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Edited Transcript of BHARATFIN.NSE earnings conference call or presentation 22-May-19 3:15am GMT

Q4 2019 Bharat Financial Inclusion Ltd Earnings Call

Hyderabad Jun 21, 2019 (Thomson StreetEvents) -- Edited Transcript of Bharat Financial Inclusion Ltd earnings conference call or presentation Wednesday, May 22, 2019 at 3:15:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Ashish Pipaliya

Bharat Financial Inclusion Limited - Senior EVP of IR & New Initiatives

* Ashish Damani

Bharat Financial Inclusion Limited - CFO

* M. Ramachandra Rao

Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director

* Ritesh Chatterjee

Bharat Financial Inclusion Limited - Chief of Organizational Excellence & Service Quality

* Shalabh Saxena

Bharat Financial Inclusion Limited - Chief Distribution Officer

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Conference Call Participants

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* Dhaval Gada

DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials

* Saikiran Pulavarthi

Haitong International Research Limited - Research Analyst

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Presentation

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Operator [1]

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Good morning, ladies and gentlemen. Welcome to the Bharat Financial Inclusion Limited Analyst Conference Call. (Operator Instructions)

Please note that this conference is being recorded.

I now hand the conference over to Mr. M. R. Rao, MD and CEO, Bharat Financial Inclusion Limited. Thank you, and over to you, sir.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [2]

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Good morning, everybody. Thank you for joining the call. So let me quickly dive into the operational highlights.

We have had a healthy customer acquisition of 9.6 lakhs in Q4 of this year. This is as compared to 9.2 lakhs in Q3 of the same fiscal year. In April, we were close to 3 lakhs of run rate, so we are fairly confident that the growth momentum through the strategy of fresh customer acquisition is in place.

The loan disbursements for the year was about INR 26,699 crores, which is a 45% year-on-year growth. And in Q4 of FY '19, the disbursements were INR 6,568 crores. If you look at it as a -- on a quarter-on-quarter basis, there has been a 4% decline in the disbursements quarter-on-quarter. That is partly because of our own doing. We deliberately went conservative in 2 states, Orissa and West Bengal because we sign -- saw signs of overheating there. So we tightened the norms of our -- or the credit policy. So essentially, we changed the policy while we're following a policy of 3 lenders and 80,000 indebtedness limit. Seeing the signs of some overheating, we changed the policy to 2 lenders and 60,000. That resulted in shortfall in the cost. So we think it's -- it was prudent to take that decision at that time. And while we have revisited part of the listing in part of the states, we will monitor the situation closely and keep calibrating our credit criteria based on the situation on the ground.

In terms of loan portfolio, the gross loan portfolio grew by 38% on a year-on-year basis, and -- which is consistent with our medium-term guidance. And the gross loan portfolio as of 31st March stands at INR 17,385 crores (sic) [INR 17,394 crores] partly driven, again, as we explained in our strategy, 20% growth in borrower base and 11% growth in ticket size. And there has been a small tenor tweak in our midterm loan that has contributed to a 4% growth in the book.

As we have been articulating over the last few years, our growth will be coming from mostly customer acquisition with the part increase in offtake. And this tenor size is a onetime listing unless we change the tenors again in this year, which is highly unlikely. So if you relate this back to the 9.6 lakhs customer acquisition in Q4, I think we're on the path to meet our targets this fiscal as well.

The cumulative collection efficiency for all loans given post January 2017 continues to be extremely robust at 99.7%. And this we attribute solely to the fact that we continue to follow the Joint Liability Group system, focus in rural areas, marginal increases in ticket size without getting into high-ticket-size lending.

Now on the financial fees, our NII grew 65% year-on-year. While for quarter 4, the NII grew by 9% and 53% year-on-year.

The marginal cost of borrowings at 9.5% has been kind of steady. The cost-to-income for the year is at 39.3% and 35.9% for Q4 FY '19, while 39.3% for the entire year. If you were to look at the cost-to-income on a GAAP basis, it is 43.6% for FY '19 and 45.7% for Q4 FY '19. Post my detailing, I'll request Ashish Damani to spend some time on this -- these percentages to elaborate. I'm just giving you the snapshot as it is.

