JM Financial Limited (523405) Earnings Call Transcript & Summary

Thank you very much. On behalf of JM Financial, we extend a very warm welcome to all of you to the conference call to discuss our financial results both for the fourth quarter and, importantly, the full year 2019, 2020. I hope most of you guys have had a chance to go through our presentation, our press release as well as our results. We have updated them on the website and also the stock exchanges. I'm joined on this call with our full management team. I have Manish Sheth, our Group CFO; Subodh Shinkar, MD and CEO of our Investment Advisory business; Shashwat Belapurkar, CEO of JM Financial Credit Solutions; Anil Bhatia, MD, CEO, JM Financial Asset Reconstruction business; Gitanjali Mirchandani, who heads our origination for our Real Estate Lending business; Mrs. Sonia Dasgupta, who's Head of Group Borrowing and also heads financial institutions in the Investment Banking business; and Mr. Ajay Mishra, who heads all of our Private Wealth business. I shall now provide an update on the performance of our businesses, post which Manish will take you through the financial numbers, and then we can open the floor for Q&A. Our consolidated revenue for FY '20 stood at INR 3,453.55 crores. It was a small decline of 1.3% year-on-year. Our profit after tax for full year FY '20 is at INR 545 crore, a decrease of approximately 5% year-on-year. Given the uncertainties around COVID-19, we have taken additional provisions across the group to the tune of INR 175 crores for the last quarter, which is captured under the ECL framework and fair valuation of investments held by us. Our adjusted FY '20 PAT without the pre-COVID impact, after minority interest, would have been INR 621 crores for FY '20 and INR 206.6 crores for quarter 4 FY '20. With that, I will move on to the loan book details. Our consolidated loan book stood at INR 11,531 crores, down 18.3% year-on-year. The breakup of the loan book is as follows. Wholesale mortgages continues to be the largest part of the book and constitutes 70% of our loan book, which is approximately INR 8,000 crores. The wholesale mortgage book registered a year-on-year de-growth of 20.5%, and this has been a conscious strategy for the group since the IL&FS crisis. The capital market loan book constitutes 4% of the loan book, which is approximately INR 465 crores. This book has registered a year-on-year de-growth of 56.8%. The corporate lending loan book, which also includes promoter lending, constitutes 20% of our loan book, which is at INR 2,270 crores, and this is largely flat from last year. The retail mortgages loan book constitutes now 6% of our loan book at roughly INR 7 50 crores. The book has registered a year-on-year growth of 28%. This loan book compromises -- comprises largely of housing finance and our education institutional lending business and also a cross-sell of loan against property to our wealth management clients. Moving on to asset quality. The gross NPA ratio of the lending businesses is at 1.65%. The net NPA is at 1.13%, and the SMA2 stands at 2.64% as of March 31, 2020. A few comments on liabilities and leverage. On a consolidated basis, our gross debt-to-equity stands at 1.47x as of March 31, 2020, and on a net basis at 1.04x as of March 31, 2020. During the full year, FY '20, we raised approximately INR 640 crores through public issue of NCDs, which has helped us diversify our investor base. As of March 31, 2020, our borrowing mix comprised of 91% of borrowings from long-term sources and only 9% from short-term sources. This is compared to 84% from long-term sources and 16% from short-term sources as of December 31, 2019. We feel very comfortable with this current position. In fact, we feel extraordinarily comfortable having excellent long-term borrowing mix currently. With that, I will take you through a brief update on the performance of each of the group's business verticals. We shall start with IWS, which is our investment banking, wealth and securities segment. For FY '20, IWS posted revenues of INR 1,611 crores with a profit before tax of INR 434.6 crores. The business contributed to 40% of our group's PBT for FY '20. The profit after tax from this segment increased to INR 311.26 crores for FY '20 compared to INR 239.6 crores for FY '19. The assets under advice of our wealth management business currently stands at INR 44,883 crores, excluding custody assets. The equity component as of 31st March declined 17.7% year-on-year to INR 10,159 crores. Large part of the decline on 31st March was because of the value of the assets coming down due to the drop in the stock market because of the COVID-19 crisis. The loan book for this segment stood at INR 3,880 crores, which is a decrease of 31.1%. As of FY '20, the gross debt-to-equity for IWS segment stood at 1.54x, and the net debt-to-equity stood at 0.8x. We are in an extremely cash-rich position in the IWS segment, and we will look to gain more market share over the next 12 months in these businesses. Moving on to the second group vertical, which is the mortgage lending business. For FY '20, this segment had revenues of INR 1,350 crores with a profit before tax of INR 533 crores. This business contributed 49% to our group's PBT for FY '20. Profit after tax from this segment stood at INR 178.6 crores. Our loan book stands at INR 7,651 crores, which is a decrease of 8.1% year-on-year. The wholesale loan book has decreased as that was our strategic decision we had taken post IL&FS. And our retail mortgage lending book has increased. Again, a strategic decision we had taken 18 months ago. Coming to the distressed credit business. Our assets under management for FY '20 reduced by 18.2% year-on-year to INR 11,489 crores. Our JM Financial ARC's contribution to the SR stood at INR 3,000 crores, which is an increase of 2.5% year-on-year. For FY '20, the segment had revenues of INR 413 crores, with a PBT of INR 85.58 crores. The business contributed 8% to our group's PBT for FY '20. Profit after tax from this segment de-grew to INR 29.85 crores. The gross debt-to-equity for distressed credit segment is at 1.64x, and the net debt-to-equity is at 1.46x. We've had some significant recoveries in the distressed credit business in the last 12 months. And despite an extremely challenging environment, we have managed to have a significant amount of resolution. And we hope that we are able to keep up that scheme over the next 2 years despite the crisis we are facing with the current COVID crisis. Moving on to the asset management business, which comprises of our mutual fund business. The segment had revenues of INR 63 crores with a PBT of INR 22.5 crores. The business contributed 2% to our group's PBT. PAT from this segment de-grew to INR 10.28 crores for FY '20. The average quarterly AUM of the mutual funds stood at INR 6,109 crores, comprising INR 3,285 in equity and INR 2,824 crores odd in debt schemes. With this brief update, I will now request Manish, our group CFO, to present the group's financials. And after that, we will open up for Q&A. Thank you. Manish, over to you.

