Ladies and gentlemen, good day, and welcome to Piramal Enterprises Limited earnings conference call for Q4 and annual FY 2023. 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 the conference call, please signal an operator by pressing Star Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ruchika Jain, Associate Vice President, Investor Relations from Piramal Enterprises Limited. Thank you, over to you, ma'am. Thank you. Welcome to the earnings conference call for Q4 and annual FY 2023. Our results have been uploaded on our website, and you may like to download and refer to them during our discussion. The discussion may include some forward-looking statements, and these must be viewed in conjunction with the risks that our business faces. On the call today, we have with us our Chairman, Mr. Ajay Piramal. Mr. Anand Piramal, Director, Piramal Enterprise and Piramal Group. Mr. Rupen Jhaveri, Group President, Piramal Enterprises. Mr. Jairam Sridharan, Managing Director, Piramal Capital & Housing Finance. Mr. Yesh Nadkarni, CEO of our Wholesale Lending business, and the CFO of our company, Ms. Upma Goel. With that, I would like to hand over the call to our Chairman and would request him to share his initial thoughts. Thank you, and over to you, sir. Thank you, and welcome to our earnings conference call. Today, as we mark the end of FY 2023, I would like to discuss how we have delivered on our strategic priorities over the past year. Our total assets under management stood at approximately INR 64,000 crores. We have significantly improved our retail wholesale mix to 50/50 from 33% retail and 67% wholesale in FY 2022. Our retail AUM witnessed a 49% year-on-year growth to INR 32,144 crores from INR 21,552 crores in the last year. Quarterly disbursements have grown by 34% quarter-on-quarter and 3,361% year-on-year to INR 6,828 crores in the retail business. The wholesale 1.0 AUM reduced by 33% year-on-year to INR 29,000 crores from INR 43,175 crores in FY 2022. Our Stage 2 and 3 wholesale assets reduced by 39% quarter-on-quarter to INR 6,374 crore from INR 10,369 crores in the Q3 of the current year. We concluded four stressed asset monetization transactions during the quarter through a combination of asset sale and ARC sale. With these, we generated over INR 12,500 crores of cash realization through accelerated repayments and resolution proceeds from our wholesale 1.0 portfolio in line with the provisions on these assets. We have built a wholesale 2.0 AUM worth INR 2,792 crores across real estate and corporate mid-market lending. Our GNPA ratio reduced to 3.8% in the last quarter of FY 2023, from 4% in the third quarter. Our profit after tax for FY23 grew 5% year-on-year to INR 1,902 crores, post excluding exceptional gain of INR 8,000 crores in FY 2023 pertaining to the demerger related demerger of the pharma business transaction. The PAT for the quarter stood at a loss of INR 196 crores, led by MTM loss of INR 375 crores on Shriram Investments. Excluding the impact of this MTM loss on Shriram, our PAT would have been INR 136 crores for the quarter. As of yesterday, this MTM loss has been reversed by INR 218 crores. Net interest income for FY 2023 grew 21% year-on-year to INR 4,176 crores. We have maintained a strong consolidated net worth of INR 31,000 crores for FY 2023 and a capital adequacy ratio of 31% on the consolidated balance sheet. We have maintained a strong liquidity with cash and liquid investments of INR 7,430 crores despite of all the provisions undertaken during the FY 2023. Due to our strong balance sheet and improving AUM mix, we have reduced our average borrowing costs to 8.6% for FY 2023 against 9.6% in FY 2022 despite a rising interest rate environment. The board has recommended a dividend of INR 31 per share, subject to the shareholders' approval at the AGM. The total dividend payout would be INR 740 crores. Coming to the liability management. Our ALM is well matched with positive gaps across all buckets. With 59% of liabilities being fixed in nature, we have remained well cushioned against the interest rate cycle. We saw an improvement in disbursement yield at 14.2% for the quarter. Our average disbursement ticket size stood at INR 11 lakhs for, you know, the last quarter of FY 2023. We are consciously pivoting to a multi-product strategy in which banks are less present. We are present majorly in four product categories in retail business, namely housing loans, secured MSME, that is LAP, other secured, currently used car loans and unsecured loans. Our secured offerings, which include housing loans, secured MSME, LAP, and other secured loans, contribute to 80% of our retail AUM. In these product mix, over 50% lending happens in Tier-2 and Tier-3 cities with an average CIBIL score greater than 735. In our unsecured loan offerings, we are experiencing strong growth from multiple channels. We have served 880,000 customers with an average CIBIL score of 753. We continue to expand our retail lending business, we are also investing in manpower, branch infrastructure, technology, and analytics of our retail lending business for its future growth. Over the last one year, we have added 95 new disbursement active branches. Today we have a growing network of 404 conventional branches and 120 microfinance active branches. We have established our presence across India, serving 515 districts across 26 states. We've acquired more than INR 4 lakh new customers during the quarter. Our customer franchise now stands at three million, having more than one million active customers. Let