L&T Finance Limited (LTF) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the L&T Finance Holdings Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us today Mr. Dinanath Dubhashi, Managing Director and CEO and other members of the senior management team. Before we proceed, as a standard disclaimer, some of the statements made on today's call may be forward-looking in nature, and a note to that effect is provided in the Q3 results presentation sent out to all of you earlier. I would now like to invite Mr. Dinanath Dubhashi to share his thoughts on the company's performance and the strategy of the company going forward. Thank you, and over to you, sir.

Thank you. A very good morning to all of you, and a warm welcome to all of you who are joining this call. I hope all of you are safe and in sound health. It's a funny -- not funny. It's a strange feeling to speak on 30th of April, about 31st March results. Normally, it's a short period. But as you all know, the country has gone through very tough times in the last 30 days. So some of the things that I may talk seems like long time back, but you have to remember that it was just 30 days back. And it is the result of Q4 that I'm going to talk about. It is very easy to get lost in despair or pessimism when we suddenly consider the last 15 days, and we will, of course, discuss that what we think about that because many of us, including me, have relatives who are in hospitals, looking for hospitals. And the situation is grave, no doubt. But talking professionally just as a chief executive of a company, I think we should not forget that just a quarter back, we were talking about return to growth, we were talking about green shoots of the economy, we were talking about return to normalcy. And we should not forget that, that is the normal. We will have bad times. We will have very grim times, not just bad times. And I'm not [ booing ] the bad times that we are going through today. But my appeal and what I will also try to concentrate on is the strengths that we have built throughout last year. And last year was by no means easy. But the strength we have built throughout last year, which will help us grow once this mess is over or subsided, at least, in the medium to long term. And more importantly, will help us tremendously to deal with these short-term issues that the country is going through, all of us are going through most definitely. Talking about last year. I've heard that last year was unprecedented. Last year was tough, last year was black swan. All these words I've heard. And there are no -- there is no doubt that all this is correct. I mean, all this is true, there is no fighting. But perhaps what is important to see is the wild swings that last year had, the last year's environment had from quarter-to-quarter. You actually take any economic parameter, you take growth, you take just fear of pandemic, you take growth, you take interest rates, you take liquidity or you take inflation. Let me just give you an example. If you just say economy depreciation in the first quarter last year to partial recovery, to return on growth in Q3, the budget -- everybody talking growth, growth, growth after the budget. And then again, growth is returning this quarter. Interest rates. Interest rates, very high interest rates in the first quarter coming down to absolute bottoming out in Q3 and Q4. And once again, now yields firming. If you take any aspect of economy. It will be the same. I mean, just a fear of pandemic. First quarter, everybody being very afraid, nationwide lockdown to then second quarter slow opening up. Third and fourth quarter, everybody actually forgetting about pandemic, and I think many of us are guilty of -- personally forgetting about the pandemic, starting going out, enjoying. And once again, deep fear coming up. It is -- that makes the last year strange. Normally, with my life, I know that the cycles are a reality of life. But normally, they happen over 3 to 5 years. But this time, you have seen to have seen the whole 3- to 5-year cycle in just 1 year. What it brings to this call and what I want to say is that I would like to submit that when we have seen such years where things go up and down every quarter, what we need to concentrate on is doing things right, doing the basics right. And when we do the basics right, we survive as a people, as a company, as country. We survive through bad times, and it gives us the strength to double down on good times and what is working well. And over the next half an hour, I would like to submit that L&T Finance Holdings has tried to do that. Let us talk about the evidence of that in our profitability parameters. Our earnings before credit cost has actually increased quarter-on-quarter from about INR 1,000 crore in Q1 to 1,000 -- to close to INR 1,500 crores in Q2, and it has increased quarter-on-quarter. And now it is -- actually when compared to year-on-year, it is up 24% from last year Q4. And this is before any credit cost and anything like that. This is profit from pure operations. And that's increasing quarter-on-quarter and up 24% from last year, right? I mean, sometimes these things are just lost. Our PBT has increased continuously quarter-on-quarter and actually almost doubled from last year to INR 828 crore this quarter. Our PAT before exceptional items, and I will try and answer your questions on exceptional items. Our PAT before exceptional items is [ EUR 428 crore ] in Q4, up from -- up by around INR 135 crores on a quarter-to-quarter basis from Q3 and even up on a Y-o-Y basis. So you can say that end of Q4, our majority of the profitability metrics, which is PPOP, PBT and PAT before exceptional items, have undergone continuous quarter-to-quarter increase, and we have tried to capture that in our investor presentation. Now I'm not quoting these numbers as the be-all, end-all. The reason why I'm quoting this number is I want to actually explain where these numbers have come from. They have come from the business trends and various strengths that we have built. And I would like to put these strengths in 5 buckets. First is the business trends that we have built and which will last us in good stead for time to come. Second, the collection strengths we have built, which have improved a lot of our parameters, and those strengths will definitely come to great use in the first quarter, second quarter when these pandemic-related issues are going on. The third is the liability franchise we have built. And I definitely believe that NBFC, especially, is differentiated by the liability franchise more than the offset side. Fourth, the asset quality and provisioning regime that we have had and which has helped us from shops. And I had actually said in the first quarter that we would like gradually increasing performance. And to do that, we used our macroeconomic provisioning policy, and we have used it to good stead and also have a positive surprise there we, ourselves, due to our performance in fourth quarter. And I will elaborate on that. And last is the balance sheet strength that we have built. So I will elaborate on each one of them. The company definitely remain one of the leading financials in its focused businesses, especially in rural and real estate. We not only maintained our market share across businesses but also gained share in 2-wheelers and farm equipment business. In our retail businesses, how we were helped, actually, we were helped tremendously. It's not just group strength. We don't use that. Our digital and data analytics capacities have helped us tremendously. It points us in the right direction, points us to dealerships where the portfolio has been good, will be good, and then we can concentrate on increasing counter shares at those dealerships rather than spreading our resources. And very clearly, that has been the clear formulation of our gain in market share and dominance. So farm equipment, we are #1, obviously, and the market share close to 15%. The yearly disbursements have grown by 17% and the book by 22%. If we come to 2-wheelers, we are among the top 3 financers in the country, and the numbers have changed, but we are in top 3 with a market share now close to 11%. You remember, just 4 years back, this was in mid-single digits. The focus, again, has been analytics-based capturing higher count per share, and the Y-o-Y increase in book has been 8%. Micro Loans. You would know that in the initial period of the year, we have been very careful. We concentrated Q2, mainly Q1. Of course, there was no disbursement in Q2. Concentrated on existing customers and slowly increasing new customer underwriting. Until now, we have reached, in fact, in Q4, close to 50% of our underwriting has been with new customers. And that's really now increasing the momentum of [ pipeline movement ]. Infrastructure, will depend on our churn model. And as you would have noticed, our sell-down capabilities have actually remained very steady through this difficult year also. Housing. Our success definitely has been limited. Our real estate, we have not done any new underwriting this year. And in home loans, we are concentrated mainly on salaried customers. Volumes have been low, but I can say that the salaried customers now are 92% of total disbursements. So through the year, in line with our strategy, we have grown the retail portfolio and churn the infra portfolio, leading now for the first time, the percentage of retail, which is only rural plus retail housing at -- for more than 43% now. As you would know, 5 years back, we started with close to 23%, 24% on this ratio. Slowly but steadily, through difficult times, we have been increasing it. We have also resisted the temptation of showing big growth in overall book by putting capital behind infra and wholesale businesses. Our strategy is steadfast, and that will help us in time to profit. Second, collections. For any successful lending business, obviously, strong collections is a must. Of course, on field efforts are important, but once again, analytics laid prioritization, and resource allocation has helped us tremendously. We have remained steadfast on this. We have not changed this despite changes in quarter-to-quarter situations. In fact, I'm glad to say that in a year like FY '21, our overall collections in rupees-crores has been 33% higher than FY '20 despite very low collections in Q1. One of the reasons why [ Parabas ] book has not grown as much, but I would think it's a good problem to have. It's a problem of plenty at this point of time. It's a good problem to have. Higher collections in rural were backed by very strong data analytics, and we are completely focused on on-due-date collections there. And I'm glad to say that farm equipment, we have reached regular collection efficiency of 91.5% in March, which is very clearly head and