Fusion Finance Limited — Q3 FY26

Fusion Finance Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=dbvf7AtEPfU Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Fusion Finance Limited Q3 and 9 months FI26 post results earnings 0:09 9 seconds conference call. As a reminder, all participants line will be in listenon only mode and there will be an opportunity for you to ask question 0:16 16 seconds after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on 0:24 24 seconds your touchstone phone. Please note that this conference has been recorded. I now hand over the conference to Mr. Smith 0:31 31 seconds Sha from Ad Factors PR. Thank you and over to you sir. 0:36 36 seconds Uh thank you. Good morning everyone and thank you for joining us on the Q3 9mm FI26 earnings conference call of Fusion 0:45 45 seconds Finance Limited. We have the company senior management team with us today on this call. Before we begin, I would like to remind that certain statement made in 0:54 54 seconds today's discussion may be forward-looking in nature and may cont involve certain risk and uncertaintities. A detailed statement in 1:01 1 minute, 1 second this regard is available in the Q3 and 9M FI26 investor presentation that has been uploaded on the stock exchanges and 1:08 1 minute, 8 seconds the company website. I now hand over the call to Mr. Sanjay Gari, MDL CEO Fusion Finance Limited to begin the proceedings. Thank you and over to you sir. 1:19 1 minute, 19 seconds Good morning everyone and thank you for joining us for Fusion Finances Q3 and 9month FI26 earnings call. As we begin 1:28 1 minute, 28 seconds the new calendar year, I wish you and your families a very happy and prosperous new year. Before moving to performance, I would like to acknowledge 1:37 1 minute, 37 seconds two important leadership developments that significantly strengthen our platform for the next phase of growth. 1:43 1 minute, 43 seconds We recently appointed Mr. Krishnan Gopal as CFO effective January 17, 2026. 1:50 1 minute, 50 seconds Krishnan brings over two decades of experience and adds strong financial leadership as we scale the business. At the board level, we have welcomed Mr. 2:00 2 minutes Brahmanand as an independent director, a veteran founder with deep operating expertise in MSME and rural financial 2:08 2 minutes, 8 seconds ecosystems. His founder-led perspective and grassroot understanding of small enterprise lending will materially 2:15 2 minutes, 15 seconds strengthen our strategic direction as we expand our MSME and semi-urban franchise. 2:22 2 minutes, 22 seconds I would also like to place on record our sincere appreciation for Amandep Singh who served as interim CFO during a 2:30 2 minutes, 30 seconds particularly critical phase for the company. Q3 represents an important inflection point for fusion. The 2:38 2 minutes, 38 seconds business has now entered a phase of control stabilization and disciplined execution. I am pleased to share that we 2:45 2 minutes, 45 seconds have returned to profitability this quarter delivering a PAT of 14 crores. 2:50 2 minutes, 50 seconds This was supported by broad-based improvements across asset quality collections credit cost and disciplined 2:57 2 minutes, 57 seconds disbbursement growth. Importantly, our auditors have reviewed the company's financial position and confirmed that 3:05 3 minutes, 5 seconds the earlier emphasis relating to going concern is no longer relevant, reflecting the strength, stability and 3:11 3 minutes, 11 seconds resilience of the business. The quarter also marks our third consecutive period of improvement in asset quality, collections and credit cost. 3:21 3 minutes, 21 seconds Importantly, this progress has been achieved without relaxing underwriting guardrails, reinforcing the durability 3:28 3 minutes, 28 seconds of our recovery. Let me begin with disbbursements. Q3 disbbursement stood at 1594 cr up from 1 to 98 cr in the 3:37 3 minutes, 37 seconds previous quarter. This growth was driven by two focused initiatives. First, reducing operational friction for our 3:45 3 minutes, 45 seconds front-end teams. And second, leveraging a pre-approved base of highquality clients where approval rates are significantly stronger. 3:54 3 minutes, 54 seconds Approximately 30% of our new dispersements now come from this preapproved base with approval rates close to 50%. As we highlighted last 4:03 4 minutes, 3 seconds quarter, our credit framework is increasingly anchored at the branch and district level. are our top performing 4:10 4 minutes, 10 seconds branches categorized as A and B demonstrate significantly lower portfolio stress and superior collection efficiency. These branches account for 4:19 4 minutes, 19 seconds 82% of our network and contribute 91% of fresh dispersements. Our credit guardrails remain stronger than industry 4:27 4 minutes, 27 seconds standards and extend beyond traditional bureau-based assessments. We are also seeing a strong traction on the MSME 4:35 4 minutes, 35 seconds portfolio particularly in the 7 to 15 lakh ticket size segment. While this is an evolving journey, we have built 4:43 4 minutes, 43 seconds scalable processes and tools that position this business for meaningful growth. Momentum in disbbursements in 4:50 4 minutes, 50 seconds both MFI and MSME has continued into January where we have already crossed 670 crores between more than one lakh 4:59 4 minutes, 59 seconds customers. For the past 3 months, new additions have hence exceeded repayments setting the stage for sustained book 5:07 5 minutes, 7 seconds growth. Turning to our most important metric, current bucket collection efficiency. Through continued emphasis 5:14 5 minutes, 14 seconds on ground level discipline and strong guardrails, collection efficiency now stands at 99.4% 5:22 5 minutes, 22 seconds in December and 99.7% within that on the new book which currently represents 80% of the 5:30 5 minutes, 30 seconds portfolio. We are also seeing strong discipline in center meetings reflected in improving collection behavior. 5:37 5 minutes, 37 seconds Approximately 94% of collections are realized on the same day most of it from the center meetings with a further 4% 5:46 5 minutes, 46 seconds collected within the same week and the balance 1.5% within the same month. 5:52 5 minutes, 52 seconds We've also seen a s sharp reduction in borrower borrower leverage with clients having exposure to more than three 5:59 5 minutes, 59 seconds lenders now drastically reduced to 7% of pass down from earlier levels of 16 to 17%. 6:08 6 minutes, 8 seconds Our net flow forward rate in the current bucket stands at 0.25% translating to an effective collections efficiency of 99.75%. 6:19 6 minutes, 19 seconds This performance gives us confidence that credit costs in a stable state are expected to normalize in the range of 3.25 to 3.75%. 6:30 6 minutes, 30 seconds On recoveries, our in-house collection team continue to deliver improving results. We are currently averaging over 6:38 6 minutes, 38 seconds 12 cr per month of 60 plus DPD recoveries in cash with approximately over 85% 6:46 6 minutes, 46 seconds driven by internal teams. We continue to invest in strengthening this capability and are targeting 50 crores in quarterly 6:55 6 minutes, 55 seconds recoveries. On the technology front, we are pleased to share that most of the work related to our enhanced LMS and LOS 7:03 7 minutes, 3 seconds platforms is complete. We expect to begin UAT in the coming weeks with phased implementation targeted for 7:10 7 minutes, 10 seconds completion by May this year. These upgrades will modernize legacy processes, improve front-end execution, 7:18 7 minutes, 18 seconds and provide real-time visibility into operational gaps. Finally, a brief word on our people who remain the foundation 7:27 7 minutes, 27 seconds of our execution. The branch manager role core to our JG processes and field culture has stabilized meaningfully with 7:35 7 minutes, 35 seconds annual attrition at around 30% and firmly under control. Over 75% of our branch managers now have more than three 7:44 7 minutes, 44 seconds years of vintage. This deep experience at the front line is critical to sustaining operational discipline and consistent execution. Looking ahead to 7:53 7 minutes, 53 seconds FI27, we have outlined a detailed road map to cross 10,000 crores in AUM. We are confident that on the stable book, 8:02 8 minutes, 2 seconds the credit costs will be in the range of 3.25 25 to 3.75% and we will continue to optimize the 8:09 8 minutes, 9 seconds operating expenses. With a strengthened leadership team and solid capital backing, we are confident in delivering 8:16 8 minutes, 16 seconds on this plan. With that, I would like to hand over the call to Krishnan for his introductory analyst call and take you 8:23 8 minutes, 23 seconds through the financial performance in greater detail. 