Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Yes, thank you, Margaret. Good evening, everyone, and welcome to the conference call. From the management team, we have Mr. V.P. Nandakumar, Managing Director and CEO; Mrs. Bindu, Chief Financial Officer; Mr. Raja Vaidhyanathan, Managing Director, Asirvad Microfinance; Mr. Jeevandas Narayan, Managing Director, Manappuram Home Finance; Mr. K. Senthil Kumar, CEO, Vehicle and Equipment Finance; and Mr. Salil Bawa, Head, Investor Relations. We thank the management for providing us the opportunity to host the call, and I'll promptly hand it over to Salil to start off the discussion, and then we'll open it up for Q&A.

Thank you very much, Abhishek. Good evening, everyone. Thank you for joining our Q4 FY '20 results conference call. Apologies for postponing the call by 30 minutes. We didn't want to have a clash with FM's press conference today. So that's why at the last minute, we had to shift the time by 30 minutes. Apologies, again, for the same. During discussions today, we will be referring to the Q4 FY '20 investor presentation uploaded to the exchange and on our website. I would like to state that some of the statements in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. I would request you all to read the detailed disclaimers in our results document also. With this, I would now like to invite Mr. Nandakumar to begin the proceedings of the call. Over to you, sir. Thank you.

Ladies and gentlemen, welcome to Manappuram Finance Q4 FY '20 Conference Call. Our purpose today is to discuss our Q4 performance but we meet under the shadow of a global pandemic that has darkened the outlook for all business and the economy. Let me then take this opportunity to put things in a macro perspective as far as Manappuram Finance is concerned. As you know, gold loans have been the dominant share of our company's business mix, accounting to -- for over 2/3 of the total portfolio. Our past experience is that during periods of economic stress, banks temporarily become risk averse and ghost loans for on-lending. The global financial crisis in 2008, '09 was when major economies went into recession and stock markets crashed. But looking back, there was also a period of strong growth for us. As for the lockdown, during Phase 1, we kept all our offices closed, new customer acquisition came to a halt and collections were affected. However, by focusing on online channels, we kept the momentum going. And we were able to restore collections in gold loans, even as our branches remained closed. Today, as we near the end of Phase 3 of the lockdown, most of our branches are functional, although customer footfalls are still low, because public transport is not there. Recently, the government announced an economic package of INR 20 trillion to revive Indian economy. Specifically, the loan guarantee scheme of INR 75,000 crores for NBFCs and MFIs would help in easing the liquidity challenges faced by the NBFCs. Both the government and [indiscernible] are fully committed to do whatever it takes in addressing the challenges of the pandemic. Going forward, we expect demand to rise once restrictions come off and start the businesses, especially micro and small enterprises get back on their feet. Coming to our Q4, we have achieved good increase in business volumes and profitability, despite the impact of COVID-19 in the last month of the quarter. Some of the key performance highlights for Q4 are as follows. Number one, our consolidated AUM has crossed INR 25,225 crores. Consolidated AUM is up by 29.8% year-on-year and 4.7% quarter-on-quarter. Two, gold loan AUM grew by 4.5% on a sequential basis and 30.9% on a year-on-year basis. This growth was driven by a combination of increase in gold holding, which grew by 7.2% year-on-year, and higher gold prices. At the portfolio level, our average LTV is less than 50% against target limit of 75%, which means most of the customers have a lot of room to borrow more against their existing collateral. Our micro finance subsidiary, Asirvad Microfinance, reported an AUM of INR 5,503 crores, an increase of 43.3% year-on-year and 9.6% quarter-on-quarter. The strategy focused on quality. Earlier, we had a state-wise cap on lending at 10%. Now we also have in place a district-wise cap of 1% with a directive to reduce that to 0.5% in 3-years’ time. That's below 45%. Asirvad has the lowest operational expenses in the industry. Going forward, we expect some short-term pain in our microfinance portfolio after the moratorium. However, based on our experience in dealing with the episodes of stress in the segment, we are much more positive about the medium and long term. India's automobile sector has been facing a slowdown for the last 20 years or so, and our Commercial Vehicle Finance business saw higher GNPL, aggravated by the lockdown. Our housing portfolio is relatively small and has been steady in terms of asset quality. During the quarter, the company consciously chose to reduce its on-lending portfolio to NBFC that is loaned to small NBFCs and MFIs given the stress in the macro environment. On the liquidity front, we continue to receive funds from all the routes, CP rollovers are continuing. We are getting funds from our banks and AMC partners. The incremental cost of fund today is at 9.4%. On the liability side, we have raised on standalone basis INR 3,978 crores in Q4 of FY '20, with the objective of further diversifying our funding portfolio and bring down the dependency on short-term sources. We do not expect any funding challenges to come in the way of our growth plans. And we are comfortably placed with our ALM, which we monitor very closely. So overall, OpEx has come down by 0.22% in Q4 as compared to Q3, mainly due to savings in security costs. We have now set up a committee that will focus exclusively on optimizing costs and bring down the operating expense further by looking at areas besides security costs. Finally, we are reporting a consolidated quarterly net profit of INR 392.7 crores for Q4 FY '20 and INR 1,461.8 crores for FY '20, and these are highest profits ever. Thank you, and now it is over to our CFO, Mrs. Bindu, for a detailed look at the numbers.

