Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Manappuram Finance Q1 FY '22 Earnings Conference Call, hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aalok Shah from Monarch Networth Capital Limited. Thank you, and over to you, sir.

Yes. Thank you, Melissa. Good evening to all. On behalf of Monarch Networth, we welcome you for Manappuram Finance Q1 FY '22 Results Con Call. We have the entire management team of Manappuram on the call represented by Mr. V. P. Nandakumar sir, MD and CEO; Ms. Bindu ma'am, CFO; Mr. B. N. Raveendra Babu, MD, Asirvad Microfinance Limited; Mr. Yogesh, CFO, Asirvad Finance Limited (sic) [ Asirvad Microfinance Limited ]; Mr. K. Senthil Kumar, Head, Vehicle and Equipment Finance; Mr. Sandeep Kumar, COO, Manappuram Home Finance; and Mr. Bikash Kumar Mishra, CFO, Manappuram Home Finance. Without taking much of the time, I now hand over the call to Nandakumar sir for his opening comments, post which we can get into the con call -- Q&A session. Thank you. And over to you, sir.

Yes. Thank you, Mr. Aalok Shah. Ladies and gentlemen, welcome to Manappuram Finance Q1 FY '22 conference call. Hope you, your family and friends are safe and healthy. Our previous con call to discuss about Q4 FY '21 results was held on 26th May against the backdrop of rising second wave that affected very badly. That was the time where many of our branches were not functional because of the widespread local lockdowns. Since then, there has been good improvement. And today, we work at full capacity. After 8 straight months of GST collections exceeding the INR 1 lakh crore mark, the revenue collected in June pertaining to our economic activity in May dipped to INR 93,000 crores. With the ending of second wave, the economy appears to have regained momentum. And the collections in July have topped the INR 1 lakh crore mark once again. However, the GST collections are essentially a proxy for the formal sector. And our experience has been that the formal sector from where we draw the bulk of our customer base suffered more damage. At the same time, the overall recovery in the economy is now being felt in the unorganized sector as well, as we have begun to see growth coming back. In the last con call, we have also mentioned how the prices of gold have corrected sharply from the peak of August 2021 by the end of the fiscal, which had an impact on our business. The overall trend in gold prices remained weak in Q1 as well, along with the physical disruptions, which prevailed in Q1, that affected new customer acquisition. All these factors had an impact on our business volumes, especially gold loans. As you know, gold loans have the dominant share in our company's business mix, and about 67% of our loan book is against gold. For the quarter, our gold loan AUM declined by 6% year-on-year and about 13% Q-on-Q, due to the impact of the combinations of factors I mentioned just now. Further, we also observed that in response to the stress in their general loan book, many private and PSU banks as well as other non-gold loan-focused NBFCs gave an extra push to their gold loan offerings, by competing our price and tenor. In our case, we saw that some of our high-valued customers with loans above INR 1 lakh were especially targeted for takeover by these other players to stand the attrition in this segment. We have now identified the areas where such attrition was seen more. We have launched special schemes for these areas, targeting high-ticket borrowers on competitive terms and conditions. I can say that the results are already visible in terms of renewed momentum of growth and new customer acquisition, and we are confident the trend will be sustained. The stress in the formal economy and weak gold prices led to higher auctions as well. As we are mainly into short-term gold loans, we recognize the stress in the portfolio early. And we initiate auctions in time so that the credit costs are minimized. As a rule, the price stress is better managed in the short-term gold loan compared to the 1-year product offered in the market. Going forward, as I said, we're already seeing growth coming back. And barring further pandemic disruptions, we are confident that it would be back to business as usual. Some of the key performance highlights for Q1 are as follows: consolidated AUM at INR 24,756 crores, is down by 2%, 3% -- 2.3% year-on-year and 9.1% Q-on-Q, mainly due to the weakness in the gold loan portfolio, which we have discussed. Our gold holdings stood at 58.1 tonnes. The tonnage degrowth for the quarter was about 7 tonnes. Our Microfinance subsidiary, Asirvad Microfinance, ended the quarter with AUM crossing INR 6,000 crores, a growth of 20% year-on-year and 1.1% over the preceding quarter. During the quarter, we prioritized asset quality over AUM growth given the stress in the system. Going forward, we believe the worst is behind us and barring further unforeseen eventualities, the outlook is quite positive. Our commercial vehicle business reported an AUM of INR 1,045 crores, which is down by 0.7% Q-on-Q and by 17.8% year-on-year. Collection efficiency was 87% in May and 105% in June. Our housing loan portfolio, which had a total book of INR 668 crores, which is up by 0.3% Q-on-Q and up by 6.5% year-on-year. Collection efficiency was 79% in May and 87% in June and fast improving. On the liquidity front, we are placed comfortably, and we continue to receive funds from all groups at competitive rates. 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 closely. Finally, we are reporting a consolidated quarterly net profit of INR 437 crores for Q1 FY '22, up by 18.7% year-on-year. Also sequentially, it is down by 6.7%. Thank you. Now over to our CFO, Ms. Bindu, for a detailed set of numbers.

