Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Manappuram Finance Limited Q2 Results Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Chheda from B&K Securities. Thank you, and over to you, sir.

Hi, a very good afternoon to all of you. We have with us today the entire senior management team of Manappuram to discuss the Q2 FY '22 results and also any queries that investors might have. So from Manappuram, we have Mr. Nandakumar, MD and CEO; and also Ms. Bindu, who is the CFO. Also, we have the senior management team from the respective subsidiaries, Asirvad and then Vehicle and Home Finance book. I would now hand over the call to Mr. Nandakumar for opening remarks and then followed by questions and answers. Over to you, sir.

Thank you. Good evening, ladies and gentlemen, and welcome to our Q2 FY 2022 conference call. I hope you and your family are safe and doing well. In our last con call to discuss the Q1 results, I had mentioned that the recovery in the economy which you have seen first in the formal sector was also beginning to be felt in the unorganized and rural sector. Since then, we are seeing signs of a sustained upfront with the resumption of economic activity supported by the rapid pace of vaccination. In fact, the key takeaway from our Q2 performance is robust growth we have achieved in our business volumes, be it in gold loan, microfinance or in the home loan or vehicle loan. It reflects the emerging recovery with the rural and unorganized sector, aided by some of our own focused efforts in this direction. The trends are promising. And going forward, we expect to sustain the growth along with improved profitability. In the last con call, I had also mentioned for private and PSU bank, SMS other [indiscernible] loan focus in BSE has sought to counter the trust their general loan book by pushing their gold loan offering and competing on price and tenure. They have targeted some of our high-value customers with loan above INR 1 lakh per takeover. Since then, we have responded with aggressive offer of our own to retain and attract high-value customers. The results are visible in the sharp growth of our gold loan portfolio, which at INR 18,720 crore is up sequentially by over 13 percentage compared to INR 16,540 crore for the preceding year -- preceding quarter. Importantly, this was accompanied by proportionate growth in gold collateral, which grew sequentially by 11.4% to 64.7 tonnes from 58.08 tonnes in Q1. Further, we also saw a 4.2% Q-on-Q growth in the live customer base of gold loans. The growth was no doubt aided by overall recovery in the informal sector and the good monsoon. Equally, a key role was played by a more focused marketing strategy, which involved hiring of over 1,500 marketing personnel, who were posted at the branches. This was accompanied by higher spends on our advertisements across print, electronic and new media channel. While this has pushed up our OpEx, we see an investment in growth which will pay over the short to medium term. Consequently, our consolidated net profit at INR 370 crores was lower by about 15% compared to Q1. In fact, by the end of this fiscal year, we expect our gold loan portfolio to grow by about 15 to 20 percentage over the previous fiscal. Away from gold loans, our nongold business also recorded brisk growth during the quarter, led by our microfinance subsidiary, Asirvad Microfinance. It's AUM of INR 7,160 crores represents a growth of 18% Q-on-Q and is perhaps another pointer to the strength of the recovery in the informal economy. Our commercial vehicle business reported a Q-on-Q growth of 21%, while our housing loan subsidiary reported modest growth, growing its book by 9.58 percentage during the quarter. The full details of performance of our non-gold business has also a more comprehensive look. All our numbers will be covered shortly by our CFO. For now, I would like to conclude with the reminder that last month, the international rating agency S&P upgraded our long-term issuer service rating from B+ to BB- with a stable outlook. S&P also affirmed as a B short-term issuer credit rating for the company. Thank you. Now over to our CFO, Ms. Bindu A.L. for a more detailed look at the numbers.