shoulders above the industry. The agri sector has been relatively resilient to COVID, and the collection efficiencies have been held by favorable macro environment and healthy farm cash flows. And it also avails well in the future. Our regular collection efficiency in 2-wheelers has now reached 38.4% -- 98.4% in March, which is at pre-COVID levels, very clear. On Micro Loans, I had talked over the last 2 quarters, Q2 and Q3, that it is not so much the issue of collection efficiency. Collection efficiencies have improved. It was the issue of lack of cadence. That problem seems to have reduced drastically in Q4, and collection efficiencies are now steadied at about 99%, 99.1%. I must say that these look like new normal to us. We believe that the 99.6%, 99.7% collection efficiencies are at least far away from now. And we should be ready for the profitability, which comes out of a 99.1% collection efficiency, 99%, 99.1%, and we are ready for it. Amongst infra projects, I would say that collection from transmission and renewable projects continue to be in line with pre-COVID level. There is nothing new to report here, but I would say that the must-runs status on new renewables, the liquidity package for state electricity boards have worked well. Annuity roads continue to receive timely payments and collection from toll roads are up actually 13%, Y-o-Y, in March '21. And even if you see the distribution, it is the lowest and the worst-performing toll road, will be about 86%, 87% of pre COVID. And the best-performing toll road will be about 145% of pre-COVID. So it's not just the average, which is 103%. Generally speaking, toll roads have done well in our portfolio. The escrow collections on real estate projects financed by us are up 21% to Y-o-Y during Q4. And various government measures, attractive schemes given by developers is looking like helping the industry. Sales had picked up in Q3, Q4. I would think April, yes, obviously, registrations, et cetera, are closed. But too early to say at this point of time, very clearly, our sales. Our sales as in sales of our portfolio of projects are 102% as compared to previous year levels. And yes, which -- so I must say that previous year was not great. So 102% of previous year is no cause to celebrate majorly. But okay, it is a cause to become slightly sanguine about. The third bucket is ALM and liquidity. You know that Q1 saw tremendously tight liquidity and we were able to raise funds across [ tenures ] during that time also. And in easy times also, which is Q3 and Q4. So we actually raised close to INR 16,000 crores of long-term resources during this time and quite uniformly throughout all the 4 quarters. The strength of the liability franchise is to see that were we able to raise funds, require funds and maintain liquidity in the bad situations and aggressively work on cost reduction in good time. And I must say that this cost reductions have not been achieved by increasing CP levels, et cetera. It has been achieved by raising good long-term resources, in fact, locking into good, low cost, long-term resources. We have been able to raise close to INR 3,500 crores of TSN throughout the year at extremely low cost. And with the government extended this scheme at least til September, it bodes well for us. Our AAA rating has been reconfirmed as late as this month after all the mergers and everything that has gone through by all ratings. As far as asset quality is concerned, that's the fourth bucket. Here the headline number is NS3, is actually down to 1.57%, our lowest-ever level and with a good level of GS3 at 4.97 and PCR of 69%. Why I quote NS3, because, obviously, we have done some aggressive write-offs even in the fourth quarter, close to INR 700 crores have been written off in the fourth quarter. All the write-offs happen at later buckets with assets which are 100% provided. And hence, very clearly, it is an interplay between GS3 and PCR. So even after that, a good level of PCI and a low NS3 shows it's a clear indication of good collection performance. Talking beyond this NS3, et cetera. The important point is how are we managing our stage 1, stage 2, okay? FY '21, definitely saw marked improvement in asset quality, no doubt. But if I would think a highlight of our strategy is that we have tried to create cushions, create reserves that we can depend on by creating additional provisions, either in the form of COVID provisions or overlay provisions or macro prudential provisions. We built close to INR 1,750 crores till September. We didn't build anything new by December. As you know, we utilized some about INR 18 crores. And we were thinking this whole plan was that this INR 1,750 crore, we will need to utilize in Q4. Why Q4? It's because, obviously, the moratorium was over in April and most of the stress would have actually come in Q4. That was the initial thinking I had shared with you. But even the positive surprise that we had is that our collections based on all the efforts, all strategies, were so good in Q4, actually, is that we had to show these kind of NS3, GS3 numbers also. We had to utilize only INR 706 crore in Q4. We have not planned for it. We have believed that we will be able -- we will be required to use most of this INR 1,700 crores. But we used only INR 700 crores. And today, we are in a reasonably good situation that we are carrying INR 1,033 crore of -- in a best case, stage 1, stage 2 provisions, whether it is macro prudential or overlay provisions to the next year. Lots of questions about whether that will be enough to handle COVID 2, all those questions. But the true answer is I don't know. I will not guess that what will happen according to COVID 2, et cetera, I don't know. We will always try our best like we have tried last year. But the important fact is whatever is the impact of COVID 2, we are pushing to the extent of positives. That is -- INR 1,000 crores is not a small number by any means, right? And that's what I would like to speak about, and that I would think is the more important message today. The fuel balance sheet strength, obviously, we raised INR 3,000 crores in the fourth quarter capital adequacy currently stands at close to 24% with a Tier 1 of close to 19%. Leverage is below 5x, now at 4.72. We believe that this prepares us very clearly to take care of growth opportunities, organic, inorganic whatever comes in the medium to long term, and more importantly, absorb temporary instability in the charter. If I talk specifically numbers and clarify some numbers, which all of you are asking. We -- during entirely, as I said, throughout 2021, we tried that we keep our business, we keep our numbers steady and improving over the quarters. Obviously, sometimes the realities of business take over, but that's our attempt to guide you properly and deliver according to that. One of the good things that was our fee income. NIMS, of course, but I will talk about it, but fee. Our fee income has increased 44% -- 46% quarter on -- I mean, year-on-year, in the fourth quarter. Increase in fee income has been despite actually lower disbursements in many of the businesses. We would put it mainly -- there are a few factors, but mainly to our cross-selling engine and extremely data analytics-led cross-selling. And I'm proud to just quote 1 number in my rural business today. My customer attachment ratio. That is how many products that I sell to one customer is today at 4.1. And the upside of this is that today, most of the products that I sell, other than the main loan product, are actually protection products. There is so much more potential, and that will be the future to even cross-sell other loan products to the customer. We have not yet used it that much, only to a small extent. And that is really the secret of fee income coming. Our NIMS plus fees definitely facilitated by low-cost of borrowing and our ability, perhaps, not to pass on the entire increase to the customers. Ability to maintain a lower liquidity buffer in -- throughout Q4 again increased it now. But throughout Q4, definitely worked and the NIMS plus fees was at 8.17%, right? I must be also very clear that there are some onetime incomes in this. If we normalize them, and some of them are very obvious. As you know, 2 of them are [ satisfied ]. As you know, we had refunded the interest on interest for less than INR 2 crore customers, even before the fourth quarter, and we have actually not recognized that as income because we have refunded that even though it was going to come back from the government. It has come back from the government before the end of March, and hence, we are recognizing that. So that number of about INR 83 crore is a plus in Q4. So very clear, it's not manna from heaven. It was not recognized in the second and third quarter, and now, recognized together in Q4. So this is operating income. I'm only -- it is not nonoperating. It is very much operating income because it was normal income earned. But it has come as a lump in the Q4, and hence, I'm normalizing it. On the other hand, in Q4, we -- the Supreme Court also gave a judgment that gives interest on interest more than INR 2 crore loans also to be given. And there is no clarity that government is going to reimburse, and we are not counting it. So we have made a provision for the same. That is INR 45 crore. So if you minus INR 45 crore, it is a net impact of about INR 38 crores that has come. There is another more similar amount, which has come out of interest on tax refund. We have got some tax refund, and the interest on the tax refund. It is normalizing from all this. It is not nonoperational but still normalizing for all this. The NIMS plus fees will be at about 7.68% instead of 8.17%. Many of you asked for guidance, and I have always been guiding that our NIMS plus fees based on cycles will be between 6.5% to 7%. We believe that going ahead, at least for 2 to 3 more quarters, I can guide you closer to 7% as we go ahead because interest rates have also bottomed down. We are also locking in more and more long-term funds as we go ahead to -- as a good [indiscernible] management. As we also look for growth, some of the NIMs will have to be passed on more. So with that, we believe that this 7.68% is a good starting point that we have. And we believe also that it will be conservative to guide all of you to 7%, and this very high number. I have talked about the other earnings before credit costs, et cetera, before. Our expenses. As some of you have pointed out, our expenses. I will also like to put these expenses in context, right? Expenses should be seen as into 2. One is expenses which are non-value-added and expenses which are valued. Every expense which is done to source more business or to do more collections is a good expense. So the way you have to see is what is the delta of NIMS plus fees