The PAT for Q4 is INR 321 crores on an Ind AS basis and INR 226 crores on a GAAP basis for Q4. The PAT for the entire year on Ind AS -- per Ind AS is INR 985 crores, and as -- the PAT as per GAAP is INR 871 crores. This GAAP of -- GAAP profit of INR 871 crores is against our PAT guidance of INR 620 crores.

Partly because of our borrowing -- the change in borrowing strategy of assignment and the merger -- in line with the impending merger, the -- a lot of book was transferred to -- through assignment basis. As a result, our capital adequacy is at 49.5%.

The cross-sell piece, we facilitated the purchase of INR 1.7 lakh cross-sell units in Q4 FY '19. We know this is a muted number, but we continue -- because of change in process of direct delivery to the borrowers, we continue to face challenges in finding the right logistics provider who has the last-mile connectivity the way we have. And therefore, the numbers are muted. We're in touch with lot of logistics companies. It might take 1 quarter or 2, but we note for 2 things. One, the demand at the borrower level for the products that we are financing exist, and we're unable to fulfill it. We also know that given the focus on rural, that we'll eventually find 1, 2 or more logistics players who will meet the requirement of last-mile delivery.

Simultaneously, we are piloting delivery of these cross-sell products at the RDSP to reduce the turnaround times.

The update on RDSP is as follows: We started with a pilot of 1,500 RDSPs. As of now we have 1,100 RDSPs which are active. The last -- we have not expanded the pilot because of the challenges we faced on e-KYC. Thanks to the Supreme Court ruling. Now that we've got -- the bank is allowed to use e-KYC, we have fine-tuned our technology and the processes. And pretty soon, we will start the process of enrolling fresh RDSPs. And as we speak, the work on the ground has started. We've got in touch with, I think, 15,000 to 20,000 Kirana stores. Ritesh, my colleague, will elaborate this more. And we're confident that by the end of this year, we'll have more than 50,000 Kirana stores who'll be doing the cashless. So the pilot on cashless operations also is running well in 2 branches.

So just to take a step back, there are 3, 4 hypotheses on the basis which we started this whole RDSP concept. Essentially, we said that RDSP should act as ATM equivalent in the village, and people should be able to do cash in and cash out just like all of us do through ATMs. The technology was developed over a period of time. It's become really seamless. And we have done through these 1,100 RDSPs about 2.3 lakhs of banking transactions, which is withdrawal -- cash in and cash out, withdrawals and deposits. And total that is coming to the -- or value of the transactions is about INR 84 crores. There were also 86,000 prepayments which we did through RDSPs amounting to close to 1 crore. And 600 product financing applications were also sourced through these RDSPs.

Now the most important pieces in those 2 branches where we have -- we're encouraging the borrowers to go and make their installment payment and park it in their savings account. We're extremely successful. As we speak, 80% of the borrowers in these 2 branches are actually using the RDSPs to park their savings. And on a weekly basis, on the settlement in there, we are pulling it from their account into our account through the Standing Instructions mode. So essentially, this point that I'm trying to make is the RDSPs concept that we started with some few hypotheses, all of them -- all boxes have been ticked, and the process, technology glitches, everything has been ironed out except for the logistics piece, which we're still working on. But now we will be on a rollout mode starting June 1. And as I said, by the end of the year, we want to have more than 50,000-plus RDSPs.

As regard to the question of the 400 missing RDSPs because we started with -- via the 1,500 RDSPs and only 1,100 are active. Part of them we dropped out because they were not very efficient. Part of them were not interested. But we think attrition in this piece is also a part of the business, although we don't expect the attrition to be as high as, let's say, 400 on a 1,500 basis because over a period of time, what we've seen with the RDSPs is that owners are making reasonably good incremental money on a month-on-month basis, which will motivate them to continue doing this business with us.

