Shriram Finance Limited (511218) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Shriram Transport Finance Company Limited Q1 FY '22 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Umesh Revankar, Managing Director and CEO of Shriram Transport Finance Company Limited. Thank you. And over to you, sir.

Yes. Thank you. Good morning, friends. And good evening to those who have joined from the Western part of the world. A warm welcome to all of you who have joined this call. I hope all of you are healthy and fit, in the confines of your homes. Today, we have our JMDs with us, Mr. Sudarshan Holla, Sridharan, Nilesh, Sunder and Parag, on the call. All of them will be talking to you. And Mr. Sanjay, who is our IR Head. First of all, let me thank everyone, all the investors who participated in our recent QIP. The participation was overwhelming and we are very happy to have such a large participation. It was -- demand was maybe 6x the -- our size, INR 2,000 crore size. And even our promoters also have chipped in with the initial amount of INR 250 crores. Hence, now I'll go through the economic updates, then let me come to the results. The economic impacts of the second wave have been less severe compared to that of the previous year. And the -- there were fewer limitation on manufacturing, vehicular movement. Therefore, our customers who are basically carrying essential goods were not really impacted. Only certain segments were impacted, like tourism or travel, et cetera. The socioeconomic indices also suggest that [ labor participation, railway freight traffic ] did not fall to the extent of the earlier wave. So overall I should say India managed it reasonably well within a short period. We could recover. This time, the noticeable feature was that more than 50% of the cases were reported in the rural area. Last year, rural area almost did not have any impact, but this time the impact was more on the -- in the rural area, especially thickly populated rural areas. Government of India has continued the vaccination drive, and therefore we believe that it will [indiscernible] certain control. And we also don't really expect a third wave or fourth wave to come in, in a big way because the government is well prepared. This time around, the number of infections were higher among our staff and customers, so we had certain challenges in a few geographies and operations were restricted. And as I was telling you, the passenger transportation was continuing to have a challenge because last year also, first 6 months, they had severe restrictions because of a total lockdown. Later on, the business got revived, in October to March, for the passenger transportation. Then again, it has been hit now, but as far as the goods transportation, we feel that it's doing very good. Especially, the freight rates have moved up in FMCG, pharma, e-commerce and food distribution. Last-mile transportation also has been quite good. So the -- in spite of the [indiscernible] price increase, the freight rates have also simultaneously inched up and therefore helping the customers for their -- in their earning. The customer behavior this time around was a little cautious, especially in the month of May and June. Many of them were holding onto their cash in spite of earning. And they are making the part payment to us. Because none of our customers -- or most of our customers do not have insurance coverage, the only option for them of getting a treatment for them or their family members or their dear ones will be keeping cash. So it is understandable that they carry a little more cash, but we believe that this quarter, especially in July, we are witnessing the collection trend to be much better than even June. And therefore, we feel that, this quarter, whatever the postponement we had in moving to stage 2 or stage 3 -- should come back. The government has announced several policies to help Indian economy to get back on the track: a fresh loan guarantee scheme of 1.1 lakh crore for expansion of -- in COVID-affected sectors, including health care, tourism [indiscernible]. And the ECLGS scheme was additionally expanded by INR 1.5 lakh crores, a new policy for a [ precedent ] approval of infrastructure project. And their monetization was also announced to ensure speedy clearance of projects. The infrastructure focus should really help in creating employment; and also movement of heavy vehicles, especially who are deploying cement, steel, which should help the heavy commercial vehicle immensely. The RBI also has come out with several positive statement and initiatives. RBI announced Resolution Framework 2.0 for enabling the restructuring of MSME and small businesses as well as the standard on March 31, '21 -- and can be moved up to September 30. A special liquidity window of INR 15,000 crore [ were opened ] for banks to provide on-tap lending to contact-intensive sectors, including private bus and taxi operators, up to 3 years. RBI extended its special liquidity window to SIDBI, amounting to INR 16,000 crores for on-lending and refinancing MSMEs for a period up to 1 year. So all these [ above ] measures. We expect the Indian GDP growth will move to 9.5% for the year 2022. This is what the IMF has recently indicated. And of course, it is much lower than the earlier expectation of 12.5%, but we believe, with the pent-up demand being there, our segment, our sector should be less impacted and we should bounce back quickly. Overall, manufacturing was a little subdued in the month of April, May, June, the PMI index being 55.5, 50.8 and 48.1. [ Gradual contraction ] was there, but in month of July, we see much higher movement. And we feel that the manufacturing has come back to the normalcy. Maybe the numbers will reflect later on. Even the GST collection, which has been trending downwards, should move upwards in the month of July and August. July is not -- normally, every year, July is not the biggest month because of the peak monsoon time. And normally it picks up in August and September, so we expect August and September should be big months. Now coming to the auto industry. Commercial vehicle sales was [ 1 lakh 5,800 ] units against 31,636, but we cannot compare with the previous year alone. If you go back to '19, '20, it was 2 lakh 8,310. That means still it is 50% of the '19, '20, but I -- this time around, the demand is visible. The sales numbers were low mainly because most of the dealerships were closed. And RTOs were not functioning in most of the states because of the lockdown and diversion of staff from RTO office to other activities by the state governments. So I feel with now dealership being open in the month of July and most of the RTOs are back to the functioning, there is much larger activities. Even the secondhand vehicle buying, selling transactions could not be registered. And even new vehicle registration did not happen in the month of May and to some extent in June, but June second half, things have improved significantly. We continue to operate on all branches. All branches, we have kept open, other than containment zones, so the -- as far as the functioning is concerned, we are "feet on the street" kind of functioning even though -- we've maintained the COVID appropriate behavior all the time, but we believe in trying to be to the ground and meeting the customer as much as possible. Now if I look, coming to the quarter performance. We clocked a disbursement of 12,733 crores, including 220 crores towards new vehicles and 12,462 crores for the used vehicle, compared to 985 crores. Of course, it's not comparable, but it's total lockdown last year. It is nowhere to be [ compared ], but compared to the previous quarter, Q4, it was down by around 15%. And -- but we believe that, Q2 onwards, the disbursement will be much larger. AUM was INR 1 lakh 19,301 crores compared to INR 1 lakh 11,756 crores in the previous year, June '20. Net interest income was INR 2,107.45 crores in Q1 against INR 1,842.54 crores in Q1 last year. Net interest margin was 6.38% against 6.42% in the Q1 previous year. Profit after tax was INR 169.94 crores compared to INR 320.06 crores in the previous year. EPS stood at INR 6.64 against INR 12.99 in the previous year. Collection for the month of April, May, June were 92%, 87% and 94% of the demand, respectively. The stage 3 NPA stood at 8.18% compared to 7.98% in the previous year. Overall [ credit cost ] in this quarter was [ 4.16 ]. The -- we are carrying a higher liquidity, as said in the previous quarter call. And we'll continue this till September. Then we will have a relook post-looking at the wave 3 or COVID wave 4, whatever, but situation is dynamic. So we have -- the liquidity position now stands at 17,051.48 crores against [ 17,131 ] crores in the previous quarter. I will -- some additional frequently asked questions I would like to touch upon. We are carrying a high liquidity, as I've told, up to 5 to 5.5 months liability repayment till September. And growth outlook, we still are confident of double-digit growth. We believe that pent-up demand is quite large, and August and September, we should be able to witness the same. The cost-to-income ratio has come down in this quarter to 19.11%, but we believe that it will be anywhere between 22% to 23% going forward. We could not really hire people in the first quarter because of the COVID; and the interviews and the initial training could not -- we could not organize. The -- now the recruitment has started, and we have targeted to add 1,500 to 2,000 people in next couple of years. As far as the as a quality target of long-term -- reaching a long-term average of 2%, it has got a little postponed, I should say, at least by 2, 3 quarters now because of the severity of the wave 2. And we are quite confident, by the fourth quarter, we should be able to for -- the fourth quarter number should be less than 2% or around 2% of the credit cost. As far as restructuring is concerned, we are very cautious on restructuring. We have done only 300 crores of restructuring in this quarter. And we would rather allow customer to be in stage 3, stage 2 rather than restructuring -- the offering restructured to all the customers. Even the customers would like to wait. And they don't want to rush into restructuring which will lengthen their tenor, which they don't like. They would like to complete their loan as early as possible. As far as the merger is concerned, we have been working on the same. I should say we have restarted the work because the COVID-related uncertainties are coming down. And we should be able to come out of the process very soon on what we are thinking on the merger. Nothing is now concrete, but maybe in the next couple of quarters we should be able to announce [ the same ]. Then there are a few more long-term initiatives which we have taken now. We are looking at the future trend into consideration. One is the digital road map. The company is already having all the digital tools that competition has, but still we would like to go on totally a new platform, a new feeling to our customer. So we have a long-term digital road map. We also have a look at green financing or alternative fuel financing. For that also, we want to have a long-term strategy plan. Even today, you would have seen, some of you, that Tata Motors have announced that 25% of their fleet of new vehicle sales would be electric vehicle in next couple of years. So there has been -- manufacturers also are changing their target and changing their focus, so we are also looking at the same. And we are also trying to reach deeper pocket: We feel that still there is a lot more deeper pockets in the rural market which we have not reached. We have 18, 21 branches now, but we feel that, if at all to reach the rural pocket, we need to have at least 5,000 outlets brick-and-mortar. Even though we'll go on the digital mode, our customers who are less educated or maybe less comfortable on everything being on the digital -- we need to create a reach also. So that also, we are planning. As far as the COVID provisioning is concerned, we have already done 2,591 crores. And this quarter, we are doing additional INR 261 crores. And this additional INR 261 crores is done only for the passenger vehicles. We feel that [ residual values ] of passenger vehicle can be a bit lower because of lower demand and the -- and non-usage for a longer time. So we feel that a little higher coverage for the passenger vehicle could help us to manage any kind of surprise tomorrow. Now I request my -- our CFO, Parag Sharma, to take the call. Subsequently, the -- and Sunder also will be joining and [ with the accounts number ]. Then the other 3 joint managing directors, Sudarshan, Sridharan and Nilesh, would talk about the strategic initiatives which we are discussing. Thank you. Parag?