Thank you very much, sir, and thank you all for attending the call. The company has taken several preventive measures to deal with the impact of COVID, including ensuring adequate liquidity across each entity within the group. Cash and cash equivalents on hand on a consolidated basis was INR 3,646 crores at the end of March 2020, and the number at the end of April was approximately INR 2,525 crores and undrawn bank line of another INR 1,518 crores, improving the ALM position and significantly increasing the duration of our liabilities. The company has taken several cost initiatives that is partly reflected in the OpEx ratio, reducing from 7.64% of AUM during the previous quarter to 6.76% of AUM on stand-alone basis in the current quarter. OpEx growth is expected to further moderate going forward. We are following a cautious approach to the growth of non-gold book with this soft macro environment. The company has increased the focus on digital collections and customer communication. Let me take you through the earnings update for the quarter that is gone by. Our consolidated AUM for Q4 FY '20 was INR 25,225 crores, up by 29.8% year-on-year and 4.7% Q-on-Q. Consolidated profit after tax after minority interest was INR 392.7 crores for Q4 FY '20, growth of 43% year-on-year. FY '20 consolidated PAT stands at INR 1,461.8 crores. ROE on a consolidated basis was 28.2% and ROA of 5.7% for the quarter ended March 2020. Talking about the gold loan business, which constitutes 67.3% of consolidated AUM. The AUM increased by 30.9% year-on-year and 4.5% Q-on-Q. The gold holdings stood at 72.39 tonnes and the tonnage increased by 7.2% year-on-year and down by 1.5% Q-on-Q. Gold loan average ticket size and average duration was INR 38,500 and 58 days, respectively. The Board has approved a policy on moratorium to the opting customers. Most of our gold loan customers have preferred not to opt for moratorium as they realize the deferment of payments without waiver of interest would add to their interest outflow. The total number of gold loans customers stood at 26.23 lakhs. The gold loan book at INR 16,967 crores. Auctions during the quarter were INR 15.23 crores. As the lockdown started, only from 24th of March 2020, we completed the auctions due before lockdown started. Our weighted average LTV stands INR 2,345 per gram or 59% of current gold price. Gold loan disbursement during the quarter at INR 51,912 crores compared to INR 40,304 crores in Q3 FY '20. The online gold loan book is growing, which accounted for 48% of total gold loans. Coming to Microfinance business, Asirvad grew by 43.3% year-on-year at INR 5,502.6 crores and delivered 25.5% ROE in FY '20. Collections in March 2020. INR 290 crores was accounted as advance received due to the moratorium offered by Asirvad and aim is higher to that extend. As a reminder, Asirvad MFI is now amongst the largest providers of microfinance loans in India with a diversified geographical footprint and prudent lending knowledge. The company is rated AA- stable by CRISIL, the highest credit rating in the MFI sector. For Q4 fiscal '20, the company made a profit of INR 60.08 crores. We provided 100% for loans due over 90 days, 50% on loans due between 60 to 90 and 10% provision on loans between 1 to 60 days. We provided additional INR 55.02 crores during Q4 due to COVID-19, which is 1% of total AUM. We also recognized INR 55.45 crores as income from our assignment transaction during the current quarter, which has partly offset the impact of COVID additional provisions. The company has a capital adequacy ratio of 25.4%. Coming to Vehicle Finance. In the business, we have reported an AUM of INR 1,344 crores, which is down by 3.8% Q-on-Q and up by 20.6% year-on-year. Home loan business had a total book of INR 629.6 crores, which is up 4.7% Q-on-Q and up by 21.4% year-on-year. It operates from 47 branches and reported a profit of INR 10.48 crores during FY '20. Loan to NBFCs reduced by 13.7% Q-on-Q to INR 554 crores as we did not disburse any loan during FY '20. Loans to SME and others stood at INR 227.4 crores. The new businesses contributed 32.7% of consolidated AUM and the remaining 67.3% as gold loan. The total consolidated borrowings stood at INR 21,817 crores. Our stand-alone average cost of fund in Q4 has increased to 9.46% from 9.12% in Q3. We raised in Q4 INR 3,978.8 crores, through U.S. bonds, INR 2,128 crores, and NCD private placement of INR 1,350 crores and term loans of INR 500 crores. As on date, we are having nearly INR 2,700 crores liquidity. Out of the same, 50% is kept as bank fixed deposits and 50% as cash credit lines. Between 1st April to till date, we could raise CPs of INR 1,375 crores and INR 100 crores under TLTRO. Provisions and write-offs of the stand-alone entity during the quarter were INR 36.96 crores, including additional provision of INR 14.9 crores due to COVID-19. Our gross NPA was 0.88% as of the end of quarter compared to 0.5% at the end of Q3 FY '20. The company's consolidated net worth stood at INR 5,745 crores. The capital adequacy at 23.44% and the book value per share stood at INR 68 crores. Thank you. We can go for questions -- Q&A now.

[Operator Instructions] The first question is from the line of Love Sharma from Lombard Odier.

