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

Good morning, everyone. On behalf of L&T Finance Holdings Limited, I welcome you all to the Annual Investor and Analyst Meet for the financial year 2022. We thank the office audience for gracing the functions. We have with us today our Managing Director and CEO, Mr. Dinanath Dubhashi and other senior members of the management team. Before we proceed, as a standard disclaimer, we'd like to provide that some of the statements made today on today's meet may be forward-looking in nature, and a note to that effect is provided in the Q4 and FY '22 results presentation and Lakshya 2026 presentation uploaded on our website. Also, request you all to kindly put your mobile phones on silent. I would now like to invite Mr. Dinanath Dubhashi, our MD and CEO to please come on stage and provide us with a detailed perspective on Lakhshya 2026.

Thank you, [ Kartik ]. A very good morning, and thank you to all of you. I think before I start my presentation, the first feeling, performance, results analysis, [Foreign Language] And just the feeling of seeing all of you after 2 years, [Foreign Language]. I mean, genuinely feeling so good to see all of you safe. Let us also at this time, recognize the tremendous efforts put by workers in the industry, forget just L&T Finance, over the last 2 years. I mean just imagine that we are all meeting and feeling good after meeting after so long. These are the people who have been toiling on the field and also taking care of themselves, taking care of their family and still making sure that results are delivered. So my thank you to all of them. Today is 2nd May, 2022. I remember a day just one shot of 6 years back, which was 3rd May 2016, when I stood on a similar stage in some other hotel and presented the strategy what later became LTFS 2.0. Many of you were there. My management was there. I was there. Yes, we have changed. We have all changed. I've got more -- many more gray hair than what I had time. But important thing is that strategy has genuinely transformed the company. But at the same time, let me admit that the output results of the strategy has been a mixed bag, admittedly so. There are many things which worked very well according to the strategy, perhaps even better than the strategy. The strategy involved delivering top quartile ROE through right businesses, right structure, right people. We did all that right. And in fact, till 2000 -- for the first 3 years, we had a very good journey to top quartile ROE. On business side, the businesses that we chose to continue, many of them, we acquired leadership positions. Genuinely, in 2016, in most products, we were also ranked. From there, in certain products, very clearly -- in many products, in fact, we are in the top 3. More important than this just a rank, we believe that we have the capability, the capacity to move markets, to actually lead how the market thinks, how the market behaves, how competition thinks. We are -- we have a proud seat at the planning tables of most of the OEMs as we work. One more thing which worked tremendously well was what we did in digital and data analytics. In fact, funnily, that was actually not the part of the initial presentation in 2016. But as developments in that area happened, very clearly, we took industry-leading stances, in fact. Not necessarily, I will say, number one because very clearly, there is a player who has done much better than us. But yes, what that player has done in urban, we actually did that in rural area. May it be customer identification, may it be simple things like credit assessment -- and use this for credit assessment that, of course, we did. But also did things like -- throughout the P&L, that is, efficiencies, collection analytics, how to predict the industry. Wherever the industry is growing, the industries we are in nature -- by nature, cyclical, but how to maximize? Within that, our performance by concentrating on areas, dealers, which our analytics shows can do well. Many things like this, we did very well, liability franchise. Maybe other than the first couple of months of COVID 1.0, we have continuously been very comfortable in our liabilities, and develop now a fairly superior franchise in liabilities. Having said that, a couple of things certainly didn't go well. Now yes, we can blame COVID, we can blame various industries, we can blame whatever. But it doesn't change the fact that we had certain losses in part of our corporate book and a part of our real estate. Maybe we can believe that the market punished us much more than what those losses deserve. But that doesn't change the fact that many of you who have put faith in us, invested in the shares or recommended that shares, it didn't work well. Let me start actually -- on behalf of the company, behalf of the entire management, apologizing for those things that happened. Those assets with the kind of execution, the kind of industry knowledge that we have, we could have managed better. Having said that, obviously, the question will be that, look, you told this strategy. But these are the few things which went wrong. So why should we believe what you are going to talk today? There, my only request, will we give us a patient listening today. We will talk primarily about what my team has been doing for the last 6 years, what are the strengths we have developed and how in the next 4 to 5 years, we are going to use these strengths and accelerate tremendously as we go ahead. At the same time and perhaps more importantly, we will talk that how are we strategizing to make sure that these specific areas, which went wrong, how are we making sure that those areas don't get repeated, right? Yes, definitely a few things went wrong. We have been very good in recovering. For example, I would say ILFS, L&T Finance as the forefront of results. But taking a few steps back, even though the business of lending is about some credit mistakes happening, how are you strategizing to make sure that such accidents don't happen again. And not only us, management, market, but more importantly, all of you can put your qualitative trust in us, no doubt. But more importantly, your models become much more predictable than perhaps for the last couple of years we have been able to give you. So that's what I would like to present to you for the next 1, 1.5 hours. And then of course, in your question and answers, you can ask me and my team, any doubts that you would have about the strategy. We will try and satisfy you. And then only I can only say that every quarter's performance after that, we will make sure that your faith in us only grows every quarter. With that introduction, let's talk about what we are about to unveil in front of you. Many of you or your colleagues who follow the large financial group, now that we have various 5-years plan called Lakshya. This plan is vis-a-vis the financial services, what is the Lakshya for 2026. So we will -- before getting there, let me just quickly recap just a couple of slides. I will not bore you. I realize that this presentation was put up on Friday, but just for connecting what we have achieved in Q4, what we have achieved in FY '22, connecting it with the next 4 to 5 years is what we are planning. So you remember in FY '16, our retail share was less than 25%. And we said that in our right businesses and right structure part, we will increase the retailisation. First, our target was 50%, and then we said at least to 2/3 we will go. Whenever I was talking I say my ambition is 2/3. I'm glad to say that we actually ended March 22, despite COVID, despite everything at 51%. The important thing is in retail, this year, FY '22, we could disburse close to INR 25,000 crores, which is our highest ever disbursements. The quarter itself, we could disburse a little more than INR 8,000 crores, which is our highest ever disbursements. In some of our businesses, micro loans we did close to INR 4,000 crores this quarter, which is again our highest ever disbursement. 2-wheelers and farm, we have not only maintained our market share, but maintained our disbursements at a very good level in a market which was falling. Home loans after losing ground, we are again gathering speed, and we have disbursed close to INR 800 crores this quarter. We understand that it is very small, but we believe we have found the formula, we have found the mojo. And from here, it will be only growth. And last but not the least, our consumer loans, which is a digital native product and very important for many reasons. We did close to INR 800 crores this quarter. This is a product which we started just about 2 years back, and it has gone to close to INR 800 crores. Now why are these numbers very important? When we talk about retail growth over the last -- next 5 years, it is very important what each of these numbers signify. One, INR 25,000 crores disbursement overall retail, good number. We have shown the ability to grow, grow in bad markets and hence, the confidence that we will grow further. Second, let's say, cyclical markets like 2-wheelers and tractors, specific methods, and which we believe will continue and continue well, specific methods to maintain our disbursements when the market is majorly down because over the next 5 years, cycles are going to come. And I would like to display this proven ability now of fighting cycles. Micro loans at INR 4,000 crores this quarter. What does that signify? The ability to come quickly out of big problems. I remember, first quarter of FY '21, we disbursed INR 7 crores. First quarter of FY '22, we disbursed INR 100 crores, INR 200 crores, something like that. Something like very, very low number. And we have shown the ability to quickly recover from this. Home loans, I told you, it shows that we are getting the formula right there and growing. And last but not the least, consumer loans. It shows 2 capabilities: one, so our consumer loans almost entirely is cross-sell. We have done very good cross-sell, but one thing that we lacked was cross-selling more loans, and it shows that we have been able to do that. And second, our ability of digital native. From identification of customers to disbursement, no manual intervention. So these are all the capabilities that, that one small line of retail at all-time high disbursement of INR 25,000 crores. NIM, 7.84% for the year, 8.17% per quarter. I remember those times that I was guiding you around 6.5% to 7%. Now this has not happened only because the treasury has done fantastic well, there is no doubt. But interest rates will keep going up and down. So importantly, what this shows is the advantage of retailisation and it shows our pricing power. And that is why we are quite sure of maintaining and perhaps eventually growing the NIMs that we are having. I talked about weighted average cost, 7.24% actually for Q4. A lot of people ask me interest rates going up, what will happen. One, statement out of confidence -- out of business confidence that we have a pricing power; second, out of just the mathematics -- arithmetic, that as the balance sheet becomes more and more retail, the duration of the balance sheet will keep coming down. And hence, duration versus overall rates going up, we should have a quite good cost of funds. And last but not the least, the asset quality. Overall asset quality has been maintained well. And very importantly, and in fact, I must perhaps -- one more -- once more say sorry to many of the analysts here is that many of you were expecting us to release some of the large overlays that we were having. So we have close to INR 1,700 crores of overlay. We took the call. And I must admit great scientific reason on that call. It is just showing cautiousness -- caution is that with COVID cases going up again, we do hope certainly that this will be like the Q3. COVID never really hurt us, other than our health, our people's health. What hurts business is lockdowns. COVID doesn't hurt business. Government actions like lockdowns, hurt business. So as long as COVID is not serious enough for a lockdown. And then people give me immediately examples out of China where large part of economy is locked down, et cetera. So it is better to watch how quarter 1 and quarter 2 goes, right? What last 2 years have definitely taught us is humility. Humility to understand that neither we are gods, nor do we have a crystal ball to see how exactly things will go. So it is better to err on the side of caution. So forget releasing, we actually created some were what we call macro potential provisions. But obviously, as we said in our presentation, we will achieve -- we will look at it for a couple of quarters and then start releasing. I have looked at some other result call commentaries of other peers. And I believe some of the more conservative peers are also taking the same stance as they go ahead. So it's a cautious one. Let me put it this way, but it also bodes well for the years to come or quarters surely. So this is the slide, just shows our journey up to FY '16. You know this, you know what happened in LTFS 2.0 also. Very clearly, today, we can claim that we have the right to win in certain products. It doesn't mean market leadership. Market leadership, [Foreign Language], it can go on for some time. I mean you see in tractors. We and our nearest competitor are very close. And month-on-month, #1 can keep changing, right? That's not important. What is important is are you just price takers? Are you just takers of practices in the market or do you make practices in the market? And very clearly, I can genuinely, from the bottom of my heart, say that over the last 2 to 2.5 years, we have been making practices. And that's crucial, right? That we have been able to do across products, very, very capable of continuing that. Very proud of the liability strength that we have created and last but not the least, digital and data analytics. And we will be talking much more about that as we go ahead. Now what is Lakshya 2026? In summary, it is very clearly a complete shift -- or maybe not a complete shift, a journey from a product focus to customer focus, impact, establishing a fintech at scale. I will try and explain both these numbers. We have been very product-focused by design, that we wanted to be the bloody best in the products that we are doing, okay, in which one small issue happens. Little funny, but it is also a big opportunity. And I have said it once or twice, and we have been working on changing that. And right now is the time that we can declare that we are changing. So if any of you have borrowed from LTFS for any reason, I wonder -- I don't think your profile is, at this point of time, rural and you would have borrowed from LTFS. But if you would have borrowed from LTFS, and I hope given your profile, you have registered an e-mandate, which we do for everyone. And given your profile every month, quietly your amount gets debited EMI, we get money. Chances are, okay, that after selling you that loan, after selling you insurance in the beginning, L&T Finance will never contact you, right? It sounds funny, right? My best customers, I would have never contacted, but that's changing. That's changing and changing intelligently. It's not like good customers we want to just call and keep troubling. We will never have call centers who will call without analytics, [Foreign Language] Yes. Analytics is always correct up to P95. So there will always be anecdotes where this has gone wrong. But largely, we will make sure. But now we will concentrate on the customer and make sure that the customer we sell more and more. Very clearly, the target my team has is a good customer never should get an NOC from us in a way, okay, that you should always have. And we will know and not a question of over borrowing, over leveraging, that is still it because analytics will show very clearly whether it's overleveraging and not. But very clearly, if the customer is going from us to someone else, he should not. We should be able to predict these needs, call him up and give that loan. That's the push. And secondly, of Fintech at scale. Everything that we will do, we are not looking at replacing our strength physically, but extend those strength digitally, giving choice to the customer to approach us and get fully service digital. While we are calling it a fintech at scale, one of my peers, whom I very much respect, very famously said the following sentence, it's not mine. So I should give due credit without taking the name, but many of you will recognize it. Sir, I have seen many fintechs with $1 billion valuation. I've not seen a single one with $1 billion balance sheet. So that is what he said, and I believe that his company is definitely a fintech, which is at a huge scale. We definitely plan to become one, not copying, but taking inspiration from what this brilliant peer has done and finding our own way, own -- perhaps unique way of becoming a fintech at scale. You have seen this slide in the Q3 presentation. Before we get into how, this is the what, as is our habit, we would like to put that. This is what we intend to achieve by 2026. Retail at 80% of the balance sheet. And it says greater than minimum 80%. Retail CAGR assets of 25%. And we are talking CAGR, hopefully, we will achieve it every year. But yes, as I said, 1 year COVID [Foreign Language]. We will make sure that 25% CAGR is achieved. Achieve this at an excellent asset quality, try and keep our NS3 at less than 1% always and get back to ROEs of close to 3%. So that's -- these are the targets we are putting for ourselves. And I will now go into saying how. But once again, before that, before we put a plan, I would like to show a few slides on what we have done over the last 5 years. Two reasons: one, to keep convincing ourselves and making sure getting the confidence that we are not talking something out of the hat, we have done some of these trends before; second is to make sure that what are the strengths that we have built which can be useful, which can be leveraged upon going forward. And that's why we will first talk about LTFS 2.0 performance recap. Now you remember -- many of you may remember these 3 parts: right businesses, right structure, right people. I would like to talk about this especially the third part and which is perhaps just digital analytics, yes. But after that, also you need people to deliver. So right businesses, we rationalized our businesses and across products, we have actually got leadership positions. So we have a very clear way of saying this is how we will choose businesses, yes. Over the way also we exited certain businesses. And many of the businesses that we have stayed, now we have leadership positions. Right structure. Now this is interesting. 2016, we promised that we will -- we had so many subsidiaries, actually 16. We have 7 subsidiaries and we will merge. We started merging. We had 2 stages of merger. There is one more still, balance. But hopefully, if all goes well, we will have one company over the next couple of weeks. Now one thing we have realized over the next 5 years -- I mean last 5 years is not that easy, right? When -- even the mega merger announced sometime back, it was said that it may take 18 months because we all realize in the industry that within the regulations, it is not just up to the management or shareholders that we will merge, it is easier said than done. There is some regulation somewhere, which will cause a difficulty. But in spite of that, we have done it and gone ahead. Retailisation, I talked about already. The last one is what I'm most proud of, right? There are a lot of you who have asked me that expenses have been going up. So certainly, expenses have gone up. We believe that going up and in control are 2 very different things. Yes, they have gone up, but we believe they are in control. Over the last 2 years, we have spent more very clearly on collection costs, making sure that the portfolio remains good. Expenses can be brought down. But portfolio, once it is spoiled, it is very difficult. And hence, we have put more investments in correction costs, of course, more investments in IT, et cetera. But a good part of the expenses is the first. So now what is Tooth-to-Tail Ratio? It is people on the field vis-a-vis people in the head office. This is a change. From 12:1, it has changed to 36:1. Very funnily, we used to occupy 2 buildings in Kalina 5 years back. Today, we occupy 1 after this growth in balance sheet. And 5 years back, we had 10,000 people. Today, we have 25,000, which actually shows that almost the entire increase has happened in the field. And that, we believe, is very crucial executive leadership. Many of us here are people who have grown in our roles, grown from senior levels to executive level, from middle level to senior levels. In fact, close to 70% of the leadership team, which is the top 70, 80 people of the company are people who have progressed internally. And we believe that's why this last column, tremendously prepares us for the next 5 years. I will not repeat this. I'll quickly go ahead, just leave the slide there for a couple of seconds. I've talked about this because there are numbers now to show. Yes, I admit that over the last 4 years, the balance sheet, total balance sheet has actually de-grown. But the quality of the balance sheet is very different. Retail has continuously grown, and we have shown that we can show a very consistent growth in our retail. Wholesale. We have maintained a very capital-light model. We have disbursed a lot in wholesale, but maintained the capital-light model and defocused the business -- that we said was defocused we have now reduced to almost negligible levels. There was a question when we called it defocused 3, 4 years back, that will there be losses, how will you able to reduce? We have actually reduced it now to negligible levels. If we actually look at the details, I'm talking about greater than 25% CAGR over the last 5 years -- 6 years actually, my retail book has already grown by 20% CAGR. And if you take rural, which has been our strength, it has grown by 25% already. And I'm putting forward certain things that we are going to do additionally, but this has grown. Wholesale and defocused, I talked about. Our mutual fund also, we have been able to grow 3x. And as you know, we are looking at monetizing it. And we believe now that with these proven abilities, we are now ready for the next phase of growth. I talked about leadership positions across business. Now many of these things I've spoken about. This is the first time those numbers are there on the screen, okay? It's a good opportunity that we are meeting personally. It is good to see these numbers. So today, we are having a customer database of 2 crores plus. Over our efforts over the last 2 to 3 years, this is a deep customer database, very deep, which can now be used. A geographical presence of 21 states and 1 union territory. And you will see this touch point 13,000-plus. Now what does it mean? We have actually stopped counting the branches we have. Yes, branches plus meeting centers, certainly, we have more than 1,500, but that's different. What it actually means is each one of my field staff now is the branch manager. The field staff, with his or her handheld, can close business. Can close business, can close collections. And close, meaning not just collect and issue receipt. Close, meaning the entire reconciliation, accounts reconciliation, everything is done, finished. What remains only is the cash is collected going in deposit in the bank, and that reconciliation grab. And that has to happen by the end of the day. We make sure that our field collection reconciliation is 0 by the end of the day, every day. That's genuinely what we mean by 13,000 touch points. Business, yes, definitely we can do -- it is quite fashionable also to say everybody can close business. It is difficult, but yes, we have achieved that, but much more difficult is the collection. And today, we are proud that each of these 13,000 people, whomever we say that you have to do collections, not all 13,000 do collections, but they can close on their handheld completely, including issue of receipts. What goes out of the window is printed receipt, books, fraud vis-a-vis receipt books, receipt book reconciliation, [Foreign Language]. All this doesn't exist anymore. Market positions across 3 products. You will see how the book has grown. The important part of these numbers is disbursement to book growth ratio is arithmetic, right? That if the disbursement is down for a year or so, then after that, the book growth is limited for some time. We believe that we have crossed that rubicon. After disbursements being down last year and also Q1, we have shown continuously good and growing disbursement in the last 3 quarters. And now the speed of addition to the book is going to be quite fast. More importantly, the bottom 2 graphs, even today, we have 4.1 products sold to every customer, and this is important, unfortunate -- not unfortunate. The opportunity is that most of this 4.1, other than the main loan, are insurance products. So which gets us great fees, but we believe that once we stand by, cross-selling loans to these customers, we can get much more income. And as many as 15 cross-sell products we have, insurance products. And many of them, we are actually cocreated. We are clearly one of the largest insurance distributors in the country too. Many of these products are co-created products, along with our insurance products. Liabilities. Many achievements are AAA, diversification from bank borrowings to others, the opportunity given by government for the last 1 year to raise priority sector loans, and we have matched this opportunity. We have done our first green bond 5 years back. Now we have done our first ESG-related loan, sustainability-related loan. And we believe -- the lender has told us that, that is the first in the country, and we believe that this is the first of many for us. It is a loan, which is ESG related, and it is -- of course, the price is nice. And there are further incentives if you achieve certain ESG targets. And as this percentage keeps increasing on the balance sheet, we will show that good ESG is not only good for the planet, it is also good for the balance sheet. And we will continue to work on that as we go ahead. And obviously achieved our lowest ever weighted average cost in FY '22 and in Q4. Asset quality, up to FY '18, you will see there were various changes in rules. FY '17, 120 DPD became 90, then Ind AS happened, et cetera. After that, there is a consistent reduction in asset quality as we have gone ahead. And more importantly, for the last 2 years, there is an additional provision outlay that I talked about and now it has reached close to more than INR 1,700 crores as we go ahead. This is a very important part of the journey that I would like to talk about. More importantly, because this was completely conspicuous by its absence in FY '16 when we made a presentation because that time, this science was very primitive. But using this, what all we have done? So we are never, never the cheapest in the market. So what is it that gives us this advantage? Why do we get this kind of market share? There a lot of people ask that how do you compete with banks, right? And not only us, there are so many NBFCs who are competing with banks and not on quality. Gone are the days where NBFC used to operate in this nether world of credit, right? [Foreign Language] Those times are gone. In fact, if I can talk very confidently about our peers, most markets that you think, tractors, 2-wheelers, gold loans, we are not there, housing loans, consumer loans. I would bet that the name of first recall is the NBFC, not necessary the leader all the time, but the name of first time. Now, you think in your mind and you will see. What does that happen -- how has that happened? Very simple. Customer gives your business. What is good business? Is the customer finding a reason to leave profit on the table for you? This is my own definition, okay? And in that [Foreign Language]. Why would the customer live profit on the table for you? Many products, it is speed. Other products, it is transparency. Other products, it is just customer service and enveloping all this is an intelligent way of doing this. So I will give some of these examples. So speeds are on your left-hand side. Many of you have visited our channels, some of them arrange meeting, some of them surprise visits. Now, these are P90, [Foreign Language] P95 speeds. So there will be some we will be doing better than this. Some we will be doing worse than this. So let's not talk about the trends. 95% of our cases are done within this time, and you will see that definitely some of the fastest. The second one is very important. We all talk about the third one, which is underwriting analytics, that how do we underwrite. A lot of analytics, a lot of digital is used there. We also do that, hopefully, do that quite well. The second one is very important. I will give one example here. And maybe I'm giving out competitive secrets, but [Foreign Language]. People come, people go, so you better be ready to share everything and still be better at it, right? Because staff comes, goes, et cetera. So [Foreign Language]. I will give you this example. I remember this time when I was talking to one of my dear friends. He just -- 5 years back, from a tractor [Foreign Language] tractor market, right? I don't know how many of you have watched some movie called Swades. Most of you, right? So Shah Rukh Khan is doing global precipitation satellite. [Foreign Language]. Largely, that is how we used to predict the tractor will grow [ OMU ]. And the funny thing is our budgets used to be made in February, March. [Foreign Language]. That's another matter, right? But largely, the talk was if the monsoon is good, tractors will grow, if the monsoon is not good, tractors will not grow. And that is true. But then what? Do we all keep playing to the rain gods? That's not the way of doing business, right? So that is how we develop this algorithm is that we will go actually in predicting demand of a particular model of a particular make in a particular area, in a particular in PIN code, right? And this is possible. This is possible through all those data is which we have put here. More importantly, that data is available. Most of it publicly, some of it can be collected, a lot of it through credit bureaus. The point of it is using it intelligently. Today, on a quarterly basis, I can not only give targets to my branches, [Foreign Language] But I can actually give them operating instructions. This dealership will take so much from a counter share. For that, you will get this many resources. Budget for tractors or for any product is not top down anymore. We can actually predict business at PIN code level, and the budget is actually bottoms up built up, like this. Bottoms-up budget always has a danger, right, that everybody will understate their numbers. But we don't take the numbers from them anyway. The numbers are drawn by analytics that how much business is possible. Products teams, LTVs don't come any more out of what the team feels. It comes out of factors like payment record for that model, second hand price for that model. This can actually be modeled now and can be put. And the whole idea is it is dynamic. Every quarter, we can change it. There are products where every month we can change. Now why I'm talking so much? If anyone of you feeling [Foreign Language] FY '22 [Foreign Language] right? The whole idea is I should be knowing what I'm capable of before [Foreign Language]. So it is important to at least showcase what we have done for -- to get credibility on what we are saying about the future. So here we talked about -- previous slide. So when digital and data analytics is used, mostly people talk about credit. And credit or underwriting is just 1 part of the 5 things that we have used it for. So these are 3, collection and retention. Here, it has been used really well. I will again give you an example out of tractors that there was a time where certain tractor accounts one person ATR -- accounts per collector, ATC. And used to say, okay, [Foreign Language]. Okay. Now we imagine the problems used to happen. For those 10 people, I had to put one supervisor. I have to train that supervisor. I have to make sure that all supervisors across these 100 people in the country, we have the same. And moment I train that, a competitor will poach that person. So whole journey starts again, right? Today, actually, we are at a place -- and I will demonstrate some of them to you, where, following, we can actually do a propensity to pay index. I'm saying low-risk. Their mandate will get collected, will clear. I don't have to allocate this to anybody. I don't have to pay incentive for this to anybody. Some medium risk where call center has to call and remind, and they will pay. And some hard where I have to allocate and maybe some completely chronic where I have to just not just waste time just reprocess. Imagine in micro loans, how much change it makes. Yes, 99.6% of the customers will follow the banker. [Foreign Language]. That 0.4, there will be different ways to collect. We have to approach them at the right time. We have to approach when money is available. And all this now analytics capture. All this offers analysis. When are they paying others. At that time, our people can be there. So lots of things can be changed. And there are collections efficiency statistics, which I have put at the bottom of the slide, which you can actually read. So I'm not going to talk about each one of them. I'm talking many more things, which are not on the slide. The slide is in front of you, presentations will be with you. The important thing is retention analysis. And this is now very important for the