ICICI Prudential Life Insurance Company Limited (ICICIPRULI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the ICICI Prudential Life Insurance Company Limited H1 FY 2023 Earnings Conference Call. [Operator Instructions]. I now hand the conference over to Mr. N.S. Kannan, MD and CEO. Thank you, and over to you, sir.

Thank you, [ Sami ]. Good evening to all of you, and welcome to the results call of ICICI Prudential Life Insurance Company for the half year ended September 30 of financial year 2023. I have [ my colleagues ] with me on the call: Satyan Jambunathan, CFO; Deepak Kinger, who is responsible for Audit, Legal, Risk and Compliance departments; Manish Kumar to manager for our investments, Souvik Jash, Appointed Actuary; Dhiren Salian, Deputy CFO; and [indiscernible] Investor Relations team. Let me start by talking about a few developments during the quarter before I move on to our performance. First, I'm pleased to inform you that the members of the company have approved the item of special business pertaining to the appointment of Mr. Benjamin Bulmer as the Non-Executive Director of the company nominated by Prudential Corporation Holding Limited with effects on July 27, 2022, in place of Mr. Wilfred Blackburn by way of a resolution. Second, I would also like to share that ICRA, I-C-R-A, a domestic registering agency has reaffirmed the long-term rating for our subordinated [ doctorgram ] the outlook on the long-term rating of [indiscernible]. Support development on the regulatory front, in line with IRDAI's vision that by the year 2047, which happens to be the [ centennial ] year of India's [ independence ]. Every Indian should have life cover and every family should have self-cover and security. On this vision, authority has taken several measures with a clear focus on increasing insurance penetration in the country and ease of doing business for companies like us. I would like to talk about some of these measures. IRDAI on the regulatory review committee RRC, comprising 22 members to examine the regulatory framework comprehensively. The Regulation Review Committee has been interested with a task of streamlining and recommending simplified regulations, which are principles-based with a view to enhance the use of doing business and making the regulatory regime at par with the global standards. Further, the regulators proposed the formation of [ demarketing ] and all-in-one digital platform for solidification, servicing and claims. We believe that this would be a game changer and possibly the [ big ] moment for the insurance industry. Over time, we expect this unified platform to be used to have a large number of customers to fulfill all their insurance needs, but also by insurers as well as intermediaries in conjunction with other market participants, such as insurance repository and also connectivity to external databases and ecosystems. We welcome the [ launches ] provided by the regulator with respect to allowing certain categories of products to be launched through the use and file approach relies [ nothing but the norms ], a need of documentation for purchase of immediate [ terms and ] product. Further, the series of exposure drafts have been derived by the regulator in the areas of distribution, expenses of management, other forms of capital, [ deal material, insurance ] policies. We believe that these regulatory response will structurally and functionally reform the sector and boost insurance growth and development, while enhancing ease of doing business for the insurance industry. The fourth development during this period is about ESG. As briefed earlier, we have adopted the ESG framework in the year 2020. To sharpen our existing Board oversight on ESG, the Board has enhanced the terms of reference of the CSR committee of the Board to also improve oversight of our sustainability agenda. The committee has accordingly been renamed as the both sustainability and CSR Committee. As a result, we now have a formal structure with the board overseeing the ESG matter, the both sustainability and CSR committee, focusing on monitoring ESG initiatives and disclosures and the Executive Sustainability Staring Committee driving the ESG agenda within the organization. I would like to hear reaffirm my commitment, our commitment to create a culture of embraces sustainability. I'm also happy to state that we continue to be the best [ trust ] Indian insurer based on reports by major ESG-[ rating ] agencies. I'll now move on to the performance of the company for the quarter. Our 4P strategic elements, that is premium growth, protection business growth, persistency improvement and productivity enhancement continue to guide us towards our objective of growing the absolute value of new business, while ensuring all the times that our customer is at the core of everything we do. I'll summarize our performance on the fourth page, Slides 5 to 9 of our presentation, it is loaded and then conclude with the commentary on VNB. Satyan will then be taking you through the performance in detail. So let me start with the first P of strategic elements, which is premium growth. Our annualized premium component APE grew sequentially by 32%.For the second quarter of this fiscal, we ended the first half of the year at an APE of INR 25.19 billion with a 10% year-on-year growth and the new business premium of INR 73.59 billion with a 14% year-on-year growth. As you can see in Slide #6 of the presentation for H1 of FY 2023, the contribution to A PE from linked products stood at 41%, non-link savings at 28%, protection at 20% annuity at 7% and the balance 4% came from growth savings. We would like to highlight that this quarter onwards, we started disclosing the distribution mix based on retail APE. The retail distribution mix of the first half of the fiscal [ APE ] is 40% from bancassurance channel. 31% from Agency channel, 15% from direct business and balance from other partnerships at 14%. Here, our focus is on investment in building existing channels and also widening the distribution to maintain the diversified distribution mix. Further, we believe that the recent expression draft wherein a corporate agent can tie up with up to 9 insurers instead of 3 now. If implemented, we believe that it will provide us a great opportunity to expand our distribution network for them. We believe that our diversification agenda on go-to-product under distribution mix is on track, thereby enabling us to manage the impact of external development and response to the changing consumer preferences on behavior in a [ APE manage ]. Moving on to the second P of protection business, which is presented on Slide 7. The total protection APE is at INR 7.1 billion in the first half of this current fiscal, resulting in an increase in the protection mix from 17% for the whole of last fiscal to 20% for the first half of this fiscal. Protection APE has continued to grow in both the quarters of fiscal year 2023. The growth was 22%, if you remember, in the first quarter on a year-on-year basis, which has accelerated to 35% growth in the second quarter, resulting in a 29% year-on-year growth in the first half. I would like to highlight that based on the total new business sum assured, our market share has increased from 13.4% for financial year 2022 to 15.7% in H1 FY 2023. With this, we continue to hold on to our market leadership in terms of sum assured, new business sum assure in the private sector. We continue to take a risk-calibrated approach and our underwriting practices are commensurate with the prices offered, including emphasizing sourcing of preferred customer profiles. Further, we have been leveraging the opportunity in the group protection business even as we seek to revise the retail protection business. The third P of persistency presented in Slide 8, we continue to see significant improvement across cohorts. Our 13-month persistency ratio has increased by 130 basis points from 84.6% at March 2022 to 85.9% at September 2022. Similarly, our 49-month persistency ratio has increased by 200 basis points from 63.4% at March 2020 to 65.4% as of September 2022. Moving on to the fourth P of productivity, which is presented on Slide 9. Our total expenses grew by 20.9% year-on-year for the first half of the current fiscal. The absolute expenses are, of course, higher as compared to the same period last year because we have been investing in building our future growth. Alongside our 4P strategy framework, we continue to maintain a resilient balance sheet as we have presented in Slide #10 of our presentation. We have evaluated the insurance risk and the emerging mortality experience, and this is within our expectation, and we will continue to monitor it closely as we go forward as well. We received the COVID-19 claims net of reinsurance of INR 272 million for the first half of current fiscal [ both of rates ] INR 26 million was patterning to COVID-19 debts in the first half of the current fiscal. Thus, we have released the COVID-19 provisions which we were carrying in the last quarter. Our solvency ratio continues to be strong at 200.7% as of September 2022 as compared to the regulatory threshold of 150%. Our assets under management AUM stood at INR 2.43 trillion at September 2022. On credit growth, only 0.3% of our this income portfolio is ignited in insurance rated below AA, and we continue to maintain a track record of not having a single NPA since inception. Of our total liabilities, non-par guaranteed return products comprise about 2.8%, while 77.2% liabilities are primarily linked to market performance. We continue to closely monitor our liquidity and ALM position, and we have no issues to report. Moving on to value of new business, VNB. As a result of the above driver, the VNB for H1 FY 2023 was INR 10.92 billion, a growth of 25.1% over the corresponding period last year. Given our APE of INR 25.19 billion, the result in VNB margin was 31% for H1 financial year 2023 as compared to 28% for the whole of last fiscal and 27.3% in the first half of the last financial year. While this increase in VNB margins is primarily on account of shift in underlying product mix, we, on our side, continue to focus on growth in absolute VNB. Before I hand over to Satyan talk us through some of the details. I would like to maintain that we continue to maintain our objective of doubling financial year '19 VNB by the end of this financial year, which requires a VNB growth rate of around 23% for the whole of this financial year over the last financial year VNB. With the VNB growth of 25.1% for the first half and with a favorable premium base for the coming months from here on, we believe that we are on track to achieve this operation. Our primary objective is to outperform the industry on VNB growth over the medium term. Towards this, we believe all necessary levers are available with us. With this, I thank you all for joining the call, and I'm handing over the call to Satyan to take us through the performance of the company in detail. _