Just 2 questions for me. So on the liquidity side, can you provide details about your -- any maturities for this quarter remaining from here on? I remember, I think there is significant -- some amount of cash -- working capital lines, which are due. So any color on that, how that's being going on? And also if you can also provide details for the -- for Q2 requirements for debt maturities. Secondly, for the businesses outside of gold loan, especially the micro finance and the vehicle loans, et cetera, can you provide details about what are you seeing in terms of NPL -- I mean given this moratorium now, but what do you expect in terms of the NPL pressure there? Any specific requirement of funding in those businesses, specifically from the parent entity? So those will be very useful.

Liquidity.

Yes. So liquidity, earlier, we were having a higher CP percentage and because of the fundraising in Q4, we could reduce the CP ratio to 11%. So our maturities will be INR 1,800 crores over 2 months. So that is the maturity for CP. But during April, May, also, we could get the rollover and renew CPs. So that is the reason we are able to maintain the same liquidity, which is available at the end of the year. And we are getting positive responses with regards to TLTRO, 1 transaction already completed. And we are working with the bank. And the response is positive. We may get new lines also. The first 2 months, slightly slow because of the audit, et cetera, in banks, but we are expecting sanctions in June. So liquidity-wise, I think things are better.

So about MFI, Mr. Vaidhya... Mr. Vaidhya?

Sorry, go ahead, yes.

Yes. Yes, sir. But I thought he was asking about -- the liquidity position in Asirvad is very comfortable. We started with about INR 1,000 crores of liquidity at the beginning of April. And as it stands, we are very comfortable for the next 2 quarters, and we still -- we have undrawn balance of about close to INR 1,200 crores. And in all new schemes, TLTROs and the short-term liquidity of CP and [indiscernible], Asirvad is always at the top of this resuming of the liquidity because of its -- it's the only AA- company in India in the MFI sector. So I -- we don't foresee any issue in liquidity at all in this company as of now. And I don't think we require any support, even from the parent, as going forward for the next 2, 3 quarters?

NPL on that.

On the NPL on the -- particularly on the nonperforming thing, what -- the biggest difference between earlier times and now, this crisis is, there is a moratorium, which is announced by the government itself, a very thoughtful scheme announced by the government, which will ease the pressure with the borrowers. And we feel because of this particular measure, the level of losses, which the company -- which the industry had earlier has been much eased off. Demonetization was a very different story. So we feel it's going to be much under control than what it was earlier. And the company was also very prudentially provided. We've got about another INR 50 crores we provided now for -- on additional 1%, INR 55 crores, we provided. And we are sitting pretty with about INR 100 crores of opening provision against future, plus -- as regards to RBI, we're again, INR 50 crores more than what RBI requested us to provide. So on all basis, we are quite conservative and well poised to tackle the crises.

CV, Senthil?

Thank you, sir. Yes, we do expect some short-term pain for the next couple of months. But going forward, I think Vehicle Finance space will start looking better. As of March, we have around 10% of our customers who had opted for moratorium. And in fact, in the last 40 days, around 30% of them have come back and said that they're going to pay the EMI and they have paid. And, like, I'm sure, with things opening up in the next couple of weeks, I think these customers who'd opted for moratorium will also come back and pay their installments. So I think we don't see any significant pressure. Of course, there will be a short-term pain for the next 2 months. But going forward, I don't see any significant pressure on the portfolio in terms of moratorium or NPL profile.

Yes. Sorry. Yes, just a follow-up on the liquidity side. So if I understood correctly, INR 1,800 crores is what is pending in terms of the CP repayment over the next 2 months. Is that correct?

Yes. Yes. Already, we got INR 1,300 crores deals confirmed. So the liquidity position will continue.

Understood. And how about the bank working capital lines, et cetera? Because I think that was quite substantial as well?

Yes. We got INR 100 crores TLTRO and another INR 200 crores of working capital in [indiscernible] banks. And we are working with a few other transactions. So I think it will come because April, because of the lockdown and the audit. Normally, the sanctions will be less. But the response is positive. So we believe that we will get a few other sanctions in Q1.

Understood. Okay. So no issues in terms of rollover or additional working capital lines from bank?

That's right.

Okay. Fair enough. And sorry, just 1 more question for me. On the moratorium side, can you indicate what's been -- how many customers, et cetera, have taken moratorium for the gold loan business?

Gold loan business, very, very few. Yes. Hardly 5%. Very low.

5,000 customers. Is that?

No. Hardly 5% there. It's very low. Even though softer for moratorium. Yes.

Only 100 customers.

Yes, very, very low. And even though the moratorium also are coming forward and redeeming or servicing interest. So this is particularly nothing. In CV, out of 1,400 crores portfolio, yes, around 650 crores had opted for moratorium, out of 1,400 crores. But some of them are paying even from those who opted for moratorium. In housing finance, out of 650 crores of portfolio, around 200 crores, that's a volume, have opted for moratorium. So from there also, many customers have, yes, are paying now. So -- because they understand the difficulties there. So [indiscernible] accrued on this portfolio. So many customers, when they get the money, when they have the liquidity, they are ready to pay.

The next question is from the line of Parag Jariwala from White Oak Capital.

