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

Ladies and gentlemen, good day, and welcome to the L&T Finance Holdings Q2 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 of that effect is provided in the Q2 results presentation sent out to all of you earlier. I would 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 everybody. Thank you for joining the results call. Last 18 months, since the start of COVID 1 has been a very difficult and strange business environment to say the least. We had periods of extremely depressed and difficult business climate in the first 2 quarters last year, large part of the first 2 quarters of this year and interspersed with periods of excellent rebound in Q3 and Q4 of last year. What we have tried to do, L&T Financial Services is through the months of COVID, kept our focus on building a sustainable business model, which ensure that we deliver towards our long-term goals as well as taking counters for any short-term hiccups. I would like to put the Q2 results in that context, and would like to appeal to you to see it as a part of the journey, and I would like to explain the journey to you. For this, we have depended on 5 first principles at the cost of repetition because I have repeated this over the last couple of calls. Let me mention them again. And also mentioned in Q2, how we have demonstrated these 5 strengths and how these 5 strengths have come to our help and how they will help us in the quarters going ahead. So the first is proven business strengths, focus on maintaining and retaining our leadership positions in businesses where we have a clear right to win and are either market leaders or are moving in that direction, and concentrating on channel partnerships in the segments we operate. So these trends using lots of digital and data analytics is actually helping us maintain market shares and show growth in most of our areas, especially retail area. Now what we have done over the last 18 months is stayed away from all temptation to cut costs in these areas. And the large part of the cost increase that you are seeing, and I will try and explain it a little bit, has been more investment in both in business as well as our collection network. And very clearly, we believe that these investments are already paying us back in terms of improved collections and improved business. The second factor is strong collection framework, and I will quote collection efficiency numbers to show that leveraging our digital capacities, capabilities, especially data analytics capabilities has helped us clearly stay ahead of the curve in this. A well-established liability franchise quarter-on-quarter, we are showing not only a reduction in cost, but also preparing for any increases in yields in the future. Improved asset quality and more importantly, adequate buffers to deal with disruption. And I would say that we had a large NPA slipping -- large assets slipping into GS3, but the effect of that on the P&L was minimum due to this strategy of ours to create macro prudential provisions and keep this provisioning policy has really strengthened our ability to deal with any such shots. I mean these shots should be minimal, but it has helped us certainly. And then a strong balance sheet through a very high capital adequacy at this point of time. So after saying -- talking about these 5 strengths and I will talk more in details about them, what happened in this quarter. But if I have to put the headline of Q2 before we start, I think 2 large headlines we can make. Number one, with the existing asset quality, and the additional provisions we are carrying in our book, we believe, and I can definitely make this statement, that the ill effects of COVID 2.0 are indeed behind us. I'm not going to take a real guess on COVID 3.0, et cetera. But given the way that vaccinations, et cetera, are going in the country as a whole, in our company, especially, we believe that the impact, if at all it happens, will be minimum. But more importantly, let me say that the ill effects of COVID 2.0 both in terms of business as well as in terms of credit cost are definitely behind us. In addition to this, over the last 18 months, we have delivered a very stable growth in rural book and which we believe will only further increase in the coming quarters. So our retailization percentage has reached 47%, and this increase in rural book with proper reasons will definitely have a positive impact on the overall profitability. So I would put these as 2 headline positives. Couple of things perhaps have not gone as well as they ought to be like infra disbursements definitely need to pick up. Yes, we want to have an asset-light model for Infra definitely. But yes, the first 2 quarters, the disbursement momentum has been lower than what we thought. And we will -- we have plans to change it in the next couple of quarters. And as I said, 1 slippage, a large slippage in a real estate account, I will also talk more about it. But on that account, I would also say that the last 2, 2.5 years of bad situation in real estate, we have managed our book reasonably well. And yes, unfortunately, after some progress in the projects of this particular borrower, this quarter, finally, it has slipped into GS3. We have recognized it, taken provision and we are sort of moving ahead. I will again talk in details about it. So these would be the headlines, and I believe that the 2 positive headlines will have a very, very good positive impact in the quarters to come. So now deep diving into various key business metrics, disbursements first. Disbursements volume for the quarter have witnessed both year-on-year on quarter -- and quarter-on-quarter increase in our retail segment, especially in the rural segment. Infra disbursements, as I said, were muted on account of various market challenges, both in some delays and some delays in signing of PPA lower awards and also, at least temporarily, some risk-written paradigms changing in the market. And we're staying for the temporarily away from deals which -- where we believe that the yields are not commensurate with the risks of the project. So if we talk product wise, let us talk about tractors first. Definitely, the impact of the pandemic is being felt in the tractor sales, the industry, there is an 11% decline Y-o-Y. But despite this, L&T Finance has achieved its highest ever Q2 disbursements and maintained its market share on -- at about 15%. The reasons are 2 or in fact, 2, 3 reasons. One, analytics has helped us in very, very proper resource allocation which has actually helped us in increasing counter shares with our top dealers, top dealers in terms of volumes, top dealers in terms of asset quality. Now this analytics-based approach helps us in increasing sales, disbursements at the same time, maintaining an excellent asset quality, which actually is for everybody to see. I mean, you would see some other players in the market having a very different kind of asset quality than what we are showing in our farm portfolio. Now another reason, and this trend you will see actually across and will help us in the future is a very analytics-based approach on cross-selling to our existing customers. And we clearly have this internal motto of saying if a customer is good, on-time paying and have paid us for some time, we should never allow that customer to go away from us. And hence, there is a big organization-wide focus on doing refinance of giving additional loan to the same customer. And today, and this is something you will recall we started doing this about 2, 3 years back. And today, in tractors, almost 1/4 of our disbursement in this quarter come from financing and refinancing of our existing customers. And this is cheaper. We don't have to pass with any incentives and it's -- and of course, the asset quality because it is given to only chosen customers, asset quality is substantially superior to a normal farm -- the normal tractor portfolio. So this definitely bodes well as we go ahead. 2-wheeler. 