me talk to you a little bit about wholesale, where we continue to focus on the resolution of Stage 2 and Stage 3 assets, which will further moderate the wholesale book size in the short term. A focused professional team is involved in monitoring and executing the resolution strategy for complex recoveries and enforcement aimed to improve recoveries and monetization of assets. The recognition and provisioning parts of our asset cycles have been completed. We are now deep in the resolution part of the cycle. We are deploying the following tools for resolution of stressed assets: A, the monetization of underlying assets, B, one-time settlements, three, enforcement via IBC or other means, portfolio sales to ARCs in cash and/or SRs. We had good success in our resolution strategies in FY 2023, particularly in the last quarter. We concluded four stressed asset monetization transactions during the quarter through a combination of asset sale and ARC deals. As part of these deals, we called out last quarter that we are working on the resolution of a large non-RE hold-co loan, namely Mitra. We'd like to inform you that we've exited the same this quarter, thereby re-achieving a reduction of INR 1,908 crores in a single transaction. We have also concluded sale of an N-NPA portfolio in cash. We concluded sale of certain stressed assets through two separate ARC transactions under the 15:85 structure. We generated over INR 12,500 crores of cash realization through accelerated repayments and resolution proceeds from our wholesale 1.0 portfolio in line with the provisions of these assets. All the ARC sales have been undertaken at post-provisioning valuations. Security receipts were issued at 63% markdown to face value of underlying assets sold in FY 2023. Both the transactions received INR 1,364 through cash receipts and SRs. As of FY 2023, we have an outstanding SR portfolio of INR 3,630 crores and 44% of the outstanding SRs have retail loans as underlying assets. As resolution process continues, we expect more ARC sales over the next two quarters and related continued enforcement. We are also focusing on building a high quality wholesale 2.0 AUM. We are focused to build a diversified and granular wholesale book backed by cash flows and assets that will give loans to well-capitalized companies across multiple sectors and geographies. We've already built a wholesale 2.0 AUM of INR 2,792 crores by adding INR 922 crores of loans during the quarter. We will further build this book in a calibrated manner while capitalizing on the market gap. The average ticket size is around INR 200 crores for real estate loans and INR 55 crores for CMML loans. What are our midterm strategic priorities? We have drawn our strategic priorities for the midterm, wherein we intend to achieve the following. Mid-to-high teens AUM growth. AUM mix of two-thirds retail and one-third wholesale. Lending to Bharat markets in retail business. Building a new granular wholesale business. Keep technology and analytics at the core of lending. Ensure a conservative liability mix. Scout for opportunistic inorganic plays. Achieve a 3% ROA and mid-teens ROE. With this, I would request to move to the questions. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touch-tone 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 line of Mr. Chawathe from Kotak Institutional Equities. Please go ahead. Thanks for taking my question. You know, a couple of questions actually. You know, the rundown in your housing book appears to be sort of, you know, rather large. If you could kind of, you know, give us, you know, help us understand what would be the reason for this. Are you talking about the wholesale book or are you talking about the housing book? I couldn't hear. I'm talking about the housing book. Yeah. I'm talking about the housing book, essentially on slide number eight. Trying to sort of, you know, add up disbursements and book loans. Okay. If you go to our slide. No, that's okay. If you go to slide number 19, you know, that shows the pure housing AUM and how the AUM has grown, you know, quarter-on-quarter. You know, that'll give you a sense. In general, Q4 tends to be the peak quarter for balance transfer outs. You will see higher level of runoff in Q4. That's seasonal. You usually see a reversion, you know, quite steeply in Q1. We haven't seen anything particularly unusual in Q4 that we do not normally expect. On an annual basis, your rundown is something like around 23%-24%, right? That is correct. any specific reason why it's so large in housing? so high in housing? See, where, you know, a player like us who's originating housing loans at, you know, 12% yield, will end up seeing a lot of balance transfer outs if you compare the metrics to, you know, to. Given the environment where, you know, good quality credit customers are able to get, you know, single-digit pricing. You will have to imagine that your runoff rates will be a little bit higher. As we disclosed in our, on our slides today, our average CIBIL score of our housing customer is 748. These are pretty high quality customers. Some of them will end up getting, you know, competing offers where. And that's fine. That's something that we have baked in into the way we have priced the tranche. And you're probably assuming a similar run rate going forward, I said. As I said, you have to adjust for seasonality. Q4 is very high from a seasonal runoff perspective. Except that, yes. Probably as your cost of funding comes down, maybe you can offer a lower rate. Is that a fair assumption to make? I