Thank you, everyone. Good evening. Hope you are safe and in best of your health. I am pleased to welcome you all to this conference call to discuss Q1 FY 2023 Results. Our results materials have been uploaded on our website, and you may like to download and refer them during our discussion. The discussion today may include some forward-looking statements, and these must be viewed in conjunction with the risks that our businesses face. On the call today with us we have our Chairman, Mr. Ajay Piramal, Ms. Nandini Piramal, Executive Director of Piramal Enterprises and Chairperson, Piramal Pharma, Mr. Khushru Jijina, Executive Director of Financial Services PEL, Mr. Jairam Sridharan, MD of Piramal Capital and Housing Finance, and Mr. Vivek Valsaraj, CFO of our company. With that, I would like to hand it over to our chairman, and I would request him to share his initial thoughts. Thank you. Good day. I really appreciate that all of you have joined us today. I know that today seems to be the busiest day for all meetings, and there are several meetings going on simultaneously. What I'm gonna do is to make a very, very brief statement, and I will leave much more time for you all to ask questions and for us to respond to them. However, if there's any more details you want, please don't hesitate to ask that. For our performance for the first quarter, revenues have grown by 22% over the previous year in the same quarter and now stand at INR 3,548 crore. In this, financial services grew by 33% year-on-year, and pharma revenues have grown by 9%. Our net profits stand at INR 486 crore for this quarter. The main thing this quarter is that over the last few quarters we've taken several measures to prepare both our pharma and financial services businesses to emerge as two separate listed entities. In the first quarter of the current year, we made further progress towards achieving this goal. We have received consent from RBI, SEBI, and the stock exchanges earlier in the year. In July, we received clearance from our shareholders and creditors. Earlier this week, we also received the RBI approval for the NBFC license for PEL. We are now on track, and the demerger and the listing of Piramal Pharma is expected to get completed by the third quarter of this year, subject to, of course, a few remaining approvals. Also, as we are moving towards two separate listed entities, we have been enhancing our disclosure both in financial services and pharma businesses over the last few quarters. In financial services, you might recall that we had categorized the transformation journey of our business into three phases. We've completed phase one and two of this transformation journey. We stated during the last quarter that this journey has achieved a major portfolio transition as well as significant growth through the acquisition of DHFL. Our AUM grew 37% year-on-year to INR 64,659 crore, with retail AUM growing 4.3 x year-on-year to a high of INR 22,267 crore. The share of retail loans has also increased to 37% from 12% as of June 2021. As part of our transformation journey, we've also hired key top quality senior talent to ensure that we have a best-in-class team to help us build a large, diversified financial services company. We have Mr. Jairam Sridharan, Mr. Rupen Jhaveri, Kalpesh Kikani, Yesh Nadkarni, Upma Goel, all with rich experience in their areas of specialization joining us. Mr. Khushru Jijina has retired from our company, but will continue as a senior advisor to our group. The phase three of our transformation journey now begins. We have put in place all the appropriate levers to improve performance in the future, and this has started reflecting in the operating performance of our business during the quarter. I am not going to speak a lot about the businesses, whether retail or wholesale, and will be happy to answer any questions that you have. I would like to just cover the pharma business. The pharma business grew 9%, delivering revenues of INR 1,485 crore. While the India consumer healthcare and complex hospital generics businesses grew 17%, 9%, and 10% year-on-year, the CDMO business delivered a modest growth of 8% year-on-year due to some execution-related challenges and changes in order delivery schedules. The business broadly delivered in-line EBITDA margin at 11% during the first quarter versus 12% in the same quarter last year, despite moderate growth in our CDMO business and increase in the raw materials, packaging materials, and operating costs. As we have mentioned earlier, the nature of our pharma business is such that we generate significant part of our profit in the second half of the financial year. Last year, the second half contributed to nearly 70% of our profitability. With this, I am going to now leave the floor open to your questions and we'll address them and any other issue that you have. In conclusion, I would like to just say that with a strong balance sheet, the uniqueness of business models and focus of our teams on delivering towards our strategic priorities, I believe that both the emerging listed financial services and pharma companies are well-positioned to create long-term value for our shareholders. Thank you. Thank you very much, sir. We will 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 question queue assembles. The first question is from the lineup, Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity, sir. Firstly, on the overall pharma, I mean, typically you share the overall revenue guidance for next two years. If you could share the similar numbers for FY 2023, 2024? Tushar, considering the current volatility and. Hello? Sorry, Tushar? Yeah. Tushar, considering the overall volatility in the situation, and as we have mentioned that there are certain execution issues also which we need to fix, we are in the process of revisiting this, and at this point in time, we would not like to give a guidance for FY 2023. Okay. Secondly, again, on the CDMO side, with this inauguration of API plant or upgrading of oral solid. Am I audible? Sir, sorry to interrupt, but your voice is a little muffled, sir. If you can take. Is it better now? Yes, yes. Considering the new API plant in Canada, where the initial production run has already started and upgrading of oral solid dosage capabilities, what kind of asset turn and what can be expected from these facilities? The investment that we have done in our CDMO