Emerald Finance Limited (538882) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Emerald Finance Limited Q1 FY '26 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. Chandni Chande from Kirin Advisors Private Limited. Thank you, and over to you, ma'am.

Thank you, Pandvi. 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 Officer; 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. I would like to extend a warm welcome to all of you for joining us today for our company's Q1 FY '26 Earnings Conference Call. Thank you for taking the time to join with us and for your continued interest in our journey. With me is Gurmeet Kaur, Chief Risk Adviser and Talin. Talin is joining from New York, you might be dropping off and on in between. Further, we look forward to discussing our Q1 FY '26 results, key business progress during the quarter and our strategic focus for the upcoming times. We have started this financial year on a decent note marked by a decent growth in both our consolidated and stand-alone performance. On consolidated basis, our total income for Q1 stood at INR 6.74 crores, which is a year-on-year growth of 453.20% and the net profit increased by 86% to 3.19 CR. On stand-alone basis, our total income grew by 89.22% on a year-on-year basis to a total of INR 4.74 crores and our net profit grew by 138.39% to INR 2.63 crores. As far as the EWA product is concerned, we are now partnered with more than 90 corporates pan India, to be only signed with a fairly decent sized company, a big technology. Yesterday, we signed with Supreme Enterprises Mumbai. And now month-on-month disbursement has crossed INR 4 CR. Looking ahead, we continue to focus on our -- increasing our early wage access platform by expanding our corporate partnerships. We stand by a target of 250 corporates by the end of this year and a long-term vision of 1000 corporates. We have also recently informed RBI regarding the launching of our app, we should be, I think, launching in this quarter our app also, and that should give us better reflection and better disbursement rates. As far as the NPA is concerned, they're still under -- very much under control. We had just 2 very small in the business loan side and the NPA in the EWA side. The business is a total amount of NPAs was less than INR 50,000, but we hope to recover that in this quarter. But we have not written off those both these INR 50,000 NPA, we are very much confident of recovering that money in this quarter. Before opening the house for your question and answer, I would like to request you one thing, what we have realized our existing investors are the best source of sourcing clients for EWA. In fact, 6 of our existing investors who 4 of -- 3 of them were Chartered Accountants, they are partnered with us for sourcing EWA clients. I would like on a professional fee basis, I would, once the conference call ends, I would request you to go to a partnership page on the Emeraldfin website or just drop a mail at info@emeraldfin. In case you are interested for joining partnering with us for sourcing more corporates for EWA, please let us know. Now open the house for your question and answer, please.

[Operator Instructions] The first question is from the line of Rahul Singh from [indiscernible] Investors.

Congratulations for the new [indiscernible] wonderful numbers. My question is what is the current. My question is what is the current revenue for EWA and like you mentioned in the last call by financial year '26 end, you will be unwinding 250 clients for EWA. But what we can see in terms of run rate, it is not impossible, but very difficult to achieve. So what could be the absolute figure, which we can 100% achieve this financial year?

See, we have already done 90-plus in the -- till 30th June, and we have already signed up with 3, 4 I think 4 clients, 2 of them already on exchange and 2, 3 are more in pipeline. I think we should be informing the exchange in this week only. And we are targeting about 40 to 45 clients in this quarter. And I think you should be able to do our -- reach our target of 250. Because our network is expanding now very rapidly. In fact, our existing clients have also started sourcing cases for us. We have closed in the last quarter, we closed at least 2 cases were referred by the existing clients only.

The next question is from the line of Abhishek from AB Capital.

Just to ask one guess on clarity about the business model like our main business model is to get more customers from EWA and get the fees or our main target is to that to act as a channel from which we get more customers, whom we will cross-sell other loans, which is the main target for us?

Both, both. Both is the target, in fact we are resourcing clients at a profitable basis and we cross-sell also. I think if I'm not wrong, we have done INR 2 crore plus cross-selling in the last quarter.

Okay. Okay. And I think last year, in one of the con calls you had told that EWA is around 4% of the total revenue. So how much is it right now after this quarter?

I think 3% or 4% only, I think 4% or 5%, something like that.

By this year-end, do you think it will go up or it will remain at this level only?

No, I think it should go up as we source in the more number of clients, it should definitely go up. See lot of cross selling opportunity has started also pairing from that. I told you like we did INR 2 crore cross-selling in the last quarter only. And this cross-selling volume should now slowly and steadily increase only.