future. [Foreign Language] Let us not keep doing it again. And that is crucial. Not only to reduce expenses, but one, grow business, not letting competition come in. And more important our analytics shows, naturally, that the customer where we are giving repeat loans, that portfolio is far superior to the overall portfolio. Naturally, because you give repeat loans only to customers who are good. And across products, so these are these words, [Foreign Language] and [Foreign Language] These are mostly giving loans per existing customers, cross-selling, upselling to existing customers. Consumer loans is actually a new product altogether by cross-selling to our customers of other products, 2-wheelers or home loans and you actually see the kind of growth that is happening. Good growth has happened, but great can happen in the future as we go ahead. So I will now stop there and come now to the important part of why we have called all of you. I'll just take a sip or water. So Lakshya 2026 is all about aim, innovate and create. Aim for setting up the ambitions, setting up the aims; innovate because almost everything that we are doing is one, depending on the strengths we have built, no doubt, but innovating to maintain or increase that growth rate and then, of course, create that future that hopefully, all of us will be proud of. And the goal is to be a top class digitally enabled retail finance company. Moving forward from a very strong product focus to a customer-focused approach. We will talk about each of these worlds and hopefully not only show you what we are going to do, but also give you the confidence that we have the ability to do that. Repeat slide, just to remind you of what we are about to do. Now this we are going to achieve by concentrating on 4 factors: first, very important. Where are we getting -- going to get this sustained profit and growth? Sustained is important. Profit is important. Growth are important. All 3 are important. For us right now, I always believe that any NBFC or any bank has to consider 4 or 5 objectives: the first is liquidity, which always comes first; second is solvency; third is asset quality; fourth is profitability; fifth is growth. We are not changing that. This order is very important. But this is -- now we are quite really confident [Foreign Language], and we have it there. Now maintaining the profitability and getting into a growth mode is very important. We had mainly 2 complaints about this: one, that some wholesale accidents here and there; second, growth [Foreign Language]. Let me answer the second one first and then come to the first. The second important factor, as we grow like this, we have to recognize and be aware that the kind of risks are going to change completely. What has helped us till now is not going to help us. Credit risk, yes, very important. But operational risk, technology risk, these risks are going to become way more important perhaps than just credit risk. Then what are we doing in digital and analytics, how are we creating a fintech at scale? And last but not the least, how do we make this growth sustainable through ESG. So these are the 4 things that I will talk about. And this is our path to becoming a top-class, digitally enabled retail financial. So I'll talk about the first. Now, this is very important to understand. I said that we have already achieved a 20% growth in retail and the 25% growth in rural over the last 6 years. Now this entire growth has been achieved, using 1 or 1.5 vectors of growth. One, first vector, product section. We have been very good, no doubt. The second vector, which we have just used over the last 2 years, is cross-sell and upsell to existing customers. We are very new there, good beginnings, but we are still new. We believe now the formula for growth is unleashing 5 vectors of growth. Continuing on our vector, which is product excellence, but unleash the other 4 vectors also, I will talk about. Now this is important. We are not talking just 1 vector of growth. We are talking about 5. What do I mean by this? So first, product excellence. We are very good in farm. We are very good in Two-Wheelers. We are very good in micro loans. Clearly, we have to grow there, and I'll talk a little bit more about this. Retail housing, we have regained our mojo. Consumer loans and SMEs, we are very new. All this will grow over the vector of product excellence. We are also launching new products, having established the strength in each of these areas, new products in the same areas. So rural business ecosystem, we are also always in small rural businesses through our micro loans. Now we'll use that ecosystem to address the entire rural business ecosystem, the farmer ecosystem. Today, we lend only farmers only the tractor or a little bit more farm equipment to the farmer. Can we do much more for the farmer? Urban consumption ecosystem. We have a small presence here through our consumer loans, Two-Wheelers, home loans. Can we use that? And last but not the least, SME ecosystem. So many more products being launched in these ecosystems. Right now, we are blessed with a 25% capital adequacy. It is going to go up hopefully in Q3 once we close our micro and our mutual fund transaction. So more capital will come and the capital adequacy will go up. And hence, we are very clearly looking at acquiring portfolios in addition to all these vectors that we are doing. It's not -- it's definitely not the main way of growth. As you know, we are very price conscious. Good portfolios structured well at good price, we will look at. You will see I'm not talking about acquiring businesses because, at this point of time, I believe multiples of businesses are crazy. But yes, we will be open if we get a good price. We never buy anything costly. There are other businesses that we would like to talk about, and I have a little bit more detailed slide forward, infra. This is a platform which we have built with great care, right, 5 years, like I said that, look, we have to reduce the proportion of infra. We have to have a model, which is profitable. And I'm proud of my infra team that they established what we call book-to-sell model. We underwrote and we sold down. Over the last 6 years, we have disbursed close to INR 75,000 crores of loans, and the book has grown by less than INR 10,000 crores. That much we have been able to sell down. We believe that this platform, which has been established, especially in the renewables sector. And today, one can continue to operate in a capital-light model, but we can surely explore getting the partner in. Because very clearly, the company's goal is retailization. But this business is excellent, the team is excellent, the platform is excellent, in fact, one of a kind. And we believe that we can get value out of this. We also believe from our initial interactions that this -- as we are still exploring, but initial indications are that this may be a part sale, people will like us to continue, and we are okay with it. The idea is not to exit from that business. We do very good in that business. The idea is simple. One, capital will more and more go to retail, not to infra, and infra has great potential for growth. So how do you manage both this, is getting capital from outside into the plan. And clearly, this is going to be our endeavor over the next 24 months as how to grow this business, at the same time, limit capital allocation to this business. Mutual fund, as you all know, the call was taken, the mutual fund -- when we are going retailization, you will ask mutual fund is such a retail business. Why did you exit? The reason is very clear. Every business we like to be in the top 5. We like to make rules in the business. Our mutual fund business while it was excellent, we managed it well, it has 55% equity, we were not making rules in that business. The rules are made by the top 3 or 4. Many times, those rules good, many times bad, whatever, we were just followers of those rules. We don't like businesses like that. Being followers is not a good thing, we don't like. Again, it is good for that business and that platform, that the person who can bring way more capital and grow it. Another thing we thought that if we have to really become big, we have to invest much more in that business, which perhaps the capital we believe is better used in growing retail finance. And hence, we found a partner, which will bring capital, and more importantly, value the team that we have built. We could have sold it to a large player and perhaps the team wouldn't have been valued. Now our team is extremely valued there, and that's the way we are monetizing. Real estate, you all know that last 2 years, we have not done any new underwriting. There are people who are asking me real estate business [Foreign Language], yes, that is true. But very clearly, the dependence of this sector now on so many things, including permissions -- various permissions, progress of projects, it is becoming more and more difficult to be predictive. And with that, we have decided to, one, complete our existing projects. We are certainly not in a hurry to run now. We have been doing that over the last 1 year, we have actually reduced and collected portfolio of close to INR 3,200 crores. We are confident of leave out the odd Supertech, but we are confident of doing that collection, and at the same time, exploring various inorganic options, inorganic structures of accelerating this reduction. We believe that the past capabilities we have shown of reducing some portfolios without a big damage to P&L will help us. It is not defocus. We are not calling this defocus. We are making sure that each of the projects will be complete. We will make sure they are complete. We have shown, as I always show, how much disbursement they do there every quarter. Each rupee of that is for completing projects. We have a large list, almost 10 projects or so that we actually completed this year and exited. And we are sure that we will continue with that. I believe this slide itself clears a lot of air on various questions that have been about these 2 businesses. There is a lot of talk about us exiting wholesale. Very clearly, there is a differentiation between what we are doing for infra and what we are doing for real estate. Infra is very clear, we are looking at value. If we don't get the value we have in mind, we will continue with a capital-light model. And this, I would like to make a clear unequivocal statement. We are looking for value there. Whereas real estate, yes, we can -- one, we are reducing -- completing projects and reducing, and we will also look for certain inorganic structures to reduce. Coming back on the product excellence vector, the first vector, 3 of the products where we have leadership positions -- whereas the leadership need not mean #1. Yes, that's in the top 5, already defined it, maintain them and build much stronger right to win in retail housing, consumer loans and SME. This is what very clearly on existing, what has actually helped us build this leadership is very strong OEM relationships, more importantly, data analysis framework, best-in-class service, very premier customer relationship and a stable team that has helped us. We will continue to work on this to make sure that these products go from strength to strength. But here comes the other 5 vectors, the first of the other 5 vectors where we will grow. Now this is important to understand this slide. This slide is rural, this slide is urban. The pyramid shows low income, middle income, high income. Okay. The colors, what is that color? Pink [Foreign Language] Violet. Okay, I'm colorblind by the way, I must tell you. But there are 2 different colors. The one on top is what are our existing products. Below is the new products where we are doing. And this is how -- rural, we are very good. This is how we are going to address all the income levels in rural India. At the low income, we have put in micro loans and Pragati. We are launching individual loans there. We are launching micro loan against property there. In middle income, largely today, we have farm loans and farm top-up loans. We are looking at, again, going there middle income also micro lab, agri input loans. And then in high income, we are launching our warehouse receipt financing product. The interesting thing is on the right-hand side, urban. In low income -- low and middle income, we have our Two-Wheelers and consumer loans. And in mid income, consumer loans, HL, SME, LAP. We are looking now at launching CL partnerships with various players and top-up products. At the bottom is how are we going to do this? It is a large extent through monetization of the data that we have and as we -- and monetization doesn't mean selling. Monetization means realizing the value, unlocking the value. So how will we unlock value is upsell from micro loans to individual loans, micro loans to Pragati. Pragati is a product where we believe -- we know that there is no other lender there. And hence, we can genuinely go and capture the customers fully. Farm top-up, cross-sell from farm loans to warehouse balancing, micro loans cross-sell, farm loan cross-sell. On upsell side, from sale to sale, top-up Two-Wheeler to consumer loans and many more combinations, I've put here some of them. What is the important thing here is knowing the customer well, predicting the need of the customer and being there before anyone else. We are sure that we have the ability now. We have the analytics, and most definitely, we have the tools, and I will demonstrate some of those tools as we are going here very clearly a move from product focus to customer focus. Now here, expansion. We are today primarily a rural focused company, so much so that Two-Wheeler, which is a very urban product, we call that also rural. Of course, we do a lot of rural. But that much, we had rural focus. We are now making sure that we make an entry and grow in urban India as well. First, we are having a very clear organization to do that. We have set up a very separate vertical under a separate chief executive to get into urban. Second, very clearly, the question will be rural, you are strong. In urban, what makes you believe that you will not get a bloody nose. There are people who are very strong in urban. Here, protected your rural. So that's why we have actually put forth the strategy in front. That what makes us sure that the strength we have built in rural, we can now juxtapose them or take them forward to urban. Very clear income in rural is more cyclical than urban. We believe we have credit models already created for cyclical business. For non-cyclical, it will be much better, much easier. The availability of data is better, and we can do credit very well. Repayment mode, we are very good in collecting cash. Urban, one, it is easy because it is more and more amenable to electronics. But also important, do we have the capacity? Yes, we have put all the electronic tools of collecting in rural area, and the success of that is continuously increasing, continuously improving. More importantly, the collection algorithms that we have put, we believe that this can be used very well in urban itself and believe that we will be able to do urban collection as well or perhaps even better than the rural collections. Competitive intensity. Yes, we realized that urban, the competitive intensity is quite high, but market size is also high, as I said, established a dedicated vertical there and also believe that the capabilities we have in rural can be extended. I have talked to some of them. This is very important, we are not looking at getting into BNPL, getting into credit card yet. We may form those opinions as we go ahead. But clearly, our expertise is in income generation. In urban, we will be income generation and in responsible consumption. What is responsible consumption? Is when you are actually buying the goods, you are buying tractors -- sorry, you're buying a house or you're buying education course or you are going to a hospital for elective surgery. These are the first products that we are launching. And like that, we will work on more and more partnerships. So some of these products are on soft launch stage, some of them are pilot stage. But as quarters go, usually a slew of products coming. And last but not the least, credit penetration. I mean I can say with confidence that we can do good credit in rural with the information there. We can certainly do good credit in urban. We believe that judicious use of all the strength we have built in rural and, more importantly, the digital and analytics strength that we have built, we will be able to make more than a mark in urban also. The important thing is that this is in addition to all that we are doing in rural. So it is only additive. The fourth vector is channels. Today, we are a very point of presence or a point of sales-oriented company. We are very strong in dealerships. We are very strong in visiting the customer's house and lending that, collecting that. We are now using the strengths that we have built in digital and analytics to make sure that we do geoagnostic sourcing, use digital and use analytics to deepen our understanding of the customer and open up more and more channels for the customer. I will demonstrate some of this, but for now, be sufficed in saying that we will not be only branch-based. We can approach the customer through chat bots, through WhatsApp, through web, through apps and ultimately through ecosystem. And that's the whole power of channels that we are unleashing. So the first power that we are unleashing is cross-sell and upsell. Second, geo expansion. Third is channels. And the fourth is new products. The first line is clearly the existing products that we have. Many of them, we are very good. Rural on this side. Urban on this side. Products which are in pipeline, meaning you will see in first 2 quarters of this year is rural individual loans, warehouse receipt finance on farmer. Consumer loans, education loans, hospital loans, top-ups and SME [ all raps ]. And then future, the other products coming. Now the important part here is also the organization. We are organized like this now. There are 4 Chief Executives reporting to me doing all these 4 businesses. So very clear concentration, 4 teams working on this. The first one is perhaps what requires a little bit of explanation. There was a circular -- RBI circular talking -- clarifying about micro loans or micro finance, right? Lots of interpretations. We believe that the circular is very positive. Of course, it will depend on how the industry behaves, whether it behaves well, not behaves well, et cetera, but it is very positive. What used to happen that there was a limit of INR 1,25,000 of income in the rural area. People used to take a declaration from the customer saying the income is less than INR 1,25,000. We always believe that our customers are not less than 1,25,000. We used to take a declaration saying it is more like INR 1,25,000. And instead of micro finance, we started calling it micro loans. We didn't used to use it for any priority sector or anything like that. They were not qualified assets, right? Now the rule has changed. Now it is family income, INR 3 lakhs. Even more important. You have to actually do an estimation of family. Now this is where we believe our strengths, first of all, the market opens. So below INR 3 lakhs, it is micro finance, we will do proper micro finance. We'll start calling it micro finance again. But our initial finding is about -- it's only about 80% of people will be about INR 3 lakhs. About 80% of our customers will be about INR 3 lakhs. And there, the rural business loans area opens. Now with that confidence that it is not a declaration, but it is income estimation, credit areas simply open. And we believe that big growth can happen here. And income estimation is our strength. So 14th of March, this circular came. On 1st of April, our app for capturing the entire process online was on. Very clearly, the first company to have digitally enabled this new RBI circular. On 1st April, we're on. And of course, there will be improvements, there will be changes, first of all, as we go ahead, but we were on. Because this circular very clearly played to our strengths, which is how you estimate income and you lend accordingly. And that is why we are now calling that circular -- I mean that business line, rural enterprise, rural business finance, and it opens up the possibility for so many products. So just to summarize, these vectors of growth and where we believe that the growth engine, the profitability engine is going to come from is: first, becoming even more stronger on the products; second, cross-sell, upsell; third, geography; fourth, channels; and fifth, new products. We believe that with all this unleashing, I will try and demonstrate some of them today, some of them every quarter [indiscernible] some of them you will keep seeing every quarter. And I will, of course, keep showing you how we are growing on each of these vectors. We'll keep demonstrating that every quarter as we grow. There are very, very senior people in the organization in charge of this every product, every project. You know this is the strength that we have displayed before, projectizing every line on the PPT and making it happen. We have displayed it before. We will display it once again. So that's it. That's the summary of the first part that we will continue to hold our advantage, continue to strengthen our rural franchise, at the same time, establish an urban franchise, have an autonomous connect digital channels and strengthen our process. We believe, hopefully, over the next couple of years, with this, we will be able to further enhance our target of a 25% CAGR. But right now, I know that what is promised has to be delivered. And hence, we are looking at a 25% CAGR and are very confident of achieving. I have talked about this already on that slide. So I will not repeat it. There is nothing new here than what I've already talked. But once again, to underline the difference between these 2, right, because there was an article -- in fact, let me handle it straight away. Our group Chairman's quote that we are exiting entire wholesale business. Please understand the group Chairman talk, he talks about at his level. Whatever we discuss with him, whatever he gets out of it, he talks at his level. It is very general. One thing he said that he said very correctly is that it is over next 2 years. So it is not defocused. It is not panic sale. It is none of that kind. It is the best way of making sure that we have the best combination of products, of businesses and how capital can grow more and more to retail. At the same time, growing infra, which we believe we have done it very well, and slowly collect from the entire real estate portfolio. So that's the clear explanation. In the question-and-answer session, I'll be ready to handle any question out of this. Other than what state the inorganic projects are, I can't talk about it. What I can talk is we are exploring various options. Next, very important, risk. I think I'm not going to talk here about what is risk and how do we do credit well. It is all understood. We have demonstrated that already. I'm not going to talk about that too much. What is important to talk about is the realization that the type of risks are going to change. And we are once absolutely ready, at the same time, getting more and more ready for addressing those types of risks. And enterprise-wise risk framework, obviously, we have. We have a risk appetite statement. We have risk limits framework, dashboard, early warning signals. All these I've been talking about before, like today, I'm talking here, I was talking about all this 4, 5 years back. And I believe the status of our retail portfolio actually shows that all this has been built already. Now as we build up fintech at scale, there are capabilities that we will have to not only deepen but develop. I'm glad to tell by the way that in cybersecurity, we have already got the 27001 certification ISO. And we are looking for more stricter and more stringent certifications as we go ahead. But that is still deepening. But more important, how to do complete new-age portfolio management, how to prepare for future scenarios, how if another COVID happens or something like that happens, we will be even better prepared. Everything is about sustainability, emerging risks, BCP. There are different kinds of risks will come up. Operational risk is a big risk, which will come up. We're making lots of investments in this area. Our CRO is -- CRO comes from one of our most respected peers, and he is working 100% on this, how to work more and more on this. I'd like to talk a little bit about this new-age portfolio management. I remember when I was discussing with one of our consultants 6 years back, and when I was discussing early warning signals. They were talking about percentage of NPA to book, right, and how each area, each portfolio, we should look at NPA to book and look at early warning signals. That is the first time we challenged them. It's a very well-known firm, but we challenged them how can NPA to book be early warning, right? That is by the time it is too late, Right, so how is it early warning? Now that we challenged and we actually moved many of our models to 1 DPD. Today, as a result of that, we have some of the best 0 DPD books across products in the industry. Our collection efficiencies are at numbers which are very clearly best in the industry. Now we believe the next is even within 0 DPD, how to predict that something is likely to become 1. So not even waiting until it becomes 1 DPD, not even waiting for the default, but how to build through analytics that somebody is likely to default for the first time. And default, I don't mean NPA, I'm talking 1 DPD. And some of those things we are working on, improving day by day. And hopefully, once again, be ahead of the market in doing this. Now perhaps the most important part, the technology on which all this is riding. Very clearly, the very important part here is not just a retail finance company, it is not just from product focus to customer focus. The most important part here is digitally enabled. Not because it is fashionable, it is, that's another matter. But because we believe that none of this is important, unless you are ahead of the curve in digital and data analytics. Not necessarily, again, in those fashionable things like blockchain, [ autos ], Web 3.0. We will be there when that time comes. Right now, we are a little bit far away from lending to [ autos ]. We will concentrate on lending to real people first, and we will see after that. But yes, when the time comes, we will probably be ahead of it. But right now, let's talk what we all understand is lending to real people, judging their need before anybody else can, judging their capability to repay better than anyone else, reaching them more efficiently than anyone else and then dealing with them in a way that they find right to leave profit on their table. This is the entire definition of what we are trying to do with our fintech. So the 3 columns on the right-hand side, we have already done a lot, and we have to deepen it even more. So ability to identify a customer, right? We have talked hell of a lot about whatever we have done until now. These are the things we are working even stronger now. Liveness matching. This is about credit. Credit is all about -- retail credit is very simple. Actually, all credit is simple. But retail credit is about ability to repay and identity. These are the 2 things which are important, right? So for identity, that you are lending to the right person, there is no fraud. There is liveness matching. I mean whether I'm taking the photo of the real person or I'm taking photo of a photo. Because photo of a real person, you can't do a fraud. And more things come further, then using [ digital logic ] using fuzzy logic in deduplication. Pending credits, which we already are doing. I mean, these are things of biggest -- I told you operational risk will be bigger. These are things, our biggest product, bank account here. There were times where many [indiscernible] talking about bank account here, [ my creditor ]. So all these things have happened. We are making sure that it is impossible now. Credits, fuzzy logics, these are the way to see that there are no frauds or minimize frauds. The next one is my favorite. So this is deduplication by facial recognition. Some of the things I have seen my team doing is amazing. So many people here commented that people have changed over last 5 years. I have changed. I have gained close to 8, 9 kilos. All hair become white, et cetera, et cetera. Now if my photo was taken 50 years back, maybe not 50, maybe 40 years back, [Foreign Language] maybe 40 years back, if it was taken 5 years back and now and assume that I have grown beard, I should be able to do deduplication. Deduplication saying it's the same person, right? And there are various ways, distance between eyes, distance between nose and eyes, et cetera, et cetera. And I will see magic happen. Magic, I've seen things being deduplicated with a photo taken in tie and suit, and the person doing a video interview with us with a beard and all from the Himalayas where he is on a vacation. And the software has deduplicated and said he is the same person. Naked eyes, you wouldn't be able to make sure that it's the same person, and the software has done that. Now just imagine, why are we doing all this? It is not because it is fashionable. One, because the scale is going to be crazy. We can't put physical people to check whether it's the same person. We can't, just cannot. Second, it is going to be paperless. That's the whole idea. Next stage of paperless, it is going to be not assisted. It is going to be unassisted journeys. And third, it will probably in rural low income, so it should be that easy. When a person takes a selfie, we should be able to deduplicate it. That's what we are growing, we are deepening. Lookalike. Now lookalike is not people. Lookalike, it is credit lookalike that large part of our customers will likely to be new to credit. How can we do credit by lookalikes, same lookalikes? That is important. Ability to underwrite application scorecard, preapproved models and moving from preapproved to live. We are, I think, already good in pre-approved. Please understand this. I mean, on my app, offer is dropped to you. It will be a preapproval that I have your data and I drop that off. You get thrilled, but actually, it is very easy because I have your data before and I can process and give a preapproved one, right? And I'm not saying in principle preapproved, actual preapproved. More difficult is you logging in and not having your data and you logging in your data there, and me approving it real-time. That is much more difficult. Doing all the checks everywhere, real-time and approving. We are getting there. Ability to collect. We have talked about all this, and we are getting better and better. What we are developing now is ability to predict needs and having genuinely hyper-personalized offer. Now all this will become important whenever app becomes more popular. See, app, I always have this question, which I ask my team. What is the reason why a company should download ou app? What is the reason why somebody should use our app? And most importantly, what is the reason why somebody should keep our app? Banking apps, the reason is very simple, you do transactions every day. Why would you keep an NBFC app? And we have to continuously look at that answer. There are many answers. This is one of them. Identifying your need, giving you a hyperpersonalized offer, giving you the next best offer. Okay, you're not with this, you are buying this, okay, can I do something better? Fine. So all this now is a part of our data monetization project, and data monetization is one of the important pillar of forming a fintech, right? Now remember, again, fintech at scale. We have something which fintechs don't have, we have scale. And we have something which fintechs have is we have innovation. And now we will grow more and more on that innovation. This is interesting. So that was as far as data analytics is concerned, this is as far as digital is concerned. I talked about unleashing channels. This is the time that I demonstrate 3 of them, right? So in assisted channels, we are very good in point of purchase. We are very good at our branches. We are quite good at call centers. We have to get better. We still make some pesky calls. The whole idea is pesky call should go to people whom we have to collect, not to everyone else. But we can get better. Third-party partners and field agents. Now what is important for field agents? Field agents [Foreign Language] So what is important. I'm going to demonstrate the app, which is used by my micro loans or micro finance field agents, which is about capturing details of the customer, which is about income generation or income estimation, and more importantly, it is about collections. And within collections, even more importantly, it is about customer location. In micro finance, we have close to 15,000 people. At the feet on street, it's a tremendous level of attrition. My first problem when a new person joins is customer [indiscernible] because address is in rural, [Foreign Language] And if that village [Foreign Language] meaning you don't exactly know where. Can we exactly locate that customer? Even more importantly, can we give our most efficient route map to my person? Basically, can we make sure that my person's life becomes easy, productivity increases to the roof and without involving any paper? We do end-to-end. So I will just go and sit there and request my colleague to run the video. These are videos but it is real. [Presentation]