and the delta of expense. What did I say about the strategy? That protect where things are not working well and double down where things are working with. Things tremendously worked well in the rural business. So we pushed completely the pedal on rural business both on business and collections. Obviously, it means expenses. And if you see that we have increased much more than the delta expense in income and also carried forward INR 1,000 crores of macro potential because of better collections, I believe it is well worth to spend those expenses. I talked about [indiscernible], I have talked about GS3, NS3 before, so I will not repeat. Now I will talk about the explanation of exceptional items. So we have talked about INR 161 crore of exceptional items. Let me explain what they are. As you know, our IDF, which was set in FY '14 was, obviously, a tax-free entity from FY '14 onwards. But the actual -- and that is according to government of India notification. We had even had tax assessment, and the assessment was closed at nil tax. We actually got a notification saying that we are tax-free in FY '18 -- from FY '18 onwards. And right now, there is a notice of demand raised by the tax department of this amount of about INR 73 crores for Q4 for FY '15, '16, '17. Obviously, we have made a representation that we are IDF and we are not supposed to pay this. But in discussion with our auditors, we have conservatively decided to take this provision. So this is INR 73 crores and it is most certainly onetime, and hopefully, we will even win that. So it [ has ]. The second one is a onetime merger cost, which is time-duty. That is INR 88 crores, which we have already said that merger will cost. We believe that given the advantage that we will get in ALM management, liquidity measurements, liquidity management, when we don't have to manage 3 platforms separately, just that. Our utilization of capital -- more efficient utilization of capital when we don't have to maintain good ratios in 3 entities will more than pay for this in the medium to long term, very clear. Now to strengths we have built, and I'm now coming to the conclusion. Prepared such in 2 folders. These 5 strengths, we updated. The numbers, we updated. One, looking at optimistic side of it, we all agree. And we were all agreeing until 3 months back that all the factors, tailwinds, budget, everything point towards good growth atmosphere across sectors and especially in our sectors, in the country in the medium to long term. We believe that each of these strengths that we have built, market strength, collection strengths, ALM, liquidity management, asset quality, and last but not the least, good capital adequacy will help us take full advantage. But more importantly, in the short term, we definitely believe -- I mean, I'm not -- we should not get carried away with pessimism. At the same time, we should not get carried away with optimism. I'm fully aware that in April, situation has gone pretty bad in the country. It will probably turn worse in May because April, I must say, that the first 15 days of April was actually business as usual. And much better than normal April also, so last year's April. And then the situation has turned quite bad. But let us even look at this wave in -- take out the emotions out of it, and look at it very practically, right? There are a few things which are -- which show that this will -- the handling of the country is better. One, there is no nationwide lockdown. The probability of that is very low. Moratorium-like event, probability of that is very low. I mean, I'm not crystal ball-gazing. I'm only looking at probability. And a huge liquidity crisis. Last year, there was all this liquidity. At the same time, some mutual funds are closing down schemes and all those things. But a huge liquidity crisis, probability is very low. So these 3 things I can say, I can take that look better. I would think economically perhaps there are lots of measures done, the budget has been pushed for things. In terms of rural well-being, monsoon, the reserves are much better. So these are all positives. But there is one thing which is negative, that the severity, mortality, situation of cure and care and, hence, the fear is much, much higher than last time. It leads to 2 things. It leads to customers. Obviously, their livelihood is getting affected, and hence, their ability to pay getting effected temporarily. And more importantly, the holding cash also in fear. So both these things can work negative temporarily. And secondly, every day, I will feel I have to exercise the options choice between business continuity and safety of my people. And we do it in a very measured way properly, not putting our people at unmanageable risk. So these 2 things are very clearly pointing towards difficulties in the quarter. I can't measure and give you numbers as to where I see business in the first quarter or where I see collections in the first quarter. It is frankly too early to do that. As I said, the past 15 days of April have been very different than the next 15 days of April. It will depend on many factors. I only submit that we believe that we are much better prepared in increasing strengths as well as financial strengths to handle this crisis and handle business continuity than perhaps we were in last year first quarter, where it came as a big shock. So that's as far as the short-term is concerned. Now what are the opportunities that I'm talking about in the future. So very clearly, we believe that the digital and data analytics engine, right, that we have built is going to be the bulwark of our growth over the next 3 to 5 years, which is what I call medium to long term, very clear. And I will try and talk about our existing products. We are primarily, our retail is rural related. And if you see all indicators, whether it is [indiscernible], which was 3% higher, with better sowing in palm seed, oilseeds and wheat, which are the main crops. Water reservoir level storage was 23% above normal. Rainfall prediction is at 98% of long-term average, which is considered to be very normal rainfall. Tractor market is at now INR 9 lakh vehicles each year and expected to grow at a 7% to 8% CAGR over the next 5 years. Two-wheeler market. Yes, it was definitely suppressed over the last 2 years for some reason -- various reasons, but we expect over the next 5 years, 8% to 10% growth. The finance penetration has improved substantially as a normal phenomenon in the market. And obviously, due to also some of the specific schemes launched by us and other financials from about 30%, 35% to 50%, 55% over the last 3, 4 years. And we believe that over the next 5 years, it has the potential to increase by another 15 to 20 percentage points. Introduction of electric vehicles, is another good potential and good growth potential as we go ahead. I mean, I'm not talking about a number of electric vehicles today, but very clearly, I'm a great believer and the company is a great believer in the potential of this. We are taking baby steps in tying up with 2 or 3 manufacturers, and I'm happy to say that in this quarter itself, we have financed our first electric vehicles. But of course, very, very small numbers. I'm talking about 2 wheelers. We are not in car finance. So we are under very, very small numbers, but this has potential to grow. Microfinance, very clearly, keeping aside the recent trouble in the next maybe a few months. I'm not talking about that. But clearly, the industry has grown at a good CAGR. Very clearly, the number of borrowers, women borrowers are quite large and with good potential to grow further. Only thing is you need to have the infrastructure to penetrate deeper, to find new borrowers and not keep lending to the same borrowers, and hence, do overlending. And that -- we believe we have that due to our digital and data analytics capacity. The CSR programs we run, especially our flagship program of digital [indiscernible], tie up extremely hand-in-hand with this, and we believe today that the any product or even new products in rural sector, where very clearly, the farm sector doesn't consist of only these 3 products. We are looking at -- as I have said in the last time also, we are working on many proof of concepts. And soon, it will be pilots on many products in the farm ecosystem, we believe good growth potential over the next 3 to 5 years. Housing segment, definitely growing. I must admit, we have not been able to take a big advantage of that. We have recently made a leadership change, as some of you would have noticed. And now, we have the retail rural finance and retail housing reporting to the same individual, so entire retail reporting to the same individual. And we believe that this facilities of retail has the growth that -- no, for rural, and the growth that rural saw over the last 3 to 5 years will now -- we will see the same coming in housing. I'm not talking immediately. But over the next 4 to 5 years, we will become a good player in housing also. On the wholesale side on infra, the potential is we don't want to talk about book growth potential because that is not the strategy. But very clearly, our strengths in underwriting, our strengths in understanding our sectors and down-selling will help us grow our underwriting and disbursement in infra as well. So if you put all this together, that existing retail products, good growth, new products in farm in consumption. Right now, we have taken baby steps in consumer loans. Consumer loans, we have done only to -- as a cross-sell right now to our existing customers. We are now looking at other areas of consumption. So the common factor will be, it is not consumer loans with money given in the hands of the customer, but tying up with various areas of consumption, whether it is education, travel, hospitalization. All those things, and tying up with this and doing -- through deep data, utilizing this for increasing our consumer loans wallet. Putting all this together, notwithstanding any short-term issues, we believe that our retail portfolio over the next 5 years should have excellent growth, perhaps a CAGR of 20% plus. At the same time, our wholesale portfolio, despite good income and good fees, we can keep the growth CAGR at below 5%, and which will lead to not only an overall CAGR of high teens, but the retail to wholesale proportion, completely changing becoming Ulta from 43% to more than 60% over the next 5 years. So I believe very clearly, so just to summarize, we have built good strengths, which will help us deal with the short-term issues, which are unreliable, and frankly, at this point of time, unmeasurable. And more importantly, help us grow the way I have outlined over the next 3 to 5 years. Thank you for your patient listening. I'm open to answer any questions that you may have. Thank you.