Thank you, Kannan. Good evening. Our primary focus continues to be to grow the absolute value of new business through the 4P strategy of premium growth, protection business growth, persistency improvement and productivity improvement. On the first element of premium growth. We continue to leverage on our innovative and comprehensive suite of products, distribution strength, robust technology and strong risk management architecture. We have recently launched ICICI Pru Sukh Samruddhi, participating savings products to enhance our offering in the category. Coming to product performance on Slide 15. You will note that we have registered a strong growth in the non-linked savings, protection and annuity segments which have contributed to our APE growth of 10% year-on-year for H1 FY 2023. With an APE of INR 2.33 billion and a 69% year-on-year growth in H1 FY '23, we were one of the largest pension and annuity providers in the market. The protection and annuity business now contributes approximately 50% of the total new business received premium. Our focus has been to sustain growth in the annuity line of business by driving synergy between our company and our subsidiary, ICICI Prudential Pension Fund Management company. The AUM managed by the PFM has increased by 36% over September 2021 to INR 132.44 billion at September 2022. The PFM has a market share of 14.8% in the private sector AUM at September 30th, 2022. Moving on to distribution. On Slide 17, a well-diversified distribution selling comprehensive products suited to customer needs has been our goal, strengthening the existing network and widening distribution with new partnerships has been one of our key focus areas. During the half year, we have added over 15,000 new agents, 3 new banks and 44 non-bank partnerships. As we stand today, we also leverage more than 13,000 branch network of our partners for the distribution of our insurance products. Coming to the performance of these distribution channels on Slide 18, you will note that we have witnessed growth across most channels. The second element of protection growth on Slide 20 with an APE of INR 7.10 billion, the protection segment saw a growth of 29.1% over H1 FY 2022. In this segment, we continue to take advantage of the opportunity available in the group business, specifically on group credit life products. We continue to witness significant demand for the group protection products, especially now with the pricing recalibrated closer to the pre-COVID-19 levels. The retail protection growth, though challenged on a year-on-year basis has broadly stabilized on a sequential basis. We have also been encouraging rider attachment on our savings products and term products. The term product with return of premium that we had launched last year continues to contribute about 15% to 20% of the retail protection portfolio. This is a category-creation exercise, which we believe will take time to develop. With all these initiatives, our total new business commercial stood at INR 4.8 trillion for H1 FY 2023, a growth of 42.3% year-on-year. We have retained market leadership in the private market space with a sum assured market share of 15.7% in FY 2023. The third element of persistency on Slide 22. We continue to have a strong focus on improving the quality of business and customer retention, which is reflected across all cohorts. There has been a significant improvement across all cohorts in the last 1 year with our 13th month and 49th-month persistency ratios improving to 85.9% and 65.4%, respectively, at September 2022. The fourth element of productivity on Slide 24. Our overall cost-to-total weighted received premium ratio stood at 21.6% and the cost-to-TWRP ratio for the savings business at 14.4% and the cost-to-average AUM at 2.2% for H1 FY 2023. During the COVID-affected year, we have curtailed some of our discretionary expenses. This year, we have started to see a normalization of such spend. In addition, we are also investing in building blocks to enable future sustainable growth. In any case, under the Indian embedded value principles, VNB is computed after considering all expenses during the year. For increased productivity, we continue to invest in technology, which is central to our strategy, thereby aiding us to provide better value to our customers. Specifically, on Slide 40, we have detailed some of the key initiatives undertaken in H1 FY 2023. We are happy to report that we are now a financial information user and a financial information provider in the account aggregator ecosystem. We believe this will leave the entire documentation and verification process for customers going forward. The usage of data excellence at every phase of our customer journey has also been detailed on Slide 41. The outcome of our focus on these 4 fees, as you may see on Slide 25, has resulted in the VNB of INR 10.92 billion for H1 FY 2023, a growth of 25.1% over H1 FY 2022. Given our APE of INR 35.19 billion, the result of VNB margin was 31% for H1 FY '23 as compared to 27.3% in H1 FY 2022 and 28% in FY '22. While this increase in VNB is primarily on account of shift in underlying product mix, we continue to focus on absolute VNB growth, which is our stated objective. As the product mix evolves over the rest of the year, the VNB margin is expected to move in line with the underlying product mix. Coming to the financial metrics. Our profit after tax for H1 FY '23 was $3.55 billion compared to $2.59 billion in H1 FY 2022, primarily on account of significantly lower COVID-19 claims. Our value of import business, or [ BIF ], grew by 16.4% year-on-year and stood at INR 27.97 billion at September 2022. The adjusted net worth reflects the mark-to-market impact on the investment portfolio. The embedded value grew by 8.1% and stood at INR 36.48 billion at September 2022. To summarize, we continue to monitor ourselves on the 4P framework of premium growth, protection business growth, persistency improvement and productivity improvement. Our performance on these dimensions is what we expect to feed into our objective of doubling the FY '19 VNB in the financial year -- in this financial year and VNB growth over time. Thank you. We are now happy to take any questions that you may have.

