Ladies and gentlemen, good day and welcome to the Satin Creditcare Q1 FY 2027 earnings conference call, hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pratik Matkar. Thank you, and over to you. 2027 earnings conference call of Satin Creditcare Network Limited. First of all, I would like to thank the management of Satin Creditcare for giving us the opportunity to host this call. From management team, we have Dr. H.P. Singh, Chairman and Managing Director, and senior management team. I would now like to hand over the call to Dr. H.P. Singh for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir. Thank you, Pratik, and good morning to everyone. It is a pleasure to be back with you to discuss Satin's performance for the first quarter of FY 2026/2027. After sharing with you all our great performance in the earlier quarters. During our last earnings call in May, we said that FY 2026 had tested the sector, and in doing so, had separated the institutions that were structurally sound from those that were not. That test is now behind us. The question that matters from here is a different one, which is, who is positioned to grow and to grow in a way that holds up when the next cycle turns? Q1 is our first answer to that question, and we are particularly pleased to share that this quarter marks our 20th consecutive profitable quarter and our strongest first quarter performance in the last eight years, underscoring the resilience of our business model and the disciplined execution of our strategy. The Q1 FY 2027 performance is not merely an outcome of riding the tide, but it reflects a philosophy that has long guided Satin, that we have now formally adopted as our identity: dream big, deliver bigger. This is not a mere tagline for the sake of saying. It captures the way we have built and grown the organization over the years. Whether it is innovation, developing strong teams, maintaining credit discipline, or delivering 20 consecutive profitable quarters despite challenging industry conditions, we have consistently backed our ambition with execution. Dream big, deliver bigger represents both who we are and the standard we continue to set for ourselves as we take Satin into its next phase of growth. As for the sector, we can say with confidence that the industry has moved from repair to expansion. Gross loan portfolio stabilized at INR 3.31 lakh crore in March 2026, after eight consecutive quarters of decline. Portfolio at risk for loans overdue between 31 and 180 days improved to 2.6% in March 2026, from 4.4% in December 2025. 95% of industry exposure now sits with borrowers who have three or fewer active lenders. The guardrails have done what they were designed to do. There is a structural shift underneath this that we want to flag. Banks' share of outstanding microfinance loans has fallen to 26.4% from 32.6% a year ago, while NBFC-MFIs have risen to 43.7% from 38.9%. Specialist lenders are carrying more of this market than at any point in recent memory. This is an opportunity for institutions with underwriting depth. It is also a responsibility because the quality of this cycle now depends far more on how firms like ours behave than it did in the last one. Two things we are watching, and we would rather name them. The revised monsoon outlook warrants caution on rural cash flows over the next two to three months. The West Asia situation has had no discernible impact on our business to date. Neither has touched our book. However, both are reasons we have chosen to strengthen our buffers this quarter rather than release them, and we will come to that shortly. Consolidated AUM reached INR 15,935 crore, growing 27% year-on-year and 5% sequentially. Standalone AUM stood at INR 13,312 crore, up 22% year-on-year. Consolidated disbursements were INR 3,495 crore, up 56% year-on-year, with standalone disbursements at INR 3,008 crore, up 46% year-on-year. We would ask you to weigh these disbursement numbers against the fact that the first quarter is seasonally our softest. This is the highest first quarter disbursement in the company's history. Consolidated total income was INR 827 crore, up 22% year-on-year, and standalone total income INR 734 crore, up 21%. Consolidated profit after tax was INR 123 crore, up 172% year-on-year, and standalone profit after tax was INR 120 crore, up 182% year-on-year. Consolidated PPOP grew 33% to INR 267 crore, and standalone PPOP 36% to INR 258 crore. On margins and efficiency, standalone NIM improved to 14.36% from 13.16% on gross yield of 22.44%, against a cost of funds of 8.08%. Our operating expense ratio improved to 6.33% from 6.98% in Q4, as the 392 branches added last year begin to season. Cost to income improved to 44.49% from 48.91% year-on-year. AUM per loan officer rose 29% year-on-year. These are the operating leverage numbers we recommend you track, because this is where the branch investment of FY 2026 starts paying back Standalone return on assets was 3.55%, and return on equity was 15.10%. Standalone GNPA improved to 2.2% from 3.7% a year ago, and 3.1% in March. Net NPA stands at 0.3%, down from 0.9% a year ago. GNPA in absolute numbers is INR 219 crore. Ex-bucket collection efficiency was 99.9%, and every one of our top states is at 99.6% or better. Stage three coverage improved sharply to 85% from 73% in March. Our