Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 Earnings Conference Call of Manappuram Finance Limited, hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Piran Engineer from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir.

Yes. Thank you. Hi, everyone. Thanks for joining in, and welcome to the conference call. Today, we have with us the entire management team of Manappuram Finance led by the MD and CEO, Mr. Nandakumar. Without further ado, I would like to hand the call over to management for opening comments, followed by Q&A session. Over to you, sir.

Thank you. Good evening, and thank you for joining to discuss our Q2 FY '21 results. Since our last interaction in July, we have seen a strong recovery on the economic as well as to the pandemic front. As the rate of new infections have slowed, most economic indicators have shown improvement in the last couple of months. GST collections have recovered, have regained the INR 1 trillion level for the month. Demand side, inflation remains benign, very close to productive sectors, including NBFCs have improved. Interest rates are up. It's near all-time loss. We are seeing strong festive demand in most consumer segments, be it white goods, consumer durables or automobile. Even the housing sector is seeing increased inquiries. Further, the rural economy, which was less affected by the pandemic, is leading the recovery, cycled by good monsoon rains. Overall, we are optimistic that the pandemic-led situation is behind us and now look forward to things getting back to normal soon. Thanks to the economic recovery, we saw increased demand for gold loans during the quarter. Now we know that this, after the nationwide lockdown, availability of credit from banks and other NBFCs has an issue due to the [ high ] risk aversion. But more recently, we are seeing demand for gold loans to pick up as economic activities head back to normalcy and with the rural economy showing strength. We significantly stepped up our digital infrastructure, and we continue maintain our strong positioning in the online gold loan space. Last year, we have introduced our doorstep gold loan service, which was well received. After the pandemic struck, we extended the doorstep gold loan facility to all our branches across India. This allows us to serve the customer even beyond normal working hours at their homes and offices. They don't have to come to our branch even once. Now heading to our results for the quarter -- for the second quarter of the year, the highlights are our consolidated AUM crossed INR 26,900 crores, up 18.6% year-on-year and 6.1% quarter-on-quarter. We are reporting a consolidated quarterly net profit of INR 405 crores and INR 773 crores for the first half of the fiscal, an improvement of over 10% over the first half of last fiscal. Gold loan AUM grew by 30% year-on-year and 11% on a sequential basis to INR 19,736 crores, also helped by the increase in gold price. Our gold holding remained flat at 69 tonnes. That's the same level as the preceding quarter. Our microfinance subsidiary, Asirvad Microfinance, ended the quarter with an AUM of INR 4,971 crores, an increase of 5% year-on-year and a decline of 1% quarter-on-quarter. It is well known that the microfinance sector has faced stress in the post-pandemic scenario, but Asirvad has performed well under the circumstances. While it posted a marginal loss of INR 2.5 crores for the quarter, we are confident that the worst is behind us and positive about the medium to long term. India's automobile sectors have recovered in the last 2 months, and our Commercial Vehicle Finance division saw improvement in the collection efficiency towards the end of the quarter. The Commercial Vehicle AUM stood at INR 1,060 crores, a fall of 20% year-on-year and 16% sequentially as our focus was on recovery and consolidation. Our affordable housing portfolio is small, and the asset quality remains stable. During the quarter, we did not face any funding challenges. And our CP rollovers are happening at record-low rates. We remain comfortable on the ALM front. Our stand-alone average cost of borrowing declined by 26 bps to 9.13% from 9.39% in the preceding quarter. Our overall OpEx-to-AUM ratio remained stable at about 5.3%. Our net growth of INR 6,500 crores and 26% ROE gives us the confidence to continue on the growth path. Thank you. And now it is over to our CFO, Mrs. Bindu, for a detailed look at the numbers. Thank you.