facility in Canada has given us about 35% additional capacity, whereas we have got about 1.8 billion tablet capacity at our facility in Pithampur. Both of them have been augmented, keeping in mind the kind of requirements that the customer has. We expect that over the next couple of years, we should be able to adequately utilize these capacities. Thank you, sir. Just lastly, there has been good number of projects in the Stage 3, particularly in the CDMO. Is there any kind of outlook by the customers to build up the product for the commercial part? While, you know, typically in the development phase, the capacity required is very small, but as the product advances on the commercial side, is there any kind of orders which gives the confidence of extending the development work to commercial manufacturing? You know, it's an ongoing process and you know, the kind of capacity expansions that we are doing now, as well as what we propose to do in FY 2024 is keeping in mind, you know, what could be some of these requirements that come up. As you're aware that we are doing investments at most of our facilities which offer these kind of niche capabilities and that's kind of keeping in mind the customer's requirements. Yes, while it's difficult to put a number to it, we have kind of augmented capacities to be able to serve it as and when required. Sure, sir. Thank you. Thank you. That helps. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah, hi. On the pharma side again, I understand last time you gave some revenue guidance of mid-teens to high teens, but margin guidance given volatility you had avoided. Would that be correct, or you are rethinking about it? As I mentioned, the situation is a bit volatile, and given the tough start that we have had to our CDMO business, we are reassessing. There are a few things that we need to fix, and therefore, at this point in time, we are not really giving a guidance for FY 2023. Having said that, our long-term guidance still remains, as we have maintained and, there's no change from a long-term guidance standpoint. For the short-term guidance, we shall come back later. Understand. If you could give more color, like what are the issues you're facing at CDMO? Is it supply chain? Is it, renegotiating contracts, suppliers or buyers? I mean, just some color would have helped. There are a few issues, but I'll highlight the ones which are more pertinent. As you're aware, during the pandemic, we had significant attrition at our overseas sites. Being able to get the talent, fill up these vacancies and train those employees and get them productive takes some time. These are like maybe critical positions, which are required for day-to-day operations. We are in the process of staffing and training our people. Second is, some of our customers also changed the phasing. You know, what was supposed to be delivered in quarter one, they requested that to be pushed out into the subsequent quarters within the financial year. Both of these have been the most pertinent reason for us to kind of, you know, have some challenges in executing versus our plans. Let's mention there was one more product which was due for U.S. FDA approval. Where are we in that? Sorry, are you referring to Desflurane? Yes. Okay. No. As of now, the status remains the same. We don't have an approval yet. While we have launched in the other markets, the situation is the same as far as we are concerned. We're expecting calendar 2022 or 2023? No, it's difficult to say that actually. Okay. No worries. Thank you. I've done. Yeah. It wouldn't be coming in this year, at least. I don't think it'll be coming in this year. Thank you. Before we take the next question, a reminder to the participants. Anyone who wishes to ask a question may press star and one at this time. The next question is from the line of Prasheel Shah from CapGrow Capital. Please go ahead. Hi. In the previous quarter, we had moved some non-real estate exposures to Stage 2, about INR 2,300 crore. In this quarter, there were some slippages from Stage 2 to Stage 3. Are we talking about the same account or there is still some stress left in that Stage 2, which was moved? Accounts which were moved to Stage 2 in the previous quarter. There's only one account that has moved to Stage 3 during the course of this quarter. There were a few accounts that moved to Stage 2 in the last quarter, and one of them happens to be this. It slipped to Stage 3 this time or? Yes. Okay. Fine. On the retail business that we have, disbursed this time, about INR 2,500 crore. What would be our focus amongst these four to five business segments? What would be our focus three years down the line? What product are we mainly banking on to grow in three years? What will be our NIMs and what people are you guys targeting? Okay, there are a few different questions there. See, our core business in retail is, or the anchor products are gonna be housing and MSME lending, particularly secured MSME lending. Those are gonna be our two anchor products. You should expect, from a book composition perspective, housing to be maybe a little under 50% at the overall assets level, and MSME to be a little under a quarter of the book. Those are gonna be the big anchor products. There is going to be a category of products which are unsecured in nature, right? And there'll be three or four different form factors there. It could be digital, unsecured, embedded finance type stuff. It could be personal loans which is branch distributed. It could be microfinance. It could be a few other form factors, but unsecured lending. We should expect that to be a little over 20% of the book in the end state. We request all the participants to please stay connected while we reconnect the management. Ladies and gentlemen, the line for the management is reconnected. Over to you, sir. Hi. Apologies for that technical glitch. I hope you heard the answer that I was talking about. Portfolio composition, you know, 45-ish% housing, you know, 20-25% MSME, you know, about 20-ish% unsecured, and whatever is left will be the other secured lending products. That's the composition that we are targeting. Overall at an FS level, we believe the kind of business that we are building, two-thirds retail, 1/3 wholesale, a multi-product retail with the composition that we just spoke about, et cetera. This type of a business, we believe, should be able to deliver high twos, low