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

Ladies and gentlemen, good day, and welcome to the L&T Finance Holdings Q1 FY '22 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 Q1 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. And good morning to all of you. What I will do is I will just give some very short comments on these results and then open to questions. Hopefully, we will be able to take more questions than normal, and hopefully, we will be able to clarify more doubts as we go ahead. So the Q1 results, yes, they can be actually described in absolute in just one [ data ] and maybe 4 or 5 bullet points saying that, profit after tax, up 20%. Yes, of course, it is up 20% over last year's same quarter, which was a very bad quarter, but again, COVID quarter to COVID quarter, it is still 20% up. And more importantly, it is 20% up after taking another INR 400 crores almost of additional overlays for protecting our balance sheet. So we consider it positive. Another positive is the margins, the margin plus fees jumping back to 7.5% on back of good product mix and on back of excellent cost of borrowings despite movement, further movement, towards medium- to long-term mix or establishing our liability franchise. On slightly negative side, of course, there is a drop in book, and I will go and explain that; and a slight increase in GS3 [indiscernible], which will be perhaps to be expected at the end of a COVID quarter. So these are -- I mean these are some very simple things to look in the P&L, but I wouldn't be doing justice if I don't put it in perspective. And the first thing which is important to maybe point out again is something that I have said 3 months back at the end of the fourth quarter results. I will not be able to quote it exactly, but largely what I have said -- and I remember it was from 28th of April or something like that, where just wave 2 was being talked about. Some curves had just started. And what we had said is that we have built 4 to 5 important strengths which will help us. While we can't predict how the quarter will go or how the immediate future will go, these strengths will help us grow well, perform well in the medium to long term. And if at all there is a short-term problem or short-term disturbance, these will -- these strengths will help us emerge on the other side not only safe but stronger. These strengths were business strengths, the business franchise which we have built through our analytics and through staying in the right channels based on our analytics and strengthening them despite the need to reduce costs in bad times; our strong collection framework, which is becoming more and more data oriented as we go ahead and hence showing results; a well-established liability franchise providing us the ability to raise money across tenors at timings of our choice; improved balance sheet quality, which was at that time bolstered by about INR 1,000 crores, INR 1,033 to be exact, additional overlays. And of course, we had just raised capital and improved our capital adequacy. So these 5 strengths, I've said that will hold us well if some problems happen in the short term. And if they don't happen, then in the long term, they will help us grow and again take profitability to the top-quartile ROEs which we always aim for. Now what happened obviously was, almost immediately after that, things actually went worse. For namesake, there was not a nationwide lockdown, but yes, almost entire May, the lockdowns were pretty severe across. Wave 2 -- I think it is very important for using the learnings from wave 1 to wave 2. It is important to compare wave 2 [ with it ]. Yes, if you actually look at it just financially or just practically, we'll actually see that there are many things which were much better in wave 2 than wave 1. I think primarily the liquidity in the system. You would remember that everybody was waiting for liquidity last quarters -- last year, same quarter, whereas this year there was no problem at all on liquidity, at least for a good company. And I think the regulator needs to be commended for that, for maintaining good amount of liquidity and making sure that there is no strain in the environment based on that. So definitely [ that was there ]. Nature of curbs were more localized and also fairly short term, less lasting, that things started closing down in April, and by end of June, things have started opening up already. So they were even less lasting than last year. Last year, things started opening up only after August, I remember. Even business impact, closure of point of sales across states, for example, for our retail. It was less complete, less total, than last year. Notwithstanding the spread of COVID in rural areas, most of the point of sales in rural areas were actually reasonably open. It was only urban point of sales which were affected. Last year, it was almost complete closure. And on-field collections, impacted certainly, and I will talk about those numbers, but less impacted than last year. Of course, in DPD terms it was better last year because there was a moratorium and nothing was moving forward, but actual collections on the ground last year were negligible despite all efforts. So with all these positives, I will still stick my neck out and say that COVID 2 impact or the lockdown 2 impact was much, much, much higher than COVID 1. And why? And this is -- this perhaps cannot be measured by any financial metric. I think the fear, the happening of COVID very close to you, was actually very different in wave 2. And that is why I really pray to god that there is no wave 3. It goes beyond what is the impact on financials. I mean, frankly, our collections, our business numbers, everything looks better in wave 2, but what looks worse is what happened to our people. We had -- out of our 23,000 people, close to 2,000 people came down with COVID. I'm not counting people who were isolated because of cases in the family. We lost as many as 18 people in COVID in the last 4 months -- 4, 5 months. And these are things I think I should take the opportunity to thank them and pay them respects. And that really hit the operations also for, say, about 30, 35 days or maybe 45 days. And I must be upfront in doing that. It is very strange that last year, in the first quarter, when there were government curbs on our movements, we had to actually convince our people who were straining at their leash to go out and perform. We had to actually force them to stay indoors so that -- not to break any law, while this year, initially at least, even wherever people were allowed to go out, there was a big reluctance in our teams as well as agencies to go out and because there was a big fear. People were losing people, if not in immediate family, at least in related families, extended families. And I would think that was a big impact on, I will say, the rhythm of the company. So what did we do? Yes, while many other lessons from COVID 1 had to be applied also to COVID 2 -- and they worked well, but one big thing that we did was to become completely employee health focused for about 1 month. Within a month or a little more than a month, first, we gave top priority to employee health; and did a very, very targeted vaccination program. You know the numbers which happened pan-India for vaccination, but within a short period of 2 months, which was beginning of May to 30th of June, almost 93% of our employees have at least received one jab. And why one jab? Because our people are younger. The average age is some 27 or something, so they are not -- they would not complete the required 84 days for the second jab. Old people like me are already fully vaccinated. So that actually turned the tide, took away the fear. Lots of monetary support was given. People who -- unfortunately, the people who lost their lives, complete support to their families has been given. I don't want to recount those. I don't want to show off because nothing can replace a life, but the important thing for this call is to say that confidence in people to go out was very quickly restored by a project which was led by me personally; and made sure that, okay, whatever else happens, first, people have to be fully vaccinated and protected. And I'm glad to say that, if you take business, if you take collection efficiency, to -- from the end of June, it is already showing great results. The July numbers up to 15th are even better than June. June numbers are in front of you. The July numbers are even better. And while obviously it must be because of curbs opening up, et cetera, I also give credit to the confidence of our employees to go out and do business or do collections. So that was one thing which was perhaps quite different than what was in COVID 1, but in everything else, we very clearly use the template which we used during COVID 1. The second thing, which