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

Ladies and gentlemen, good day, and welcome to Q4 FY '24 earnings conference call of Capri Global Capital Limited hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pramod Shettigar from Capri Global Capital Limited. Thank you, and over to you.

Good afternoon, everyone. This is Pramod Shettigar, Senior Vice President at Capri Global Capital Limited. I shall read out a brief disclaimer for today's call. The discussion on today's call regarding Capri Global Capital Limited's earnings performance will be based on judgment derived from the declared results and information regarding business opportunity available to the company at this time. The company's performance is subject to risks, uncertainties and assumptions that could cause actual results to differ materially in future. Given these uncertainties and other factors, participants on today's call may observe due caution while interpreting the results. The full disclaimer is available on Slide #41 of the Q4 presentation. Participants are requested to take note of the same. We have Mr. Rajesh Sharma, Managing Director of the company; Mr. Partha Chakraborti, CFO; and Mr. Sanjeev Srivastava, CRO, over the call today. I may now request Mr. Rajesh Sharma, Managing Director, to present the opening remarks.

Good afternoon, friends. Let me start by wishing you all a happy Akshaya Tritiya. We declared our audited consolidated results for Q4 FY '24 in Wednesday, 8th, May 2024. I hope you had a chance to go through the investors deck. I would like to start by highlighting a few decisions that our Board approved in its latest meetings. CGCL's Board in the meeting dated 29th, April 2024, has appointed Shri L.V. Prabhakar, Independent Director and Chairman of the Board of Directors. Shri Prabhakar, with career as a banker and former MD and CEO of Canara Bank, was appointed to CGCL Board in January 2024. The Board of Directors approved dividend at the rate of INR 15 per share on the face value of INR 1 for FY '24. This will be payable on [ previous agreement ]. It could be based after the recent split from INR 2 face value to INR 1 face value as well as the bonus in the ratio of 1:1. As a result, CGCL's outstanding fully paid-up equity shares have increased 4x from approximately 206 million equity shares in Q4 FY '23 to approximately 825 million equity shares in Q4 FY '24. In the light of the split and the bonus issue, the EPS and book value per share for the past quarter has been suitably changed to make the values comparable. You may please take note of the same, wherever the values appear in our earnings releases. I shall now turn to the commentary on business and earning performance. So as far as business is concerned, please refer Slide 4, 5 and 6. During FY '24, we crossed various business milestones with AUM crossing INR 150 billion to touch INR 156.5 billion. This was a second consecutive year of 50% AUM growth. We are well placed to drive growth and achieve the targeted INR 300 billion AUM by FY '27, as we stated earlier. As guided, our Gold Loan AUM increased to 3.1x Y-o-Y to cross INR 30 billion AUM target. The Gold Loan AUM including co-lending AUM stood at INR 34.9 billion in March '24. The milestone in Gold Loan business was achieved in just 20 months of launching the business. Momentum continued in a strong manner. The share of Gold Loan AUM was 37%, and the share in disbursal was approximately 50% in Q4 as well as -- FY '24, respectively. The number of exclusive Gold Loan branches were 750 as of March 2024. If you talk about one of our key growth drivers, MSME, our AUM have grown to INR 5,017 crores and which is growth about 15%. If you talk about the Construction Finance disbursal, which is remained during the range-bound in Q4 FY '24, driven by the existing sanction pipeline, the AUM share of both CF and indirect lending together shared about 20%. The commentary in CF business remains unchanged. The business continues to be supported by a strong outlook for residential real estate in our key geographies like Mumbai, Ahmedabad, Pune and Bengaluru. The competition amongst lenders for quality projects in the intent, although we have seen some return of pricing power. In Construction Finance, we will remain guided by our cautious risk value [indiscernible] at or below 20% of consolidated AUM and remaining focused only on residential project in the Affordable Housing space. Our core lending AUM continued to rise during Q4 FY '24, increasing to 11.7% of AUM compared to 8.9% in Q3 FY '24 and 5.3% in Q4 FY '23. We have gone through a lending [ path ] since commencing co-lending 2 years ago. The acceptance ratio of loans with our partner banks is now significantly higher