Cholamandalam Financial Holdings Limited (CHOLAHLDNG) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Cholamandalam Financial Holdings Q4 FY '22 Results Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital Limited. Thank you, and over to you, sir.

Thank you, Aman. Good morning, everyone. From the management team, we have Mr. Sridharan Rangarajan, our Director of Cholamandalam Financial Holdings; Mr. N. Ganesh, Manager and CFO of Cholamandalam Financial Holdings; Mr. V. Suryanarayanan, MB of Cholamandalam General Insurance; and Mr. S. Venugopalan, CFO at Cholamandalam General Insurance. So I'll give first to Mr. Sridharan to give us his initial remarks, post which we can open the floor for Q&A. Over to you, Mr. Sridharan.

So good morning to all, and hope all are doing well and your family also is doing well. Though the pandemic is slowly coming down, kindly take care of yourselves. To start with, I think we have the entire team to answer and discuss with you your questions. Our MD, Mr. Suryanarayanan; and Venugopalan, CFO, Cholamandalam General Insurance is there. Ganesh is also there, our CFO for Chola Financial Holdings. We have posted the presentation so you have an opportunity to go through this, and I'll just quickly walk through a few of the highlights. So as usually, consolidating NDC. Chola Financial Subsidiary and joint venture Chola investors continue to report under NDA as per the regulatory commands. I'll come straight away to the stand-alone financial performance. Chola Financial Holdings income consists of income by dividend, interest and royalty for brand use. Total income for the quarter ending March '22 is about INR 50.85 crores against INR 50.74 crores in the corresponding quarter of the previous year. Profit after tax is about INR 36.3 crores, again INR 31.9 crores against the corresponding quarter last year. The consolidated results for the company consists of results of Cholamandalam Investment and Finance Company and Cholamandalam General Insurance, as well as the Chola Insurance Express, which is a joint venture. Total income for the current year ended -- current quarter ended March '22 increase by 6% to INR 3,743 crore while the profit after tax increased by INR 243 crores, [ 41.7 ]% to INR 2,147 crores, primarily due to reduction in impairment charge on modes. I think that's quite a lot covered in detail on Cholamandalam Investment Finance Company, so I will go straight away into Chola MS General Insurance. Chola MS General Insurance is for the GDPI of INR 4,854 crores in FY '22, an increase of 10.3% over the previous year driven by increased contribution from new channels and growth in commercial and the semi segment, offsetting the drop in financial channel. The growth, excluding financial channel, was 14.5%. The company continued well in changing the mix of products within the motor insurance. The share of 2-wheeler has grown from 15% to 23%, and private car share has grown from 25% to 29%, resulting in a reduction in commercial vehicle share from 58% to 48%. The company maintained its leadership position in motor LOB in Tamil Nadu, Chhattisgarh and targeting to reach #1 in Andhra Pradesh and Telangana. The company absorbed INR 262 crores of opening balance of deferred acquisition costs as per IRD advice. The company continues its good effort of making the compromise detailment. The solvency asset March '22 is 1.95x after considering the detailments of INR 165 crores of taxes paid towards contingent liabilities of [indiscernible]. This has an impact of 0.19x in solvency, which means the solvency needs to be on [ .995 plus .119 ] the normal course. The median concern, I would say that mean economy is inflation driven by crude oil as well as by the commodity price. The global yield on debt is increasing, and along with that higher Indian government borrowing plant, putting pressure on Indian debt market interest rates. Though such interest rate is beneficial for fresh investment in terms of yield, the MTM where the existing book would have negative impact on profit booking. In summary, the company has addressed all the issues starting from provisional investment, absorption of DAC, and COVID times. The company has invested in digitizing the process, customer databases and analytics. It has strengthened the team, and will grow from strength to strength from here. So I would now open up for Q&A. Thank you once again to all.

[Operator Instructions] The first question is from the line of Devansh Nigotia from SIMPL.

So just a couple of questions. Sir, one is, in the asset quality, we have seen 1.5% improvement. So GMP ranged from 0.8% to 0.3%. But no write-backs have flown in the PNM, so if you can write back on this channel, what exactly has happened over there?

