Muthoot Capital Services Limited (511766) Earnings Call Transcript & Summary

Good day, and welcome to the Muthoot Capital Q1 FY '24 Earnings Conference Call, hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta from Elara Securities Private Limited. Thank you. And over to you, ma'am.

Thank you, Seema. Good afternoon, everyone. On behalf of Elara Capital, we welcome you all to the earnings conference call of Muthoot Capital to discuss the Q1 FY '24 earnings performance. From the esteemed management today, we have with us Mr. Ramandeep Gill, CFO, Mr. Mathews Markose, CEO. Without further ado, I now hand over the call to Mr. Ramandeep Gill for his opening comments, post which we can open the session for Q&A. Thank you. And over to you, sir.

Thank you, Seema. Thanks Shweta. A very good afternoon to everyone. I'm very happy to converse with each one of you to showcase the results of Q1 of this financial year. The quarter remains stable in terms of business, but yes, the focus was to add various partners with respect to various products that has been offered by the company. At the same time, the top most priority has been provided to the asset quality of the company, which always remains the key areas of the company. We'll talk about the asset quality also in detail. The accounts have been approved by the Board on 8th evening. But first, we'll share you the highlight of the results. Post that, our CEO, Mr. Mathews Markose, will be providing you the target for the Q2. He will be sharing with you the broad strategy, which the company will be adopting in the quarters to come. So let me begin with the quarter 1 results. The quarter 1, as I said, the AUM of the company stood at INR 1,996 crores, wherein the company has done a business growth of INR 201 crores, which has taken the balance sheet at INR 2,236 crores. The total number of the customers stood at 468,407. However, if we compare and if we compare the PAT of the company and returns of the company, the profit of the company stood at INR 18.03 crores, which record a growth of 26.08% from the profit, which we had in the Q1 of last financial year. Whereas if we talk about return on asset of the company, the return on asset of the company stood at 3.56%, wherein if we talk about the Q1, it stood at 2.80%, recording a growth of 27.14%. The ROE remains more or less the same, which is 14.50%. For this financial year, it was 14.48%. Significant change can be seen in the leverage of the company, which has gone down from 3.8 to 3.3 and 3.6 of the last quarter to 3.3. The GNPA, as I said, the company has an opening GNPA of INR 431 crores when we opened this quarter, whereas closing stood at INR 424 crores. The overall portfolio, which we can see, the efficiencies which companies have seen, in 0 bucket, we have seen as much as 97% of the efficiencies, whereas the portfolios that we have created in last 12 months amounting to INR 600 crores, having a total GNPA of 2.40%. And portfolio that has been created between 12 months to 16 months, amounting to 18%, having a total GNPA of 3.40%. The capital adequacy of the company gone more strong, if we compare it with the Q1. It has gone up to 29.89% as we close this quarter, recording a growth of 47.24%. The overall number of the company that we have seen in terms of own funds, the own funds of the company, we have closed at INR 507.2 crores, whereas if we compare to the quarter 1, it was INR 425.66 crores. The average cost of the company, with respect to the cost of funding is 9.70%. We'll speak on that. The company in terms of recoveries, as I said, the [ NACH ] performance of the company has been specifically improved in this quarter, wherein our success rate, which used to be 35%, has gone up to 43% as we close this quarter. Bucket 0 has always been and has always been a key focus, wherein we have tried to bring the entire team in-house so that we can also save -- we can also have efficiencies in terms of recovery costs. Therefore, we have seen that -- therefore, we have seen that we have achieved the highest efficiency of 97% in bucket 0. As I said in the last quarter, we have been going ahead with the co-lending partners. In this quarter also, we have added 2 more partners. With respect to our co-lending businesses, the total partners, which we are having, they're having a total AUM outstanding with us at INR 253.34 crores. And each and every rupee stands at a standard asset. In terms of corporate book performance, corporate book performance of the company, the corporate loan provided by the company stood at INR 160.33 crores, with the total number of clients outstanding at 3-5, 35, and then everything remains standard. As I said, the total slippages, which we have seen in terms of NPA was INR 35.95 crores, whereas in terms of recovery that company has seen, was INR 42.61 crores during this quarter. The company has a total provision coverage ratio of 90.11%, which is as healthy. And provisions remaining -- provision for the Stage 3 assets stood at 20.06%. With respect to the shareholding pattern, the promoter group continued to hold 62.60% of the company, whereas in terms -- whereas 23% has been held by the retail, the banks and financial institutions and FII, FPI and NRI, they are holding 3% and other corporate bodies are holding 5%. In the last quarter, the company has raised INR 129 crores of additional funding, which include adding one bank and which also include adding the funding through NCD. As I said in the last quarter, we want to have a borrowing mix, which contain working capital demand loan also, NCDs also and term loans also. In terms of new banks that we are going to add, the banks have shown interest specifically after our Q4 results, and we are in touch with the banks. We have already received the term sheets of approximately INR 200 crores. But as per the requirements of the funds, we have been closing these banks. As far as working capital demand loan is concerned, which was quite a concern area in the last financial year, wherein our GNPA was high and banks were assessing the same. In this quarter, we have seen that each and every working capital that company has paid, we have been successfully able to roll it over, whether that pertains to Union Bank, which we have done in the last financial year, Q4, or we can say the TMB Bank, IDBI Bank, Central Bank that we have closed in this quarter, plus IOB. As I said, the borrowing mix of the company, the 60% still comes from the banking loans, whereas 22% of the book is hold by the securitization. The NCDs which were close to 8% in the last quarter and 3% in the Q1 of the last financial year, now that has gone up to 11%. Whereas in terms of MLD, which was 0 in the Q1 of the last financial year, has gone up to 5% as we closed this quarter. The overall growth, as I said, the company has done extremely well, specifically in terms of maintaining the NPA levels and also adding various partners because we know that from Q2 onwards, various festive seasons will be starting, and we need to have partners who can work as an extended arms in the quarters to come. Now, I would like to hand over this call to our CEO, Mr. Mathews Markose, who will be providing you the overall strategy of the company, for the company which we have adopted in Q1 and how we'll be able to perform in Q2. So Mr. Mathews Markose, over to you, sir.

