Sammaan Capital Limited (SAMMAANCAP) Earnings Call Transcript & Summary

Thank you, Aman. A very good day to all of you, and welcome to the earnings call of quarter 2 fiscal '21/'22. I hope all of you and your families are doing well and are safe. As we enter into the 20th month of the COVID era, the worst public health crisis of our generation, it is heartening to hear from various health experts that India has reached the end the next stage of the COVID-19 pandemic. As vaccination has gathered pace and all of us have adapted to the new normal and learned to live with the virus, the threat of third wave seems to be receding. The rebound in the country's economic activity has gained traction in the last couple of months, facilitated by the ebbing of infections and near total lifting of restrictions with a sharp pickup in the pace of vaccination. Various domestic as well as international rating agencies have indicated that they expect India to post strong economic growth in the coming quarters. Supported by favorable economic policies of the Reserve Bank of India as inflation is expected to remain within RBI's comfort zone. The resurgence in the real estate sector continued its momentum with residential projects across major cities achieving record sales during the quarter. Housing sales in quarter 3 calendar '21 recorded a whooping 92% year-on-year increase in the top 8 Indian property markets with strong sales being recorded across price segments. Property registrations in Mumbai, India's costliest property market recorded 10-year highs in September and October 21. Overall, residential sales in top 8 Indian cities exceeded the pre-pandemic 2019 average quarterly sales by 4%. As per Knight Frank Report, unsold residential inventory has come down sharply. Markets such as Chennai, Hyderabad and Kolkata have even seen prices increasing marginally during the quarter. Real estate developers, too, have regained confidence with residential project launches in quarter 3 calendar '21, recording a 90% y-o-y increase with micro markets of Hyderabad, Ahmedabad and the National Capital Region, showing year-on-year growth in units launched of 650%, 193% and 119%, respectively. Overall, residential unit launches in top Indian cities in quarter 3 calendar '21 exceeded the pre-pandemic 2019 quarterly average by 6%. This, coupled with just an 11% mortgage to GDP penetration in India, presents a beautiful opportunity for the company to grow from here. Even the commercial office market, which has been -- which had been in doldrums ever since the beginning of the pandemic on account of work from home practice adopted by most companies, has started to see a gradual recovery in this quarter. Quarter 3 calendar '21 has been the strongest quarter of the year with 12.5 million square feet of office space transacted, which is 168% growth on y-o-y terms, and which is 83% of the average quarterly volume transacted during 2019, the prepandemic year, which incidentally was a record year for office transactions in India. Among the larger markets, transacted volumes in quarter 3 calendar '21 in Bangalore and Chennai have even exceeded the 2019 quarterly average. Thus, one can now say with full confidence, and this is being echoed in commentaries of various industry experts that recovery in the country's real estate market is strongly underway. I firmly believe that the next decade will be extremely good for the real estate sector in the country. I will now cover the headline numbers for the quarter. I request you all to refer to the earnings update that has been sent across. Please firstly refer to Slide 3. As at the end of September 21, our loan book stood at INR 64,062 crore, with assets under management at just over INR 77,000 crores. We now, from second half of fiscal '22, expect the AUM to stop degrowing, which it has been and to stabilize and eventual growth of AUM to begin from fiscal '23, in line with the guidance given earlier. Our capital adequacy at the consolidated level stands at a comfortable 31.2%, of which Tier 1 capital is nearly 25%. Our net debt to equity has further moderated to just 3x. Profit before tax for the quarter was INR 390 crores, registering a 5.5% quarter-on-quarter growth over INR 369 crores of profit before tax in the last quarter. Profit after tax came in at INR 286 crores, which is a 1.7% quarter-on-quarter growth. The company's profitability has now stabilized for the last 6 quarters and is showing a trend on growth quarter-on-quarter. Post the change in our rating outlook to AA with stable outlook by CRISIL as well as with ICRA. Our incremental cost of funds have also started declining, and in the quarters to come, should start supporting profitability. Our cost of funds stand at 8.3% with book yields at 10.8%, enabling us to earn a spread on book of 2.5%. Moving on to now Slide 