Okay. And you have told that in the PPT that you aim to onboard 250 clients for EWA by last year. So considering that we can be completely get 250 clients, how much revenue do you think can come from this EWA?

Well, we are targeting about INR 15 crores of monthly disbursement. If we get 250 clients, we are now fairly large-sized corporates are coming this [ EBIS ] technology, they have employee strength of 3500.

So INR 15 crores of monthly disbursement, but our fixed fees is there, right? So how much will be the fees you think can...

See the total turn out to be disbursement of INR 180 crores, if we INR 15 crores per month as we reach a target, annualize the basis will come to INR 180 crores. On an average, you can take it 1.5%.

Okay. Okay. So INR 180 crores will be the total disbursement for the full year, then 1.5% of that might be our revenue.

Yes, might be revenue, plus you have to look at the cross-selling opportunity. See other corporates are -- NBFCs are sourcing clients at a loss. We hear we are looking at client at a profit, plus the huge cross-selling opportunity which comes along with that.

Okay. So beyond this 1.5%, that is 1% of INR 180 crores that is coming as revenue, which will be pure revenue. Beyond that, we will get cross-selling opportunities to these clients.

Correct. Correct. And the main thing -- our book is performing very, very well. In the last 1.5 year, where we delinquency.

Okay. Okay. And what about the loans that we have given, what is the NPA status of the loans other than the EWA?

In the business loan, we have 2 delinquent clients. One, the total delinquent amount is [ INR 3,500 ]. And another delinquent amount is INR 40,000. We have written off these in the June quarter -- not written off, sorry, we have booked as NPA and reported to CIBIL, but we are very much sure of recovering in this next coming quarter. We have spoken to both our clients and they are promised to pay us in this quarter.

The next question is from the line of Priyam from Premium Asset Managers.

Priyam here from Premium Asset Managers. Sir, my question is that I want to granularly understand the spread that we make on an EWA loan? Because from my understanding, you just answered in the last question, that we will make 1.5% on the overall pie, which I thought was a bit too low. So can you -- can we deep dive into this? Like what is...

IRR comes a little higher. Talin you can explain that -- in terms of IRR is much higher. Because the normal get the average dispersion takes after only on the 15th of the month. Normally disbursed on an average on the between -- mega checkout disbursement happens after 15 only.

Right. On a INR 15 crore monthly disposal, how much do we make on a monthly basis, let's say, if we achieve that by that period?

In terms of yield returns?

Yes.

Yes, INR 22.5 lakhs. But in terms of in terms of IRR is quite high.

Right. Okay.

Because from a large number of corporates, we get payment to payment only on the 30th of the last year of the month itself. So our money is locked only for 10, 15 days.

The next question is from the line of Raj Shah from Claire Capital.

Congratulations. The business is doing wonders in all the financials. But one concern is regarding that large stakeholder is selling the source in open market. So is there any reason like we are selling it in open market?

See one, they have purchased the share at INR 38, Investi Global. They have sold, I think, about 40% of their portfolio -- 40% of their holding because they got -- there is a chit of about INR 100-odd.

Yes, right. But the thing is like even preferential issue was run at 131, and promoter was also part of it. Are you not arranging any buyer for block deal? Or are you not planning to buy yourself instead the...

I don't say anything at this stage will see in future. I can't say anything about that at this current stage. But I'm talking about the sold 40% of the stake because they bought it at INR 38, and they made a handsome profit on that.

Okay. And regarding this company sizes that we are onboarding right. So what's the minimum size of employees? Like what's the minimum number of employees the company has?

Normally, we don't onboard companies with less than 100 employees. But now fairly large ticket size companies are coming. I told you -- as I told you today only we onboarded 1 company with 3,500 and onboarded Master Trust, they have 900 plus employees. And we're already working with [ IDS ] they have 1,500 employees. And since now IDS is going to give the subsidiary also, which has 450 employees.

Okay. So now whatever companies we are acquiring like the overage we can expect like 1,000 to 2,000 employees per company.

Not really. Even if the company is good and [indiscernible] we get we'll onboard them. Prefer to a fairly decent sized company. disbursement takes more in that particular case.

Yes. Basically, like what's the average account per company that we have?

Our average count currently sits at around 300. So what we've realized in the market is essentially companies having 200 to 500 employees is where the sweet spot lies, in terms of sales cycles, in terms of engagement, in terms of conversion.

Okay. So actually 3,000 if very less, right, but we are planning to move into bigger size right now?.

