Manappuram Finance Limited (531213) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Manappuram Finance Limited Q4 and FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Abhijit Tibrewal with Motilal Oswal.

Yes. Thank you, Ryan. Good evening, everyone. Welcome to the conference call to discuss the Q4 FY '24 results of Manappuram Finance. We have the senior management team of Manappuram Finance with us today represented by Mr. V.P. Nandakumar, MD and CEO; Dr. Sumitha Nandan, Executive Director; Ms. Bindu A.L., Chief Financial Officer; Mr. B.N. Raveendra Babu, MD of Asirvad Microfinance; Mr. Rajesh Namboodiripad, CFO of Asirvad Microfinance; Mr. Basavaraj Shetty, Senior VP and Head IR, Asirvad Microfinance; Mr. Kamal Parmar, who is heading the Vehicle and Equipment Finance business; Mr. Suveen P.S., CEO of Manappuram Home Finance; and Mr. Robin Karuvely, CFO, Manappuram Home Finance. With this opening remarks, I hand over the call to Mr. V.P. Nandakumar for his opening remarks, post which we will kind of start with the Q&A. Thank you, and over to you, sir.

Thank you. Good evening, ladies and gentlemen. It gives me immense pleasure to welcome you all to the conference call for the fourth quarter FY '24 financials. India continues to maintain growth momentum despite global uncertainties and has just entered the INR 5 trillion market capitalization club, inclusion in global bond index [indiscernible] stability to ForEx and bond markets. And this strong economic performance is a huge confidence booster for all business establishments. And it is against this backdrop that I present our Q4 financial results. As India is poised to repay huge demographic dividend until 2050, NBFCs have a great opportunity to continue tapping this segment and expand their credit portfolio. This will be supplemented by the opportunities provided by increased formalization and urbanization. This quarter, we achieved good growth in both AUM and profit, which is symptomatic of a strong traction achieved by us in the last mile credit delivery. I'm happy to share that we recorded a net profit of INR 564 crores with an improvement of 35.7% year-on-year driven by profitability in gold loans and microfinance. Gold loan AUM stands at INR 21,500 crores, an improvement of 8.9% over the year ago quarter and 3.6% sequentially. While stand-alone AUM [indiscernible] entity at INR 28,679 crores grew by 17.4% year-on-year. The consolidated AUM is INR 42,070 crores recording an increase of 18.7% over the year ago quarter. Asset quality in the stand-alone book has been contained below 2% while we posted an ROA of 4.9% for the quarter is an improvement of 60 bps year-on-year. We are also pursuing a strategy of diversifying our funding mix by reducing dependence on bank borrowings and opted for dollar bonds with this objective. At Manappuram, we take utmost care to comply with all the RBI guidelines. That's what the reason one with respect to the INR 20,000 cash limit in disbursal. It is applicable to all NBFCs. We are the pioneers in online gold loans and digital mode of disbursement, is hassle-free and saves a lot of time. We have the infrastructure and the same is implemented from 8th May 2024. The company's microfinance subsidiary, Asirvad has posted an AUM of INR 11,881 crores, showing a growth of 18% year-on-year and a profit of INR 458 crores, which marks a growth of 105% for the previous financial year. The share of microfinance in the overall profit pie is set to go further in the days to come. Like in the previous quarters, we continue to post maximum growth in the vehicle finance business recording 69% increase year-on-year with an AUM of INR 4,111 crores followed by home loans with an AUM of INR 1,510 crores. This thing, 37.8% increase over the corresponding quarter in FY '23. We are keeping a close watch over the affordable housing segment, where we see a lot of potential. The share of non-gold business now stands at 49% for the total assets on the management. And this is very much in line with our diversification strategy. The upcoming full union budget is expected to spell out further measures to propel these sectors forward. We are confident of achieving both top line and bottom line growth as we continue to maintain comfortable liquidity. For more comprehensive review of our financial performance, I hand over the floor to our CFO Ms. Bindu A.L.