Thank you very much, sir. Thanks to all our stakeholders for attending this quarterly update call. The industry saw a drop in disbursements and collections in Q1 and is expected to bounce back to the pre-pandemic level by the end of this fiscal. While collections have already started improving, disbursements gained momentum in the run-up to the festival season, good monsoon and pent-up demand for credit across various sectors. Now coming to the operational overview. We are carrying surplus liquidity across all businesses. Cash and cash equivalents on hand on a consolidated basis was INR 4,578 crores, and undrawn bank line was INR 4,265 crores at the end of the quarter. Our CP exposure is 8 percentage of total borrowings in the stand-alone entity. Our ALM is well positioned across all buckets. Stand-alone borrowing cost has come down to 7.94 percentage in comparison with 8.61 percentage in Q1 FY '22. Our consolidated AUM for Q2 FY '22 was INR 28,422 crores, up by 14.8 percentage Q-on-Q and up by 5.6% Y-o-Y. The sequential growth in AUM was largely on account of gold loan growth. During the quarter, the company invested significantly in gold loan growth initiatives, which led to increased OpEx. We hired 1,622 marketing personnel at branches to drive higher growth, additional spends on advertisements and higher growth resulted into increased field incentives. As a result, consolidated profit after tax was INR 370 crores for Q2 FY '22, down by 15.3 percentage Q-on-Q and down by 8.8 percentage Y-o-Y. ROE on a consolidated basis was 19 percentage, and ROA was 4.7 percentage for the quarter-ended September '21. Gold loan business, which constitutes 66% of consolidated AUM. There is the balance, 34 percentage, comprises of microfinance, vehicle, housing and other businesses. This quarter witnessed a sharp growth in gold loan, tonnage and new customer acquisition. Gold loan AUM increased by 13.2 percentage Q-on-Q, down by 5.2 percentage Y-o-Y. Gold holdings stood at 64.7 tonnes, up by 11.4 percentage Q-on-Q and down by 6 percentage Y-o-Y. During the quarter, we were able to add 3.89 lakh new customers against 2 lakh in last quarter. Gold loan average ticket sales and average duration was INR 48,090 and 106 days, respectively. The total number of gold loan customers stood at 25.08 lakhs, the gold loan book at INR 18,720 crores. Our weighted average LTV stands at INR 2,896 per gram or 67 percentage of the gold price as on 30th September 2021, which is well below among the peer group. Gold loan disbursements during the quarter stood at INR 34,783 crores. The online gold loan book accounts for 45 percentage of the total gold loan book. Coming to MFI business. Asirvad MFI AUM stands at INR 7,162 crores, up by 18.3 percentage Q-on-Q and up by 44.1 percentage Y-o-Y. And this business reported a profit after tax of INR 12 crores in Q2 compared to INR 7 crores in Q1 FY '22. Our collection efficiency from MFI business during the quarter was 91 percentage compared to 74 percentage in Q1 FY '22. And disbursements during the quarter was INR 2,749 crores. The company has a capital adequacy ratio of 18.6%. Vehicle Finance business, we have reported an AUM of INR 1,267 crores, which is up by 21.3 percentage Q-on-Q and up by 19.3 percentage Y-o-Y. Collection efficiency for the quarter was 120 percentage compared to 97 percentage in Q1 FY '22. Home loan business, total loan book of INR 732 crores, which is up by 9.6 percentage Q-on-Q and up by 18 percentage Y-o-Y. It now operates from 73 branches and reported a profit of INR 2.7 crores during the quarter. Collection efficiency for the quarter was 95 percentage compared to 84 percentage in Q1 FY '22. Loan to NBFCs at INR 79 crores and SME loan book stands at INR 461 crores. Provisions and write-offs for the stand-alone entity during the quarter at INR 10 crores compared to INR 29 crores in Q1. Our GNPA at 1.59 percentage at the end of the quarter compared to 1.96 percentage in Q1. The Board declared an interim dividend of INR 0.75 for this quarter. Our capital position is strong, and the company is well capitalized with a capital adequacy ratio of 31.8% percentage. Company's consolidated net worth stands at INR 7,968 crores. The book value per share stood at INR 94.1. Thanks. Now we can go for the Q&A session.

[Operator Instructions] We have the first question from the line of Aswin Kumar Balasubramanian from HSBC AMC.