Two-wheelers, we have expanding the pilot. I think as of March 31, we have done about 10,000 two-wheelers. The repayment is 100%. And the pace of growth there is increasing. So if I give you the last 2-month numbers, March, we financed about 1,800 two-wheelers; and in April, we financed about 2,200 two-wheelers. I think we're good to probably do more than 30,000 two-wheelers here. The challenge in this segment is, again, not a -- that of demand, but how do you do the credit appraisal for the husband as well who is not probably an income tax payee or doesn't have the cash flow statement that one traditionally goes through while earning in this segment. But a good piece is we -- that given our criteria and given our unique appraisal system, the pilot has been successful. We've got almost 100% repayment except, I think, in one case where there is a bit of a due. But that, the team is confident of collecting. Over a period of time, we expect this through -- keep increasing along with the microfinance portfolio.

So for the last pieces, the update on the Orissa cyclone, 4 districts are the most impacted. Those 4 districts are Puri, Khurda, Cuttack and Jagatsinghpur out of the 30 districts in Orissa. These districts contributed 35% of the enterprise portfolio. The rest -- for the rest of these 26 districts, our collection, essentially, efficiency is normal at 99.5%. Given our past experience with floods in other parts of the country and the repayment, we expect that the repayment will be -- will come back to normalcy.

So in Orissa, the loss rate finally was 1.8%, but we don't expect that kind of a loss rate in Orissa because while the cyclone was devastating and severe, it was not as bad as Kerala. So we expect the normalcy to be restored. And part of the areas that we will report going forward is basically on account of fact that we ourselves voluntarily gave moratorium to the borrowers for 4 weeks to ensure that they get back to their lives before we start collecting.

So worst-case scenario for Orissa cyclone, as per our estimate, would be 0.06% of the enterprise AUM. So it is hardly impacting the book and the P&L.

As regard the liabilities, we have rolled out in 340 branches, but we stopped at 5 lakh accounts that we reported a quarter or 2 back partly because of the whole e-KYC ruling. But we expect -- we now -- we're going to roll it out from Monday onwards across all the branches.

The good news here as well is out of these 5.5 lakhs savings account borrowers that we have, 2.5 lakhs of them have opted recurring deposit. And if you were to look at the average liability balance for savings and RD combined, it is INR 1,700. These are for the about 2.7 lakh customers. So I think we've got the process right, we have got the service metrics right. We're totally paperless on savings and RD account opening, all based on biometric. I think that's where technology is playing a huge role. So we'll be rolling this out starting next Monday.

And finally, the elephant in the room, what is the update on the merger. Yes, it has taken longer than what we anticipated. The matter is reserved for order by NCLT. NCLT is on vacation till May 26. So post 26th, we hope to be -- that there will be some progress on this fact.

With this, I'll request Ashish Damani to speak a bit about the profitability and the -- for the quarter as well as the year, and also explain the nuances and the differences between Ind AS and GAAP. Damani, can you add?

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [3]

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Yes. Thanks, M.R. Good morning, everybody. Thanks for dialing in onto the call.

In terms of profitability, I think the right numbers, we'll look at it on a PBT basis, especially given that we had no tax impact in the previous financial year. So it will be a right thing to compare to start with.

If we look at year-on-year on a PBT basis for the quarter, Q4, then we had seen a growth of 32%, INR 277 crores against INR 210 crores. And if you look at from a full year basis, the PBT growth has been 147%, INR 1,124 crores against INR 455 crores.

When we look at PAT on a quarter-on-quarter basis, there has been a 7% growth compared to the previous financial year, on the Q4, INR 226 crores against INR 211 crores. And when we look at -- for the full year, again there has been a 91% growth compared to INR 455 crores in the last financial year, we have reported INR 871 crores. So there has been a very healthy and a steady growth on the number, and this is way above -- like M.R. explained, way above the guidance that we have given at the beginning of the financial year.

Coming to the quarter-on-quarter, if we really look at it, it is primarily muted on account of some onetime expenses that we have taken into the current quarter. One is the prepayment charges, which have been -- are related to the merger. Keeping in mind the impending merger, we had prepaid certain borrowings as a part of our proprietary. This is something that we also touched upon on the last Q3 analyst call, that this is something we will be doing. And then there was a special incentive drive that we have done in the field, which -- where we had a cost of about 9 crores. These are the 2 large items. There are some minimum wage changes which have been brought up to speed in this quarter, which accounted for another 5 crores. These are the large onetime things which kind of pulled down the quarter-on-quarter performance. But as the growth continues to be strong, we will get back to the trajectory that we had.

