Satin Creditcare Network Limited (SATIN) Earnings Call Transcript & Summary

Good day, and welcome to Satin Creditcare Network Limited Q4 and FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. H.P. Singh, Chairman and Managing Director of Satin Creditcare Network Limited for the opening remarks. Thank you, and over to you, Mr. Singh.

Good morning, everyone, and thank you for taking your time out and joining us today to discuss our Q4 and FY '20 earnings performance. I hope everyone is keeping safe and my prayers are to those who are fighting this out. These are challenging and uncertain times. And before we briefly discuss our quarterly and yearly performance, I would like to highlight the macro factors affecting the economy and how we see it panning out for the microfinance industry and Satin. The World Health Organization declared COVID-19 as a pandemic on March 11, 2020. And the Government of India acted swiftly to implement the first phase of nationwide lockdown since March 25, 2020. This resulted in complete halt to the economic and financial activities having significant impact on the incomes and livelihood of the people. Coming to the microfinance industry, the industry growth got impacted in the later half of March 2020 as lockdown resulted into complete halt on disbursements and collection activities. This was followed by Cyclone Amphan in the East, which disrupted the operations in the states of West Bengal and Orissa for a couple of days. However, we see a significant revival in the sector with lockdown restrictions easing out as most of the borrowers are residing in the areas where there is no major impact of the pandemic. Also majority of our borrowers are engaged in classified essential sectors of animal husbandry and agriculture allied activity. So there is no major impact on their income. Company has delivered a decent performance for the financial year 2020, even though the financial sector, particularly microfinance has faced multiple challenges of liquidity crunch, heavy floods in some states, nationwide protests, sand crisis and now COVID-19. Your company has come through these difficult time offs and was able to grow its book by 15.6%. We had assumed our growth journey after completing the process reengineering in Q4 FY '20 only and lockdown brought a short-term halt for us. But we at Satin believe that in these unprecedented situations, keeping our fundamentals and processes right and adopting the new normal work changes will help us to overcome -- come out even stronger. Talking about technology, it has become a vital part of -- for all businesses. And right now, we are witnessing its need than ever before. I'm happy to share that we have undertaken several new initiatives to successfully aid our staff and borrowers. Within the quarter, when critical movement of our staff and borrowers were restricted, we have successfully launched a new customer service app to increase digital and financial awareness amongst customers and to help them connect with brand Satin. We strongly feel digitization is the future and have quickly launched the digital collections in the current lockdown conditions. Customers are encouraged to pay their installments through various digital apps like Google Pay, PhonePe and Paytm. Also, our staff is in touch with our borrowers, and we are also undertaking telecollection activities by CSS in COVID-19 containment zones. In addition to this, we are also in the process of adding Satin on Bharat Bill Payment System, which is a one-stop solution by NPCI for recurring payments and also under process of taking customer activation for regular collections via NACH and eNACH through bank accounts. Overall, our digital and cashless collection is seeing a good traction, and approximately 37% of collection was done via cashless modes in March '20, which is up from 27% in December '19. At Satin, we have always adopted our holistic approach with our customers being at the epicenter. And to continue with this legacy, we have undertaken a couple of initiatives to support them in these tough times. During the quarter, we have launched a new product called Pragati Loan. The main purpose of this product is to rebuild borrowers income generation activities impacted due to COVID-19 and Cyclone Amphan and also helped to reduce monthly cash outflow on their loans. Following these financial and social-economic approaches for our customers as well as our employees have helped us achieve few major milestones. We secured first place amongst all MFIs in the customer service index evaluation conducted by MFIN for fair practices code policies and process. Certified by Great Place to Work for building and sustaining high-performance culture. We have been awarded a Certificate of Excellence in Clean Energy Finance for distributing 85,579 clean energy products impacting 4.11 lakh peoples life and becoming a part of UNFCCC clean development program. We further endeavor to bridge this socioeconomic well-being of the low-income households by financing them on a sustainable basis in order to improve their livelihood, establish identity and enhance self-esteem. Now allow me to share the financial and operational highlights of our company. Our AUM has seen a growth of 15.6%, which stands at INR 8,174 crores as compared to INR 7,068 crores a year ago. As of March '20, we have a customer base of INR 34.58 lakhs. Our disbursement stood at INR 8,045 for FY '20. Net interest income for FY '20 stood at INR 917 crores, registering a growth of 14%, while for Q4 FY '20, it stood at INR 271 crores. For FY '20, our pre-provisioning operating profit registered a growth of 15.1%, which stood at INR 434 crores as compared to INR 374 crores in FY '19. While PAT for FY '20 stood at INR 155 crores as compared to INR 201 crores in FY '19. For FY '20, our standalone cost-to-income ratio stood at 49.9%. For FY '20, our OpEx-to-GLP ratio stood at 6.1%, whereas for Q4 FY '20, it stood at 6.4%. As of March 31, 2020, our consolidated ROA for FY '20 stood at 2.2%, whereas ROE stood at 11.9%. Coupled with several challenging macro factors during the year, we also undertook investment in complete process reengineering and digitization, which increased our operating costs as thus impacted our return ratio. However, with right systems and processes in place, we believe that going ahead, the operating leverage will play out, which will help us control our costs and improve profitability. Our collection efficiency for the year stood at 98.8% despite the challenging environment. 