overall provision coverage ratio now stands at 115%. Now talking about credit cost. Our reported credit cost for the quarter was 3.06%, an improvement of over 175 basis point year-on-year, and within our guided range of 3%-3.5%. That reported figure includes a management overlay of INR 36 crore. Excluding the overlay, our credit cost for the quarter was 1.97%. Let me spend a minute on what we have done here and why, because it materially affects how you read our return ratios. We aim to deliver a consistent performance which is cycle-proof, and hence creating a buffer during the up cycle is important to provide a cushion against impending shocks. For instance, Assam, one of our key states by portfolio exposure, is currently experiencing severe floods. While three districts, Jorhat, Sivasagar, and Charaideo have been impacted, the financial impact on our portfolio is significantly mitigated through our NatCat insurance coverage. Around 44,000 borrowers representing a portfolio outstanding of about INR 149 crore have been affected, of which INR 96.95 crore is covered under NatCat insurance. While it is expected that many borrowers will bounce back once flood recede, however, any residual stress will be further supported by our prudent management overlay, providing an additional buffer to absorb potential losses. Our reported ROA of 3.55% and ROE of 15.10% are after absorbing that INR 36 crore buffer. Adjusted for it, ROA for the quarter was 4.34% and ROE 18.46%. We could have reported those numbers. We chose not to because we have just come through a cycle in which returns across the sector swung violently, and we don't want to be among those who report their best numbers at the top and having nothing left when the turn comes out. The first measure will always be our exceptional underwriting skills and further strength which shall come from the buffer. Our on-book provision stands at INR 250 crore against an RBI requirement of INR 152 crore. That gap is deliberate. We intend to keep building this buffer through the good quarters. This is not conservatism for its own sake. It is that the return profile we want to be judged on is a cycle-proof one, and ROA and ROE that are consistent across good years and difficult ones, rather than spectacular in one and negative in the next. Building a cushion while credit experience is benign is how an institution gets there. We will continue to disclose both the reported and the adjusted numbers every quarter so that you understand our vision clearly. On diversification, non-MFI portfolio now stands at 19% of consolidated AUM against 14% a year ago and a target of 30% by 2030. Satin Finserv was a standout with AUM of INR 1,360 crore, up 134% year-on-year and 29% sequentially across 121 branches in 14 states. The RAR is 27.1%. The green finance book reached INR 624 crore, with INR 294 crore dispersed across 50 loans in this quarter alone and around 45% of the sustainable and emerging businesses portfolio aligned to clean mobility and renewable energy. Satin Housing Finance stands at INR 1,263 crore, up 31% year-on-year, with CRAR at 59.8% across 57 branches in 22 states. Satin Technologies had its first quarter with paying HRMS customers, and QTrino Labs achieved its first customer revenue milestone. Our core banking platform has completed development and moved into customer UAT, with go live targeted for Q2 FY 2027, after which we expand into loan management and loan origination for NBFCs. Satin Growth Alternatives is progressing towards the first close of its category two AIF and its first deployment in the coming quarter with institutional LPs being onboarded against a strong deal pipeline. Diversification, there is one point we want to make because it is the question we are asked most often, which is what all of this does to our returns. Our subsidiaries are today all in their scale-building phase. SFL and SHFL have only recently crossed INR 1,200 crore each. Each is at its own growth curve, carrying its own fixed cost base against a portfolio that has not yet reached efficient size. As those books scale towards the 30% mix we have targeted, the operating leverage within them will be substantial. Satin Technologies is a two-year-old business, a growing share of that income is going to be fee-based and not proportionally capital hungry. The consolidated return profile you see today is not the steady state. It is the investment phase of it, with the capital invested in these businesses still not yielding the returns it potentially can. That is a significant part of why we are comfortable talking about consistent returns throughout the cycle rather than exceptional returns in a single quarter. We raised approximately INR 3,000 crore during the quarter through diversified instruments, including INR 285 crore of subordinated debt, which took our subordinated liabilities to INR 497 crore and supported a capital adequacy ratio of 26.74%, up from 25.39% in March. We hold undrawn factions of INR 2,600 crore. We secured a INR 2,000 crore direct assignment faction limit from a public sector bank through its first-ever digital direct assignment. Marginal cost of borrowing reduced 37 basis points year-on-year to 10.52%. We now have 77 active lenders, with our top 10 accounting for just 52% of borrowing, a net worth of INR 3,243 