was our strength of liquidity. We used once again the opportunity to shore up liquidity. Not only that, there is a lot of medium- to long-term funds now to lock in longer-term funds at these lower costs. So our cost of funds is 7.65%, just a little bit, wee bit, I think 1 basis point, less than last quarter. And over the -- Y-o-Y reduction is close to almost 85 basis points. Prepaid a lot of high-cost funds, borrowed low-cost funds, raised record number of PSL funds actually and including about INR 650 crores in this quarter. And what it has done is actually ensure that, even if interest rates go up in H2, which probably it will, our rise in interest rates will be less pronounced. And we can -- okay, I don't want to sound too cocky, but yes, all indications are our margins plus fees will keep this good trajectory in the coming few quarters also. The next thing which worked for us was excellent analytics-driven collection. The business perhaps which was less -- least affected was tractors. We give complete impetus on early buckets on tractors, and very clearly it saw great impact on collection. This was a business where the least impact was on collection volumes. On-ground collections were affected in May. And regular collection efficiency is already back to close to 90% by June, which was almost at pre-COVID level. And if you see, compared to last year, obviously it will be far, far better. Two-wheelers. There was the impact in May, was much more certainly, but increased manpower allocation and increased digital modes, which we did based on our data analytics, has made sure that regular collection efficiency comes back to almost 97% by June already. Micro Loans was one business where we saw a drop in June over May, okay? So farm and two-wheelers, there was an improvement in June already over May, whereas Micro Loans, we saw a drop over May, but still I will say [ it has delights ] between us and the competition. 90% regular collection efficiency very clearly indicates that the portfolio is good, continues to be good. And one good thing is I can share that in July, in the first 15 days, we have already crossed 94% in Micro Loans. So what is common in all these 3 rural businesses is July is already better than June. And we certainly expect collection efficiencies even in Two-Wheeler and Micro Loans to come back to pre-COVID levels by the end of Q2, okay? Now all this obviously has a proviso of third wave, all those things, but we don't think that third wave will hit in Q2 even if it hits. So Q2, we can say with reasonable confidence that collection efficiencies will be far superior to Q1 already. Our other 2 businesses, consumer and home loans, also saw smart recoveries in collection efficiencies. Consumer Loans, in fact, continues to be at pre-COVID level after dropping a wee bit in May. And in home loans, both check bounces as well as collection efficiencies have actually improved sizably. Even in Two-Wheeler, the check bounces have improved sizably. Another business that I would like to talk about collections is actually infra. Now the low interest rates has -- actually have another effect also. So yes, we have a model which is we book. We underwrite, and then we sell down. This quarter, we actually saw fairly heavy prepayments as well, so which indicates that there are other lenders who look at our book as good book and ready to refinance it at low interest rates. And that is the main reason in our overall reduction in book -- in total book. If you will see, we have given the complete breakdown. The retail book, the rural book, has actually gone up by 8% despite lower business in Micro Loans, but it is mainly because of the infra prepayments that the overall book has gone down. So let me actually summarize collections. If we summarize collections: Across businesses, we have seen a dip in collection efficiencies in April and further in May. And in many businesses, maybe with the exception of Micro Loans, we have seen improvement in June itself over May. And then in July, across businesses it has improved. Now this is true not only for regular collection efficiencies but the [ rural rates ] in the further buckets as well. So generally speaking, collections looking up, I don't want to count my chickens. It's too early. If COVID 3 happens, what will happen? I don't think anybody can predict when will COVID 3 happen, how severe it will be. And more importantly, how much will be the impact on lockdowns, and what will be the severity of lockdowns in that? Even in COVID 2 and in COVID 1, our conclusion is collections are more affected by curbs and lockdowns than actually by the impact of COVID, okay? This is very clear. COVID or no COVID, if a lockdown is there, collection is affected. If lockdown is easy, collection is not affected that much. If we even see our state-wide and region-wide distribution, these average numbers that we give, South is recovering much slower because the impact of COVID as well as the impact of lockdown was much higher in the south states. And it continues to be in states like [indiscernible], whereas in North, where the curbs have been reasonably easy and also lifted earlier, the collections have picked up much faster, all right? Now let me talk about business, disbursements. So I must say that now our disbursements -- of course, disbursements depend on demand also. And they depend on how the point of sales have been opened, but they also depend on our collection performance. So let me take product by product. On farm, we have seen increase in farm incomes very clearly mitigated the impact of pandemic. Rainfall has been good. The reservoir levels are smartly up over long-term averages. Year's kharif crop sowing has shown a decline over last year, no doubt, but it is unlikely to affect the demand in tractors. We expect the industry to definitely grow in single digits, but we are clearly focusing in counter share of top dealers. And actually, in this business in tractors, this is our best-ever first quarter disbursements. You know that it's a seasonal business, but no first quarter before this we have done as much disbursement in farm as we have done this year. It is almost the anniversary of us achieving a #1 status in the industry. And so now it is 12 continuous months that we have maintained our #1 status in tractor industry. Two-wheelers, definitely more impacted since urban markets were affected. Urban point of sales was affected. One good thing is most manufacturers, with one exception, were not affected by supply chain issues. And hence, the supply of vehicles in the market was not affected, which was very different last year, first quarter. And we have seen now a gradual pickup of business by end June. Micro Loans, a very interesting number I will give you. You know that in first quarter we disbursed INR 797 crores, out of which INR 719 crores were done in April itself. So in May, we did INR 20 crores. In June, we did INR 50 crores. So that is how it is INR 797 crores. And you will see a big impact which has obviously impacted business and book, but that's the big positive, right, because without question, we are going to do a multiple of this in Q2 without question, without any uncertainty. And very clearly, it will impact both interest income as well as fees as we go ahead, extremely positively. As far as home loans are concerned, yes, I must admit we talked about a management change last time. And we are right now faulting out our structures, our strategies, et cetera, but in the meanwhile, we are concentrated on salary disbursements, building a good book. And large part of our disbursements have been salaried in the home loan book, but volumes are not too much to speak about. But that's okay. We will pick it up as we go ahead. Infra disbursements post unlock continues to be robust. We have done decent amount of disbursements, but obviously I explained why the book has come down. Real estate, we are seeing signs of some turnaround, but we are still being careful. In Q1 also, we have not done any new underwriting. We have continued to support the projects, which are progressing well on our book. The current focus will be on completion of projects. And in Q2, we may look at 1 or 2 very, very selective disbursements and new underwriting as we go ahead, so this also might be another small uptick. So once again, though I don't want to guide anybody towards a rosy future, I definitely want to say that Q2 -- I normally don't give such short-term forecast, but in business as well as in collections, we believe that certainly Q2 will be better than Q1. Q3 normally is a great quarter. It is a festive quarter. It is a quarter where disbursements are maximum, but I will be very careful there because I don't think the best of scientists will be able to predict when a wave 3 will come, if it comes. And more importantly, what will be