8:27 8 minutes, 27 seconds Thank you Sanjay and good morning everyone. As this is my first earnings call with Fusion, I would like to briefly say that I'm pleased to be 8:35 8 minutes, 35 seconds addressing you all this morning. Over the past few days, I have worked closely with the management team to ensure continuity in the execution and 8:44 8 minutes, 44 seconds financial discipline and I'm encouraged by the strength of the people, balance sheet and the progress made by fusion 8:51 8 minutes, 51 seconds across key financial matrices. I now take you through the uh our financial performance for quarter 3 and 9 months 8:59 8 minutes, 59 seconds of financial year 26. Starting with our capital and liquidity position, the liquidity remained comfortable at about 9:08 9 minutes, 8 seconds uh 1783 cr as of December and our capital adequacy stood at 38.8%. 9:15 9 minutes, 15 seconds providing adequate headroom or regulatory requirements. In addition to the liquidity of 783 cran has sanctions 9:23 9 minutes, 23 seconds in hand of 1825 cr which we can draw at any point of time. The first and final 9:31 9 minutes, 31 seconds call of the rights issue received a robust response and we got rupees 390 cr subscription that is approximately 99% 9:40 9 minutes, 40 seconds from the issue size of 400 cr. Fusion is indebted to its lenders for their continued supports towards liquidity 9:48 9 minutes, 48 seconds supply and supports extended to the company during the recent times with the challenges around the going concern and 9:55 9 minutes, 55 seconds covenant breaches. We are glad to share that the support has continued and going concern challenges behind the company. 10:02 10 minutes, 2 seconds Now the company has significantly strengthened its uh funding profile through diversified borrowings across 10:10 10 minutes, 10 seconds banks, financial institutions and development uh focused lenders reducing concentration risk and enhancing funding 10:18 10 minutes, 18 seconds resilience. During the quarter we raised uh rups 2,127 10:25 10 minutes, 25 seconds cr comprising term loans of 1347 cr direct assignment transactions of 434 10:31 10 minutes, 31 seconds crds of 310 cr and ptcs of 37 cr totaling the total debt raised in the 10:39 10 minutes, 39 seconds first 9 months till December 25 to rups 3,940 cr from our lenders. This ongoing 10:48 10 minutes, 48 seconds confidence is reflected not only in waiver approvals but also in fresh credit lines extended to us underscoring 10:55 10 minutes, 55 seconds the resilience and credibility of our company within the financial ecosystem. 11:01 11 minutes, 1 second Importantly, several banks have freshly opened up to Fusion and lenders who were earlier in wait and watch mode have now 11:10 11 minutes, 10 seconds started to actively re-engage with Fusion underscoring the improving lender sentiment towards the company. 11:17 11 minutes, 17 seconds This expanding lending universe combined with healthy liquidity and sustained profitability positions us well to 11:24 11 minutes, 24 seconds support our growth plans in a prudent manner. During my early interactions with our lending partners, it is clear 11:31 11 minutes, 31 seconds that relationships remain strong and constructive. Waiver coverage for covenant related matters has improved 11:38 11 minutes, 38 seconds further with approximately 97% coverage achieved as of date reflecting continued 11:45 11 minutes, 45 seconds lender uh confidence. This confidence is also visible in the continued availability of funding lines and 11:52 11 minutes, 52 seconds renewed credit limits reinforcing Fusion's credibility within the financial ecosystem. 11:58 11 minutes, 58 seconds Moving to funding and margin performance, our average cost of funds remained broadly stable at 10.3% 12:05 12 minutes, 5 seconds while marginal cost of funds moderated to 11.8%. 12:10 12 minutes, 10 seconds Net interest margin for the quarter stood at 11.3% supported by a favorable portfolio mix 12:19 12 minutes, 19 seconds improving asset quality and lower income reversals from stage three assets. Going 12:26 12 minutes, 26 seconds forward, we are confident that with the diversity of sanctions in hand and availability of liquidity and uh 12:34 12 minutes, 34 seconds profitability, we would like we would be anticipating our marginal cost of borrowing to continue to improve from 12:41 12 minutes, 41 seconds current levels. We expect that our credit rating agencies shall take cognizance of the developments at fusion 12:49 12 minutes, 49 seconds reflecting the strengthening of our funding mix, lender confidence and overall financial profile. Turning to the expected credit loss and asset 12:58 12 minutes, 58 seconds quality, the company has maintained a strong emphasis on portfolio hygiene and constructive provisioning. Conservative 13:06 13 minutes, 6 seconds provisioning asset quality matrices improved further during the quarter with gross NPA declining to 4.38% and net NPA remaining contained at 0.63%. 13:18 13 minutes, 18 seconds with right of recovery at 14 cr and net credit loss impact to the profit and 13:24 13 minutes, 24 seconds loss for Q3 stood at 65 cr equivalent to 1% of the average onbook loans. ECL 13:32 13 minutes, 32 seconds provisions as on as of December stood at 353 cr compared to 440 cr in the previous quarter. Stage three coverage 13:41 13 minutes, 41 seconds remained strong at 86% while combined stage 2 and stage three coverage stood at approximately 80% reflecting a 13:48 13 minutes, 48 seconds prudent approach to recoverability and focus on minimizing P&L volatility. 13:54 13 minutes, 54 seconds During the quarter there was a writeoff impact of 170 cr on the portfolio and we released 14:02 14 minutes, 2 seconds uh 15 cr of management overlay based on the management analysis including asset quality matrices. the reduction in 14:09 14 minutes, 9 seconds delinquency and the conservative provisioning approach under ECL supported by higher provisioning coverage across stages. 14:17 14 minutes, 17 seconds On operating performance, the focus on cost discipline and productivity improvements continues. The cost to income ratio for the quarters stood at 14:25 14 minutes, 25 seconds 69% while overall operating costs were nearly flat quarteronquarter. Any 14:32 14 minutes, 32 seconds sequential movement in operating cost ratios is largely attributable to portfolio normalization and is expected to stabilize as growth resumes. 14:43 14 minutes, 43 seconds Despite a calibrated approach to the balance sheet expansion, pre-provisioning operating profit for the quarter stood at 94 cr demonstrating 14:51 14 minutes, 51 seconds the underlying earning strengths of the franchise and the benefits of operating efficiencies. During the quarter, there 14:58 14 minutes, 58 seconds was also a one-time charge to the penal towards the new labor code which resulted into an impact of 6.91 cr 15:08 15 minutes, 8 seconds excluding that the pre PPOP would have been about 100 cr and the profitability 15:15 15 minutes, 15 seconds would have been above 20 crores. To conclude, Q3 and 9 months FY26 mark a 15:22 15 minutes, 22 seconds period of continued strengthening of Fusion's financial profile characterized by the stable margins, strong provision 15:31 15 minutes, 31 seconds coverage and healthy liquidity. As I take on this role, my focus will remain on sustaining financial discipline, 15:38 15 minutes, 38 seconds strengthening lender relationships and supporting calibrated well-guarded growth. With improving asset quality and 15:45 15 minutes, 45 seconds robust capital buffers, we are well positioned to deliver steady progress in the coming quarters. Thank you. Thanks 15:53 15 minutes, 53 seconds everyone. We can now open the session for the Q&A. 15:58 15 minutes, 58 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 16:05 16 minutes, 5 seconds star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 16:14 16 minutes, 14 seconds requested to use answers while asking the question. Ladies and gentlemen, we will wait for a moment while the question Q assembles. 