4, please. Here, we have detailed our performance on various important financial metrics. The management's unwavering focus continues to maintain a fortress balance sheet through capital adequacy, liquidity and asset quality. In terms of capital adequacy, we are one of the best capitalized housing finance companies within our peer set with a capital adequacy of 31.2%. We are also amongst the least geared. The strength of our balance sheet has resulted in the revision in our credit rating outlook. The company is now focused on getting an upgrade to AA+ and is taking all strategic and operational steps to try and ensure the upgrade in the coming quarters. Our asset quality has shown great resilience despite a period of acute macroeconomic stress brought about by the COVID-19 pandemic and the resulting lockdowns. Our gross NPAs stand at 2.69%, down from 2.86% in the previous quarter. We have strengthened our balance sheet to effectively tackle all potential future contingencies by shoring up provisions on balance sheet to INR 3,153 crores, which is almost 4x of the regulatory requirement and equivalent to a healthy 5% of our loan book and 152% of our gross NPAs. We have provided 4x of liability requirements, 5% of our loan book and 152% of gross NPAs. This higher provision cushion places our portfolio in a strong position to negotiate any macroeconomic uncertainty stemming from the second wave or a possible third wave. Our Stage 2 provision coverage, which is specific provisions towards Stage 3 stand at 43%. Net NPAs are down to INR 1,179 crores from INR 1,487 crores last quarter. Amongst the various regulatory forbearances given by the Reserve Bank of India and the Government of India. We were allowed to restructure loans. We've had to restructure loans of only a paltry INR 96.7 crores, equivalent to only 0.15% of our loan book under the restructuring framework 1.0 and 2.0 combined. Under the ECLGS framework, we have disbursed top-up loans of INR 176 crores till the end of September 21. Our collection efficiency has also normalized to nearly the pre-COVID levels. Thus, a strong provisioning pool, seasoned retail portfolio, practically no restructuring, strong demonstrated recovery capabilities will [indiscernible] the asset quality and gross NPAs should remain in a range of 2.5% to 3.5% and credit costs should come in a range of 100 to 125 basis points for the full year as has been guided earlier. Moving on to Slide 5. Here, we have given an update on the elements, which are at the core of our retail asset-light model. Over the past 2.5 years, we have been on a path of consolidating our wholesale loan book largely through loan sell-down transactions and structured transactions. However, as was highlighted in the last investor call, with the uptick in the real estate cycle, we are witnessing strong sales traction in residential real estate projects of our wholesale borrowers and hence, are witnessing strong collections in escrow accounts of these projects. Having spent over $1 billion on a gross basis on construction to ensure that the projects of our wholesale borrowers get completed. Now we are at a situation where most of these projects will get completed over the next 6 to 18 months, which, from a consumer perspective is a sweet spot since consumers are looking to buy completed on year completion projects. Thus, going ahead, we expect in line with what we have seen in quarter 2, wholesale book reduction will be more via the more normal self-liquidation route that is through sales and collections. Over the past 3 quarters, we have continued to expand our branch network in Tier 3 and 4 towns, and we've already, in this year, opened around 18 technology-enabled smart branches, which puts us well on track to add around 50 branches in Tier 3 and 4 cities by the end of fiscal '22. Moving on to the most important aspect of our strategy, in which we've also made the most considerable progress, which is the asset-light model. While we had been speaking about the asset-light model over the last 18 months and we had a lot of naysayers, we were focusing on ensuring that each relationship that we enter into has a strategic objectives being fulfilled by Indiabulls Housing for our partner. And we are confident that fulfilling strategic objectives while presenting a portfolio with sustained asset quality will make the model highly self-sustainable. This has enabled us to enter into certain key relationships with specific banks and financial institutions. I'm happy to update that just in the month of September, which is in 1 month, 30 days, we were able to, under the co-lending model, disburse retail loans of INR 325 crores with various partners. Since then, disbursals have continued to gain further momentum month-on-month and the uptick being witnessed in the residential market should allow us to grow this to