Thank you. Maybe a little bit long, but I thought it is important that we go through the entire app. The important thing is, yes, admittedly, 98% of the micro loan customers still pay cash, but we have complete ability to make sure that if they want to pay through UPI there, our person can send the UPI link to this and the person can pay through UPI completely. We will move now slowly to even unassisted or unprompted payment, through [ e-nat ] and all those things, but the change will be. That rural lowest income change will be gradual. The whole idea is that are we ready, the answer, emphatically, is yes. But that is only assisted channels. This is about improving assisted channels. Now can we get into autonomous channels? Like portal, chatbot, we already talked about. Ecosystems. Right now, we are all doing our own sourcing. How can we source through ecosystem? I'm not necessarily talking about the Bank Bazaar and Loan Bazaar kind of ecosystem. But can we help people who are doing their own work, can we get the data from them? Can we use that to use to source? What are the different types of ecosystems, key aggregators, which is the key aggregates we all know about? Our partners and third-party products. Now can we use our entire marketing cloud? And we can, I'm sure. One, having a complete link, live link with this. So for example, if you are taking admission in [indiscernible] or somebody like that, while you are filling up your admission form, how can data come to us and we can drop off. One, to a certain criteria, it will be preapproved, anyway. But beyond that, how can we drop off or can we drop off if that person is not completely qualified. These kind of things going on. And doing it on a completely integrated way, this is what I was talking about. Today, I believe we are getting better and better and better in preapprovals. We have 2 crore database which is a great database, but it is not 12 crores like one of our peer has. So we have to get over that, right? Our database will keep increasing. But how do we get over having a 2 crore database and not 12 crore is by doing this, is by having a marketing cloud, where we are completely and constantly linked with our API partners and can drop offers to our customers real-time. Yes, next. Here comes the next thing, which I would like to demonstrate. So this is where things happen, okay? Customer service is as important as selling because customers can get very pissed off with sales. Most companies, and we for one had until last year a pyramid, where almost 50% to 60% of customers were serviced through branches, 50% until FY '21 through branches. That's the first one. Second, say, around 40% through call centers, which is more efficient than branches, but most efficient is this last 10%, which is automation. Can the customer service himself or herself. That was only web. And that service was also not complete. Complete service is what? Inquiries, getting statements, transaction history, paying, asking for another loan, this is all complete service. In FY '22, we have already inversed this pyramI'd. But now assisted journeys have increased to around 30%, autonomous 38%, autonomous. Next is call center and branches Very few people operate the branches, already go to branches. No, this is very important because branches, as much as they're trained, I cannot train people uniformly. And that is the focus, right? We keep keeping about training. We keep keeping about retaining people, attrition. Why it was very important to handle all that for being the best place to work. But you can't base your business models on that. Your business models have to be completely agnostic of all this. And this is where our WhatsApp service model, which is already live, would like to demonstrate. [Presentation]