threes kind of ROA. That's where I'll leave it, instead of going into individual line items or the people plan. Okay. Thank you. Thank you. The next question is from the line of Vivek Agarwal from Citigroup. Please go ahead. Yeah. Thank you for the opportunity. Although you don't give any revenue guidance, but is it possible for you to share any color on the investment plans, especially in the CDMO injectable space over the couple of years? Sorry. The question was regarding the CapEx investments in the business? Yes. Yes. Yes. Yeah. What is the overall CapEx that you are planning over the next couple of years, and which areas actually we can clarify? Thank you. Right. You know, our investment plan for FY 2023 and FY 2024 is about $200 million per annum. In the midterm, we are stepping up our investments to create capacity. This includes expansion of our antibody-drug conjugate capacities at Grangemouth, High Potency API capacities at Riverview. We are also looking at increasing capacities for our API facilities in India and for our potent injectables at Lexington. Okay. Understood. Overall $400 million you are planning over the next couple of years. That's correct. Okay. Thank you. Sir, although debt clearance is widely talked about product, but would you like to share the number of new product introduction in the injectable space for the next year, FY 2022 or FY 2024? Yeah. We have indicated a pipeline of about 40 products. It's there on the presentation in terms of the various stages at which they are. You can please refer to page number 45, the details are there. Okay, perfect. That I will do. Finally, sir, one thing I just want to understand, why the revenues in CDMO space are relatively more skewed towards second half? If you can clarify. Thank you. It's slightly difficult to put a finger as to exactly why they are skewed towards second half. There are multiple reasons. It depends upon the overall phasing of the customer's requirements, which has been over a period of time, and also the kind of time period required to kind of being able to, from the time you receive the order to be able to deliver, it gets skewed towards the second half. It just the way the orders have been historically. Thank you, and best of luck. Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead. Yes. Thank you for taking my questions. I just wanted to understand, I mean, I think in this quarter we have kind of reported that we have launched the MFI business through the BC model. Not sure if you had kind of in the past suggested that we're looking to enter the MFI segment as well. I'm just trying to understand what are the other newer product lines that you're kind of looking to enter. Because I'm not sure, but kind of somewhere I kind of heard from someone that we have also entered into gold financing now through a partnership with a gold lending fintech. What are other newer product lines that you're looking to enter? The other related question here is, I mean, are we not kind of trying to spread ourselves too thin too fast into newer product lines, for this, I mean, over 20% of the book that we talked about, digital embedded finance, personal loans, MFIs and all the other, unsecured, lending products. That is my first question. The second question is more on this wholesale account which you suggested had moved from Stage 2 to Stage 3. If you can just give some color, what was the quantum, what was the nature of the account, and what kind of led to this slippage from Stage 2 to Stage 3? Lastly, on this wholesale lending, our old strategy, I mean, I don't know, I mean, in our wholesale lending, our old strategy, I mean, we kind of clearly acknowledged that, perhaps, I mean, it was not in the best interest of the company, and which is why we kind of decided to run it down and decided to make the book a whole lot more granular. Now that we are again kind of building on a wholesale piece, understandably in mid-market, residential products, much lower ticket sizes, do we have that confidence that this time around the wholesale lending will be, much, much better than what we did in the wholesale lending, our old? Those are the three questions. Thank you so much. All right. Thank you Abhijit for your questions. Your first one was around product strategy in retail. The intent, Abhijit, very much is to build a diversified portfolio in retail. Our belief is that through the cycle for you to build a resilient book which can perform well across various risk cycles, it is important to have adequate level of diversification. You know, portfolios that are dominated by a single product, you know, we believe are going to be more fragile through the economic cycle. Hence we've been you know quite clear that we will continue to build a diversified book. Now, we are still at the stage where we will experiment with a lot of different products. You mentioned gold, for example. It's at a very, very low-key experimental level. I won't actually talk very much about it. We've barely done, you know, INR 1 crore of business in that partnership. So, we will try a bunch of different things, see which has adequate traction in the market and just scale on those things. Microfinance, we felt good about the feelers that we were getting in the market and how our early experiments panned out. We are scaling that, and hence we made that announcement during the course of this quarter that we are committing to that business now and are moving forward. In terms of what next, in the other big business which we have chosen to commit to, we haven't actually started the business yet, so you should expect to hear about it next quarter, is a branch-led personal loans business. Unsecured salaried segment lending, you know, done out of our branches. That's the other business that you should expect to see. Apart from that, we don't have any major plans through the rest of the year. There are a few different experiments. You spoke about gold. Yes, that is something that we are experimenting with. We will experiment a little bit with loan against securities, et cetera. Those will be very, very low scale just for us to learn something so that we know whether they are worth building out in the coming years. That's your first question. Your other sort of question 1B, which was around execution risk of trying to do a lot of different products at the same time. That's a very good point, Abhijit, and