Cholamandalam Investment and Finance Company Limited (511243) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Cholamandalam's Q3 FY '20 Earnings Conference Call hosted by Kotak Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nischint Chawathe from Kotak Securities Limited. Thank you, and over to you.

Thank you. Hello, everyone. Welcome to the conference call with management of Cholamandalam Investment and Finance Company Limited. To discuss the 3Q FY '20 performance of Chola and share some industry and business updates, we have with us today Mr. Arun Alagappan, Managing Director; Mr. Arul Selvan, Executive Vice President and CFO; Mr. Ravindra Kundu, Executive Director; Mr. Shaji Varghese, President, Housing Finance; and Mr. Rupinder Singh, Senior Vice President and Business Head, Home Equity and SME. I would now like to hand over the call to Arun for his opening comments.

Good morning, ladies and gentlemen. I have great pleasure in presenting to you the performance of Chola Finance for Q3 FY '20 and YTD December 2019. Because of the QIP and the compliance factors, we have delayed the investor call and are doing it post the silent period. At the outset, I'm happy to state that we ended the quarter with a business asset base of INR 60,778 crores, registering a growth of 20% over the last year. The following highlights from the Q3 FY '20 and YTD December '19 performance reaffirm Chola's steady growth despite the prevailing adversities in the external markets. Aggregate disbursements for the quarter ended December 2019 were at INR 7,475 crores as against INR 7,644 crores in the same period of the previous year. Aggregate disbursements for YTD December 2019 was at INR 23,429 crores as against INR 21,558 crores last year, registering a growth of 9%. Assets under management, including incremental cash held in hand, grew by 25% from INR 52,591 crores for YTD December '18 to INR 65,992 crores for YTD December '19. PBT for the quarter ended December 2019 was INR 522 crores as against INR 463 crores last year, registering a growth of 13%. PBT for YTD December 2019 was at INR 1,528 crores as against INR 1,362 crores last year, registering a growth of 12%. The PBT-ROTA for Q3 FY '20 was at 3.4%. The PBT-ROTA for YTD December '19 was also at 3.4%. PAT stood at INR 389 crores for Q3 FY '20, and for YTD December 2019, PAT was at INR 1,010 crores. ROE was at 20.3% in Q3 FY '20. Book value was at INR 90.21 per share as of Q3 FY '20, up by 18% from INR 76.55 in Q3 FY '19. We have increased our branch network to 1,073 branches, out of which 81% are in Tier 3, 4, 5 and 6 cities. We are well on our way to reach the 1,100 mark by the end of this financial year. We have maintained continued focus on our efforts to reduce the nonperforming assets. As per Ind AS, our Stage 3 assets at the end of December 2019 was at INR 2,024 crore as against INR 1,648 crore in December 2018. Stage 3 percentage to total gross assets stood at 3.5% in December 2019 as against 3.3% in December 2018. Coverage ratio for Stage 3 was at 33% as of December 2019 as against 35% in December 2018. Let me also share with you the business level performances of Vehicle Finance and Home Equity divisions. Vehicle Finance has delivered a performance with an improvement in disbursements, asset growth and profits for YTD December '19. The Vehicle Finance business grew by 6% in disbursements for YTD December 2019 and 19% in terms of closing assets year-on-year. The business recorded a PBT of INR 295 crore for the quarter as against INR 308 crore last year, and on YTD, the PBT was at INR 932 crore against INR 906 crore last year. The slowdown in VF disbursement is primarily due to the industry degrowth in Commercial Vehicles segment. The CV segment at the industry level has degrown by about 23% for YTD December '19 against the same period last year. To compensate for this drop, we have consciously increased our product mix in other segments like passenger vehicles, 2-wheelers, 3-wheelers and used product segment. CV segment, which used to be approx 39% of our disbursement mix for YTD December '18 as a result has come down to 31% for YTD December '19. Moving on to the Home Equity business. The Home Equity business grew disbursement by 10% and AUM by 16% for YTD December 2019 over the previous year. PBT grew by 9% for the quarter and 17% for YTD December 2019 over previous year. The business recorded a PBT of INR 88 crores for the quarter ended December '19 as compared to INR 80 crore last year and YTD December '19 at INR 259 crore as against INR 221 crore last year. Recoveries continue to be good by leveraging SARFAESI, resulting in higher profitability in this business. The company's capital adequacy ratio at the end of Q3 FY '20 was at 17.04% with Tier 1 at 13%. Capital issue. The Board of Directors at the meeting held on 23rd Jan, 2019, have, subject to the approval of the shareholders, approved an issue of equity shares by way of preferential issue to Cholamandalam Financial Holdings Limited, a promoter entity, up to an amount not exceeding INR 300 crores in one or more tranches at such prices in accordance with Chapter V of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018. And also, we have done a QIP of INR 900 crore basically to meet both business growth and augment our Tier 1 capital. Before I conclude, I would like to impress upon you that technology adoption is increasingly becoming more and more critical for our business. We at Chola have continued in our efforts to infuse technology and analytics into the day-to-day processes and systems. It is becoming evident that a lot of these capabilities are helping us maintain the quality growth of our assets. Our tech teams have been leveraging the API and micro services platforms to fast-track adoption and minimize time to market. Our existing underwriting models are getting augmented by AI and ML tools, including predictive models across credit, sales, collection and risk function. These capabilities have helped us predict and strategize for credit risk, field collection efficiency, sales and productivity, cross-sell efficiency, audit and fraud monitoring. We are confident that all these technological interventions will positively improve the experience of Chola customers in the long run. Thank you all for attending the call. My colleagues and I would be happy to answer any queries now.