This was short. Capabilities are still being developed. As you see basic capabilities already there. This will grow more and more. Now these are just examples of what we are trying to do. We are trying to make the customer even come to us and go with the best offer without a person intervening. Because over 5 years, we have seen as volumes grow, assuring uniform service through people in person, right? I mean, all of you would have seen it, right? If you call your branch -- if you call a call center, and God help you that in between the call drops, the next time you call, there's another executive and you have to start all over again explaining your problem. Can we change that totally? The answer is an emphatic yes, and that's what we are doing. And then last but not the least, the mobile app. We have just launched -- we are in the soft launch of our mobile app. It's on both Apple App Store as well as PlayStore. Invite you to download it, to have a look at it. It's a nice app, continuously improving, no doubt. What are we trying to do? And this is not the end state. This is what we will try to do within 1 year itself. But this is 1 way to be geo-agnotic. It will handle both existing customer and prospect customers. Right now, I think it is absolutely complete for existing customer prospects we are getting better. And if it is not a preapproved offer, there will be applications, scorecard on that. It will divide good customers and delinquent by using guardrails. For good customer, we will look at machine learning for propensity to buy and then give based on all this personalized stuff. So it is not that the customer is only saying what he wants. If that is that, it is easy. But can the app give personalized offer to the customer? Admittedly, it is the first step. I will talk about the end state in a few seconds, but first, let us see that. [Presentation]