So I have 3 question. One is just a clarification. The moratorium numbers which you have given so far is as on which date? Is it March or April? That's first. Secondly, what do you see on the outlook of growth, particularly gold loans? Because as you highlighted in the opening statement, that banks have turned quite risk averse and the gold revenue is less good for the customer in this environment. And thirdly, out of our total branches, what proportion of branches are now fully operational?

Yes. So the figures I have mentioned is as on April.

Okay.

About moratorium. And then growth, you see after the lockdown 2, 3 weeks, the first reaction would be to redeem the gold. So currently our 90% of the branches are open today. Operational today. So what happens is auction as well as the new pledges, the volume remains more or less the same.

So sir, are we on the path, let's say, lockdown-related business compulsion ends by June 30, then are we on a path to achieve the loan growth guidance that we have been stating for gold as well as other businesses?

Yes. We hope so.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Now, sir, would you -- as you mentioned to the last caller that the loan growth guidance is maintained, kind of. So FY '21, would you like to share any kind of guidance?

So we can't give any guidance, particularly in a situation which is uncertain. But we hope the growth we usually achieve. That is around 10%, 10% to 18%.

10% of gold loan and overall, 51%?

So this year, as of -- Yes. So 1, 1.5 quarters are lost. The growth could be around -- let's say, growth could be around 10%.

Including all other businesses, right?

Yes, yes, yes.

The next question is from the line of Shubhranshu Mishra from BOB Capital Markets.

First, if you can please elaborate on the growth number, sir. How do we arrive at this 10% that you're guiding for gold and then microfinance and vehicle. And we also do affordable housing. If you can elaborate on this growth number, it would be very helpful.

So in non-gold segments, initially, our priority will be collection. So we don't expect any growth in non-gold segment this year. Gold...

So we should model then for a 0% growth in other subsidiaries, sir?

Yes, yes. No substantial growth is expected because initial years, we may be focusing more on collection. So there can be some initial reduction in portfolio. So maybe during the last quarter or so, there could be some growth. But that can not compensate -- that will only compensate the reduction that could happen because of that. So we don't expect any net growth in the portfolio during the year. Gold loan -- what we generally tell the market. So we are able to grow around 10% to 18%. That is our usual sort of plan. So it's not a guidance. In fact, it is our usual plan, which we used to achieve. So this year, as 1/3 of a year is lost, we expect the balance 2/3, we may be able to grow 10%. That's our plan.

Sure. And this would more value-led growth or volume-led growth, sir, in gold loan?

Yes. Gold, currently INR 17,000 crores. May be in the range of, let's say, INR 1,500 crores and INR 1,700 crores to INR 2,000 crores. But maybe in that range. That's our plan.

Right. Sure. And sir. One thing, in terms of a concept, sir, the gold loans are bullet repayment loans, sir? The moratorium in only on the term loans. How can we offer moratorium on volumes in that case?

See, actually the gold loan who have sought moratorium is very, very negligible.

No, sir, but are we -- can we address moratorium.

Out of 2.6 million customers, the exact number of people who have opted for moratorium is around 100 only.

No, sir, that is not my question. My question is can we offer moratorium?

See, yes, yes. Yes, there is a bullet repayment. Our foresee, our loan tenure is 3 months. Yes. Some people who may feel some difficulty in redeeming that at that point of time may ask for some moratorium. So the exact figure right now, around 100 people only have opted for moratorium as far as gold loan is concerned.

Sir, my question is not on the quantum, sir, my question is very conceptual. Can we offer moratorium or can we not offer moratorium on gold loans?

Yes, of course. It is a -- yes, the option is between the lender and the borrower. Yes. That is possible. Even FBA has classified. The second thing, yes, around 61% of our customers are online gold loan customers, so again customers who can transact -- who are mostly transacting regularly online. So we are able to collect interest also whenever they transact that day. So our accrued interest is only of around 1.5 months, arcual is the. Yes. So we are able to collect interest almost periodically.

Okay. Sure, sir. And sir, I wanted to ask about your vehicle loan. Initially, in this conversation, we were told 10% of the customers have opted for moratorium. And then you said that 650 crores on a value basis have opted for moratorium. So which one is correct?

No, no. Initially, out of 1,400 crores volume, so volume-wise 600 crores should have been under moratorium, except there isn't. And now that is not impacted, as Mr. Senthil has mentioned earlier. Many of the customers, when we asked them about moratorium, initially, they said yes, we are hoping for moratorium. But at the same time, many of them have paid. That means it was only a portion as far as they were concerned.

Right, sir. So how much of the Vehicle Finance portfolio is under moratorium as of April, sir?

Yes. Senthil?

Yes, sir. Just 1 small clarity. As sir said, around 650 crores customers -- I mean, the portfolio was 650 crores, the customers that asked for moratorium. But later on, when we started speaking to them, I think customers realized the impact of the moratorium and they opted out of moratorium. As of March, we have around 10% of the customers who had opted for moratorium. That is around some 130 crores, is the figure. And out of these 130 crores, 30 crore of the customers have come back and paid us. That is it.

So as of April, we have roughly around 90 crores under moratorium. Is that a correct understanding?

