Emerald Finance Limited (538882) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Emerald Finance Limited Q4 FY '25 Earnings Conference Call, hosted by Kirin Advisors Private Limited. [Operator Instructions] Please note that this conference is being recorded and is for 1 hour. I now hand the conference over to Ms. Chandni. Thank you, and over to you, ma'am.

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

Good evening, everyone. Thank you for joining us today for Emerald Finance Limited Earnings Call for Q4 FY '25 and the full financial year FY '25. With me are Mr. Gurmeet Kaur, who is our Chief Risk Adviser; and Mr. Talin Aggarwal, who is Head of Business Development. Together, the three of us are pleased to walk you through our financial performance and key business developments for the quarter and the full year. FY '25 has been a transformative year for our company. We have continued to strengthen our position as a technology-driven [ nondeposit ] taking NBFC. Our flagship Early Wage Access product is gaining quite a good momentum and traction in the market. As on March 31, '25, we have successfully onboarded [ 62 ] partnerships under our [ EWA ] program. This program, which is quite prevalent in U.S., Europe and now getting a lot of traction Indonesia and Philippines enables employees to withdraw a portion of their earned salary before their payday. In the month of March, against the projection of INR 2 crores, we disbursed INR 3 crore plus in the last month of the year with an average ticket size of INR 25,000. Now we are seeing daily active users about 30 every day. We plan to scale the number of partnerships from 50 [ to 150 ] partners during the current financial year. As far as our financial performance is concerned for the quarter 4, our total income was INR 6.5 crores vis-a-vis INR 3.9 crores for the similar quarter in FY '24. And our net profit jumped to INR 2.65 crores vis-a-vis INR 1.14 crores, which is a jump of almost 132%. As for the stand-alone basis, our total income was INR 4.6 crores vis-a-vis INR 2.02 crores last year. And our net profit jumped to INR 2.16 crores in this quarter on a stand-alone basis vis-a-vis INR 0.63 crores, which is a jump of almost 246%. On a consolidated basis for the full year, our total income was INR 21.63 crores vis-a-vis INR 13.36 crores last year. And our net profit was INR 8.89 crores vis-a-vis INR 4.14 crores last year with a jump of almost [ 140% ]. I'm very happy to report in this financial year, our NPLs are absolutely zero. In fact, we had very nominal NPLs in the last 3 years also, which was less than 0.5 in the last corresponding 3 years. But this year was absolutely zero, closed the year with zero NPA. In terms of revenue composition, 48% comes from -- on the consolidated balance sheet, 48% comes from interest income and the rest comes from fees and processing fees. The fees and processing fees includes three components. One is our income from DSA business. Second is processing fees what we charge to our business loan clients. And third is the processing fees what we charge from our EWA customers. In the fourth quarter, we raised INR 10.2 crores through [ transition allotment ]. We issued 7.6 lakh equity shares at INR 131 each. These were subscribed mainly by the promoters and same capital fund Mauritius. Also listed by Mr. Rajesh Jain, Mr. Rajesh Jain was a partner of KPMG in India and Africa, and he was the one who set up [ Grant Thornton ] in India. Also one of the [ lotteries ] was Mr. Vishnu Sultania. Mr. Sultania is adviser to United Nations and is recognized among the top 100 CFOs of India. We are also pleased to announce a strategic partnership with [ Bay Patty Limited ], Singapore for invoice discounting. This initiative will help us to support suppliers of large corporates such as JSW Steel, [ Daisy, PVR ], Reckitt & Colman, [ Haldiram's ], among others. Looking ahead, we remain focused on expanding the EWA product and strengthening our technology infrastructure. I'm very happy to inform you that our mobile app has now been approved by the Play Store, and we'll be shortly launching it for the -- our existing clients. We are very optimistic about the NBFC industry as a whole, which holds about 22% of the share of the credit market and is projected to grow at 17% in FY '25. India's strong macroeconomic fundamentals, rising rural incomes and the government's continued push for financial inclusion provide a very favorable environment for future growth. Digital lending is expected to account for 60% of the Indian fintech market by 2030. And we at Emerald, I think we are quite well positioned to capitalize on this opportunity. Financial year '25 has been a year of strategic execution, financial growth and operational excellence. With a strong foundation in place and a clear roadmap ahead, we are quite optimistic on this current financial '26-'27. I'm now happy to invite questions from you all, please. Thank you once again for your time and continued support.

