Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Thank you, Aisha. Good evening, everyone, and thanks for joining into this call. With us, we have the entire management team of Manappuram Finance led by Mr. Nandakumar. Without further ado, I'd like to hand over the call to management for opening comments, followed by a Q&A session. Over to you, sir.

Thank you, [ HDN ]. Good evening, and thank you for joining us to discuss our Q3 FY '21 results. During the past 3 quarters, we have gone through the worst of the pandemic and the economic stuff. But now, with the release of multiple vaccines and decline in new cases in India, there is much optimism all around. We are now set to witness a strong rebound in economic activities, even as some advanced economies battle second and third waves of the pandemic. On Monday, when the Finance Minister presents the Union Budget, it would be premised on stronger economic growth, benign inflation and return of normalcy on the international trade front. GST collections have been strong. Even the government want to spend more towards health, infrastructure and education. There was strong festive demand in most consumer segments, be it in white goods, consumables or automobile. Policymakers have used this period to build the base for regaining growth momentum through various reforms, not to mention the timely infusion of liquidity into the financial sector, which has lowered interest rates all around. We saw increased demand for gold loans in the past quarter and expect the trend to continue as economic activities recover and as the unorganized sector regains its footing. During the year, we have significantly stepped up our digital infrastructure. And we continue to maintain our strong positioning in the online gold loan space. We have extended our doorstep gold loan facility to all our branches across India, which allows us to service customers, even beyond normal working hours, at their homes and offices. Coming to our results for the third quarter, here are some key highlights. Our consolidated AUM has crossed to INR 27,643 crores, up 14.7% year-on-year and 2.7% quarter-on-quarter. We are reporting a consolidated quarterly net profit of INR 483 crores for the quarter, a 19% improvement over the previous quarter. Gold loan AUM grew by 24% year-on-year and 2.4% on a sequential basis to INR 20,214 crores, in line with our guidance. The gold loan business accounts for 73% of our consolidated book. Our microfinance subsidiary, Asirvad Microfinance, has made an impressive turnaround. It entered the quarter with an AUM of INR 5,358 crores, an increase of 8% quarter-on-quarter. Asirvad posted a PAT of INR 17.8 crores versus a loss of INR 2.4 crore in the preceding quarter. Importantly, our collection efficiency has reached pre-pandemic levels. India's automobile sector has bounced back in the last quarter, and our Commercial Vehicle finance division saw improvement in collection efficiency, reaching 110% levels. The CV division's AUM stood at INR 988 crore, down 7% compared to the preceding quarter as we focused on recovery and consolidation. Our affordable housing portfolio is small, but growing, and asset quality remains stable. We remain comfortable on the ALM front. We continue to bolster our long-term funds. And just the other day, we have raised INR 600 crores from [ LIC ] with a tenure of 7 years. With the availability of funds not an issue, our stand-alone average cost of borrowing declined by 18 bps to 8.95 percentage. Thank you. And now it is over to our CFO, Mrs. Bindu, for a detailed look at the numbers.