[Operator Instructions] The first question is from the line of Arav Sangai from VT Capital.

I had a few questions. My first question being on asset quality. So on your clarification, you said the write-offs was INR 700 crores. But somehow, I see that we have made INR 600 crores of provision on RPL, and we have also utilized INR 700 crores of our standard provisions which we made. So somehow, my write-offs calculation comes to INR 1,300 crores. So if you could clarify around that bit? And where is that major write-off coming from? Is it from the defocused book on the microfinance?

This year -- this quarter, you are talking about, it is in fact [ microfinance ] and 2-wheelers. Over the year, we have also done it from defocused book. The write-offs over the year are around -- one second, write-offs over the year are around INR 2,000 crores, INR 1,964 crore. INR, 1,964 crore, out of which about, I would -- say, defocused book will be about INR 640 crore, and the rest will be majority rural. About your detailed questions, number questions, I would request that you contact [ IR ]. It will definitely clear each of your detailed questions.

Okay. Sir, my second question is again on the divestment front. So if I look at...

Excuse me, I would like you to ask more directional strategic questions to me. I will be in a position to answer them better. Detailed questions, we will be very, very open, transparent and answer all your questions, you can get in touch with my Investor Relations.

Sure, sir. I'll ask a strategic question. So I just wanted to understand on the disbursement front as well. So last quarter, we have disbursed quite a healthy amount to microfinance customers. So now, seeing the commentary that you gave, and obviously, the situation is evolving right now, do you think that the kind of disbursement that we did, there might be some kind of incremental stress on microfinance because the ground situation we are hearing is that these customers are again suffering, and maybe this time, they will suffer more than the last year. And last question, again, on the strategic front. So as you mentioned that our aim is to grow the retail portfolio, like that is very hartening thing to hear. But the point is that we were also focused a lot on inside disbursements where we thought that the kind of intra push that the government is giving right now, it will be a good opportunity to capitalize on it. So will that strategy remain around giving a lot of disbursement in infra selling it down and not take it on book? Is that the main point?

