Ladies and gentlemen, good day, and welcome to Cholamandalam Investment and Finance Company Limited Q1 FY 2024 earnings conference call hosted by Kotak Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nischint from Kotak Securities. Thank you, and over to you, sir. Good morning, everyone. Welcome to the earnings conference call of Cholamandalam Investment and Finance Company Limited. To discuss the Q1 FY 2024 performance of Chola and share industry and business updates, we have with us the senior management of Chola, represented by Mr. Vellayan Subbiah, Chairman and Non-Executive Director; Mr. Ravindra Kundu, Executive Director; and Mr. Arul Selvan, President and CFO. I would now like to hand over the call to Vellayan for his opening comments, after which we will take Q&As. Nischint, thank you so much. Good morning, everybody. I just want to go through the unaudited financial results for the quarter ended June 30th, 2023. Our disbursements were at INR 20,015 crore for the quarter. Total AUM was at INR 122,755 crore, which is up by 42% year-on-year. NIM was up at INR 2,127 crore, which is up 30% year-on-year. PBT was at INR 968 crore for the quarter, which is up by 27%. The NBFC retail industry AUM growth is expected to be 18%-20% in FY 2024. Secured NBFC retail loans, consisting of vehicle finance and other secured business loans, is forecasted to grow at 14%-16%. Chola's growth momentum continues in Q1 FY 2024 across its diversified business segments. In terms of our quick performance highlights, aggregate disbursements, like I said, you know, are at INR 20,015 crore. Vehicle finance disbursements were at INR 11,301 crore as against INR 8,562 crore, registering a growth of 32%. Our Loan Against Property disbursements were at INR 2,679 crore as against INR 2,036 crore, which is a growth of 32%. Our home loans, which includes our affordable home loans and affordable laps, disbursed INR 1,454 crore in Q1 FY 2024, as against INR 611 crore in Q1 FY 2023, a growth of 138%. Our SME business disbursed INR 2,045 crore in Q1 FY 2024, which is a 98% growth over the FY 2023 number. Consumer and small enterprise loans disbursed INR 2,355 crore in Q1 FY 2024, as against INR 1,055 crore, which is a growth of 123%. Secure business and personal loans disbursed INR 182 crore in Q1 FY 2024. Like I said, the total assets under management stood at INR 122,755 crore, compared to INR 86,703 crore, which is a growth of 42% year-on-year. The PBT growth is at 27% as compared to our overall asset growth of 42%, which is primarily due to two reasons. One is the fact that the cost of funds was lower in Q1 of FY 2023, and progressively increased over the quarters last year. On a, on a quarter-to-quarter comparison, you know, that change is, is fairly significant. The second is that vehicle finance book is a fixed-rate book. Repricing of that book portfolio happens progressively as the proportion of new book is replaced with higher NIM. We're beginning to see that, I think that this will begin to adjust in upcoming quarters. The PBT ROA for Q1 FY 2024 was at 3.3%. The ROE was at 19.9%. The company continues to hold a strong liquidity position, with INR 7,069 crore as cash balance at the end of June 2023, including INR 1,500, INR 1,007 crore invested in G-Sec and T-bills, which is shown under investment, for a total liquidity position of INR 9,479 crore, including undrawn sanction. The ALM is comfortable, with no cumulative negative mismatches across any time bucket. Our consolidated PBT was at INR 956, as against INR 764, with a growth of 25%. Asset quality-wise, HP levels have marginally increased to 3.06 in June 2023, from 3.01 in March 2023. GNPA, as per RBI norms, was reduced to 4.3 as against 4.63. NNPA has also dropped to 2.82 as against 3.11. NNPA is below the 6% threshold prescribed by RBI for PCA. The details, we will basically share with... The capital adequacy ratio for the company was at 17.44% as against regulatory requirement of 16%. Tier 1 capital was at 15.14%, and Tier 2 capital was at 2.3%. The board of directors in a meeting which held yesterday afternoon, subject to the approval of shareholders, approved a proposal for capital raising by way of QIP, equity and or PPD, at a price to be determined under the SEBI Regulations 2018. We are targeting to raise INR 4,000 crore by way of these instruments, subject to necessary approval. I will stop with that, Nishint, and we'll be happy to turn it over to the audience for, for Q&A. Thank you very much. We'll now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the questions assemble. Participants, you may press star and one to ask a question. The first question is from the line of Suresh Ganapathy from Macquarie Capital. Please go ahead. Yeah, hi, good morning, everyone. I had a question on the credit cycle itself. I mean, how do you read this? You have grown at 40% and growth across all categories, whether it is banks, NBFC is so strong. How do you see the situation on the ground? What explains such strong demand and asset quality outcomes? Yeah. Suresh, I mean, I think it's a good question. If we take the different businesses, right? I mean, actually, kind of, the advantage we've had in some of the smaller businesses, at least for us, right, are that, you know, our starting position is very small, right? Let me take vehicle finance. If you, if you see vehicle finance overall- Mm-hmm. Obviously, kind of there, it's a more mature product. It's also a product where we have larger penetration and, you know, we do see strong demand still kind of across segments in that business as well. Obviously, growth for us is a bit more, is, is limited compared to the growth we've seen in some of the other segments. What's interesting in the other segment is that, you know, I, I would say kind of first off, you know, our home loans continues to kind of see, you know, very strong, you know, potential for growth. The segments we're going into, we see as significantly underserved, and we're seeing a lot of good demand in those segments. The one area where obviously kind of there are concerns, I, I say kind of like, you know, once you get to the smaller loans, right, kind of both unsecured and, and secured. There are certain pockets where, you know, we are seeing, you know, certain, you know, caution that we're developing. Because in certain pockets, we are seeing, you know, kind of a bit of, you know, overlending, and therefore, we, we