Yes. In essence. April will be slightly higher because there are customers who opted for 3 months moratorium who moved to 2 months, and then who have subsequently moved to -- who have moved to 1-month moratorium. So in that way, like customers have come back to us and they have started reducing the number of months which they had requested for moratorium. April, yes, we do have around 90 -- yes, around 100-odd crores who have requested for moratorium now. But we do have customers also come back and say that they have paid the April EMI, so probably they'll opt for moratorium for 1 month. So probably...

What is the total value under moratorium for Vehicle Finance as of now?

Around 130 crores as of now.

130 crores. Sure, sir. And sir, what are the total provisions we have taken for COVID-19 in each of the businesses, sir?

COVID mainly in portfolios?

Yes. So is -- yes, in Asirvad, we took 1%. In the stand-alone entity, additional is around INR 15 crores.

In stand-alone entity, how much we have taken, ma'am?

Additional INR 15 crores.

And this is largely for the Vehicle Finance portfolio because we do it in stand-alone business, right?

Yes.

Sure, ma'am. And just 1 data keeping question, ma'am. If you can please tell me what the auctions are and weighted average LTV in percentage and then rupee.

Okay. Auctions during the quarter, INR 15 crores. And the weighted average LTV on portfolio, 59%.

And in rupees, ma'am?

INR 2,345.

And the accrued interest in crores?

3%.

3%?

Yes.

Sure, ma'am. And just 1 feedback, ma'am. It is a sincere request if you can put out the results much before the call, ma'am. Here we had the call and we got the results, like, just some minutes before it. We have barely punched in the numbers in our model. And I get the point that there was a Finance Minister's call as well concurrently but that doesn't stop us from uploading the results on the stock exchange.

Yes, we'll take your point, definitely. If any further detail is required, we are available. And next time, definitely, we will address this concern.

Shubhranshu, your point is noted. Thank you.

The next question is from the line of Utsav Gogirwar from Investec.

Sir, my first question is with respect to auction strategy. Just want to understand, as in the -- during the call, you mentioned 90% of the branches are operational as of today. What is our strategy of actioning over the next 3 to 6 months? That is first question. And secondly, related to that, how the gross NPA would move in your view?

The auction strategy is maybe for another 2 months. So we may not conduct any auction. What we see -- our auction percentage on the disbursal is 0.5% only. So they have a room -- headroom to renew the loan because as the gold price has gone up, there is some headroom. They need not bring the full interest in such cases. So I don't think there will be much to auction. And I don't think the gross NPA to move up drastically in the coming quarters.

Okay. For gold finances business?

Yes, initially. In this quarter, there may be some -- a spike, maybe there -- some slight spike will be there. But in 1 or 2 quarters, it will get flattened, will come down.

Okay. Sir, just want to check 1 number. The cash and cash equivalent as on April is INR 2,500 crores, which you mentioned. Is that correct number?

Consolidated was around INR 3,600 crores.

As on April?

No, no. As on 31 March. And as on 30 April, cash INR 2,500 crores and another INR 1,500 crores undrawn line.

Correct. So this usage of around INR 1,000 crores, is it just because there was a liquidity issues and we have utilized this cash? And in the coming quarters, we plan to increase the liquidity on the balance sheet? Or how should we look at it?

Yes. So as on March 31, we carried in books because the limit got approved and the year end is important for the lenders also. But during the quarter, we reduced the carrying costs. And we are keeping it undrawn line. That will save the cost.

Okay. Okay. And just last question from my side. What percentage of -- so in -- post-April, we must have -- have we disbursed any loan in the gold business? And if yes, what percentage of customers came to the branch or the new customer we have seen? Just a rough sense.

So. Yes. Our total volume is...

Those numbers are very high.

Yes. We were disbursing around INR 700 crores every day.

INR 700 crores.

Even on an average, every day, even during the lockdown period, our branches were closed. As I mentioned, around 60% of the gold loans are online. So many customers were transacting through them -- through this online because we have 2 apps. We have other online facilities. So they were transacting. So the volumes are very high. Yes. Okay.

The next question is from the line of Nischint Chawathe from Kotak.

Just 1 question on the Vehicle Finance side. If you could help us understand the profile of your customers because what we understand is that most of the vehicles are on the road. So obviously, it's challenging for customers to pay installments. But I guess, a very few of your customers are actually opting for moratorium. So I'm just trying to understand in terms of other vehicles, actually on the road, are they paying from their savings? And what is actually the income profile of your vehicle owners?

Yes, Senthil?

Yes. We addressed the retail side of the portfolio. We don't have much focus on the fleet operators. Our portfolio will consist of 1 or 2 vehicle customers. In terms of the repayment capacity, yes, I know they've been -- they have -- the whole -- the entire industry is through a stress. But 1 advantage we have is that our -- since we addressed the retail end of the portfolio, we don't have customers who really go on a very long haul, or are with -- who run in contracts with big industries. In that way, their load movement or the site movement is very versatile. They can either fly intrastate or even in our LCV and the HCV portfolio, they'll be flying intracity. So in that way, I feel -- the retail customers are in a much more advantaged position than compared to the large set of customers. And in terms of -- yes, we do have, as of March, only 10% of the customers opted for moratorium. We have been continuously following up with the customers. We have been in touch with them. In fact, most of our collections, around 50% of our collections, 60% to 70% of collections are through online mode either through -- directly through NACH presentations or through indigenously developed apps through which a customer can transfer payment into his accounts. As I said earlier, we do see there will be a short-term pain for the next couple of months till such time all the vehicles are on road and all the lockdown restrictions are removed. But as far as our portfolio is concerned, since we don't have many long-haul routes, I feel we should be back on road once again in next -- probably within a month or so.