the nature of curbs at that point of time? Which brings me to my -- the most important topic is the need and the reason for creating additional overlays this quarter. So if I take you to last year. And very simple, [ big ] numbers, I will give you. Last year, when we began the year, we were carrying close to about INR 300 crores of additional overlays. We created another INR 1,400 crores, close to. And these are big numbers. Exact numbers, Anuj will give you. To reach a balance of [ completes ] around INR 1,700 crores at the end of Q2 in terms of overlays. Now where did it help us, okay? It helped us tremendously in Q3 and Q4. In Q3 and Q4, as the curbs reduced and the visibility, future visibility, increased, we were able to write back INR 700 crores out of the INR 1,700 crores. This INR 1,700 were created to be used, but the collections improved so well that we had to use only INR 700 crores out of that and carried INR 1,033 crores into this year. Now given that -- seeing the impact of COVID 2, we have created another about INR 360 crores, INR 369 crores, in this quarter. And at the end of the quarter, we are carrying a INR 1,400 crores of additional overlay, right? This is in addition to the [ fee structure, yes ]. This is in addition to the provisions that we are carrying on our OTR portfolio. On our OTR 2. What we did, about INR 900 crores of OTR 2, we are carrying about 17% provision on that too, about 18%, right, 18%. Provision on INR 983 crores, about INR 172 crores of provisions are being carried on that OTR portfolio also, so we believe here that we are carrying a good amount of provisions. A lot of people have asked me already how they will provide -- how we will provide in Q2, Q3, Q4. I will only say that we will follow the same template that we followed last time that, if we see clarity clearly going ahead in terms of COVID, third wave, curbs, et cetera, we will start utilizing. Otherwise, if we believe that there is a need to be more protected, we will create a little bit more. In all probabilities, it may not be as high as we created in Q1, okay? So I'm only pointing out -- short of giving guidance, I am pointing out various things which, notwithstanding a COVID -- or without -- not taking into account a third wave, will improve. I believe that business will improve. I believe that collections will improve. And I believe that possibly lower overlays will be required as we go ahead in Q2, et cetera, okay? So that's very clearly, as far as capital adequacy is concerned, we are at 24.5%. And leverage is actually now quite low at 4.44. Whether it is good or bad, [ that will be for you ] to conclude. Yes, definitely book drops have led that to happen, but also there is another positive thing that this book drop has happened, is because of the rural book has grown. Infra book has fallen. And hence, our retailization percentage has actually run ahead of schedule and is at 46%. There are 2 more businesses that I would like to talk about. Our consumer loan business, a very small book at this point of time but slated to cross 1,000 crores in Q2. Now this is our digital-native business. This is a business which from day 1 has been completely digital, completely paperless, totally end-to-end digital and data analytics helped. At this point of time, this book is run as a loyalty program completely cross-selling on our various databases, but yes, as we go ahead, hopefully, by the end of this financial year, we will also launch end-use-based responsible consumption products, meaning, what, for education, for medical, all these products, by the end of this year. And further upside and further retailization will come from here. Collection efficiencies of 99.5% in March in this business dipping to 97.5% by May and again recovering to about 99% by June is giving us a lot of confidence in this nascent book. No doubt it is very nascent. I don't want to talk too much about it. In our mutual fund, the last business that I would like to talk about, we have seen a 27% AUM growth Y-o-Y, higher inflows in our hybrid capacity. A pure equity and hybrid mix now is 58% for L&T Finance -- L&T mutual fund vis-a-vis 45% for this industry, which actually augurs well for this business. We have beefed up this business, made some investments. And this also augurs well for future performance and hence increase in [ fee ]. So with this, I will just quickly point out some numbers, important numbers, which obviously you will have seen: 125% in disbursements Y-o-Y basis led by farm equipment definitely, a 2x increase in collection volumes. And I think some slides we have put actually is that collection volumes obviously are majorly above last year's same quarter, which is nothing much to talk about but which is also above the quarterly average for last year. Rural book is up 8%, within which farm is up 27%. Two-Wheeler book is up 8%. And the Micro Loans book, no doubt, is down, but we see a good potential here now based on pickup of business in Q2 itself. Our defocused book is down 50% from last time. And these are some positives that I would like to talk about in the book description that we have given. NIMs are very clearly up. NIMs plus fees are at 7.5%, not only above same quarter last year but also above what we normally guide. Normally I guide between 6.6%, 6.7% to about 7% for NIMs plus fees. We have maintained well. Two reasons for this: One is cost of funds which have been maintained low, and second is the move of the portfolio towards retail. So NIMs plus fees, good. GS3, yes, something to be mentioned. GS3 definitely has seen an uptick, some of the farm book flowing forward this quarter and also a couple of infra accounts flowing forward, but the most important thing is that the absolute number of GS3 is actually lower than last year. And it is the percentage is our primary reason; is a big drop, almost 10,000 crore boost -- 10,000 crore drop, in the denominator from last year. OTR 2 at INR 983 crores, against which we are carrying INR 172 crores of provisions; additional overlay of INR 1,400 crores. These are some of the numbers that I would like to point out. Before I end, I would like to talk about -- especially talk about ESG. This is the third year of our sustainability report actually. It's the third sustainability report. It has been now 3 to 4 years since we have been focusing on working on ESG, and because of many things that has happened, it gives me confidence to speak about it very specifically, all right? We have very clearly made GRI Standards 2016 the fulcrum to work on, strongly working on the 6 capitals of ESG and using Ernst & Young as an external assurance partner for our sustainability report. Very clearly, our businesses are very closely related, very naturally related to ESG. We have saved almost 49 lakh tonnes of emissions; LEED gold certification for our corporate HQ; and several technological solutions to save electricity, conserve paper; and very clearly taken all these targets as we go ahead to work on this. On the social front, our CSR projects work very closely with our rural communities for digital literacy. And we reach out to close to 13-plus lakhs -- 13 lakh-plus community for going ahead and pushing this further. I'm also proud to say, on the governance side, a diversified Board; segregation of MD and Chairman's office now for the last 5 years; 2 women directors on the Board, when 1 is compulsory, and of the highest standards. And our Nonexecutive Chairman, who is an independent director, has been confirmed (sic) [ conferred ] the GCB.D, the global competent boards designation. So very clearly a clear focus on ESG. Beyond it being obviously our focus and good for the country, I'm sure it will be great for the business as well as it gives us access to several ESG-oriented funds and responsible funds across the globe. Our raising PSL funds is also an integral part of it. So as we go ahead, we still believe that we are pretty young in this and have been ranked reasonably well by various agencies, but very clearly there is a good upside on this as well. So with that, I will stop my comments. I will very simply say that, what we said at the end of Q4, that the learnings that we have learned, we have incorporated them into our way of being, our balance sheet. And that has clearly helped us not only survive but -- not only survive and emerge stronger but also [ report ] good numbers at the end of Q1 this year. And we hope that -- while we hope that Q3 -- I mean the COVID wave, third, doesn't happen. Or even if it happens, it doesn't lead to any big disturbances in the economy. I would like to assure that this company is strong and ready to face that. I already talked about some of the early indicators how Q2 will be and which gives us a lot of hope as we go ahead. So with that, I will end my comments and open the floor to questions. Thank you.