My question was regarding the MFI business. It's been a fairly sharp growth. In fact, seems to be higher than even many of your peers. And also today, it constitutes about 25% of the overall consolidated loan book. So I mean, do you have any kind of upper limit in mind as a proportion? So that is the first question. And the second question is on the asset quality here. So if I look at Slide #27, your collection efficiency seems to have improved in this quarter. But if I look at the 0 plus, 30 plus, 60 plus numbers, I mean, those are higher. So I mean I just wanted to -- it would help if you could just explain that slide a little bit better so that we can get a better understanding of what's the exact trend there.

So your question knocks on 2 [indiscernible], one about the MFI business [indiscernible] out of consolidated portfolio 25% is from microfinance. About the growth plans, how much at the consolidated level we are allocating our capital. Our capital allocation for MFI business would not exceed more than 15%. It is capped at 15%. Now the capital we have allocated stands well below 10%. If for its growth, anything is required more than 15% of our consolidated growth, we will raise capital from outside or we will restrict the growth at that point of time. It's our risk appetite as far as the MFI business is concerned. So 85% of our capital will be allocated for secured business. There are also our major criteria, more than 50% of our capital all the time be allocated for gold loan business. That is according to priority, that will be the priority #1. The priority #2 where around 50% of the capital will be used to -- would be for the mortgage business, micro mortgages up to INR 15 lakhs. This comprises both affordable housing as well as MSP portfolio. As I mentioned, it will be fully secured against collateral. And the third, around 15% of our capital would be allocated for people of microfinance. There are also [indiscernible] against commercial vehicles rather than private vehicles. And the balance is 13% maximum. And we want even then 15%, you would limit that capital allocation around 10%. This is at a consolidated level, this is our business plan. And about collection efficiency, your questions will be answered by their CFO, Mr. Yogesh. Yes. Yogesh, you can.

First, our collection efficiency is certainly improving more quarter-on-quarter which is setting up to 91%. Though the PAR at the moment is around 26%, and we hope that our efficiency will cross above 95% and increase more than 95% which will definitely help us to collect to also overdues from the current OD customer, and we hope to bring PAR down which is at around 26% currently, we will -- substantially reduction we have planned in for Q3.

If I can just clarify that. But even the overdue proportion, even the 0 plus has increased, right, like from 22.4 to 25.8. So I mean because if the collection efficiency has improved, I mean we would normally expect that to come down. So is there any like restructuring which is -- which you had provided in June or something which has come out of the moratorium or something of that kind which is contributing to this?

Not exactly. I mean the restructuring could be one of the reasons. But again, in the current scenario, we are also having a little more of a fresh flow which is coming from the non-OD book. So -- so PAR may remain at around remain 26%. The improved collection efficacy has not given us the impact which resulted -- which we intended to have. So the Q3, our endeavor is to reduce the fresh look, which is slightly higher for us or higher for us in Q2. Once we control that, it will definitely give us the desired result of reduction in PAR.

And how much would be your restructured book? And like what will be the nature of the restructuring which you would have done typically?

So currently, we have around INR 100 crores, which is remaining in terms of the restructuring, which is around 15%. So the customer may have seen that customers are -- some customers have requested us for restructuring. They did not want to -- we had also taken that into concentration. And the current efficiency in the restructured book is slightly lower, which is we just pulled overall our efficiency down. Our restructured book efficiency is around 70%. So that once we improve that, that will automatically improve all the parameters.

But you do not have any moratorium in this restructured book? Or I mean, how would that be?

No, no, we did not give any moratorium.

The next question is from the line of Subrat Trivedi from SBI Life.

Just wanted to know what has been the gold auction in terms of tonnage and value this quarter.

Bindu?

Yes. So we had seen a higher auction in Q1. So now things are almost back to normal. During the quarter, we are done in terms of amount, it is nearly INR 360 crores. That is the auction we have done during the quarter.

The next question from the line of Johan from Point72.

Congratulations on good growth momentum. Just three quick questions here. Firstly, is on the group side, right? So are we changing our strategy, i.e., going from more majority 3-month product to more like a 6-month product?