The main question is very easy to answer. You have given the answer yourself very clearly. See, the infra, way the yields are, right, the funding and the ROE can be made in the long term. Of course, quarter-to-quarter, the strategies can be -- I mean, there is no strategy quarter-to-quarter. So sometimes, you will see the book going up, sometime coming down because the disbursements and sell-down doesn't happen in the same quarter. You would have seen my disbursements have suddenly dropped to about INR 1,000 crores in Q4, right? Because each of these disbursements are bulky. Sometimes, if they happen, instead of March 31, they happen on third of April, it will go to the next quarter. So quarter-to-quarter, let us not read it too much. But your strategic direction is 100% correct. What you talked about, that infra, we remain very bullish. We remain very bullish in underwriting and disbursement, we will not give it too much capital as a strategy over a long term. Let me put it this way, right? There will be times when a couple of quarters, we will have to build book and then sell down, those things happen. It's not like quarter-on-quarter as far that business of capital. I was talking about 3 to 5 years, general direction. Direct channel, we will like to, and I'm sure all of you we like our retail book to go up, right, and that is what we are trying to do. Does that answer your question? The second question?

Right. Yes. Yes, sir. Understood. And sir, microfinance.

Now over the long term, right, let us talk about last year, right? Last year, in June '20, that is after the mratorium was over. Morat 1 was 100% to microfinance industry because the industry has said that. But June '20, my Micro Loans on-time collection efficiency was at 54%. The industry was even lower. Because you answered your question, I have to answer by giving past number, right? Because otherwise, it's only a feeling. And it is your feeling and your opinion versus my opinion, so I'm trying to answer it by giving past numbers. So this is the trend, okay? In June '20, it was 54%; in September '20, it was 82%; in December '20, it was 98%; in March '21, it is 99.1%. So it shows that if you lend well, and what do you mean well? It's not okay. [Foreign Language] If you lend in good states, if you lend to good people, how do -- and how do you say good people? That if your analytics is able to actually, in a black box, can implement the policy properly, like what is the total indebtedness of that person and try and see what is the indebtedness of the family. Try and see the track record of the person, all this data is available. If you use that, you respect that. You do state-wise good disbursement. And I will just give you some very, very simple analysis. We have -- if you see where our disbursements have increased, it is clearly where the collection efficiencies are. Our disbursements have increased in northern states, more Punjab, [ Hariana ], Bihar. We have gone slow on -- some, definitely, we have gone slow on [indiscernible], we have gone slow on Tamilnadu. But coincidentally, these are all election-led state. But the point is these are not strategic decisions that we take because we can't go wrong. These are all things which are thrown up by early data analysis, the early signals coming from data. And that gives us the confidence. [Foreign Language] But that gives us the confidence. So why did we disburse INR 3,000 crores in quarter 4? We did disburse because suddenly, there was a big demand. Demand was always there. It is because our engine approved more cases and the percentage of approvals went up. And it is because we saw positive things happening. In fact, as I was telling you, new cases to old cases, right? In Q2, for example, my repeat customers were close to INR 4 lakh crores, and new customers were INR 16,000 crores. In Q3, my repeat customers were INR 4 lakh crores, new customers were INR 80,000 crore. In Q4, I disbursed totaling to about INR 7,500 crore, which was almost 50-50 repeat and new, right? What does it show? It shows that we are getting into new customers. We are getting into mostly -- sorry, did I say crore. They were actually a number of customers, sorry. My mistake. It was a slip of tongue. These are number of customers. So 7 lakh customers, 7.5 lakh customers we're linked to, out of which it was 50-50 to new and old. This shows that we are trying and improving the quality. We are trying and getting into new customers. We are trying and getting into relatively unbanked customers. And we hope that this will stand us in good stead as the year progressed, I don't know what will happen in Q1. But credit quality is never mentioned. And that is why I also gave you the figures of the last 4 quarters. Secondly, don't forget that we are carrying huge amount of provisions. And as -- if some of these roll forward to more than 90, these provisions will also roll forward. So the impact on P&L will be of a short-term disturbance, will be less to that extent. Let me put it this way, right? That is the best I can answer your question based on our strategy, our confidence in all database, the care that we take. I'm considering that currently, the scenario is quite different. I mean, I can just give you a number even before you ask of the collection efficiency. We ended... [Foreign Language] Yes. So March collection efficiency, as I said, in micro loans is 99.1%. April -- until 30th of April, we are at 98 point -- 26th of April, we are at 98.3%. I think, I don't [indiscernible]. And April, we owe this collection efficiency to early collections till 15th of April, our micro loan collection largely up until the 15th of the month. So you will -- I know you will ask how the collections have been during April. You will see that through 26th of April, we are within 0.8% of last year's number -- of March numbers. But will that be an indicator for me? I don't know. So I want to convey our confidence in our models. At the same time, convey the uncertainty in the atmosphere. Both. Does that answer your question? Long answer, I'm sorry, but I thought I should clarify and give as many numbers as I can.

No, no, sir. Thank you for the detailed answer.

The next question is from the line of Rikin Shah from Crédit Suisse.

Just had one question on the growth outlook that you've painted out. What we have seen is that the disbursement has been pretty strong for us in the rural business, but that has not converted into overall growth. And of course, we know that the infra business is a high-churn business model. The housing disbursements has been weak, and in the past, the defocus book was growing. Now while you have pointed out that we do expect 20% CAGR retail book growth over the longer-term, but if I kind of compare it with your expectation on the tractor financing -- tractor growth of 7% CAGR to wheeler up 8% to 10% CAGR, the 20% CAGR looks reasonably high. So just wanted to understand how do you intend to achieve that.

Good question, and thank you for asking it. The growth I talked about, so there are 2. I also said we are launching new products, right? And a fairly good part of the growth will come from -- and I've been talking about 5 years, will come from new products. We are also planning obviously to do much better in home loans, where we are scratching the surface. It will come from that. And last but not the least simple arithmetic here. The tractor, it's the same reason. This time, why my book growth is not as much as my disbursement growth? It is because of random -- because I did hardly any disbursement -- I mean, very low disbursement in the first half of the year. So the difference in your calculations is the industry growth I'm talking about disbursements, and the book growth will always be different in a growth year. If you grow disbursement. So if the industry is growing by 7%, I hope that in my position, reasonably, I should be able to grow by 10%, 11%. And if we just do the calculation on a 5-year tenor product, say for TAM, 10%, 11% is if you maintain it nicely and steadily, the CAGR can be in high teens also, even infra. So just arithmetic. So one is disbursement, second is book. That's right.

And just kindly talk about -- a bit more about the new products that you are looking to launch in the rural business and what kind of growth expectation is built into the 20% outlook number that you mentioned.