Hello, everyone. I'll be covering the liabilities side. So overall, liabilities as of June, compared to March, has not gone up. It is constant. There has been improvement in cost of overall debt, which has improved by around 16 basis points in the quarter. And we do expect another 10 to 15 basis point improvement in September quarter. The incremental cost of fund is down. That is at around [ 7.5 ]. Blended will be [ 7.5 ], a major benefit coming from securitization transactions, what we have done for the quarter. The overall fund mobilized for the quarter was [ 12,770 crores ], out of which securitization was 1,700 crores; and roughly 3,400 crores of domestic bonds, NCDs, what we have raised. ALM front. We are comfortable and in each individual bucket will be positive. And cumulative surplus of 2, 3 years will be more than INR 17,000 crores. Apart from that, I think we already covered about QIP mobilization and preferential issue. We have also mobilized 62 crores through warrants to the promoter. Liquidity as of now has been already mentioned, 17,051 crores, which is we will relook in September. And by December, if we bring it down to our earlier norm which was 3 months of liability repayment, then there can be further improvement in the cost. That should further improve by around 10 basis point. So incremental borrowing costs coming down and with liquidity being reduced, further benefit can also flow in. I think I've covered the liabilities side. And on the deposit, flow continues to be good; retail deposits, which has now gone up to 17% of our liabilities. And we are looking at further reduction in costs from 1st October...

August. August.

We are reducing by around 70 basis point...

50 to 75 basis points.

Now over to Sunder for...

[indiscernible].

Hi, everyone. The -- as Mr. Revankar had listed out, there has been marginal reduction in the employee count that come down by 260-odd employees compared to March quarter. And one data point we wanted to communicate was that 70% of the employees have been vaccinated at least one dose of COVID-19 vaccine. We had lost 4 employees in the wave 1 and further 23 employees in wave 2, taking the total toll to 27 employees. We have supported their families with adequate compensation and also have taken the responsibility to take care of the children's education till graduation. We have also increased the limits of the mediclaim policy to give comfort to the employees who have been physically attending offices and meeting customers. And the cost-to-income ratio has come down to 19% primarily on account of lesser spent on the CSR expenses in the current quarter. And also the royalty payments have been lower because of the [ reduction in the profit ]. And the coverage has been maintained at 44.16%, as against 42.05% in the previous quarter. Stage 1 contributed to 77.29%, as against 81.04% in the previous quarter. Stage 2 was 14.53%, as against 11.90% in the previous quarter. We have maintained the coverage of 3.29% in stage 1 assets, as against 3.25% in the previous quarter. We have maintained the coverage of 9.97% on stage 2 assets, as against 9.70% in the previous quarter. And the PD for stage 1 was 7.35% in the current quarter, as against 7.38% in the previous quarter. And the PD on stage 2 assets were 22.17%, as against 22.24% in the previous quarter. And the LGD was at 45.28%, as against 43.49% in the previous quarter. We continue to maintaining higher provision cover as compared to the RBI requirement. The RBI requirement is 2,952 crores. And we are maintaining a provision of 8,978 crores, meaning we are having an excess provision over and above RBI requirement of 6,026 crores. The capital adequacy ratio has been pretty comfortable, thanks to the QIP and the promoter issuance. The tier 1 was 21.05%, and tier 2 was 2.22%, totaling to 23.27%. And as we had informed in the previous call, there were around 9,600 customers who had not paid even a single installment. There have been some improvement in that front, but however, we have fully [ provided ] the entire assets of those borrowers. And whatever [ regimens ] come, it'll go to the -- to add the bottom line going forward. With these data points, I request Mr. Sudarshan to talk about the EV vehicles.