are getting more cautious. We're really taking, we're taking the same micromarket view that we used to take with vehicle finance and bringing it out to these other segments. Taking a fairly cautious view in areas where we're beginning to see a little stress. The stress is actually... There's not really a demand slowdown, but we're seeing kind of a bit of oversupply into a couple of, couple of areas available. Okay. coinciding with this, you have also seen your other business NCLs actually having gone up, you know? I mean, I know it's a small base, 0.7% has gone to 1.1%. Anything that we should read into it or just a seasonal thing, or did you slow down this segment little bit going forward? How to be read into it? Suresh, I'll give my comment here, and then I'll, I'll, I'll have Ravi add with his comments as well. Mm-hmm. See, basically, the, the other businesses, like you, like, you know, kind of, you know, at least the ones that... I mean, the newer ones, kind of, the book is just building, right? We've always said that, which is like, you know, kind of having an extremely small NPA is not gonna be kind of sustainable in that business. Mm-hmm. Mm-hmm. Some of it is just the book building. We, we don't- we continue to kind of have a, a high degree of confidence in, in terms of the segments and our ability to kind of grow in them. We don't see any concern from, you know, what we're seeing as, you know, like you said, a movement from 0.7 to 1.1. Ravi, why don't you add your thoughts and comments? Yeah, Arul Selvan here. Here we expect, and we have also articulated, that it will be in the range of around 1.2%-1.5%, and I think we're still well within that limit in the new businesses. They will tend to have slightly higher NCLs as compared to the previous other major businesses, because they are of a slightly risky nature, which is more than adequately compensated by the yields. We are still running them at a much tighter levels, and even lower than the existing products, because we have been, been very selective about the customer profile right now we are working on. Okay, thanks so much. Thank you. Next question is from the line of Apurva T from Motilal Oswal. Please go ahead. Good morning, everyone, and thank you for taking my question. When we look at from each quarter, which is where, there are two, three points where I need your help to understand why they happen. You just touched upon NCLs in the newer businesses being higher, but being compensated by higher yields. Again, when we look at how the reported numbers, the gross credit costs in the newer businesses works out to somewhere around 5%. Again, this is your overall credit costs, and I removed the vehicle, home loan LAP credit costs and divide it by the average loans outstanding or the book outstanding in new loans. It works out to about 5%. Are these gross credit costs, and are there some recoveries from your, your partners under some-... FLDG arrangements, because of which the net credit cost in the newer businesses are lower than what we are looking like. A related question here, and in the newer businesses, particularly in retail, what is the collection efficiency that you are seeing today? What is the bounce rate that you are seeing in the retail industry? Why I ask this is, in the past, you have articulated that you will not shy away from slowing down in the newer businesses, if the delinquencies are higher than what you have budgeted for. Are you seeing some early signs of stress, and also given the fact that recently the narrative around some of the peers acknowledging stress in rural personal loans. Are we, what Vellayan sir was explaining, taking a cautious view in personal loans now and concentrating more on professional loans, business loans, or how are we thinking about this research? See, you are right in the extent, but, I think, I, I did... In the, in the NCL, what is happening is there are two parts in the NCL. One is we have a FLDG recovery of around INR 35 odd crores, which is shown at the gross level in NCL, and the FLDG recovery comes in as an income line. This is another in there. Around INR 35 crores is, is, should not, should be lower in the NCL numbers and, for the new businesses. The second part is, as the new businesses scale up, they need to be also provided with standard assets provisioning, equivalent of standard assets provision under the PD/LGD norm. That would also add up to the overall number. Between both these, your, your provisioning number will look higher, when, when you see these numbers as a reduction of the total NCL minus, the three businesses we have reported. For it, we are not seeing any significant increase in our, our credit risk. From that angle, we are not slowing down any of the new businesses. Just to add, actually. I, I don't think, I mean, I don't know if you interpreted it as kind of we are going cautious on the new business. What I said is that kind of there are, there are some... This is true always in kind of vehicle or any other businesses we are in, which is there are always some micro markets which we will be cautious on. Overall, we continue to be very optimistic and see a lot of growth potential, and we'll, we will see kind of growth in the new businesses, absolutely. you know, I don't think that this should be interpreted as kind of, you know, kind of turning overly cautious, right? Which is, which, which could be one of those. Got it. Got it, sir. I mean, just a follow-up question before I ask my next question to Ravi sir. Basically what I inquire is, we are not seeing any higher delinquencies in the newer businesses, which will kind of make us cautious. At the same time, what Ravi sir was explaining, there is that component of FLDG recovery, standard asset provisioning. Nothing outright alarming in the newer businesses is what you have seen, is what I'm referring here or referring here. Correct. Hope, hope that is correct. The next question, the, and the last question that I have is for Ravi, sir. Sir, how should we look at the yield trajectory in vehicle finance? The fact that we are not seeing yields picking up in vehicle finance, not just for you, but I think at the industry level today. Is it a combination of your competitive intensity that you're seeing or product mix, or what, what some of the peers have experienced, some higher-yielding books are running off, which is kind of leading to this? Sir, what could be the