Too early, too detailed. That is why I talked 5 years. It is very directional. Our calculations actually -- if everything works, it can be higher than that, but we know that everything will not work, right? And that is why we have taken some probabilistic. So -- but I will tell -- I talked about products that we believe, first, the big plus will be rural. Right now, we do only tractors or only 2-wheelers in rural, which is according to our consultants and our research, is just about 10% to 15% of the entire rural lending potential. And I'm not talking about the potential, which is priority sector and done by nationalized bank, no crop loans, et cetera, or Kisan credit card, I'm not talking about. I'm talking about the way you can find various other needs of the farm, right? Large dairy plants, fertilizers, irrigation equipment, other farm equipment, seeds, the other inputs which goes into farm like pesticides, insecticides, everything. Like all this, the Kisan credit card product is never enough. And when you can identify good dollars one and the good channel through which we'll fund. So this money will not be given to the farmers. So this is only concept. And I'm maybe -- it should not be mistaken that we have this product ready and we can launch now. It will take the better part of this year to launch, actually. I must be frank. So -- but we believe that we have the strength and we can go there. I already talked about consumption loan. We have also a good prototype ready for getting into SME loans. We are looking at the right time for launching the pilots. I know SME is in problem, but we do that also. There are pockets exist where good business can be done. And we are identifying those. And maybe early part of this year, that is maybe Q2 or early Q3, we will do our pilots in SME also. So lots of retail or retail-light products is what we are planning. I'm definitely not claiming that everything will be a success, but if a few of these are reasonable success, we are sure that a 20% kind of CAGR over 5 years can be maintained.

Okay. And just as a follow-up, sir, on the housing side, I would like to understand your assessment of what was the reason why we were not able to capture the market rebound that we overall saw despite of the yields on the product not too inferior to some of the larger private sector banks. And also, I did note that you do intend to start disbursing some development loans in FY '22. But in terms of the quantum of it, what kind of growth acceleration do we expect even in the developed loans?

Second question, I will answer first. Easier to answer. That's a statement of intent. I don't think we will disburse anything great in Q1, we're watching the situation. The statement of intent came out of seeing the turnaround in the market the way retail sales were picking up in our portfolio as well as in A and A-plus developers, inventory going down. So early indicators that we need not be as dogmatic as no underwriting for the whole year. So we -- it was a statement of intent that we will look at doing underwriting this year. I don't want to put a number. I don't want to put a budget for my people. We will do -- if we think that it's a good project to underwrite, we will underwrite. We will not stay away completely like we stated in FY '20 that is a fact, right? What was wrong? Let me be very frank. I don't think we executed. Every strategy has to be executed, the strength of our other retail products. When infra has been execution, housing, we -- I must admit and stand in front of you saying that we don't think we have executed properly, and we will definitely try and execute.

[Operator Instructions] We take the next question from the line of Nischint Chawathe from Kotak Securities Limited.

Just 2 questions from my side. Just looking at the overall picture. You're talking about looking at overall growth, maybe mid- to high-teen overall growth. You recently raised capital as well. So how should we really think about the ROEs evolving over the next 2 to 3 years?

Okay. Very, very good question. Right now, as you see, the leverage has come down to below 5, right? We will be concentrating very clearly on ROE for -- at least for 2021 because it's not that we can suddenly take the leverage up in 2021, and because of ROE, we will go to mid-teens. So all -- sorry, yes, calendar year '21, FY '22 end. It will probably start, hopefully. And our entire track will be that this growth, and hence, the increase in leverage will start coming back by FY '23. I mean, FY '22 to '21, there's definitely an increase in leverage, definitely increase in ROE, there is no question about it. But it will not go to the mid-teens level, at least in FY '22. We are hoping that '23 onwards, we go clearly in that direction. There is one more thing, obviously. And I must say before I answer this, that there is nothing on the plate right now. But the good portfolios are definitely there for sales. And once -- sale, meaning purchase for us. And in our -- now that we are very clear which are the areas where we want to grow. We will be open to that also if they are available at a good price and try and increase the speed of increasing leverage. But I agree with you clearly that it is not going to happen in [indiscernible]. That FY '22, we will recover the ROA. But the ROA to ROE conversion is going to be suddenly 6x, 6.5x. It's not going to happen, which is also good. Now ROE is one thing, but in times like this, it is good to keep leverage low.

Sure. Now post-merger of the group companies, I guess, what we will see is the 2 group company or probably maybe I don't know, wholesale/retail together and the depot? Is that the way the representation will be?

This year onwards?

Yes, I mean, after the merger of companies.

So the merger of companies and presentation is very different topic. We have never presented company-wise anyway. We have always treated it. I understand your question is, it is rural housing infra or wholesale retail, how we will show. That's what -- is that your...

That's right. That's right.

[Foreign Language]

So the other thing is post-merger has been for companies that are possibly there on the cards in terms of -- I know looking at new portfolios. But when you look at new companies as well, and any comment, if you could give any thoughts about other group companies or anything in the current businesses that you can monetize?

Multiple question, okay. Monetize is a very dangerous thing to answer on a call. [Foreign Language] You have heard rumors, when the rumor has become new rules will be the first to know. [Foreign Language] I mean, I wouldn't be able to say that. It is not right to say that. So let me put it that way.

But the direction we are hoping to do in the lending plus-plus businesses.

You are not clear. I'm not getting you.

Directionally, you are okay to being the lending plus-plus businesses because what you've done is now your consolidated outlining together?

So am I okay to acquire lending business, you are saying?

Lending plus, other businesses like that?

[Foreign Language] Okay, you mean mutual fund? We are very clear. Mutual fund is our very, very core business. There is no question about it, okay. And we have a very clear plan on growing the mutual fund business. There is -- so that's what I was talking about rumors, et cetera. If anything is new, yes, either on buying or selling side, we will let you know, very transparent, okay? Your other question on acquisition of companies, I have generally seen that companies are more costly to acquire than brand portfolios. But if our -- a proposition comes which is mouthwatering, we will certainly consider. Why not? Now we have equity, we have the strength. So we will really spend it well. [Foreign Language] And we will be very, very careful while investing.

The next question is from Kunal Shah from ICICI Securities.

[Foreign Language]

Yes, yes. So 2 questions from my side. Firstly, in terms of the net allocation or the new equity allocation you highlighted, the focus would be more on ROA. So incrementally, if we have to look at it within the businesses and, say, the newer products, which we are planning to launch, how is the entire equity allocation would happen and which would be the key focus segments because there has been some volatility around housing infra. So how should we look at the network allocation?

I believe your question is very strategic and directional, so I will answer it like that. I said product by product, perhaps too early. I mean, within retail, will say, product by product, too early. I would say that 5 years down the line, the number that I believe we can confidently reach, and hopefully, we will try to do more and are confidently achieve is 60% retail. And retail means rural plus any new retail products that we launch on retail housing, minimum 60%, which is today, exactly 43.1%, is what we are planning to do, okay? We believe it is -- this number is achievable. We will definitely try and do more. The strategy to achieve that over the longer-term is what are we 100% sure of, is the growth in our existing products. What are we hopeful of and working very hard on it, is making -- trying and making new products and hoping that 50% of that, we will be able to execute well and do well. Even if 50% is a success of the new sub-products that we launch, we will -- good growth. So that is we are hoping for. And what we will be continuously looking for, and I'm actually putting a specific team for that is looking for opportunities in the market for acquisitions. Acquisitions will only be in retail, in our -- the chosen products, either existing products or new products. About the new products [Foreign Language] how much I can say today, I have already said. So I don't want to go into further details. But so if you are asking how much will be far and how much will be Micro Loans over 5 years and we outrun, but price is different than planned. I mean, we will achieve that plan directionally. In between that, there will be some changes as we go ahead. Does that answer your question? And -- yes, portfolio acquisitions. So -- and quarter-on-quarter, this will definitely change. I mean, next quarter, maybe my infra will suddenly grow, and it will come around. But that is not strategic. Strategic is, okay, infra book, we will grow maybe for 2 quarters, and all of a sudden, you will see a sale happen, like it happened in Q4. So -- but strategically, 3 to 5 years business direction.

