Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Manappuram Finance Limited Q4 FY '23 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanket Shera from DAM Capital. Thank you, and over to you.

Yes. Good evening to all of you. We have with us the entire management team of Manappuram. To begin with Mr. VP Nandakumar, CEO; Ms. Sumita Jayshankar [indiscernible]; and Mr. Bindu, the CFO. Also, we have with us Ravindra Babu, who is MD of Asirvad Microfinance; and [indiscernible] who heads vehicle and equipment finance. Without further ado, I would hand over -- hand the call over to Mr. Nandakumar for his opening remarks, and then we can follow up with Q&A. Over to you, sir.

Thank you. Good evening ladies and gentlemen, welcome to the conference call for our fourth quarter and full year FY '23 financials. I take great pleasure in presenting our results at a time when India is set to become one of the fastest-growing global economies of the world. So the optimism about India's growth prospects in all [ services ] in the country now universally acknowledged in economic circles to be an island of macroeconomic stability. The interest strong by many countries to trade with us in INR exemplifies our improved Stability. In the last call, I had first the need for a balanced and prudent growth strategy. This financial year, there are strong signs of that strategy being put into practice as we have achieved good growth in both AUM and profitability. I'm happy to share that we have recorded a consolidated net profit of INR 415.3 crores in Q4 with an improvement of 59.1% (sic) 59.2% over the year ago quarter, primarily driven by profitability in gold loans and a turnaround in microfinance business. Full year consolidated profits also grew by 12.91% to INR 1500.2 crores. Gold loan AUM was INR 19,746.2 crores, an improvement of 6.08 percentage over the previous quarter. While stand-alone AUM at INR 24,445.6 crores grew by 9.1% year-on-year, the consolidated AUM has reached INR 35,452.3 crores in Q4 representing an increase of 17.2% over the year ago quarter. I get asked all the time about increasing competition and emergence of new players, not only in the NBFC space, but also in the digital lending space. However, India's underpenetrated financial market gives room from a large number of players to coexist without sacrificing profitability. The company's microfinance subsidiary, Asirvad, has posted an AUM of INR 10,042.9 crores, showing an impressive growth of 43.4% year-on-year and a profit of INR 99.3 crores during Q4, taking full year profit to INR [218.1] crores. This financial year, [In semis] INR 15.3 crores in FY '22. As a sector we full benefits of the ongoing economic recovery, the share of microfinance in the overall profit pie is set to go up in the days to come. Continuing the trend in the previous quarters, we have fostered and perceived growth in the Vehicle Finance business recording 49.4% increase year-on-year and an AUM of INR 2,455.1 crores followed by home loans with an AUM of 1,095.8 crores, registering a 29.6% increase over the corresponding quarter in FY '22. Home loan profitability has grown to INR 19.5 crores this financial year, from INR 7.2 crores in the previous year. The strategy of diversifying into other sectors is gaining pace and this rebalancing is reflected in March '23 quarter results. The share of loan gold verticals in our total assets under management now stands at 44% and is in line with our award objective of achieving 50 -- portfolio mix between gold and the non-gold segment. We will continue to press ahead with this policy of becoming a well-diversified NBFC. Collections from microfinance business is expected to improve further. And this sector correlates well with the economic account. In the Housing Finance business, the focus is on [ lower ticket ] rousing loans. We have decided to enter niche areas like finance and health care professionals and small hospitals with the good potential. For our corporate loan front, we have already disbursed around INR 1,000 crores. For the Vehicle Finance business, we are increasing the penetration in rural and semi-urban locations. That gives us edge and are our own digital lending platforms and automated approval processes. Now we have introduced an app called MaMoney, which brings all the products under one umbrella. MSME and personal loan sectors are other areas where we want to increase our process. I want to add one more thing. In the recent past, you would have seen in the media about the ED rate and all, and I have clarified how is this. It is something belonging to -- something of 12 years old, very old. And whatever requirements are there, everything have been submitted. And RB has been overseeing that over the last 10 years, 11 years. And they have given us a letter saying that we are largely satisfied. But whatever ED has said, the background also is told, the one person who have complained in 2011, he, again, prepared a complaint in his brother's name and asking the ED to investigate. And I got -- without looking into the earlier [ causing ] petition of his allowed that and that is the reason. So whatever has been submitted, they have done it. But I'm happy to share that its operations has been fully stayed through high courts order today. In the upper court, that -- they pronounced the stay order. And we are yet to obtain the return copy of that. We expect that to come by the late evening today. So the operations have been stayed, and we are confident of crossing that order of enforcement directly. So this is what I want to share about that because I feel like some of you may be anxious to hear about that. For a more comprehensive view of our financial performance, I hand over to our CFO, Bindu.