Thank you very much sir. Thanks to all our stakeholders for attending the quarterly update call. I'm happy to report that we had a strong quarter despite the multiple macroeconomic challenges. In Q3, we have seen improvement across the businesses in disbursement, collections and implementation and transformation of business-wise risk parameter. There is pickup in non-gold loan businesses, which is almost at pre-COVID levels. Given the soft macro environment, the company continues to follow a prudent approach to accelerating the growth in non-gold loan segments. We are carrying surplus liquidity across all businesses. During this quarter, on stand-alone basis, we have raised fresh borrowing of INR 1,925 crores through term loans and WCDL and NCDs. Cash and cash equivalent on a consolidated basis at the end of the quarter was INR 2,640 crores and undrawn bank line of INR 2,502 crores, adding to nearly INR 5,000 crores surplus liquidity. Our CP exposure has come down to 8 percentage against 24 percentage on year ago. And in the stand-alone entity, the borrowing cost declined sequentially by 18 basis points to 8.95% despite the significant extension of average duration of borrowings. Our consolidated AUM for Q3 FY '21 was INR 27,643 crores, up by 14.7 percentage year-on-year and 2.7 percentage Q-on-Q. The growth was largely led by gold loans. Consolidated profit after tax was INR 483 crore, grew by 19.2 percentage Q-on-Q and 16.6 percentage year-on-year. ROE on a consolidated basis was 29 percentage, and ROA was 6.1 percentage for the quarter ended December '20. Talking about the gold loan business, which constitutes 73.1 percentage of consolidated AUM. The gold loan AUM increased by 24.4 percentage year-on-year and 2.4 percentage Q-on-Q. Gold holdings stood at 68.24 tonnes. The tonnage was nearly flat Q-on-Q, but was down by 7.2 percentage year-on-year. As we have mentioned previously, we see an inverse relationship between gold prices and the gold tonnage growth. Our customers borrow as per their financing needs. So when the gold price go up, they place lower quantity of gold. Gold loan average ticket size and average duration was INR 46,318 and 75 days, respectively. Our total number of gold loan customers stood at 26.24 lakh. This is a net increase of 67,000 during the quarter. The gold loan book stood at INR 20,212 crore. Auctions during the quarter were INR 3.62 crores. Our weighted average LTV stands at INR 2,963 per gram or 63 percentage of the current gold price. Gold loan disbursements during the quarter stood at INR 57,445 crores. The online gold loan book accounts for 59 percentage of the total gold loan. Coming to the microfinance business, Asirvad MFI AUM stands at INR 5,358 crores, up by 7.8 percentage Q-on-Q. And this business reported a PAT of INR 17.78 crores in Q3 FY '21 compared to a loss of INR 2.42 crore in Q2 FY '21. The collection efficiency from the MFI business was at 99 percentage in December, and the disbursements during the quarter was INR 1,306 crore. We are confident that COVID impact is largely behind us, and we foresee improved performance for Asirvad in the coming quarters. The company has a capital adequacy of 24 percentage. Coming to Vehicle Finance business. We have reported an AUM of INR 988 crores, which is down by 7 percentage Q-on-Q, and the disbursement for the quarter is INR 116 crores. Collection efficiency was 110 percentage and 112 percentage in November and December, respectively. We gave only 3 months moratorium to our Vehicle Finance customers versus the rest of the market, which allowed moratorium up to August. The home loan business had a total book of INR 633 crores, which is up by 2.1 percentage Q-on-Q and up by 5.4 percentage year-on-year. It now operates from 47 branches, and reported a profit of INR 3.16 crore during Q3. Collection efficiency was 94 percentage and 97 percentage in November and December. Collection efficiency for the quarter at 94 percentage compared to 90 percentage in Q2. Loan to NBFCs is at INR 242 crore and the other SME loans at INR 210 crore. We have been steadily pruning this book over the last few quarters. Credit quality for this portfolio continues to be robust. Provisions and write-offs for the stand-alone entity during the quarter stood at INR 29 crore compared to INR 38 crore in Q2 FY '21. We provided INR 28 crore additional provision due to COVID-19 since March 2020. Our gross NPA is at 1.26 percentage compared to 1.11 percentage in Q2 FY '21. The Board has declared an interim dividend of INR 0.65 for this quarter. Our capital position is strong and the company is well capitalized with a capital adequacy ratio of 25.85 percentage. Company's consolidated net worth stands at INR 6,870 crore. The book value per share stood at INR 81.2. We can now go for the Q&A session. Thank you.

[Operator Instructions] The first question is from the line of Ashish Sharma from Enam Asset Management.

Just a couple of questions. First, on the microfinance book. So we have grown in this quarter. Have we increased our provisioning on the MFI book for the COVID stress? And how do we see the stress emerging from the state of West Bengal? I mean what's our percentage of book, which is in that state? That would be the first question. And second would be on what is the outlook on the borrowing cost. We've seen that for many banks and NBFCs, the cost has come down, but we haven't seen the same sort of a positive impact on the cost side. Do we see that in some quarters lag, we'll see the benefit of borrowing costs? That would be the 2 questions, sir.

Yes. Mr. Raja?

Yes. On microfinance, for this quarter, also, we have done provisioning. We have done -- taken a provision of INR 48 crores -- INR 48.4 crores. The overall provisioning is adequate, and we have done what close to INR 320 crores for the year. And this would definitely take care of the provisioning requirement for the loan.

Okay. Okay. And in terms of growth outlook now? And then on the...

We have shown a positive growth of AUM this quarter, and this will be -- increase as we go forward. And we certainly come back. On the disbursement side, we have done about INR 1,300 crores this quarter. It will increase now substantially from -- as we go forward.

Okay. Okay. And then the exposure towards West Bengal?