Thank you. So these were the 3 capabilities that we wanted to demonstrate. As you saw the app today, it's complete end to end for consumer loans and it is a servicing platform for all other type of loans, full-service platform. You will also see that considering our rural lending, it is in all vernacular languages. So its app, which is, I believe, in a good state of readiness today. And over the next 1 year, it will become better and better. And over the next 3 to 4 years, we'll develop into this. This is the end stage, where we believe that we will truly answer the question, why will somebody not delete the app, why will somebody keep the app. But now that we are in so many ecosystems, how can we help the customer in the ecosystem, right? Try to remain as close to our core as possible. But yes, if we -- at some point of time, we have to book airline tickets, we may, we will see. We will go there. That we don't know. But right now, important thing, let us take a farmer. A farmer ecosystem means that if that farmer is growing a particular pulse or a particular grain, identifying which are the mandis in the area, that mandi price, transportation cost to that mandi and putting the suggestion as to which mandi he should transport it to. Once the farm laws are clarified and cleared, maybe we can tie up with the mandi intermediaries. And actually, the farmer can maybe buy and sell on our app. So the end state today is genuinely, sky is the limit. It will depend on how the law of the land develops. All the tools are there, and we can do more and more. The whole idea is engaging the customer completely and then using every data which we get and every area that we get to lend more to a good customer. So all this is towards what? Identify good customers, identify the need of the good customer and lend more and more and more to him while keeping him or her a good customer, not lend so much that they become a bad customer. This is important. Identity customers who are likely to go bad because of some pressure coming from here and there and take correction actions early and then identify customers who are already bad and take correction actions. So this is the sum total of retail finance, of retail finance growth, of retail finance good operations. We have been doing many of this. Can we add complete digital and data analytics to make sure? We believe yes, and we believe that is what will make us truly of intricacy. Now coming to the last part, last but certainly not least. As we start on our journey and you can calculate like a 25% CAGR minimum of retail, we will take our retail book to more than INR 1,25,000 crores in 4 years, we'll go there plus the acquiring and things like that, how we are making all this sustainable? And as I said, certainly good for the planet, which is very important to us, but we truly believe that it makes great business sense also, and that's what makes it sustainable within the company also. That's how we keep building on this. So this is just a small synopsis of how we have moved in the last 3 to 4 years on ESG, starting with a simple gap assessment in '18/'19 to '19/'20 publishing our first sustainability report to '20/'21 adopting targets for the first time. So we adopted a target of becoming completely water neutral in FY '22 itself and carbon neutral by FY '35. To now actually making progress on that, setting up a ESG Board Committee for ESG. Clearly, introducing materiality assessment across all stakeholders and now concentrating on having a specific route to achieve these targets every year. We will be publishing our first integrated report this year -- next year -- this year, first integrated report this year. So very clearly, it is not lip service for us. We do believe that it is a great, sustainable way to grow with very clear advantages even on the business. These are some of the ratings where we have permission to publicly display it here. The rest of it are on our website. Please, invite you to look at them. Across agencies, except one, we have actually seen major improvement in our ESG ratings. And we hope that we will keep showing these improvements, which will actually demonstrate -- put the ratings where our mouth is. We are making this sustainable. We have actually set a ESG vision. We will be an environmentally and socially responsible financial institution built on a foundation of assurance, and we'll generate sustainable long-term value for all stakeholders. That's our ESG vision, and we have taken various goals for that and various projects we have taken up for that. And the next slide actually talk about very specific projects. This is what we actually achieved. So we have actually achieved a 20% reduction in our carbon footprint from last year to this year. We have achieved it by putting many conservation measures, energy conservation measures, by financing and using, actually by using financing Scope 3, by using green energy. Our head office uses green energy completely and then doing something which is up our sleeve, we will do it very well, is planting of trees, maintaining them. We are a rural company, and we can do that better than anyone else. So we tried it very well this year, and we will accelerate it as we go ahead. Water neutral, we already are. We were already on a CSR project of water conservation. Once again, it makes great business sense doing water conservation projects in some of the areas where we lend, using, of course, reuse and recycle, but most importantly, as I said, water replenishment in drought-prone areas. That is something we have done always, and it is coming of use. It is making sure that we are already water neutral, one of the few companies in the country which is already water neutral. So that's it. This is the time that I should summarize. Lakshya, we want to be totally digitally enabled. We want to become a retail company focused totally on customer, going beyond the product focus that we have. We are going to achieve through 4 major initiatives: one, obviously, business, which is a sustainable profitability and growth engine. Second is futuristic risk management. Third is becoming and launching various tools to become a fintech at scale. And last but not the least, making this all sustainable through ESG. Specifically talking about the first, we have 1 vector working today, 1.5 maybe, which is product excellence and maybe half of cross-sell, unleash 5 vectors, which is product, cross-sell, geographic expansion, different channels, especially digital channels, and new products. Through this, achieve and make sure that we achieve the goals that we have set forth. We have used our digital and data analytics for internal excellence, for operational excellence, for operational efficiency till now largely, unleash it now for determining the need of the customer, capturing the customer, basically unleash it externally with the end state of having a fully developed digital market. Just would like to end by showing the good things that we have achieved in retail over the last 5 years. And that is where we believe that we will not only achieve but perhaps exceed the targets that we have set for ourselves for FY '26. Thank you very much for a patient listening. The presentations are already uploaded. We have uploaded 2 presentations on Friday. We uploaded a Q4 presentation, where numbers are in the old format that we were giving rural, housing, infra. This presentation and from now on, we will present retail, wholesale everywhere where you will see quarter-on-quarter, the character change that we are having. And in few quarters, along with this character change, we will also see the total delivery that we are doing. Thank you very much for the patient listening. Hope I have been able to give you the confidence that we will be able to further build upon the strengths that we have built, and we also have some projects in mind to make sure that the mistakes that we have done are not repeated. In fact, they are limited completely, got rid of, and we grow with a new breath. I hope that I've got your confidence to a large extent with this presentation, but me and my team are deeply aware that we have to work hard and grow this confidence in your mind on quarter-to-quarter. Thank you very much for the patient listening. Thank you. We'll now open for questions. I will invite my CFO, Sachinn, to join me on the stage, and we are open for questions.