than a year ago. With new technology being put in place, we see momentum in co-lending continue. If we talk about Housing Finance, our book has grown about 52.8% from previous Y-o-Y, from INR 2,666 crores to INR 4,073 crores. And Home Loan will continue to grow in coming years also in the range of about 30%-plus growth rate. And we clearly see a strong traction helping on ground there. Now I come to the earnings. Let me first start with the core earnings. Our spreads were stable at 6.4% for the second consecutive quarter. The increase in marginal cost of funds were more than offset by an improvement in yield or advantage. The net interest income, or NII, during Q4 FY '24 increased 4% quarter-on-quarter and 36% year-on-year. On a full year basis, the NII increased 55% year-on-year. The noninterest income performance also exhibited strong momentum across key income lines. It increased 10% quarter-on-quarter and 25% year-on-year Q4 FY '24. On a full year basis, the noninterest income increased 41% year-on-year. The share of noninterest income in net income was 31% in Q4 FY '24 and 28% in Q2 FY '24. The share of noninterest income in net income is settling about 30%, and some of the changes is factored to the Car Loan distribution commission in Q2 FY '24, and co-lending income recognition during Q4 FY '24 is stabilized. With AUM momentum continuing to be robust and new insurance fee income expected to be contributing FY '25, we expect the noninterest income performance to continue a strong growth trajectory. The cost-to-income ratio reached 70.5% during Q4 FY '24. These are majorly due to strategic investment in expanding our team and implementing impactful marketing initiative. We'll be able to significantly review this issue. A result of higher quarterly OpEx, the pre-provisioning operating profit declined 16% quarter-on-quarter, INR 1,096 million, but was up 22% year-on-year. On a full year basis, the pre-provisioning operating profit increased 37% year-on-year. I come to the asset quality now. Our GNPA ratio declined 18 basis quarter-on-quarter to 1.92%. The PCR on GNPA stood at 43.2%, and the net NPA ratio declined by 28 basis quarter-on-quarter to 1.1%. As regards profitability and outlook, we have reported a net profit of INR 826 million, which is high 27% year-on-year and 26% quarter-on-quarter. Excluding the loss incurred in the Gold Loan business, our net profit would have been INR 885 million. We reported 2.3% ROA and 8.7% ROE in Q4 FY '24. Our ending performance during Q4 FY '24 can be done in being very resilient. Our efforts in diversifying our business and income streams over 2 -- past 2 years are now beginning to support as meaningfully as in Q4 FY '24. We have comped up with a decline in spreads and increase in credit cost for 2 consecutive quarters but reported a stronger bottom line. Now I come to the technology and ESG initiatives. FY '24 has been a year of innovation and transformation. Technology has been a critical area of focus for us, where a number of initiatives has gone live, including our in-house-developed LOS, FLEXCUBE LMS developed by Oracle, collection module, process reengineering, analytical decision-making, has been implemented. This stacked initiative will be an improvement in turnaround time, especially for MSME and Affordable Housing business loan, through technology now, which is a new advance in LMS, leading to improvement in sales productivity, optimized for [ production and processing ] and drive improvement in the net interest margin, which should be visible in the first half. If we look at Capri, in the process of establishing systematic ESG practice internally, has crafted policies required in the ESG guidelines. We are currently in the process of obtaining ratings from global agencies. Furthermore, we are conducting training for our internal teams and aligning our business processes with ESG requirement. Moving ahead, we shall periodically keep our stakeholders updated on the progress we make on ESG assessments. We look forward to regularly sharing quantitative outcome towards acquisitions over the next few quarters. Capri Loan continues to be a Great Place to Work certified for the third year in a row. With that, I conclude my remarks. We shall now take questions.

[Operator Instructions] We'll take our first question from the line of Satyaprakash Pandey from Haitong.

I had just one question. With the introduction of the new RBI regulation on Gold Loan, what operational challenge do you foresee on your branches encountering? For instance, do you anticipate an increase in TAT or a potential shift of customers back to the informal segment, considering that many from rural areas, specifically women borrowers, may not have bank accounts?

