Arman Financial Services Limited — Q4 FY26

Arman Financial Services Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=ft87dYOefDU Published: 2 weeks ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Arman Financial Services Limited Q4 and FYI26 earnings conference 0:09 9 seconds call. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the 0:17 17 seconds presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchstone 0:26 26 seconds telephone. Please note that this conference is being recorded. 0:31 31 seconds I will now hand the conference over to Mr. Aloc Patel, vice chairman and managing director from Arman Financial Services Limited for opening remarks. 0:39 39 seconds Thank you and over to you sir. 0:42 42 seconds Uh thank you so much and uh good afternoon to everyone and welcome to the Q4 FY26 0:50 50 seconds and fiscal year end 26 earnings conference call of Arman Financial Services Limited. On behalf of the 0:57 57 seconds company, I would like to extend a very warm welcome to all the participants joining us today. I'm joined on the call 1:04 1 minute, 4 seconds by Mr. Vive Modi, ED and group CFO along with our investor relations team. I hope all of you are had the opportunity to 1:13 1 minute, 13 seconds review our financial results, investor presentation and press release which have been uploaded to the stock exchanges as well as on the company website. 1:23 1 minute, 23 seconds On a broader level, the micro finance industry has gone through a challenging phase over the last several quarters driven by a combination of macroeconomic 1:32 1 minute, 32 seconds pressures and sector specific issues which were discussed in great detail in the previous calls. 1:39 1 minute, 39 seconds However, with the beginning of the second half of FI26, we saw a perceptible shift. Collections 1:46 1 minute, 46 seconds collection efficiency trends improved meaningfully. 1:50 1 minute, 50 seconds Borrower behavior showed signs of stabilization and demand across the micro finance products particularly in the rural geographies began to revive. 2:01 2 minutes, 1 second While the operating environment is yet to fully normalize, we believe that the industry has moved beyond the most difficult phase and is now entering into the stable and disciplined growth cycle. 2:13 2 minutes, 13 seconds That said, we must acknowledge that the broader economic environment remains uncertain. 2:19 2 minutes, 19 seconds Domestic stress in pockets of the economy persist and there continues to be global uncertainty including disruptions caused by the West Asia conflict. 2:30 2 minutes, 30 seconds These factors continue to create headwinds and require careful monitoring. 2:36 2 minutes, 36 seconds However, the financial inclusion imperative and the underlying credit demand remains intact. 2:42 2 minutes, 42 seconds Against this backdrop, I am pleased to share that after many quarters, Armani Aum has crossed his record AUM to 2728 2:51 2 minutes, 51 seconds KES in FI26 representing a year-on-year growth of 22%. 2:57 2 minutes, 57 seconds Along with its higher highest ever quarterly dispersements of rupees 951. 3:05 3 minutes, 5 seconds This growth of course has not happened overnight. Rather, it has been achieved through consistent execution and disciplined efforts which started many quarters earlier. 3:16 3 minutes, 16 seconds Over the last several quarters, we have taken important structural and operational steps and decisions to strengthen the business and improve portfolio resilience. 3:26 3 minutes, 26 seconds One of the most significant changes is complete separation of credit and recovery functions from the branch operations. 3:35 3 minutes, 35 seconds This realignment has now been successfully implemented across most branches and has delivered measurable improvements in accountability, 3:43 3 minutes, 43 seconds monitoring, execution, discipline, and collection efficiencies. 3:49 3 minutes, 49 seconds This change has also allowed branch teams to focus more effectively on customer engagement and business sourcing. With dedicated recovery teams, 3:58 3 minutes, 58 seconds we have better visibility into emerging portfolio stress and can intervene earlier. This has meaningfully reduced loan losses across the portfolio. 4:09 4 minutes, 9 seconds As a result, loan losses across the portfolio reduce meaningfully reduce uh leading to a moderation and write offs and provisions and supporting improved profitability. 4:21 4 minutes, 21 seconds Consolidated profit after tax for the quarter stood at 41 crores registering a growth of 85% sequentially and 120% yearonear. 4:31 4 minutes, 31 seconds uh excuse me 220% yearonear for FI26 profit after tax stood at 57 kores reflecting a year-on-year growth of 9%. 4:42 4 minutes, 42 seconds In parallel we also strengthened our portfolio protection framework about 90% of our micro finance portfolio is now 4:50 4 minutes, 50 seconds covered under the CGFMU scheme. This provides an additional layer of protection and demonstrates our commitment to student risk management 4:59 4 minutes, 59 seconds especially considering the macrolevel uncertainties at this stage. 5:04 5 minutes, 4 seconds Along with this structural realignment, we also fundamentally strengthened our underwriting approach. We moved away 5:12 5 minutes, 12 seconds from traditional groupbased JLG credit assessment model which had its inherent limitations in assessing individual 5:20 5 minutes, 20 seconds repayment capacity and shifted towards a more individual level credit evaluation. 5:28 5 minutes, 28 seconds Under this new model, each customer is evaluated more closely based on his or her prepayment capacity, household cash 5:36 5 minutes, 36 seconds flows, credit history, and overall financial profile rather than relying solely on group behavior dynamics. 5:44 5 minutes, 44 seconds But these improvements have not come without costs. 5:48 5 minutes, 48 seconds To be completely transparent about the trade-offs we have made, first the the rejection rates continue to remain elevated. 5:57 5 minutes, 57 seconds However, quality of the dispers portfolios improved significantly. 6:02 6 minutes, 2 seconds Second, operating costs have increased significantly as I'm sure you have noticed. 6:07 6 minutes, 7 seconds The new credit model requires a larger team, more detailed letterw writing and better monitoring capabilities. 6:15 6 minutes, 15 seconds These, I believe, are necessary investments to build sustainable business in the long run. Bringing these cost under control while maintaining the 6:24 6 minutes, 24 seconds integrity of the credit process will remain our key focus area for FI27. 6:31 6 minutes, 31 seconds Despite these near-term pressures, we believe that the investments are essential to position us for sustainable growth in the next phase of the cycle. 6:40 6 minutes, 40 seconds Moving on to the performance of our micro finance business, the AUM stood at 1le9 cr that's 1,999 6:48 6 minutes, 48 seconds crores registering a growth of 19% on a year-on-year basis. Dispersements for Q4 6:55 6 minutes, 55 seconds FI26 stood at 738 KS reflecting a growth of 88% yearon-year and 62% sequentially. 7:05 7 minutes, 5 seconds Business momentum improved significantly during the second half of the year resulting in a fullear dispersement of 7:12 7 minutes, 12 seconds 7798 crores. 7:16 7 minutes, 16 seconds Gross total income for FI20 or excuse me gross total income for Q4 7:23 7 minutes, 23 seconds FI26 stood at 117 KSES while for the full year it stood at 433 kores 7:32 7 minutes, 32 seconds supported by the improving operating environment and lower impairment cost three repositioning operating profit improved to rupees 41 7:41 7 minutes, 41 seconds crores for the quarter and 143 crores for the full year profit after tax for 7:47 7 minutes, 47 seconds Q4 FI26 to that 29 Ks while full year tax to that 13 KS 7:55 7 minutes, 55 seconds asset quality trends improve gradually throughout FI26 our G&P is stood at 3.4% while our NNP are reduced to 0.95%. 8:08 8 minutes, 8 seconds These matrix reflect the benefits of our separated credit and recovery structure, disciplined credit assessment and stronger monitoring and collection efforts. 8:18 8 minutes, 18 seconds On the standalone front, MSN2 and lab businesses continue to witness steady traction during the year supported by healthy demand across our operating 8:26 8 minutes, 26 seconds geographies and consistent execution by our field teams. During the year we expanded our footprint into Uttar 8:34 8 minutes, 34 seconds Pradesh that is for the MSME uh portfolio strengthened our lap field teams and launched a pilot for solar 8:42 8 minutes, 42 seconds loans in Gujarat. We expect these initiatives to contribute meaningfully to the AUM growth over the next two four quarters. 