Can Fin Homes Limited (511196) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to Munda Network Capital's Opportunities Unlimited 4.0 Investor Conference. For this session, we have Can Fin Homes, which is represented by the newly joined MD and CEO, Mr. Suresh Iyer. We'd like to thank you, sir, for taking out the time and talking with the investors. We also have the entire management team represented by Mr. Amitabh Chatterjee, who is the Deputy MD; Mr. Apurav Agarwal, who's the CFO; and Ms. Shamila, General Manager. [Operator Instructions] Kindly note that this session is recorded. I will now hand over to Suresh, sir, for his opening remarks. Over to you, sir.

Yes. Good afternoon, everyone, and thank you for taking time out. So it's just -- [ Munda ] just got us in the last day just before we were able to close -- we are closing for the silent period. So while the performance you are all aware, I'm sure a lot of you would have been [ focusing ]. The company has -- the 3 quarter results are already there for everyone to see. And Q4, we are progressing well, and it's [ unseen ]. So I guess in terms of specific details if you want, we can discuss about the questions. In terms of the performance, the company is doing well in terms of the Q4 also. As you all know, the business of the housing finance is normally more in the second half and that also the Q4. So that trend will continue. And we -- second thing is about the NPA or the nonperforming assets. There also we -- the company has had a very good run. We have almost best in industry kind of NPA ratio. So we hope to continue. That is a very [ distinct ]. There are not any surprises that are there on the books. So that's about it in a nutshell. Probably you can -- if you have any queries, you can go ahead.

[Operator Instructions] Yes, [ Harshit ], please go ahead.

Yes. Am I audible?

Yes, You are audible.

Yes. Sir, thank you for the opportunity. Since you are addressing for the first time, at least I have heard, if you can say whether there will be any changes in the course of our business after you have joined? And what kind of growth trajectory one should expect going ahead?

Sure -- in terms of the business -- I think there's an echo.

No, he has to keep on mute.

Yes. So in terms of the trend, the focus areas for the company. There are not going to be any changes in the focus areas. The company is in a very sweet spot in terms of the business, in terms of the ticket size, we are at INR 20 lakhs -- INR 20 lakhs to INR 22 lakhs and it's a very sweet spot, and we've got the best in kind of experience and the training team, which is doing very well in this segment. So we will be continuing in this segment. In terms of the segmentation, yes, we are looking at expansion will continue. We have had a very gradual kind of expansion plans, which also we will continue because we also need to lay a stress on the quality of the portfolio as we build and for new branches also, there is a training and all. We give a lot of importance to training. So that, therefore, we will be looking at the same kind of trend in terms of branch expansion, looking at the same kind of geographies. We are already present. We have a very widespread kind of a presence, although there's a slight higher percentage in the South, but now we are having a presence in many states even in the North and in the West as well. So we'll continue to have a gradual growth in terms of the branch expansion. And in terms of the segments, yes, as I again said, we are in the sweet spot with a good mix of the salaried and self-employed segment. So that mix will also continue. So this is in terms of the business profile and the growth that we are looking at.

Sir, what is the growth are we targeting?

See, the industry, if you look at it, has been talking about 15%, but I think we are comfortable with 20% because that's what we've been growing at. Even in the last couple of years, we've had that kind of a growth, a little higher than the industry. And you know the industry, the affordable segment, the ICRA last quarter had spoken about 13% to 15%. So I think over 20% kind of a growth should be good enough in terms of disbursements. That's what we look for going forward. That is what we are looking at. That is how I think now that the industry is stabilizing and a lot of things are -- interest rates also. I don't think there will have much of an upside from here. That's what is our internal feeling. Maybe there will be a one rate hike or something. But once that stabilizes and all, we will be able to -- the business will again pick up and we should be able to -- going forward in the coming years, we should be able to look at something like a 20% steady state growth.

Okay, sir. So this is AUM growth, right?

AUM also, we would be able to do that kind of a 20% growth -- disbursement growth and AUM growth, 20% should be good. Yes. Year-on-year loan book growth.

Loan book growth. And sir, with the increase in cost of funds and we are hearing about further increase -- sharper increase likely to happen. So your thoughts on sustaining the NIMs which are at current level?

