UGRO Capital Limited (511742) Earnings Call Transcript & Summary

Yes. So good morning, everyone, and welcome to U GRO Capital Q1 FY '22 Earnings Call and presentation. We have, along with us Mr. Shachindra Nath, who is Executive Chairman and Managing Director; and we also Mr. Nirav Shah, who is the Chief Strategy Officer and Head of Investor Relations. So Mr. Nath, over to you sir, if you could start with a brief details about the results and then probably we can take up questions-and-answers.

Absolutely. Thank you, Jignesh. Thanks for hosting us. A very momentous day for us because yesterday, for the first time, we got listed on National Stock Exchange. I'm really pleased to see both trading code of NSE plus BSE on this screen. I'm also pleased that along with the [indiscernible] we also have Mr. Anuj Pandey, our Chief Risk Officer; Mr. Amit Gupta, our Chief Treasury Officer; and Mr. Sandeep Zanvar, Chief Finance Officer. So let me start, I think the people are still joining. Let me start with some brief of -- for those who are not familiar with U GRO, given our young vintage as a company [Audio Gap] let me give some -- a little bit of background. So this is who we are and where we stand. The numbers -- some of the numbers reflected here is as of July. We normally like to update our investor fraternity of the current state. Given the market is very volatile, 2 months' back results is important, but [indiscernible] of what -- how the month have been also is included. U GRO today have a INR 955 crores of net worth, INR 1,561 crore of total asset under management as of July, total cumulative disbursement of INR 3,100 crore, covering more than 8,200 plus customers. In the last 2 years, we have increased our lending partnership. We have 32-plus lenders and as of March total gross debt of INR 816 crore. We are still touching to be roughly around 400-plus employees. Our business continues to be very overweighted to the secured businesses. And we are expanding our physical footprint simultaneously to our digital footprint, and we have now 34-plus location, more locations are being added. And our portfolio performance have remained healthy and steady over this period of pandemic wherein gross NPA being 2.3% and net NPA being 1.9%. In addition to where we stand today, I think so for some of the people who are not familiar with U GRO, U GRO is [indiscernible] form of a listed company called Chokhani Securities, which has been in existence since 1992. Largely, it was an investment company with a very small capital base. At the mid of 2018, which is July 2018, I acquired control of Chokhani Securities and all of this capital from institutional investors. We went live on 14th of January 2019. Between January to March build a small finance book of around INR 40-odd crores. And our full live year was April -- financial year '19-'20, wherein we operated for 11.5 months, bringing INR 850 crores of AUM. In 2021, we were functional only for 5 months because it was pandemic year. Still, we were able to grow our book to roughly around INR 1,350-odd crores. Both April and May was again shut down. We came back and restarted the business mid-June. June, we did a gross disbursement or -- of roughly around INR 136 crore. July, we did roughly around INR 206 crore. So you would see that we have -- in the first year to second year, we've doubled our AUM and now the balance sheet is expanding simultaneous to our entire liability side. And our credit engine and distribution engine is also now ramping up. In -- I think so in the month of July, we went live with India's first and the largest co-lending partnership with Bank of Baroda, wherein we started disbursing and we're seeing money on that. This is just to give you a quick summary of which -- what I talked about, the same numbers, which we spoke is reflected over here, so I will not make -- repeat. This will give you in terms of how the balance sheet has been expanding. So as I said that if you look at July '20, which is just a post pandemic one to July '21, you will see that disbursement have been growing very strictly. And July was -- though it was not a full operational month as much as we wanted, but this was the largest month in terms of our total disbursement. In terms of -- this is the way our AUM is building it up. So I think so we are coming out of our build period and now we are in the growth cycle, while the build is continuing to happen. And that's why our asset under management is also now growing sequentially month-on-month. I'll do a quick overview for people who are not very familiar with U GRO. U GRO is being built on 5 pillars, very strong corporate governance: very strong management team, very large institutional capital and a business which is a combination of tech knowledge. That's why we are -- we say -- we characterize ourselves, not truly a fintech, but although we have fintech in a lot many respects, but it's a knowledges plus technology business. One other thing which -- given that we have just got listed on National Stock Exchange, reason why we built this business in a listed company format was a twofold objective. What we have seen as founders of this business that majority of the new creation of lending institution or fintech businesses are all done in private domain. By the time these businesses mature when they come to the market, businesses already peaks up. And majority of the public market investors get opportunity to participate when the business is already very matured and valuations are picking it up. We wanted to create a business for perpetuity. That's why we felt that if we build a listed company format, the business would there forever. Our existing investors would continue to get their exit from the public market. but also it gives an opportunity for large public market shareholders to participate in the journey of the growth rather than participating at the peak of the growth itself. So that's philosophically why we did this. Quickly, this business is dedicated to the small business financing in India. We say it's a $600 billion of under-penetrated opportunity and we want to solve for the problem in some form and shape. Our model of business is divided, as I said, in 2 parts. So at the center of it, it's our knowledge, which is our deep sector specialization, driven by a deep [indiscernible] in technology platform. The asset side engine is divided in 4 part. We are expanding our branch network, which is divided into Tier 1 branches, which is prime -- serving prime customer, and Tier 2 branches with serves our micro customer. We have