Thank you so much, Ramandeep. Very good afternoon to all of you. Very, very happy to connect with all of you once again, especially in the backdrop of the result that Ramandeep has just announced. So if you see that we have improved on all the parameters -- over Q-on-Q, we have shown a steady improvement over all the parameters and especially in the backdrop of the fact that we discussed last name on May 20th. So the initiatives that we discussed, the effects of that would have just started trickling in and most of it would not have come in the Q1 result. So the results of that we are seeing now. So the positive side is that Q-on-Q, our results have shown steady improvement, and we get into the festive season, the festive in our country starts with Onam in Kerala. Kerala happens to be our biggest market. The biggest market for us had a drop in Q1, about 20%, 25% drop in Q1, but we were able to manage our disbursements at a steady pace, which would mean that our market share would have slightly gone up in that market, in our principal market. And with Onam coming in, we are seeing a lot of buoyancy in the market. As we speak today, we are already double of what we did last month so far. And that is, of course, a function of the activity in the market. So dealers are doing good business now. There was a lull in the last quarter, especially in the southern markets where we have more than 60% share and these markets are showing a lot of buoyancy, and we expect that to reflect in our results as well. On various other initiatives that we have taken on bringing in operational efficiency, first and foremost, is that we are moving to a new LOS, which will give us an end-to-end TAT of, say, 20 minutes. We'll be able to disburse a loan in 20 minutes to 30 minutes. So, there's a poster in my room which says loan approval in 30 minutes. So I was -- that, of course, was a dated poster, thinking where we are headed to. So that was a time when we had proposed loan approval in 30 minutes, and now we are talking about being able to disburse a loan in 30 minutes. So that is where we are heading to. That LOS will be up and running by the end of September. But yes, we're moving it to UAT now. On the -- so overall, even outside markets, we have put up new teams. The entire sales force is there in place to cater to the festive season, which will be coming after Onam. Once Onam gets over, purchases season starts in the northern part and the western part of the country. And so therefore, we really are looking forward to Q2 and Q3 with great hope. Hello?