[Operator Instructions] First question is from the line of Nidhesh Jain from Investec.

Congratulations for the strong set of numbers and for a QIP. On the asset quality, sir, if you can give some color which segment is leading to this increase in asset quality? How is asset quality experience between Housing Finance, Home Equity and vehicle? And within Vehicle, which segment is contributing to this asset quality increase?

Okay. So the Vehicle Finance, we are at around 2.7% and the -- it's audible, right?

Yes. Yes.

So 2.7% is our Stage 3 numbers as compared [ December ], we were at around 2.35%. It has marginally increased a bit. Considering the market situation, et cetera, I think this is something which is inevitable. And again, similarly, in the Home Equity also, it has actually moved up a slight bit from 5.9% to 6%; Home Loan, it has reduced marginally, 3.8% to 3.7%. Overall, we are at around 3.5% at the December closing on the Stage 3 to total business assets. Does that answer?

And sir, within Vehicle Finance, what we understand is that the sector is witnessing higher stress in HCV. So is it [indiscernible]?

We also see the same trend. HCVs have moved up a bit. Actually, that is why also, in a way, the provision coverage is seeming to be dropping, but that is primarily because heavy realization on the crystalized loss, the LGDs are lower. So that is why the provision coverage will seem to be dropping and that is because of the mix changes. Actually, our performance on the used and the higher-risk profiles, like tractor, et cetera, has improved. The individual Stage 3 numbers have improved compared to previous year.

Okay. Okay. And sir, what will be the commentary or guidance on the asset quality going forward? Should we expect further deterioration because Commercial Vehicles segment continues to remain under stress?

See, heavy commercial vehicle -- this is Ravi Kundu. Heavy commercial vehicle is under stress for the last 1 year and that's the reason we are reducing our focus on this product. We have reduced our mix from 39% to 31% at the overall level for commercial vehicles, which is primarily driven by the heavy commercial vehicles. So if you would have done the higher heavy commercial vehicle, our portfolio would have been impacted. But having said this, the market side, if we see that last 3, 4 months, we have started seeing that the customers have started paying their EMI, but still struggling. October, November, December was a very bad period. After that, things have started improving. So I think this is going to continue for some time and let's see how far can we actually change the story. We are expecting that this kind of struggle for heavy commercial vehicle customers will be there for at least 8, 9 months.

Sure, sir. And then lastly, sir, on the operating expenses, there is a sharp increase in operating expense for last 2 quarters, Q2 and Q3, despite muted growth in disbursement and a slowing down asset growth. So what is the key reason for operating expense growth for the last 2 quarters?

Post Ind AS, relating these expenses to disbursement has lost its significance because under the Ind AS, the sourcing cost gets amortized, so you will -- the impact actually is of the past period's book, amortizing of cost, that is what is coming into the sourcing cost. The cost increase is primarily on the collection efforts that is being put, which needs to be charged up because that is incurred and that is on the book. So there's 2 aspects. So don't try and relate it to disbursement is my only request. Disbursement growth or degrowth will not immediately reflect on the expenses. It will now be more on the asset side. And then the other aspect is, yes, we have increased cost on the collection side, and that's what is showing up there.