Thank you very much, sir. Thanks to all our stakeholders for attending the quarterly update call. We hope you are doing well and staying safe. Since Q4 2021, the industry has been making a return with significant increase in disbursals and collection efficiency. However, the recovery had been hampered due to lockdown across all the geographies and fear among the employees and customers. Now coming to the operational review, we are carrying surplus liquidity across all the businesses. Cash and cash equivalents on hand on a consolidated basis was INR 2,893 crores and undrawn bank line was INR 7,320 crores as on 30th June 2021. Our CP exposure has come down to 6 percentage against 9 percentage a year ago. Borrowing costs, now more stable due to less availment of new facilities. Our consolidated AUM for Q1 was INR 24,756 crores, down by 2.3 percentage year-on-year and down by 9.1 percentage Q-on-Q. The Q-on-Q decline largely by gold loans. This is on account of partial lockdowns and the auction of collateral as well as the higher-than-normal redemptions. As you would have seen, gold prices have been declining globally, driven by the outlook towards higher interest rate. We believe that we are extremely well positioned to deal with any significant volatility in gold prices with average LTV of 65 percentage. The short tenure of our gold-loan product, which is 3 months, on an average results in early recognition of the NPAs compared to other players in the market who offer longer-tenure gold loans. Consolidated profit after tax was INR 437 crores, up by 18.7 percentage Y-o-Y and down by 6.7 percentage Q-on-Q. Despite the significant adverse effect of COVID Phase 2, ROE on a consolidated basis was 23.4 percentage and ROA was 5.8 percentage for the quarter. About the gold loan business, which constitutes 67 percentage of consolidated AUM, the AUM declined by 6.8 percentage Y-o-Y and down by 13.3 percentage Q-on-Q. The detailed explanation for the decline is provided in Page 23 of the investor presentation. Gold holdings at 58.1 tonnes. During the quarter, we were able to add only 2 lakh new customers as against 3 lakh in last quarter due to lockdowns and limited operating hours for our branches. Gold loan average ticket size and average duration was INR 42,749 and 114 days, respectively. The total number of gold loan customers stood at 24.06 lakhs. The gold loan book at INR 16,540 crores. Our weighted average LTV stands at INR 2,850 per gram or 65 percentage of the gold price as on 30th June 2021. Gold loan disbursements during the quarter at INR 35,419 crores compared to INR 44,630 crores in Q4. The online gold loan book accounts for 53 percentage of the total loan book. Coming to MFI business, the AUM stands at INR 6,053 crores, up by 1.1 percentage Q-on-Q and up by 20.1 percentage Y-o-Y. And this business reported a PAT of INR 7.7 crore compared to INR 4.1 crore in Q4 FY '21. Our collection efficiency from MFI business was at 70 percentage in June, in line with the industry. And disbursements during the quarter was INR 1,181 crores. MFI collections are steadily improving. The company has a capital adequacy of 22.7 percentage. Coming to vehicle finance business. We reported an AUM of INR 1,045 crores, which is flat Q-on-Q and down by 17.8 percentage Y-o-Y. Collection efficiency was 87 percentage and 105 percentage for May and June. Home loan business had a total book of INR 668 crores, which is, again, flat Q-on-Q and up by 6.5 percentage Y-o-Y. Now operates from 68 branches and reported a profit of INR 2.2 crores during the quarter. Collection efficiency, 79 percentage and 87 percentage in May and June. Collection efficiency for the quarter was 84 percentage in -- compared to 96 percentage in Q4 FY '21. Loan to NBFCs at INR 144 crores, and loan to SME and others at INR 307 crores. Provisions and write-offs for the stand-alone entity during the quarter stood at INR 30 crores compared to INR 12 crores in Q4 FY '21. We have provided INR 15 crores additional due to COVID-19. Our gross NPA is at 1.96 percentage against 1.92 percentage Q4 FY '21. The Board declared an interim dividend of INR 0.75 for the quarter. Our capital position is strong, and the company is well capitalized with a capital adequacy ratio of 34.4 percentage. Company's consolidated net worth stands at INR 7,662 crores at the end of the quarter. The book value per share stood at INR 90.50. Thank you. Now we can go for the Q&A session.