78% of our borrowings are in the essential services, thus recoveries for them are expected to be much faster. Our GNPA at an AUM level stood at 2.9% as of March 31, 2020. While we have made adequate provisioning of 2.3%, bringing our NNPA 2.6%. Our NNPA has seen a reduction of 16 basis points on a year-to-year basis, while on a sequential basis, it has come down by 30 basis points. Now an update on moratorium. With respect to borrowers, we have always been supportive to our borrowers and have offered a helping hand to sale through testing time. Borrowers who will avail moratorium will have to pay the incremental interest and the increase in the loan tenure would be explained to the borrowers. As of May 31, 2020, 25% to 30% of our borrowers are expected to opt for moratorium. With respect to lenders, we've got a moratorium for 63% of our lenders on principal repayment, while companies will continue to service interest during moratorium to all the lenders. We also continue to work with our lenders to raise additional funds. The recent announcement by the RBI with respect to TLTRO with specific limits for the NBFC and NBFC MFI, is a positive for the MFI industry. Also, the announcement of NABARD getting INR 25,000 crores and SEBI getting INR 15,000 crores, and NHB getting INR 10,000 crores is a boost for the sector. Satin and its subsidiaries have a strong existing relationship with these institutions. On geographic expansion, for the full year March 2020, we have added net 220 branches across regions, while Q4 FY '20, we have added 29 new branches. As of March 31, 2020, our total branch network stood at about 1,300 ATC. Our strong branch network is spread across 397 districts. Our branch network remission grew approximately 19% on a year-on-year basis. We have a strong business and risk team in place, which follows a very cautious approach in selecting near geographies and opening our branches. During the year, we have expanded our presence to Sikkim, which takes our total data in unitary count -- territory count to 23 now. Our diversified presence across districts has also helped us mitigate portfolio risk to a large extent. During the year, we expanded operations to 38 more districts, bringing our districts penetration to 397. As of 31st March, 96 -- March 31, 2020, 96.5% of our districts have less than 1% of portfolio exposure, which we aim to bring it down further in the coming times. Exposure to top 4 states, 58.2% in FY '20 from 85.9% in FY '16. We see arrangement with IndusInd Bank stands at INR 543 crores as of March 31, 2020. During FY '20, we have been able to disburse close to 170,000 loans under the product financing category, which includes loans for bicycles, solar products, home appliances, consumables and water and sanitation. On the portfolio quality, we have made -- during the year, we have made an additional provision of INR 82.76 crores on account of COVID-19, followed by sincere lockdown and cyclone. Our CSS ensures uniform processes across branch and provide back end support to credit appraisal quality and customers support, along with post-disbursement monitoring. Our cashless collection now stands at 37% after we were successful in implementing 100% cash flow disbursement across all our branches. In continuation to this initiative to further digitize, we will provide payment gateway facility on Satin's website also. We believe all these initiatives are on the right track and will help us move in end-to-end transaction and driving system efficiency and reducing operating cost without hampering our portfolio quality. Our capital base has been strong with our CRR of 30.49% and well above the regulatory requirement. We have a healthy Tier 1 capital comprising of 22.10% of the total capital base. Long-term credit rating CARE A stable and ICRA A stable short-term rating CARE A1 and ICRA A1, upgraded from ICRA A2 Plus and Grading MF1 highest order. Liquidity has never been a barrier for us as a company, and we have access to a diversified lender base with 64 active lenders. We continue to maintain a healthy balance sheet liquidity worth INR 1,600 crores of surplus funds as on March 31, 2020. In addition to the overall liquidity, we have undrawn taxes of INR 871 crores as on March 31, 2020. Our structurally positive ALM also adds to our advantage. An update on subsidiaries, all our subsidiaries have been making good progress. We induced INR 30 crores of capital in the Satin Housing Finance Limited, which has now reached an AUM of INR 139 crores with nil delinquencies and having presence across 4 states. Satin Housing has a collection efficiency of more than 80% even during lockdown. Total capital of Satin Housing stands at INR 80 crores, with a capital ratio of 125.9% and stand-alone credit rating of CARE BBB stable. Satin Housing has a 100% retail book of driving of 87% affordable housing loan, and 13% of LAP. Satin's Infra, our MSME arm is also taking good shape, post commencing operations having AUM of INR 111 crores. During the year, there was an equity infusion of INR 80 crores. SFL's business aim to focus on secured retail MSME lending, wholesale lending to small NBFC MFI among others. Total capital of SFL stands at INR 102.5 crores with capital ratio of 92.1% and stand-alone rating credit rating of CARE BBB-. Our business correspondent services under Taraashna Financial Services has reached an AUM of INR 704 crores. As of March 31, 2020, the company operates to 213 branches at more than 3.7 lakh active loan clients. With this, I would like to open the floor for questions. Thank you so much.