[Operator Instructions] The first question is from the line of Hitesh Randhawa from CaGR Quest Capital.

My question is on the kind of technology actually. Kind of in one of the previous con calls, I had read that you had created your technology platform with the help of a few consultants, et cetera. So my question is kind of -- you did say that it is entirely owned by you, but kind of what is our IT team strength actually currently?

Our IT team is of 5 people as of now.

5 people as of now.

Technology has been driven entirely by in-house only.

Okay. Okay. And second, basically, it covers everything, right? So can you just -- would you be able to say -- I know it's an earnings call, but would you be able to speak a bit more about the technology stack, et cetera, that basis which we have built this particular platform and maybe our kind of -- do we have our business continuity plans, et cetera, disaster recovery plans, et cetera, everything in place, I believe?

If I may take that.

Yes, Talin.

Hitesh, as sir mentioned, the entire technology has been developed in-house. And we give a lot of emphasis on data security, data privacy and continuation of business, right. So in case anything happens, so we have all policies drafted. We have all the training in place. So if tomorrow, something -- by God, if something is to happen to our technology or our data, we are very well backed up to immediately resume continuity of business. We'll just maybe switch our servers in case the server is the issue. So in case of any black swan event, we can go live with the entire data in less than 12 hours. So we follow all of IT policy norms of the RBI and other bodies which we can, just to ensure safety of our data.

Right. Okay. And kind of in terms of when we -- kind of around EWA actually, kind of whenever we kind of issued funds actually for this particular EWA, the funds are issued against the employer or the company basically? So if it is an NPA, how do we classify an NPA? Would it be against the employer or would it be against the employee?

Against the employee. So it's technically a personal loan taken by the employee from us. In case of an NPA, tomorrow, the employee would be liable to pay us back.

Okay. Okay. And normally, what is the kind of duration that we assign to such loans actually?

About 30 days.

Maximum it's 30 days, okay.

Correct. So any loan taken in this month would be deducted from the next payroll.

Right. Okay. And lastly, I just wanted your view on one of the things that you kind of -- I know maybe it might be a bit too soon to talk about this, but what is the probability, possibility of maybe a bank acquiring an EWA start-up and kind of integrating its EWA platform into their own banking platforms or applications? The reason being that they have the data, right? They have the salary accounts with them. So what do you see around the possibility of something like that?

Gurmeet sir, would you like to take that?

Yes, Talin. So Hitesh, so we need to be understanding the dynamics of the Earned Wages Access lending program vis-a-vis how it does not fit into the banking [ problem ]. So of course, all the banks have the salary accounts of the users. And based on what are the salary credit that's happening, they also have the loan program for the salary deployed, right? And they can give them an EMI or a term loan and on a certain rate of interest and charging some processing fees. So one of the key regulation or guidelines by RBI for the banks is that they cannot give a 0% loan. So even as a product has a nil interest, however, it disburse -- we charge a fee at the time of disbursement. It's a percentage of the disbursal amount which the user [ remunerate ]. So there's an APR. So this one does not fit in line with the banks can do and what the banks cannot do, right, because it is about the cash, which is into the savings account or from various customers like us, and that money is going to get deployed into lending. And if it does not give them a rate of interest, that particular policy is not acceptable to them. Yes. The second thing is that this particular product is an operationally very high technology-dependent product. And the ticket size is so small that the interest of the bank for -- on running such a product is not there. The third thing is that most of the public sector banks in the country, they are also required to support the government's various subsidized schemes. So they have a lot of their [ PSL ] portfolio that they work on. And this particular product in a vision board and from an RBI guidelines does not fit in their scheme of [ things ].