There are clearly no signs of revival in all these stress districts of West Bengal and Odisha and certain other states. As the group CFO mentioned, the collection efficiency has dramatically improved in all the places. And we don't find anything very alarming in any of the states. West Bengal was lagging behind, but now it has caught up. And we expect that, as we go forward, it will come back to normalcy in quarter 1 of next year.

Okay. Okay. Could you quantify the exposure of Asirvad in West Bengal?

Our West Bengal exposure is -- we've got about 20% -- 12% of our AUM.

12% of AUM. Okay. Okay. Yes. I had a question on borrowing costs. Bindu ma'am can -- yes.

Yes. So Q1 and Q2 put together, we could achieve nearly 45 basis points in the cost of borrowing. So the new money is coming at a long tenure and with a slightly lower cost. So we expect the benefit to continue. If the scenario continue, we expect a further reduction in the next quarter also.

The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund.

First of all, in the microfinance business, I had 1 question. Are the margins coming down? Because I see the net interest margin are coming down year-on-year. And is it because of any interest reversal that is looking like one-off? The second question that I had was on your CP book. You have reduced it significantly though, in nature, gold loan is a short tenure business. Is there any limit that you're keeping for the CP business in terms of increasing borrowings in the coming quarters?

Mr. Raja?

See, margin -- we operate on a RBI guideline of this 10% margin. That is a margin cap. What has happened is the OpEx has increased in the last 2 quarters because of a lower disbursement and lower AUM growth. Otherwise, our margins are still the same, intact. As we go forward, as the disbursement increase and the AUM increase, we always calculated the OpEx as a percentage of the AUM. So it was 4.8% last year. It is now 5.6%. And that will come down below 5% as we go forward. That's the pressure on margins because of the lower AUM growth. Also, we have done a lot of improvement on increase in cost of -- improving the number of -- the manpower has been increased to increase collection efficiency. So those things have shown immediate results, but the costs have gone up a bit. In the coming quarters and as we move forward, as AUM grows, it will come back to normalcy.

This year, we could raise a lot of bonds from the market. Through TLTRO and PCG also, we could raise long-term money, and that is coming at a slightly lower cost. So that is the reason, temporarily, we thought of taking those long-term money. So that our monthly maturities will come down. But CPs are available, and it is coming at sub 4 percentage kind of level. So we will increase the percentage, but, temporarily, we thought of taking this long-term money. That will give us a long-term benefit in terms of tenure as well as on the cost because these bonds coming at a lower cost compared to past. If we compare the March '20 bonds and the transactions which we did now, the cost difference is almost 2, 2.5 percentage. So that is the reason we thought of taking this long-term money and temporarily reducing the CP exposure. Going forward, we may slightly increase the CP exposure.

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

Can you hear me?

Yes.

Sir, first question is related to the overall ECL provisions outstanding on the balance sheet. Secondly, what is the total provisioning outstanding, specifically for the microfinance portfolio? And lastly, for the vehicle financing portfolio?

Yes. So overall, in the stand-alone entity, we are holding nearly INR 223 crore provision. So on an average, we can say Vehicle Finance is holding nearly 6 percentage provision, nearly INR 1,000 crores is the AUM, and we are holding INR 66 crores provision on the Vehicle Finance book.

So just to get this right, INR 160 crores is for the gold loan portfolio and around INR 65 crores, INR 66 crores is for the vehicle financing.

Yes. INR 66 crores for vehicle, yes.

Okay. And the microfinance?

And on the MFI, also, we are holding 6 percentage. So the total amount is INR 322 crores.

Okay. And when we are giving this number, this includes everything, right, Stage 1, Stage 2, Stage 3 plus COVID, all the provisions put together?

Yes, yes, yes.

Okay. And considering whatever the events, which are happening into West Bengal and Assam, do you think for this entire provisioning of only 6% is sufficient or we may have to buffer up the provisioning in that portfolio now? While the collection efficiencies have improved, but certainly, over the last, whatever, 15 days to a 1-month over what we are hearing, there have been some issues in terms of the collections again now.

No. Actually this -- our Assam portfolio is considerably small. We have only INR 38 crores for the INR 5,000 crores. And West Bengal also, as I said earlier, it's 3%. ECL provisioning, as you know, it takes into care what losses might occur in the next quarter also and then we provide. So as it stands at INR 322 crores, we provide, it should take care of the entire year, barring, what you say, some unforeseen circumstances. Otherwise, it is all also it is covered completely.