Would you have a rough idea, how many of the vehicles are currently on the road?

That's very tough. But having said that, like -- we have been in touch with almost all our customers. We have been in regular touch with customers. We've not -- at least in the last 10 days, I would say, around 50% to 60% of the customers have started flying vehicle albeit in a very -- probably within a very restricted distance.

And I wish to add 1 more thing, out for 1,400 crores portfolio, around 300 crores portfolio is 2-wheelers.

The next question is from the line of [indiscernible] from [indiscernible] Mutual Fund.

Sorry, I had a couple of questions. You had said that a very few percentage of customers are opted for moratoriums. But what is the bounce rate that you see on the EMI? That's one question. The second question, which is there is, what is the value -- you're saying that a lot more online transactions and gold loan prices have gone -- gold prices have gone up. So is the value per customer going up?

Yes. Regarding gold loan, yes, the -- the gold value is going up along with that. The LTV is going up. So currently, the average LTV, we have mentioned, taken by the customer is only 59% against a regulated cap of 75%. So customers have used only 59% on an average. Yes. Regarding bounce rates, Senthil, you can answer.

Yes, sir. Yes, the bounce rates, obviously, have -- it has gone up. On overall portfolio, the bounce rate is around 44% to 45%. That's what we have seen in the last couple of cycles. But I said earlier, like -- and our team has been in touch with the customers, and we try to -- in almost on -- once in 2 days basis, and we try to recover this amount. And if you compare to pre-COVID, yes, the bounce rate has gone up by almost around at 18% to 20% is what it has gone up.

So -- yes, in the -- yes. So during lockdown period, out of the billing, our collections in the vehicle portfolio is around 45%.

Okay, sir. Sir, it is on the gold. Also, if you can just quantify this. Let's say, the average loan per customer. What was it-- you gave it an LTV basis, it is also very useful. But the average loan per customer. Has it gone up? Or it also [indiscernible] with the earlier question that somebody asked in terms of, is it going to be volume growth? Or average loan per customer is going to go up? And that's my last question, sir.

So there is no much difference. Yes. It remains somewhere around INR 50,000, INR 55,000.

The next question is from the line of Saptarshee Chatterjee from Centrum Broking.

Sir, my first question is in the online gold loan. So when this year, maybe we can see lower footfalls in our branches? So any initiatives we are taking to further increase our online gold loan percentage?

Yes. So before lockdown, the percentage of online customers were around 45%. Now, it is 61%. What we have done, we have introduced all facilities, apps to convert to this non-online gold loan to online gold loan. And many of these customers used to that. And because of that, even during the lockdown period itself, the online gold loan out of our total portfolio has gone up by 10%, 12%. So it is going up, and the people are more accustomed to that, and they love it. So that really helps us in this collection. And whenever they have some money in their accounts, they answer online. So that makes gold loan, yes, asset quality very high. And also, there is no much increase in the accrued interest even after 1.5 months lockdown period.

Understood. Sir, in your sense, you expect majority of the disbursals this year will be through online mode? Or...

Yes, see, we are able to see an increase in our -- of 1% in our total portfolio moving to online. Yes, 1% per month is moving to online.

1% in terms of value?

Yes. The 1% of the volume. Yes, probably towards the end of this year, 70% of our portfolio would be online.

Understood. Very helpful. And if you can give some color on the OpEx side. What are the line items where you can rationalize OpEx further? And how much scope is there? If in qualitative basis, if you can give some color, high scope, low scope even further savings in OpEx?

Yes. So a year back or so, around 1, 1.5 years, I have indicated that we'll bring down the security cost by INR 100 crores. We have achieved much more than that. So this year also, you will see that continuing because of the technology-enabled storage system, which I have described in the past. So that innovation has helped us. And in technology use, we have a subsidiary company, a technology company, which has employed around 200 technologists. So with that help, we are evolving in the use of new-age technology like RPA, artificial intelligence, et cetera. With that, we continue in reducing our costs. And also, we are planning some back-office consolidation of all our business and it is done in different places now. So we plan to consolidate all these back-office functions over a period. So I feel like, this year through that way, use of technologies and back-office consolidation, et cetera, we may be able to bring a considerable saving. Yes. Somewhere, my expectation is around -- this year, we may be able to achieve a cost reduction of around INR 20 crores, INR 30 crores, which is an ongoing process to bring down the costs. So we largely use for this new age technology. And also, we plan to have some cost rationalization, replacing the outsourced platform through -- for -- with our own platform, which -- we are making it ready, particularly in [indiscernible] and also the infrastructure management, et cetera, et cetera, which can also bring down the cost. So overall, we expect some INR 20 crores, INR 30 crores this year. Going forward, you will see the benefits of that. The OpEx, hopefully in another 1 year, in gold loan could be brought down to -- by another 1%.