Thank you, sir. Good evening, ladies and gentlemen, and thank you all for joining us today. Our consolidated AUM for Q4 FY '23 was INR 35,452 crores representing 11.2% sequential growth and 17.2% percentage Y-o-Y growth. Our consolidated profit after tax was INR 415 crores for Q4 FY '23, which was up by 5.5% Q-on-Q and up by 59.1% Y-o-Y. All nongold businesses reported an ROA ranging from 2% to 4%. Consolidated profit after tax for the year was INR 1,500 crores, which was up by 12.9% Y-o-Y. ROE on a consolidated basis was 17.5% and ROA was 4.3%. Our GNPA 1.33% versus 1.61% during the previous quarter. Liquidity position, cash-on-cash equivalents on hand on a consolidated basis was INR 3,000 crores and undrawn bank line was INR 2,949 crores as on 31st March 2023. Our CP exposure is NIM in the stand-alone entity, and our ALM is well positioned across all the buckets. Stand-alone borrowing cost has come down by 6 basis points in Q4 after the repo rate hike. Talking about the Gold Loan business, which constitutes 56% of consolidated AUM, where is the remaining 44% includes, Microfinance, Vehicle Finance, Housing and MSME Finance. Stand-alone gold AUM has increased by 5.4% Q-on-Q. Yield at 21%, which is slightly lower than Q3 FY due to increasing the tenor of Gold Loans from 3 months to 6 months now. During the quarter, we were able to add 4.56 lakh new customers. Average ticket is at INR 57,546 and average duration of 71 days. Our Gold Loan average LTV at 60%, which is well below the peer group. Our stand-alone revenue, there is a small reduction on account of the higher liquidity, which we placed in Q3 for repayment of our dollar bond. Our stand-alone PAT was INR 309 crores, down by 2.9% sequentially and up by 16.5% year-on-year. Coming to Microfinance, Asirvad Microfinance, the AUM stands at INR 1,040 crores, including Gold Loan AUM of INR 705 crores up by 16% Q-on-Q and up by 43% Y-o-Y. PAT for the MFI business has increased to INR 99 crores in Q4 versus INR 70 crores in Q3 FY '23. Our collection efficiency from MFI business during the quarter stood at 104%, and disbursements during the quarter was nearly INR 3,000 crores. In Asirvad, the Gold Loan AUM as on 31st March 2023 stands at INR 705 crores. Cumulative ECL provision in Asirvad has increased INR 242 crores, net NPA stands at 1.15%. CRAR 19.6%, ROA 4.05%, ROE of 26.6% in this quarter. In Vehicle Finance, we have reported an AUM of INR 2,445 crores, which is up by 16% Q-on-Q, up by 49% year-on-year. Collection efficiency for the quarter was [indiscernible] from 3.1%. Home loan book AUM INR 1,096 crores, which is up by 9% Q-on-Q and 29% Y-o-Y. This operates as 66 branches and reported a profit of INR 7.3 crores during the quarter and was INR 19.5 crores for the year. Collection efficiency for the quarter was 101% and GNPA at 1.9%. Loan to MSME and others at INR 1,945 crores, collection efficiency at 110% and the GNPA at 1.5% Our own lending AUM stands at INR 875 crores with a disposal amount of INR 420 crores during the quarter. Our asset quality improved. On account of that, our provisions and write-offs of the stand-alone entity stood at INR 4.3 crores compared to INR 9.8 crores in Q3 FY '23. The Board has declared an interim dividend of INR 0.75 for this quarter. Our capital position is strong with a capital adequacy ratio of 31.7%. Our control [indiscernible] stands at INR 9,645 crores at a book value of INR 1.139. Thank you. Now we can go for the Q&A session.

[Operator Instructions]. Our first question comes from the line of Abhijit Tibrewal from Motilal Oswal.