think that's absolutely correct. Perfect. Just one small suggestion. You know, is that I think the AUM on housing on page eight and page 19, maybe if not, if you can reconfirm. Probably we can do this offline, but I think, you know, some of the minor numbers don't really add up. Just one more question is, what constitutes like 8.9% odd fees for you? Sorry, 8.9? Uh, the- Mr. Chavase- The fee income of The audio is muffled from your line, sir. Please use the handset mode. Yeah, sure. Fee income of around 9%, if you could clarify what does it comprise of? If you're referring to slide number 12, which is where we have shown that. This is fees as a% of total income. The total income, the what we are calling the operating income, which is NII plus fees, the total is about six and a quarter percent, which is what you see in the chart on the top left. You know, that's the six and a quarter percent. Mm-hmm. What we are trying to show is that of that, what proportion is fee and what proportion is is NII. What we are essentially saying is roughly 91% is is NII and 9% is fee. Got it. Thank you very much. Thank you. Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead. Yeah. Yeah, hi. Good evening. Thank you. If I sort of, try to focus on slide 39, that's where you have given the wholesale asset details and the provisioning. Mr. Singh, the audio is unclear from your line. Please use the handset mode. Yeah. Is it better now? Yes, sir. Please go ahead. What I am trying to focus on slide 39, where you have given the details about the wholesale asset and the provisioning. I do understand that there's one sort of a chunky corporate account that you have resolved. However, still even adjusting for that, if I see a kind of a provision cover has gone down in Stage 3 and Stage 2 and 1 as well. What sort of, I mean, you know that comfort you are getting that sort of, you are okay with reducing the provision cover. That's one. Also if you can just help us with sort of, you know, that impact of your POCI and sort of, recoveries, the impact on the P&L and balance sheet for the quarter and the full year. Yeah, these are my two questions. Yeah. Got it. Let me try and see whether we understand your question correctly, and we'll try and answer. See, the Stage 2 and 3 provision pool was about, you know, INR 4,700 crores last quarter, and it is about INR 2,100 crores now, right? If you look at the actual pool itself, the pool itself has come down from about INR 11,000 crores to about INR 6,000 crores. I mean, INR 6,500 crores, give or take, right? essentially, we've had a INR 4,000 crores odd reduction in the stage two and three pools. how does that reduction happen? The reduction of half of it roughly, let us say, is the micro transaction or a little less than half. The rest of it is still significant decline has happened in Stage 2 and 3 population. This is when the, you know, we are going through the resolution cycle. As you go through the resolution cycle, the provisions that you have made, you use that to actually either sell the asset or you or you basically get it off your books. That's precisely what you're seeing here. Since we have completed the recognition and the provisioning part of the credit cycle, and we are in the resolution part of the cycle. In the resolution part of the cycle, the provisions that you made will get used up, and you get those assets off your books. That's precisely what you're seeing here. I'll just add two points to this. This is Yash here. If you actually look at the math, in December quarter, stage two plus three AUM, provision coverage ratio we had was about 45%, which today stands at about 34%. That 45% that we had in December quarter had Mitra, which had more than 70% provision. If we exclude Mitra out, and there was a reason why we provided 70% specifically against Mitra, and we actually sold it at a value which was in line with that provision. If you, if you exclude Mitra from the bucket, two and three, for December quarter, then the provision was roughly 37% versus 34%. If you actually look at the rest of the pool, decrease in provision is not as material as it appears on the face of it. The second point I would mention is that in terms of all the monetizations we have seen over the last quarter, including Micra, which I alluded to, happened in line with the provisions, which only substantiates our confidence that we have been providing for the stage two and three assets in line with what the recoveries have proved to be indeed and will be. Answer your question? You had also one question on POCI. The POCI book as we've shown page 38, the POCI book was INR 3,100 crores. It has come down to INR 1,400 crores. Some of the and that reduction of about INR 1,600-1,700, some of that was part of one of the two ARC transactions that we did during the course of the quarter. If you see our slide on our SAR portfolio that we have added, you will see that about 44% of the outstanding SAR are retail in nature, and that comes from here. What is the reason you see the POCI reduction is that it was part of one of the S-SAR transactions that we did. Its impact on P&L for the quarter? There isn't any. Okay. One follow-up if I may have one. Sorry, one different question. I mean, in your this, tech or digital partnerships, if the regulation permit, particularly the Fintech or NBFC, do you have FLDG arrangements in place or it is just like a traditional part of it? We have no FLDGs in place. FLDGs are not allowed by the new digital lending guidelines. I know RBI is talking about it again