Ladies and gentlemen, good day and welcome to the Aavas Financiers Limited Q3 and nine months FY 2022 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. Good afternoon, everyone. Thank you for participating on the earnings call to discuss the performance of our company for quarter 3 and 9 months for FY 2022. With me, I have Mr. Ghanshyam Rawat, CFO, Himanshu Agrawal, Investor Relations, and other senior member of management team and SGA or IR advisors. While the infection rate was quite high, but thankfully the symptoms were milder as compared to prior waves. Restrictions on mobility and economic activities were largely restricted to weekend and night curfew. Consequently, the impact on business and collections was relatively very low. With our continued effort, we had improved 1+ DPD notably from 8.88% in September 2021 to 6.45% in December 2021, and this has further reduced to around 6.25% in January 2022. Similarly, our exposure to 90+ DPD assets has come down from 0.96% in September 2021 to 0.83% in December 2021. I would now hand over the line to Ghanshyam Rawat, CFO, to discuss various business parameters in detail. Thank you, Sushilji. Good afternoon, everyone. I extend a very warm welcome to our earnings call. During the year, company borrowed an incremental amount of INR 26,790 million at 5.91%. As of December 2021, our average cost of borrowing stood at 7.03% on outstanding amount of INR 92,206 million. IGAAP to Ind AS reconciliation has been explained in detail for profit after tax as well as net worth on slide number 32 and 34 of our presentation. Regarding key parameters, as of December 31, 2021, total number of live accounts stood at 1,41,311, which is 19% year-on-year growth. Total number of branches was 298, with 35 new branches added in the last twelve months. Employee count was 4,758, showing a 34% year-on-year growth. Assets Under Management (AUM) grew 20% year-on-year to INR 10,601 crore as on December 31, 2021. Disbursement increased by 24% year-on-year to INR 9,509 million for Q3 FY 2022. It increased by 41% year-on-year to INR 23,150 million for nine months FY 2022. As on December 31, 2021, average borrowing cost was 7.03% against the average portfolio yield of 12.79%, resulting in a spread of 5.76%. For further borrowing access to diversified and cost-effective long-term financing, we maintain a strong relationship with the development institutions. Gross Stage 3 stood at 1.72% and Net Stage 2 stood at 1.33% as of December 31, 2021. The Gross Stage 3 of 1.72% includes 0.89% of up to 90-day DPD (Days Past Due) assets, which have been categorized as a GNPA following the RBI notification dated November 12, 2021. During the financial year, a resolution plan was implemented for certain borrower accounts as per the RBI Resolution Framework 2.0 dated May 5, 2021. Such accounts, with an outstanding amount of INR 1,501 million as of December 31, 2021, have been classified as Stage 2 and provided for as per regulatory and Ind AS provisions. Total provision for COVID-19 impact, including that resolution framework 2.0, stood at INR 305.8 million as on December 31, 2021. Total ECL provision, including that of COVID-19 impacted, stood at 793.4 million as on December 31, 2021. Liquidity of the company is 25,430 million as on December 31, 2021. This includes cash and cash equivalents of INR 13,220 million, unavailed cash credit limits of 1,140 million, documented unavailed sanctions from National Housing Bank of INR 7,500 million, and documented unavailed sanctions from other banks of 3,570 million. Profitability increased, with PAT up by 19% year-on-year to INR 2,413 million for nine months FY 2022 as per Ind AS accounting. As per IGAAP, PAT registered year-on-year growth of 17% to INR 2,334 million for nine months FY 2022. ROA was 3.37% and ROE was 12.70% for nine months of FY 2022. ROA was 3.58% and ROE 13.62% for the recent quarter, Q3 FY 2022. As on December 31, 2021, we are very well capitalized with a net worth of INR 26,655 million. Our book value per share stood at INR 337.7. Now with this, I open the floor for Q&A. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may enter star and one on their touchtone telephone. If your questions have been answered and you wish to withdraw yourself from the queue, you may enter star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask a question, you may enter star and one. We have the first question from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yes, thanks for taking the question. Hello, Sushilji. Hello, Shyamji. Hope both of you are doing well. Sushilji, seeing your results and I think congratulations to you and your team, for exhibiting such a sharp improvement in the 1+ DPD number, which in my view suggests that the collections have been strong and that maybe over the next 2 