[Operator Instructions] We have the first question from the line of Dhaval Gada from DSP.

Sir, just a few questions. First is on the gold loan stock. So basically, we saw this quarter, the stock of gold come down from 65 tonne to 58 tonne, approximately. Could you explain the sort of drop between the pressure that you saw in the high-value gold loan customer segment that you talked about? How much was the volume loss from -- on that account? Second is the auction-related loss in tonnage. And any other related impact because of which this net decline is? And also, how much was the fresh disbursement during the quarter in volume terms? So that is the first question. The second question is related to the restructured loans. Can you give the stock of standard restructured loans in the MFI segment, vehicle finance segment and the housing segment? Yes, and then I have a follow-up.

So the talk of gold decline was -- see, our gold loans are of a short tenure, 3 months. We have just launched to pick up the price, and these have come for auction during this period. And this has become overdue. As the company's policy is to maintain a high asset quality, so when we started the auction procedure, many of the customers had scrapped their books. Along with that, there was some auction also. That was the reason for the decline. And now that the branches are open, activities have started, we are seeing growth. And with the growth at present of what we witnessed in the recent days, we see the ForEx growth of around 15% during the next 9 months, during the next 3 quarters. So the auctions are also coming down. And we have some growth-focused activities also like for targeting high-ticket loans. So we have initiated several things, including communication with the customers through publicity and other channels of communication like online channels as well as local advertisements. So we hope the growth will come back soon. And our strategy has been mainly to manage the price risk. So we can see with the price risk is very much reduced for the 3-loan -- or 3-month gold loan product compared to 1-year product in the market. So see, there is a 9-month difference between 3-month product and 9-month product. So this difference is going to see in the market in the coming 2, 3 quarters, where we will be able to grow. Regarding the numbers, yes, Bindu?

Yes. So Dhaval, we have provided in Slide 23, how the new customer acquisition is different between Q4 and Q1. Q4, we added 3.1 lakh new customers, which is 2 lakh during this quarter. But after June, when things opened up, this was around 40 percentage growth compared to the earlier period. So we hope this will help us to increase the gold loan business.

Ma'am, what was the auction that we saw -- amount of gold auction?

So last year, we had the maximum disbursement in Q2, which is nearly INR 1 lakh -- nearly INR 93,000 crores. So if we see as a percentage of AUM -- as a percentage of disbursement, this is 1.5 percentage auction. So in absolute amount, this is INR 1,500 crores during this quarter.

INR 1,500 crores is auction and 1.5 tonne -- sorry, is that number correct?

1.5 percentage of disbursement. In terms of tonnage, it is 4.5 tonnes.

4.5 tonnes. Okay. Got it. And last quarter, if I remember right, you had auctioned 1 tonne?

Yes.

Right. Okay. And the second follow-up for this is -- so you talked about high-value customer. Just -- are these the customer base that the banks target? And was rate one of the reason why we were seeing this pressure? If you could sort of pinpoint what was the reason this pressure was witnessed in the last few months?

See, the banks have an advantage, some leeway with regard to the higher LTV up to 90%, which is over by March. And with that LTV -- 90% LTV at the highest price, the banks are feeling the pressure now. Because of that pressure, I don't think that the sort of profitability advantage the banks have is sustained. I think that is vanished.

No. Sir, sorry, my question was the pressure that we -- sort of we are talking about in the last 3 months on this segment of high-ticket gold customer base. So this pressure came on account of -- was it rate of interest? Or was it tenure? Or was it higher LTV? So what was the trigger for this pressure? Especially in the...