about INR 500 crores by December and INR 800 crores, this is just co-lending and not the overall lending, by March '22. All of our core lending relationships are now in place with 7 banks and financial institutions, namely HDFC Limited, Central Bank, Yes Bank, Punjab & Sind Bank, Indian Bank for sourcing home loans, RBL Bank, Central Bank, Canara Bank and Punjab & Sind Bank for securing -- for sourcing secured MSME loans. These partnerships enable us to cater to a wide spectrum of customers across geographies, ticket sizes and [indiscernible] and thus go behind the entire market, which was not a scenario, even when we were AAA rated. So this is the widest product spectrum that we have ever had in our history. We are thus firmly on track to disburse over INR 1,000 crores of retail loans through co-lending in the current quarter, which is quarter 3 fiscal '22, which will represent roughly 1/3 of our retail disbursals. I will now cover the third pillar of liquidity and ALM management in some detail. On Slide 8, we have given the details of the monies we have raised since H1 fiscal '22. We have raised a total of INR 12,186 crores through various institutions across instruments and tenors. This includes INR 2,800 crores of 5-year term loans, around INR 4,400 crores of loans between 1 and 3 years. We also did a public issue of bonds for the first time after 5 years, raising around INR 800 crores, which amounted to almost 4x of the base issue. Further, through securitization and loan selldown, we've raised around INR 2,700 crores. In addition to this, we raised INR 1,500 crores of equity and quasi-equity capital through FCCB issuance and sale of our remaining stake in OakNorth Bank, where we exited completely, earning an IRR of 48% over our investment period of 6 years. Our funding program as is evident from the data I just shared with you is on track, is going strong and is in line with our plan of stabilizing AUM in the second half of fiscal '22 and AUM growth from fiscal '23 onwards. As at end of September, Indiabulls Housing had a liquidity buffer of over INR 10,000 crores, which split between unencumbered bank balances of over INR 8,000 crores, bank deposits of around INR 1,500 crores, government securities of INR 500 crores and other liquid bonds, mutual funds, et cetera, of INR 760 crores. We continue to run a liquidity buffer north of 15% of our loan book, which is our stated goal. Moving on to the topic of ALM management. We had a, so to say, a hump in September '21, which had caused a lot of naysayers in the market to practically write us off with a large bond repayment of around INR 7,000-odd crores plus regular bank loan repayments. Not only have we successfully repaid these monies through proactive management of the ALM, we, in advance, repurchased around INR 4,500 crores of bonds by May itself. We have moved ahead. And as we shared last quarter, we've continued with the voluntary creation of reserve fund for the next, so to say, large repayment of $350 million equivalent in May 22. We've already contributed 50% into this reserve fund and will contribute another 25% next quarter, thereby in advance, putting in 75% via the lenders repayment trust. With the -- whatever we are doing, we are doing in accordance with the extant RBI guidelines. We have fully hedged the principal portion of these bonds. That's INR 2,730 crores of the total liability, which is going to come due, we will have INR 2,047 crores of reserve fund created by January. This proactive management of ALM underlines a strong capital position and a comfortable level of liquidity as well as the management mindset of prioritizing balance sheet strength and liquidity, along with ALM management over everything else. I'm sure it will provide comfort and confidence to all stakeholders and further strengthening the company's criminals. Our ALM is published on Slide 7, and we have provided quarter-wise detailed ALM on Slides 23 to 27. Moving on to Slides 12 and 13. During the last quarter, we had laid down adjusted targets for the company over the next 10 years to improve upon its operations so that we adhere to ESG best practices. I'm happy to report that we have started taking operational steps within the organization as well as written partnership with external parties towards achieving these goals. To enable all stakeholders to do an independent review of the company's sustainability initiatives, we have enabled a link on the company's website, which details all the steps being taken by the company towards achieving its ESG objectives. We will continue to update this on a quarterly basis and also provide to you a third-party opinion on the exact status of where do we exactly stand on our various ESG objectives. That concludes the update for the quarter. On the whole, we feel that these are exciting times to be operating in the