So I believe that after a general account, there is -- no customer are as such, which we come across, which are a significant number, who do not have bank around. I think this cash -- circular on the cash disbursement in excess of INR 20,000 have been clarified by RBI that NBFC should not have done it. So I think all NBFC will not be doing it. I do not foresee any challenges in that by the volume shifting back to informal segment. Because most of the time, these cash disbursements are being facilitated to the BT transaction. So I think when everybody in competition following the same norm, customer will have no option but to take their disbursement in the bank account. And today, everybody has a bank account. You don't come across any customer, who do not have Aadhaar or bank account. So I think we do not foresee any problem. Earlier, because everybody else was doing, some of the players are continuing to doing it. But now common norms have been stipulated, so I clearly see that the customer will also fall in line.

The next question is from the line of Aman from Dolat Capital.

Hello?

Yes, we can hear you. Please continue.

So regarding the previous question the analyst has asked, what percent of your gold AUM is cash disbursal based?

So very difficult to point out that what percentage. But I can say that there was no disbursement happening, which are just purely cash. And after the guidelines have been issued, we have already stopped the disbursement in cash. And we can see that despite that, the volume has not dipped. And we can give you outlook that the first quarter results, when we again meet sometime in July on the call, you will see that despite that Gold Loan disbursement stopped in cash, volumes have gone up. We have seen in the March. We are currently seeing this. So we don't see any dip because of that.

Okay. So let me ask that what will be -- what is the share of about INR 20,000 the average ticket size? Like what will be the share of cash transactions? I want to understand like -- for example, if you say that more of the transactions are BT-based, so can you give just a ballpark number regarding that?

I think giving a ballpark number would be difficult. But going forward, that less than INR 20,000 loans will be less than 10%.

Less than 10%?

Yes.

Okay. So it is like close to the BT number. Like can I know what is the BT number?

No, no. So it is not the BT number, you can specifically say. When you are disbursing the loan in the bank account of the borrower, you do not know whether he has already repaid that loan out of his own funds and what. It will be difficult to point out.

Okay. So this less than 10% is about INR 20,000, right?

Yes.

Okay. And you have no clarity with respect to percent of gold AUM, which is cash-based, right?

No, because that is not how you tag in the system. No.

Okay. Got it. And I have other 2 questions, like, if I may proceed. Can you provide a brief overview of the robust housing outlook? Considering the underlying demand in real estate across different geographies? And do you anticipate that we will be able to accelerate the growth of our housing business significantly in response to this demand? And will we enter new micro markets as well?

So if you see the housing demand, which is in the Affordable Housing segment, and you will see there, even the incremental 90% demand at the number [indiscernible] Affordable Housing, not value-wise, but number-wise. If you look at the data of various bureaus, rating agencies, even NHB data and other data, clearly, there's no demand. So if you have seen last few years, we have grown significantly. Last few years' growth have been in excess of 15%. I think next 4 to 5 years, we'll continue to grow 30%-plus in Housing Finance. And we will continue to add more branches. This year, we will add some of the branches maybe in the UP, [ 6 ]. That plan is under discussion. But yes, every year, we added the branches, and we'll continue to grow the 30%-plus space in the Housing Finance.

Okay. So can you give me the -- what is your targeted branch plans?

For?

For housing, how many branches you want to add for this year?

So that plan is yet to be projected. In the first quarter, we'll go to the Board. And again, then we have to take all the other approvals. But on an average, we will keep adding 20 to 30 branches every year.

Okay, 20 to 30 branches, is that right, what I heard? Okay. And regarding this Car Loan business, which we've seen a very good growth trajectory. But this quarter, we have seen a slight downturn compared to Q3. So is there any specific reason for this decline? And what sort of growth are we anticipating for this business for FY '25?

So FY '25, we should see a growth of about 20% in the overall volume. But this coming year, we are going to add another business vertical, it's the Used Car Finance. And that business vertical will take about 3 to 6 months to step up. And starting this second half, we'll see some volume happening. So I think next year onwards, with Used Car Finance and New Car Finance, you will significantly see the enhanced profitability. And as you know, [indiscernible] income play, we do not take any underwriting risk. We don't provide any capital here. And this entire business has been shifted to the new company called Capri Loans Car Platform Private Limited, which is a business subsidiary company. All the business related to cars is going to be there. We see a significant development and technology initiative in this company to garner the business in -- anything related to the car. If you see, even currently today, in their corporate DSA who are not dealers, we are the #1 pan-India, and we are having the dominant position in this space.