2-wheeler also, the industry registered a decline of about 12% in sales in Q2, on account of cost -- increase in cost of ownership, rising fuel prices and few more reasons. However, here also, we were able to achieve our highest ever Q2 disbursement at about INR 1,244 crores, which is about a 13% increase here last year first quarter, while maintaining the market share at 11%, which are great positive. Now I must say that there is an element of increase in asset prices also in this. So definitely, there is no question that we were helped in the rupee term in the disbursement growth, no doubt. But the important part is very similar to tractors, we are using the same kind of tactics, concentrating on the best dealers using analytics to maintain market share. So these are 2 products where we believe that we have been able to maintain, in spite of a strong competition, our market share and more importantly, our asset quality at every bucket, check bounces, 0 DPD, ex bucket, all other buckets and especially NPL are actually trending much, much better and are almost across the board, are at -- already at pre COVID levels. So that is doing extremely well. One very small achievement in 2-wheelers, but it's a strong but small but encouraging beginning is this quarter, we have made our beginning in EV financing, and funded about 400 e-scooters. And we believe and hope that definitely in the longer term, this industry is going to do well, but we hope that even in the medium term, this momentum will continue. And we are having very interesting times with some of the manufacturers where it will be -- we will be a part of their end-to-end process of disbursement. So that again, bodes well. What I'm trying to do is try and match the Q2 performance with how things looks going forward. Micro loans, here, our disbursements have always been collection-based so as collections improved disbursements improved. So business volumes in September actually normalized to about INR 918 crores. So our normal rate before pre-COVID was between INR 1,000 or INR 1,200 crores, and now it is rapidly moving in that direction with our overall disbursement picked up across the country. And in the quarter, excuse me, we had disbursements of around INR 2,100 crores, which is an increased 56% Y-o-Y and a big increase over the first quarter, which was only INR 800 crores. But the important part is I'm not so much comparing last year or first quarter, but more importantly, even in this quarter, the whole quarter's disbursement was INR 2,100 crores. Whereas the September rate had already gone beyond INR 900 crores. Even if we maintain this in the coming months to INR 900 crores to INR 1,100 crores, you will see that this bodes well for the microfinance disbursements booked and definitely being one of the most profitable products. It bodes well for the overall profitability. I would also like to add that we have added another state this quarter, we have launched Microfinance business in Rajasthan, which we will believe will provide a further [ help ] to disbursement volumes and also aid in geographically further derisking the portfolio. I would like to mention -- give a special mention to consumer loans, though it is a very small portfolio at this point of time. Fresh portfolio. I remind you that at this point of time, we are largely concentrating on cross-selling royalty, but we have also started some limited sales to other databases by taking it through all our credit engine. Here, the future is exciting, and I will talk more about it later. But disbursement this quarter have now reached a rate of almost INR 500 crores. And very clearly, while these numbers will still small compared to the other products, but these are obviously reaching higher trajectories quarter-on-quarter. And the portfolio albeit a new portfolio, but staying in very, very good shape. Let's talk about home loans, another small product at this point of time. Right now, our strategy is very clear that overall market HL LAP is expected to grow at around single digits. Demand for housing, especially middle income, lower income is really picking up. And right now, we are concentrating on -- mainly on salaried segment. Yes, it is not immensely profitable at this point of time. But for the volumes that we are doing, it helps us definitely maintain portfolio quality, bring the COVID impact on the portfolio absolutely in control and more importantly, maintain the channel in good shape. And as we slowly restart our SENP and LAP businesses properly, these volumes will also go up. But at this point of time, we are on the maintenance trajectory here, we are clearly witnessing increased traction. And you will see -- you are seeing already, quarter-on-quarter disbursement going up. Salaried segment remains 93% of our total disbursements and definitely credit quality is improving rapidly. Infra disbursements have remained flat quarter-on-quarter at a much lower level than what we would like to do. Okay. Yes, the positive impact of this is higher NIMs plus fees, higher retailization, no doubt. But we want to achieve much higher retailization, but over a medium- to long-term period. I must assure you that this INR 1,200 to INR 1,300 crores in disbursement in Infra is not strategy, it is a temporary market condition, which has come in place, but we have a robust deal pipeline in place, and we believe that we should pick up these disbursements in Q3 and Q4, which we will aid. I mean if you see a lot has been written already about the overall fall in the book, there is no denying that certainly. But you will see that largely Infra and obviously, real estate is responsible for that. The retail portfolio are actually showing a growth both year-on-year and actually rural has shown almost a 3% growth quarter-on-quarter, that's very clearly the reason and also the defocused book running down continuously. So overall, just showing AUM, just headline negative number, needs to be taken in context based on this but the profitable AUM is actually growing, not only growing in percentage but actually growing also absolute numbers Y-o-Y as well as Q-on-Q growth. Real estate, not much new to say, except that we are concentrating very heavily on project completions, project progress, specific teams working on each project. And also would like to say that we actually underwrote for the first time after 6 quarters, a very premier name and a very small amount just to signal that we are not out of the market. We will remain extremely, extremely selective for any new underwriting that we do. But one thing we will make sure that our projects get completed. So that's as far as the disbursements is concerned. Summarizing, while infra disbursements remain bulky and hence can vary quarter-on-quarter, retail disbursements are showing an excellent momentum. In the coming quarters, we'll continue to build on our strengths in farm, 2-wheeler, farm and two-wheeler especially. Microloans have seen increase in disbursement and rates coming back to normal by September, and even if we just maintain this for the next 6 months, it will show a substantial increase over the first 2 quarters very clearly. And consumer loans going from strength to strength. This clearly bodes well both for good growth as well as profitability. So with that, I will move to collections. Analytics and very detailed analytics forms the cornerstone of our collection engine. Collection always traditionally was always [ to where is MP ]. We have concentrated it on every bucket, but not only that, increasingly, we are concentrating our analytics on geo marking, on prioritization of resources and prioritization of collections and buckets. This has started paying dividends to us, and we believe that our collection efficiencies in the 0 bucket as well as resolutions in the remaining buckets is actually one of the best in each of the segments and definitely coming back to normalized collections close to pre-COVID levels across the retail businesses. I will quote some numbers. Collection efficiency in Q2 in farm, we have maintained at around 90% of CD collection efficiency. Our focus very clearly remains on data-driven resource allocation here, and very clearly far superior than industry collection efficiently. Two-wheelers, 2-wheelers increased manpower allocation for collection and also increased collection taken through digital and call center mode has actually helped us increase our digital collections to almost 60% now. Regular collection efficiency has normalized to 98% in September, and bounce rates have always improved actually quarter-on-quarter after COVID has started. So bounce rates have also come well in control. Microloans, though the sector as a whole continues to see asset quality pressure, we have been able to improve our collection efficiency drastically through identification of various priority pools. Our regular collection efficiency has returned back to 99% levels, but more importantly, even higher bucket resolutions have improved. Our focus remains on boosting the 0 DPD collections and managing early bucket delinquency in this market in microloans, and that is very clearly helping us. And you would see that this quarter, we are not created any more macro prudential provisions, which actually signals that we are believing that things are coming back to normal. Housing -- in retail housing collection volumes have improved across geographies on account of, again, higher resource allocation and focus on initial buckets. You would see on-time collection efficiency of housing -- retail housing is back to 99%. In the real estate segment, our continued support to developers in construction progress and improved sales in various projects, and we have actually given these numbers in the investor PPT. We have seen increase in escrow collections, which are now on the average at about 91% of pre-COVID levels, which is during this quarter. Infra of course, collection has not been a problem. In fact, in Q1, we had seen lots of prepayments actually and the book had fallen drastically. So here, collection continues to be at an excellent level across portfolios, across industries, it remains at an excellent level. So overall, I would say that collections has helped us tremendously in collection efficiency, it has helped us to keep OTRs in control. So I must also share this, this comes sometimes later in matter, but it is an important part to share. That the way we had -- we project the need for taking early provisions is by actually modeling how collection is going, how much OTR may happen, how many customers would have asked for OTR. And we had actually projected how the situation will look maybe 18 months, 2 years