Yes, yes, yes. See, the main thing is kind of company on board, we should go with good corporate. We shouldn't have delinquency on that particular corporate. So we are very conservative on that side, the quantum limits we're sanctioning to corporate are quite conservative on that side.

Yes. And also about the limit, right, we are only giving up to 40% of that employee salary as advance, right? Can't we increase that to 60% or what's the rational behind this 40% only?

So we're giving up to 50% why we don't go up is because there's a law in the wages, in the label of Payment of Wages Act , which states that a corporate cannot deduct more than 50% of the gross salary of an employee, for any deduction, Be it in advance, be it category deductions. So in case you have to, let's say, hypothetically, you have 60% as advance. The corporate legally can deduct only 50%. The remaining 10% collection will come to us. So that's the kind of risk we don't want to bear.

[Operator Instructions] The next question is from the line of Chandan Mishra from Fin investors.

Congratulations on posting great set of numbers. I have a few set of questions. First of all, sir, earlier, you have reported a INR 3.4 crore EWA disbursement rate per month. What is current disbursement rate?

See, in the June month, we crossed INR 4 CR.

Okay. Second question is.

I think INR 4.25 crores, something like that.

Yes, sir. Sir, second question related to EWA only, we did approximate 100 companies, how many are active out of those sir?

I think -- see, we have stopped out of these 100 companies, the payments were late will stopped 3 companies. I think on an average, 85% of them are active out of that. Sometimes we block also in case there is a payment delay in payment from the company side, we block that company. the companies...

Sir, next question is related to small ticket size loans, sir. What is the current overview on invoice discount on a small ticket size loan?

Small ticket size loans, see not doing too much of a small ticket-size loans. We are doing basically business loans right now.

Okay. We are not doing that segment right now?

So that is not much. They're not doing much, Talin, the numbers, how much you're doing [Foreign Language]?

I think EWA is a small ticket size loan. So EWA we are doing close to INR 4 CR a 1 month.

So we are doing some -- for some clients we're doing for 9 months also, no? If you're talking about that.

So I think the -- I think what he's referring to is cross-selling the personal loans from Emerald's book. If I'm right, personal loans from Emerald's books.

Sir, earlier, we have announced a segment for EWA customers at a small ticket size loan. I want overview on that only, sir.

We are doing that. We are already started that -- we are doing 9 months loan for those EWA customers. Currently we're not doing more than 9 months for them.

Okay. Okay, sir. And sir, my last question, sir, what is the margin guidance, sir?

See, [indiscernible], we charge on average, I think 36%.

The next question is from the line of Ankit from Fusion Capital.

Congrats on a great set of numbers. So I have 2 questions. First is on our business loan segment, right? There are 2 -- NPAs and apart from these 2, like are we expecting some further like 30 days or 60 days, something -- are you planning to make some provisions or cautious provisions there?

No, no. All other entire rest book is performing well. And the 2 are open to recover. So I think this quarter, we should recover those amounts. The INR 3,500 crores I think is a very nominal account. I think it should come in the next 7, 10 days and the balance out of INR 40,000 is spending, I think that should also get streamlined.

So for these 2 was it 1 EMI missed? Or like is it already 60 days or more.

It's past 90 days, 3 EMIs missed.

Okay, okay. And secondly, like I am following the company from the starting of FY '25 and there, we discussed about the 8x to 10x PAT. So over FY '25, it is actually INR 9 crores from the base of INR 4 crores. So like it is more than that and we have a solid start in Q1. And recently, we have done this preferential, right? So now we have total equity to be INR 86 crores, if roughly.

INR 75 crores plus.

Okay. Okay. Yes. So like are we like to reach the FY '27 like roughly INR 30, 35 CR profit. So are we planning any further equity dilution or until that we can expand by improving the ROE and the leverage ratio? And are we on that track?

No, no, we don't have any plans for further dilution as of now. You know main reason we're raising for INR 75 crores equity in the last year was get eligible for NSE listing. If you -- on 3 balance sheets, you have to have INR 75 crore plus net worth, then will you become eligible automate eligible for NSE listing. So now in April '27 will become automatically eligible for NSE listing. We plan to get listed on National Stock Exchange in that FY '27.

Okay. So like are we still on track for that FY '27 guidance?

Yes. Yes, absolutely. Absolutely. You see, quarter-on-quarter, we have the growth coming -- and it's not rocket science. Now once we have 250 corporates and once we have 1,000 corporates over the long term, our growth will automatically come. And more than the growth it's more important is get delinquencies under control. That is very critical to this scenario.

