Emerald Finance Limited (538882) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Emerald Finance Limited Q3 FY '25 Results Conference Call, hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to [ Ms. Samiksha Ramteke ] from Kirin Advisors Private Limited. Thank you, and over to you, Ms. Ramteke.

Thank you. On behalf of Kirin Advisors, I welcome you all to the conference call of Emerald Finance Limited. From management team, we have Mr. Sanjay Aggarwal, Managing Director; Ms. Gurmeet Kaur, Chief Risk Adviser; and Mr. Talin Aggarwal, Business Development. Now I hand over the call to Mr. Sanjay Aggarwal. Over to you, sir.

Good afternoon. I warmly welcome all of you to Emerald Finance Conference Call for the Third Quarter of the Fiscal Year 2025. It's honor to have your continued trust and support, which has enabled us to post decent results for the reported quarter. With me is Ms. Gurmeet Kaur. She is a Chief Risk Adviser; and Talin Aggarwal -- my son, Talin Aggarwal, who is a Chief Business Development Officer. Can you allow me to take you through our financial performance and key business developments. on the financial front, during Q3 '25, a consolidated total income has surged by 67.7% on a Y-to-Y basis to INR 5.74 crores. Our net profit has more than doubled to INR 2.4 crores with a margin improvement to 43.19%. For the first 9 months, our consolidated total income has risen by 16.11% on a year-to-year basis to INR 15.15 crores, and the consolidated net profit has also more than doubled, growing by almost 108% on a Y-to-Y basis to INR 6.25 crores. During this quarter, on a stand-alone basis, our total income has increased by 91% on a year-to-year basis. And additionally, our net profit has increased growth of -- grown by 123%. On a stand-alone basis, we have decent growth during the first 9 months with a total income increasing by 64.45% and net profit margin profit growing by almost 80% to INR 4.29 crores. We have taken a couple of initiatives to strengthen our financial foundation during this quarter. Firstly, we have raised INR 10 crores via preferential allotment. This shares -- 10 lakhs were issued of the face value of INR 10 at INR 90 premium. One of the major allottees was Minerva Venture Funds, it's a Mauritius-based FI. And to also to Mr. Rajiv Jain, who was pioneer in setting up KPMG within Africa and India. And he was one of the founding fathers of Grand Hotel in India. On the earnings flagship program, Earned Wage Access, we are on track for tying up with almost -- more than 50 companies during this quarter -- during this year. We have already tied up with 40 companies. In the last quarter, we tied up with one of the large shoe manufacturer of North India. They've got 7 plants, and we have started operations in one of the plants, and we expect to start operations in the balance 6 plants shortly in the coming quarter. Plus, we have tied up with a very large insurance broker based out of Surat. We also started operations recently with them. We also secured a credit rating from CRISIL, it's BB+, stable, for our INR 30 crores bank loan facility. And glad to report that for the first 9 months, we have 0 NPAs during this period. Not even a single account has shown into the NPA bucket. I take this opportunity to express my heartfelt gratitude to all of our employees for their dedication and to our partners for their collaboration, and most importantly to our shareholders for their continued trust and support. Your confidence in us inspires us to strive for even greater achievements. With my -- both my colleagues, I now look forward to your questions and for insightful discussion and suggestions from your side, please. Thank you all.

[Operator Instructions] The first question comes from the line of D.S. Inder, an Individual Investor.

Congratulations for posting very good number. I have a few questions. And my first question is regarding EWA program. In last quarter, there was a guidance of 100 corporate but this time has been revised to 60 by the end of FY '25. Sir, why is it so? And is the adoption of EWA in corporate is not being adopted or getting slower due to other competitors? And still there has not been any big corporate added in the list like Tata or Mahindra.

See, business is -- we're not facing any difficulty from our competition, there's hardly -- tell you frankly, there's hardly any competition. The only 3 or 4 players doing in this. But we are taking a very prudent step, and we're just scrutinizing probably all the corporates we are tying up with. Your numbers are increasing. Like we have a target of INR 2 crores per month by March. And in this very particular month, by 7th only, we have achieved, I think, INR 60 lakhs plus business. I think we should achieve that INR 2 crores target shortly. As far as the number of prospects is concerned, 40 we have already tied up. And in fact, we are trying to, as hard as possible, to increase the number of corporates. But I think relatively speaking, we should be able to touch 60 corporates by March.

Okay, sir. And are we optimistic or we have some plans to give the target by the end of this financial year about 100 or...