Other large thing which kind of impacts the profitability is assignment transactions. Since we have done INR 5,168 crores worth of balance sheet transactions, those typically postpones the income to some extent based on the cut-off dates and things, and this also carries an impact on the profitability. So this should normalize things in the coming quarters.

Just quickly upon the Orissa. I think just want to again reiterate what M.R. said. The total portfolio that we have in the affected geography of all of these districts is 3.5% of the enterprise portfolio. And if we look at Kerala as any guidance, then 1.8% of the affected portfolio was what has gone bad. And if we multiply then the -- on the affected portfolio basis, the total impact on a enterprise level will be 0.06%, which is hardly anything. And later on, Shalabh would actually explain the ground realities.

So we can open the floor for questions. M.R., you have anything else to add?

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [4]

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No. Not as of now. I think based on the questions, I'll-- I will add my comments once the questions are addressed by you guys.

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [5]

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Thanks. Yes. We can open the floor for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Dhaval Gada from DSP Mutual Fund.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [2]

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Congrats on a good set of numbers. Three questions. First is, could you quantify M.R., if the benefit of the RDSP once it scales up to the target that you talked about, what is the kind of benefit that we could see in number terms? Some medium-term guidance on that would be very useful. Second is, Ashish, if you could quantify the impact of the assignment income that got differed due to timing. That is the second one. And third is on the growth percentage and impact because of the tight credit norms. And so one is the number and second is, our strength has been more or deeper rural compared to large part of the industry. So just wanted to understand how that core strength is getting challenged when competition is heating up in both states that you talked about. So yes, those are the questions.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [3]

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So I'll take the growth piece and the RDSP piece and then ask my colleagues to add their comments. And then Ashish can take the question on the financials.

I think RDSP as a concept when we thought about, of the 4 items that I spoke about in my opening remarks, I think all the 4, 5 boxes have been ticked very beautifully and faster than we anticipated. I think now the proof of the pudding lies in scaling up and ensuring that what we have achieved in the pilot is translated when we roll it out. I think that's an execution challenge for all of us as a team, and that's a big piece.

Now it's difficult to quantify. But at a headline level, for example, if we move cashless even to 80% on all-India basis, I think that will significantly reduce the workload on the loan officer, and it will get into -- become more efficient. Today probably at 609 borrowers per loan officer. We are efficient. But I think you can add another 30%, 40% to the efficiency there given the fact that set a center meeting which takes about 40 minutes could crash down to 25 or 30 minutes when 80% of your collection is cashless.

The second piece is as we get more and more borrowers to start using savings accounts and start parking small savings to the recurring deposits, over a period of time, you'll have humongous data for which -- on which you can do your analytics and start slowly moving into higher ticket sizes and individual lending and so on because there is a robust data where you get to know the family savings, family cash flows and so on and so forth. But that's couple of years down the line. But this is the foundation that is being laid for a strong data analytics platform.

Of course, the cross-sell efficiency will increase because once the Kirana store starts sourcing applications for cross-sell, having the potential to grow the business will be there.

Just to give you a small metric, each loan officer will have probably 15 or 20 Kirana stores in his area of operations. So instead of just one loan officer marketing the -- these products, you have 20 small entrepreneurs marketing, who are incentivized to this. However, the credit decision is with us. So we're not giving away the credit decision, we are only asking them to market it and be the point of acquisition. So the credit robustness will continue. These are 2 pieces. And then the benefits that the bank gets in terms of liability balances, the benefits that we get on account of bill payments, and what is more interesting is there are lot of offers, transactions through the RDSPs. So villagers who are non-borrowers in the same village and even neighboring villages are using this Kirana store as an ATM and coming to withdraw money from their accounts. That's a fee for the bank, and we'll pass on some to the Kirana store and pass on some -- keep something with us. So there's a profitability gain also.