Sure. And lastly, kind of my question is around the kind of investments that we are looking forward over to make in FY '26. By this, what I mean is that we got a target of onboarding to [ 250 ] corporate clients by the end of FY '26. And I'm not sure if there are going to be any further maybe technology-related spends. So basically, are we going to -- most probably we're going to put more, kind of people on the field, et cetera or something on those lines to get these corporates onboarded. So overall, what are the kind of investments that we are looking to make in FY '26? And if you could just quantify as per segment that, okay, sales and marketing maybe X amount and technology X amount, branch expansion maybe Y amount, something on those lines, please?

We won't want to be quantifying it because, again, we believe the quantification here would just limit our ability to grow, right? So as the business scales, accordingly, the supporting staff will scale. But we can tell you that we will be, one, investing in, as you mentioned, sales and marketing; second, in data analytics; and third, in compliance because as the business grows, our back-end compliance needs to be much, much stronger to be able to manage. And we'll need some data analytics people just to be able to analyze all the data we've been churning on a daily basis now to see where we can improve more.

Right. Okay. And would there be more -- would there be investments into physical branches as well by any chance? And how many branches et cetera?

So I mentioned, so us being a very technology-heavy system, so we believe in centralized operations from our head office with a sales team deployed pan-India.

We already recruited one person in Bombay.

[Operator Instructions] The next question is from the line of Vishal Dudhwala from Trinetra Asset Managers.

Yes. So first question was, how Emerald Finance is different from its competitor in sense of instant salary access, financial wellness tool and some HRMS integrations?

Can you please repeat the question?

So my question was, how Emerald Finance is different from its competitor in sense of instant salary access as well as financial wellness tools and HRMS integration? Like how and what technology did -- Emerald is using?

So if I may answer that. So in terms of how we are different from a competition, I'll give you entire holistic view how we differ ourselves from the competition. So there are two things here now. So one, the entire -- from distribution to technology to lending, the entire supply chain, so to say, is owned by us. So in this case, there is no fintech or an NSP partnership sort of a model here, right, which a lot of our competitors follow because there are fintechs who do not have a lending license. But in our case, the entire supply chain is one owned by us. That gives us immense control over the entire piece. And so we're not dependent on any third party to execute any of the services here. Second, we act as a one-stop solution for all financing needs of a corporate and of an employee through our subsidiary, ShubhBank.com. So if anyone, let's say, tomorrow does not want a salary advance, but they want a bigger loan, they want a home loan, they want a car loan or a company wants a business loan; we're very easily able to facilitate that through the subsidiary itself. So that essentially makes us a financial powerhouse or a financial package sort of a solution to every company we pitch to. And that network of ShubhBank has been built by almost 30 years of its existence in the market, again, which none of our competitors are remotely that old.

Okay. Got the point. So basically, we are using EWA as a future creditability system, right?

So you can see, we are using EWA as a customer acquisition tool.

The next question is from the line of Khush Kothari from FEC SPIT.

First of all, congratulations on stellar results. I want to understand, why are we entering into the new vertical, the bill/invoice discounting partnership?

So Khush, as I just mentioned, so we are essentially trying to build a synergy around financing to employers and employees. So we found that bill discounting is a very lucrative and very attractive to the kind of companies we are putting EWA to. So this happens to be a natural cross-sell to them. So our cost of acquisition goes up dramatically because of EWA. And our underwriting is already done on the corporate because of EWA, right? So that makes it very lucrative for us to sort of cross-sell these other products to them.

Understood. And one more thing which I would like to understand is what is our penetration in these corporates where we are targeting our EWA. So we have roughly 60 partnerships now, right?

Currently it's about [ 75 ] now. Now it's almost [ 75 ] plus.

Okay. So out of these companies, what percentage pool of the employees are using our product and what is the repeat rate? And are we looking to cross-sell the employees some other products such as insurance or maybe something else?

