Sammaan Capital Limited (SAMMAANCAP) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Indiabulls Housing Finance Limited Investor Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prakash Sharma from Jefferies India Private Limited. Thank you, and over to you, sir.

Hi. Good morning, good afternoon, and good evening, everyone. Thank you for being on this call. I have the pleasure of welcoming the management team of Indiabulls Housing Finance Limited led by Mr. Gagan Banga, Vice Chairman, MD and CEO; as well as Mr. Ashwini Hooda; Sachin Chaudhary; and other senior members of the team to help us understand the developments at Indiabulls Housing Finance Limited and the way forward. Without much ado, I will hand it over to Gagan to take us through it. Thank you, Gagan, and over to you.

Thanks, Prakhar. A very good day to all of you, and welcome to this investor update call. I hope all of you and your families are doing well and safe. We began the institutionalization process of Indiabulls Housing nearly 2 years ago and took concrete steps towards achieving best-in-class corporate governance standards. As financial institutions, which ultimately handle public money, as they mature, they have to go through a process to both upgrade and create the right perception, around corporate governance and transparency. We have been doing this in a step-by-step manner, and we believe now Indiabulls is ready for what we internally call Indiabulls 3.0. To implement on Indiabulls 3.0, as step one, Mr. Sameer Gehlaut, the Founder and promoter of Indiabulls Housing Finance, relinquished Chairmanship of the Board in August 2020 and Mr. S. S. Mundra, ex Deputy Governor of the RBI, assumed the position as the Non-Executive Chairman of the company. The company since then has also appointed Mr. A. Siddharth, who is a partner with Deloitte, Haskins & Sells for over 30 years to the Board. He now chairs the Audit Committee. Other independent directors like Mr. Dinabandhu Mohapatra, ex-MD and CEO of Bank of India; Justice Gyan Sudha Mishra, retired Supreme Court Judge; and Mr. Satish Mathur, ex Director General of Police Maharashtra, have also been inducted into the Board to serve as independent directors. As Step 2, we then -- we did our -- all of our Board committees to tighten the Board oversight. All key committees are now chaired by independent directors with relevant experience. The Board has regular and direct oversight on all key areas of executive operations. Step 3 towards implementing Indiabulls 3.0 was yesterday's stake sale by Sameer. This was a necessary step in drawing a firm line between ownership and management. Sameer sold 11.9% of his holding in Indiabulls Housing, thereby reducing his stake to 9.8%. We got several marquee investors, including Blackstone to come in into the transaction yesterday. As is common knowledge, Blackstone has partnered with other Indiabulls Group companies in the past, and we have a long-standing relationship which gives us both hope and confidence that we will continue to deepen this relationship. And towards this end, we are hopeful of doing the following 2 things. In quarter 1 of fiscal '23, we will begin the operationalization of 2 alternate investment funds with global majors such as Blackstone and others, undertaking co-lending in the real estate space. We are talking to several global funds, and we are quite hopeful that with at least 2 of them, which may include Blackstone, we should be able to start a credit fund, which creates a credit flow opportunity to the real estate sector, which is a sector which is in requirement of very good capital but that capital flow has completely stalled. The platforms will do a new incremental -- will do new incremental wholesale real estate developer loans in a 10-90 or a 20-80 co-lending structure. We will not be exclusive to any 1 fund, neither will any fund be exclusive to us. It will be a classic co-lending structure. Our endeavor is to create 2 platforms, 1 platform will extend residential development finance and the other will cater to near complete commercial developments, which then converts to rent generating assets. We are quite confident that both of these platforms will begin contributing to the bottom line from the next year itself. The other strategic extension of the stake sale from yesterday is to shortly convene an AGM and take an enabling approval from shareholders to offer Board seats to significant shareholders, including the strategic investors who have come into the round yesterday. This AGM should get convened as soon as the Board meets next week and proposes this to the shareholders. As step 4, Sameer will step down from the Board by the end of the fiscal. His communication in this regard has been filed with the stock exchanges, subsequent to which we will begin the process of de-promoterization once all the requisite approvals are in place. At Step 5, in the next fiscal, we will do a strategic transaction with certain investors to ensure that the capital buffers of the company continue to improve, and we have a continuous flow of capital to support our credit ratings as well as our long-term growth. Thereafter, as a final step, we will go in for a name change of the company and thereby complete the process of