[Operator Instructions] The first question is from the line of Swarna Mukherjee from B&K Securities.

Sir, a couple of questions. First one on the ROP product. So I was looking at the run rate since the last 3 quarters and the product has been launched, the run rate remains fairly seem across quarter in the absolute number. I understand that 4Q was, of course, a very small period in which the product was launched. Now, I wanted to understand you -- as you mentioned, if the category creation [ site ] will take time. But if you could throw some color on what are the efforts that are being put in and what case, is there any challenges that you are seeing, maybe from the channel side or maybe from what the customer is asking for in the product? And whether if there is any supply-side issue also in this we have seen in the retail protection side. So that is my first question, sir.

Sure, [indiscernible]. So you're right, it has been consistent at 15% to 20% over the past 3 quarters since we have launched it. And as you mentioned, it is a category creation. The point really is that the customer segment, which is choosing this product is a more mass-oriented customer segment. And therefore, for this to continue growing, it will have to be based on a suitable distribution customer segment match. Typically, distribution channels, which have a strength in more mass-oriented customers, such as agencies or small finance bank and some other distribution partners who have access to the customer segments are what will popularize this. We don't see any supply-side issues in this. These products are priced with an appropriate level of mortality. And therefore, I don't expect that to be a challenge. I think it is contributing meaningfully even now. In that, we are not out of line with the rest of the market with the exception of one company. I do think that it will take a period of time before it becomes a larger mix, but we are quite happy with the way that this business is progressing.

And just to add to that, I would only say that we would be more focused on growing the retail protection site together. And we are quite happy if ROC continues to stay up to 15% to 20%. But we are quite okay with the [ talk ]. The focus is more on going the entire [ P ] rather than focusing on ROP or [ other ].

Okay, sir, that's helpful. Any comment on the PR term side? What are you seeing? And should we expect any growth and any movement this year?

On the retail protection, so year-on-year basis, obviously, you would have seen that this challenge because that's also looking overall numbers for also still decline on retail protection. Of course, we give the numbers only by the end of the year in terms of split between retail and growth. But I can say that year-on-year declines have been coming down on retail protection. That's one trend I can point out towards. And the second trend is that on a sequential basis, when I look at it, it has been stable. So that is the 2 trends I can tell you. Demand side, we are not seeing any lack of demand. Demand continues to be growth stable for these products. And if I really look at the underwriting side, the processes are stabilized. And the pricing is also stabilized. So those are the indications I can give you in terms of sequence stabilization, stabilization of process and stabilization of pricing. And that is what we are seeing with a lot of positive outlook in this segment as we move forward. Now if you look at the customer protection from a demand perspective, why I say that the demand is impacted is because we are seeing a rider attachment increase. If I look at the unit, the rider attachment has gone up to about 45% plus in the recent month. If you look at the rider attachment income, that has also gone up. So these are the things that give me an indication that the protection demand is quite intact amongst any consumers. Now to answer your question on then it will vary lookup, I think the growth will come back in the second half of the year. That is what we believe because when you look at the last year, the second half things have started flattering and actually started coming down. And slowly, we are flying our day back in terms of a sequential stabilization now and slowly a sequential improvement, which in the second half, we are hoping that [ will result in ] the year-on-year growth also. This is the color I can give you on PR term on the retail side. On the other side, your term on the group side, that is growing quite well. There have been some news reports about the pricing and all that. But we believe that the employer, employee, and other groups do have a lot of need for the growth term cover. There's a continuous moment towards increasing the employee coverage or the coverage per employee, and we are one of the leaders when it comes to this segment. So that is also helping us to continue to show robust growth in the group segment as well. So [indiscernible], this is the color I can give you. So the sense is that by the time when you see any plateau on the group side, the retail would have got stabilized and then will come to help us on the growth of overall protection.

Sir, that's very helpful. A couple of quick questions on the channel side. First, on the non-ICICI banks. So that segment has been growing very strongly. If you could give some details on what would be the product mix difference between a non-ICICI bank and ICICI bank for us to gauge how this growth can pan out going ahead?

Yes, if you really look at ICICI bank first, as we have always told you -- from a customer franchise perspective, they have not been selling any non-linked products in the savings side. So that strategy continues. So the focus on the channel and ICICI bank, just to give you a color, continues to be on protection. And of course, given that in general, we have seen the supply side concern on protection as same as ICICI bank and the rest of the channels as well, same as in the industry as well, given that it has been a bit slow. But given that the environment is improving and as I said earlier, things have been stabilizing on the retail protection, we should expect that growth to happen in ICICI bank protection. On annuity, ICICI bank continues to drive growth. On link, of course, since they don't distribute non-linked, link given the environment and the market conditions, it is -- that has been a decline in ICICI bank because they don't sell any traditional products to offset the decline in the yield. So this is what ICICI bank is concerned, but we are happy to look at protection and annuity as 2 key segments of growth in ICICI bank. Now, you talked about the other thing is, first, let me talk about other banks. So wherever we have tied up with the banks in the last couple of years. We continue to see momentum in those banks and those banks are very much focused on the fee income rising out of insurance, and that is something we are leveraging as well. So that part is moving. And you have seen in our retail distribution, other banks other than ICICI contributing to about 17% of our numbers, 17% of our business. So this is -- that expenses testimony to how things have been moving on the non-banks. And we have added 3 more bank partners. Of course, these are all cooperative and small banks. That's what we have added, and that is something which we are having. Then as I said in my opening remarks, the exposure draft, the [ IRB sales ] that corporate agent can tie up with life insurance insurant. I see it as a great opportunity because we are used to not just working with ICICI bank, but also working with 30 banks now. So that itself should give us a good entry into this new opportunity. And that is something we will be in our cost manner, we will be doing. Now you asked about the products in the other than ICICi bank segment. We are really electric to the partner. If you really ask me some of the smaller banks who really ask us to do every traditional products and not so much on [ emitting ] products. And that is something we are happy to [indiscernible]. If you look at the agency side, [ agency ] also used to be 4 years [ factor of unit ]. But our agency now is becoming something like also in terms of traditional protection annuity and the other products. So because we believe that it is the right match because the customer segments they cater to, there will be a lot of mass-market fluent end of segments where this product mix is probably a better mix compared to a highly skewed value product mix. So to answer your question, yes, the channel by channel, we do have the mix which we have lifted to the respective bank partners or the other partners, and we will take the outcome as it comes. That has been our approach. For example, if you look at our Slide 17, we have talked about what has been our strategy in each of the segments. If you look at the agency as an example, their protection annuity is 31%, non-linked 35% and linked, 34%. So if you look at the bancassurance, protection annuity mix is 47%. So this is -- and the partnership distribution, which is [indiscernible]. We have products that protection annuity mix 28% and non-linked savings, 61%. So these are all the outcomes based on the customer segments, the channels are tapping to and the channel preferences. So that is the way we would like to. And we have come to a situation today as a company that we have a [ 40% unit and 24% ] protection and the balance contributing traditional another product. But we are completely, completely neutral, and we are very happy to [ settle] to the customer and the final requirements in terms of product mix.