Devansh, could you please repeat your question? Asset quality -- we can't hear you well.

Yes. So asset quality, GMP has improved from 0.8% to 0.3% Q-o-Q, but we are not seeing any write-backs that have come for us. So if you can help us understand.

On the NPA point? This is on the -- you're talking NPA of the NBFC business. Is that correct?

No, no. The investment book of the general insurance business.

Okay. Okay, can you please go ahead with your next question? We will...

Yes. So regarding investment, if you can help us understand the reason on floating bond mix? So we can assess the incremental impact on the increasing yields on our feed bonds, which can come? So this was regarding the investment book. I mean, we are operating expense, we are continuously seeing this step-up, especially in advertisement and publicity expense. Even if I adjusted for the one-off -- the amortization, which is happening. Although the most increase is 50% Y-o-Y. So -- and the kind of benefits we are now seeing in the business growth, even if it is probably the mix change that has happened in the motor business. But other than that, we are only growing in line with the industry or probably around that. So when this growth can be higher than the industry, where exactly are these investments in ad-expense, are these ads that we launch on television or these are visible in nature for the distribution? So that is one. In fire business also, we are lagging growth compared to our peer, and these are highly profitable segments. So what exactly is happening there? In your prepaid expenses, the amortization was, I think, INR 36 crores and INR 80 crores was expected. So why lower amortization has happened? And what is the current balance of prepaid expense which is really amortized?

So let me. Come up in the -- Yes, not being reflected. I will take the last one first. So on the prepaid expenses, there is nothing that is left to be absorbed as of March '22. IRDA had [ obliged ] us to absorb the company's portion of the prepaid expenses related to sourcing costs by the year-end, that is March '23. So whatever you thinking, the productivity on the balance sheet? As prepaid expenses have normal contradiction to novelty, there is nothing to do with sourcing costs, so there is no more [indiscernible] on the cost. That's the first point that I would like to clarify. And then there is a question on the investment book. There is -- on the presentation deck, there is a complete analysis of the investment, that probably is Page 53 of the investment -- there a complete presentation deck that it is put out on the website. Very clearly, you can see that the change in portfolio is also happening, where the gradual shift away from this book into the [ hunting ] infrastructure book is happening. And there is now the infrastructure, we are investing in the previous years and the infrastructure bonds of banks. Infra bonds issued by the [indiscernible] bank and the one by the [indiscernible]. While this shift is happening, but the issue was also about the write-backs. In Q1 our [indiscernible] was restricted mainly in Reliance Capital and also in the asset in line efforts between the test. And then we may have only about INR 12 crores of exposure that is automatically returned to ours. But then we know that whatever we reported on the cards, both in the case of financial section as well as Reliance Capital, indeed we get recognized on cash basis at a lending employed capital certainly with liquidity. So is there anything else that you will require on the investment book? Other questions?

Yes, one clarification.

Clarification in the lending investment book -- first, yes, please.

See, I think one other question asked is that how much is locked as a fixed interest and how much is locked as variable interest?

I think it is -- everything is fixed interest, but you have a capability to sell and move. But we have bank deposits worth almost 8.7 percentage of the impaired investment book. It's -- get to take advantage of the higher interest rate that will come in the future. So that's how we pick the holding and the bank, which is like you can quit and then move to the higher interest sheets. So now, I will move on to the other asset relating to OpEx. In this year certainly was a year of transition where it's not just the opening prepaid expenditure that are fully observed, but also on the long-term business has been procured. Also, the complete cost has to be absorbed, so this is also reflecting the overall -- combined our CapEx and commission costs, the marketing costs and all of it. And also as we have mentioned in our -- even in our earlier calls, our long-term business proportion is roughly about 8% to 10%, lending between 8% to 10% of our top line. We relate essentially to the many businesses that we write, where the typical payment goes up to 5 years. And then on the crediting, the personal accident business that we write where, again, it goes at 5 years. And in some of the benefit health qualities that we write, which goes up 2 or 3 years. So these are the long-term business that we write, and to the extent that we have growth volumes of these businesses, the P&L takes the hit upfront by way of completion costs, even though the earnings from the premium will grow over the period that was mentioned with respect to each of these categories. So this effect is there, but as the growth in these products stabilize, it will reach an equilibrium where we will not have a hugely incremental high volumes. You would also have noticed that our volumes from the presentation, these volumes, these go up for added share in for both the sale as well as the P&L side. For instance, it is there in slide 48 of the presentation in the populated part of the presentation deck. We have noticed that our health growth in employer [ family ] robust is about 46%. Likewise, in the return back to the seasonal growth in last month in Q4. So all this is also pertaining that the cost is subject of [ upfront ].