based on a bunch of lobbying that's happening from the Fintechs and maybe some version of it will come back in the future. As of today, FLDGs are not allowed in digital lending. We don't have any of course. Okay. Thank you. The next question is from the line of Bhavik Dave from Nippon India Mutual Fund. Please go ahead. Yeah. Hi. good evening, sir. two questions, sir. One is on the yields. I see that yields are moving up obviously because of the secured and unsecured- Oh, excuse me, Mr. Dave. Please use the handset mode, sir. The audio is muffled from your line. Sure. Sir, just two questions. One is on the yield front, wherein the yields are going up because of the shift in mix. If you could just explain, like, broadly, what would be the yields that we, like, charge in, like, different segments, like home loans and the unsecured fees that we are doing. Roughly what will be the yields there? Second is on the operating expenses. Like, I understand we are building a retail business which will require higher costs. Just want to understand the trend line on OpEx because this year, like when you see year on year, the OpEx grew almost 89%, which is understandable. Going ahead, how will the operating expenses move? Like what... how should we think about it? Is it like OpEx to AUM? How should we model that number? Like from a one and a half year perspective, and then maybe things become steady state. Sure. Sure. You know, great questions. Our product-wise disbursement yields are disclosed on slide 41. Okay. You can just take a look at that, and you will see housing we do at roughly 11%, LAP we do at 12.5%, cars, used cars we do at 16%, and unsecured we do at between 18%-19%. That, that creates the overall, you know, weighted average of 14.7%. Sure. You will notice that in the other slide we have 14.2%. Correct. I want to emphasize that 14.2 is only for assets which are greater than one-year duration. Okay. there are some short-term assets we do with a very high yielding, but they're not going to be on your books. From your modeling perspective, it's not super useful, so actually keep that in mind. We disclose separately the yield for assets which are greater than one-year duration, which is at 14.2% that we disclose up ahead. Otherwise, our all-in yield is about 14.7%. Your point on cost to, you know, cost to AUM, you know what? The way you should think about it is, you know, as the mix shift with... There are two trends that are happening here. One is that retail, you know, cost to assets will continue to come down from where it is kind of, you know, every year you should expect that to come down. Wholesale cost to assets will probably roughly remain the same. It might come down a little bit. Right. Trend line number one is retail cost to assets will keep coming down. Trend line number two is that retail as a proportion of overall book keeps going up. Right. The net of both of these is that over the next year or so, you will see the cost to assets go up before it comes down. Right. Eventually we expect cost to assets to settle at about a 3% level. Imagine about 3.5% of retail and about, you know, 1% of wholesale and at a 2/3, 1/3, that gets you to about a 3% overall, you know. Yeah. company level cost to assets. That's where it will eventually settle down. Correct. Before that, will it like stay near the 3.5%-4% mark where we are today, maybe like the fourth quarter? I think so. Does that make a fair assumption? Okay, thanks. The last question is on the unsecured piece. The yields like on the microfinance segment where we see 18.5, 18.8%, and like when we see the standalone microfinance companies charging 20% and above, do you think that that can like inch up or what happens there? The second is on- There are two parts to our microfinance portfolio that you see here. One part is where we originate microfinance business. That is, business is being originated at 24% average. Sure. The second part of this is some microfinance transactions we did and we continue to do as a direct assignment purchase. Okay. We do this just to get a sense of different parts of the market because we are still new in this business. Right. We want to get a sense of where the market is and where portfolios of different states are. To get a sense of that, we do DA transactions. Those tend to happen more around the 13, 12%-13% kind of range. That's the weighted average is what you're seeing here at about 18%. The MF that we originate happens at 24%. Perfect. Understood. Sorry, last question is on the wholesale side. When we see the PCR that like Yash spoke about, which has gone down, and like you rightly mentioned, the large account that we resolved this quarter had a 70% kind of PCR. Do you think that this 55% on the stage three and like overall for 34 odd% that you spoke about stage two plus stage three, that holds us good for like any other resolution that we are planning or sell down that we are planning for the next year, FY 2024? When this book keeps coming down, incremental provisioning requirement on this should not be much, right? Is that a fair assumption that we have like modeled that well? Yeah, we believe that's a fair assumption. Great. That's helpful. Thank you so much. Yeah. Thank you. The next question is from the line of Nishit Shah from Ambika Fincap Consultants. Please go ahead. Good evening. Thanks for taking my question. I would like to understand the rationale for the wholesale book two, when on one side we are trying to reduce the wholesale book one, and we're still at INR 30,000 crores remaining, and