8:50 8 minutes, 50 seconds Standalone AUM grew by 30% year-onear to 730 crores with MSME segment 8:57 8 minutes, 57 seconds contributing 76% of the overall portfolio followed by the flap and two-heer businesses. 9:05 9 minutes, 5 seconds Dispersement momentum across all segments remained healthy with quarterly dispersement standing at 213 Ks while fullear dispersement stood at 636 Kores. 9:18 9 minutes, 18 seconds Asset quality across these portfolios remained stable with GADA for the MSME segment at 3.84% and two wheeler segment at 3.9 uh 5%. 9:30 9 minutes, 30 seconds Collections are also strengthened across across these segments. In Q4 26, collection efficiency for all segments 9:38 9 minutes, 38 seconds stood about 96% while zero bucket or Xbucket collections were 99.5% plus for the whole quarter reflecting 9:47 9 minutes, 47 seconds delinquencies returning back to pre to normal precycle levels. 9:53 9 minutes, 53 seconds Lastly, on the liquidity and capital position front, the company continues to remain well capitalized with capital 10:00 10 minutes adequacy ratio of 27.86% 86% for the subsidiary number of finance and 41% for 10:06 10 minutes, 6 seconds the standalone business as of 31st March 2026. 10:13 10 minutes, 13 seconds The company continues to maintain a healthy liquidity profile with available liquidity of 229 crores comprising of 10:22 10 minutes, 22 seconds cash bank balances liquid liquid investments undrawn CC's FDOD limits etc. 10:29 10 minutes, 29 seconds In addition, we have undrawn sanctions of 275 KES from existing lenders as of March, providing adequate financial 10:38 10 minutes, 38 seconds flexibility to support future business growth. 10:43 10 minutes, 43 seconds As we look ahead to FI27, our approach is to remain focused on responsible and disciplined growth. 10:50 10 minutes, 50 seconds While we expect dispersement momentum to continue improving, growth will be pursued within clearly defined risk 10:57 10 minutes, 57 seconds parameters and strong emphasis on quality over growth. Maintaining collection efficiencies and monitoring 11:06 11 minutes, 6 seconds asset quality metrics will continue to remain key priorities for us. At the same time, we will continue investing in 11:14 11 minutes, 14 seconds our credit recovery and monitoring infrastructure to build a stronger and more resilient operating framework. 11:21 11 minutes, 21 seconds Improving operating efficiencies and rationalizing cost structures without compromising underwriting discipline or portfolio quality will also remain an 11:30 11 minutes, 30 seconds important focus during the year. We believe the structural improvements undertaken over the past several quarters position us to strengthen our 11:38 11 minutes, 38 seconds market position and capitalize on growth opportunities in the evolving industry landscape. 11:45 11 minutes, 45 seconds With that, we can open up the floor for questions. Thank you very much. 11:52 11 minutes, 52 seconds Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 12:00 12 minutes touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. 12:07 12 minutes, 7 seconds Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 12:18 12 minutes, 18 seconds We take the first question from the line of Rohan Meta from FCOM family office. Please go ahead. 12:26 12 minutes, 26 seconds Hi, am I audible? Yes, please go ahead. 12:30 12 minutes, 30 seconds Perfect. Thank you so much for the opportunity and congratulations. 12:35 12 minutes, 35 seconds Uh I have three questions. So firstly, how should we think about your cost of borrowings trajectory for FI27 12:43 12 minutes, 43 seconds and what is your outlook for the same if you could also quantify it? Uh because you know a meaningful part of the book is on a fixed rate uh you know basis. So 12:53 12 minutes, 53 seconds is there a near-term nim compression uh risk if borrowing costs rise or they remain elevated? 13:02 13 minutes, 2 seconds Uh so borrowing costs have been steadily declining. I I think uh uh 13:09 13 minutes, 9 seconds look uh the cost of borrowing for the past 6 months or so the marginal cost have been declining. Our average cost of borrowing continues to be approximately 12%. 13:19 13 minutes, 19 seconds uh when uh the marginal cost in the last two quarters would have been about 11.75. 13:26 13 minutes, 26 seconds Uh what you're referring to is the likelihood of the bus being MCLR going up and the general stress on uh interest 13:35 13 minutes, 35 seconds rates. Uh I think if that were to really start happening in a bigger way, uh we can say that we're not completely 13:42 13 minutes, 42 seconds insulated on that. But having said that uh you must also kind of look at that uh micro finance for last few years 13:50 13 minutes, 50 seconds including Namra which is the larger contributor to the uh entire event uh performance was not probably the best 13:59 13 minutes, 59 seconds that you that one would expect and now as things improve I think there are reasons for us to also look at 14:06 14 minutes, 6 seconds advantages in terms of also borrowing going down from that aspect. So in that two way one thing that might pull it 14:14 14 minutes, 14 seconds down the other in terms of a performance having improved likely to kind of keep the cost of borrowing uh at the same 14:23 14 minutes, 23 seconds levels or probably looking at a lower level. Uh I think we seem to be pretty 14:30 14 minutes, 30 seconds comfortable uh at the closing cost for not really making any major changes from there. 14:38 14 minutes, 38 seconds Got it. Got it. And from the presentation I see that ease have uh you know come off in Q4 versus the last quarter. So uh I'm trying to understand 14:47 14 minutes, 47 seconds uh over last one to two months uh have you taken any repricing uh on uh both the 14:55 14 minutes, 55 seconds and what is your uh sort of stabilized NIM outlook for FI27? 15:02 15 minutes, 2 seconds So now you mean I'm talking. 15:12 15 minutes, 12 seconds Yeah. So as the product mix is changing you will find some obviously you will find some level of uh distribution 15:21 15 minutes, 21 seconds because for example if you look at the standalone business uh the lab products are a significantly lower cost than for example the MSL products. 15:32 15 minutes, 32 seconds So the product mixes will affect the yields in the same way. Uh you know as 15:39 15 minutes, 39 seconds far as the micro finance products are concerned the products are priced differently for you know lower risk 15:46 15 minutes, 46 seconds customers, individual levels uh versus JL customers versus uh different kinds of customers. So that 15:54 15 minutes, 54 seconds mix will continue to change. uh uh we have not adjusted the interest rates in 16:02 16 minutes, 2 seconds the last quarter although we did in the previous quarter uh the quarter before uh in in Q3 we did modify it manually 16:12 16 minutes, 12 seconds uh but what you are probably seeing is some timing differences and uh the product the product may change. 16:23 16 minutes, 23 seconds Got it. And my final question is you know with uh the consolidated ROA at approximately 2.3%. 16:30 16 minutes, 30 seconds Uh what is your outlook or aspirations on ROA for FI27 given that your margins 16:38 16 minutes, 38 seconds now appear to have stabilized? So where do you see that incremental opportunity you know improvement in ROA? Is it 16:46 16 minutes, 46 seconds should we think about it from the lens of margin expansion or operating leverage from OPEX or lower credit cost? 16:55 16 minutes, 55 seconds Uh all three of them not withstanding uh any major global disruptions uh you know 17:03 17 minutes, 3 seconds which will which is not just a micro finance problem or the NDFC problem but largely for the whole economy. 17:13 17 minutes, 13 seconds So notwithstanding any disruption caused to that we expect healthy growth in the 17:20 17 minutes, 20 seconds ROA I don't want to place an exact figure to be honest but definitely 3 and a half 4% plus is u sort of easy to 17:29 17 minutes, 29 seconds expect all things considered if our growth trajectory remains uh consistent. 17:36 17 minutes, 36 seconds Got it. And for RO ROE I mean you know RO is a function of 17:44 17 minutes, 44 seconds leveraging as well. So uh again I don't want to quote exact numbers but uh 17:52 17 minutes, 52 seconds probably if you annualize uh I mean so if I address that I think the leverage in the 18:00 18 minutes last two years have been pretty low right the leverages are likely to move upwards as the dispersements and the overall uh 18:08 18 minutes, 8 seconds uh micro finance and unsecured lending uh picks up uh as we've seen in the last four five months. 18:15 18 minutes, 15 seconds So that uh the leverage should help uh the overall roe to move up. 18:24 18 minutes, 24 seconds I mean we have a number that we are targeting. I'm just little hesitant to say it out loud. That's all. 18:31 18 minutes, 31 seconds Sure. Thank you. Thank you so much for answering my questions and wishing you all the best. Thank you. 18:38 18 minutes, 38 seconds Thank you. We take the next question from the line of Ronach Cher from Aura Capital. Please go ahead. 