[Operator Instructions] The first question is from the line of Rikin Shah from Crédit Suisse.

Apologies in advance if this was covered in the opening remarks. My line was bad so couldn't really hear, but I have a couple of questions. Firstly, I just wanted to understand in terms of increase in the NPAs in the infra loans. So what could be the outlook for the recovery of the same? That's number one. Number two...

Can you just repeat that question? I lost you for a minute.

Sure. So first one was on the infra -- increase in the NPAs in the infra business. So what could be the outlook on the recovery and the resolution of those loans? That will be first one. The second one, I just wanted to understand that it's been a quarter then we have changed the housing portfolio and delivered to the new business head. So what are the early thoughts in terms of the new strategy? And when can we expect the growth to pick up in this particular segment? These will be 2 questions of mine.

Okay, thank you. The infra NPAs, there are just 2 NPAs totaling to about 300 crores, all right? And these were a couple of assets which were sort of -- one of them comes from legacy, I think, underwritten some 8, 10 years back. And another one was perhaps more recent, underwritten maybe 5 years back. These were assets were -- which were, I think, almost always in stage 2 and have slipped now because of, I will say, shortfall in toll collections more than anything else. Whether they will roll back very quickly, I don't know. I don't think so, but yes, at some point of time, resolutions will come. And both of them are road assets, and our exposures are small. I think average about 150 crores each. So I -- if I interpret your question as do we see as a trend with many more infra assets suddenly becoming NPA, the answer is an emphatic no. These were 2 assets which were always in stage 2. There are assets which you get recoveries. You get paid at the 75th day, 80th day. These were the assets of those kinds, so which are rolled forward this time. So that's about it. It should not be taken as any trend, okay? Does that answer your question, the first question?

Yes, it does.

Yes, okay. The trend on infra assets is definitely good. I don't see there is any point to worry about, any reason to worry about that portfolio, all right? Housing: Housing, good question. If real estate, I will think that we are actually doing a very, very strong and, I will say, even harsh review of each of our projects, making very sure that, even if it is for one borrower, there are -- say a project, a large project, making sure that parts of them are completed. Money comes back. I mean I will just give you a number. Between last first quarter and this first quarter, 2,500 crores of real estate repayments have been actual repayments. There is a drop in book, right? A small part of that drop, close to maybe 25%, 30%, is because of [ we selling ] something to ARC. And that, you can see in the [ SRs ], but close to 70% of that drop is because of actual repayments coming, either escrow collection or the developer, if the developer was very good, repaying to take advantage of cheaper rates. So this gives us good hopes in real estate; and actually gives hope that, hopefully, in Q2 but definitely by Q3, we should be able to restart underwriting on this. Obviously this will be on very, very select basis, very select developers. There is -- also another way of doing underwriting here is doing what is called priority funding that projects which are almost complete and need 100 crores, 200 crores or even perhaps lower than that, disbursements with [ priority charge ] -- that is, when the first the money flows in, the first hit comes to you. Those kind of structures is what we will very selectively underwrite as we go ahead. I don't want to promise necessarily Q2, but definitely in the next 6 months we should be able to start underwriting here. As far as retail is concerned, yes, very clearly, at this point of time, the strategy is on conservation. Climate is also not too good to make a roaring entry into the arena. Interest rates are also very low at this point of time, so we are at this point of time staying on the pitch, keeping our network on by doing small amount of business, but most definitely there are plans which are being pushed which are on good-quality salaries, of course, but good-quality SENP as well as good-quality LAP. We will certainly start pushing these, I will say, sooner than later but very clearly, at this point of time, concentrating on portfolio conservation, making sure that the portfolio remains extremely healthy; the team, the network remains healthy. So maybe another 3 to 6 months in this as well. So we are not too worried about that. The other 2 businesses, hopefully, are running on full cylinders. And this business can take the time in garage, making sure that it is in good shape when we start growing properly. Does that answer your question?

It does.

The next question is from the line of Kunal Shah from ICICI Securities.

Yes. So a few questions on asset quality, particularly in terms of OTR 2.0, if you can just give some color in terms of which segments have got a restructure. And obviously there will have been a relatively higher request as well wherein more will be implemented, so what are the expectations? Last time, we did [ 1,300. 980 ] are already implemented. And what will be there in the pipeline and nature of [ our ] current restructuring? Yes.

Good question, Kunal. So the difference between last time and this time is that, the last time, OTR 1, was almost entirely for wholesale, right, almost entirely, other than HL LAP, whereas OTR 2 is almost entirely for retail, yes, by their very nature. Top level has been kept at 50 lakh -- 50 crores. We have not gone beyond 1 crore also. So it is almost entirely retail in this, and hence there is no pipeline of OTR. You get? Because when you do for wholesale, after the OTR is invoked, then you have to go for rating and all those things. And then it takes 3 to 6 months to implement OTR. These are all which were requested in June, done in June, finished, right? So -- and in July, at this point of time, I can confirm that the pipeline is 0 at this point of time. That doesn't mean in O2 -- in Q2 we will not do anything, but as the requests come, we will be doing it. So I will think -- so farm was not allowed, so farm is 0. Out of these INR 983 crores, almost...

1/3...

I think it is 1/3, 1/3, 1/3 [indiscernible] in Micro Loans, two-wheelers and home loans and LAP. And in home loans and LAP, it is 95% SENP. That is nonsalaried.

Sure. This is helpful. And...

[ All right ]? So that's it. Right now pipeline will be 0, but that doesn't mean we will not do anything in Q2. I believe more requests come at the end of the month because [ they are rated ] and immediately done also.

And of the requests, a major part would have been restructured. Or maybe we are being cautious, conservative, depending in terms of what the viability would be.

So major part will be restructured; and in Micro Loans and two-wheeler, what you will see and do viability [ or not ]. I mean it is people have requested. You have to do it, right? So major part will be restructured. I think easily more than 80%.

Okay. And second is in terms of stage 2. We don't disclose that, but it would be really helpful because I think in this kind of an environment that would be a number to look at. So if you can just highlight how that movement would have been from Q4 to Q1.

I will tell you. So in Q2 -- I mean Q1, obviously a COVID quarter, the movement has been substantial, but most of it, we believe -- and because most of it is in retail, so most of it will roll back as collections improve further. So I would think close to 9% will be the Q2, other than the restructured portfolio, okay? If you don't count the OTR portfolio, our restructured portfolio will be close to 9%, which is if we take...

[indiscernible].

I'm sorry. Stage 2 portfolio. I'm sorry. So if you take out the restructured portfolio, the stage 2 will be at 9%. And most important number that we need to point out is on the retail stage 2 portfolio the provisions are at 37%, if you count. And a lot of people ask me, why do these overlays and things like that. Because -- I said that this stage 2 will, hopefully, roll back, but we have to also provide for a probability of them not rolling back, and hence you have to make the provisions. So on our entire retail portfolio, in stage 2, if you'll take the overlays, we are carrying a 37% provision, okay, so which shows actually -- for your models, you show that, with the probability if some part of it rolls forward also, we are very well provided, right? I mean if, say -- let us say 1 out of 2, which is a horrible assumption, rolls forward. Our provision coverage will be more than 75%. And obviously 1 out of 2 will not roll forward, right? Much lower will roll forward. So that is where -- that is how this model works. That is how this whole black box works of stage 1 to stage 2, which product. And based on this, these overlays are calculated. We actually -- the black box actually does probability of something becoming NPA 6 quarters from now, and then it provides. And this gives us the confidence. So have you got the numbers right? So about 9%...

[indiscernible]...

