Capri Global Capital Limited (531595) Earnings Call Transcript & Summary

So hi and welcome, everyone. Welcome to this virtual interaction on the gold loan business of Capri Global. We have -- I'm -- my name is Ravikant Bhat. I handle investor relations. With me is Ravish Gupta, who heads our gold loan business. He joined Capri Global a year ago and has been instrumental in basically rolling out and driving the rapid expansion that we have seen in the last -- since August especially. We had formally announced in February the launch of this business, and we formally launched the business in August 2022. So we have a short presentation just to give a quick overview on the company and after that, overview on the company, overview of the gold loan business, where we are, where we started, where we are as of today. And after that, I will hand over the floor to Ravish, who will have a further insight on the business. He will append to what we would share in the presentation. Just to make one specific note. As you are aware, we have proposed a rights issue to the tune of INR 14.4 billion. And since we're still in the process, there are certain reasonable restrictions on how much forward-looking we can talk on what exactly in terms we can divulge. So to that extent, we may have certain -- we may have to follow certain restrictions when we respond to your queries. Let me start off with this presentation. So this is the background of the company promoted by Mr. Rajesh Sharma. He's a first-generation entrepreneur, a native of Jaipur. And he's also the promoter and the current managing director of the company. We are listed both on NSE, BSE with market cap of INR 131 billion. Main businesses, MSME, affordable housing, construction finance. Recently, we have done tie-ups with SBI, Union Bank for co-lending. And we have also emerged as one of the top distributors for car loans of 6 leading commercial banks in India. So that's our product bouquet. We launched gold loans in August 2022. This is our expense and a good snapshot of the financials. AUM now almost touching INR 80 billion. We did consult PAT of INR 2-odd billion in FY '22. We were at a little above INR 1 billion in 1H. Net worth is INR 20.4 billion, of which -- so the fundraising that we're doing, this is the first major fundraise in over a decade. The last fundraise was for QIP of INR 4.4 billion. After that, it's only now. Everything else that we see in the net worth has wrote back profits. Branch network, 327, more than doubled over March '22 level. We are present in 14 states and union territories. This is the physical presence. As far as the car loan distribution network is concerned, we have 6 branches over there, but we are present in 29 states and union territories. This is a quick snapshot of how we have done over the years, network employees. As you can see, I mean, in the last couple of years, we have added momentum to the overall business. The lending journey in -- the product journey rather in this slide, FY '11, we started with construction finance, '13 was in SME, '17 was housing finance. And in '22 -- '21, we started the car loan distribution. '22, we did gold lending types, and FY '23, we have launched gold loan business. So the phase of product launch has basically begun more recently. Previously, it used to be through 1 product every 3 or 4 years. Now we have done one product launch every year since last 3 years. This is a quick timeline of our gold loan business. We announced in February we would foray into gold loan business. Prior to that, we had done our own groundwork during the pandemic, during the lockdown period and [ had been building ] upon this product. But formally we announced in Feb, in August '22 we'll launch with 108 branches. By the end of second quarter, that is within a span of 5 weeks, our network has expanded to 182 branches across 7 states and UTs. These are exclusive gold loan branches. And as of December, we have crossed branch count of 400. We are looking to add 550 to 650 exclusive gold loan branches in this financial year. And from a medium-term perspective, we are targeting, as we had announced earlier, 1,500 exclusive gold loan branches and AUM of INR 80 billion. This is -- I think Ravish will be a better person to touch on. Later on, I will just hand over to him to talk more about what is our service proposition and what is it that we are building to the table, although it is a kind of homogeneous product, one may think, but we are trying to bring in certain differentiation. So I would request Ravish to basically expand on this. This is our gold loan leadership team of this [ company ] headed by Ravish. And then we have very experienced hands who have spent meaningful years of their careers handling gold loans. I will just quickly come to the -- let's see if it works from here. Yes. So we're done. So I will share with you -- is my -- is the screen visible?

Ravikant, it's not visible. It's not working, yes.