Sure. Sir, in terms of…

Swarna, may I request you to please come back.

Sure.

[Operator Instructions] The next question is from the line of Avinash Singh from Emkay Global.

Couple of questions. One, just, again, going to the accounting profit of [indiscernible]. I would just need your help. I can see -- I mean, if I'm looking Y-o-Y for the quarter, the big variance has come in part. Shareholders accounts understood how the market realized gains, I understand. Non-par Y-o-Y because you have seen a strong growth, so of course, there will be a strain or like you can have a [indiscernible]. Another big thing that is in the non-par and annuity [ software ]. Now – I mean the last 2 quarter is negative I understand, what was -- if you can help me, why it was it a big positive number last year in the same quarter? So why there's such a swing when it comes to supplant annuity Y-o-Y basis because that is the thing that is driving Y-o-Y surplus lower. So if you can help me, that’s perfect.

So when [ I say strained ] under the annuity portfolio is a function of mix between single pay and regular pay and also a function of the tenor of the deferral period for annuity. So for every period, the annuity train would not be the same. We recently launched a regular pay deferred annuity, which is much more longer term. So a trained profile for the annuity business this year is definitely different from what it was in the past years.

Okay. And lastly, it was a big positive number generates while some in past and major the mortalities [indiscernible].

No mortality. Last year, in the same period, there may also have been some realized investment income. On the fixed-income portfolio that may have caused. But otherwise, there is nothing unusual that is happening on those portfolios. It's really a function of the underlying mix of what we are selling.

Okay. The second question now, of course, in annual report, the details of your hedging in the core, just I mean, on incremental basis, in the first half from March 22 to now, what would have been the [ MPTM ] movement in your product and what that impact on your solvency and network, if you can help me, [ Sosa ].

MTM and FRA has had no impact on solvency because in aggregate, the equity portfolio plus the FRA portfolio, MTM is net positive. So there is no impact on solvency. You can't take credit for positive. Only if it is in aggregate, negative, will you take a hit from a solvency point of view. So there is no impact. In fact, the MTM has come down quite sharply at the end of this quarter than it was at the end of the last quarter. Those numbers are not specifically publicly disclosed, but I can confirm no adverse or positive impact on solvency and MTM impact substantially lower now than it has been at the end of the last 2 quarters

Okay. So I mean your equity, MTM FRA hedging LP both put together, I mean, if they are negative, then only you have any solvent I mean of course – we cannot take quality. But if you're getting -- so if you have made some negative on FRA and some point equity, I mean they [ case ] to each other. Okay.

That is correct.

Okay. Lastly, I mean, again, this minor thing. Based on a negative regulation in the property side, is it because of some sale or some company value that has come down?

So, you're talking about negative 1?

No. Upon decline, if I look at sequentially, your revaluation resolving for quality has come down slightly, of course, very minor number. But typically, -- so is it some sale property? Or is it the usual [indiscernible]?

No, it's just a usual revaluation. We get it that month a year. You won't have any change in this period. You would have had it at the end of last year. This period, the only thing that would have happened on property would be that we moved one piece of a property from the part, pension fund to our life fund. So to that extent, it may be sitting in a different place, but there is no revaluation which has happened this quarter that typically happens only at 31st March.

The next question is from the line of Shreya Shivani from CLSA.

Congratulations for a good set of numbers, sir. I had a question on new bank parts [indiscernible] coming from your [ finance ]. Hold on a second. Is it better now?

You seem to be in a windy place. That’s better, please go ahead.

All right. So I just wanted a clarification on the 3 new bank partners you've added. Just a bit of an understanding on how many bank partners do you look to add? These new bank partners, I just heard -- they are small banks, I believe. Are you the #1, #2, #3 insurer for them? So some more flavor around these new bank partners is my first question. And my second question is any APE guidance that you have for the full year of this year.

So say, these 3 partners actually got added in the first quarter. So they are in the first half year. In this quarter, we haven't added anybody new. These are very small, so it doesn't really matter whether we have how much share of shop we have. But the point really is that all of these partners put together now are building into a reasonable scale. And I think that's a more important part that we tend to focus on. With now 17% of the retail APE coming from the non-primary bank partnership that we have developed. So to that extent, these are not big. Let's see going forward, whether we are able to get more or not. Without an objective, we would like as many as people would like to have us. But it's really a long decision period. We keep working and pitching with various potential bank partners to establish a credentials. And if it comes to, it should be positive. APE guidance for the year, we have not given any APE guidance. We are still holding on to our expectation of the 23% VNB growth. We have said this in the past, once upon a time, we would have to depend on a 20% APE growth to get to that VNB growth. But now the degrees of freedom are many more given the diversification in products. So even if the APE growth is either faster than what it was for H1 or even a little slower than what it was for H1, we still feel that we have a fair shot at getting to the objective.

The next question is from the line of Sanketh Godha from Spark Capital.