So on a portfolio level, we see an engagement of close to 10% to 12% and a repeat rate of close to 80% to 85%. So essentially, until a person doesn't leave the corporate, they tend to use our facility if they already used it once. And in terms of cross-sell, again, we are looking to -- we've been looking to cross-sell higher-ticket loans to them through ShubhBank, so personal loans, vehicle loans in case anyone needs.

Got it. Got it. But nothing apart from -- as in many apps are -- I guess some of our competitors are trying to, let's say, sell mutual fund or some other products...

We'll definitely explore as the opportunity comes by, we'll be more than happy to explore.

The next question is from the line of Aman Baheti from InCred Capital.

Congratulations on a great set of numbers and very, very happy to get some answers from you. So first thing on the loan book. Can you just give me a breakdown of the loan book in terms of retail, MSME, gold, et cetera?

Of the total -- so of almost INR 80 crores, INR 77 crores is business loan, about INR 3 crores EWA, as of now.

Okay, sir. And I mean we have -- sorry?

It is on 31st March.

Okay, as of 31st March. Got it. And we have raised a substantial amount through preference allotments. So around INR 17 crores, I think, we have cash in our bank. In what terms are we planning to use it through the fiscal year?

See, out of the INR 17 crores, INR 10 crores was received on 31st March, a preferential issue closed on 31st March. So as of now, we almost utilized about INR 14 crores out of that, and only INR 3 crores are remaining in the bank.

Okay. So INR 3 crores are -- I mean, so I'm just trying to understand how will -- so actually, this EWA loan is for 30 days. So how do we manage our money rotation there because the loan term is very small, right?

Yes, yes. See, we put the surplus funds in the SBI liquid fund. There, we get about 7%, the short-term funds. SBI is the principal banker. So whatever additional funds are there, we put in the short-term liquid fund over there. There, we get about [ 7% ]. But this monthly like on 30th -- from 30th onwards, the first or second, we received back all the money which we [ lended ] during the month, and that rotation keeps on going.

Sorry, if I may just add a point in there. So in the last 12 months, we have actually collected a lot of transaction data. And so we essentially have the spread of when how much money is utilized in a given month. So accordingly, we're able to manage our cash flows accordingly.

That's great to hear. And one last question. Any kind of guidance you want to give? I mean, we know that the target is acquiring 200 to 250 corporates this fiscal year. So in terms of disbursement, any kind of targets we have for this fiscal year?

See, we are targeting about 250 corporates. I think if we should be able to achieve 250, we should have about INR 15 crores of disbursement by next year-end, March [ '26 ].

So in terms of our top line and bottom line, can we expect a similar growth trajectory going forward in the next couple of years?

Hopefully, yes. See, our major focus is on acquiring customers, entering into more and more partnerships and then expanding our -- via partnership program. Once we achieve this, automatically the growth will come.

Any large corporate -- sorry.

More than the growth, our major focus is on keeping delinquencies very low. Like with disbursed INR 3 crores in the month of March, we could have easily taken to INR 4.5 crores. But company-wise, we are restricting company-wise limits. Even if a certain, let's say, company is asking for INR 50 lakhs limit, we are just restricting to INR 25 lakhs or INR 20 lakhs. We don't want to take too much exposure on a single corporate.

Got it, sir. Got it. And any large corporate in our pipeline that we wish to onboard in the next quarters?

Talks to me -- a lot of corporates right now. As and when it happens, we'll inform you accordingly. I would not like to disclose names at this stage, please.

[Operator Instructions] The next question is from the line of Ankur Aggarwal from Motozak LLP.

I wanted to know like out of our total loan portfolio, how much is secured and how much unsecured?

The entire amount is unsecured, even if you consider -- even also if we are taking unsecured, so technically it's secured by the employer. But the entire INR 80 crore portfolio is unsecured.

The products that you cross-sell, they are also unsecured loan products, not secured, right?

Come again?

Sir, you cross-sell some products to EWA customers, right? So all the products that you sell are unsecured in nature?