or 3 quarters we should hopefully be able to reach that 1+ DPD of 5%. Also, I think that the organic improvement in asset quality, which you kind of saw during this quarter, was impacted obviously by the RBI NPA circular, and to that extent, you have also conservatively made provisions on those loans as well. Which is why today I do not want to ask any questions to you on how you did during Q3 or how do you look at Q4. I have two questions today, and they are more structural in nature. My first question is on disbursements and operations. They are, in a way, interconnected. When I look at your disbursements, I get a little curious as to what is leading to these levels of disbursements. I say this because, having known you and interacted with you for a few years now, I believe that you have had this distribution and operational capacity to do these levels of disbursement even two years back. Sir, if you could just explain the underlying reason for this. Is it because the demand on the ground is not as good, or is it because the demand is there, but maybe you are not comfortable with the quality of customers? Or is it because of your consistent approach that you have talked about in the past? In fact, the other interconnected question that I had was on the OpEx. When the disbursements or the business volumes do not quite keep pace with the OpEx, should we read it as that maybe you are significantly adding capacity either in your standalone entity or in your subsidiary, which is Aavas himself, in terms of growing out your strategy for the U.S. states or branch expansion, and that this augmented capacity can potentially lead to significant improvement in your business volumes in the years to come? Yeah. Abhijit, good afternoon. If you will see for nine months, we have disbursement growth of 40%. I think that is in line with what we always say that we want to be consistent. We are increasing our capacity, and that is also in line with what we are putting OpEx around it. First of all, OpEx last year to this year has two significant meaning. Last year because of COVID impact, the appraisers and salary hikes were limited, which in this year has significantly increased. We always say that 35% of our OpEx are directly linked to disbursement. When disbursements were high (40%), I think OpEx are in line with that. OpEx to ATA, yes, because of 1 or 2 months COVID impacted, I think that will be in line. Despite that, I think ROA and other metrics are maintained. Secondly, I think disbursement growth is in line with what we see as a consistent player. Right now, I think like last 2 months we are almost INR 375+ crores per month. So if we will take next 12 months also, this is a disbursement growth we can anticipate which is in line with our theory of 20%-25% growth, year-on-year. I think, growth side, yes, COVID phase one, COVID phase two, COVID phase three we have seen, we were more particular about asset quality, which I am seeing now that it is in control the way we look at it, and further this quarter will help us further improve it. Now, we can accelerate our growth on disbursement AUM side a little bit, but we don't want to go overboard. We will be consistent player over a period of time. OpEx, it's normal, like we open 30-40 branches every year. This year also we are in the same trajectory. If you see last 12-month to 12-month, 35 branches, and right now we are around 300 branches and another 14-15 branches will be opened this quarter. We will be in line of our consistent play around it. As the situations will normalize, we will again be showing 25-40 basis point OpEx decrease year-on-year in near term. Sure. Thank you, Sushil. The last question that I had was if you could help us understand that while your reported spreads over the last three quarters seem to suggest that they have been stable, we see a significant volatility in the computed spreads. While I understand that you are using daily average and we have a limitation of using only quarterly average, if you can give us some comfort around the pricing environment, whether there is any significant pricing pressure from the competition or because your customers who have a very good repayment track record are very enticing poaching targets for your competition. Lastly, if you can share what recent discussions have you been having with your credit rating agencies and when would they be comfortable in giving you your next credit rating upgrade? No. Abhijit, if you will see, we're consistent in our approach of maintaining a spread, and we say 5% is ideal spread for our business, and I think that we are maintaining for more than 40 quarters now. We said that during the COVID, our spread has increased to 5.75%+ level. Out of which 25 basis points we have already shifted to our customers in the first two quarters