it's a really good risk to keep in mind. We are super aware of the fact that execution on multiple product lines is not easy. It requires specialized skills, et cetera. Thankfully, we have a, you know, fairly strong team with a very broad set of experiences and, once something clears our experimental hurdle, then we are willing to commit to it by getting industry experts in and hiring the right people, who will be able to lead some of these businesses. As you've seen over the last year and a half, as we started SME lending first and then used car financing, and now microfinance, et cetera, while it seems like a lot is going on, essentially we are launching one major product every six months or thereabout. I think that pace is a pace that we can take from an execution risk standpoint, and we feel pretty comfortable with growing that out. The next set of questions you had was about the accounts that moved from Stage 2 to Stage 3 on the wholesale book. You know, you might recall that there were some challenges that we have been facing in the non-real estate wholesale portfolio. It was 13% of our portfolio last quarter. It is now at about 12% of our portfolio. But one of the accounts in there was this quarter kind of migrated down to Stage 3. The ticket size of the account was a low INR 100 kind of crore. That was the size of the account that moved. Not much more to say, like it's a non-real estate account that had been facing, you know, payment challenges. The account continued to age. It first aged into Stage 2 and then it aged further into Stage 3 as it went past 90 days. There was one other question. Last question. Wholesale lending 2.0. Yeah, Wholesale 2.0. See, again, good question on execution ability and confidence on executing it well. As you have seen so far, under Wholesale 2.0, there are two parts to it. The real estate part where we have not yet done disbursement. We are at the stage where we are evaluating about INR 600 crore worth of deals, you know. We will see when we make our first disbursement, et cetera. Then there is this mid-market stuff, which is very low ticket size, like 50 crore kind of ticket size business where we have over the last six to nine months disbursed a total of about INR 650 crore. As you can see, we are being very slow and deliberate about the way we are building this. We are not gonna rush into this. You're not gonna see us, you know, disburse thousands of crores all in a hurry. You know, we recognize that the business that we are attempting is different in nature than what we have built in the past and hence requires different muscle. Internally, from an organization structure perspective as well, we have built a different org structure, where we have moved to a more traditional lending type architecture where we have a separation of a coverage team and credit team, and we have an oversight from a risk team on top. The so-called three pairs of eyes type of architecture for underwriting, as opposed to the two pairs of eyes architecture that we have had in the past, right? That org structure also needs some time to get adjusted and settle in. We recognize that all this takes time, and we are in no hurry. We will be very careful and very deliberate, and we will keep looking at signals from the market in terms of how the strategy is panning out before we hit on the accelerator too hard. Thank you, Jairam. This is very, very useful. If I could squeeze in just one last question. Are we in a position to kind of now answer whether all these unsecured loan portfolio that we are building will it be housed in the listed NBFC business? Yeah. The listed NBFC entity. You will see a significant part of it being housed in the listed NBFC. Not all of it. You know, remember that regulatorily, the housing finance company, which is the subsidiary, has to predominantly house you know, assets which are related to residential housing. We will stick to the commitments that we have made to the regulator in terms of portfolio composition in NBFC versus HFC. Thank you so much. This is very, very useful, Jairam. Wish you the very best for the coming quarters. Thank you so much. Thank you, Abhijit. Thank you. A reminder to the participants, anyone who wishes to ask a question may press star and one at this time. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Hi, sir. Firstly, with respect to this provisioning, again, on Stage 2 assets, there is some provisioning which is done of almost INR 300 crore. I think maybe from the slippage, as far as slippage is concerned, maybe there we have done 54%-55% provisioning on the new slippage. Last time, I think you highlighted that at least this 5.7% seems to be quite comfortable and there might not be too much of a need, but in fact, we are still seeing almost INR 260-270 crore incremental stage or ECL provisioning which is being there. Just wanted to understand what goes into this and what is the kind of further risk which we are seeing wherein there could be a more provisioning which will flow through. Right. Kunal, this is not coming out of any, you know, significant portfolio review or anything like that. The way to think about this now, Kunal, is that, you know, the big kind of revaluation one, kind of relook, at the portfolio in a post-COVID context was what we did last quarter. You saw the impact of that. After that, and now, a lot of the clients have all sort of, you know, come out of, either restructuring or whatever OTS years they might have had with other lenders, etc. Now the situation is becoming a lot clearer in terms of, what the different clients', financial position is. Based on that, if you see some natural aging, you will see that getting reflected. You will see that getting reflected in Stage 2 and further kind of if the aging doesn't stop, you'll see that reflected into NPA. So think of that as sort of a flow of stress if you know, if I may. On the pool, this is not a one-off revaluation type exercise. You might have noticed, Kunal, that this quarter in terms of our disclosures, if you look at our presentation on page 34, we have disclosed a new kind of a way of looking at our provisions numbers. You'll see that we have shown our trailing 12-month credit cost as a metric, and how it has trended over the last ten quarters. If you look at that, you will see that in the calendar year 2021, our credit costs kind of were, you know, slightly south