we're still trying to grow the book two. How is the book one different than book two? What problems we ended up, my apprehension is what problems we ended up in book one can also happen in book two. These are two different parts of our business strategy, right? Wholesale one has certain assets where we are seeing stress. Outside of that, which represents Stage 1, is where we actually are seeing runoff, which is organic and which is coming from the underlying cash flow from the assets. Stage 2 and Stage 3 is where the issues are, and we are actually resolving that part of the book and shrinkage is happening predominantly there. That happens, but that doesn't take away the fact that Stage 1 is performing, and it does allow us to building a book in this space allow us to actually capitalize on a big market gap which exists by way of doing a portfolio which is granular and which is diversified in terms of our wholesale loans. Our focus as it relates to the one point of shrinkage is concerned, is on a part of the book, only that part of the book where we have complex assets and we see the problems. Outside of that, we continue to have that book. It's not that we are exiting one point two holds in totality. As we reduce that book, we also actually build on a more granular and diversified part of our wholesale business, which is a profitable business to be in, and where there is a market gap, and therefore we think it's a great vantage to start building that book as well, across not only real estate, but also across other corporate sectors, as we call it, mid-market lending. Yeah. The other question is can we have the names of the top exposures in the wholesale book one? Because that has been the apprehension in the market. My question also comes from the fact that on a INR 65,000 crores book of asset management under management, your market cap has gone down to INR 15,000 crores. Market is just not valuing and not giving any credit. There are guys trading at multiple times on book and we are trading at 0.5 on book. Can we have some more details on the wholesale book one, the names and et cetera? you know, it. We'll not be able to actually disclose individual account level details. We have never done that, and it's poor practice for a lender to start talking about individual client relationships in public forums. It is unlikely that we will do that. Your point on kind of, you know, market valuations and multiples, we fully understand and empathize with. I totally hear the concern and anxiety that you have, and we feel the same anxiety ourselves. We would like to believe that the quality of our franchise, the quality of the book is much better and much more than what the market values today are ascribing to it. Our best hope is to do our best quarter-on-quarter, to continue to resolve more and more of these assets and show, as we have shown in this quarter, that all the provisioning part of the work is done, and that the resolutions that we are able to bring in, the reduction in books that we are able to bring in by genuinely selling and exiting some of these positions, are happening at precisely the kind of, you know, provision levels that we already have on our books. If we do that, you know, regularly, and if we are able to demonstrate to the market, as we have done this quarter, that exits are possible and without taking any incremental hits to P&L, hopefully some of this negative overhang that you're talking about will go away. That is, that's a little bit less in our hands. We'll need to do our karma of actually doing the right thing with respect to the to the portfolio, which is what we are focused on. Sir, my last question is on the book one and on an overall basis, are we sufficiently provided now or are there any provisions yet to be taken? Like last quarter we had some one-time gain and we had booked against that some provisions. Are we done with the provisions or are we still to do some more provision? No, we reiterate that we are done with provisions. We don't expect any more provisions at all. In fact, two large transactions that we concluded in the March quarter proved the point that for those transactions, we did not take any further provisions, the actual realization happened in line with what we had provided for. That only increases our confidence in pounding the table and saying that what we have provided for is indeed what we believe the provisions are required for. That's useful, and thank you very much for taking my questions. Thank you, sir. Thank you. Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead. Hi. Just, you know, a couple of questions to understand the stage two movement. Firstly we did two ARC sales. What would be the total quantum of it? Well, one was INR 5,500 crores. That's in the media. No. You're referring to face value, Piran. Don't get confused by that. That doesn't help you understand actually the portfolio very well. What I'd encourage you to do is to actually look at our page 27, which gives you a sense of the security receipts portfolio. That will give you a sense of how some of those transactions have actually gone down through the course of this year. If you look at page 27, what you see is that, you know, we have, you know, there was a big original value, let's say INR 12 or 1,000 crores. We took a 60+% markdown on that. We received through multiple transactions, many of which happened in this last quarter, you know, a purchase consideration of INR 4,600, of which we received INR 700 crores of cash and about INR 4,000 crores of SR. Since