Yes, just a second. There seems to be some trouble. We'll just share the links later on about -- this was -- this video was regarding -- it just gives a sneak preview of our gold loan branches. I think we will settle for a description of how the branches look like, Ravish can explain, typically 650 to 700 square feet branches. If we manage [indiscernible], try to share this later on. But presently, let me hand over to Ravish. Ravish, your quick comments and then we can move for Q&A.

Good afternoon, everyone. I guess the brief summary about the product, about the company Ravikant has already covered, so I will simply focus on the product. So gold loan as a product, we officially launched in the month of August. And this is roughly like around 5-month-old product for Capri. As far as the business model is concerned, we are coming -- we have started the business on a typical branch-led model where we are setting up physical presence. And we are creating the brand awareness to generate the branch walk-in for doing the business. As far as the specific about the branch is concerned, our gold loan branches are typically 600 to 800 square foot size and is fully comprised of all the requirement in order to store the gold or in order to service the customers. So all our branches are equipped with a proper strong room to store the gold and a 3-layer security in order to ensure the security of the collateral, which is one of the basic requirement when it comes to the RBI regulations. As far as the process is concerned, our complete process is digital. From customer onboarding to customer release, complete transaction is on our digital platform. And on demand, we issue the physical printouts to customer. If a customer is techno friendly, he can have his complete experience on a digital way. In terms of overall branch setup, all our branches have enhanced capability to evaluate the gold. So the tag for any transaction is quite short since the end-to-end transaction happen at one place and through the in-house team. So that's the brief. By the end of September, which was H1, we reported active branch count of 182 and a book of around INR 138 [ CR ]. Current quarter's numbers are, because of right issue, we are bound to not disclose. So that's on the number side. Any, I guess -- this is a brief -- it will be better if I answer the questions because I don't know what kind of queries you have.

[Operator Instructions]

This is [ Gautam Desai ]. I had like a question related to the data points, if you could tell me what is your average portfolio yields on the core loan book.

Okay. So [ Gautam ], since as I just shared, we are already in a [ boundation ] because of right issue. I guess Ravikant has initially shared in the PPT also, we have filed for a right issue. So the latest number, I'm not allowed to disclose. But yes, as on September, since it was a start-up business, the boarding yield, what we reported is around 15.2.

Okay. And is there any co-lending share on your book?

Not exactly. As of now, it is completely on Capri's book as of now.

And one last thing, like what is your operation -- I mean, operational ratio looks like, for example, cost-to-income ratio, cost-to-asset ratio, if you could give me a sense of that?

I guess it's too early. It's -- till September, it was just 1 month. So the branches are still in a process of settling down. The branches, the -- you can say the income or the expenses are yet to settle to give you a number. But yes, the OpEx is more or less fixed in the branch business model. So we have created a certain budget for the monthly OpEx per branch, and we are creating our -- focusing on creating our book to create the income side in proportionate to debt.

Yes, [ Abhijit ], we can't hear you. I guess some issue.

Yes. So my question with respect to the average ticket size and the target customer segment. So just wanted to -- so if you give some numbers or some color there, we'll be able to understand the landscape and where we are trying to build up our franchise.

Right. So I guess on the customer type, gold loan is open, you can say, a product of mass. So it is not restricted to any specific profile. But yes, our target ticket size is below INR 1 lakh, which is a typical retail, you can say, personal need kind of a requirement. Overall, our existing products are also like into the same segment where the bankers or the organized institutions, you usually take time or usually are not so comfortable. So even in our MSME or even in our home loan business, we are targeting the same customer base. And we are leveraging the same while dealing into gold loans also. So our typical focus is on below INR 1 lakh. The current average ticket size stands at around INR 85,000. But since these numbers, as I again and again repeating, these are very early numbers. Just a number of around 1, 1.5 months kind of tenure. So not the right benchmark to do, but we are working towards the direction where we want to keep our average ticket size somewhere around INR 60,000 to 65,000.

So sir, since you talk, I mean, so INR 60,000, 65,000, that means broadly similar to what Muthoot, Manappuram also had like they all have similar rule. Like INR 55,000 to 60,000 is an average ticket size. And we are seeing that they are struggling in their landscape. I mean, firstly, also because the PSU banks and overall banks have become very, very aggressive, and they remain to stay aggressive it seems like. And further, if you look at how are you seeing the competition from banks on the -- under the classification of [ agri and allied ] segment [indiscernible] PSL category. And I think banks have been disbursing loan under the [ agri and allied ] segment, even the rural geographies. So how are you seeing the competitive landscape, especially when established players are seeing it difficult?