Good evening, ladies and gentlemen. Thank you for joining us for the discussion of our Q4 results. As you are aware, Asirvad Microfinance filed its DRHP on October 5, 2023. We request our participants to restrict their questions on Asirvad to the published numbers. Now coming to the operational overview. Our consolidated AUM for Q4 FY '24 was INR 42,070 crores, representing 4.2% sequential growth and 18.7% Y-o-Y growth. Consolidated profit after tax was INR 563 crores, which was slightly down Q-on-Q and up by 35.7% Y-o-Y. Consolidated profit after tax for the year was INR 2,197 crores, which was up by 46.5% Y-o-Y. ROE on a consolidated basis was 20% and ROA was 4.9%. Our leverage is currently only 2.9x. GNPA at 1.93% versus 1.99% during the previous quarter. With regard to liquidity, cash and cash equivalents INR 3,181 crores and undrawn bank lines of INR 6,000 crores as on 31st March 2024. Our CP exposure is 4% in the stand-alone entity. The borrowing cost has gone up by 16 basis points in Q4 FY '24. Talking about the gold loan business, which is 51.1% of consolidated AUM. The AUM stands at INR 21,500 crores, up by 3.6% Q-on-Q and up by 8.9% Y-o-Y. During the quarter, we were able to add 4.13 lakh new customers, our average LTV at 58%, which is well below the peer group. The online book accounts for 57% of the total gold loan book. Stand-alone PAT was INR 428 crores, which is up by 2.6%, if we adjust for the dividend of INR 15 crores from the subsidiary in Q3 FY '24. Our stand-alone PAT for the year was INR 1,658 crores, up by 30.9% Y-o-Y. Coming to Asirvad Microfinance, the AUM stands at INR 11,881 crores, including the gold loan of INR 890 crores, which is up by 3% Q-on-Q and 18% Y-o-Y. PAT for the quarter INR 102 crores versus INR 127 crores. And for the year, INR 458 crores compared to INR 223 crores in FY '23. Net NPA stands at 1.71%, with a CRAR of 22.79%. Vehicle Finance business, we have reported an AUM of INR 4,111 crores, which is up by 14.3% Q-on-Q and up by 69.1% Y-o-Y. Our GNPA at 2.9% as on 31st March 2024. The home loan business had a total book of INR 1,510 crores, which is up by 6.7% Q-on-Q and up by 37.8% Y-o-Y. It operates from 65 branches and reported a profit of INR 7.1 crores during this quarter. Collection efficiency for the quarter was 98% and GNPA at 2.4%. Loans to MSME and Allied was INR 2,908 crores with a disbursement of INR 310 crores. Collection efficiency is at 100% and GNPA of 1.7% versus 1.5%. On lending to NBFCs, the book stands at INR 989 crores with a disbursal of INR 130 crores with an ROA of 5% for this business. The Board has declared an interim dividend of INR 1 for this quarter. Our capital position is strong at 30.6% CRAR and the consolidated net worth at INR 11,548 crores and the book value of INR 136 crores. Thank you. Now we can go for the Q&A session.

[Operator Instructions] Our first question is from the line of Shubhranshu Mishra with PhillipCapital.

Given the fact that we have moved from the cash disbursement totally, and we are doing mostly disbursement via RTGS or NEFT, now this data becomes available to the bank as well through whom we are doing the disbursement. So we are opening up those customer profiles to the banks as well. So do you think that there could be some attrition because of this? This is one. Second is when we look at the non-online gold customers, the ticket size is fairly increasing so maybe online gold customers who are basically repeat customers where we are seeing the ticket size increase. But if we split that and we look at the average ticket size of non-online gold customers, the ticket size is hovering at INR 141,000 ballpark. So these are my 2 questions. There are a couple of data questions which I'll come back after these ones are answered.

So your questions are all about cash disbursals of stopping at disbursal of INR 20,000 and above. So we are fully compliant about that -- about it from the 8th of this month and we are disbursing loans of INR 20,000 and above only into the bank account or through online gold loan mode. We don't see any business impact because of that because as -- most of the customers have their bank accounts now, Jan-Dhan account or many accounts. And the 80% of the customers who are regular, we have intimated them for -- coming for availing the loan, they should bring their bank accounts and they are complying with that. So after that, we have seen an increase in the online gold loan. Now it stands at 63%. It is increasing daily.

And with that will we not open up data to the banks? Can we see customer attrition because the banks will be able to see these transactions?