Okay. And just last question on the gold loan business. Now I can see that the ROAs have improved to almost 7%, and there have been significant increase into the competitive intensity. Any plans to reduce yields into that particular business? And what do you think growth outlook for FY '22 now? Would we stick to our guidance of around 15% kind of a growth rate for FY '22? FY '21, it's more or less over. So FY '22, any sense on this front.

Yes. We have been holding that view of 15% growth -- annual growth. And we hope that we can achieve that in '22 also.

Okay. And sir, the ROA guide, obviously, not specifically related to the ROA, but the ROAs are almost at 7% plus into this business now. So do you -- just because of the competitive intensity, would you plan to reduce some yield and pass on the benefit to the customers?

Yes. It will remain around 6 to 7 percentage.

The next question is from the line of Lokesh Mallya from SBI Funds Management.

Question is on the MFI part. Can you state the total amount of 0 plus in Asirvad as at December 31? And what was this number on September 30, the total overdues in the microfinance segment? And second, if there has been any disbursement to 0 plus accounts also during the quarter?

Yes. In September 30, the 0 plus was INR 1,044 crores. On December 31, it is INR 935 crores. So it has come down. And it is coming down as in January, I think it has come down further. And to answer your question, we are not -- the disbursement takes place certain method. We don't disburse to everybody. Only when we are closer to maturity, we do the disbursement. But there are certain newer products we have introduced for the support of the people. So that disbursement has taken place, but it was very -- it was not very significant. Out of INR 1,305 crores, which we disbursed, this disbursement is less than about INR 150 crores or so -- INR 100-odd crores, yes.

The next question is from the line of Dhaval Gada from DSP Mutual Fund.

Congrats on the great performance. I had 3 questions, sir. First is, like last quarter, could you give the billing collection, the data for MFI, Vehicle Finance and HFC for October, November, December, just to get color on that and even if some trend on January, that would be useful. So that is the first question. Then I'll ask the next.

Mr. Raja about MFI.

Dhaval, it is there is the presentation, but Raja sir will explain.

Billing efficiency. You had collection numbers. But billing last time, I remember, in MFI, it was 82%, and collection was 90%, 91%. So just wanted to get where are we as far as billing collection is concerned.

Raja sir.

Well, collection, as we had said, it has moved from October, November, December, 91% to 93% to 99%. That's the overall collections. This was -- as compared to last quarter, it was 75% in August, 90% in September, and 93% in October. So that's the overall collection, which includes, of course, our total current collections plus the collections, which we normally do when we do a disbursement. We are not doing so, but including that.

Sir, normally -- I mean, even the data that is there for last 7 months since April, on an average, the overlap between billing and collection is about 7%. So that is the same number. So basically, the collection -- the billing number would be like 7%, 8% lower than the collection efficiencies?

No. It has reduced now about 4% to 5%.

Okay. Okay. And -- okay.

Yes. Mr. Jeevandas?

Jeevandas here. For the HFC, billing and arrears you want separately or you want total collection? Which one you want?

No, no, billing and arrears separately, sir. Billing and arrears separately.

In October, our billing was 86.5% and arrears was 6%, thereby a total of 92.5%. In November, it was 88% and 6%. That is 94%. And December 90%, plus 7% arrears, 97%.

Senthil, CV?

Yes, sir. Thank you. See, in quarter 2, like overall, we had EMI collection versus billing of around 74% and arrears collection was 16%. And in Q3, it has improved to 82% and 28% of arrears collection. And if you're looking at on a monthly basis in the month of October, our collection against billing was around 81%, and our collection against arrears was around 25%. And in November, it was around 79% and 31% on collection against arrears. And there was the improvement in the month of December, where the collection against billing had gone up to 85%, and the collection against the arrears amount outstanding was around some 27%. So overall, there has been an improvement of -- when compared to Q2 from 74% to 82% and from 16% against arrears collection to 28%.

So the overall collection has reached 110 percentage in CV.

Yes, sir.

Understood. Sir, just taking this forward, if you look at all the 3 non-gold businesses, basically they are 5% to 8% below in terms of pre-COVID billing, collection efficiencies. So in that context, given the level of provisioning that we have currently, don't you think that there is some shortfall in the MFI portfolio specifically? And also in the HF portfolio? These 2 portfolios, any comments that you have as far as provisioning level is concerned? Because if I remember right, in HF, our billing number used to be 95%. And right now, we are at 90%. So...

In MFI, we have provided 6%, INR 322 crores. 6% we have provided now -- provisioning is there already. So that is the -- and as we move forward, the collection efficiency in the new book is 99-point something. So it is -- the adequacy is provided for there.