16:27 16 minutes, 27 seconds The first question is from the line of Rajiv Mata from Yes Securities. Please go ahead. 16:34 16 minutes, 34 seconds Yeah. Hi, good morning. Congrats on good performance. Uh so sir while you have already communicated January's dispersion numbers but can you also you 16:42 16 minutes, 42 seconds know talk about the net flow forward trend in uh January and so far how it is shaping up in February and also you can 16:49 16 minutes, 49 seconds share the first bucket 1 to 30 DPD bucket as of September and December. 16:56 16 minutes, 56 seconds Yes, Rajiv. Sure. So, uh on dispersements, uh we have explained that uh the dispersement trend continues uh and this is despite stronger guardrails. 17:06 17 minutes, 6 seconds On the flow rates, uh I can't tell you exact numbers because we don't publish like that. We give you only quarterly numbers. But I can give you a 17:15 17 minutes, 15 seconds confirmation that January is better than the quarter uh three flow forward rate on the uh Xbucket. Net flow forward rate on the X bucket. 17:24 17 minutes, 24 seconds Yep. Okay. 17:25 17 minutes, 25 seconds So uh and this is very secular. So this is across states u and there is no particular state and we also share state 17:34 17 minutes, 34 seconds level collection efficiency. So this is across state. There is no state where we see any dip. The second is on the first 17:41 17 minutes, 41 seconds bucket is approximately so what we ended total is about uh 48 cr is what the 17:49 17 minutes, 49 seconds first bucket is and that would have come down right from September. Yeah, that's come down by 17:55 17 minutes, 55 seconds about 15 crores from September. So from a uh yeah that's come down from actually uh about over 75 crores from September. 18:08 18 minutes, 8 seconds To give you an exact number September and 1 to30 was close to about 87 crores and now it is 44 crores. 18:18 18 minutes, 18 seconds Oh great. Yeah. Okay. Um and sir when you talk about this pre-approved eligibility and then you know that is 18:27 18 minutes, 27 seconds how you approach growth and which is also helping you. You said that that that pool of customer wherein you have figured out there's a pre-approved uh 18:35 18 minutes, 35 seconds you can do some pre-approval based lending. How exactly you approach a customer? I mean this is all group right? This is not nothing is individual 18:42 18 minutes, 42 seconds when you talk about pre-approved uh you know opportunity in a in a certain client side. 18:48 18 minutes, 48 seconds Okay. So uh I think uh the so the question that you're asking is that how do we uh how are we utilizing the 18:57 18 minutes, 57 seconds preapproved base now yeah you said it's 30% of this was spent for Q3 yeah so the so just let me explain to you the 19:04 19 minutes, 4 seconds preapproval happens at an individual level it happens within the group but not every customer would I 19:11 19 minutes, 11 seconds preapprove so let's say there are my average meet center meeting size is let's say when uh and uh five of those 19:20 19 minutes, 20 seconds customers are let's say eligible for the next uh stage not everybody uh would I preapprove so I'm preapproving where uh 19:30 19 minutes, 30 seconds my uh uh on a certain base of customers where I see the propensity of taking 19:37 19 minutes, 37 seconds that to be very high and uh I'm keeping in the pre-approved base I'm keeping the leverage even lower than what my guard 19:45 19 minutes, 45 seconds rails are so essentially what I'm directing my sales team or the front- end teams to focus on this because my 19:54 19 minutes, 54 seconds because our uh data says that the approval rates and the behavior and the power of the pre-approved base is far better than even rest of the customers 20:01 20 minutes, 1 second that we are acquiring and uh the so the pre-approved base essentially operates at an individual 20:09 20 minutes, 9 seconds level but it addresses the group the customer is not required individual customer the customer will be so there 20:16 20 minutes, 16 seconds will be part of the group group uh in a pre-approved there will be at least two customers in the group which I will uh give a repeat loan to 20:25 20 minutes, 25 seconds for that center meeting to be eligible okay so would you introduce another loan or you would enlarge the size of the 20:32 20 minutes, 32 seconds loan if he is eligible for a larger amount of loan as per your analysis uh so when do you do that with that 20:39 20 minutes, 39 seconds customer or you wait for the cycle to get over and then you offer him a larger loan correct so we do not have two loans for the same customer in the system. We just 20:48 20 minutes, 48 seconds have one loan for one customer in the system. Now, uh the pre while the normal cycle is after 14 months, the 20:55 20 minutes, 55 seconds pre-approved is after 19 months. So, the vintage of the customer with us is much higher. 21:03 21 minutes, 3 seconds Got it. 21:05 21 minutes, 5 seconds So, the customer who's ended uh who's had a vintage of 19 months with us u you know all our guardrails. One of the critical guards is that the customer should not be delinquent currently. 21:17 21 minutes, 17 seconds Whatever bucket the customer should not be delinquent currently. We do not fund uh deluquent customers even in the first bucket whether of competition or fusions. 21:27 21 minutes, 27 seconds So uh for for to qualify for a pre-approved base the customer has to be 19 months of vintage uh versus 14 months which is our normal uh guardrail. 21:41 21 minutes, 41 seconds Okay sir. Thank you. Best of luck. Thank you. 21:48 21 minutes, 48 seconds The next question is from the line of Viril Sha from IIFL Capital. Please go ahead. 21:54 21 minutes, 54 seconds Yeah. Hi. Uh thank you for the opportunity and uh I would say congrats for now finally the first quarter of uh profits after uh this entire stress. 22:04 22 minutes, 4 seconds Sanjay uh few questions for you. One is uh with regards to first of all the profitability itself. Uh now that we 22:12 22 minutes, 12 seconds have uh turned a profit uh do you intend to recognize the DTA in 4Q uh and uh if my calculations are right what would be 22:20 22 minutes, 20 seconds that uh quantum would it be roughly around 400 450 crores in 4Q. 22:26 22 minutes, 26 seconds Okay. So is that your only question Vir or is that No, I have a couple hours. Yeah. 22:30 22 minutes, 30 seconds So if you can put down all your questions I'll answer them together. 22:34 22 minutes, 34 seconds Sure. Uh my second question was just uh clarificatory uh with regards to the current uh collection efficiency. uh so 22:42 22 minutes, 42 seconds I think on the executive summary the number is bit different from uh on page 17. Is it a change in the methodology 22:49 22 minutes, 49 seconds that we have done uh in this quarter and if you can just touch base on that uh what is that change and uh thirdly 22:57 22 minutes, 57 seconds basically uh wanted to understand uh how has uh this uh net power flow rate uh there is a sharp decline from 60 bits to 23:06 23 minutes, 6 seconds 25 bits uh from 2Q to 3Q. If you can just help us uh understand uh this reduction basis the forward flow rates 23:14 23 minutes, 14 seconds uh that you have given across buckets because I see an improvement of course in the first bucket but uh the second and third bucket largely the forward 23:21 23 minutes, 21 seconds flow rate seem to be stable probably could be a function of the net right back but that will be helpful to understand okay sure so we all first starting with 23:30 23 minutes, 30 seconds the DTA so see uh the overall quantum of DTA is close to about between 380 to 400 crores now we not and you understand 23:39 23 minutes, 39 seconds that DTA is not necessarily an operating profit. So we're not very uh pushy about when to claim that DTA. Uh we will let 23:47 23 minutes, 47 seconds it happen in the due course. Uh I'm not u u pushing whether we will do it in Q4 or next year or we will do it in a 23:56 23 minutes, 56 seconds staggered manner. U and we are also not focusing on it but just to give you a quantum that's close to about between 24:03 24 minutes, 3 seconds 380 to 400 crores. So that's why just just on that piece