institutionalization of the company by September 2022. While we were stitching up this transaction, there were several options in front of us. We have been working on this process of institutionalization and getting in strategic investors for the last 20 months, initially due to COVID and subsequently, due to challenges faced by our peers. On the regulatory side, we've had to go back to the drawing board repeatedly. It was -- that's a very, very hard decision for Sameer to take. But in the best interest of the company he thought it is best to get something done rather than continuing to talk about doing -- taking forward the institutionalization process, which is why a transaction which could be stratified in good time. Strategic investors could start participating in the functioning of the company, eventually get Board seats. And as I said, move on to step 5 where we also can perhaps expand the capital base of the company at an appropriate time. All of that gets in motion. So while it was a tough call, it was a call where there was bias for action versus just doing discussions and trying to make models on paper. I will now cover the operational aspects and the strategy going ahead. Our focus through our asset-light model is to regain our position as a large originator of loans and drive total loan assets under management rather than balance sheet growth. With the macro having changed for the real estate sector and mortgage to GDP ratio still being at about 11%, we feel that there is a large opportunity in the mortgage industry, and there should be a very sustainable macro for housing for the next 8 to 9 years. To elaborate on our strategy, I will first give you an update on our co-lending experience and what we are doing specifically as we speak. On co-lending, the company has spent the last 2 years in realigning its business model to the change realities for NBFCs and now clearly has a head start on its asset-light business model. This collaborative model with banks is the way ahead for nonbanks in India, and that is very much in line with how mortgage loan distribution happens in developed countries. With all our intended co-lending tie-ups operational, we will exceed our targeted INR 1,000 crores of disbursals through co-lending in quarter 3 fiscal '22, which is the current quarter ending in about 15 days. And for quarter 4 fiscal '22, as has been guided earlier, we have clear visibility of extending the INR 1,000 crore per quarter number to INR 1,500 crores per quarter. Our targeted split between co-lending and assets that we are originating to subsequently securitized has been a target of 66% for assets that we originate to subsequently securitize and 33% for co-lending. I'm happy to inform that for the last 4 months, every month, we are steadily achieving this target. In all, we will be disbursing over INR 3,000 crores of retail loans this quarter, going up to close to around INR 5,000 crores to INR 6,000 crores next quarter with 1/3 of it through co-lending. The rest will be on our balance sheet to be sold down once we -- they achieve the regulatory minimum holding period or MHP. This time we are our sweet spot mix going ahead and is being hugely facilitated by the regulatory clarifications and circulars, which have been coming in since September last year -- sorry, September this year. On AUM growth and profitability, we are focused on resuming profit compounding. We compounded profit steadily for shareholders for over 10 years and paid over INR 11,000 crores in dividends through the course of the 10 years. We want to make profitability and shareholder returns more predictable going ahead. AUM growth will resume from fiscal '23 as has been articulated earlier, from which point on AUM should grow between 15% to 20%. That's from the end of fiscal '22, where we estimate the AUM to end at about INR 75,000 crores. We should end fiscal '23 at about INR 90,000 crores on the back of roughly INR 30,000 crores of retail disbursals on a gross basis, and we should comfortably go past 1 lakh crore by the end of fiscal '24. On the back of the RoE accretive nature of the asset-light model, by the end of fiscal '24, RoE should go past 15% and then stay steady in the high teens. While we focus on co-lending and AUM growth in order to ensure that our focus on a longer-term basis can be what is operationally crucial, we shall continue with the following 2 areas of focus as well: one being the reduction in our on-balance sheet developer loan book. We've guided that by the end of this year, 1/3 of the book will be reducing over last year. And by the end of calendar '22, there should be a 50% reduction from where it was at the end of March '21. We are well on track, and I am happy to inform that quarter 3, which is the current quarter, is seeing very, very robust net reduction in the wholesale book. I'm particularly happy with the way that progress is happening and has already happened till the 15th of December as far as the reduction in the developer loan book is concerned. The other big area of focus for long-term competitive advantage is our continuing emphasis on CapEx towards technology, which continues to help us drive reduction in our cost income ratio and also to, in a viable manner, scale up our distribution. Our