And how much will that be in Q4?

[indiscernible], okay. Sorry. Retail with 7.5% is stage 2, and that will be 37% provided already.

Sure. And this number would have been how much in -- by March end? So you said it's substantial movement, but this would have gone up from [ 3, 4 to 7.5 ]...

[ We are ], March end -- [indiscernible]. Can we give you the number later on...

Yes, yes. No worries. I just wanted to get a sense in terms of whether it could have doubled or maybe...

[ Yes ]. [indiscernible] of course, it is substantial movement. You have COVID quarter. Between March and June, of course, we -- If it is not substantial, I'll be very worried, right? It should be normally about 3%, 4% or 2%, 3%. And it has moved to 7%, 7.5% and which gives me the hope that in Q2 it will be rolled back. If it has not moved substantially, I'll be very worried. You get the logic.

Yes, yes, got that, yes, sure. And you alluded in terms of the overall real estate financing, the way we are taking the review of the projects, but overall how has been the behavior in second wave? Is it like it's still steady? You said like escrow collections have been good and we have seen maybe prepayments, but on that portfolio are we very comfortable that in second wave that has been more or less as resilient as the entire corporate book would have been in general? Or maybe that [ the pain is there ].

Maybe, Kunal, general answer, I will not give, okay? So very certainly, in second wave, sales are down, okay? In second wave, I will think -- the numbers, we have given, right? We have given numbers of portfolio sales have been at 31% of FY '20 levels in second wave. In first wave, it was 25%, so is it better than first wave? Yes, it is better than first wave, but is 31% good? Obviously not. 31% is horrible, right? You have to take these numbers in that kind of perspective. Collection in escrow, in Q1, it is 77% of pre COVID. In Q1 last year, it was 23%, but entire FY '21, in Q3, Q4 that -- if the recovery was so good that -- the overall FY '21 was 87% of pre COVID, right? So yes, over -- if you compare to first wave, is the performance better? Certainly better, but is it still anywhere close to pre COVID? Definitely not, nowhere, right? I will tell you Q3, Q4, where the recovery was, right? Q3, Q4, the recovery was mostly in low income, middle income. Luxury never recovered. Luckily, close to 90% of our portfolio is in low income, middle income. Now you take -- let's take MMR. Where will be low-income, middle-income houses? They will be in places like [indiscernible]. They will be in places like [indiscernible], et cetera. Now for sales, for somebody to go and see the project, for that category of people, how they will travel -- they will travel by trains, right? Trains are not working, so how will sales take place, right? That is what I'm saying. These things are affected more by curbs than by COVID, okay, but one good thing in this year, compared to last year, including our own experience, meaning our own, meaning L&T Realty's experience, is if you have the funds to make sure that your workers are taken care of, their lodging and boarding and vaccination is taken care on the site, almost 80% of the labor has stayed on the site, whereas last year it was 0 on the site. So constructions had stopped. This year, if funds are available, money is available, construction is on. Sales certainly low, and we have given the numbers, but construction is on. And hence, our attempt is to see that -- do very strong analysis of our projects, identify the units within those projects which we should complete, right? We are not -- also not investing. We have made the builders change plans. Say if there is a project of 50 buildings, 20 buildings. We are not putting money behind all 20 buildings. We are actually saying which buildings are very close to completion, good sales, where sold receivables are high; [ or complete cutoff, pay ] for the [ OC ], make sure that the [ OC ] comes ready for possession, complete, recover the money. That is the strategy we are doing. I think this kind of very, very close monitoring will have to be done in Q2 also and perhaps a part of Q3 also. So is -- all hunky-dory in real estate? Certainly not. Is it better than last year, Q1? Definitely yes. It is better than pre COVID? No again. I think very, very close monitoring will be required on the portfolio. It will be like project management. It will be like we are managing the project rather than the developer managing the project. The developer is only constructing. We are actually making sure that which building gets delivered get the sold receivables in and go ahead. Because the more you depend on further sales in this quarter or the next quarter also, you will have a problem because even in that category sales are down because lack -- inability of people to reach sites. So what needs to be done is buildings where there are sold receivables completed and those sold receivables recovered, which is the way to go and which is giving the reasonable results. I think it was a long-winded answer to your question, but I thought I should clear the air on this.

Yes, yes. The only thing was entire overlay buffer was towards rural, 90% of that, not much towards housing, [ yes ].

[indiscernible]. We are carrying close to 300-something crores for real estate [indiscernible] for real estate...

Yes. So that is good enough. There is no...

Yes, yes. We are comfortable with that.

[Operator Instructions] The next question is from the line of Aditya Jain from Citigroup.

Just let me check on the amount of write-offs in the quarter and a related question. So we can see the NPA provisions and additional provisions...

Q1 write-offs is easy question to answer, Aditya. Q1 write-offs 0, nil.

Okay, okay. And then just related to this, if you could tell us the stock of provisions as of March and as of June, the total stock, so including the standard provisions, NPA provisions as well.

We are -- get in touch with Anuj, yes. He will give you all details, yes. Specific numbers, I wouldn't have right now in front of me. Any details, Anuj will share, no problem.

Got it. Then the -- in infra you talked about some prepayments happening, if I heard correctly.

Yes, yes.

If you can just talk about the nature of the contracts in infra loans. So how is -- how easy is it to refinance? Is there some penalty on refinancing? Or is this a risk going forward as well, in more loans in infra? Because they are generally high-quality loans. [ I think ] will be attractive -- more loans will be attractive in the book for refinance...

Part of business. Most definitely there is a prepayment penalty, most definitely, which also contributes to fees. Part of life, but it -- that it is a very, I will say, a flavor of the month, other than a few players who have always been strong and focused on infra. Many people from infra is -- a bad word to infra is a darling, happens very quickly. There are times. So currently it's the phase of infra is a darling. So there are many -- even banks who had said, "Okay, we are not doing infra at all," are now funding at -- projects long-term funds, projects at less than 8% [indiscernible]. So this is part of life, right? And when we say that our model in infra is underwriting and selling down, we don't look at it with great amount of distress. We will be able to build back the book. Infra is not a book we need to monitor quarter-on-quarter. And any case, over the next 5 years, we don't want to increase the book too much. We want to increase the book only by single-digit CAGR in infra and high-teens CAGR for rural. So that is how we will change our retailization portfolio. So yes, we -- did we like our book suddenly falling by about 4,000 crores? No, we didn't like, but yes, we have to take it [ in the slide ]. We are not looking at it as some huge risk or something like that. So also [indiscernible] there has been little less fresh business this quarter, lower awards, et cetera, which will pick up. So there will be more business to do, more underwriting to do. So that's okay.

Got it. Just last thing, the restructuring which is happening. So what are [indiscernible] period for which there will be...

I'm sorry. I'm losing [indiscernible], so I'm not getting your question.

Sorry. My question was, in the restructuring happening now, what are the terms? So what is the period of moratorium on principals and extension in tenor of loans?