The next question is from the line of Shankar Narayanan from Deutsche Bank.

Sir, I just wanted to ask from the period April 1 till today, i.e. May 14, in the last 1.5 months, how much disbursements have you made on a consolidated basis in crores? And how much collections have you received in the same period?

Yes. Gold, approximately, it would be around -- yes, it is very high. It is around INR 20,000 crores because a lot of our disbursals are happening around [ INR 1,700 crores, ] I told you, on a same day. Similarly, more or less, the -- an equal amount is coming back up. Yes. Because this was -- these are done like an overdraft to the -- yes. The volumes are very high.

Okay. And collections, how much in crores?

See, we are able to collect almost all interest in gold loans. So that's why our accrual pre-COVID and to date, there is no much difference as far as gold loan is concerned.

The next question is from the line of Krishnan [indiscernible] from India Advisory.

I have 2 queries. I wanted to know if 1% COVID commissioning for Microfinance is very conservative. And my second query is, has Manappuram Finance given any corporate guarantees for Asirvad? And if so, what is the quantum?

So the -- your first question is not a question, it's only a compliment, I understand. The second is the corporate guarantee in -- Manappuram Finance has not given any corporate guarantee to any of our subsidiaries. They borrow on their own. They are all AA-rated companies by CRISIL. And they are the priority sector. So yes, in that particular category, they are rated, perhaps, the highest. So they don't have any liquidity pressure being in the priority sector. They are able to raise their debt on their own.

The next question is from the line of Shweta Daptardar from Prabhudas Lilladher.

Congrats on good set of numbers. Sir, as far as Asirvad Microfinance is concerned, I see the employee expenses have gone up almost 50% Y-on-Y and 20% on a sequential basis. Sir, is it that we have ramped up collection infrastructure? How is the scenario on the collection activity because central meetings must not be happening? If you could throw more light there?

Mr. Raja?

Yes. Whatever you said, what has gone up, you said?

Employee costs.

No, the employee costs have gone up last year mainly because there are a number of branches. We've added another close to 100 branches last year. And that's one of the reasons the costs have also gone up sequentially. And if you look at the percentage, our OpEx is really the lowest in the industry. We're about less than 5%. The employee costs and admin costs comes into that. So we are much well within the industry. We are agreed industry leader in OpEx. On the collection, you're right, the whole industry, the collection of microfinance happens at the place of the borrowers, and that has been since March 24, as we are not able to do the collections. They've been prohibited from meeting people because most of the states have this Section 144. Nevertheless, what we have done is we are -- we have like Asirvad, for instance, using our 6,000 strong employees have touched base with 2.4 million customers telephonically, just to ascertain their intention to pay -- their intention to take moratorium. And we have also used this period to educate them on the digital collections, which in the industry is much less than even 1% industry-wise because everybody their cash -- collections are all cash basis. So the center meetings are not happening anywhere because it cannot happen. Nevertheless collections are happening because of the method of collection has changed. And from April 14 onwards after the first lockdown period, we have started using -- educating people to deposits in our bank accounts directly. And now we have got our own app, where we they also use this app to pay directly. But center meetings will start only after the May 31 lockdown is lifted, when the normal practice of going to their place and collecting will happen.

So sir, till March 31, that is during the first lockdown, there have been [indiscernible] collections?

Those collections are now treated as advanced because at that point [indiscernible]. They have collected more than 80% to 85% of March collections already. So but we are treating them as advanced and offering moratoriums. So when it opens, we will ask the borrowers whether they need to -- whether they need the moratorium or adjust it against the immediate repayment.

Okay, okay. And this INR 55 crores, I understand it's a pretty conservative number. So does it cover all the forthcoming risk that you perceive in next 1 or 2 quarters, partially for microfinance, which is highly vulnerable to the current situation?

See, our provision is, again, one of the most potential and conservative. We have the standard provision already of about equivalent amount, about INR 50 crores or so, 1% on our assets, plus COVID provision of another INR 55 crores. So we start off with about INR 105 crores of opening provision. Plus every time, during the year, whatever -- our net NPA incidentally is 0. We have provided completely -- there's no -- nothing to be provided for on the more than 90 days. But again, it's not there. We don't carry forward any NPA at all. So we feel this is definitely adequate provision. Going forward, every quarter, anyway, we'll review this. But I think we are standing pretty much quite strong to tackle this as we go forward.

Okay. Okay. Sir, secondly, on the gold loan business side, you mentioned 59% LTV. What is the price per gram?

See, we -- as far as we know, if we take past 30 days trailing average of price published by Indian Jewelry -- Gems and Jewelry Association. Yes. Currently, it is INR 2,334 -- INR 2 345. Yes, that is LTV.

Okay. Okay. Sir, secondly, you mentioned in your opening remarks, there have been -- there could be redemptions on gold post lockdown. So would that mean a dip in gold holdings and maybe quarter-on-quarter slightly slower growth on the gold loan AUM side?

Yes, we expect some reduction in the collateral during the initial quarter, not 2 quarters. There could be some reduction.

Okay. Okay. Sir, then lastly, you also made a mark on the -- made remark on the cost rationalization measures on the control book. But if I look at your vehicle finance and housing finance, where we have a chunky set of number of employees, do you see any correction out there?