Do we go to questions now?

Sure, sir.

A couple of more things. Last time we discussed about putting up a used car as a -- used car as an opportunity area for opportunity. So, we have already started that. We have put up a full-fledged team pan-India to kick-start our used car business. And we are happy to see the progress there in. We've been able to clock good numbers now. This month, hopefully, we should end up with about INR 5 crores of disbursement to start with. So that is on the new product initiatives. We also launched the PL product. PL, this is being targeted on our existing base within the group companies. So that is another opportunity that we are pursuing. Yes. So, I think that's from my side. We can take questions.

[Operator Instructions] We take the first question from the line of [ Bhargav Jasdeep ], an Individual Investor.

Sir, this is Bhargav. Congratulations on good set up numbers. But I would like to know upon the AUM target for this year. Like from the last 2 or 3 calls we have been listening that the target was earlier given for INR 2,700 crores and slowly to INR 2,400, crores and we still ended up with only INR 1,996 crores. So what is the target that you are focusing for FY '24?

Bhargav, Ramandeep Gill, this side. So Bhargav, yes, yes, we know, we spoke about that. And just to give you a glimpse on this target, we have revisited the entire thing and yes, INR 2,700 crores we have said, but somewhere we'll close somewhere around between INR 2,500 crores to INR 2,600 crores for sure. Why I'm saying this? As we have said, we have added 2 partners now. For each and every partner, the limits have set now, right? The limits are up and running. And earlier, we were only relying on the business that is from MCSL, but yes, we, as -- when we say these partners, these partners are behaving like our extended arms, right? So the targets have been set. So right now we are moving with them with a quarterly target, and I'm 100% sure whatever number that we have set, with a gap of approximately 5%, 10%, we will be able to achieve it for sure.

And one more question if I can ask.

Yes.

The thing is regarding the NPAs. This quarter, as we are seeing the opening balance of INR 431 crores and the new slippages are little bit worrying because they are to the tune of INR 35.95 crores. Is there any target that you put? Because in last -- in Q4, you said your quarter end target will be INR 430 crores and you have achieved it. This time, the new slippages are little bit worrying. They came into INR 36 crores, although you recovered [ INR 45 crores ], the newer again INR 36 crores. So is there any target for this year by -- what is the percentage that you are aiming at?

Right. Thank you. Thank you so much, Bhargav, for your question. So first of all, I just want to add what I have said in the call. I have also told that we have added approximately INR 600 crores of book in last 12 months, which is showing, which is showing overall GNPA of 2.40%. This is one. If we talk about 2 new slippages, we talk about new slippages in NPA, that there was a circular from RBI on 12th of November, 2021, which says that once an NPA will become an NPA. So even if that will go as an NPA, it has touched. But we have been able to recover -- we have been able to recover one or more installments from them. Even if the DPD of the customer stand at 60, still, we are classifying them as an NPA. So new slippages contain both and majority portion -- majority of the portion comes from these NPAs, which we call it internally as a soft NPA. And with respect to your next question, targets for this, yes, as I said, INR 424 crores was the target -- sorry, INR 420 crores was target for Q1, but we ended up at INR 424 crores. With respect to Q2, we are targeting somewhere around INR 410 crores to close the Q2. And in terms of closing this financial year, we are expecting our NNPA to be under 2%.

Sorry. Last one, I missed it. For the full year, what was the number that you are looking at?

In the full year? So full year, we are expecting our NNPA to be under 2%, below 2%.

[Operator Instructions] We take the next question from the line of [ Pankit Shah ] from Dinero Wealth Private Limited.