real estate sector, which is now at the cusp of a decade long up-cycle. The Indian economy is on the path of resurgence and the real estate industry with its link to about 250 ancillary industries, and being the second largest employment generator has a huge role to play in India's growth story. As an important cog of the financial system, and with its ability to reach out to a vast cross-section of the population and diverse geographies, NBFCs assume a very important role in ensuring an efficient financial intermediation system, which facilitates adequate credit flow, especially at the last mile to each and every segment of the society. The regulator has recognized the role of the NBFCs. And as a measure to effectively regulate NBFCs, RBI over the last 18 months, has overhauled the regulatory framework for NBFCs. As per our understanding, the regulatory overhaul is largely finalized now. [indiscernible], we don't expect the regulations as we read them to have any onerous effect and the operations of the company and believe that the newly introduced regulations are several steps in the right direction. We are in the process of adopting and adapting our operations. For example, we are appointing joint auditors moving on from a single auditor. We are also, along with Grand Thornton, who would be the internal auditor, building a new internal risk-based framework. On the technology side, we started the process of migrating to a core banking solution, which will continue to run as a parallel initiative to the various user interface initiatives we have been taking over the last 5 years. We've already started a process where there is a direct transfer of data happening on a monthly basis with the regulators in line with banks. All of these changes, which has been brought about by the regulators are welcome changes and in the long term, will strengthen all NBFCs and specifically Indiabulls Housing operations. At this juncture, I would like to reemphasize our clear strategic goals while remaining focused on continuing to maintain a fortress balance sheet and strong liquidity. Our strategic goals would remain to continue to grow the co-lending arrangements with our banks to reach INR 1,000 crores a quarter co-lending led disbursal in quarter 3. We've already achieved a balance of 2/3 of disbursals of assets on our balance sheet, which subsequently gets securitized and the balance 1/3 directly as co-lending. The recent RBI regulations around securitization are clearly helping to this end, and this would continue to remain #1 area of strategic relevance to the company. The second area would remain a focus on now stabilizing the AUM in the second half of fiscal '22, so that we can start growing the AUM from fiscal '23 onwards. That would result in us reaching our targeted ROE of 15% by fiscal '24, while maintaining a spread of 2.5%. We are not a mass home loan player. We would continue to remain focused on our niche segments in both home loans and retail [indiscernible] MSME loans. Now that the tech-enabled retail lending platform has stabilized, select members of the senior management team since their time to use the second half of fiscal '22 to operationalize the AIS for builder and real estate financing in partnership with the global fund. I'm quite hopeful that by the end of the second half, this will be operationalized. In fact fiscal '23 onwards, this will contribute as an additional revenue stream, which will meaningfully contribute to our return on equity of 15% by fiscal '24. And most, most importantly, I want to continue with the evolution on the governance front that both Indiabulls Group and Indiabulls Housing has started around 2.5, 3 years ago. You may be aware that the group's exit from the real estate development business is at the very last leg. The founder stake has declined to an insignificant portion percentage now. We've already completed the migration at the Board level. And now we are taking steps, which will further institutionalize the company from a control and management perspective, which would effectively result in a moment where we can say this changes everything as far as IndiaBulls Housing is concerned. To conclude, the management is fully focused to take advantage of these exciting times. The macro is in our favor after a long, long time. The hard work done by the team makes us extremely ready to take full advantage of this opportunity. I'm quite sure that fiscal '23 onwards, the growth will come; fiscal '24, we will get to an ROE of 24%. As we pursue these goals, philosophically speaking, as [indiscernible] says, a day is but a piece of signs that led us to live and die. This day let us live and live totally. And then continuing with this, we are fully focused on today, but we are preparing the organization for tomorrow. Thank you, and now we are open for questions.