Okay. Okay. But sir, when we look at our OpEx as a percentage of net written demand, 36%, and that is almost 7%, 8% higher than our peers. So I'm still not able to understand where -- why are we a setting division? Because...

Let me explain that I wouldn't know who you are looking at peers. But to give you a perspective on how the cost is -- actually take us out in the industry, those companies which have a fairly large component of government business, namely the crop business or in the government health business, are likely to have a lower OpEx because in both government business, there is nothing called sourcing cost. Our portal in there is very, very marginal, more to do with the banking-related costs by way of enrollment cost at the infant crop business. Otherwise, there are no intermediaries with competitor businesses, and therefore, companies that have a high proportion of crop will have their cost structure be lower. Companies which do not have any crop business means that their business is largely intermediary-driven. And therefore, to that extent, you will find that the cost structure is at a different level. And going by numbers that we have seen with respect to competition, we believe that amongst companies that do not have crop business, we compare reasonably there. So that probably would explain where the difference of 6%, 7%, 8%, whatever is there.

Okay. So as a percentage of net-operating premiums, these are 36% as of now, what would be our outlook for next, say, next 2 to 3 years? How much should operating be as a percentage of net-return premium?

One, as I said earlier, that definitely on the operating expenses in absorption rate gets bigger as we grow, and therefore, it can reduce. I would aim to think that we can come down by about 1%, 2% at that level. Other than that, given this future that we are unlikely to have any large normal business on our GWP, we may not be able to see a very substantial change because the social costs will continue to -- will continue to reduce, so we may not be able to see substantive change there. But then the efficiency certainly will increase on a larger base. That is definitely going to be there. And the OpEx-related absorption will definitely have prepared out that in the -- definitely coming in the [ year ]. So at the current level, we can certainly see about 10% change is something that we can certainly reform. Okay. So that will be the answer.

[Operator Instructions] The next question is from the line of Sanketh Godha from Spark Capital.

Sir, if you look at fourth quarter exit motor OD loss in share, seems to be -- it is reported at 83%. Sir, it's definitely very elevated compared to what we have reported in 9 months of the current year, or of FY '22. Sir, just wanted to understand if you want to extrapolate it to FY '23? Will you see this 83% as a new normal or 70-plus adding more normals number to get into FY '22? And if you believe it's 70% to be kind of a number, then what could be the levers to achieve that kind of a figure? That's the question on motor OD. Similarly, on motor third party, the exit has marginally increase at 67%, so we had a big lockdown in the entire year specially in the first quarter. So just wondering whether we will go back to that 80-20 kind of a number in '23 if things normalize as we enter into it? So on motor -- motor investments, if you can answer this, then maybe I have a couple of questions on health and inflation book.