So first thing on the used car side, the new businesses we are trying to build. What would be our USP in that business? Because a lot of competition already doing it aggressively. There is Poonawalla. There is Piramal. So how are we doing it differently and how do we win the market?

Thanks, Pankit. Mathews here. I'll take that question. So see, our USP in this product continues to be our customer base. So, we have a group which has Muthoot FinCorp, Muthoot Microfinance. So all the entire customer base of these customers graduate to a two-wheeler and then to a used car, okay? Now that is our primary focus. We will focus on the customer base of Muthoot Microfinance and Muthoot FinCorp. So that is our primary focus because there is enough space there already available. There is enough headroom for us to -- the targets that we have set out for ourselves this year can be met easily by focusing just on the base. Other than that, we are doing all the regular stuff, which is tying up with all the Maruti True Value and Mahindra First Choice, all those people to source business from the market. But primarily, the focus will be within in-house and that is our customer focus.

Okay. And so if you use the in-house customer base, do we have to some -- do we have to pay some percentage to the group company or the margins would be lower?

We pay a very smaller -- when we compare it to an external DSA or a dealer, the payouts are much lower. But yes, we do pay. There's a internal RPT agreement that we have signed with each of these groups.

So it would be similar to like a lower than a dealer payout structure?

Yes, yes. It's lower than the dealer payout structure.

Okay. So now....

They complement us also in the fact that -- out of that, even for our -- on our two-wheeler base, we have today about 50% clearance through NACH, and the rest 50% comes through customers walking into the MFL branches and voluntarily paying their EMIs. So they complement us in collections as well.

Right, right. I got it. So coming to this, if I heard it right, you said INR 2,500 crores, INR 2,600 crores is AUM target by end of FY this year, right, FY '24?

Yes.

So probably your disbursements will have to aggressively start from here. And I understand that lot of the customers, which you'll be targeting are group customers. So the sourcing would be quite quicker. So is this a right understanding? Or the partners which we have recently signed up, they will be aggressively scaled up?

Yes. So, this is not just a one-way strategy. We have a multi-pronged strategy. So on the two-wheeler side, which is our bread and butter business there, of course, we will be going aggressively in the dealership channel, as well as through partnerships because they are all -- all these customers are new customers to us. Very small percentage of that comes from our group companies. While there is a portion, but there's a few portion. But on the car loan, used car loan, because this is a new business and where our understanding, we are also learning this business, we would tread with caution on that. And there, we'll bank more on the group companies where we already have a credit history. We know those customers well, and therefore -- and we've moderated our targets on this product to that extent. Partnerships with -- for co-lending as well as VCs will continue to be our focus area because that gives us a disproportionate advantage of moving faster in some of these markets. If I were to set up my own retail team and try to build it, it'll take a lot of time for me to set up that team, but partnerships give me that advantage. So, that will continue to be our focus.

And that comes with a much lower yield.

The yield is lower, but there is no risk on me because on the other one, the entire risk is on me. The collection cost is on me. We have no costs on me. The yield is clean income to me.

Okay. Right. Got it. So now coming to provisions, we have INR 200 crores of access provisions. We are about to utilize it or probably write back. So what is the plan there?

So I'll take the question, sir. So sir, what we will do is we'll be taking some call on this in this quarter itself. That's how we are going to treat this provision.

So probably PCR is already good. So, we will have to write back, right?

Yes, most probably, most probably, but can't confirm as of now, sir.

Okay. Got it. Again, on the -- I think last call also, I had asked the same question. We are about to come up with a strategic plan of 3 years to 5 years that what is our vision, how do we want to -- how do we see the business over next 3 years?