Nandakumar sir, if you could just clarify what you said during your opening remarks and if I heard it right. You have now received a stay order under ED investigation. And what you said is a written order is expected sometime by evening today.

Yes. Okay. About the case also, I will tell you, this has been clarified before also. The 12-year old case, about Manappuram Agro Farm, which was my proprietary concerned, and that has some public deposits. And one local person complained that the deposits are taken in the premises in of one of our finance, et cetera. And RB, we have asked what is in fencing, et cetera, it has been done. And I offered myself to repay everything in 2012. And the amount was put into an extra account along with interest. And the [result] hopefully repaid along with interest, except INR 900,000, where the customers are untraceable. So total amount put in used for that was INR 159 crores. Yes. And the balance outstanding is only INR 9 lakhs. And these are regularly supervised by RB. And it's a part of their [investigation] process. They issued a letter also. Yes, they have largely satisfied with our action. This is the [indiscernible]. And [indiscernible] complain -- he prepared a complaint to high court saying that all the previous inquiries and the investigation he not satisfied. Now ED would investigate, et cetera. So high court has said that let ED also investigate filing an FIR with a police. And police already referred to this case and the court also has closed it. So that is all. The ED then asked for details, et cetera, which has been provided. And yes, to surprise [indiscernible] in the office last week. And this order was issued, whatever is some freezing of some of my personal assets, which includes a part of my shares in Manappuram Finance. This is order. So we consulted our lawyers in ruling supreme court lawyers. They said, yes, this is absolutely [indiscernible] with some ulterior motive. So they said, we can easily cross it. So as first process to begin with, we prefer our visiting in like honorable Court of Kerala, then on the basis of that, today was the first sitting. In the sitting, honorable judge has pronounced a stay order in the operation of executive order from ED. And our councils are very sure about, very hopeful about cautioning that in the -- next two to three hearings after hearing the other side. This is now stay order. So this is the situation. So as such, its the operational state, and they will release all the freezing orders. They have to defreeze it. That's the situation. And the [indiscernible] only. So the order will be available in the late evening, maybe around 8:00.

Got it, sir. Congratulations on that. Sir, another thing I wanted to understand is on the Gold Loan business, this quarter, we have reported a sequential decline of...

Abhijit, Sorry to interrupt you there.

Yes, is the line better now?

No, no, your line is better. It's the management line that has been disconnected. Ladies and gentlemen, we have the management team connected. Abhijit, you can proceed with your question.

Yes. Sir, the next question that I had was on the Gold Loan business. This quarter, we have reported about a 140 basis point sequential decline in your net lease in Gold Loans. We have given out a reason this is because of the conversion of Gold Loans from 3 months to 6 months. So if you can just help us understand how the conversion or increase in tenure of Gold Loans from 3 to 6 months led to a decline in the yield of Gold Loans maybe? And sir, I mean, for the last many quarters, now we are seeing a continued trade-off between the Gold Loan growth and spreads or margins mainly the gold lending business. So just wanted to understand that even though we say that the competitive intensity from banks have had the margin been easing out, we are not quite seeing that happening in terms of the trade-off between the gold loan growth and the spreads. So is there a sweet spot wherein you can operate at slightly lower Gold Loan yields settle for maybe slightly lower margins and ROAs in the Gold Loan business? Will that help you get to a situation where you can demonstrate both stable spreads in margins and good Gold Loan growth as well?

So. Your first question was from the tenure from 3 months to 6 months. How is it affecting the yield. So if it is 3 months, immediately after 3 months of the date of plans, it becomes overdue and the overdue charges are available. Now the overdue charges are available only after 6 months. That has led to some decline in the yield. So we are planning to operate at a yield of around 22% less. So our yield now is a growing -- because we're slightly increased that. And with the new changes in the product structure, et cetera, we hope it will settle at around 22.5%. This is going to be -- see, we don't believe that reducing the yield by 1% or 2% will improve our business. What we expect this year is around 10% growth in Gold Loan AUM. So we are growing at that pace now, 10% AUM growth for the FY '24. So we will be able to settle around that.

Our next question comes from the line of Shreepal Doshi with Equirus Securities.

I wanted to ask you a question pertaining to the Microfinance business. So on that front, like we are already having an average of more than 6x. And I think the capital adequacy is also below 20%. So what is -- so are we looking to infuse capital? Or is there any thought on that front? Because given the kind of growth we are having in this segment, so what is the thought process on this front?