Sudarshan, you can join now.

Good morning, sir. Can you hear?

Yes, we can hear. Please continue.

Yes, yes.

The subject is electric and alternative-fuel vehicle. At present, in vehicle industry it is an important topic and growing interest across in vehicle industries. Reason for that: increase of oil price; and to reduce the pollutions to protect the -- from global warming, to have safe and cleaner environment. Now different type of alternative fuel [ at present ] available: CNG, LNG and electrical or hybrid vehicles. In India, NITI Aayog had set an -- EV, electrical vehicle, goals for 2030. In that, they have targeted 80% of the sales in 2- and 3-wheeler should be electrical vehicle. 70% of the commercial cars should be electrical vehicle, and 40% in buses and 30% in private cars. Currently, if you see, only 1% of the total sales are in electrical vehicles. Expect it to grow because of the same 2 government initiations, because of subsidy and some tax benefits. Because of that, it will grow further [indiscernible]. Expected growth by 5% in 2, 3 years; and by 2026, above, it will be 36% growth will be expected. Challenges are high price because the lithium battery cost is high. And battery manufacturing facility in India and charging infrastructure availability at present, these are on the challenges. As 50% of the -- if we take the EV [ current ] costs, we require around 7 lakhs crore in the year -- financial year 2021 to financial year 2030. So there is alternative opportunity also there to fund the retrofitted products, where 5-year-old vehicle can be converted into electrical vehicle. The [ Bharat Forge ] company is -- already started fitting this retrofitted product in these vehicles, especially smaller vehicle. And in 2- and 3-wheeler finance segment, Shriram is -- already we are having tie-up with our franchisee revenue-sharing partners, small [ financiers ]. They are all very good hold in this 2- and 3-wheeler financing, especially major cities like Bangalore, Hyderabad, Gujarat, so Mumbai, Delhi. These cities, the city, 3-wheeler [indiscernible]. So that can be converted into electrical vehicles. Then 2-wheeler also, there is a huge demand from the individuals for converting to electrical vehicles because of the fuel price. And in the commercial car segment, already we are financing Ola, Uber vehicle segment. There also, if the customers want to convert into electrical vehicle by retrofitting or to upgrade for the new vehicles, we have already our customer base. There is an good opportunity for us to increase the base. And we can tie up with the dealers, manufacturer. And we can have MOU with them for initial period. So this is a huge opportunity for Shriram because we have the network and we have our franchisee network through them and [indiscernible] through our branches. We can do good business in this segment. That's all from my side, so thank you all.

Yes. Next, any -- Nilesh or Sridharan, one of you, yes.

Yes, yes. Good morning. Today, I will talk about these 2 new initiatives -- not actually new. It is already we are working, but to increase our customer base and to increase our presence in rural area, actually we are working more aggressively on 2 cost-effective models. One is our rural center because, as on date, we are having around 800-plus rural sector all over India, but if we take the number of [indiscernible] in -- all over India, it is 5,000 plus. So we are working because this model is a cost-effective model. And even we are getting a small ticket size with good-margin business from all of these areas. And even our cost of, like, the fixed asset or rent, if you see, it is on lower side compared with the branches. So that is number one. And another, because of this customer addition, number of customer addition, if we are increasing, then our working capital [indiscernible] also will be -- we can promote more. That is number one. Another, we are planning to add more franchisees. Actually we are [ saying as ] RSP channel. That is revenue-sharing [ pipeline ]. So in this model, actually we are having -- all over India, it is around 70,000-plus private financers are working. So we are planning to add in our association with STFC so that at least we can target more rural area. And even at -- like what we can say is that like up to -- we can reach up to add 2-wheeler and 3-wheeler customers also. And this model is also a cost-effective model. And we are lending at some percentage with the financer, and the financer is lending at a higher rate with the customers. So in RSP channel, we are having 2 model. One is financing to financer, where small NBFCs are -- we are targeting. Another, directly, we are funding to the customers through RSP model, where we are charging -- suppose we -- say for example we are charging some 18% from the RSP. And RSP is charging more from the customer. So balanced. Whatever is the difference, that is a margin of the RSP. That model is also like -- already we are working on it. And at present, we are having around 500 RSP all over India, and we are planning to increase more number of RSPs. So these 2 models, we are working very aggressively so that our customer base will increase. And because of that, only our -- like, margin, also we can increase with small ticket size because in small ticket size around INR 2 lakhs to INR 3 lakhs we are getting more contracted IRR. And because of that only, our net interest margin will also go up. So we are working on that. That's all from my side.

Thank you. Sridharan? [indiscernible]...