of this year. Hopefully if COVID situations will improve, we will continue our trajectory of 5% spread and whatever excess spread we will shift it to our customer base because that will help us being transparent organization and it helps us with scaling up our business also. I don't know how you calculate but spreads are always maintained. NIM has increased because, say, earlier out of total balance sheet size, the cash available in balance sheet was high. Now, as per available balance sheet size and cash, the cash proportion has reduced, so income generating effects has got increased, because of which NIM has increased in the business. Sure, sir. I mean, essentially, I mean, just to sum it up, there is really no, I mean, significant pricing pressure from your competition, or in other words, you're not having to kind of give maybe lower interest rates to your customers just because they are being pushed by the competition. Abhijit, it's a journey for us. 2011, we used to borrow at 12%, and now Ghanshyam Rawat has told that this year we have borrowed at 5.91% in the year. If we want to continue our spread journey, I think, it gives us the strength in the balance sheet that we can source both the side of the customer. We will not leave our customer base where we have created the niche, but at the same time, we can enter into a zone where we can have more category A customers, more solid customers, and we can take some part of the customer profile, which we were not able to do because of pricing earlier. I think, right now, we are able to maintain our prices, but at the same time, cost is getting reduced. Above 5% spread, we'll shift it to our customer base, as per our practice in the past. Okay. Lastly, if you could comment on my last question, what discussions are you having on your credit rating agencies, and when would they be comfortable in giving you your next upgrade? Abhijit, we can't comment on regulatory framework working. Our job is to do consistent performance and regulators and stakeholders have their right to assess us and at the right time when they feel comfortable, they can increase our rating. Sure, sir. Thank you so much, Sushil ji, and wish you and your team the very best. Thank you. We have the next question from the line of Aditya Jain from Citigroup. Please go ahead. Hi, Sushil. Sushil, would you talk about the impact? I think conservatively taken a much higher GS3 in this quarter. The impact of that we've seen on provisions. Is there also material impact of that in the interest income? If you could quantify what is how much is that reversal which is happening this quarter? I think INR 16 crore additional provisioning we have done on this and around INR 5 crore interest reversal, so around INR 20-21 crore impact on this quarter balance sheet. Got it. During Q4, so till January and in February, March, what would you expect in terms of recovery from these higher the GS3 8 portfolio? Are you already seeing some traction in decline in it? Aditya, this has come as a boon for us because there was a sticky portfolio of around 2%, which used to be in 61-90 days to pay one installment. With this guideline coming on 14th November and all working in first 45 days, this has reduced from around 2% to 0.89%. I have told in January again, overall portfolio has further improved by 0.2%, 20 basis points. From 1.7% to around 1.5% range is already achieved and even on 1+ 6.45-6.25. I think we will try our level best and best of our efforts to give better performance on collections in this quarter. It's also, like we have done in Q3, our Q4 guideline, we have achieved in Q3 itself on collection. I can't predict future number, but I think we will continue doing the better job on that side. Got it. Just lastly, the LCR. Is it being carried at the 60% requirement or are we carrying higher? If it is higher, then do we have any plan of reducing it? No, no. We have substantially higher LCR, and because we have around INR 1,300 crore fixed deposit and other G-Secs. I think we are far above than what is the regulatory requirement. Okay, Sushil. Thank you. Thank you. We have the next question from the line of Prakhar Agarwal from Edelweiss. Please go ahead. Yeah, hi. Sir, three questions. First to start with, in terms of your your gross stage three and the rise that we have seen in that, how are you seeing the stage three provisions moving in? If I were to just look at last year or so, that number has dropped from 29% to 23%-24% now. Given the fact that now the pool might be even more stickier, how do you think what level of provision cover will you be comfortable with? Prakhar, Ghanshyam Rawat is declining. Prakhar, if you see Stage 3A and 3B, there are two components we published in our results. Three A also we made almost a similar provision what we have made