then, out of that INR 4,000 we have received on a further INR 660 as cash. We have about INR 3,300 left. This is for the full year. You know, a majority of it or a large part of it actually happened in Q1. I'm just using this as a base. This is a better way to actually understand it. Here, as you see, you know, we are doing a transaction at a significant haircut to the face value. On, on average, about 63% haircut to face value. If you just look at the face value number, which is what sometimes the press quotes, and they say big numbers like INR 5,000 crores, INR 6,000 crores and all, that seems really, really large, but actually the transaction size is not anywhere near that large. We are talking about a transaction which is, you know, 60-plus percent haircut from there, and the haircut has already passed through our P&L, either through purchase price allocation or through, you know, P&L hits that we have taken in prior quarters. That's, that's been kind of the nature of these transactions. Basically what you're saying is that this INR 4,622 crores is the value of the loans. This INR 4,622 crores was in stage two and three? Or was it a higher value? That's all I'm trying to understand, yeah. No, no. It will be a lower value. See, basically these consist of... Actually, I was using this more as a, as a baseline to give you a sense of how to think about the ARC transaction. If you were to look at our Stage 2 and 3, if your intent is to say, okay, let's, let me just figure out which of the, you know, what are the movements in stage two and three. Yes. And kind of, you know, what went in, what went out. Let's start with Stage 2. In Stage 2, firstly, there was no incremental Stage 2 creation that happened during the course of the quarter. Nothing moved from Stage 1 to Stage 2, right? More to more, the, you know, in fact, entirely, like, there was zero movement from Stage 1 to Stage 2. No slippage happened. That's kind of, you know, point number one. You know, in terms of, you know, sale to ARC, there was about INR 500 crores, or sorry. Yeah. INR 500 crores from Stage 2 and about INR 2,500 crores from Stage 3 that were part of the ARC transaction. Plus, Sorry, can you repeat that? INR 500 crores from stage two and INR 500 crores from stage three. Yeah. There is some other 4C stuff as well. You'll see 4C reduction that has happened, so that's also part of the multiple ARC transactions. There were two ARC transactions that happened during the course of the quarter. That's getting back to my first question. Just tell me the value at which of these loans that you were carrying on your book that was sold to ARC. Forget what the media says, what was it on your book? No. If you actually look at page 26, the stage two plus three AM reduction, there is a pie chart there, right? Out of the INR 4,000 crores reduction, about 20% came from the sale of ARCs in the 15:85 structure, right? That doesn't take into account the sale of NPA portfolio for cash, which is the 10% additional. Since it was the net cash, it only INR 50. That was nevertheless an ARC transaction. 20% of this INR 4,000 crores, which got transferred, is equal to INR 800 crore in terms of the book reduction, but that happened at a loss of INR 200 crores. The claim value in these assets which got transferred were about INR 1,000 crores. Okay. I think I take this offline. Just secondly, if I have to just think of credit costs for the quarter, you know, in simple terms, you know, you've had a net loss on the recognition of financial instrument of INR 2,900 crores, but which has a gain of INR 130 crores from your bond buyback. It's roughly INR 3,000 crores and a provision reversal of INR 2,500 crores. It's fair to say that the credit cost for this quarter is INR 500 crores, right? No, no. The credit cost for this quarter is INR 300 crores only. The bond buyback and all was from previous quarter, Piran. This quarter there's only INR 300 crores credit cost this quarter. Of that's about 50/50 retail and wholesale. The rest of the stuff is MPN loss that go around about INR 300 crores. Nai, NPA If I just draw your attention to page 32 of the I think you are referring to the SEBI results. We'll bridge it for you. Page 32 of the IR deck, we try to simplify here. We've combined the two, three line items into PCL losses slash fair value loss gain. If I just focus on the two core numbers, which is the first column, that number is 298, which was the 300 referenced earlier. For the quarter, there is no bond buyback gain, et cetera. The total number is INR 298 crores for the quarter, which on an annualized basis, the% of credit cost is significantly lower than what we went through in the first nine months of the year. Okay. That's, that answers it. Just lastly, in terms of the SRs that we are holding of the INR 3,600. Piran, your voice is breaking. We can't hear you. Sorry. Is this better? Yes. Yeah. The SRs of INR 3,600 crores that we have, are there corresponding provisions on the liability side? So- See. Go ahead. Piran, SRs are investment instruments. There is, unlike a loan, there's no provision outstanding against them. The way you work on SRs is you keep taking fair value, fair value hits, which already goes through the P&L. The point of page 27, which is where we have got all the details of our SR portfolio, that is to make the point that these SRs have been haircut by 63% from where they were originally outstanding. After the transactions, we have already received 11% more as cash from the transactions already, right? The remaining 26% odd is what you