crore. Shareholders have approved the promoter infusion of INR 100 crore at approximately a 17% premium to the minimum issue price under SEBI regulations. We mention the premium deliberately because that is the part that matters our confidence in the business. That is not a technical compliance with the pricing formula. Our guidance for FY 2027 is consolidated AUM growth of 20%-25%, implying INR 18,200-INR 18,900 by March 2027. Standalone credit costs of 3%-3.5% on a reported basis. That is inclusive of any buffer we choose to build. Standalone return on assets of 3.5%-4%, again, on a reported basis. We have begun the year ahead of that AUM range at 27% and our reported ROA at 3.55% sits at the lower end of the return range. Both are exactly where we would want to be after one quarter. We are growing faster than guided with reported returns in the guided range because we are putting the difference into the balance sheet rather into the profit and loss account. We will review guidance at the half year once we have seen how the monsoon plays out. Our long-term target of INR 32,000 crore of consolidated AUM by 2030, with 30% from non-microfinance business, is unchanged. We serve 34 lakh clients across 2,041 branches and 3.9 lakh centers through 18,518 employees. In June, we commenced operations in Kerala, strengthening our South India presence alongside Tamil Nadu, Karnataka, Andhra Pradesh, and Telangana. We added 41 branches at the standalone level during the quarter. Our confidence is underpinned by strong execution capability. With a presence across more than 112,000 villages and nearly 590 districts, an experienced field force, and technology-enabled operating platform, we are well-positioned to scale efficiently while maintaining operational discipline. As always, our priorities remain unchanged. We will continue to focus on profitable growth rather than growth at any cost, further strengthen portfolio quality, expand our diversified lending business, improve operating efficiency, and deliver sustainable long-term returns to our shareholders. Before we conclude, let us leave you with one important statistic. Our field leadership team, comprising around 200 regional managers, zonal managers, circle heads, and business heads, have recorded zero attrition. In a sector where field attrition has historically exacerbated credit cycles, field leadership stability provides strength and continuity to business. It has been a key enabler of the strong collection performance and the operational execution we have delivered this quarter. With that, we would like to thank all our investors, lenders, analysts, customers, and employees for their continued trust and support. We look forward to another year of disciplined growth and sustainable value creation. Thank you. I will now hand back to the moderator to open the floor for closing questions. 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 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. We take the first question from the line of Deepak Poddar from Sapphire Capital. You may proceed. Yeah. Am I audible? Am I audible, sir? Yeah, you are. Okay. Thank you very much. Yeah, you are. Go ahead. Thank you very much, sir, for this opportunity. Many congratulations for a good set of numbers. Thank you. Sir, just wanted to understand, first up, this INR 36 crore management overlay. You mentioned that we'll keep building this buffer. What's the extent of this buffer that we are looking to build on an annual or a quarterly basis? See, Deepak, we are scientifically looking towards it basically based on the operational capabilities and the ecosystem which actually runs through. Right now, we feel that. Hello. Sir, you're not audible. Hello, sir. It seems like the line for the management has been dropped. Please wait till I rejoin the management. Ladies and gentlemen, thank you for waiting patiently. The management's line has been connected. Over to you, sir. Yeah. Thank you. Is Deepak still there? Yes, sir. Yeah. Sorry, Deepak. Yeah, no problem. Yeah. I told you, since we have scientifically looked at how we do the accretion, we are not actually committing a number to it. Okay. It will all depend on how the macroeconomics as well as the field level things pan out to be. It could possibly be there that we would not require maybe additional buffers to be put in, and this would be sufficient enough for us to take any kind of a cyclical distinct. What our idea is, we look at the complete ecosystem and the way how the field operations pan out to be, and that is the reason why we came out with these numbers and try and look at that and build that kind of a software. The idea is always to probably have returns which are absolutely on the go, not be very cyclical, so as that it affects, to be very honest, shareholders' perceptions as well as our own possibility of giving fair returns to everybody in the ecosystem. Okay. Understood. It is also possible that you may not require additional buffer also. Depending upon the macros. Absolutely Already you have a provision of INR 250 crore and our gross NPA is close to INR 219 crore, right? Absolutely, Deepak. We will look at it from a very straight lens in how we really want to do it. Okay. Understood. Sir, just a clarification. When you say ROA of 3.5%-4%, we are saying on a