See, we are targeting in the short -- medium term, we are targeting 250 corporates. I think we should be able to achieve that by March '26. But this year, I think by March '25, we should be happy if we touch 60 corporate mark. But now the flow has started -- incremental volume per corporate has also increased. As I said that we've already done 70 lakh, today it's like 8th, but you already achieved a disbursement of INR 70 lakhs. But most of the disbursement happened after 15th because normally, the salaries come before 15th, and after 15th, employees normally withdraw from us. But this month, we've already seen a spurt, and we've already done about 70 lakh plus disbursement. So we are in line for what guidance again for INR 2 crores disbursement by March. Monthly disbursement INR 2 crores by March, we should be able to achieve earlier than that.

Okay, sir. And sir, my second question is that we are targeting customers base to around 5x. And looking into some loan kind of product sir, other than EWA, and through, I think, invoice discounting, sir. So is there any delinquency overview in there because it will be very different from EWA program.

Which one, which product you said?

Sir, I am telling about -- I am asking about some loan kind of product, sir, which we have been told there is small ticket size loan will be given or any new product...

Yes, yes, that's the -- Gurmeet would you like to take that?

And sir, on loan kind of product, sir? And is there any delinquency overview in there because it will be very different from EWA.

Gurmeet, would you like to take that?

Yes, please. I hear two questions. One is that we were talking about launching small ticket size personal loans for the digital EWA customers that we will be launching towards the end of the first quarter. That is not launched as yet. And like you very rightly said, as per the question understood that the delinquency could be slightly different. And yes, we understand the dynamics of EWA and for personal loan are different. So the eligibility criteria and the underwriting cycle here for personal loans will be definitely more stable than the EWA customers and there will also be price. Having said that, we have got what our selections and the operations organization. This is stable. We have to tie up for selection for both online and offline activity. So we are in the business of taking risk. So per our plan and our policy, we would make sure that whatever policy, the underwriting policy, and verification strategy that we have done. Don't lead us to this.

Okay, ma'am. I'm having another two questions but I will be queue, sir.

Next question comes from the line of Aayush Rathi with Aditya Birla Money.

Congratulations on a great set of numbers. So I'm relatively new to the company, so please pardon me if my question should be repetitive. So I'm interested on the EWA side. So what kind of growth can you expect on the EWA business over the next 3 years?

Sir, can you speak a little bit loudly, I can't hear you properly.

Yes. So my first question was on EWA business, what sort of growth can we expect from the EWA business over the next 3 years?

Okay. See, what we are looking at, what we are internally targeting is INR 2 crores disbursement, per month disbursement by March '25, and INR 15 crores disbursement by March '26. I think this INR 2 crores disbursement we should be able to reach this a little earlier. We won't have, I think, wait for the month of March. And the next year target is INR 15 crore disbursement per month.

Okay. Okay. On EWA only, so what kind of competitive advantage or moat do we have in this business? Like given that this is currently at a nascent stage. So how large is the opportunity size for the -- opportunity of the product, EWA? And what kind of moat do you have?

Talin, would like to take that?

Aayush, again, in India, this is a very nascent product. So it's just getting started. As sir mentioned that there's hardly any competition in the market. So the challenge here that comes with this is that there's lack of awareness for the product in the market. So as the time progresses, us and the competition together, as we onboard more corporates, the awareness of this spreads as well. So that helps us in onboarding and hence, expands our attainable market. And so we've seen a great adoption by this to whoever we pitch. We have a great conversion rate. So we just expect it to keep going as the time progresses.

So what stops the like stocks like if there's a huge opportunity. So what's the other players to come in, into this business? Do we have any kind of moat in this business to protect us from other?

So the main moat that we would have that our competition doesn't have, is that we ourselves are the lending partners and we are the technology and distribution partners as well. The entire fees from distribution to technology lending is us. Whereas if you see our competition, all of them have partnered with lenders behind. So technically, they are dependent on those lenders for funding. They themselves cannot fund the products since they're not NBFCs. And again, the lending partners are then depending on these technology partners to provide the distribution of the technology. Since these NBFCs do not have the technological capabilities to power such a product. But in our case, it's us doing the entire thing. So we've essentially found the sweet spot between lending, compliance and technology distribution. I think that gives us a first mover advantage into this market.

Aayush as you said, it is such a huge market. Now they not even scratched the surface. There are only four players right now in India market. If you look at U.S., Indonesia, Philippines, this product is growing at a very fast space over here. And India, I think it was a $900 billion market. And we have not even scratched the surface right now. There's a huge, huge opportunity waiting out over there.

Got it. Got it.

And the experience for the last 6, 7 months, we're doing is a fantastic business. We are putting a 0 delinquency.