Essentially, I think if I were to put it in a nutshell, RDSPs, once they are rolled out and we execute it well, and as I said, that is a challenge, there'll be a lot of efficiency gains and have a direct bearing on OpEx. It will impact the top line because we will probably do more funding of the consumer durables. It'll have a direct bearing on bottom line because we're getting fairly good sourcing fees from these manufacturers. So that's the -- a piece.

So on -- regarding our strategy as we are -- we continue to be focused on the rural. We'll continue to penetrate deeper. This -- West Bengal and Orissa slowing down is a tactical short-term decision for us because when we saw the overheating and particular the problems faced by one big, large NBFC in Orissa, it was a tactical decision taken to slow down till the heat comes down in these areas. And once we have confidence that our borrowers, our processes continue to be robust and continue to deliver good repayments, we'll go back to the original norms that we had. So we think this is a quarter or 2 impact. But we don't see this impacting in the long run.

As regards the rural penetration strategy, all our branch openings that we are planning for this year will continue to be in the adjoining areas at where we are present, and they will help us penetrate deeper into the rural areas.

Now I'll request Ashish to speak about the financial impact, and then ask Shalabh and Ritesh to add comments on your questions, if they have any.

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [4]

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Thanks, M.R. So basically, on the impact on the assignment transaction, if we try to understand this, this is a positive impact when we look at it from a Ind AS standpoint because we're recognizing all income in the same time as a transaction. But when we look at on a GAAP basis, this is what I was trying to explain, based on the cutoff, the income recognition is on a cash basis at the time when we actually do the payout to the investor. That's how it works, and that is why there has been a postponement of income. Approximate quantification to that was 25 crores for this quarter. So this is -- typically happens when we have large amounts of assignment transactions that we do. So there will be this impact. But this 25 crores would come back to you in 3 to 4 months actually. And then the balance will be contracted then on. Shalabh, can you take the...

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Shalabh Saxena, Bharat Financial Inclusion Limited - Chief Distribution Officer [5]

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So there were 2 issues raised. The first one was about customer acquisition. I'll answer that. And the second one, I'll supplement what M.R. said on Orissa. So let's begin with the customer acquisition.

So we've kind of -- over the years, we've been focusing, and our fundamentals of the growth strategy has been customer acquisition. It remains so. [These qualify to] the next level, which is retention. So we're doing -- it's a two-pronged effort that we are focusing on now: how do we retain our existing customers? The second one, obviously we keep on acquiring in markets where we are either underpenetrated or where the industry is underpenetrated because there's significant scope still available.

The -- our firm belief is that with the impending merger, offering our customers both the liability solutions and the asset solutions, which we will do, plus deepening the product suite of both the liability and assets, we do see -- we have -- we are very confident that the customer retention part, we'll make significant strides.

We -- having said that, we will continue and we are -- so the way we look at our customer acquisition strategy and retention strategy, we go to -- we get a customer, we go to geographies which -- and we do significant research. We do lot of deep testing and therefore we really expand to the next level. So we will continue to do that and -- while still now focusing on the other part, where both the liability solutions and the RDSP will add significant value.

So the targets for the next year, or rather this year on customer acquisition continue to be -- will continue to be addressed. There is an additional customer retention focus that we are going to bring. So that's the first part.

The second part, on Orissa. The 4 districts M.R. mentioned, Puri, Khurda, Cuttack and Jagatsinghpur, of which Puri seems to be the most affected, as far as we're concerned, we got over. So we had some Kerala experience where we garnered our teams and galvanized our entire machinery to support the customers in this hour of need. While at this -- the way it looks like, we are supremely confident that Orissa will come up faster than Kerala. Still not -- still difficult to ascribe time, but except Puri, which might take some time, the balance 3 districts should be up and running in another max 6 to 8 weeks.

I'm also taking an opportunity to thank all the stakeholders, the investors, the employees who contributed to the relief in Orissa because we've done significant amount of relief work because we do feel that in this hour of crisis, we have to support our customers first, and the financial aspect of this whole thing comes at a later stage. We're just doing an encore of what we did in Kerala. And obviously, at the cost repetition, I thank our -- all the stakeholders and the company and the employees who stood by our customers and members.