Thank you very much, sir, and thank you all for joining us. So we started with unlocking of the economy, and therefore, we have seen business coming back to normal, especially the gold loan book grew by 16% in the first half of the year. RBI has come up with several schemes to infuse liquidity in the NBFC sector, and we have raised funds through NCDs under TLTRO and PCG, apart from the MLD and the [ plain lumpsum ] institutions. During the quarter, we raised a fresh borrowing of INR 2,904 crores through term loans, CCD and MCD. The cash and cash equivalents on hand on a consolidated basis was INR 4,300 crores and undrawn bank line worth INR 1,140 crores as of 30th September 2020. Again, our CP exposure has come down to 7 percentage against 25 percentage a year ago in the stand-alone entity. Borrowing costs declined sequentially by 26 basis points to 9.13% despite significant extension in average duration of borrowings. Gold loan business has seen a good growth in the first half, and this has resulted in the non-gold businesses contributing to 27 percentage of the consolidated AUM and the remaining 73 percentage of gold loans. Our consolidated AUM for Q2 FY '21 was INR 26,903 crores, up by 18.6 percentage year-on-year and 6.1 percentage Q-on-Q. Consolidated profit after tax was INR 405 crores for Q2 FY '21, grew by 10.2 percentage Q-on-Q and 6.4 percentage down year-on-year. Profit was up by 16.7 percentage year-on-year if we adjust to the onetime tax benefit of INR 60 crores and INR 25.34 crores due to the reinstatement of Asirvad Q2 path of FY '20. ROE on a consolidated basis was 26%. ROA was 5.1 percentage for the quarter ended September 20. Talking about the gold loan business, which constitutes 73 percentage of consolidated AUM, the AUM increased by 30.1 percentage year-on-year and 11.3 percentage Q-on-Q. Gold holding stood at 68.83 tonnes as at September 30, 2020. Gold tonnage, nearly flat Q-on-Q but was down by 4.4 percentage Y-o-Y. The gold loans average ticket size and average duration was INR 46,499 and 47 days, respectively. The total number of gold loan customers stood at 25.57 lakh. The gold loan book at INR 19,736 crores. Auctions during the quarter were INR 3.22 crores. Our weighted average LTV stands at INR 2,869 per gram or 61 percentage of the current gold price. Gold loan disbursements during the quarter stood at INR 93,368 crores compared to INR 68,390 crores in Q1 FY '21. The online gold loan book accounts for 61 percentage of the total gold loan compared to 63 percentage in Q1 FY '21. Coming to the microfinance business, Asirvad MFI. AUM stands at INR 4,971 crores, down by 1.3 percentage Q-on-Q. And this business reported a loss of INR 2.42 crores in Q2 FY '21 due to higher provisioning. We provided additionally INR 66 crores during Q2 FY '21 due to COVID. And cumulative COVID provisions was INR 196 crore at the end of the quarter. That is 3.9 percentage of AUM. Our collection efficiency from MFI business was at 90 percentage in September. And disbursements during the quarter was INR 557 crore. The company has a capital adequacy ratio of 25.7 percentage. 32 percentage of the MFI AUM was under moratorium as on 31st August in compassion with 80% in Q1 FY '21. Coming to the Vehicle Finance business, we reported an AUM of INR 1,062 crores, which is down by 16.4 percentage in Q-on-Q and by 19.4 percentage year-on-year. Collection efficiency was at 93 percentage and 106 percentage as in September and October, respectively. Restructuring is only 3 percentage of Vehicle Finance AUM, and that is 0.15 percentage of the stand-alone AUM. The home loan business had a total book of INR 621 crores. It is down by 1.1 percentage Q-on-Q and up by 2.3 percentage Y-o-Y. It now operates from 47 states and reported a profit of INR 0.9 crore during Q2 FY '21. Collection efficiency was like 95 percentage and 92 percentage in September and October, respectively. Collection efficiency for the quarter was 90 percentage compared to 62 percentage in Q1 FY '21. The other loans, loan to NBFCs at INR 320 crores; and loans to SMEs, INR 193 crores. Provisions and write-offs has come down at INR 338 crore compared to INR 50 crore in Q1. We have provided INR 36 crores as additional provision due to COVID since March 2020. Our GNPA reduced to 1.11 percentage as at the end of the quarter compared to 1.25 percentage at Q1 FY '21. And this is largely driven by non-gold businesses. On the improved performance, Board has declared an interim dividend of INR 0.60 for this quarter. Our capital position is strong, and company is well capitalized with a capital adequacy ratio of 22.8 percentage. Company's consolidated net worth stands at INR 6,451 crores, and the book value at INR 76.2. Now we can go to the Q&A session.

[Operator Instructions] The first question is from the line of Chirag Sureka from DSP Mutual Fund.

We see that collection efficiency is uneven. And in some states, you have a problem. And in fact, in Karnataka, after having a better month, it's actually come down. Could you explain the stress in West Bengal and Karnataka. That's question number one. And the question number two is in housing finance. Also, you had mentioned that the collection efficiency had actually come down in the month of October after being slightly higher in September. How do you see this trend going forward? And if you could give us some color on that.