Got it, sir. So just on the -- connecting question on this one. So what is the strategy to increase the penetration of this product since the product is very nascent right now. So how do you strategize to penetrate in the market?

So Aayush, we have a multipronged strategy here. So even today. So one, we have our own sales team deployed on the ground. Second, we have multiple partners who bring us these corporates, partners, people, again, who have met -- contacted high, high corporate network. And third, we keep partnering with a couple of HRMS firms, HR firms, who again in turn know HR of these respective corporates. So our idea is to just keep expanding this sales network, and we'll keep onboarding more corporates.

We recently held a function for Dera Bassi industrial town near Chandigarh, where about almost 90 manufacturing units participated. We have plan to organize more of these kind of functions, gatherings. We're planning something like similar stuff in Delhi also in next quarter. We got a very good response from there.

So like I'm just using my last question. So regarding the 8x to 10x PAT growth guidance, sir, what gives us the confidence in achieving this, particularly from an execution standpoint? So could you like share some of your thoughts on -- like 8x to 10x growth, if I'm not wrong, you have mentioned one of the con call.

In the next year. See, for the last 3 quarters, we are almost growing at rate of 100% on a year-on-year basis. And if you look at the 9% and 9 months performance vis-a-vis '24 performance is almost 108% growth. I think we should be able to continue to grow.

Sir, what has significantly changed in the company that we are able to give such a big guidance? That's my question actually. On ground, what has changed?

Aayush, if I might take it. So I think the of technology has really boosted our capabilities. So earlier -- if I mentioned earlier, all of our functions are manually given. But now we are moving to a completely technological base, where technology handles the bulk of our tasks. And that is increasing the operational efficiency as can be seen through our net margins as well.

Next question comes from the line of Abishek with AB Capital.

Yes. Just wanted to know at what rate will you be growing the EWA book like in the next 3 years, any number you can give percentage-wise?

See, what we're internally targeting is about INR 2 crores per month by March this year and about INR 15 crore plus, minus 10% per month by March '26.

Okay. So how much percentage of your entire book will be the EWA product, like eventually you want it to become?

See, we'll continue to grow our MSME as well as both of these. See, funding is not an issue with us. We have decent funding with us, and we can have a sufficient bank lines from State Bank. So money will not be issue. And money should not be an issue with us.

Not money. My question was like out of the entire book, how much percentage will EWA product be going forward?

Yes. Sanjay, if you could just let him know out of the total business volume that we would be doing.

We will continue to grow both the products. So I cannot put a percentage marks like that. So honestly, our major focus of EWA because the margins over here are very good, and as well as the ticket size is very small, and the risk factor involved is very low. So major focus is on EWA program, but we'll continue to grow our MSME as small ticket size loans simultaneously. So it would be difficult for me to put percentage -- targeting percentage on that as such.

And can I just add one thing here in response. So there are two things that we need to look at. One is what is the amount that we are going to be disbursing month-on-month towards a particular product and which Sanjay clearly mentioned that we're targeting going forward disbursing taking it to INR 15 crores for next year. You also have to keep this in mind that the second concept is asset on book. So end of the period, what is the total loan under management, your asset under management. EWA as a product has the USP where whatever that you will disperse in a particular month will be deducted from the salary in the following months. So EWA is more defined by the amount of disbursement that we will do because we end up collecting 100% in the next month itself. It is more like a 1-month loan. So the asset under management on EWA practically is nil or is equal to only 1 month. Whereas when it comes to a loan, which is driven by equated monthly installments and has a term of anything between 6 months to 36 months. That will -- that would stay on your book. And if you run off once the loan duration is complete. Does it, does that answer your question?

Yes, yes.

Next question comes from the line of Raj Saraf with [indiscernible].

So congratulations on the good set of numbers. Sir, initially, we have targeted like 100 or more than 100 corporates to be added to the Emerald EWA program. This is two quarters back, sir. So right now, we are targeting at 60. And by the opening statement or in some discussion on the question, sir, I just heard that we are targeting 250 corporates by the end of March FY '26. So this is 190 corporates in next year. So are we being very much optimistic, sir? Or we have some very concrete plan about that, sir?

So sir, if I might take that. So it's right. So we do have a plan for that. So again, our entire -- the last 8 to 9 months we have spent of strengthening our sales team our sales network. Now we're confident, we can say that, that entire thing is in place now. And now we can actually push the accelerator and onboard 10 to 15 corporates a month at ease. And coming to the guidance we've given until this financial year of '25 or 50 corporates. So we have actually focused more on the quality of corporates than the quantity. So as sir mentioned, we are targeting to touch INR 2 crores by March. So that was our initial target with 100 corporates as well. So we've seen that we have actually partnered with good level and good sort of corporates, and thereby, we are able to reach a monetary targets very well with even 60 corporates. So that's why we've been -- that's why we've pushed it. And as I mentioned, our sales network is in place now, so we can definitely push the accelerator for FY '26.