an ecosystem channel, which take care of the supply chain and the machinery financing business. And we have a large partnership and alliances channel. Where, in our cost of capital advantage, we are disseminating through multiple partners. These partners can be fintech, payment platform and NBFCs, so on and so forth. And we have a digital direct channel, which is fully piloted at -- as soon as the full pandemic recedes, we'll start that. On the liability side, we are both a traditional balance sheet-led plus a fee-based platform. We have -- you'll see at the end of this presentation, we've said that [indiscernible] balance sheet not beyond 3.5x. So we have a traditional balance [indiscernible] approach. The co-origination is deep focus for us. We are -- as a young company, we are very fortunate to have 2 of the largest public sector institution now partnering with us on the co-origination. Most of our asset origination are impact and priority sector related. That's why we are creating a specialized program for the global DFIs, and we are also simultaneously flipping our assets. We have publicly said that our intention is to build -- take 1% market share and build INR 20,000 crore of business. Of that INR 20,000 crore of assets under management by 2025, 70% of that asset side would come from a branch-led channel, 20-odd percent would come from our ecosystem, 10-odd percent would come from our partnership and alliances and balance would from our digital. In terms of the liability side balance sheet, 50% would be on balance sheet, around 30-odd percent would be in co-origination and balance would be in terms of the securitization of assets. And that's why with low leverage, we are targeting to generate high ROE and ROA. So the way you should look at it is a combination of a tech-fee originated platform plus balance sheet-led platform. And in terms of our governance, this is a unique company where we believe that most of the failures in India for financial services is the failures of governance. From day 1 we have created a governance framework where in our articles it is provided, if the majority of our Board is independent director. Any shareholder, which is more than 10% of the company has a Board seat. All of the rights in the framework, we cannot lend more than 1% of our net worth. All the framework of how the company would function is [indiscernible] in our articles. And that's why for a young company like us, we have a Board of 13. Our Board members come from background, which are their domain specialists with some regulatory background, public sector, private sector, so on and so forth. In terms of the management team, we have very heavily invested in our management team layers. Our first layer, second layer and third layer. So we have not waited for the size of the business to get created before we create the entire people infrastructure. And we have a large pool of equity option, which drives some people to stay and we participate in the value creation. So that is the way we are augmenting our management team on an ongoing basis. As I said, that U GRO is one of those companies, which, at very early stage, did India's largest institutional capital raise [indiscernible] more of the private equity, public market investors through QIP and preferential allotment had participated. In terms of where we stand, so we say that small business financing in India is divided in 2 part. On one side of the spectrum, you have specialized NBFC, which are divided in sector, product and geographies. Most successful ones are those who focus on geographies. And the other side of the spectrum, which are largely fintech players who focus on asset side spectrum, they can [indiscernible] a digital lender supply chain platform. And we are at the intersection of both. So on one side, we are deeply specialized by sector, but other side, we are tech-oriented as a lending institution. Within our specialization, we have looked in India, the entire 180 sector spectrum. We have filtered 20, and we operate in these 8 broad sector and micro enterprises as an additional sector wherein we are sector-neutral. Within those 8 sector, we operate within 70 to 100 subsector. So that's the deep specialization, which we are building over a period of time. And our sector specialization is driven by deep data analytics driven underwriting with physical touch. Our underwriting is divided in 2 parts. We -- our most -- all of our underwriting is built on 3 core pillars of [ GST Banking ] plus bureau. And that's why we have a score, which is called GRO Score 2. It was a GRO Score 1, post pandemic, we have refreshed it, and we combined the machine learning, banking module along with the bureau data. This score has categorized customer from A to E, wherein you can filter bottom of 20% customer which contributes mostly 80% of the loss ratios. And that gives us ability to turn around every login into our system at a very effective rate. And that is supplemented by physical underwriting, which is driven by a template, wherein we have researched almost 100 subsectors. And we have created an underwriting scorecard for our underwriters to take. So when they visit, they know what exactly they have to review and take data and make automated judgment on the platform. And as I said that we're among those very strong players who are -- who believe that MSME financing in India in the next 4 to 5 years would reach the level of consumer financing, so it will become on [ TAT ]. The combination of GST banking and bureau gives you a virtual -- ability to virtually profile the customer and come to the eligibility very, very quickly. And we are constantly working on that. We have invested a very significant amount of both cash -- capital plus [ people you trust around ] this. We -- our technology is driven by 4 core platforms, which supports our channel. All of our platforms are digitally integrated. We use roughly around 40-plus APIs. We fetch data, log into in principle approval, we do without physical intervention in 60 minutes. And our distribution network as we -- as I explained earlier, is divided with these 4 parts. Our Tier 1 branches services the prime customer with the definition of prime customers, the customers who have ability to borrow between 8% interest rate to, say, 12% or 13% interest rate. And our micro branches are serving the micro customers, which are sub INR 25 lakh of loan. We are expanding our micro network very, very -- on a consistent basis, we piloted first 25 locations in the last quarter of previous financial year. And now we're expanding