pioneering comprehensive e-Home Loans platform, which we launched back in fiscal 2016, well ahead of our peers, had helped us drive our cost-to-income ratios down to below 13% levels. As we invest in both people and distribution in fiscal '22 and '23, the cost income may marginally go up to more like 15% levels. But with the technology implementation in play, we are very, very confident that by fiscal '25, we should be able to bring this back down to the current low teen levels. And then over the course of the next 2 years, get it down to sub-10% levels. That is where we see cost income ratio landing up. So the journey for the next 5 years is from the current mid-teen levels, the cost income ratio will go down to 10%. Through our clean tech-enabled branches, we are already expanding our branch network, adding cost-efficient loan sourcing offices across urban and rural geographies, which is riding on our co-lending relationships. And today, be it in a Tier 1 location or in a Tier 5 location, not only do we have the widest ever geographical distribution, but as has been highlighted in the past, the product portfolio in terms of our ability of being able to price a loan and yet make a reasonable spread at 7 quarters, thanks to co-lending and to go all the way up to 11%, this kind of a wide product suite we never had in our operating history, which we have, which is flowing through to the disbursal numbers, which we are achieving, which is how co-lending is already trending at past INR 1,000 crores a quarter. As we scale up the business, we will hold on to the following tangible parameters of consolidation that we have been focusing on the last 3 years. We cannot take our eye off liquidity. We will continue to maintain an equivalent of at least 15% of our loan book at cash and investments, as that, it covers our repayments very, very comfortably, ensuring a fully matched ALM with comfortable liquidity in the near, mid and long term. The other area of focus has been to continue to build on a fortress balance sheet. Our capital adequacy level at around 30%, higher provisions, very low gearing of only 3x and our direction that gearing would remain restricted between 3 to 3.5x is a commitment that we have given to all stakeholders, and this is something that we will continue to maintain as we grow our AUM. Our provision cover, which stands at about 5% of the loan book and is nearly 1.5x of our gross NPAs will continue to be an area of strength for us, and we believe our higher provision covers will help us maintain our asset quality. Our asset quality has also marginally improved over the last few quarters. Now with all the well-known forbearance provided by the Supreme Court, as well as the less known forbearance provided by local court, thank to COVID, it's over. We expect recoveries to hasten up which we are again witnessing in a very robust manner in the current quarter, which is quarter 3. With the strong provision and a reasonably high quality pre-povisioning operating profit, we believe after having done a thorough scrub of our book, daily marking of NPA or the new upgradation process that the RBI guidelines have described, we should -- we do not expect any significant earning volatility to come in for the company over the medium term. Our credit rating trajectory has also stabilized soon after our first FCCB, CRISIL updated -- changed our outlook to stable. Soon after the second FCCB, ICRA also did so and Brickwork has also done -- given a stable outlook for our AA+ rating there. All of this has helped us in normalization of our liabilities program, whereas we have been able to -- whereby we have been able to raise money through banks as well as NCDs. And we are strategically using the public issue route to continue to tap and widen the resource base available to the company. In our last public issue, we raised around INR 800 crores, and we have another public issue ongoing as we speak. Our next target is to make a strong case for an upgrade to AA+, wherein we believe most of what is necessary has already been done from a perspective of capital infusion, Board governance, et cetera. The company is also investing meaningful management time in building up a robust ESG program. We've already articulated our goals for fiscal '22 onwards. Much like India is speaking about our net zero program. We are also running a net zero program here, as far as emission is concerned. We are working with our employees to make sure that we are taking training as well as employee benefits to the next level. All in all, we believe with ESG, we will have a much more sustainable business covering all aspects and the co-lending franchise will makes us collaborate with banks and ensure that there is no earning volatility, which is typically attached to how most NBFCs in India tend to perform. On the whole, we are very excited for the future and look forward to getting the company back on the path of growth fiscal '23 onwards. And as we get back to the growth phase, we shall be operating as a professionally run Board over government financial institution to emerge as one of the largest mortgage originators in the country. That is Indiabulls 3.0 for you. And along with my team, now happy to take questions. Thank you.