So major part of your voice was not heard. Your thought was not heard. Can you repeat the question?

Okay. Let me repeat the questions, sir. Is it better now, sir?

Yes. Yes, now better.

Okay. Sir, the first one is regarding Asirvad. When you said 90%, it sounds -- the West Bengal is at 75%. Some states are close to 100%. And Karnataka has actually declined after reaching a certain high number. So could you just explain the nuance in each of these states in terms of what is happening, especially the low-collection-efficiency states? And you had mentioned that the worst seems to be over. So what is the reason for the optimism there? That's the first question, sir. Would you like me to ask the second question also and just finish it up?

Yes.

Okay. The second question is on housing finance also. There the collection efficiency dropped in the -- dropped after peaking the previous month. I think you mentioned the number is 95% and 92%. So is that right? And what was the reason for that?

Okay. So yes, Mr. Raja, sir?

Yes, I will answer it. This is Raja Vaidhyanathan, MD of Asirvad. I also have Mr. Babu, the Joint MD. We will answer this question. First, let me go to West Bengal. West Bengal has been -- if you have seen the presentation, we started with a low of about 56% in July, and they are now at 75%. It is on the increase. West Bengal had uneven lockdown pattern strategy. They had lockdown during week days. They had lockdown during weekends. There is no pattern with many states where there is a continuous lockdown. So when there's an uneven lockdown, the collection pattern there, we operate on fixed day collections, it gets altered. So that's one of the reasons for West Bengal lower collections. But having said that, the collections have improved now, and we are upwards of 75%, and it is on the increase. There's no doubt about that. West Bengal is definitely one of the lower states for collection efficiency but on the increase. Karnataka is a temporary blip. We had 99% in September. In October, there's a temporary blip in some local issues, and it is again back to normal. So as we speak now in October, in September, it was at October, we already reached 90% collection efficiency. That's the optimism why the Chairman said that overall, the collections have improved in Asirvad. Across India, the collections have improved in pockets. The good news is in pockets where we have had no collections earlier, collections have started coming because of livelihood increases.

That was very clear. So on the housing also, please?

Shall I answer for the housing side? Jeevandas here.

Hello? Am I audible?

Yes, sir, you are audible.

Okay. Regarding the housing collection, as you know, from the worst of times, during the initial months of the pandemic, in April when it was 50. We have steadily improved and reached 95-plus as far as the current building is concerned without including the old deal, 95-plus in September. As you know, every quarter, the next month which follows the quarter, there is some bit of flatness which I should admit to, and that also it's not 92% per se, it's around 92.4% something. So this is not an undue cost of money because this is being tracked on a day-to-day basis. And as Mr. Raja mentioned, even in this case also, in some states, especially in the state of Kerala because of the heightened influence or COVID and all, we had some issues even now in terms of particular areas being in containment and all that. So that's why there has been a bit of slackness, I would say. But then we are tracking it on a day-to-way basis. And this month, in fact, we see on a day-to-day basis comparison also, we are much better than in October. So I would say that we should be able to improve on it and keep this going on -- during the rest of the months to come.

The next question is from the line of Viraj Mehta from Equirus PMS.

Congratulations for the good set of numbers. Sir, for the gold loan, what is the average loan per gram at this point? Hello?

Ladies and gentlemen, please give me a moment. We cannot hear anything from the line of the management. Give me a moment while we check. Ladies and gentlemen, the line of the management has been disconnected. Please give us a moment while we reconnect them. Ladies and gentlemen, the line of the management is reconnected. Thank you for patiently waiting. We have in the queue, Mr. Viraj Mehta. I will request you, sir, please go ahead with the questions.

Congratulations for good set of numbers. Sir, my first question was regarding the gold business. What is our current loan per gram of gold at this point?

So last quarter's average?

Yes.

INR 2,869 per gram.

Understood. So that means we would still have around 10% growth which can still happen based on this number apart from the grammage?

That's true. Yes, not more than that because our -- yes, as of today, our average LTV stands at 51%. That means 14% more scope is there.

Understood. Understood.

Yes.

And sir, in terms of -- if I look at Asirvad...

Yes.

Would it be now fair to say that we have reached our final leg of whatever that we had to provide? And do you see more provisioning continuing or -- but because now that we have reached -- except West Bengal, in all other states, we have reached more than 95% collection efficiency, would it mean that now we will not see provision going forward in Asirvad?