18:46 18 minutes, 46 seconds Hello. Yeah. Go ahead. 18:50 18 minutes, 50 seconds Yeah. Hi Aloc and congratulations team for the results. Um my first question is on the OPEX you did touch upon in your 18:58 18 minutes, 58 seconds opening remarks. Uh now that that uh transition to a more sustainable uh OPEX 19:05 19 minutes, 5 seconds is largely done. uh how should we think about uh cost to asset uh for the year and then at what scale of AUM do you 19:14 19 minutes, 14 seconds think it uh you know uh goes to a steady state number uh if you could just talk about how you think of to asset ratio 19:23 19 minutes, 23 seconds yeah no so yeah definitely can talk about that uh a lot of people ask about 19:30 19 minutes, 30 seconds uh you know cost to income which I don't I'm not very familiar with but yeah uh cost to assets definitely. So right now 19:38 19 minutes, 38 seconds we are at one of the highest levels. If you look at micro finance we are probably around 9% or so which is uh 19:46 19 minutes, 46 seconds higher than it has ever been. I think at our lowest point probably we were probably close to 4 and a half 5% or 5% is 19:54 19 minutes, 54 seconds 5%. So quite a bit of a jump and that jump happened due to multiple reasons. 20:00 20 minutes the number one portfolio was declining uh but we did not see the number of employees going down. In fact, the number of employees increased 20:09 20 minutes, 9 seconds significantly even in a situation where uh the portfolio was declining and that is for two reasons. Number one uh we 20:17 20 minutes, 17 seconds needed uh obviously people to go collect the money during the credit cycle. So that was the recovery officers and 20:24 20 minutes, 24 seconds second was the separation of the credit people which is the VCMS or the branch credit managers. So all of that added 20:33 20 minutes, 33 seconds substantial cost on the OPEC side and uh you know previously people had asked me about this and I said that you know 20:41 20 minutes, 41 seconds right now is not a time to worry about operating cost. Uh there will come a time to worry about it and uh you know 20:48 20 minutes, 48 seconds frankly speaking that time is now. So we have luckily managed sorting out uh the asset quality issues and now we will 20:57 20 minutes, 57 seconds concentrate on bringing the OKX under control. Uh largely speaking you know naturally as AUM grows as a 21:06 21 minutes, 6 seconds percentage terms when the denominator increases the OPEX will come down. 21:12 21 minutes, 12 seconds uh the I don't again like I don't think that we will ever manage going back to our 21:20 21 minutes, 20 seconds previous uh book. Uh may it may be possible to bring it down to let's say around 6% in 21:28 21 minutes, 28 seconds the short to medium term. Uh this year we are probably targeting to bring it around 7 odd% that is the target uh that 21:38 21 minutes, 38 seconds we have set ourselves. So from 9 to 7%. 21:43 21 minutes, 43 seconds Perfect. Um my second question is on uh your products like uh MSN and LAP now that they have kind of attained a 21:52 21 minutes, 52 seconds sustainable size. Uh how should we think of the growth especially on the MSN side 21:58 21 minutes, 58 seconds now that you're running it at a sizable amount in terms of growth? uh uh what are you picking up in terms of 22:07 22 minutes, 7 seconds on ground reality because this pro this book comes with a lot of underwriting uh effort all 22:15 22 minutes, 15 seconds so can you talk about no so lap loan side I mean you know we reached break even this year so started 22:25 22 minutes, 25 seconds seeing some money there on the lap side and uh that portfolio is relatively stickier because it is long-term as you are aware 22:33 22 minutes, 33 seconds the techno is much larger and so all in all uh happy with the lab product. 22:40 22 minutes, 40 seconds Obviously it's not like micro finance. 22:43 22 minutes, 43 seconds It uh it's a competitive environment. A it requires specific type of customer 22:50 22 minutes, 50 seconds your cash flows to match a person willing to secure uh their their residence or commercial property or what 22:59 22 minutes, 59 seconds have you. and uh dependent on the paperwork being clean as well. So there are lot of conditions. So uh definitely 23:09 23 minutes, 9 seconds we can expect it to grow by 20 25% but not like a huge jump or anything like that. And MSME as well we are targeting 23:18 23 minutes, 18 seconds somewhere around uh 25 odd% growth uh uh in FY27. 23:25 23 minutes, 25 seconds Uh can we push it more? Of course we can. 23:30 23 minutes, 30 seconds Um the question that when we were deciding the targets and you know everything with 23:38 23 minutes, 38 seconds the team the question was that things have improved. Why have they improved? 23:45 23 minutes, 45 seconds Is the ground level situation much better than it was or are we selecting better? And I think overwhelmingly 23:53 23 minutes, 53 seconds the answer was that we are simply selecting better but the ground level situation remains 24:00 24 minutes I don't want to say complicated but you know there there's a lot of questions there's a lot of uncertainties it's very 24:07 24 minutes, 7 seconds hard to predict what tomorrow next month next quarter is going to be like with all these disruptive global elements and 24:17 24 minutes, 17 seconds other things going on. So this is probably not the year to push growth uh 24:24 24 minutes, 24 seconds or push growth hard at least. Uh but of course we will keep recalibrating as the months and quarters go on. 24:33 24 minutes, 33 seconds Perfect. And my last question al is we've already crossed our peak aum. Uh should F27 now actually in F27 can it cross our peak profitability also? 24:48 24 minutes, 48 seconds Uh I wish I I hope I don't know. I mean that's al almost a direct one. I wish we could say yes or no. 24:58 24 minutes, 58 seconds There are uncertainties that should always be unlikely but we'll get it close. 25:04 25 minutes, 4 seconds Perfect. Thank you so much for answering my questions and best of luck. Thank you. 25:11 25 minutes, 11 seconds Thank you. We take the next question from the line of Kesha Carva from White Pine Investment Management Private Limited. Please go ahead. 25:19 25 minutes, 19 seconds Uh thank you for the opportunity sir. Uh I wanted to know on the asset quality front uh how the April and May collection efficiency trends were and 25:28 25 minutes, 28 seconds going forward can you provide some color on how are you seeing the trends in MFI and MSN given the inflationary pressure arising? 25:38 25 minutes, 38 seconds So as far as dispersement volumes in April and May, predictably they were lower than Q4 Q4 but that is always the 25:48 25 minutes, 48 seconds case in financial services. Uh Q1 is always lower than Q4. But 25:55 25 minutes, 55 seconds surprisingly the asset or you know zero DPD and everything has been stable. So there's not been any drop there despite 26:03 26 minutes, 3 seconds a very very hot summer and lot of other issues petrol running out and LPG issues 26:09 26 minutes, 9 seconds and all of that stuff. So I mean it's a good surprise but it is a surprise that we have not seen much of a drop in that 26:17 26 minutes, 17 seconds uh in in the at least early delinquencies. Okay. 26:26 26 minutes, 26 seconds Let's hope it's not a delay. 26:31 26 minutes, 31 seconds Thank you. We take the next question from the line of Shrinat V from Bell Weather. Please go ahead. 26:39 26 minutes, 39 seconds Hi. Hello. Hi guys. I just wanted to check on how collections are coming in the delayed buckets given now that DPD 26:47 26 minutes, 47 seconds DPD0 has settled down. uh you know any chance later this year that we'll start seeing some level of interest reversals 26:55 26 minutes, 55 seconds uh you know as some of the older customers are getting collected I mean lot of rightbacks are already 27:02 27 minutes, 2 seconds happening so I don't do we disclose that so uh it won't be in the presentation probably annual report 27:11 27 minutes, 11 seconds yeah so uh so annual report and otherwise we kind of give the net uh gross uh write offs sorry the net right 27:20 27 minutes, 20 seconds But uh what we seeing is right of connections are uh fairly good uh and uh 27:29 27 minutes, 29 seconds as we move forward I think uh the connections and the harder buckets should consistently improve uh as as 27:38 27 minutes, 38 seconds obviously customers are also getting choked for fresh credit and there is a reason uh for them to kind of also clear 27:46 27 minutes, 46 seconds up. we keep on having uh customers coming up for more settlement cases than we've seen in department. 