Yes. So first on the motor OD business, yes, 32.8% is exactly highest to there. We certainly see that around the mid-70s is what we look at the motor OD, given the current competitive intensity in the market. What is in it from the 82.8% is very clearly the effect on the earnings, arising from the change in composition would start reflecting. For instance, you can see that our proportion of [indiscernible] has been going up continuously. These earnings, whatever we have grown, the full effect will be there in the current year. And actually, between the various categories, we know that comparatively, we have the loss ratio on 2-wheelers is lower than what we see in cars and commercial vehicles for that matter, so that rate reduction is what we'll bring in. Second, that the element is also that the pricing certainly on the new areas is far better. The portfolio, we also see an improving change in mix of new vehicles, which is coming. Last year, it also meant that the proportion of motor vehicles was much higher, but then the earnings impact arising from the new vehicles is certainly likely to be better. Or whatever we have done by way of increasing between Q4 and Q3 and Q4 of the previous year, we are most likely to reflect that. So these 2 would be very clear factors, besides the depreciating 2 factors that would always be there. But then we also have to understand that, that is also the inflation push that will come in by way of both the parts prices as well as the labor charges. So by efficiency, we'll take care of that, these 2 factors, the increasing proportion of new vehicles and the mix effect is more than likely to bring our OD loss ratios down for the mixed entries given the current market situation.

This is [indiscernible]. On multi-city -- yes, this is the multi-city?

So on the multi-city, yes, that's 2 years, 2021 and '21, '22. We'll see some benefits are coming out of the lockdown which is reflected in the primary markets environments, but also across other insurance as well. This year, all of us are likely to see an increase from the reported levels of multi-city mass ratios. The anticipated price increase can be some relief, but it is still awaited. We expect the final notification to come through not just at the draft exposure level, but at a city higher level as well. But that can help smother down some cost push that can be there. We certainly see TP loss ratio going up from definitively from FY '21 and FY '22 level. I would tend to think that we are more likely to go closer to about our FY '21 level, is what I would think that the thing we will do. Which is at about -- we have reported 79.7% so we will certainly go closer to that.

Got it, sir. Perfect. And any motor TP where 2-wheeler companies is decreasing, so -- just acting as a buffer should play a role or even factoring that between 80%, most likely the number to be reported in motor TP.

No. See, both the motor vehicle impact is something that why it has been notified, we will have to wait to see how the courts will react to it. But yes, the real take would be on 1st October, very productive when the 6 months is clearly have passed, at least for the first few. So That is what would tell us very clearly as to how the courts are going to react. So I'm not too sure if a company would start even seeing the benefits out of the India straightaway by way of faster reporting. But then some other benefits that were there, they're benefits by way of -- say paid recovery order and both these instead can start showing some benefits from products from these 2. So that is what we can expect. But then we are not really factoring in any of these at this point in time. The good thing is that has been notified, we'll have to really wait and see as to how the courts will react and actually improvement as well.

Got you, sir. Sir, just given the NPA got implemented now, so do you think any -- any -- because diverse investment ever has been the biggest -- one of the biggest burning points of our business model. So though it can improve potentially the loss ratio, the negative impact on the assume the 6 months close gets potentially fully implemented on phase earlier. Any thoughts you have made on internal working behind it, which could have a potential impact on the investment leverage or on motor TP business?

I think that should have given the larger proportion of the motor business as such. And also the fact that we've been doing fairly well on the long-term premium attrition, and the choice for long term premium has really been growing. And as I said, March '22, I think the number is now about INR 1,200 crores?

Yes.

Okay. So at that level, it's obvious that the effect and change is going to continue. Yes, to an extent, with the faster reporting.

Can you hear me, sir?

Payments are also made earlier. But I would see that as more as a -- while possibly impact a challenge for '23, '24 and not necessarily for '22, '23. We have to first experience the faster reporting. That trend, we will have to see...

My broader question was that the benefit of cost ratio should be overwhelming the negative impact of lower deleverage, and therefore, net-negative ROE activity. That's the way you look at it?

Very clearly, yes. Yes. Definitely, it automates the investment CapEx, and therefore, the investment income. And to that extent, it will really help the EBT, PAT and the ROE. That much is certain. Not in doubt at all.

Got it, sir. Sir, last 2 ones and 2 questions. One is on -- see, again, even on health, given we did not have anything with respect to -- largely anything with respect to COVID in the fourth quarter. We usually -- we usually are in health and PA less than 50% combined our large company in the historical past. I know the indemnity part has gone up and all those things, but still at 79% kind of loss issue in the fourth quarter in health and PA put together, it looks a little on the higher side. Again -- again, wanted to understand why it led to the deterioration? And finally, if you can disclose the average duration of the cost, what we hold? That can be useful, sir. Yes.