I now invite questions from the audience, please. [Operator Instructions]

Mr. Dubhashi, this is [ Sarath Chandra ], investment adviser. 5 years back in the same hall, we met and you gave a long presentation. And I'd just like to open that presentation, Slide #4. And in that Slide #4, you had promised 5 years down the road that you will transform, improve ROE, cost income growth, which you have obviously delivered on, cost income ratio, et cetera, et cetera. It's a rural business, housing business, wholesale business, investment management, wealth management, so on and so forth. 5 years have passed. ROE has come 50% down. Stock price has also come down. 5 years back, I got some confidence from your talk. But today, you are giving me a new hope, a Lakshya. 5 years later on, I don't know if I'll still be in that business because I'm already old. So I hope after 5 years, we'll not be disappointed again the way I -- we are disappointed after 5 years.

I humbly accept your comments, sir. I would only like to say a few things here, which I said actually at the beginning. I started my presentation by acknowledging that. So one, as you rightly said, the growth, the strength of businesses, the leadership positions in our main products, what we promised, we have delivered, right? Yes, certainly, the ROE is down for 2 reasons, and this is not an analysis or, say, [Foreign Language]. It is acknowledgment. Two reasons, one of them surely is, as you know, there is INR 1,700 crores of what could have been profit but is today a management overlay that we have kept. And INR 1,700 crores is large, right? It is double our annual profit almost. It is kept throughout -- and we are building throughout COVID or eventually. And as I said in my investor presentation for Q4, we will watch for a couple of quarters. If COVID is remaining within limits, we will start slowly releasing. So in our minds, it is very important to say that INR 1,700 crores is the balance sheet strength. It is the conservator of the company, which has not come in ROE. It has not come in P&L. Certainly, we acknowledge it, but it's there in the balance sheet. It has not disappeared. It is there. And at some point of time, hopefully quite near, it will come in the P&L. So that is the first one. Second, as I said, that, yes, certainly, there were some accident stroke mistakes, right? I will quote ILFS. I don't believe it was a mistake. It was an accident. It was a AAA company we lent. And frankly, we have not lost any money there. But it created a big overhang on the -- on what came. And we have not lost. We were actually solving things. But yes, DHFL was a mistake, whichever part of the business it was. We were -- it was a AAA company. Again, we were in trading and dealing with those securities, bought stock. But did we have any business lending to another NBFC? We did not. It was a mistake. Supertech. Yes, Supertech was a good promoter at some point of time. Should we have lent INR 1,000 crores or more to them? No. So there are some mistakes which we have done. It has most definitely led to intermediaries and investors which are pained like you. At this point of time, the entire management is in front of you humbled, only assuring you that there are a lot of things we have done well, and we will grow on that. And these mistakes, we will not commit again. There is one more thing I would like to say is, along with management, we are shareholders also. The company's stock is held almost 5% by people. And genuinely, as much as we feel in our heart, we also feel it in our bank approach as much as I do. Apologies. Apology for what happened. And you have the word of the management that we will make sure that it doesn't happen.