Yes. Well, I mentioned about the back office consolidation. So many employees in the back end could go for productive work in the field. So many employees will be moved to the value source from the back office. Yes.

Sir, the INR 20 crores, INR 30 crores of cost correction, which you mentioned in value terms by the end of this year, is it on the console business?

Yes, it is on the console business through various means. One, the technology -- we have our own various platforms developed to buy our own internal team, which we have tested and found very successful. We have outsourced many functions like infrastructure management by IBM. Then [indiscernible] was through other agencies, et cetera. These are costly. So when we compare that -- and also moving to cloud. So we also thought that could be a consolidated saving in that to the extent of INR 20 crores, INR 25 crores annually. This month -- this year, we will not be able to enjoy that full, but annually, that itself would bring a saving of around INR 20 crores, INR 25 crores. But this will be available from the second quarter onwards. That's our expectation. Yes, I mean, the second half year onwards -- third quarter onwards. So this year, there could half, but other measures are also there like the back office consolidation in certain areas where people concentration are more and also more than that particularly using new-age technology. We are bringing down the headcount at the back end and moving them to the front end, which is the value source.

The next question is from the line of [indiscernible] from [ DST ] Investment Managers.

Two questions. First is on the OGL, given the sort of expectation that you have of further increasing the proportion by 1% per month. So what is the kind of cost benefit that can come through in the gold business? And would you use this cost to improve the branding and advertisement activity is one part. So that is the first question. The second question is on the vehicle bit. So I'm sorry for just asking it again. But -- so at the end of the year, we were at about INR 1,350-odd crore of portfolio. And you mentioned that about INR 300 crores of this INR 1,350 crores was 2-wheeler portfolio. So just wanted to understand what was the billing in the month of April? And how much was the eventual collection at the month of April? What was the billing in the month of May? And how much have we collected so far in month of May? Just to clarify, excluding moratorium and all other bits, how much is the actual sort of forward flow in the portfolio? Yes, those are my questions.

Yes. OGL definitely should bring a lot of cost saving because -- but it will be accrued only in future because we should have a minimal number of people in the branch. Let's say our average portfolio gold loan per branch is around INR 4.8 crores, nearly INR 5 crores now. So even if it grows to around INR 15 crores, we don't need any additional people. So in future, this is going to bring a lot of OpEx saving per branch. So there's a situation. So why 1% of the people are moving, they understood how beneficial it is. It is -- they can come and have a free storage of gold. So negative free storage because we don't charge anything for storage of gold. So they can get a drawing power up to 75% of the LTV. So they can draw at any time from anywhere. Even in cities, we started in a couple of cities, door delivery of gold loan. No one wanted to get a loan. Yes. We go there and do every -- appraisal every day and immediately, we disburse this to them through online. So their account will be credited. Yes. So they can hand fill from anywhere. So now today, our gold loan is, for them, 24 hours, 365 days operable from anywhere. So that's the reason why this is increasing. So we don't want -- we don't do a very wide publicity, et cetera, et cetera, because that is very costly. Rather, we plan to use the digital modes. For -- new -- various social media, et cetera, et cetera, that's a cost saving measure. At the same time, we will be able to reach out to the customer. So our thrust will be more on cost savings. The second is a question is about CV collection -- billing collection during April and May. [Audio Gap]

manage risk in a more efficient way. Given that we've had a growth shock and there is a possibility of little intervention in terms of payment, et cetera. So any thoughts around how we want to energize collection in this period?

Yes. See, the whole industry is waiting to see how the performance of the borrowers are going to be in collections after May 31. So we have not disbursed in the last 2 months. None of them, none of the companies have disbursed in the last 2 months. It's only based on our physical interaction with them, talking to them about their [indiscernible] other. We are not able to assess their real situation. So after the June 1, we will make an assessment. And the disbursement, which definitely starts slowly not as fast as we said it earlier. And we will -- by the second quarter, I think we'll be back to the normal rate of disbursement if the collection percentages keep increasing. That's the strategy we have. Plus on the risk mitigation measures as the Chairman has mentioned, we have moved to even -- and before this crisis, we had moved to a district level risk portfolio capping. And we have -- we will -- now, again, based on this, we will make sure that we don't have an exposure of more than 0.5%, 0.75% in any district. And so in Microfinance, it's always -- the losses are always localized. It doesn't spread far and wide. So we are having a smaller percentage in district level is the -- going forward is the only answer. The third is the, of course, inculcating the digital collection and making them more aware, so that in future if such crisis come -- remonetization really opened the doors for the disbursement through digital and 100% disbursement. Asirvad 100% bank disbursement only from August 17. So we will move more toward a digital collection. These are the lessons, I think, will be the going forward.

Ladies and gentlemen, due to time constraint that was the last question. I now hand the conference over to Mr. Abhishek Murarka for closing comments.

Yes. Thank you, Margaret, and a big thank you to the management team, Mr. Nandakumar and everybody else for allowing us to host the call. Good evening, and have a nice day. Keep safe.

Thank you. Bye.

Thank you.

Thank you, everyone. Bye.

Thank you. On behalf of IIFL Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.