Mr. Raja?

Yes. In the current method of ECL provisioning, whenever we do a provisioning for any quarter, it has to be -- the whole year has we considered, and the provisioning has to be done. So when we have done this provisioning, we have taken that consideration, and we have done. Having said that, besides -- while we have been taking care of all this emergency provisioning due to COVID and all that, there could be some provisioning because of the normal businesses which happened -- which is happening every month. So I wouldn't say there won't be any provisioning. But as you say, major provisioning, they have been done.

No, I understand provisioning due to normal course of business, but that is less than 1% when...

Yes, correct. Correct.

That's normal provisioning, right? But here I'm talking large provisioning of -- what we have done is close to INR 300 crore on a INR 5,000 crore...

Yes, yes, correct. And as we had mentioned, as the CFO of Manappuram mentioned, we already provided about 3.9% of AUM as the COVID provisioning itself, which is a very extraordinary item, and we have already provided with abundant caution. And I should say now vis-à-vis RBI provisioning of INR 147 crore, which is necessary, we have done nearly more than 50% or so.

Understood. And sir, last question is to Mr. Nandakumar. Sir, we are hearing a lot of noise from banks becoming very aggressive. But when I look at yields of either yours or the larger competitors in gold loan business, the yields do not seem to be affected. Can you tell me the rationale for it so that everyone is kind of clear with that?

See, yes, I always maintain and I always tell the customers who are going to the bank are different. Yes, our customers are typically that of a money lender. Because they want the solutions instantly, the turnaround time shall be low because he wants to save the day. And second, our average ticket size is around INR 50,000 only, so average life of the loan is around 2 months only. These customers keep on coming. So they want instant loan. Even for redemption, they want to get it done in the evenings, et cetera, so that they'll save the day. For a small ticket, 2 months, 3 months, et cetera, going to a bank and, well, if he saves some interest, he loses 2-days wages, which is far higher. Those going to the bank take out larger tickets. And also, their intention is to have a long-term borrowing. So yes, yes, I have been holding -- yes, our territories -- our NBFC territory is the NBFC territory only.

Right. And sir, just last question, if you may allow.

Yes, please.

We have always talked about -- even in the last conference call of yours, you had mentioned 10% to 15% gold loan AUM growth. But we have already achieved more than that in the first half itself.

Yes.

So would it be fair to assume that -- and second half is generally a stronger half for us as far as even growth is concerned. So would be fair to assume that we would see even sequential growth from here of, let's say, 10% over next half over this -- as of September ending through to March?

Viraj, we see a good traction, yes. So yes, things should -- yes, it would be good, I would say. Second half of the year also, yes, the business will be good.

The next question is from the line of Jaiprakash Toshniwal from India First.

Can I have a borrowing breakup of Asirvad?

Mr. Raja?

Yes, Asirvad, we have term loans of close to 60%, debentures of 12% and securitization of 25%.

Okay. And sir, on the provisioning side, you mentioned INR 66 crore of normal provisioning, and our GNPA has increased from 2.1 to 2.5. Does it mean that there is also a normal provision also? Or we include the special provision under the PCR of -- line calculating PCR?

In this particular quarter, INR 66 crore provision is an exceptional provision fully. But if you look at the Q2, there is a normal provision of 19 -- close to INR 19 crore, INR 19 crores to INR 20 crores in Q2, which was basically done in Q1, which is prior to what has happened to March 1 that has been provided for in Q1. In Q2, the INR 66 crores is entirely COVID provision.

Okay. Okay. Okay. And lastly, on -- again, on Asirvad, sir, our employee cost has increased Y-o-Y from 48 to 35 -- INR 35 crores to INR 48 crores. Is that because of any specific addition to headcount and any issues? And what segment it has been added?

No, no, it is a very conscious strategic decision because we found that once the COVID broke out and collection is becoming tougher, we consciously reduced the case load of our employee -- of the field people. From a level of 750, we come down to close to 500 now. So every employee is contacting less number of people so that the efficiency moves up. So we found the cost of increasing HR is much beneficial than having the higher case load. This improved the collection efficiency directly. That's the exact reason, the only reason to the increase.

The next question is from the line of Abhishek Murarka from IIFL.

Sir, just a few questions from me. So first, if you can share the number of customers in gold loans in lakhs for this quarter, for 2Q '20 and for FY '19, if possible.