See, if you look at the portfolio, the entire book is on -- almost the entire book, 100% close to is on a floating rate this thing. So even if there could be a time gap between the passing on of the interest rate both ways, but then it eventually will be passed on to the customers. So effectively, the -- if you look at a year or kind of a thing, we will be able to sustain the spreads and the NIMs as well. We are -- it's not a very high kind of a thing, which is not sustainable. We are in a 2.3%, 2.4% kind of spread and 3% plus kind of a NIM, which is sustainable.

Sir, last question from my side is, sir, we are hearing that there has been some slowdown in the housing loan segment. So a few of the DSAs are sort of commenting and because of the sharper increase in interest rates, where the EMI would increase more for the home loan customers. So your thoughts on the -- on slowdown, are we witnessing any slowdown because of the increase in interest rates?

Yes. No, you're right. You're absolutely right, actually. That's why in the beginning itself, I said that maximum, we may be able -- we might be at least expect that one only rate hike. So the past rate increases have had an impact in terms of the demand. And even in terms of the supply. Actually, the supply also in this segment has slightly gone down because, obviously, it's the rates have -- costs have -- construction costs have gone up, the demand is slightly slowing down. So the builders have also been a little going slow on supply. But once the interest rate stabilizes, the demand for housing is always going to be there. And once the income levels and everything also goes up and they are able to match that kind of EMIs, it will probably -- again, the pickup will come. Because this is an industry where interest rates do have an impact in terms of the demand. However, the demand -- the latent demand is always going to be there because houses -- the [Foreign Language] kind of thing is always going to be there. So once the rate stabilizes, it will again pick up. So that's what I said in the -- there has been a slight impact in terms of the demand. But with the rate stabilizing, going forward, we will be able to see a good growth. That's what I mean. So I mean have I been able to answer you? Or I mean, is there something you would further want me to clarify?

No, sir.

[Operator Instructions] [ Manooj ], you can go ahead.

Sir, first of all, congratulations for the new role. If you can, sir, a little bit elaborate on your strategy, like the way you want to see the organization in 3 to 5 years? And what are the key levers, which some of that may require transformation, some of them you may like to continue? Especially when you are talking about like industry-leading growth or 20% kind of growth, for that, what are -- what would be the key levers to continue to grow at that path? So if you can elaborate a bit on that, that would be helpful.

Sure. So I mean, if you are looking at something like a SWOT analysis as to what are the things to change. Well, I would put it that we'll probably have a discussion later. But I don't think there's much in terms of the model. This is a kind of a proven model. So we have the DSA model that is there for sourcing of business, that's a very strong model. We will be strengthening going forward the DSA model and to get in more lead generation and doing it. Right now, if you look at it, the model, we are having a 70-30 kind of a breakup or mix in terms of the salaried and self-employed. And we have a purely retail kind of a book. So going forward, there are a lot of opportunities that are there in terms of slightly modifying or exploring newer segments or customer segments as well as newer product segments. So these are the few things that we'll be looking forward. And obviously, I would be open to looking at these kind of things and -- but we will all internally take a call, and we may start slow and maybe that kind of a thing will happen. So in terms of the business, we would obviously continue to -- with the model of our sourcing. And in terms of the product and segments, there are opportunities where we would be able to look at something.

Sir, in the current scenario, as I think one of the previous participant has also asked. Looking at the increase in interest rate, are you seeing any kind of stress in the system in terms of like honoring the EMI or delays in the EMIs or in terms of putting additional efforts towards collection? And secondly, in current scenario, whether you will be still comfortable with 20% kind of growth rate? Because I think, since as you mentioned that the builders are delaying, even the new home purchasers, they may be delaying their purchases. So if you can elaborate on that also a bit.

Yes. So there are 2 questions. The first point you mentioned about the stress. So in a way, the EMIs have gone up, no doubt about it. But in our books, so far, we have not seen too much of a stress and at least, if you look at it, and even in the last couple of quarters, you would see that the NPA levels have been maintained. And we don't see any major surprises in that book either. There could be -- even otherwise, there could be at most, there would be 3 or 4 bps here and there could be moving it. But otherwise, I don't see any major stress or anything coming. But yes, the EMIs have gone up. And as far as possible, we are trying to -- since there is a good scope to even give an extension of tenure so far. We've not had many customers in our book, at least where the EMIs have gone up, which have resulted in the difficulty in collections. Because we've been able to pass on in terms of the tenure. And God willing, if the rates start coming down sooner, then it will be even better because, again, the tenures can be adjusted back to the old tenures also. So that's why in terms of the -- because we've been able to pass on in terms of the tenure, we've not seen too much of a stress in terms of collections, and that has helped us because the good part is that because the conservative lending was there, we've not gone too hard -- in terms of the tenure, giving the tenure to the customer, we've not gone too far in terms of the giving longer tenures to customers and at a higher age limits also. So that has helped us in adjusting the tenures, whereby we've been able to manage the NPAs. So that's point number one. The second point you are saying about whether the 20% growth is sustainable? I would still say, yes, because if you look at the kind of focus that the government is giving on the housing, we have an opportunity to go both ways. One, on the higher side where we can increase the ticket size also. And second, even on the -- because our average ticket is about INR 22 lakhs -- INR 20 lakhs to INR 22 lakhs. So we also have a lot of opportunity in the lower segment where the government is pushing for the BLC, that is the beneficiary-led construction and affordable housing in participation with the developers. So these 2 opportunities are also where the government is putting in a lot of money.