reported basis, right? It includes all management overlay that you might be doing. Absolutely. That's why we said, if you exclude that, we are standing at an ROA about 4.28%. Okay. Now regarding the infusion, I think the promoter are looking to infuse INR 100 crore equity, right? Can you share some thought process on that? What is the thought process behind that? The thought process is that we require that our subsidiaries are growing too fast, and that's for the reason why we wanted to infuse a little bit more of capital in it so that our capital adequacy, if you really look at it, is standing at about 26.74%, which is fair enough for us. We can do our internal growth of about 15%-20% standalone based on our internal growth rules. The subsidiaries do require some momentum in terms of capital, and that's the reason why we wanted to infuse some amount of capital to probably look at that. Because if you look at the growth of Satin Finserv, they've grown about 134% on a year-on-year basis, and they have targets to do much more than that. It's growth of subsidiaries. Okay. Understood. Just a couple of small things more from my side. Our PAR 1 has been continuously improving, and it currently stands at about 3%, right? Yeah. What has been the normalized level? I mean, pre this MFI problem started and by when we expect this PAR 1 to reach the normalized level? See, it is normalized. If you look at it, this has been the stable state practically across for the last, I can say, about six to seven years. Before this whole crisis started. My sense is we are still working on the metrics where we are able to also bring it down. See, our ultimately idea is, and I will not mince my words in saying it, could probably be the same. We have still guided a 3%-3.5% of credit cost. We would like to outperform that. On a stable state basis, we feel that about 2.5%-3% is fair enough for this kind of a unsecured business, which is microfinance. We will tend to overbeat that in every possible quarter, and that's what our ultimate goal is. That's the reason why we said we coined that fact. We dream big, but we want to deliver bigger. Sure. Just last thing on the surplus liquidity. We have got about 15%, right? About INR 2,300 crore. What has been the drag on NIM because of the surplus liquidity? You did mention, we are keeping it because of this cautious approach on non-fund, right? No. I think, see, Deepak, you have to understand. We try our level best. We've got 77 lenders. Sometimes it comes from outside. The ECB is there. Sometimes there's always an influx of maybe more capital coming in. We are cognizant to the fact that it does affect our negative carry to a slight extent. We are oblivious to that fact. We are looking at that fact, sometimes it becomes practically impossible for us to do that. We definitely are working towards it. You'll probably see far more better carrying in terms of the negative carry which we have on our balance sheet. And what- Just to add. Yeah. Sorry. Just to add, these are quarter-end numbers which are slightly inflated because we get some money towards the quarter, half year end. We not maintain that for all 90 days. Yes, quarter-end numbers are high. In general, what is the negative carry that we generally carry in our balance sheet that we are comfortable with? I think if you really look at it overall, Deepak, it does carry about a 20 basis point, 0.20 basis point on the overall- Drag drag, I would say. 0.15-0.20, I think is the maximum which it carries. That, as what Jugal mentioned, it is probably a little inflated towards the end of the quarter end because that's where all the money gets pumped in. During the whole course of three months, technically the drag would be very lower as compared to what the 30th drag would be. Okay. If I say that the 30th drag would be about 0.15-0.20 basis during the entire quarter, it would be 0.5 basis points as such. That's the difference which comes in the last three years. Got it, sir. That's very helpful. Thank you so much and wish you all the very best. Thank you. Thank you. Thank you, Deepak. Okay. Thanks again. Thank you. We take the next question from the line of Somil Shah from Paras Investments. Please proceed. Hi, team. Good morning, and congratulations on a very good set of numbers. I wanted to know on the DA income, there has been a lot of fluctuation quarterly. I think March quarter was somewhere around INR 140 crore and this quarter it is at INR 94 crore. What is the kind of sustainable DA income for every quarter or maybe every year? We track on the overall AUM, our DA, this thing on a quarterly basis. What has happened is overall, we maintain close to about 20%. The range is between 20%-22% is where we maintain our DA book on the total consolidated AUM. It remains within that range. It could probably be in a slight deviation, which might happen according to quarters. If you would recollect, and it happens across over there, the last quarter is always a very heavy quarter. You would probably have small uptakes on that. Maintaining that is probably more important. It will be within the range of 20%-22% on a yearly basis of the Sorry, standalone AUM. Okay. This quarter was about INR 94 crores. Yeah, INR 94 crores. Second and third quarter should be within the similar range? You know, fourth quarter is slightly heavy. The rest of the quarters will probably be on the same level as such. Yeah, similar range. Okay. What was the gross slippages and write-off for the quarter? The slippages were INR 49 crore for the quarter. Write-off was INR 127 crore. 