So, I'll take that question. Mathews here. So next 3 years, we will look at -- so first thing is that we will not be a single product company anymore. So, we will have used car, used LCV, TL, all of these products going up and running. And these policies have already been framed. And as we speak, it's been rolled out also. So, we'll try to bring down our concentration of two-wheeler to about 50% or close to that. And rest of the products occupying that space. And that is on the product side. On the partnership side, dealer business today contributes about 75%. Co-lending is about 12%. Our branch business, which is business from MFL is about 13%. So that also -- dealer should come down to about 50%. Branch channel will contribute about 25%. Co-lending will be about 20-odd percent, and VC partners and the other digital and all will be about 5%. So, that's the way we see it.

Okay. Okay. And we are also about to raise the capital for this growth, which we are expecting. So is there any progress on that front?

Yes. So, sir, in terms of raising the capital, if you see our leverage as we speak, it's only 3.32x, right? So if we raise this capital now, then there will be a direct impact on the ROE, right? So what we'll do is we'll assess the requirement again in Q3 and then we'll see.

Okay. And till what levels are we comfortable up to 5x or 6x?

We can say up to 5x, but yes, we'll start our work when we reach somewhere around 4x to 4.2x, sir.

[Operator Instructions] The next question is from the line of Aditya Shroff from InCred AMC.

Am I audible?

Yes, sir.

Yes, Aditya.

I had 2 questions. So first was lower yields in co-lending. What is the stable spreads that we are targeting?

Sorry, Aditya.

I beg your pardon.

So now that we are getting lower yields on the co-lending business, and we're also focusing on expanding this channel. So can we expect that the spreads are going to reduce? Or the current 17% spread levels are going to maintain, or whether these are going to increase or decrease further?

Sir, I will take this, right?

Yes, Raman.

Very good question, sir. We have thought about it and I'll tell you, though, about the homework that we have done on it. So sir, in terms of yield from the co-lending, yes, we are doing co-lending only in the areas and with the partners who are basically the subject matter expert of those areas, geographic, right? And who are there on those areas from last, say, 15 years, 20 years or who are in the experience of those areas. So, we are entering with them. And the biggest thing is the -- whatever co-lending that has been sourced by them. Right now everything remains at standard. So if we talk about OpEx on the co-lending, or if we talk about the cost of recoveries, which we have as of now. So I will say it's more or less 0, right? So if we talk about the net yield, we'll not find our gap of more than 1% to 2% for sure. But yes, one thing is for sure that this co-lending, which we are getting, the asset remains standard, more than standard, I will say, asset remains 0 days overdue, which gives a lot of comfort and it also helps us in bringing down the overall GNPA level of the company.

Okay. Okay, sir. And secondly, so on the disbursement run rate, I wanted to understand. So has our monthly disbursement rate improved in this quarter? Because we had done around INR 200 crores in the past -- in 1Q?

So, I can't say you the number for this quarter as of now. But one thing is for sure that you will see a huge improvement in terms of business numbers, specifically in Q2 results. That is for sure.

We'll take the next question from the line of [ Vinay Jethwani ], an Individual Investor.

And some of the questions have been answered. This one is regarding -- can you give some tentative figure regarding your 3-year view? Seeing -- where are you seeing the AUM 3-year down the view, just a tentative figure and the profitability also?

Okay. So sir, I'll take this.

Yes.

In terms of figures, we are seeing -- comfortably we are seeing INR 5,000 crores as our first target, though, we'll be more than that. That is one. In terms of profitability, I'll say that our own funds would be somewhere around close to INR 800 crores to INR 850 crores, that is at base level.

Okay. And one thing more. During 2016, there was a dividend policy of around [ 25 ] payout. And from 2017, it has been kept at 0, citing that we will be requiring funds for future growth. So could you give some light that from when we can expect some kind of a change in dividend policy because other companies which are also growing, they're also paying some kind of a dividend. So what kind of -- regarding this, what can we expect in future?

Yes. Sir, we are thinking on the same line, first of all. The last financial year, last to last financial year, we had a huge loss, right? So that's the reason. In last financial year, the profits which have come is basically, we can say that the profit is -- profit has been plowed back to the business. And in this financial year also, the profit -- our expected PAT would be somewhere around 15%, 20% higher than the last financial year for sure. And then we'll be able to consider. We'll be able to consider the revision in this policy for sure.