[Operator Instructions] First question is from the line of Sudhir Bheda from Right Time Consultancy.

Congratulation on a good set of numbers in unprecedented situation.

Thank you.

Sir, couple of questions and 1 observation. The question is, as I was listening to your TV interview, and you were telling that your collection 25% to 30% borrowers have opted for moratorium. So what is the collection efficiency in May and June so far? That is the first question. Second, would be -- you have done some INR 82 crores, something provision for COVID. So will this provision be sufficient, considering your gut feeling. Actually, the -- how situation will turn out, nobody knows. Then what's the situation or what's your gut feeling about this provision, whether we will need extra provision or this will be the sufficient provision going forward? And third observation is, there is a reverse migration happening. So will that we benefit for a microfinance industry as a whole? Because lot of people are migrating to rural and rural income is expected to go up because of good agriculture and good monsoon and so. So your comment on that.

So let me answer you the third question first, basically. So you're absolutely right. Because of the migration now happening to states like Bihar and UP. The avenue for increasing rural incomes will definitely increase. And we are seeing a good traction in our portfolio of collections, where I revert back to your first question also. If I look at our collection efficiency, which primarily, if we look at it, opened up from technically 1st June onwards when our branches, which were even in the red zone and everything started opening up. Our collection efficiency on a day-to-day basis is now touching close to about 60% or so, which bodes very well in terms of how the collections will pan out during this crisis also. And coming back to your this thing, the demand will be very, very huge. Looking at the avenues for increasing the rural penetration and income-generating activities. So we feel that the demand has a lot of huge potential. In terms of opting of moratorium, this is where our connect has been made with our customers when we are looking for collection. Now if we are saying that we are technically able to connect and have a 60% collection efficiency means that what we feel close to about 35% to 40% right now. This is, I'm talking of June middle. We'll be opting for a moratorium as for our initial this thing. But since the moratorium is there until August end, I think the figures will try and oscillate. But the indications right now are very, very positive when we say that we are touching a collection efficiency of 60% on a day-to-day basis. In total, if I give you a figure, we've been able to collect close to about 230 -- INR 228 crores?

INR 228 crores.

INR 228 crores in terms of our collection. And April was absolutely negligible because of lockdown. May was again at about INR 95 crores because of the late end of opening up of branches and the voice reaching the -- this thing. But we've been able to collect close to INR 228 crores up till now. And June signifies a much better traction in terms of collections.

That's great thing, sir. And sir, the provisions, would it be sufficient? Because the market is pricing our share at just 32% of our book. So it's a pricing wiped out network kind of scenario. So will there be -- it will be necessary to provide more going forward apart from this INR 82 crores?

See, on what the market terms as prices is something which I would not like to comment on because whatever factors are therein, I would not like to comment.

Yes, yes. That is just like this is observation.

Yes. Yes. So what I can probably say is that in terms of provisioning, I think we've been able to clean up our balance sheet to a very large extent by providing a provision. You're right, absolutely, the times are very uncertain. But we feel the way we are reaching a traction, I think the credit costs will probably be -- will not be that much as what we have provided in FY '20. That's what our take is.

[Operator Instructions] Next question is from the line of Vinit Rai from JM Financial.

Just a couple of questions. One, a slightly macro question, since you've been in this business for so long, and you've seen plenty of crisis in India. How do you think is this different? Like if you compare it with demonetization, et cetera, you've been through it and you came out of it. So one question is just some macro general thoughts on whether it is as bad as demonetization, worst than demonetization any comparison. And second, specific question was in this period, April, May, June, are you also disbursing money as interim loans, et cetera, or our focus is only on collection?

Yes. So thank you. What we're looking at on the macro level, if I can probably give an answer to that, I feel that this is probably not going to be as difficult as what demonetization was. And I know probably, I think a lot of people will not be able to really digest this at this moment. But very frankly, we are seeing that the income levels as well as the infection levels in the rural space is lesser than what we have in major metros like Delhi and Mumbai. That gives us a very positive response. So having looked at it very closely in the last 3 months, we feel that I think the bounce back will be far more better, wherein it was not that great during demon. And the other factor, which is probably added on is demon was probably more of when people used to talk about loan waivers and loan mafi's. This time, thankfully, it is only a moratorium, it's a deferment, and people do not talk about the loan waiver. So that's a very positive sign if you really look at in terms of how these macro factors will probably pan out. And the other factor, which probably is also very interesting is that our major portfolio is related to agri and agri holdings. There has been a very good harvest time this year. So that will also have a very positive play in terms of how our repayments pan out. So that is also one of the positive signals, which we are looking at during these times. In terms of our disbursements, we started our disbursements in June, we are making -- which I talked about, the Pragati loan, this is technically to enhance livelihoods for people who might have impact on their livelihoods and their income levels. This was -- have been started now. We didn't discuss anything in April, May because it was not possible to do it. But yes, disbursement has started, and we hope to pick on this moving forward. So these are both the positive signs, which we are trying to look at significantly.

Next question is from the line of Harsha from Dimensional.

Hello, am I audible now?

Yes, sir.

Yes. Sorry. Sir, I wanted to understand -- I wanted to ask a question on your moratorium. So the industry moratorium has been in the northwards of 70%, 75%, whereas you have kept it at around 30%, which is quite commendable. So can you just explain what are you doing right that your moratorium is way, way below the industry level?

See, I don't know about the industry level of the normal NBFCs and the normal NBFC MFI, there could probably be a difference. But what we can say is when I give you a figure of collection efficiency of technically 60% happening in June gives us that, if you look at people who have not been able to pay in the first 15 days, technically, is close to about 40%, which gives us an indication that, that plus/minus 5%, 7% is where I think people will not avail a moratorium. Moratorium is till August. So what indications which we are getting and when we are talking to them, if they are making an installment. That means that they do not want to avail the moratorium. And that is where the percentage figures has probably come in.