Yes. All these have helped the competition in general to gain the ground. And we think it is over. That phase is over. All the 3 whatever you have mentioned.

Okay. Okay. Fine. Sir, and sorry, on the restructured loan, if you could provide the breakdown between the 3 businesses, that would be very useful. That was my last question.

Bindu?

Yes. So in the stand-alone entity, we had very few loans considered for -- or we have offered the restructuring because there was a delay in collections for May and June. April, things were almost normal. May and June, in fact, our employees also were not able to reach out to the customers for collection. So wherever we found a genuine request, we have considered. Otherwise, as usual, we are taking an upfront provision, and we will focus on collection. So based on the request from the customers, we will do a few cases only. So we will see, the time line is available up to December. So we will monitor the trend in collection efficiency because immediately after the quarter end, the things are opening up. So we know that this will delay the cash collection. So our focus at this point of time will be more on collection. Then going forward, we will see.

We have the next question from the line of Prashanth Sridhar from SBI Mutual Fund.

Just 2 questions from my side. So on the INR 1,500 crores of auctions, what is the amount of principal and interest related to these accounts?

The INR 1,500 crores is principal.

Okay. So we would have recovered 100% of principal and 0 interest. Is that correct?

Yes. There will be a small principal loss if there is any appraisal issues, et cetera. Other than that, we have recovered 100 percentage.

See, because of the short-term nature of the product, we are able to realize. That's the reason why we are able to protect our yield. See, there is no fluctuation with regard to yield.

Right. Sure. Sure. And on the MFI, how much will be the debt coming up for repayment in the next 1 year? And Manappuram Finance would have given any loans to the MFI? And this one -- this is what, I think, last time, we had reported 4% restructuring in MFI and 8% in vehicle. I understand there is no other restructuring in this quarter.

Yes, it's based on the loan from the parent to the subsidiary. See, on an average, the life of the loan is around 18 months. So our loan book currently is INR 6,000 crores.

Okay. So what would be the quantum of debt that is maturing over the next 1 year in the MFI?

Bindu?

Yes, Yogesh, you can give the numbers.

Yes. So you are talking about the AUM, which is coming for maturities are roughly around 40% of...

Borrowing. Yogesh, it is about borrowing.

Borrowing. Borrowing. So for borrowing also, we have generally our -- currently, our average tenure is more than 24 months. So roughly for next 1 year, about 30% of our borrowing would come for maturity, which -- for which we have backup lines as well.

30%. Okay. Okay. Sure.

We have the next question from the line of Prateek Agrawal from ASK Investment Managers.

A few questions. One, this time around in the COVID period, we saw a dip in online gold loans. I would have thought that when that closed, people would have left that product up. So that was one. Second, on the MFI side, now that things have opened up and on your presentation, you're talking of much higher collection efficiencies in July, do we expect further stress? Do we expect write-back? What should be the expectation going forward? And third, of your other 2 products, housing loan and vehicle finance, have they stabilized? And now are we on the growth path? Or they are still being stabilized?

So this COVID period, COVID first and second, the major difference is, the COVID first, it was completely locked and people wandered for money. So using the online platform, they have -- and the price also was going up. Using that opportunity, they have availed more amount on the same platform. During the second COVID phase, yes, what has happened is the closedown of branches were intermittent, and the price has come down. And many people who wanted money, they have used this occasion to -- who have cashed out, they used this occasion to scrap the gold in the market and realize money. This was the difference. That's why during the first phase of COVID, there was a sharp increase in the online gold loan. And during the second phase of COVID, there was no much increase. The branches were open, and the price was down. As there was a redemption pressure which for many of them subscribing to the gold in the market. And yes, the CV finance, et cetera, the collections are steadily improving. And as I mentioned, month-on-month, we see 15% to 20% increase in collection. And I think it is because of -- in vehicle finance, last month, it was 105%. This month, it is expected to cross 110%, 110% to 115%. So it means that the ideal collection is also coming. Microfinance also, it is steadily improving. So with the opening of the economy and a lot of activities, these are steadily improving.

So we will start to grow here? We have been like holding these...