We take the next question from the line of Rishikesh Oza from RoboCapital.

Sir, could you share your disbursement targets for FY '24?

Okay. So sir, I will take it. And in terms of Q1, we have done a number of INR 200 crores. Whereas Q2, Q3 and Q4 put together, we'll be doing a total business of somewhere around INR 1,100 crores to INR 1,200-odd crores. And that is something which I'm saying at base level. It will only increase.

Okay. This is, I believe, the net -- this is the disbursement target you're saying or the net..

Disbursement. Yes. Disbursement only.

Okay. So basically, I think even last year, it was not very less than this. So why have we changed our guidance from INR 2,000 crores? I think our -- earlier the target was about INR 2,000 crores. So what exactly is the reason that we have revised this target down?

No, no, no. So there are 2 things right now. First is basically, as I said, it will be somewhere around INR 1,100 crores INR 1,200 crores for the next 3 quarters, right? So, we are targeting somewhere around -- the total business for this year would be around INR 1,500 crores, including my Q1 also, right? But if we see great momentum that has been -- we can see that in our new products that we are offering. Then 100% sure or if -- then 100% sure, we'll be able to meet this target somewhere around INR 1,600 crores, INR 1,700 crores. But following a very cautious approach, wherein we are -- call it, we are monitoring our asset quality each and every time. As I said, for the last 12 months, we are having best asset quality in terms of GNPA of the entire business sourced. So whatever happened in last to last financial year in terms of the increase in GNPA and all, we want to focus on that on the other hand, too, sir. That's the reason. We want to show a growth in the business at a -- if we talk about the last financial year, the company has done a business of INR 1,314 crores, right? 100% we will be going somewhere around INR 1,500 crores to INR 1,600 crores in this financial year. And that would be considered as a very good growth. But yes, if we talk about GNPA comparison of last financial year and in this financial year, we'll see a sea change in that.

Okay. Okay. And sir, my second question is, why have our AUM and interest income have fallen this quarter? Is there any one-off there?

Yes, yes. No, no. So what I -- so the answer to it is, in this quarter itself, our repayments were higher than the business that we have done. The repayments that has been received by us. Since it's a two-wheeler, wherein the average time period of the product stands at somewhere around 2 years itself. So repayment is always on the higher side, right? But that is something which I'll say that this is -- that's the Q1 of this financial year, wherein we have seen this trend. With quarters to come, our total business would be way higher than the repayments. And you will see a growth in the AUM and interest income simultaneously.

I will add to that. Currently, we have a -- I don't know, 91%, 92% of the book is two-wheelers. The average tenor is about 18 months to 24 months. And when the moment we add used car and used LCV, the average loan tenor will tend to be between 36 months to 48 months. The runoff on the book will be much lower. So on the portfolio that we will add, the AUM growth will be much larger compared to what it is. So if you're comparing a disbursement vis-a-vis AUM growth, it will not be the same as in the past.

Okay. True. Got it. And also, I think, to the earlier participant, you mentioned around 15% to 20% PAT growth, is this on a consolidated basis, you are saying, 15%, 20% PAT growth for this year?

Yes, yes.

Okay. Got it. And just one last question. What would be the future bifurcation between used car and two-wheeler portfolio?

So maybe in the next 3 years, two-wheeler business will be at about 50%. This year, the disbursements would be high, but the AUM growth -- your used car business will continue to be a minor player because the AUM growth will happen slowly.

[Operator Instructions] The next question is from the line of Rahil Shah from Crown Capital.

Am I audible?

Yes, Mr. Rahil.

Apologies, if this is repeated, but I'm not sure you've stated this. But I just wanted your outlook on the ROA for the full year and also the cost to the income. So what has led to the increase for cost to income and if you can just provide the target for the same?