Okay, sir. And sir, one thing also, sir, this -- with your presentation when I'm going through, I see we are trying to venture into something other -- some other businesses like invoice discounting. So what could be the yield percentage in this? And what could be the risk in this, sir?

Gurmeet, would you like to take that?

Sir, in word discounting, so your presentation mentioned that we are looking into some businesses like MSME loans and invoice discounting. So what is the yield in this sir, and the risk factor in this?

Yield is about 18%. Yes, Gurmeet.

Yes. Yes. The yield is about 18%. Risk, we will be coming back to you because we are evaluating the data. One of the partners with whom we would like to do the pilot partnership. And once we evaluate that particular data, we will get to know what is the probability of -- what percentage of the portfolio the payment by the merchant is getting delayed by how many days. And we will look at what percentage of that particular portfolio may be construed as it was by default. And accordingly, we'll setting what could be the default percentage. And similarly, like Sanjay said that average prices could be 18%, depending upon what is the risk associated, we may also do a small risk-based pricing fundamentals. So it may be a range, which could be 18% and it can go also up to about 21%.

Okay. And we have started a small token loan, I think Q3 onwards only. So have you started this? Or if we have started already, then what is the contribution to this -- to the revenue and the profitability right now, ma'am?

You're talking about the small ticket size personal loan?

Yes, ma'am.

I think we answered that we have not yet launched it. We plan to launch it towards the end of Q4 now.

Okay. And right now, what is the run rate for EWA, right? Because the 2 quarter back in June, I think the run rate was INR 1 crore per month. So what is right now the run rate?

INR 1.5 crores right now. Outstanding as of INR 1.5 crores.

Okay. And we are targeting to end this financial year by INR 2 crores.

Yes, yes. No, I think we should be able to see that next month only. If all goes well, by Feb only should be able to touch that goal. As I said, we've already done INR 70 lakhs till now in this month.

Okay. And are we standing by the -- sorry?

Yes, please. Please, please go ahead.

Sir, just asking about the run rate only, sir, if you can give some details about that, that it's okay, so please complete your sentence.

See, INR 70 lakhs is already done in the first 8 days. Normally, this is low period till 1st to 15 that will also be on the lower side. And with increase after 15th. But in this month, we've already seen substantial withdrawal in the first 8 days only.

Okay, sir. And sir, are we standing by your guidance that is for 3 years -- in next 3 years, PAT at 8x to 10x.

I think so. I think so. So if you look at our past history for the last 9 months, we have given 100% growth year-on-year basis in every quarter. We should be able to achieve that.

Next question comes from the line of Gaurav with Code Advisors.

Congratulations on a great set of numbers. My first question is what is the breakup of the total income. How much of that comes from the EWA segment versus the non-EWA segment? And what is that projected for the end of this year?

See, as of for the first 9 months, our distribution income is right now almost 50% and MSME loans is 48% and EWA is 2%. But I think going forward, EWA will increase at a much high rate. But for the first 9 months, 50% is from a distribution -- fee income from distribution business, 48% is the interest income from MSME business and about 2% is from EWA.

Got it. The second question that I had is, so you mentioned that you're going to be touching about INR 15 crores in revenue over the next year or...

We will finish with monthly disbursement.

Yes, the way the disbursement works there it's a percentage fee of the total loans, so let's say, about 1.5% or maybe 20% annually. So would it be fair to assume that, that would be a INR 3 crore revenue on an annual basis if you touch INR 15 crore disbursement on a monthly basis?

Yes, yes.

Got it. And then so the 8x to 10x growth, is that considered only for the EWA segment or that for the business as a whole?

No, look, we are counting it as a business as a whole, not for that particular segment. So MSME book and the distribution income is also increasing. We have tied up with new partners also for distribution business also. We recently got tied up with Avanse. We have got the corporate DSA shift for doing loans for schools.

Next question comes from the line of Priyam Shah with [ Trinatra ] Asset Management.

So as we scale up EWA, will we lean more towards bank funding? Or are we looking to dilute more at some point? And also what will be the cost of our funds approximately?

See, we got limits from State Bank at 10.95%. And we'll continue on all the fronts. What is the most optimal we'll do that.