You don't see any further addition requirement in...

Yes. As I said -- as I answered to another question, as of now, when you do a limited review, you take into account the entire and provide. As of now, we don't -- the requirement is only about that. We actually provided a few -- something more than what is necessary for that. So we don't -- we think we may not require anything for quarter 4 if things are going as such, what it is now.

Mr. Jeevandas?

Yes, sir. In fact, our pre COVID in January, February was around 95% only -- 95%, 96%. That is including arrears collection also. So we have reached and crossed that. In fact, in December, billing is 90% and arrears is 7%. So overall it's 97%. If I remember, that in February, in March, we were around 96%, 97%, same level. So we have reached pre-COVID level.

Okay. Okay. And just -- yes, sorry.

Senthil?

Yes, sir. I think we would be reaching pre-COVID levels in Feb. And as of now, I think we adequately -- we have covered adequately by provisioning. So I don't think we would have any requirement for additional provisioning going by the trends. The trends have been increasing in the last couple of quarters. And hopefully, we'll be able to better this quarter also.

Dhaval, as you are aware, our portfolio is without any second phase moratorium for the Vehicle Finance business for the first 3 quarters. Last 3 quarters, we took an aggressive provisioning. And now it is coming down. So the provisions are accurate.

Correct. Fair point, ma'am, yes. And just last point related to the gold business -- related to the volume part. I'm sorry. I joined a little late, so in case you covered that part. But just going forward, are you surprised with the current level of degrowth that you are seeing in the gold business, even on sequential basis? And going forward, any comments that you have as to how this should pick up? And what would be the drivers for the pickup?

So the key driver is the demand. So the volume has picked up. The underlying collateral has less significant. Because people wanted so much money, they bring collateral, what is required to avail that much of loan. So when the gold price is down, they bring more collateral, and the collateral growth also start increasing. Only this. So what we aim at with the gold price down or gold price up, we are hopeful of achieving a growth of around 15% that we have maintained.

[Operator Instructions] The next question is from the line of Prashanth Sridhar from SBI Mutual Fund.

Most of my questions have been answered. Just 2 things, if you can clarify. Is there any 0 plus in the other loans of around INR 450 crores? And what is the incremental LTV of the gold portfolio?

So the incremental LTV, see, you are aware, the LTV is capped at 75 percentage. So the LTV -- when the gold price is up, the LTV -- the average LTV goes down. And gold price is down, the average gold price grow little. That's the only difference. So there will not be much difference in the LTV.

Sure. Sure. Understood. If you could just clarify if there is any 0 plus in the other loans of INR 450 crore?

Bindu?

Yes. See, on the SME loans, there will be a small amount. The NBFC lending, we have considered a small provision wherever we felt fit. So there will be a small maybe INR 20 crores put together.

Okay. Okay. So INR 20 crores on a portfolio of INR 450 crores.

The next question is from the line of Shweta Daptardar from PL India.

Sir, I have 2 questions. One on the gold loan side, sir, 59% of your total gold is online. So can you just give a color as to how much is the share of existing customers and new customers? And how much is the share of existing customers with fresh collaterals?

Raja? Yes.

On the 59 percentage gold loan -- online gold loan on the total AUM, that means whatever be the outstanding, we have as on 30% on INR 20,400 crore. 59% of that book is registered in this online model. Customer is onboarded in that. Bank account also registered. They can transact through that model. That is on portal. On the total customer base, whatever be the new customer coming, first instance, what we've seen on the 15% to 20% of the new customer onboarding in the online. Because this is a new things in the market, the customers are yet to understand and all. But once they started doing transaction, second and third transaction onwards they are converting. So that way, the balance customer also converting. So the first instance on new customer 20% and the existing customer also converting. So that way only we reached this 59%, and there'll be an incremental on quarter-on-quarter also from the AUM level.

Okay. Okay. Sir, secondly, again, in your gold loan business. So in the last quarter gone by, there were certain brand shuts in region of Maharashtra. So is it -- I mean, of course, it was due to political influence. So is it that, that there is difference in our incentive structure vis-à-vis industry? How did the employees got influenced? Can you just throw color on the same?

All these are settled. So these are some politically influenced. These are not exactly by employees. You are aware about what is happening. So we need to settle with the concerns of political parties. These are over. And all the branches are functioning. Yes, not employees really. Yes.

Okay. So one last bookkeeping question on MFI side. Sir, what are the write-offs for this quarter vis-à-vis previous quarter?