for 3B. Combinedly, we see Stage 3 is adequately provided for in the balance sheet. We don't see any extra provisions. Any sort of terminal loss will not be higher than what we have provided or what we already provided as a provision. No, sir. The question is more from a strategic perspective. Do you think that 23%-24% is somewhere you will be comfortable with or you'll again take this to 29%-30% over a period of time? I think 23%-24% is good. Good number. Sachinder, again, I will say here this is a six monthly process which as per India's guideline, auditors and management team do the review of the data, and accordingly, they come to a formula which is sufficient for the balance sheet. I think last review happened in September, and there this number was static. Again in March, they will review, but as per management view, I think we are better, on the better side of this number. Got it. Just again on this, the second part. This is more of a data thing. If you could just highlight if there was an 83 basis point of growth staging that you said, apart from RBI regulation, what would have been home loan and other mortgage loans staging? Just for comparison's sake, if I were to look at comparing it to last quarter. You are saying HL and other side now? Yes. Just give me one sec. It says 3B, housing loan 0.84%, non-housing loan 0.79%. Got it. Yes. Yes, sir. Yes. Done? Got it. Just one last question. Have you utilized any COVID provision this quarter? We were carrying some chunk around INR 340-INR 350 million last quarter, given what we are seeing between restructured and COVID provision. While there has been a rise in restructured, the provision that we made, but we seem to have utilized the COVID related provision. Is that a fair assumption? Oh, yeah. Sachinder, accounts which got normalized or foreclosed, on that we have released the provision. Rest provision is still in the balance sheet. When do we see when we tend to utilize this extra buffer, any thought process around this? No. I think we will review situation every quarter and as the things will get normalized, and as per auditors and management decision. Normally we do it either if the account is 18 months in normal situation, Stage 1, or if the account is foreclosed, then we release the provision. Okay. Just one last data question, if I may. Excuse me. What was the assignment income this quarter and subsequently last quarter? That number, assignment income. Yeah. Assignment income for this quarter is INR 45 crore versus last quarter, INR 33 crore. Got it. That is it. That's all. Thank you so much. Side by side, if you refer to our details sheet, we give the detailed information of reversal of earlier assignment transactions also. In this quarter, INR 21 crore got reversal of early transactions versus last quarter, INR 18 crore. Okay. 18 versus 21 and 33 versus 45. Forty-five. Perfect. Okay. Thanks a lot. Net-net, 15 versus 20. 15 versus 25. Last year, Q3 was also INR 40.5 crore. Got it. Yeah. Refer our sheet and presentation. We have published in detail. I'll do that. Thank you so much, sir. Thank you, sir. Thank you. We have the next question from the line of Kartik Chellappa from Univista Fund Management. Please go ahead. Yeah. Thank you very much for the opportunity, sir. Three questions from my side. What will it take or what signals are you waiting for to accelerate disbursements on the home loan segment? For the last two quarters, that segment has been seeing a sub-20% disbursement growth, whereas the non-mortgage segment has been seeing very strong. What are the signals that you are looking for to accelerate your disbursement growth in mortgages? Yeah. Like Kartik, we always say overall mixes we attempt for 75/25. I think this quarter, hopefully, we should be around 72-28 kind of numbers. Home loan segment, yes, we will start pushing more. As you know, we have more business on self-construction side, where disbursement happen in 5 stages. When we are doing this business also, this will have impact in next six, 5-6 months. The business on that side is also on a run-rate basis. It's good, but since it's tranche-based disbursement, earlier businesses tranches already got reduced. Now whatever new business we are booking, the disbursement is happening on tranches, so some effect on that part and some effect on just new business which will be. We will be around 70 to 28 or 70/30 this quarter itself. Okay, got it. Sir, second question. What was the like-for-like average increments that you have provided to your field staff? The context in which I ask this question, the 37%-39% OpEx growth that we are seeing for the last two quarters seem to be slightly on the higher side relative to trends. If you are going to be adding only like 30-40 branches, which is like a 10%-12% increase in branch count, what