[Operator Instructions] The first question is from the line of Prakhar Sharma from Jefferies.

Gagan, I had a question that you mentioned on the retail co-lending is scaling up. Also on the wholesale side, you have tied up with some global partners. Can you share some numbers around what's the current scale? What are the time lines that we are looking at? And maybe any economics that you can share?

Sure. So we are, Prakhar, in the process of doing the tie-ups as far as the wholesale lending is concerned, the broad construct is ready with 2 global funds, but we are yet to ink the packs and get the whole thing in motion. What I had indicated was that with 1 or 2 or 3 of the global funds, for sure, we will have this in full implementation mode within quarter 1 of fiscal '23. So we've matured in terms of asset selection, et cetera. I will hand over the phone to Ashwini to talk more about the wholesale co-lending platform. And subsequently, Sachin, our Chief Operating Officer, who oversees the retail business will talk about the retail co-lending platform. Ashwini is the Deputy Managing Director and the entire wholesale business works under his supervision. So they are the guys who are best placed to talk about unit economics and everything else.

Prakhar, so Ashwini here. We've spent tremendous time building up this co-lending franchise, which is now up and running. We also parallelly have been working on this wholesale platform where we've tied up with 2 large global funds for one residential platform and one commercial platform. So the way that works is we bring in 10% of the funds, whereas 90% of the funds would be lent by the fund in the AIF structure. And on our piece, we would earn a 5% spread. And on the entire asset, we will earn 1.5% fee. So we hope to underwrite next year's loans of around INR 1,500 to INR 2,000 crores. So that should result in us earning on our portion, around INR 100 crores a year and on the entire fund another INR 300 crores, so INR 400 crore annualized income in year 1, and it continues every year. And as AUM grows, that income will only compound and multiply further. So it's a very value-accretive platform, just like in retail co-lending, whereas the volumes pick up, the AUM grows, it's exponential income growth. And while we are only participating to a very small extent of 10% which allows us to grow in a very asset-light model. So we don't run huge liquidity risk on our liability side, while the AUM is very lucrative. So that's how we are looking at it. Sachin can take you through how the retail portion is scaling up.

Hi, Prakhar. Sachin on. On retail, co-lending side, we already have got around 7 partners. And we proudly said that we are the pioneers of this model because the numbers and the scale and the associations we have been able to establish is equal to the market as a whole being able to achieve it. So today, we have got 4 public sector banks, 2 private sector bank and a leading housing finance company as our origination partner. And this is going on for us for almost 2 years now. And we're in -- we have discovered, we have arrived at the common working program, the policy process. And on the technology front, we have integrated ourselves to all our blending associates. And we are working on a platform which is going to be even more effective and efficient, and we can scale it up to furthermore partnership or scale up our numbers to 10x from where we are standing today. So the work is going on. Today, our numbers stand somewhere close to around INR 1,000 crores for this quarter. And this is when we are working on our new associations and relationship on the banking side and the product program we are expanding. And as the process happens in the market, especially on the lending side, the initial phase that everybody wants to come up with a test program and want to expand so much. What we have seen that we have been able to establish that kind of a scale and size where our partners are now in a Phase II of expanding their policies, the geographies and the product programs where we can scale up. So today, we are very confident of reaching a number of around INR 1,500 crores in quarter 4. And from the next year onwards, our average rate will be somewhere close to around INR 2,000 crores to start within the first quarter. And the whole year, we are aiming to do around, if not more, will be around INR 10,000n crores to INR 12,000 crores, So that's what we are scaling up. And this volume works in 80% gets sold off, 10% remains with us, and we have got a skill in the game. Our economies of scale has started catching up. Our margins have improved from where we were standing -- doing it stand-alone on our balance sheet basis. And in terms of technology, the solutions which are available in the market and the mutual solutions that we have arrived at, it is bringing in more efficiencies and cost reductions at our end. So net-net, the scale is now visible and the model is tried and tested, and now we'll be looking for our next level of growth in the next 3 to 6 months. So anything further you wish to elaborate on?

No, I think maybe I will take that off-line.

The next question is from the line of Dhimant Kothari from Invesco India Mutual Fund.

So firstly I wanted to couple of clarifications as to the wholesale co-lending. So first was whether Indiabulls will provide any credit announcement to the AIF. Or it would just be a 10% skin in the game?

Yes. No, it will be -- there won't be any credit enhancement. It will be -- we would be only contributing 10% pro rata in funding and we'll have [indiscernible] on that funding along with the fund. So there is neither a credit enhancement or first loss, any kind of guarantee that is given. So the entire funds money is at risk, and we are only providing asset management while contributing our bit to demonstrate our skin in the game.