Mr. Raja?

This time -- this -- we wrote off INR 68 crores, books. Previous quarter, we didn't have any write-offs.

The next is from the line of Nilesh Saha from Edelweiss.

Yes. I have a question in regards to the MFI piece, right? Could you please talk about what percentage of the book is not active? Like what percentage of book is not doing the -- their due EMI?

See out of the total 20 -- yes. Out of total 23 lakh customers, there are about 1 lakh customers are what we call as not active, but that is also only till December. These people have never paid till December. So now as per the RBI guidelines, we restructured the portfolio of this 1 lakh customer. And we have found that 18% of them have started paying in January, so which means even that 1 lakh is coming down. So 1 lakh represents about 4% of our total customer base. And because we have now given them an additional 24 months and we have reduced their EMI as per the guidelines of RBI, we expect this percentage to come down further.

Okay. Okay. And I think you said write-off numbers. That is...

Write-off is a policy of the company. Write off is anything which is over 180 days, which we normally don't keep it 180, like it will bring down the AUM. But the collections are still -- efforts will still be on. So a little bit more accounting entry. Provision is different. Provision we would have already made long-term back. Write-off is just the next step on that.

Right. But the number you gave was INR 68 crores or some, right?

Yes, yes.

So is that -- so your total provision over the last 4 quarters is roughly about INR 220 crores, right? So this INR 68 crores is a part of that?

No, no, no. INR 322 crores is over and above that. Otherwise, the provision could have been INR 322 crores plus that INR 68 crores.

Okay. Yes, I'm getting a bit confused here because I can see your provision expense for this quarter is INR 48 crores, right?

Yes. See don't confuse provisioning and write-off. Write-off is the next stage. It won't come as provision. They've already been provided for earlier. So now it has been removed from the books totally. So that is the reason I'm saying that -- let me say INR 322 crores. That INR 68 crores does not figure in, because the AUM has already been removed. We have written it off. So there is no need for a provisioning for asset which has been written off. If you -- if we write-back and you say we had not written back, that provisioning would still be there.

Okay. So you're like standing addition on the book ex of the write off is what's now?

Yes, yes. Exactly.

No, no, I just wanted to get that number from you, please.

The number is INR 322 crores.

INR 322 crores. Okay. Got it. Got it. Got it. Okay. So now I think that I'm just trying to get your perspective on incremental provisions from thereon, right? Just -- I mean, how should we think about that?

So I'd answered this couple of times during this call itself. The incremental -- the AR provision required for the entire year now as for the ECL working comes to about 300 and -- less than this amount. We have provided INR 322 crores. This is actually slightly about INR 15 crores, INR 16 crores less. We have provided that more. So we are -- barring unforeseen circumstances, we should not be having additional provision for quarter 4. We have adequately taken care of that. And we find that the restructured portfolio works better. This can even come down. The provisioning can even come down.

Okay, okay. Okay. And 1 final question, right? I think you made some comments around growth in this book, right? So which geographies are you trying to grow your book from here on?

See, we are now absolutely very well diversified. We are in 23, 24 states now. And this particular year, there has been a very subdued growth. Even if we grow -- we will grow uniformly across all geographies, but our growth will be more pronounced in the central and northern region this time, North and South and East. Our new branches, which we are planning, would come in the Central and Northern -- Central, West and Northern region and North and South and East region.

[Operator Instructions] The next question is from the line of Prateek Agrawal from ASK Investment Managers Limited.

Yes. One comment on the presentation. I really liked the Slide #29, which talkies of risk control on the MFI piece. The question that I have is on gold loan growth. Now if you look at several other banks, who are active in this space, they have shown a growth, which is substantially higher than what we have. So what is happening? And it is not as if those banks had a substantially lower AUM. Yes, 1 had actually higher AUM. Others may be lower. But yet, their growth of 10%, 6% sequential is significantly different from sub-3% that we have achieved. So really want to understand that. What is happening?

See, you're aware that there cap on LTV has been hiked to 90% temporarily, up to March 31. So many of the customers who collected with them, moved, have availed more LTV. And also, yes, they were able to get more loans also because of this temporary advantage. We feel like when the temporary advantage goes and will be -- the growth rate will come down. This is our feel. This is what the feel we get from the market.

Okay. Understood. So next quarter, the growth rates could again swing to your favor is what you are saying?