So currently, the live customers are around 26 lakhs.

26 lakhs. Okay.

Yes. So last year, FY '19, yes, one second. Here, we got -- in here, Abhishek, it was 24 lakhs. Yes, now it has gone up by 2 lakhs.

And in FY '19?

Yes, FY '19, when we started FY '19 -- yes, we closed FY '19 with 24 lakhs, yes.

Okay. Okay. And sir, in Asirvad, basically, 2 questions. One, how much extra provisions are you planning to make in the second half considering that number of people who haven't made payments is also 9%, and you have 2% in those who have less -- paid less than 50% of the EMI? And second question is, would any additional capital infusion be needed for Asirvad or that is not really a requirement?

Mr. Raja?

So both these questions are interrelated. As I said in the previous time, we have now provided adequately for Asirvad, thinking that there could be some provision which would come in the next half also. Even taking into account that provision, we will not require any capital requirement for Asirvad because we are sitting at close to 25.31% now.

Okay. Okay. And basically, this extra provision would be within your operating profit levels. So you would -- should not be reporting...

That's correct. That's exactly the reason. The net worth cannot get affected.

Okay. Perfect. And the third thing is just another data-keeping question. So for your collection efficiency for different businesses, can you break it up into with arrears and without -- as in with arrears we have, without arrears, what it would have been?

Yes. You will get this for me.

Do you understand my question?

Yes. So this is -- yes, commercial vehicles. Can I tell?

Yes, sir. Yes, sir.

So without any moratorium or anything, yes, this is the total, yes. Okay. In July, it was 59%; August was 74%; September, 77%; and October, 81%. This is, yes, without considering ideas. So apart from that, there was -- there is arrear collection. This is apart from [ moratorium ]. But it is in July 15% arrear collections.

1-5.

August, 17%; September, 19%; and Q2 altogether, it is 17%; ad October, 24%. So the total collection also, I will tell you, including arrears plus billing collection, that is July, 84%; August, 91%; September, 96%. So Q2 average is 90%. And October, it is about 105% -- 1-0-5%. Year-to-date, if we take, it is 77% during the pandemic, yes. Yes.

And what about MFI?

MFI, Mr. Raja, you have?

For MFI, I have broad number, sir, because...

Yes. I would expect, yes. Shall I say?

Yes, sir, please.

Yes, I have -- yes, total, July onwards, collection, I guess, billing as well arrears, July, 68%; August, 71%; September, 87%. Q2, it is -- the average is 75%. And October, it is 87%. This is -- yes, this the current one. So you want the split, arrears and billing?

Yes, sir.

Yes. In July, it is 68% without arrears.

How much, sir? I'm sorry, I didn't get the number.

July is 68% without arrears.

5-8?

6-8.

The earlier numbers you said, sir, those were without arrear, is it?

Yes. Yes. July, that is -- yes.

Okay. Okay. Sir, with arrear it is 68%.

Earlier what I was telling is including arrears. This I'm saying is excluding arrears.

So your earlier number for July was 5-8, right, 58?

No, no, it was 68%.

Okay. Okay. Sorry about that. Yes.

Yes. So July, the same number, yes, 68%. So yes, August, also 71%, there is no arrears. September, it is 82%. Q2 average, it is 74%. And October, it is 82%.

Okay. So it is pretty much stagnant October over September?

Yes, yes. Yes, you're correct.

But sir, October number, you said 87%, whereas your presentation says 90%.

So the 3% is some -- yes, some INR 4 crores. Including that INR 4 crores, it is 90%.

Okay. Okay. So 82% to 87%, 5%.

Yes, I would say like this. Yes, it is 82% -- for example, 82%, yes, it is billing collection in October; 5%, arrear collection; and the balance, 3%, is the...

The INR 4 crores, sir.

INR 3 crores, that's the fact here.

Sure, sir. Got it.

The next question is from the line of Pratik Kothari from Unique Asset Management.

Sir, on the Vehicle Finance side, what is the provision that you provided for the quarter?

Vehicle Finance.

Vehicle Finance provision stands at INR 78 crore.