Okay. Got it. And if I missed the earlier commentary, like why was there is a dip in this quarter?

So there is a slight dip maybe because of 1 month, there is lesser volume, plus we are in the process of shifting our codes from the CGCL to the new entity. But if we really look at it like this -- Q3 also, we had done the good number. In Q4, the numbers are similar to that Q3 number, not that -- maybe a dip of marginal 1%.

Okay. It's like more of a process issue, right?

Yes. But you cannot say it is because we have done about INR 2,800 crores in the Q3, and we have done INR 2,761 in the Q4.

We'll take our next question from the line of Romil Savaliya from Concept Investwell.

First of all, congratulations on a good set of numbers. So sir, I have a couple of questions. Am I audible now?

Yes.

So I just have a couple of questions. So let me start on the first one. So if you see our cost of funds being increased by 50 basis points approximately in last few quarters, right, and that has been remained same so far. So it is actually impacting our NIM. So is there any specific reason why we haven't been able to pass it on to the borrowers? That's the first one. And second one is on a technological initiative expense side. So what would be the total expense we attributed on the technological side in FY '24?

Yes. So if you talk about the cost of funds, cost of funds have gone up about 50 basis in the -- from the Q1 to Q4. And out of that, we are able to pass on partly that cost because some of the loans are semi-fixed in nature, and some of the loans are on a floating rate. So the loans, which are in the floating rate, get automatically reset in the higher rate. But the loans which are 3-year lock-in for the price, they have not been. However, our Gold Loan portfolio is increasing in the overall contribution. And Gold Loan pricing is higher. So the more and more Gold Loan overall AUM increase in the overall AUM, our net interest margin as well the spread, will continue to improve. If you talk about the last year, we have spent about INR 112 crores on the technology and data science. And this is a significant investment, and that is one of the reasons that our cost/income ratio is quite unlimited. But in the second half of the current year, we will see a significant difference in the tax and resulting in the higher productivity and better volumes at a lower cost. The cost/income ratio will start showing the improvement in the second half of the current year.

We'll take the next question from the line of Akansha from [indiscernible] Capital.

I have a couple of questions around Gold Financing. Firstly, I wanted to get a sense of the competitive intensity in the space, I mean, given banker is extremely aggressive -- still continue to be aggressive here. So how are you see that tracking in the space?

So we are not aggressive because that is backed by the branch expansion. If you look at the -- in about 15 months, we opened 750 branches. It's -- and then the branch opening has happened across every quarter. And every branch is giving us AUM. I believe that this year, we have closed AU of INR 5 crores per branch. And next year, we are targeting to close the AU about INR 18.5 crores per branch. Co-lending is also helping us in this space in addition to that. That co-lending, we are able to get adequate lines, which is helping us to offer the rate -- interest rate to even those company -- otherwise, you would not have lower rate. So Gold Loan will continue to give a good amount of fee income because of the co-lending in the coming years.

Sure. Noted on that. Following up on the same thought, how much of the growth this quarter? Sorry if I missed this, but how much was it driven by, let's say, the current condition, what is the gold price benefit?

So you are asking how much was the growth in the current quarter, the last?

Let's bake down across tonnage. How much was being driven by the real growth in tonnage versus the pricing additions?

So if we talk about last 6 months, as my colleague has told, that we have moved from 5 tonnes to the 10 tonnes. So while the tonnage will not reflect the pricing, but we will see the kind of volume, it has gone up.

Okay. I have one additional question, which is on the housing impact. I mean this is not really specific to the quarter, but more of a long-term view that I'm trying to get a sense around, which is that, India housing penetration is very low, 11%, 12%, throughout the country. But are you seeing India's rural mix has been a challenge to growth? What are the level-specific tools, KPNs, and then what does -- how does it differentiate versus the industry sense?