Okay. And that would be very much similar in the retail originations that would be sold off without any recourse?

Yes, identical. So there is no credit enhancement. This is not a platform where we're trying to do any sort of a structured transaction. This is the future much like in the retail world. If you look at the developed markets, mortgage lending happens outside of the bank where there is an originator and then there's a warehouse. In the Indian context, a lot of franchise value has historically been attached to balance sheet size. We've taken a brave, bold step to say that franchise value for Indiabulls should be associated with the sort of disbursements that we are being able to do where the per unit economics resulted to profitability from day 1. And as that scales up, I'm very, very sure that the potential of growing this business practically infinitely will be appreciated. There are, obviously -- even for the best in class, there are obviously restrictions as far as the growth of balance sheet is concerned. In our case, there is no restriction whatsoever. The other thing that I would like to -- that I would hope everybody appreciates is from any long-term stakeholders' perspective, and I am a long-term stakeholder for the company, in the last 15 years since we started the lending operation, every 5 years for one reason or the other, there is a phase of volatility, which NBFCs go through. And why that happens is because a large component of the NBFC's liability franchise is wholesale financed, and the wholesale markets tend to get jittery for one reason or the other. We had a crisis in 2018. We had a crisis in 2013 when the taper tantrum happened. We had a mini crisis in 2016, when NBFC and demonetization came very close to each other. But in 2018, minus 5; 2013, minus 5; 2008, and so on, every 5 years, you will see for one reason or the other, there is volatility in the wholesale market, which results in volatility on the business -- on an overall basis. What cannot change is the fact that the wholesale nature of the liabilities cannot change. So in that context, we feel that we should move on and start valuing ourselves internally on the quality of our disbursals on our net interest margins on our return on asset on AUM, focus on credit quality and make the whole business infinitely scalable, sustainable basis on our credit quality and no dependence on one significant partner, thereby we are doing business with 7 different partners and focusing on technology and making sure that the data interaction that we have with all of our banks is so superior that they -- a lot of their workload, which the executives in the branch otherwise need to do is sort of outsourced to us. That is the value proposition on the retail side. Similarly, on the wholesale side, the idea is not to give a credit enhancement or a first loss guarantee. Any construction finance proposition today is hugely required. We have a macro tailwind as far as residential real estate is concerned. But as I have been speaking often on these calls, the nature of consumer behavior has completed migrated from trying to earn a pop by booking early to now strongly preferring only homes which are fully completed and not worrying about the pop, which one would get typically between booking at an early launch stage and then getting a completed apartment which would have probably appreciated 1.5 to 2x. Nobody is interested in that. Everybody wants the certainty of the house. Thus, the working capital requirement has gone up. The project finance environment has gone up, and the players doing that financing have gone down to practically 0. So there's a multibillion dollar opportunity. And in the first year itself, we believe that this can contribute to almost like 20% extra profit before tax for us and then keep adding as a contributor. So -- and the kind of funds that we are talking to about creating this sort of a setup have an ability of being able to pump in at least $2 billion to $2.5 billion a year into the segment. So overall, our fire power will be in the ballpark of $5 billion a year. Given that, one is very hopeful of the scalability of that. What we bring to the table is clearly a lending experience around the residential space and around the wider real estate space of the last 15 years, a portfolio, which has performed stupendously well through a down cycle over the last 15 years. For the first 4 years, the residential cycle was up. For the last next 8, it was down. For the last 1, it is up. And yet, the asset class has delivered for us an annualized 5% return on asset. These strategic investors, some of whom have also come in, have gone loan by loan into the book. They know exactly the quality of loans that we have done and therefore, are aware of the quality of assets that we have been able to create, which have certainly been impacted. There has been certain significant dilution of equity in the loans. But even today, they are such that with the provisions, et cetera, that we have taken, we are in a very, very good position for this asset class to continue to perform for us, and thereby, the confidence that the stock should do well, and therefore, they come in as shareholders and subsequently help us set up a platform. So all in all, I think the setup for us is extremely good from a co-lending piece, and we are very confident that with the sort of a scrub that we've gone through for one reason or the other by multiple stakeholders, each time we go through a scrub, we get more confident ourselves that what we have done is right, which is why we are getting the backing beat of our regulator. All of our lenders are now strategic investors. And with each step, the management team's confidence continues to increase. One thing which is very crucial at this stage to highlight while I'm sort of digressing from this question -- from your question is that as professionals, despite the headwind that the sector faced, despite the specific headwinds that the company faced, it was very easy for professionals to run away to safer pastures, to less volatile pastures, to pastures with less stress. But given the fact that we had done these loans with our own 2 hands, we had built the franchise with our own 2 hands, the entire senior management team has stuck together in the top 30 people, in the organization in the last 3 years I've not seen even one exit. And at this point in time, it is these 30 people together who are actually bringing on more talent to make sure that as the regulatory framework changes for the company, we are in a position to manage risk, manage compliance. As we intend to spend even more on technology, we bring in the latest technology architects as against just going along with the team, which has perhaps now more dated experienced. This team has worked very, very well together. And that is the confidence which came to me where I -- when the promoter indicated that this is potentially a good step to take, at least we will move forward, rather than in theory talking about doing a press, doing this, doing that, all of which is good for the company but have some or the other challenge in the near term. We have moved forward and moved forward distinctly. What distinguishes Indiabulls Housing to others is our bias for action. In the past, in our bias for action, we have made certain mistakes. At this point in time, despite our bias for action, we are governed and counseled by a very, very wide set of directors who have a very round -- well-rounded experience across all dimensions and aspects of business which impact the business on a day-to-day basis. And now with strategic investors also coming on to the Board, shareholders need to have this additional comfort that their specific interest as far as shareholders are concerned are going to be protected by common sort of interests and representations on the board. So I think with this wide and wise council, with the flexibility that the team has, the maturity that the team has and the loyalty that the team has, I believe we are well set to take care and full advantage of the very favorable macro.