difference today between your book yield and disbursement yield today in vehicle finance? In the vehicle finance, because of the nature of the business's income, you have to see the 4 factor. One important is that book yield versus the marginal book yield. Marginal book yield is, as of now, higher by 1%, that is 1 thing. In the case of the book yield, it is lower by 15 basis points. That's point number 1. Why it is? Because the business what we booked in 2018, 2019, 2020, at that point in time, because the cost of fund was high, we were actually booking with much higher rate. Those agreements are running down. Therefore, after that, what is actually booked was a lower, lower rate, and we are pouring the new businesses, which is at a higher rate. The mix is as of now catching up. It will take 2 quarters to reach the level of what we want to basically see from the interest income line, pure yield line. That's one thing. Second is that the other income line. The other income line is also lower by 15 basis points, because other income is actually the bad debt, debt recovery, the fee income, the insurance income, the cross-sell income, the additional finance charges, CBC, ABC collection. All these things actually, it actually start from Q1 at a lower level because of the collection, collection is a lean period, and then it picks up during the 3-4 quarters. Third, fourth quarter, you will see that, that will also start, you know, delivering at a higher level. That's the point number 2. Point number 3 is the product mix. Now, if you see that continuously, the new vehicle businesses are actually high, higher level, and we are maintaining our market share in that business. So there is a, you know, mix between the high yield versus the low yield. As long as the new businesses are doing well in terms of the industry sales, we need to continue to participate and maintain our market share. At the same time, we are trying to increase our yield through increasing our business focus on the used businesses as well. Used businesses are growing much better, but at the same time, the car sales was up by 10% at industry level, and we have been participating in one of the major manufacturers. We have also gained a little bit market share. That need to be continued because of the business strategy. Product mix is also such that it is not allowing us to increase the marginal book yield significantly. We have increased it 100 basis point by June quarter. In the month of July, it has gone up by 130 basis point. It's going up, you know, quarter and month-on-month, and you will see that we will start showing up those numbers in the book build in the quarter 2 and or maximum quarter 3 end. That's the third thing. Fourth one is that the cost of fund itself. Cost of fund was the lowest in the month of, in the June quarter, and subsequently, you will see that the cost of fund started going up. The difference between the cost of fund now and the previous quarter will start coming down, so the overall NIM will also going up that way. What we are saying, in the vehicle finance business, we are down, say, 14.9 to 14.6. There's a 30 basis point reduction. The cost of fund has gone up from 6% to 7.3, so 1.3% increase. One point six percent of the gap in the NIM is getting reduced by reducing the OpEx from 3.3 to 2.9, and the losses has come down from 2.1 to 1.5. Therefore, at the end, our ROA is, is looking down by 60 basis point. The 60 basis point is our problem, not that the 150 basis point total. This 60 basis points in the subsequent quarter, you will see that the gap will continue to go down because the losses will further go down. We are starting from 1.5, we will be ending at 1% or less than that. That way, you will see that the losses line will start showing reduction, and the ROTA will go up. At the end of the day, we have been always saying that if you go line by line, it is difficult to manage. We should always see the ROA. As of now, we are 60 basis points lower than the ROA. That is because of the fixed versus the, you know, floating book, you know, concept, which will get covered up in next two to three quarters. Thank you. Sorry to interrupt you, Ajit. I will request you to join with you again for a follow-up question. I request to all the participants, please restrict to 2 questions per participant. The next question is from the line of Gaurav Kochar from Mirae Asset. Please go ahead. Yeah. Hi, good morning, everyone. Thanks for taking my questions. A couple of questions. Firstly, just extending the question on credit cost. If you mentioned there are certain cohorts and micro markets where the stress is visible. If you were to split, let's say, your, your stress or, you know, the credit cost, where it came from, from your in-house sourced customer book and the partnership sourced customer book, will it be more skewed or largely skewed towards the fintech and other partners? See, actually, the, the... I think you have misunderstood the, the point what Mr. Vellayan is making, was making it. He said that we have introduced the similar micro market model of, you know, managing the, you know, predicting the probability of default. That doesn't mean that we have seen that problem. In our case, in the new businesses, the partnership business, which is a small ticket, a small tenure loan, where the FLDG are something which is coming up, and that is getting, you know, accounted in the income line. To that extent, we are actually booking the losses. That is one, okay? That will continue to happen, which is a small portion. Okay. The majority of the net credit cost, which is being shown under the new business line, is actually the provision created for the standard asset. The standard asset provision is actually, you know, almost 60% of the total, you know, NCL, which is being considered now, because we have not given, you know, any page on that, but all of you are working on total minus EF, minus HL, minus LAP. That is what I'm trying to explain you, that the, our PL or BL book of the C-Cell is actually behaving the same manner. Our bounce rates are lower than the market. It is still at 5.6%. Basically, in the market, it goes up to 13%-14% bounce rate. We are much lower. Our collection efficiency is 99.5%. The losses which you are seeing it on the NCL line, on account of the new businesses, majority of the business is actually coming from the either standard asset provision or