[Operator Instructions] The first question is from the line of Abhiram Iyer from Deutsche CIB Center.

First, first of all, congratulations on a quick set of results in these trying times. I had a couple of questions, if you don't mind. The first one was on your strategy on running down the CRE book. Basically, if you look at the proportion of the AUM over the last 2 quarters and this quarter as well, [indiscernible] in terms of breakup between CRE, SME and the retail book. So do you have any guidelines or flags that you're setting in terms of goals that this proportion will be reduced on in the future?

Yes. So at this point in time, you will appreciate that we have been -- while we've been running down our CRE book, we've also been disbursing a lot of money into that book to get it into the sweet spot where consumers will buy. At the same point in time, we have been -- we had scaled down our retail disbursals through fiscal '20 and '21, and we started growing them. And we have now reached a level where retail disbursals are growing faster than the retail run down. So these percentages will remain sticky for a little bit. But on an absolute value basis, we are looking to reduce the wholesale book by 33%. I think the evident change in these percentages that you're looking out for should be visible from quarter 4 onwards.

Got it, sir. And this 33%, is that a -- what's the targeted sort of time for this -- time line for this?

Within this year, so March '21 to March '22. On an absolute basis, we will look to run down the wholesale book by about 33%.

Perfect, sir. The second question that I had was on the liquidity that you mentioned. You gave a breakdown between cash investments on your book and other bank balances. Just wanted to sort of understand the difference between the INR 10,000 crores that's mentioned here and close to around INR 17,000 crores on the balance sheet. If I look at...

That would include investments which are not liquid. So it will basically include investments which we cannot liquidate on a T+1 basis. So whatever we can liquidate such as [indiscernible], mutual funds, et cetera, we count as liquidity buffers. But if we have invested in an [indiscernible] ARC or in [indiscernible] and all of that, that we cannot count as liquidity and therefore, those are excluded.

Got it, sir. And the difference in cash -- and you mentioned that it could be around [ INR 8,000 ] available for liquidity. It's close to [ INR 9,700 ] on the balance sheet different. The difference, specifically for cash, could you care what's driven by?

Yes. I'll have to check back with my colleague, Ramnath, could you please?

Yes, I can. So the number you mentioned would be about INR 10,900 crores. But we have -- when we put in the ALM, we, both from borrowings and from cash and investments, we have deducted what we have put in the reserve fund. [indiscernible] So [ INR 1,362 ] we have put in the reserve fund already. So in the ALM, we have adjusted that target.

Our next question is from the line of Craig Elliot from NWI Management.

Good evening. Thank you for the overview and congratulations on your great results, especially the fortress balance sheet aspects. there's been a tremendous progress over the last year, 1.5 years. Looking forward, could you please provide a little bit more color on these new kind of tech-enabled mini branches, what they look like? It seems like they're in areas that are sort of underserved or under banked. And what are some of the advantages of the experiences that you're seeing so far with the aspect of the strategy, please?

So the basic genesis of our thought process is that while India is going to grow, India is going to grow at least in the near term, more -- it's going to be more of a consumption-led growth and private CapEx is missing, private CapEx is not coming back in a hurry. The government is quite focused on ensuring GDP growth. And starting calendar '22 onwards, there are several crucial state elections, which will then, after a couple of years, culminating to the national election. So the next 2 to 2.5 years, there is going to be a heavy emphasis on GDP growth. Given that, we strongly believe that the government will have no option but to continue to spend on infrastructure. And as it does continue to spend on infrastructure. We believe that the pace of growth of smaller cities will be far greater than the pace of growth of Mumbai or Delhi. Seeing that, the historical issue as far as smaller city is concerned is that if you run a high-cost operation, despite the pace of growth, just the number of loans that you can do in those cities does not make economic sense unless you run very, very low-cost operations. So we've been able to over through our -- by digitizing the entire journey for our employees as well as for the customer from a loan processing perspective. We've been able to reduce the running cost of these branches to a mere INR 100,000 a month. So these are small 150 square foot branches with 2 people and nothing. They basically source. And the entire processing happens elsewhere. Thus, we ensure that there is no risk of fraud. There is no credit dilution, but at the same point in time, our cost to income remains within control, and we are able to penetrate into territories, which otherwise would not be making economic sense to be catering to. But given the fact that a lot of money today is being spent on roads, on power, on electrifying more and more locations, on making sure that manufacturing is coming to India, a lot of these locations are seeing much heightened economic activity as compared to the past, and we're trying to basically make the most of it. That's broadly the framework with which these cities or these small towns are being targeted and branches are being opened and businesses happening here.