is the kind of OpEx growth that we should build in at least for the next one to two years? Yeah, sure, Kartik. As we always tell that 35%-40% of our OpEx are disbursement linked. If you compare from last year to this year, our disbursement has grown nine months; this is 40%. The variable cost has increased in that proportion. If you will see, manpower cost has increased from INR 57 crore to INR 60 crore. That is not been much growth. Like in COVID time, the discretionary expenses on advertisement side, traveling, IT and those side of the expenses. Now since we want to have that 25% kind of growth, headcount has also increased, which we have not increased last year. Anyway, 35 branches year-on-year opening will have some cost impact. To your point, 57-60 on manpower, but variable expenses, as we always say, is that will increase in proportion of business increase. Advertisement and other expenses I've told you which were on hold last year is now on the normal path. Again, the way I explained on the first question, because we have reinvested for the, for the business capacity, which I have said that last 2 months number are always anyway INR 30 crore-INR 75 crore plus disbursement numbers. These numbers will anyway, within next 2-3 quarters, you will see 25-30 basis point reduction, anyway. We continue for that trajectory again for 2-3 years from here on. Last question, Sushil ji, the 0.89% of NPA which has been added because of the circular. This is the operator. Sorry to interrupt. Mr. Chellappa, your audio is breaking. Could you, yeah, just fix the line, sir. Sure. Is this any better now? Yes, it is. Thank you. Please go ahead. Okay, great. Sir, my last question is the 0.89% of NPA that we actually have seen because of the RBI circular. Under the old Ind AS format, how much of this 0.89% would be in stage two and how much would be in stage one? Mostly it is two. Mostly Stage 1. Out of total INR 76 crore, INR 4 crore in 1-30 DPD, around INR 12 crore in 31-60 DPD, and INR 60 crore in 61-90 DPD. Okay, mostly in the 60-90. Okay, I have a few follow-up, but I'll come back in the queue. Thank you very much and I wish you all the best, Sushil ji and Ghanshyam ji. Thank you. Thank you. We have the next question from the line of Shripal Doshi from Equirus. Please go ahead. Hello, sir. Thank you for giving me the opportunity. Firstly, a housekeeping question. What will be the number for asset held for sale in the balance sheet? I think that number as on 2021 was close to INR 22 crore on the gross level. What would that number be for 9 months? Give us something, balance sheet number. 20.4. We've seen some resolution happening there and therefore the number has come up. You can see the NPA number going down. This will have both sides of the impact now. Right. Sir, this is not part of our stage one, two, three, right? Yeah. Yeah. Asset held. Yeah. In the last 9 months. Say in this bracket, I think INR 2-3 crore is getting added every month, and more than that is getting resolved. Mostly you will see this number is sticking with around 2 years, around the same number. Got it. Right. Sir, the second question was with respect to the branch expansion. In the last, say from FY 2019 onwards, we've added close to 90 branches, of which close to 50-55% is in the newer states like UP, Karnataka, Haryana, Punjab. Is it also having an influence on our loan book mix changing with respect to non-HL share increasing and also salaried customer share increasing? Two things. One is salaried, yes. Non-HL, no, because new state we do less non-HL business. Salaried, yes, in the new state we do more secured business initially. For understanding the SENP business, it takes 2-3 years time. Broadly, that is having some influence in the mix, sort of changing on the salaried. I told last time also, we started journey with 12% and now borrowing at 5.9%. That pricing also there will be some mix change because we will be able to attract more salaried customer in our booking. Got it. One last question was with respect to our sourcing strategy. While we have been one of those HFC who's having 100% sourcing through our own employees. Are we exploring other revenues for lead generation? Because we had an application which was something like Aavas Mitra app, and we were, you know, building in that digital sourcing infrastructure also. Are we looking at, you know, exploring, you know, or having a diversified sourcing platform for us or we will continue to have a- We will continue our journey on pilot run on alternate channels. Right now, this has become 6%-7% of total business. We intend to take it to 15% in next 2-3 years. That will be driven by some incentives? In this Aavas Mitra's profile, we have very less incentive, more on the learning more and relationship and business initiative on both