And you don't expect any equity dilution until FY '27, right, if I'm not wrong?

See, as of now, we don't have any plans going further. We'll see what has to be done. As of we got any plans, we're raising debt only as of now.

The next question is from the line of Akash Jha from AG Wealth.

So one question from my side is, since we are targeting 250 corporates by the end of FY '26. So I mean, what gives us the confidence to scale at such a rapid pace? I mean currently, we have around 80 or 90 corporate. So it's almost more than doubling we are targeting.

See, we have 90-plus corporates as of now. So we are targeting about 40, 45 corporates in this quarter. You're going quarter-by-quarter wise. Last quarter, we raised about 25 corporates this quarter, we are targeting 40-plus corporates. I think we should be able to achieve that. We are looking at the growth on a quarter-on-quarter basis. If we meet the quarter-on-quarter target, we should be able to reach 250 because ou know our network of agents and subagents our own, now we already deployed 2 people in Bombay on our own goals. They have sourced 2 clients in Bombay. And we've partnered with a lot of CAs also now. As I told you 6 of our investors are only partnership partnered with us for sourcing. 3 of them are chartered accountants, and they have a huge database with them.

And second, sir, on the invoice discounting, like I mean, last quarter, you mentioned about launching this product. So I mean -- any feedback from our clients so far on this one?

See, we're going very slowly on that. It's a little risky market. What we have understood is it market don't want to take on dues. So we are doing very putting very cautious manner. So we don't want to take any undue -- see, [indiscernible] discount is one of the many products that we are doing. And we want to approach it in a very cautious manner only.

Okay, sir. Perfect. And just last question on ROE, sir. So our ROE -- I mean, currently, it is around 10%, 11%. So what is our target for ROE by FY'26 or maybe FY '27?

We are planning to raise more debt, I think that should improve our ROE.

Okay. Any number that you want to guide?

No, I cannot put a number at the stage right now.

But it will improve, right?

Yes, it definitely will improve.

The next question is from the line of Rahul Singh from Fininvestors. The next question is from the line of Priyam from Trinetra Asset Managers.

So I just wanted to ask that for the current run rate, we have projected run rate of EWA for the end of the year. Are we planning to raise more equity?

No, no, Pam not as of now. Not as a organ debt only right now. Because see, we raised last year equity because we wanted to cross the 75 mark, INR 75 CR mark to become eligible for NSE listing. So now we are only eligible for NSE listing in 27, FY '27. Similarly, we have no plans to raise equity.

Right. And sir, what is the current cost of funds? And do you see that going down?

See, major chunk of funding is right of SBI. That is around 10.95%. So I think as the RBI is decreasing, I think that should go down only. See major chunk of funding is right from equity and some nominal part from SBI.

The next question is from the line of Darshil Jhaveri from Crown Capital.

So firstly, congratulations on a great set of results. Sir just wanted to like we had given the previously we wanted to 8x to 10x of profit. So I think that's the guidance for Fy '27 -- but in the current year, what kind of profit are we expecting like a Q1 run rate has also been such a great growth. So how do we wish to take it forward?

We stand by the guidance. I think numbers should not be a problem once keep on onboarding more and more corporates. I think that should ultimately come. That increment we're already seeing in terms of disbursements, [Foreign Language] main thing is to keep the bottom line impact. [Foreign Language] undue risk on that side.

Correct. Correct. Correct, sir. So for like FY '26, what kind of profit would you aim for, sir?

See we standby the guidance, [Foreign Language] we are aware now, can I put numbers on to like that, but quarter-on-quarter growth.

Okay. Okay. That's fair, sir. And sir, just wanted to know [Foreign Language] business loan, what's our AUM currently, sir?

Total [Foreign Language] business I think around INR 90-odd crores.

The next question is from the line of Ankit from Fusion Capital.

I just had a follow-up on our business loans. So like any other apart from these 2, would you like to highlight whether there is a 30-day or 60-day miss?

Come again. Gurmeet would you like to take that?

So in our business loan segment, like apart from these 2 NPA, are there any other loans that you would like to highlight where we have...

Only they only these 2 NPAs. And I think we should recover them. I'm pretty [indiscernible] both these loans. So turning I think is around INR 3,500 and the use, I think, 40,000. I think we should...