Yes. So, sir, I have heard your second question for sure. That is for cost to income. Yes, in terms of cost to income, we'll see that the income has fallen down, right? So that's the reason you'll see that denominator is getting down whereas the numerator stands at fixed. That is the reason we have seen a jump. And the second thing is, which is contributing too, is basically our -- we have seen a slight increase in the finance costs. On the other hand, we have seen this similar decrease in the OpEx also. Because as I said previously in the call that we have been able to reduce our cost of recoveries. So one reason which is contributing to it is basically the denominator, which is I'll say is an interest income. We have seen the drop there. That's the reason our cost income is showing at a bit of higher side. Sir, can you repeat your first question so that I can answer that as well?

Sure. It was on the ROA, the return on assets.

Yes. Tell me?

Yes. What are you expecting for the full-year that you target ROA?

What are you expecting for the full year is what he's asking, Raman.

At what level of ROA?

So in terms of ROA, we are expecting somewhere around 4.5% to 5%.

4.5% to 5%.

Yes.

The next question is from the line of [ Pankit Shah ] from Dinero Wealth Private Limited.

Sir, actually, I wanted to ask on the yield and the cost of funds side. Basically, we have seen our yields dropping significantly last quarter around almost 200 bps. And at the same time, our cost of funds have improved. So how should we read this? What are the reasons behind this? And does this trend continue?

So, Pankit, if we see P&L as a whole, right, we see only 2 things because those 2 things are on this slide. But I would like to explain you, the yield is basically the factor of what we are doing in terms of average. If you are doing your own business with a GNPA of 4%, you will be getting a yield of 21 odd percent, right? If you're doing a co-lending with a yield of 15 odd percent and a GNPA of 0, then this yield is basically a combination of that, which you're seeing.

So, this quarter was a higher of co-lending.

Yes. Not higher of co-lending, I'll say, but yes, we'll say 40% to 45% was contributed, right? But that's the reason we have also seen that our OpEx or our GNPA remains stable and our GNPA for the last financial year has gone down significantly. And now second thing on the cost of fund. Yes, the cost of fund was the result of the borrowings that we have taken in Q4, right? In this financial year -- sorry, in this quarter, we have taken the funding only from our bank and one NCD has been [ made ] since we already have funds in hand. So that is basically a multiplying factor that is carried forward from the last quarter itself. I hope, Pankit, I have answered you.

Yes. And so next thing. Last quarter, sir, what recently you give the guidance of INR 1,500 crores disbursement this year, does this include the co-lending piece?

See, I say -- as I said, the co-lending partners have been added, right? But we, end of that day, we need to see that what we can offer in terms of yields to them, right? If we go aggressively, then we can go somewhere around -- including co-lending. We can go somewhere around INR 1,800 odd crores as well. INR 1,500 crores is something which I say overall as a base figure for the company.

Right. Why I'm asking is because last quarter, if I'm not wrong, what we had discussed is INR 1,600 crores target was on organic basis and INR 750 crores was a co-lending target. So total disbursements target for the year was at INR 2,300 crores plus, minus. And from there, we are significantly coming down to now INR 1,500 crores. So that's what I'm thinking. What has changed in this last one quarter? What has changed in 3 months?

Nothing has changed. It's all about -- since you know, Pankit, we spoke that it's basically what sort of yield do you want to have on your portfolio? And wherever you are comfortable in terms of geographies and areas, we can do it. If we want to do the same number of business with GNPAs on hand, right, then in Q3 results, I will be saying that, though, we have done INR 500 crores, but we have also done [ 6% ] of NPA on that. So, that is something we are considering it quite carefully. Yes, when you plan things out, when you plan for a higher ROE and ETA for the shareholder, you tend to tweak the things, but that tweaking should be in the favor of the shareholders itself. So, we have taken that. We have also considered the 2 opportunities here. One, to be there in the markets wherein we have not as of now. That's the reason we have adopted this co-lending piece. Second. Second is basically to make sure that the overall [Technical Difficulty].