adding 50 more net branches to ourselves. And we have said publicly that our goal is to reach to 275 locations in the next few years. U GRO today is the only company which -- so its branch product architecture has the ability to serve the prime most customer to the micro customers. So we have 4 products [ platform ] which is targeted to a CMR 1 to 5 customer at a price band of below 10%. And this is a program, which we are doing along with Bank of Baroda. So this gives us the ability to even compete with the largest or the most prime-most lender, which is technically a bank customer. Saathi is a product which is same prime customer wherein the eligibility cannot be created just out of the system. So there is -- an underwriting intervention is required. Saathi again, a prime customer whose collateral is not prime. He has collateral, but it's not prime, it is not a self-occupied [ residual ] property. But otherwise, this cash flow can be analyzed on the same basis through banking plus GST. And Micro is a customer which is largely secured, but it is really small business. It can be a shop, [Foreign Language] store, tailoring, anything which you can think of in a micro sector. So that's why in terms of our product architecture, it's a large framework which we are creating. Second, in our ecosystem, we -- majority of India's were financing for moving to cash flow-based financing and all of the cash flow-based financing is getting trapped through supply chain financing. We are building large products around our supply chain financing platform, it is a completely digital technology-driven platform. We do anchor-led financing, non-anchor-led financing. We do vendor, distributor, dealer. We do sales invoice discounting, purchase invoice discounting. We are the first lender on GeM platform. We actually created the GeM Sahay platform along with the iSpirt we have [indiscernible] to the government. The entire GeM Sahay is actually hosted on U GRO Cloud. So even the largest lender in the country goes through our cloud. So that's our ecosystem. These are the number of anchors which we have. And second part of our ecosystem, why we call it ecosystem because at the center of it, you have either an anchor or an OEM provider. So we have now integrated ourselves with 152 plus OEMs. Wherein at the point of sale or a point of origination of a machinery, we do financing. And that's also in India, actually, there are very few lenders who do machinery financing. Our view is that financing against a collateral like a property versus machinery, machinery is far more superior because it's a productive asset financing. When you finance a machinery, it straightaway adds to the revenue of the customer. And that's why we are expanding this also as a channel. And third is our are channel what we call our partnership and alliances. We believe that, given our cost of capital, which is far superior within the peer set, we have an ability to partner with multiple other financial institutions, marketplace and transaction aggregators who have ability to originate customer and reach to the bottom of the pyramid, and we can provide a source of capital. So we do co-lending with the players which are listed here. But broadly, the strategy is to look at online aggregator e-commerce marketplace, POS payment providers, neobanks, NBFCs, who have either a transaction data source or a customer origination capacity. And through our data analytics platform, we automate credit. And most of these programs are supported by these originators in some form of a credit cover, and that's the way we are expanding this as a channel. And digital, which we will go live most probably the last quarter of this year, wherein we have an aspiration to bring MSME financing without any physical touch. We have now the ability of looking at multiple sets of data through which we can underwrite -- originate customer digitally, underwrite digitally, disburse digitally and collect digitally. But given the volatility in the market through pandemic, we have delayed our launch for our digital channel. In terms of the liability management, I talked about three-pronged strategy of liability balance sheet origination assignment. Today, if you look at in last 1 year, we have expanded our universe of lender, almost the entire lending fraternity. Most of the public sector bank, private sector bank, SFBs and others have come on our balance sheet. We are now working towards bringing DFIs to our balance sheet. Our cost of borrowing has been sequentially going down. But depending upon the size of the leverage, which is required, our cost of borrowing keep moving around. But I think for a relatively younger company, market and especially the liability side universes recognize the potential of this platform. And that's why we are sitting on a significant amount of liquidity on the balance sheet. But more importantly, as I said, that lending in India, especially for NBFC would become asset light if lenders continue to focus on being an originator of assets rather than the owner of the asset. And that's why after almost 1 year of work with Bank of Baroda, we have gone live. We are now disbursing loans and the loans are getting co-lended by Bank of Baroda. And hopefully, we will soon go live with State Bank of India as well. If that happens, actually, your ability to generate fee-based income accelerate multifold and obviously, your liability side pressure is also not there. So most NBFCs like ours should then would be looked more on a fee platform than just the interest arbitrage platform. In terms of the financial metrics, broadly, it's given most of it is here. I think so gradually, our portfolio yields is gradually going up. Our cost of debt is going a little down. We are very well funded by equity. So our NIM is currently high. Our OpEx to income ratio, given this build-out phase it still continues to be a little high. But I think so by end of the year, I think so our OpEx leverage would start kicking in. We have been able to maintain the quality of the portfolio through the pandemic and it's showing very strong results. It is also a function of -- philosophically of keeping a very high proportion of our portfolio as secured with not getting [ tracked ] for a very higher yield portfolio to begin with. And we have made sure that the entire build-out period, we have always remained profitable, and we would want to now gradually increase and focus on both ROEs and ROAs. I will stop here because most of the other things is a matter of detail, but I'm happy -- we'll be happy to answer to Q&A.