So can you make it clear, are we moving from 3 months to 6 months, is the question?

Yes, because I think your 3-month product percentage of loan came down quite a bit -- quite sharply this quarter.

Yes. Yes. We have -- we believe that moving to from 3 months to 6 months is justified so that the customers would get up to 9 months. Even then our -- more of our focus would be regular collection of interest. For that, we have done several facilities to the customer. Customer interface is improved through using online technology collection technology, et cetera. So we generally have [indiscernible] moving to around 3 months to 6 months so that the customer would get maximum 9 months. There is a slight change in the strategy.

Got it. Understand. And how should we think about the yield going forward? Because I think we have a little bit of a new job this quarter. I'm not sure whether that's related to having more 6-month product in the mix. Do you mind giving us some color on how much you contribute to job and to what extent and when can we see a [indiscernible]?

So I am not able to get your query. What is it?

I'm just asking on the yield side, right? The NIM and also the yield has declined a little bit this quarter sequentially. So as we go for this 6-month products, should we expect to see continued yield and NIM decline?

I get your point as yield, right?

Yes.

Yes. So the yield, yes, there is some shrinkage. We hope it will settle around -- somewhere around 2% lower than our highest yield in the previous quarter. So this 2% will be compensated by improved brand efficiency. That is -- yes, as we have around 3,600 branches which is not growing numbers, yes. So the average AUM per brand is bound to grow with this growth. So this is going to grow our operating efficiency and push our OpEx to AUM down. Second thing, so what we look at is -- with this growth, our capital adequacy, which is the Tier 1 capital, the capital adequacy will be down. We want to keep it down to somewhere around 25%. This is a Tier 1. So we have reduced that by around 200 basis points -- 150, 200 basis points last quarter. So with more growth in the portfolio, it will be down. Our overall objective is to see that we grow at a rate of 20%, where gold loan also grows at 15%, 20% year-on-year and also maintain an ROE at 20%.

Got it. So when you say 2% lower, are you referring to 2% lower than current quarter? And if I look at the stand-alone net yield, 25.3%, is it relative to that? Or sorry, I didn't catch that.

2 percentage reduction in yield from the current quarter level.

Got it. Sorry, just last question on the operating expenses front. So grateful if you can share some color on what's the outlook for second half? Will it continue to increase? And also, how should we think about the absolute OpEx growth rate for the full year this year and also next year?

So see the reduction can happen very fast because -- and it will be maintained because in coming 2, 3 quarters, whatever has to come down, it will come down. Thereafter, it will be stabilized. So what we have said, we are expecting that to come down around nearly 2% can happen in 2, 3 quarters, and will be sustained thereafter.

Sorry, 2% you are referring to?

Bindu, you can mention.

Yes, yes. So on the yield part, we are expecting 2 percentage reduction to Q2 level. On the OpEx part, in absolute amount, we are not expecting much increase. But on a better growth, we should be able to reduce the percentage, is our expectation.

[Operator Instructions] The next question is from the line of Abhijit Tibrewal from Motilal Oswal.

Now in the previous question, while you have already kind of touched upon the fact that you are expecting the yields to settle down around 200 basis points or 2 percentage points lower than the current levels, a, if you could just kind of quantify that? And b, I mean, given that we have clearly embarked on a change in business model where we are kind of looking at a sustainably lower yield maybe over the next 2 quarters, what that -- what does that translate into, I mean, spreads by the end of this year? That's the first question that I had. And second question was, I mean, when we look at the increase in OpEx that you have had, I mean -- and thanks for giving out that bridge that you have given on Slide #19 highlighting, which was components have kind of led to this increase in OpEx. What I'm trying to understand is, I mean, you have paid out something like INR 31 crores in incentives during the quarter against disbursements of something like INR 35,000 crores, if I heard you correctly. So if you could just help us understand, I mean, what are these kind of incentives that you are kind of giving out? I mean, because the incentives look very high. And given that you've suggested that, I mean, you're not expecting a material increase in the absolute OpEx, would it be fair to suggest that I mean, for such high levels of disbursements to sustain, we would have to continue giving out such higher incentives?