of zero, right? What you've started seeing these last two quarters is sort of a trailing twelve-month credit cost, which is in that sort of 1.5%-2%, you know, kind of range. Not nearly at the levels that it was in calendar year 2020, but not the sort of negative numbers that it was in 2021. you know, we will see how this goes, and you know, we'll see the financial health of our clients every quarter in terms of their ability to pay. You might have also noticed, hopefully, that we have given a lot more granularity in terms of disclosures of our wholesale portfolio. if you have not, I'd encourage you to take a look at slides 22 and 23 on our presentation, where we have disclosed a lot of information about what the wholesale portfolio looks like. Our intent here, Kunal, is to show all the information to the investing public and allow you to make your own judgment calls about what the implied health of the portfolio you know might look like. We are not offering any specific forward guidance on credit costs, etc. Through some of these new disclosures that we have added, hopefully that'll give you a good sense of where how the portfolio is positioned. Sure. Yeah. I was just on that plan and wanted to ask a follow-up question on that. In terms of when we look at this early stage projects, almost like 24 odd% exposure and even mid stage, another 18 odd%. When we look at it in terms of the bullet payment maturity, almost like 16 odd%, what are the risks which are there with this projects? Okay. Last time also we said like, okay, we have reevaluated and then there was some further provisioning. Again, this time it is there. Are we done with the exercise or maybe this is gonna continue and we should see some flow through in terms of the further provisioning? I understand in terms of the steady-state credit cost and that chart which you have shown that it will not, definitely not be a negative or low. Overall behavior of the wholesale, are there risks coming out eventually? The way I say this, Kunal, is that the residential housing market, you know, has went through some challenges around, you know, around COVID. You know, now some of those challenges are over, but some of the projects, you know, in which one might have exposure are projects that are launched pre-COVID. You know how, you know, consumer mindset is, you know, works nowadays. Right now, sales are not happening on the consumer end, in early stages at all. You know, sales are happening when the project is kind of well on its way to completion, and the consumer can actually see the property. The consumer behavior has changed and we are also watching our sort of developer portfolio as well as all our other portfolios very closely to see what impact it has in terms of their repayment to us. You know, you rightly pointed out the 24% early stage, the 16%. If you look at it differently, 16% in bullet payments, etc. Those are all pockets that are pockets of vulnerability, and we are watching it you know just as closely in terms of what might you know come in. We will let you know as and when you know things develop. There is no one-off revaluation exercise that we are planning on taking up, if that's something that you're thinking about. Inviting Mr. Khushru Jijina to add to this as well. Yeah, a couple of points here. I think in early stage itself, let's define early stage. Out of that, the 24%, 16% is actually under construction, but they are early stage, but they are under construction. That's number one. The second thing about your question was on the provisioning, which I would like to answer a little differently. What is happening is that in real estate, and this is what. Let me attempt. I've done it before also for the same question. While we have already done the entire eval last year, last quarter, what will happen in real estate is that there is a value at the end when you complete the project. But in between, like you look at the additional provision this time in Stage 2, why do we do that? Because sometimes if we have to enforce or if we have to take some action to get the project offhand and on away from the developer, we may have to take it to Stage 2 or even to Stage 3 to ensure that we take over the asset and complete the project. Let's differentiate between what will happen quarter-over-quarter. Yes, there could be a case again in future while on an overall health of the portfolio, we can confirm that after we have done the reval and especially for the non-real estate which happened in March, there shouldn't be any surprises in future. If we have to ensure that we recover our money in a real estate project, and if we have to enforce, even if we have to take it to Stage 3 temporarily before we get our money back, we will do so. One comment, if I may add on that, on a sort of, taking a slightly different angle, Kunal, is that while these provisions, you know, come at these sort of, you know, more steady credit cost, you know, structure plays out, there is adequate level of, other revenue streams in, you know, which are creating the ability for, the financial services business to still deliver a 2%+ ROE, right? Like you saw this quarter, the DHFL book and the recoveries from there, are giving you the ability to actually take that and use for some of these, provision requirements. Even though these provision requirements have come, you're still seeing a 2%+ ROE, you know, during the quarter. hopefully, we'll be able to continue to generate, you know, some of that cushion through POCI and some of those other means in the future quarters as well. Sure. One last question on this DHFL again, so, the recoveries. Any lumpy recoveries from the wholesale portfolio this quarter from DHFL's tail book? No lumpy recoveries. There was a minor sort of, you know, a small portfolio sale of a couple of deals, but nothing, no big lumpy recovery. All the big lumpy stuff is gonna go through a big, long process of litigation, et cetera. You will, you know, keep watching the space. You know, we will do small ARC type transactions every now and then, but nothing huge yet. Okay. Support of these recoveries are somewhere around 1%-1.5%. Do we expect that to continue? If for the next few quarters, absolutely. Okay. Okay. Got it. Yeah. Thanks a lot. All the best. Thank you. Thank you. The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Hi. I have a couple of questions on the finance and