the counter entry of the FLDG. Okay, understood. The second question is on the cost of funds. Yeah, please go ahead. Yeah. On the cost of funds side, so there is a 40 basis point in, in jump in cost of funds. Is that largely done now or the repricing of your borrowings, which were linked to NCL or otherwise, is that largely done, or you believe there could be further inch up of cost of funds from here on in the second and third quarter? It is largely done. The only caveat I would say is, if there are further increases that are happening because of any external events, yes, then there will be an fallout of that. As of now, it looks like there will be no further increases by the regulators. If that continues, then there should be, actually, we should see some improvements there. I, I, I don't see further increases more on the cost of funds. Okay. Just to, just to be a little more specific here, roughly half of your borrowing is bank borrowing. What percentage of that, would have already re- repriced? Or what would be the gap between the marginal cost of bank borrowing and the stock cost? If you look at it, if I look at my total borrowing, 55%-60% will be bank-related borrowings. The rest are all fixed-rate borrowings. The bank-related borrowings I've got out of the 60%, around 10%, which is fixed rate. Right? There is no movement that is forecasted on that. The rest are either repo rate linked or MCLR linked or the T-bill linked. In the case of the repo link, repo link rates, they are negotiated the spreads on the repo, when because we would have agreed on a higher spread in the earlier period when repo was lower. We are renegotiating with many of the banks, and we have built in clauses with the banks to repay in case the negotiations fail at the times of every reset. Wherever resets are coming up, we do renegotiate with the banks. Not saying in all cases we'll be successful, but in some cases, wherever we are successful, we have been able to pull down the rates. The new loans are coming at, you know, at fairly decent rates because we are now, as you have also seen, that we have now shifted our focus on to doing more of securitization. When we do securitization, we do priority sector approach, which gets us better rates than, you know, simply borrowing at MCLR from the bank. The securitization route, adopting the priority sector as our key factor to negotiate, has helped us, and we have done, you know, almost like INR 8,800 crore in Q1. Another reason why the cost of funds has also impacted marginally is we consciously built up our Tier 2 during the Q1 by issuing certain amount of perpetual debt as well as subordinated debts, because we wanted to build the Tier 2 part of it. That impact of it is also showing up. That would continue because that's a fixed rate book, but it's a small number, INR 700 crore. Sure. Sure. Thank you so much, sir. Thank you. Next question is from the line of Pranav Shinde from SBI Mutual Fund. Please go ahead. Yeah, Prashant, you're not audible, may I- Sorry, am I audible now? Yes. Yeah. Yeah. Thanks, sir. Two questions. One is on the retail unsecured piece and the new businesses. If you could just help us understand how you are tracking how the customer is getting over-leveraged, and what do you do when you find out that he over-leveraged? Number 2 is just a technical question. The loan book has grown at, like, 40% and the ROE is around 20%. How has the Tier 1 capital adequacy increased versus last quarter? Yeah, just these two questions. Thank you. Actually, the because, you know. Prashant, may I request you to mute your line from your end, from your side, please? There's some maybe disturbance coming from your line. Thank you. Yeah. Yeah. From a capital adequacy point of view, securitization is not treated as debt. It is, it is adjusted out of the risk-weighted assets, because under the capital adequacy, when we are securitizing the book, we, we can adjust the adjust the securitized assets. That's where you are seeing a good amount of Tier 2, Tier 1 improvement happening. Again, as I said, some amount of perpetual debt has also been done. This has helped us. The in the leverage ratio, we don't consider it that way, because under India, it is shown as borrowing now. Earlier, under the IGAAP, it was shown outside the book, so it keeps changing. From that angle, now the leverage will look because the securitization does not move the needle on the debt equity ratio. In the case of, you know, underwriting of the personal loan business, see, one important thing is that we have conducted what we are doing under the C-Cell division. We are doing three type of business. One is that the partnership business, which is small, small ticket size, small tenor book, and that is purely going to be salaried class. I, we have mentioned that these are all getting dispersed 720+ scores. The business loan, which we are doing it with the self-employed, non-professional customer and also doing it with the professional like doctor, engineer, chartered accountant, which is basically again, we are doing 720+ customer. Majority of the customers are there. 96% customers are 720, and 4% customer are between 700 to 720%. Our third customer is the personal loan, which we started recently, and we have not done much personal loan because in the personal loan, it is, it is mainly salaried class who gave the personal loan. We categorize, industry categorize the employer, you know, Cat A, Cat B, Cat C type. All Cat A, B, C get funded by the banks at a much lower rate. DE type of employer, where employees are working, the salaries are lower. They're getting funding by the NBFCs. We, we saw that it is actually, one, that, you know, the yield is lower as compared to the business loan. Second is that, you know, why should we will take the risk for the E and F category of the employer, where the employees are working? Therefore, we have not done the personal loan business. We are only going to do with the direct sales team and also with the existing customer, mainly. Now coming to the evaluation, whether the leverage or not leverage, is depending on, one is that the credit score itself, that the customer is taken the loan and paying it in time. Second is that how much EMI customer is paying and what is the total income of the customer. What Mr. Jalan was also trying to say that if there is a, you know, over-dependency or customer has taken loan and paying more