uh the only reason is that uh see a lot of lenders 24:11 24 minutes, 11 seconds would typically look at an annual financial and it just helps your uh the balance sheet matrices uh much better 24:19 24 minutes, 19 seconds from a rating standpoint. So that was just the only thought process behind this. 24:24 24 minutes, 24 seconds I completely agree with you. I understand that and we are in uh uh we give a monthly update to all our lenders 24:31 24 minutes, 31 seconds on the complete P&L including our collection efficiencies and metrices and if you see that's where the confidence 24:38 24 minutes, 38 seconds is coming from and there are some PSUs also which have opened their uh wallets for us in the last quarter. Uh however 24:47 24 minutes, 47 seconds we don't want to be pushing this uh because of this reason. So uh if it happens in due course uh that's fine uh 24:57 24 minutes, 57 seconds we will not push the DTA uh but yes we are uh evaluating that. So I I won't say anything further on this on the 25:06 25 minutes, 6 seconds collection efficiencies. Uh the figure that you see in the executive summary is 99.14 which is at a pause level. Uh this is 25:14 25 minutes, 14 seconds average for the quarter. This is average for the quarter three. Uh what you see is 99.41. 41 in December that is 99.41 25:24 25 minutes, 24 seconds 41 for the month of December that's like quarter ending the difference between uh previous and now on collection 25:32 25 minutes, 32 seconds efficiency what we have done is we have put it on pause uh because that is a meaningful meaningful way that's how the market does it however in the Nexure we 25:41 25 minutes, 41 seconds have also put on numbers so in case you want to refer to the previous uh that is also there in the Nexure so that's the uh difference between the two on the net 25:50 25 minutes, 50 seconds flow rates uh the the there are two areas where we have seen improvements. 25:56 25 minutes, 56 seconds Uh see on the first bucket which is 1 to 30 when we were evaluating ourselves against competition our flow rates were 26:03 26 minutes, 3 seconds close to about uh 35 30 35 to 40%. Now we were much better against the industry 26:11 26 minutes, 11 seconds on this. So we we were doing a better job on the 1 to30. 26:16 26 minutes, 16 seconds We realized that where uh we need to do better is on the gross collection efficiency. So that uh there's a lot of 26:23 26 minutes, 23 seconds focus that we have put on uh the center meeting discipline. Uh the same day collections like I have told you 94% of 26:31 26 minutes, 31 seconds our entire collections is happening on the day of the demand. 26:35 26 minutes, 35 seconds So uh these are the uh essentially the the flow back is more or less the same as before. The gross flow forward rates 26:44 26 minutes, 44 seconds have drastically come down because of which the net flow rates are far better. 26:50 26 minutes, 50 seconds on the second and third buckets if you see so there's an improvement on each of the buckets over the previous quarter uh 26:59 26 minutes, 59 seconds on second and third buckets as well I'll just give you a uh on the graph if you 27:07 27 minutes, 7 seconds see there is 5 to 7% uh improvement on each of the just give me a minute 27:16 27 minutes, 16 seconds yeah if you see the collection efficiencies or the flow forward rates in November and December in the 30 to 27:25 27 minutes, 25 seconds 60. Now we are in the range of 65 to uh 65 and 57 for December. This was 27:33 27 minutes, 33 seconds averaging about 70 in the previous months. If you can refer to slide number 13 and 60 to 90 uh is remained more or 27:42 27 minutes, 42 seconds less same because we think that by 60 to 90 I think we have uh juiced out everything from the customer but 1 to 30 27:50 27 minutes, 50 seconds and 30 to 60 is where you see uh improving improving trends over the previous quarter by at least 5 to 7%. 28:01 28 minutes, 1 second Got it. This is very helpful. This answers your queries. Yes, it does. Thank you so much and all the best. 28:09 28 minutes, 9 seconds Thank you. Thank you. 28:13 28 minutes, 13 seconds Ladies and gentlemen, to ask a question, please press star and one now. 28:19 28 minutes, 19 seconds Participants who wish to ask a question may press star and one this time. Thank you. 28:29 28 minutes, 29 seconds The next question is from the line of Ashles from KCurities. Please go ahead. 28:36 28 minutes, 36 seconds Hi sir, good morning. Uh two questions from my side. Firstly, if I look at this net forward flow rate number uh for 3Q which was at 25 basis points. Uh where 28:45 28 minutes, 45 seconds do you eventually expect this number to end up? Uh let's say when most of the bad loans have been cleaned up that is one and secondly if you can share what 28:54 28 minutes, 54 seconds is the outstanding pool of bad loans which were written off over the past couple of years uh in this cycle and how much recovery do you eventually expect from that pool? 29:05 29 minutes, 5 seconds Okay. Yeah. Yeah. Thanks, Ashish. So, first uh on the uh net forward flow. So, by this has nothing to do with the bad 29:13 29 minutes, 13 seconds book. This is only uh the net flow rate is on the current book as we all understand. So, uh and uh the biggest 29:23 29 minutes, 23 seconds change that has happened is that the leverage on the current book uh is drastically come down. you are seeing that greater than three lenders on the 29:32 29 minutes, 32 seconds overall book is close to about 7% or less than 7%, greater than three lenders. So one this has distinctly uh 29:41 29 minutes, 41 seconds come down and this will uh help us get better and better on even the current current bucket collection efficiency for 29:48 29 minutes, 48 seconds January. I have already told you that we are better than what the average that you see for the quarter. Now I think the 29:55 29 minutes, 55 seconds way uh I'm looking at it is that uh even if we continue at about 0.25% of net forward flow and assuming everything else flows forward. 30:07 30 minutes, 7 seconds So in a stable state the way we should look at it is 0.25% translates into approximately annualized uh credit cost of about 3%. 30:18 30 minutes, 18 seconds uh add another 25 and uh 90% 80 to 90% of whatever flows forward will 30:25 30 minutes, 25 seconds eventually flow into uh 90 plus. So take about 85% of that that is about 2.7 2.65%. 30:33 30 minutes, 33 seconds For a so 2.65% is a credit cost that should be there in decent times and about 50 to 60 basis points uh when 30:43 30 minutes, 43 seconds there is a tough scenario. So that's where I said that uh which is about 3.3 3.4 that's why I said that the credit 30:52 30 minutes, 52 seconds cost will range between 3.25 to 3.75% in a stable book on a stable environment. 31:00 31 minutes I hope these this answer understood sir. 31:03 31 minutes, 3 seconds Yeah. Second one was sorry second one was a uh different one the outstanding pool of bad outstanding on the so the total 31:11 31 minutes, 11 seconds write off is close to about 3,000 crores. uh we have done a I have explained in the previous calls we done a bureau run and we done multiple 31:19 31 minutes, 19 seconds propensity checks about 900 800 to 900 kores is uh what uh we see recoverable 31:28 31 minutes, 28 seconds uh which means that these are the customers where there are some or the other transactions happening in the bureau or we see some trade lines which 31:35 31 minutes, 35 seconds which gives us a positive sense we are uh expecting about uh 50 crores of recovery in the entire are 60 plus. 31:44 31 minutes, 44 seconds Now why I'm saying 60 plus is because the most of the provisioning in our case happens in 60 plus itself. So uh I'm 31:52 31 minutes, 52 seconds looking at about 50 crores every quarter. So over the next uh four quarters I'm looking at approximately 200 crores of cash collection uh which 32:01 32 minutes, 1 second will come from the entire 60 plus of which about uh 85 90% will come from 90 32:09 32 minutes, 9 seconds plus which will be divided between 90 to 180 and the write off. 32:14 32 minutes, 14 seconds So you can assume that from this quarter which is quarter four onwards for the next one year we are targeting close to about 200 crores of recoveries in the 32:23 32 minutes, 23 seconds entire 60 plus understood sir. Sir just lastly I miss your opening remarks today if you can uh 32:30 32 minutes, 30 seconds if you have given the guidance for loan growth for next year that's yes which I have already given. You want me to repeat that? 32:41 32 minutes, 41 seconds Sure sir please. Okay, thank you so much. Thanks Ash. Thank you. 32:50 32 minutes, 50 seconds The next question is from the line of Tohill Canali from ULJK Financial Services. Please go ahead. 