Okay. Okay. And could you also give us the breakup of your provisions in terms of how much is towards FLDG, how much is write-off? And how much is provision which you taken to the balance sheet?

So I can ask Mr. Jugal Kataria to give you an answer on this question. So Jugal can you.

Yes. So on a portfolio level, our provisioning is about, basically in terms of provisioning on BC as well as on the on book portfolio. So the overall credit cost for this year is 3%. And our gross NPA is about 2.9% on a portfolio level against which we have a provisioning of 2.3%, which includes both on book and off book, whatever is our FLDG cost and the credit cost.

Okay. Okay. And last, just a bookkeeping question. So your business income, I'm talking about the standalone numbers, the BC income has increased from INR 25 crores to INR 62 crores Y-o-Y and annual. But your AUM -- your stand-alone AUM under the BC income has reduced by 20%. So can you just reconcile these numbers?

The BC income started building up last year. So in the first 2 quarters, it was slow, and then it started building up, while in the financial year '20, it was consistent throughout the year. So that is why the BC income is in terms of absolute number is more for this year.

The next question is from the line of Andrey Purushottam from Cogito Advisors.

Congratulations for a decent set of numbers. I had two questions. One is related to cost-to-income. You've made considerable progress in reducing the cost-to-income. I just wanted to understand, if you can throw some color as to what are the specific steps that you've taken and what are the major costs of income -- of costs that has been reduced? And going forward, and how much scope do you see for further reducing cost-to-income and where were the areas for reduction lie?

Thank you, Andrey. See Andrey, we always have tried to see that where does our cost-to-income will probably go down in terms of our operational efficiencies. I think what we've been able to really leverage on is the way we've been trying to increase our cashless collections to a large extent. We were doing process reengineering. And I think that probably before the lockdown and post the lockdown also, I think we are looking at various measures of increasing our cashless collections. We are looking at various measures of actually rebooting and reconfirming our branch strategy and our regional office strategy in the larger context. I will probably not be able to share the intricate details for as such. But we are really taking a very serious look at how do we are able to consolidate all these operations. So that the cost-to-income ratio falls further. There is a large scope, which we are trying to look at. And definitely, yes, in terms of our operational efficiency. I can give it to you in writing that we'll probably be having far more efficiency building in even post the lockdown and the post-COVID-19 era to look at how we are able to significantly reduce our nominating expenses.

So you're not able to give a little bit more specific on this metric thing?

I mean these are all work in processes. You know Andrey, I said, we are consolidating a lot of our regional offices and branch offices. So you can probably take a shot from there, and cashless collections to a large extent. I think it was probably mentioned in my opening remarks, we have launched our customer service app. So technically, what we are moving towards that all our microfinance borrowers will have an app from where they can actually make a payment and do disbursements from there. So the whole process of moving ahead with manual intervention will take our back to a large extent. So these are few measures, which I can probably give you in the outer context. But intricate details probably can be shared off-line with you.

Okay. And my second question is related to the moratorium and NPAs, et cetera. The first clarification is that given that this is a moratorium till August, will we get to know what the incremental NPAs only by September end, would that be right?

I think all -- yes, that should probably be the right way. Because right now, the figures which we will quote technically will not have much bearing because the whole thing will pan out after August. But looking at the initial response of collections, how it is coming, and we were also not very, very hopeful the way I think the response has come in for us. I think we will have probably this thing. And the economic activity has already started in the rural region. After the lockdown, the economic activity has been done with the good harvest and everything which is there. So that bodes well for how the NPAs will technically pan out in the later stage. But it's encouraging and it's positive.

And do we have a granular understanding of those who are not paying? What kind of people are these? For whatever reasons, that they are not paying? Do we have an understanding of what happening in the ground?

See, we have cuts and we do data analysis, and we -- our teams are in touch with these institutions. A couple of places -- clearly, yes, there would be a small, again, interferences from the local leaders as such, where they will probably say, why don't you take a moratorium because it's been announced. But it's only a question how you made your connect. So I think we still have it. Sufficient time for us till 31st August to make those connect and look at the more positivity coming in even after this.

Next question is from the line of Sundar Kumar Gupta, an individual investor.

I have 2 small questions. One is, how the shareholders are being rewarded. They're not being rewarded because their capital has risen to the extent of 80% during the last 6 months. Can the company now think of reducing it post borrowing by rewarding the shareholders by the right issue?

Sir, I cannot probably comment on this because these are questions, which I probably will not be able to answer. I think we've done every possible thing in terms of our operations of the company. And I think that is probably a ultimate reward, which will translate down to the shareholders. I think I would probably be refrained in answering this question directly.

But cost of borrowing can be renewed in that cost...

Sir, cost of borrowing -- sir, just to give you an idea, cost of borrowing has no significance for us because we work under a margin cap. So the RBI has specified our 10% margin cap for us. Even if the cost of funds go down, it will be passed on to the ultimate borrowers. So the margin will always remain the same. It's only the operating cost, which can actually deliver us much better results if our operating cost goes down. The margin will always remain the same.

I understand. But shareholders have being -- getting rewarded directly.

Sir, I've given my answer to it.

The next question is from the line of Gautam from GCJ Financial.