One more point, actually. If you see that our disbursement has gone up for YTD level only, for Vehicle Finance grew by 6% in terms of value. But in terms of units, it has gone up by 34%. So number of file passes for the similar disbursement has significantly gone up because we have started doing more 2-wheeler, 3-wheeler, passenger vehicle, used and older vehicle business. These vehicles' businesses required upfront payout to the dealerships and the people who basically work for us as a connector. So therefore, one is that the number of people hired for small ticket size has increased in sales and also, correspondingly, we have added manpower in collection.

Okay. Okay. Sir, this OpEx to asset ratio, which has increased, has increased slightly, which is slightly structural in nature because the share of high yielding, low ticket product is also increasing?

Correct.

Yes.

[Operator Instructions] The next question is from the line of SivaKumar from Unifi Capital.

Sir, what would be the capital adequacy ratios post the QIP raise?

It will be 20-plus, including Tier 2. On the Tier 1, it will be 15-plus.

And according to your internal calculations, how long should this capital last when you have to again approach the market for a raise?

This capital will be good to sustain 20% growth provided our PBT-ROTAs are in the range of around 3.5%. So this is a factor of these 2: growth of assets; and also whether our internal generations are adequate to feed the growth. So if we are growing by around 20% or less than 20% and then we still clock 3.5% of ROTA -- PBT-ROTA, then we don't need capital. And I think even otherwise, this will sustain us over the next 2 years, even assuming there is some slowdown on the profitability side, if there are some slowdown.

[Operator Instructions] Next question is from the line of Nischint Chawathe from Kotak Securities Limited.

Two parts. One is based on the recent trends, if you could give some outlook for growth in both Vehicle Finance and Home Equity business. And even in the Vehicle Finance, maybe some outlook for industry volume growth or the OEM volume growth as well. And maybe on the Housing Finance side, if you could articulate the strategy. We saw that Mr. Shaji has joined you, so maybe if you could kind of articulate some strategy on that front as well. Those are my 2 questions.

Yes. This is Shaji here. Now as you know, we already have an existing base within the space of very close to INR 2,900 crores of AUM, which is managed. The whole thought is to create as trade focus and strategy around the Home Finance company. And as a group, there's a very good risk understanding of the LMI segment. So we would like to build housing as a separate business unit within the group. That's the broader thought, and a separate license for HFC has been seeked (sic) [ sought ]. It's pending with the regulator to finally grant the license. Once that is through, we will frame up the strategy and, of course, we will come back and update the way forward at that stage.

Any ticket size and yield guide -- yield that you sort of -- segment that you have in mind?

Yes. As a group, the understanding of the risk management of LMI, lower and middle income group, has been time tested for all these years. So it is more logical to ride on the same where the group has a better understanding. That is one. Second, there already, we have a large presence across 1,000-plus locations. It is more logical to ride on the same platform. So it will be an extension of the existing -- coming to the ticket size, directionally, we don't want to go below the INR 1 million ticket size. Currently, it's around INR 14 lakhs is the average ticket size, and more interestingly, the LTV is around 60%. So very well thoughtfully -- thoughtful client segment and LTV and the risk profile. So we would like to continue to build on this in a big scale. That's the opportunity we are sitting on.

As far as the Vehicle Finance is concerned, if you see that heavy commercial vehicle, September month was the very lowest month in terms of heavy commercial vehicle sale. The TIV came down to 10,000 units. And after that, it is going up every month. And in the month of January, it has reached to 15,000. But the peak number used to be 30,000 and the average number used to be 25,000 -- 20,000, 25,000, so that will take time to reach this level. At the overall level, commercial vehicle, we have seen that the TIV in the month of January reached the 74,000 level, which is a respectable figure, and it is growing month-on-month. But this quarter and the next quarter, we are moving from BS-IV to BS-VI. Therefore, all the OEMs and dealer put together, they are planning to reduce their inventory to 0 and then start building the inventory, which is going to be a big task, and that is why there is a disruption in the market, and it might impact the disbursement in Q4 and Q1. After that, it will start picking up. And Q2 onwards, we can expect that the industry will perform, not only because of the numbers, also because of the low base effect also will start at a -- last year Q2 was very smallest number. So as compared to that, optically, you will start seeing better numbers.