We have been offering this online gold loan for a long time and we don't see the customer poaching by the banks. Because see there is a high degree of customers for loyalty. And what is the most important year after that? Do we see growth? So we see a reasonably good growth even after implementation of this.

Second question, sir, on the non-online gold average ticket sale.

This -- see the non-online gold loans are below INR 20,000. So for such customers, we can disburse cash.

No sir, what I meant is that the ticket size is not increasing over the last couple of quarters, I think that is around INR 41,000. So what is the reason for that?

The ticket size -- see, here the customers borrow money if they are confident of repayments. The life of the loan remains around 100 bps. It means the customers have in mind while taking a loan that they have to repay the loan within a period of maximum of 100 days. So with increase in price, we can't expect growth in the ticket size. So gradually, this is increasing a couple of -- every year, we see increase in ticket size by around INR 10,000, INR 15,000 average ticket size. So that will continue.

And towards the data point, sir. One is what is the accrued interest as of fourth quarter and last quarter gone by? And what is the AUM split of less than INR 1 lakh -- INR 1 lakh to INR 5 lakh and more than INR 5 lakh?

Interest accrued 5.3% as on 31st of March. And on the AUM...

Up to INR 1 lakh is 44% and up to INR 3 lakh -- up to INR 1 lakh is INR [ 44% ] and INR 1 lakh to INR 3 lakh is 33%, balance above INR 3 lakh is 22%.

Sir, what was the accrued interest last quarter?

It was 4.5%, around 4.6%.

And by auctions this quarter?

INR 76 crores.

Our next question is from the line of Rajiv Mehta with Yes Securities.

Congrats on good quarter. Sir, firstly, on this impact on restrictions on cash disbursements, while you spoke about not seeing any long-term business impact. But since when the restriction has come, what has been the impact on a daily disbursement run rate? How much our daily disbursement run rate has fallen by? And in the longer term, wouldn't we see any structural customer loss, customers going back to informal players if some of the customers are not willing to share the bank details?

So we -- suddenly we see the growth improving after the introduction of these changes. The reason could be -- we assume that the reason could be many other players in the NBFC industry may not be -- particularly the small ones, may not be ready with this online gold loan, et cetera, et cetera, whereas during the last 5 years, we have made that very robust. And around 60% of the customers even before that have become this online gold loan customers. So maybe because of that, after the introduction of this thing, the growth has only improved. And long-term, I don't see any challenge because of that because this is applicable to all the regulated entities. So we don't lose any level playing field out of that. So we don't expect any negative fallout because of implementation of the new regulation with regard to cash disbursement.

Got it. And now, sir, the impact of higher gold price. So gold prices in the [indiscernible] have gone up significantly. So how do you see this benefiting our growth in the next 2 quarters? See if you look at our LTV, the LTVs have fallen to 58%. So if you can tell us your expectation where would the LTV settle in the next 1 to 2 quarters? Would it go back to 65%, 63% because of customers availing the benefit of higher gold prices. Can you comment on the positive effect of higher gold prices in your growth?

So I consider that to be more or less benign, will be a slight growth will be there. Because, as I mentioned earlier, the customer who pledges has always thought about this cash flow. The average life, as I mentioned, remains around 100 days. In spite of the gold price going up, going down, this remains like that. So they will not simply avail because of the gold price has gone up because the customer -- normally a customer comes with multiple number of ornaments. Yes, if he want to avail -- the family has -- the ladies have -- who got 10 bangles or 8 bangles. If they want the smaller amount, they come with 1 bangle. If they want more amount, they come with 2 bangles like that or some other small ornaments. So when the gold price goes up, they bring lesser quantity of gold. They don't simply avail more amount simply because of that. That is why when the gold price goes up, the average LTV goes down. But around 10% of the customers avail that full duration of 1 year. For them sometimes for renewal that also for around 5% to 6%, temporarily, they may take the advantage of higher LTV because of the gold price -- growth in the gold price. So that's -- so the impact is very minimal.

Okay. And just one last question on the employee expenses. Sir in the stand-alone financials, your employee expenses has been trending flat over the last 4, 5 quarters, while we see strong growth being reported in the non-gold business side. So can you explain this, has there been a reduction in employee count? And if yes, in which business the employee count is going down? And how should we look at employee number growing from here on and the employee cost growth in FY '25?