49- If you look at the write-off, which looks higher, it is because the GNPA got down by 90 basis points. Sure. That's correct. Okay. Yeah. On a consolidated basis, our ROA for the quarter was 3.3%. Typically, June being the weakest quarter for our industry and for us, where do we see this ROA in the coming quarters? Can this 3.3 gradually increase quarter on quarter? It will. Shah, it will increase. We are very conservative always in our guidance as we want to overachieve. That's what our motto is. We definitely will try and beat that. This is a conservative guidance which we've given across. It will increase quarter on quarter, that's for sure. Correct. Are we seeing any stress currently? I mean, monsoon-related or Assam-related? Assam we have covered to a very large extent. We are not even a little bit concerned based on that. Assam's got a very fantastic PAR history of repaying capacity. It's only a question of a couple of months before each of these borrowers will technically be back in this fold. We are still covered by NatCat insurance, the natural calamity insurance we've been able to take. Okay. What percent of our Assam portfolio would have been affected? This would be about INR 149 crore. Out of the entire 2,000. It's about 5%, you know. 5% of the Assam portfolio. Okay. Yes, of the Assam portfolio. Okay. Correct. On the subsidiary, Satin Housing and Satin Finserv, I think we are hardly making any profit which is affecting our return ratios if we see consolidated basis. By when do we see this, I mean, it will start contributing meaningfully to our bottom line? I think they've started to contribute right now, that's the reason why we said that these are babies which will probably be leveraging themselves in the future as such. That's probably, I think if I give you the complete picture as such, that these are lending businesses, two of them, which will probably be there. The AUMs are still small. My sense is that you will see the benefit coming in quarter by quarter now from now onwards. It will be there now. Okay. That's it from my side. Thank you, and all the best. Yeah. Thank you so much. Thank you. Before we proceed with the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. We take the next question from the line of Manuj Oberoi from YES Securities. Please proceed. Yeah. Hi, good morning, team, and congratulations on the good set of numbers. Sir, I've got just one question. Am I audible, sir? Yeah. We can hear you. Sir, just wanted a sense on how exactly the collections are happening in Assam, sir. I know there are three to four districts that have been impacted. On the trade first, you said in your opening remarks. Hello that we'll see or review the situation in the second half. How exactly are the collections panning out, sir? Sir? I told you three districts which means that the collection in these districts, which are about 40,000 odd customers, the collections are not happening basically because they're right now under flood. Having said that, we made it abundantly clear that for us, out of INR 149 crore of portfolio close to about INR 100 crores all covered by Nat Cat insurance. We don't have any kind of a problem in that. The balance which is there, we are adequately covered by our buffers, and that's the reason why we have been building these buffers up for ourselves. Even having said that, for our collection across entire Assam, leaving these few risks is absolutely 100% on target. What is an aberration, which is also very slight, is only these three to six collections. If you term it as I mentioned in the earlier answer to mine, this is practically 5% of our total AUM portfolio. Rest 95% is completely safe. There's absolutely no problem. Out of this 5% also, around 3.5%-4% is adequately covered by the insurance. So our only ultimate distinct is about 1%, of the INR 149 crore, which is hardly anything. Got it, sir. That's all from my side and best of luck for the next quarter, sir. Thank you so much. Thank you. We take the next question from the line of Giriraj Daga from Visaria Family Trust. Please proceed. Hello, team. Congratulations on good set of numbers. My query is like last quarter when we spoke about the growth consol number, we mentioned 25%-30%. This time we are now- Did we? I just referred to the transcript again. The number standalone, we said 15%-20%. Console we mentioned 25%-30%. I think are we conservative there also? We are conservative every time, and you can see it from other things. We've been able to do 27%, and I didn't want to state that we give again 25%-30%, because in writing, when we give a guidance, basically we want to always overachieve it. Our sense is we'll be able to achieve this also, this 20%-25%, and that is where we are right now. Okay. I think currently environment is looking good, I don't think there is a doubt there. How should we look at FY 2028 now? Given the building blocks in place, we had a good branch expansion last about 12 months. What would be an early indicator of FY 2028 numbers? Giriraj, don't hold this against me basically