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Edited Transcript of CANFINHOME.NSE earnings conference call or presentation 5-Nov-19 6:00am GMT

Q2 2020 Can Fin Homes Ltd Earnings Call

Bangalore Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Can Fin Homes Ltd earnings conference call or presentation Tuesday, November 5, 2019 at 6:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Girish Kousgi

Can Fin Homes Limited - MD & Director

* Prashanth Joishy

Can Fin Homes Limited - Head of Finance & Accounts

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Conference Call Participants

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* Augustya Dave;CAO Capital;Analyst

* Digant Haria

Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research

* K. SivaKumar

Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager

* Kunal Shah

Edelweiss Securities Ltd., Research Division - Associate Director

* Nirmal Bari

Sameeksha Capital Private Limited - Equity Research Analyst

* Punit Mittal;Global Core Capital;Analyst

* Shubhranshu Mishra

BOB Capital Markets Limited, Research Division - Analyst

* Utsav Gogirwar

Investec Bank plc, Research Division - Analyst

* Yash Agarwal

JM Financial Institutional Securities Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q2 FY '20 Earnings Conference Call of Can Fin Homes Limited hosted by Investec Capital Services. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Utsav Gogirwar from Investec Capital Services. Thank you, and over to you, sir.

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Utsav Gogirwar, Investec Bank plc, Research Division - Analyst [2]

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Thanks, Margaret. Good morning, all. Welcome to the Q2 FY '20 Earnings Conference Call of Can Fin Homes Limited. To discuss the financial performance of Can Fin Homes and to address your queries, we have with us today Mr. Girish Kousgi and the [ex-CEO] of Can Fin Homes Limited; Mr. Shreekant Bhandiwad, Deputy Managing Director as -- from management team to assist them.

I would now like to hand over the call to Mr. Girish Kousgi for his opening comments. Over to you, sir.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [3]

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Good morning. With me, I have Shreekant Bhandiwad, who is the Deputy Managing Director; we have Shamila, who is the business head; and we have Joishy, who's our CFO. So we had a good quarter and good H1. We were able to do well given the market conditions. On interest income, we've grown by 20%. On interest expenditure, again, by 20%. So our NIM has gone up by 19%.

NIM has increased to 3.21% from 3.18%. I'm giving H1-H1 comparison by [year-end]. Our yields have been better. There's been an increase in PBT as well as PAT. All of us know in last 1 year, there are a lot of challenges with respect to liquidity. In spite of that, now we were able to maintain our cost at 7.95%. If I compare this with the last year, it has gone up by 5 bps. It was 7.9%, now it is 7.95%. Our spread has come down from 2.31% to 2.28%. June -- as of June, it was 2.3%, now it is 2.28% so that is around 0.02% lower.

If you look at our OpEx, it has slightly gone up and that is largely because of (inaudible) cost and CFS. (inaudible) is due to addition of new staff and the nominal increase in salary. And of course, the CSR -- last year, CSR, we spent a significant portion in H2, whereas, in this year, we spent in H1 and therefore there's a slight increase. However, CSR spend for the whole year would remain almost same.

On asset quality, there has been slight increase on a quarter-on-quarter. We have increased from 0.63% to 0.79%, but what is important to note here is that our Q2 incremental NPA has dropped by 25% compared to Q1. And all the efforts, what we have done in Q2 and Q1, will develop in Q3. We have a good stock of repossessed properties, which is materialized in Q3.

So our net NPA has gone up from 0.42 to 0.58. This is on H1 Y-o-Y basis. There was increase in book by about 16%, 15.8%. On the approvals and disbursement, it was pretty flat and that's understandable since we were little cautious even though there was enough and more demand in the market. There is no change in demand, however, there are certain challenges on the supply side, largely from developers where they were not able to complete the project. And therefore, they were not able to complete the sale, and the new projects have come down. We are not impacted by this since we operate in different segments and different geographies, and our profile would be a little different. And the first-builder projects would be very small on a number of units, low rise where we start funding only when the project is almost 70% to 80% complete. And therefore, we are not impacted in terms of completing the disbursement. However, on the demand side, there has been some impact from the builder side.