Yes. Just wanted to say that non-adjusted bank growth which was very strong, around 6% to be first quarter as it should be talk of a low base in the previous quarter number, it seems to have moderated a bit to 50% lately in second quarter those numbers look pretty strong, but second quarter is extremely little moderately and the driver it is canvassing closer to the overall EPS growth of the company. And if I look at the other channels like agency and direct, they also have [ none terms ] as well relatedly, given the partnership channels have done well. Sir, just wanted to understand anything to read why [ non-licensed ] bank channels have not grown to the expectation or again, the same point that the market share, potentially this we had a low hanging powered reached it and incremental it more in the current growth.

So Sanketh, the way I would look at it is this. I'll maybe talk about the agency and direct first before I get there. agency had a very, very strong base in Q2 of last year. And some of that is what we are seeing come through as a base effect. Also, in agency, you would have noticed that 1/3 of the business is unit linked. To the extent that unit linked has been a bit more of a struggle in the current quarter, that is an impact which has happened. As we get to the next 2 quarters, typically both December and March tend to be fairly peak period for agency. So we have no concerns about the trajectory for growth for agency into the next 2 quarters. Direct-to-customer for us is predominantly the upsell channel executed by our proprietary sales force. Now, this is executed on existing customers. Given that our existing customers are predominantly unit-linked oriented, this channel has seen the same impact that we have seen for the unit-linked category as a whole. And that's why for the quarter, it was relatively slowing. As we go into the next 2 quarters, we think that should not -- that should again help connect over a period of time. So again, from a direct point of view, while the number does seem modest, we are not concerned in any material action about the trajectory. And other than ICICI bank, from a 70%, 80% growth in the past, I would hesitate to say that it will not moderate, that it will moderate. Those are periods of time that will happen. I don't think one should read too much into what happens in a month or what happens in a quarter. This is a channel which has been growing at a fairly robust pace. And if you look at even the wider industry context, this is a segment which has been doing as well as the rest of the industry as well. So from a growth point of view, I'd actually say that the base effect is going to be an important determinant through this quarter, that Kannan mentioned in his opening comments, Q2 last year was a Y-o-Y 35% growth. And eventually, Q3 and Q4 last year were 16% and 4% growth, that should be a slightly more benign base that we look at potential growth into the future. So yes, we will always have periods of improving growth or decreasing growth, but I'm not so sure that we can live our life based on what happens on a month-on-month basis.

Got it, sir. And second thing was to understand that if I look at our 60 per month consistently compared to FY '22, it has improved very sharply from 54, it is almost 61 which means to some extent, can we assume that we have a lever given is it a structural improvement in the increment to improve the position after 5 years -- in the [indiscernible] of the 5 years of completion. Is that a level substantially available from the full-year [ control ] further expand the margin?

Yes, Sanketh. It may well be a lever when we get to the end of the year, but we would like to assess it when we get there.

Okay. And finally, if you can quantify the MTM impact or negative economic [ IRS ] number on the impacted value in the 1X number systems of July the impact on the network seems to be around INR 509 crores, is on embedded value is how much it could be?

So Sanketh, we have not disclosed that specifically. We will have to wait for the full year before we disclose all the breakup of movement in [ numbered ] value.

Got it.

So I can only reiterate that the value of import has continued to see a very strong growth at 16.5% year-on-year.

The next question is from the line of Ansuman Deb from ICICI Securities.

Yes. Thanks for the opportunity. So one of my question was regarding that persistency part. So we have seen a very sharp increase. And it could be because of a little bit of lower units. But regarding our base case assumptions, is there a chance for a positive release in the year-end? That would be my first question.

That's what I confirmed in response to a get question as well. It may well be the case. We'll see where it gets to. Right now, I'm not getting into an explanation of what is causing this. Whatever is the cost of improvement, I will take it happening.

Right. Absolutely. Point well taken. And the second question is more of a thought [ ports ] in the sense when we started this journey of doubling the VNB, we had a very high protection growth trajectory. And as we moved ahead and we are almost -- as you rightly said, we have a great shot of meeting their objectives. It has been more towards savings. So if you could just tell us in terms of the strategy of the company, has it absolutely remain same in terms of as per of whatever the customer demand is or we have done certain special strengths on objectives in meeting a protection savings business because we have now a significant portfolio in terms of savings, which has given us a good VNB growth.

So Ansuman, what we had articulated then was that protection and annuity would be very significant engines for us to grow our VNB. That has not changed at all. And I don't think protection growth has slowed down. If we just look at this year, first quarter protection growth was 22%. Second quarter protection growth was 25%. So I know we all get very caught up about retail protection. And in that, we missed the fact that the protection business growth is actually not moderated. I would -- I think most companies across the world would give an arm and a leg to get a 30% growth in protection over a half-year period. So to that extent, I'm absolutely no discount with the way the product is moving. What we have added to our armory that we did not have 5 years back is what you mentioned, a wider product suite. Now the benefit of the wider product suite is that it helps us reach many more customers and improve opportunity. So the purpose of widening the productivity was not about improving margins. It was about adding more to growth. It was about getting more customer opportunity that were not choosing the product categories that we were present in earlier. So strategically, nothing has changed, protection and annuity are very, very core elements in our VNB growth. Savings, whatever is the need of the customer, we are happy to offer. But whatever we offer on savings, risk will be a very big filter. Market risk is not something that is unhedged. Market risk is not something that we would want to take on the balance sheet.

The next question is from the line of Dipanjan Ghosh from Citi.

So maybe following up on some of the points that have been listed on the call. On your non-ICICI channel antithesis, could you give some color on the counter that we maintain out there? Or in other words, are you growing faster than the trade probably largely about -- can partner? And my second question is on similar lines. You mentioned that the proposed person by to expand [ token marketecture] and bancassurance channels is available for the company to forget tire have a sanction or other bank partners. But if you go back and see the history of the events that happened after the first open marketecture. There is also a [ strong ] of the smaller players get to enter the channels or the for channel at base we have been going at a processes today. So how you think of from that perspective also maybe for 5 years down the line funding econo there is also to diversified product to today some whatever has increased like that. So those are the 2 questions.