Okay. So I would start from the first point, which is like on the PSL or agri or all the things which are more related to the regulatory kind of a thing, okay? So there has been no recent regulatory changes. All these things are already available since years. So even banks have that ability or you can say allowance to do funding against gold on these logics even in the past also. Now coming to the current scenario, yes, bank has gone a level ahead in terms of increased their focus in terms of gold loan sourcing. But banks are -- always have a bouquet of products. And their focus keep on changing time to time. And this is their experience in terms of profitability or in terms of risk appetite, they are not the subject specialist when it comes to gold loan because in gold loan, yes, there is no credit requirement. But at the same time, it is more about the -- how you are ensuring the collateral against which your lending is intact. So I would say still a bigger chunk of market is with the unorganized players, still a multiple industry reports such as that still 70% kind of a market is with unorganized players, jewelers or money lenders or local pawn brokers. So our target is to grab market share from them. Our focus is to increase the overall, you can say, market size by our inclusion. So we are not finding it very difficult. Our focus is very clear, and our geographical presence is also very focused. And we are entering into those markets where still there is a huge spoke of a new entrant to create their presence. So north and west is the geography which we are targeting, northern part of the country and western part of the country. And we are targeting Tier 2 and below kind of cities. So out of, let's say, our overall branch count, almost 80% is in below Tier 2 kind of cities, typically in Tier 3, Tier 4, Tier 5 cities.

Okay. So that question because, I mean, if you -- I mean, as we know, the established players are also focusing in the similar, say, geography in terms of tiering, all the locations, not in terms of geography maybe. They are more in south and some players are well-established across India, in fact. So then where are we trying to differentiate because there are newer players also venturing in like yourself. Then how are we differentiating there?

So we are differentiating in a sense of operational control. Our L1 leadership is more than you can say if I just add their experience, it is of more than 100 years of experience in the L0 leadership itself. And when I go to L1, L2 leadership, everyone like have a big experience specific to the gold loan as in business. This business is more about operational excellence because if you -- as I earlier told, the only risk in this business is the collateral. So the operational excellence will be the key to success. We are quite confident that with the kind of industry experts we have onboarded in our L1, L0 leadership, we are very sure that we will be able to give -- grab our market share in the geographies wherever we are entering. Moreover, we are working on some -- you can say, the digital methods also to add on our sourcing so that we can go to a next level in terms of increase our -- and see increase our new customer acquisition and keeping the cost on a lower side on the acquisition. As I earlier told, we are trying to make our journey completely digital. So intent is that even when my branches are having a bigger count of customer, I don't have to increase my physical requirement. My majority of requirement can get fulfilled through the help of the technology. So we are quite optimistic in terms of the control, the processes, the network, what we are creating. And with few USPs, which are the pain point of customers, which is the focus on the security and the focus on the relationship management, we are quite hopeful that customers will give preference to us in all the new players as well as among the existing players. It's a fast-churning business, where the book get revolved in roughly 6 to 12 months. So despite being a new player, I don't have to wait for many years to catch my competition.

Got it. Sir, just last 2 questions. Firstly, like I mean, while you highlighted that you have -- you're building this model based upon technology and digitization, at the same time, you are focusing more in Tier 2, 3, 4 geographies. So some data points or some color as to how -- I mean, the target audience that we are sort of targeting, how easily are able to approach us because, I mean, is there that penetration of -- of course, smartphones are increasing, but is there a relatability there that you are seeing and therefore, are you able to acquire customers smoothly? That is question so if you could answer that or some data point...