The next question is from the line of Pranav Tendolkar from Rare Enterprises.

Yes. So actually, congratulations for great [indiscernible] numbers. Co-lending [indiscernible] if I understand it correctly, you have a certain interest rate and co-lender that pay [indiscernible] has a certain rate of interest rate and the borrower gets the blended interest rate. Is that understanding right?

That is correct.

That is correct. So our interest rate tender is basically limited other co-lender in [interest rate]? Or are we charging more interest rate...

We will -- so our revenue streams are the following. We will charge a higher interest rate, such that our rate will be higher than the blended rate and significantly higher than the rate of our partner. That is one revenue stream. So the spread that we make on our rate versus our cost of funds, that is one revenue stream. We will typically get the processing fees for around 92%, 93% of our borrowers, we will be able to sell to them at least one insurance policy. And in due course of time, we will be able to sell them at least one more insurance policy to about 1/3. Within a 2-year cycle, we are able to sell 3 policies. So insurance, fee income and the spread that we earned plus the 80%, which is on our partner bank, our partner Financial Institution. We will be earning a management fee, which will range from anywhere between 70 to 200 basis points per year for the residual life of the loan.

Right. So that will take care of total cost of operations, collection and [indiscernible]?

Yes. Our cost of collections and operations, fortunately, in a product where bounce rates are in the handle of 5%, 6%, 7% is not that significant. So a large part of that is our profit.

No, I was saying that management fee that will take cost of operation throughout the [ loan], because it will be 7, 8 years [ loan ].

Yes. No. So that 70 basis points we get every year. 70 basis points. We don't spend 70 basis points every year or 200 basis points every year.

Right. And anything in the regulations which stop us from securitizing our 20%?

No, we cannot securitize that 20%. That 20% has to remain on our book.

Okay. Okay. So, sir, if I do very rough math, the ROE of this model will be very high right?[indiscernible].

The ROE of this model will be high. It has to scale up. The ROE of the securitization model is even higher because you're able to do loans to segments that we understand with our specific exposure to self-employed, et cetera, which may not be acceptable to our partner banks without any seasoning. And now, as you may have realized, which is what I alluded to that the recent RBI regulatory changes as far as securitization is concerned, has basically done 2 things. One, it has bought Indian securitization guidelines to be at the same level as the most developed markets. It has covered each in every type of securitization situation. It has also brought in an element where you can reduce the minimum holding period, you can reduce the minimum retention of risk basis, credit rating, et cetera. All in all, for a player like us, the minimum holding period is 6 months. So if we hold a loan for 6 months and then securitize, that's the highest ROE. And the next highest ROE is to [indiscernible]. So which is why I said of our gross disbursals, we will do that or continue to do that in a ratio of 2/3 and 1/3. 2/3 that we originate, hold it for a minimum holding period and then subsequently securitized. The balance 1/3 we [indiscernible], which is from this current quarter, expected to be at a run rate of INR 1,000 crores, growing steadily. And then on a blended basis between these 2 products with a little bit of help from the real estate platform that we are setting up, we should be able to get to a 15% ROE by [ fiscal '24 ].

Right. And our target INR 2,000 crores per month, eventually that was released.

Yes.

The next question is from the line of Rishikesh Oza from RoboCapital.

Sir, my first question is How should the disbursement number look like in H2 of FY '22 and going ahead in FY '23?