33:00 33 minutes Uh uh yes sir. So congratulations on a good set of numbers. So I had a couple of questions. So first one being what is 33:08 33 minutes, 8 seconds the attrition rate in this quarter among the field officers and the second question was um how many 33:17 33 minutes, 17 seconds of the customers of fusion finance still have more than uh you know G lenders as of Q3. 33:25 33 minutes, 25 seconds Okay the uh sorry the second one was uh fusion plus 3 greater than fusion plus 3. Yeah. 33:32 33 minutes, 32 seconds Okay. Okay. So I've answered the second one but I'll okay repeat again the uh first one first I'll address the 33:39 33 minutes, 39 seconds attrition. So I have given you attrition figures at a branch manager level are close to about annualized 30% 75% of branch manager are greater than 3 years. 33:48 33 minutes, 48 seconds The question you are asking is field officers now the way we measure is field officer greater than 6 months is close 33:54 33 minutes, 54 seconds to about uh a little around 50%. is less than just little less than 50% and greater than 6 months uh on the which is 34:04 34 minutes, 4 seconds how we measure because a lot of people less than 6 months are trainee and uh the book allocation doesn't happen on 34:11 34 minutes, 11 seconds the fusion plus three uh I've explained to you that at a cost level now we are sub 7%. You remember we used to be 34:18 34 minutes, 18 seconds hovering around 17 to 18%. Now we are at 7%, so 7% of the entire book uh at a 34:26 34 minutes, 26 seconds pause level is fus greater than uh fusion plus two. Okay sir. Got it. Thank you. 34:35 34 minutes, 35 seconds And the new disbbursement that we are doing we have shared with you uh about 80% is just fusion and fusion plus one 34:42 34 minutes, 42 seconds not even fusion plus two. So uh that is also important to keep in mind. 34:48 34 minutes, 48 seconds Understood. Understood. I'm sorry it's also thank you very much. Thank you. 34:56 34 minutes, 56 seconds The next question is from the line of Maitri from Sapphire Capital. Please go ahead. Hello. 35:06 35 minutes, 6 seconds Hello. Yes ma'am. 35:11 35 minutes, 11 seconds Um uh could you repeat the disment number that we mentioned for January 24? 35:19 35 minutes, 19 seconds Sorry mi your voice is broken. Did you say disbbursement numbers? Yeah. 35:25 35 minutes, 25 seconds Yeah. So yeah any other question you have I'll answer them collectively. 35:30 35 minutes, 30 seconds Yeah. So for 27,000 AUM, any RO targets do we have for the next year? 35:39 35 minutes, 39 seconds Okay. So I think the second question you are asking is that against that AUM, do we have an ROA ROE target? Is that what your question is? 35:47 35 minutes, 47 seconds Yes. 35:48 35 minutes, 48 seconds Okay. Okay. So uh is that all? Uh can I start? Yeah. Yeah. 35:54 35 minutes, 54 seconds Okay. So Jan Jan disbbursement numbers are uh little over 670 crores for JAN uh 36:02 36 minutes, 2 seconds which is come from over one lakh customer I think approximately 1 lakh 10,000 customers u the second uh and 80% 36:12 36 minutes, 12 seconds and in uh MFI 80% of these customers that we have acquired okay 76% of these customers at a pause level are our 36:20 36 minutes, 20 seconds existing customers and 24% are new uh on the ROA roe see we don't give a exact 36:29 36 minutes, 29 seconds guidance on ROA ROE but uh I've given you you know our uh uh names uh you you 36:37 36 minutes, 37 seconds can clearly figure out what is the we have shared with you our margin analysis you know the uh income streams that we 36:44 36 minutes, 44 seconds have uh we given you a sense of credit cost to look at in a stable environment 3.25 25 to 3.75. So the only metric that 36:53 36 minutes, 53 seconds you would want is opex. Uh I can tell you confidently that opex uh at a percentage level will significantly keep 37:00 37 minutes coming down. The call that we have taken is that see 85% of our opex is people. 37:08 37 minutes, 8 seconds Now it doesn't make sense in a in a falling book. It didn't make sense to cut down on people and then we would again require people later on. So the 37:16 37 minutes, 16 seconds call that we took was that how do we utilize our existing people into more productive areas. One of them being 37:24 37 minutes, 24 seconds collections. We have a 3,000 cr return book. Uh and that is why we so there's a significant number of people we have put 37:32 37 minutes, 32 seconds behind collections at least for the next one year. So the compensation of let's say a little higher opex uh against 37:40 37 minutes, 40 seconds let's say a a normal opex that you would want to see is about 5 to 6%. uh we will obviously be higher than that that will 37:48 37 minutes, 48 seconds be compens that will be uh to some extent compensated by the recoveries that we get in the 90 plus or the right off pool for at least for the next one year. 37:58 37 minutes, 58 seconds Thank you so much. Thank you. 38:05 38 minutes, 5 seconds Before we take the next question, we would like to remind participants that you may press star and one to ask a question. 38:14 38 minutes, 14 seconds The next question is from the line of Viril Sha from IFL Capital. Please go ahead. 38:20 38 minutes, 20 seconds Yeah. Hi, thanks for giving me the opportunity for the followup Sanjay. Uh this with regards to your uh 38:28 38 minutes, 28 seconds collections and the write off that you mentioned. You mentioned that 50 crores of recovery per quarter. Uh this is on the 60 plus portfolio. I'm sure part of 38:37 38 minutes, 37 seconds this is basically your normal uh I would say the recovery of an overdue book roll back all those things that happen what 38:45 38 minutes, 45 seconds out of this 50 crores what is the exact I would say or not exact I would say but uh more likely uh proportion of uh recovery from the write of portfolio of 38:54 38 minutes, 54 seconds 3,000 crores if you can help us with that and secondly also with regards to your credit cost guidance of say 3.25 25 to 3.75. 39:03 39 minutes, 3 seconds Uh does this kind of uh take into account say the use of the residual management overlay of around 30 crores? 39:09 39 minutes, 9 seconds Uh given we have used another 15 crores this quarter as well. 39:14 39 minutes, 14 seconds So the second question I'll let Krishnan take on. I'll just answer your first one. uh on the uh 50 cr breakup like I 39:23 39 minutes, 23 seconds already explained while this is 60 plus 90% of it uh which is approximately 45 cr will be 90 plus which is 100% 39:31 39 minutes, 31 seconds provisioned uh right now uh we are averaging 30 of which of these 45 cr right now about 13 cr we are averaging 39:39 39 minutes, 39 seconds from the right back for the quarter which uh we will be taking to close to about 18 to 20 cr. So of 45 cr about 20 39:49 39 minutes, 49 seconds cr for the quarter will be right back and the balance 20 25 cr will be uh 90 to 180 recoveries 39:58 39 minutes, 58 seconds for the second question I'll yeah pass on to gishas so hi vir uh on 40:05 40 minutes, 5 seconds uh on the credit cost irrespective of management overlay reversal there is an improvement and that should continue uh 40:14 40 minutes, 14 seconds as far as utilization of that management overlay is concerned that is based on the improved uh flow rates and asset 40:21 40 minutes, 21 seconds quality. So as we have communicated earlier there is a plan to utilize some bit of it every quarter and uh however 40:30 40 minutes, 30 seconds uh every quarter we take an assessment of this and uh we we'll take a call uh however the our stand is we should 40:37 40 minutes, 37 seconds utilize this uh over next one or two quarters gradually the way we have utilized in last two quarters having said so there should be there is there 40:46 40 minutes, 46 seconds is a clear-cut improvement in the credit cost removing the management overlay and uh that should continue in the next quarters as well. 40:55 40 minutes, 55 seconds Got it. Thank you. Thank you. 41:04 41 minutes, 4 seconds The next question is from the line of Rajiv Mata from Yes Security. Please go ahead. 