If you see the proportion as compared to the past, the proportion of indemnity and benefit of products help us different for the current year, especially with the financial channels and the consequent attachment businesses of PA and benefit to health products not really seeing at the lockdown level. And then we will see the change in trend in the Q4, we have seen a larger proportion of concept projects coming back and the PA products coming back. It will help reduce the [ film trial ] and loss ratio further from the Q4 level of about 78.9%. But we may not go back to our historical levels of 40% or [ 49% ] now, because there is an innovative business which is there, and innovative businesses cannot be run at that kind of loss ratio. So we would only tend to think that this 78.9% can definitely go down to about 70% at [ Chola ], which is a fairly acceptable loss ratio for that portfolio. That is all we would like to look at it.

So the current mix of health into indemnity and benefit, if you can disclose?

Presently, we are at -- somewhere around at our -- very -- for example, the -- our retail -- our indemnity benefit books, something at around 38.62%. But the impact and indemnity at 62% was the bundled benefit products. So this is what I'm saying. So this is -- while we would want them to be 50-50 by the product indemnity over a period of time, the higher proportion of benefit is actually beneficial in terms of balancing the loss ratio.

Sir, what you have given is only sell, right? It is not health and PA put together, right?

Well, it is actually health and PA put together.

Okay. Okay. Got it, sir. And last, if you can speak about the duration of the bonds?

Duration, Venug -- correct me if I'm wrong for I'm talking from memory here, so our duration was at about 3.4 years.

Yes. 3.5.

Okay.

That is what we are. So far, as Sridharan mentioned earlier in the call, we have a fairly large component in bank deposits and we redeployed for advantage. Of course, it is factored in the duration working, but then that is the flexibility that we have without losing anything on the interest rate.

Got it, sir. Perfect.

[Operator Instructions] The next question is from the line of Kashyap from Broadview Research.

Sorry to enter a little bit late, I also have questions. First is on the provisions and all cost absorption that you mentioned that the company has taken from here, so the right reflection of the current year FY '22 activity is INR 350 crores in your view? What is the base on which we can expand and build growth from now?

I think base level is about INR 300 crores.

Okay. And just one broader question was that if you look at the investment book, which is around INR 12,500 crores now, which was INR 9,300 crores a couple of years back, and that's growing from here. So if one was to look at close to 7% or 6%, around 7% growth, I mean, investment return on that book which is growing, you are kind of with the INR 900 crores of investment income. And even if the GWP got to grow at 12% to 14% from here, and you kind of model a 107% crore at the overall level, unlikely that we'll lose anything more than INR 350 crores, INR 400 crores. So is it fair to say that INR 500 crore PBT of the business is more or less a fair reflection maybe a year or 2 out for the business? If not this year, then next, but at some point, we should logically arrive at that number? Is it a fair way of understanding the way or the direction in which we are heading?

There are assumptions. Certainly on the investment book side, that is quite large and we do intend to concur with that. On the core business side, let's -- the last year, '21, '22, we returned back to the growth path with a 10% plus growth. The numbers for it turned around, and therefore, I can say that we have begun a new year, right? April [indiscernible] March. The base effect is certainly there, both for industry and also for Chola MS within the year as well. But as growth rate increases, you will find that there will always be the pressure of absorbing cost of contract, so that pressure will be there. So definitely, it's over a 2-year period, we certainly see very clearly things that are accumulating down to a good level of profitability.

Sure. Okay. All the best.

The next question is from the line of Yash Mehta from Steinberg Asset Management.

Am I audible?

Yes.

Yes. So sir, I just wanted to, first, juxtapose your comment on competitive intensity with the change in composition of our business. Now, as I see over the last 3, 4 years, you've increased the share of passenger vehicles, 2-wheelers and private cars both, at the same time reducing the share of CV. My question is what is allowing us? Who is -- how are we able to kind of gain share in these favorable segments, especially when there has been a rise in competitive intensity in the industry? So that's my first question. The other 2 are not related. Yes.