Sure. Yes. We'll go ahead with the question and answer. Nirav, you want to add something on this? Or we can straight away go into question-and-answer now?

We can straight away go to question-and-answer. There are few questions asked on the chat box. And I think we can take those first. So the question is, does all co-lending partnership comes under Pratham only? So the answer is that with Bank of Baroda the tie-up is for a Pratham product. For the Sanjeevni, Saathi, et cetera, we will have tie up with different public sector banks. So Pratham, it's only for Bank of Baroda.

Sorry, just to add what Nirav said that we are not building an auction platform or a marketplace. We have to understand that every bank, when they partner with an NBFC, originally, in the first version of co-lending banks wanted their credit screen to be used by NBFC. And that's why it didn't work out. But now banks are -- especially large banks are adopting our credit model to go into their system. But that's why you would like as -- our strategy is to dedicate a particular product with a particular lender. And once our scale becomes so large that a -- one particular bank cannot absorb everything of one product, then we add one more lender to the particular product. But that's what we are focused on right now.

I guess, Mr. [indiscernible] wants to ask a question.

Yes. Sir, my first question is based on your Slide 23 and Slide 12 where you talked about the multiple distribution lines and multiple product. So this is a very good strategy. But my question is at the balance sheet size at which we are, what is the thinking process behind starting with so many multiple products and multiple distribution lines? Because if you see Slide 23, we ourselves are saying that there are almost 10 to 15 companies which are doing the same thing which we are doing. So we are doing as good as 15 companies at a time. So isn't the execution challenge become very -- too much for us to handle? So that's the first question.

Like, can I answer this first?

Yes.

Yes, Shachin, you can.