Thank you, Vishal. Good evening, everyone. As usual, before I present the financials, I would like to bring to your notice that any forward-looking statements made on this call are based on management's current expectations. However, the actual result may vary significantly, and therefore, the accuracy or completeness of these expectations cannot be guaranteed. Now let me take you through the group's results, which were announced yesterday and are available on our website. In quarter 4 FY '20, our revenue grew by 6.12% year-on-year to INR 840 crores from INR 792 crores. The quarter 4 FY '20 profit before tax is at INR 215 crore, which is a decline of 12% year-on-year, but our quarter 4 FY '20 profit after tax increased by 1.49% year-on-year from INR 128 crore to INR 130.56 crore. With regard to the full year numbers. For FY '20, the gross revenue is INR 3,453 crore, and the net consolidated profit is INR 544.98 crore. This represents an EPS of INR 6.48 versus INR 6.82 for the same period last year. As of March 31, 2020, the net worth is at INR 5,586 crore, which is a book value of INR 66.41 per share. Some more details. The group's finance cost has decreased to INR 1,385 crores in FY '20 as against INR 1,446 crores during the same period, primarily on account of decrease in the borrowings and overall gearing. Our cost of funds for the lending business stood at 10% compared to 9.2% year-on-year, primarily due to increase in the borrowing cost and also due to change in the borrowing mix. As Vishal said, we have 91% long-term borrowing and only 9% short term versus 73% long term and 27% short term a year ago. With this, I would like to conclude, and we are happy to take any questions. Over to the moderator, please.

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

My first question is with regards to the asset management business. I think a few quarters back, we had alluded to the fact that there are some new hires in the wealth management business and the wealth management, and the asset management business would get aligned. But what are our thoughts presently on the asset management business? And given the fact that there are a few AMCs, which are already up on the block, are we looking at inorganic expansion? Are we looking at acquiring anything from the asset management? How do we scale this up to a larger space in the AMC industry as such? That's my first question.

Yes. Sure. I'll take that question. So I think our wealth management team has almost doubled in size, and most of the people have joined us since Diwali and Christmas of last year so -- and a lot more joining even this quarter. And so you will see that significant difference because it takes a year to 18 months in terms of performance. Having said that, our productivity and efficiency per manager has actually improved a lot, both from the quality of AUM, the mix of a better equity AUM as well as the integration of our investment banking, wealth and securities working wonders, and we are able to put through a lot of transactions between our wealth investment bank and institutional clients. On the asset management side, again, most of our recruitments are now complete. We have already closed our private equity Fund II. We have finished -- completed the first close of our distressed credit fund. Our private equity Fund II has closed at approximately INR 600 crores. The distressed fund had, had a first close of almost INR 175 crores. So those teams are ramping up, and we look forward to raising more and more funds over the next 2 to 3 years. On the mutual fund side, we've hired a new CIO. Satish Ramanathan has joined us. He used to be in Sundaram Mutual Fund earlier. And the team is working on a lot of new products and new structures. Of course, a lot of them may not be launched immediately or you may not see the movement because of COVID-19. But I would think most of our recruitment over the last 18 months, which has been planned, has been completed. So we look forward to seeing more traction over this year in these businesses.

And the inorganic expansion part, given the fact that [indiscernible]

Yes. So it all -- we've looked at a few. And to be honest, we are very careful on our capital allocation. And unless something is at a very attractive price and makes a very good cultural fit, we will not generally be the top buyers or the top payers for some of these assets. Mutual fund valuations on the private side are still rich, and I would imagine the industry from a pure mutual fund perspective is going to be under some amount of threat with the advance of index funds over the next 5 to 7 years. You've seen pressures on fees on the regulatory side. So it's not a very easy decision to take when you have to pay a premium price and purchase some of these assets when the underlying shift for some of these businesses is almost half a decade away. Having said that, the alternative investment business is a better and more attractive business. And the PMS equity business is a much better and attractive business, and I think we will be focusing and growing strategically in those areas, as I've said also in my earlier calls, than really full fledge growing some of these mutual fund businesses. The mutual fund space will get concentrated in the top 10 names. And I won't be surprised that we would reach a stage in India where more than 70%, 80% of market share of most mutual fund managers in India will be concentrated in the top 10 names, and more than half of them will have large bank-based distributions.

I take that last point. We are already at that stage, 83% of the total AUM is at top 10 AMCs. So why do we have -- I understand what we are putting across PMS and the [ IF ] businesses, which are lower regulated versus the MF business. So my question was, can you then -- if you don't want an inorganic expansion, why are we in this business in that case? This is a small-sized business. What -- why should we be in this business, in that?

Because it is a good business. It is profitable. It has been managed extremely efficiently by the current team. And if you see, one thing that has definitely changed for the mutual fund space on the credit side is that almost everyone's becoming equal, right? You have seen large players having problems, which the small players haven't. So there are pockets of opportunities which we can build onto. And so there is no reason for us to just exit a business because we think it's not going to grow. As long as we know it can grow profitability and add to our bottom line, there is no rush to exit it. So I'm not saying I'm negative on it. I'm saying I'm negative on making some big bang acquisition. I think even in the 20%, among the non-top 10 players, there is a very clear position where we can operate profitably and grow it well.

Sure. My second question is with regards to the retail home loan. What are the numbers that we are building in from a 2- to 3-year perspective? What kind of a book size are we looking at? And are we going to grow? Like will it be own sourced? Will it be sourced to DSAs? Will there be some kind of a portfolio buyout? How do we look at this home loan portfolio?

Yes. So I think it will be more homegrown. We will do a few buyouts opportunistically wherever we can, but I think it will be more home loan going through our direct connect to customer as well as DSAs. And our target, obviously, pre-COVID was to have a book size of almost INR 3,000 crores plus by FY '22. I hope we can maintain the same target. It is difficult to comment currently whether we should have a change or track in strategy or not. We are also watching the situation of how the uncertainty due to COVID develop over the next few quarters. But yes, I think it's more of a homegrown strategy. It's a business that we want to increase in size over the next 2 to 2.5 years. Manish, you want to add any comments on the same?

No. I think, Vishal, you've covered up. So basically that is, most of the business is in Tier 2, Tier 3 cities, [ what you do ], and it is sourced by our own DSAs on the ground. So I think, Vishal, you covered up. Thanks.

Sir, just one last question, which is a data keeping question. The home loan business, what is the average ticket price? And what is the average yield on that particular portfolio?

The average ticket size is around 10 lakhs, and the yield is around 12.75%. Is that correct, Manish?

Yes, sir.

The next question is from the line of Ritika Dua from Elara Capital.