So what part I will take, the quantification, CFO will do. So the lower yield, I have told the yield may settle in the coming quarters by -- at around 2% lower than the current level. Yes, this will be matched by the increased efficiency or creating efficiency at the branch level. You see, the growth is happening in the existing branches with the same number of employees. So this will bring down the OpEx slowly. Then another thing that I had mentioned about the use of capital more efficiently. The Tier 1 capital as of now stands at around 32%. We intend to bring it down slowly to around 25% but effect -- in effect bringing more efficiency as far as capital usage is concerned. You pointed out -- also pointed out about INR 31.2 crores as incentive. See, we have been facing this pandemic situation. And we were not able to get our employees back. So we need to get our employees back and also do their marketing activities. It has led to the payment of INR 31 crores as incentive. The -- our target had been, what we have seen losing during the first quarter is in higher tickets acquisition. We were losing to our competition in higher-ticket cases in gold loans. So having understood that we have attacked that segment, and we were able to bring it up. So it has gone down from 50% level by around 9% during the first quarter, but we were able to bring it back to around 50% plus level for the second quarter. This was done one through the advertisement bringing the yield down in that segment, particularly according to the ticket size. Say INR 5 lakh -- between INR 3 lakh to INR 5 lakh by about INR 2 lakhs, et cetera. So we were -- we had to bring down some reduction in the yield. This is -- and these are yielding results now. We are able to grow these tickets above INR 5 lakh also. So -- So this is the strategy, and the strategy is paying off well, and we are hopeful of achieving the target of 15% to 20% growth year-on-year through this strategy, which we have demonstrated in the past. We have regained that subsidiary in the second quarter. So we have seen the growth coming back very fast. So regarding some of the numbers which has been asked, Bindu can answer.

Yes. So the expected yield reduction of 200 basis points, we expect 1/4 of that can be achieved through reduction in cost of borrowing. So on the spread, we may have to expect 1.5 percentage dip, is what we are expecting. With regard to incentive of INR 31 crores, on an average, we used to have INR 3 crores per month as the incentive. So in a quarter, we may spend INR 10 crore in the past. But during the quarter, we additionally spent almost INR 20 crores. This is -- this payment is mainly on the growth portion only. So we paid for a growth of up to INR 18,750 crores gold loan AUM growth. And the incentive will depend on further growth from that level. So this incentive include for all the businesses, the nongold businesses also. During the quarter, vehicle finance also could do well. So that INR 31 crores includes the -- incentives for vehicle finance, gold loan growth. And collection incentives is also a part of the INR 31 crores incentive. So from the previous quarter level, our expenses have gone up by INR 20 crores on a growth of 13 percentage growth in gold loan area.

Sure. And if I can ask you just one last question here. Under this new business model, we've been talking about improvements in productivity and efficiency. Just trying to understand what kind of disbursements per branch or AUM per branch is something that you're looking for in the near term given that, I mean, we've been talking about improvements in productivity and efficiency under the new business model, given that we hired I mean 1,600, I think, sales and marketing personnel during the quarter. What I'm trying to understand here is, I mean, can just addition of personnel, I mean, on a quarter-over-quarter basis actually help us in improving disbursements?

Okay. So this 1,600 manpower is one-off only. We thought of adding 1 person for the majority of the branches to do the local marketing activities. So every quarter, it will not happen. This is a one-off expenditure. And the branch efficiency, per branch gold loan AUM stands at INR 5.2 crores now. And this has improved from INR 4.7 crore to INR 5.25 crores. As we are expecting another 15 percentage growth in AUM, this will reflect in the per branch business, that is our expectation. So our -- in absolute amount, the expense may not be increasing. So that will help us to have a lower OpEx to AUM ratio. That is the expectation.

The next question is from the line of Prateek Agrawal from ASK Investment Managers.