See, this year -- we expect the momentum to be maintained. Because more and more activities are happening. The businesses are coming to the normalcy. Because of the normalcy in both in agri and other sectors, we feel like the growth momentum is being maintained.

Sure. And lastly, from my side, now that the economy is all opening up and things are close to normal, how is the last quarter going for you? Last quarter is usually a strong quarter for you.

Yes. That's why -- see, now, yes many of segments are close to where we used to get good business. Like the academic institutions are still closed. In many sectors, industry, cottage industry are still slowly picking up. And the migrant laborers are returning for work, et cetera, et cetera. We see all these as positive. And the government's funding of infrastructure is expected to increase during the last quarter. We hope we will -- all these will help us in loan growth.

The next question is from the line of Pratik Chheda from IIFL Securities.

I just wanted 1 clarification on GNPA numbers. I just wanted to understand these GNPA numbers that you've put out is this based on the Supreme Court order? And if not, what is the pro forma GNPA across segments?

This is on the book, the total GNPA. So the 1.26% is gold loan plus Vehicle Finance mostly. So we have not done this bring out adjustment in the standalone entity.

So what would be the pro forma GNPA? I wanted to understand that.

I will get back to you because this -- the NPA numbers reported is as per the books.

Okay. And just wanted to understand what is the level of restructuring that has been done in the gold loan book. I mean MFI you have suggested around 1 lakh customers have been -- accounts have been restructured. But what is it in the gold loan book?

Yes. No restructuring. Even moratorium also nil only.

The next question is from the line of Radhika Lohia from Mirae Asset.

So there has been an increase in the Asirvad profitability. And what has accounted is this other income? So can you please tell what is included in the other income?

Raja?

Other income normally includes our documentation, the processing fee of 1%. Then we have income from fixed deposits, which we have placed for as collateral. And the third is we also do some cross-selling of products to the customers. All these 3 put together is in other income.

Okay. And my next question is that can you give me some idea on your incremental lease on your loan book, like specifically for the gold loan segment?

Yes. The yield will be maintained.

So any percentage if you can give me?

No, the incremental yield will be the same only, will be maintained. There won't be much difference.

The next question is from the line of Aswin Kumar Balasubramanian from HSBC Asset Management.

I have 1 question. Basically, your gold tonnage has come down slightly, while your gold AUM has increased quarter-on-quarter. So if I'm not wrong like the gold prices also July to September quarter were likely on the higher side as compared to from the December quarter and -- since your product is mainly 3 month product. So I just wanted to understand -- I mean, just wanted to understand how the AUM have actually grown.

See, it's a very usual phenomenon. When the gold prices are up, the tonnage will come down, because even then the growth of -- so we are getting some growth of some 10 to 20 percentage. And when the gold prices are down, then also we get around 10% to 15% growth. It means that when the gold prices are down, the tonnage increases. The gold price is up, the tonnage will go down. Because of this reason, people borrow money for their use. They borrow INR 10,000 or INR 20,000. See, they bring ornaments to avail that loan only. That's the reason. So because see when they avail, these people avail a loan of INR 10,000 or INR 15,000 or INR 20,000 or INR 50,000. They are always conscious about the need of early redemption because these are all family jewelry.

I got that. My question is more on a sequential basis between the Q2 and Q3, because Q2 and Q3, there's not been much price increase. I mean the price -- gold prices won't come down.

Yes. The difference will tell you that effective, for instance, in Q3 and -- Q2, Q3.

AUM grew by 2.4%.

AUM is grown by 2.4 percentage, and the tonnage is almost flat only this quarter. But ma'am already told that there is a 67,000 net increase in the number of customers. Okay. That way, the business is -- there are new customer also, which is increasing on the Q3 only. The result of tonnage is exactly related to the price also, again, because there customer is coming with some INR 25,000 need. They may carry some gold. So that is only reflecting in the tonnage. So that increase and decrease is happening. But the business side, there is an increase of 67,000 customers, net addition is happened. New customer also compared to Q2, it is increased by around 50,000 addition is happened compared to Q2.

Okay. And would there be an increase in LTV also or LTV will be similar?

63% now. So that 59% was in Q2. Now it is 63%. So because of the price, slight reduction, that may increase. That you see directly increase in that 2%, but actually it is 63%.

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

Congratulations. Sir, just had 1 question on funding profile. If you look at our liability mix that has changed considerably in spite of our business being extremely robust. We have almost completely shunned CP market compared to where we were a couple of years back. A, do you feel that we've gone really defensive in terms of our liability profile, which is affecting our cost of borrowings? And do you think we will make any changes there?