And my apologies, I missed both Vishal and Manish's opening remarks. So in case if they have been answered, then I'm sorry for the repetition.

No problem, Ritika. Go ahead.

So firstly, on the OpEx bit. On the employee bit, it looked quite down quarter-on-quarter. What is there to read into it?

Sorry. On the employee bit, meaning?

On the employee expenditure.

Yes. So we have a quarterly provision for incentives and which is not based on performance at the year-end. So we had a lot of provisions already made for 9 months. So we did not require as much of payment for the incentives to be made at the end of the year. That's all. So it's roughly -- maybe roughly a INR 20 crore, INR 25 crore adjustment at max.

Right. And sir, if I could understand that on an annual basis, how does this number look like?

It's roughly -- it could be anywhere between INR 100 crores to even INR 150 crores to INR 160 crores, depending on performance and depending on the outlook for the next year.

Sure, sir. Sir, the second bit, obviously, the provisioning, which we have done, which obviously most of the financial companies are adhering to because COVID being uncertain, could I get some more color on this provisioning number that you have done? Some thought behind -- maybe some thought behind the moratorium being given or how have we -- the best way you can help us understand that how have you arrived at this number and how confident are you -- I know it's uncertain, but still how confident are you on the numbers not increasing.

Yes. So that is actually $1 billion question on whether the number will increase, decrease, be stable. I hope I could answer that accurately. But let me give some perspective on the call on what we've done. So what we've done is we've done a complete bottom-up analysis and on almost -- at least on the wholesale side, each and every loan that we have. At JM, internally, we have already done a full AQR on our entire wholesale mortgage portfolio. So it's an internal risk-based board committee-driven asset quality review. And that was completed sometime in December of last year. And in fact, we felt extremely comfortable after that review. And in our Jan Board meeting, we had taken a decision to restart growing the wholesale mortgage business, which we had put on hold post IL&FS. And all the origination teams and Gitanjali, who's the head, was clearly instructed to go out and actually source new business starting the new financial year, which is April, May of this year. And of course, COVID struck us in March. So obviously, that is again back on hold. So based on that AQR, a lot of provisioning -- a conservative amount of provisioning was already done for 31st December. So what did we do differently? So what we did differently is we worked with our internal risk team. We worked with our auditors over the last 5 weeks. And we went through each and every account in our wholesale book, the wholesale mortgage book as well as the corporate funding book as well as the promoter loan book. And we figured out how each of those accounts could be impacted, where we could have potential losses. And with a specific focus on our NPA, our SMA accounts, and we decided that we should conservatively provide and as high a provisioning as we think is possible. And bottom-up, account by account, we increased provisions on our NPA, SMA2 as well as SMA1 accounts. And that is how we've come to a total number of INR 175 crores. The same, the [ ditto ] same account-by-account methodology was followed by our ARC for their distressed asset book. They had estimated provisions that they need to make as well as the fair value losses that they need to provide against each and every security receipt that they hold. And the same thing was also extended certain framework for our capital market loans. So the impact on the capital market loans as well as the home loans as well as the restructured finance and corporate loans book is very small. The large part of the provision that has been made here is actually between our wholesale mortgage and our distressed asset book. So if I were to give you the breakup between these books: the provision made in the wholesale mortgage business is roughly INR 87 crores; the ARC is INR 67 crores; the structured finance and promoter lending book is INR 16 crores; the capital market book is INR 3.7 crores; and the home loans book is INR 1.6 crores; and this adds up to INR 175 crores.

That's very helpful, sir. Sir, any number on the moratorium that have already been extended in terms of the percentage of the portfolio, which is maybe peak or extended [indiscernible]?

Yes. So our wholesale mortgage portfolio is almost 2/3 on the moratorium. Our capital market portfolio has almost 0 moratorium. Promoter loan portfolio has 0 moratorium. Our home loans portfolio is around 50% under moratorium. Our education institution finance business, I think, is almost 0 moratorium. And our structured credit business has roughly 1/3 moratorium.

Sure, sir. Sir, on the liability bit, if I can ask that, and maybe I'll come back to because I have more questions. On the liability bit, obviously, because we have now -- we have a very high share of NCDs and, obviously, we have completed rundown on CPs, which is a good thing. Banks, obviously, has not been increasing as much, which is obviously a bit of an industry-wide phenomena as well. But obviously, the NCD, which will not give you moratorium, at least the bank side, maybe now some bankers are still probably looking to now extend the moratorium, which was probably awarded earlier as well. So how do you really look at this on your -- while you are liquid enough, you have low leverage, et cetera, but like how do you really look to change your liability a bit more? And what is your discussion with banks at the moment?

Yes. That's a very good question. It's something I think about every day. So yes, we do have a heavy share of NCDs, but we also have a very decent share of bank borrowing. I expect by this quarter end, our share of bank borrowing will go up substantially. One more reason, Ritika, you should understand is that we have taken a decision 18 months ago not to grow the wholesale real estate book. And the wholesale real estate book actually depends on bank borrowing the most, right? So the NCD borrowing is really for capital markets, promoter lending where -- and ARC. Where we cannot borrow from banks with these businesses, you have to borrow from -- from an end-use perspective, you have to borrow from the capital markets. But for the mortgage lending book, there is no issue at all. So I think we will raise a lot of bank finance this quarter. We are hoping to close a few transactions, few loan transactions, [ that is ] TLTRO transactions over the next few weeks. So that will take care of the issue on the wholesale mortgage lending side. On our distressed credit side, we are obviously stuck a bit with NCLT being closed. A lot of recoveries were anyway delayed because the NCLT, the IBC process has been a bit frustrating and slow compared to what we thought it would be. So our reading of the time lines for our ARC recoveries has been a bit too optimistic compared to where we are seeing it. And we are hoping once the COVID-19 situation settles a bit and IBC opens up and the fact that the government has said that no new IBC filings can be made for a period of time, that will help the current cases to get resolved faster, and therefore, give us a lot of recovery cushion to take care of the liabilities on the asset reconstruction side. And if that slows down, then we will have to prune down our assets, and we'll have to sell our assets to foreign investors, which is always a choice we've had and we've opted not to do. But maybe we'll opt to do the same over the next 1 year and get the liquidity back into the ARC. Now coming to the capital markets book and the promoter lending book. Now this entire business actually depends on market finance and capital market finance, both in the form of CP and form of NCDs. But luckily, as I said, that we are holding a ton of cash, and our liability profile is very long term in nature. So I don't see this impacting us at least for the next 12 to 18 months. But if the economic crisis is going to be very bad and some people talk about Great Depression, et cetera, et cetera, then we don't know. But as of now, for 12 to 18 months, we are in a very comfortable position, and we'll still be able to fund and grow our business, even though the NCDs and CPs are going to be out of reach for at least the next couple of months. Our cash on balance sheet should be able to provide us the much-needed growth. Also, the book here is fairly short-dated, right, with the maturity of the assets on the promoter lending and the capital market side is all less than 1 year, which gives us a potential additional liquidity of almost INR 1,350 crores to INR 1,500 crores. So if those repayments come back, and they will because they are against all liquid securities, that additional buffer for us to be able to grow the business. So this is kind of the overall picture. Now on a macro level, how long do I think before people get confidence back to start lending from a mutual fund side? I think it's going to take a long time, right? I mean we've never heard of [ 6 funds ] getting closed down and almost INR 28,000 crores of investor money not being available to them, which should have been available to them at a moment's notice. So these are very significant sort of events that have happened in India's capital, India's financial markets. And therefore, it's only advisable to still be prudent and not do anything stupid.