All right. And sir, the second question is that on our legacy business, especially the MSME funding, we've had 0 NPA for several quarters now. But is going through a slightly rough cycle and we have been reporting NPA, so can you just speak about our risk management practices for a minute? What is it that we distinctly that has ensured 0 NPAs and how scalable that is?

Gurmeet, would you like to take that?

Yes, Sanjay, sure. So at this particular time, we a Phase to what are the for which we acquired this particular business for a private customer. So currently, we looking at what is the of book that we would have to this year. So given that our initial selection criteria, the eligibility criteria as we have scanned for the MSME coupled with our underwriting, retail underwriting practices and the personal meeting with the customer as well, has ensured that our delinquency -- there is no NPA. Now when we talk about there's no NPA, which was talked about our robust election practices and follow-up -- more than 95% of our customers end up paying us on the [indiscernible], of the remaining 5%, we end up getting the payment, payment with some maximum delay of about [indiscernible]. So currently, given the number, the target numbers that we plan to achieve for this year and coupled with strong screening at the incoming side, coupled with good underwriting and then robust selection practices to ensure that the NPA, we don't get an NPA.

So there is INR 10 lakhs-- or is that -- is it more? Or is it less for MSME?

Sanjay what is our average ticket size for this particular quarter?

INR 35 lakhs. Yes.

So it is not actually an MSME. So we are actually looking at more of an estimate.

Next question comes from the line of Rahil Shah with Crown Capital.

So first question is, I believe in the last call, which was a webinar, you had mentioned that out of 34 corporates, 25 were active and 9 should have been up by Jan. So what's the status now? Are they all active?

See, as of the -- as of 31st December, we have tied up with 40 corporates and 31 are active. And 9 should -- the balance 9 should start. And another for like -- we're targeting 20 more corporates by March end. I think we should be able to achieve that target.

No but what's the situation with those 9, which are inactive, like for this?

Yes, we are at different levels of integration now.

Okay. So can we expect them to be active by the year-end as well?

Yes, yes, yes. I think hopefully, Talin I think they should start by this month only, balance 9 or no?

Yes, it is, of course. So we're just completing the onboarding formalities. And they should be live by the month of -- the end of this month.

Right. Okay. And you also mentioned a major chunk of the income ahead will come from this EWA vertical. And the split will change in its favor. So what will be the percentage of total income going ahead, if you can give a...

Percentage of total income?

Total income, like how much -- how much will it be from the EWA vertical?

See, our targets, as set mentioned earlier, this achieved INR 2 crores per month by March. And by next year, INR 15 crores per month by March '26. So -- plus there's a lot of cross-selling huge income, which will come from sourcing this business. Already seeing the benefits of the cross-selling.

No, no, that I understand. You mentioned it is 2% of the total income right now, right?

2% of INR 15 crores per month.

Of just INR 15 crores.

Yes. See average age revenue is anywhere between 1.5% to 2% from disbursement of EWA loan.

Okay. And lastly, again, in the last webinar call, you had mentioned the MSME loan book at that time was INR 55 crores. What is it as of today? And what kind of growth rate one should expect going ahead?

Today, I think it's about INR 63 crores.

63 crores, 6-3. Any outlook or guidance on that going ahead, what kind of growth...

That's growing. That's organic -- being on organic -- going good organically. We are not taking an giving the market scenario. We're not taking any undue risk. Prudently we are all scrutinizing all the cases. [Foreign Language] We don't want to take that route. It's okay. So going like steadily on that, not so aggressive.

Next question comes from the line of Chirag Pachisia from SKP Securities.

First of all, congratulations there for the fantastic set of numbers. So my question is, since it's mentioned in the PPT that EWA margins are 18% to 30%. It's not the interest, but service fee, right?

Yes. Yes.

So what can they like...

Come again?

How much margin can be expected to be like once they're steady, like can it become 25%?

Gurmeet, would you like to take that?

Sorry, can you please repeat your question?

My question is, I know it's hard to pinpoint but since it's mentioned, EWA margins are 18% to 30%. So on a steady basis, let's say, in 1 year or 2 years or so, can it become -- like how much can we expect those margins to be?

So we will try to normalize it at roughly 24% P.A.

Okay, 24%.

Yes.

Our next question comes from the line of Sunil Patel, an individual investor.

Congratulations for the strong quarter. I just want to know the interest spread rate for MSME loans, and I have some doubt about EWA. Is there any correlation between the growth of EWA and economy slowdown?

Come again, Sunil, your margin -- the lending on an average rate of MSME is 18%.

No, I just want to talk spread. Interest rate spread for MSME.

7%. We get bank funding at 10.95%.