On the liability mix, it's almost pretty same. Our bank borrowings contributes to 52%, NHB is 13% and market is 33%, [ET] is 15% and the balance is NCD. There has been a slight change in the mix, I think because there is slightly -- I think bank borrow has slightly gone up, NHB has slightly gone up and the market has come down.

Even during H1, in spite of all these liquidity challenges, we were able to raise about INR 3,260 crores from banks as well as market. We have unutilized limit of close to INR 2,200 crores, this is largely from banks. And 1st September, we are holding sanctions of about INR 1,400 crores.

Just to talk about commitment for H2. Towards borrowing it's about INR 3,600 crores and lending is INR 3,500 crores. So approximately, it comes to about INR 7,150 crores. And we have INR 2,921 crores available with us and first sanction of INR 1,400 crores and INR 3,100 crores of collections. So the total commitment is INR 7,150 crores and funds available is about INR 7,500 crores, so it's almost matching.

Just to talk about the mix, we largely focus on home loan. It is much safer compared to nonhome loan. Our home loan proportion is 89%, nonhome loan is level. Out of nonhome loan, we categorize top-up as nonhome loan, actually it is a additional loan given to a home loan customer after a certain period, depending on the repayment track record. So it is as good as home loan. So our LAP contributes to about 5%.

In terms of profile, salaried and SEP is 71%, SENP is 29%. I think by design we kept SENP proportion quite low since there is a lot of stress in the market for last 24 months. And we've seen in home loan industry, the increase in NPA is largely contributed by this segment. So we generally operate in 0 to 25 -- up to 25 lakhs ticket size. And proportion, we have almost 70% of portfolio up to 25 lakhs and more than 50 lakhs is hardly 4%, and more than 1/3 would be hardly -- it'll be less than 60-odd cases.

On the way forward, we want to keep our product mix this way, largely focused on salaried and SEP. Self-employed, we would definitely focus but depending on geographies, which additionally has lower credit losses, where the repayment culture is good, focus on small ticket, focus on safe collaterals and safe profiles and safe variants.

In terms of geographical mix, our focus would be on Tier 2, 3 and 4 cities because these are the cities where we see less competition and we have power of pricing, whereas in top cities, there is enough and more competition, especially from banks. And there, we have [2 cases] cut on margins. And therefore, in big cities, we will focus on the outskirts, otherwise, our focus would largely be on small towns and cities. Our effort will be there to increase NIM and spread.

I would like to open this forum for any questions on earnings.

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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 Nirmal Bari from Sameeksha Capital.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [2]

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My first question is on the gross NPA increase. Typically, Q1 is a quarter when we see a large proportion of increasing gross NPAs, and then Q2 onwards it starts moderating. But this time, Q2 also has seen an increase. So if you can throw some light on where is this gross NPA coming from and is there a particular reason, say, SENP or something, where we are seeing higher proportion of NPA baggage? First.

Secondly, if you can give an EBITDA around what's the current outstanding number of properties that we are having, that we would be looking to liquidate in Q3 and which would result in lower NPAs?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [3]

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Sure. So if you look at the NPA, there has been reduction compared to Q1 by 25%. Now there has been a slight increase in NPA. It is not confined to any particular geography, but it's a restricted profile, obviously, it is SENP. Now we've done a lot of work in Q1 and Q2. We have repossessed assets close to INR 26 crores. Out of this, at least 65% to 70% would materialize in Q3. And you will see this trend of NPA dropping quarter-on-quarter. There are a few other reasons. The reason is our principal recovery, either through settlement or through sale is more than 100% at the enterprise level. Since our recovery is more than 100%, and we actually give sufficient time for borrower, if borrowers' intention is good to come and settle. And meanwhile, we will try to assess and if we should feel that we need to go again to the customer, that's when we actually clear.