27:53 27 minutes, 53 seconds So flow forward rates are if that is your question. Yes. 27:58 27 minutes, 58 seconds Yeah. Normally the second year after the problem is solved because of the interest reversal sometime credit cost even goes to like zero or negative you 28:06 28 minutes, 6 seconds get a net right back into the P&L. So just wanted to check if you guys have seen that kind of a situation somewhere 28:13 28 minutes, 13 seconds especially given you know on a static book over the last two years the NPS were really high right right 28:22 28 minutes, 22 seconds got it uh any uh on loan against property uh dispersements have kind of flattened out 28:31 28 minutes, 31 seconds in the last 6 months. How are we seeing that particular business? We did want to 28:37 28 minutes, 37 seconds for you know in south India and and get some business from Andra Telana. What how is the progress there? How is the progress on distribution of the product? 28:48 28 minutes, 48 seconds Uh I I'm aware that it just takes a lot of time to find these customers but want to understand from a growth perspective how we are looking at going property. 28:58 28 minutes, 58 seconds uh mentioned to one of the uh previous scholars that uh it's not so I mean 29:08 29 minutes, 8 seconds growth and dispersement in this business as expected is not it's not like micro finance where you open up a shop and uh 29:17 29 minutes, 17 seconds you know typically uh you'll get customers because it's unsecure. this is secured and it's it's and it's 29:24 29 minutes, 24 seconds competitive and everybody's kind of jumping into this product. 29:29 29 minutes, 29 seconds uh uh so that's why you are seeing a little bit of that flat is 29:37 29 minutes, 37 seconds uh increased competition you know lot of NBFCs are coming into this product a lot of the NFIs are also trying to come into 29:44 29 minutes, 44 seconds this product and and so uh competition is fine I mean we'll we'll work with it 29:52 29 minutes, 52 seconds and uh happy to have a competition problem than quality problem honestly 29:58 29 minutes, 58 seconds And uh but yeah that is our reality on distribution of this product. Uh where are we in south or have we been able to open some branches? 30:09 30 minutes, 9 seconds No we are so we have penetrated we are doing quite a bit of volumes in Telangana also but it's a very mature market and there is a lot of 30:18 30 minutes, 18 seconds competition. So it's it's hard to again uh not very easy to break into those markets. As you know the south markets 30:27 30 minutes, 27 seconds are much more uh saturated u especially in terms of lap and secured loans and 30:34 30 minutes, 34 seconds gold loans and other types of loans than let's say western India or northern India and last one are we looking at Uttar 30:43 30 minutes, 43 seconds Pradesh for NAP have we been able to you know open up that particular market any so right now we are just expanding MSE 30:52 30 minutes, 52 seconds so we have opened up a few branches we'll open or more this quarter. Uh once that stabilizes, we'll more than likely go into that market as well. 31:04 31 minutes, 4 seconds Perfect. Perfect. Congratulations, guys. Hope you have a good FI27. Thank you. Thank you. 31:12 31 minutes, 12 seconds Thank you. Participants who wish to ask a question, please press star and one. 31:18 31 minutes, 18 seconds We take the next question from the line of Bum Sha from Aquarius AMC. Please go ahead. 31:24 31 minutes, 24 seconds Hi uh good afternoon. Uh uh I just wanted to understand in individual microloans uh which we are scaling up 31:34 31 minutes, 34 seconds does the ming guard supply or is it out of the purview of an 31:42 31 minutes, 42 seconds so if you are classifying it as a retail lo it is outside the purview. If you are classifying it as a micro then it is within the body. 31:53 31 minutes, 53 seconds So how are we treating it? 31:56 31 minutes, 56 seconds Well, this is 32:03 32 minutes, 3 seconds treating it as supply non. 32:23 32 minutes, 23 seconds Sorry, your voice was breaking a little bit. Can you repeat the Yeah. Yeah. I'm sorry. Uh is that it 32:31 32 minutes, 31 seconds depends on customer profile. Uh if it's a true micro customer, which means if 32:37 32 minutes, 37 seconds it's meeting the criteria RBI as a qualifying asset then that automatically becomes as a micro loan and therefore guard rail has applied following. 32:51 32 minutes, 51 seconds uh if it does not meet it then it becomes a retail loan on our books and that falls as a non-qualifying asset 33:00 33 minutes guardrails may still be in in many cases the guardrails are still there I mean they still might be valid under the 33:09 33 minutes, 9 seconds guard rails as in you are still meeting the criteria but depends largely if it's as retail or micro finance 33:19 33 minutes, 19 seconds okay uh so we have loosened some filters uh as compared to JS loans in IBL 33:28 33 minutes, 28 seconds let's say Arman plus2 or plus three what are our internal filters for this kind of loss there 33:36 33 minutes, 36 seconds many filters so we are not relying on this simplistic one sizefits all credit policies 33:42 33 minutes, 42 seconds largely we are uh MS are in place to evaluate a c well based on their 33:49 33 minutes, 49 seconds occupation their assessed cash flows are and based on those cash flows uh we offer a loan. 33:57 33 minutes, 57 seconds So arguably I would at the expense of sounding arrogant 34:06 34 minutes, 6 seconds our system is far superior than the so-called one size type. 34:16 34 minutes, 16 seconds So again so we've also kind of in certain ways tightened because uh when 34:23 34 minutes, 23 seconds we doing which are probably outside the perview of the guard we're also on the fact that these cases are 34:32 34 minutes, 32 seconds not new to credit these are seeing customers in terms of their uh 34:38 34 minutes, 38 seconds bureau cost of let's say 700 plus uh in terms of their uh standard collection contract these all enatch or mandate. 34:51 34 minutes, 51 seconds Yeah. So those those are additional that you you might call a filter or in terms 34:59 34 minutes, 59 seconds of the connection efficiencies that you want to put up uh we taking those necessary steps 35:08 35 minutes, 8 seconds you know frankly speaking I mean it sits in 35:17 35 minutes, 17 seconds but let me very honest with you that the MFI industry earlier 35:25 35 minutes, 25 seconds uh it was as I said a one credit policy where you know look at guard rails today 35:33 35 minutes, 33 seconds if you are a borrower in a country as large and complicated as India you're good customer at two lakh but at two 35:41 35 minutes, 41 seconds lakh 1,000 you become bad if you borrowed from whatever two three MFIs you're good anymore you become bad 35:50 35 minutes, 50 seconds you if you have an EMI of 12,500 you are good 12,600 I'm bad I mean it's too 35:58 35 minutes, 58 seconds anyway what that is true in Gujarat or Kerala or Bihar envirment all the same so 36:06 36 minutes, 6 seconds I mean I'm not saying the guard rails are bad they're I voted in favor of the guard rails as I've said earlier as well 36:12 36 minutes, 12 seconds uh because that is what was required to delever uh the the overleveraging that had occurred but in the long term we 36:21 36 minutes, 21 seconds have to move past these kind of you know tailor the credit to an 36:28 36 minutes, 28 seconds customer. There might be many customers who can afford a much higher EMI than 12,500 and there'll be many that cannot even afford 6,000. 36:38 36 minutes, 38 seconds Who's to judge what is uh abs what is absolutely correct for everybody? Right. 36:48 36 minutes, 48 seconds Okay. Got it. And other question is assuming that uh FR27 is the normalized 36:55 36 minutes, 55 seconds year uh how should we look at the credit cost should it be in range of 2.53% or more than that 37:04 37 minutes, 4 seconds I think that's a ballpark a good number of 3%. Yeah, I think uh we should be able to pull that off. 37:14 37 minutes, 14 seconds There's the macros. 37:22 37 minutes, 22 seconds Okay. And last question is woman I would request you to please join back the queue for followup questions. Sure. 37:31 37 minutes, 31 seconds Thank you. We take the next question from the line of RA from IPMS. Please go ahead. 37:40 37 minutes, 40 seconds Yeah. Thank you for the opportunity sir. Am I audible? Yes. 37:46 37 minutes, 46 seconds Yeah. So sir first question on the offic side since you have said that uh we have changed uh tweaked the model are uh a 37:54 37 minutes, 54 seconds little bit. So could you help us understand like what are the levers that we have in our hand to get that control 38:02 38 minutes, 2 seconds co cost under control like what could be do from our side? 38:09 38 minutes, 9 seconds Well you know in the finance industry the easiest thing to do to solve all your problems is to grow the book. 38:17 38 minutes, 17 seconds So whether you are facing asset quality issues or opex issues, the best way to the easiest way to do it is to increase the denominator. 