Hello, everyone. On the digital way forward, we are looking at a very long-term strategic approach. And we are clearly guided by the fact that our ecosystem completely comprises of the trucking community which is always on the move, on the go. And it is this community which requires digital support majorly, and we find a huge [indiscernible] in this space. Now looking at our customers and trying to facilitate our interactions with customers in the digital mode was the focus until now, trying to enrich the relationship until now, but now we are looking strategically to go one step further to find business enablers for the trucking ecosystem. We would like to bring in digital applications which will enable, facilitate and enhance the business opportunities of the players in the trucking ecosystem and thereby being a part of this entire system in their growth and thereby benefiting by looking at opportunities at the right movement whenever funding support is required. Some of the tools that we are looking at to achieve this. For example, I would like to explain the driver's digital application which is basically an ERP for drivers. Why drivers? Drivers are our future customers. Drivers are the primary players who become truck owners tomorrow. So when we have an ERP or digital application which will help a driver manage his business, manage his customers, manage his duties and trips, have his documents digitally, looking at all his payments digitally during his course of business, when we have an app enclosing all these features; and when we engage with drivers both on his personal expenditure as well as his professional expenditure, digitally being present there with them in a platform, we will have a good insight about his professional activities as well as his fund movement both on the professional and personal sides. Well, this is just an example. Similarly, we are looking at a small trucker digital application which will fundamentally help them because our fleet customers, which are not our primary targets, are equipped with fleet management systems, but the small truck operator is left to dry. So we would like to empower the small truck operator with similar features where he will be able to manage his number of trucks, his trips, his customers who need servicing, making their relationships much more [ attractively ] and digitally; link him up with the driver app so that he will be able to get drivers at the right time as and when they are required, which will be a benefit for the drivers and for the truckers. Bring both of them together on the same digital platform, and then also bring together our loads interface platform. On the perspective of loads, we have been currently trying to get all the digital loads available in the system to the notice of our customers, but then we would like to throw open this platform, bring in all the players in the ecosystem: somebody who wants to put in a truck, somebody who wants to put in a load, somebody who wants to put in a service as a driver. Integrates to the entire ecosystem so that, when people share their contacts network and do -- are able to do business better and better, while this all happens on our platform, when we will be understanding and appreciating what is happening, facilitate them to enhance their business opportunities, we will ultimately benefit with the idea. In fact, we are also plugging in an e-commerce app in this platform which is primarily for this ecosystem. Any digital business purchase, let's say, for tires or for fuel, for spare parts, for repairs and services, for [ fast change ] loading, for driver trip expenses -- then all the business purchases of the small trucking community is brought into this platform. We are looking at bringing in vendors like from the tire industry, from the fuel industry. Everybody is on the platform, where everybody in the trucking ecosystem would be able to do their business purchases 24/7, deliverable wherever and whichever location they are present in. And try and understand these business purchases that are happening on this platform, and thereby we will be able to identify specific time-bound requirements of finance. And then we will see how to pitch in and be a part of that financial service requirement. Now extending these applications, we've also been looking at becoming a member of the Bharat Bill Payment System and empowering our customers to pay their bills digitally from wherever they are 24/7. Now primarily, when a driver is on the move and then he requires to pay his utility bills at home -- and now he's a guy who needs a lot of assistance. His electricity bill might be due, but he is traveling on the highway. Now digitally equipping him will give him more peace of mind, will help him manage his home affairs much better, as well as his business purchases. For example, on the move, he's able to recharge his [indiscernible]. He's able to digitally make purchases. So when we bring in utility payments and become a member of Bharat bill payment systems, we are empowering the trucking ecosystem to get every transaction done on the go. Now as a conduit for payments delivery, very similar to the Google Pay, we are planning on an application called [ Shriram pay ]. Now [ Shriram pay ] will be very, very unique in the sense that it will be the only system which is -- which will basically be platformed on the unified payments interface, UPI, model, where money from the loan account, from the customer's loan account, would pass on to the vendor, from whom he is consuming services, digitally, instantaneously, at the point of consumption without any time delay. Now this payment, initially the way we are looking at this, it will be only restricted to the ecosystem. It will not open for outside payments. As far as it's with the trucking ecosystem for necessary business purchases, this will be enabled. And then we will take it from there. So the systems are getting ready. Now on a similar line, we're also looking at another problem on the ground. One of the biggest problems or challenges that the trucking community faces is still today's money or payments for the [ freight trips ] are made in cash, especially for the small truckers which is the dominant portion of our portfolio and our prospective portfolio, prospective customers. Micro ATM services are being looked at. We are looking at getting into the micro ATM services being placed in strategic locations in petrol banks so that cash can be converted to a digital money so that it can be used. And for all this, we would like to anchor the relationship with a loyalty program which will reward every player on this platform, to be rewarded for every action taken. So this is a very long-term plan, and we are working with our digital technology partners. And this will take shape in the coming months. Thank you.

Yes, thank you, Sridharan. Now we can [ take the call for ] questions.

[Operator Instructions] Our first question is from the line of Sanket Chheda from B&K Securities.

Congratulations on surprising but good set of numbers. So my questions are on 3 fronts. First is disbursements and collections; second, asset quality. And third are the merger. So on disbursements, I just wanted to ask that our disbursements in this quarter are almost similar to what we did in Q3 where the movement was much, much higher and are not comparable to what we had in this Q1. So how and where did we disburse so much? And on collections, if collections are so robust -- why we keep such high liquidity on -- since last many quarters. So that's one. Second, on asset quality. [ Our outcomes are ] really superior compared to peers, but then why the confidence on maybe 2% credit cost is not held from the next quarter. And we still guide for 2% to come up, starting Q4. That's -- and also [indiscernible] had reported more than 70% increase in their preowned vehicles. And against that, our increase in stage 3 is much, much more -- less. So any light there would help. And lastly, on merger. It's announced about 2 years back, and since then, we had nothing agreed [indiscernible]. And although SCUF was in consolidation phase, now is the time when prospects are getting better for SCUF as well. And we are also -- we have also started doing well maybe on the growth front. And asset quality is also holding up [ as of this year ]. So now why again come up with this merger in a quarter or 2? Maybe -- so what's really the thought process there in terms of mergers? Because individually, both the business, they -- businesses have just started doing well, [ or not ] and maybe some visibility has come up. And why again are these merger [indiscernible]? Yes, those are the 2 questions.

Yes. Thank you. See, first of all, on the disbursement front, most of our disbursement were they're the pipeline cases which we had in the Q4 of a previous -- the previous quarter. That, we completed. Therefore, the disbursement number were reasonably good. Normally it takes 30 to 60 days for a resolution of each of the proposals. So whether it is inspection, endorsement and clearing the previous loan, if it is the vehicle had any previous loan with the -- a bank or other institution. So normally it takes a long process. So the pipeline was very robust and strong for us, so we were able to do higher disbursement. And most of the disbursement happened in the April and first half of May. May onwards, the new proposals were a little slow, but again it picked up in the month of June as lockdown was removed in many of the states. The demand is still good, the used vehicle demand. Retail prices are much better. The LCV retail prices have gone up by around 20% to 25%. The passenger car, private car requirements also have gone up by 20%, 25%. So most of the small-ticket loan, demand is high by 20%, 25%. Only in heavy vehicles the demand is a little sluggish. That also, we expect that this quarter it is -- already start showing a positive result, positive demand. And as far as the liquidity is concerned, yes, our collections are good, but we are keeping higher liquidity as suggested by the Board because Board -- which comprises of bankers. Because we have a few bankers in our Board. Both of them feel that we -- whether it's -- wave 2 or wave 3 can surprise anyone. And liquidity can get squeezed at very short notice, so better to have higher liquidity. And therefore, we are carrying higher liquidity, as persisted by the Board, till September. Post September, we will relook into it, and maybe we'll be able to reduce our liquidity further. That's the collection reasonably being good. As I was mentioning you, most of the customers were able to make at least part payment. So that is positive for us. We are able to reach out to the customer and they are able to make the payment. They're keeping certain portion in their hand for medical emergencies, but I feel, by and large, the goods transportation is not impacted at all. There are some challenges in the passenger transportation, especially in the tourism, school bus and [ staff ] transportation, which we had given restructuring last year when the RBI gave restructuring option. And the visibility is still a little lesser there. Therefore, we also have made a little higher provision in this quarter. So the credit cost being high is mainly because of the higher provisioning, what we have made, on the passenger segment. And that will come down over the period. By third quarter, definitely we will have a good visibility. And by fourth quarter, we can be in -- or at around 2%, which is what we intend to do. As far as the merger is concerned, you are right. Both the companies are doing reasonably good. We also have a good growth plan, or we have segments where we can grow individually. The merger is basically to bring in synergy among 2 companies or among the group. We feel that by having the customer base or the network on a single platform will gave a lot of synergy benefit, including the costs of borrowing can come down. Rating can be better. Operational costs can come down. And the ability to sell multi products to customers can go up. So these are the synergy benefits which we are looking at. We are not freezed upon either merger or non-merger, but we are seriously looking at all the synergy benefit, including that a digital road map will help us in building the synergy much better. So -- well, in fact, one of the reasons we are reasonably focusing our energy on the digital road map. So these are the broad answers. Maybe more specific, we can go on individually.