The trend for next few quarters on NPA will be that -- no, it'll keep coming down, and this is because our ticket size is lower. We fund in geographies where property players are not very high. I'm talking about property price because higher the property value, the distress portion would be higher. So the property value when the bank or HFC wants to sell, what they would [realize] will be much, much lower. But if the property value is lower, the virtue of tickets has been lower so the recovery would be much higher. And therefore, our cost loss is absolutely 0.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [4]

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And in how many cases would we have issued (inaudible) notice, this number was available for previous quarter in the presentation and it was about 1,200-odd [simplified] to be. So what would be the number?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [5]

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SARFAESI action initiative would be -- it's about 800-odd cases. What we have repossessed is close to INR 26 crores.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [6]

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Okay. 800-odd cases. Since the next question, again, is on the NPA. So the provision that we have been doing has continually come down since Ind AS was applied. So at present, what has -- for -- specifically for stage 3 asset, what is the -- not even default assumption that we are (inaudible).

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [7]

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No. Stage 3 asset -- this is Joishy speaking. For stage 3 assets, we are following the IRAC norms. We are [listing] the [treasury] considering 100% [closing] on the sales side. But when we calculate, we consider the realizable value of the security to the extent of 90% and then we calculate. That comes below the IRAC norms what NHB has given. So we are measuring the provision as for directly norms only because ECL model always be the leverage under the value of the [security]. And we always have with us a good securitization of coverage with (inaudible) a time gap that is creating [network] for [fixed-currency] income.

So it will be a provisional asset [in] the time gap that it's creating the provisional assets.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [8]

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Okay. So we are still providing as for the IRAC norm, which would typically be higher than the ECL provisioning that we would be required, is it?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [9]

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Yes. Absolutely, absolutely.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [10]

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Okay. And sir, secondly, in this quarter, there was a steep decrease in capital adequacy ratio from 19.39% to 18.52%. And this was, I think, the decrease was from Tier 1 capital adequacy. So what was it that changed quarter-on-quarter to lead to such steep decrease.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [11]

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Yes. It is actually the loan pension was not discussed. It was a positive point for the company. We have sanctioned the loss rather discuss in event to take place, for which the risk coverage, we have to give 50%. On account of that, it has come to 18.86% from the 19-plus percent asset. So going forward, we have to improve sanctions for the purpose of disbursement, which will improve the area of the company assets. And the requirement as far as resi sits at 12%. Going forward, it is 15%. We are well above that mark comfortably.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [12]

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Okay. And last question is, on the cost -- so it's a you joined Can Fin about 2 months like so what are the other -- what is your strategy for Can Fin going forward? And what kind of growth do we -- I understand that there is a vision document, which -- we are following on that. So would you like to make changes on those -- on that reaching also [110]? What kind of growth are we -- are you looking forward, you can give in Can Fin to (inaudible)?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [13]

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Sure. So this is not a guidance, but just to answer your question. The focus would be on -- going forward, focus would be on, largely, 3 things. One is, of course, growth. When you talk about growth, industry is expected to grow at about 11%, 12%, we'll be growing much above industry growth rate.

Now the second focus is going to be on asset quality. Asset quality is largely driven by geographies, where we do business; ticket size, which we want to focus; and the profile to whom you want to lend, and the collateral what you want to lend, and the variants in those which we want to sell. Now these 5 things, largely, would lead to a better asset quality. On ticket size, as I told you, we want to keep it at about INR 17 lakhs, INR 18 lakhs. On segments, we want to focus only on verified income. On collateral, we would focus on self-occupied and partly without residential and commercial properties. So asset quality is going to play a very, very major role in future as well. So that's our priority.

Number three, there will be constant effort to increase NIM as well as other income. And the salary income is about [insurance]. So these 3 would be our focus.

And the fourth, a very important thing is our liability, position and mix. So we'll be tracking ALM very, very closely. And as I told, we are able to raise funds at a much lower rate in hedge fund. We are sure we'll be able to maintain that in H2 as well. So not much of changes. There are small tweakings here and there required, which we -- which is an ongoing basis. So that's anyway we are doing. The model is good. This model has helped us to focus what Can Fin had in the past and what they're going to have in the future. Nothing is going to change much but yes, we are focusing more on profitability, on asset quality and growth.

For example, you will see our NIMs going up in quarters to come, spread bettering, our others no fee income would increase since there is now focus on that piece.

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Operator [14]

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(Operator Instructions) The next question is from the line of Punit Mittal from Global Core Capital.