So Microfinance business definitely needs capital. On the one side, we will infuse capital that may be around INR 500 crores and also offer a subordinate debt to -- for an equal amount to our subsidiary. And also parallelly what we try is to raise capital from outside from -- through IPO or maybe one or two, so privately, it is. This is already the -- we have talked to some merchant bankers already. And for proceeding, all are awaiting for the Q4 results, FY '23 results. Now as that is ready, we'll start scouting for capital from outside also. And from the parallel side, as I already said, we may infuse somewhere around INR 500 crores, which should be within the covenants with some of the lenders. Then we had to also will support subsides.

Got it. Sir, I wanted to understand what is the disbursement that we have done in the MFI piece, like under Asirvad in FY '23 overall and in 4Q FY '23?

Yes. FY -- what is...

We have may INR 7,000 crores for the full year.

INR 8,300 crores.

INR 8,300 crores.

Okay. And this quarter? Okay, we'll get it. That's okay. Got it. And sir, what has been the write-off in this business in FY '23?

INR 113 crores.

INR 113 crores.

Okay. INR 113 crores. That is for the whole year FY '23, right?

Yes, yes.

Okay. Got it, sir. One just last question pertaining to the Gold Loan business. What percentage of our book is about 2 lakh ticket size in the Gold Loan business?

[ Raju? ].

That is about INR 200,000 -- it is 35%.

Okay. About [indiscernible] is 35%. Okay. Got it. And what is the highest ticket size that we have ever done in Gold Loan? If you could give some sense?

Like INR 50 lakhs, INR 1 crore also will be there, but that will be very minimal in number.

Which will be maximum at [indiscernible] customer.

Yes. Maybe....

So up to INR 1 crores.

Our next question comes from the line of [indiscernible] Xi [indiscernible] from [indiscernible].

Am I audible?

Yes.

Just want to ask on the Gold Loan side. So you said that we expect to operate about 22%. So do we expect next quarter our Gold Loan yield will bounce back to around the level? And what's the month of April Gold Loan yield?

Yes. So currently, it is around 21% for the quarter, but steadily, it is going up. So we expect to achieve by the end of Q1. So average may be slightly lower, but we will be able to achieve at the end of the quarter.

So you're saying so monthly basis is going up. So by end of first quarter, you will come back to 22%. Is that what you're saying? Just kind of...

Yes. So by the end of Q1, we will be able to reach 22% yield for our Gold Loan business. So as we started from 21%, it will be -- the average for the quarter will be 21.5%, but we will be reporting 22% yield at the end of the quarter.

Okay. [ Gold ] costs, we used to share what's the monthly yield. So do you mind sharing what the monthly yield for April for Gold Loan?

Yes, it is steadily improving.

Okay. Got it. And then the change of duration from 3 months to 6 months. Is there a changing strategy? Or it's just a time mix? More customers tend to take 6 months this quarter -- or how did it work?

See, we thought we will increase the tenure to 3 months to 6 months because a lot of surplus in auction is accruing. So we felt like, judging the gold value for the last couple of years, the risk in increasing the tenure through 6 months, is not a price risk for us. Because -- and also, I want to tell you all other lenders are offering for 1 year with the same LTV. In the same LTV, they are offering a tenure of 1 year.

Okay. Is our entire portfolio now on 6 months or...

Yes. Because all the [indiscernible] will move to that because all new plugs will be in the new tenure.

Our next question comes from the line of Kushan Parikh with Morgan Stanley.

I have three questions on the liability side. Just wanted to understand through the past week since the ED investigation began. What is the feedback that we have from banks and fixed income market participants regarding this ED action? And have we been able to raise any fresh funding? And is it on similar terms as before? And just lastly, I just wanted to understand if -- I mean if this affects your loan growth expectations going forward, I mean, due to the -- if there are any funding interruptions?