That was pretty detailed. So yes, part of it, you already touched upon in terms of the top talent, but any particular changes what we should foresee in terms of the managerial changes or any particular operational changes for Indiabulls 3.0?

So as Indiabulls 3.0 plays out in the top 30 people, which today cut across the senior management, which is myself, the team which manages the retail function under Sachin, the team which manages the wholesale function, which will migrate to an AI structure under Ashwini, Rajiv, Vijay and Ambar. All these people are just going to continue to do in a more evolved format. The most important thing for any NBFC to minimize volatility is the liabilities function where I believe we have a brilliant team, which has actually really done well through the crisis, even when our name was under a cloud, we kept raising money. When the cloud got cleared, we raised more money. Our costs started declining. The team, along with the analytics team, worked with the rating agencies to get the ratings -- our rating outlooks in line. That team led by Ashwin, I think that's very well staffed and supported under his watch. We certainly need to react to all the regulatory changes that RBI has brought about. So there, we are doing 2 things. We are setting up an external advisory group, which would comprise of ex senior banker, who was also one of the independent directors with State Bank of India, prior to which he was -- he retired as the Chairman of a bank. We have another person who also retired as the CEO of a bank and a technology expert. This advisory group will guide the compliance function. We are splitting our risk and compliance function in order to be able to get this done. And we are doing significant additions to our technology function, splitting our information security function and a compliance function within information security and for new developments getting in new talent, which incidentally has already joined. So from a new talent acquisition, it is more around technology and compliance. And we would also seek external advice in order to, in a timely manner, implement all that -- all the regulatory overhaul, which otherwise comes into play from 1st October 2022.

The next question is from the line of Subhradeep Mitra from UTI Asset Management.

So sort of a data keeping question from my side. So there are a certain number of NCDs in the market where there are covenants linked to Mr. Gehlaut shareholding. And if -- so that sort of covenant obviously gets breached now. So just wanted to understand, I mean, what's the total quantum of such entities in and around that outstanding? And what's the liquidity position so that can be taken care of?

The liquidity position of the company is fairly comfortable. We are extremely well provided. As far as covenants are concerned, we are working with each of our lenders. I've actually gone ahead and met with most of our lenders and updated them and gotten their verbal consent. So I do not see any covenant breach triggering even INR 1. I think it's a transaction which is being welcomed by all of our lenders. To my positive surprise, I have actually gotten fillers from some of these NCD holders who were otherwise holding back on fresh investments of NCDs to start looking at our NCDs again and making sure that they start the investment with this institutionalization process, which is giving them a lot of comfort. So I would state, to the contrary, I think that you are going to see the NCD program on the longer end of the curve to start expanding as early as before the end of this month.