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Punit Mittal;Global Core Capital;Analyst, [15]

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I think I've asked this question a couple of times before as well. I do not see much progress on your deposits -- retail deposits. Why is that? And what are your plans on those lines?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [16]

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Thanks for raising this question. Yes. We were not actually focusing on deposits, primarily because of the costs involved in raising deposits.

Now compared to our cost, so deposit raising costs would have been too much higher, about 7% to 8% higher. So now they'll be focused on deposit as well. So now we are going aggressive on the redeposits because we feel that, long term, stable, retail deposits would help the company in the future and therefore, now there is -- there will be focus on deposits.

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Punit Mittal;Global Core Capital;Analyst, [17]

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Okay. Great. The second question -- and I think, probably, it's a bit of hypothetical question. Naturally, there are news and rumors, and we've probably known a few days about the Canara Bank's decision on financing homes. But the hypothetical question here is that, let's say, so you -- the new promoter or parent would be -- if the promoter or parent is a private equity company. Currently, I think you do enjoy a good perception and goodwill in the market and probably also credit rating. Because Canara Bank or PSU is the parent or the promoter. How does that not change if Canara Bank is the promoter of the company?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [18]

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Canara Bank has been as a parent, and they have extend all support, which parent has to extend to the subsidiary. So going forward, I don't see too much of a difference because primarily what drives the rating or at what rate you can borrow from market or from banks or at what rate you can do deposits largely depends on sales of the company.

As long as you know, we can -- we're able to grow, maintain our margins and have good asset quality. I don't think so there will be too much of a difference but for a bit of perception, which should probably -- because there are so many positives and negatives which come with any particular decision. So I don't think so there'll be much of an impact because largely it depends on how well you run the company and maintain all the margins.

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Punit Mittal;Global Core Capital;Analyst, [19]

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Okay. So just on those lines and for the bank's funding that you have about 52%. How much of that funding is from Canara Bank?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [20]

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We actually have many banks from whom we borrow. In fact, the largest funding is not from a parent.

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Punit Mittal;Global Core Capital;Analyst, [21]

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Okay. Would you be able to give a percentage or no?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [22]

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Yes. Sure. This is Joishy here. See the bank borrowing actually -- the parent have a restriction that the exposure to the related parties is restricted to the 10% of their tagged-on capital. So their exposure in (inaudible) assets. And major lender to us is the State Bank of India. Apart from that, we have other private sector as well as other Central banks in the line. We have given the disclosures in our annual report, clearly in this regard (inaudible) as well as the percentage rate which we borrow at.

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Operator [23]

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The next question is from the line of Omkar Kulkarni, an individual investor.

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Unidentified Shareholder, [24]

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Yes. You have said that there is sufficient amount of capital with you and the growth is also not that high which it used to be. And you have mentioned that you are looking to raise around 1,000 [PR] so that's only a provision you have taken? Or is there anything on the card (inaudible) financially we are looking for?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [25]

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Yes. So I think there is enough opportunity for growth. I did mention that at the beginning, there is enough opportunity for growth. And what we have mentioned about INR 1,000 crores is only enablers.

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Unidentified Shareholder, [26]

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Okay. But the [enablers] you have taken. Okay. And if you can throw some light on the Bangalore or the South market in which you have the major presence. How that has grown? And how [fantastic] quality was there? And new sanctions as well. If you can tell about that.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [27]

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Yes. I think the proportion of business from south remains at about 70% to 71%. And given the dynamics in south, largely, the profiles are SEP and salaried. And therefore, even that percentage is about 70-odd percent. Now the balance 30% is from other geographies. So historically, there are certain good markets, some in north, some in west and some in south. So these markets have good repayment culture. So since we have that advantage in South and this is by desire and design both. So the portfolio quality would definitely -- clearly is a good (inaudible). So we see demand coming back in Karnataka. We see Hyderabad and GP market growing. And we are not (inaudible) present in clearing that, so we will try and expand our network in Kerala (inaudible) other states over a period of time.

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Operator [28]

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(Operator Instructions) The next question is from the line of SivaKumar from Unifi Capital.

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K. SivaKumar, Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager [29]

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I have 2 questions.