Hello?

Sorry, sir. Please go ahead.

Yes. So we have that opportunity also to slightly go lower in the thing as the investments that the government has spoken about in the budget. Once they start -- they get translated into action on the ground, we'll be able to see that demand coming from that segment as well. So on either side of our ticket size, we have an opportunity to grow. So I am quite confident that 20% in the long run will not be on a sustainable basis. It will be possible.

We have the next question from Devansh.

Yes, and congratulations on the new role. So just a couple of questions. Sir, one is in case of provision coverage ratio during 2014, '15 during Mr. Ilango's tenure, the PCR used to be around 100% provision coverage ratio, but that has eventually changed. So can you help us understand the current PCR policy, which is there at Can Fin?

Sure. So you would be aware that since then, there were the ECL provisions, our requirements have come in. And based on the ECL requirements, now we are having to make the provision. And ECL provisions also have come out almost on the same lines or in fact over kind of a thing in the same range. So therefore, even in terms of the -- and it's a very scientific method on which the ECL works with the probability of default and loss given default. And with the kind of past track -- and this is done on the basis of a 5-year analysis of the portfolio, how it has behaved. So based on that also the requirement for provisioning is not coming out to be on the higher side. So in fact, I mean the auditors are also comfortable with this kind of provisioning because it's a proven kind of a recovery this thing.

So, it is more assessment based?

It's a ECL -- yes, it is on the basis of the performance of the portfolio in the past 5 years. The probability of default and the loss. So traditionally, the loss ratios have been very, very minimal.

And in case of -- with the change in the income tax rules for debt mutual funds, do you see it can affect any -- have any effect on our cost of funds going forward? I mean, if you can share any outlook on the same.

No, I don't expect.

Banks will be having deposits now.

So the point is this will -- I don't see -- I expect this to actually impact us on the adverse side. The banks will be able to -- we have a very sizable amount of funding coming from the banks where it is going to actually help them more positively. So they will hopefully be able to pass on the rates to us or the rates of the higher deposits that they're able to garner from the market. And that's about it. I mean, so far, we've not got any indication on that -- on those lines.

And current difference between bank borrowing and CP rate that we had last issued, what would that be?

As of now, it's not -- it's about bank borrowings and to this, it will be about 1.5% -- about 50 bps.

50 bps. And in case of how are we seeing the BT movement happening? Is it accelerating, decelerating post change in interest rates?

No, BT rate so far, we have not seen -- in fact, it's been the same kind of figure. We've not seen any spike as yet. I mean -- in fact, you would recollect that the rates are also been -- we are also passing on the rates benefit whenever a customer comes forward asking for a rate release. We also have that option. So we've been able to retain the customers on that front also by offering them wherever the customers have been having -- have demonstrated a good repayment track record, we are also able to offer them a conversion and giving them some benefit wherever it is possible. And therefore, if a customer who's not having a good track record, then we would gladly let them go also. So that way, we have been able to manage the prepayments, which has not seen any great -- it's not having much dent on the...

Any rough percentage of AUM that you can share for BT out for this year that has been so far...

Percentage... It's about -- the actual BT out is not much, it's about 1% of the book only. It's not a very high number, actual BT out. We also have prepayments where customers make a payment of their own. But BT out, if you look at it because you've been analyzing it, it's not a very large number. I mean, prepayments would be a little higher than 1%. Obviously, it is much higher than that. But I'm saying if it's a pure BT out, it is about 1%.

And how are we seeing the opportunity for BT in for some of the holding assets, which for maybe lower ticket size, how are we looking at that opportunity?