Yes, I think the change in the business plan that we see, earlier you were very focused on profitability. But obviously, there was only so much growth that was possible. But now it seems, with some tweaks, you are now able to grow very well, and that is a positive observation. A lot of my queries were actually asked by the previous guy. Could you simply simplify it for me and tell me in the newest growth model, what should be the ROA that should be expected for the gold business on a sustainable basis?

The ROE will be maintained above 4.5% -- between 4.5% to 5% level. You see a few things here. So the growth you are seeing in gold loan has come during the month of -- during the second half of the second quarter. So the average growth during that period was lower, it was actually negative even though we have grown by 13 percentage. So the benefits will come only in the coming quarters. So we may be able to maintain an ROA of around 4.5 to 5 percentage, is our expectation.

Understood. Just one added question. Now that gold prices have moved up from the bottom, would you change your auctioning policy a bit? We have seen your competition keeping on holding gold until actually this year making a loss rather than auction it off immediately if the borrower is unable to pay back. Now that...

Yes, our strategy is to see that the auction is reduced. So we view [indiscernible] to the customers as well as our own employees to contact the customers and get it redeemed or renewed at the new rates as much as possible. So what we believe is putting pressure on them at an early stage will settle better results. This is what we have seen during the past 5 years. But the cost profit scenario was slightly different. And we believe that early reminder, early pressure is better for the customer also. So the time will tell what is the right strategy. You need to watch for 1 or 2 quarters more to see what is happening to a longer-term lender.

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

I wanted to ask about the microfinance book, where we have seen substantial slippage of your sell portfolio into PAR 0 and PAR 30. And yet, the collection efficiency number seems to be a bit high. In the sense, I'm trying to reconcile these set of numbers. How do you expect the microfinance book to behave going forward?

Yes. There had been some delay in collection. That is why the collection numbers, even though better, there is a slippage to PAR. So now as the rural economy started picking up, we hope that PAR also will come down going forward. We have given adequate provisions already 10.2% of loan book prior to this call, it outbreak. This has been already either written off or provided for. So we have made enough provision, and we believe we can -- we'll be able to contain the credit loss with that. Now I'm leaving it to the CFO to clarify the numbers.

Yes. So as pointed out by Chairman sir, though our efficiency is now picking up, the main reason what we have analyzed is a fresh flow which is coming, so which is not investing -- so that is why the other PAR is remaining at some -- a little higher level. And in the MFI industry generally, the customers are not able to pay 2 EMIs in one go and get [indiscernible]. So that is where PAR for some time is remaining -- has remained at a higher level. And Q3, we are definitely expecting the collection efficiency also to grow beyond 95%, number one; and number two, we are also working towards to ensure that fresh flow doesn't come which is causing the PAR not -- I mean PAR is not able to reduce, so that these 2 things should help us to reduce PAR.

And our new disbursal strategy also is very conservative. 80% of our new disbursal are to existing regular customer. So we are conservative. So another thing what I want to highlight, the new disbursal in these segments, the collection efficiency is nearly 99 percentage. That is the existing customers who have a good track record, who have been regular customers, as well as the customers who have been screened and [indiscernible]. So it is going well. And now our collection efficiency, it's around the 93%...

95%.

As against 84% during the previous month or the previous quarter. It has improved from 74% to 93%. And this quarter, nearly third month, it is improving. And this quarter, the first end of this quarter, we hope it will cross 95%.

Excellent, sir. If I can just ask a follow-up question. Is the lag of the PAR ratios coming out of a few regions where there have been any problems? Or is it like a more broad-based thing?

Yes. The major thing has come from places -- geographies where the lockdown was prolonged when -- in Southern Tamil Nadu and in West Bengal, et cetera. So there had been some delay. But now with the improved focus in these particular states, the collections are bound to improve. One good thing about this is the state where we are from that is Tamil Nadu, where we have a grip of things. The collections were lower compared to other states. Now as we know the state and we have the people have come forward, and the lockdown is removed, things are back, we are -- we'll be able to improve the collections very fast there, which gives us the hope that towards the end of this month, next month, et cetera, et cetera, the collections will grow above 95 percentage.