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Operator [30]

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Sorry to interrupt you, SivaKumar. Your voice is not clear. May I request you to speak on the handset?

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K. SivaKumar, Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager [31]

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I have 2 questions. First, if you can give us a sense of how much do you anticipate the margins to improve over the next 6 months?

And second, in terms of our raising funds, is this deal negotiation currently underway by our parent in any way affecting our ability to raise the funds in terms of [quality] or the price?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [32]

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Okay. Just to answer your first question, I won't be able to comment as to by how much percentage or how many bps we'll be able to grow. But yes, the focus is to grow, and we will explore and look for opportunities in every single market to try and improve our margins.

As far as the second point is concerned, no, it has got nothing to do with the transaction per se. It is -- from a company's point of view, we feel that there needs to be additional capital. And therefore, this enabler is short.

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K. SivaKumar, Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager [33]

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In terms of our institutional funding refinancing, any particular timelines where (inaudible) the higher cost funding to get maybe rolled over and the cost to come down.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [34]

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Our cost is now 7.95%, which is one amongst the best in the industry. We'd want to maintain and further improve positive loan cost in the future as well. It all depends on the market situation. So all our long-term funds are tied up with pretty attractive rates. Only thing is we want to slightly tweak the mix and therefore, there'll be a lot of focus on deposits. And our CP as a proportion of overall in the mix is quite low, and we do want to keep it that way.

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K. SivaKumar, Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager [35]

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But sir, in the opening remarks, you indicated that the cost of fund was 7.9% a year back and it's 7.95% currently. Just -- is (inaudible) any of these numbers?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [36]

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You're right. You're right. So from 7.9%, it has gone up to 7.95%. There is increase in cost by 5 bps. You're right.

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K. SivaKumar, Unifi Capital Pvt. Ltd. - Assistant VP & Fund Manager [37]

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But in the (inaudible) there has been significant cash flow in due course. The significant cuts by the Central Bank should directly affect your funding cost, it should come down. Is that a fair assumption?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [38]

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I won't be able to comment. But if you look at what's happening in the market, if the market condition eases out in terms of reduction in the benchmark, I think that would have some impact in the reduction of cost of funds. So today, we are well placed to get best rates from banks and also some markets. So we will try and keep exploring to keep our -- the cost of funds low.

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Operator [39]

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(Operator Instructions) The next question is from the line of Ritesh [Kahoti] from [Rockstep] Capital.

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Unidentified Analyst, [40]

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My first question is, like, what is our ALM profile as on date? Like if you can provide with some details from the near-term perspective, let's say if, like, after a year or so.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [41]

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Yes. This is Joishy here. Given approximately, we are -- as we have shown what we presented at the annual report about [last year] the same trend has been continually maintained. And as explained by our investors in (inaudible) presentation audios, the commitment up to March, what we require [and] what we hold. We have around INR 300 crores extra points in the (inaudible) assets. And consequently, we have a couple of brand sanctions also, which are in a negotiable stage. We have an unutilized market exposure to the extent of INR 4,600 crores with [debt]. So with all these revenues, the liquidity (inaudible) around the (inaudible) is more comfortable in taking care of future projected expansion also. There is no mismatch in the year-end as of now. And we have hope, we (inaudible) as what we projected.

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Unidentified Analyst, [42]

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Okay. So we would be comfortable with our targets to meet.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [43]

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Very much comfortable.

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Unidentified Analyst, [44]

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Okay. And lastly, like, on a yearly basis, like how do we see our asset quality to be? Like, will it be in (inaudible) market, like [NPA level] 0.62% and 0.43% on a full year basis? So do we expect to be in line with that kind of number? Like it will be better or worse according to...

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Girish Kousgi, Can Fin Homes Limited - MD & Director [45]

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Our NPAs, going forward, incrementally, new additions should keep dropping, number one. Since we are maintaining the [roll off] profile mix, geography mix, product mix, all those things impact or rather we are trying to improve from our current position. So our incremental NPA should be -- should keep dropping in the quarters to come.

The reason for saying this is on 2 fronts. One is the book, what we're originating is not that risky on comparable terms, A. B, we're holding a lot of stock, which we can try and either initiate total closures under the (inaudible) or [payment]. Since we have seen more than 100% recovery on costs, we are in a comfortable position to bring this percentage down.