from last March or from when the COVID 2.0 happened. And I must say that we are quite happy with the results. So you would see, especially in rural, the overall credit cost way below what we took in Q1. So the way we do it is when we project that over 6 quarters, something will happen, 1/6 of that provisions we would have taken in Q1. And now with vastly improved projections, obviously, now for the remaining 5 quarters, we will take much lower provisions. And the result of that we have seen is we didn't have to create any more macro prudential provision. And in fact, we believe that from the next quarter onwards, we will start utilizing the macro prudential provisions used. And this is actually the proof of the pudding. That when you see like Q4 -- in Q4 of last year, anyway, the overall credit cost came down plus macro prudential provisions also were utilized. So this strategy has worked. This strategy is that when situation starts going bad, create -- don't worry about that quarter's P&L, create provisions so that you don't -- when situation starts improving, you show a twofold increase. One is overall provision reducing. And secondly, utilization of macro prudential provisions. So that actually indicates that as we stand with our additional provisions today, we stand on a very, very strong wicket. But before coming to that, let me talk about liabilities. A lot of talk about increasing of -- hardening of yields most definitely. We believe that liquidity will continue to be quite good, but yields will slowly start hardening in the market. We have taken advantage of the very strong liability franchise that we have built and a good liquidity scenario to actually lock in excellent medium-term to long-term finance at very, very low interest rates. So our quarterly WACC now stood at -- that is weighted average cost stood at 7.53% which is the lowest ever, down 11 basis points quarter-on-quarter and almost 80 basis points year-on-year. But more importantly, even in this quarter, we have raised medium- to long-term funds of close to INR 5,000 crores at sub-6% levels, right? And what we are trying to do is when at the time of liquidity shocks, it helps us to -- we have raised liquidity and kept. But now as yields start hardening, will our cost of funds go up? Yes, most certainly, it will jump. But because of good asset liability management because of now locking in into good medium- to long-term funds, we have a good window of the next 2 to 3 years where we have locked in some long-term funds. Priority sector window being extended by RBI bodes well for us. We have raised, in fact, market-leading amounts of priority sector funds, and we hope to continue to do that. We also -- I mean there was an event in the NBFC market. Luckily, I think that was already discounted and that didn't cause any hiccups. But we had also maintained, it was at the time of the quarter end around that, that this news started coming, and we have maintained higher liquidity just to protect. So if something happens, luckily, that didn't happen. So this is another part, as you will see as on 30th September, we have about INR 13,000 crores of liquidity. I must qualify, it has 3 components. One is the normal liquidity that we will maintain for business. Second, is at 2 of our companies, we are today maintaining -- as on 30th September, maintained liquidity for specific purposes. At the holding company level, we have -- we had gone to the market, gone to the preference sharing holders to ask for early prepayments of our preference shares, which were at a high rate. And say, one, all the -- since we have got the permission of the shareholders and all that will be repaired during this quarter. Not only the cost of funds will go down, but the negative carry will also go down because of that. And secondly, there is a liquidity up to the tune of almost INR 3,000 crores on our ex IDF balance sheet. We are awaiting RBI license there to operate as a normal NBFC. We hope to get it this quarter, the moment that comes, that liquidity will also go down. So most certainly, another upside in the NIMs plus fees is the reduction of this negative carry because of fairly large amount of liquidity being carried. So that will certainly trend down. Okay? And hence, NIM plus fees should trend up. So that is very clearly where it is going. Asset quality, very clearly significant improvements in collection efficiencies over the quarter has helped us actually manage not only NPAs, but also debtors. Now a number that we gave to answer to a question last time, that is on Stage 2 on our retail business. Very clearly, our Stage 2 in June I had answered that it stands time at 7.8%. That has now improved to 6.2%. And we are seeing this good trend happening across our retail businesses. Incremental focus on collections, as I said, has also ensured that OTR remains quite limited. And in the entire OTR 2.0, we have done around INR 1,800 crores of OTR across products. There is 1 thing that I would like to mention, and also shows our collection efforts, even though OTR happens, we go and still continue to request the customer, that please, repay because after all, you are going to pay the interest. So a good thing that in OTR 1, we had done almost INR 1,350 crores of OTR, which is now already stands reduced to about INR 1,200 crores. So INR 150 crores of OTR 1 actually got repaid in Q2. Now you will ask, is this something that is sustainable quarter-on-quarter? Too early to say that, but it just shows that we continue to meet the customer and keep pushing them to also try and repay through that. So we believe now as an overall percentage, OTR space well in control. Our GS3 in actual numbers, in absolute numbers is that close to INR 4,800 crores, which is at 5.74%, and NS3 stands at about 2.81%. GS3, similar levels as Q1, whereas NS3 has seen a rise. This obviously requires an explanation. So 1 large NCR-based real estate account, which was in the news 2 years back, and we had continued on our project progress, albeit slowly, over the last couple of years with various events happening, the capability of the builder to service our interest is vastly affected. And hence, we have chosen to classify this as GS3 close to INR 950 crores of that has been recognized this quarter and another INR 350 crores will be recognized next quarter of this particular asset. Two good things is that based on the macro prudentials that we have built in real estate and also the progress and the progress status of the rest of the real estate portfolio, we believe that this particular asset though large, coming into GS3, the impact on P&L will be minimal because we are already carrying the very good macro prudential. So that is number one. Number two, good retail collections have helped us maintain our GS3 at a steady level. We have also -- I must be very frank, and it has been put very transparently in the investor presentation also, that we have also written off some of the old 100% provided assets. And overall impact is the GS3 number is at 5.74%. While a lot of people ask why the NS3 number is up? Naturally, whatever we have recovered or whatever we have written off was close to 100% provided. And as the new asset comes into GS3, the provision number on that will be much lower. And hence, the average PCR has naturally fallen. But the important part, I would add in addition to PCR, and this is the more important part, in addition to the PCR, that is the GS3 provisions, we are carrying close to INR 1,750 crores, which is about 2.2% of standard book as macro prudential, OTR, additional overlay, so INR 1,750 crores of additional provision is being carried, which we believe is quite enough to deal with any residual impact of this COVID as we go ahead. And based on all this explanation, we can confidently say now that as far as P&L concern is concerned, COVID 2.0 is definitely behind us. Even GS3, we believe that taking into account that INR 350 crores additional, which will come in Q3, still GS3 levels will remain well in control. We don't think they will increase substantially as a percentage, but that's our estimate as we go ahead. So overall, we believe that our strategy of providing on standard book and macro prudential provision has genuinely helped us. And this 2.22% is in addition to the normal standard asset provision of 0.35%, 0.4%. So that doesn't include that because that is anyway always going to remain on the standard side. This is actually usable provisions. So that's -- we believe because of that, both asset quality as well as credit costs will trend positively for us. Balance sheet. Yes, capital adequacy stands at 25.16% up from 21% a year ago. Tier 1 stands at 20%, debt equity at 4.4%. Now this can be seen both ways. Just 1 year back during COVID, this looks absolutely great because it has very strong -- makes the balance sheet very strong. Just when everybody is talking euphoria, this looks like a low multiplier from ROA to ROE. These are 2 sides of the same coin. We believe that having a good capital adequacy prepares us now for the growth to come, definitely organic growth opportunities, but possibly any portfolio buyout or inorganic growth opportunities that may come over the next couple of years, we are well prepared to take advantage of that without having to raise any further equity. Now it is also worth mentioning