So that's one of the things. If there is further question.

So just to quantify the Orissa thing, as of now, roughly about 62,000, we have affected customers in there. This is the largest state that we have, about 12 lakh customers. The numbers are -- the affected customers are in single-digit percentages. So I'll repeat what was said earlier. We don't anticipate too much loss except the 0.06% that has been said across at our enterprise.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [6]

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Ritesh, do you want to add anything on RDSP?

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Ritesh Chatterjee, Bharat Financial Inclusion Limited - Chief of Organizational Excellence & Service Quality [7]

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Yes. Basically, all the parts, I think, have been covered. But one of the things is our focus has been on RDSP viability to make sure that we're able to continue to serve the totals for which they have been set up. So that is a focus area which continues in parallel. It supports the rollout. So the rollout essentially really talks about you should have a rollout where we don't -- we have minimum attrition after the enrollments. So for that, the team is working separately also to ensure that they are supported by new product lines, payments options which helps them get more customers to their stores. So that's -- so the whole rollout will be supplemented by new product lines for the Kirana store and increasing its revenue streams.

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Operator [8]

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The next question is from the line of [Divyesh Mehta] from Investec.

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Unidentified Analyst, [9]

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I have a couple of questions relating to the -- a more macro point on how the -- how do you view our current target households in terms of income cutoffs and what is the current penetration level in the industry?

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [10]

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So our -- we are happy to take this offline because we do lot of -- use lot of data and work a lot on this. But at a high level, we focus on the unbanked population. The incomes levels of these borrowers are difficult to estimate. So they will -- it's all basis, anecdotes and their own statements. But essentially, the idea for us is we focus on women. We focus on giving them loans for income-generating activities. And given the huge demand-supply gap in this segment, our penetration levels are -- is different on a state-wide basis. But I think our strategy of continuing to focus on rural and every village that we go, we know the -- what is the population there, how many households are there and so on and so forth. We'll be happy to share that on an offline call, and Pipaliya or his team can organize the call with Shalabh and his team to take you through those numbers, yes.

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Unidentified Analyst, [11]

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Sure. Okay. I might have missed your earlier comments, but I wanted to understand why our customer acquisition for the quarter was lower.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [12]

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No. So if you look at on a quarter-on-quarter basis, it went up from 9.2 lakhs to 9.6 lakhs.

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Unidentified Analyst, [13]

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Right. Y-on-Y, it's lower, right?

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [14]

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No. no.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [15]

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No.

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [16]

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I think...

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [17]

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You guys, you want to -- Shalabh, you want to talk about it?

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Shalabh Saxena, Bharat Financial Inclusion Limited - Chief Distribution Officer [18]

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Yes, so last year...

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Unidentified Analyst, [19]

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Is it pertaining to West Bengal or Orissa decision?

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [20]

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No. No. No. So one is customer acquisition is kind of all over the place. The book impact is on account of a slowdown in Orissa and West Bengal, which is a tactical decision.

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Unidentified Analyst, [21]

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So on a Y-o-Y basis, it's down 4% active, and overall members are down 17%, if I see the fresh acquisition run rates?

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [22]

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Pipaliya, you want to take this question?

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Ashish Pipaliya, Bharat Financial Inclusion Limited - Senior EVP of IR & New Initiatives [23]

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Absolutely. If you -- I'll just add and then, Shalabh, you can. So if you see the borrower base, there is a increase in 20 -- increase of 20%, okay? The acquisition rate, if you're looking about March '18 quarter and March '19 quarter, it was 11 lakhs, and around [March], it's 9.6 lakhs. But on overall basis, from point-to-point in terms of number of borrowers, it's a 20% increase in number of borrowers. On -- specific Q4 FY'18, it is...

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Shalabh Saxena, Bharat Financial Inclusion Limited - Chief Distribution Officer [24]

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Yes. On a year-on-year for the full year, last full year we acquired about 3 million customers. This year, we are close to 4 million, just shade short of 4 million. But on a year basis, it's about 33%.