Why it is increasing in the non-gold business. See, non-gold business is collocated with the gold loan business. Various opportunities are there but to extend this across all the gold loan branches, we extended non-gold business to the extent of around 20% only. So our expansion of distribution through this gold loan branches, these non-gold products, the scope of that is very high. But we are taking a very considerate step in expanding that, understanding the asset quality, et cetera, in this places or other players. Accordingly, we are expanding the non-gold business across the gold loan branches. So that is the reason why the headcount is increasing in non-gold business. In gold loan business, there has been some rationalization wherever we have seen number of employees hire, et cetera. It is because of the employee rationalization there because more and more online gold loan is coming, the requirement of cash... Cash requirement is there, we have to go -- we have to post employees who are regularly going to bank, et cetera, et cetera. So those numbers, et cetera, have come down. So I can say it is because of the rationalization in gold loan branches. So the employee count in gold loan segment has come down. Non-gold, yes, we are slowly expanding our footprints.

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

So my question is pertaining to one of the key players in the landscape being impacted by the regulators action. But can you quantify the benefit to us in terms of customer addition and tonnage, because optically, it seems like there has not been any significant benefit on both these fronts?

Yes, one of the players -- their business is impacted, but yes -- so we are not much benefited out of that but we are getting a reasonably good growth even before they were impacted, and that continues. So we expect a robust growth in gold loan also in the coming quarters.

Second question is if you could give us some color on the online customer split with respect to below INR 1 lakh...

Online customers, the profile is the same. Profile is the same because the advantage of gold loan is that they -- yes, they have to come only once in the branch. Then they can transact this account more or less like an overdraft facility. But if they have some amount, they can remit to that and whenever they require money, they can take it back from anywhere in the world, 24 hours. So on seeing this facility, for example, INR 10,000 gold loan, somebody takes INR 10,000. Then after 20 days, he can remit INR 2,000. There after he can -- whenever he has the requirement, he can avail whatever is the gap there as per the LTV on that day. So this advantage is there. Because of this advantage more and more people are using that. It is not because the profile of the customer is changing, et cetera. It is because of the advantage of the product. So we have introduced another scheme. If some customer is unable to come to the branch because of any reason, whereas he also is in need of money, we deliver that service at their door steps. We go there, do all the KYC process, all the processes with regard to onboarding. Then the disbursals are done online. All these are done. So it has become a very attractive product. So the popularity is increasing and that is working seamless as far as we are concerned.

Got it. Sir, but my question was like how we gave the split for below INR 1 lakh, INR 1 lakh to INR 3 lakh and above INR 3 lakh for the overall gold loan book. Could we provide the same for this online gold loan book?

Yes. It is irrespective of the amount. Whatever is the amount -- even for INR 10,000. Many customers are availing even though the cash disbursals are possible. Because it is like -- for them, it is like a credit card. Only when they avail, which can be done from anywhere, even for merchandise, it's very convenient. So the amount or whichever amount -- whatever amount they want, that's not material here.

Okay. I'll take that number maybe offline. So just the last question on the MFI front. What is the PAR zero for this particular business that we have seen over the last 2, 3 quarters been trending, the PAR zero number for the MFI business? And just one more observation here. The credit cost continues to be elevated here, even the GNPAs are elevated. So could you just throw some light on this?

We have some problems in some states like Punjab, Rajasthan, et cetera. So where we have reinforced collection missionary. We have strengthened the collection missionary. And we hope the collections will improve going forward.

Okay. So the PAR number are elevated because of these 2 states particularly or across states for our MFI exposure?

PAR number is slightly elevated, that's why there was some impact on the profitability. But we have strengthened the collection missionary and it started working. And hopefully, going forward it will improve.

Our next question is from the line Pratik Chheda with Guardian Capital Partners.

I just want to continue on the asset quality point. Even if I see the MSME segment, the GNPAs have risen from around 1.5% in last year to around 2.8% despite the 50% -- more than 50% AUM increase. And you've mentioned that most of it is looking like it is coming from a digital PL. First of all, could you just help us quantify what the GNPAs are there in the digital personal loan segment? Secondly, is there any strategy -- is there any change in strategy that you're looking at, given that this segment is looking fairly volatile. And with a yield of around 26% in the unsecured PL, is the segment currently profitable?

