunity that we see playing out over a period of time. So as I said at the beginning, this is a business that is growing profitability with a big focus on improvement in quality and very much on track to deliver double-digit net VNB this year. Moving on to our health insurance business. This continues to be one of the fastest-growing stand-alone health insurance companies in the market. Our GWP grew by 73% year-on-year. Our retail premium has doubled and now about 71% of the GWP mix. We've built a fairly strong franchise in terms of customer sourcing. As I mentioned in the outset, we have about 6.5 million lives that we've covered. That's about 5x growth year-on-year. This is -- as I mentioned earlier, about half of these micro-sized and bite-sized products in different geographies in India. We have one of the largest third-party distribution capacity with 9 Banca tie-ups in this business. We are also leveraging digital ecosystems and have tied up with about 28 digital partners in this business to be able to distribute our product. We believe in this business we're expanding the market by catering to both new customer segments as well as launching innovative new products. Innovation is a very key part of our growth strategy here as well. And that has resulted in this growth that I've been talking about because we've been able to open up a new segment and -- through new products that are probably not available to traditional health insurance players. We have a unique customer value proposition focused on higher engagement and a very holistic risk management approach, as a result of which our average age is about 5 years lower than the industry. We have seen a 6% lower claim and a 20% higher retention ratio, in fact, for our active and our engaged customers versus the rest of our customer cohort. So clearly, there is a value to the proposition that we're bringing in, and we can start seeing it in the numbers. We're also looking to -- we capture a lot of data, as you'd expect, with 6.5 million customers that we -- lives that we've covered. And we're looking now at leveraging the large data set for customer insights through analytics, and this will play out in different ways. But we've also seen that our digital servicing has increased fairly significantly over the course of the last year. In this business, as we've said before, we are on a steady path to breakeven. All our metrics are pretty much in line with the metrics that we're expecting. Our Q3 combined ratio is at 128%. It has come down significantly over the last year. And our overall claim ratio is at about 64%. So we believe that, at least on these metrics, we are on track to deliver what we expected to do, which is to breakeven sometime in '21, '22. I'll just spend a couple of minutes on our other businesses. And interestingly, our other businesses actually have contributed to a YTD PBT of about INR 44 crores versus a loss of INR 8 crores in previous year. This has been driven by the profitability of general insurance booking business, by our stockbroking business, by our asset reconstruction platform. Our strategy of cutting businesses that were not performing as per expectations and growing the businesses that have potential, I think, has delivered this outcome. So you've seen over the course of the 9 months actually a loss of INR 8 crores last year has turned to a profit of INR 44 crores this year, so again, very much the portfolio strategy of picking winners and cutting where we don't think there is an opportunity has worked and delivered the results. I'd like to stop here now and be very happy to take any questions that you may have.

[Operator Instructions] We have a first question from the line of Nidhesh Jain from Investec.

Congratulations for a good set of numbers in a difficult environment. Sir, firstly, on the credit cost in Aditya Birla Finance, I think large part of credit cost has come from the corporate book. If you can give some more details how the credit cost behavior and trends are there in the retail book, that would be useful. And any guidance or color about how the credit cost you see panning out over coming quarters and coming year?

Nidhesh, like I said, I think the credit cost in the other segments is pretty unchanged over the quarter. The spike in credit cost is really driven by the 3 corporate accounts that I mentioned, which are from the corporate segment. As I said, we expect that the credit cost will probably be -- it's very difficult, given the environment we're operating in to make any specific projections. But we do expect that the credit cost next quarter will probably be in the same range. And hopefully, after that it normalizes.

Okay. Secondly, in the housing finance, also, we noticed that the credit cost is slightly elevated for last 3 quarters, especially this financial year. While headline gross NPA numbers are still steady, but the credit cost number is quite elevated versus previous years. So any particular reason there?

I think that's, again, just a function of the environment, Nidhesh. I mean we are operating partly in a salaried segment which is performing much better, partly in self-employed segment where there is obviously some amount of disruption. So I think it's pretty much in keeping with the environment in which we are operating.

Sure, sure. And any color on the incremental cost of fund? What is the differential in incremental cost of fund versus what we are borrowing -- what is our on-book cost of fund for both of these businesses?

It's same as Q3. Yes.

Yes. I don't think -- I think we don't see very much of difference. Maybe -- if at all, maybe some reduction in the housing finance business.