see outstanding on our book right now. We have also disclosed here that these SRs are about 45% retail and 55% wholesale. The reason we make this point is to tell you that a lot of it is very granular, where there is predictability to how much of it will actually get recovered and hence pricing it in. Pricing it has been relatively straightforward and easy. Got it. Okay, that's all from my end. Thanks a lot. Thanks, Piran. Thank you. The next question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Hi, good evening. My question is on the wholesale book in terms of how do you expect I mean, not the resolution, the roll down to happen in the current year and where do you expect it as a natural close part of the inflows. Where do you expect it to close at the end of this year? This is the wholesale 1.0. In terms of the SRs that you just spoke about, where did the retail SRs come from and It's interesting that, you know, why didn't you just resolve it on your own and why did you need to sell it out to as SRs? Those are my two questions. Thank you. Okay. I'll address the first question. Just a few data points as we alluded to earlier, in FY 2023 we reduced the wholesale 1.0 by a total amount of INR 14,000 crores. In the last quarter of FY 2023, we reduced the book by INR 6,000 crores. six out of 14 came in the last quarter. Quite happy with the momentum that the book reduction exercise has taken because we are running this as a project where a dedicated team of people working just with the objective of working on this complex asset resolutions. Going forward, in the next 12 months, we wouldn't give any specific guidance, but we would want to maintain the momentum that we have built and we do expect us to make quite material progress in the direction of reducing this book further. Your point on SRs in retail, all the SRs came from the erstwhile DHFL portfolio. You might recall that when we purchased DHFL, on the retail part of the DHFL book had a 26%-27% NPA ratio. We have been carrying that with us for a while, and we had that as part of our POCI book. You will see a reduction in the POCI book, you know, shown in the presentation. That's the part that has actually gone into SRs. you know, one could have actually kept it and continued to recover from it ourselves as well. However, as you do as a company, as you do resolution strategies where there are, you know, accounts that you want to resolve and you want to actually, you know, get, create pools of assets for which there will be potential buyers in the marketplace, you know, you will always mix and match assets of various asset classes to make pools attractive and to find enough buyers and for there to be enough price tension when you go out to sell. That's what's behind some of this, some of these transactions that you see. Okay, got it, sir. Thank you very much and good luck. Thank you. Thank you. The next question is from the line of Chintan Shah, an individual investor. Please go ahead. Chintan Shah, your line is in talk mode. Hello. Yeah. Thank you for the opportunity. This is Chintan Shah from HDFC Securities. Two, three questions from my end. Firstly on the wholesale portfolio only, Stage. Basically, if you could just help me with some color on the portfolio which is under Stage 2 and Stage 3. Would that, how much of that would be towards RE and towards non-RE? If any, a ballpark percentage. It would be predominantly towards RE. A small part of that would be towards non-RE. The single largest non-RE transaction just went off our books, Chintan. Pretty much what's remaining now is largely RE. Okay, sure. Under RE, so any ballpark on how much would be towards under construction? Excuse me, Chintan Shah, the audio is not clear from your line. Please check. Okay. Sure, sure. Hello. On RE, which is under Stage 2 and Stage 3. Any ballpark on how much would be towards under construction projects? Most of it is under construction projects. Most of it. Sure. I mean, we don't have specific data that we share. Yeah. That is fine. Okay. Sure. Sure. Understood. Also, secondly, now as we are building this wholesale 1.0, our very company is looking to build a granular ticket size portfolio. Is there any cap on a maximum ticket size beyond which we won't be looking to enter that for that account, lending towards that account? No. As a matter of our credit policy, we are all set to limits clearly. If you look at page number 29 and 30, that would give you a good sense of how we are looking at granularity here, right? From here, I think we, our portfolio is expected to get more and more granular. As far as the real estate part of 2.0 is concerned, as you can see here that the outstanding is about INR 1,296 crore as at March across two deal across 10 deals, which is roughly INR 129 crores per per deal in terms of outstanding but in terms of sanction it's roughly INR 200 crores. We also have a strategy that we are actually putting in place for small developer financing piece, which would have an average ticket size of INR 25 crores-INR 30 crores. There are two distinct parts of our real estate wholesale build-out strategy where on the first part the average would be in the range of INR 200 crores. On the second one we'll have the average of INR 25 crores, INR 30 crores. That will give us a weighted average in the range of let's say INR 150 croress or so as we actually progress. On the corporate mid-market side, as you could see, we have built a nice granular portfolio across multiple sectors and across multiple positions where the average ticket