See the unsecured P&L of the digital personal loan, that -- the disbursals have been brought down by tightening the underwriting process there. So the disbursals are low. So it is coming from the old accounts. In MSME, there was some delay in collection on account of these elections happening, et cetera. But last quarter...

Yes, it was 1.5%, increased to 1.7%. And if you see the digital personal loan in the overall ratio mix, it has come down to 9%. Because of the higher delinquency we have tightened the underwriting. So the proportion also come down in the digital PL.

So if I just do a -- if I just include that 9% in the base and take that 1.1% differential GNPA, your digital personal loan GNPA is around 12%. Is the math around looks fine?

Yes.

The digital personal loan is...

It is only very small only. In the total AUM, it is only 1% of the book in the -- even in the stand-alone book. In the consol book, it is 0.7%.

Our next question is from the line of Bunty Chawla with IDBI.

My questions have been answered [indiscernible] so you have achieved around 18.7% on a consolidated basis. What will be the -- FY '25 basis between AUM for gold loan and for the overall?

Well, we have been talking about is a CAGR of 20% and ROE of 20%. We delivered -- at around nearly 19% and in the recent consol ROE. So we hope it had to continue. So the share of -- it appears now the share of our gold loan will improve.

So overall -- in overall basis, you are saying gold loan percentage will improve?

It appears like that, that is the trend we see. And talking about the standby, it's a similar a CAGR of 20% [indiscernible] ROE of 20%.

And sir, secondly, we have seen on a stand-alone basis, there has been an increase in the cost of borrowing. How one should see now for the FY '25 and similarly, the margins?

Yes. So after this risk weight increase, every rollover we are seeing an increase in the cost of borrowing. So that trend in the last quarter also, we have seen the increase. And to have diversification and more liability profile, better liability profile, we did the Dollar Bond also, which is also coming at a slightly higher cost. So there will be an increase in the cost of borrowing, but at the same time, which is going on gold loan at 22% yield, and that is the reason it will not impact the profitability.

Okay. So can we say the margins should sustain at this level for next year as well though cost of borrowings might inch-up?

There could be a slight dip in the net interest margin, but it will be overcome by profitability will be maintained because of better growth, we expect a slight shrinkage in the net interest margin.

Sir, specifically for gold loan [ AUM ] growth, what is the guidance for the next year?

I'm sorry, Bunty, to interrupt you. We have lost the line of the management. Please stay connected while I join the management. Ladies and gentlemen, we have the management line connected with us. Bunty, if you could please ask your question once again.

Sir, lastly, as you said there, there could be an inch-up in the gold loan. So any specific guidance for the gold loan AUM growth, are we revising it?

I used to answer like this. Marginal decline can be expected. But we expect that to be compensated with a better growth so our objective of reporting ROE of 20% will not be affected with this. We are hopeful of regaining the same ROE in the current year also.

Our next question is from the line of Dhaval from Mumbai DSP.

Sir, just one question on growth. Sir, I think I missed your conversation on growth expectation for next year. Did you mentioned that next year, you expect gold loan growth to be higher than overall loan growth and overall growth is 20% guidance. Is that what I heard, sir, I just want to reconfirm that.

This is a follow-up question of the previous question on price because the audibility is a little weak. Is it the same as last?

Is my voice clear now, sir?

Yes, yes. See what I said is, there is a slight shrinkage -- marginal shrinkage as far as NIM is concerned. But that is not a cause of concern for us because we expect that will be compensated with a better growth. So we are expecting to report an ROE of 20% next year also -- this year also.

Okay. So basically, growth will be higher than 20% in gold loan. Is that what you're trying to...

See, judging from the current trends, we expect a robust growth in gold loan. That could be better than last year. The other segments are also expected to grow healthy.

Okay. And sir, just one last thing. In terms of credit cost for the MFI business and overall on a consolidated basis, could you give some perspective of credit cost that you expect in the MFI business sense for FY?

So the collection machinery has been strengthened and we see an improvement in collection, yes, week on week. So we expect the credit cost going down in the coming quarters.