Yes. So vehicle finance, we are disbursing now currently around INR 100 crores a month, and this is slowly improving. Similarly in home finance also, which was -- where we were not able to disburse, but at the current level, we have reached a disbursal level of around INR 35 crores, and it is steadily improving month-on-month. Microfinance also, yes, more emphasis is on collection. But we are also growing slowly. We hope we can attain a reasonable growth there also.

Microfinance, what would be the expectations on provisioning, write-offs, et cetera, next quarter?

Yogesh?

See, currently, as we see, we have July and first few days of August, we are consistent at 95%. So -- but it's too early to comment on anything as we expect it has to steadily improve month-on-month. So we provided INR 90 crores in first quarter. Going forward, provision should come down, hoping that these collection efficiency trends continues and improves from hereon.

Just one directional thing, sir, at the end of this fiscal, do we expect gold loan AUM to be higher than last year? That 15% growth that you spoke about was over this quarter or was over fiscal '21 end?

It is fiscal '21 end.

From this quarter.

From this quarter.

From this quarter.

9 months. 9 months.

9 months, we are expecting this growth.

3 quarters from -- starting from July.

Sir, but the base on which you are talking of 15% growth is Q4 end of last year or Q1 end of this year?

See -- from the closing of the first quarter.

So de facto, we will go back to where we were at the end of the year?

Yes, yes.

We have the next question from the line of Raghav from ADIA.

Can you hear me? Hello?

Yes, please go ahead.

Sorry, I had muted it. I was just asking on the gold loan AUM side, I'm sorry, but maybe the explanation was not fully clear. But could you help us understand the AUM in terms of price versus tonnage. The drop in tonnage is what stands out, right? So 72 tonnes at the end of FY '20 came down to 65 tonnes, and then now it's 58 tonnes. So what does that mean? Is it that customers are unable to sort of pay back, and hence, there is auctioning of the loans? Or -- can you help us understand tonnage reduction as a volume metric?

See, the customers, our target audience was feeling so much of pressure because of the 2 rounds of COVID, which is continuing for the last 1.5 years. In the meantime, you see the price of gold also has increased. So to maintain the -- to have the same amount, they need to bring a lot of quantity. And because of the short-term nature of the -- our gold loan, the customers' turnover is relatively higher. So because of that, our this thing -- yes. So the gold loans are repriced continuously, bringing down the result of these prices. So that's the reason why the reduction has happened. And the gold price -- as the gold price is down, we see steady growth in collateral also. Now it has come down to 58 tonnes. This also is steadily growing. As I mentioned, during the next 9 months, that is second quarter, third quarter and fourth quarter, we see the prospects for growth of around 15%. Simultaneously, the collateral also will grow.

So just to make sure I understand, it's because of underlying stress that some of the customers are not able to pay back, and hence, the loans are getting auctioned and that will get accelerated as the price of gold reduces, so LTVs go up. That's fundamentally what's driving this. And once gold prices stabilize and the COVID stress goes away, you think normalcy will return?

Yes. And now our LTV is around 60...

63%.

63%. Our LTV is around 63% at the current price. Yes, so we -- it means with the growth which I have projected, the collateral also is growing -- will grow.

Yes. The redemption should have been compensated if the new customer acquisition is similar. Because of the lockdown, we have seen dip in new customer acquisition also. Q4, we had new customer of nearly 3.1 lakh, which has come down to 2 lakh during this quarter because of less number of working days. Otherwise, this would have been supported for the decline in tonnage.

We have the next question from the line of Abhijit Tibrewal from Motilal Oswal.

My first question is to Bindu ma'am. In the last quarter, if you remember, we had given some kind of a bridge between our Q3 and Q4 gold AUM. Possible if you give some kind of a bridge, even if it's approximate, what is it that kind of contributed to this gold AUM and the gold holdings' decline, auction-related, withdrawal related? What was it because of competition from banks and some of the non-gold NBFCs, which were offering gold loans at lower prices and lower interest rates?

Okay. So during the quarter, the decline in tonnage is around 11 percentage, and in terms of AUM, 13.3 percentage. So mostly the price remained stable. And the decline largely happened in April when the price was very low. We have seen 23 percentage decline from the peak gold price when the maximum auction and this redemption happened. So the other details I can share separately. The other breakup I can share with you separately.