that we had one of the credit agency, a credit rating agency, ICRA had our outlook as negative for perhaps industry reason.All our surveillances are done, all rating agencies have reconfirmed our rating to AAA, and ICRA has upgraded its outlook from negative to stable. So which actually is a good indicator that even the rating agencies now are seeing that things are coming back to normal. Our mutual fund business has actually registered the highest quarterly gross inflows in the import and equity and hybrid segments. Our AUM now has crossed INR 80,000 crores, showing good growth. We are garnering good flows in this quarter across categories, we expect this AUM growth to continue. We have recently beefed up manpower, recently beefed up our branch network. And certainly, hope that we will continue our march towards the INR 1 lakh crore mark in mutual fund also and thus, strengthening 1 more retail business that we have. I will just briefly speak about sustainability. As an organization, we focus on ensuring sustainable growth for all stakeholders. On journey on the ESG parameters, we have shown our commitment towards the following: one, undertaking environmentally responsible businesses while we have helped -- where we have helped avoid 7 lakh plus tonnes of CO2 emissions through renewable financing, nurturing stakeholder initiatives where almost 7 lakh community members have been benefited through our CSR initiatives and 98% of our employees are now vaccinated. 99% actually, first vaccination and 97% of eligible population with the second vacillation and we are talking about more than 23,000 employees. That has -- very clearly shows a lot of employee care initiatives launched and obviously, ensuring robust governance by clearly working on institutionalizing deployment of the ESG framework. We have been -- efforts have been recognized by global indices like FTSE for good and MSCI, and we have been maintaining our A rating continuously. So summarizing the numbers very quickly. Overall, disbursements are now up 40% quarter-on-quarter, majorly led by retail disbursements, which are up 54% quarter-on-quarter. Collection have actually come on par with last year's numbers. And with very clearly collection efficiencies are back to pre-COVID level. Rural book is up 3% quarter-on-quarter. And I must mention that even the worst times in the pandemic, we never had a Y-o-Y negative growth in our rural book, whereas overall, AUM did have negative growth this year, but rural was always positive, and this uptrend is now only expected to strengthen further. Absolute NIMs plus fees stands at 7.5%, 8%. This is definitely higher than always what we have been indicating that between 6.5% to 7%, but we have consistently maintained it now at around 7.5%. Definitely, the cost of borrowings reduction is responsible for this, but also increasing retailization, increasing concentration on cross-selling and fees has also been responsible for this. And we believe that with further increase in retailization -- and I'm not talking quarter-on-quarter. I mean, next quarter, if I certainly do INR 4,000 crores, INR 5,000 crores of infra disbursements this number may be down on quarter-on-quarter. But as a trend, we believe that certainly, we can indicate that between 7.25% to 7.6%, these kinds of NIMs plus fees are now more sustainable as we go ahead. Total OTR book, I talked about at about just about OTR 1 and 2, now at about 3.5% of the book. GS3 well in control, credit costs. On the reduction, this quarter's credit cost was INR 778 crores compared to INR 900 crores in Q1. And this trend, we believe, will improve as assets improve and also as we start utilizing slowly as we get more confident the macro prudential provisions and which leads to both PBT and PAT having an excellent growth on a sequential basis, though I must add it that our PAT is almost 15% down from Y-o-Y basis. There is 1 more item that I may like to emphasize that very simply tax in last year second quarter was based on the goodwill benefit that we had, whereas now it is more without the goodwill benefit. So there is a impact of additional tax as well in this PAT Y-o-Y drop. So Q-on-Q, it is more comparable, and it is 26% up as we go ahead. So we believe now that corner has been turned and we should be able to do better even in the medium over the next couple of quarters. I will talk a little bit about some long-term trends. And I must say that hopefully, before the end of the year, we will be coming up with a detailed long-term plan come along with the group's Lakshya plan, we should be able to come and approach you with a detailed long-term plan. So I don't want to talk before all those things have gone through the organizational processes. But I would like to give some indications on where we are seeing the excitement coming over the next 4 to 5 years. So with a strong balance sheet, a well-established liability franchise and data analytics-driven collection, adequate provisions and established business strengths, we believe we have showcased our ability to deal with extremely tough conditions and also to take advantages of any upswing in demand. We firmly believe now that COVID 2.0 is behind us. We use this to played on our strength and definitely undertake lending of our choice. So with COVID 2.0 behind us, we believe that credit costs will trend down and growth in retail will go up. We have established and while the many strengths in data analytics that we have established, I would like to talk about 1 strength that this pandemic and especially, our way of working has given us, is proximity to our customers. We now have a rich understanding of our retail customers how they behave both in borrowing and collections, their needs -- the gaps that exist in our current offerings and the way we can fulfill those gaps. And when I say customers, I mean over INR 1.1 crores of retail customers of LTFS with whom we have existing relationships. During our journey in the last couple of hours (sic) [ years ], we have continuously worked on increasing our wallet share. Our association with the customer, which was a meager 1.2 products per customer in FY '16 has now increased to 4.1, showcasing our abilities to identify needs and cross-sell right financial products. In addition, I mean, some of the good things we can talk about is our first digitally-native product, which is consumer loans, which is entirely fed at this point of time with our in-house customer data is scaling up extremely well as in volumes as well as portfolio quality, which is far better than the market. Of course, it is new. We will be soon launching perhaps late this year or early next year, the open market version of this product targeted towards responsible end use. So it will not be consumer loans, which we will be giving cash in hand of the consumer when we go open market, but we will be targeting responsible end use as we go ahead. I had earlier mentioned that by FY '26, which is 5 years from now, our retail businesses, we are hoping that will go to almost 60% of the portfolio. We are actually believing that with launch of new retail businesses, we may even look at crossing the 70% mark by FY '26, quite comfortably. With retail balance sheet being concentrated on concentrated on and wholesale asset-light model, this is the journey that we will have. Based on current plans in the pipeline, I talked about the expansion of the consumer loan business, and keeping whole thing very digitally native, farmer finance, building on adjacencies on our leadership in farm equipment business. And more importantly, SME, where we will definitely launch business loans. In fact, we will be underwriting the first loan in this quarter, actually, hopefully, tomorrow, we will be launching our SME product. So with all this, we are very gung-ho about the organic opportunities in businesses, which are more of retail nature going in the next 4 to 5 years, and we see excellent growth coming from there. With this opportunities with end-to-end digital digitization with data analytics, we are also increasing more higher percentage of our retail business where customers can undertake complete end-to-end journeys, which will not only help us in increasing volumes, but also, hopefully, increase customer satisfaction and reduce expenses to some extent. So what we're trying to do actually is launch more and more retail digitally-native products and at the same time, digitize and yes, make data as the bedrock of existing products. And over the next 5 years, this journey looks very exciting. And I'm not talking about any opportunities of inorganic growth at this point of time because that you can't strategize. But we are -- we will certainly look at it as and when it comes, but those opportunities have to be there. Definitely, as I said, we will be shortly presenting you a detailed plan. But what I can definitely say is with the current strengths we have built both balance sheet and business trends, we are certainly taking very strong steps of moving towards a goal that we are calling already in the organization is a fintech at scale. So that's what we are trying to move over the next 5 years. Thank you very much for your patient listening. I think I took more time than normal because I wanted to put the results in context. I now open the floor for any questions. Thank you.