installment, obviously that will not get through in our system, and obviously it is getting rejected. Some market it is found that the customers are having little higher leverage. Obviously, we are not reducing our credit score, bureau score and credit score, which is required for clearing the proposal from 720 to 700 for PA loan. That is what is the basis of underwriting. The under, the leverage is actually taken care by, you know, evaluation of the income to the EMI burden of the customer, plus the credit score where which is coming out from the bureau and from the underwriting tool, what we have developed for our system. Sure. No, sir, that's quite helpful. Just. I'm sorry to interrupt you. May I request you to re-enter queue again for a follow-up question? Sure, sure. Yeah. Thank you. I request to all the participants, please stick to one question per participant, as we have a long queue. The next question is from the line of Umang Shah from Kotak Mahindra. Go ahead. Yeah. Hi, am I audible? Yeah. Yes, sure. Yeah. Yeah, thanks, thanks for taking my question. Sir, just one thing on ECL provisions, especially on the standard assets. If I look at our stage one and two provisions, they have kind of pretty much normalized back to pre-COVID levels. I'm talking about stage one and two provisions combined. However, given that the overall AUM mix is shifting now in favor of new businesses which inherently have higher forward flow rates, should we expect that our standard asset provision, provisioning requirement might actually increase going forward? How should we look into it? Yes, it will marginally increase because we are evaluating. See, what we are doing right now is, we don't have enough traction on the existing book to arrive at PD/LGDs for the new businesses. We are adopting a very conservative way of looking at it. Either in the case, for example, in SBPL and SME, we are following the LAP model. In the case of C-Cell, we are trying to put a, a provision which is, you know, more stringent than what, what is either for we or for any of the secured businesses. By end of March, we would have around 24 months or plus of the businesses, which would give us the traction to arrive at the PD/LGDs. By March end, March 2024, we should arrive at PD/LGDs for these businesses, and then, then after it will change accordingly. Okay. but, despite that, we believe that we would be able to contain our credit cost within our guided range. Yes, as you said, actually, in my opinion, at that point in time, there could be a... Because we are now pursuing an aggressive provisioning norm with regard to the new businesses, there should be, PDLGT should show a reduction in my view. Let us wait for the numbers to come up rather than, you know, take a call mostly on this. All right. Thank you so much, and wish you good luck. Thank you. Next question is from the line of Kunal Shah from Citigroup. Please go ahead. Yeah. Thanks for taking the question. Last time you highlighted that in terms of the credit cost, it should vary in the range of 0.75 to 1.1, 1.2. We have seen a slightly higher credit cost in 1Q. How should it actually pan out? Because vehicle has been higher, as well as on the new businesses, it's been upwards of 4.5% odd percent. Now do we still stick to that kind of a guidance? Are we confident that it will still sustain below 0.9? If you see that in the vehicle finance, we started actually showing up lower NCL than the Q1. It has come down. I mentioned that in the previous- Yeah. When I'm answering with the last question itself. If you see that in our investor presentation itself, it's very clear that it has come down from 2.1 to 1.5. Last year, at the overall level, NCL was 1.2 for FY 2023. We started from 2.1. Ended up for the entire book, entire year is 1.2. You start at a 1.5, obviously it will go down below 1% now. Yeah. Okay, okay. In fact, it's more of a Q1 thing, and that's where it's showing up. Yeah. Q1 and also it is- Yeah. From where you are starting. You are starting 60 basis points lower than the Q1 number, isn't it? As of now, if you see that in last, last time, your, if you see the Stage 3 of the vehicle finance in the Q1, it went up significantly at that time. Here, today, in this quarter, Q1-Q3, the increase in Stage 3 is only from 3.0 to 3.35, which is hardly, you know, 30 basis points. As again, the increase of 70 basis points. For now, it is only 15 basis points, 3.2 to 3.35. We have 2 advantages here. One, that NCL is not going up, Stage 3 is not going up, and Stage 2 is actually showing a much better situation. It is actually now, stage two is has come down, in fact, from, you know, the same if you compare it. If, if you take the two important point, one is that the NCL of Q1, 2.1 to 1.5 now, is coming down by 60 basis point, and at the end, when we started with 2.1, we delivered 1.2 for the year. Obviously, the NCL will go down. Again, second thing, the stage two and stage three, where we are in now as compared to the Q4. Similarly, if you go Q4 to Q1 last year, you see that our, you know, book is also behaving much better than what it was like last year. Sure. Secondly, in terms of this FLDG, so no doubt it's PNL neutral because it's there in the other income as well as in the provisioning. Does that really show that maybe the stress in that pocket is higher than what we would have anticipated, and that's where this entire FLDG is coming through? No, actually, this is, this is actually not that the all of these FTDs happened during the current quarter. What has happened is, we had been pursuing this with the with partners, and these have been, you know, we needed to account it out this year because, this quarter, because of the new norms of the RBI, where we needed to, consider them and write off on one end, and then only recognize the FTD on the other side. That is the reason why we needed to bring them into books. Otherwise, it's not like all of them had happened in this quarter. Okay, this is cumulative? Cumulative, yes. Okay. Cumulative FTDs we've accounted, yes. Okay. Yeah. Thank you. Thanks. Thank you. Next question is from the line of Viral Shah from IIFL Securities. Please go ahead. Yeah, hi, sir. Thank you. I have 2 questions. Again, going into the new business phase. You mentioned, of course, it's a function of the standard asset provisioning. Can you give a breakup of what is the standard asset provisioning, what was the NPA