Congratulations on a good set of numbers. So my question is regards to what process you followed for moratorium offering to our clients?

So, right now, it's a process of connect with our customers. So we are technically connecting with all our customers. Customers who are willing to repay we are taking installments. But customers who say that they are probably affected by the COVID-19 as they have probably taking more time to repay. We're giving them the time that they can think about it and they can take a moratorium if they wish to do so. So that connect is already on. The process of our voice meeting the customers, meeting the group leaders, having not exactly the center meeting because social distancing has to kept. So they're meeting center leaders and they are meeting group leaders and getting an enhanced answer from them in terms of how the moratorium would really work on. And that is the reason why when we say that we've been able to get on a demand collection basis, the collection efficiency of 60%. I think it gives us probably an answer how it is to be done. There's all work in process. Again, I think till 31st August, we will keep on continuing doing that, keep on getting our collections, whatever we can from our borrowers and then we'll see how, this thing. Along with that, I think we're doing all CSR activities by maintaining connect. So all CSR activities are happening. We are distributing masks, sanitizers and all other stuff to maintain that connect. And also trying to see that we have set up a call center where the calling is going on with all the customers. And in fact, we've been able to maintain a calling connect even of containment zones where our customers are to a tune of about 95% to 97%. That is how we are using this process.

How many of our clients we will able to connect -- we could connect with them in terms of percentage?

It is close to about 95% to 97%, we've been able to connect.

Okay. And why we would not be able to collect the rest 3% to 5%?

Well, there are challenges of reaching out across, so there -- where the district administration is probably making that a containment zone or something like that. So there is only a challenge because of logistic activities. There's no challenge because of any other things.

Okay. And as things stand today as India is going for unlock in a big way, how do you see 2020 -- FY '21 in terms of our credit costs and growth?

See, credit cost is already -- I've already given an answer earlier. But in terms of growth, I think what we are looking at first half technically of this year, FY '21 is going to be a consolidation phase. The concentration is going to be on asset disbursement, but more on collections. And the second half of FY '21 will probably be -- somewhere we can look at enhanced disbursement, and looking at probably the growth. So that is how this whole year is going to be panned out.

The next question is from the line of Rohit from RARE Enterprises.

Congratulations on good set of results. I think all the questions have been answered. So if I have any, I'll come back in queue.

Thank you so much.

The Next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund.

Given the fact that there are issues that come up in microfinance in a very unrelated way once in a while, what would you say would be your capital policy or capital leverage ratio, not capital adequacy ratio as well as your liquidity policy going forward? That's the only question which I had.

So on liquidity, I think we've probably always been very conservative. We've been maintaining liquidity worth close to about -- in excess of 3 months of our disbursement. So we've been conservative and I think that will probably continue because that does constitute a negative carry on our balance sheet. But looking at it, I think during these times, we would still like to maintain that kind of liquidity. So on liquidity, I think that is what our scenario is. And sorry, the other question was...

On capital, sir. Capital -- on your total leverage ratio, what would be your -- are there any covenants saying that your debt-to-equity cannot be more than a certain number of...

No, we don't have that. I think well within that now. I think our leverage ratio is close to about 3.7% or so. So we're very comfortable even on the leverage ratio.

Okay. Would you capitate certain number? This 3.7%, maybe 4%, 5% so on.

See, there's still room to grow. And I think no lender technically has given us any kind of a covenant on that. So we can probably -- even if we are able to increase it. I think in our earlier, it used to be close to about 4.75%. So even if you go down to 4.75%, I think we probably will be good because no lender has probably flagged that issue or has come ever under any kind of a covenant. So we're happy with this.

Next question is from the line Abhishek Murarka from India Infoline.

Yes. Sir, my question -- sir, 3 questions actually. One on disbursement, can you share some data on the amount of disbursement you would have done in the first 15 days of June. Just to sort of get an understanding of the scale of the pickup. The second question is specific to Cyclone Amphan. If you can give some ground-level feedback. And what is the current status of relief efforts and whether customers have started repaying or whether it's just relief work is going on and the repayment will take some time to start. And the third question is on this Pragati loan. Can you give it specifics and under what circumstance are you disbursing? And also, how is the different from your existing loan products like [ Pradhan and Jagjit ].

So if I give you probably a ballpark figure of disbursements happening in June, I think we've done right now, close to about INR 5 crores worth of disbursements. So it's been less. But I think it has been significant, looking at logistics issues and all that. But the product has been oiled in, and now I think there will be a pick on from now on. Looking at the cyclone, I think Orissa didn't have a major impact of Cyclone Amphan. So over there, I think it was a disruption for a couple of days, and then I think things are back to normal. So the leveler has been to as extent in West Bengal. And West Bengal also -- see it has just been in a couple of our branches where the impact has been. The disruption has been there for a week, I think, for a couple of weeks. I think that's over now. So the relief work and the rebuilding exercise is going on. So I think that Cyclone Amphan whatever thing was there is now probably over. So I think now -- I think we are looking back at our collections coming back from there and starting our normal activities, that's there. For Pragati loan, I can only probably give you that this is a loan which has been given to -- for people who probably are not looking at moratorium to a certain extent, but who have been rebuilding and who really needed for their economic activities to be shored up. So it's a small kind of an emergency loan, which we are giving it to customers who are not in part and who would require it for their rebuilding of income-generating from this loan.