So when we say technology, we have not created any complicated technology. Let me very upfront with you. We have created a very simple technology as you -- on your own accepted that the smartphone count is growing in India or even, I would say, today, even the bottom of the pyramid is also at least holding a smartphone, maybe of a different cost, but at least he had -- he is holding a smartphone. So we are using a simplified technology. Our customer, we have simplified the repeat customer journey. So we have done some automation where the repeat customer don't have to go through the complete process again and again. The more important is we have included a middle layer, which none of my competition is having. This is a unique USP of relationship manager. So usually, the concept of relationship manager is with the -- any product which is linked to our HNI segment. So whenever you talk about relationship managers, the first thing come into mind is a big ticket size. While we have think it as a vice versa because that's the territory or the geography which we are entering require a clear communication. So majority of the business in gold loan is a repeat customer business. And if he is not have a clear communication or if he's not having a satisfy journey from disbursement to the closure, there is a high probability it doesn't come back to me. So we have solved it through the addition of relationship manager concept. All our customers are mapped to a relationship manager in a branch. And his duty is to solve the customers' need in a very local language and in a very local connect. So that's the way we are looking to solve both the things.

Got it. Sir, just what is the pricing range currently like at this point?

I just shared the September EOD reported number were on the boarding yield, it is 15%, 15.2%.

The range would be like, the lowest would be like?

In terms of offering, our ROI starts from around 9.96%, roughly you can say 10%, and it goes up to 22%.

And in terms of product tenures like tenure of the loans...

6 and 12 months.

All right. And somebody who wants to pay it early, there are charges associated or not?

So we have offered again a unique USP to our customers as of now. Even a customer coming for closure tomorrow morning, he don't have to bear anything other than 1 day interest.

Am I audible?

Yes.

Well, most of my questions are already answered. Just a couple of questions. So one is, sir, I just want to know about your branch expansion strategy that you mentioned that you exploring Tier 2 below cities, but among them also. So have you identified that influential cities, we need to open branch? And more upon that, what is the difference between the 2 branch? Like what -- is there any criteria that you don't open branch in up to such kilometers or such distance? And second is, just wanted to know like as you mentioned that currently, you are exploring North Indian market. So what are your plans to enter into the South Indian market? Like keeping the availability of gold is high there. So what are your plans in medium-term for South Indian market?

So I will start from backward. As a strategy for the next, you can say, at least up to the next financial year, we are very clear we want to work only on the selected geographies which I shared, which is north and west part of the country. We do not want to deviate ourselves. We want to work on these geographies. With regards to south, I can't comment as on date. That what would be our plan post FY '24, but definitely, we will get back with the time as we come close to FY '25. With regards to your first question, how to select the location, typically, what we are working as a strategy is very simple that we go -- we do a kind of a survey through our in-house team. And we just find where the location basis where still the unorganized players are dominating the market. So when you go to any smaller city, you can easily sense that when you talk about gold loan, who are the bigger players. If the bigger players are still the local jewelers, we definitely find a big opportunity for us. But at the same time, I would say in north and west part of the country, still there are markets where hardly a single or 2, you can say, gold loan-focused NBFCs are having a presence. So there is a huge scope for us to create presence. Northern and western part of the country are not so dense penetrated in comparison to the south. So there is still a decent scope if you ask me, particularly in north and west geographies.

Sir, just if you can share the number of cost-to-income ratio in gold loan?

I just answered it earlier also. Unfortunately, we are into right issues. So there is a limitation on sharing the latest numbers. Since September was the last reported number being a listed identity, it was just a 1-month data. So I can't -- that would not be the right number to quote because it was hardly a month. So it was only the cost, hardly income is there.

[ Abhijit ].

Am I audible?

Yes, we can hear you. Slightly grainy, but go ahead.

[indiscernible].

Sorry, [ Abhijit ], your voice is breaking. I'm sorry. [Operator Instructions].

Yes, is it better now?

Yes. Yes, it's much better.

Like I said, [indiscernible]. I mean, I think most of us will agree that [indiscernible] set up a great franchise in gold loans. So obviously, the expectations are that we see even better franchise under your leadership back [indiscernible]. A couple of things I wanted to understand, Ravish. One is, I mean, like you were suggesting that, I mean, obviously, very early days. So like you suggested, you are in the middle of a rights issue. So not really asking you numbers per se, but when you lay down the roadmap and talk about the strategy for the gold loan business at Capri, I mean, trying to understand that if the -- let's say, the [indiscernible] around 15.2% like you said, right. [indiscernible] you can probably [indiscernible] I mean, just wanted to understand what's the cost of borrowing for the company? Essentially, what we're trying to get to is not on the spreads and margins that we will be making in this gold loan business. And versus that, what is going to be our OpEx, OpEx ratio from an OpEx perspective and what is the kind of ROI that you are looking to make in this product?