Sir, if I have maybe a second [indiscernible].

Sure.

Sir, on the capital bit, what is the view now? I mean we were maybe -- obviously, if the price is obviously -- was also a consideration. But then I think a lot of financial companies would again start and already we are hearing a lot are planning to. What's your view on capital raise? What is [indiscernible] for some time?

So I don't have a view. We have a resolution in place. We had taken a Board resolution last year, enabling one to be able to raise capital. See, right now, we think we are in good shape. So there is no urgent need to raise any capital. But we'll keep reviewing this. As you will understand, the situation is very dynamic. I mean I haven't left my home in almost 45 days. I've not sat in my car for the last 45 days. And I haven't entered my office in the last 45 days. So -- and I don't even know if I'm going to be able to do the same in the next 15 days. So things are very dynamic. But having said that, I think our ship is sailing quite well. So we'll take that decision as things evolve.

Sir, just one on the provisioning business to close there on the provisioning discussion. So obviously, when we had discussed last also, you had a decent provisioning on your ARC book because of the delays and et cetera. I don't know if you want to maybe share the number or you only share the percentage, whichever way or maybe a [ comfort then ], how provision we see ARC book today. And secondly, on the promoter bridge. So while I understand, obviously, you are a lead investment banker, so you are very close corporate relations. But then I know the stock market, obviously, has been very brutal. So how confident are you with just like -- if I remember you when you were disclosing your breakup of the INR 175 crore, would a, if I'm not wrong, a INR 16 crore kind of a provisioning be okay given the way the markets have fell? And most of the cases, I think it will be the security of the promoter which would be as -- against which probably you would be extending the lending to?

Okay. Both again very good questions. So I tell you why we increased the provisionings in our ARC book. The reason is we think that there are going to be more distressed assets available. And when there are more distressed assets going to be available, the price realization that you will face from your current assets may actually go down. So we actually believe that the IRR returns that we would get from our current stock of assets will actually go down because of more distressed assets being available. Having said that, that is also an opportunity, and that's why we are raising these distressed funds. Our ARC team is working very closely with our asset management group to raise distressed funds. We have lots of credible partners globally. More than 5 have already contacted me to partner for various assets coming up as well as assets in our own book. So I think it will be -- it will slowly move. The distressed asset piece will slowly move from being a balance sheet business to actually being an asset management business. But that is not true for our real estate business. I think we have a fab -- an absolutely fabulous wholesale real estate business. I think it will stand the test of time. I think we have a great management team, which has done a good job. I think we will probably have the lowest NPLs in this sector, and we have great asset coverage underlying our loans. And that is a business we would still want to grow on balance sheet, and we were ready to grow it this quarter. We did not now because of COVID. But as soon as the time is back, we will be the first ones to grow it again. And your question on promoter loans. So I think most of our investment banking -- and you rightly said that most of the clients we lend to are our investment banking clients. But it is the integration of the IWS, the investment banking, securities and the wealth franchise, which allows us to manage the risk extremely well in these situations. And I can confidently tell you that in the last decade, forget about the last 1 year or 2 years, we would probably have had the lowest loss given default in this business among all our competition [indiscernible]. And the reason is we are very conservative. We look for very high security levels. Our understanding of the underlying company that we are lending to is super solid. And we are also very fast in pressing the exit button, which is the critical thing to manage risk here. And therefore, you see low provision. So we're very confident that we will not see any incremental issues in our promoter lending book.

[Operator Instructions] The next question is from the line of Umang Shah from HSBC Securities.

I just wanted to clarify on a couple of things. So on the moratorium front, fair to assume that on probably the overall book level, almost about 50% to 60% of our -- of customers or 50% to 60% of our loans would be under moratorium?

That's right. Roughly half. That's right.

Roughly half. And have we sought any moratoriums from banks or we are honoring our commitments?

We have not sought any moratorium from any bank or any financial institution, and we don't even plan to in the near future.

Sure. That's great. On the liquidity front, Vishal, you mentioned that, clearly, you have got a very good cash cover on the balance sheet. Would it be fair to assume that maybe that allows you to manage your repayment obligation, your fixed cost, maybe for a couple of quarters?

Yes, probably even longer than that.

Okay. Okay. And just lastly, Vishal. In some of your previous calls, clearly, you have given your outlook for the sector that it has to get -- it had to worsen before it could get better, and that was pre COVID. And obviously, now we have been hit by such an unexpected event. Clearly, your commentary so far infuses a lot of confidence that you appear to be fairly comfortable on your book, but then where do you expect there will be pockets of stress because there will be stress, for sure, right? So which would be the pockets of stress? And probably within the sector, what would be gos and no gos for you as a company? Maybe not looking immediately 2 quarters, but maybe from a 4- to 8-quarter perspective?