So as of now, our BT in has been lower than the BT out. So in a way, if you go out on that aspect, it will be there. But if you also consider that we have been insisting on the quality. So obviously, we -- there are a lot of other players where a lot of kind of segments, customer segments and property segments where we will not be able to consider the BT in. So I guess it won't make much of a difference. But yes, as I said, presently, our BT out is slightly on the higher side compared to the BT in. So maybe that way we can look at something.

Okay. And within our salaried customer base, can you help us understand the government and nongovernment employees?

60% is government. I'm sorry just -- yes, 60% is government and 40% is private -- on the private side.

So what...

Sorry, you're not audible. I can't hear.

Yes, I think he's out of the line. He's not there. [Operator Instructions]

This is Nilesh here. Can I go ahead? A few questions from -- now you have been part of Can Fin organization coming from somewhere like Gruh. So I wanted to understand, if I want to -- if you want to draw parallels to organization, where do you see Can Fin today? And in your initial assessment, what you think can be done or what are the low-hanging fruits, which can be plucked at the current juncture to: one, drive growth; second, building a sustainable growth model; third, also pluck out any inefficiencies, which we saw in Can Fin with regard to some branch level problems, which came out last year? So one, what are the low-hanging fruits you are seeing where Can Fin drive growth? And what are you doing to basically eliminate any such problems going ahead?

So for the first part of your question regarding the comparison between the 2, that is Gruh and Can Fin. So I mean if you go back in time, I think both organizations have grown almost on a very, very similar basis. The genesis of both the organizations has been the same. On the parentage side also, I would say both have had very strong parentage. And therefore, the value that the parent brings in, in terms of the conservative approach, in terms of the commitment to the customer satisfaction, in terms of giving a fair transparency in the way of doing business. I think there are many, many similarities. And even at the time when I was at Gruh, we would always have a very healthy competition and always look up to Can Fin to do the business. And so that way, there are many -- there's not much of a difference in terms of the way things are happening. Okay? As regards the low-hanging fruit that you're talking about, well, as I said, we are presently in terms of -- I mean, this is just a very firsthand and a very preliminary kind of [indiscernible]. So the first thing is in terms of the source...

Sir, you are on mute.

Sir, line got mute.

Yes. So I hope I was clear in the first part of the answer about regarding comparison between -- yes, okay. So in terms of the low-hanging fruit, I mean, if you're asking me, it's a very preliminary kind of -- this thing just based on the few days that I've been here. But I would say that I would certainly want to look at the sourcing because we have a single mode of -- a majority of the loans are coming through the DSA channel. So we would also look at that to start with, whether there are opportunities there to bring in some more channels, whether we could explore some direct sourcing, whether we could look at something like that. Earlier also, I responded to the questions regarding this segment as well as the products, where also we would -- we will have a discussion as to -- and this thing with the Board as well as to how we can look at -- whether we can look at some newer segments and a newer set of products. We have, in the past, done a very good lending in terms of the builder book also, that is developer loans. But as of now, we don't have any exposure. So maybe that also is something on a very small minor basis, about 1% or 2% we can look at. So these are some of the things I believe we can -- we will definitely have an internal look at all these things. So these are the kind of things. Anything I missed out?

Yes. The third piece was the problems which we saw in Can Fin.

Yes, yes, yes. So I -- I mean from the -- from the whatever I've had internal reviews, frankly speaking, I do not see much of a problem in the books or in the quality or in the people. So I would like to -- I wouldn't want to say anything on that front because I don't see much of an issue. It's just that, as I earlier said, the general tendency is to err on the side of caution. So any small incident also probably was raised and taken up very seriously, which is rightly so coming from the parent and all, very, very rightly so. But I don't think there is anything, which is much, which has come out in terms of something that needs to be -- that I need to worry about. That's all I would say.

Okay. Okay. Sir, one follow-up question on the comment where we are also looking at origination outside the DSA. So I wanted to understand when I see cost-to-income numbers for Can Fin, HDFC, they're typically very on a lower side. One reason could be because of the DSA outsourcing, which comes to my mind. But now to some extent, changing strategy or exactly having a larger mix from the internal sourcing, but what impact do we see on the OpEx? What impact do we see on the growth profile if one more channel is now open for us from DSA versus original sourcing? So any change in the growth rates because of that?