I guess I will quickly take the part on the cost of funds. And after that, you can comment. So [ Abhijit ], I think we have reported cost of funds around 9-plus percent. That's the average where we have been in the last few quarters. Obviously, I mean, it's been going up, but we are back to NCLRs of banks, and banks have begun raising NCLR, so this cost will go up. So that's where we are on the cost side. Yields, as far as the yields are concerned, Ravish will also explain, they are not bound to 15.2%. So my only suggestion over here is not to [ view ] the 15.2% onboarding yields that we have reported as our steady-state yields for this particular product. So obviously, we have launched at these levels, but we don't envisage ourselves sticking to this level. So as we go ahead and as we stabilize the business and we will be looking to progressively raise this. Ravish, you want to comment on this quarter?

Right. So [ Abhijit ], I will just continue from what Ravikant had just covered that it was just a 1-month data. So unfortunately, because of the timing, it is showing as 15.2%. But as you also know, it is a retail business. And in retail business, usually, the -- once the book start getting matured, the size of book start getting bigger, the scope of improving on the yield gets eased out as an organization. So I can quote one number, which is now in public. So around last week, we declared that now we have 400 active branches on a public platform. So we are creating the physical footprint at a rapid pace. Our intention is to reach masses as closure as possible. And when you are dealing with a small ticket loan, which is sub-INR 1 lakh loan, my ROI is typically in a range of 18% to 22%. So once my proportion increases on the typical retail side, once my ticket size reduced from the current INR 85,000 to a 60,000, 65,000 kind of a level, automatically, my yield will have a higher jump. So that's how it is.

Understood, Ravish. So one more question we had here. One more question that I have Ravish, was on our branch strategy. I mean, at least, I mean, the picture that we have kind of put out on the branch in the presentation and maybe some of the videos that I've seen on the branches in the past, I mean, you would have only seen branches at IIFL, Muthoot, Manappuram, right. I mean, at least the branches that we are building looks like more fancy slightly because you also talked about a middle -- another layer, I mean, the RM layer like you were explaining a bit in gold loans. So what I'm trying to understand is if you look at the OpEx ratios for some of the players like Muthoot and Manappuram, right. It's already, I would say, someone like Muthoot is already 3.5%, 4% thereabouts. Someone like Manappuram is even higher, I would say, in the range of 5% to 6% kind of OpEx. So with this kind of infrastructure, more fancier branches, bigger branches, RM, I am guessing your OpEx would be even higher. And in a business like this, right, where -- I mean, I would say spreads and margins, right, I mean, are no longer where they used to be 2 years back, right? Do you think, I mean, it will be possible to make some healthy ROAs in this business?

Right. So I guess you have asked a very pointed question, and I would love to answer this because this is a kind of a presumption as an outsider, anyone will get that my branches are maybe having a higher OpEx or my overall employee cost or running cost will be on a higher side. So let me tell you, I have not created a higher-cost infrastructure. My OpEx, the count of staff in any branch is as equal as to any other competitor. So you name any competitor, anyone is having around 6 people per branch. So I am also having only 6 people per branch, okay? So in terms of manpower, I just redefined their KRAs more specifically to have a better experience for customers as well as for employee. So that comes to point #1. Point #2, as far as the look and feel is concerned, the look and feel is more a onetime CapEx expense, not having a bigger impact on the regular OpEx because regular OpEx is similar for everyone. Like if you talk about security, the security arrangement is the same for me or anyone else. If you ask me about electricity or telephone, it will be like same for me or anyone else. If you ask me about the miscellaneous expense like tea, water, something on those lines, these would be also common for. So it's not that we have created something not in sync with the industry standards. But yes, we have optimized -- we have gone a little ahead when it comes to the kind of look and feel creation at the stage of branch, you can say, branch preparation. So I would not quote the name of competitors, but majority of the competitor or the big players are also having a similar strategy. Maybe since they are doing it for 20 years back, so they are just continuing with that setup. But even they also try to keep their look and feel common to have a customer a good recall about the branch. So don't be -- on that direction that my cost is high. I know that ultimately, in this business, I have to maintain the cost. The second is on the -- how I will ensure the ROA or how I will ensure the cost-to-income ratio. Our focus is because the -- when it comes to income, it is a multiplayer of AUM and a yield, okay? So what we are trying, we are trying to work on both the direction with equal focus because focusing on one direction will automatically have a negative impact on the other direction. So I cannot work only on the AUM or I can't work only on the yield. So I have defined average of the strategy where we are focusing on both the fronts. And we are trying to create the income in accordance to the cost with what we have put in, in terms of as a regular OpEx. So we have budgeted some numbers for branch operations, and we have budgeted some income against those expenses to be built over a certain period of time. So with this focused approach, actually, we are quite confident that we will be able to deliver better productivity in comparison to our peers.