41:11 41 minutes, 11 seconds Yeah. Hi, thank you for allowing a followup. So now Salar when you talk about doing a 10,000 plus cr book in the 41:19 41 minutes, 19 seconds next year uh you know it's it's a big jump in terms of where we are right now. 41:23 41 minutes, 23 seconds Uh so from a funding point of view how confident are we of funding this kind of growth and uh if you can also talk about 41:32 41 minutes, 32 seconds now at what cost I mean uh your marginal cost of funds is running pretty high and it has to come down now. So uh where do 41:40 41 minutes, 40 seconds we see our cost of funds uh broadly you know stabilizing uh you know as we get the benefit of uh you know coming back in terms of uh the overall P&L 41:49 41 minutes, 49 seconds so uh Rajiv I'll just uh partially answer your first question and the financial aspect of it I'll leave to Krishan uh see uh we don't look at while 41:59 41 minutes, 59 seconds you are while technically let's say we end this year at about 7,200 7,300 cr and you're looking at it let's say from 42:08 42 minutes, 8 seconds a 7000 1,000 to 10,200 that's close to about 40% growth but I'm saying uh we should not look at it like 42:16 42 minutes, 16 seconds that because this is something that the current infrastructure anyway supports so if you look at our customer base of 42:24 42 minutes, 24 seconds over 25 lakh customers 1600 branches 1450 MFI branches 42:32 42 minutes, 32 seconds uh technically we should be just MFI we should be about 12,000 K of AUM just MFI I so with the branches that we have 42:41 42 minutes, 41 seconds maybe we need to just add people at a front end nothing else we should be at about 12,000 cr of aum only on the mfi 42:49 42 minutes, 49 seconds book so I think the uh while you see it as growth u I look at it like like 42:58 42 minutes, 58 seconds reinstating or utilizing the existing infrastructure because we have not uh 43:04 43 minutes, 4 seconds let a lot of people go we have not uh caused any huge anxiety amongst people 43:12 43 minutes, 12 seconds and it is hence uh I realized maybe in hindsight while we were being uh internally also we were anxious of the 43:20 43 minutes, 20 seconds fact that we are carrying a high OPEX I think in hindsight we did the right thing because uh for example you see two 43:27 43 minutes, 27 seconds quarters back we were averaging 250 crores I'm telling you we are at a 670 that's two and a half times but we're not feeling like that the pressure is 43:36 43 minutes, 36 seconds not like we have gone up two and a half times because it's just the people were there the muscle memory the way people were operating uh and we let uh people 43:45 43 minutes, 45 seconds be there and I think that's worked in our favor so uh however you'll see significant buildup on the MSME side the 43:53 43 minutes, 53 seconds book that you see about 700 crores uh about 15% of this 10,000 cr will be MSME which means that the MSME will be almost 44:01 44 minutes, 1 second double now this is where we are creating a right to win and uh we are into completely secured. We are only into so 44:09 44 minutes, 9 seconds self occupied, residential and commercial and uh we are very confident that we will be able to offer at a lower 44:18 44 minutes, 18 seconds credit cost uh a right to win which will differentiate us from the market. So 15% like I said of the 10,000 cr will be the 44:26 44 minutes, 26 seconds MSME uh AUM. uh the rest of the I'll just let Krishna do the 44:33 44 minutes, 33 seconds so on the capital front as you can see our leverage stands at 2.2 times and uh capital adequacy at touching about 39% 44:42 44 minutes, 42 seconds and this 2.2 two times is on the back of uh like a uh extra liquidity of about 44:49 44 minutes, 49 seconds 1,800 cr. So this number should continue till March when we come to the normal 44:56 44 minutes, 56 seconds level of liquidity. So these two matrices clearly show that we have a good headroom uh of growth. Uh the number we talked 45:05 45 minutes, 5 seconds about the next year and uh uh the one uh more year and this is based on the current levels and I'm not even talking 45:12 45 minutes, 12 seconds about DTA some someone of uh the stock touched upon DTA. So that is also uh now we are profitable and this is just a 45:21 45 minutes, 21 seconds matter of time. So uh uh so that ways we have enough capital for growth uh 45:28 45 minutes, 28 seconds without uh that DTA as well and when DTA comes there is a straight addition of about 400 cr and as I said that is a 45:35 45 minutes, 35 seconds just a matter of time so so we are not worried on that front and uh as we have mentioned on the uh debt side we are 45:44 45 minutes, 44 seconds already getting uh sanctions we have liquidity of 1,800 cr sanctions in the hand of about 1,825 cr So uh the focus 45:54 45 minutes, 54 seconds uh is on the business and the growth and uh we are getting good support uh from the lenders plus as I mentioned we have 46:01 46 minutes, 1 second a good headroom uh our leverage is is uh is have very uh good uh headroom plus capital adequacy as well. 46:11 46 minutes, 11 seconds Just one last thing I want to check on was that uh that government sponsored credit guarantee scheme which was supposed to come. Um any thoughts uh is 46:21 46 minutes, 21 seconds that coming uh size or something on that? 46:25 46 minutes, 25 seconds So I will let see uh conceptually we have agreed that Alogi who's the CEO of Men he's uh representing us and he's 46:34 46 minutes, 34 seconds chairing that. So anything pertaining to that uh I think it is uh I would uh deem it fit and proper for him to do the 46:42 46 minutes, 42 seconds talking but obviously if it comes it's a great for the industry in what when I think he's the spokesperson for the 46:50 46 minutes, 50 seconds industry and he should do the talking on this. Sure. Thank you. 46:58 46 minutes, 58 seconds Thank you. 47:00 47 minutes The next question is from the line of Sonel from precient cap. Please go ahead. 47:08 47 minutes, 8 seconds Uh, hi. This is Sonal Manas. I hope I'm audible. Yes. 47:14 47 minutes, 14 seconds Yes. Sir, you were talking about recoveries of the order of 200 kodes uh before future. Um, what is if I see 47:25 47 minutes, 25 seconds slide 25? I think uh the recovery rates are much lower than that on a quarterly basis as we see right now. Am I reading the data right? 47:34 47 minutes, 34 seconds uh just want to understand the numbers first and how that is going to be enabled going further um to meet those numbers just wanted to understand that. 47:43 47 minutes, 43 seconds Yeah. 47:44 47 minutes, 44 seconds Okay. Great. Yeah. So uh so there are two part of recovery. So like I said 50 cr is the total 60 plus and I gave a 47:52 47 minutes, 52 seconds breakup of that that 50 cr about 5 crores is 60 plus and the balance 45 cr 47:58 47 minutes, 58 seconds is u uh 60 to okay sorry 90 to 180 and the balance is about 20 cr is write off 48:06 48 minutes, 6 seconds now write off that let's say I'm positioning right now so this total number that you see right now against 50 48:14 48 minutes, 14 seconds cr is about 36 37 cr Right. Uh and uh between this the write off is 13 cr for 48:22 48 minutes, 22 seconds the quarter which I'm positioning at 20 crores. There are certain changes that we have done on how we were uh there are 48:29 48 minutes, 29 seconds some experiments that we were doing in certain set of branches and we've been extremely uh successful and the results 48:37 48 minutes, 37 seconds have been encouraging. Uh there are some technology changes we have done. We have taken uh advantage of propensity. There 48:45 48 minutes, 45 seconds are some AI calling that we have done because reaching out to you would understand this is like uh 10 12 lakh customers so reaching out to them would have been very expensive manually possible. Yes. 48:56 48 minutes, 56 seconds Yeah. So there are multiple so we have also taken uh help of AI and and uh actually uh we were amazed we were 49:05 49 minutes, 5 seconds thinking that the rural customers response to AI would be weaker as compared to urban. We were pleasantly surprised and uh all of us have listened 49:14 49 minutes, 14 seconds to a lot of those calls the uh I think if we choose the right partner and if we 49:21 49 minutes, 21 seconds uh do this right uh there is a significant upside that we can get rather than you know burning money on hiring people on contact center and uh 49:31 49 minutes, 31 seconds warm bodies. So there are and that's one of the reasons why the overall cost of collections even in the write off has been hovering around 20%, otherwise in the market is close to about 354%. 