sides. Digital mode, we don't do any incentive. It's a digital and marketing initiatives where we're getting lots of leads from websites, Facebook, social media and other digital mode where we can access our customer base, plus existing customer base reference. Okay. Now we have almost 40,000+ customers downloaded our loan app from where they can directly refer the customer to us. Mr. Doshi, do you have any more questions? There's no response from this participant line. We'll move to the next question. The next question is from the line of Bharat Shah from ASK Investment Managers. Please go ahead. Hi. Sushil Agarwal ji, Ghanshyam Rawat ji, namaste. Namaskar ji. Right. First of all, on a more longer term basis, just wanted to revisit our ROE tree, starting with kind of a spread in NIM, including fee income, et cetera, expenses, credit cost, pre-tax and ROE. If you can just draw the schematic, ROE tree. Yeah, sir. Sir, we always have kept that on a 6-10 leverage basis. We will be able to give 2.5% kind of ROA on sustained basis. 2.5% ROA, gross it up by tax. You can assume around 50 basis points for credit cost. Operating cost will be on a long-term sustainable basis, it will be around 2-2.5%. The spread plus, so you can say NIM, around it. Right now this is like 8.6% NIM and then around 3.34% OpEx. Our credit cost is around 0.5%. Yeah, 46 basis points. We see, sir, as we will scale up, our spread will go down as we analyze when we came for the IPO last 3-4 years. We said that this 5% spread can go down up to 4%. Because of market conditions and all those things, we were able to maintain that spread. OpEx-wise, last 2 years we were consistently going down because of this COVID and investment in new business lines. We want to scale up our business capacity of INR 2,000 crore per month for next 4-5 years kind of scenario. One or 2 months COVID impacted in 12 years balance sheet. It is showing our OpEx by 30 basis point up, but I am sure that we will continue our journey of 25-30 basis point going down year-on-year basis. On a steady-state basis, you will see around 2.5-2.6% consistent ROA with 6-7 times leverage book in our balance sheet. Which means we are talking of a sustainable NIM of about 7.5%. NIM calculation I leave to you, yes. Maybe that's right. Yeah, because ROA at about 2.5-2.6 will mean pre-tax margin will be 3.5%. Add to that the credit cost and OpEx of 2.5%. That makes it around 6.5%-7%. Yes, sir. Yes, sir. Consistently, we can deliver that number. NIM of 6%-7%. Yes, sir. When you say margin It's coming down to 4.25%, which is right now 5.76%. Sorry, come again on that. No. Which means that it's spread coming down from 5.76% to around 2% less. Yeah. Which is a sharp assumption. But this is something on a more longer term basis sustainable while the still picture for- Yes, sir. That, I have kept from initial time that we can sustainably give 2.5% ROA on 6-7 times leverage book consistently for next 5-6 years. Yeah. Which means our actual, deliverable numbers will be better than this, because what we are assuming on ROE and what we achieve. ROE is somewhere around 13 point— Thirteen. Thirteen. 13.62 ROE. It may increase with business numbers and market scenarios. It will COVID extra provisioning. 15% to 16% ROE—in the near term, our balance sheet is already in that position. No, it should be more. That is because of the extra liquidity that you have. It will normalize the balance sheet at some stage. Is increasing for us despite spread being maintained because liquidity versus total balance sheet size—it is coming down. Sure. You said de-leverage. Balance sheet cash. Our balance sheet is coming to around INR 11,000 crore. Still, cash is around INR 1,300 crore. Income-generating assets are getting increased, which is the way we explained the thing. That I normalize in my calculation when you factor that excess liquidity, is it? Normatively, it is part of the leverage in order to work out the normative ROE. That is fine. Sushil, leverage when you say six to seven times—that means 1 rupee of net worth and 6 to 7 rupees of leverage, right? That means 7 to 8 rupees of total capital. It's loan book divided by capital. That means leverage of 6-7 is actually 5-6 times leverage. 