a question on the pharma business as well. In the financial services business, given the fact that you're experimenting with microfinance and also with gold finance, is acquisition a real possibility of some other company because these are all very physical touchpoint-oriented businesses typically, and you know, the branch network will be complementary to yours. That's question number one. In the pharma business, you know, I understand you're making CapEx, and you've not given any guidance, but could you also broadly give in terms of the indicators, caps that you might have within the group, let's say, high-level debt EBITDA numbers or any financial covenant that you would have? Thanks. Let me start with the FS thing and I'm sure Vivek will jump in and offer you some thoughts on the pharma side. Firstly, one quick clarification. The microfinance business, we are now committed to. It's no longer in experimental mode. We like what we see. You are gonna see us make further investments there. The gold one is absolutely in experimental mode. We We might or might not go ahead with it. We will see how that plays out. To your question of are we open to M&A in these spaces? Yes, we are. You all know we are an extremely well-capitalized company with a lot of spare capital available. As a group, we have had a rich tradition of successful M&A. These businesses, as you absolutely rightly point out, are businesses which are very M&A friendly. You know, we will continue to watch the space for potential M&A opportunities. I want to caution that as a group, we are generally, you know, value-oriented M&A players, and some of these spaces are extremely rich from a valuation standpoint right now. It might not work out right now on that dimension. If we find something which is a good product fit, and it checks the box on value, the valuation, I think we'd be quite open to it. Thank you. Yeah, Vivek, while we have not given a specific guidance for pharma, let me reaffirm that the demand remains strong. In fact, we are seeing the highest inflow of RFPs ever than we have seen before. It's just that decision-making is taking a little bit more time at the customer end. With respect to your question on debt, well, the guidance we have given is that we will cap at about 4 x the EBITDA of the business. Okay, great. Thank you so much. That was very useful. Thanks a lot. Thank you. The next question is from the line of Kiran Engineer from CLSA. Please go ahead. Hi. Thanks for taking my question. Just a couple of clarifications on the POCI book. Firstly, how much of it is retail versus wholesale? And just so that I understand this correctly, the INR 3,300 crore of books. Whatever is left is essentially your profit in the sense. Yeah. The POCI book is all retail, Kiran. There is no wholesale in there. The way to think about the POCI book is there is a face value. We have disclosed this on the slide. If you see there's a face value of this asset, which is, let's say about INR 9,500 crore. It has been marked down by 65% odd to about INR 3,500 crore or thereabout. That's what we see. If recoveries are greater than the mark, then you get P&L flow. If it's less than the mark, then you get a P&L hit, right? That's the way to kind of think about it. Okay. This fair value is essentially part of your net worth then. Plus or minus of this fair value becomes a debit or credit to the net worth. Yes. Yeah. Yes. I mean, the INR 3,500 is part of the balance sheet, if that's what you mean. Yes. Yeah. It's part of the balance sheet. Yes. Okay, got it. Then the next question is that, you know, who will lead the wholesale business now that Mr. Jijina has retired? Mr. Jijina, though he's retired, he continues as advisor, and we have got now a Wholesale 2.0, where we've appointed Mr. Yesh Nadkarni. Yesh was early on with KKR, and he's also going to be involved. Okay. Got it. The teams remain the same, and yeah. Oh, understood. That's all from my end. Thank you. Thank you. The next question is from the line of Deepak Gupta from SBI Pension Funds. Please go ahead. Hi. Good evening. Thank you for taking my question. My first question is on retail disbursements. You know, the runoffs from Dewan Housing book has been quite elevated in the last three quarters, running at a run rate of about INR 1,600-INR 1,700 crore per quarter. How do you see this going forward? Because the runoffs are total runoffs here, not just the [DHFL] book. Please remember that, you know, we are doing about INR 150-INR 200 crore of disbursement of embedded finance. These are very short-term products, and the runoff there are pretty high too. Even in our organic business, the 23% of the organic business that you see on slide 13, which is digital embedded finance, those are all very short-term businesses and hence the scheduled repayments are going to be quite high in there. Essentially a lot of the runoff that you see here, the mix is shifting more from attrition towards scheduled repayments, as we continue to press the pedal on some of these digital pieces. The attrition pressure has actually come down. In the last quarter, attrition pressure has been meaningfully lower. Of course, Q4 is always very high pressure on attrition. Both seasonally as well as more structurally, attrition pressures are lower in Q1 than they were in Q4. Sure. I hear you. The second question is on incremental yield on the book versus incremental cost of funds. Somewhere in the presentation I saw incremental disbursement yield is 12.6%, but in the next slide it's also showing at 13.1%. Yeah. I was a bit confused on that. Yeah, sorry. Maybe we were not super clear. See, in the 12.6% that is on page 13, we have excluded the digital embedded finance, the 23% of disbursements. The reason we have done that is that we don't want investors to be modeling in disbursement yields into a longer term book because the embedded finance book will churn out very quickly. Twelve point six is all disbursements ex of embedded finance. When you include embedded finance into it, the yield increases to 13.1. From a modeling perspective, if you're trying to model the full book, I would encourage you to keep 12.6 as a number rather than 13.1. Sure. What will be the incremental cost of borrowings right now? The 7.9% right now. Okay. Understood. The next question is on asset quality. You know, if you could give a break-up of the GNPAs between retail and