because you can read transcripts better than my memory also. I think what we are looking at as a stable state of 20%-25% is what we are trying to look at across 2028 also. It's not a guidance. Having said that, we will probably be in the same bracket and the stable zone even in FY 2028. Okay. Just last thing on again, this growth side of it. How is the environment on your side? Let's say when we came out from the crisis, the thought was that probably we are one of the last men standing on the street, given the state of the industry. The thought was that probably we'll have a very clean slate where we can choose our growth. If required, we can even grow 30% also. Let's say, what is the state of industry? If there's a need out there and there's good customer out there, probably we should have that number also. Is that thought process right? Giriraj, it's not like that. If I really want to, you can achieve 40% also, but you have to go with caution. The ultimate effect of the overall ecosystem is not just pure disbursement or growth, it is also based on your collection efficiency as well as your capability of managing the entire portfolio. I think when we say that's the reason why we are always very conservative, that we will do what we can possibly look at amongst the whole thing, how we are able to achieve our portfolio quality to the best. You can see it for sure. We've been able to maintain and get better on our GNPA front as well as on our credit cost and everything. It is not just a pure growth basis, but we've been able to do it. If you look at it, for us, we brought in guardrails much before even this was brought in by the SRO. We've always been very clear and very particular about our growth. It has to be a growth, but it has to be a growth with calibrated portfolio quality. Okay. Understood, sir. Thank you. Thank you so much. Thank you. We take the next question from the line of Shaju Paul from Growth Investor Private Limited. Please proceed. Well done, sir, for the great set of numbers, and thanks for the guidance on the revenue. My question is about the financing margin. While our revenues have been consistently growing, with an exception that Q1 used to be a weak quarter, if you look at the financing margin, you see huge fluctuation including during December 2024 till September 2025 quarters, which has been financing margin has been single digits. While this quarter we have done exceptionally well as well as the last quarter. This financing margin becomes pretty critical to understand the profitability aspect of it. Can you please provide some guidance on the financing margin aspect of your numbers? I think, Shaju, you are talking about the NIM. NIM has probably been stable across. If you look at it the last four quarters, I can probably say, you can go to page 13 of our investor presentation. It moved from 13.16% to 14.48%, then to 14.50%, then to 15.85%. Now 15.85% as compared to 14.50% is a slight aberration because the last quarter, as I always said, is probably the most heaviest quarter. DA in fact had gone down before that. We brought up DA to about 21% of our total AUM. If you look at this quarter, this is now down to about 14.36%. Having said that, for us, NIM will remain stable between this range of about 14.35% to about 14.50%. This is the stable state where it'll be. Don't look at slight aberrations which might Coming quarter by quarter. Steady state, it's about 14.50%, what we will probably be aiming at and that will remain over there. The lowest it has been in last eight-plus quarters is 13.5%. And yeah. Yeah. It has never been single digit. I was referring to financing margin%, not NIM. It's fine. Actually, you have answered it differently, we have got the answer. I was referring to specific percent in the financing margin, not NIM, but that's fine. You answered me indirectly. Just one more last question, sir. You have been growing pretty fast in terms of branch expansion. Very glad to see that as a shareholder. I wish to understand, typically how many months or years it takes to really turn around one new branch to be profitable? Thumb rule is, a new branch gets profitable when we cross about 1,000 customers over there. That's the thumb rule which we have overall. Okay. On an average, typically how much time it takes to get 1,000 customers? Nine months. Nine months. Okay. About nine months. Okay, sir. Thank you very much. Thank you. All the best. Thank you. Thank you. A reminder to the participants, in order to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Amit Mamodia from Ajit Investments. Please proceed. Yeah, good morning. Sir, may you please update about CGFMU, what license we have applied for. The CGFMU, the trade guarantee scheme. Yeah. Technically, we have not entered into that because we feel that if our GNPA technically crosses about 3.5%-4%, then it becomes very relevant. Since our GNPA have dropped below 3%, in fact, it is at about 2.18%, we don't feel that there is a need technically for any CGFMU scheme to probably be valid for us. Sure. There's a call going on behind. Yeah, there is some background noise. I think- Oh, sorry. Sorry to interrupt, Mr. Amit. Please mute your line when the management is speaking. My question is answered. Thank you. Okay, sir. Thank you, Amit. Bye. We take the next question from the