Okay, sir. And the last question: What was the write-off in this quarter? And do we intend to do write-offs in next couple of quarters as well? Since we guide for a relatively high freight cost for at least a couple of next quarters.

The write-off was 360 crores in the current quarter.

Okay. And the interest reversal...

Interest reversion. That, you can just contact Sanjay. He will be in -- he will be able [ to tell you ].

Our next question is from the line of Aditya Jain from Citigroup.

On the restructuring, so some bit of restructuring has been done in this quarter. Could you talk about the pipeline? And how much do you expect to get done by the time OTR 2 closes?

The pipeline is not really large. We may do another few hundred crores because the customers feel that they need not do restructuring, they can make good payments in the next couple of quarters. So I feel that if they get into restructuring, that tenor gets longer. So even though our -- the restructuring option is grown to around 1,500 crores worth of asset loan outstanding, we may end up doing another 300 crores only in the next quarter.

. Got it. On the customers who are not paying anything, could you elaborate a little bit? You made a quick reference in the initial demand, but how much is that portion of customers who are not paying anything? And related to this, the segments which you said in TV are more stressed. What portion of the overall loan target?

The school buses basically and the vehicle, which is involved in staff transportation, they have been not able to make the payment, and we have given a restructuring option to them. Number of customers...

Yes, around 9,600 borrowers were there in the last quarter, amounting to 112 crores. Out of that, some recovery has happened a couple of crores. Last quarter, we had classified the phase 3 and provided 40%. This quarter, we have written off the entire amount on this portfolio.

Got it. Okay. Understood. Just lastly the digital properties, which we talked about. So which stage are they? So right now, they've been conceptualized and what is the launch plan?

As far as the digital tools are concerned, all our digital option and tools is available to our customers on whether it's making the payment or taking insurance, everything is, today, currently available to the customers. What we are planning to do is build a robust platform. So that other players can also, who are involved in this ecosystem, transport ecosystem, they can also come in and give a better product and a better offering to the customers. And therefore, we'll be able to really looking at the interest of the various people. We will be able to help them with the financial need. So that's the plan. So we started working on that. It may take a year's time to come on the new platform. Otherwise, all our customers have tools available now. But going into new platforms, where in more players who open platform and more places to come in, it will take a year's time.

Our next question is from the line of Shalini Vasanta from DSP Mutual Fund.

Sir, this is [ Vivek ] [indiscernible]. I have a question on the asset quality as well as in securitization. On asset quality, we've heard from others -- one of the large CV manufacturers that customers are -- the fleet operators are facing a lot of distress because of high fuel prices, lack of load and the fact that freight rates were not moving up. So we would like some color from you in terms of how this is progressing and whether they be able to pass on these kind of costs and earn a reasonable profit margin. And then the question on securitization is, Parag sir, of course, we've seen that collection efficiencies in several pools of CVs especially has come down in a few states in the last quarter, again because of lockdown. How did you -- is the cash collection in securitization increased? Is there a change or rating agencies looking at it differently? Sir, sorry, I'll just add one more question, which is like a sub question to the first one. We've also heard from other NBFCs that customers are preferring to keep cash because of the health and other emergencies that have happened because of COVID wave 2. Do you see that also in the customers where they've been keeping cash and now in July when they're feeling a little better or when vaccination is better, they're paying you extra amount?

Yes, you are right in saying that many of the large fleet operators that had a challenge in operating the vehicle. First, because of the spread of COVID, many of the driver community or working community, they went back to their homes. So there were shortage of drivers. For a large fleet operators, they could not operate. That is a big challenge for them rather than not having a load. And of course, the industrial output and industrial manufacturing activity had come down to a certain extent, especially in the hubs. Wherever the industrial hubs are there, Tamil Nadu, Maharashtra, Gujarat, there are large industrial hubs where the functioning was impacted because of COVID spread and local lockdowns. So the manufacturing output were less, and therefore, the movement also was a little less. But it was mostly in the month of May, and by June, things were normal. But for essential goods transportation, absolutely, there was no challenge. They got a better rate, freight rates were better, commensurate with the increase in the fuel price. They got a better rate, so they were able to pay at the right time. And they were able to pass on the fuel price hike. Maybe if you look at your grocery or vegetable budget being at home, if you calculate, you will understand that you will end up -- you have paid 20% more mix because the fuel price has gone up in the last couple of months. So that's how we get passed on to the end consumer. And it doesn't fall on the truck operators by and large. The people keeping cash and for emergencies and paying later, yes, that is because they don't have insurance. They don't have any other facility. The only way in India to get best medical treatment in shortest period is keeping loads of cash. You show the cash, you get everything. That's how it operates. And they are all business people, they understand that. So they have been keeping cash. And as the impact of the COVID spread that's coming down, they're able to give a little more. So this month, we are able to witness a good collection in July. And we expect August and September to be much better. The other question was -- okay, to Parag, securitization.

Yes, securitization. Yes, [ Vivek ], I think most of the securitization what we do is for priority sector assets. And the challenge what we have clearly stated is on the passenger portfolio, which is not normally securitized because this is nonpriority. And so there will not be any collection-related issues in the other asset classes. And since it was temporary, the collection shortfall overall for the company is temporarily down from 95%, 96% to 91% or 88%. I don't think there will be the over collateral or the first loss what we provide will be partially used and then it will be capped -- topped up in the month of June and July. But largely, what I'm saying is the securitized portfolio of August will not have had much of an impact because passenger vehicle is normally not securitized.

Our next question is from the line of Kunal Shah from ICICI Securities.

So firstly, in terms of the overall disbursements and AUM, if we can get a broad sense as to how much would be used in transportation of essential services and how much would be more towards say the mining, infrastructure, et cetera? So that could give a much better color in terms of we holding on to asset quality very well.

See, if you take out the passenger and the tractor, which is around 25%, rest everything is almost into what we call essentials only. Now mining and infrastructure, what happens is some of our customers will have a dual usage. Indian vehicles are open vehicle. They always use for multiple applications. Now imagine there is a cement factory from -- in Gulbarga or maybe in Rewa in Madhya Pradesh, they go to the city, they come to the city like Mumbai. When they go back, then not necessarily that they carry the cement or other industrial good. They may carry some other essential goods. It can be gray or it can be consumer durables. So it has a multiple application. So by and large, it's 75% to 80% of our customers use the vehicle for essential in one way or other way. In the sense, if there's a 2-way transportation, at least one side, it will be for essential purpose. So by that definition, most of our customers will be part of the essential commodity goods transportation system.