So fair to assume 60% net worth in retail and 40% in...

Yes. Yes, sure, sure. Four, 5 years, yes? Like how we do the exactly opposite.

Okay. And similarly, so when we look at it in terms of the evolution, farm and two-wheeler has done much better for us. And now, we are in this position. So where are we -- definitely you have been highlighting and from maybe this we are now to 8%, 10% and 15-odd percent in this segment. So where do we think we are? And should we expect base to slow down given this base and the market share which we are having?

Okay, we will try and outperform the market by a small percentage. If you are saying that this market share, we will be able to outperform the market by 50% or 100%, obviously, that is not going to happen. But can we continuously outperform the market by 1%, 1.5%? We are going to try, okay? But obviously, it will all be data-led. Right now, it is -- sometimes people think that this is a cliché, but it is not cliche. We report market share. We don't go for market share. We don't plan for market share. What we plan for is counter share. And my one moment, we choose the dealer. Our ambition per counter share is always 100%. And in some cases, we reach that. So that dealer is chosen on the portfolio there, various practices, et cetera, and then we launch specific schemes for the dealer, specific attractive schemes. Various LTVs are different, product-wise, dealer wise. It's a complicated engine. And I think you know it well. You are spending good time with our retail team, our digital team. So it's a complicated box, which finally comes to a number, 11% or 15%, which I saw simplistically report. But what we try to do is data analytics pointing towards a particular area, dealer, et cetera, model, actually, and then maximizing our share in that. That is something which has worked for us one, Kunal, so we'll continue it.

True, true. And one last question in terms of this merger. So how much would be, say, more regulatory-driven and maybe the aspirations for the banking license? Because otherwise, losing out HFC status, that has some cost attached to it, okay? And definitely, it's a prime license as well as IFC. So then how should we actually look at this? Maybe it's more to do with the taking aspiration and giving out some cost in the interim? That's how we are looking at it. Because...

Banking, it can be very, very vague. And I mean, it has nothing to do that much directly with banking aspirations because banking aspirations, at that point of time, we would have merged, right? What was the rush? If at all, that happens and then that happens. I don't want to talk about it. Regulatory push, in a way, certainly. I think regulator is looking into having simpler reporting, very clear and transparent reporting. When regulatory comes here, obviously, he sees -- and I mean, inspections goes on for 3, 4 months now, where you see customers comment to 2 companies, they will see whether money has moved from here to there. Regulator has turned extremely, extremely watchful, and rightly so. We believe that having 1 company will take away any search doubts, speculations, anything that the people have 3 companies, customer, [Foreign Language] So in that way, it is regulatory-driven. It is not like for banking. It is an aspiration to, not only be transparent, but taking out any whispers from the market to have 1 company [Foreign Language] So that's the thing. And also, numbers-wise, right? Yes, you are talking about the housing license, the infra license. These are important things, no doubt. But very simply, we have done the savings potential from ALM, liquidity management, ability to borrow more strongly in the market. And most -- I will give you an example because the infra company itself. When you see the infra NPA ratio, right, the ratio for the business will be different in the register company, it is different sometimes. And to manage that NNPA to net worth ration, you have to unnecessarily put equity in that company, even though we are not growing book there. So all these things go away when you merge. In the medium term, it will lead to much more efficient -- is the question you asked. [Foreign Language] Today, I can confidently answer [Foreign Language] Till now, it would have been a more nuanced answer [Foreign Language] Capital provision decided. It is not only according to asset size and assessment, et cetera. Now in one company, all that becomes very clear, that according to book, capital. One ALM -- maintain one ALM, maintain strong ALMs according to that, borrowing, right? Simply CPs, right, CPs, you see. Company-wise, L&T Finance has a lot of short term, but we have to still artificially keep CPs low based on various regulators and all this things. And whereas turning to housing and infra, long-term assets, so anyway can't raise CPs. Now when you say 8%, 9%, 10%, whatever of the book we can raise CPs, it actually means 10% of the book we can raise CPs and not have wary, company-wise. So there are many, many ways in which we will benefit also. There is no question, there are short term costs, but it's a strategic call we have taken, which everything cannot be measured in rupees, crores. I believe governance-wise and transparency-wise, it was a good call. I mean, I would have challenged anybody that take the published balance sheets of my 3 companies and try and put it together to find my consolidated numbers, this would not have been possible. Now it is easy, transparent, and I believe, high governance.

The next question is from the line of [ Shagun Varma ] from Goldman Sachs.

So this is Rahul here. I've got a couple of questions. Number one, to start with, sir, last 3 years, the balance sheet has taken up headwinds, the portfolio deterioration and the market headwinds, et cetera. So when you look at the next 3 years, as you are embarking on another round of, let's say, transformation of the balance sheet, which is moving more towards retail, as we just talked about in the previous question, any specific stress that you are that you are wary of, you need to settle down in the portfolios? Or it's going to be completely market-driven? There is nothing that is left now in the portfolios? Can give some color around the stress that could be still left in the portfolios?

Okay. So first of all, one clarification. There is no re-embarcation on retailization strategy. Retailization would always bring the strategy because of last year, the first 6 months, hardly any disbursements, et cetera. It might have slowed down. But just giving the number from fires, we have changed it from 23% to 43% in fires, okay? So it has always been the strategy. So it is a 20 percentage point increase. And over the next 5 years, I'm actually talking about a 17 percentage point increase. So it is not something that we have not done before. So just to put that into perspective [Foreign Language] we are increasing that. Perhaps at this level, it is a little more difficult, but we will. So that is the first point. As far as stress is concerned, look, I mean, none of the portfolio is something different in character than what it was for the last 1, 1.5, 2 years, right? But what we have today is INR 1,000 crores of overlay, which we didn't have at the beginning of last year or the beginning of the year before that. So stress, I mean why I'm hesitating answering that question [Foreign Language] We don't know what is happening. Genuinely, don't know, right?

So for the whole industry?