[Operator Instructions] We have next question from the line of Uday Shah from Uday Shah & Associates.

I would like to know the total provision on the 3 account. How much provision is pending for the fourth quarter?

So as of now, our total provision on these 3 accounts is INR 80 crores. We believe these accounts are well collateralized. But I think as we go forward, we will realize whether the provision is adequate or not. If required, we'll make more provision. But as of now, our view is that the provision is adequate.

So still the credit costs were going to be higher in fourth quarter, that's what your guidance is, right?

I said it will be the same as Q3.

We have a next question from the line of Ronith Ramesh from Pantomath Fund Managers.

Sir, can you please give me the percentage of provisions you've taken on those 3 accounts?

It will roughly be around 20%.

Around 20%. And what is your view right now on the credit environment right now, especially in the SME segment?

So SME segment, if you look at, especially our portfolio, we saw some spike in quarter 2. But in quarter 3, we have seen resolutions coming through. So we are not seeing any adverse performance on the portfolio. So in fact, our resolution in quarter 3, both for SME, and quarter 4, which is there in the pipeline, looks quite healthy at this point in time.

Got it. And sir, like when you lend to SMEs, it's more of cash flow-based? The -- when you do the credit appraisal?

Yes. So it's cash flow-based. We look at the cash flows and the working requirement of the company. We assess that. We also look at what is the capital expenditure investment the SME has to do. So we look at both of that and we back it with a collateral security, which can be the plant, machinery or the residence or the office of that SME.

Got it. And what is your -- are you seeing any early signs of problems in the retail sector right now?

So again, retail sector is quite stable at this point in time. Our bounce rate and our 90-plus is all quite stable over the last 2, 3 quarters. So we are not seeing any deterioration in the retail portfolio at this point in time.

Got it. And one last thing, sir. Can you just tell me which industries those 3 stress corporate accounts are from?

I mentioned it earlier. I said there's 1 real estate NBFC, there's 1 power equipment manufacturer and there's 1 textile and plastic manufacturer.

We have next question from the line of Manoj Bahety from Carnelian Capital.

Ajay, my first question is on the growth parameters. In fact, if I look at the balance sheet, it is well capitalized. It will be like in accelerating the growth pedal? Like even though, I think, on the retail side our growth has been encouraging overall, but if I look at like some pockets, especially on HNI and others, where I have seen like, especially your last portfolio has gone down. Any reason like, in terms of, your LAS is fairly secured and safe portfolio, why that portfolio is shrinking?

It was just scheduled repayments, Manoj. So in that sense, that money has come back. So where there's a scheduled repayment, that money will come back. Where we felt that we wanted to cut our exposure, we've taken steps to cut it. It's that combination that has led to the outcome that you've described.

Okay. Okay. And in terms of growth, like the -- means what are challenges you are facing in terms of growing overall AUM? Is it like getting the right kind of -- in terms of like when you consider an overall risk parameter, so in terms of getting right kind of asset? Or means what is stopping us from growing at a accelerated pace vis-à-vis like other peers who have got like very strong balance sheet? But if I compare their growth vis-à-vis our growth, our growth is lower as compared to theirs.

So I think it's a mix of a few things. I think it's a mix of, one, the general environment. I think like I said at the beginning, the overall credit demand itself is very, very muted. There is only growth in very few segments. If you will look at all the data, you'll see that the growth is largely in the retail segment. At an aggregate level, SME demand -- I'm talking about systemic demand -- has virtually been flat. Corporate demand actually has come down. So I don't think we're talking about an environment which is particularly conducive overall in terms of demand for credit. So that's item number one. Item number two, as I said, we are focusing on in terms of our own -- the sector that we want to focus. Our retail business has grown by 30%, SME has grown by 17%. I think subsequent growth and future growth accelerating is really dependent on building greater footprint on the ground, which is why I spoke about our branch network having to increase because that will give us greater pull -- greater presence on the ground and allow us to accelerate that growth. So I think it's a combination of both, what your branch strength is as well as what the overall environment is. And I don't know who you compare ourselves to, but I think you have to compare like-to-like based on segments because that will give you the right answer.

My second question is on your health insurance business. So I mean, are you still maintaining breakeven by '21, '22?

Yes. That's what I said.

We have next question from the line of Nischint Chawathe from Kotak Securities.

Couple of questions. First is on the life insurance side. Just one clarification. On Slide #30, you have the channel mix. So this is essentially individual APE or -- I mean, where you're saying 54% is partnerships?