No. So in terms of the cost-to-income ratio, it would not have an impact. On the contrary, the DSA, there's a payout -- there's a sizable payout that goes out in terms of the thing. And nowadays with the processing fees coming down, and offers galore everywhere. So direct sourcing actually would be able to give us some advantage in terms of the pricing if we have the -- and productivity levels of the stock obviously will be monitored, and we will be able to push that. So if that is managed well, then I think the impact on the cost-to-income ratio would actually be, could be a little -- could be on the positive side rather than on the adverse side, okay? And obviously, with an additional source of sourcing, another channel for sourcing, it will obviously help us have a deeper penetration. It will also help us look at other avenues like direct tie-ups with builders for APF projects, having all those things.

Transformation that will also be one.

And additionally, just to highlight that we have -- we are just embarking on an IT transformation. So obviously, it will take about 1.5 years kind of a thing. There is a period that we are looking at. But once done, that also will bring in some advantage in terms of the cost because the TATs will also improve as well as the operational costs will also come down. That is also something which is -- there which can help in the longer run.

Got it, sir. That was really helpful. And one last question from my side on the competition piece. During your erstwhile period at Gruh, I believe competition was there. But now when we fast forward, say, to 2023, a lot of banks are now focusing on retail, especially on the mortgage, there has been commentaries or basically narratives drawn by banks today, where they want to focus retail A and mortgage B, someone like Bajaj Finance, et cetera, is also targeting this segment in a big way. We have a lot of small affordable guys now turning around INR 10,000 crores kind of AUM. They're also focusing on the segment. So how do you think we at Can Fin can navigate through this increasing competition and have a sustained growth of, say, 20% for the next 4 to 5 years?

Sure. So Obviously, if the banks decide to come full-fledged on the hog, obviously, their cost advantage or the pricing advantage will definitely have an impact. But having said that, if you look at the way the banks are operating, they are still mostly in the metros and urban towns where they are doing a sizable amount of business whereas operators -- I mean, the HFCs and these NBFCs are doing more in the peripheral areas and in the deeper geographies. So that is -- and then once we are looking at that kind of a segment and comparing with the NBFCs and the HFCs, then in that case, Can Fin with this traditionally low cost of borrowing is something where we will have a slight advantage over the others. So I mean, this is one of the enviable kind of borrowing cost that we are having, which will definitely help in terms of this thing. Not to mention the kind of experience of 30, 35 years plus that the organization has in terms of giving customer service, in terms of having the market knowledge and everything. So I mean if you're looking about 4 to 5 years, I think even if the banks decide to go full hog in terms of the retail, it will take quite a while for them to actually get so deep in the -- and have the last mile kind of connectivity. So for the last mile kind of connectivity, dedicated HFCs and NBFCs will be required. That is what I strongly believe. Because if you see from the RBI's point of view also, I mean -- I think that point is well understood. That is why they are coming out with things like DA securitization and this co-lending and things like that because they know that at the end of the day, for last mile connectivity, it will be the HFCs and NBFCs will be required to do this.

Got it. On the cost of fund -- to be very frank, I agree with your point with regards to competition from the other NBFCs or HFCs, but with regards to bank my sense is that having DSA channels common mostly servicing both the platform, either Can Fin or other banks, it could create some problem.

No. I told you so if the banks decide to go full hog, yes, that will be a major problem. But as I said, that they will -- they are more concentrated in the metros and the large towns predominantly, whereas in the peripheral areas is where the growth is happening, where the smaller ticket size business is happening, that is where we come in.

Got it. And a few questions for the CFO also with regards to the now HDFC Limited merging with HDFC Bank, a large portion of the NHB financing would be freed up. So any quantum, we are looking at to capture from that piece, A? And second, of course, with the recent rise in the yields, we have been guiding the NIMs and the spreads would compress lower to the normalized levels in -- as seen in pre-COVID levels. But any guidance on in the interim period, are we trying to manage NIMs or are we trying to basically manage the growth at a higher rate?

So I appreciate that you understand the HDFC Limited is merging, so there would be NHB funding that would be available for other NFCs. So that would give us some cost advantage. But as a process or as a philosophy that we follow, we'll try to garner the maximum NHB for funding that we can manage. Anyhow, we'll be applying it post June, after the year-end closure. And let's see how they come up with the balance funds because I understand that NHB would have a limited pool, which would be available for HFCs. And if HDFC is leaving their space, it could be less for HDFC, but good for us. So that's something that we presume. And costing side, there will be a little pressure, but we'll have to manage the best sort of funding options that we can avail because as HDFC is moving out, there would be a little more space in the money market also. That should give us some advantage.