No, see, cross-selling is done through our own books also plus though our DSA business. In case of DSA business, we don't carry any risk in our books because in that case, we only receive fee income from the lender. As far as the [ old ] books are concerned, we have not taken any property collateral from any of our clients. That way, you can say technically, it's all unsecured.

Okay. And sir, like the bill discounting product that you are talking about, so like I'm from Jaipur and in my local market, I've seen very many small NBFCs started and then closed it because it's like a little risky, what I have understood. So sir, what is your point of view on that?

See, our credit policy is very tight. And most of the customers, they are anchor partners, are large ones like JSW Steel, Reckitt & Colman, Haldiram's. We're not going for small anchor partners. They're all AA+ rated anchor partners for whom we are doing like delivery. And these are the partners which Baya has signed. But again, we present each and every -- to each and every client before onboarding.

Can I add something here, please?

Yes, Gurmeet.

Just to address your query, this is not the vanilla bill discounting product that is available in the market that Emerald is doing. Emerald has tied up with an LSP -- Baya is the LSP for [indiscernible]. And Baya has their own technology platform that facilitates the entire invoices management of the merchant with the anchor. Now, in order for Baya to impanel the merchant and the anchor, they do very detailed due diligence. And we -- our policy, we have restricted our policy to support these customers, who have already been there on Baya platform and there is a proven record of the last 6 months of invoices being cleared on time. So this is not like a traditional product where we are going, we are checking just the bills and how much are they getting to the anchor. So here, both the merchant and the anchors are verified. There is a proven record of the invoices being cleared by those particular anchors, along with the annual agreement for the service that needs to be signed and renewed between the anchor and the merchant.

Okay. So like in some ways, you also get guarantee from, let's say, Haldiram before you start discounting with their vendors or something, right?

I don't think so. Sanjay, you want to address this or I can also take it?

Yes. you can take away.

So please -- so the model here is slightly different. Like I said, Baya is our loan service provider. And we have got an agreement with Baya, which also covered the FLDG component, which is submitted by RBI. So -- and they also are going to be supporting us in the collection efforts because these customers, these merchants are the customers of Baya and they have got a verified track record on that. So the first agreement is with the LSP. Then the second agreement is going to be with the customer, where the customer is evaluated based on our business loan policy, which has multiple eligibility criteria and underwriting criteria and based on which a percentage limit against the invoice that needs to be discounted is [ there ].

The next question is from the line of [ Sneha Deep H.], an individual investor.

Okay. So my question is that recently, RBI has announced a guidelines on gold loan. Are you facing any decline on your gold loan distribution segment?

No, no, not at all. Not at all. See, we are presently doing for HDFC and ICICI Bank. And as we stated, we have tied up with RBL also. We are going to start up with RBL shortly.

And apart from Chandigarh, which other state corporates are showing interest in this program?

Come again?

Apart from Chandigarh, which other state corporates are showing interest in this EWA program?

No, we are doing EWA pan-India. We have tied up with corporates in Mumbai, Hyderabad, 2 corporates in Calcutta also.

[Operator Instructions] The next question is from the line of Raj, an individual investor.

My first question is regarding bill discounting. So how much margin are we expecting in bill discounting after deducting all the commissions? And how much business we are expecting in that for this financial year?

See, we get about 17% and 50% of the processing fees. Let's say, we lend to somebody at 18 or 19, our share of the profit is 17% plus 50% of the processing fees.

Okay. And second question is regarding the large MNCs. So we are trying to onboard large MNCs since like 2, 3 quarters. But still, there is no certainty. So how -- like what is stopping there? And how much more time will be required to onboard such large MNCs?

For EWA progress?

Yes, for EWA, yes.

See, we have -- like we have started operations with a very large company. [indiscernible] services, they have about 1,500 employees. We have tied up with very large company in Bombay. We are going to start operations with them shortly.

Okay. And how much employees...

Major target is midsized segment companies. If you talk about Tata Steel, it's very difficult to penetrate these kind of companies because there's a lot of bureaucracy and it's very difficult to penetrate these companies. Our major sweet spot is medium-sized -- small- and medium-sized companies.