Yes. So again, that's a great question. But I think, one, the issue really is -- so my commentary obviously has been conservative and have always maintained that the worst is still to come, but I did not have a magic sort of wand to predict COVID, right? I mean no one predicted COVID. No one even knew what COVID-19 was till late Jan. So this obviously is an unprecedented event, and it can have crazy sort of ramifications. We are -- we're just in an environment where our management team has been very conservative. I'm actually blessed to have people who constantly think about risk all the time, who are not just telling me to grow, but also telling me to manage balance sheet. And because of the construct of our DNA, the construct of how we think, we've been very conservative, and that's playing out sort of in our favor right now. But if the COVID situation were to extend, say, beyond 1 year, say, it's still around in May, June, July, then obviously, it is -- I will look to be a debt-free company. I mean why am I going to hold any kind of leverage if the situation is going to pan out the way it pans out? And luckily for us, our leverage is already 1 is to 1. So to bring our leverage down to 0 will not take us very long. It's just about triggering a large asset sale program to 2 or 3 large banks and taking our leverage down to 0. So the point is not that. That is not the intention of the management. But the point is it's very difficult for me to tell you what will happen going forward. But let me give it a very quick attempt without taking time away from the others. So I think -- personally, I think the COVID issues will settle sometime around January, February of next year, let's say. This is not going to be a problem which is going to vanish away over the summer just because we have some more heat. There are a lot of smart people in [ WH ] that are people who study medicine and study viral infections over the years. And they clearly understand that the mutation of the current coronavirus is extremely, extremely contagious, and it's not going to sort of go away fast. Having said that, I think the global response to find a vaccine, to find medicine to cure this is also unprecedented. And I'm pretty sure we will have some early wins maybe in the fall of this year. So I think till December or at least till maybe February of next year, one has to have cash, minimum. I think we have more, but businesses should have cash to cover all their liabilities, interest payments, principal payments as well as all the fixed costs. Very important, number one. Now when you come to the real estate sector, I'd make a few comments. I think -- so my intuition and my thought process and having seen this sector over the last 1.5 decades, I think I'm super bullish on residential real estate. I think the next 12 months to 15 months will see the completion of the down cycle of real estate, which India has seen over the last 7 years or 8 years, depending on which city you pick. And there are a couple of reasons why I think that. I think we're coming out of a phase of huge insecurity. I mean COVID has created insecurity between families, businesses, people who are employed, people who run their own businesses. And I think the first thing you would do when you come back to some kind of semblance and some kind of normalcy is that you will want to own a home, number one. Number two, home prices will come down. And I don't think home prices come down by 5% or 10%. I think home prices come down by 15% to 20% on average, right? So that is going to be an attractive proposition for people to buy homes. Number three, interest rates are going to go down. They're going to go down further. There is no choice. I think we may see a contraction in GDP by over 10% to 20% this year. If that's going to happen, there is no way interest rates are going to be where they are. We are already 8.5 lakh crores of liquidity of banks sitting in RBI, not lending out. And the safest asset class in India over the last 4 decades of statistics has been home mortgages, home loans. And the first asset class, which the government will want money doled out to and banks will be comfortable taking risk will be home loans. So I think you will have a lot of financing. You will have interest rates maybe as low as even 6% or 7% on a home loan. You will have home loan prices cut, not by 5%, 10%, but maybe even 15%, 20% and 25% in certain cases. And lastly, you're coming out of a phase where, psychologically, people will want to own homes. Then if you talk to large companies, you talk to TCS, I mean, just look at JM, we are looking at moving 25% of our workforce to work from home, right? When you look at these trends, which are developing, I think investment in a home is going to be very important. So that makes me feel that the next 12 months to 18 months is the final, final sort of down cycle for the residential business in India. And then I think we see a 7-, 8-year up cycle, a clear, a big up cycle. And one more point. The last reason is there are a lot of projects, there are a lot of dud projects, a lot of badly financed projects, a lot of badly constructed projects, which will never see the light of day. So when people talk about inventory, inventory is just as the project is launched, it goes on to inventory. It's not completed inventory. And I think a lot of that inventory is never going to see the light of day because there are many companies which will not be able to complete the construction finance, and many projects that don't deserve the construction finance for the project to get completed. So if that's the case, you're never going to see the inventory coming up. So 18 months down the line, the inventory picture is going to be very different. So that's the fourth one. Now overlaying all of this, the concern I would have and where I could be proven wrong is that if we don't have a strong enough fiscal push, right, and if India goes through a deeper crisis, not able to attract more foreign industry, FDI or Indian businesses suffer a lot more pain compared to what most of us are thinking today, then that could result in a lot of unemployment. And if the result in unemployment is quite high and the unemployment statistics continue to weaken over the next 2, 3, 4, 5, 6 quarters, then that could be a little bit of a dampener in terms of home purchases and linked to that home loans. So that is one -- that is the one negative. But I think the 4 positives outweigh. I'm fairly confident that our government will eventually take steps. There will be a fiscal package in place which will help SME as well as consumer India. And a year from now, things will be back to normal. Now coming to commercial real estate, I have a very different view. I think commercial real estate will go through pain, and every country is going to localize more than globalize. Just like India is going to want more jobs in India, the U.S. and Europe and many companies that are going to want more jobs in their own countries because COVID-19 is not a disease that has impacted one country. It's impacted the whole world. Because of more of a local movement compared to more of a global movement, there could be trends against outsourcing. There could be trends against offshoring. And to cut costs in all those businesses, people will focus on ideas like work from home and reduce their commercial space requirements. So -- and commercial has seen a very strong sort of growth in the last 4, 5 years, and I think that will turn and get hurt probably over the next 3 to 4 years, but I think residential will grow. Coming to retail. I think retail gets impacted the most in the short to medium term. But I think after we get past corona, I think retail, again, will come back with a bang. So I'm long-term bullish on retail, but short term, very, very negative.

This is great. This was really helpful. Just one last data point. Have you guys referred any of your projects to the SWAMIH fund?

No. Zero in our real estate business. We just won one project in our ARC.

The next question is from the line of Anand Laddha from HDFC Mutual Fund.

Am I audible?

Yes, you are. Go ahead.

Most of my question has been answered, actually. The explanation, what you offered just now in the previous question was good. Just wanted to understand, like to clients to whom you had given moratorium or within your wholesale book, if you can give some color like what proportion is residential financing, what proportion is commercial and what proportion is under construction.