And you'll see the rise in tickets as well next year?

Ticket sizes, basically, heavy commercial vehicle will go up by 10% to 15%. Ticket sizes definitely will be high. Among all 3 products, in terms of percentages, small commercial vehicle will be high and then the light and the heavy commercial.

And just some outlook on growth in the Home Equity business for next year?

This is Rupinder. So basically, in last year specifically, we moved to additional 80, 85 branches. So that was a thought when we realized that market is going more towards Tier 2, Tier 3 and focus is more there than the Tier 1. So strategically, we planned that piece. And now in the last couple of quarters, we start beefing up there basically. So eventually, outcome is ticket size will go down. So earlier, the ticket size was, say, in the tune of INR 54 lakhs, INR 55 lakhs, which will be now -- on the book will be around INR 42 lakhs, INR 44 lakhs because the ticket size is on the lower side compared to what in Tier 1 market. Secondly, this will also help in building a more team, particularly, because you get better rates, better fees when you go to the markets, which are Tier 3, Tier 4 particularly, then going to Tier 1 like Bombay, Delhi, Chennai, something like that. So this is a strategy which we are adopting it. And this is a strategy where you have to put more hard work, right? It will be more concentrated with the in-house built team instead of depending upon channel partners like DSAs and all. And obviously, result in terms of better ROTA and better NIM is the outcome what we're looking for. In terms of growth, it will take time because market is a little sluggish as of now, but we are optimist that maybe in a quarter, 2 quarters, as soon as it picks up, we are ready with it in terms of the teams which are well placed now and picking up the numbers.

Next question is from the line of Piran Engineer from Motilal Oswal Securities Limited.

Congrats on the quarter. I just have a couple of questions. Firstly, on asset quality, while the HCV asset quality has been deteriorating, is there a chance of rub-off on LCVs in the coming quarters? Does that typically happen? Or has that happened in the past?

So heavy commercial vehicle and medium commercial vehicle, medium commercial vehicle in our portfolio is a part of light commercial vehicle. So all above 12,500 kg -- 12.5 tonne and to 16 tonne is actually called as ICV or MCV, have also been seen as a portfolio quality deteriorating, which is along with the heavy commercial vehicles, but rest of the LCVs are better.

But -- and it will continue to be so?

Yes, until the market improves, it'll be -- continue to be like that. But first is the improvement will come in MCV, then HCV will be followed.

Okay. Okay. Fine. And sir, secondly, now that Feb is also almost over, any trends in prebuying that you witnessed across categories, be it HCV or cars or other products?

So during this time, actually, all dealers and OEMs are completely -- they are busy in reducing their inventory. And therefore, the availability of vehicles are not there across the dealership. Fast-moving vehicles are not available, and it is very difficult for them to manage to get the vehicle from the other point to the point where customer is sitting. Because of that, there is a logistic issue and that is impacting on the sales. Little bit prebuying is basically because there is a discount and customer also now have understood that they have to pay some 10% to 15% extra from April. So they want vehicle, but vehicles are not available. Secondly, the finance companies are also now not taking call on the cab chassis. Only fully built vehicles are only being funded because the registration will not be possible before 31st March. So because of these 2 reasons, in spite of having some interest in the customers' mind to buy the vehicle, sales is not picking up and neither manufacturer and dealerships are in position to solve this problem.

Okay. Okay. Understood. And sir, just lastly, when you spoke about TIV sales being 15,000, what is TIV? What does it stand for?

Total industry volume. In the sense, all the manufacturers put -- all the OEMs put together for the heavy commercial vehicle for the month.

The next question is from the line of Pranay Rajani from B&K Securities.

Can you just -- your voice wasn't clear on the asset quality front. So can you just repeat the gross NPA number for vehicle segment, which is 2.7% was in Stage 3 as compared to?

2.35%.

2.35%.

Yes, 2.35% last year.

This was in last year. And Home Equity segment was 5.9% previous year and currently it's at 6%.

Yes. Correct.

The next question is from the line of Saurabh Dhole from Trivantage Capital.

A couple of questions from my end. Firstly, on your NIM, if you could explain exactly what is causing the improvement in NIMs on a sequential basis? Is it the changing mix of the book? Or have you taken some price hikes?

This you're talking company as a whole?