Ranging about...

There have been no bureaucracy also over there, and they have been performing extremely well.

And also, Sanjay, if I may just add, I think we also need to understand that most of the public sector companies have got a lot of facilities and programs for their employees themselves. So this kind of a product may not be a very -- that may not be the most lucrative market for us.

The next question is from the line of [ Aakash Jha ] from AJ Wealth.

Congratulations for great set of numbers. So one question. I mean, in your previous call, you were planning to launch an unsecured personal loan for this EWA customer? So is there any update on that?

Aakash. So that is still a work in progress. We've been caught up with the bill discounting partnership and the entire product alignment in the last quarter. So we're still working out the logistics and the compliance part of the personal loan piece. So let's see by when we should be able to launch the same. But nonetheless, anyone who needs a personal loan right now is being routed through a subsidiary. So again, there's no loss of revenue there just because of sheer lack of product.

And we want to be a bit careful for taking exposure -- bigger exposure to the employees. Right now, the market is not that good. People appreciate [Foreign Language] but the main thing is to collect that money. [Foreign Language] we can do it in the next quarter only. But to collect that money back the entire INR 100 crore back is a tough challenge. So we want to be very slow and steady on a firm footing.

Okay, sir. So second is, I mean, I would like to understand the management's reason for this EWA product. I mean, over the next 3, 5 years, how big could this business become for Emerald as a whole?

So if I may add into that. So on a quarter-to-quarter basis, on a quarter-quarter basis, the revenue from this program has increased by close to 100%. So when we strive to maintain that percentage going forward. So the idea here is, as we have reiterated in previous calls as well, so our EWA essentially a customer acquisition tactic we use. So we are able to, one, acquire a business corporate house; second, the employees of it. And we cross-sell a lot to both these categories. And similarly in this respect, we've been launching products to cater to this audience. So the idea here is that EWA will help us quickly get these clients and then we cross sell. Either we cross sell from our own book or we cross sell through the subsidiary, and that's where the real money comes in from.

And one last one. I think last year...

Sorry to interrupt Mr. Aakash, I request you to return to the question queue as there are several participants waiting for their turn. [Operator Instructions]. The next question is from the line of [ Dharmesh Patel], an individual investor.

Congratulations on a good set of numbers. So my first question is any plans to list on NSE, sir?

Come again?

Any plans to list on national stock exchange? We are listed on BSE earlier...

To get listed on the National Stock Exchange, you need a BSE-listed company needs to have INR 75 crores of net worth for 3 consecutive balance sheets. This year, we have crossed INR 75 crores. One of the major reasons for coming out with the preferential allotment, the net worth should increase INR 75 crores. This year, we have closed on INR 75.10 crores. So the '26 and '27, if they -- our net worth is more than INR 75 crores, we will be eligible for listing on NSE.

Are we planning to list over there, sir?

Let's see, we have 2 more years to do that. We can't do it before March '27. But we have become -- for first year eligibility criteria is satisfied. Like in FY '25 balance sheet, we have a INR 75 crore plus 1, and now we need to have 75 crore net worth in '26 and '27 also.

Okay. So in our EWA programs, are there any...

I would request you to return to the...

This is my second question -- this is my second question only.

I understand, but we have limited. The next question is from the line of [ Aroop Devi ], an Individual Investor.

Could you provide any guidance on personal loan and bill discounting such as AUM reimbursements or any other relevant metrics?

Come again, I can't hear you properly, please. Can you come again, please.

Could you provide any guidance on personal loans and bill discounting such as AUM disbursement or any other relevant metrics?

See, we are targeting 250 corporate this year as far as EWA program is concerned. Bill discounting we had just started. I cannot give you any exact numbers, how much we would have done by end of the year. That is still work in progress. So as I said earlier, we want to move in a very slow and steady manner on a firm footing. But as far as the profitability, whatever guidance we have given in the previous con call, we will stick by that. And I think, hopefully, we overachieved what we have projected in the last year. And in the coming year also, we should -- earnings growth should be what we have given the guidance in the previous con calls.