Sure. And secondly, in terms of the disbursements. So if you can broadly categorize in terms of how much would be, say, for the purchase and how much would be for the other requirement to the existing customer base?

Normally, it is 60-30 and 60% is for buying and 30% is our existing customers after completing his existing loan wanting to buy -- wanting to have a loan, or he'll be taking the loan for repair of the vehicle. So what happens is the vehicle life we produce 7 or 8 years, and if he completes in 3 years, there is a balanced life where for which he will take loan for buying another vehicle. So he'll continue that vehicle with him and keep taking a loan. And the 60% will be for a customer who will be buying a new vehicle, either it could be a new customer or existing customer buying a second vehicle.

Got it. And in terms of merger, so you said that -- so it will be involving all 3 entities. And maybe if you can just say in terms of what are the various optionalities being worked out? And the synergies, looking at the customer base of SCUF and Shriram, it hardly seems to be like a customer synergy. So if you can explain in terms of what kind of a synergies can we look at it because in terms of Shriram products, SCUF products and the transport, that's quite a varied segment. So maybe apart from treasury, investments and all, what other operations could really have the synergies between all the entities?

Kunal, if you really look at the segment which we are financing. Now we are financing to truck operators. -- who could be SME owner, SME owner or maybe a wholesale trader. He will be buying the vehicle. Now it can be defined as a captive use and you can lend it as SME financing or you can make it a pure vehicle financing. So there are both options. So SCUF is in SME segment. So all SME customers will have -- will require a vehicle. It can be captive, it can be higher. So -- and if you look at the 2-wheeler customers of SCUF, most of them will be using the vehicle for business purpose. They may not be using buying the vehicle only for the purpose of your, what I should say, transportation to the office. They're not white collar employees. They're -- most of them would be blue-collar entrepreneurs who will be having some business or other. So ultimately, the ecosystem will develop over the period, where you will find there is a requirement of both kind of assets or both kind of financing. So that's how we are looking at a broad ecosystem that emerge over the period. It may not emerge immediately. Right now, we are working in silos. There may not -- there may be a less customer -- common customers between us. But over the period, now for example, you take housing. Now many of the new housing finance have come who are financing to the SME owners or because banks are giving to only employee class. Most of the housing finance companies are focusing on masons, carpenters to the SME owners, shop owners. So now if by the definition, you can't say that all housing owners would be only the white-collar job or people who are working in the company. There are other segments. And in India, 80% of the informal segment doesn't have bank lines. And they are dependent on NBFCs for financing. So all this, what call silos or what all these compartments will get merged over the period when there is more data, more information and more availability of resources to them.

Sure, and when can we see this happening. It will be like in a quarter or 2, we can get the clarity in terms of the structure and the plants getting evaluated or it's going to be slightly longer?

It will be in a couple of quarters, yes.

Our next question is from the line of Abhiram Iyer from Deutsche CIB Center.

My question is primarily related to asset quality once again. Apologies if you keep hearing multiple questions on this. But Stage 2 assets, basically, have increased in sort of proportion over the last few quarters. We've seen a corresponding increase in GNPAs as well. Are we expecting this to translate further into higher GNPAs over the coming quarters? If not, is that a company strategy to sort of bring this down?

Most of the Stage 3 and Stage 2 movements are temporary in nature because of the disruption caused by the severity of wave 2. So we feel it's temporary. And this quarter, most of the customers would be able to come back to the normalcy. So I feel the...

Sorry to interrupt you, sir, but the reason why I'm asking you this question is the proportion of Page 2 is higher even after -- even compared to, say, June last year, when people who had been struggling with wave 1, which you mentioned was far more severe than this one, so it seems odd that...

No, you can't compare last year because there was a moratorium and near 90% of our customers were given moratorium. So there is no comparison.

Got it. So you're basically expecting this to come down, both the GNPAs and Stage 2.

Yes.

We'll take our next question from the line of Alpesh from Motilal Oswal.

Sir, first question is related to the interest expenses. While the borrowings are flat quarter-on-quarter, but the absolute number of interest expenses are up by almost 8%, 9%, any one-offs in that?

The major borrowing was done in the last week of March 2021, and the impact had not come into the previous quarter. The entire interest has been booked in the current quarter. And hence, that increases there.

So this would be a normal run rate. There is nothing one-off in this...

That will be normal. Yes, going forward, that'll be normal.

Okay. The second comment that we had was the credit cost for the year should be around 2%. That means so for the entire year, we are looking at around 2,400, 2,500 kind of provisioning, whereas the first quarter itself is almost 1,500 crores. So our credit seems to be very low, especially considering the environment we are in. What gives us the confidence of 2% credit cost?

We expect -- see, one thing is we expect COVID wave 3 or wave 4 will be well managed, because the better anticipation, better planning. And that gives us the confidence that our economy will bounce back. And the pent-up demand also is quite good. So we should be able to reasonably manage our -- the provisioning cost. And whatever we wanted to give on the passenger or the restructured asset, we already given. So because of that, we are confident that by the time Q3 and Q4, our credit cost will come down significantly.

Okay, so this is a number for the exit. For the entire year, what would be the credit cost that we are...

No, no, it's for Q4.

Yes. So for the entire year, what should be the credit cost? Should we take around 3%...

The entire year it would be -- see, last year, it was around 2.4% -- it was 2.48%. So we should be less than that, but we'll not be able to arrive at the exact number.

Okay. And Parag, another question is related to the gross assignment. Since there is almost INR 100 crores of net upfront gain during the quarter. So what was the quantum of assignment transaction during the quarter?

Assignment was only INR 400 crores -- INR 370 crores.

Okay. So this INR 100 crores of upfront gain, it is related to only assignment or there are other things also in that?

No. It is only related to assignment. And after doing the NPV, the INR 100 crores has been arrived at. So this will be for the -- the tenor should be around 48 or something, 5 years tenor but there is also -- balance majority will be around 48 months. So this income should have logically been accrued by -- in the next 4 years, but because of the accounting standard requirement, we are booked upfront.

So are we expecting more of assignment transactions in FY '22? Or it will be more of securitization?

More of securitization only.

More of securitization. Okay, and just the last question on this LGD assumption. I guess we have increased it from 43% to 45%. One of the answer for that was related to the passenger vehicle. But if I look at the used vehicle prices, they are quite strong considering the new vehicle prices have gone up because of the commodity inflation. So what led to this increase into the LGD assumption to 43% to 45%. And the related question to that is the customers are willing to not restructure and you are okay to move the assets to GS3, that means the -- for the incremental stress, we have to provide 45% rather than 10%, which is as per the restructuring guideline. So how much time would the customer take to move back from GS3 to GS2 or GS1?