line of Vinay from Viksha Capital. Please proceed. Thank you for the opportunity and congrats to the management on a good set of numbers. My first question is on the Forex component in the interest expenses on the P&L, because in this quarter it is sharply negative compared to the previous quarter. Can you please shed light on what is the source of this sharp reversal and how we should expect this line item to do going forward? Sure. Couple of facts I want to highlight before I explain the accounting part of it. We have INR 1,573 crore of ECB outstanding as on 30th June. 100% of all the transactions that we have done are fully hedged. There is no exchange rate risk in the balance sheet. These are accounting entry which impacts different period. The MTM gain or loss on the derivative contracts are booked through the income and while the exchange fluctuations are booked in the finance cost item. It impacts during different period depending upon the exchange fluctuation. That is why in our presentation, to explain the margins better, we have knocked down the effect of change in Forex from the revenue item. The total impact for this quarter is a negative of INR 3 crore, while you can see huge numbers both in income because all the transactions are fully hedged, the corresponding impact is there in the finance cost. The net impact during the quarter is negative of INR 3 crore, which is not major. Hope that explain the thing, but again to reiterate, it has no impact because all the transactions are fully hedged. I see. Okay. That explains it. Thanks. The second question I had was about the borrowing split. Between, if I get my dates right, December 2024 and March 2025, your share of commercial paper has shot up from 0.5% of your total borrowings to roughly 22.5% according to your presentation, and then it has roughly remained in the same range since. Was there a change in the strategy regarding borrowing sources for the company? CPs have never been too high for us. They have always been one and a half max. It's a very short-term instrument, so yeah. Sorry, if I see the presentation, I'll just quickly pull up the page number. Vinay, we've never. In pie chart, two bars are very close to each other. Maybe that's why. CPs have never been high. Okay. They are barely 1%. Sorry. In fact, it's 0.2%. Not even 1%. Not even 1%. In the pie chart, it's very close. Those are very adjacent. Right. I guess the 21.5% there is actually DA and not commercial paper. Is that right? Yes, that's correct. Okay, perfect. Sorry about that. The last question I had was that if you look at the asset quality, the stresses have reduced substantially, but the credit costs have gone up, right? Could you please explain what is causing this divergence where your asset quality is constantly improving, but there's an uptick in credit cost? Absolutely. I'll just throw you two numbers. The slippages in last quarter were INR 90 crore. The slippages in this quarter were INR 49 crore. The GNPA for last quarter was 3.1%. The GNPA this quarter, 2.2%. The overlay last quarter was little over INR 20 crore. The overlay this quarter, INR 36 crore. If you add all of this, while incrementally my portfolio is behaving much better, the credit cost will increase because the GNPA got reduced by 90 basis points, the buffer got increased while my slippages were drastically reduced to half. I hope that answers. Yes, it does. Yes. That's it from my side. Fine. Thank you and all the best for the future. Thank you, Vinay. Thank you. Ladies and gentlemen, we take that as the last question for the day and would now like to hand the conference over to Ms. Aditi Singh for the closing comments. Over to you, ma'am. Thank you, Anushka. Thank you everyone for taking time and coming on this call. 35 years in this business teaches you that the quarters which build an institution and the quarters which reveal it are rarely the same quarters. This was a revealing quarter. What it revealed is a franchise growing so well ahead of its market with the best asset quality in its history, choosing to convert part of that outperformance into protection rather than into a headline, or I would say, a remarkable bottom line. Let me close on where we are going, because that is part what matters to us and matters to you as stakeholders. 35 years ago, the idea that an institution can be built on the premise of serving the underserved and do it with the strength of technology-led underwriting was unheard of. Today, it is proved by INR 34 lakh customers, five businesses, and a platform built for scale. We are well-positioned to be a INR 32,000 crore diversified financial services group by 2030, with a third of that book outside of microfinance. We are building the balance sheet, the capital base, and the businesses to carry it. Everything we do is measured against that end state rather than against any particular quarter. Dream big, deliver bigger is the mantra which keeps us going. Thank you all for joining us and we look forward to your questions. Should anyone want to discuss anything, they can get in touch with my colleague, Ms. Shilpa Bajaj, or myself, Aditi Singh, or you can also get in touch with Valorem Advisors, our IR advisory. Thank you everyone. Bye-bye. Have a good day. Thank you. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.