So I want to tell you that this is not something -- this -- whatever led to this is not something new. This is known to all the stakeholders for the past 10 years. And they all know everything has been repaid out of 10 years business, some very old story. So one person was creating this problem, the same person only over the last 12 years. So this is nothing new as far as our stakeholders are concerned. And now we obtained a stay. And as [someone has said] everything is not something which can create any problem. We are very sure, our counsels are very sure about [ closing ] this case in the high court in the coming weeks. So this case is posted for next week, our counsel will argue, and we have a very strong ground and a similar case -- through his wife, it was filed through his wife. That was already caught by the high court. So it's not an issue. Already the police has [indiscernible] case and the [indiscernible]. So it's fortunately is only a matter of time including we got the stay, and that will be safe with our stakeholders. And with that, we don't expect our liability if challenged on account of that. And some of the banks have renewed that one is HDFC bank. Now I'm leaving to the CFO.

Yes. So we have enough undrawn lines. And post the event also, we were able to get disbursements from a few banks. In other cases, they may be updating the credit committee. So once we get the stay order, we will share with all the lenders. As MD sir told, this is an old issue. It is -- this information is available in all our public documents, including the prospectus, et cetera. So this does not create much issue for the liquidity profile.

And just on the terms of the funding, I mean, have they changed? Or I mean, they remain similar to what was before the event?

It is similar only.

Okay. And just if you could -- sort of guide us on your loan growth plans as well. I mean, do they change in any way going forward? Or we are still looking to around 20% overall consolidated loan growth?

So the business plan will continue as per the plan. We are not seeing any liquidity constraints at this point of time which will reduce the growth. Funding is not a constraint at this point of time.

Our next question comes from the line of Piran Engineer from CLSA.

I had one clarification. So all of the loans on the book today are 6 months?

Yes.

Okay. Okay. And second thing, just in your notes to accounts, you mentioned about this RBI inspection, show cause notice that you all got. So can you just elaborate on that, please?

This is relating to financial year 2021. During the inspection, RBI pointed out the extension of tenure, which we were following for last so many years. That inspector interpreted this as all over of loan. And you remember, there was a spike in NPA in FY '22 because of this RBI response. And we provided all the details, and we are discussing with RBI on this issue. And we are awaiting the feedback from them.

We had a personal hearing also. So we are expecting a positive response from them because. We have a Q&A reply, which -- we I hope this will convince them the backdrop.

So Bindu, if you can just clarify, like you were extending the loan, what exactly about extension -- like why we extending the loan?

Okay. So in the past, our scheme structure was initial tenor of loan will be 3 months. And if the customer is servicing the full interest, he will get an extension for another 3 months. So this was the scheme structure as we can test to the cash flow of the customer, and he has to service the full interest after the completion of 3 months. That is how we were doing from like 2014 onwards, we were doing like that only. But in FY '21 inspection, that is interpreted as a rollover of loan. And we -- whether we have assessed the cash flow of the customer, is there any concession. These were the queries which we are answering. That is as planned.

And your competitors also have such schemes? Or you have [indiscernible]?

Our competitors -- I think everywhere does 1 year scheme. In our case, only was 3 months from 2014 onwards.

Okay. But they used to not extend, is my question.

That we don't know.

Okay. Okay. Fair enough. And just lastly in terms of this book, which is less than 12% yield, which you've given on Slide 18. Does that go to 0 any time? Or is this sort of a steady state?

No. It will be -- the 12% scheme will be maintained.

Maybe it may not get to 13%, it might get to 8% to 10% level because the scheme already exist earlier also.

The blended yield -- we have structured in a way that the blended yield would be 22.5% towards the third quarter of this year, it is consistently increasing. This quarter end, we expect that to settle around 22%.

Okay. And banks are still offering the 8%, 9% gold loan even now? Like NBFCs have stopped. Are banks still doing that?

We don't see that sort of aggression now -- because those were the days where they were getting liability growth, but not getting adequate asset side growth. Now they are getting asset side growth more and liability growth less. So their aggression in small loans have come down, particularly gold loans have come down. We don't see much advertisement, et cetera.

Our next question comes from the line of Nischint Chawathe from Kotak Securities Limited.

You mentioned that around 35% of your loans are about INR 2 lakhs. What was the issue for FY '22, which is your [indiscernible].

So FY '22 last year, it was 45%. About -- not 45% , it's around the 28%.

Sorry sir, 28% became 35%. So actually, the number of -- the proportion of loan book about INR 2 lakh actually went up this year, isn't it?

Yes.

Because I thought you had articulated to the strategy where you're kind of going down the ticket sizes.