Yes. So 25% of our asset size book on the wholesale mortgage side is actually loans where the projects are completed, and our security is completed units with occupation certificate. So over there, it is only basically sales happen, and we get paid. Roughly 25% of our book is loan against shares to developers as well as loan against land. And another 25% -- sorry, 50% of our book, the balance 50% of our book is construction finance loans. Loan against land is broken up into 2 pieces. One is pure loan against land, which we will only do if the land parcel is very attractive and is super prime. So super prime, for example, in India, would mean Malabar Hill or Breach Candy or Altamount Road, right? So very, very super prime land parcels, where we know we will be able to sell it at some price to someone. It doesn't have to be a land parcel for development. It could be sold even for a private bungalow, for example. And the balance is projects, which are early stage, which are against land right now, which needs some aggregation or need some development. So loans against land for development, loans against land where it is pure security and loan against shares of large commercial developers like Embassy or like RMZ or DivyaSree. These kind of guys, they are 25% of the bucket, as I said. So the breakup is not -- it's not very even. It's really more project-based. So for example, if there is a project which has been selling very well and the units are ready with OC and the developer feels he has enough of cash flow, then he's not asked for the moratorium. But if the sales cycle has been slow, he's been pushing on sales and because of COVID-19, many of the registrations have not happened, and he's very confident he will get the cash flow back in June or July when the lockdown opens, he's obviously asked for a moratorium. So again, it's a case-by-case analysis and that's how the moratorium is not very even or even percentage across the entire portfolio. Shashwat, Gitanjali, you want to explain more or this is okay?

That's fine. And when you, in the presentation, has given an indication in terms of the structures [indiscernible] and some of the large exposures, some of the loan growth, does this cover -- takes into account the fact that there could be a 15% or 20% price cut in the [indiscernible]?

Yes. So what we did is in our AQR modeling, what we've done is we stress tested the portfolio, assuming delay in construction, delay in sales as well as a drop in prices. And we try to figure out that, assuming some very strict adherence to these probabilities, right? So for example, say, a price drop of 25%, say, a delay of 2 years, right? And assuming all of this, what percentage of our portfolio actually falls below a cover of 1, right? Because that is scary. If the cover is going below 1x, then it is obviously a red signal. And interestingly, the number is 3%.

Okay. Okay. Okay. Perfect. Perfect. And lastly, on the liability side of the balance sheet. When you interact with multiple banks, so what you are hearing or [ what are they doing feel ]? Are banks still looking to fund -- to give you line of credit? Or how is it [indiscernible]? Second, on the NCD exposures. If you can break up that exposure into what proportion of the NCD is retail NCD and what proportion is largely taken by future fund or by corporates or by insurance companies?

Yes. Sure. So -- sorry, your first question was again?

What are you hearing from the bank in terms of line of credit [indiscernible].

Yes. So I think my view, frankly, is that I think the banks will lend and eventually lend, but the banks also are in a bit of a shock right now. I mean the COVID-19, see, what happens is think about you being a lender, right? You have to disburse money if you give money to clients. And you know there is an unprecedented crisis like COVID. So the first thing you're going to do is you're going to check your own balance sheet. You're going to try and project what NPLs you may have this year and next year. And then you figure out who do you think is going to survive, who do you think is going to be safe. And then eventually, you start lending. So obviously, the first -- your first gut feeling is, yes, let's just lend to a Reliance or a Tata because we know they are safe and they're never going to default, right? So it's a process time which takes place within a bank and a bank system. And I think eventually, that credit will start moving. But it has to move. If credit transmission doesn't happen, then I think you will very quickly forget about waiting till next year. I think by September, you will see bankruptcies going up in India. And I'm sure RBI and the government understand that. And I wouldn't be surprised if they just make the reverse repos 0 just to make sure that the 8.5 lakh crore actually moves in the system. Because one thing is very clear. If you have $1 and then you give a subsidy of $1, remember, the subsidy of $1, you've lost it the minute the subsidy has been used. You're never going to recover anything from it. At the same time, when you use that $1 and you use that $1 to provide, say, for example, a credit guarantee, you may actually never use it, but by providing the credit guarantee, you will move $10 of credit in the system. And I think this is the point the government and RBI need to understand, that the government, by providing a 2 lakh or 3 lakh crore guarantee, will move 20, 30 lakh crore of credit in the system, which will get the economy back and going. But I'm sure there are some smart people there who will understand this and hopefully we will see some action soon.

[indiscernible] and on the NCD side?

Yes. So we have roughly, if I'm not mistaken, almost 1/3 of our borrowing is in NCD form. So Manish, just correct me if I'm wrong. And I think 40%, 45%...

That's correct. [ 20 ]...

40% to 45% of that would be retail NCDs. And of the balance, which is the 50%, 55% of that 30% number, would be, I think, 10% from corporates and the balance from insurance companies as well as mutual funds.

Perfect. And do you track on the retail entity data, like what could be the number of customers you have? What is the repeat customer [indiscernible]?

Yes. So we have never contracted any kind of deal or transaction to attract wholesale customers. Most of our retail entities are pure, real retail NCDs. So we've never tried to fill up a public issue just for the heck of it. I mean, we go for a pure, well-distributed retail response in each and every issue that we've done.

Okay. And lastly, on the margin side. Given the environment and the liquidity with the wholesale developer, I think there is enough pricing power with each of the lender. So the new interacted bank, we see each of the bank indicating to us there is enough pricing power even with a large AAA corporate. Can you hope that there can be some margin increase next year?

Fingers crossed, let's see. But I'll tell you one thing. In -- you've got to be careful in real estate, and you've got to be careful generally, right? See, you're going to have a very -- see, again, credit transmission, as I said, is the key. If you just look at the sort of simple macro card, you have inflation, which is definitely going to run low for this year. I don't see oil demand picking up. I mean I don't see cars on the road, right? So there's a question of why is demand picking up. So oil will remain where it is. Still traffic comes back to normal, both on land as well as on -- in air. And so -- and India has a good stock of food grains. India has surplus in food right now. And hopefully, if you have a good monsoon, that's going to be okay, too. Consumer staples health, they'll do well, will do fine. But consumer discretionary is going to get hit in a big way. So we are talking about a low inflation environment, right? So if you have inflation, say, circa 4% to 5%, and our credit spreads have widened. They have not narrowed because credit transmission, as I said, the biggest problem in the economy is not happening. So if we have a widened credit spread on low inflation, and we try to increase our margins, then we could be inviting bad assets on our books, right? This could be a recipe for actually disaster long term, trying to actually increase your margin in this environment. So we can increase our margin for short-term funding. People who have short-term needs where we see just a cash flow mismatch, and we are comfortable with the security of the source of repayment, and we will continue that business. And that business made a good amount of profit for us last year, which is part of our investment banks, and we will continue that business over next year. But in our mortgage business, we'll be very careful. We are not very enthused with making a lot of loans with high interest rates because we see that as a recipe for disaster 2, 3, 4 years down the line.

And then may I ask last -- one more question? On the OpEx side, if you can give some color like what proportion of the OpEx is fixed, what proportion of OpEx is variable. Is there any space to reduce some part of the variable...