But sir, are you giving it only to existing customers or new customers? Or also, what is the ticket size and tenure and those details?

So it's only to the existing customers. And the tenure is for 2 years, and it's a INR 15,000 loan, 1-5.

And does the customer have to sort of repay 1 EMI or 2 EMI to get this? Or that's not necessarily because it's for rebuilding and an emergency kind of loan?

So the clarity is that someone who needs it for his economic activities and who is not in par. That is what our basic fundamental on this loan is.

Not in par as of February 29?

Exactly.

Okay. And just one more question, when you said your collection efficiencies INR 228 crores is what you've collected so far. And May, I think you said INR 95 crores. So that leaves around INR 130 crores in the first 10 days of June, is that correct?

So like when we give the breakup. So it was mentioned that the collection has started picking up in May only. So May, it was INR 95 crores. And in June, first 10 days, it was around INR 98 crores, rest all collected during March and April, the balance.

Got it. So if you've done roughly around INR 100 crores in June. And if I look at your ALM disclosure, it says that you would have collected by way of loan and as in principal and interest, around INR 140 crores in June. Where is this disconnect? Because ideally, then your collection efficiency is very, very high.

So there is, this INR 228 crores number is on the ALM level, which includes on book and off book portfolio. While the static ALM that we have given, which is slightly behavioral and only for the on book. Because for the on -- off book portfolio, BC and direct assignment income, which is of direct assignment portfolio, which is close to about 36% or so. Whatever we'll collect, we'll pass it on. So that number is either they are in the collection nor in disbursement in the static ALM. While when we are seeing this INR 228 crores number is the gross number we've putting it.

Okay. So out of roughly INR 140 crores, which you've scheduled to collect in June, how much would you have collected? So just your on book amount?

Broadly, it is 2/3 on book portfolio. So slightly here there, means we are focusing on the entire portfolio. So we do not have any risk left out in the DA portfolio, but we make all the sincere effort to do the collection there as well. So that's probably 2/3 on book interest -- off book.

[Operator Instructions] Next question is from the line of Rohan from Multi-Act.

Sir, two questions. Firstly, we've said that we are doing limited format group meetings. So if you could elaborate on what that means do we meet only the group leader and the group leader collects on behalf of the borrowers? How this format changed versus the pre-COVID meetings that we used to have? And secondly, again, following on the previous participant and the 60% collection efficiency that we are talking about in June, so in -- would that be higher on account of a few borrowers paying for April and May, we have also now in June, of the 60% in June is, June daily collection against June daily deals only that we are talking about to just understand the qualitative color on the sentiment about repayment.

So the second answer to your second question is that this is June payments. So June demand as compared to the June collection. So we are talking about that. So when we talk about INR 95 crores of May, it is against the May demand and May, this thing. So June is what we're talking about, the June demand and June collection is what we are talking about. In terms of the center meeting pre-COVID, it used to be the normal center meeting where all the members used to be present. But since now, we have to maintain all this. It is now a connect with the group leaders and the center leaders. So the collection is happening where these center leaders and group readers connected from the other members of the group of the center, and then they pass it on to our this thing. But catalyst is also one of the modes, which is being looked at it very firmly. So both these modes are going on.

Next question is from the line of Kislay Upadhyay from Abakkus.

Could you share your strategy on disbursal going ahead? You mentioned certain aspects about Pragati loans. So overall, what will be your expectation of disbursal number? And would it be to existing customers or to new ones and if the existing, who among the existing would be eligible for this?

So we are looking at only at, working to our existing customers because I think it's not the right time for us to look at new customers and new geographies or new areas. So that is for sure. The extent to where we are looking at disbursement is basically again what I had referred earlier is if somebody needs for their business to revive up their economic activity, that's one. And technically to non-PAR customers. So it is going to be for them. But as I said, first half is definitely more towards consolidation. But we are looking at how we are able to really look at probably making best use of the existing customer base of ours. So that the connect remains, and we are able to follow-up probably dutifully by looking at disbursing to these clients.

And your expectation on numbers for the year?

I can't validate probably a number because I think it will be -- it won't be nice for me to give that. But definitely, once this settles down till September, this is what we feel, once the moratorium gets over, I think then we can probably look at growth within these geographies only it is. But the second half is going to be probably where disbursal will take probably a major decision.

Okay. And then finally, could you give some estimate of expectation of OpEx in the next -- in this year FY '21?

NP downward from what we have shown as ending on FY '20. That is for sure. There will be a downward trend of what we have shown. So I think the -- yes.

So absolute number will decline, right?

Yes, I can't give you an absolute number, but yes, it will be a declining trend. That's for sure.

Next question is from the line of Riddhesh Gandhi from Discovery Capital.

Congratulations on your recovery and collection efficiencies. Just had a few questions in terms of your effectively provisions, how much of it is in lieu to the Assam as opposed to ex-Assam and actually kind of COVID thing?

Jugal, can you answer the...

Sorry, I missed the voice in between, is it how much is because of COVID?

How much because of Assam and in addition how much is Ex-Assam, which I'm assuming is because of COVID.