Individual.

This is individual FYP or APE?

FYP.

FYP.

Sure. And the product mix on Slide 29, that is -- that's individual APE, I guess?

That's also individual.

That's APE or FYP?

FYP.

FYP.

Okay, both are FYP. Sure. Just moving on to the lending business. Kind of trying to understand the -- basically your project and structured finance kind of business loan book picked up this quarter. So anything specific to really read in that?

Where is it picked up, Nischint? I mean, we've actually said our structured finance book has been drawn down.

So project finance -- project loan book is...

It's virtually the same percentage of our lower book, right?

Okay. It's gone up 17% year-on-year.

17%? Which slide are you looking at, Nischint?

Okay. I'll just circle back with the excel sheets, obviously, work out the -- worked out the math separately. The other thing was on the -- if you could just share the segmental yields in the housing business in terms of home loans, LAP, CF and affordable housing?

So the yields in the housing is: around 9.5% is on the housing, home loans affordable is 10.5%-plus and LAP may be around 11.5%-plus. So that's the range yield -- customer yield.

Okay. And if you could just share maybe the average ticket size in these 3 segments? And LAP also, of course.

We had mentioned there in the slide INR 14 lakh is the average ticket size for the affordable home loans.

Finance, INR 37 lakhs.

And INR 37 lakhs is for the home loans price. And construction finance which we have, the average ticket size will be INR 18 crores. That's only 5% of our overall book.

Sure. And LAP is, sorry I...

The LAP is INR 56 lakh.

[Operator Instructions] We have next question from the line of [ Bhavesh Patel from Patel Investments. ]

First of all, congratulations on a good set of numbers. My question is more in terms of your focus on digital channel and then across products in terms of cross-selling and what's your strategy looking ahead on that? And how would you then utilize new-age analytics to look at risk models and then fine-tune them?

Sorry. Can you just break up your question into segments and I'll answer each one?

Sure. The first question is, what's your focus in terms of digital channel and contribution to overall product mix because of that?

So I think it varies based on different businesses because that's the way the industry works in terms of digitalization in different businesses. So if you take our asset management company, about 80% -- 85% of our transactions are really on a digital platform. If you take our health insurance business, most of the sourcing is done on our digital platform. We have a digital lending business in our NBFC. Our life insurance company, again, has a digital interface to acquire customers. So I think across the board, we have assets to acquire customers on our digital platform. We're also using digital in a big way to service. We're one of the largest users of WhatsApp today, for instance, from a service perspective. That is leading to much greater customer service. And obviously, it allows us to -- allow customers to self-serve rather than coming to our call center, coming to our branches to get service. So I think you have to see it from 3 perspectives: one, what it does from a customer viewpoint; two, what it does from a service viewpoint; and three, what it does overall from a robustness and efficiency of process viewpoint. Because we've used, for instance, process -- robotic process automation in different businesses to actually reduce the time taken to do a process and to make it more scalable. So I think digital really runs across each of these platforms in different ways, as I said, based on the industry and its acceptance of digital.

That's good to know. So basically, you are giving a comfort that we are future-ready and, again, we can scale up all of this part?

I would say the future is moving fairly quickly. So, I think, we'll also have to keep moving quickly to stay abreast. But there is a large focus on digital technology across the platform.

Sure. And the second question I do have is in terms of what's our long-term strategy for value unlocking, looking at current market valuation that some of the individual businesses are getting, so that we are, as a holding company, but we do have great businesses, so in terms of longer-term plan that we have?

So I think our view is that, ultimately, we want to make sure that the value of the platform is realized for the shareholders. And if the platform in its current structure does not release that value, then we are always open to look at other options to be able to create that value because, ultimately, we're in business to create value for our shareholders. So I think all options will always be examined, so that we can unlock value that we think is required for our shareholders.

[Operator Instructions] We have next question from the line of Alpesh Mehta from Motilal Oswal. Hello. Hello, am I audible?

Yes, Alpesh.

Yes, sir. You are. Please go ahead.

First question is, of the capital raised of around INR 1,100 crores, how much is allocated to the different businesses or it has been used to repay the debt at the holdco level, and the capital was already allocated earlier?