Okay. And is there any correlation between EWA and growth and economic slowdown?

I don't think this -- there shouldn't be any correlation. Gurmeet?

We're asking for the correlation between what?

Economic slowdown and EWA expansion growth.

I doubt it because at this particular point of time, when you talk about an economic slowdown, which will -- it depends upon what kind of sectors are you targeting. So if you look at the kind of sectors that we would like to kind of partner with are the companies who have got employees which are more than a certain number. They have been existing business for a certain number of years. They're contributing to the provident fund. They have been year-on-year having stable and they are profit-making organization. So it again depends upon what is going to be our target employer. So we don't see that particular slowdown impacting based on the business strategy or the acquisition strategy that we have set.

So it's a huge market.

Yes, it's a huge market. Huge, huge potential. They're not even scratching the surface. India, nobody scratch the surface. Many billion-dollar market.

Next question comes from the line of Niraj Kunjkaran with [ Sarthi. ]

Very enthused by your performance in Q3. I have some basic questions if you could help me understand this EWA product. And my questions are addressed to the CFO, please.

Gurmeet, would you like to take that? Can you repeat the question, please?

Yes. Yes. So we did roughly INR 5.7 crores worth of business in the Q3. And out of this, how much is our realization from EWA? That is my first question.

See, of the total revenue for the first 9 months, 48% is from MSME book, 50% is from fee income from our distribution business and 2% is from EWA for the first 9 months.

Perfect. Perfect. So is it been increasing from quarter 1 to quarter 2 to quarter 3, and hence, what have we achieved in quarter 3, as a percentage as you just told me?

EWA business is increasing now, EWA business is increasing on a quarter-on-quarter basis. And what we expect going forward also the percentage of EWA...

Could you give me a sense of the increase? Because that is where my question is sir. That is what my question is addressed to. Could you give me a sense as to how we are increasing our EWA product from Q1, Q2, Q3, just a sense, nothing -- I'm not looking at hard numbers, just a sense, please?

So we're increasing the number of corporates and -- plus one we're adding number of corporates. Number two, we're also increasing the penetration in the particular corporate. We have set up a 3 member the telecalling team also, where we are directly calling the employees.

How many people own telecalling?

3 people. As of the date, 3 people. But we'll be invoice going forward, including the team also.

Okay. So I'm still wanting in my understanding over there but I will pass this and I just hope someone I can connect with someone and clarify my mind on this. My second question is, you said that in the current month, with just 8 days, you have done INR 70 lakhs of EWA disbursement. That's what you said, sir?

Correct, correct, correct.

And you aim that we will hit a monthly run rate of INR 2 crores by what you call, March of '25. We want to be consistently disbursing INR 2 crores every month by March of '25. That is what you alluded, sir?

Our target is INR 2 crores by March '25 but we'll keep those increasing that because next year target is INR 14 crores.

Now the question is sir -- now the question is, how do I understand this as an investor? So let me put it this way. Can I assume that INR 2 crores is equal to 100-odd disbursements of an average loan of around 20,000. Can I assume that?

Yes, average ticket size is 18,000, 20,000, right?

20,000, right.

Yes. Yes. So I'm looking at a ballpark understanding. So that's what I'm trying to develop, please help me out over.

So when we look at INR 2 crores, I can break it down on an average to 20 -- 100 disbursements of 20,000 each to the subscriber.

Sorry, 1,000 transactions, not 100.

Okay. 1,000 transactions. Yes, yes. And on a 20,000, we get around to 1.5 to 2.5. So roughly, let me estimate that to be around 500 as transaction fees that you charge? And that into a number of disbursements gives me a 5 lakh run rate from EWA on a monthly basis. Is my understanding correct, sir?

Yes. Yes, EWA is about 1.5%, 2%, yes.

So this is one of the issues that I wanted to get cleared. I'm very thankful for response. Regarding the first part, when I asked you to the growth rate from Q1 to Q2 to Q3, how do we take this forward? Because I'm not getting a sense. So I get the thing that you are pushing the number of corporates and you've reached 40 corporates. And you are wanting to get 60 corporates by end of this financial year. And particular amount you just mentioned some time ago by the end of the next financial year. That is very good, sir, you're putting up a sales team, telephone caller team, everything is growing hunky dory, sir. But how effective have we been in the first 2, 3 years is a sense, which I want to look at?

Sir, can you come again?

In the growth.

So what is the Q1 disbursal, so Talin if you can just tell him what is the Q1 disbursement, Q2 disbursement and now the Q3 disbursal, right? That is growth trajectory.