And what is your current monthly run rate for EWS?

As of 31st March were INR 3 crores, we did INR 3 crores plus and now at currently, we are doing INR 3.4 crores.

The next question is from the line of [ Vibhor Halan ] an Individual Investor.

First of all, congratulations for a great set of numbers. Two parts to the question. One is that out of your total book size of INR 80 crores, what is your book size of SME? And what is the growth we are targeting for next year? That's the first question. And the second part of the question is your ROE is very low at 10.8 percentage. Are we targeting to increase the ROE to around 15, 14 percentage in the near future?

We try to increase it as much as possible. That can always increase if we take higher risk. We don't want to take extraordinary risk, please appreciate one thing. Of course, every company's interest to increase the return on equity. But for that, we have to correspondingly take the higher risk also which we don't want to take as much at this stage.

And first part, sir, what is our SME book size and what is our growth guidance for that...

Of the total book as on 31st March, INR 3 crore was EWA and the balance was SME.

And what is the -- so INR 77 crores for SME, right?

Yes, yes.

And what is the growth guidance for the next year? What is the loan book? What is the AUM growth guidance?

See we're targeting INR 15 crore book by end of March for EWA and about INR 110 crores plus in this business loan. That is the bare minimum. In fact, with the buyer we might be increasing it.

Sir, one more thing. If we are not thinking of taking undue risk, right, of increasing the ROE by -- increasing the ROE, then what was the logic behind taking a prep of INR 13 crores, INR 14 crores because [Foreign Language] then where have we deployed this capital out of this INR 17 crores, [Foreign Language], sir?

See we have deployed in business loan and we are deploying in the EWA program.

So sir, [Foreign Language] can you provide a breakup of your ROE thing because ROE of 10.8 percentage seems to be very low if you are a 0 NPA product.

See, business loans, we are deploying almost about 17% on average and EWA is about 20%, but we're giving gross return on that.

Okay. So you are seeing on EWA, you are -- what is your interest rate percentage for EWA?

Almost 20%, 20% plus only rather.

Okay. And your -- as of now -- and one of the reasons what I think is of your very low ROEs, your maybe leverage ratio because your leverage ratio is probably 0.5.

Yes, our leverage is very low. Now we are planning to raise an equity, we have increased -- planning to raise debt only now.

So no more plans to raise the preference, right?

No, no. No, we are planning to -- we already applied to State Bank for increase on our limits.

The next question is from the line of [ Jigar Shah], an individual investor. Please proceed.

Congratulations on a very good set of numbers. I have one query, this EWA program, who pays the commission actually? Is it the employer pays or employee, it gets directed from the employees whatever, 1.5% to 2% commission you charge.

It's the employee who pays us. It's the employee who is bearing the cost for the program -- for using the facility.

Okay. So it doesn't come from HR or the employer actually? You just deduct that commission from the loans which you have given advanced loan, which you have given to the particular employees. Okay, fine. And another question is why are we targeting...

I would request you to return to the question queue as there are several participants waiting for their turn.

Okay. This was first question only, right, 2 questions are allowed.

I understand, but we have limited the questions to 1 per participant. Your next question is from the line of Hitesh Randhawa from CaGR Quest Capital.

My question has already been answered.

Hello, Mr. Hitesh. It seems like...

I just said my question has already been answered.

The next question is from the line of Dharmesh Patel, an individual investor. Please proceed.

Sir, any customers who have decided -- employers who have decided to discontinue their services in EWA program?

No, not as of date. No, not as of yet.

And cross-selling sir, do we cross-sell insurance or mutual funds or any other products?

Yes. This time we're only cross-selling higher credit products to them. But going forward, we would definitely like to explore cross-selling of investment and insurance.

The next question is from the line of Khush Kothari from FEC SPIT.