And on our regular portfolio, we are able to get our maximum collections between DPD 5, till DPD 5. So we do not have a portfolio which is in bucket 1, 2 or 3, which means 30 DPD, 60 DPD, or 90 DPD as our portfolio is current and only there are 2 accounts which are NPA.

It, I think collection competes look into both of them. I think need [Foreign Language]

Yes. That is the update. Like you've been already saying that these are not -- they are not intent issue people, they're ability issue people, and they are completely contactable. And the follow-up -- the regular follow-up is going on with them.

The next question is from the line of Akash Chaudhary, an Individual Investor.

Congratulations on a good set of numbers. I have two questions. So -- yes, so I think from last 4, 5 quarters we were showing around year-on-year growth of 50% and almost equal to 12% quarter-on-quarter growth. But this quarter, I think we are seeing only 4% growth. So is there any seasonality or like what it could be because...

4% in terms of top line or bottom line?

Top line.

Yes. Top line was only 4%. Yes, correct, correct, correct. See, our interest rate and other expenditure has gone down dramatically in this quarter. So that is why we had a great bottom line growth.

Okay. So yes, bottom line we are getting...

Akash I told you we are not too much focused on the top line. [Foreign Language] We don't want to take unnecessary undue risk in today's current market scenario. So we have been extra careful and cautious. The more focus [Foreign Language] over a period of time it becomes a huge giant. The only thing is get -- not to get emotional and get carried away in this kind of particular market. [Foreign Language].

Got it. Got it. Second question. So 8x to 10x PAT growth [Foreign Language]

INR 4 crores.

[Foreign Language]

[Foreign Language] We have recently tied up with RBL Bank for sourcing gold loans. [Foreign Language]

Sanjay, can I add something here?

Yes, sure, please.

Yes. So just to give you an update. So our portfolio is diversified and the whole idea is that our risk gets managed very appropriately. So there's a distribution business, there's a business loan and a personal loan business and then there is an EWA product. All 3 of them will contribute to the growth in revenue and the profitability in the proportion that has already been shared that we're looking at a INR 15 crores disbursal month-on-month by the end of this financial year on EWA product and other products also will go proportionately.

Got it. At last [ setting ] we were talking about some app. So how will this app be used? It would be used by the end employees to get the loan amount from EWA or like what would it be about?

Talin can you take that?

So the app is to essentially increase our engagement in withdrawals. So it's a mobile app, we'll be launching. So the idea is to engage employees more and increase subsequent disbursements.

Okay. Okay. Just tell your...

Absolutely. Absolutely. It has to be completely seamless.

We recently showed it to one very senior banker in Bombay our app. She was shocked to see the quality and simplicity of our app. She said we employ engineers to Amazon and all these big tech companies and our own bank app is so complicated and yours is so seamless. It is so easy to utilize.

Yes. Actually, I'm also working somewhere. So I have used this product. So I was using some other competitors' file. So I'll just click in there and should get the money instantly into my bank account. So that's how I was just assuming. Will it be similar to that? I'll just put in the amount and click and it will just come to my bank account within seconds.

Absolutely. Even today, what we're doing is exactly the same. We're just putting it on a mobile app now.

The next question is from the line of Raj Shah from [ Flair Capital ].

So we are planning to raise more capital via debt, right? So like how much limit is approved, how much is the unused fund and how much the maximum limit we can get approved?

See, we are applying to State Bank for further enhancements and we are raising from other multiple sources also. I cannot disclose right now. But State Bank we are sending an application for enhancement.

Okay. So currently, like are we utilizing all the funds that we have raised or...

They are some unutilized limits lying with us in case of emergency we can draw down from them.

Okay. And any number on how much more fund like we can raise based on our benefit. Yes, debt-to-equity ratio is very, very comfortable. As on March 31, net worth of INR 75 crores. We have a debt of just INR 14 crores. So debt-to-equity ratio is very, very comfortable. We can raise huge amount of debt on these numbers. And we have excellent track record with all the lenders. We have a 0 check bouncing record since we got the NBFC license with all the lenders. And in fact even during COVID time, we did not take any moratorium from any of our lenders.

The next question is from the line of Abhishek from AB Capital.

Yes. I just wanted to ask how big is our collection team and what steps do we take if any customer refuses to pay?

See, our collection team right now is only 2 people. [Foreign Language]. So we don't -- there is no need to increase the collection team as of now.

Sanjay, can I add here?

Yes, sure, sure.

Yes. So we are well prepared. We have got our in-house collection team, which is 2 team members. Apart from that, we have tied up with a collection agency, which has got pan India presence. In an event if the delinquencies go up, then we are well equipped to kind of address it in a very early stage because our relationship already is there.