provisioning, and what was the write-off for the new business? I, I don't think at this juncture we are giving that breakup, you know, when we start presenting the new business P&L, we will start giving this information. Okay. As you mentioned, majority of it is due to standard asset provisioning and not, write-offs. Yes, I still stand by that. I'm saying I don't, I don't have to give you the breakup because we have not yet started presenting the usual profitability of these businesses. Kindly wait for the end of the financial year. We will start presenting this one. Sure. How should one look at the profitability of these new businesses? Because earlier you had mentioned that the ROAs for these businesses are significantly higher than the current business. Does that still remain? Yeah, yeah. ROA of these businesses will be higher than the existing businesses. As of now, they are still either equal to or marginally even lesser than the existing businesses, because they are on the growth phase and costly file, upfront costs are high. Got it, sir. Just one last question from my side. Can you give some color on the digital platforms that you are building? Basically, the Gaadi Bazaar and the Chola One app that you are building for the personal loans. Yeah, sure. Gaadi Bazaar app, we have built, quite a few, facility feature in that. One is that the, all our repo stock, which is almost close to 3,000 units per month, we are selling it digitally on, you know, by listing it and by putting it up, with photographs and valuation, everything. Customer can evaluate the, you know, buy, and then they can quote, and this online quoting, bidding is happening. We are doing that part. That way, we are able to, 1, that realize the best value of the thing, and it is also transparent and there is no chance of any kind of wrong dealing happening in the branches, because we are, we are working from our 1,150 branches, and we have resident location close to 500. All 1,600 branches are doing this thing, but this, all the vehicles are getting sold in a same manner. 1, 1 is that. Second is that, we have more than 5,000 dealers are there in vehicle finance division, where we are dealing with them. All the people who are taking the trade advances, and close to INR 1,600 crore of trade, trade advances getting disbursed every month, that is getting done. Empowerment of dealer, request of the trade advances and replenishment of the, you know, trade advances. Everything is online, digitally done, which used to be done, completely, you know, file-based manner. That's the second thing. Third important is that we have also created a used vehicle marketplace, and across the country, we have close to, say, 10,000 used vehicle dealer. All of them are basically doing the transaction with us. Their stock is getting listed in our platform, and to that extent, we are generating the lead for buy and sell, and we are helping their stock to dispose of, and therefore we are also able to generate the revenue from them. One is that the used vehicle marketplace, where we are generating revenue by, you know, helping them to create the, you know, generate the lead and sell the vehicle. Second is that we are also able to do the dealer trade advance through our TA portal. Third is that the used vehicle market, where the repo vehicle market, where we are disposing our vehicle at a much better price, and we are also generating revenue through that. The fourth one is the customer service. The customer service is, again, 2 type of services we are giving. All the customer grievances or request, which is coming through physical mode by through branches or through the call center. Now, today, they can actually approach us in the digital way, and almost 96% of the customer request, customer services are now getting delivered digitally. And they are also able to pay digitally using our Gaadi Bazaar app. Almost INR 150 crore collection is happening through the Gaadi Bazaar app. This is what is the Gaadi Bazaar, which is vehicle finance ecosystem. Digitally, we are enabling customers and our dealer and our broker and our used vehicle partner to work with us. In addition to that, we have also given the app to our repo agent, who are, who can actually get the details of the vehicle, where to be need to be repo, repurchased. They can submit the bills, the lease, lease can be paid. That's the additional services we have given. In the case of Chola One App, which we have launched it for C-Cell... We are doing digital lending similar to what we are doing it with the partner, it is actually internally done for the employees as of now, for the Murugappa Group ecosystem, it is actually done almost INR 4-5 crore. We have started doing it in this platform. We are testing this platform and trying to see that, you know, what is the delinquency, what is the, you know, bounce rate, and then slowly we'll open it, open it up for the market. Got it, sir. Thank you. Thank you, sir. A request to all the participants: please restrict to one question per participant. Next question is from the line of Kaustubh T from Anand Rathi. Please go ahead. Kaustubh T, may I request you to unmute your line and go ahead with your question, please. Hello? Yes, go ahead, please. Thank you. Sir, I just wanted to understand more at a macro level, if you can help us understand about the sustainability of the growth rate that you're seeing over a 3- to 5-year period. I know your businesses are very small, but is there any structural change that you're seeing at the ground level, that you can make us more aware about? Thank you. As D. Balaji mentioned that, you know, affordable housing is something which we see that it is very less penetrated across the country. Even in, in the case of Chola, whatever business we used to do 1 year back, 70%-80% business used to come from South Zone. East, West, North were under-penetrated from Chola's point of view also. We have started doing it, and as of now, our penetration in non, non-South is 40%, and 60% we are doing it in South. That is one. Second is that we need to also see that what are the, you know, type of product which can you know, give it to the customer who are going for affordable housing. We see that only few customer profile is only, you know, their needs are addressed. Almost, you know, 60% of the customer profiles are not getting addressed in, in affordable housing still, because of the properties within the