Okay. So [ Anilji ], the way you should think about that all the companies which are listed, the core difference is that most of them have yet not reached except 2 of them, the size of equity capital with which we started our business. Obviously, that gives you the strength to build because as we said, that we want to serve the -- because there's no single institution in India which has created a large impact to SME financing. So that's a matter of aspiration, and we want to do that. And that's why we started with a large capital base. Second, in terms of the execution challenge. Now we have proven that all of our lines are getting stabilized we have management team depth which can do that. And as you rightly said that we have -- the way we have built is by vertical. So our machine refinancing business is similar to what an electronic or Siemens is, there is a characteristic of that, and we are improvising on that by using our data analytics and technology. Our micro vertical is similar to what many other such unlisted NBFCs are in that space. Our prime is similar to what most of the mainline lenders would be. Our supply chain is similar to most of the supply chain financing platform, and digital would be similar to digital lending. So the way -- also when -- you should look at it from this perspective, we have created this vertical to service the need of MSMEs in India. MSMEs have their need coming from different segments of the market. So we look at customer-first approach. We should be able to serve a customer for its working capital requirement in supply chain, we should be able to serve a customer for its machinery, we should be able to provide a term loan through a secured lending, so on and so forth. So we want to serve the need of customers. And as you rightly said, in a few quarters, I think so this -- you will not have this question about our ability of the execution channel because we are now -- all our channels are ramping up and we have no trouble at all.

Shachin, just to a very -- if I were to look at lending and when you say diversification in the lending space, we look at diversification from the perspective of the customer that we are serving. So for example, if -- it would be right to say if we are doing two-wheeler loan or a gold loan plus an MSME loan or plus some kind of another micro-finance loan, then we can call it that, yes, we are doing too many things simultaneously. Here, what we are trying to say is, there are various products within the MSME lending space, right? So we are always keeping the customer, which is the MSME, at the core of our lending philosophy. And within that, whatever circles around what MSME needs is what we are serving to the various product requirements. It's not a diversification, but it is just serving the needs of the SMEs, what I would say.

Yes.

Yes. And second and the last question is on the restructure asset. So on one slide, industry-wise restructuring, we have given. So what I would like to understand more is out of this 7.5 restructure asset, how much has not made any payment till date and I think you have said 67% are current. So can you give more details on this restructured assets? What is the moratorium we have given? Is it only principal payment, interest payment? So can you give more details on the restructured assets.

Anuj, do you want to take it quickly?

Yes. So these restructuring has happened under the restructuring guidelines of RBI. There are 2 kinds of notification, one for MSMEs and other for small businesses. And most of the restructuring has happened post pandemic 1. And the kind of restructuring which we have done is a combination of principal moratorium, interest moratorium or, in some cases, principal plus interest moratorium. Ranging from 3 months to up to 2 years, which was allowed. So if we have to divide the restructured portfolio by tenures, I would say approximately 50% of the portfolio would be less than 1 year, and other would be more than 1 year tenure from restructuring tenure perspective.

And -- yes, sorry continue, sir.

No, sir. Please, go ahead.

No, so how many have not made even a single payment till date in the restructured asset, any details on that?

No. So there are hardly any people who have not made any payment under restructures. This is a very, very recent thing and it still continues. The restructuring window actually through RBI is open until September. But we haven't encountered anyone who was restructured and post restructuring have not paid.

I have an interesting question from Venkat saying that while the companies are technology-intensive, why we are not seeing CTU in your leadership here? Is there an overlap with anybody in the IT? Venkat...

In the leadership team, he meant. So LT.

Okay. Leadership team. Yes. So Venkat, it's an interesting question. So I think the core differentiate -- so we have a very strong Chief Technology Officer in the company, Rishabh. Rishabh has been ex co-founder of Gramcover and before that he was head of development for Biz2Credit, which is a very large U.S. tech-driven SME financing platform. It's just a matter of orientation [Audio Gap] most of the young start-up want to take technology as the lead. And they forget that this is a balance sheet-led business, wherein your production of principle and earning of the interest is the core to the business and technology is facilitated to that. So our CTO directly reports into me. We work very, very closely. We are doing everything. But we would like people to recognize us for the credit quality, balance sheet expansion and ROEs and ROAs we make over a period of time. And technology is leading to a lower OpEx and efficiency for the customers. But yes -- but it's a good thing since at some point in time, we will showcase our CTO as well.

So Shachin, there are various other questions also on the chat box, actually. So what we can do is, one, we can finish the Q&A around here and then go through the chatbox question as well.

Yes. Please.