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Unidentified Analyst, [46]

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Okay. Lastly, what is our PCR ratio as on date?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [47]

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35%.

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Unidentified Analyst, [48]

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Are we, like, comfortable with that?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [49]

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Yes. We're comfortable.

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Operator [50]

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The next question is from the line of [Gaghar Shach] from CD Equisearch.

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Unidentified Analyst, [51]

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Yes. So my question is, what are the type of assets in stage 2 loans?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [52]

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Stage 2 loans are consisting of those loans which are in the 30 to 60 and 60 to 90 days -- no, it is 0 to 30 and 30 to 60 days.

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Unidentified Analyst, [53]

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Great. And sir, what would be the median size of these loans?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [54]

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Our ticket size is about INR 17 lakhs, INR 17.5 lakhs.

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Unidentified Analyst, [55]

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No. I meant, sir, for stage 2.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [56]

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The same -- it was [directly] remain the same asset 50-50. I'll give you the right -- it's about INR 17 lakhs.

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Unidentified Analyst, [57]

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Okay. So sir, no majority of LAP or site loans here? Are LAP loan composition is (inaudible)

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Girish Kousgi, Can Fin Homes Limited - MD & Director [58]

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LAP is about 5% and plot is 1%. So 94% is as good as home loans, only because top of the category is nonhome loan. So you say 89% is home loan and 11% is nonhome loan. If I exclude LAP and plot, it's -- 94% is home loan and almost our 99.8% of lending is to individuals.

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Unidentified Analyst, [59]

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All right. Got it. And sir, could you just give me the highest exposure to your LAP book?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [60]

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We have about 60 cases, more than 1 proof. So you can -- I'm doing overall, this is overall, all the LAP, HL, all products put together. LAP could be hardly -- I don't even remember how many cases. We have exposure of INR 1 crores from LAP. We can come back to you on that. We don't do chunky loans. We generally operate between 10 lakhs to 25 lakhs, 30 lakhs kind of ticket size. So our more than INR 50 lakhs is about 4% and more than 1/3 is -- I think less than...

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Unidentified Analyst, [61]

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Less than 1%.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [62]

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0.5% or 0.6%, yes.

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Operator [63]

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The next question is from the line of Shubhranshu Mishra from Bank of Baroda Capital Markets.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [64]

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My first question is slightly conceptual. I just want to understand, given that we have a focus on Tier 3, Tier 4 cities and on salaried class, how do we compete for the likes of PSU banks like SBI, which have better cost of funds than us? Why should the salaried class in Tier 3, Tier 4 [prefer] choose us versus SBI?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [65]

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Very good question. See we are not competing with banks. We are not competing with banks.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [66]

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Right. So how do we source the salaried customer in that case?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [67]

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Exactly. So our profile would be different since we are focusing on Tier 2, 3, 4. So in these markets, so there is less competition from banks. And we have a good (inaudible) service. We have various sourcing models, and our TATs are better and our advice to customers on the property, on legal and technical presence is far superior. And therefore, we are able to grow business in these markets. We do business in big cities as well, but that is not within the city. It will be the outskirts because now, since the competition is not banks, we -- there could be 10%, 15% overlap because whichever market talk about, we have (inaudible) and banks all over northeast locations.

However, considering our product proposition, our service TAT, in order to get better business and better share.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [68]

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So if I understand it correct, you're trying to put across that the salaried customer in Tier 3, Tier 4 city is interest rate agnostic. You would come to us that we are charging almost 10.2% on a portfolio basis. Whereas SBI would get me a loan at around 8.5%, 8.6%. So are these salaried guys willing to pay us 200 bps more?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [69]

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In the small market, these are not price-sensitive markets compared to top cities. In top cities, not [fixed] like this. If higher the loan, better is the negotiation, which happens on pricing. The lower the loan amount, they're not that rate-sensitive. At the same time, we screen the profile, and we are available there at customer's place. And therefore, we are in a better position. As I told, it will not just salaried, it is salaried and SENP also. But depending on the geography, the mix could vary since we are present in most of the geographies there, the salaried in the city profile, our proportion is more. Our portfolio [competition] is (inaudible). Once you go towards north, of course, you would have a slightly higher proportion of self-employed nonprofessionals. But at the enterprise level, we want to be largely skewed towards salaried and SENP.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [70]