38:27 38 minutes, 27 seconds The more complex way is of course to drive efficiency harder. So we plan to do both 38:35 38 minutes, 35 seconds uh get more work out of people in a more efficient way through the use of technology. 38:41 38 minutes, 41 seconds Obviously high volumes are achievable as proven by my team uh during Q4 where it was probably 38:50 38 minutes, 50 seconds uh a record quarter for us uh both in terms of volume and growth and uh so just execute that properly and 39:00 39 minutes over and above that if you do that properly then the EUM will naturally grow and the denominator effect will cut 39:07 39 minutes, 7 seconds down cost but definitely we are not planning running any layoffs or anything like that to cut cost. So we've never done that. I've 39:16 39 minutes, 16 seconds never done it in the last 16 years. Uh and definitely we don't plan to do that. 39:24 39 minutes, 24 seconds Got it sir. Currently sir it's at around 8% if I look at consolidated level for FY26. 39:32 39 minutes, 32 seconds So what are the aspiration levels that we would uh aim for to bring it down from hydro 39:39 39 minutes, 39 seconds side? It's probably closer to 9% or so if I'm not mistaken. We'll probably get that try to get that down to 7%. 39:47 39 minutes, 47 seconds Uh it's I mean at our peak levels we are probably at you know about 5%. Whether that is achievable now I don't think so. 39:57 39 minutes, 57 seconds Uh but six is definitely achievable in the medium term for this year. Probably 40:05 40 minutes, 5 seconds around seven sounds like a nice go figure, achievable figure. 40:12 40 minutes, 12 seconds Understood sir. Understood. And sir, uh lab product has seen a little bit spike 40:18 40 minutes, 18 seconds on uh par 30 to90 and gnps. Uh is there any reason that you should be concerned about that? 40:27 40 minutes, 27 seconds Um I mean uh yes you I mean if you're seeing spike what you need to understand is that uh it's a relatively new 40:35 40 minutes, 35 seconds portfolio. So yes we've seen some few cases getting to the power 90 in lab product and then 40:42 40 minutes, 42 seconds yeah I didn't think we had much of a problem. No, no, we I mean I guess uh every every NPA is a problem but then uh 40:50 40 minutes, 50 seconds if uh the GNPA sub seven uh.7 uh GM 7.7 41:00 41 minutes okay so probably four or five cases there's cases understood sir what would be the levels 41:08 41 minutes, 8 seconds of GMPA and credit cost that we would be comfortable in this portfolio as we scale at 20 25%. 41:17 41 minutes, 17 seconds I don't know. I don't have enough experience with this portfolio. I don't know. Okay. What is a standard? 41:23 41 minutes, 23 seconds Uh people have told me it's anywhere between 1 and 5% uh depending on the type of customers and what type of cycle 41:33 41 minutes, 33 seconds you are in. But you know in any lending product it's never going to be zero secure and unsecured. 41:43 41 minutes, 43 seconds and your security is only as good as your ability to repossess it and also to uh liquidate it. Uh now this product we 41:53 41 minutes, 53 seconds are not really getting on the fact that you will manage repossessing and liquidating. Uh 42:00 42 minutes so it's definitely not going to be zero or 1%. Probably 2% is a is a good 42:08 42 minutes, 8 seconds uh is something that long-term a good long-term number that we should be happy with. 42:16 42 minutes, 16 seconds Understood sir. Understood answer. Uh what I would request you to please join back the queue for follow-up questions. 42:25 42 minutes, 25 seconds Thank you. We take the next question from the line of Vinit Sharma from Param Capital. Please go ahead. 42:33 42 minutes, 33 seconds Thank you so much for the aortion key. 42:35 42 minutes, 35 seconds Uh just a quick one on the operating expenses for this quarter. Uh does it include any oneoffs or like for instance 42:44 42 minutes, 44 seconds the CGFMU premium or anything which is particularly coming in this quarter? uh which it does include CGFMU 42:53 42 minutes, 53 seconds uh uh premiums but that is no longer oneoff I mean at least until the program is active we are going to cover 43:01 43 minutes, 1 second everything 100% so that that will be a part of the overall cost u recurring on a quarterly this would be 43:08 43 minutes, 8 seconds an annual recurrence right or a quarterly one there's an annual component and a quarterly component as well so quarterly 43:16 43 minutes, 16 seconds will be the new the annual ones are but I believe that we capitalize those. So, so the annual 43:25 43 minutes, 25 seconds one uh let's say what becomes uh payable or applicable for FI27 43:32 43 minutes, 32 seconds obviously is covered uh equally for all the four quarters of 27 and uh there would be a quarterly component which 43:40 43 minutes, 40 seconds would be applicable to the new dispersement that we do right so that is dependent on the amount of new dispersement and that would also be capitalized I 43:48 43 minutes, 48 seconds believe so if it's like so so that that's only for a quarter for the new disbursement for that uh first year it's a prorated uh amount. 43:57 43 minutes, 57 seconds Okay. 43:58 43 minutes, 58 seconds And hence it's only applicable to that quarter. Okay. Yeah. Thank you so much. 44:09 44 minutes, 9 seconds I guess one of salaries also not just to answer his question there was some cost related to that new labor code and everything. 44:18 44 minutes, 18 seconds Yeah. Yeah. 44:19 44 minutes, 19 seconds So if you're referring to that I think uh for both the companies taken together there is a uh labor code impact which is uh gravity. 44:28 44 minutes, 28 seconds Yeah about something like that. 44:35 44 minutes, 35 seconds Got it sir. Thank you so much. 44:39 44 minutes, 39 seconds Thank you. We take the next question from the line of Amit Mantri from 2.2 Capital Advisor. Please go ahead. 44:47 44 minutes, 47 seconds Yeah. Hey hi just on the app business I had a question. So we are seeing a fairly healthy disbbursements there but 44:54 44 minutes, 54 seconds the book growth is not significant. So for example over the last two quarters there have been 35 crores of disbbursements but the loan book has 45:03 45 minutes, 3 seconds grown by only 5 crores. So what is happening here? 45:08 45 minutes, 8 seconds Uh uh there was uh the loan book has not grown significantly because there was 45:15 45 minutes, 15 seconds this uh uh 10 of the 45:22 45 minutes, 22 seconds Yeah. So there was some one large one of couple of large ticket loans that we've done which had seen some early payments 45:31 45 minutes, 31 seconds secured loans were there but uh they were closed earlier so the displacement was higher but then the EU declined 45:41 45 minutes, 41 seconds but so these loans are all small ticket loans right so uh in the 45:49 45 minutes, 49 seconds uh again uh there were couple of loans which are uh which were last ticket loans and these were u 45:58 45 minutes, 58 seconds kind of less than 6 months and got over got prepaid. 46:06 46 minutes, 6 seconds Okay, got it. Thanks. And what's and in the aum and a particular quarter because they were there on that quarter 46:14 46 minutes, 14 seconds but probably should have left them out of the dispersement reports and anyway we we'll probably adjust it next time. 46:23 46 minutes, 23 seconds Yeah. And uh the opex for this year was around 15 crores on the consolidated basis. What kind of opex uh are we budgeting in for FI27? 46:36 46 minutes, 36 seconds Yeah. So you see an absolute term absolute terms. 46:41 46 minutes, 41 seconds Yeah. Absolute terms kind of what kind of growth on opex front. 46:45 46 minutes, 45 seconds So, so probably be slightly uh awkward to say 46:53 46 minutes, 53 seconds depend on how how many branches eventually we open up and you know how how things really pan out but uh largely 47:02 47 minutes, 2 seconds as Alo was saying earlier we try the target is to maintain it or bring it down to about 70%. 47:09 47 minutes, 9 seconds Okay. Okay. Thank you very much. 47:14 47 minutes, 14 seconds Thank you. We take the next question from the line of Pri Anag from Wealth Finis. Please go ahead. 47:22 47 minutes, 22 seconds Uh yes. Uh one is uh uh you mentioned that April May so far is looking uh on 47:30 47 minutes, 30 seconds track and not seeing any worsening in quality. Uh my question is even if it were to worsen given that there is a 47:38 47 minutes, 38 seconds CDFMU protection for at least 90 odd% of the micro finance book wouldn't that give a lot of protection in the case the quality gets bad? 47:49 47 minutes, 49 seconds Absolutely. Yes. Uh correct. 47:52 47 minutes, 52 seconds Uh as long as you get the claims it should cover about 75 72%. 