Yes. That would be better. [ Rishikesh ] from [ Robo ] Capital. Do you want to go ahead?

Yes, sir. Am I audible.

Yes.

Yes. You are.

Yes, yes. Please, go ahead.

Okay. Okay. So my first question is, sir, what disbursement numbers are we looking at going ahead in future quarters?

Rishikesh, we are not actually publishing the futuristic number in the presentation. And hence, to that extent, will be very limited to -- but what we can, as a commentary do is, you know how historically on a month-on-month we have performed. And our expansion of the various distribution platform that is taking shape. What we can only say is that all of those which were affected during COVID period are coming back on track. And if all engines has to work on full capacity, then it will be much, much multifold x from here. But I don't think we have to give any sense.

I will add one directional response to this. In our first year of operations, we did almost INR 850 crore of disbursement when we operated for 11.5 months. In our second year of operation, where we were operational only for 5 months, we did INR 700 crore of disbursement. So if you multiply for full year, it's worth INR 1,500-odd crore. So we virtually doubled our AUM from first year to second year. That would give you an indication that when market would -- went up -- and in the interim our 3 new engine of distribution got built doing pandemic: our GRO Micro vertical, our Partnership and Alliances vertical. So that would give you a sense that what would be our end AUM by end of this year.

Also, just to add that our login to disbursement was much lower during the pandemic period because we have tightened credit considering some of the sectors and subsectors that we operate in. If we were to, kind of, only convert those log-ins into some of a better, kind of, a disbursement percentage, I think that itself will solve the purpose for us.

Okay. Okay, sir. So what was the July disbursement for the particular month, July?

Yes. It's in the presentation, it was 2...

INR 250-plus crore.

Okay. Great. And my second question is, sir, how many branches we added in FY '21? And what is our plan for FY '22?

It's a public data we have published, so that we can talk about it. So we added -- Q3 FY '21, we added 25 micro location, and this year, we'll add 50 micro location.

Okay. Great. And how much of our book is PSL compliant?

95%-plus.

Okay. And also, sir, my question is next that, many NBFCs, they are vertically focused and whereas we may have exposure to several sectors. So how will these be managed?

Sir, can you explain what you mean by NBFC being vertically focused?

So basically, many NBFC you see they are focused to some specific sectors or some bank, okay? And whereas you have exposure to several other sectors, what you say 8 other sectors, okay? So how...

Okay. I understand that question. So I look at it -- so you have NBFCs like Indian School Finance Company, which are into, say, K-12 financing. You have Kinara and a few others, which are in machine-tool financing. And you have geographical focus NBFCs, which don't look at sectors. Now majority of the large-scale players don't look at sectors. They are sector-neutral. They lend to everybody because they're more collateral focused. So from that perspective, we are actually focused. So it's the way you look at it. But that benefits us because during the pandemic period, what we realized that our ability to decipher -- so if you look at hospitality, we have our ability to look at hospitality and look at the banquet hall differently than a fast food chain is what benefited us in terms of our -- how we expand the credit. We -- the entire sector analysis is what we call knowledge and we centralize that pool. And through technology, we disseminate at the ground. So I think that's a plus benefit to us.

Okay. And my last question is, sir, a few months ago, you had reshuffled your team and also there was a resignation of CEO. So can you please comment on there?

So U GRO's management team -- the first round of management team is coming to a level of maturity. So we are 3-year-plus old. Our business model is also pivoted from the -- from where we have started. Some of those people who have joined us in the first phase, they want -- actually, a lot of people are benefiting from U GRO's brand creation and they are getting bigger and better opportunities from their personal perspective within the large [indiscernible] banks and others. So it is a combination of some realignment of the management team, which fits to our long-term goal, and few individual choices of people who want to take different role. So there's nothing -- I think what is good about U GRO is that the kind of and size of the talent which we are attracting now is of a very different quality. And we are actually -- a lot of new people want to come and work for us, so which is a very good thing. I've seen in my journey of 35 years -- 30-plus years of financial services experience, every financial institution take around 5 years to settle for a more stable team. Look at the HDFCs and ICICIs of the world. This is our first round of that transition where certain set of people came in, set the business, brought it to a level and now it's a second generation of team coming in and now growing the business. So nothing odd about it.

Mr. Maheshwari, you want to go ahead with your question?