Sure, ma'am. The other thing that I wanted to check with you, what is the interest accrued component as on Q1?

So INR 740 crores.

INR 740 crores. Okay. And the last question that I had is -- and this is also to Nandakumar sir. Sir, I mean about a month back when you were trying to do some kind of channel checks around the gold loan demand, we were given to understand that while the demand was picking up very swiftly in Northern India, because of continuing lockdowns in Southern India, the demand was still, I would say, tepid. And sir, when I look at our branch split, and I have our FY '20 branch split, about 63% of our branches were in the southern region. So I mean, would it be also fair to say that, I mean, lower acquisitions that we saw during Q1 were also a function of our stronghold in the southern markets? And how is the southern market demand looking like now in August?

Yes. As you have rightly said, our presence is rather -- 2/3 of our presence is skewed in favor of South India. So as to the -- as the pandemic conditions were more severe this time in North India, North Indian branches remained closed in many places. So that also has been a cause for the decline. At the same time, we don't want to take the price risk. So the recoveries, auctions were happening without any interruption. That's why, we have been able to maintain NPA, the stand-alone book NPA including other products at 1.6 percentage. So we are out of the price risk. And now Southern India has opened up. And we see good growth happening in Southern India also. All the 5 states in Southern India, we see good growth.

Okay. Sir, if I could squeeze in just one last question here. Because, I mean, gold prices were at their peak some time in August and September last year and given that you are seeing that a large part of the portfolio where LTVs are greater than 80%, you have already kind of taken those risk management measures and the proportion of that high LTV portfolio is down to about 6%, so fair to say that, at least, I mean, those loans which would have -- we would have done around August and September last year would have largely run off or would have been auctioned by now?

Yes. Yes. The higher LTV loans, all are out of our books now. So what we have given importance is managing the price risk. We were skeptical about the gold price, and we believed that the gold price would come down. So our focus remains to manage the price risk. So that's why -- these short-term loans and timely auctions to clear us out of this price risk. Had it been 1 year, yes, we would not have faced such a decline as seen in the market. But we have a big query before us. After 9 months, what would be the scenario about gold price? We can't predict. And for these customers, many of them may not service the loan. They will accrue the interest, and after 1 or 2 quarters, we would have ceased. Now we don't have that worry. We are looking towards growth.

[Operator Instructions] We have the next question from the line of Anand Bhavnani from White Oak.

Just wish to understand how are you seeing the microfinance business at this juncture? And if you can give us some color on [Technical Difficulty] the credit costs for this business in...

Mr. Anand, this is the operator. Sir, the audio from your line is breaking. Could you repeat the question?

Yes. The question is on microfinance. And I wish to understand if you can give us some color on how do you see the credit costs in the microfinance business for the financial year '22? And how you see the AUM growth potential? Any color on microfinance business?

Yogesh, can you share?

Yes, sir. So -- see, in first quarter, since we have a lockdown, so our collection efficiency was -- average efficiency, we registered 75% in Q1, where we took INR 90 crores of provisions. But as we speak, we are at 95%. And if we hope that we, at least, maintain or improve the collection efficiency hereon, we may have a lower provision in the next quarter. However, I will -- it's very difficult to put any number or an estimation to credit cost. Last year, we took around 5%, but I mean -- this year, we -- I mean, it's very difficult to estimate at the point. But if the situation improves from here, it could not be -- the provisions in next quarter could be lower than current quarter.

Okay. And what percentage of our microfinance customers would have requested a top-up in Q1?

So top-up loans, we don't give, but we only give the -- to the existing customer, we give them a new loan. We don't -- we have not given any top-up loan as such.

Okay. So what percentage of our existing customers would have requested a new loan?

No. So they only get a new loan when they're closer to maturity. When they have only 3 EMIs pending out of 26 EMIs, they are eligible for renewal. So that is what we call as a conversion. That is what we have given.

We have the next question from the line of Milind Agrawal from SBI Mutual Fund.

Sir, just a question on the competitive aspect. So over the last 1 year, 1.5 years, banks have incrementally been more competitive. But that's a business where maybe the ticket sizes are slightly higher and the lending fees are lower. So from our side, is there a thought process to sort of cater to bank business incrementally where maybe we do slightly higher ticket size lending, but one that comes at rates that are lower than the rate that you have on the book. Any thoughts there in terms of changing the structure of loan that we have?