But we don't utilize their service as of now. There's no need for us to utilize their services as of now.

The next question is from the line of [ Ankit ] from Fusion Capital.

Sir, my question was on this debt to equity. So, with what debt-to-equity ratio, we are comfortable with? Any number we have in mind?

See, 1:0.5, I think, we'll be very, very comfortable or 1:1 also we'll be very comfortable. So as of now debt-to-equity ratio is very low, but we are increasing to -- planning to increase the debt. I think 1:0.5 or 1:1 should be very comfortable.

Like in FY '26, FY '27, we will reach, I think, more than 2, 2.5, right, if we raise the fund only through debt.

Come again, come again.

Like, if we raise the funds only through debt, then in FY '26 and -- or FY'27 starting, we will reach more than 2x debt to equity with our current growth rate, right, if I'm not wrong?

[Foreign Language] in EWA product mainly we get the money by the month end only. See most of the -- lot of companies pay by the 30th itself, like the disbursement takes place, let's say, 15th to 20th, 15th to 30th. They pay on -- 30, 31st they will repay the money. So we don't require -- that fund itself, we deploy again on 1st.

Got it. So we are good with even 2x, right? Then...

No, no, 1:1 will be sufficient. If it is INR 75 crores debt and 75 equity which is good enough.

The next question is from the line of Lalit Kumar, an individual investor.

Sir, my one question is on your collaboration side, you are 14 lenders and NBFCs. How you manage money to disburse?

In the sense that come again, I couldn't understand, please.

Sir, your collaboration side, 14 lenders and NBFCs you are collaborating with money to disburse money. So I understand your money flow, I want to understand.

Distribution, we don't use our own money over there. We just act as distribution agents for them. Like for HDFC Bank, we are the third largest sourcing agent for gold loans. But money -- all the money is deployed by HDFC bank, not by us. We just get the sourcing fees.

Okay. Okay. Okay. And sir, your further growth are same like past year's or improvement?

Come again?

Your future growth, sir, in line with the last year or improvement or in financial year '26?

Yes, we have given -- from the last year, we've given 8x to 10x growth target, we should stand by that. I think we should be able to achieve that. [Foreign Language].

The next question is from the line of Vishal Singh, an individual investor.

Congratulations on the good set of numbers. One question, sir, all questions are answered though. We talked about the business loan in this con call. So what is the current portfolio of this business loan? And what is the current yield in it, sir?

See it's about INR 90 crores and the current yield is about 18%.

18% is the yield.

18% plus 1.5% upfront processing fees. In terms of yield, it is about 18% and 1%, 1.5% is the processing fees we charge upfront.

And what I heard -- I just want to confirm, I heard it 1.5% EWA that comes to -- for this INR 15 crores, that comes to INR 2.25-odd crores. Is that right, sir?

About INR 22.5 lakhs per month.

No. Directly, sir, for INR 15 crores that your target it's INR 2.25 lakh -- no INR 22.5 lakh.

INR 22.5 lakh.

Yes, yes, INR 22.5 lakh. Okay. 22.5 lakh okay.

The next question is from the line of Siddesh Chaudhari from Maximal Capital.

I am having just one question. So in this earned wage access product there are new startups. So how do we see this as a threat and what kind of edge we have over there?

I can't hear you. Can you speak a little loudly, please? Yes, yes. Can you repeat the question, please?

Sir, I was having the question regarding this EWA product.

[Technical Difficulty] Sorry to interrupt you sir. Mr. Siddesh, please use your handset.

So sir, how do we see as competitive edge of this EWA product? Like there are many new start-ups which are coming into this segment?

Talin would you like to take that?

Sir, the competitive advantage of our EWA product.

So let me touch upon 2 things here. So I think one is the expansion of market. With these start-ups coming in, it essentially expands the entire pie for everyone because I think EWA as a concept is a very niche concept in India. As more and more competitors come in, the market awareness spreads, the market becomes more aware and thereby the entire market increases for us to take. Second, coming to the competitive edge, where our competitive edge lies is entire vertical supply chain integration we have done. So I think barring there's only 1 company in the market, which essentially owns the entire supply chain. That is from distribution to technology to funding. Now given how highly regulated the funding the [ entity ] sector is, it is a great advantage, presently owns the entire supply chain, wherein you are the one who's funding the client, you are the one who's bringing the client and you are the one who owns the entire technology stack. Secondly, what we have with us is almost a 30-year track record through our subsidiaries. With our [indiscernible] they've been working with all your banks, NBFCs for the last almost 30, 35 years now. So what that makes us is a one-stop solution for all financial needs of a corporate and their employees. If the corporate doesn't want early wage access, they can take a business loan. Employee doesn't want an advance, they can take a home loan. They can take a personal loan. We become the one-stop solution for them. And since all of it is taken care through our technology stack, it becomes very seamless for the customer as well, and we make money on it.