Perhaps you can connect later because I have to run all these numbers from system once. So we can see the entire disbursal sheet but I'll have to break quarter-wise and present it at a later date, is that to be But on a month-on-month growth, we are seeing close to 12% to 13% growth on a monthly basis in amount of disbursements. And that's been the trend ever since we did the launch in April last year.

That's a wonderful response. Can I make a small suggestion, please?

Sure.

This is a parameter, which people like me who have tremendous interest in the company would want to monitor. So can it come up in some form in the presentations?

Yes, yes. Definitely, why not.

Because if this comes, a lot of questions from people like me, they get answered in the presentation itself.

You want month-on-month growth. You want to see month on growth...

So month-on-month, how EWA is growing in terms of disbursements and in transactions would be a great help as part of the presentation, sir.

Yes, yes, sure, definitely, definitely. Talin, just put it on a month-on-month increase in business.

Sure, I'll get the team on it.

Next question comes from the line of Aditya Sanghani, an Individual Investor.

Congratulations on the great set of numbers. My question is about this new personal loan product like it opens significant upselling opportunity right? So is there any guidance in terms of revenue or PAT for this personal loan product?

We haven't launched it -- so as ma'am mentioned earlier, we haven't launched it yet. So I think we are just running a few metrics based on risk and return. And once everything is in place, then we'll be looking to launch it maybe by the end of this quarter or perhaps in next quarter. I think then we will be in a better position to answer your question.

Okay. Okay. And secondly, I wanted to ask on that gift card announcement that was like we have a gift card for Amazon and other things. So are the margins similar in that? Or is there some difference?

Margins are more or less similar. So in EWA we make 1.5%, 2%. There we make 2.5%, 3% roughly.

Okay. And is it a significant contributor to the -- in terms of sales, that gift card thing.

So we're seeing some engagement there. We haven't been pushing it aggressively but we'll begin to -- in some time, just been focusing on business expansion with a number of corporate increases.

Next question comes from the line of Sheikh Mujib Ahmed, an individual investor.

Sir, just I would like to congratulate, first of all, for good numbers. And my question is, you told that from next year onwards every month you are going to make around INR 15 crores disbursement in this Earned Wage Access, correct? So...

Not immediately from next -- what we're targeting is March '26. By March end of the year, we plan to reach a target of INR 15 crore disbursement per month.

By end of the March '26, that gradually it will be increased.

Is like from INR 2 crores to INR 15 crores, will not jump in 1 month. But gradually, we plan to reach INR 15 crores and will be huge, INR 15 multiplied by 12 for next year, we tend to about INR 180 crores of disbursement.

And what kind of PAT we are expecting with this INR 15 crores per month disbursement by March '26?

For INR 15 crores, 1.5% -- anywhere between 1.5% to 2%, plus the revenue from our cross-selling opportunities.

Okay. Okay. Sir, one more thing when -- in your business when you're calculating as revenue that whatever the -- in the revenue part, in the profit and loss statement, the revenue part here means you are calculating the disbursement whatever we are doing, does it go as a revenue there?

No, no, no. Income we earn. Processing fee we charge from the client, that comes into the revenue, not the disbursement amount.

Next question comes from the line of Jagdesh Sharma, an individual investor.

Congratulations for wonderful set of numbers. I have two questions. Both are related. The first one is what is the TAM of this early access program. If my understanding is right, it is $1 billion, right?

Come again. I can't hear you properly, please. Can you repeat the question?

What is the total addressable market for this early access program, EWA access program? It is $1 billion, right?

No, no, no. It's much more than that. Talin, what is number?

It's much more than $1 billion. I mean the salary market of India is close to about INR 90 lakh crores per annum in INR. So again, the total addressable would be that much, again, but again, so we're not -- that's the total salary market of India. And again, our target -- so that is total addressable market. So the addressable market we are targeting in the next 3 years would be to touch close to about INR 40 crores to INR 50 crores in a monthly disbursement, which will roughly be close to almost INR 600 crores per annum then.

So my second question was, if this...

Coming next 2 to 3 years.

2 to 3 year, yes, yes, understood. My second question was...

It's a huge market. Look, this a huge market. And what we have seen in the last 9 months, it's almost risk-free. Nobody would like to default. No employer would like to default on his employee salary.

Correct. Correct. So my second question was if this product has 0 NPA -- if this product has 0 NPA business model, when you are the inventorying into another businesses where we can incur some NPA. That is my second question.

Gurmeet, would you like to take that?