[Operator Instructions] The first question is from the line of Kunal Shah from ICICI Securities.

Yes, sir. So firstly, with respect to this entire housing finance, so NCR-based account. Earlier, it was INR 800-odd crores. Now it's almost INR 1,300 crore, as you highlighted, INR 950 crores recognized this quarter and INR 350 crores to be recognized in the third quarter. So was that like more funding, which was extended to them for maybe based on the stage of construction or maybe for the construction thing and that's why this exposure has gone up and maybe in terms of like when we look at the analytics across these real estate space, was it providing a lot of comfort for that particular stance. And do we see any risk in any of the other portfolio within the real estate?

Okay. So yes, definitely, the increase over that INR 900 crores that we were talking about. You remember that was 2 years back or almost 2.5 years, right? So there are 2 items. One, obviously, as you rightly said, construction going up. And definitely, the progress has been slow, Kunal, slower than what we expected and that has increased the exposure. And to some extent, by some projects for interest during construction as well. So with both these, the exposure is now at around INR 1,300 crores. I must also say here and ask for all your forgiveness very, very modestly, that I had mentioned at that point of time that we are very confident on actually reducing that exposure. Unfortunately, COVID happened. That reduction was mainly based on monetization plans of some other collaterals that we are holding. We are still holding those. Those monetization plans are still in the pipe, but I must admit that COVID has taken -- put the calendar completely out of sync for those monetization plans, especially for this name, right? Because now that name is also -- has some Supreme Court judgment with that, et cetera. So it will take some more time. But now, of course, very clear, we are also working -- by the way, we will continue to work on the resolution here. Our [ try ] is that we will not increase our exposure, but we'll work with some other agencies for structures like priority funding, et cetera. This is, of course, it is only trying so that the projects are completed. Because the good and bad thing about this sector is till the project is completed, it is worth noting. And moment it is completed, you can recover a large part of your exposure. So that is answering, I believe the first 1, first half of your question I have answered satisfactorily. Then I will move to the second half. So we have looked at our overall portfolio, risk profile of the portfolio has certainly improved drastically over the last 2 quarters. There is no question about that. Large part of our portfolio, close to 90% is in lower income and middle income kind of portfolio. The -- and I'm talking overall portfolio. There will be some assets here and there. But the escrow collections as well as the sales momentum is picking up excellently well. As I say, we are working very closely with our parent to bringing the parent wherever possible, not necessarily for JDA, but even for marketing arrangements, for getting in some engineers properly on the site, very, very close monitoring that we are doing on making sure that projects get completed. Of course, when you take the overall portfolio, there will be some categories which are green and everything going very well, completed inventory, almost completed inventory, et cetera. There will be some parts which will be amber where we -- there will be some very specific things to be done to complete the project. One thing I can say confidently is that is there any part which is red hot, any other account, which might go bad over the next 6 to 9 months? I can confidently say that there is no such thing in the portfolio as we speak. So to answer your question, if you say, is it risk free? Of course, no real estate thing will be risk-free. But we have got the progress of the rest of the portfolio under control. And I can confidently say that we don't see any other NIM slipping for the next 6 to 9 months at least. And by, hopefully, by that things will improve much better. Does that satisfactorily answer your question, Kunal?

Sure. And just in terms of the provisioning on this account. So when we look at the additional provisioning, so there would be some component of OTR, but otherwise, it's INR 384-odd crores, which is there. And so should we say that maybe that was broadly covering this account and that's where you are confident that there will be no further requirement for higher provisioning, particularly with respect to housing finance because now we have gone net Stage 3 of 4.7 plus some restructuring out there. And against that, we have 1.8% of excess provisioning?

It's a very, very good question. Okay. Very good question. I would also have to talk about trends. So right now, according to the IndAS, the ways we have taken provision on this much in addition of Iraq, and you can do the math here, it's housing finance, you know the [Foreign Language]. You can do the math. Right now, it is based on the current valuations as we see as well as the projected cash flows, and we have written down the projected cash flows. We have given the right amount of discounting to it and taken this provision right? What we have also seen is the additional INR 350 crore coming, one, as well as any further deterioration of the cash flow. We believe that the macro prudential that we have on the balance sheet should be largely enough, largely enough. And given my previous statement that we don't see very high probability of something else slipping into GS3 from real estate. We believe that the macro prudential that we are carrying should be largely enough. Okay? And that's a statement I'm making with reasonable amount of confidence. Yes? But if at all something little is required more from the P&L, I would believe it will be fairly limited and no large shocks to the P&L coming. I think that much statement I can make confidently. It's a forward-looking statement [Foreign Language] so I don't want to promise something saying 100%, but we will -- we believe that what we have squirreled up in the balance sheet now is largely enough, both in terms of PC -- if you add PCR plus the macro prudential.