Okay. Fine. Sir, my second question, in terms of our guidance for the next 3 years, we have mentioned that we'll be aggressive in increasing our book on the microfinance and also on the vehicle, basically the non-gold part of the business. And is there any change in strategy given the underwriting results that we have seen? Because even if we go back a couple of years during demonetization, we have to provide a huge percentage of the book for the MFI part. Even during COVID, we have already provided 4% of the book in the MFI part; I think about 7%, 8% of the book on the vehicle part. I mean the reason I'm asking is this business generates about 7%, 8% of pre-provision profit on the AUM that we manage. And if you have to provide 4% to 6% of the book, it include all the profit. And in fact, exceptional items are the more frequent when it comes to the MFI business. So any change in strategy? What are your thoughts? Any changes you are making internally such that we don't have to face it time and again? Because the underwriting seems to be slightly weaker or, historically, we had seen that a gold business obviously is very safe, but this seems to be losing a lot of money time and again.

No, no, it is -- one reason is our conservative provisioning policy. Later, even after demon, we have collected some -- whatever -- a good sum out of the return of amount. So we do that, we provide that from the provision as well as the return of amount. It is -- we continue collection. So only because of a conservative policy, which is more conservative than the regulatory policy new, we have made a higher provision.

Mr. Kothari, may I request you to please come back in the queue?

No, there is a follow-up mandate, if I can complete. Sir, so what you are alluding to is -- and what we are providing for, basically, we'll see some reversal going forward. And this is also what we see -- saw during demonetization?

Yes, yes. See, it is always our policy to be very conservative in provisioning. So whatever you said is right.

[Operator Instructions] The next question is from the line of Dhaval Gada from DSP Investment Managers.

I had just 2 (sic) [ 3 ] questions. First is, sir, if you could give the normalized billing collection pre-COVID for all the 3 segments. You said that, for example, in Vehicle Finance, our billing collection in October was 51%. What would have been the normalized collection pre-COVID in this segment? Similarly, for MFI, you mentioned 82%. I would presume pre-COVID normalized would have been 98%, 99%. So if you could just confirm that. And the third is the home finance, if you could give the same numbers like vehicle and MFI for July, August, September, October and also comment a little bit around pre-COVID, what is the normal billing collection. Yes, that's it.

Yes. Mr. Raja is there?

Yes, sir. I will, yes. On the MFI business, I would answer, yes. So the pre-COVID collection in MFI is normally ranging from, as you are right, 97% to 100%. It was 99% a couple of years back. The new normal, between 985, 99%. So February, around 98% to 100% was the pre-COVID. And as our Chairman said, in October, we are -- our collection was 82%. That is because when you say collection is 82%, we should understand it's 1 to 30, plus 1. We are talking about plus 1. We're not talking about 0. Post-COVID, with the collection, on the due date of collection, it's always -- it is decreasing, but it comes within due date. So 1 to 30 days has become slightly higher now, and that is the reason for showing an 82% current collection. It is definitely collectible. It is not something which is like pre-COVID. There, if we are unable to collect, normally, it slips to 30 to 60, 60 to 90, and it moves forward. So that is a major difference in the industry. One should understand that it is not that 99% is higher than we said. That 1% was never collectible even after 30 days. Today, the situation is different. It is collectible. It comes with the lag. Sometimes it's a week lag or sometimes it's a month lag, that's the percent going to [ generally good ]. So it is not an alarming situation, it is very normal, and the Asirvad is on top of these, on these collections now.

So Mr. Senthil, about, yes, CV and two-wheelers together.

Yes, thank you, sir. Yes, pre-COVID, our collections were on current -- current billing collections is around 90% to 94%. And as MD, sir, had mentioned sometime back, our collections in October and September was around 77% on the current billing and around 81%. And hopefully, going forward, probably in the month of November, we would be improving on our performance. And by the fourth quarter, we'll be back to the pre-COVID levels in terms of collections.

So Mr. Jeevandas?

Yes, sir, good evening. Pre-COVID, our collection efficiencies were ranging between around, say, 94% to 96%. And in fact, to be precise, in February, it was 95% plus. Then of course, the rest is history, as we'd say. We started off again from 50% in April, 60% in May, 76% in June, then to 85% in July, 90%-plus in August and reached about 96%, 95-point something in September. As I mentioned earlier, because of the quarterly phenomenon, next month, there is a bit of a [ snatch ] in the system, but that is something which is not insurmountable. So in October, we saw around 92.4%. Now this is divided between current billing collection and also arrear collection. For example, in September, our current billing collection was 87%, 87.35% to be precise, and overdue collection was 8.06%. That as of October, the current collection is 86.63%, and the overdue collection, 6%. So if you take that 95%, that's why we've said we have come to around 95-plus means we have come to pre-COVID level. Going forward, definitely, I think the worst is behind us. And as Mr. Raja also mentioned, it's not as if it is not collected in the current bucket at the end of it. In many cases, it gets collected as an EMI, recorded as EMI in the next month. Keeping with the segment in which we are, I believe this is quite an acceptable thing. And I'm sure going forward, we will have better collection.