48:00 48 minutes So yes that that hedge is always that risk hedge is always there in the form of CGSM right so the reason I'm raising that is 48:08 48 minutes, 8 seconds in the past cycles prior to the CGSMU guarantees uh there was a large risk uh 48:16 48 minutes, 16 seconds of high uh NPS so should we assume that now the NPS will not go beyond a certain threshold 48:26 48 minutes, 26 seconds without getting too technical here actually the percent NPS should increase 48:33 48 minutes, 33 seconds because until you file the claim you're not allowed to write it off. Is that correct V? Am I saying that correctly? 48:39 48 minutes, 39 seconds So nothing the net will the net will be uh lower the your provision coverage will remain intact but let's say the 48:47 48 minutes, 47 seconds customer was to go back then obviously they'll be sitting on your book till the time you get get the claim. Yeah. 48:55 48 minutes, 55 seconds Understood. Okay. The other question, sorry, excuse me. I'm glad you asked 49:03 49 minutes, 3 seconds that question because uh I was just thinking about that maybe a few weeks ago that given how the framework of CGFNU works. 49:15 49 minutes, 15 seconds I mean NPA is something more important. 49:18 49 minutes, 18 seconds Yeah, the the gross NPA will unfortunately go up because I'm not allowed to write 49:25 49 minutes, 25 seconds off the assets until the claims are done and that might not happen for like a year, you know, until they become NPA. 49:34 49 minutes, 34 seconds Okay, got it. Noted. Uh the uh the other question I had was regarding Elevation Capital. So there seems to be uh I think 49:44 49 minutes, 44 seconds elegant capital seems to be exiting their positions and they still have an eight odd person stake left. Do you have a sense by what time or within how much 49:53 49 minutes, 53 seconds time will they exit their entire position? 49:57 49 minutes, 57 seconds I mean I think uh they are making choice trades I guess uh in the market. there 50:05 50 minutes, 5 seconds is no pressure on their side to exit as quick as possible or no pressure from us 50:12 50 minutes, 12 seconds or anything like that. So u I don't believe that they have given me 50:20 50 minutes, 20 seconds a time frame. It could be quarters, it could be years. Uh I don't think they are in any bit of a rush. Uh but that 50:28 50 minutes, 28 seconds said, I think uh all investors eventually need to exit. That is just 50:36 50 minutes, 36 seconds how the industry works. Uh they came in in 2016. It's been about 10 years. They've been great investors. 50:44 50 minutes, 44 seconds Uh and uh we are quite happy with them overall. Uh zero complaints. 50:51 50 minutes, 51 seconds uh and uh you know I I believe Zul who was a nominee director in Arman board 51:00 51 minutes had resigned in anticipation of uh exiting event slowly 51:08 51 minutes, 8 seconds uh that was about 2 years ago I believe and uh so so yeah it's no big secret 51:16 51 minutes, 16 seconds that they are slowly exiting uh but as far as the time frame is concerned, I don't believe they are in any rush. 51:26 51 minutes, 26 seconds Noted. Thank you. And the last Thank you. We take the next question 51:34 51 minutes, 34 seconds from the line of J. Praash Kumar from Corman Capital. Please go ahead. 51:39 51 minutes, 39 seconds Hi. Uh I have uh uh question regarding MC. It's uh it's going up quarter and quarter I think from 7 to%. 51:51 51 minutes, 51 seconds I I think we commented about it but I missed that comment. I couldn't share it clearly. So if you can please give your view why MNP is increasing and why we 52:00 52 minutes are not providing why NMPA has increased by 20%. So uh so 52:09 52 minutes, 9 seconds uh as you see right now the NMPA might look slightly higher for one simple reason that uh you know uh for the last 52:18 52 minutes, 18 seconds two years has seen a lot of early stage write offs uh given the overall uh asset 52:24 52 minutes, 24 seconds quality concerns and based on the performance of individual loan accounts uh not just with us but easily a lot of 52:32 52 minutes, 32 seconds others because when we write off we also kind of look at how they have been performing at this point of time with other lenders as well and hence uh 52:42 52 minutes, 42 seconds whatever NPA actually sits on the books might be of lower aging leading to a uh 52:49 52 minutes, 49 seconds lower provisioning requirement based on uh you know the expected loss on those cases. Hence uh a bit of increase here. 52:58 52 minutes, 58 seconds Uh B again if uh some of these loans are covered under uh the CDFU uh that kind of compare would also set 53:07 53 minutes, 7 seconds in for a lower provisioning requirement and hence a bit of a change uh spike that you might see 53:15 53 minutes, 15 seconds but still it kind of across all segments uh continue to be uh lower than 1% for all of them. 53:24 53 minutes, 24 seconds And do you see that there is a need for providing for these MBA coming quarters because as of now I'm seeing that the credit cost is pretty low. I think 53:33 53 minutes, 33 seconds provisioning maybe there might be some recovery or write offs. Uh but there uh it's it seems very low as of now. Do do 53:41 53 minutes, 41 seconds you think that provisioning will be increased in coming quarters if uh this will be for NPA 53:50 53 minutes, 50 seconds credits that you are seeing in this quarter is a function of many things. 53:54 53 minutes, 54 seconds There will be certain provision reversals. 53:57 53 minutes, 57 seconds There will be certain uh cases which are covered under CGFMU uh which might not require a full 54:05 54 minutes, 5 seconds provisioning. there will be certain rightbacks as well assets which were previously written off but collected. Uh 54:14 54 minutes, 14 seconds so as one of the previous callers also said in many cases you see a negative uh sort of a contra impairment as well 54:23 54 minutes, 23 seconds which unfortunately is not the case in with Arman. 54:27 54 minutes, 27 seconds Uh so it's a function of many many things but u yeah a lower figure is definitely a 54:34 54 minutes, 34 seconds good sign especially after so many quarters of uh you know sweating over it. So uh let's see. I think you know as I said it's a function of many things. 54:47 54 minutes, 47 seconds Uh it's not like oh let's just provide more. I mean it looks too low let's make 54:55 54 minutes, 55 seconds it higher or there's enough profit let's do this. I mean it's not it's not the accounting standards are not that uh 55:02 55 minutes, 2 seconds simple anymore where lot of things are in our control to do that. You know there are ECL models, there are CGFMU 55:12 55 minutes, 12 seconds requirements, there are many many factors. Next question. 55:24 55 minutes, 24 seconds Thank you. We take the next question from the line of Hard O Jooshi from Aquarius Securities. Please go ahead. 55:33 55 minutes, 33 seconds Thank you. Most of my questions have been [clears throat] answered. I have no further questions. Thank you. Thank you. 55:41 55 minutes, 41 seconds Thank you. We take the next question from the line of Ronald Cherra from Aurora Capital. Please go ahead. 55:48 55 minutes, 48 seconds Yeah, thanks for the opportunity again. 55:51 55 minutes, 51 seconds Uh Aluk, I just wanted to check with you. You said the rejection levels are continued to be very high uh especially 55:58 55 minutes, 58 seconds on the underwriting side. Um so just wanted to check with you uh in terms of how is your sales team kind of absorbing 56:07 56 minutes, 7 seconds this kind of uh push back when there is there is so much of reversal on ground 56:14 56 minutes, 14 seconds in terms of your X bucket being at 99.5 um there's a possibility on the ground 56:20 56 minutes, 20 seconds so how do you think of your sales team's uh you know motivation kind of uh in the 56:27 56 minutes, 27 seconds new environment where there is the trade officer sitting. 56:32 56 minutes, 32 seconds Yeah. So, uh so personally speaking, it went better 56:38 56 minutes, 38 seconds than I expected and uh largely it is for I would say selfish reasons. 56:47 56 minutes, 47 seconds Uh the ground team largely went through a sort of a hell in the 56:54 56 minutes, 54 seconds last couple of years and so any initiative that makes their lives simpler in terms of collecting money is 57:02 57 minutes, 2 seconds is is welcome by them as long as the memories of the past two years remain fresh. 