Got it. And on the NIMs per se in the interim period, the transition phase because a large portion comes from the banks -- term loans from banks. And we have seen a sharp rise in Q3 -- maybe towards start of Q4. So just wanted to not a quarterly understanding, but in the interim phase from, say, a 6 to 12 months period we'll try to manage NIMs or we'll try to grow at a higher pace with slightly lower NIMs we are comfortable?

So that's a business call. But what we are trying to do right now is we are renegotiating the terms on the interest side -- on the credit side with the banks because see, what is happening is the repo although is increasing, but the money market operations that are in place right now and the liquidity that was there till the beginning of the Q3, the banks were able to manage a good sort of a cost at their end. So we are trying to renegotiate with the banks because approximately half of the funds come from the banks. So we are trying negotiating them and bring the cost down. And as you rightly said, there might be a little pressure, but we'll try to work it around with the best possible options.

Got it. Got it. Because I see your [ aids ] have not gone up sharply in the last 3 to 4 quarters from 8.1%. Our numbers has been the range of 8.9%. The repo is high by around 250 basis points. We have high by around 80 basis only. So I wanted to understand, are we trying to manage yields for the growth's sake?

No. So Nilesh, what happens is there is an annual reset clause on the asset side of the book. So that would like be a slower sort of lag effect would be there...

No, I thought we have largely variable book in nature. So as and when repo hikes we will do it.

Yes, we have variable rate on the asset side, most on -- as I said, almost 100% of our book is variable. However, the variable rate is with the annual reset clause. So what happens is if the reset has happened in June, then the next reset will happen in the next June. So in between whatever increases happen, we'll be impacted on the liability side, we'll immediately see the effect or whether maybe a 1 or 2-month lag, we will see the effect. However, on the asset side, it will happen at the time of the next reset, which comes in June. So just to give you an example to get -- for better clarity sake. So we still have a sizable amount of rate transmission, which is yet to happen on the asset side.

So I have a question in the chatbox. Do we have any fundraising plan in the near future?

Well, as of now, we are -- we have a strong good capital adequacy ratio, and we are quite well capitalized in terms of growth capital also, but we will redo because as we see that growth and as the market picks up. And if we need that we feel that we will require, we may even come back. But as of the moment, I think we are comfortable.

[Operator Instructions]. Yes, Paresh.

Paresh, sorry, we are not able to hear you. I think you're on mute. No, you're still on mute. I'm sorry.

Sir, we are not able to hear you. Sir, can you join back again? I can't hear you.

Can you hear me now?

Yes.

Now yes, yes.

Can you hear me now?

Yes. Yes, Paresh, we can hear you. Please go ahead.

I'm so sorry about the delay, Suresh. At the outset, congratulations on your new role, Suresh, we've been invested in Gruh Finance last 10 years. So very happy I am back in Can Fin. So my -- I had a couple of questions. Some of them have already been answered by earlier speakers. The first one is the annual reset clause that you're referring to. From what I understand in the last con call about 72% of our annual reset is yet to be done. So any way where we can change this policy to where we could have it on a [indiscernible] basis? Or change it to even a quarterly basis because HDFC has, for instance, on a quarterly basis.

You're right. In fact, as of the moment, when the rates are going up, I don't think it will be fair to the customers that we change the pricing reset clause. Because it will not be something, which is fair to the customers. Probably when the rates start going down, we can look at it, where we can have a lower -- the transmission of the reduction in the rates, which can be passed on faster, which will be more fair to the customers. So that's how I would put it.

Okay. The second one was -- and you can correct me if I'm wrong on this. We will continue to outsource what I call our technical valuation and the legal requirements. And for example, a company like HDFC or Gruh, this was generally internal in nature. So any thoughts on that as well, Suresh?

So in terms of the valuation, anyway, you would require the valuer to be -- the companies can have their own valuation policy and accordingly, they can look at it. But as per the guidelines, you are required to have a very qualified person who can give the valuation. So either you need to have that kind of qualified people on board as employees who can do it at all the branches, which becomes very cost prohibitive if you have to look at it in these kind of qualified people at all the branches. So the better way of doing it, which most players are doing is to have external valuers who are empaneled to do it. Even for SARFAESI and all those things, you need to have an external valuers who are qualified for 34 wealth tax valuations. So when you look at that kind of a requirement, it is better to go for external valuers who can do it.