So we had -- our total fundraise was meant to be INR 2,100 crores. Of that, INR 1,100 crores has already come in. That is being used to refinance debt that we had on our books. We are pending -- we are waiting for another INR 1,000 crores to come pending approval from the ministry in Delhi. When that comes, again, it will probably be used initially to retire debt, but, ultimately, that will be used to fund the growth of our businesses this year as required.

And what is the debt level at the holdco level right now?

It's about INR 450 crores or so.

Okay. So by -- once those funds will come, we'll be debt-free at the holdco level and whatever the excess that would be allocated towards people?

Yes, which is why I said, you should see the interest cost coming down. When that equity comes in, the interest cost that we show in our book will completely disappear.

Perfect. And is it fair to assume that the entire INR 1,000 crores will go towards the lending businesses, either at NBFC or HFC?

I think NBFC, HFC, health insurance and ARC. I think those will be the places that we probably require capital. It will depend on the growth of these different businesses. So based on the growth, we'll have to keep aside money for these businesses.

Okay. And now the second question is, now looking at the current environment, what's your sense about the growth in next year, '21, '22? I'm not looking for the exact number, but maybe some metric that we can track.

You're talking about which business specifically?

NBFC, lending businesses, lending businesses.

So you're talking about the book?

Yes, loan book growth.

Yes. So I think, I said it in my opening comments that we see -- the corporate book decline is kind of more or less done. So the corporate book will either stay where it is or grow slowly. The growth will really be driven by retail and SME. And as we put more branches on the ground, we expect that to gather pace. So I think it's very difficult to give specific numbers in terms of what the numbers will look like, but we do expect the growth in the book to resume in the course of next year.

Perfect. And just a small -- one more thing. On the affordable housing side, the average ticket size last quarter was around INR 12 lakh and this quarter it has increased to INR 14 lakh. Anything to read from that at all? Just...

No, it's -- I think at a unique customer level -- these numbers are at a unique customer level. The earlier figure was at our land level. So that's the difference. Otherwise, it's the same.

Okay. And do we have the customers who have the 2 loans from you maybe for the -- normal for the housing finance and then you would have given a home improvement loan or some other kind of a loan to the same customer?

Yes. We would have given a top-up to the customer. And that's the reason why at a land level, the loan was lower -- average ticket size is lower and at a unique customer level, it's slightly higher.

[Operator Instructions] We have next question from the line of [ Saravanan Vora ], individual investor.

And I want to congratulate the team for a good set of numbers. My question was on the AMC business. As the environment is getting challenging in terms of competition from so many...

Sir, I'm sorry to interrupt. Your voice is not clearly audible. Please use the handset.

Yes. Is it audible now?

Please speak a bit louder, sir. We can't hear you well.

Yes. So my question is on the AMC business. The environment is getting challenging with a lot of competition coming from so many AMCs. So how do we see the growth panning for the AMCs?

Yes. The AMCs -- well, of course, the market is open for many players. We have created our own space in building our size. Once the expansion, as Ajay mentioned about, and increasing our footprint, increasing our IFA contribution as well as building our direct channels, all put together should help us maintaining our overall leadership position. Also I'm aware that it's not just restricted only to 3 or 4 players. And there are few players who also come back and they've have shown a growth last year. At the same time, we also have the same competitive environment last 5 years with a leadership position. That will continue to keep as a big focus area for us. And also build our retail business, and as Ajay mentioned, about 70 lakh folios and also SIP being one of the biggest contributors. These are the basic strategies of business growth, they will continue to be the focus area.

Right. Sir, could we have some guidance in terms of our AUM growth for the next 3 to 5 years?

I think, again, depending upon where you see the industry growth, industry is about INR 26 lakh crores. As per the PwC report, which has got published, by 2025, they have put about 100 million -- INR 100 lakh crores. Though I'm not expecting that INR 100 lakh crore will come, but I think, broadly, as urban industry, demand is a big focus area for financial industry and we being one of the largest player would continue to have our market share as well mind shares.

[Operator Instructions] As there are no questions from the participants, I now hand the conference over to Mr. Ajay Srinivasan for closing comments. Sir, over to you.

So thank you very much for joining us for this call. We wish you all a very happy weekend, and hopefully Union Budget gives us a reason to cheer next week. Thank you.

Thank you very much, sir. In case of any further query, you may connect with Mr. Pramod Bohra, Investor Relations. Ladies and gentlemen, on behalf of Aditya Birla Capital Limited, that concludes this conference call. Thank you for joining with us. You may now disconnect your lines.