Yes. You have heard about home finance from Mr. Jeevandas?

Yes, sir. And sir, just one follow-up. If you could -- if this -- if you see the billing collections across the 3 businesses, there seems to be some stagnation that has come from September to October. So is this normal, in your view, or is that a little bit of a concern that the billing collections are not going back to the so-called pre-COVID level across all 3 businesses? So any comments around that?

Last month, a few things have happened, which is temporary. One, a number of festivals were there. The second, in many parts, there were some temporary lockdowns. So in rural areas, in the urban areas, yes, it was the time of picking up. And now it is slowly flattened and coming down. So November onwards, we hope the collections will improve.

The next question is from the line of Mitesh Gohil from AMBIT Capital.

My most of the questions have been answered. Sir, I just want to understand one thing, why the gold tonnage is coming down.

See, the people are not availing the full LTVs. Our ruling average LTV, current average, the LTV is only 61%. People come and borrow, say, 20,000, 25,000. They are bringing these -- this is not one piece of gold. This pledge is not one piece. These are in pieces. These are ornaments, small, small quantities, small, small weights. So they pledged according to that requirement of their money, loan amount. So that's why, yes, they redeem, then when they come back for the same amount, they need to pledge only a lower quantity. That's the reason. And when the gold price goes down, still also the portfolio will go up, so they will come with more ornaments. That's the reason.

The next question is from the line of Kaushik Agarwal from Haitong Securities.

Sir, just 2 questions from my side. One is a data-keeping question. Sir, can you please repeat the disbursement number for the current quarter, Q2 FY '21, and the same number for the previous quarter, Q2 FY '20? And sir, my second question is with respect to Slide #18, we can see that more than 50% of the gold loan AUM is coming from urban and metro areas. So my first thing is, sir, what kind of customers are we catering in this region? As from broad industry's perspective, we can see that most of the gold loan demand is from the rural area. And the major portion of the gold loan area is from urban and metro. So just your view on this, sir -- yes, these 2 questions.

See, the disbursement, you want all the figures?

No. Sir, I just wanted for gold loan business, disbursement for this quarter and last -- previous year quarter.

Yes, yes. So you said -- I will answer first to the second part of the question. The -- see, we have a larger number of branches in metros, even though the metros, the lockdown was there, because of this online gold loan, digital gold loan facilities. And our facility we have provided, infrastructure we have provided in converting this non-gold into gold loan also, so a lot of customers started availing online gold loan. And this -- our goal loan pre-COVID was around 48%. Now just during the COVID period, during this pandemic, it has gone to more than 50%. So many of these customers who are availing online gold loan, they have pledged for a lower amount because they can avail the loan at any time from anywhere. So through their [ bank, their phone ], anytime they can withdraw. So they have withdrawn. So that has a push to the gold loan growth also. And you said the -- with this online gold loan facility, the profile of the customers have also slowly changed. Now as for liquidity, comfort is there for the house way, or a small retailer or a person who are regularly traveling, so our profile is slowly moving up in the economics factor. And now we'll go to the disbursement number.

Yes. So during the quarter, our gold loan disbursement is at INR 93,368 crore and compared to INR 68,390 crore in Q1 FY '21.

Ma'am, just Q2 FY '20 number was?

INR 50,250 crore.

Okay. And sir, just one follow-up question on the first question which you answered. Sir, just regarding as you said that since most of the customers are now moving to the online gold loan facility, sir, these customers you feel are more mature, and they must be having other -- like they can avail other kind of unsecured loans also from the market. Considering the interest rate being charged on the gold loan by NBFCs is comparatively higher to the banks, so why will the customer go for the gold loan in the online -- through the online gold loan space?