Just one last question. So I think we talked about branch count, which was about 100, 110 [indiscernible] I don't recall the exact number.

So at the end of September, it was 182 to be precise. And last week, since we have put it on a public platform, I am informing you, we have already crossed 400 live branches. So now Capri loans is offering gold loan services from more than 400 places.

So these 400 are all standalone gold branches is it?

Standalone, the same look and feel what you're talking about, fancy, colorful. We're just trying our level best to make purple a new color of gold loan.

Ravish, we have 2 questions in the chat window. One is pertaining to the AI and other technology implementation that we have done. I think this is more pertinent for the security infrastructure that we have set up. So if you could also comment on that, especially the part wherein we have taken some ready-made infrastructure and added our layer on to it while taking the infrastructure from the lessor. And the other question is on the hedging cost. So whether we have gone for any hedges, price hedges for the gold collateral because I think this question has come from Saurabh Agarwal. I think he's more concerned about price volatility in the -- on yellow metal.

Okay. So I will take the security question first. I guess security is something which is a big challenge for all the gold loan NBFCs in the recent few years. Many unprecedented incidents have happened in many of the peers. So from day 1, we are very clear that we have to work on having a very strong, you can say, security mechanism. So we have created a 4-layer arrangement just hold. Sorry, guys. So when it comes to security arrangement, it's a 4-layer security arrangement. The primary is the physical security where we -- all of our branches are having a physical security through the leading security agencies, having a decent experience. The empaneled agencies are SIS, [ Risala ] and Eagle. So the physical security is the first layer. The second layer is on the e-surveillance. So we have taken the latest technology e-surveillance system where I have approximate more than 4 cameras. So specific number, we are intentionally keeping it hide, few are visible cameras, few are hidden camera. So you can say latest sense, latest technology when it comes to e-surveillance system. And then the third layer is the strong room. So all our branches, all these 400 branches are having a proper 9-inch concrete strong room along with the leading strong room doors provided by Godrej, Gunnebo and [indiscernible]. So all these 3 layers we have created to make sure the gold, the collateral, what we are accepting from our customers is properly secured because it is very important to ensure their trust. And as a fourth layer, as a backup plan that despite putting all these efforts, if any untoward incident happened, so all the gold has been covered through insurance cover. So that's how we are ensuring the security side. The question #2, which is...

The price hedge.

The -- sorry?

The price hedge.

So the gold price volatility, I guess, in the -- the good thing what RBI has done is the -- they have regulated the LTV, okay? So be it me or be it my peers, everyone will be in the same boat. So the LTV is broadly regulated. The only thing what we can control is a better look on the portfolio quality what we are building to have a better control on our collections. Again, my concept of relationship manager will come into play here because the relationship manager is not only to solve the customer's problem at a time of disbursement. But even the RM responsibility is to have a healthy relationship with customer and to make him understand that delay in repaying loans will impact his scores as well as will impact his cost because in gold loans with the default, the ROI usually increases the impact on the overall cost for the borrower increases. So we are working on both the fronts. On one side, we are making sure that we are -- complied on the LTV. We are keeping the look on our portfolio on a regular basis through audit and back-end checks. And at the same time, we are ensuring that our RMs are in touch with our customers and to make sure that our book is not moving towards the default. I hope your query is solved.