Okay. From 4Q level or from full year basis...

So it is going down already. It is improving on a regular basis.

Our next question is from the line of Pratik Kothari with Unique PMS.

Sir, my first question, given this change below INR 20,000, no more cash disbursement. Any change in behavior from customers? I mean, they were talking between that they might shift back to money lenders. Anything that you can highlight?

So see, [ please see ] -- the growth is not affected. In fact, the growth has only [ rolled ], we believe that it is because some of the players in the NBFC space is not [indiscernible] So there is -- yes, it takes time for them to have a system, a robust system, whereas we have that -- actually that is benefiting us. We don't see the new customers or total bond disbursals coming down. So it has only improved.

Correct. And sir, how much was the turnaround time changed now from earlier?

See even before this, 60% of loan disbursals were through online gold loan. So it is improving regularly. And we don't see much increase in the catch.

Correct. Fair enough. So the gold again, have you reached that auction surplus which we wanted to come below, and have you applied for...

Yes. So it just gone up to INR 48 crores. This was the accrual over the last 15 years. So we have employed many other measure including different agencies, et cetera, for repayment, and that is bearing results. It has been brought down now to around INR 14 crores from INR 48 crores and we have intimated to the RBI about that. And we hope that we'll get the brand offering permission with these. We continue our efforts and we are able to reduce by around INR 2 crores every quarter.

Right. Fair enough. And sir, my last question on MFI. Can you highlight what are the issues that we are seeing in say, Punjab and Rajasthan which is hurting our profitability. And I believe this is also affecting our growth because at the beginning of the year, we had expected much faster growth, which is not coming. So is this specific to Punjab and Rajasthan? Or is this something else?

Yes. Punjab, Rajasthan and Gujarat. And so now you'll see a considerable improvement in the business in the coming quarters as well as improvement in the collection efficiency. We are seeing that now.

Our next question is from the line of Rohit Shah with Ladderup Wealth Management.

I think all my questions have been answered before.

Our next question comes from the line of Gaurav from Capital Farming Consultants.

I have 2 questions. First is on in terms of our capital allocation strategy. Like in Manappuram Finance is our parent entity. Now since we are in a way, bringing the IPO of Asirvad Microfinance. So capital requirement of Asirvad Microfinance will be funded through the money that will be raised by the IPO and whatever way the means that Asirvad will require the money for? So now considering in Manappuram Finance, on a quarterly basis, there will be earnings somewhere around on the back, INR 400 crores to INR 425 crores, which has been the trend for the last 3, 4 quarters. That translates into somewhere around INR 1,600 crores to INR 1,700 crores annually, right? And our capital adequacy currently approximately 30%, 31%. So to improve our return on equity, what would be the capital allocation strategy of management? Is it in terms of giving more money back to shareholders, doing buybacks or -- because growth, I don't think so that -- we are targeting around 20%, 25% annual growth in the stand-alone Manappuram Finance. That is the first question on the capital allocation strategy. Second thing, looking at the shareholding pattern of Asirvad Microfinance, which has been disclosed via the papers which have been filed with SEBI, it has been noticed that the promoters of Manappuram Finance got an opportunity to get shares in Asirvad Microfinance in their own names along with the names of the Manappuram Finance. So isn't this a misgovernance in terms of corporate governance practices that while the retail shareholders or the institutional shareholders haven't got any opportunity to participate in having shares of Asirvad Microfinance, where as the existing promoter of Manappuram Finance got an opportunity to get share at a dirt cheap price in Asirvad Microfinance, which will get valued at a much more higher price when the company get listed. These are my 2 questions for which I would expect an answer from the management.

So the capital allocation strategy policy is skewed in favor of secured letter. So for us, only unsecured lending -- Microfinance. So for unsecured lending, our total capital allocation plan is around 10%. So we have done that. And the company has a capital adequacy of around 24% now. See, then we are preparing ourselves for the IPO. And with that IPO, the company will be able to carry out its operations as well as achieve the target of its growth plans in the coming years, a parent company [indiscernible] The second thing is the promoters of Manappuram Finance is not participating in any pre-IPO capital investment. Promoters of Manappuram parent company is not participating in that. Regarding institutional investors, the decisions will be taken at appropriate time.