So if we talk about it, as far as Capri is concerned, we are lending to the real semi-urban customers, where they do not have adequate income group. And we are more in the semi-urban rural areas. So our USP will be that how can we do underwriting, which is better and faster, understand the customer need, tailor-made solution. And this is that now we have aligned our technology also. So the mortgage tech side, we have done a significant work in the last 15 months. And as I said earlier, that this will reflect in the second half in terms of productivity, and thus improving your cost-to-income ratio. So we have developed in-house collection model, which is very, very effective. We have taken the help of Boston Consulting Group to advise in the entire process. We are doing automated AI-based selection of the calls to be made by the automated callers. And by optimally selecting where our field source should go, where our automotive callers should happen. So this significant work has happened on the housing finance side as well. So I believe that next year will be defining year in terms of all aspects of the way we are doing entire retail lending.

Okay. Noted on that. Just one last question from my end, which is what would be your outlook on cost of fund? And how do you see it tracking from here on?

So I think cost of fund is we gather the impression of various commentary of the market and Reserve Bank and everything. I think cost of income should -- sorry, the cost of fund should stabilize at this level. I don't see any further hike going forward. However, we expect that, that might be a strong performance. In 6 months or so, we should see some rating upgrades. And that happened, back of that, we should see some cost reduction in the cost of fund. However, we are now -- the new lending, they are able to pass on the cost of fund. So net-net basis, the incremental lending will not have any spread contraction. It has happened to a limited extent last year, where we are not able to pass that on to the immediate customer. In the coming year, we don't see any hike. So clearly, there will be no much impact on the cost of fund reduction.

We'll take our next question from the line of Gaurav Sharma from HSBC.

Am I audible?

Yes.

So just a couple of questions. So first is, like a few months ago, RBI is concerning one of the Gold Loan NBFCs that there were some discrepancy noted in the Gold Loan quality and weight when the gold is coming for disbursal as compared to the auction. So have you also come across any such instant? And at CGCL, what are the corrective measures you have taken at your end? That is number one. And sir, I also want to know the internal threshold of LTE beyond which you go for the auction of the gold related to that? And another question is related to Housing Finance. Sir, recently, RBI issued some guidelines, where it has directed companies which are delaying the disbursement and charging the interest rate on the portion of [ clearing the debt ]. And the guideline is actually issued to the customer, and the NBFCs are charging interest for that portion. So have you also noticed such type of instances in your company? And if yes, then what would be the amount of interest you would be reversing? So these are my questions.

Yes, my colleague, Sanjeev, will answer.

Sanjeev Srivastava here. I'm the Chief Risk Officer. I think if I recollect your first question is that what are the precautionary measures that we have taken with the difference in karat or weightage that you wanted to understand. So what we have done is that we are in continuous engagement with various regulators. We are in continuous engagement with all the departments, whether it is audit, our business and everybody. And we are giving a lot of training workshops and everything is happening. A notable thing that what we have done is that we have organized training from the government's MSME skill development. And we have trained around 1,600 of our staff on the valuation of gold. And it is an online training. It is a physical training, where they are -- they teach you how to value a gold as well as they give you a certification. So now 1,600 staff of my Gold Loan team are certified by this training program. So as -- since we're lateral entering into this particular Gold Loan, anyway, my team members were like valuers. So valuers are like having more than 5 years of experience in valuation. They are from competition. They understand the Gold Loan business very well. So that has worked in our advantage, added with a fresh set of training for all of our employees, which is going to take care of any kind of a difference in the gold valuation. But your second question was that at what level do we go for auction? So auction happens on 2 counts. One is the plain and simple DPD, which is obviously both 90-plus, we go for auction. And the second point was that, internally, we also track something on a daily basis, which is for mark-to-market. So in that mark-to-market, we start giving notices to the customers the moment they reach 80% LTV. And once they reach at 85% to 90%, we do the auction. If you can repeat your third question?

Yes. So sir, my third question was related to the Housing Finance business. So what was happened that some of the NBFCs was charging interest between the time duration they actually -- or they're issuing the check and the amount actually getting credited into the customer account. So for that portion, like a 15 days, 20 days, they're charging interest. So RBI has asked them to stop such practices.