Sorry to interrupt, may I request Mr. Kunal Shah to please rejoin the queue. We have participants waiting for their turn.

Yes, but Kunal, are you okay with that?

Yes, yes. So I had few more questions. I'll come back in queue now. Okay.

[Operator Instructions] The next question is from the line of Saurabh from JPMorgan.

Sir, just 2 questions. So firstly, good to say that on your comments that COVID 2.0 is behind. Sir, basically, 1 is what will be the Stage 2 including wholesale, which I mean, you commented on the retail Stage 2, but just at an overall company level what will be Stage 2? And secondly, sir, basically, as in your rural growth, could you just comment on how the operating leverage and NIM should trend? So can we expect PPOP growth to start outpacing loan growth for you? So that's the second question. And the third, if you have time, is basically on the net worth, sir, your net worth is now INR 20,000 crores. So you touched upon the ROE piece of it, but at least any target on what you want to deliver as an ROA please?

You will have to repeat your second question between the OTR -- I mean between the Stage 2 and the net worth part.

Yes. Sir, basically, the operating leverage. So what I was trying to get over is now that your retail book will be growing faster. So -- and so how should we think about both your NIMs and your operating cost because I'm guessing there is a level of cost, which is fixed cost, which is baked into the business, which is not coming down as your AUM has come down. So if you start growing your AUM, can we start expecting some PPOP margin expansion? Or will that be too optimistic?

Okay. I will answer all your questions. So first of all, we have started giving the Stage 2 retail numbers as we are established a trend in that. On wholesale, it is more one asset going here and there. And hence, at this point of time, we are not giving a quarter-on-quarter number. We will soon start giving it. Let me tell you that it is not too far away from the retail. The overall number is not too far away from the retail numbers. So it's not like something which will shock you. But at this point of time, we have started giving the retail number, we are confident about that trend. Wholesale seems 1 asset like this shifts on quarter-on-quarter, we will wait for a couple of more quarters from giving that number. That is number one. Number 2, Net worth, excellent question. You see the net worth, first of all, why we increased, right? We always -- I always say 1 thing that NBFC always -- I mean it has multiple targets, multiple metrics to deliver always the management has to be clear as the ranking of those. I always put safety first. So in those targets, the first 1 will be liquidity. Because any other issue will put the company in a problem in a few months, liquidity can push -- put us in problem today even, right? So always, liquidity comes first for me. Second, then comes what we call capital adequacy of the company, which makes long-term safety of the company, correct? Third is asset quality. Fourth is profitability and fifth is growth. So this is how myself, my team is trained. So obviously, we were not there. We don't say that growth is not important, no doubt. But when decisions have to be taken. And there are 2 different metrics pulling that decision in 2 different directions. This is how we will take. And that's the background of this kind of net worth. Clearly, this kind of net worth has come because last year, as I said, things were in a mess in the climate and in the environment, we didn't know how COVID will go, nobody's judgment could be depended on. And I have said at that point also very clearly, we got the ultimate from rating agencies that you want to maintain your rating you have to raise equity. So at that point of time, the decision was very clear that we need to maintain liquidity. For that, we need to maintain our AAA rating. And we need to maintain very good capital adequacy as we go ahead, and then the equity was raised. So that is the reason. Today, it sounds very different because COVID is behind us. The whole world is now saying, okay, it looks like COVID 3.0 will not be crippling definitely. And all of a sudden, this liquidity now and this equity is we are talking in terms of leverage, both operating and financial. How do we go ahead? So very clearly, the way out of that, as you rightly said, is growth, and good growth is definitely going to be the way out because most good NBFC seeing growth on the horizon should look at things like returning capital, et cetera, right? That will be stupid. So very clearly, growth is going to be within the other parameters, maintaining good profitability, et cetera. Growth is going to be the underlying emotion. For the next 4 to 5 years. Hence, for example, am I concerned about the fall in AUM overall and infra, most definitely, I'm concerned. But am I sweating? No, I'm not sweating because the profitable AUM growth is retail growth, the rural growth is especially, and that's happening right. I explained to you how it will accelerate as we go ahead because of which products that will accelerate you will see an unprecedented new product launches coming from us over the next 1 year. I mean we have not launched any new products in the last 5 years, right, to talk about other than consumer loans. But you will see a real unprecedented adjacencies being launched completely new products being launched, while taking care that risk parameters stay in control and while taking care that any product that we launch, we should be very clear about the logic of that product. We should be very clear and confident about being able to build a right to win in that product. We will very, very clearly, launch that. Third thing is our focus on the customer now rather than a focus on product. So increasingly, as we build our data bases and have now excellent capability of drawing all juice out of that database, we believe that our retail growth will now definitely accelerate more than even than what we have done in the last 2 years. Precise numbers, et cetera. Give me a quarter, I'm going to come with good detailed plans on the retail growth numbers as we come. But I thought that it is important to state that where we are very, very, very clear that while keeping the other things in control, it is no longer sufficient to say that we are coming out of COVID, we -- our balance sheet is well protected, we are happy. It is no longer sufficient to do that. We have to go for growth while keeping the other parameters in control, and that's what we are going to go. And quarter-on-quarter, notwithstanding over the long term, this growth in balance sheet is going to come from retail in our strength areas and hence, the risk will be granular as we go ahead. So this is answering your question on net worth, I believe. As far as NIMs plus fees are concerned, retailization, hopefully, we will maintain. So NIMs plus fees are going to, as I said, stay very healthy, whether they will go up from 7.5%, even maintaining at 7.5% is very, very good. I'm not going to talk about interest rates going up and down. That is 1 thing. In short term, they will go up mainly because of our liquidity premium coming down or the liquidity negative tariffs coming down, we are not going to maintain this kind of liquidity now. Secondly, also, as I said, cost of funds, of course, is good. But over more long term or medium term, it will go up by 2 factors. One is realization certainly, Secondly, short term, there is 1 more thing. Microfinance clearly is going to be much higher in H2 than in H1, H2, H1 together, we did INR 3,000 crores, less than INR 3,000 crores disbursement in microfinance. We will easily double up that in H2 very easily at the current run rate of INR 900 crores to INR 1,000 crores. And if you just do the math, right. So with that in short term, NIMs plus fees will be healthy. But I'm right now wanting me to do the long-term trends as we increase retailization and as we increase customer focus and thus increasing cross-selling and hence fees, we believe the NIMs plus fees will trend very well. Now your other point. Certainly, expense as the total AUM will definitely go up as we do utilization, naturally. But we will try and see that on the retail portfolios, we maintain PPOPs at a good level, even maintaining current PPOPs. Let us say worst case scenario, we maintain current PPOPs on our rural portfolio, right? Even then as the portfolio mix changes, overall PPOP will definitely trend up just because of the -- and this is a -- I would -- without taking the effect of digitization and all into our counter and just saying maintaining current PPOP on the rural portfolio. As the weightage of rural increases overall PPOPs will trend up. So without giving very precise numbers, I have tried to answer your question, does that satisfy you Saurabh?