size is INR 55 crore. This is on page number 30 of the deck. Sure. Under wholesale 1.0, we have average ticket of roughly INR 200 crores, right? That was for stage one part of it, where the. Okay. was smaller, but otherwise the average was much larger. In fact- The good part of wholesale 1.0 was average of INR 200, but the part where we had a challenge had a much higher ticket size. Sure. Sure. Understood. Sir, just one thing on the margins, and the last question. The cost of borrowings actually for this year, so it has improved for us and relatively also we have been benefited on the yield side. Going ahead, given the next year, so do we face any challenges on the cost front given the repo rate hike? Also do we expect the yields to sustain given that we are largely focusing now into the retail piece? Any thoughts on that would be helpful. No, I think the margins will stay around here or, you know, in the near future as well. There are, in the very short term, let's say Q1, you know, right now you will see some of the accumulated effect of passthrough of repo rate increases that might happen. You might see a little bit of cost of funds increase in Q1. Overall, as we get through the latter part of the year, our view is that rates will stabilize after Q1 and maybe start declining towards the very end of the financial year. You should see some impact of that coming through from our side as well. As far as the yields are concerned, yields have had upward trajectory for a while. There's a little bit more steam left in there. You might see a little bit more upward trajectory in yields as well. While there might be a little bit of upward trajectory in cost of funds, there is also a little bit of upward trajectory in yields. On the whole, we're not super worried on that front. If you see slide 12 in our presentation, you will see our operating margin, which is an NII plus C margin, and that has been relatively stable around the 6.3% kind of mark. That should give you a good idea of where we are, where we are gonna be in the very short term. Sure. Sir, just one last thing, if I may squeeze in on the credit cost part. I think our credit cost was around 1.9% in Q4. Can we expect then this kind of run rate or to sustain for FY 2024 as well, somewhat near this range? We're not offering any specific guidance for FY 2024, as Yasmin mentioned before, we believe that the provisioning cycle as far as Phase 1 wholesale is concerned is completed. Most of the provisions, if at all that you see, are all gonna be about new business that we originate and the Stage 1 provisions that come with that according to Ind AS. That depends a little bit more on the growth of the businesses rather than on asset quality. Growth is what's gonna drive provision numbers. We feel like we are getting there in terms of what normalized credit costs may be. We may not be quite there just yet, we are kind of getting there. Sure, sir. This is very helpful. I think that's it from my side. Thank you. Thank you, Chintah. Thank you. The next question is from the line of Praveen Rathi from Praveen Rathi & Associates. Please go ahead. Good evening, sir. My question is asked for Jairam. First one is for regarding the professional and legal fees paid during the quarter and for the year. The second one is our position pertaining to the deferred tax assets of DHFL. The third one is anything on Shriram Finance GSL, sir. Okay. See, the first two questions, I don't have them readily available. I'll have somebody, you know, reach out to you and give this to you offline. If you could, if, you know, Our IR team will just send you. I don't have the specific, you know, professional and legal fees numbers, you know, with me offline. As far as the Shriram sales stuff is concerned, Yeah, maybe I can add. At the very flag end of last quarter, large part of the value of Shriram is now in listed shares, and that's one of the key reasons why the P&L has swung this quarter. We own 8.34% stake in Shriram Finance. It's listed. We have no lockup. We don't sit on the board. As we've discussed before, now that it's listed, at the right time, we will be looking to monetize this stake. Sir, the deferred tax assets, which was on the books and which we are currently showing in our books, in notes to accounts also, is it net deferred tax asset or the gross deferred tax asset? No, no, it is net, but it's not on our books right now. I think we are showing- No, it's, what we are showing on our notes to account, basically. Right. We are showing it in the notes right now. We have not brought it onto our books yet. We will, at the right time in speaking with our auditors, etcetera, you know, we will decide on what is the right time to actually bring it onto our books. So far we have not done that. We have spoken in the past to you all about pockets of value that exist on our balance sheet. Some of the pockets of value you've seen them, actually get realized over the course of the last year. This is one of those pockets of value which is not yet realized and it still remains with us. Okay. Thank you. Okay. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Jairam Sridharan for his closing comments. Thank you, and over to you, sir. Thank you very much everyone for your participation in this earnings call. We remain available to you to offer any further details or clarifications on our results. Thank you for being part of the call and have a very good evening. Thank you. Ladies and gentlemen, on behalf of Piramal Enterprises Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.