Yes, these are 2 distinct products with different convenience. See, this online gold loan, what is the facility, they are, in fact, getting free safe custody of gold, free storage of gold. And also the liquidity, they did not draw the money at that point of time in full. Yes, they can -- they get their [ profit ] based on the weight, based on the value of the gold, so which they can use anytime. So even without paying interest, they carry the liquidity. See, this is like, yes, virtually, they use like an overdraft in terms of facility. So the other loans, yes, for these unsecured loans, they don't -- these loans don't offer the -- our soft facility, the working capital facility. So many of our customers -- gold loan customers have the facilities from banks also.

The next question is from the line of Harish Kumar Gupta from Nirmal Bang Securities. As there is no response from the line of Mr. Gupta, I've muted his line. And we'll go to the next question, which is from the line of Shweta Daptardar from Prabhudas Lilladher.

Sir, 2 questions. One, when you say 51% of your AUM is online gold, sir, can you just bifurcate this into renewals or fresh customers?

See, this online gold loan, they -- once they've set up the facility, are in the facility in a branch, they use it several times. Sometimes, of the same day itself, they may use. So almost all the customers are old customers. Very few, only around 5% customers are new customers. The reason is they plugged it as a non-online gold loan for the time being, then our people will be able to showcase them the advantages, communicate with them the advantages, then they start doing -- then they become, yes, also online gold loan customers.

Sir, is my understanding correct, sir, is it -- does it so happen that the loan is -- for instance, the average majority of the gold loan is, say, 3 to 5 months and closer to the end of the period, the customer comes for renewal and opt for online mechanism?

Yes. The real life of a customer continue -- the loan continued over a period of time, yes, maybe after closing the existing pledges on the same day, settling interest, everything and marking to the market, et cetera, et cetera. So that life is 2 months, but the average life of that customer is around 8 months.

Okay. Okay, I get that. And sir, lastly, what are the write-offs for this quarter and the same number for previous same quarter last year?

Gold loan, there is no write-off. In other segments, yes, the CFO will tell.

Yes. So the -- Shweta, the P&L impact, which was INR 50 crore in Q1 in the stand-alone entity has come down to INR 38 crore in this quarter.

So that's INR 50 crores for the non-gold business, right?

All put together, this includes stage 1 provision also. So Q1 -- compared to Q1, there is a reduction in P&L hit on account of matters in provisioning.

Okay. And Ma'am, what was the number for the corresponding quarter last year?

Last year, I'll get back, Shweta. It is comparatively less because these 2 quarters, because of the COVID, there is a small increase -- there is an increase in provision because Q1 also, we aggressively made a provision for COVID because there were uncertainties and the lockdown at system on that. So that is the reason. Q1, we didn't have aggressive provisioning. Q2, things -- the fund and the collection efficiency also improved, and that is the reason the provisions has come down. Q1 was mostly based on some estimates. Without doing much moratorium in the book, the delinquency has been taken into consideration for the provision especially in the case of Vehicle Finance because in the stand-alone entity, gold loan remained -- the collections remained same compared to pre-COVID.

Ladies and gentlemen, due to time constraints, this will be the last question for today, which is from the line of Bunty Chawla from IDBI Bank.

Can you share the incremental LTV during this quarter for the gold loan? As you suggested, 61% is on the portfolio basis, so just incremental LTV. Secondly, as we have seen gold portfolio has grown at 30% for H1 FY '21, so can you share -- can you -- previously, your outlook AUM growth of 15%. Can you read or you can increase the AUM growth for the full year FY '21? Or what is your forecast for that? And thirdly, just a clarification. COVID-related provision for MFI stands at INR 196 crore; and Commercial Vehicle, INR 78 crore? That's from my side.

Okay. So the incremental LTV is around 2%. Yes, first half of the year, we have grown over 15%, and we are seeing good traction in that -- during this quarter also. We hope that things would be good. And yes, regarding the provision?

Provision, yes. MFI provision, you are right, there's additional COVID overlay at INR 196 crore. The INR 78 crore which we discussed is the total Vehicle Finance provision outstanding in the books. In Vehicle Finance, second phase of moratorium was 0, so whatever are there in the books we considered as Stage 3 as it is and made our provisioning, so there is no separate COVID provision for Vehicle Finance.

Okay. And for the full year, what will be the AUM growth guidance on an overall basis?

No, we are not guiding. But sir, that seems to be good.

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

So yes, thank you for attending the conference. Yes, even though there were some disruptions happened in between, yes, thank you for remaining patient and actively participating. And look forward for an active interaction with you in future also. Thank you.

Thank you.

Thank you.

Thank you.

On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.