Yes. I would think it is different for different loans, but I will think, generally speaking, for Micro Loans and for two-wheeler it will be around 6 months. For home loans it will be higher than that, maybe between 1.5 years around, average, but then you have to also ensure that the overall tenor doesn't increase by 2 years. [ So all that circus ] will have to be done.

The next question is from the line of Saurabh Kumar from JPMorgan.

Sir, just 2 questions. One is on the disbursements. So by when do you think you will come back to a 10,000 core, 11,000 crore run rate? Do you think that's possible Q2 onwards? Or that takes slightly longer. Second is again just following up on this renewable -- infra, specifically renewables. You're seeing a lot of large buckets now enter. And obviously [indiscernible]. And you would be one of the earliest players in that space, but given the cost of funds differential, I mean, do you think, I mean, that's a business which is now attractive to you? And how would you now run it? Because now this business is moving more mainstream and large corporates are now coming in to be working. Okay...

Okay, very good questions. So first of all, I would actually like to break it up into various segments. And 10,000 crores, 11,000 crores is dependent on largely what we do in infra and real estate, right, because these are big numbers, infra when suddenly it happens, some 3,000 crores, 4,000 crores, [ right ], but let's start business by business. So I certainly expect tractors to -- you know that last year we did excellent business in tractors. We will do more than that this year and perhaps substantially more than that, maybe closer to 10% growth minimum. That's definitely we will do. Two-wheelers, we will do more than last year. Micro Loans, yes, Q4, Q3, we did excellent business, but Q2 was very less business last year. This year, we will start doing well from Q2 itself. Now I -- while I don't want to give full year projections, please understand, Saurabh, is I'm -- I mean, with all modesty, [ some good study ] [indiscernible], I am -- reached this conclusion that the effect of wave 3, when it comes, will depend more on the kind of curbs which are put on the main markets. And which, who can guess, yes? At least I can't. I'm sure none of you can, right? We can make intelligent guesses and we can be prepared for eventuality, but otherwise, who can guess? It's really strange, right? I can actually predict to you almost accurately, which I don't want to give on calls, is how much business or how much collection I will do in Q2. About Q3, I will have to give this kind of proviso that -- depending on wave 3 and curbs and all those political statements I will have to make. So that's the issue on giving you disbursements predictions. One thing I can say, Saurabh, definitely is the business trends that we are building, the analytics and especially the digital push we are doing -- I mean there are several exciting projects on digital. And maybe at some point of time, we can talk about it either one to one. Or maybe in a couple of quarters, I will be able to talk about them on calls. Is exciting projects on direct-to-customer digital projects, customer tracking, the geographic tracking projects. These are very, very exciting projects that we are doing. The new products we are launching, which will be completely digital native, yes, those products are exciting. I would think that the progress of disbursements, the push of disbursements, which will come at some point of time once this COVID nonsense is largely over mainly because of vaccination, is more to be measured in the quality of those disbursements, the retail heaviness of those disbursements, rather than just numbers of those disbursements. So I would -- not exactly 11,000 or 12,000 is the number to see. It is what part of it comes from retail. What parts of it comes from new products that we will launch over the next 6 months, over the next 5 years? They will excite me much more. It will help -- and I'm not -- please don't misunderstand. I am not saying that, wholesale, we don't like, et cetera, but obviously you see that, more granular business written, more modernized business, it can be modeled more. And much more importantly, one reason that I believe that more retail is good is because credit costs can be modeled and taken in that year itself rather than waiting for an event to happen in wholesale, right, [ fulfill ] a particular asset, like the example. 300 crores became NPA [ this time ]. We had to take the credit cost this time, whereas in retail, even for 0 DPD credit costs can be modeled and taken. And that gives much more solidity, much more predictability to the P&L. And that's why my appeal -- I mean, when we will go to 11,000 crores, frankly, I will have to wait for entire COVID to go, but one thing I can say confidently, that year-on-year, business will move to more retail, more predictable and definitely more exciting because it will be more native digital as we go ahead.

Okay, understood, sir. And sir on the renewable part...

Sure, okay, renewables. There's large corporates coming, yes. I mean you are talking about as developers, right?

[ That's financial ], sir. So basically you've been financing renewables for probably the longest time in the industry. And at a certain point of time, there was spread in the business for you to do it, but now you are seeing bigger -- I mean the bigger corporates are coming...

Yes, I get what you're saying. So you know what, with large corporates coming, the bigger threat, I'm not so worried about banks coming and funding at cheap rates because largely it is temporary. Second, they look at our loans only as the -- as a source. So it helps our sell-down and frees up balance sheet. And that is why I will invite you not to worry about the overall book growth anymore because this is going to happen. We will free up balance sheet. We will grow retail in that. All those things will happen. The bigger threat is, because large corporates coming into the business, the ability for them to raise bonds, right? And that will be at rates where no bank also can. And that, according to us, is bigger threat. And hence, our model will have to be more and more actually to -- on our underwriting capacity for under-construction product [indiscernible]. As our expertise now is almost templatized in that, we will have to further more and more work on our underwriting turnaround time, almost what we did in retail: underwriting turnaround time, doing it fastest; helping the promoter putting up the project in just about 9 months; and then after 1 or 2 years after the projects becomes operational, helping him to convert it into a bond, which we will not subscribe to. That will be the model. At this point of time, it looks like that will be the model going ahead as more and more external funds also get interested in annuity infra business. And that's what is very clearly happening and we will have to further adjust our model for that. So infra is not a business which we will be looking now for book at all. I mean we -- you know that we have been moving in that direction for the last 3 years, but I believe that, that direction will be enhanced now because, very frankly and very ironically, at the end of COVID, all of a sudden the infra business, especially roads and renewables, is being seen as the [ safest ] business; that people who don't know -- who have not modeled the rural or retail credit costs will be hit by some of those things, sudden credit costs in this year. Housing, same thing; real estate, same thing. Infra, because of the [ must-run ] status of renewables and a reasonably lower impact on tools; and government making sure, at least for NHAI and all that, the annuities keep coming, the risk perception of infra has actually fallen. So there are 2 sides of the coin. As risk percentage -- risk perception fall, interest rates will fall; and we have to change our models to adjust that. And I can [ put it ] with some amount of pride that we have never pushed the balance sheet model for infra. We always pushed the underwriting and sell-down model. Yes, temporarily, there will be these book drops, et cetera, but generally we should be okay.

Okay, so that is basically the syndication just gets you [ fee income ]. You're not looking to [indiscernible] balance sheet...

Yes, yes, hopefully, hopefully. We will see. We are still -- it's a recent phenomenon. We are still working on it but yes. It will -- we will have to develop very, very strong turnaround times in underwriting for this business. It will also come down to less than a month, from beginning to end, to very clearly show our strengths in underwriting. And I believe we should be able to do that because most of our learnings are templatizing.

The next question is from the line of Alpesh from Motilal Oswal Financial Services.

Congrats on [ a great set of numbers ]. [indiscernible].

Thank you.

Sir, 2, 3 questions. [ Firstly ], is there any one-off in the operating expenses, during the quarter, related to the margin? Or any other one-off expenses.

No, not to my knowledge. Sachinn, anything?