The next question is from the line of Aalok Shah from MNCL Group.

Just 2 questions from my side. You've talked about something like a 4% to 5% ROA on a stand-alone book. Does that mean that we can go back to something like 24%, 25% ROE on a stand-alone basis even as we look to adjust our yield's PAR? That's my first question. And the second question is trying to get your sense on, is there anything in terms of deviation on the IRAC norms from what is the standard practice for what RBI has been talking about or in reference to the document that has come out on Friday evening?

So our staff just said CRA and ROE is around 20 percentage. So it is more than we consider that as a bonus. We will endeavor our best to see there is a bonus, yes. With 5% ROE -- between 4.5% to 5% ROE, yes. Even at a 30% level. Tier 1 level, we'll be able to maintain. And yes, we want to bring slowly to around 25%, yes. So between 4.5% to 5% targeting an ROE would be possible. So your question on, is this limited to stand-alone book, no, it is a consolidated level. But of course, we have -- we will maintain that level of ROE on the stand-alone book.

Sure, sir. And anything on the second point on the IRAC norms?

Yes. I have no idea about the IRR norms or what is going to come in the next document, et cetera, et cetera. So my team, anybody is having any idea, they can try to respond.

Yes. So the recent circular, this came last day only. And we are in the process of evaluating the implication on the non-gold businesses, what is the impact. So we are studying in details, and we will come back with the details. This is an industry issue. So we will see how the whole industry. Definitely, I think, Manappuram will not be very different. So we are evaluating the implication of the circular.

Yes. What I understand is both the NPA recognition, no. So there could be something different [indiscernible] as NPA. So throughout its life, it will remain as NPA [indiscernible]. But I guess this is something. See, first of all, 2/3 of our portfolio is in gold loan book. It does not have this problem. The second thing, even if it comes, it is -- it will lead to lead only just a delayed recognition of the income. So it is not good to have the impact on the business. It's only a temporary one quarter-to-quarter impact for the industry as a whole, because when 180 days NPA recognition came, then when it is gradually reduced to 120, 90, et cetera. So there has been a market feeling that the amounts are going to fall, but nothing has fallen. So the income is not going to go anywhere. So it may get -- it is going to be -- the recognition is going to be cash based in such cases. So I don't think it is going to affect the industry as a whole.

Sure, sir. And maybe if I could just squeeze in one last question. This quarter, certainly, there seems to be some kind of change in strategy of looking beyond 3 months as a product. Now is that something which kind of will be on an ongoing basis? Or we would look to go back to a 3-month product 2 quarters from now because that's been a sweet spot for us?

See, we -- see, for the last 5 years, we had been successful in the 3-month product. We had been successful. So the growth compared to the peer had been similar, the growth. So where we have missed the bus was in adjusting the consults of higher tickets, which we have done is now, and we see growth. So the question is whether we'll go back, I cannot say no to that. We'll watch the market. And we -- if we see that we maintain -- we can maintain the growth going back to 3 months products, yes, we may move. Yes, I'm not sure. But what is most important for me is delivering the market expectation with regard to the CAGR growth as well as ROE.

So is it safe to say now that the key focus for management is now on growth? Because ROE, there are drivers for ROE. And historically, where there have been external factors which have impacted growth. So, we are trying to take up corrective measures to get that addressed.

Yes, yes. So management thoughts are highly dynamic to see that to achieve the desired result, what is the strategy. We will adopt that.

The next question is from the line of Shubhranshu Mishra from Systematix.

Couple of data points. I just wanted to understand what is the weighted average LTV in percentage and rupee? And what is the interest accrued and the gold price per gram in the quarter? So that's on the data points. What I wanted to understand is the concentration of the gold -- gold finance branches. What do the top 20 branches account for in terms of disbursement and AUM and top 50 and top 100 for disbursement of AUM and gold finance branches?

Bindu can take up.