I'll just like to add something. [ Sarath ji ], you would have invested over the last 5 years. Now 5 years back, yes, we came up with lots of promises. We have been able to fulfill some. What we would also like to share is the balance sheet that we started off in FY '17, beginning of FY '17. If you look at the balance sheet, we have gained lots of strength. Today, we have almost close to INR 20,000 crores in terms of net worth. But the plans that we are talking about today, the first thing that we need is a very strong balance sheet. Our provision coverage ratios, which used to be in only 20s, are about 50% by now. The asset quality also has improved a lot. In case we need to grow, the first thing that we need is enough muscle, and we have developed that muscle. The technology DD already has shared with all of you, a kind of technological progress we have made, the kind of investments we have made, this investment, what we have shared is the output. But let me tell you that the infrastructure that we have built, we have invested very heavily on IT. We have close to 200 people working on the technology side, about 30-odd people working on digital, 30-member team, about 35 members taking care of analytics. We also have a large 30-member team working on enterprise data warehouse. And then this is backed by an IT infrastructure, which is about 100-member team. So lots of investment has gone in. I would say that in that journey that we started off, we are somewhere in the middle at this point. We have not been able to complete the course. And I believe at that point of time, perhaps the visibility was low. We have achieved 50% of that journey. And the next 5 years, you're going to see -- reap the reward is what we all believe at LTFS.

Thanks. Just one more thing I would like to add. First, also the top quartile ROE was achieved despite everything. The top quartile achieved ROE was achieved before COVID. After COVID, as I said, we have chosen to keep money back in the balance sheet. But again, I mean, the proof of the pudding is in eating it. You are interested in not only the company being good but the market and the share price, gearing, accordingly. So fully acknowledge that, and we will definitely do our best now to make sure that the strengths are built upon and the mistakes are not repeated. Who is managing this? [ Karthik ], I think you should stand and manage as hands go up.

This is Rikin from Credit Suisse.

I'm sorry. Yes, I could not see you, sir. Yes.

So I have 2 questions, one relating to the new businesses and one on the wholesale side. So on the new businesses, if you could elaborate some of the new products, how are they fundamentally different versus what you are doing. So I am talking about Pragati, Vishwas, Kisan Suvidha, et cetera. And more importantly, if I look at our exit ROAs in 4Q, the retail business, they are around 2.6%. And simply by unwinding some of the excess provisions that we have created, we could probably go to 2.8%, 3% ROA simply by doing that. So is it fundamentally correct to assume that the yields of all these new products, the behavior is going to be largely similar to the existing businesses at the portfolio level? That's on the new business. And second, on the wholesale side, given that we would be looking to either exit through inorganic routes or kind of look for a strategic partner, how should one think about the risk that if there could be any further haircuts required, any hidden skeletons in our existing portfolio? And how should one think about the provisioning? And an extension to that is the employee attrition within the wholesale, right? So is there a risk that the existing business heads who run these businesses may or may not stay and the portfolio quality could be impacted? That's it from mine.

And you said, that's it. You actually asked the whole strategy. So I will answer this question in some detail. I will take the second one first because, obviously, lots of people are wanting. So number one, we don't have a thing in our lexicon called hidden skeletons. In fact, perhaps we have suffered more, okay, with the first sign of danger come to the investor call and say, okay, we have a problem here. We -- I told about Supertech almost 1.5 years before it actually became empty. [Foreign Language] Supertech has. So hidden skeletons, no, surely. When do you make a big haircut or a loss? When you're selling something. If you do a panic sale, naturally, some maybe [Foreign Language]. So if it is a panic sale, then you will make a loss. I will make an unequivocal statement that neither of this are panic sale. Always, we are ready with a plan B. Infra, very simple. If we don't get the value and that to the value we are looking for, which I won't tell now, we will not sell. We will continue with the current model of asset light. [Foreign Language] When retail becomes INR 1,00,000 crore, this can become INR 40,000 crores or INR 45,000 crores. It will grow less than the street, 80% retail [Foreign Language], okay? So that is the plan. So Infra, very clear. There is no vulture thing here. Real estate, again, why are we talking now? 1 year -- we took 1 year of pain to demonstrate that we can actually collect INR 3,200 crores. The INR 3,200 crores is a large part of the book. We have brought down the book. In some cases, we had to maybe sell it to ARC in a meanwhile and then resolve. There are assets we have resolved. And how is it resolved when this resolution happens? A good customer comes and replaces the not-so-good developer and [ moves ]. I have given -- can we talk about the case? I don't know. We -- there was a beautiful project near Hiranandani, behind Hiranandani Hospital. The developer came into problem because of some other hotel, et cetera, he did. We got another developer to come and take up that. The project was already with ARC. There were certain flats that we have taken. Today, all the flats are sold. The project is already out of ARC and resolved completely. So that is plan B. Plan A is talking to various other funders, whether they can come with us, whether a 50-50, a 51-50, that the funding after this, to complete, they can do, so that our exposure doesn't increase, right? And yes, they get a better part of the return, et cetera. There are various structures like that. We are discussing them. Very clearly, taking a big haircut is, at this point of time, not on budget. Even then, one more thing I will mention lastly. You know, for sure, that we are selling mutual fund. Okay. Mutual fund, also, I would like to clarify. There was some talk that we are selling it cheap, et cetera, et cetera. I think I clarified it last time. We are selling it for $425 million plus cash in the company, and the cash in the company was the order of another $100 million. So it is $525 million, which we believe is a good price, especially considering the sale that has happened after that, right? Almost whole or the majority of the profit, as is our habit, we will keep it in macro prudential provisions. That doesn't mean that we are expecting that loss, et cetera. We were expecting that we would have kept a particular amount. We're just keeping the entire profit rather than declaring that profit. Declaring onetime profit is no fun game. Nobody used value for that [Foreign Language]. So actually, keeping it [Foreign Language]. So it should not hit this growth journey, which we are now putting, right? So having a main plan where there will be -- should not be any shocks. At the same time, remaining humble [Foreign Language]. And because of that, keep a kit. And this will be a large kit, selling at $525 million. After even taking out the cost price, it will be a large kit, and we will keep that. Does that answer -- there is one more thing. People. Certain attrition at lower levels, et cetera, is given, right? Also, the scale at which we are actually having our real estate platform, those type of people are anyway not necessary. And we will actually encourage them to seek a career if they want a career in real estate. The company is growing so much that if they want a career somewhere else, we can give. Anyway, [Foreign Language] I joke also privately, you are not born from your mother's womb saying real estate professional. You are not even born saying financial service professional. You grow into it. So you can do something. Last but not the least, Raju Dodti, who is sitting here, who heads our wholesale finance, he is the person actually spearheading this whole inorganic process. So -- which shows the quality and the spirit of the people that we have and the trust that we have in our people. We are trusting him to run the process, right? Ajay is here. Ajay Chaudhary, who is -- he is the #2 in Infra. He is working with the people to give the data and doing the process. So as long as -- so one is, these people are the future. And anyway, since we are only getting a partner, there is a very clear future for them. In fact, the future is better that if just it remains with L&T Finance, then the capital is not growing. And they have to keep doing this underwriting and sell it down. If a new partner comes and puts security, and obviously, that partner is not going to be some shady Indian name. They will not have -- they will either be a great Indian name or a great foreign because they should also have that capital to put and take a 51% stake in a INR 30,000 crore portfolio. So it will be a name of quality if we go ahead, and it will be a great career for people. So I hope that answers all of your questions regarding wholesale side. Now retail. So some of these products details, I will let my Investor Relation talk after -- later on because let us look what we are trying to do, right? So let's take tractors. We used to fund the tractor early on the implement and then forget about that. Now that same customer may need a top-up at some point, may need many other loans for his normal operations. The customer will be a very well-paying customer with us, and we were not using this wealth of customer. We will do the same thing, go to the dealer, again, stand with the dealer, look at new customers, which is good, which we should do. What about farming? We were great hunters. We were s***** farmers, right, which is ironical, considering that most of our customers are farmers. But we are not doing farming of data, which now we have started doing. And actually, if you see those graphs, we have started talking about it 2 years after we have started, right? So people have very specific targets now of these kind of things within their carriage. So Sonia, who heads my rural business loans, or Asheesh, who heads farmer loans, have very specific targets. And he and his team or she and her team have targets on farming like how do you launch more and more products for the existing customers. Details about each product, I mean, I can give because they are my favorite products, but we will be taking too much time. They will definitely [indiscernible]. But one thing I can tell you that naturally, because it is existing customers, we can lend with more confidence. And because of that, the quality is -- I mean, it is something else of that portfolio. It is some -- the various quality parameters are 3x better, 4x better. It is not percentage better. So that's how it is trending. It's all very good.

Thank you very much for your question. We move over to the next question, please. The gentleman out here.

Aditya from Citi. I wanted to ask about, as you mentioned, getting people to download an NBFC app is not a simple question to answer. So how natural is it to extend the whole infra to the web platform? And how much of a cost is it to have all the journeys which users are doing on the app also available on the web? And do you think that dilutes the proposition in some way that people don't download the app? So do you lose something? And what's the implication of the whole fintech-related products that you want to work on?

Good question. Very important thing to understand that the most dangerous thing [Foreign Language], if you launch a software or launch anything, you call it web, app, whatever, and then force-feed what you have into that, I've been through this, that you launch an app or a software before. And then whatever happens physically, you try and capture that, which is a disaster. A customer who wants to remain physical will remain physical, and you have to keep getting better and better at physical. This is -- in addition, this is another layer on it that if that customer wants to become digital, we are there. And then there are many other customers who are very comfortable in being digital, who don't want to be physical. We launched for them, right? So it's not -- my farmer, I wish his -- somebody asked me, one of our Board members maybe, should we increase our Google Pay or UPI payments, right? And how much we do and we should increase it. And my answer is -- to that is, why? Actually, it's a question. What I will maximize is my e-NACH registrations and make sure to do my data analytics that my e-NACH gets passed more and more. Whatever collections happen, without any choice to the customer, to press a yes or no is better, right? So we should not look at a solution and go in search of a problem. There should be a clear problem which we are handling. So all our push is towards looking at that problem which we are handling and not a solution than to skip on the problem, [ don't care ]. That is [ scary ]. And at the cost of sounding naive -- not naive, ignorant, I will today say [Foreign Language] blockchain [Foreign Language], then we will not keep looking for problems to solve. There -- at a time where blockchain or Web 3.0 will become a reality, we will get there. But at this point of time, entire investment is to make sure that efficiency is maximized, effectiveness is maximized and add these channels over what we do excellently today, right? If a customer comes to a dealer to buy a 2-wheeler, I'm not going to tell him, [Foreign Language]. That will be a disaster. That I will close there. But the whole idea, if the customer wants to approach, if I have a 2-wheeler marketplace, soon, I don't have, let's say, with the EV manufacturer, I enter into an integrated API, and that EV manufacturer has a model of direct sale, I should be tagged in there to do that direct sale. And that is the differentiation, right? Investment, I don't want to give precise numbers. Frankly, it is not as much as I would like to be. I always keep telling my CDO that he should invest much more, not to waste money. I will look at every rupees, fine, but we should look at avenues to invest much more. Question is not whether we can afford to invest, we can. The most important point is we just cannot afford not to invest. We have to be at the forefront of technology because that's the way to go forward without sacrificing what we have, right? Let's give an example. Now today, a farmer loves to go to the mandi, sell, spend his time in the taluka place where the mandi is, buy a few goods, clothes, et cetera, toys for his children and come back, right? Are we going to replace that till he wants to be? No. But are we going to, hopefully, one day, this is, of course, subject to farm laws and all, enable him to sell his goods [Foreign Language]? Yes, we will. I will give a very simple example. How many years back, just 5, 6 years back, it was said that branch [Foreign Language]. People like that. They will not do Internet banking. What was the last time we entered a branch, right? So things do change, change fast. And I'm sure even the farmer will change. The point is, are we ready for him 2 years before he changes? And are we also pruning agents for him to adopt this change? No.