[ Not in this quarter ].

Not in this quarter, right, no...

[ Last year ]...

Yes. Not in this quarter, but the increase that you see in OpEx obviously is because last year, same quarter, there were no operations. [ There's no OpEx as well ]. So this year, as we push...

[indiscernible] -- my question was, since this quarter, the disbursements were also a little bit soft, considering whatever the COVID situation was, so the -- should we expect the rising trend from here because the collection is obviously going to remain high at least in the near term? Should we expect a rising trend on to that particular line item [ from now on ]?

In which line item, OpEx?

OpEx...

Other operating expenses.

Q2 should be higher than Q1, 100%, sure. Definitely, most definitely. As business as well as collections go up, the expenses will go up, but contribution will go up much better.

Agreed. Okay, the second question is on [ network ] allocation. In this quarter, we have increased the allocation towards the rural and housing and [indiscernible] allocations [ towards ] infra. Any specific formula that you guys work with related to how to allocate the [ network ] into various...

I will leave it to my CFO. It has -- that has to do with the merger now, but I will leave it to my CFO. Go ahead.

So basically, post the merger, what we have done is now we -- it's only one balance sheet. Earlier, there were different leverages for housing, different leverage for infra. All that has now got merged into one. So debt equity for the company is the debt equity for businesses, and hence this is a onetime adjustment which we had to do which has been taken care of now. And you will see uniformity going forward.

Okay, great. So another question is when we are converting this IDF to ICC investment and product -- investment company. So what are the advantages and disadvantages? One thing that I'm sure is the [ tax advantage ] that you used to get that may not be there any longer, right, on the IDF structure.

We don't have to...

Tax.

So okay. So let me take that. So first of all, let me not pretend that this is some -- great, strategic, brilliant, that we are converting from IDF to ICC. The situation has come to pass, this one, that very clearly the merger was necessary. We have done the merger. We were hoping, and both the projects were launched at the same time, of getting a majority partner in the IDF. These -- both these resolutions were passed on 22nd of March 2020, so you would grant that in terms of timing we couldn't have got it more wrong, right, 22nd of March. From 25th of March, there was a [ national order ], okay? So both these projects, basically we are not in control. They took their own life, right, both the merger -- because of NCLT closing this, that; and obviously getting a majority partner to [indiscernible] people interested in India, et cetera. Those were -- policies were going on. Finally, what happened was the merger happened before the majority sale. At the time of the merger, we were actually having a nonbinding offer in our hand. That much, I will be able to say, not more than that, but then we didn't get grandfathering or a forbearance from the regulator. So the merger happened. The moment the merger happened, we don't have an infra company. We don't have an infra company. So the merger, by the way, had to happen within 1 month of NCLT passing the order. Otherwise, we will be in contempt. So we had to do the merger. Once the merger happened, IDF didn't have a sponsor, so it is not IDF. So that is why we are going for this ICC. It is not as a part of some great strategy or something like that. At this point of time, we have seen various strategies that we can do with that entity. It will be too premature to talk about that at this point of time. Now as far as financials are concerned, certainly there is a tax loss, but we'll be more than adequately compensated by the -- simply the money -- the lower cost of funds because now my treasury can actually manage the ALM by IDF. It had to manage exact tenor by tenor, okay, only funded by NCDs, nothing else. Now with -- we will be able to manage the ALM the way we manage everything else safely but, yes, manage. We will be able to raise some CPs there. And based on that, that tax benefit lost will be very easily made up by the interest [ cost savings ], yes, but all this provided depending on the date on which we get the ICC license. Till then, we are not doing -- we are not allowed to do business there. And because of that, we will be carrying some [ load-outs ], I mean liquidity, that are there, because we can't lend any more till we get the license. We are hoping that we will get it in Q2 and then restart.

Okay, okay. And last question, related to the infra business. [ There's a bit of a data ] [indiscernible]. When I look at the [indiscernible] provisions movement just on the GS3, right, that number has increased by around [ 20 crores ], whereas the charge to the P&L is almost 125 crores, so -- in this quarter. And we mentioned that we did not do any write-offs during the quarter, so -- and there is no COVID-related provision -- hardly any COVID-related provision [indiscernible]. So is it because of the GS2 -- the movement towards GS2 [indiscernible] provisions? [ Or how do I ]...

No, no, no. You have -- there is a mix between provisions and credit costs. Credit costs also have MTMs on certain [indiscernible], mark to market, right? So Anuj will give you the details. There are just 2 different numbers. So total credit cost has provisions as well as MTMs...

[indiscernible] investments...

MTMs on investments, which are MTMs [ on disbursement, as far as ] you have to mark down or whatever every quarter. So that is it, but Anuj will be able to give you the details.

[Operator Instructions] We'll take the last 2 questions -- from the line of Piran Engineer from CLSA.

Yes. Sir, congrats on the quarter.

Thank you...

A couple of questions -- yes. And a couple of clarifications. So firstly, when we talk about our strategy being selling down in infra -- and it's been a strategy for the last 3, 4 years, but now if I look at this quarter, for example, our sell-down volumes are up Q-o-Q and Y-o-Y significantly. But the fee income is down, so how exactly does the sell-down, if you can just elaborate a bit, translate into a P&L impact? And does it come with a lag? Or does it happen in the same quarter? Just so that we can better model it.

Sure. So fees don't come with a lag. Sell-downs don't with a lag. You don't earn fees when you sell down. You earn fees when you underwrite, okay? And then when you sell down, that time, the book goes down, and because of that, fee percentage only goes up, but the absolute fees comes when you underwrite actually. So then...

What really is the logic of selling down, apart from freeing up capital?

No. That is the main logic. So you can book more on the same capital because we don't allocate too much more capital to infra, right? We want to move to retail. At this point of time, it is [indiscernible] because of a very high capital adequacy, but generally speaking, when you are operating on a 17%, 18% capital adequacy, we have to be very careful about where you allocate capital. So as it keeps freeing infra capital, you can do more underwriting and book more fees, right? There is also another technical one that, when you book fees, you amortize them for Ind AS. And when that asset goes out of your book, the entire non-amortized portion, you can write in. So that's the technical part of your modeling you will have to take in. Do you get it?

Yes, I got it, but just one further clarification on this. So like in retail loans, when you sell down, you also earn a spread, right, between what you've lent to the borrower and what you...

[indiscernible]...

What the bank is giving you. So -- yes. [ How we ] -- do you all earn a spread, or is it like a refinance then? Because it sounds like a refinance.

Yes. If it is a loan, it's you don't earn a spread. If that loan is just, what do you call, assigned, then loan, you don't earn a spread naturally. It will have to be done at the same terms, right, but -- and the fees that you earn initially, you keep it, right? Unless 2 things happen is that -- if the loan is completely refinanced. If the loan is refinanced and new loan is written, then it is at a lower rate. You negotiate with the borrower to keep a little bit, although it's not a model. It goes on negotiation. Of course, if you lent in the form of NCDs, then based on credit spreads going down and also the interest rates going down, you can earn a spread, but it can go the other way also. When interest rates rise, [ there is the ]...