We are -- our assets come in the elevator every day and go back in the elevator every day. That is the biggest variable component of our assets, right? We are a financial services business, so it's people. So that's the biggest part of our cost. Our remaining costs are not very high.

And what part of the employee cost is fixed and variable?

So it'll be roughly 65% to 70% fixed, and the balance will be linked to incentive schemes and variable structures, including deferred payouts.

The next question is from the line of Antariksha Banerjee from ICICI Mutual Fund.

Yes, sir. Sir, one thing has to do -- each piece is actually the wholesale part. The SMA2 number that you provide, if I look at your credit solution separate presentation, there is a INR 150 crore, which is not credit solution. Could you just tell me what those SMA2 accounts would be like?

Sorry, what is the INR 150 crore? I missed that.

Of your overall SMA2 that you've provided. Without the credit solution, around INR 150 crore roughly is the balance that is remaining, if I do the calculation correctly. Is that related to wholesale mortgage or there is some other...

Yes. So that would be the old wholesale mortgage booking products as well as the structured finance, if there is any SMA2 there. [ Nishit ], you want to clarify that exact detail?

Yes. So Vishal, you are right. It'll be in the old wholesale mortgage as well as in the structured finance.

I think, roughly, I think, half and half.

That's right.

[indiscernible]

Sorry?

[indiscernible]

Sorry to interrupt you, Mr. Banerjee. Your voice is breaking up, sir.

Can you hear me now?

No, sir. Your voice is breaking, is unclear.

Okay. [ Final then ].

We can hear you now.

Yes. The second one is this early stage financing part, which you touched upon, it's roughly 17% of the credit solution book, according to the breakup. So I understand those are not concentrated. These are very small and specific exposures [indiscernible].

That's right. There will be many loans across various projects.

Okay. So that's not something you would [indiscernible] something? Would not categorize that as a stressful product at the moment?

No, no, no. See, in fact, if something is very early stage, actually, it's not very stressful also because we're under approval. It's not that you disbursed too much money for construction of the project to start. So actually, we're in a very good position where we don't have stuck projects, right? Our projects are moving. We have 1 or 2 stuck projects, that's it, which we are very confident we'll take care of. But most of our projects are moving, which is a big positive.

The next question is from the line of Dhruvesh Sanghvi from Prospero Tree.

Am I audible?

Yes. Go ahead.

Vishal, just wonderful replies and very patient hearing and replying. One part on the entities. The retail entities on the market are quoting anywhere between 18% to 25%, with very thin liquidity, of course. Is JM, with such a wonderful position, not even trying to signal something like buybacks or some form of legal remedy to this? Because that will help to raise retail deposits at a later point in time.

So I had -- to be honest, I had no idea retail entities are trading at 18%. I'm actually even heard it. I think we closed the buyback recently for a very large NCD at a much lower rate. Sonia, are you aware of this?

Yes. I think that was at 8.5%, which I heard. But the strange part is that if people are looking to exit at these rates, it's like -- it really signals a very bad -- and we don't know sometimes, these things can have its own contagion at a later point in time. So that is one feedback which you should consider.

No, I had no idea. I haven't seen -- I mean I've been told NCDs haven't even crossed like 13 number. They've been well below 13 even in a very, very bad time. So I'm shocked.

I will send the list.

Please do.

And I've been tracking this weekly for the last 1.5 years.

No, no, please do.

[indiscernible].

No, I will have a look at it myself.

Right. So the second...

It's quite shocking to me honestly because considering our leverage and considering our strong balance sheet position, we should not be trading at those levels.

Right. And the thing is, even the [ keenest ] people on the call, if they start looking something like this past 6 months, they will have unwarranted questions in their head going on, which you will never come to know when the speaker is asking a question of.

Fair enough.

Right. So that is one. The second element here is I want to understand your mindset and the organizational mindset in terms of, let's say, how do you see the IWS and, let's say, specifically the securities business. And when I say security, let's start and break it by broking particularly. So in the advent of the discount brokers who are taking market share, let's say, I think the CDSL, NSDL data came in with some 5, 6 lakh additional accounts getting opened even in the month of April. I see that JM does not have an online mechanism of opening accounts. So are we not losing out in a very big way in this manner?

Yes. It's a good question, and we've been studying these trends just like you have been. In fact, we spent -- I spent almost 3 hours -- 2 or 3 hours this morning on our online strategy. And you will see more of that very soon in the next 3 to 6 months.

Right. So a little bit of scuttle but which I did with a lot of employees and some where I've been associated with JM as a client as well. So what I see is the employee of the retail business also feels strangulated considering that the company sees everything only from a compliance metric and the business development really goes to the back burner, even when there are good employees across the value chain that you have. So again, this is one more feedback. And the last one is, apart from the securities, where do you see -- let's say we are focused on the mortgage lending, but there could be situations where so many builders will not be there anymore. And if their consolidation in the residential space happen in a big manner, how will this create an opportunity? Or this will be a dangerous situation that customers are [indiscernible]?

I can only tell you one thing. That if there are going to be more residential developers who've disappeared, the lenders will disappear even faster.

Okay. Okay. Okay.

So that is least of my worry because I hear of more than enough clients that we have. So I would courageously say that for us to double our loan book today, I don't think we have to even add a single more origination officer. I think just from our current set of clients on book and people who we have dealt with over the last decade, we can very comfortably and easily double our loan book over the next 3 years, which is almost 25% to 30% growth. So I'm least worried about that. And I don't see in our list of 120 clients, I doubt even 10% go under.

The next question is from the line of Kaustav Bubna from Rare Enterprise (sic) [ Rare Enterprises ].

So I see this investment banking was secured...

Sorry to interrupt you, sir. May I request you to speak up? We cannot hear you very well.

Can you hear me now?

Yes, much better.

So I see your investment banking, wealth and securities business has really supported the profitability line item over the year and over the last few years has been doing well. But going ahead into this year, and I mean, it's really -- I understand it's tough to predict what's going to happen, how sentiment is going to improve, how the pipeline is going to look 6, 7 months from here. But I mean coming off a strong base, how do we see this division and the pipeline going ahead in times of uncertainty and less business movement in general? Could you just highlight?