Answering to your LGD portion, we had provided -- increased the LGD of certain segments, the passenger vehicles, buses and taxis to by around 20% compared to the March level. So that has resulted in the overall increase by around 2 percentage points from 44% to 46%. That was the reason. And going forward also...

I'm sorry. Sorry, Parag. So the LGDs into all this passenger vehicles subsidy would be around what, 70% plus now?

It will be around 52%, 52% is the LGD on the passenger segment. And the second question, sir, you need to -- so talking about -- what was the second question? Can you just repeat that?

The second question is related to since the customers are not willing to restructure more than logically the assets are moving to GS3 and the provisioning requirement over there is almost 45% as compared to a restructuring provisioning of around 10%. So how are we looking at the situation? And how much time do you think that the customer moving from GS3 to GS1 or 2 would take.

See, basically, what happens is in the passenger vehicle, especially in tourist or in the aggregator model, if the revenue gets postponed, they may not go for -- they are not willing for a restructuring because they feel the tenor goes up and their ability to service the longer tenor is difficult. So -- but there is a challenge for us also if it all be repossess. Then the value of the passenger vehicle can come down significantly. And therefore, the LGD is calculated based on likely losses on the vehicle going to stage 3, then we position. So that's the reason we have increased the provisioning on the passenger vehicle. So the -- if customer feels confident on restructuring he'll be able to pay, then it is good. But otherwise, the reposition is the only option we have. So considering that only we have made a higher provisioning.

Okay, and if I may squeeze in one more question, I can understand the mergers synergy between SCUF and Shriram Transport. Will Shriram Capital be also involved into this entire merger process? And what are the synergies from that particular venture?

Right now, we are not really looking at the insurance piece of it. Insurance would be kept separately. So we are thinking of merger without insurance being a part of the scheme.

But Shriram Capital would be a part of the process. So the 3 level merger will be there.

Yes, we have to come to any kind of, what you call, freezing of ST. It is still a dynamic. So I'll not able to comment more on that.

We'll take our next question from Gaurav Kochar from Mirae Asset.

Sir, just continuing from where Alpesh left on the borrowing front. There was a capital raise of around INR 20 billion in this particular quarter. I'm just still wondering even if I exclude the previous quarter and take 3Q as a base, the cost of funds have gone up from 3Q. 1Q '22 versus 3Q '21, the cost of funds have gone up despite -- I mean in the last call as well, you mentioned that the incremental cost of funds have been coming down. And even in this quarter, you mentioned around 10 basis points or 15 basis point improvement in cost of fund. So why is it not flowing on the stock?

But Q4 of last year, we borrowed close to around INR 21,000 crores. And in the month of March. So the entire interest impact for the same will come in the current quarter only. And if you want to have working for the same, I think you can be in touch with Sanjay, he will be able to help you out.

Okay. Sure, sure. And a related question to that, if I look at margins that you gave, that was at 6.8% last quarter, and that had dipped to 6.38%. So what has resulted in this 42 bps decline? Is it again the base -- the denominator that you said would remain the same or you take weighted average cost and weighted average borrowings and then calculate margin?

We do go base on a day-based working. So those workings also Sanjay will be able to help you out.

Okay. Perfect. I'll take it offline. And my next question is on this COVID buffer, the INR 28 billion COVID provision that we have. Is this already part of the Stage 1 to Stage 3 provisions that you disclosed on Slide 11?

Yes, it is part of it.

Okay, it is part of it, all right, all right. And then coming to this Stage 2, are you seeing any collections happening in July? Can you give some color around July as to are there any rollbacks which is happening from Stage 2 or other accounts. So any qualitative remark around that? That would be really helpful.

Yes Revankar had briefed in the earlier call, replied in the earlier call, the collections for the month of July has been better compared to the June one. However, the rollback in housing, it will be -- we need to work out and then come back. So as of now, we don't have any contract figures to reply to your query.

Okay, sure. And sir, lastly, on this merger, will it not alter our growth ambitions and the near- to medium-term strategy that we have? Or will it take -- will it not take some part of management bandwidth into this integration process?

The management bandwidth will not be because we are all in-house companies. We have a single group. So there will not be wastage of time in now trying to create new synergies and all whatever the plan, our strategy, what we have individually, that will continue to play out. Only thing is at the back office, there will be some integration of our -- and we are also on the same, what to call, the software package. So there will not be wastage of time is what we feel. So it will be used more constructively to build and improve the business for both the companies.

Our next question is from the line of Prashanth Sridhar from SBI Mutual Fund.

Just a doubt on restructuring. So what we have invoked in both 1.0 and 2.0, that together would be around INR 3,700 crores. And out of that, we expect only around 600 crores to result in actual restructuring. Is that correct?

In restructuring 1, we had invoked close to INR 3,000 crores and out of which INR 590 crores -- INR 580 crores or INR 590 crores were actually implemented. And the restructuring 2, we invoked INR 1,400 crores. And out of which INR 340 crores has been implemented in the current quarter. And what we have given guidance is that further INR 300 crores may come in the next quarter.

Sure, sure. And anything on ECLGS in this quarter?

No, nothing.

Okay. So if you could give us this -- the trans tourism plus staff transport, school bus, commercial PV, these 4 segments today would form what percentage of the loan book?

It will be...

Passenger overall is around at...

Overall passenger is 19%, and out of that, private passenger, that is for individual transportation. That will be around 10%. So public will be totally 9%. Out of that 9%, the school buses and the staff transportation and tourist put together will be less than 3%.

Okay. So 9% of commercial PV plus 3% of school bus equity.

No. Within that.

Oh, within that, within that. Okay. Okay. Just 2 more data keeping point. So this restructuring generally, is it already part of phase 2, 3? And if you could give us the total disbursement last quarter and this quarter?

The restructured book is part of the Stage 2. And prior to restructuring those cases might have been in Stage 1 or Stage 2. So we have not restructured any case, which is in Stage 3. Now for the disbursement part, Sanjay, can you just answer this?

Yes. The total disbursement was INR 12,733 crores, out of which used were INR 12,462 crores. Do you want the previous quarter also?

Yes. So this will be for June, right? What would it have been in March quarter, sir?

March, used was INR 14,205 crores and new vehicle was INR 606 crores.

Our next question is from the line of Shreya Shivani from CLSA.

This is [indiscernible], I had a couple of questions. Firstly, for Parag sir. In your annual report note 59 where we do fair valuation of the loans that are securitized...

Sorry to interrupt sir, we are not able to hear you clearly. Your voice is...

Is this better?

A little better.

Yes. So my question was for Parag sir. In the annual report, note 59 where we do fair valuation of the loans that are securitized. It has always been the vicinity of plus, minus INR 300 crores, 400 crores, but in the last year, that net position has gone from minus INR 300 to minus INR 2,700 crores. What exactly does this mean and does this impact the P&L or the cash collateral that you give? That's my first question.