The next question is from the line of Rahul Jain from Goldman Sachs.

Yes. Just a couple of questions. Number one, on this particular account that you talked about, what exactly transpired? Is it more of a function of the Supreme Court verdict, which is why the entire exposure needs to be downgraded? Or you could see that coming, let's say, a quarter or 2 back, given second wave, et cetera, and that perhaps further crippled the servicing capability of this company? Was it like more event driven the weakness was in event?

Mix of both very clearly, were the project is going to our satisfaction? No, there was some progress in the project. If there was no progress, we would have classified it some time back, but definitely not to our satisfaction. This Supreme Court verdict plus some ED, et cetera has impacted -- so by the way, the Supreme Court -- let me clarify those 2 buildings, we have nothing to do with them. We have no exposure. They are not -- forget funding those projects, we don't even have them as additional collateral or anything like this. So we are away from it, okay. But obviously, it will have impact on the -- because it will involve some cost. It will have some impact on the ability of the builder to service our interest also. And we were definitely not once -- beyond a particular stage, we were not interested in increasing our exposure only by doing interest during construction. There is a particular limit. Of course, those projects are scaled on, and we can very well do the interest during construction. But always, the management has to judge whether it is all going in the right direction. And we believe with the promoter's more limited ability to find the money to service our interest. It was better for the stakeholders to recognize it at this point of time. Provide and then work for turning this project around. And that's what we will certainly do.

And just to understand the resolution process, particularly of this account, given the size that is involved is pretty large, what options do we have on the table, even including what can be done with the parent company?

Sure, 2 stage. Parent company, very little can be done. 2 stage, we have certain assets as additional collateral. So over the years, as we saw things going bad, certain assets or so even today, as we stand, the security cover is more than 1x, it should be. And when we started, it was 2x, et cetera. But even now, it is more than 1x at beaten down asset prices. Those collaterals have to be sold, have to be monetized, it is a slow process at this point of time, but they will be monitored at some price. And that will reduce the exposure, number one. Number two, our -- and that is our first option is not to increase our exposure, ,but to get funds, private equity funds, to do what they call priority funding. So they do the funding and they have the first right after that on -- once the project is completed to take it out also. We believe that something like INR 100 crores, INR 150 crores more may be needed overall to complete all the projects. And we are right now in discussion with some similar entities, private equity entities to bring in priority funding to make sure that these projects are completed. So it's a 2-stage or rather a two-pronged resolution approach. Difficult route, but there is a route very certainly. So I'm not saying over the next 3 to 6 months, we will come and declare that this is solved. It's a difficult route. But at the same time, we didn't want any overhang of this being in Stage 2, and hence, there is an NPA threat and all those things. Now we can do everything go legal, put all sorts of pressure. Our hands are free now, once having recognized the GS3. So very ironic way, recognizing it as GS3 actually makes the recovery process more strong. [Technical Difficulty] Can you please disconnect that call? There is a cross connection, important call going on. Please disconnect immediately.

Yes, sir.

Okay. Sorry, please continue. I'm sorry for that.

Just give me a moment, sir. [Operator Instructions] Sorry for the disturbance, you may please go ahead.

Yes. Next question, please. I hope I have answered that question satisfactorily. If so, we can move to the next question.

The line of that person got disconnected. We'll move to the next question, which is from the line of Nischint Chawathe from Kotak Securities Limited.

Just going back to the most discussed exposure. Out of the INR 1,300-odd crores of exposure, how much do you think in terms of an absolute quantum is sufficient provision? I believe you will have around 20% or 25% direct provision and then the balance is something that we are kind of accruing from the additional provisions.

I answered that question already. At this point of time, we believe, based on the cash flows that we have heavily discounted that the provisions we have made is adequate, including the additional INR 350 crores, which will -- GS3 which will come in Q3. But we also believe that even if a few things go wrong, we have a scope within our macro prudential to make another 10%, 15% of provision. The chances of things going beyond that are limited. But if it happens, the impact on the P&L within that -- in that quarter or year, will be very limited, right? And also, we are reasonably sure because since we will be using macro prudential if this happens. We are reasonably sure that the rest of the portfolio, the chance of anything -- first of all, we don't have any such huge exposures. But the chances of stepping into GS3 are fairly limited. So on the balance, Nischint, we believe what I should be concerned with. That will any quarter see a huge hit to the P&L, those chances are absolutely minimal.

Sure. And out of the INR 1,700 crores of additional provisions, how much would be accounted to OTR?

[Foreign Language] how is that number come? [Foreign Language] yes, around INR 490 crores.

Sure. So the way this breaks up is that I think INR 1,100 crores to INR 1,200 crores is for the...

Macro and everything else and INR 500 crores. Yes. Right? And the macro -- Nischint, the beauty of macro is that it can be used in various ways, right? That is why we have kept it as macro. So if it's a larger part then we think of OTR, the OTR provisions are built based on what we believe based on our models can be the performance because OTR -- let's take 1 thing for granted, right, that it will be very naive to say that OTR portfolio will behave like a standard portfolio, even though it is a standard portfolio to decide. So we always model the way we believe OTR portfolio will behave based on their current repayment portal. We believe that this provision is enough. Similarly, as I said, that we believe that the real estate provision is enough. But we hold this INR 1,256 crores of macro prudential, which can serve as a dry powder for any of these things going wrong.

Okay. So it's not necessarily only carved out from microfinance. It could be for microfinance?

It has a mix no? It has microfinance and real estate.

Okay. Yes, sure. Just 1 quantitative clarification from now on the tax rate should be a full tax rate across businesses is it?

That is correct.

Sure. And I think if you could give the PBT numbers for the investment management business because I believe taxation is making a little bit of a difference on the PAT decline?

Can I give it on the call after a few minutes?

Yes, yes, that should be fine because this is something that I guess all the analysts will...

Actually whenever my colleague passes on the number to me. So we can move on to the next question.

So just -- and this is a slightly qualitative one. Your collections on the rural side have been fairly strong. But if you look at some of the recent comments from FMCG companies about demand not being so strong in rural India, et cetera. How do we really corroborate that? And I guess the outlook for rural...