Yes. No, let me -- the opportunity to answer. So we are growing at a fairly strongly in the 2-wheeler space. As I have even mentioned even in the earlier calls, the driver has been the entry into several OEM programs, which has actually helped us gain a market share of about 15% in most 2-wheelers that are sold in country. We are present in almost all Indian co-brands for market 2-wheelers. Likewise in cars, we are -- we have added our OEM partnerships. For example, last year, '21, '22, we impact the [indiscernible] partnership where we are 1 of 3 players in the program. That has helped with growth. [indiscernible] we've been stepping up our market share in, presently, [indiscernible] business. We continue to be a fairly significant player in the Trucker business. Maruti, we operate in a few states that have been allotted to us. So these are the drivers behind the growth. And as I have even said this in earlier calls, our presenting 3 terms have helped us leverage our -- even the motor business pretty well, not just in the older vehicles where the priority is within the business. But also, we are able to reach out to the dealerships in these markets better because of our market presence growth. So that is what has helped us grow in both cars and 2-wheelers over the last couple of years, are now big fairly significantly.

Understood. And would it be a fair assumption to say that, let's say, given that terms like many other players that competitors want to enter into a debt share of the OEM business, the higher expense ratio that we see in our shareholders' account, is that -- like, is it a profitable account? Is that a reflection of lower margins on OEM because you were having to pay to the OEMs effectively to get share from them?

Yes. So without getting into -- the competition in competitor intensity is not just on the payout, but it is also on the middle of premium discounts that are there. There was an earlier question on motor OD loss ratios taking the -- into account not just for us but for almost the entire industry. The driver is essentially the discounts, that will prevail for various categories and various products. And there is a lot of different discounts. The discount level for a new vehicle will be very different than discount level for us. Consequently, on first year renewal, we'll have to follow it, become really different because the customer is going to see the price, having bought our premium for a new vehicle at a certain discount. Next year, he's not going to pay anything more -- rupee more especially to the buy-now trend. So the first year premium often is a benchmark for the median level in the first 2 subsequent years. It could therefore have some product captured with it, and it is where the competitive intensity is fairly high because we'll be launching newer vehicles. I also talked about that the newer vehicles earned premium is higher, and therefore, that we heard the last batch down what I mentioned in the previous, but that is what causes the competitive intensity.

Understood. And your question that the financial channel has been declining. Now, sorry if this a question people understand. In the new revenue, we have seen a recovery in the [ disbursements ]. So do you expect it to grow along or there are some structural reasons for the decline in the financial channel?

No, we have seen the rivalry in that channel. That's really the guidance. The last 2 years, the financial channel had their own problems to compete with in terms of portfolio management and otherwise. Now, we do certainly see in Q4, we did see some change. And even month of April we are seeing some changes there. And in fact, even in the financial channels, we keep only adding partners there, and therefore, we certainly expect that volumes to improve. And therefore, in the composition that was mentioned earlier, we would like to think that -- I would say it's still more or less continuing around the mid-40s, is what we would tend to think in terms of the market composition.

Mid-40s?

Yes. Mid-40s composition.

Motor composition of...

Commercial vehicle. The portion of commercial vehicles in the amount of business.

Understood. Fair enough. And my last question is, sir, last quarter, you mentioned INR 350 crores as a baseline CDP. In the current call, if I hear this correctly, it's around INR 300 crore. My only question, what is the [ divergent ] first? And from like in a quarter's time, and as long as -- as far as the resumption to profitability is concerned, when would that be visible?

Actually, we don't give out any estimates of profit, so these are just larger numbers that we did. The only point that I will say is that, definitely, we still -- we are poised for much better growth, even possibly a better growth rate, than that had seen in the hands of '21, '22. And as growth comes in, it is going to have an effect on the payables by way of open obstruction, so that is a really possible reason. But -- and then definitely the -- some tailwinds, possibly the higher yield on the investment book side, which is always coming at a beneficial factor that the [indiscernible]. So what we have indicated, it's more a ballpark number at those levels than...