57:10 57 minutes, 10 seconds Uh I would imagine one things once things get better for the next 6 to 12 months uh you are right that push back may 57:18 57 minutes, 18 seconds start coming from the sales team saying that oh you know out of every 100 cases if I bring in if 75% are rejected then 57:27 57 minutes, 27 seconds what's the point right uh so uh but I think all of these things have a lot to do 57:36 57 minutes, 36 seconds with culture uh and and tones than any magic formula. And so 57:44 57 minutes, 44 seconds uh you know at the expense of uh pooping our own horn uh our culture is 57:52 57 minutes, 52 seconds very very good in terms of uh the ground level team being on board with risk 57:59 57 minutes, 59 seconds measures uh as long as they it makes sense to them whatever they're doing right and we take a lot of feedback from 58:06 58 minutes, 6 seconds them as well you know anything that is not adding meaningful value in terms of risk risk assessment. Um, we try our 58:15 58 minutes, 15 seconds best to take it out. Um, I for one hate red take. So if it doesn't make any sense of doing it just because we did it 58:23 58 minutes, 23 seconds in the past, that doesn't mean that we should keep doing it. 58:28 58 minutes, 28 seconds For example, I'll tell you that the norm for 30 years in micro finance that was that 58:35 58 minutes, 35 seconds uh you know third cycle customer is better than second and fourth cycle customer is better than third. 58:43 58 minutes, 43 seconds through numerous cycles I have found no evidence of that and so while it's important to from a 58:50 58 minutes, 50 seconds customer retention perspective we don't put so much emphasis from a race perspective anymore just because somebody's been with you for four cycles 58:58 58 minutes, 58 seconds that does not automatically make them now we did get push back that oh this is a four cycle customer why are you rejecting them or why are you not 59:06 59 minutes, 6 seconds approving a higher loan amount and so those kinds of push back come quite often And that is up to us to educate 59:15 59 minutes, 15 seconds them, train them or communicate with them that these are the specific reasons why that is happening. But yes, you are right. It is a I mean nothing is simple. 59:26 59 minutes, 26 seconds It definitely there are challenges to convince the and in the finance business 59:33 59 minutes, 33 seconds uh little bit of fights between sales and credit is not necessarily a bad thing. 59:41 59 minutes, 41 seconds Fair. Uh yeah. And and lastly on your aspiration of 5,000 K of EUM which we had spoken 59:50 59 minutes, 50 seconds about couple of years back. Uh now that we are past the uh difficult period in the industry. Uh is that path now clear 59:59 59 minutes, 59 seconds for Arman as on a consolidated basis to achieve in the next 18 to 24 months? 1:00:08 1 hour, 8 seconds You know the last cycle has made me a bit superstitious. 1:00:12 1 hour, 12 seconds So I'm not going to say anything that aspiration amount still remains but when 1:00:19 1 hour, 19 seconds and how we achieve it is is always I better we we better talk about it at 1:00:26 1 hour, 26 seconds some point of time if things are not bad. But let's let this uh you know war and LPG and patrol and all of these 1:00:34 1 hour, 34 seconds things get over and then probably we'll have a better discussion around 5,000. Sure. Thank you so much. 1:00:44 1 hour, 44 seconds Thank you. We take the next question from the line of Bumi Sha from Aquarius AMC. Please go ahead. 1:00:52 1 hour, 52 seconds Hi. Uh sir I just wanted to understand what is the provision and right of 1:00:58 1 hour, 58 seconds policy for 90 plus cases provision and right of policy for 90 1:01:06 1 hour, 1 minute, 6 seconds plus simple answer 1:01:16 1 hour, 1 minute, 16 seconds provision coverage ratio on an asset provision coverage ratio ratio is about uh 92%. 1:01:29 1 hour, 1 minute, 29 seconds Yes. But that is based on the auto. So uh and provisioning requirements on 1:01:39 1 hour, 1 minute, 39 seconds you know uh what is the probability of default and the other aspects to it because 1:01:47 1 hour, 1 minute, 47 seconds when the customer comes into default in terms of the age uh of the thinner of the loan uh will make 1:01:57 1 hour, 1 minute, 57 seconds somebody just to give a case somebody uh for on a 24 month loan 1:02:04 1 hour, 2 minutes, 4 seconds defaulting in in the third month itself will probably require a higher provisioning percentage 1:02:12 1 hour, 2 minutes, 12 seconds defaulting installments 1:02:20 1 hour, 2 minutes, 20 seconds which are certified are being reertified annually that that takes care of those 1:02:29 1 hour, 2 minutes, 29 seconds approved after Thank you. 1:02:41 1 hour, 2 minutes, 41 seconds Sure. 1:02:42 1 hour, 2 minutes, 42 seconds Thank you. We take the next question from the line of Vine J. Praash Ambbeaker and individual investor. 1:02:49 1 hour, 2 minutes, 49 seconds Please go ahead. 1:02:56 1 hour, 2 minutes, 56 seconds Hello V. Please unmute your line and proceed with your question. Oh, am I audible? 1:03:05 1 hour, 3 minutes, 5 seconds Yeah, yeah, you are. Hi. 1:03:08 1 hour, 3 minutes, 8 seconds Yes. Um, uh, I just wanted to, you know, if if you could throw some light on, u what is the on ground competitive 1:03:16 1 hour, 3 minutes, 16 seconds scenarios that we are seeing. You briefly touched upon it saying that you would rather have competition pressure than pride pressure. uh but generally 1:03:24 1 hour, 3 minutes, 24 seconds you know what has typically happened after bad cycles is that uh you know people who have burned their fingers withdraw from the market and uh you know 1:03:33 1 hour, 3 minutes, 33 seconds unfortunately you know they come back towards the peak uh right now since the cycle is turning um are we seeing lesser 1:03:42 1 hour, 3 minutes, 42 seconds competition uh due to withdrawal of the large NBFC's or the multi-asset NBFCs in specifically in MFI 1:03:51 1 hour, 3 minutes, 51 seconds uh that was my first point to understand. 1:03:56 1 hour, 3 minutes, 56 seconds Yeah. So I'll answer the first point otherwise I'll forget it. Uh so uh the 1:04:03 1 hour, 4 minutes, 3 seconds so the competition I was referring to to one of the previous callers was uh regarding micro lab. Uh you know competition is always in flux. 1:04:17 1 hour, 4 minutes, 17 seconds Uh so you know there was a time 6 months ago where where everybody was talking about diversifying 1:04:26 1 hour, 4 minutes, 26 seconds you know reducing mfi book uh and and many other things and I think I'm not sure if I said it in one of the 1:04:33 1 hour, 4 minutes, 33 seconds con calls but it's like that's music to my ears you know that when everybody's jumping into a business that is when you 1:04:41 1 hour, 4 minutes, 41 seconds should be more cautious and when everybody's talking about getting out of something uh that is something that is 1:04:48 1 hour, 4 minutes, 48 seconds is a great thing for I mean you know as a as a businessman to see okay you'll have less competition 1:04:56 1 hour, 4 minutes, 56 seconds uh on the converse when people were talking about diversifying they were talking about getting into some of the 1:05:04 1 hour, 5 minutes, 4 seconds other segments that we have like MSME or microlab so in that sense there was much 1:05:11 1 hour, 5 minutes, 11 seconds increased competition in the sort of individual MSME small ticket loans uh that everybody seems to be doing now uh 1:05:20 1 hour, 5 minutes, 20 seconds calling it different names but in a sense it remains a similar product and a lot of people including SFBs and 1:05:29 1 hour, 5 minutes, 29 seconds everybody have started going into these small ticket lap loans as well. So there is much higher competition there in the MFI space. 1:05:39 1 hour, 5 minutes, 39 seconds Uh yes and no. I think uh unfortunately or fortunately I think as 1:05:48 1 hour, 5 minutes, 48 seconds a defense mechanism uh I've always said that uh people have 1:05:55 1 hour, 5 minutes, 55 seconds uh very short memories and uh and that includes myself as well probably that 1:06:03 1 hour, 6 minutes, 3 seconds few good quarters and everybody says ah it was co or it was demon or whatever this was and life goes 1:06:13 1 hour, 6 minutes, 13 seconds And so uh while people were talking about uh you know giving up or getting out of MFI 1:06:23 1 hour, 6 minutes, 23 seconds uh many people are pushing up volumes uh back to you know 1:06:30 1 hour, 6 minutes, 30 seconds precrisis level. Now uh there are significant competitors who are facing some issue or another whether it's 1:06:39 1 hour, 6 minutes, 39 seconds liquidity or capital or other things. So from that side there is much lower competition. 1:06:46 1 hour, 6 minutes, 46 seconds Uh but uh I don't know I mean it's pay and it's another thing to do. 1:06:53 1 hour, 6 minutes, 53 seconds At least in the fourth quarter, I did see lot of larger players uh increasing their volumes quite a bit. 1:07:06 1 hour, 7 minutes, 6 seconds Okay. uh because if I just zoom out a little uh you know assuming that the total addressable market remains more or 1:07:15 1 hour, 7 minutes, 15 seconds less same or it has in fact grown over uh last few years and the total NFI book has actually shrunk uh from 4 and a half 1:07:24 1 hour, 7 minutes, 24 seconds crores to less than four and uh we are now talking of uh circumspect growth numbers of you know like anywhere 1:07:32 1 hour, 7 minutes, 32 seconds between 20 to 30%. whereas in the past we have grown at upwards of 60 60 70% also in some quarters. So the thought 1:07:40 1 hour, 7 minutes, 40 seconds was that you know this lends some longevity to the uh business if uh lending is done prudently. 