Basically, if you see -- if you look at the business per se, there are some nuances where the customers will take a disbursement request form. If the customer asks for the disbursement, then only will we disburse. Not all disbursement is in a housing kind of a scenario, there is something called registration. So the registration, they get a time or a token from the SRO and which can be like a week, days, 10 days later. So that was the situation which the regulator wanted to cut. And so what we have -- the action that we have taken is, even though we disburse it in the system on a certain date, so that we are ready, and the customer doesn't face any issue when his actual date of registration is coming by, but my interest charge will happen on the date I'm handing over the check to the customer. So in my system, I'm also building on a button called handover button. I push that only, my whole calculation will start. So that's how we are complying with the regulation.

Okay. So sir, that means you don't have to give us any of the interest till now like in that schedule? Is that certain?

This has recently come up, and the time -- only time which it took was more to do with implementation on the system. So between this period, whatever we have disbursed, those will be [ panning to transaction ]. Because as you know, April, anyway, is a very muted kind of a month for the business.

We'll take the next question from the line of Manvi Rathod from Ventura Securities.

So my first question is, what is the average business for Gold Loan branch that we're doing currently?

Yes, yes. So you're talking about the average AUM per branch is 4.6 crores.

4.6 crores, okay. And what increase do we see going forward?

What was the next question, ma'am?

Yes. I'm saying, going forward, do you see any increase in the average business?

I'm sorry, Manvi. Can you use the handset mode, please. It is not very clear.

I was asking what is the average business for Gold Loan branch? And do we see any increase going forward?

Yes, yes. Definitely. As we mentioned, if you look at any of the housing -- any of the Gold Loan business and -- for any of our peers or competitors, you'll see that the -- I would say, around 12 crores is the average AUM for branches, is what we understand from our study of peers and everything. Currently, we're at 4 to 5 crores. So we have a good revenue to grow. And obviously, one is led by the growth in the same branches. And also, if we can briefly open some more branches, then that will also add to my growth. But having said that, I think we have ample room to grow from the existing branches.

Exactly. Okay. And secondly, in our previous con call, you had mentioned that going forward, from Q4, we'll be able to share some specific numbers in the insurance income on the segmental front. So do we have any insights on that as of now?

So I think right now, we are yet to publish that, but we will come back to you with this number.

[Operator Instructions] We'll take our next question from the line of Akshat from Niveshaay.

Am I audible?

Yes.

So my question is that why the cost/income ratio has inclined upward again this quarter?

So cost/income ratio has gone up primarily because of 3 reasons that some of the hiring has happened. And plus, we have taken some marketing initiatives, including Capri Car Loans, where we have taken this partnership with the Gujarat Titans for the IPL and some other initiatives. Plus technology spending is also impacting. As I said, we have spent close to INR 112 crores in the technology side this year. So combined with the fact is that our cost/income ratio has gone up, but I clearly see that, after first half, we will see significant technology spend going down because a lot of initiatives will be come to the completion, and only the enhancement for which will we need a smaller amount of expenses to be incurred. So a combination of this, I think, we'll see a significant drop down after first half.

Okay, okay. The next question from my side is that what would be our contribution from MSME over next year?

MSME contribution, so if you see, the MSME will continue to grow in the pace of about 15%. And Gold Loan will increase in the pace of about 30%, 35%. Home Loan will also increase over 30%. So this is how the pace will go from the coming years.

Okay. Okay. Sir, one more thing I want to ask is about the demand around ruler automobile loan sector.

I -- we had a new Car Loan distribution business. And if you look at the new car market, it's growing with the pace of economy, it is growing at about 10%, 12% every year. But we have set up the distribution across about 800, with the people about 750 locations pan-India, with either help of our DST network or with the DSA network. So our Car Loan business per se will increase about 20%.

[Operator Instructions] We'll take our next question from the line of Professor Ajit Kaushal from GD Goenka University.

And first of all, I would like to congratulate the entire team for successfully taking the company ahead. My question -- a part of my question has already been taken. Anyway, am I audible?