If I can ask something on infra lending. So if you see the business today versus 5 years ago, underwriting, we find a lot more banks participating in that segment. Maybe there is more difficulty around how projects are underwritten. Has the business changed structurally? Or do you think it's a cycle which will bring in interest from different players at different times?

Both -- Mix of both. Infra becomes -- has this tendency of becoming flavor of the month. [Foreign Language] infra was -- nobody was touching it. Today, people are asking, "You have such value, why are you exiting?" The first answer is, we are not exiting. We are only looking for a partner. But this is flavor of the month. It keeps going up and down. But the answer to your other question is also yes, the nature is certainly changing. Your ability to monitor projects, getting very specific data on projects, the technical inputs into the project, right, and the early warning signals which can come from the project, have gone to another level. And that's where we believe, otherwise, just by lending, we won't be able to compete. There are projects which are being funded between 7%, 7.5%. 7.5% will lend [Foreign Language]. The ability we have developed to monitor, to identify, to monitor, underwrite any downside makes this business viable for us and viable for the partner who will come in, right? And some of these projects, I mean, sometimes it looks like the projects are going slow. They sometimes indeed goes slow. But the ability to closely monitor them in bad conditions. COVID, for example. 2 years, we were not able to visit the projects. We had one project which was getting complete in the state of Kashmir. We were able to monitor it closely. And today, we are proud to say it is one of the best tunnels in the -- not one, I think perhaps the best tunnel in the country, the Qazigund tunnel, which will perhaps change the geopolitical muscle of the country. A journey which used to take 2 hours to 9 hours now take, what, 19 minutes, something like -- 9 minutes. We are proud of it. We have created an asset for the nation and the Indian army. So yes, the nature has also changed, but yes, it is cyclical also. The like and dislike for infra is very cyclical.

Moving over to the next question.

This is Nischint from Kotak Securities. On the capital gains from stake sale in mutual fund, you mentioned that you want to keep this as macro prudential provisions. I mean, rough calculation suggests that the capital gains are going to be almost 2x of the current provisions. So would you -- I mean, how should one look at it? Is it just something which is going to be a buffer? Is it going to be -- some part of it could be a special dividend. How should we think of it?

I may not be -- on special dividend part, I may not be able to answer right now. We will take these calls closer to that. Right now, I maintain it as a statement of intent. But a large part of it, we will keep as a buffer. If there is a special dividend, that's for the Board to decide. Too early to decide. There are also some RBI regulations on amount of dividend which can be declared. We have to see what we do vis-à-vis that also. So that's all. We will -- at some point of time, we may also explore merger of the listed company with the operating company. So there are -- because the listed company, once the mutual fund is sold, there is no need to have a CIC, right? So we will explore all these things, and the precise answer will come out of that. I was just answering as a statement of intent, okay? Our -- what is it, our intent or our -- normally, our leaning will be towards creating a buffer. That buffer will be, by no means, an indication if [Foreign Language]. I mean, it is just kept. If we [Foreign Language] distribute [Foreign Language], we will keep for the rainy day. And we have found out over the last 2 years that rainy day can come any time. So that's right. So I'm sorry if I'm not giving a precise answer. The answer is, I don't know, too. That's the intent.

The real estate side, I think the NPA exposure is around -- sorry, NPA coverage is around 30%. NPA exposure on the real estate book.

It is almost entirely one account.

Okay. Would you be comfortable to -- at this coverage? Or would you want to increase this?

We are close to 30% coverage at this point of time on that account. Obviously, I'm comfortable right now. Otherwise, Ind AS means I have to provide more. We believe that -- the stage at which the asset is. What was the problem? There are assets on the ground. By the way, we have more stake in the buildings, towers which are being razed and things like that. Our projects, we have been always telling is at a particular stage of completion. Now with that name, that 100% completion and people buying, it's difficult, let us accept, right? So we have been trying on our own. So we have certain nonproject assets mortgaged to us. So there is a one -- a choice of taking them over, telling them practically and getting off. Second, the NCLT process, we have been also trying to replace, which is not easy considering the current mental state of the builder. The NCLT process, in fact, we were trying to get into NCLT much before this was actually admitted. We are actually positive that it should hopefully quickly result in somebody taking over. We believe given the asset coverage that we have in our projects and plus the additional assets that we have, even by the estimate of the builder, it is about 50% of that total exposure. Shall I put any haircut to that, even if it is 30%, 40% of that total exposure, additional assets, plus the project assets, we believe that at 30% progress, we should be fine at this point of time.

Just coming to the digital strategy. Thanks for the detailed presentation. We're still trying to absorb some parts of the presentation, of course. But don't you think that there are too many things happening here? So many segments, products, et cetera. So does this get implemented over the next couple of quarters, over the next 2, 3 years? And what if some of these things don't really fall in place? And this specifically comes in the backdrop of the fact that it is possibly expected rural slowdown or already a rural slowdown out there. You probably see -- I mean, you're already seeing fuel prices going up. So maybe next 6 months or next 1 year, for the rural economy, specifically may not be as good as what they were, say, last, whatever, 2 quarters.

Okay. So there are -- actually, there are many questions in that one question, and I will try and answer. But let me take it in the order of importance. Strategic first and then cyclical slowdown, I will talk about it. So strategically, many of these things, we are doing. So first of all, the many things, as you say, are actually just the components of few things. The few things are what? They are just 5 vectors, out of which 1.5, we are already there, right, which is product excellence and cross-selling. Now we have to increase on that cross-selling. We have to get our urban foray right. Digital also, we are quite a bit there. We have to get this app and all right, and third is the new products. We have to make a majority of them successful. So summarily, there are 3 things. To make sure that the majority of these things are successful, we have to have the right organization. So we are actually -- what was initially perhaps being managed by under one Chief Executive, we have now 3 reps, and plus we have an SME. So we have 4 Chief Executive-level people reporting to me. So each one is like a separate company, actually, a separate medium-sized company running their businesses. That is why I believe that the majority of this will be successful. Why I keep on saying this majority, majority, majority? It is a given that some of the many, many projects that we do will not be successful. That's life. [Foreign Language] today 100% [Foreign Language] successfully, right? And that is why we are planning all these things that even if 70% to 80% of the things are successful, we will do these targets. What we will make sure is we will not go wrong in asset quality because their not being successful means damage. We may be not successful in growing or establishing a firm grip on the market, but we will make sure that asset quality is good. If we are not able to establish a few things in any portfolio, there will be certain things which will not do well. But by very nature, the things which do well will keep becoming bigger and bigger part of portfolio because they are successful, basic tenets of our portfolio strategy. And that's answering your second question that what if a few don't become successful. I'll tell you today that some will not become successful. We will make sure that we will double down on what becomes successful. And that it is overmanaged so that what is not successful doesn't damage the portfolio to a large extent. And that's now coming to fund 2 things. The whole strategy is if you see to make sure that -- which I always say, that in a good cycle, we should gain more than the market; in a bad cycle, lose less than the market. The whole strategy towards micromanagement of field calls, doing more sales to existing customers, which is not dependent on the sale of the primary goods, primary commodity, otherwise, we will never be able to get away from the cycles. It's one of our tools to get there. Last but not the least, we believe that the major slowdown in the rural market has actually happened. We always proudly state that we are ahead of the market in predicting the trends in the rural market. You will remember, Nischint, that last 4 meetings, I have been saying rural market is slowing down, is slowing down. [Foreign Language] as if it is something new. We actually believe that with the current predictions of monsoon, the current trends of rabi market, the current mandi prices, if monsoon, indeed, is good from this festive season, we believe trends will turn. In fact, in our internal projections, none of the rural market will have taken the route of negative growth. We have not taken a positive growth for the industry, but we have taken a steady industry growth for FY '23. So we are once again being contrarian. I don't think rural market bad news is coming. I think rural market bad news, we alluded to for 1 year already. So I've answered your question from strategic to the next 6 months. If I have missed something, you can ask now, ask later, whatever.

Thank you, sir, for your detailed response. We move over to the next question.

[ Karthik ], we'll finish in, what, 10 minutes. Because if there are no questions, people are hungry, we can have lunch now.

Yes. Any more questions, please?

Okay. So let me just take a minute, summarize. Clearly, 4 vectors, big ones. Profitable growth, we showed how it is going to come from, these 5 growth vectors that we are unleashing: continued product excellence, cross-sell, geographic expansion, digital channels, new products. In addition to this, we will certainly be open, there were no questions to that, but continuously be open for portfolio expansions. And hopefully, if you guys give us a better and better multiple, we will also be open for acquisitions. Right now, our multiple makes it impossible, right? I mean, you will have to pay somebody much more. But we will be open as we go ahead. The whole idea is how do we use up this 25% capital adequacy and perhaps which will go up to the 30s after the mutual fund is called quickly and bring it down back to a 17%, 18%. The 3% ROA also has to translate into ROE, right? And that's where growth becomes very important. And that's why so much concentration is going on growth. It will obviously come always while controlling risk. That is where we are looking at next-gen risk. Digital and data analytics, we have a CDO and his whole team working on making sure that all this is not only digitally enabled but digitally led. And last but not the least, making sure that this is all very, very sustainable. At the same time, when we grow retail to 80%, making sure that the great infra platform we have developed, we get value out of that. And real estate, we make sure that no shocks are given. And we slowly recover, complete the projects and recover that money. The entire management stands here confident of the good things that we have achieved over the last 5 years, which gives us the confidence of achieving more over the next 5 years and also, hopefully wiser and definitely much more humble of the mistakes that have happened in the last 5 years. And making -- we will make sure -- do everything to make sure that they are not repeated in the future. Thank you very much for the patient hearing. I promise you on behalf of the management that each one of these things, we will report progress at quarterly meets. Some of these things, at every quarter, there may not be progress. But definitely, some of these as the biggest accountability comes from milestones and the milestone track. So we will keep showing you that, keep demonstrating that. Thank you once again for the patient listening. We will break now for lunch. Thank you.

Thank you, sir, for the detailed clarification. With this, ladies and gentlemen, we conclude the Investor and Analyst Meet 2022 for L&T Finance Holdings. For any further clarifications, request you to contact the Investor Relations team. We now request you to join for lunch, which is served outside the ballroom. Thank you very much.