1:07:48 1 hour, 7 minutes, 48 seconds So is this can you think about it uh you know from a structural perspective on these lines? 1:07:56 1 hour, 7 minutes, 56 seconds Yeah, 100%. I think uh if there were many lessons to be learned and uh I 1:08:04 1 hour, 8 minutes, 4 seconds think hopefully people have absorbed them. I know I have and uh you know I 1:08:11 1 hour, 8 minutes, 11 seconds think uh all said and done we are perhaps slightly better off for it uh in 1:08:19 1 hour, 8 minutes, 19 seconds a in a strange sort of way. So uh yeah I mean I'm not exactly sure how to 1:08:26 1 hour, 8 minutes, 26 seconds answer that V but yeah no yeah sure things better than they were 100%. 1:08:35 1 hour, 8 minutes, 35 seconds Yeah. 1:08:35 1 hour, 8 minutes, 35 seconds Uh better than ever were I mean it's relative depends on what you are what is your comparison threshold. 1:08:46 1 hour, 8 minutes, 46 seconds Sure. Sure. Just to round that point off uh what I was also thinking is that uh you know we have been hit by 1:08:53 1 hour, 8 minutes, 53 seconds externalities very often till now. uh and while there has been accidents at company level in any different uh 1:09:02 1 hour, 9 minutes, 2 seconds institutions at an industry level what has happened in the last year or two is you know kind of self goal by everybody 1:09:09 1 hour, 9 minutes, 9 seconds and uh now that you know all of them have learned from that probably uh internally there are stronger mechanisms 1:09:17 1 hour, 9 minutes, 17 seconds in place uh and then now we just go back to business as usual where we uh work with known externalities and then hope some unknown externality doesn't hit us. 1:09:28 1 hour, 9 minutes, 28 seconds So that's that's my comment on that. 1:09:32 1 hour, 9 minutes, 32 seconds Um my second uh being prepared that's what my second point was uh can you just 1:09:40 1 hour, 9 minutes, 40 seconds throw some light on how we are thinking of uh the solar vertical uh what what which customers are we 1:09:48 1 hour, 9 minutes, 48 seconds targeting what products are we financing some color around that. 1:09:54 1 hour, 9 minutes, 54 seconds Yeah. So the solar sort of venture started with uh there is a government program in place 1:10:03 1 hour, 10 minutes, 3 seconds wherein you are get uh you know the government uh for qualifying there is a subsidy on place depends on 1:10:12 1 hour, 10 minutes, 12 seconds what state you are in can be as high as maybe 70 75,000 rupees of subsidy that you get from the government for putting 1:10:21 1 hour, 10 minutes, 21 seconds rooftop solar. I believe it's up to 3 KVA is the most ideal 1:10:27 1 hour, 10 minutes, 27 seconds uh uh ratio to get your thing and uh and so you know looking at the numbers it's 1:10:35 1 hour, 10 minutes, 35 seconds sort of an easy to convince a customer that listen your EMI will be equal or less than your electric bill and in 3 1:10:42 1 hour, 10 minutes, 42 seconds years or whatever you know you'll get free electricity and while there is a lot of competition 1:10:49 1 hour, 10 minutes, 49 seconds in the uh in the in the urban spaces I did not find that there was enough 1:10:57 1 hour, 10 minutes, 57 seconds distribution or enough competition in the rural spaces right and so that beginning 1:11:06 1 hour, 11 minutes, 6 seconds of the pilot uh but uh overall it's I mean it's too early to 1:11:15 1 hour, 11 minutes, 15 seconds tell so I I I'm not sure if I want to add anything to that besides the reasoning of why we started the P. 1:11:23 1 hour, 11 minutes, 23 seconds Sure. Sure. Okay. But uh uh the yield continue to be in line with our other products and our underwriting practices 1:11:30 1 hour, 11 minutes, 30 seconds continue to be similar to other products. Uh I mean just if you think about it, what 1:11:40 1 hour, 11 minutes, 40 seconds is the profile of customer who would voluntarily invest money for a rooftop solar? Right? 1:11:48 1 hour, 11 minutes, 48 seconds I mean clear this is not like unsecured personal loan where I mean clearly the people who want to do it in the rural 1:11:57 1 hour, 11 minutes, 57 seconds side will automatically be slightly bit more responsible be slightly better off 1:12:04 1 hour, 12 minutes, 4 seconds be have the ability to think long term right and and many other factors. So 1:12:12 1 hour, 12 minutes, 12 seconds you feel uh uh concerned about the asset quality itself. 1:12:20 1 hour, 12 minutes, 20 seconds Uh however uh you know it's it's more the finding the customers that is probably going to 1:12:29 1 hour, 12 minutes, 29 seconds be the biggest issue. finding the distribution of uh dealers because I mean you know all of these different manufacturers you 1:12:37 1 hour, 12 minutes, 37 seconds have Adani and VI and many many other players uh they don't do it themselves they have 1:12:44 1 hour, 12 minutes, 44 seconds a whole distribution channel in place and there's a lot of confusion there are 1:12:53 1 hour, 12 minutes, 53 seconds thousands of these small to large players and so sorting them out and working with them will probably be the biggest challenge. 1:13:02 1 hour, 13 minutes, 2 seconds Okay. 1:13:04 1 hour, 13 minutes, 4 seconds Okay. Like you said, maybe you know a couple of quarters down the line, we may have better discussion around this. 1:13:09 1 hour, 13 minutes, 9 seconds We probably need a couple of quarters at least. 1:13:12 1 hour, 13 minutes, 12 seconds Sure. Sure. My last point uh was cutting employees uh because again about a year back you know there were we had talked 1:13:20 1 hour, 13 minutes, 20 seconds about some pressure on the employees when they go to collect and then you know life was generally tough uh for 1:13:27 1 hour, 13 minutes, 27 seconds them. Um is is are those kinds of pressures uh uh still continuing or have they abided to some extent? Uh because 1:13:36 1 hour, 13 minutes, 36 seconds there were lot of churning between organizations also with employees leaving us and all that. 1:13:42 1 hour, 13 minutes, 42 seconds Correct. No. So u obviously that collection pressure especially zero DPDX bucket has come down significantly. 1:13:52 1 hour, 13 minutes, 52 seconds uh as far as uh later bucket collection you know we now we have recovery officers 1:14:00 1 hour, 14 minutes so 100% that pressure has come down the digital itself has moved to about 35%. So yeah digital collection itself has moved 1:14:09 1 hour, 14 minutes, 9 seconds to 35%. for individual loan portfolio 70% plus uh you know so 1:14:17 1 hour, 14 minutes, 17 seconds so all in all that's much better uh you know in terms of incentives and bonuses 1:14:25 1 hour, 14 minutes, 25 seconds and RNRs they lot is relative but they made much more money than they have before uh with 1:14:33 1 hour, 14 minutes, 33 seconds better volumes and better collections and otherwise meeting targets and other things. So yeah, I I I think it's fair 1:14:42 1 hour, 14 minutes, 42 seconds to say that it's much better for them now than it was, let's say, 12 months ago or or or even 6 months ago. 1:14:52 1 hour, 14 minutes, 52 seconds Very good. And like you said, culture is very important and that is something that we have maintained uh over so many years in the past. So uh thank you. 1:15:02 1 hour, 15 minutes, 2 seconds Culture becomes much moreish. Thank you. 1:15:05 1 hour, 15 minutes, 5 seconds Thank you. I'm sorry. I I but uh as far as culture it it becomes more and more 1:15:13 1 hour, 15 minutes, 13 seconds difficult to maintain with such high attrition because it doesn't have chance to permeate. 1:15:21 1 hour, 15 minutes, 21 seconds Very true. Very true. Okay. Thank you. Yeah. Thank you so much. Bye. 1:15:29 1 hour, 15 minutes, 29 seconds Thank you. 1:15:31 1 hour, 15 minutes, 31 seconds Ladies and gentlemen, we take that as the last question and conclude the question and answer session. I now hand the conference over to the management for their closing comments. 1:15:41 1 hour, 15 minutes, 41 seconds Yeah. Uh no, thanks to everyone for uh joining this call and uh please reach out to us or investor relations team uh 1:15:51 1 hour, 15 minutes, 51 seconds directory should you have any further queries. So thank you for joining this call and uh have a great evening ride. Thank you. 1:15:59 1 hour, 15 minutes, 59 seconds Thank you sir. On behalf of Arman Financial Services Limited that concludes this conference call. Thank you for joining us. And you may now disconnect your line.