Saurabh we have a follow-up. So Ravish, I think we are not taking any specific price hedges, right? So we believe the LTV that we are maintaining is sufficient or sufficient to cover any short-term price volatility. Is that what we are saying?

Sorry?

The LTV that we maintain is a sufficient cover to for any short-term price volatility.

So there is nothing where I may specifically go different -- on a different path. The 25% margin what RBI has put in as a regulatory norm is quite sufficient, point #1. And moreover, if there is any downfall beyond 25%, then everyone is in the same boat.

So Saurabh has a follow-up. He basically wants to know whether if this industry practice not to hedge.

So it's not about -- so hedging is something you cannot -- because you are dealing into a lending product where you have a sufficient margin even we have a margin call policy. So if the margin level hits the 90%, we have a policy where we can ask for principal to repay as in loan recall. So we have that policy in place. And third thing, since collateral is in my custody even if the customer is not repaying me my principal, I can even proceed with kind of an issue of instruction to him for a complete loan recall or even process with the options to recover my value. So hedging is usually not required because you have sufficient margin, and you have enough policy in place to recall the risky side of the portfolio.

Any further questions?

Can I ask?

Go ahead, [ Raghav ].

Just a few questions. So as I think [ Abhijit ] had pointed out, the branch looks fancy. But doesn't that seem a little counterintuitive, given that the gold loans are or at least what we understand of them are emergency loans and therefore, the only objective of the customer is to have the fastest turnaround time? And therefore, the customer experience may not make a lot of difference to him as much as the TAT would. That's the first question. Yes, so I'll ask the other one.

So [ Raghav ], I guess, you have got it absolutely right. And that is the reason I have not put my branch look and feel as my USP. I have put my complete digital journey as my USP. So you are absolutely right. Customer is looking for a faster TAT and ease of transaction. Why we have made our branches a little different in terms of look and feel is since we are a new player, how you will get reminded of me as having a different identity. So once you visit my branch, you will always have a recall that, yes, I want to visit that purple color branch. So I will just repeat my lines. We want to make purple as a new color of gold loans.

Sure. And you had said that you had -- you have defined or revised the KRAs versus what the industry does. Is that understanding correct?

Yes.

Can you elaborate? Yes.

So as I earlier covered, even the industry work every branch with around 6 people per branch. Majority of my peers, I would not say everyone, but majority of my peers works with an average workforce of 6 people per branch. So my count is nowhere different from them. My branch are also having 6 people in the branch. The only difference what we have done is that we have all these 6 people in the branch have a very defined KRA, have a very pointed roles and responsibilities so that they do not go into the flow of doing -- just I will -- recently, the football world cup has closed, I will just give it a comparison. So we have made a goalkeeper. We have made a forward player. We have made a defense player. So it is like this. Everyone will play their role so that the match will have its own -- it will not be a [Foreign Language]. So that's how we have redefined it. I have a BSM. I have RM, I have a [ BOM ] and I have a loan officer. So a [ BOM ] has a very specific KRAs. The BSM has a very specific KRA. RM has a specific KRA, and a loan officer has very specific KRA. So that's how it works.

And so I think I still need to understand more on that versus what the industry is doing. But nonetheless, I'll just move to the next question. So I think what we understand is the industry is operating on 90% fixed cost. Is that something that's there for you, too? As the industry, it tends to work on a very high fixed cost structure. Is that something that's applicable to you as well? Or what do you budget as fixed cost as a percentage of your total cost?

So I don't know what is a high fixed cost when as a comment, it comes from you because, yes, when you put a physical setup, it has certain fixed costs like rentals, like manpower cost. But the uniqueness of this product is that the physical change of hands is required when it comes to the collateral. So this is not a product where you can do a lean marking or you can do a hypothecation or a mortgage. Actually, you have to take over the custody of the gold. Okay. So for taking custody of gold, I have to create some arrangements. And to run those arrangements, I have to put some fixed cost. Our costs are in line with the industry. I would not say it is over the industry or below the industry because we are taking the branches in the same geographies or in the same locality where the competition is present or usually where the financial transactions happen. So our rentals are also in the same lines. So that's the side from mine.