Yes, please.

Yes, a part of my question has already been taken by one of the participants here. My question is related to Gold Loan, its valuation and auditing. So I heard the CFO explaining about the valuation of the Gold Loan. My question is that once the valuation is done, so after that, what is the system of assessment and auditing at a higher stage?

I will ask my colleague, Sanjeev, to explain.

Yes. A very important question, a good question to at least answer when there's so many regulatory aspects are going on. Basically, each of our branch is equipped by 5, where 3 of them have -- they know and understand how to value a gold. They have the competence to do valuation. And if you look at our process, each gold is valued by 2 of the valuers. So there's a maker-taker control in the system building. And both of them have to put their approval authority into the system through their user ID. So that takes care of that, if there is any confusion or there is a lap which can be taken care of. Now coming to the audit piece of it, we have a trained audit staff of 100 people, who are responsible for auditing every gold, which is -- which we have underwritten on a regular basis. In addition to that, we have also deployed some AI/ML trigger on the system, and we have built some 35-odd triggers, which gives me early warning signal on this valuation. In addition to that, what we have also created is called the cross-audit monitoring. So cross-audit happens in a way that, suppose there is a rotation of auditors, and there is something in a particular branch is audited by X employee, then my team from the west will suddenly go to north and do the audit. So these kind of controls we have built in. Otherwise, we can proudly say that we have been -- have actually 100% of my packets of gold has been audited by my internal team.

Okay. That's great. Sir, I am fully satisfied with your answer, and we have total trust in your managerial system. But we'd like to talk something further about the technology, which you are employing for the purpose of valuing and assessing the gold, which has been submitted for the Gold Loan, if there is something?

For assessing the Gold Loan, there cannot be any technology as such because you have to physically touch the gold, use all the various methods of either putting the chemical or cutting it or using some machine to do that. So it has to be done manually. Assessing the gold cannot be done with any kind of technology.

[Operator Instructions] We have a question from the line of Gaurav Sharma from HSBC.

Just one question on NIM outlook. So you mentioned that the cost of funds has almost peaked out, and your other income and Gold Loan basically also improved or increased. So can you please give a NIM guidance for FY '25?

Guidance on?

NIM, net interest margin, sir.

So as you know, the net interest margin is still the more the leverage will happen, the net interest margin will continue to go down. So I think that may not be a right indicator always, right? The indicator is always spread. Currently, our spread is in the range of about 6.4%. As I said, since our Gold Loan proportion is increasing in the overall AUM, our spread will improve from 6.4% to -- it should improve to -- in the range of about 6.8%, 6.9%. And that is where our margins will further improve. So assuming that we are able to achieve a significant hike in the Gold Loan business, it will continue to improve. Now it improved 300 basis or 400 basis, that will depend on the -- how Gold Loan we are able to close by the March.

We'll take a follow-up question from the line of Aman from Dolat Capital.

Yes, sir, just a data-keeping question. I wanted to know the BT number regarding Gold Loan and Affordable Housing, if you can share for this quarter and previous quarter and for the year?

And that number may not be readily available. You can separately contact us and get us after a week.

As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you, sir.

Thank you. So thank you for sparing time and showing the interest to know more about us. So as we'll continue to grow our secured lending business, which is -- and we are all in the sector which are very, very high growth, keeping in India's economy growth and the way that our economy has picked up the momentum across rules, semi-urban area, we'll continue to grow our book in MSME, Home Loan and Gold Loan and Construction Finance side. And our fee income from the Car Loan and the insurance income will also significantly will contribute. Co-lending is another space where it will give us a good amount of fee income because we do not put any capital, but just originate and write and collect. So that model will continue to grow. Collectively, we see 2024-'25 will be a year which will define us the way we process our entire end-to-end loan processing. Being property involved or the security involved, where legal valuation technicals are done, I think this is [ the year ] which will put us in a very unique position, and this will result in lower -- in better productivity, resulting in ultimately the lower cost-to-income ratio. So with this, I will say, this year, we'll see a good high growth, along with the lower cost-to-income ratio, compared to the last year. And we should see some good numbers coming in.

Thank you, sir. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.