Yes. So let me break up that question in 2 parts. So one is pipeline and the second is the execution of the pipeline. So let me tell you one thing that our pipeline is rock solid. So we have a really, really strong pipeline. I think the IWS team has performed really well, and they've done a great job in the last 18 months. I think we've taken away market share in almost all our businesses from competition. But the challenge this year is going to be the execution of the pipeline. So just for example, if we have an M&A transaction, the challenge we are facing today is how do we execute it, right? I mean how do we do diligence? I mean we can't even leave our homes, as I said. [ So pipeline ], I'm not concerned about. I mean just the mandated transactions that we have today will grow our revenue over last year's revenue, I'm very confident. But can I put those transactions through? So if Ajay has to go meet some new wealth management accounts who want to transact with us, I mean, how much are we going to be able to convert that on a Zoom call, right? It's not that easy. So we are seeing huge amount of interest, huge amount of business volume coming to us. So pipeline, I'm not worried about. It's just the execution. So therefore, I think this year, from an execution perspective, may be a washout. But I'm not concerned about pipeline at all.

So how does that affect -- I mean how would that, per se, affect profitability in this segment for the [indiscernible]?

Of course. Of course, it will affect [indiscernible].

Because I mean it makes...

You can't do IPOs if you can't close your deals. You can't get new customers on the wealth platform. You don't add to your PMS accounts. Secondly, if the equity markets remain low, then the equity addition in our wealth management portfolio actually goes down. So of course -- but what do you do? You actually strengthen yourself. You cut costs. You make yourself more efficient. I think we'll be making a lot of investments in technologies further, right? We'll be sharpening our resources to focus on more profitable opportunities and more profitable clients, servicing profitable clients more. And we'll look to basically gain more market share once we are behind COVID. So it's a difficult question, right? It's like, frankly, asking Mahindra & Mahindra how many tractors they'll sell or how many cars they will sell.

I understand. Just wanted to get your view on [indiscernible].

Yes. No, it's a good question, so as I said -- that's why I broke it up. Pipeline is not a problem. The problem is really the execution on the ground. Now our office is -- our biggest office is in Prabhadevi, which is a containment zone, right? So we can't open our offices. So we are all trying our best to work from home, but what do we do? All of Worli, Lower Parel, Prabhadevi is shut. Bandra, BKC, because of the Dharavi, is going to be shut. So it's just a execution challenge.

All right. And on the wholesale -- just on your loan book, wholesale and home, and I mean other parts, too, even though they're small. So a big part of your book is in moratorium, but that doesn't mean that these guys are going to default. I mean the situation requires them to be in moratorium, let's just say. But I could also say -- and again, it's just a confusing thing. Like 70% of your wholesale book is in moratorium, but the provisions you've made obviously doesn't have to align to the 70%, but it's still -- I'm still confused by this number. I mean I would say like based on the -- I would have expected this number to be a little higher, or I don't know, could be going ahead in the next few quarters. So could you talk a little bit about how you see -- putting your book, certain parts into moratorium and then providing on that, could you speak about how you do that?

So I think one concept of moratorium is, see, if you understand that how it's easy for us to tell a few clients that, no, you please pay, or we provide funding to those clients and tell them, okay, continue paying and don't be in moratorium, right? But we are really here to make sure that we are not troubling our clients when they themselves are going through pain, right? So for example, today, a real estate developer, his biggest pain is going to be to make sure that he has enough migrant labor to be able to construct his building. So I'll tell you what we've done. So our team has spoken to each -- almost each and every account. So almost 80% to 90% of our book has been spoken to. We know exactly when they're going to receive the permission to restart. We know exactly most large accounts, how many migrant labor today are already on the site, when they should be able to start, getting material, how easy it is to get material into and out of the city. And therefore, when we can predict that the sales cycle will be [ stopped ]. Dwello, which is our internal sales listing in our real estate broking business, has actually sold apartments in the month of April. Well, not a large number. Obviously, a lower number compared to February and March, but at least the cycle has been continuing and working. While I can talk you through the data and it would tell you why the concept of moratorium being at 70 or 100 or 50 is not important. The important thing is that how quickly will these projects restart. And we really don't want to give many of our clients the pain of thinking about interest through these 3 months, but really thinking about restarting and getting their cash flows back online. So I think, for example, Bangalore is back first. I mean worse is on full fledge on most sites. And the -- all the developer offices also have started, albeit with 1/3 sort of attendance. Mumbai and Pune is next. I think most permissions are coming through. The only challenge is how are they going to get the material onto the sites. And that also will, in my view, get sorted in the next 2 to 3 weeks. Where we see issues are really Kolkata, Pune and maybe Noida. But having said that, in Noida, labor is not an issue. And for Kolkata and Chennai, I think they've seen a bit of a problem in restarting. But I'm pretty sure in the next 6 weeks, that should also get sorted out. So I think we are more focused on engaging all our clients and all our borrowers on these issues than really pushing them that, oh, just pay interest and keep JM's book current. We are very confident they will sell. They will do a good job, and our loans will get repaid there. So these are not things I'm really stressed about.

The next question is from the line of Kapil Popat from Sundaram Mutual Fund.

Just wanted to understand a couple of things on the liquidity. First, you said that you are planning to do a TLTRO. Any indication on the amount, size, when will that happen?

That would be tough for me to comment. I mean we've applied for a reasonable amount. We haven't applied for a big amount. So I'm not -- I don't believe that we should pay up too much for our borrowing. So if my borrowing costs are increased, I will not grow my book. We need to borrow at a reasonable level, and we should lend at a reasonable level and make our margins. And that is how your asset quality remains good over time. So we've applied for a reasonable amount. I wouldn't say a very large amount, a small amount, and it's to various banks, it's almost 7 to 8 banks. Sonia, you may want to give more color on the same?

Yes. Sure. So basically, we have applied to the banks, and the banks are talking to us on the same, as you know. The TLTRO 1 was largely given to all AAA names. And the TLTRO 2, which is largely for NBFCs, has finished only tranche 1, of which only 50% was subscribed to. So we are actually engaging with them. And like Vishal said, our focus will be to borrow long term and at a good rate. Since we are very comfortable on our liquidity, we won't like to spoil our yield curve and borrow in distress at all.

Sure. But as a ballpark, would it be like 10% of your borrowing or less than 5% of your borrowing?

It will be more than 10% of our borrowing.

Okay, okay. And one more question I had, if you can allow me. I understand that the liquidity is managed on an umbrella basis and not on segment basis. Is that understanding right?

That's right.

Okay. So in that, in one of the pages, you have mentioned that the cash and cash equivalent as on March 31, '20 result of -- was -- or stood at around INR 3,400 crores.

That's correct.

And in the presentation, you have mentioned the surplus liquidity of [Audio Gap]