49:43 49 minutes, 43 seconds So uh this is what uh our sense is that the the 50 cr backup will come from and we are uh so if I were to give you the 49:52 49 minutes, 52 seconds January number against this 50 we are very close to let's say uh 14 uh we are 50:00 50 minutes about 12 to 14 cr in Jan so from a u and my previous average uh was 11 crores so 50:10 50 minutes, 10 seconds I'm uh basis that also So we are getting confidence that uh this will be uh I'm 50:18 50 minutes, 18 seconds not saying a cakewalk but 50 cr uh we should be able to target in about uh one and a half quarters time 50:27 50 minutes, 27 seconds and for the and and this is the average per quarter for the last for the next four quarters so that we will be at 50 crores so that I'm pretty confident on 50:36 50 minutes, 36 seconds got it sir thanks for explaining this sir uh going further from a prudence perspective And in micro finance the 50:43 50 minutes, 43 seconds cycles are uh the up and down cycles are there after every two three years. Just want to understand like uh there is 50:50 50 minutes, 50 seconds credit which has uh early provisioning uh policies uh just taking them as example but there other more who 50:57 50 minutes, 57 seconds basically more conservative in terms of provisioning much ahead of time uh compared to peers in the market. How 51:04 51 minutes, 4 seconds should we see um fusion going further going ahead uh from a 2 three year perspective like uh is there enough 51:13 51 minutes, 13 seconds buffer you want to create and provisions uh from the profit pool so that whenever the next down cycle comes you're ready 51:20 51 minutes, 20 seconds uh and that secures the institution for the next cycle as well uh from a down cycle just want to understand from a risk perspective uh how how things going 51:29 51 minutes, 29 seconds to be different for for fusion not from a regulatory perspective Yeah. So no, so I think a very uh I 51:36 51 minutes, 36 seconds think very very apt question. So from a uh risk perspective, the way we are looking at it is that there are two ways 51:45 51 minutes, 45 seconds of managing a let's say a tough situation or a market or a cycle is that during the good times you you take lesser risk, you build your guard rails much stronger. 51:55 51 minutes, 55 seconds Sure. and you don't get to so there are all this challenge happens because of the fringe customers or customers who are on the bench 52:03 52 minutes, 3 seconds and those are the customers who move to let's say a delinquency uh during the bad time. So one is that guardrails have to be much tougher. We have already 52:11 52 minutes, 11 seconds explained that uh uh our guardrails are at least two to three times tougher than what the industry guardrails are and 52:20 52 minutes, 20 seconds we're not using just simple uh bureau as a baseline. So that's one. The second 52:27 52 minutes, 27 seconds thing if you look at our ECL model it is extremely aggressive. In fact uh most of the analysts have come back and said that you are overprovisioning. 52:37 52 minutes, 37 seconds We didn't want to change all this during the year. So you are absolutely right. I think uh should we between provisioning 52:45 52 minutes, 45 seconds and ECL let's say creating fresh management overlay and provisioning uh should we be creating a buffer? Absolutely. What you're saying is right. 52:53 52 minutes, 53 seconds Uh and uh but uh what it but both the things cannot happen at the same time. 52:58 52 minutes, 58 seconds We cannot take a very high provision. We cannot take a very high ECL and then also provision and create a management overlay. So u we have taken a very 53:08 53 minutes, 8 seconds aggressive provisioning and like and this was because we had a very tough time last year. We did not want to change it during the year. But uh I 53:17 53 minutes, 17 seconds think as a team we will sit down uh uh there are two people who are working on the ECL model. There's an external consultancy also we have hired who gives 53:25 53 minutes, 25 seconds us a very fair and an unbiased view. uh so we will I think at the beginning of the year uh look at uh both whether we 53:34 53 minutes, 34 seconds need to uh build more management overlay or we need to make uh the uh ECL 53:42 53 minutes, 42 seconds provisioning a little more clearer but you are absolutely right so we will take this call in Q1 the moment we are 53:50 53 minutes, 50 seconds done with Q4 and so how do you tie this just just want to ask on this how do you tie this with growth because you have given a 53:58 53 minutes, 58 seconds growth guidance uh uh which is fairly uh aggressive. So basically just want to 54:05 54 minutes, 5 seconds understand uh from a growth come the risk perspective is that growth something which you feel is it's uh is 54:13 54 minutes, 13 seconds is uh reasonable enough for the risk that you want to play with. Okay, great. 54:18 54 minutes, 18 seconds So I think uh let's break this down. The growth is coming from where is the growth coming from? The uh one we are saying that the MSME book will almost double currently 720 will go to 1500. 54:29 54 minutes, 29 seconds Yes. 54:30 54 minutes, 30 seconds Yeah. Is that risk? Obviously the risk is much lesser. Why it is lesser? 54:34 54 minutes, 34 seconds Because it is completely secured. Uh the LTVs are fire protected. Our book LTVs are close to 55%. uh we are not uh we're 54:42 54 minutes, 42 seconds not uh and we are very very uh clear on what kind of properties and what kind of risk we will take. We are not taking any 54:48 54 minutes, 48 seconds cash flow risk there. The only risk that we are taking is on marketable properties. So uh we will we create so 54:56 54 minutes, 56 seconds 1500 cr of book let's say 700 to 1500 cr will be a uh a far less uh risky book. 55:03 55 minutes, 3 seconds The second part is that uh MFI going from let's say 6,500 or 6,400 to 8,600 55:12 55 minutes, 12 seconds like I said I don't uh we should not see this as real growth because we did not cut down on branches we did not cut down 55:20 55 minutes, 20 seconds on people and I'll just give you a number we did 670 crores uh out of which 55:26 55 minutes, 26 seconds about 35 crores is MSME 630 K is MFI is Now the question that you have to ask 55:34 55 minutes, 34 seconds is that for next year if I have to do let's say uh 8,000 K or disbbursement from MFI 55:42 55 minutes, 42 seconds 650 K my this month number or 630 cr will take me to 7,500 K do you think going from this number to let's say 720 55:50 55 minutes, 50 seconds K average for next year is it really growth is it an aggressive growth okay I think that's the uh so maybe uh it is 55:58 55 minutes, 58 seconds sounding growth to you because the first two quarters were like really First quarter was like really down. We were less than 1,000 cr dispersement 56:06 56 minutes, 6 seconds and there was a huge runoff because of the book quality or the previous book that we had acquired. That's why you saw the book deterioration happening very quickly. 56:17 56 minutes, 17 seconds Got it sir. Got it sir. Thanks. Thanks for listening sir. I'll call back in the queue. Thank you. 56:24 56 minutes, 24 seconds Thank you. 56:26 56 minutes, 26 seconds The next question is from the line of Aijit from Modilal Oswald. Please go ahead. 56:33 56 minutes, 33 seconds Yeah, good morning sir. Thank you for taking the question. Uh so uh please let me know in case these questions have been answered. Uh first thing is I mean 56:41 56 minutes, 41 seconds today uh we see an increasing propensity of uh MFI lenders to go to CGFME. 56:49 56 minutes, 49 seconds So our thoughts around that I mean is there a portion of our portfolio which is guaranteed under CGFME and if yes 56:57 56 minutes, 57 seconds what is the proportion if not how are we thinking about it? The other thing is um incrementally we have seen is talking 57:05 57 minutes, 5 seconds about taking some uh hiking lending rates. So what are our thoughts there? 