So as we explained in the previous calls, our Assam portfolio is coming down. So we now have close to about 4.7% of our booking Assam, which is INR 381 crores. Out of that, roughly INR 238 crores is on book balances off book where we do not have any risk left out. So we are making all the sincere efforts and call effort to connect that. So our gross NPA number on the on book is about INR 52 crores and almost 90-odd percent of that is already provided for.

Got it. Got it. So of the provisions, which we have done in Q4, how much is provided for, which is lending to a service? So how much is the Assam provisioning in Q4?

Actually, the provision that we have made for COVID event that has created on the Assam portfolio also. So I think it is to break that state by, et cetera, we can discuss that offline in detail.

Got it. Yes. Understood. And the other question is with regards to the BC relationships. Are they continuing to be open to connect would be -- if you can educate disbursing loans? Or have they stored down right now is everybody else? So I mean, how should we be thinking about the AUM growth for NFBC as things are normalized, I'm not talking about it right now.

So for the Pragati loan, the way we are doing it for our clients is probably the same thing which we are doing with our BC partners also. So there's not been any kind of a dilution in terms of disbursement being made. So it is there continuing with even our BC partners.

Next question is from the line of Nidhesh from Investec Capital.

Hello?

The participant has placed the call on hold. Do you want to go to the next participant?

Sure.

Next question is from the line of [ Parth Agarwal ].

So my question was, have you seen any political interferences in terms of recovery in any particular geography?

There have been very small instances in Punjab and Orissa, 2 places, but it's been limited to a very few districts over there. It's not an interpreter. It's where when we do this customer connect with this thing, I think there has been the saying that please offer moratorium since it's there. They don't want us to even connect with the customers. But that's the thing which has probably been taken in the upside. But there's not been the way interferences used to happen during the demon time. I think it's probably not there at all. So just a couple of districts where I think they have been a local administration or a local leader, which has probably been there. But nothing of significance.

Okay. And second question was, you had mentioned in your presentation that you have collected INR 228.5 crores from lockdown till 10, 15. So my question was how much was actually been, we should have been collected, had that not been any lockdown?

On an average, if you look at it, I think monthly, we should probably get about INR 570 crores-odd. That's what my number is, principal and cash was put together. So I can extrapolate for 3 months basically, and that is what we've collected.

Okay. And till 15th June, you collected INR 228 crores, if I am not wrong, right?

Sorry, till 15th?

You mentioned in your con call, sorry...

No, no, we've disbursed close to about INR 5 crores.

Till 10th June, we collected INR 98 crores.

Next question is from the line of Manish Ostwal from Nirmal Bang Equity.

My question on your comment about the -- this crisis much lower than the demon. So first, in terms of ultimate credit cost in this cycle compared to the -- because last time, what we have seen that one of the leading microfinance player reported much lower credit cost compared to us. So when you say our collection efficiency are much better than those players. So what is our assessment on the ultimate credit cost in this down cycle?

No, you want to compare demonetization with this time, or you want to compare both of them.

So I'm referring, sir, your comment about this crisis is much lower than the demon. That is one. And secondly, our collection efficiency versus the largest player in the sector.

So I will not compare with anyone else, but I can only give you about what we do. So demonetization, technically, if you look at it, these are the major ones which were impacted by demonetization. So I think those comparisons probably holds are not good in terms of what we do it with someone else. And I'll be very clear on that. What I was trying to say and what I think it probably is the answer is, the way we -- the credit cost probably moved out in demonetization because of political interferences, elections, raw material of new notes not being there as well as loan waivers and, et cetera. We are probably far more in this thing as what is compared to this crisis. This crisis has had an impact of economic activity, but not to a very large extent in the rural space. And that is where the difference between demonetization and this crisis probably in terms of what will happen in terms of credit cost is probably the answer which I was trying to inaugurate during my opening remarks -- during my question and answers.

Next question is from the line of Sarvesh Gupta from Maximal Capital.

Sir, the first question is you mentioned that around 75% of the borrowers are in rural activities. So could you give us some color on the remaining 1/4 of the borrowers? What kind of activities they are induced in? And what has been the impact on their income level as you see it?

So when I think 75% is in rural means they are pure, pure rural. Now which does not mean that the 25% are not -- they are peripheries of rural and semi-urban towns and this thing, which if you really look at it, also, probably, I won't say it because if you go by the technical terminology and this thing, it probably will not be called rural. But the extensions are probably more rural as compared to more urban, even on the balance 25% which we are talking about. So over there, the activities could probably -- will not be pure agri or agri related, it could be essential services, things like maybe a kirana shop or maybe something like that. But it's all technically, which is -- has an extension towards the rural space. That is what microfinance and that is what typically we follow.

Understood. And since you mentioned around 60% collection efficiency. So I think what you're doing is, you are multiplying INR 98 crores by 3, and making it INR 300 crores, and you are taking the denominator at around INR 500-odd crores, which you are supposed to collect every month, including principal and interest. So that's how you are calculating that you have reached around 60% collection efficiency currently. However...

So let me conclude on -- give you on this. It's works the 4% range. So if my total demand for the day is, let's say, INR 25 crores, if I'm able to collect 60% of that. And if you multiply it by the same thing, you'll have the same answer.

So -- understood. So you have read that, and that is very well. But the missing payments that we had in April and May plus 10 days of lockdown in March would also amount to almost INR 1,150-odd crores. So what is the outlook? And what is your thinking of that major chunk of INR 1,150 crores? What can be done about it? And what do you expect in terms of your collection going forward?