non-retail. Secondly, I know this question has been answered before, but just some more clarity on, you know, the increase in Stage 2 loans. You know, because I thought last quarter you had mentioned that you had done a review of the entire book and whatever had to slip has been slipped. But again, we've seen about INR 400 crore of slippages, at least moving from Stage 1 to Stage 2. How should we read this? Do you think, what exactly is going on here? If you could give some more clarity on that. Thank you. Yeah. Because I don't think we said last quarter, and we're not saying it this quarter either, that whatever needs to slip has already slipped or come into Stage 2, et cetera. The way to think about it is that over time, the big reval exercises that you know, the one reval exercise that happened two years ago in March 2020 and another one that happened last quarter, et cetera, you know, throw up some specific accounts where you feel like, "Hey, you're underprovided and you need to do some work." That process is not gonna happen every quarter. It's you know, it will happen occasionally, maybe once a year or thereabout, right? From a flow perspective, you know, if there are specific client situations where the client actually goes through, you know, some trouble and some flow happens like this quarter, we have seen like a total slippage of roughly 1% annualized. Some level of slippage, some level of Stage 2 creation, you know, some rate of that, you should just, you know, you should expect to see. These are, these are idiosyncratic situations and not sort of any broad brushstrokes or portfolio effects that are, you know, that are there. Mr. Jijina? Yeah. Okay. To give color to this, Stage 2, let me divide it to a few parts. Some of them were small loans where we actually did a one-time settlement, and maybe there was some INR 5 crore-INR 10 crore difference, and that's what we provided extra. Actually, those loans are getting settled. Actually, the two large ones, and again, here, there is an embedded value here. However, one was a real estate company in the south, where the developer had some trouble. In fact, there was an ED inquiry, so we decided to take the loan to Stage 2. Not that he has defaulted. Actually, the account is standard, but we decided as a caution to take it to Stage 2. I think it's good you asked this question again so that we clarify it. The other one actually is again a hotel which has now started doing well, but since there has been some mismatch of cash flows, we decided to make it Stage 2. Again, if you ask me the value of the hotel, it's far more than the value of the loan. If that clarifies you. Sure. If you could just share the breakup of GNPA between the retail and non-retail. Thank you. I mean, we did it last quarter. I don't intend to do it every quarter, to be honest. Yeah, like, we'll do it once a year. We are not doing full segment reporting yet. Let these businesses settle down. We'll start doing full segment reporting at that point in time. Sure. Okay. Thank you so much. Thank you. The next question is from the line of Abhiram Iyer from Deutsche Bank. Please go ahead. Yes, sir. Hello. Thanks for your thanks for taking my question. I had two questions. One is, could you just highlight your methodology in which, you know, you brought down the interest expenses from 8%- 7.1%? The other question is, could you also highlight how, you know, Capital Adequacy Ratio has gone from 21% - 25% over the last quarter? On the first one, which is the cost of borrowing, there are a few different factors, mostly related to the point that I said, you know, back in 2019 and early 2020, when liquidity environment was quite challenging, there was a lot of, you know, higher rate borrowings that the company had to take up. Now that the liquidity situation in the company is just completely different, all of those borrowings have gone past their prepayment penalty dates. We are prepaying more and more of them and we are able to borrow in the market now incrementally at much cheaper prices, and that is slowly reducing the cost of borrowing. Even though the market is seeing an increase or elevated interest rate environment, our cost of borrowing continues to come down. I think he misunderstood. He didn't hear. It was not 7.1%, I think. 7.9%. 7.9% is the incremental borrowing. Correct. This is just in the last quarter. The portfolio level, the average cost of borrowing is 8.8%. 8.8%. Yeah. Now your second question was on capital adequacy. Capital adequacy is at 25, just over 25%. Two things have changed. One is, of course, addition of profits in the numerator, and in the denominator, there's some risk weightage, again, on a weighted average basis, risk weights have come down a little bit and that has nothing very dramatic, but that's what has resulted in the move that you see. Sir, could you just clarify on the risk weight coming down? Is this because of the mix of loans or is there any other- See, with post the DHFL acquisition. What was the question? Yep. No. W hat is the question? On the cost of- No. Post the DHFL acquisition and with the improving mix on the retail, you know, you can see the mix of retail has gone up from, you know, 12% - 37%. This is what is resulting in, you know, change in the risk weightage, where the risk weightages have kind of improved towards the retail side and, you know, increasing the capital adequacy ratio. Agreed. Also- That should have been sort of reflected in the previous results as well, right? I mean, net-net from a book perspective, the composition hasn't significantly shifted over the last quarter. Yeah. Last quarter were provisional. These are audited numbers right now. Got it. Provisionally, we lower our capital adequacy. Got it. Thank you. Yeah. I think. We were conservative on that. Yeah. I just wanted to add on the cost of borrowing quickly. The other important thing, which people should note that while the interest rates are going up, our spreads as a AA has been consistently going down because of the performance of the company and especially with retail coming in, et cetera. That's the other point to note. Noted, sir. Thank you. Thank you. The next question is from the line of Nischint Chawathe from Kotak Securities. Please go ahead. Hi. Am I audible? Yeah. Yes. Hi. Thanks. I just want to understand the, you know, the ROA target, you know, that you're putting out of around 2 odd%. This includes the benefit of recoveries from the, you know, from the erstwhile DHFL related bad book? Or should we kind of expect that as an, you know, kind of further, I think, to these numbers? Two things. Firstly, the guidance or not guidance, but the aspirations or the goals that we- Yeah. That we spoke about was high twos, low threes. 