But mostly, that is INR 1 lakh to INR 2 lakh arranged. INR 1 lakh to INR 2 lakh. This is about INR 2 lakh only.

And so between INR 1 lakh to INR 2 lakh, how would the proportion has changed?

It's 22% -- 24%.

Okay. And I mean, how much would that have been changed, I mean, how much maybe in like a year?

It has changed to 18%.

Okay. 18%, very good sir. And actually, I know you've discussed this, but I didn't quite understand the reason for the decrease in sequential. Maybe if you can just clarify that a little bit more in detail.

Can you repeat that question, it's not clear?

The decline in yield, if you could just maybe touch upon that aspect once again because I'm not sure if I followed that properly.

Yes. So recently, we have increased the contractors of gold loan from 3 months to 6 months. As it is a transition phase, the other charges, overdue charges, et cetera, will be less. And during the tenure, we are offering as it is slightly longer tenure, the interest will be less. That is the reason this 1% is difference between Q4 and Q1 -- Q3 and Q4.

No, so I didn't quite follow. So what you are saying is that you actually give an incentive to the customer saying that I will give you some discount, but you move to a longer term tenure, is that how I should read it?

Yes.

Sure. And just finally, I think there was an RBI circular, which is talking about [ penal ] charges and kind of curtailing basically the way payment charges can be [indiscernible] to the customer. So would you have any view on this?

So see, whatever is the RBI circular, we have to comply with that. But we can structure products in a way that whatever is the yield we expect that is available. But as the products have been restructured in such a way that towards the end of this year, we will reach a level of 22.5% on the portfolio. So we have seen the instructions with regard to other charges, et cetera, et cetera, we'll come [indiscernible] even in spite of that.

[Operator Instructions]. Our next question comes from the line of Vaibhav Barjatya from Honesty and Integrity Investment.

So this is follow up with the question that the earlier participant asked. So in terms of the total penal interest that we charge for FY '23, can you give me that amount in absolute terms?

Those details...

Yes, we will come...

We'll share -- we'll come back separately. We don't have it at present. We'll share with you.

Okay. But in percentage, I mean generally, what is the policy, is it like 1%, 2% of the loan amount or what is the policy in percentage terms?

Yes. 3%, it was...

Per annum.

Per annum. Yes, that was the policy.

Okay. And this penal -- panel it starts -- the meter, starts the moment it crosses 90 days, right?

Yes, it becomes...

Overdue interest [indiscernible] from the date of maturity.

Our next question comes from the line of Shantanu from Think Investments.

Yes. I guess I missed it in the beginning, I just want to know what is the guidance for our loan -- Gold Loan segment for FY '24?

So what we have projected, what we budgeted is around 10% growth. So we are in line with that as of now.

Okay. And our yield for FY '24 would be around 22.5%?

Yes, towards the end of this quarter, we -- it will reach around 22%.

Okay. Okay. And for the non-gold loan part, what would be the growth guidance?

So in my opening remarks, I have mentioned about our overall objective of reaching 50-50. 50% on gold and 50% non-gold. Now the nongold is what you have possessed. So we hope in another 1 year, 1.5 years, 2 years, we'll reach that level of 50%.

Our next question comes from the line of [indiscernible] from [indiscernible].

Sorry, just a follow-up question to a comment earlier. So basically, on the Gold Loan yield side, so basically, this quarter, we moved from 3 months to 6 months, right? And you were saying, if I understand correctly that we give [indiscernible]. So just wondering, you are saying that monthly Gold Loan yield is steadily increasing now, actually reached 22% by end of this quarter. Just want to understand why is that? Is it because we stopped giving those incentive early? Or why the yield is moving up -- back up?

Yes. So as we discussed on the yield when we increased the tenure from 3 months to 6 months, the customer will be getting the contracted rate of interest -- instead of payement, he is getting the contracted rate of interest for 6 months. In the past, if it is a 3-month contract, our due interest will be charged from the date of maturities. So after 90 days, there will be a overdue interest. Now during the tenure of 6 months, he will get the contracted rate of interest. So as the transition is over, then it will be in the flow. So that is the reason steadily the yield is improving.

The time gap is of 3, 4 months only. That increase already reflected in April onwards. Like it is now 21.5% already reached. So it is steadily increasing. Day by day it is increasing.