Yes. Gold loan LTV at the end of the quarter was 67 percentage. And if we take the current data, it is around 63 percentage. And on a gold price of INR 4,500, this is INR 2,800 LTV. Interests received are INR 815 crores, 4.3 percentage of AUM. And the other data point, we will get back to you.

Mr. Mishra, any further questions?

No.

The next question is from the line of [ Madhu De ] from [indiscernible].

My question is, if you could give me what is the total restructured portfolio in your nongold business and how much provision are you carrying against the same?

So the restructured portfolio in Asirvad, the CFO will answer.

No, I'm not only asking about Asirvad because that...

Not one picture, another we will give.

Okay. So restructuring mainly happened in the case of MFI business, which Yogesh has already given the number, around INR 1,000 crores, the restructured book. But as the moratorium book is not there, in all the cases, the billing started and if the customer is not paying, this can be reflecting in the PAR numbers. Other businesses, we have not done much during the quarter. Q1 housing was INR 50 crore. Vehicle Finance, some INR 2 crore only. So these are the broad numbers. And on the restructured book, we are considering a higher provision than the RBI mandated portion. [indiscernible] book.

Ma'am, if you could share what was the provision on -- in the Asirvad book for this INR 1,000 crore restructuring?

Yes. Yogesh?

Yes. So for this INR 1,000 crores, whatever is my book, we may have some portion of direct assignment which belongs to the bank. That is around INR 270 crores. Out of the -- if I remove that, there is around INR 730 crores -- INR 725 crores, which is in my book. On that book, we have close to 18% of provisions we are carrying, so around...

Got it. Got it. And you don't have any restructuring for the gold loan portfolio, right?

So it is less than INR 50 crores. Gold loan, anyway it is fully secured, the INR 50 crore book in gold loan.

I just wanted to understand this because as you rightly highlighted that there is this change in strategy. You're going to move to a more 6-month product, and there's going to be a collection of -- monthly collection, et cetera. So will that materially change your auctioning policy or anything of that sort?

I don't think so. So you see, our strategy is simple, very simple, because we target a CAGR of 20% and also ROE of [indiscernible]. So our strategy will be revolving around that. So we -- for the sake of growth alone, so we are not going to compromise our yield too much. We are satisfied with the CAGR. In gold loan, what we are targeting is 15% to 20% growth. So to achieve 15% to 20%, what would be the pricing? This is going to be our lookout. So this is what we have been telling the market, and we are hopeful of maintaining. During the next 3, 4 years, we are very much hopeful of doing that.

Sir, this is just out of curiosity, my very last question. You are increasingly getting into the turf of the banks, the banking customers. And that is why it might be necessary for you to keep dropping your yield. But they have a cost of fund advantage, of course. So does this mean that structurally, we are getting into a situation where we will have incrementally lower ROA in the business?

You see, we have not targeted bank customers, and they will not consider the banks as our competition. Because our ESP is very different. So our ESP is quick turn around and availability. Availability means and bank counter is often for gold loan for around 15 hours a week, whereas our counter is open for 48 hours. So this is the big difference. And we understand the gold loan customers, their needs around -- more than 50% will redeem during this month. For him, what is most important is his time. So he will not wait up to 10:00 and waste a day. And for redemption also, he doesn't want to waste a day by coming over to the counter before 3:00, et cetera. It is not affordable for a customer, where the average ticket price is around INR 50,000. This is our target audience. Our competition is the NBFC. And the NBFC's, the pain points are common, where at some point of time, we have to come to some sort of informal understanding below that pricing, nobody can go. So this is a market reality. So see, our target is mainly from the inorganic sector which constitutes around 2/3 of the lending to the gold loan borrowers.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for any closing comments.

So yes, thank you. We do know that there will be some reaction, the expected profit is not delivered. But I can tell you, this is only temporary phase of 1 or 2 quarters maximum. And our target of growth and ROE will be delivered in future quarter. Thank you.

Thank you.

Thank you. Ladies and gentlemen, on behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.