So [ Raghav ], just to add to what Ravish has said, so we are taking possession of the branches, which already have a vault constructed inside the branch, the 9-inch concrete vault that Ravish said. The only expense that we are incurring on it is the stainless steel branded door that we fit on to that vault, right? So that's the expense. Otherwise, even though all branches come with a vault, and I think, Ravish, is that industry first because not every player has got a vault, a safe vault with a strong room -- with a strong room in their branches. I think we have implemented it first across all the branches as a standard feature. Is that right?

So again, to put a comment on my peers, I would avoid it. But yes, all my 400 branches are having -- all the branches are having a similar kind of facility. So all my 400 branches are having a strong room arrangement. Many of my peers are having 90% of branches with this facility. Many of my peers are having around 50% of branches having this facility, fewer having even not even 10%. So for them, it is a variable number. There -- I have created some alternative arrangement in a form of vaults. But since our vision is long-term and our focus is very clear, we have created infrastructure for future on day 1 itself. So all our 400 branches are having the infrastructure, which is enough for any business need even after 10 years also.

And just my last question. So as you had pointed out in the beginning of this presentation that operational excellence or the operational effort that gold loan business requires that the main arbitrage between or the advantage that NBFCs have versus banks. Now do you think having worked in a bank ICICI and HDFC, do you think there is a challenge that this arbitrage could sort of reduce or vanish at some point because of, say, maybe technology or something like that? Maybe a player could emerge who would just actually focus on distribution for the banks. And I think there have been business models which are trying to do this. And therefore, the arbitrage that gold loan NBFCs enjoy, that could reduce significantly or probably just finish altogether at some point? Yes.

So [ Raghav ], I would again repeat the same thing. The market is very big in India when it comes to gold loan. Despite the largest NBFCs holding roughly around INR 60,000 crores of AUM in gold loan, the top 4, 5 players consolidate hold around more than INR 1 lakh, INR 1.25 lakh crores AUM of gold loan. If I add all the banks, they consolidate are having somewhere around INR 4, 5 lakh crores of AUM when it comes to gold loan. But it's still the industry says almost 65% is with unorganized. Okay. Still, when you go to Tier 3, Tier 4, Tier 5 cities, customer preferred to visit his own old jeweler for any of the lending needs. So my point is the scope or the space for anyone to grab the market share is still very high. When I was saying the operational excellence, it is more about how you make your branch AUM growing faster with a decent yield. So since the income is a multiplier of both, so the operational excellence here, I'm more focused on how you can make these 2 multipliers both on an outward trend. Because on the cost, broadly, it is limited to do. You cannot change rental every month. You cannot change employee salary every month. But what you can change is the multiplier of AUM and the yield.

So we have run out of time. Maybe we could -- we can take last 1 or 2 questions if anyone wants to.

Yes, just a follow-up question, sir. Somewhere in between you mentioned your TAT is very short. If you can please quantify it?

Actually, again, here, there is a regulatory norm. RBI say that being a financial services player, we cannot quote any number because you remember the old days where the players used to claim 5-minute, 3-minute. So I will not put it as a benchmark number. But yes, since my journey is completely digital and for my repeat customer, some of the processes get bypassed, a customer can go out with a completed transaction even within 10 to 15 minutes if he is a repeat customer. But again, I do not want to quote it as a time.

Ravish, and this would also vary depending on the ticket size, right? If your ticket size.

That's what I told. If it's a small transaction, if it's one collateral transaction and a repeat customer, he can go out of branch with the disbursed loan within a short period of 10 minutes even. Because a lot of process get bypassed only one collateral need to verified, checked and a data entry, that's done.

Anyone else? Great. Then I think we can conclude, Ravish.

Then, I guess, it was great answering your questions. I hope I have given you satisfaction answers. So looking forward to meet again if you require. Thank you.

So thank you, everyone.

Thank you, everyone.

On behalf of Capri Global Capital Limited, and we look forward to further engagements in the future. We will also, in due course, announce the timeline for our rights issue. So I think we'll have more occasions to connect once again. [ Rajat ], we can stop the recording now?

Yes, thanks.