Okay. So April is 21.5%, you're seeing -- if I hear it correctly.

Yes. As on data.

Our next question comes from the line of Vidhi [indiscernible] Wealth Management.

Am I audible?

Yes.

My question is related to MFI space. How are you seeing this panning out in the next couple of quarters? And what is the expectation or guidance for growth 3, 4 quarters down the line?

Yes. See, the demand is very good, in MFI space demand is good, asset quality is steadily improving. So all depends on the liability. We are getting the liabilities renewals, et cetera. And after this quarter of results -- and clearing the cloud in the sky regarding the ED [restain] et cetera, we hope the renewals will come through. And what we are targeting is around 40% growth during the current year, 35%, 40%, then we hope we'll let you that.

Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal.

Sir, I mean again, coming back to this 3 months to 6 months, for my benefit and the benefit of other people on the call...

You're not audible. So there is some noise in the background. Hello?

Sir, the line of Abhijit has left the question queue. We move on to our next question, which is from the line of Raghav Madhavan from Vivriti AMC Private Limited.

So this is regarding Asirvad Microfinance. I would like to understand the geographical mix that's playing out as of Q4? And what would be the maximum concentration per state going forward? And also, if you can enlighten on the expansion plans in the other states, which were not key holds for Asirvad?

Asirvad, the business is spread across the country. And we have a decision not to have a portfolio of around 10% in a particular district. And also to restrict the portfolio to 1% in a particular district. So in that way, we can say that the operations have spread across the country. And now the maximum export is in Tamil Nadu, which is below 20%. It was around 20% a couple of years back. It has come down a [ 14% ]. And gradually, it is coming down.

In our investor presentation, Page #26 is given statement of distribution of MFI.

Okay. I also want to understand what will be Asirvad's presence in Andhra Pradesh going forward after the recent High Court judgment, which relaxes the position over there [indiscernible]?

[indiscernible] State government enactments regarding NBFC are annulled, state [indiscernible]. These are annulled by the Supreme Court. So now hereafter, no state can enact a separate law for an NBFC. Entirely, it is a view of union government, means Reserve Bank of India. That's second point. Now just like other states, we can do microfinance business in Andhra Pradesh [indiscernible] without any change, just like other states only. So what -- we don't have any plan for a drastic expansion of geographical spread this year. The reason is last year, we have expanded. And this year, we want to derive the benefits. Even with the present brand strength of around 17 -- 18 other branches across Indian [loading] Gold Loan branches, if our company can -- a retail level of even 13,000. That's sort of physical infrastructure is already laid. So there is no expansion plan this year.

Just a final question. If you can also let us know on Assam portfolio considering recently, we can see that many MFIs now coming back to Assam. So what is the position of Asirvad in Assam?

Asirvad presence was weakened. And we don't have much it as far as Assam portfolio is concerned. It was very small. We have just ended only.

Right. So my question is, will they expand in Assam going forward, what is the business plan like in Assam, does it continue to be restricted?

This year, we are rationalizing -- our plan is to rationalize the expenses. Why? Because last year, we have endured into the brand expenses, et cetera, put people, et cetera. Now we have the people capacity as well as the brand capacity even to treble the business. So we don't plan to expand our plans in network for this year.

Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal.

Am I audible?

Yes.

Sir, for my benefit and some other as well on the call, I just wanted to understand, this extension in tenor from 3 to 6 months, from what I recall, and please correct me if I'm wrong, has not been done recently? I recall -- I mean, 4 quarters back or 5 quarters when we were seeing accelerated auctions, immediately post that is where we have started moving from a 3-month Gold Loan product to a 6 months Gold Loan product. So please let me know if this understanding is correct. And the fact that we are not really incentivizing customers to move from 3 months to 6 months rather, as our offering, we are offering a 6-month Gold Loan product versus 12-month Gold Loan product, which is offered by the competition.

Yes. So let's see, we started moving around 3 months to 6 months, a few months back. But the transition was more towards last quarter. That was the reason.

And that's the standard product offering that we have now, right, a 6-month Gold Loan product?

Yes, yes. Now, we don't have 3 months Gold Loan products at all.

Got it, sir. So the next thing that I needed some clarification is we have -- I mean partly answered this question. Last quarter, we had given the slate of gold loans basis ticket size less than INR 1 lakh, INR 1 lakh to INR 2 lakh, INR 2 lakh to INR 3 lakh, INR 3 lakh to INR 5 lakh and above INR 5 lakhs. So if Raju sir can please provide that?