So can you help me draw a pattern around what business strategy are we deploying? I'm facing some trouble. So earlier, we were maybe entirely business loan focused NBFC, then we move towards an EWA loan-focused fintech company, and now we are again reverting back to that. Can you help me draw structure what our strategy is?

So allow me to maybe take it through the entire journey. So I think that will help shape your narrative better. So we started a loan originator back in '95, '96, at that time, we were working for Citi Finance, and that is the vertical we've been talking about, the loan origination business. So that has grown massively. So there we have almost 40-plus lenders for whom we do all sorts of credit products. And that is under a subsidiary shubhbank.com.

The next question is from the line of Ankur Aggarwal from MOTOZAK LLP.

Sir, I wanted to know one thing. Like do the promoters of the company also have a separate financing business or [indiscernible] is the only one?

No we were not into early financing business. We started as a DSA only. I'm a chartered accountant myself, we started as a DSA back in 1997.

Okay. So basically, there is like no other separate business private business kind of a thing?

No, no, no. [Foreign Language]. Look at from other angle. There is a huge scope of EWA product in this country. It's just a matter of time. Like this product is nourishing in U.S., European side and Philippines and in Indonesia, the Indonesian company is very big. There's a huge. India is one of the biggest market in the world for this kind of product. And there are only 4 major rivals in this country and endpoint operators in our case, end-to-end operations within our system, and we're operating at absolute zero delinquency right now with a huge, strong base right now on which this base, we can multiply to on this particular base. Keeping our delinquencies slow as financing pattern is very good. We are hardly leveraged. There is a huge scope for raising debt on our balance sheet. Against a total equity of INR 75 crores as on 31st March, our total outstanding debt was only INR 13 crores. You name the lender, they are -- they're approaching us. So there's a huge scope for growth in this particular product provided we keep our delinquencies absolutely...

Definitely, sir, but [Foreign Language] is very, very small for every customer [Foreign Language] so like it's a very, very huge task, I think through EWA.

I totally agree with you. I still remember my first meeting with SBI [Foreign Language] my first meeting went towards there, our total disbursement of INR 3 lakhs. Today, we are sitting near to INR 3.4 crores. [Foreign Language]. When your direction is clear and your heart and soul is there, what else you [Foreign Language] on a very neat and clean NBFC, asset like NBFC, where the sector is very low and margins are excellent. The world will come and look at these things. [Foreign Language] It's just a matter of time, we touch 250 and then we're targeting 1,000 corporates [Foreign Language], where will our company will stand.

[Foreign Language] I think it will grow fiscal...

[Foreign Language] operational right now.

So I think what he's trying to say is and I think 250 is just a goal, right. It's a process that matters more. When we started, we were barely doing a couple of lakhs a month and we are already in a couple of crores, this number will keep growing as we grow. And in simultaneous our top line, bottom line, everything will grow accordingly.

And If I may just add one part. So that's also very important. What consumer durable is to Bajaj Finance it's an acquisition channel with an early, EWA is also an acquisition channel for us. Whereby doing EWA helping the employees build their credit report. So once we haven't established -- once we have established credit history for this particular customer and coupled with the deduction flow model, we can -- we will also [indiscernible] additional credit time. So we have to look at from the growth trajectory in a holistic manner.

Understood, [Foreign Language] and I really love it [Foreign Language] because you are so connected to the market.

100% like the vision is there, but we would like to talk in this particular call on the capital numbers. It is the vision of course always start with the vision of 5 years, 10 years maybe where you want to go, but we also do own corrections and based on what the market reality happens year-on-year coupled with what are the other external influences it can have an impact.

Ladies and gentlemen, we take that as the last question for the day. I would now like to hand the conference over to Ms. Chandni for closing comments. Over to you, ma'am.

Thank you, everyone, for joining the conference call of Emerald Finance Limited. If you have any queries, you can write to us at [email protected]. Once again, thank you for joining the conference call. Thank you, Sanjay sir. Thank you, Talin sir. Thank you Gurmeet ma'am.

Thank you so much.

Thank you very much, everyone.

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