1 rupee of net worth or borrowing total funds. Yes, sir. Yes, sir. Okay. It's not leverage 6-7, it's 5-6. Okay. Again, revisiting that OpEx part. For the length of time we have been talking about OpEx reduction, which at least is not in evidence in the numbers. But I am glad you are building the business by spreading branches, by building teams, so that we are well-prepared. Currently, our OpEx intensity seems to be ahead of the revenue proliferation. At what stage will operating leverage kick in, and in what timeframe? Where revenue expansion— Sorry to interrupt. Can you hear us? Yes, I can. Sir, we missed part of your question. Could you repeat your next question once again? Hello. Yeah. I was just saying that so far OpEx and operating leverage is not played out as probably we believe it will. At what stage revenue expansion will start overtaking expenditure expansion? What kind of a timeframe do you think it will start happening? Bharat sir, if we will exclude this year because we have given increment and all those which are pending. Like last year because of our variable nature of expenses, we have reduced to the tune of disbursement. If you will see other than that, we were able to reduce our OpEx year-on-year basis, 30-40 basis points year-on-year. Increase in revenue versus increase in expense, I think next 12 to 18 months we will be in that line. That operating leverage will start showing in that timeframe in the balance sheet. In 12-18 months time. Yes. From that phase onwards we'll start seeing probably that 25%-30% OpEx drop. No, I think 30-40 basis points, yes. But on ATS side, on absolute number size, yes, that will be there. If business will increase at 25%, OpEx will not be growing in that line. Sure. While your 1+ DPD numbers have improved, I was still a bit surprised, given our conservative treatment with the RBI revised norms, our NPA recognition went up sharply. I was a bit surprised by that. Sir, normally if you will see, if we say that our 1+ is 6.5%, NPA numbers was around 1%. The middle layer, which is 30-90, which was around 2.5%, and 1-30 was around 2-2.5%. That 2-2.5%, 61-90 bucket has because of this, because we have started initiating surfacing at that stage that has significantly come down, but that number was always like that only. 60+ number in the balance sheet was always around 2-1, 2+1, so around 3%. It used to be 4% 1+. That number used to be 1.75%. Because some portion of customer always give 1 installment every month, but 2 installment which they have missed in the past, it takes 6-9 months, but because of COVID situation, that remain outstanding and they continue paying 1 installment every month. Credit cost sustainable 0.5% is realistic, right? Sir, I think this is realistic, but I will tell you, this cost has three component attached to it. One, we are carrying around INR 10-11 crore of COVID-19 impact, around 15-16 crore of restructuring impact, and then this new RBI guideline, 16 crore kind of impact. It's actually 10 + 20 + 15, so around 30 + 45. Out of INR 80 crore of ECL provisioning, INR 45 crore provisioning is on account of certain heads. Our balance sheet is well provisioned for next 18-24 months in advance. Ji. One last question. Pure buffer provision is on thirty-first December, on account of asset is how much? Meaning all the ECL provisions are taken care of, any other mandated write-offs are all carried out. In addition to that, pure buffer provision management over the is how much? Sir, like, I will say core provisioning is that, and then on this, RBI guidelines provisioning also we have done, equivalent to 90 days. We have not taken a view that this is less provision, so we have provided full provision on this balance sheet also. Normal term, it is to provisioning around 10%. There we have provisioned 22% on that also. Buffer provision, additional contingency provision, which has nothing to do with any asset or anything, purely as a prudence management overlay you are carrying. that is around INR 10 crore. Okay. Thank you, Sushil ji. Thank you. We have the next question from the line of Dhaval Gada from DSP. Please go ahead. Hi, Sushil ji, Hansal ji. Thank you for the opportunity. Actually, sir, I wanted to sort of probe a little bit more on the OpEx part. Actually, I was looking at the first nine-month data for FY 2022 and comparing it with the first nine months of FY 2020. You know, whichever metric, be it cost to income, cost to asset, even if you look at employee cost to disbursement, across metric, there is hardly any improvement per se. Just I wanted to understand a little bit more around, you know, how you think about OpEx and why are we not able to see the, you know, benefit come through. If you could be little bit more specific in terms of the interest- You are talking about FY 2020 or FY 2021? 