Have we lost the line?

Ramandeep? Line has got disconnected, I think. So just to add to what Ramandeep was saying, there are geographies we are operational in more than 20 states overall, okay? And there are geographies where our retail team is very strong, and there are geographies where we are not that strong on the retail side. So, we have gone for co-lending partners. Now, all markets don't perform similarly every month. Say for instance, first quarter was not good for Kerala. It was about 25% down. And for Karnataka also, it was flat, which are very strong markets for us. So therefore, the percentage of the co-lending went up as a function of these 2 markets not performing as much. But now with Onam coming in, these markets Will outperform. So then the share of retail will automatically. So that is the thing which keeps this percentages moving.

Right. I understand, sir.

There is a [ factor ] also in this business.

Right. I understand, sir. But just a concerning part is the change in your targets, what we are seeing from INR 2,300 crores to INR 1,500 crores is a huge difference. So that is something concerning. But of course, from a business point of view, you guys are the best person to take a decision.

We will continue to be open to all opportunities available.

And sir, what led to the drop in the business in Kerala and Karnataka last quarter?

No, that is not because of specifically, general industry....

Yes. In general industry only, I'm asking what was the reason for that drop?

So largely, what I believe is that manufacturers could not supply the needed models. So for instance, Kerala is -- about 65% is a scooter market. And Honda is the biggest player there. Honda had supply constraints. So that was -- those are the reasons. So, there was a supply side constraint.

Okay. And now we are seeing all that coming back?

Yes, yes. So now dealers have adequate stock because anyways Onam is the biggest thing in Kerala. So all the manufacturers are geared up. Even, in fact, manufacturers have also their own plan. So for instance, in Onam, they will give it to Kerala. For Diwali, they will not give to Kerala. They'll pump in the north and west stuff like that. So that's the reason why this seasonality kicks in. And last monsoons in June, July -- sorry, so that again is a dampener on the overall sales. Based on that, manufacturers do their planning.

Right. Got it. And the last point, sir, we are seeing the EV trend also picking up across towns also. In the city, it is there. So do we -- have we started our disbursements to EV side?

Yes. We have started EV. And we have also got into some strategic tie-up with a couple of EV partners.

Okay. And how is the competition there? Are there lot of players or it is better -- the competition is better than a normal ICE?

There also we have enough players now. That is also -- that side is also EV companies. Lots of competition there as well. In fact, the main OEMs, bigger OEMs who are into the normal petrol vehicles are also coming up with electric models now. That will add to competition.

We'll take the next question from the line of Aditya Shroff from InCred AMC.

Yes, sir. I had one question in terms of the co-lending arrangement. So in case an account brought in by a co-lender becomes an NPA, what will be our percentage of the liability in that case?

So the arrangement with our co-lenders is that before the account slips into NPA, they will take over. So the moment it crosses 75 days, they buy it over. So no account will move to NPA.

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to Ms. Shweta for closing comments.

Thank you, Seema. On behalf of Elara Capital, we thank the management of Muthoot Capital to give us the opportunity to host the earnings call. Thank you, and thank you all.

Thank you so much, everyone.

Thank you. Thank you, everyone. Thank you once again. I hope that we are able to address most of your observations. And to be very honest, we are super excited for this financial year, wherein Q2, Q3 and Q4 will be a game changer now. And the business volume is something which we also want to grow in this financial year in a large way. And slowly and steadily, we are on the verge of reaching that point. So, I'm expecting larger business chunks will be -- larger businesses chunks with more of the funnels, whether it's Muthoot Capital, whether our co-lending partner or VC arrangement, it will come. So just to put together, we just want organization as a whole to do well. And we specifically need your support, need your prayers and best wishes as always. That's it from my end. Thank you so much, everyone. Thank you so much, investors. Thank you, Shweta.

Thank you all. Thank you all.

Thank you. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.