Yes. This is Anuj here. I have just one quick question on -- like you mentioned about this MSME. I mean you're focusing on MSME lending, which is a big opportunity. And obviously, the AUM target which you have set, we see a lot of growth opportunity over there. Can you highlight the risk which the company faces, the key risk as you set on this growth path, what would be key risk as an investor that we should be looking at? That is my first question.

Yes, it's actually -- I should not be doing that. But actually, if you look at our size of the capital, the portfolio quality, the expansion and where we are in -- vis-a-vis any comparable in the market, you have to make your own assessment, but I can't understand what risk could be. Obviously, for every company, there are one macro and second is the -- macro risk. Our -- and our macro risk, obviously, one is MSME as a business they are more volatile than some other segments, self-employed, salaried. MSME are a business cycle businesses. So if the -- if you continue to believe that come what may, India would be sub-5% growth rate, then obviously, the entire MSME would get affected. But if you believe that whatever is the government -- whoever is the governance, whatever is the policy, India would continue to grow at least at a rate of 6% to 7%, MSMEs would continue to flourish. And I'm not taking pandemic kind of impact, hopefully, that would be over. That's one. Second, one of the biggest challenge and the risk for the growth of NBFCs or any fintech lending platform have been the liability side spectrum because the source of the liability was not permanent. And post ILFS that became very troublesome. I think we are gradually cracking the code on the liability side. The combination of the diversified liability provider, along with our co-lending and DFI partners, actually, where we sit today, we are very comfortably, you can say, that, that is not -- it is always a challenge, and that's not going to be a hurdle to over growth. Now after that, our strategy for 5 years is very clear. It's all about sheer execution, maintaining faith in our self and continue to grow. Amit, do you want to add something on the liability side, which, otherwise, is generally seen as a big challenge for lending institutions?

Yes. So Mr. Nath has actually touched about the bilateral lending aspect. I think banking liquidity continues to be very, very high. So as we speak, average banking liquidity in the system is almost INR 6 lakh crores in last -- if I actually look at the average for the last peak or so. So on the banking side, these banks also are facing issues to deploy their liquidity incredible borrowers. So obviously, given where we are in terms of our capital structure in terms of our leverage ratios and all that. We actually present a very attractive option for that deployment. Having said that, we -- obviously, on the bilateral and lending side, that is something which is sorted out, I think. Even on the capital market side also, things are opening up a lot. You have actually seen post ILFS crisis, NBFCs were actually being seen negatively. But now things are opening up again. And there are new instruments which have actually come up in the market. So you have seen the covered bonds in the form of market-linked debentures, they have become very, very popular. In fact, we have actually seen a lot of success in that particular market. So while liability is something which is a very, very important part of our business because it's a raw material, we don't really see any challenge. So on both on the capital market side and on the bilateral lending side, we are at a very, very strong wicket, and we think our growth won't be hampered because of the want of [indiscernible].

Sure. My second question was on this fee income. So how much is the fee income in proportion to this total revenue?

Right now, it is not because most of our income is balance sheet-led at income, except some of the insurance cross-sell.

Okay. Okay. And one final question. I mean, it's just in continuation of the previously asked question on the CEO resignation. So are we looking to hire a new CEO? I mean, any strategy on that?

No. Right now, I've said this in our previous quarter results as well that we have a 3-layered organization. So I, as a founder, Executed Chairman and Managing Director, I'm 100% involved with the business and dedicated. We have a CEO who was running the business on a day-to-day basis. And we've a strong second layer of the management team. Right now, what the Board has decided that given the strong management team, which we have below me, for a foreseeable future, we don't need a CEO in the company as a Managing Director, I'm driving the business both strategically and a little bit operationally, but there is no intention right now for, at least, current financial year to hire any CEO.

Jignesh, there are actually a lot of questions lined up on the chat box, I think we can take those as well. Some of them are very interesting as well and most of the people would need an answer for that. So Shachin, I'll just read...

Yes. Just 1 second. Anuj who raised the question, can you just specify your company name, please, if that is okay with you?

Yes. I'm an individual investor.

Yes. Perfect. Thanks. Yes, Nirav, please go ahead.

So one of the question Shachin has been asked on the chat box is, Mr. MD mentioned in one of his intervals that we are getting -- we are going to exhaust the INR 1,000 crore BoB co-origination loan in this financial year itself. Are you on track to achieve this?