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Sure. And my next question is understanding your risk management, how many people do we have in the collections team? How many collection agencies we have? And if you can explain with the entire architecture of the risk management?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [71]

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Okay. So let me start from onboarding. So we operate a little differently than the other institutions. Every customer is being met by our employee, every single customer, right? And we have a model base. The branch does collections. So we have a check and balance for underwriting where we have [five] centers where the file gets processed for certain value and above. Otherwise, our model is a branch model, where the branch team does sales, a little bit of underwriting with check and balance and collection.

Now we also have a vertical. Basically, we have different strategy for different buckets. For soft bucket, we use the branch. For hard bucket, we use a vertical team. We use agencies. So it is a blended model. So it's not completely agency model. It's not completely branch model. So we have a blend to manage ex-bucket and down. We have a different methodology to manage the early buckets. We use the branch style because it will be far more efficient and easier to collect. Hard bucket, we use agency...

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [72]

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Right. Sorry to interrupt you. Just can you give me some numbers? What do you define as early bucket because it could be different for different agencies. So what do you define as early bucket? How many people you have in the collections who are on the team.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [73]

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So basically, up to 60 days, we really look at. So X bucket and 1 to 60 as early bucket. Okay. 61 to 90 and 90-plus will be hard bucket. So -- and anything more than 180, for example, you would use your agency if you see there is a need. So it is a very flexible, it's a city-specific, geography-specific kind of need. Based on the lead we try to manage this.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [74]

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Right. How many people in the collection vertical: 61 to 90? And how many collection agencies you have 180 DPD plus?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [75]

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So that will be very difficult for me to give you our trend for the simple reason. See, for most of the territories, let's say, in South, we were able to do some branch model. For certain categories, we're using vertical for certain (inaudible). For certain geographies, we're using agencies. So because our total entire staff will be in [northern] collection of early bucket. Managed bound to [renew] X bucket to take a call, to visit customer and collect an early bucket. But typically we'll give you a number. It is more, obviously. What we have done is we've tried to have the blenders both centralized as well as decentralized. So early bucket is more of decentralized, it's strategy being driven centrally, whereas in the hard bucket, we use a vertical. We use agencies and also from centrally, we drag this.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [76]

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Okay. Sure. And just 1 last question. This is a data-keeping question. What is your borrowing number for the first quarter and second quarter? And my request is to please mention this on the investor presentation. It was never mentioned on the investor presentation.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [77]

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Yes. (inaudible) This is Joishy here. (inaudible) that will be incorporated in the next presentation about the size of what we borrowed. The borrowings -- what we did, we do with some of the banks as well as from the market borrowings is only for the purpose of cost leveraging, but not for the long-term lending because [we're able to] keep it in mind. So according to this, the borrowings generally goes at the rate of around 60, 40 percentage assets of the total lending and commitment and (inaudible). We have disclosed earlier in our presentation, obviously, with the commitments what we have had. In the earlier part I disclosed. This is at the same rate that this is going on past also. Future also, we will [the same rate].

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [78]

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Got it. Just on the number for first quarter and the second quarter. What was the total borrowing as of first quarter and the total borrowing as of second quarter?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [79]

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As of now, I don't have the number with me with (inaudible) asset. We will revert back to you.