It will be for the whole industry, whole country. What we -- it's -- actually, there are sometimes that I feel like a mercenary when I talk about financials and rupees. What the country is going through right now is much bigger than that. But it is my job to talk about financials and rupees. So the only thing I will say now is we will be very watchful. We have not let the portfolio go haywire in a very difficult year. We will not let it going ahead also. But one advantage that we have today is INR 1,000 crore [ KT ] that we are carrying into this year. And plus 69% PC. So that's how I would like to answer your question. You may take it as education, but I think I'm being honest. [Foreign Language] But we want to put the confidence that we are -- we will be well prepared.

Makes sense. And then this, if I was to just extend it to the provisioning policy going forward, having efforts is a great strategy to carry some extra buffer on the balance sheet because every second year, there is some sort of many crisis here in the country. Do you think INR 1,000 crore is efficient getting into the second wave? Or you think as a strategy, we should keep building something more for the future contingencies?

Okay. It's a good question. The simple answer -- I will give you a simple answer or a complicated answer. Simple answer is, I don't know whether it is enough. But what is important is whatever it comes, it will be less by INR 1,000 crore now because of the cushion and [indiscernible]. So that's a very simplistic answer. I will now give you a technical answer. This INR 1,000 crore is -- INR 1,000 crores. We have not created saying INR 1,000 crores [Foreign Language] It's not that. There is a ECL model, which shows, based on various characteristics, that how current behavior of stage 1, stage 2 is. And what are the chances of some of those assets moving to stage 3. That is how we built INR 1,700 crores, right? That is how we utilize INR 700 crores when some of them get to [indiscernible]. Why we didn't utilize INR 1,700 crores -- or only INR 700 crores? Because less assets actually rolled forward to stage 3 and remained standard, right? Whether we will create more, whether we will utilize this in the first quarter itself will depend on how this portfolio depends -- goes on in first quarter. So if I have to answer quarter to quarter. Because today, I can't say [Foreign Language] we will create more. It will depend on how the portfolio goes in May and June. That's a very technical answer. But a simplistic answer. I am an MBA not a CSA. [Foreign Language] That's done.

Makes sense. Sir, just one more question. Retail housing. Now it's coming at a nil. So you've created a nice right to win for yourself and in the rural portfolio. So what is -- what do you think is going to be right when in the retail housing. I mean, I know there's a leadership change, but any initial thoughts because this segment is already quite crowded, so to say, and the pricing is always under pressure here. So what is the right to win that we should think of?

Two things I will answer. I agree with you very clearly. Our right to wins were -- actually, we have put it very clearly that we will use our real estate contacts. Talent is real estate contact. The deep ecosystem that we have within L&T to source assets and use that, use direct sourcing. And we have moved to quite a bit of direct sourcing, used less [indiscernible], et cetera, for our right to win. What we lacked was execution. What I believe under the new leadership we will bring is the execution in regard to that. And secondly, I know the space is crowded. But what are the numbers we are talking about, right? Are we on [Foreign Language] If we do INR 1,500 crores, which is nothing [Foreign Language] INR 500 crores, INR 600 crores, to start with, which is nothing compared to the market, we will still scale up quite well, right, to start with. Having said that, I believe that if there is a need to change strategy to form even sharper right to win, we will certainly form it within the next 6 months and come back. But right now, with the strengths we have, I believe, just a good execution rigor will get us higher volumes going there. I'm not talking Q1. And in Q1, we will wait and watch.

Got it. Sir, if I may ask one more question, if you allow, please. And this is more qualitative question. So you've seen the first wave, it was, of course, quite tough. Everything was shut down, but as you -- in the initial part elaborated how things are different, and for better. How fast do you think things can come back? Should we start seeing drop in cases? What has been the customer feedback right now? Of course, people are more scared. Fear has definitely set in. But any feedback that you have from the customers initially as to how are they thinking from the field, whether it is going to take not longer, even if things normalize or things can drop off adequately? Any ground-level feedback you can share with us, particularly the...

Correct me if I'm wrong, making public statements about COVID is a punishable crime in the country right now. I thought so.

No, no, I'm not asking you to make COVID...

I'm joking. I'll try and share whatever. So first of all, I must express my inability to make any predictions here. I'm too small a person to make predictions, but I will share some of this. So as I said, first of all, I didn't say it is better. I said it is better on these 3 big criteria, which is lockdown, moratorium, and that is possibly better. We don't know. And liquidity. These are the 3 things which affect -- which are crippling, right, for NBFC, absolutely crippling. So these things. So we are not crippled, what you like, we were in Q1 last year. The -- it was crippling [Foreign Language] Even I was sitting it on. Now I come to office every day. So I would think that situation is worse than it what was in May, June last time, that we are in office, our team is working, et cetera. On the other hand, I will tell you and just share a number, over the whole last year, we had about 1,000 cases of COVID in our team in first month. In April, we have 500 cases. So if that is about my team, I'm sure it will be same about industry, about customers, et cetera. So I believe that kind of force with which this time pandemic has come as more and which is there in the public numbers also. If you believe the public numbers, reversal of trend yes, you are seeing it in some places, hopefully, in the city that we stay also, you are seeing it. But not overall, not -- definitely not -- overall, we are still not seeing reversals. I believe Q1 definitely is going to be very, very difficult. And definitely not comparable to last year in Q1 because still [Foreign Language] Business continuity is a possibility, and we are pushing it. Business continuity is a possibility. Center has clearly ruled out any nationwide lockdown, et cetera, et cetera. I'm a proud Indian here, okay. So that is about my company. I believe, yes, we have been caught unawares, but we have not been -- and this is not talking about any government, okay, central or state or anything like -- just my view as an Indian. I think we have been caught unawares like many other economies, and I think we are fighting that. Each one of us should do, each one of our companies should do something to fight back, and each one of us personally to do it. And that is the fighting that spirit. Since you asked a very general question, I'm taking the liberty to answer as a proud India. And we will fight back. We will win over this one. I'm talking as an Indian. I'm not talking as a company, okay?

We'll take that as the last question. I would now like to hand the conference back to Mr. Dinanath Dubhashi for closing comments.

Okay. I have nothing much to add actually. I'll just summarize, talking about the company, we have come through a difficult year. We have built some strengths, which I believe make us ready to face the difficulties, which are just unfolded in the first quarter. But at the same time, over the medium to long term, we are very hopeful we have a direction, which we always had. We are doubling down on that direction and to go ahead, okay? As I said, the last conclusion I will have to do is often life puts you at crossroads of choices. The choice is always between business continuity and protecting your people. And each one of us takes risk. All of us people. I myself come to office every day. We try our best to manage that choice to the best extent possible. To this community, I promise that this company will do its best for business continuities. Financial numbers will certainly be maintained over the medium term. I'm not able to predict for Q1, et cetera, but we will do our best to maintain business continuity and keep the strengths of the company. I request all of you to stay safe. Just take care of yourself, your family, people around you. And any place where you believe that personally me or my company could be of any help to you, don't hesitate to contact. We will do our best. Thank you.

Thank you very much. On behalf of L&T Finance Holdings Limited, that concludes today's conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.