Okay, there is huge for scope for EWA India. You look at the companies in Indonesia and Philippines, even EWA companies over there have grown so big. It's just a matter of time, Indian companies grow that big. It's surprising before coming -- yes, it's very surprising from U.S. and yes, Europe normally products come to India. This EWA product has gone earlier than coming to India to Indonesia and Philippines. If you look at those companies in this side of the Asia, they've grown really big over there. It's just a matter of time. EWA companies in India grow big.

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

First of all, congratulations for a nice set of numbers. Sir, I want to ask about the cash flow from operations figure that I'm seeing from financial year '25 and -- from '24 and '25, both they have been reported negative. Can you throw some light on this [Foreign Language]

Having -- let me take that sir, please. So, sir, for us having a negative cash flow is actually good. It means we are disbursing more money. For us, operating cash flow means how much are we disbursing. So a negative cash flow for us means that we're disposing more money into the market.

Okay, sir. And my next concern is [Foreign Language] at the rate of INR 131, 7.6 lakhs of equity shares [Foreign Language] that is still outstanding.

That is already allotted [Foreign Language] we wanted to reach the INR 75 crore mark. [Foreign Language]. So we have reached the INR 75 crore mark and in FY '27, we should be eligible for listing on NSE. And hopefully, we should have 1,000 corporates by that time then become -- then go to NSE, is a huge company to go -- to list over there.

And next question about the invoice discounting. Is there any plans for onboarding any large anchor for bill discounting? And what is the current state, it is undergoing.

[Foreign Language]. We want to be very careful on that part of the thing. Here, the money deployed will be ours. So we want to be very prudent on that part of that thing.

Sir, one last question. About the personal loan you have mentioned in your current PPT that [Foreign Language]. So about that unsecured, I'm talking about the unsecured personal loan. So is there any backup plan for -- in case some loan goes default?

So as I mentioned that we only have a recovery team as well, and we have outsourced an agency as well. So again, right now, we're not utilizing their services, but they have been put in place just for any contingency purposes. Since the book has been growing at a rapid pace, we don't want to -- not have these contingencies or redundancies in place.

[Foreign Language] with EWA partners only, is only personal loans only with the companies with whom the EWA partnership.

The next question is on the line of Gaurav Shukla, an Individual Investor.

Sir, in last participant, you have said that margin guidance is 36%, which is PAT margin or EBITDA margin?

Come again.

One participant has asked about margin guidance, sir. Sir, you have answered 36%.

That's the normal interest rate what we're charging, talking about IRRs.

Okay, sir. And sir, in this quarter, you have it -- you have disbursed loan at, as you said that INR 96 crores from INR 80 crores to INR 96 crores. So in this quarter, you have disbursed INR 15 crores -- and you have already said that FY '26 INR 180 crores [Foreign Language].

INR 180 crores [Foreign Language] so INR 15 crores x 12 it comes to INR 180 crores. That was for the EWA not for the business loans. We target targeting [ INR 50 crores ] monthly run rate by year-end.

The next question is from the line of Ravi Patel, an Individual Investor.

Sir, I just wanted to ask one thing regarding personal loan that I have read in your investor presentation that considering the delinquency rise and the NPAs related to personal loans, why we are venturing into personal loan for the EWA partners and how we are planning to mitigate the risk associated with that loan?

See, it is part counter guaranteed by the employer. We're not going to be giving in the open market. [Foreign Language].

No, sir, I'm talking about unsecured personal loan.

Yes, yes unsecured personal loan [Foreign Language]...

Sanjay, can I just add here?

Yes.

So unsecured personal loan is given to the employees of the corporate with whom we have a tie-up and the installment also comes to us through the deduction flow by the employer. So the same methodology of repayment, which is used for EWA is used for the personal loan product.

Okay. So you mean to say that installment for the personal loan will also get deducted along with the salary like it is getting deducted with EWA. But the period of personal loan will be higher as compared to EWA loan.