Yes. We are in the lending business, and if you have to, and we are also in the risk-taking business. So if you do not take risk, you do not get work, you do not get greater returns. How do you keep the employee engaged, if you are not able to offer them more products that they can use at different milestones in their life. So while the Earned Wage Access can give them an access to their own salary early to tide over an immediate emergency or a requirement, what happens is this particular guy needs, let's say, INR 100,000 for his house renovation or to pay for his children fee. So then you are saying that the same customer is now going to go out, and he will seek this particular amount from another bank where there is going to be the underwriting criteria, the rate of interest. And I may end up losing that opportunity to earn from this customer who is already being tested by me.

Okay. Okay. So my question -- and the second part of this question, same question is if you are giving this cross-sell or if you're cross-selling the other products to the same early wage program and all these things, will the employee incur the interest of the employer will incur the interest? That is my part of -- part B of the same question.

As an EWA product, so EWA product is a nil-interest product that we charge a disbursement fee from the employee. This is a loan or a facility which has been taken by the employee and the so will be the person now. The repayment of that particular monthly installment would be done by the employer by deducting it from the employee's salary. So we are talking about a repayment mode, which safeguard us from a higher operation risk.

Correct. So my question is your cross-selling few of the new products, right, that is -- I'm asking who will repay the amount, whether the employee or employer for this cross-selling personal loans and everything, which you're about to do it?

It will be borne by the employee, right? The loan is being taken by the employee. So the repayment...

But who will repay, whether it is similar to our Early Wage Access program. That is my question.

It will be similar to our Early Wage Access, where the employer would be -- employee will consent for the employer to deduct the monthly installment from his salary and give it to EWA.

Okay. What is the interest rate for the Early Wage Access program, ma'am, which we are charging?

Talin, what is the interest rate range that we are charging for EWA?

We do not charge interest, right? We only charge the processing fee ranging 1.5% to 2%.

Next question comes from the line of Binoy Bhatt, an individual investor.

Sir, nice set of numbers. Sir, just wanted to ask you, fee-based income has increased a lot this time. So it is because of the gold loan? Or what was that which gave that much fee-based income growth?

Okay. Distribution business is also growing. So that we have partnered with Avanse and we are partnering with one more bank, for gold loans. And existing fee income is also...

That is mainly because of the gold loans, right, sir?

Gold loans, we're doing housing loans, home loans, unsecured loans also. It's a mix of all.

It's a mix of all. And sir, do you expect this kind of growth in this business also because what was my understanding is that people -- retail people are in stress. So they have started picking more gold loan. That was my understanding. I could be wrong also. So what kind of growth do you expect in this business?

It not really that. The overall business is growing as such.

So you are expecting similar growth in this area also.

As I think this new -- two new partnership adds to -- add to the top line as well as the bottom line. They should fortify I think Feb onwards, they'll just start to fortifying both these new partnerships.

Okay. So that will also add on.

Add-on, yes. Because for Avanse we've got corporate DSA. In India, I think there were just 3 or 4 corporate DSAs.

Okay. Okay. So that's -- they have a scope to grow.

Yes, we should be. Yes.

Okay. The second thing I want to ask [Foreign Language] products wise how much is API integration and everything.

The entire EWA itself is automated, through and through. The entire onboarding journey to disbursement or to repayment reconciliation, the entire thing is automated.

[Foreign Language].

Yes, yes. [Foreign Language] All of these are API-driven. In fact, the disbursement is completely API-driven. So if anyone even makes a -- with all requested 2 am outside the banking hours. The question will be processed immediately.

[Foreign Language] Like how much time it takes to integrate a new client?

It depends from vendor to vendor. But on average, it takes about a week.

Okay. To take about a week, and that part is manual. Once that is done, so then everything is automated through the API, I think.

Yes, absolutely.

Super. I think this thing is going great. And just one more question, this coupon thing. So what kind of growth you're expecting because of this? And I think you say that you are not focusing much right now, but can you throw some light on that area?

Also, we actually expect that by the end of next financial year, the coupon would be close to 15% to 20% of our overall disbursements in EWA.

Okay. 15% to 20%.

Yes, it can be more, but this is what we're expecting. We'll not target audience and their usage of EWA. We're expecting about 15% to 20% shares would be gift cards and vouchers.

Next question comes from the line of D.S. Inder, an individual investor.

And my all questions have been answered, sir. And once again, congratulations for good numbers and best wishes.

Thank you. Due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to [ Samiksha Ramteke ] for closing comments.

Thank you, everyone, for joining the conference call of Emerald Finance Limited. If you have any query, you can write to us [email protected]. Thanks, again. Thank you for joining.

Thank you very much, everyone.

Thank you. On behalf of Kirin Advisors Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.