Excellent question, excellent question. Thank you for asking this. And this is a very, very important question, okay? So let us see the reason behind this sentiment and by the way, I agree with this sentiment. Now demand not being strong and demand being weaker are 2 different things. So let me just -- two things have happened. One is the impact of COVID, which definitely is there. Second is rainfall. This time rainfall, overall, it might have ended on the absolute number in the 90s of long-term average, but that doesn't tell the story. The problem is twofold, that geographically, it is very, very unevenly distributed. And also, time-wise, it is very unevenly distributed. That there were 2 months of deficient rainfall, and then 2 months of excess rainfall which right now, floods. So we don't think that rural demand will go down and scrape the bottom of the barrel. But at the same time, the euphoria that was being expected after the COVID 2.0 wave that everybody had thought that rural demand will go completely crazy. That's definitely not going to happen. Our view is actually quite moderate. And hence, we are not looking -- and I made my initial comments. We are not looking at increasing our farm and 2-wheeler disbursements drastically based on some idea of a huge growth in industry. No. Right now also, we have shown in a falling number of at the industry level, and it comes from our strengths of maintaining our market share, doing refinance, repeat business with our existing customers. That is what is maintaining our business in farm and 2-wheelers. So to be once again clear and that's why I thank you for asking this question. Farm and 2-wheeler, there is always a tremendous amount of seasonality seen during the festive season. Clearly, this thing also, there is the seasonality. Q3 numbers will be definitely better than Q2 numbers. But the difference and the upswing, the way we have seen last year, it will definitely not happen. Last year, Q3 upon Q2 was a huge growth. We are not going to see that. That seasonality will be fairly moderated in Q3. So that's -- you asked a subjective question to that, this subjective answer.

Sure. And probably the fourth quarter is what could be maybe an interesting quarter to watch based on the winter crop, et cetera?

You're absolutely right. You're absolutely right. It's -- let's see how sowing of Rabi goes often floods at this time bode well for Rabi. But we will have to wait for a couple of months to see that.

Sure. So we can just broadly say that, look, the single most factor for this could probably be more in terms of the rainfall unequal distribution than any kind of disruption that happens because of COVID?

Surely. COVID, yes. I mean, COVID. Hello, again, this 3.0 is a -- I don't know the answer. Though, I believe personally that even if it happens, the effect of business -- effect on business, crops, et cetera, will be limited. But certainly, rainfall is a factor also reservoir levels are lower than last year. These are -- these 2 are very clearly factors where we believe that seasonality will be more moderated. And as you rightly said, let's hope that the Rabi crop does well. There is 1 more thing, which is important. After a long time, Mandi prices are actually below MSP in most markets. And that is something bids (sic) [ bodes ] well for inflation. But for the farmer wealth is another a little bit worrying factor. Yes, to give your answer the number is INR 64 crores.

Sorry, just Y-o-Y I wanted to get a sense.

Okay. Q2 last year, INR 58 crores, Q2 this year, INR 64 crores, Q1 this year, INR 59 crores.

The next question is from the line of Piran Engineer from CLSA.

Yes. To confirm the INR 800 crore incremental OTR is again in retail, right?

Yes, yes. And was not initial was not allowed, OTR team.

And -- okay, yes, correct. And so then what would be the overall mix of this INR 1,800 crores in terms of the 3, 4 different retail products that we do? And is it part of the 6.2% Stage 2?

[indiscernible] sorry?

And also, is the INR 1,800 crores part of the Stage 2 loan?

No, no, no. It is not. Okay. So I will give you the INR 1,800 crores breakup micro loans, INR 500 crores, two-wheelers, INR 270 crores, HL LAP INR 600 crores. [Foreign Language]

Okay. Got it. Then the next question is in Supertech we have a INR 1,300 crore exposure on a loan book of INR 13,000 crores. Now I mean, 10% exposure in 1 account, isn't that too risky? And are there any other builder accounts which are -- where the concentration risk is so high? And secondly, have we done interest reversal on this account this quarter?

No. Yes, of course. If it is NPA, it is definitely interest reversal has been done. 10% on 1 account is risky, absolutely yes. Let's stay with the details that we have given at this point of time yes? So yes, 10% of the overall portfolio risky, yes. It has a history with which have happened will we do it such a thing again? No. By the way, when Supertech was at around INR 1,000 crores, the overall portfolio was INR 17,000 crores. So it did start as 10%. The portfolio has gone down and Supertech has gone up. Should we ever repeat anything like that? Definitely not. Is there any account anywhere close to this amount no?

Okay. So this is by far the largest account?

Most definitely.

Okay. And sir, could you quantify the interest reversal this quarter in the housing business?

Not immediately readily right now. You can contact IR for any details?

Sure, sure. And sir, just lastly, on your consumer loan business. Can you just give some more details as to who is your target customer salaried, self-employed the yields in this business average ticket size, tenure, et cetera. Could you just remind us about this?

Okay. I will -- we will start sharing this detail from next time onwards. I will just give you more qualitative one. Right now, the portfolio is very small. So I will give you what we are doing currently, what we are going to do in the future, right? Currently, 95% of this portfolio or perhaps more are our existing customers and existing customers only. Every month, we put all our assets, all our customers, not only lending customers, we have non-lending customers, through data analytics and throw up 2 things, customers who may be needing the loans and also customers who are largely, I think, ever 0, right? And without even a check bounce in some period in 6 months. Over the last 6 months, no check bounce, ever 0 these kind of customers we choose and offer them this product. Normal ticket sizes are about INR 1 lakhs, INR 1.5 lakhs -- INR 1.3 lakhs. That's the average ticket size as of now. Average tenure will be about 2 years, 2 years. Will be about 2 years. Interest rates are between 13% to 14%, around 13% to 15%.

Okay. That gives a good figure.

So that's current, that's current. Obviously, that's only we are wetting our toes right now in this business. But we have excellent plans as we go ahead.

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Dinanath Dubhashi for closing comments.

Okay. I mean we have had very, very detailed discussion. Once again, I would like to say that yes, on the headline, it looks like a 15% drop on the headline that 1 asset looks like and it is a big increase in GS3. But there is another way of looking at it is that, that overhang is back and is gone now, behind us. We definitely believe that the overhang of COVID 2.0 is behind us because of the strategies that we have implemented and our AUM, especially the rural is because of the reasons that we outlined are trending up, very well and thus giving good trends on various aspects of the ROE bridge. And we definitely believe that financial performance will start trending up from this point of time. I don't want to repeat everything else that I have said. But we are at the time of the year where the call cannot be over without wishing you a very, very happy festive season. All of you, stay safe. Let us hope that this nightmare of COVID is behind all of us. I mean not only our company, the country as a whole. And let's welcome the Diwali as a time of hope and happiness and life. Wishing all of you a very, very happy Diwali and a Happy New Year. Thank you.

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