Sorry, sir, but I think the shareholding pattern, which has been disclosed as part of the dropped prospectus. In that, it is clearly visible that at the time when Manappuram Finance acquired the shares of Asirvad Microfinance in various rounds. At that point of time, the promoters of Manappuram Finance also acquired the shares of Asirvad Microfinance. I'm not saying right now in the pre-IPO round, but in the erstwhile rounds. When Manappuram Finance was acquiring the shares of Asirvad family, promoters of Manappuram also acquired the shares of Asirvad, that was the question. And in terms of the capital allocation, I was talking about at the parent level. Because at parent level, you will be getting a lot of positive cash flow, I would say, in terms of profitability at the Manappuram level. At that point of time, how you are planning to invest that money judicially, so that the return on equity is improved, which is hovering somewhere around 15% to 16% now. Any plan to take it to 20% or more than 20% kind of levels? Those were specifically my questions...

See, the promoters of Manappuram Finance parent company has acquired out of sales abdicated by the original shareholders is the right -- So they don't want to subside that they didn't have the money. So whatever is the shortfall in the -- at the time of this rights issue, a portion has been acquired by Manappuram promoters. The second thing, about -- it's a higher capital adequacy. And as you see, as a shortage of effectively using the capital, with a good leverage, et cetera, et cetera. So what is most important for the shareholder is a good ROE, reasonably, a good ROE, 20% ROE on a sustainable basis, is it not a good ROE. Then how to use the capital. We are expanding to a non-gold secured lending also, MSME et cetera, and vehicle et cetera. As I said, these businesses are allocated with gold loan business, where daily we have around 40,000 customers visiting our office, 40,000 to 50,000 customers visiting our office. And so distributing these loan products also is relatively an advantage for us as our branches are visited by larger number of customers. And because of their needs only, we have expanded these businesses laterally. So as of now, our 20% of the gold loan branches are only utilized for the distribution of these non-gold secured products. So we are expanding our footprints to other branches also slowly. So we hope we'll be able to improve upon the capital utilization going forward. And at the same time, as we said, we are giving back also by improving the dividend quarter-on-quarter.

Ladies and gentlemen, we take our next question from the line of Jigar Jani with B&K Securities.

One data related question. In the Vehicle Finance business, what would be your collection efficiency?

The GNPA there is around 2.9%. We'll be able to maintain that below 3% going forward also.

Okay, sir. And for the quarter...

Our collection efficiency -- 100-plus percentage. And for us, we have given a lot of emphasis for CRM. And around 77% of these are collected through the presentation of [ NACH off tick ]. And balance 23% on the visit to employee, say the field force for collection. And we have strengthened that also. Now we hope we can improve upon the asset quality, that is what we are trying to do. Even now if we look at our asset quality is better than of the market in the [ peer finance ].

The other income in the quarter was significantly lower. Any one-off or reversals, anything [indiscernible]

Can you repeat it?

We couldn't hear.

Am I audible now?

Can you repeat the question?

Yes, I'm saying the other income in the quarter was significantly lower, almost 24 million, if you look at Q3 of -- it was about 176 million, and even last year it was 130 million. Any one-offs captured in this other line on the consolidated numbers?

Yes. So the -- bad debt recovered in what we have included in that. So depending on the write-off, immediate quarters, we will get a higher amount of collection, that is what we are saying.

Okay. And lastly, just circling back to the credit cost on a consolidated basis. Any guidance on that one?

For this quarter, on account of higher credit cost from microfinance business, it's almost 1.8%. But once we improve the collections because the majority of the credit cost is coming from microfinance only. The standalone, it is only INR 28 crores, leading and asset provision. So once we improve the microfinance collection, this will come down where we were talking about 1% to 1.5% is credit cost. Once we improve the collection efficiency, this will be in similar range.

Ladies and gentlemen, we have reached to the end of the question-and-answer session. I now hand the conference over to the management for the closing remarks. Please go ahead.

Thank you all the participants. For your further queries or any clarifications in our statement, so we are always available. We welcome you for any queries in this regard. Thank you.

Thank you. The conference of Manappuram Finance has now concluded. Thank you for your participation. You may now disconnect your lines.