Yes. So there are certain conditions which govern a personal loan to an EWA customer in order to make sure that the debt burden of that customer is not exceeded beyond the policy guidelines. So once this particular guy takes the personal loan, then we cannot do a normal EWA withdrawal. He is going to be repaying us the borrowed money over the period of 6 months to 9 months for which this particular personal loan has been given.

The next question is from the line of Jigar Shah, an individual investor.

Yes. Congratulations on good set of numbers. So these 2 [ disbursals ], which you talked about both on the EWA side or on some other loan segment side?

Hello.

Yes, yes, yes. Am I audible?

Yes, yes.

What I'm asking is the 2 loan [indiscernible] which we talked about was on the EWA side or some other business segment side?

Gurmeet can you hear that clearly.

Yes, yes, I can. These were on the personal loan. These were on the personal loan.

Okay. Okay. Not on the EWA side, right?

Yes.

I also heard about -- at the beginning, Mr. Sanjay told something about like contributing to bringing in new clients for EWA. So can you just tell me briefly like what this collaboration is all about and how we can contribute basically? If you can just give some overview.

You can just -- you just send us a mail at [email protected], somebody from the office will get in touch with you or you can go to our website at partner's page. You can just apply what is, somebody from the office will get immediately in touch with you?

Okay. What was the e-mail ID, you talked, inro@...

[email protected].

[email protected]. Okay. Or you're saying on your website also.

Yes, you can go to the website at the partner's page. You can apply over there.

Okay. Okay. Fine. So it's basically a systematic program, right, where you will sort of provide all the details and like how we work in a collaborative way.

Correct. Correct. Correct.

Okay. And another question is like AI is becoming -- artificial intelligence is becoming very prominent nowadays like every company wants to sort of start or at least factor in AI into their operations. Just wanted to understand from your planning and strategy side, like are we doing anything in this direction? Do we have any type of AI road map in the coming quarters or months, some planning or strategy in this direction?

Can I answer that Sanjay?

Talin would like to take that. Technology part he can take. Talin? Hello?

Yes. Yes. So I think in terms of AI, so we're actually planning to deploy AI for customer service in the next financial year perhaps. We've seen AI agents coming up. So once they are at a fairly mature stage, we'll be looking to integrate a few of them into our systems as well.

Okay. Yes, yes. But what about the sales and marketing and other areas also. There is a huge scope and there is a lot of improvement areas, which the manual things which we do. So anything in that direction apart from your technology stake? I'm asking from the planning and strategizing perspective, for your operating model.

Talin, can I answer this?

Sure, ma'am.

Just one sense. So there are two aspects to the lending processes. There is something that we call is automation to improve the operational efficiency. So these are -- there are fairly dynamic processes and APIs that are available, which helps us kind of automate the process. So typically, the loan origination process, the management process, the ENAC processes, the KYC verification processes, all of these are kind of automated including disbursal through the API. So that is one aspect, which is extremely critical for acquisition and loan management. The second part is going to be where the AI is going to play a role as, Talin, said in the next year, would come into play when the portfolio size is huge, and then you would like to look at specific marketing actions or collection actions, depending upon different variables, which has high impact. So typically, in financial services, that is how the journey goes. So we are currently in the build-out phase. And once you acquire a certain set of -- a certain number of customers on board and your book size comes to a certain level where a lot of slicing, dicing is required. That's where we would use tools which take support of AI.

Got it. Got it. But is it also use this for your sales and marketing in acquiring new customers and all. With agents it has become competitively very easy rather than going for a manual effort. So just a suggestion or recommendation.

It again depends. I think when you talk about the EWA customers, most of these relationships are with the corporate. So, yes, the technology team would have used tools to kind of allow the right list of corporates meeting our minimum eligibility criteria. However, the approach to reach and create a collaborative relationship still can't be replaced by a machine. It is a very, very personal interaction. It is a trust building activity. It is an evaluation of relationship at both the sides. So tying up with the corporate with 5,000 employees is -- with less machine and more relationships.

Got it. Got it. Yes, yes, totally agree. There are certain areas which are sort of -- which will require a human loop definitely. But some repetitive tasks and all, definitely, you guys can improvement.

Absolutely.

Ladies and gentlemen. Due to time constraints, that was the last question. I now hand the conference over to Ms. Chandni Chande for closing comments. Thank you, and 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, Ms. Chandni.

Thank you, have a good evening. Thank you. Bye-bye.

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