57:12 57 minutes, 12 seconds And lastly sir today when we meet MFIs right we see a subtle acknowledgement that hey in MFIs while uh the group 57:21 57 minutes, 21 seconds lending will continue basically in JLG the group debate will continue but joint liability something people don't sound 57:29 57 minutes, 29 seconds very confident about going forward. So if if you could just share your brief thoughts on these three questions. 57:36 57 minutes, 36 seconds Okay great. So credit guarantee we are evaluating but we have not yet enrolled. 57:41 57 minutes, 41 seconds None of our book is right now on a credit guarantee as and when uh we close that but we are evaluating it. So as in when we close we will come back to you. 57:50 57 minutes, 50 seconds On the lending rates you're right. I think most of the industry has increased lending rates by 100 to 125 basis points. We have not increased lending 57:58 57 minutes, 58 seconds rates in the last one quarter. uh we are evaluating the situation and our audit there's a pricing committee which 58:06 58 minutes, 6 seconds clearly has put about 75 to 100 dips uh which is a window available for us uh to 58:13 58 minutes, 13 seconds increase uh the decision is on the table not taken yet uh but uh there's a play of about 75 to 100 pips uh on the 58:22 58 minutes, 22 seconds interest rate which is available to us if we compare against let's say whatever the industry or the market is uh when do 58:29 58 minutes, 29 seconds we do this we will uh we are evaluating this this decision is on the table uh I think there are one or two more external 58:38 58 minutes, 38 seconds things that we are looking at basis which we will eventually take a call but yeah we will take a call by end of this 58:43 58 minutes, 43 seconds quarter on the JG uh I think the u the group never had a liability 58:52 58 minutes, 52 seconds however if you look at it there is there was a nudge by the rest of the lenders and they would support her whoever let's 59:00 59 minutes say any one person in the group you would support her I think the thing that we are observing is that depending upon 59:08 59 minutes, 8 seconds how we acquire the group uh the group will stay together versus not stay together so let's say uh the center 59:15 59 minutes, 15 seconds members how close are they to each other from the where the center meeting is happening uh so we have kept a certain 59:23 59 minutes, 23 seconds distance of let's say less than a particular distance from the center meeting are we gettingom homogeneous 59:29 59 minutes, 29 seconds customers on board uh in a center. Are there customers with very different leverage backgrounds? Uh how is the 59:37 59 minutes, 37 seconds entire uh center being uh looked at? Is there some reward the center is getting for let's say a center attendance 59:44 59 minutes, 44 seconds discipline? So there are multiple things that we are working on. uh and uh I 59:51 59 minutes, 51 seconds think it is getting complex and complex but I don't see and uh when I talk to some of my peers uh mid and large both 1:00:00 1 hour they also see significant uh value in the JLG concept continuing but I think 1:00:07 1 hour, 7 seconds with the use of technology and I explained to you that our entire LOS and LMS we are upgrading to a very modern system it will be operational by May of 1:00:16 1 hour, 16 seconds this year I think that will support a lot of GLG which is right now too much of dependence on the front end. So that 1:00:24 1 hour, 24 seconds heavy lifting that the front end person has to do that will move on to technology and system. Uh and I think we 1:00:32 1 hour, 32 seconds we'll be able to give you a clearer picture on this uh in uh by end of the quarter. Uh we are already undergoing uh 1:00:39 1 hour, 39 seconds implementation in uh certain set of branches. Uh I think we will be ready with progress when we talk about in the next quarter. 1:00:48 1 hour, 48 seconds Dr. Considering this one last follow when I look at um this thing that you put out on maybe slide number one level 1:00:58 1 hour, 58 seconds uh the book composition what is unique to fusion fusion plus one fusion plus two um do you think given that uh the 1:01:06 1 hour, 1 minute, 6 seconds propensity for you as well as the industry now is to come out with pre-approved loans right try to see that 1:01:13 1 hour, 1 minute, 13 seconds if you have a good borrower uh you try to take care of most of her borrowing rates. You think this this proportion of 1:01:21 1 hour, 1 minute, 21 seconds unique to fusion and fusion plus one kind of going up in the coming quarters? 1:01:28 1 hour, 1 minute, 28 seconds No, I think uh I think unique to fusion will definitely continue to grow. So right now we are at about over 40% 1:01:35 1 hour, 1 minute, 35 seconds unique to fusion. There are a lot of uh initiatives we had we have launched around this customer. You're absolutely right. I think this is very similar to any other NBSC or bank that you look at. 1:01:46 1 hour, 1 minute, 46 seconds there's a certain loyalty around existing customers. anybody who's let's say catering to just one customer. uh I 1:01:53 1 hour, 1 minute, 53 seconds think the only thing that we have to be aware that there can be an overleverage on uh getting let's say lending too much 1:02:01 1 hour, 2 minutes, 1 second to your own customer also there's a challenge and hence the selection criteria is very critical but you're 1:02:08 1 hour, 2 minutes, 8 seconds absolutely right I think uh and we are working around how we can use technology to give more value ad to this customer 1:02:17 1 hour, 2 minutes, 17 seconds because if she's relying only on fusion and let's say uh uh the criteria that we right are let's say similar to fusion 1:02:24 1 hour, 2 minutes, 24 seconds plus one and fusion plus 2 then we are doing a gross injustice to her and not giving her enough reason to continue to 1:02:31 1 hour, 2 minutes, 31 seconds stick to only fusion however if we take the entire risk something happens in the family the entire risk will be born by 1:02:39 1 hour, 2 minutes, 39 seconds us that's also a challenge so there's a uh this is this is not an easy thing and that is why I said that uh I think this 1:02:47 1 hour, 2 minutes, 47 seconds is as complex as any retail finance uh and I think all of us are realizing ing that the involvement of credit in the 1:02:56 1 hour, 2 minutes, 56 seconds entire JLG and micro finance is very different than what it used to be even what about a year back. So you will see 1:03:03 1 hour, 3 minutes, 3 seconds significant uh focus on this. I don't know what this percentage as a number should be but yes we are very cognizant 1:03:12 1 hour, 3 minutes, 12 seconds of the fact that certain set of customers should only rely on fusion for everything. Dr. said this answers all my questions. 1:03:20 1 hour, 3 minutes, 20 seconds So I wish you nothing very best. 1:03:26 1 hour, 3 minutes, 26 seconds Thank you ladies and gentlemen. That was the last question for today. I now hand over the conference to management for closing comments. Over to you sir. 1:03:36 1 hour, 3 minutes, 36 seconds Yeah. Uh thank you. So I think first at the outset uh with great humility I would like to thank all the st 1:03:43 1 hour, 3 minutes, 43 seconds stakeholders each one of you u I think we've been through the entire industry and fusion has had been through a very challenging time uh while the internal 1:03:52 1 hour, 3 minutes, 52 seconds teams have been uh rallying around to get fusion to a c to this level. I think each one of you on this call uh your 1:04:00 1 hour, 4 minutes involvement, your guidance, your inputs have helped us hugely and we will continue to bank upon you for advice. So 1:04:09 1 hour, 4 minutes, 9 seconds uh with that I would like to thank each one of you. I think it's been a a very uh uh an amazing two-way communication 1:04:16 1 hour, 4 minutes, 16 seconds with each one of you. uh and uh I'm absolutely sure uh that the fusion that 1:04:23 1 hour, 4 minutes, 23 seconds we are building from here on uh will be able to take bigger challenges than what the industry has witnessed in the past. 1:04:30 1 hour, 4 minutes, 30 seconds So thank you so much. 1:04:37 1 hour, 4 minutes, 37 seconds Thank you on behalf of Fusion Finance Limited. That concludes this conference. 1:04:41 1 hour, 4 minutes, 41 seconds Thank you for joining us and you may now disconnect your lines. Thank you.