Yes. Yes. So we analyzed and found where we lost the high-ticket customers. So there, we have introduced attractive schemes just to attract high-ticket loans. We introduced special schemes for above INR 10 lakhs, above INR 5 lakhs, above INR 1 lakh, et cetera, and these are yielding results. And we are confident to get back these customers in a few months from now.

Sure. And what is the lowest lending rate that we offer on these products, sir? And any thoughts, sir, in terms of elongating the tenor from, let's say, 3 months to maybe 6 months or 9 months for some of these higher-ticket size loans?

Yes. Yes. So in some categories, we see the need. Accordingly, we have extended the tenure of these loans. So when we see the customer profile, but because they are of a little more formal in nature, so that we are doing.

Okay. And just last one, sir, what would be the P&L interest that we collected in this quarter and last quarter, Q4 FY '21 and Q1 '22?

We -- in gold loan, we don't have any P&L interests. We have some slabs. Yes, that's -- for the first 2 months thereafter, some slabs are there.

We have the next question from the line of Amit Mantri from 2point2 Capital.

So given the number of new customer activation or acquisition in Q4, and then, last month, can you give that same number for Q3 and Q2 also because Q4 was a weak quarter for us. Our loan book had not grown in that quarter. So how has Q3 and Q2 been in terms of new customer acquisitions? And how are the current trend versus Q3 and Q2?

See, it has gone down. And now we have come back to the January, February level. So it is steadily improving, and we hope to reach a level of around -- on an average of 5,000 customers-plus new customer acquisition in the coming months, probably from this month itself. We still -- we hope we will be able to reach that level.

Okay. And second question, sir, now that...

This is the pre-COVID level.

Mr. Mantri, I'm sorry to interrupt, but we have participants in the queue. So if you could come back with your questions.

I've only asked one question. So can I ask the second question?

Please go ahead.

Yes. So now in terms of yields, now given that you have started becoming a bit aggressive in terms of -- on the higher-ticket side, so will the overall yields be trending downwards on the overall portfolio?

Yes. Maybe some contraction in the yield by 1%, 1.5%, which will be compensated with the growth. We -- so the profitability, we don't have much worry because we have the confidence that if at all the yield depresses, that it will be compensated with the growth. And also you see, with the growth, the ROA also will come down.

[Operator Instructions] We have the next question from the line of Rajiv Agrawal from Sterling Capital.

Sir, this INR 1,174 crores restructuring you have done, so did we -- was there any provisioning we have not done any provisioning on that?

The provisions as per like the IndAS or RBI provisioning, so we are following the provisioning norms.

Okay. So do we -- so in the coming quarters, there may be some provisioning? Or just -- if the recoveries are not sufficient, will there be -- can we expect some provisioning on this also, INR 1,174 crores?

Yes. We believe that this quarter is a bad quarter in terms of lockdowns, et cetera. Our team couldn't go for collection. And we believe that if the COVID issues are not there in future, the coming quarters will be better in terms of provision. So as you are aware last year also, we took some aggressive provisioning in Q1. And the P&L impact has come down in the next 3 quarters. So this quarter also, we believe that we took upfront provisioning. And with the collection efficiency, as we are getting a better trend in Q2, we believe that the provisions should come down.

Okay. And one more question. This INR 122 crore provisioning you have done on a consolidated basis, can you just give the break-up?

So mainly, it is MFI. MFI, INR 90 crores; and the stand-alone entity, INR 30 crores. So that is INR 120 crores, then the balance is housing.

We have the next question from the line of Chirag Sureka from DSP Mutual Fund.

I can imagine that the pandemic and shutdowns, it's very difficult to predict MFI business. What I wanted to know was, and Nandakumar sir, you have mentioned that the informal sector has also picked up. Sir, are the customers at least making part payments? And there -- is the business still alive? Because there might be provisions and credit costs now, but eventually the customer business still holding good?