On other bank partnerships, at least what we are seeing is we are more than proportionately contributing to the growth of their business. The objective that we are focusing on is to expand the [ pipe ] for them. And that eventually is resulting and will continue to result in an increasing share of shop. But our objective is about growing the [ pipe ] for them. So to that extent, we are very comfortable with the progress and we will continue to work on it. With respect to an open architecture ecosystem, I think eventually, every bank will have to make the decision on what they are comfortable with, whether they want to stay with 1, stay with 3, expand to 5, go all the way to 9 or whatever else that the regulation may permit, we expect the regulation to be permissive but not mandating. And therefore, to that extent, even if it means in some of the partnerships where we are 1 of 3, if somebody has entered, we would like to think that our brand is still significant enough. Our product, which is still good enough, and our technology capability is still strong enough for us to maintain our position. And to the extent that some of the banks, which may have lesser partners are not opened up, if it gives us an opportunity, we would be happy to take it. But like I said, it does not in any way establish that client and partners who are only distributing for one insurance company such as an SBI Life or a [ core SBI ] or an ICC bank will move from one to multi. That is acquisition they have to take over a period of time. We don't think there is anything given about what that outcome will be. On balance, we see the opening up to be more positive to us than [ adverse ].

Just one more question. What is some of the brands increased, some deposit rates over the past, let's say, 1 month to 2 months and a very aggressive manner and consuming price growth continues to remain at levels pay up, probably we can expect some amount of grow after translation of the high risk to the overall term deposit presumable income. On that detail is from the guarantee given products across the industry, seeing some amount of pressure on incremental throughout there in or maybe the next?

So dependent on level, I know we all tend to compare bank deposits with guaranteed return product. But all said and done, the products are [ shop ], bank deposits, 75%, 80% of bank deposits are for a tenor of up to 3 years. All insurance products are 5 years plus. We have life cover, which makes it very different. And overall, when I look at the banking system flows, we are but a small part of it. And if indeed it was so fungible in the last 2 years, insurance companies should have been growing at 50% brand. I don't think that's quite what has happened. So yes, at a conceptual level, it seems substitutive. I don't think an actual buying behavior, it is as closely reflected. From our point of view, what's important is that as long as we reflect available yields and as long as people see value in the product, whether adjusted for tax or otherwise, that will keep the demand for the product alive. In case we start seeing a change or a shift in the cycle from high-interest rates to lower interest rates, we may well see a shift in product mix on non-par on par and that's something that we would be very comfortable with. I don't think that will be a problem at all from our point of view. So we wouldn't get to caught up. I don't think an opportunity is created by a product. An opportunity is actually created by a customer opportunity. A product is only a way to leverage that opportunity. So beyond the point, we wouldn't worry too much about this relativity.

The next question is from the line of Neeraj Toshniwal from UBS India.

Sir, my first question is I wanted to clarify on the group protection pricing recalibration. So has this been totally accounted for or we may see some impact on the subsequent quarters so that growth might actually take an impact from this?

Group protection renewal now we are seeing a pricing which is pre-pandemic level. So every scheme that gets renewed, I would expect at least over the next 3 months or so, assuming that nothing else happens on the pandemic side, will be at a lower pricing pre-pandemic. This has already been the case for the past 3 months or so. What you're seeing as growth for the quarter is despite or after the change in price that has happened on group term.

So we have added new partners or you were able to add at the mid-level corporate channels because only the focus only larger corporate channels in terms of a pandemic.

Absolutely. You're right. That is what we had said we want to target, and we are doing that, and that is working well for a so for.

Got it. And the second question I have is in terms of understanding, just to mention that you might see a shift of product from non-par guaranteed products towards par and we have recently launched product towards [ pandemic ] probably into the same line. So I wanted to understand the margin, particularly on the absolute VNB as well in the automotive sports, let's say, I understand you have already given guidance in FY '23. But beyond that, would it become a linear or even because par, I understand will be a much lower margin compared to [ long par ]. How should one think about it in terms of aggregate margin profile?

So maybe the way we tend to look at it is there is an overall savings portfolio margin, which will be driven by a combination of link mix, power mix, and par mixc. At any point of time, amongst these, you will see some shift in mix. I don't think we can stand up and say that the mix is going to be stable at exactly some level over a period of time. The point that we are making very simply is that we are happy to take whatever is the margin outcome. Our approach is more on absolute VNB. And in a way, the more pronounced impact on margin will not be about par, non-par. It will be about protection annuities versus other parts of savings. So there will always be pluses and minuses. We are not, at this stage, seeing anything to suggest downside risk to margin. We think there should be stability. If [ not comfortable], we would expect there to be a positive bias over a period of time, given the fact that protection -- retail protection may come back, once retail protection comes back within protection itself, the portfolio margin can improve. Second, the mix itself of protection can improve. Third, persistency delivery can translate into some amount of margin improvement. And fourth, over a period of time, expenses also will contribute. So while there are possibilities of positives and negatives, on balance, we think there is the chance of a positive bias overall over the medium term with respect to margins.

Got it. Just on protection, given I understand some relatively smaller competitors entities of players are actually picking up in terms of lowering the retail protection pricing and the market share gains have been happening as I say -- how do you think about it? And how sustainable is it? And whether it is impacting [ demand ] or actually the shift between some share from the larger players to relatively smaller players.

I would only point you to what we showed on the slide with respective new business unassured market share, where we have actually gained market share from 13.2% to 15.7%. I'm not really seeing any small player gaining in any fashion. There are 1 or 2 midsized players who are putting in more focus, and that is bound to happen. That's the way the business will operate. But I'm not seeing that diluting our position in any way or creating a lot in market position for us.

The next question is from the line of Jayant Kharote from Crédit Suisse.

Sir, 2 questions from the line between group term and credit life, which segment has grown faster in this quarter?

They have not given the breakup in business between the 2, what I can, however, say that both have grown quite strongly.

Okay. And sir, last quarter, you had given a guidance that -- not a guidance, but with an indication that MD growth will be in line with the industry probably going ahead. Where do you see that number [indiscernible]. Is there any number in your mind?

Again, we had said that in the context of life beyond FY '23. But that is something, again, we have not given any number guidance with respect to what it can be. We'll see at the end of the year, whether we are wanting to do that. But as of now, we are not giving any number guidance beyond that certain decree.

Sure. And just one last thing just on the EV sensitivity to interest rates, have you seen that move up in the first half, is this calculated economic variance used to be slightly higher? So the directionally, is that number moving up?

Jan, we disclosed sensitivities early at the end of the year. So at the end of this year, you'll be able to see it.

The next question is from the line of Prateek Poddar from Nippon India Mutual Fund.

So just one question and looking beyond FY '23, so in the last 18 months, we have had benefits of good pricing on the group term side, and we have had a wider product suite as well as a better distribution access to other banker partners. Now going into FY '22, if you can just maybe medium term, if you can talk about what will drive growth for you on the AP side, not on the margin side, you have explained that everything. And maybe on the AP side beyond FY '22, what will be the real growth guidance?