Yes, company as a whole.

Frankly, in the company as a whole, what has also happened is there was market -- adequate market for assignment of receivables. So we could do some direct assignment of receivables. And under the Ind AS, because these assets are going off the book, we needed to upfront the profit. So we had upfronted some profits on that account. So that has also added to the NIM. The impact of the product mix has yet to show up on the NIM primarily in a large scale. Having said that, in the Home Equity, we have clearly seen NIM improvements compared to last year primarily because they were able to reprice the book -- entire book there because of the cost of funds, et cetera. So for example, if you have the presentation with you, if you see the Vehicle Finance NIM, it is still slightly lower. While it has improved over Q2, it has improved by 10 bps in Q3, it's still lower as compared to last year. And in the Home Equity, if you see on Page 47, you will see that it has consistently been now clocking 3.9%, which is higher than the 3.6% clocking last year.

Sure. Right. Right. And talking of changing mix, you also in your initial comments said that you are consciously moving towards PV, 3-wheelers and 2-wheelers. So what impact does this have on the way you're sourcing business today?

Yes, this is Ravindra Kundu. See, we have been doing all these products for quite some time. But for last 4 years, we have been slow in doing 2-wheelers, 3-wheelers and passenger cars in terms of selecting one brand and going with that. During this time, when we saw that there is a necessity for -- there is a necessity -- we need to do some activity in terms of increasing the disbursement to bridge the gap we are having in commercial vehicles side, we have also added 2 more brands in both 2-wheeler and 3-wheeler. So that -- so there is no change in the sourcing strategy with respect to 2-wheeler and 3-wheeler. We have a dedicated team available for 2-wheeler and 3-wheeler. Only thing is we have added manpower in that vertical, which is actually showing up in operating expenses.

Okay. Okay. And sir, lastly, if I remember correctly, in your opening comments, you also mentioned how post December some of the CV customers have started paying up and even though they started paying up, for the next 8, 9 months, you still see some kind of a pressure continuing. So I just wanted to know what exactly, as per you, has changed on ground which has enabled some of these players to -- some of these customers to start paying up.

See, only collection follow-ups have gone up significantly from our side. October, November, December, in fact, sales team also working with collection to collect money. So by just putting more effort on collection, we were getting money. Because at this point, the cash flow of the customers have been impacted badly. So whosoever goes to customer first will get the money. There are some customers who are getting -- yes, please?

Yes. So I was saying, on ground, as per you, there has been no change in terms of the environment that these players are operating in.

Yes, there is a slight change. On ground, in October, November, December, there were -- the capacity utilization was down to the level of 10% to 20%, which has improved to 50%. But payment cycle has gone up. Now they are not getting payment for 120 days. So -- and that was earlier also, but the payment cycle was 60 to 90 days. During the gap of the rainy season, they exhausted all their receivables and then now they need to bill that. So once they bill their receivables and then start paying comfortably, going to take some more time. So as of now, it is hand-to-mouth type of situation. Whatever comes in the month, there we need to collect the EMI.

Next question is from the line of Amit Rane from Quantum Securities.

My question is on the used CV segment. We are seeing improvement in the disbursements in that segment in last 4 quarters. So going forward, what's your outlook on this particular segment?

Used business is going to further improve because after BS-VI launch, the used value of the BS-IV vehicle will further improve. So those people who are struggling today, they have double mind to sell the vehicle in this period. Next time when they get better price, they will sell it off and close their loan. And so we are expecting that the vehicle repurchase via the finance companies of the vehicle which is excess in fleet with the customers, they will be getting opportunity to sell it off at better price during the first quarter. And that is the period we will see that the used business will further improve.

Okay. And sir, in terms of asset quality, in this used vehicle segment, what you are seeing, any trend?

It is stable, actually. Used vehicle is stable. Other than heavy commercial vehicle and the MCV, the high-end light commercial vehicle, rest of the products are stable. It has gone up slightly, hardly 5 to 10 basis points, that's because the general economy has slowed down. There is a slight slowdown in the economy, which is impacting every product, including 2-wheeler, 3-wheeler also. But it has impacted badly to heavy commercial vehicle and medium commercial vehicle.

The next question is from the line of Umang Shah from HSBC.

I just had 2 questions. One is a clarification that although we are formulating strategy for the Housing Finance business, just wanted to check that the Home Equity and Housing Finance business both will continue to run as independent businesses as they have been so far.