Okay. Suresh, the CLSS has been stopped since April -- sorry, April 1 of this year, right, with 31st of March and that was really a very, very important contributor to my mind, growth and even in terms of reducing the delinquencies, especially to the affordable segment. Now it's been almost 9 months or maybe almost a year now, where this scheme has stopped. Have you started seeing any change in traction in terms of growth or in terms of repayment capacity or any other material changes because of this, the stoppage of the scheme?

So in a way, that there has been a little impact because the supply side also has seen a slight drop and that is primarily also because in the peripheral areas and the smaller ticket size areas where the CLSS was a very prime this things. A lot of builders also did the construction, and this is a good incentive with the customers had to look at it. But I mean, if you look at the overall kitty of the government and if you look at the 4 pillars of the PMAY, the CLSS actually was a very small pillar. The real focus where the maximum amount of business, which is happening is actually in the beneficiary-led construction. There the benefit to the customer is just INR 1.5 lakhs cash compared to INR 2.67 lakhs under the CLSS. But still, that is something which is still on. So there, we can still do a lot of business. And I think that is what the government will probably now promote and push. This since it was the -- for the BLC to be implemented, the government required a lot of time to -- with the local bodies -- local government bodies to do the assessment of the requirement, how many people are having land ownership and not having any property or dwelling unit in their name. So that is why as a low-hanging fruit, the CLSS was pushed for. But as a percentage, it's a very small percentage of the overall kitty in terms of the PMAY. So I mean, BLC once it gets starts, gets going, I think we will have a good demand from there also.

Okay. Nice to know that. And last question, Suresh, from my side. Regarding the IT investments. I think in the last con call, it was mentioned that we would have a spend of about INR 200 crores over the next 7 years, right, in terms of IT. What is the impact that you're likely to see with the IT transformation? Obviously, there will be cost redundancies, but many of the other affordable firms generally have what I call the connector model as well, right, which is involved with the app and with the IT as well. So therefore, diversifying the sourcing as well. So some thoughts on yours with regard to the transformation that we could see -- material transformation, we could see because of the IT investments? And when you would start seeing that? Or what time period do you expect that to happen?

So if you look at it, IT was an enabler earlier, but now, IT is a necessity. So it is not something which you should -- which we can look at as a cost, plus the kind of the customer -- the way the customers have evolved today, mobile apps for sourcing and a quick sanction, API integrations to all other kind of -- the CIBIL and the CERSAI and all other things, and your verifications, all those things have become a kind of a norm rather than USP for anybody. So these are things which are now there. And since we had a system, which we had implemented quite some time back. So this is something which is necessary. So this -- what will happen is, obviously, as I said, these are the necessities of today's time when we will be able to offer all this to the customer, all those kind of API integrations for improving the TATs and locking in the customer. So right now, there is -- because of the -- all those kind of things, the kind of interactions, which we need to have with the customer, the kind of time that is taken, obviously, is there. And if obviously, somebody else is offering a quicker TAT, the customers are likely to go there. Today, the sanction also if the earlier you were able to give a sanction to the customer, you can lock in the customer with you. So these are the kind of things which are small areas where we tend to lose a little bit, and we can definitely improve on those areas. So that is there. As to how soon we'll be able to see it, we are almost -- I think we should be able to finalize a vendor and start something by June, right? By June, July, we should be able to finalize a vendor, get everything going. So maybe 12 to 18 months from there, we should start -- within 12 months, we should start seeing at least some things start getting -- starting to get delivered. So probably June, July '24 is something where we can start getting the benefits of it. And from then on, in parts, we'll be getting more and more improvements will start happening.

Just one clarification on the sourcing. Do we source business from, say, Canara Bank, for instance, the [ Aghar ] branches in some form or nothing like that?

No, no, we don't. It's a purely a separate kind of sourcing that we are having. It's not from the brand branches, no.

Anyone else has a question?

Pooja, we may want to conclude the call?

Sure.

Okay. So if there are no questions, I just would like to thank all of you for taking time out and for giving us the opportunity. I hope all the queries have been answered. So thank you so much. Thank you -- thank you, Pooja.

Thank you sir, for taking all the time. It's an honor to host you. Looking forward to more interactions with you. Thank you all the participants for joining in.

Thank you so much.

Thank you.