municipal limit or out of municipal limit, type of property, what type of income they are generating, or what is the source of income they are generating? Are they getting income through, you know, bank to bank or getting through cash salary? There are many ways to basically increase the penetration, both from geographical point of view and as well as customer profile point of view. Home loan, Affordable home loan is something which we are, I know, expecting that to grow continuously, much higher rate, for the next 3-4 years, or maybe, maybe more than that. Coming to the loan against property, where we have seen that significant growth coming up during last one year, one and a half year, that's because we were operating from 350 branches, now we are operating from 600 branches. Still we have, you know, another 600, 700 branches to go up. We have launched the micro LAP also in the LAP businesses, which is basically a small ticket size loan, because our surface is now available up to INR 20 lakh. As you may go in Tier 2, Tier 3 town, those customers who are having a, you know, small property, will be coming up, and they are also paying much better than what, you know, bigger LAP customers are paying. Both from... Then delinquency levels are also much lower. We have seen that the bounce rates are lower, the collection efficiency is very good. We see that the second largest business, which is going to grow within the existing businesses, is going to be the LAP. Third is the vehicles. Vehicle, you see that, you know, the industry itself has not reached to the peak level of pre-COVID, and it will continue to go up to reach over there. We know that the penetration in vehicle finance, in terms of cars or tractors or two-wheeler, is much lower in India. That will increase the vehicle. Vehicle finance growth will be lower than LAP and HL, obviously. We are, we are expecting that it should be 20% for the next few years. Now, coming to the new businesses, new businesses just opened up, and since they are in growth phase, they will continue to grow because of the lower base. In nutshell, Chola, as all six business lines put together, we are quite confident that we will be delivering at least 20% disbursement growth. Conservatively, we are telling you, but it, it can actually go up as we further, you know, you know, talk and discuss. Sure, sir. Thank you very much. Thank you. Next question is from the line of Yuvraj Choudhary from UTI Mutual Fund. Please go ahead. Yeah, thank you for giving me the opportunity. Just 1 data point, if you can share, as we are not highlighting much in the presentation about the restructure assets. Are there any restructure assets left in our books? I believe that moratorium of these restructure assets is completely now out of the move, and now they are kind of a standard assets for us. We, we have around INR 2,200 crore of restructured assets, of which, around INR 300 crore is in stage one, INR 1,100 crore continues to be in stage two. That means they are performing, but they have not moving back to stage one because they have not yet come to 30% level as per our norms, where we can move them to stage one. I think the residual, INR 500 crore is in stage three, because they have not performed and they moved to stage three, and they have started providing for them as per the normal, you know, PDMDD program. Okay. Thank you. Thank you very much, sir, and congratulations. Thank you. Thank you. Next question is from the line of Avinash Singh from Emkay Global Financial. Please go ahead. Yeah. Hi. One question, on your personal business, particularly, the kind of. ... customer segment and the credit, score you are sort of competing. What kind of a yield, because your growth of customers overall is really strong. What kind of a yield, if you were to compare versus your peers in that segment, or is the yield sort of at parity or, I mean, there is some sort of a differential in yield, particularly given the fact that you are more focusing on that, 720+ customers? Thanks. Our yields are actually almost in line with the market, in fact, slightly better than that, both the yield and fee income put together as of now, because we are not aggressively growing. When we say aggressively, it is, you know, the market potential versus what we are doing. When you see our comparison with what we have done versus what we have done in the past, obviously you see that the percentages are high. I'm again and again saying that as against the market size of the personal loan or business loan or SVPL business, we are quite small, therefore we are able to maintain both credit score at a higher level and the yield and fee income at a higher level. We are by that, still we are able to deliver lowest bounce rate and highest collection efficiency. Okay, thank you. Thank you. Next question is from the line of Pranav from Rare Enterprises. Please go ahead. Hi, sir. Thanks a lot. Sir, can you hear me? Yeah, yeah. Please go ahead. Yeah. Sir, I have, I, I, joined the call, so forgive me if someone has asked this question already. Sir, your ALM is very, very tightly matched for the 2 years. Second thing is that if we just see the new business NPA on a 12-month lagging book, so 12 months ago, whatever the book was, I think it was around INR 2,200 crore, and current NPA is around INR 100 crore. It's almost around 4% of 12-month lagging book. That is second point. The disbursement in that area is very high. Actually, how you see this situation? Because the area where it slow... if the growth slows down in that area, eventually it will have 4 to 5, 6% NPA, as you know. Juno is always known for a very conservative group. Even if you, even if you just, say, raise capital, why not just, you know, improve ALM rather than have a growth in the new areas where, whatever the theoretical PGD is, system PGD will also be tested. Why not slow down the growth? Thanks a lot. Sir, I, I'm a little confused. You are, you are mixing ALM and NCL and NPA. Yes, yes, because, because what happens is that, what happens if 5% GNPA becomes to the NPA? That is also a- 5% GNPA is not there, actually. That is wrong number. In page 3, we have given in page number 28, for the other businesses, where the new business is included, is 1.01%. That is on the current book now, so I am calculating it on the book which is still yet. We can notionally say any number and then assume. First of all, let me address your