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Unidentified Analyst, [25]

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Got it. Sir, my third question, final one, would be on what are the 6 -- which are the 6 districts in West Bengal which are worrying you? And is it that the income is not commensurate with the outstanding leverage? Is that the worry?

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Shalabh Saxena, Bharat Financial Inclusion Limited - Chief Distribution Officer [26]

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Look, the 6 districts we can -- these are tactical calls and just take off from where M.R. left in his opening call. These are very, very tactical calls which we take in a very routine manner. Sometimes, we kind of hold and moderate our strategy, which is both customer acquisition and disbursement strategy. It could be for a period of 15 days or a month. This time, we kind of stretched for about close to 4 months starting December until March. We will regularize very soon. Our portfolio continues to be stable. We're doing very well in those states. It's just that we saw some signs of overheating, which led us to take that decision. We will normalize as and when we think it is appropriate.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [27]

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So just to elaborate on this, when we say overheating and the [core main customers] says, how do you figure out the overheating? Then the customers start demanding higher ticket size citing competition, saying XYZ is giving me 1 lakh or 1.5 lakhs loan, I want a INR 1.5 lakhs. And we know that if we lose that, they report to us. We know there's something going on in that state. So rather than get down into a head-on competition by lending higher loans, we say, let us focus on process and the discipline of the group and sit tight, and eventually things will start playing out to our advantage. And we've seen this time and again in the past when there's real money flowing into the sector, which you will see -- we have seen in the last 1 year. There is always these 1 or 2 players or more who want to grow the book by playing the ticket size game. We have always stayed away from the playing the ticket size game because we believe the growth should come kind of or the combination of fresh customer acquisition and marginal increase in ticket size.

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Unidentified Analyst, [28]

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Understood, sir. And just a couple of data keeping questions. What is the exclusive customer base for us? People who are only borrowing from BHAFIN?

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Ashish Pipaliya, Bharat Financial Inclusion Limited - Senior EVP of IR & New Initiatives [29]

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See, that number what we've some time back is about 50%, 55% of the customers who've been borrowing only with us.

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Operator [30]

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The next question is from the line of Saikiran from Haitong Securities.

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Saikiran Pulavarthi, Haitong International Research Limited - Research Analyst [31]

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Just on the tax rate, meaning that when will that be the full tax rate for you going forward?

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [32]

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So for us, the coming financial year should -- we should get into the full tax rate. I mean this -- sorry, this financial year, FY '20 financial coming.

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Saikiran Pulavarthi, Haitong International Research Limited - Research Analyst [33]

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Got it. And the second thing is like we have seen a higher borrowing from IndusInd as such on a relative basis on -- if you compare with the earlier quarters, meaning what are the thoughts over here assuming that benefit, what you could get potentially? Is there any cost differential between what you are borrowing from IndusInd versus other banks?

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [34]

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So if you look at our marginal cost of funds, it has not moved any -- much. It's same as what we were doing earlier. The benefit would be in terms of keeping in mind the impending merger, there will be a smooth transition into -- under consolidation. That's primarily the idea.

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Saikiran Pulavarthi, Haitong International Research Limited - Research Analyst [35]

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And the same logic holds good even for the higher assignment what you have done?

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Ashish Damani, Bharat Financial Inclusion Limited - CFO [36]

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Assignment transactions were done with both IndusInd as well as other banks. So -- but the assignment transactions are primarily something which we can just continue without having any issues on the consolidation side. That was the idea of doing more assignment than actually borrowing on balance sheet.

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Operator [37]

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(Operator Instructions) As there are no further questions, I now hand the conference over to Mr. M. R. Rao for his closing comments.

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M. Ramachandra Rao, Bharat Financial Inclusion Limited - MD, CEO, President & Executive Director [38]

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Basically, thanks for the call. People who have not been able to ask questions or want to ask more questions, Ashish Pipaliya and his team and all of us are available to address any further queries on the results. Thank you. Thank you all for joining.

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Operator [39]

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Thank you. Ladies and gentlemen, on behalf of Bharat Financial Inclusion Limited, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.