Prateek, do you want me to give a sense on where are the drivers? Okay. If I really look at from a channel perspective, I already talked about a little bit of opening up, which is likely to happen from IRB perspective in terms of adding more bank partner insurance stock bank. Here, I do believe that as a company, over a period of time, we have been able to get this whole alliance proposition growing quite strongly. That's the reason why we see 30 bank partners primarily a banker promoter company was quite unique, I would suggest. That, given those experiences and our ability to tie up, I think the widening of bancassurance could be one big platform where we would like to grow. I'm not saying that all the banks will jump into, I think, some my insurance players are not suggesting that. But I do believe that wherever the growth momentum for the existing players are not happening, we can make a meaningful proposition to them to say that [indiscernible]. I think that is going to be inherent part of our strategy going forward. So I think, on agency, that is an area where I do believe that we have done significant investments, including manpower additional [ closings ], et cetera, in the last year or so. And as you know, the business lacks the investments in agency because they have to come up to full productivity. So if you do that, hopefully, agency would grow on here on. It has been a bit of up and down depending on the base effect. But otherwise, on a secular basis, we do see agency contributing much more than [indiscernible]. So that is the second challenge. The third one is direct to consumers. This is an area where we do believe that we can make a huge difference. On one side, you have seen IRB talk about business again. On the other side, we do have our own assisted online channel and direct online channels, which are already contributing about 15% of our retail [ EPE ] given the customer base we have today, we do believe that there's a huge opportunity to go direct in terms of upselling or down-sell. So while in the bancassurance partners, increase in the agency share further and increasing the D2C details, I think this will be the medium-term growth drivers beyond 2023. This is how we have sized up our own strategy. So if I have to really look at long term, I would definitely expect the agency to contribute at least 1/3 of our [ REP ]. That is broadly the direction in which we'll grow with bank continuing to stabilize and the other [ deck to consumer channel ] contributing much more than what they are paying today. Directionally, this is where the company will be growing in terms of the growth service on the channel side. On the product side, now we have begun completely as neutral to customer and the channel so on the product side. No more key to any particular product line or we have any preference to a particular product. We just completely leave it to the emerging environment, market environment, our consumer preferences or channel preferences, they are having to take the outcome. That is where we have positioned on these product side. So these are the approach beyond 2023.

I just wanted to check, you talked about the ID [indiscernible] banker partners, is there a margin in view from a margin and utility perspective, if a bank already have 3 partners Adding more does it make sense for them in your view?

Yes. So my next thing, let me answer first to me, when we discuss internally, it doesn't make any sense for banks to go up to a [ 9 ]. So let me go out there adding mind because of a lot of [ cars ] will be there on the shop close, and that is not going to be something which is useful later to ensure companies after the banks. On the other side, if you're looking [ at 3 being 4 or becoming 5, that will only be a PCP ]. For example, some bank has got already 2 partners. And let's say, the momentum is not happening with order 2 partners. That is where I meaningfully see a play in terms of going and presenting to them, showing them the numbers. I'm sure what we have done with other 39 bank partners and ICICI bank as well. And I'll show it to them and make a pitch to say that maybe they will benefit a lot by adding a profit. I play only day. I mean not really on a [ month ] basis, people adding and our getting into every bank, but not in the front of a place. And I’m being practical about this.

The next question is from the line of Shyam Srinivasan from Goldman Sachs.

Sir, just one on some of the exposure as...

Shyam, [indiscernible]. Your line is a little distorted, Shyam. Volume is okay but we are getting [ cutting ].

Yes, yes. Just on the exposure draft, one on expenses of management, one on payment of commissions. What are your initial thoughts in are still exposure blocks. But is it going to benefit because less like you visibly smaller to it lead to consolidation? Just for overall industry and what is your micro-story there and both those expected on?

So overall thoughts, we believe that revenue such [indiscernible] oriented approach is very good. We welcome it completely because this also helps us to structure the payment period, we want to get the best outcome rather than I'm talking about some segmental basis or a micro-management of what to pay share or what to pay there. That completely overwritten by our overall payment. So that is a lot of operational flexibility from our perspective. Second, yes, of course, it is a larger player [ and we ] welcome it because it's really beneficial to companies with a good expense ratio like us because if you look at our expense ratio, it will be probably up to in the industry in terms of expense ratio. So naturally, it is beneficial to players like us. So those are my initial thoughts, of course, at what level the expenses stabilize our commissions stabilized, that we have to see based on the competitive dynamics. But definitely, the flexibility and the efficiency, the current role we are in is beneficial to us.

Second question is on reinsurance supply. We have started seeing supply from the reinsurance perspective come back now on the pool have gone and any chances that we will see very high price, high season like last year or from them or you think it's a little bit more normalized?

So the way I would look at it, Shyam, is to say that given our balance sheet capacity, current solvency expected increase in sub-debt limits and expected shift to [ respect ] capital. I would be perfectly happy even retaining more of the balance sheet if there is not adequate capacity from a reinsurance point of view. So at least to participants in the market like us, it doesn't matter too much beyond the point what is reinsurance capacity. What is important is, what is the price at which we are getting reinsurance in the context of the experience that we are seeing. And over debt, at least our experience, we are very comfortable that it experienced in the context of our pricing is consistent. So we are happy to retain more. We'll see where it goes, not really too concerned about capacity from where we are.

The last datapoint I may try is on -- I think you called out guaranteed income contribution [ in previous quarters ]? Is it like still around the 20% number or it's done higher than that?

Shyam I never called out guaranteed return product in the mix ever. Not last quarter, not year-end.

I believe there is a 50% number, so that we have actually quite [ had it ] in 4Q and maybe my memory is wrong, 20% of AP.

I don’t know. So we haven't publicly disclosed it.

The next question is from the line of Nischint Chawathe from Kotak Securities.

Most of my questions have been answered. Just one, and this is one of the new articles a couple of days back about GST input tax credit where I guess there was some investigation on the insurance industry. Just on behalf of the industry, can you make us -- help us understand what really happened? And does it mean that you need to make any payouts right now or probably make any provisions for [ here ]?

So Nischint, you're right, this is an inquiry that is being carried out with respect to the entire industry. The context of the inquiry is about certain expenses and how GST input credit has been availed on that. As far as I understand, the entire industry, and we are continuing to provide data and cooperation to the authorities as they are seeking. They will have to go through their process and assess whether whatever evidence we have of the activities that are carried out are suitable or not. We will wait for that process to conclude. And if necessary, afterwards, it may move into litigation. In order of magnitude or what it could be or even whether there will be any impact, I think it is too premature of the call because right now, it is a data-gathering exercise by the authority.