ALM query. You are saying ALM is tightly matched. Yeah. ALM, as per regulation also, you can have cumulative mismatch of 10% for the first year. Thereafter, actually, cumulative mismatches are also allowed. Internally, we follow a much more aggressive policy, that there will be no mismatches in any bucket. That is on the cumulative number. I think it is well understood that you need to track cumulatively, because the surplus of the earlier time buckets should flow to the subsequent time buckets. Right. So if you look at it, at any point in time over the cycle, we have shown that our cumulative mismatches are never negative. I mean, mostly we can keep, you know, assuming, can I be better than this, can I be better than this? We can work on it. There is a other side, efficiency angle to it, because then you have to create more and more of reserves or cash reserves, which are not going to be cost-effective, you know, accurate for you. It, it will not be. It will have a negative impact on your cost-effective. We have, we have gone through various cycles, and we have never, ever faced a, a, an ALM issue, and I think the way we are managing it is, is quite optimal, I would say, if not conservative by itself. Beyond this, we have our risk team putting different stress testing analyses on this at, you know, moderate stress, high stress, and, you know, so that stress testing is also being planned to ensure, both from an ALM perspective and purely from a liquidity perspective, things are, you know, well managed. Right. Sitting from outside, assuming a 10% NPA and then what could happen to the ALM is a little long shot. I would stop there. Right. Right. sir, on a trailing basis, if there is no, there is some merit in considering current GNPA on a 1-year back book, right? Because you are not lending this quarter and it is becoming GNPA in the same quarter. am I wrong in thinking that? No, we do all these analysis by following the static pool analysis. Actually, one year back issue is a different issue, COVID, which is more a one-time phenomena. We have to look at the periods where, you know, it is of a normal trend and we factor in certain amount. Even if you take the PD and PD, it factors in even the COVID period and then considers it. That, that's what I was explaining earlier, that the permission, you know, coverage will look higher because of these effects. The PD, the PDLGD are calculated with one, the two years of the pool period also coming into play. I think, you know, we, we take care of all this, and we will try and build the book as well as our, you know, accounting in a, in a very conservative way. Yes, views are welcome. Thank you. Aditya Susarla, you again for a follow-up question. Next question is from the line of Taran Engineer from CLSA. Please go ahead. Yeah. Hi, congrats on the quarter, and thanks for taking my questions. Just a couple of them. Firstly, any one-off in the employee expense, which has dropped 15% QOQ, have you moved people to off-role or something like that? Secondly, the Tier 1 ratio has increased QOQ. Sir, you were mentioning something about securitized assets not being counted in capital adequacy or something like that. Are these two related? That's from my end. They are not related. See, we're talking expenses. Expenses is expenses as being. No, I mean, the increase in year 1 due to securitization. Securitization related to Tier 1. Is that related? Yes. Okay, I think, yeah, Arulselvan, you, you already answered that. He's asking the same question again. Securitization. Yeah. See, we did securitization. Securitization impacts Tier 1, because under the RBI regulation, CAR needs to be calculated in the SL method. Where there we take away from the risk-weighted assets, the securitized book, because these have been sold off to somebody. The loss levels that are expected on securitized book is to the extent of the cash collateral, which is adjusted straight out of the Tier 1, and that is the way the CAR is calculated. Factoring in that, we have improved the CAR. Got it. Got it. Okay, that answers the second question, and the first one on employee output. Yeah, go ahead. Yeah, my question. You know, if you're comparing Q4 versus Q1, yes, there would be reduction, because in every Q4, we will have the full performance of the teams being evaluated and the incentives being, you know, factored in at their highest performance level. Additional incentives. Any additional incentives, increments, et cetera, would be factored in. In Q1, it will be not there because assets should be, you know, we are in the starting mode, and we will be providing them at a normal pace. In Q2, what will happen is certain amount of increments, promotions, et cetera, will be factored in. From July onwards, the impact will start coming in, but that should not be a significant number from the overall numbers. Okay? It happens every year. Got it. Got it. Okay, that answers my question. Thank you. Thank you. Thank you. Next question is from the line of Ashwini from Edelweiss. Please go ahead. Good afternoon. Good morning, sir. I've got a couple of questions. In the month of July, we had seen some heavy rainfall and floods. Is it going to impact the disbursements, loan growth or collections for this quarter? This time, if you see, the rains are actually good. There are some market, if you've seen that, you know, it was slightly higher than that. According to me, I think it's the only no effect what people were worried about. Entire country is having a good rain, and it is almost 95%, 96% of the, you know, level. Few market where we have seen that it is little deficit was there, like, Bihar, Bengal, Jharkhand and some market. There also now rains are expecting. Coming back to the growth, you know, our July numbers are good, so no need to worry about it. We are maintaining the momentum. Okay. We will maintain, we'll continue to maintain the current overall growth rates in the AUM and the ROAs, right? Yeah, yeah, yeah. Okay, sir. That's from my side. Thanks. Yeah. Thank you. I now hand the conference over to Nishant for closing comments. Nishant, can you hear us? Thank you very much for joining us today. We thank the management of Chola to give us an opportunity to host this call. Thank you. Thank you, Nishant. Thank you, all. Thank you. Thank you so much. Thank you very much. Thank you very much. On behalf of Kotak Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.