The next question is from the line of Nischint Chawathe from Kotak Securities Limited.

Am I audible?

Yes, you are, please. Please go ahead.

Just a basic question. I'm not sure if this has been discussed, but who would be classified as promoters now?

I'm sorry. I could not hear you. Could you please repeat your question?

I'm saying who all could be classified -- which all investors will be classified as promoters now?

So at this point in time, there is no change in promoter or control as we speak. There is a process of de-promoterization as is prescribed by SEBI which requires the Board to approve, shareholders to approve, lenders to approve, in our case, regulators to approve and lastly SEBI to approve. Nothing major works needs to happen. The ball has been set in motion. There has to be communication with strategic investors. The Board has to get strengthened by the presence of more independent directors coming in as representatives of these strategic investors. That is step number one. As Sameer Gehlaut has indicated in his notification to the stock exchanges, post the Board getting strengthened further. He will look at subject to requisite approvals only. He will look at stepping down from the Board and then starting the de-promoterization process. So as we speak, Sameer Gehlaut is the promoter of the company and is in control, and there is no change. The idea is to get the ball rolling, for which technically he could have only initiated the process as per SEBI guidelines once he goes below 10%. And the guidelines described by SEBI also said that this is a process which has to happen over a period of time. You can't just be a promoter and tomorrow morning, leave the organization as an orphan. There is a process where the engagement with strategic investors has to become and transform itself from being one of financial investors to strategic investors, which takes time. And the proof of that pudding is in having people on the Board for which shareholder approval is also required. We've taken the first step, and I said that -- as I articulated during my comments, there is a step 2, 3, 4 and 5, which we will keep implementing over a period of time. And hopefully, by September next year, the entire transformation in terms of de-promoterization having strategic investors and moving on to being a company with no identifiable promoter would be achieved.

So that was very comprehensive. Just one thing. Was this something which has been discussed with rating agencies? Or would that discussion now sort of happen on this?

So with stakeholders who have guidelines as far as whether they can trade in the stock and not -- or not and required disclosures, with all such stakeholders this communication and dialogue has happened more as also seeking their advice and feedback and reaffirmation that they would welcome such a move, I have personally shared this with all the relevant domestic rating agencies, updated them and kept them in loop at every stage, including a day prior to doing this transaction. So they are well in loop. They will appreciate as any rational stakeholders should appreciate the institutionalization of a financial institution. That is the natural progression in any financial institution's life cycle. You can't have the individual bigger than the institution. You can't have ownership over shadow management. We all know that a very large portion of our financial industry actually suffers despite doing a lot of very, very good work and having excellent talent on the ground actually suffers for the overhang of ownership sort of controlling management. You cannot have that in a financial institution. And as we migrate on having done fairly well despite all the challenges over the last 3 years, the management team has raised its hand together to say we are ready to take on this challenge of having no identifiable promoter. We are ready to work with strategic investors. We are ready to work under the directions of our Board and make sure that we create a world-class financial institution focused on distribution. I'll just take one last question, if there is any. Are there any further questions?

Sir, we don't have anyone in the question queue.

All right. Thank you so much. I hope most of people's doubts would have been clarified, and we will continue to get your support. It is with mixed feelings, Sameer and I have worked very closely together for the last 21 years. We started working together in an office which was even smaller than the size of the room that I sit in currently, and we speak and in which 100 people used to work together. So from there, from those humble beginnings, we believe we've created a reasonable, good valuable franchise, which has given a CAGR on -- of returns of over 25%, has distributed dividends of over INR 11,000 crores, has had its shares of ups and downs as we nimble footed in changing product mix, in changing overall strategy, has focused on asset quality. And that focus, along with the focus on technology and people management, I believe are our biggest moats that we have created. We've embraced things early, such as co-lending and securitization. We have never allowed our ego to come in place, and we are putting it out there. Please value us on the basis of how we create a very high-quality distribution franchise and scale that up. On that note, and with a very optimistic thought around Indiabulls 3.0, I thank all of you again and look forward to seeing you or interacting with you at the end of our -- at the end of quarter 3 when we declare our results. Happy New Year, and best wishes for the season. Thank you.

Thank you. On behalf of Jefferies India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.