Yes. In the MFI business, our major focus now is collection. So the collections have gone up to 95% now, as mentioned by the CFO there. So as things are opened up and are getting opened up, the things will fast improve. Only the worry there is the predicted or anticipated third wave. If third wave is not there, yes, things would be better. So even with the worry of third wave, our emphasis is more on collection. We incentivize the employees also, and -- so the collections are fast getting better.

Sir, what I wanted to ask was the customers' underlying business is still picking up, right, with -- I mean, that has not been wiped out?

See, when things are opened up, they are also getting -- they are a little bit fast going to the bottom of the pyramid. So their businesses are getting fast back to track.

We have the next question from the line of Prateek Agrawal from ASK Investment Managers.

One more question. That INR 1,500 crore that got auctioned, what do you expect would be the behavior of those clients? Will they come back or that is client attrition?

See, in gold, and these are auctioned, the customer has -- know how much the pain against in this because he has been informed several times. We did everything to help him to redeem. See, another thing, see, those customers are those who don't have the money. And when these are auctioned, the surplus is refunded to them. If they sell it in the market, they may not get this much of surplus from this. So we don't have much complain about that -- about the auction because these are all very transparent, and with this knowledge only, inviting him also for the auction.

Yes. Understood. It's just that maybe those customers will become customers again after a long while?

Yes. They will come back.

They will come back because of this, the transparency and communication with him, the chances of coming back is very high. And most of them, 80% of them come back. That's our experience over the last several years.

So sir, over the last 1 year, if you see your other competitors, they have grown, while they may have de-grown last 1 quarter by a small amount? Plus, we are like down...

That is why I told it is primarily because of the product structure. Obviously, it's 3 months. And we -- whatever we have lent at the highest price, we have phased these out. We are far ahead of others in the market with regard to managing the price risk. Now the 1-year product, I'm not telling about competition. Whoever is lending for 1 year, they will face the real heat after 9 more months than what we faced. During that time, we have seen we are able to witness growth. We are compared with some of the NBFC players in the market. And from 2013 onwards, if you take -- '14 onwards, the growth rate has been the same. During de-mon also, we have auctioned on time. So we are able to maintain the yield. And after the auction, until '19, we have seen the same growth. So it is because of the product structure, 3 months and the market of 12 months. It is because of this only, you will see -- you will witness this in the next 2, 3 quarters.

And lastly, somebody else also asked this, is this 3-month structure way too conservative? Can we do something like a 6-month structure for everybody? The 3 months would be a calculation that there you are always in money. So it's a very safe, very good product for the house. But maybe for the borrower, is it friendly enough?

For a stressed borrower, it is 6 months only because 3 months is the contract period, and the auctions are being conducted in another 3 months of -- after the maturity of the loan. And so in fact, for this first customer, he will get 6 months. The second thing, see, if the customer pays interest in full, and mark-to market, he gets another 6 months, so in fact, it is 6 months only for this first customer. So see, what these customers -- yes, if there is some sort of pressure in the interest collection, this is for interest collection only. 3 months means 3 months interest -- at least 6 months, he has to pay the interest. Only if the interest is collected in 3 months or between 3 months and 6 months, he will be able to pull on these loans and redeem it through his cash flow. So 1-year product, see, these customers will tend to accrue the interest as the first customers. And ultimately, they will leave it.

Sorry to dwell on this, but for example, last year, the prices moved up. And for people who had a longer period is saying they could keep on accumulating interest for a length of time and show growth. Whereas for you, it becomes mark-to-market very quickly and people will reduce their tonnages with yourselves, right? So in the period of rising gold prices, your gold tonnage growth will almost definitely lag anybody else. So people are -- they will come back after 3 months, give you as much gold as is required for 74%. While the same thing will happen to somebody else's borrowers after a period of a year. That was what was in the mind actually.

See, what about the money lent during the highest yield due period? So see, for them, today's receivable is much higher than the current price, rolling price. That also should be understood.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I would like to hand the floor back to the management for closing comments. Please go ahead.

So thank you. We are always open to the investors for ready discussion or query -- answer any query from all of you. We are available. Yes, please do call if you want more detail. Thank you for attending the call. For -- Mr. Aalok, thank you for arranging the call. Thank you, all the attendees once again.

Thank you.

Thank you, sir.

Thank you.

Thank you, members of the management and Mr. Shah. Ladies and gentlemen, on behalf of Monarch Networth Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.