Yes. The Home Equity will continue to be in the main company. The home loan will move to the new subsidiary, that is HFC distribution, once we get the license.

Okay. Okay. And second is what would be your marginal cost of borrowing now?

It's around 8.5% -- marginal cost of borrowing in Q3 was around 8.5%. Now it has come down drastically around 25, 30 basis points, it's come down, around 8.20%, 8.10%.

Okay. So to that extent, we should expect some sort of margin expansion getting into Q4 and Q1 as well. Is that a fair assumption?

You need to see that this is not marginal borrowing. The total borrowing is much more than -- the book will tend to come off slowly. But there is one good point is we have been able to reprice many of the bank borrowings in this quarter. So that impact on the book also will come beyond the marginal borrowing. So both these put together, you will certainly see some NIM improvements in Q4.

[Operator Instructions] The next question is from the line of Shubhranshu Mishra from BOB Capital Markets.

My first question is just a follow-up of some previous questions. One is that you are adding manpower in 2-wheeler and 3-wheeler sourcing, sir. These are known to be high cash markets and the LGD considerations are higher and the asset quality is not historically known to be good. So why are we increasing our focus on 2-wheeler and 3-wheeler, sir?

So 2-wheeler and 3-wheeler, the arrangement what we have with the OEMS we are working is slightly different than the general way things are happening in the market. In 2014, we started with Royal Enfield and just now, we started working with Honda. And we have been doing it very selectively. And our portfolio quality is much better than the industry, and we will continue to do it. As far as 3-wheeler business is concerned, we have tied up with 2 OEMs, and with the 2 OEMS, we have a loss-sharing arrangement. In the case of losses going up beyond that, they will actually compensate the losses. So both the cases, we have actually protected our risk.

Can you quantify the loss-sharing arrangement, sir, with the OEM?

No, no, that is very technical thing, confidential matter.

Actually, whatever I said is also confidential.

Sure, sir. My second question is how many outstanding unique customer relationships do you have and the number of people you deploy in collections? Just wanted to understand how many number of -- if you've increased your collection effort, how many number of trips you were doing to a customer a year back and number of trips that you're doing to the customer as on date?

The number of customers is...

Unique customers.

Like around -- unique -- all of them -- most of them are unique customers. I would say, in the Vehicle Finance, there may be 1 customer who may have 2 or 3 agreements, but the number of such customers is very less. If you see the segment we're addressing, these are 1 to 5 vehicle owners only. They don't -- they're not fleet operators who keep on buying hundreds of trucks.

Yes. I get that, sir. So that's what I'm trying to get at, what -- the unique number of customers, if you can give me a ballpark number.

See, we have around 10,000 executives in collection and their ACR, account per customers, is around 80. So you can multiply that. I mean that is what is basically an average.

So 1 collection agent looks at 80 customers, right? Unique customers or 80 loan accounts?

1.5 million.

Right. Sure. And sir, then if you -- this is pretty granular. So why do you need the salespeople also to chase the same customers because that is increasing the OpEx of that?

That's a longer discussion. We have done those in the past. I think maybe we can do this off-line. This is the model we follow, sales separate, collection separate. I think many times we reiterated this...

You want to know why the collections -- sales guys are doing collections.

No, no, the sales guys this time have been actually involved in collections because the delinquency was there from the heavy commercial vehicle and medium commercial vehicle side. And these customers' profile is slightly bigger profile. When they get into the problem, we need to basically counsel them to understand what is the issue and how can we basically solve their problem. It's not a mass market. If the 2-wheeler delinquency is going up, sales people will not be able to do anything. You need to run behind it and collect it. So here, that is the reason we involve sales people.

Okay. So if this is going to occur for the next 8 to 9 months, sir, what is the increase in the OpEx that we should model in because of the...

It has already been done actually.

You can take the current level at the...

Current rate is going to be the same only. In fact, we are trying to reduce it, but at least this is what is basically going to -- OpEx is actually also related to the average assets. So if the average asset is not growing, then automatically it goes up.

[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Nischint Chawathe for closing comments.

Thank you, everybody, for joining us today. We thank the management for giving us an opportunity to host the call. Thank you.

Thank you.

Thank you.

Ladies and gentlemen, on behalf of Kotak Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.