So no incremental relative? So no incremental relative from last quarter to this quarter?

Sorry, I don't talk. I'm not really right.

Incrementally, no negative development? So from Q3 to Q4 in that...

So far, I tend to think that there is no negative agreement there. I said that's some of the lockdown benefits that was mentioned earlier, that will not obviously recur. So to that extent, things were back to normal.

[Operator Instructions] The next question is from the line of Deepak [ Sanamar ] from [indiscernible].

Yes. Am I audible?

Yes, please go ahead.

Yes. So like other players of a leading blip, have you taken the price hike in motor OD, especially in Q4 FY '22?

We -- the point of our business model is also from where we get a fair chunk of business from the financials as well as our own insurance express outlets across the 460,000 tons we have with open deals with the older vehicles. In there, in the older vehicles, which we have made some correction from the price. On the CV as well as in the used cars, the older cards business that we have done. Under new CAGR, we are still starting the situation in those new incremental corrections. And of course, we are also in discussion with our other resellers, other companies, so that there is some of this in that income.

All right, sir. And my second question is regarding our motor book mix. So if you can give you -- give us any differentiation? I mean, a contribution of new and used vehicle overall motor book for FY '22?

So once we had like our -- we would have about 40% of the premium coming in from the new vehicles.

Okay.

Somewhere between 40% to 42% would be new, and then the balance would be -- it could be even a 1 year or 2 years, but then it's not. So that 58% to 60% would be in older vehicles.

All right. All right. And my last question is regarding electric vehicle. So what is the contribution of electric vehicle to our overall motor book?

Yes, actually, we -- we do have a fairly reasonable presence in the 2-wheelers, where our market share is at about 8% now. So that is what it is. We have not so much presented electric cars, not much has really happened in that space. And we also have a small presence -- small semiconductor R&D type of opportunity in the 2-wheelers. This is the -- but electric 2-wheelers, it's a decent presence. And over the last 6 to 8 months, [indiscernible].

Next question is a follow-up question from the line of Devansh Nigotia from SIMPL.

I just wanted to understand your investment book, you are seeing a step-up in equity. So what is our overall strategy there? I mean, are we looking to increase this mix to increase the yield on overall book? If you can just give some perspective?

No, I think -- sorry, I couldn't hear the question again.

Yes. So I wanted to understand what is our overall strategy in terms of increasing our equity exposure in our overall investment book? So as of now, it is very negligible. But during the duration of our investment book, are you looking to increase this exposure over there? Or what is our overall strategy?

Yes. Definitely, we would simplify our exposure of equity in our investment book. Our -- yes, we would like to have, over the medium term, up to 5% of debt and over a period of 1 year, you would like to take it up to year '21.

Okay. And what would be the -- what would be our insights of our -- which is dealing with equity investments?

Sir, it seems we have lost the line of Suryanarayanan.

Okay.

Please wait while we reconnect.

Could you please repeat the question, please? We can't hear. You said what's the --?

If you could just help us understand the team side of the equity investment book, the fund manager, are we looking for some recruitments? Or just...

We have a CIO, and we have 2 research analysts backed up by him. And we also have links to other research firms to support our investment activity.

Okay.

Mr. Suryanarayanan on the line.

Yes. Sorry, the line cut.

Yes, my question has been answered. .

Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing remarks. Thank you, and over to you.

So I think thanks a lot for the participation. And we feel that Cholamandalam General Insurance have weathered quite a lot of challenge in the last couple of years. It's a very solid franchise that we have built, and we have also invested heavily in the digitization process. We feel that I think the growth is here to stay for us, and then we will see -- go from strength to send from here, and that would be our message at this point in time. Thanks a lot again for your participation.

Thank you very much. Ladies and gentlemen, on behalf of Axis Capital Limited, we conclude today's call. Thank you all for joining us, and you may now disconnect your lines. Thank you.

Thank you.