We'll share that.

All right, sir. And sir, last question, while you have already guided on the gold AUM growth, how are we looking at the non-gold product segments, what kind of bold aspirations that we have in the non-gold products segments?

MFI may grow around 35%. And other -- the HFC also may grow around 35% -- 35% to 40%. And Vehicle loan and MSME et cetera. But these are showing a trend of a growth of around 50%.

Our next question comes from the line of Piran Engineer with CLSA.

Sir, if you could just give your overdue interest number for fourth quarter and third quarter?

We will come back to you, Piran.

Our next question comes from the line of Jigar Jani with B&K Securities.

Just one question. Our cost of funds has seen a decline sequentially on a consol. basis from Q3 to Q4. Any particular reason for that? And what would be your guidance for borrowing costs for next year?

So one benefit we got during the quarter due to our repayment of dollar bonds, which was costing 11.5%, we redeemed at the beginning of the quarter. So that has given us some benefit. And in the case of Asirvad, the rate is not going up as per the repo rate hike because we were able to get the funding at a better pricing because as a group, we are getting the liquidity. So that is also getting us benefit. In Housing Finance also -- has the growth is there, improving the earnings, these things helping us to get a better pricing.

Yes. And any guidance for next year? Any increases?

Yes. So we have to see the overall market scenario because last year, we have seen a 250 basis points increase in the repo rate hike. So we have to see. I think the there will not be further hikes, then we may be able to continue at this level. And based on the repo rate hike, we may see an increase in the cost table.

Sure. And lastly, on the SME and personal loan business, we saw a marginal spike in this quarter. Anything to read in that? Or is just normal course of business with growth, there is a small spike?

Yes. That is a small ticket unsecured loan, where our yield is around 25%.

Okay. Okay. So that there is some...

In the overall scheme that is very small, I think INR 140 crores, INR 150 crores AUM.

Our next question comes from the line of Shubhranshu Mishra with Phillip Capital.

The first question is on the competition. So is it competition only from gold financials and banks into Gold Loans? Or the competition is also coming from micro SME lending from banks, other NDFCs as well as fintech [indiscernible]? Second is a data taking question. If you can please [indiscernible] accrued interest in this quarter? And the auctions that have happened in this quarter. And also if you can make the split of the AUM into less than INR 1 lakh, INR 1 to INR 2 lakh and greater than INR 2 lakh?

See, about competition. See, Now also we do understand that the largest -- the portfolio is with the unorganized sector, which may be around 3x of the organized sector, unorganized sector. But this is only an estimate because there are no data available. So it is importing around 1,000 tonnes of gold and jewelry sale is also increasing. And also, the product is becoming a [distress] product to a lifestyle product. So in this process, there are enough opportunities for a larger number of organized players to renovate our customers from the unorganized sector. So the competition was not the issue, clearly. If the NBFCs generally do short-term loans for average tenure of around 3, 4 months. And the ticket size of around INR 50,000 to INR 60,000. So this is -- and for the bank, the average loan ticket and tenure is much, much higher. So bank customers and nonbank customers are different. So with all these -- taking into account and the rural economy started coming back, we feel that competitive intensity will come down, and we saw the signs of that. Hello?

Yes, sir. Sir, this still doesn't answer my question. My question was, if the competition is from a different form factor, whether it's from micro SME lending, from various banks and NDFCs [indiscernible].

So see Gold Loan is Gold Loan why? Because this is a still loan there is no other in still loan. Gold Loan customers were increasing only. So even those customers who are availing micro loans, that may not be sufficient for their purpose to meet their purpose, need. So in addition to whatever they do, they do, they avail is gold loan and prepay. And always, when the gold is blessed, the first priority for the repayment will be gold loan because these are all family jewelry. So the other ones -- increase in other loan person loans, et cetera, this don't post much threat as far as gold loan is concerned.

Sure, sir. you can answer the data points that I asked, the accrued interest, the auction and [indiscernible].

We'll share that.

Yes. We'll share that.

We'll share that separately.

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing remarks.

So thank you for the active participation. And whatever details you asked for, we'll share with -- these details micro details. Thank you.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.