Sorry, sorry, you are not very, very -- your audio is not pretty good. And let's take the annual report questions, you just call me probably on Monday or Tuesday and I'll be able to help you out, okay? So let's not discuss the annual report question in the conference call.

We'll take a next question from the line of Anand Bhavnani from White Oak.

On the credit cost, when you [indiscernible] that it will be lower than last year...

Mr. Bhavnani, I'm sorry, even your audio is not very clearly audible. If you're in a hands-free mode, can you switch to handset?

I hope this is better now.

Yes.

Credit cost that you've given it could be over than previous year. Are we expecting [indiscernible] be released and thereby [indiscernible]. What the amount will be [indiscernible]

Mr. Bhavnani, I'm sorry, even your -- maybe I ask you to disconnect and rejoin sir the question queue. There is -- there seems to be some network challenge. We'll move to our next question from the line of Shubhranshu Mishra from Systematix.

Sir, the first question was on the rejection ratios. What used to be your rejection ratios for used vehicles as well as new vehicles pre-COVID. What was it in FY '21? And what has it come to in first quarter, what do we expect in FY '22? The second question is on disbursement. You mentioned on the 60% for buying of vehicles. If you could break down the disbursements into the number of vehicles and average ticket size and what could be the run rate that we can expect in FY '22. These are my 2 questions.

So these questions, I would suggest that you contact Sanjay offline, he'll be able to help you out.

Even the rejection rations?

Rejection ratios of used vehicles...

No. You said vaccination, or...

No, rejection ratios.

Rejection ratio. See, our business model is the most of the customer assessment is done at a field level. So the first level of rejection happens at a field. It is not that all the application yet comes to control systems for assessment and gets rejected. So our field team who first assess the proposal while inspecting or while visiting the customers' home, they reject. So there itself, the rejection will be around 30% firsthand. Before getting registered, before application getting registered 30% gets rejected. And rest will come to the branch and at the branch manager level, the rejection could be around 10% to 15%, and the rest will be at a senior level, if the division from the policy is higher. So the business model is such that we don't capture all the proposals that come in. Because at field level itself, it will be get rejected.

So this is given COVID or this was increased at -- these levels were increased during COVID?

COVID has no reason for rejection for us. For us, the COVID only made our life difficult because we could not really go to the field and because of the, what you call, the COVID protocols, we could not do certain work. But otherwise, COVID has nothing to do with our proposal being vetted. So only it prevents us from going to the field. That's all.

Right, sir. But sir, in previous calls, you have mentioned that the entries are credit filters. So sir, rejection ratios remain similar, what has changed if we change the credit filter?

The credit filters have been mostly all segment, the segment which were most affected like the aggregator model or the tourism or school buses. They, as the fresh proposals, were not encouraged. There's almost -- there was a 100% rejection, I can say. Of course, the proposal itself would have been minimal in this. And the -- all the takeovers also, we stopped totally from other NBFCs or bank, which otherwise, sometimes when a new person buys the asset from the old owner, it won't travel to us sometimes, even that we filter. So filtering was done at the front level itself.

. Right sir. And if I can just sneak in one more question, sir. What is -- how do we look at the bond issuances, sir, especially in the domestic markets in FY '22? What's a level that you're looking at?

Now you're talking about quantum or the rates you're talking about.

Quantum, quantum, what's the quantum, sir?

I think we have done INR 3,000 crores this quarter and we'll continue with similar quantum for the subsequent quarters also.

This is in domestic bond markets?

Yes. I'm talking about domestic bond market.

And what are the average tenor of the tenor base, 3 to 5 years?

Yes. No, yes. we don't take short term versus the around 3 years.

Our next question is from the line of Anusha Badhwar from Ageas Federal Life Insurance.

I wanted to ask you, I mentioned about this for handling the financials, either through NBFCs, more NBFC go through RFP. So what kind of -- sir, what quantum of loans do you plan to generate this way? And who'd be responsible for finalizing it to the end customers?

We have a policy, which is already running. We are there in this field for -- this particular segment for nearly 10 years now. On average, we disbursed around INR 100 crores per month to the -- it may not be -- the NBFC can be a financial also who are into a lending business. So in the last few months, it has come down to around INR 50 crores, INR 60 crores. Otherwise, our run rate used to be INR 100 crores. But there is a scope, there's a large scope as Nilesh rightly put it. There's a large scope for making that pretty large, pretty big. So we are looking at the various ways to see how we can do it much better than what we have been doing now.

Credit norms for us. She wants to know.

Credit norms per se -- that -- we don't have a broad norms because we look into the existing business model and the existing track record of the financial, we look into their balance sheet, their portfolio behavior. We also go to the field and see this business -- effects of this business model. So we do a lot of checking. Plus the last 3 years' balance sheet. So these are all the -- broadly, we do but we also spend some time with the financial or NBFCs to look at its focus area and its customer base. And depending upon what we understand, then we collaborate with them.

Okay. And sir, just one question on the merger. I wanted to ask you any -- I mean I know it is in initial stages, but any thoughts on the organization structure? And do you see any potential impact on auto industry segment?

See, organization structure would be very simple because we would like to have more, I should say, independence to various segments. We have been operating on what decentralized model all the time, whether it is a segment or the department or geography. So it will not get into a top-heavy structure. It will be a more decentralized structure. So there may not be any, what we call, preconceived structure on the same.

We'll take our last question from the line of Amit Ganatra from HDFC Mutual Fund.

Yes, just a couple of questions from my end. One was that this restructured outstanding till date, is it around INR 928 crores. Is that correct number?

Yes. But I'll give you the exact number through Sanjay offline.

Okay, so that was one. Second question is that, you ended FY '21 with a 0 dpd of around 57% of the book and 60 to 90 days was around 6% of the book. Can you -- is it possible for you to tell us what would have been the movement in these 2 buckets in last 1 quarter?

This also, I would suggest that you contact Sanjay offline. He will provide you these.

Thank you. I would now like to turn hand the floor back to Mr. Umesh Revankar for closing comments. Over to you, sir.

Thank you. I feel that we are getting into very promising phase. We strongly believe that COVID wave 3 or wave 4 would be well managed because preparation and the anticipation is much better from the public and also from the government. Therefore, there will be -- there's a huge pent-up demand that got postponed from the Q4, and -- Q4 of last year, that I feel will show up in the month of August and September. August and September, it will be very, very busy for us is what I believe. The infrastructure projects which the government is pushing is definitely going to give us a lot of activity, but that is a new activity opening up. So we feel that we will keep up with our target of double-digit growth. And the asset quality will improve significantly in the next couple of quarters. So when we meet next quarter call, we'll have a lot of positives to talk. Thank you very much.

Thank you. Ladies and gentlemen, on behalf of Shriram Transport Finance Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.