See, please don't forget the baseline, it is an EMI business. So the EMI will technically come in the EMI forms only. So when somebody is making a payment, he will not make bulk of payments of, if he's missed 4 or 5 installments, even not make for 4 or 5 installments. So there will always be a lag. The point which we are trying to probably tell you is that 60% of our people of our borrowers have come back into the fold even by making a single installment. That lag will always remain because you can't make 5 payments in a row. But they have been activated. And the best part is that 60% of our borrowers have been activated, and that's how the collections are panning out. What is your average tenure of loans? And so this will basically be added to the tenure of loan price. Yes.

15 to 18 months is the average loan tenure.

Next question is from the line of Rajiv Mehta from Yes Securities Limited.

Most of my questions have been answered, but I have got remaining few. So one is with regards to the customer base and microfinance. So I see a persistent reduction in customer base in the stand-alone MFI business. Whereas, we've added about 170 odd branches in the last 12 months, so the customer base has declined by 2%, 3%. So just wanted to understand this.

Jugal, can you...

So our first segment, customers are going down. We have been focusing, given the half of the year we are working on the process reasoning, et cetera, and the moment that started stabilizing in some of the branches. We started focusing only on the repeat customer. So just to give you a number in March '19, our first, second clients were 52%, which is down to 44% now, which means our repeat customers are increasing. And we are focusing on our good clients and then trying to retain them, which has resulted into slightly higher average ticket size. But we are dealing with the customers who have proven their repayment behavior and repayment history. So that helps us to have better quality portfolio, better collection efficiencies backfill strategy or that part.

And then Rajiv, just to give you a last queue on that. So we were following a lot of psychometric and just bring -- so the rejections are still very high. So that's the reason why the customer base is probably -- has gone down on a little bit.

Sir, I have a question also on the manpower. Because since we've been following our various exercises that we begin in terms of cost rationalization and also we implemented centralized shared services. We were expecting some rationalization in cost and even manpower, but which has not been coming through. Because even if I look at the nonrevenue-generating staff, that number keeps on going up quarter-on-quarter, so which is ex loan officer employee base. So when would we see -- because we are also expecting that the OpEx will come down as a percentage. So would this be a big source in terms of rationalizing this employee base and then could be a big contributor towards OpEx coming down?

See, Rajiv, I really don't have the exact numbers in terms of my nonrevenue-generating staff. But if we look at the mix, we've always been have -- had a mix of about 70-30 in terms of our revenue and nonrevenue staff, that ratio probably has not changed anywhere. So I will not have probably maybe the right answer. This is the mix which we work upon. But having said that, when I made my remarks on that, our operating costs will go down. That definitely is the queue which we are working upon by rationalizing the complete staff levels all across the geographies. So I think we've done a slight reduction. But because of whatever happened in the last month of FY '20, I think that probably will be there. And just to share you our numbers, right now, I think my -- I can probably say is that we had a reduction of close to about 1,000 people in our -- from our ranks. That probably is a step which we are taking in the direction to have optimum utilization of our manpower resources. So you see cost stability is coming down.

Sir, how do we see liquidity availability? Because now first question here is, [Foreign Language] what percentage of lenders are offering or could offer a moratorium in the second phase. I know first phase, we had a good response, 60% plus lender has offered us. So that's the question that in the second phase, how many would offer. And when I look at the mix of on book and off book in terms of AUM, so off book has been constantly climbing. So now with demand for securitization or direct assignment not being there in the market, would that kind of curtail us to grow our AUM base. Because, see, frankly, the on book growth has been quite low for us. And securitization and direct assignment has been providing us liquidity. But in the current scenario or in the current context, do you think that with the bank not to forthcoming with taking more portfolios? Would that be a constriction on growth?

So we...

Sir, can I...

Yes. Yes. Jugal, go ahead.

So we have raised about INR 1,468 crores in the month of March. Out of that, more than INR 400 crores was raised post lockdown, which includes money coming in, in the form of direct assignment and term loan, money coming in from Public sector bank and a foreign bank. We have further raised close to about INR 350-odd crores, out of which some 50% has already been disbursed, 50% in the final stage of disbursement. With all the push coming in from dominant in the form of TLTRO and passion guarantee scheme, and so on and so forth, we have a right to lenders. And with the long relationship at 65 to 70-odd lenders that we have, we are confident that whatever money is required, and we have closed this update in the month of March towards the end of it, after all this was happening. So sir, we are confident that we'll be able to raise the required funding. We have closed a couple of DA transactions post-lockdown. It will take some time the bankers are also understanding. But I think they understand the challenge on the ground and things will improve in coming quarters.

Ladies and gentlemen, due to time constraint, that was the last question for today. I will now hand the conference over to Ms. Aditi Singh for closing comments.

Yes. Thank you, everyone, for taking time to come on the call. And I understand there were a few questions which were unanswered, you can get in touch with me. My name is Aditi Singh. I look after the Investor Relations. You can also reach out to Strategic Growth Advisors who are our investment relation advisers, and we can understand those questions. And I hope we've been able to address all your queries. And once again, thank you.

Thank you.

Thank you, everyone.

Thank you very much. On behalf of Satin Creditcare Network Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.