No, but when the NCDs are sold down, you will just make a mark to market, right? You won't continue to earn a spread throughout the remaining tenure of the entities.

Yes, yes. Loan -- and same in loan also.

It's just an MTM.

Yes.

Okay, got it, got it. Then okay, I understood. And sir, my second...

[indiscernible]. I mean this is a very technical question. I am not even sure I'm the right person to answer it. You can always ask Anuj [ to take them in all details. He will get it ].

Got it, got it. And sir, did we give an EMI holiday to our MFI customers like some of our competitors did?

No.

Okay, got it, got it. And sir, just a last question. If I heard you correctly, you said that we've got 37% provisions on stage 2 in our retail book.

Yes.

Is that -- did I hear it correctly? Because if I do the math of that, then the provisions on the stage 2 book in retail is more than 800 crores, whereas last quarter, on the whole company it was 350 crores. So the increase is almost 500-odd crores, which kind of does not reconcile with your [ PPT ], where you...

So again, Piran, numbers, I'm -- I will be frank. I read out of numbers which are in front of me. It's not my core competence. I just make sure that book is well provided. So detailed numbers, Anuj is the right person. [indiscernible].

[indiscernible]. Perfect. Just sir, one last suggestion, if you can -- like your competitors give stage 1, stage 2, stage 3 as well as provisions across stages. If you all can provide that on a quarterly basis, that will be really helpful.

Yes. We will...

The absolute amount and the corresponding provision...

[indiscernible] take that feedback. I take that feedback. And since I've told you this time, in perhaps what is the worst quarter, I believe we will get the confidence to give you quarter-on-quarter now. So take that -- yes.

The next question is from the line of Karthik Chellappa from Buena Vista Fund Management.

Just 2 questions from my side, sir. Firstly, on farm equipment, have the share gains been pretty much across OEMs, or is it restricted to specific geographies/OEMs? And how does our pricing right now compare with that of the other NBFCs who are also in the tractor financing segment?

What does compare with other NBFCs? Sorry. I lost you.

How does the pricing, let's say our yield or rate, compare with that of the other NBFCs who are also in the segment?

Okay, okay. See, I will first talk to you about the strengths that we have. Our strengths are 2, okay? One is turnaround time and fairness, very clearly. Second is we are very, very concentrated on what we do. We don't spread across dealers. We -- our analytics shows us which dealer to do what business at what LTV. And based on that, we concentrate our manpower, all attention, all best teams for that dealer. So the market share, if I may say so, and I believe I have explained this before, sometime. We don't aim for a particular market share. We identify some dealers, maybe which will be 20% of the universe of dealers, let me say; and go for almost 100% counter share with those dealers. We try. We don't get 100%, but we try. In tractor as well as two-wheelers that is the strategy, identify dealers. And then we -- I mean we throw the bucket at them. I mean do everything for those dealers, okay? Fully concentrated. And that actually helps us. That is our strength and not pricing. In pricing, we will not be out of the market. We will be very clearly in the market. I will think some financers who are more captive will have higher yields. And I don't think there are -- any NBFCs will have a lower yield than us, but banks certainly will have lower yields than us. So that's -- if I may say generally, one thing that we can stand by is on the whole our LTVs will be far lower than all other NBFCs. That, very clearly. And how we are able to do that is by very clearly segmenting. So we know what are the type of farmers where we can go for slightly lower NBFCs, slightly higher LTVs. Which are the kind of business which we'll go for? Very low LTVs. And hence, average, our tractor LTVs are a little below 70% actually. So that's where we actually concentrate. That's where we -- that's the strategy, not pricing.

And this 20% dealer that you talked about will be across OEMs or related to specific OEMs.

Well, largely [ it's OEMs ]. [ Our maximum machine gain ], share gain has been in Mahindra, has been in TAFE. So Mahindra Group and TAFE group [ largely ] . We have been doing business there, but we have a good share in Sonalika [ and Swaraj trucks also ], et cetera. But Mahindra and Swaraj, I will just tell you [ this is of our portfolio, yes ]. This is of -- 100% is our portfolio. So almost 46% will be Mahindra and Swaraj, okay? And Sonalika will be around 19%. TAFE [indiscernible] will be another 15%. [ JD ] will be 11%.

Okay, great. And sir, my last question is basically on the Micro Loans. So 2 things which I noticed in the presentation this time: For micro, in the major geographies, both MP and Orissa are absent. Does that mean we have effectively exited that market? And if yes, why?

[indiscernible]

Where is it in the [ presentation ]? Hold on.

Slide 59. MP and Orissa, which was always there in our previous slides, is missing, so I was wondering whether you've exited that market...

No, no. It is just the top 5 have been put there. We have not exited any of those markets, not. The only place where we are not doing disbursement right now is Assam.

Okay, great. And sir, last question. If we look at the average ticket size on disbursement right now, it's about 45,000, whereas about 4 to 5 quarters ago, this was about 36,000, which is a 25% increase. How much of this will be explained by lending to existing customers who have completed multiple cycles [indiscernible] organic increase in ticket price?

100%, 100%. Right now almost the entire disbursement is happening to existing customers, mostly. We are not -- no, not almost, not, 60%? 60%, 50%...

So because of [ April ], 43% is new.

Okay. So 43% is new, and 60% [ on this ] is existing. And that is the reason for increase in the ticket size.

And this -- what will be the difference in the yield when you lend to, let's say, a higher-vintage, higher-cycle customer versus a new customer?

Same yield. Only ticket size will be higher.

Only ticket size will be higher, okay. Okay, that's all from my side, sir.

Thank you. That was the last question. I would now like to hand the conference over to Mr. Dinanath Dubhashi for closing comments.

Okay, first of all, thank you, all of you, for your very, very good questions. Helped us to clarify a lot of things. Anybody is welcome, obviously, for any detailed numbers to get. We will be very open, very transparent. Whatever numbers you want, Anuj will be very glad to give it to you. Of course, I am available, Sachinn is available for any strategic meetings that any one of you would like to have about how we have dealt with COVID, what are the future strategies, all those things. I will only close by saying that I talked to you today at the end of a very bad COVID quarter, fairly satisfied that the way we had prepared in Q4, at the end of Q4, for facing any such situation, we have been able to do it well. We have emerged stronger. In most parameters, Q2 seems to be definitely trending better than Q1. I can only say 2 things at the end, that I hope that, if a COVID wave 3 happens, in terms of loss of life as well as loss of business, it is less crippling than wave 2. Hopefully, us as private citizens and the government will be better prepared for that than what we were in wave 2. And then hopefully, very soon, business as usual can come back. Once again I would like to thank you. And once again I would like to pay respects to the 18 brave hearts that L&T Finance Holdings has lost over the last few months. We can't get back their lives, but we will make sure that -- the business and their efforts for which they have actually lost their lives, we make sure that, that legacy is continued. Thank you very much.

Thank you. On behalf of L&T Finance Holdings Limited, that concludes this conference. Thank you, everyone, for joining us. And you may now disconnect your lines.