So we should be looking at doing about INR 4,000 crores of retail disbursements in quarter 3 and around INR 5,000 -- sorry, yes, INR 5,000 crores of retail disbursals in quarter 4. So about INR 9,000-odd crores is what we will look to do on a gross basis. The split 2/3, 1/3 between what we will originate to subsequently securitized and 1/3 that we will do upfront securitization.

Okay. And going ahead in FY '23, how will this still pan out?

It should grow by about 30%.

About 30% Okay. Okay. And also, sir, you indicated the credit cost for FY '22, around 100 to 125 basis points. So if you could indicate what it can be for FY '23, will it be lower than that or around...

We expect that to be sub 100 basis points.

Sorry?

Sub-100 basis points.

The next question is from the line of [ Mahendra Kanata ] from Emkay Capital.

In my Q1 con call, Mr. [ Prasant SBIMF ] after the Stage plus is almost 35%, seems to be high for a GFC. And Mr. [Mangesh] answered clearly, without any doubt, indicate that in order to keep high provisions, it is necessary to keep borrower Stage 2 plus 3. Also answering to another color, Mr. Banga said that we have, through this provision, played a very, very good base for very steady compounding over 8 to 10 years. Now a provision of INR 3,155 crores is 4x of regulatory requirement. All this [indiscernible] management and Board has created very high provision, which is not factual and truthful. Moving of earnings is not right and not fair to the current shareholders. The company has understate their earning by INR 2,354 crores, [overstated] provision and understated shareholder equity, [indiscernible] . The company must reset its financial to factual and truthful earnings...

Sir, I appreciate your suggestion, but you will also appreciate that it is management's responsibility to manage all stakeholders. Shareholders are extremely valuable stakeholders, but we have other stakeholders to also manage, which includes rating agencies, lenders, et cetera. And when management takes a decisions in consolidation with the Board, it's usually done keeping all stakeholders in practice. I would strongly disagree with some of the words that you have used. We are strictly compliant with all of the applicable guidelines. And keeping in perspective the fact that we are going through very uncertain times. Management strongly believes that having a management overlay provision is the necessary thing to do. And therefore, we would continue with the practice of having higher provisions, at least for this period of high uncertainty. And that -- and which is why we are clearly communicating to shareholders as to what the expected gross NPA range is to be, hopefully. And we are also guiding as to what the credit cost would be. I'm sorry if you felt otherwise, but this is the collective decision of the management and the Board. in consultation with our auditors.

[Operator Instructions] We have the next question from the line of Manu Agarwal from [ ACTech ].

So first of all, I think the numbers are really good and I really appreciate [indiscernible] creating a road map of 5 or 10. That's really appreciable. But I have very specific 2 question. One is regarding the cold case, which Mr. [ Boshan ] has put up against us. And why is Indiabulls Group basically not going [indiscernible] and we in the [indiscernible] feel a little uninformed about the case. The second is about the dividend policy going forward. And third, higher levels of provisions, would these ever come back to profit column? Or what is the policy on that?