Yes. Viraj, see, this year, with the government support, a lot of long-term money was available, and it was coming at a slightly lower cost. So we thought of making that opportunity -- taking that opportunity. That is the reason temporarily our CP exposure has come down. But definitely, I think, the further requirements, definitely, we will use CP. It will help us in reducing the cost of borrowing further. But these bonds are available at for a particular time only. That is the reason, last 9 months, the bonds which are available, which is coming at comparatively lower rate. The last transaction we did three year money at less than 7.5%. So that is the reason we thought of taking the opportunity and reducing the CP exposure temporarily. So with the increase in tenure, quarter-on-quarter, our cost of borrowing is coming down. So this will give us some benefit in the long term. Almost 60 percentage of the liability is long term. And it is not with extra cost. So that is the reason we did that. But going forward, we can increase the CP exposure. We can manage. As our assets are short term, we can definitely manage with CP. As long-term money is available, at a lower cost, we thought of doing the bond which is available.

Sure. Just ma'am, one thing. In our longer-term goal, what will be the ideal liability structure in terms of CPs to bonds? I mean, are there any percentages in mind?

See, we were managing with 25 percentage CP, 25 percentage NCDs and 50 percentage through WCDL and cash credits. But now with the ECB transaction and the bond transactions, almost 60 percentage is long-term and 8 percentage is CP and the balance is WCDL and cash credit. So we can comfortably manage 15 percentage to 20 percentage CP as our most of the asset -- majority of the assets are short term. That is possible. 15 percentage to 20 percentage we can manage.

Due to time constraints, we'll take the last question from Anand Jhanwer from PhillipCapital.

Quickly wanted to know now that hopefully, COVID effect is behind us, would we be looking at increasing our gold loan branches? Because last 2 years, we've obviously not -- we've just consolidated our position. So brick-and-mortar model, are we going to go ahead and increase it again as the economy recovers? Or we'll focus more on the digital acceleration to get the customers? Because as I understand, last quarter, we bought some 60-odd-thousand new customers. And would that be a run rate that we can expect going forward?

So we intend to follow both. Expanding our reach digitally. We have started doorstep gold loan also, delivery at home, doorstep. And we have applied to the bank for around 300 branches in North India, where we see very good potential maybe because the functioning was a little slow because of many people who are working from home, et cetera, et cetera. So we hope the permission will come without much delay. Then we will open these 300 branches, in accordance with the permissions from RBI.

Sir, any time line for that, within a year, like calendar year '21 or?

We hope so. All depend on the permission from the regulator.

And second question, regarding that 60,000 customer acquisition for the quarter run rate, which turns around 2.4 lakh annually. Can we expect that? Because obviously, you've guided for 15% growth on the gold loan AUM, but customer acquisition has not been very aggressive, obviously, because of COVID and the consolidation was more important. But now that COVID is behind, would we look to chase customers aggressively over what we've done in the past 1 year?

Yes. Yes. We are doing that. And we hope the momentum will be maintained.

Just to add to that. 67,000 is the net increase in the customer base. During the quarter, we could get nearly 4 lakh new customers. This is the live customer as on 30 September and 31 December, what is the difference. So the customer base, there is a net increase of 67,000. But during the quarter, we added nearly 4 lakh new customers in gold loan.

Understood. Sir, 1 follow-up question regarding -- so because -- if you are expecting 300 branches to be added, let's say, within a year's time, subject to approval. So the OpEx would -- I would think go up from 5.5% what we are currently to maybe -- I mean, because earlier before 2, 3 years back, I remember, it used to be around 8%, which has come down to sub-6%. What could be the cost increase because of...

Yes. I don't think so because these 300 branches -- branch opening will be phased quarter-on-quarter, and we'll be able to achieve breakeven within 1 year. That's what we expect. So -- and the yield -- the net interest margin we hope it will be improved slightly because the cost of borrowing is coming down. And we plan to increase the short-term borrowing CP a little bit. So all these will take care of the additional cost because of this. So we hope to maintain -- even with the 300 branches happening in a phased manner, we hope the OpEx will be maintained at this level.

Thank you. That was the last question. I now hand the conference over to the management for closing comments.

So yes, yes, we hope we have answered all the questions to the satisfaction of the attendees. And thank you all for the participation and also the organizers for that. Thank you.

Thank you.

Thank you, sir.

Thank you very much.

Thank you.

Thank you.