2% would be a bit on the low side. I don't think that's what we are putting out there. Now, that's for kind of, let's say, you know, between now and five years out, we should get there. See, the whole recovery story on the legacy book and all the DHFL book, et cetera, will mostly have played out by then. In the interim, you know, all the recovery story, et cetera, will keep giving us the ROA boost. The sustainable business, you know, should be giving that kind of ROA, you know, four, five years out, right? Without having to depend on recovery because there'll be no more book to recover five years out. Basically what we're trying to say is that this is a benefit that you'll probably get in the interim period. Right. When you have evaluated, you know, the real estate and the wholesale book. We are saying that, look, it is now adequately provided. Are we taking any credit from this or is this something where, you know, you have provided it independently and this kind of maybe just provides a further buffer on that? I'm not sure I fully understood your question actually. Let's see. There's one consolidated balance sheet. I mean, it's, you know, whatever comes in the provisions line, whether it comes in, you know, one part of the business or another, it goes to the same line. We are not thinking of it separately. It is all one integrated company and one integrated set of numbers. Nischint, maybe you want to clarify the question, what you were trying to ask? Yeah. I think what I'm trying to say is that, you know, when you have evaluated the wholesale book and, you know, probably going project by project and kind of made adequate provisions against it, are you taking any credit from the, you know, from this particular pool of recoveries? Or are you kind of trying to say that, look, this pool of recoveries is something which might in a quarter like this help you to offset, you know, the hit that we saw in this quarter? Or, probably it may not. We don't want to take any credit of that. When you are kind of trying to, you know, I mean, I'm sure internally you have some number in terms of what recovery- Like, there is one team that will continue to focus on getting recoveries from the old book that is stressed. Hopefully, we'll be able to create through that team a steady flow of recoveries and a steady sort of P&L stream for the next few quarters. Independently, client behavior or, you know, or slippages, et cetera, might result in provision requirements. We don't want to color our judgment on one depending on the other. As it happens, you know, there will be, you know, situations like in this quarter where there is adequate money coming from one to pay for the other. It is not something that we are sort of. There's no master design that we are trying to do behind it. We will do whatever is prudent in any given quarter. Also, Nischint, from a disclosure perspective, you see, we clearly disclose separate line items for credit cost and separate line item for recoveries from POCI book. You know, I think that should clarify your doubts on that front. Yeah, that's definitely helpful. Thank you very much. Thank you. The next question is from the line of Aditya Jain from Citigroup. Please go ahead. Thank you. Hi. Could you talk about how large is the pool purchase? Just to get a sense of how much is the organic growth in retail and how much is being driven by pool purchase? Also what are the loans which are being bought? Pool Purchase is about 5% of our, about 5.2% of the retail book right now, Aditya. It'll always remain in that broad range. I don't think it's gonna ever be a whole lot. The kind of product that we are doing in Pool Purchase are so far we first started with microfinance because we are very keen on actually getting into the microfinance business ourselves. We wanted to actually get a sense of how the book is performing with a lot of lenders. We did some pools in microfinance, and that's what gave us the confidence and also gave us a little bit of a sense of which geographies are working well, et cetera. We are doing a little bit of small business and we are doing a little bit of housing. Correct. What we are not doing is cars or trucks, et cetera. We have not done anything meaningful there. Understood. It was 5.2% of the retail book in the last quarter as well. Say that again. This was the share of 5.2% of the retail book or the Pool Purchase. Of the book. This was the amount in the last quarter as well. Of the stock. Of the stock. Yeah. Of the stock. Correct. Correct. The OpEx declined quarter-over-quarter in financial services. I mean, a material decline. In terms of thinking about it going forward, do we think of it as the bulk of you know getting full activation in DHFL is done, so costs should be stable to a large extent in this year? Is it more seasonality or some other element? In general, you'll see a little bit of seasonality in this, Aditya. Like, you will see Q1 being a bit low and then, you know, like for example, we've not started our mass media campaigns, et cetera yet. It'll probably start later in the year. Some of the staff that are still being hired for the completion of this year, all that cost will start coming in a little bit later. I would say that just keep in mind that a little bit of seasonality with the Q1 low and a Q4 high. Right? Otherwise, you know, your point that, you know, our stabilization costs of DHFL, et cetera, are fully baked in and settled, I think the answer is yes. Now, you should think about it purely as kind of organically to fund growth. Correct. Then just lastly, the equity breakup that we have is on March. Is it possible to tell the equity in financial services as on June end? You know, typically we would be keen to disclose on, you know, six monthly period when the numbers balance sheet gets audited. Got it. Okay. All right. Thank you. Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Hitesh Dhaddha for closing comments. Over to you, sir. Thank you, everyone. If you have further questions, please reach out to the IR team. Thank you.