Sure, sir. So as far as the public interest litigation is concerned, the public interest litigation, as we have informed via the various exchange updates with a combination of several litigations which were attempted against us. Fortunately, the Supreme Court of India has already, in a very similar case, stated that the matter now stands infructuous since the [indiscernible] of the applicants was that our book should get looked into and multiple regulators and other relevant agencies of the government of India have looked into our books, including our lenders and have found our books to be satisfactory and prepared accordance to whatever are the applicable accounting standards and legal provisions. That said, unfortunately, because of the breakout of COVID, the courts for the last 20 months now, 20 months have been only taking up urgent matters, and this matter has not come up for hearing. In those 20 months, all of these inspections and audits are over, and it would be the endeavor of the management to, as and when this matter comes up for hearing, to pay to the court to cost the matter, since whatever was the player of the applicants has already been taken care of. Ultimately, it would be the decision of the court. But given the ruling of the Supreme growth and the fact that whatever was the player has already been without the court having ordered anything, the government departments having taken up these inspections voluntarily and having concluded them. We believe that the matter stands infructuous and that would be the stand that we will have in the core. Moving to your second point. As far as dividend is concerned, you may be aware that as part of the overall regulatory overhaul that the Central Bank has done, it has also now come up with a dividend payout policy for ordering pay out regulation for NBFCs. So we would be pretty much following that and be in compliance with the regulation. On your third point, as far as provisions are concerned, provisions are obviously there for stability. If at a point in time, the company feels that we are in a situation where we are adequately provided or overprovided. And in the near term, the risk in the environment has abated. It would be our endeavor to return back to shareholders. We have a 10-year record of having distributed over INR 11,000 crores of dividends to shareholders. So it's been the endeavor of management to give back to shareholders as much as we can. So it would be our endeavor. But at this point in time, it is -- it would be very premature and naive on my part to indicate anything of that thought to happen in the near future given the uncertainties around COVID, around inflation, around tapering of liquidity and whatever macroeconomic volatility it may cause. These are all big events. And for that, we have to be prepared with a strong fortress balance sheet. That is how we would like to approach the near to medium term. I hope I have answered your questions.

Just one thing actually. In future, if management would really be a little bit more cognizant of the fact that investors are kept in dark about the court hearings? And if you put the let us know what is happening a little bit that would be really [indiscernible]?

It would be my endeavor sir, to do so. I'll just take one last question.

Yes, so that is from the line of you [Kayur Asha] from PNB MetLife.

Many congratulations with this continued superior performance on the asset quality front, even under the pandemic. So I just wanted to understand some qualitative commentary on what has helped us outperform on the asset quality front. So incremental attrition [indiscernible] that has been quite measured [indiscernible] restructuring or [indiscernible] growth. So our outperformance has been quite strong. So some qualitative commentary around that?

Yes. Before I comment specifically on that point, the 2 things that I would shy away from or be very reserved from is, one, to think that we used to mistakenly you think that banks are our collaborators are our competitors. Banks are our collaborators, and they are not our competitors. And the other is to continue to compare ourselves to peers to say that we are stronger or we are better. Every organization goes through its own life cycle on the various fronts. And therefore, what we are doing, we are probably benefiting from certain things that we have done in the past and certain investments that we have done in the past. At this point in time, I think what has helped us is that through the entire liquidity crisis, we started with a strong liquidity buffer and that enabled us to continue to pump in liquidity into various assets, which were under construction. And thus, when the sales cycle picked up, these projects are nearly ready or are seeing progress. And therefore, the collections are efficient. And therefore, the developers are not seeking restructuring. That is perhaps something which is helping us. But I am in no position to comment on peers. I believe that NBFCs have done a stellar job in an environment where everybody has written off most NBFCs, especially the NBFCs with no parentage. And for the kind of performance, some of our peers have turned out. I believe the industry has done exceedingly incredible job, much beyond even my expectations. The regulator has supported again, which is -- which was again much beyond our expectation. And all in all, I think all NBFCs today, which has survived the onslaught are in a good position. Somebody may have 50 basis points of higher delinquency or lower delinquency. I strongly continue to believe that organizations, the fortunes of organizations are like NBFCs are always led on the liability side. All companies which are focused on the liability side over a cycle will price with capital adequacy levels of north of 20%, which most NBFCs are the asset side can cause some short-term volatility, but it cannot take away from the fact that the last mile fee delivery that NBFCs I do is second to none. And therefore, if we operate in a collaborative format, it's a win for NBFCs. It's a win-win for banks and it's a win-win for India. So on that note, I think we are in a good position. The sector is in a good position and the country is in a good position. I hope I've answered your questions, and thank you all for sparing time. Our 1 hour is over. And I look forward to speaking to you again next quarter. Thank you, and have a good day.

Thank you very much. Ladies and gentlemen, on behalf of Investing Capital Services, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.