2020. Pre-COVID versus nine months and versus that, the first nine months of FY 2020. From that perspective, not much improvement is visible to. Well, that will not be there because, as I've told you, first is, there is impact of business because we are dividing it by business. Current year also, first month and now 15 days, so one and a half month business got impacted because of COVID. If we will add that kind of business, all the ratios will be better. Second is, because last year of COVID, we have not increased our manpower, which now we have increased by 1,000+ people, keeping in mind future growth and the kind of consistency we want to maintain. Third point is, I will say that in business proportion, we have 35%-40% of the cost, which is in line with our business kind of growth. This year, I think that growth is already there 40%, so that cost has also increased. Yes, on ATA basis, because last year business got impacted by three months and this year business got impacted by one and a half month. Because of that, INR 400 crore-INR 500 crore AUM is less. This number is looking like this. Sushil ji, in terms of the cost structure, is there any material change in the last two years in terms of the branch led cost or, you know, any fixed cost structure, any major change that one needs to be aware of? No change in that side. Mostly, as I mentioned, around 35% of our costs are variable costs, which is inching up in tune with disbursement growth, and around 65% of our costs are that fixed nature cost. Understood. Just one, you know, other point which I wanted to understand is on sourcing. I mean, I understand that bulk of our sourcing, almost 65%-70% comes from referrals. Basically this cost linked to, you know, disbursement, how exactly one can think about? I mean, because if I understand right, we don't incentivize our employees on disbursement, it's on number of customers, if I remember right. Just, I mean, if you could explain how one should think about this 35%-40%, like what's the linkage exactly? Our sales cost, around 40% cost is attributable to variable side in terms of disbursement. Though we get customer reference, but sales team get incentive on disbursement as well number of files, both sides. Understood. In terms of sourcing, apart from referral, could you share, like, the data around alternate channel. If you remember, like, we had made the investments around, you know, the telecalling, the digital sourcing. How big are those businesses? Like, how much they account for sourcing now? In terms of DSA also we were piloting, so how big is the DSA part, if you could just tell me? The DSA part will be around 1% or less, and the other channels I have told you 6%-7%. All put together? Yeah. Okay. Yeah. Last data point is on rejection rate. Is there any material change compared to earlier trend or broadly similar? No, broadly similar. We are sourcing somewhere around INR 1,500 crore and disbursing now around INR 375 crore-INR 400 crore a month. Perfect, sir. Thank you and all the best. Thank you. We have the next question from the line of Pooja Ahuja from Monarch Networth Capital Limited. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. Am I audible? Yes, yes, Pooja. Yeah. Sir, first we wanted to understand we have increased investment in our subsidiary this quarter, so what are our plans in terms of you know the business here? Do we intend to sort of Pooja, when earlier we have applied, there was a limit of INR 2 crore net owned fund in the NBFC. Later on, when we reapplied for that license, now the minimum capital requirement is INR 10 crore. To meet that requirement, we have transferred the funds. Okay. All right. Sure. Sir, I wanted to understand how much was the write-off, if at all, and in this quarter? Total nine months I think is 1.9, but I will tell you about this quarter. Wait a minute. Pooja, we will come back to you, but for nine months, 1.9. Okay, sure, sir. Lastly, I wanted to understand: we had mentioned earlier in the last quarter that we would be adding about 30 to 35 branches. So far in this financial year, we have added about 18 branches. The branch addition is likely to come in the next quarter? No. Pooja, you will see in the last 12 months, we have added 35 branches, and every year we open around 15 to 20 branches in the last quarter—we are on track. We will be around 314 to 315 branches this year itself—around 34 to 35 branches adding this year also. Okay. Got it. That's it for mine. Thank you, sir. Thank you. Pooja, I think, negligible around no write-off this quarter. Sir, one moment, I will just unmute the participant line. Pooja, does that answer all your questions? Yeah, yeah. Thank you. Thank you. Ladies and gentlemen, that was the last question. I would like to hand the floor back to Mr. Sushil Agarwal for closing comments. Please go ahead, sir. Thank you all for attending the call. We valued your suggestions and remarks. We will continue our endeavor to give consistent business metrics and better asset quality on our book. For any further information, we request you to get in touch with Himanshu Agarwal in our Investor Relations team or your IR advisor. They would be happy to help you. Thank you all. Thank you for participating, and thank you very much. Thank you, members of the management. Ladies and gentlemen, on behalf of Aavas Financiers Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.