But have you paid anything right now to the authorities? Or is it something that -- or provided for everything in the CMS?

Nischint, we haven't spoken about any payments. But generally, whenever there is tax-related litigation or inquiry, and this is true in litigation as well, expectation is to deposit some proportion of the [ discruted ] amount upfront and then continue with the litigation. And eventually, the decision of adjudication will decide whether it goes in our favor or not. And if it goes in our favor, we get a refund of whatever be deposited.

Sure. And then this probably has -- I mean, if you're making an advanced payment, this has some implication on the P&L.

It doesn't. Advanced payment has no implication. Only when there is a substantial action, there's any implication on P&L even get considered.

Okay. So this will probably an endpoint that you consider this is an advanced payment to [indiscernible].

That is correct.

The next question is from the line of Manish Gupta from Solidarity Advisors.

So what I wanted to understand is that the way we measure our progress is doubling of VNB between FY '19 and FY '23. Now, typically in other categories in insurance, what we see is that the experience of people in group term has been very, very poor. So for example, if you see health insurance, the combined ratio in group policies is well over 100 meetings. It's a lost-meaning proposition. Now, my question to you is that in life insurance, the true profitability is only measured over long periods of time when you make the adjustment on the EV. So is there a -- can you give some data, if you can share about what your experience in growth firm has been [ VNB ] what your assumptions are because as we measure progress through VNB, we can end up reporting very good VNB when we book these policies only to reverse it at a later date. So I just wanted to understand whether my interpretation of the accounting is correct. And what your experience in group term has been basically the VNB margins we've estimated in the past. Thank you.

That is a perfectly valid question. I should not look only at VNB but also should also look at movement in embedded value, particularly within that, the operating experience, variance and assumption change impact over a period of time. You will notice from Slide 64 in our presentation deck that over the years, right from FY '18 onwards and even before when we did the IPO disclosures for FY '16 onwards, mortality, mobility variance has been consistently positive with the exception of the pandemic period. And this is been only possible because both groups as well as retail and within group credit life and group term has consistently delivered positive operating variance. So from our point of view, at the level of pricing that we are operating and offering the products on, we are very comfortable with the loss ratios and the profitability emerging. Health, particularly within health, corporate health may be a completely different ballgame from what you see in life. Clearly, at least from outside in what I've seen of that and what I know of the life insurance industry, I have no reason to believe that for the significant companies, group term should be a lot making proposition. I can confirm this for ourselves. This has been consistently positive over the years.

Okay. And one more question. Is that because the accounting in life insurance is fairly complicated, if one goes to look at accounting very, very simply, how does one think about, from a shareholder perspective, what is the return on equity of an insurance company?

This is really the sticky part. The problem is return on equity, I will have to associate it with the appropriate under an accounting standard. And given the Indian accounting standard today, the return on equity becomes a very distorted measure. So let me give you an example. If I'm selling INR 100 worth of term life policy, under Indian GAAP, I may well have a first-year P&L, which is a lot of 200. If I were to account on an IFRS 17 basis, I may well have an answer where the first year profit is not a loss, but the first year profit may be INR 25. Now between the 2, how do I determine what is return on equity? That is a tricky part of it, which is why as a proxy to return on equity, what we use is return on embedded value. Essentially, what we are saying is that the embedded value, which is the pool of future profit, it's like the capital which is supporting business growth. And the operating EV profit is the equivalent of a profit metric in that context, and that's how we are looking at the equal end of return on equity. So an ROEV of 16% to 17%, does seem like a reasonable level for somebody like us to be operating on, and that is what, at least in the current accounting context, Manish, I would prefer looking at as a measure of return on equity. Of course, tomorrow, if we move to an IFRS 17 basis, we may well decide that the EV approach can be jumped and we can move with the financial statement itself and in ROE, the way it would diverge from that as a true measure of profitability. But that, to my mind, is a little out into the future. For now, our view is the current framework of embedded value and return on embedded value is the closest substitute, if you will, to return on equity that we would consider appropriate.

But have you ever calculated the ROE on an IFRS basis?

Yes, we have. That's what I was telling you that because no new business plan, it's effectively no capital deployed.

No, I hear that. I hear you, but if you were to calculate your ROE today on an IFRS basis, what would it be?

IFRS, still India has not started reporting on an IFRS basis, Manish. It's still another 2 to 3 years later. I gave you a representative information. But I'm saying that I don't have a capital -- I don't have a loss in the first year at all. So there is no capital to be provided. So technically, it is infinite ROE.

The next question is from the line of Swarna Mukherjee from B&K Securities.

So a couple of questions. One is on the September new business monthly data that was released, what I noticed was that for the group business, if I calculate the EPE, generally for the top players as well as, I think, for you, the group APE number was quite tepid. So if you could give some color on why would that be the case? Is there a base effect or something other in play given that diversions particularly have been very -- continue to be strong? And I was expecting that the credit life portfolio would continue to be robust at least. So some color on that, please?

The group business has multiple parts. You have group term, you have group credit life, which are protection-oriented, and then you have the group funds business. By nature, the group funds business is a very lumpy business. I don't think you can ever arrive at any conclusion on trends and patterns based on monthly numbers with respect to the group AP.

Okay, sir. So I mean the only trend that I picked up was that for all the larger players, it was a bit slow. So that's why that was thing to read at the industry level trend or anything.

So I would actually suggest, [ Sven ], I don't think there is any trend at all in that if you look over a period of time.

Okay, sir, sure. Another question, a big fundamental question, sir. So if I look at the persistency numbers, see the 6-month persistency at 5 months FY '23, that should be a function of what your product mix, channel mix and customer mix was at 5 months FY 2018. And also maybe how they are behaving right now. Does it have to do with anything else to read into?

You're absolutely right, [ Sven ] nothing else.

Nothing right. So whether what would be the new business environment right now has nothing to do with that.

Not at all.

As there are no further questions, I would now like to hand the conference over to Mr. N.S. Kannan for closing comments.

Thank you. We have answered all the questions. And in case there are any residual questions, please talk to our team. Thank you so much for joining on a Saturday evening. Sorry to have bothered you on a Saturday. We just finished the board meeting for waiting overtime. Thank you so much, and have a great weekend.

Thank you. On behalf of that, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.