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Operator [80]

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The next question's from the line of Digant Haria from Antique Stockbroking.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [81]

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(inaudible)

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Operator [82]

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Sorry to interrupt you, Digant. May I request you to come little closer to the phone. You're sounding distant.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [83]

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Yes. Congrats to the whole team. My question is, what is our lowest lending rate right now?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [84]

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So I can talk about average, okay. Noted to be about 9 -- it depends, here actually (inaudible) between 8.5% and 9%. We would hardly have some 1% or 2%. And also, if you ask me, technically, what is lower, it would be 8.5% or 8.6%.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [85]

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Okay. Okay. Okay. Perfect. Perfect. So I got it. So roughly, everything starts at 9% and 9% and above, right?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [86]

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Actually very clearly, the focus is on spread, and therefore, we'll look for opportunities in markets where we can price differently and into the spread. That's the focus. And therefore, we are not in major cities competing with banks. Banks are not a competition.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [87]

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Right. Right. Right. And if you can just talk a little bit more on, especially the state of Karnataka because even that has been probably growing at the slowest pace in our whole portfolio. And then generally, like what do you see on grounding the new areas which where you are going? Like is it that -- we are going at the pace we are comfortable? Or is demand not there? Or is competition high or just any flavor on this as Can Fin versus other HFCs that you see around?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [88]

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See if you actually look at Karnataka, that (inaudible) just said earlier about now the demand is coming back and we can see there is increase in outstanding and there's a growth of 7%. So what we're trying to do is that (inaudible) in Karnataka, in other markets in South as well as in other markets across the country.

So when we talk about demand is there, I'm basically talking about small locations where predominantly loans would be given, either for purchase of house, which is ready, which is the sale or for construction on the plot or it could be plot purchase and construction and dependent on developers would be low in this small market. So -- number one. And therefore, any company we should focus on their 2, 3, 4 kind of cities. Their dependence of business would be less because we'll have very few builders there. And even if there are certain projects, it will be low rise. Number of units would be lower, and therefore, very easy to assess and manage the completion risk.

These small markets because of comparatively less competition, you would be able to better [higher deed].

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [89]

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Right. And sir, my question a little more on that in your existing markets, are you seeing a reduced competition because people talk about SBI and stuff, but I think SBI also does not do any home loans below 8.56. If you add everything to that 8.05, there are -- they hardly give any loans below 8.6%. So in your existing areas where you've been strong traditionally, is there any sense of gaining market share or lower competition?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [90]

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See -- okay, since last 1 year, there have been issues on liquidity. So what has happened is on the demand side, demand is still there. On the supply side, there are 2 things impacting. One is, of course, projects. New projects are not coming up. And the old projects, which was not finished, is not getting completed. So this is first challenge. And the second challenge is on liquidity. So many small players are not able to get funds. And even if a few are able to get funds, the rate would be much, much higher. Because of these 2 reasons, a number of lenders have come down. And therefore, to that extent, market is available, but yes, if you are operating in a geography where there is competition from banks because all banks have (inaudible) funds. And definitely, their pricing would be much lower than any HFC. And therefore, it is extremely difficult to compete as it will -- there could be an overlap of over 10%, 15%. Otherwise, it's extremely difficult. And therefore, we should look for segments and geographies where we can try and, a, grow; b, get better [fees]. So as far as Can Fin is concerned, we don't -- we have not seen any challenge in terms of growth and I feel that for the next few quarters, this growth would be impact even though market has shrunk. Even though market has shrunk, growth could be intact for Can Fin for the simple reason that some players have either slowed down or stopped funding, and therefore, overall market is good enough.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [91]

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Perfect. Perfect, sir. Sir, and lastly, this INR 1,000 crores capital raising, if you can just put these whole 2 things in perspective that, one (inaudible) it just keeps on moving around sometimes. What does the bank think and whatever we can comment on that? And that, in conjunction with this INR 1,000 crores capital [raise], should we see these 2 events independently? Or these are connected events? So whatever you can dare to talk in public domain.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [92]

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I think the [stakes still pull along]. I think at the right time, we will know outcome of that. And capital raising would be decided maybe after some time. So as of now, we are not giving talk to that. Of course, we are just totally [enabled] in saying that we will need about INR 1,000 crores. So we will decide on that maybe after some time.

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Operator [93]

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The next question's from the line of Kunal Shah from Edelweiss.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [94]

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Yes. So what is the proportion of the Stage 2 assets?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [95]

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Kunal, this is Joishy. Stage 2 assets, as we told earlier it is a (inaudible). It is (inaudible)...

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [96]

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No. No. What proportion of assets are there in Stage 2?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [97]

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That's what I'm going to (inaudible) on that point. I'm just giving (inaudible) information that (inaudible) on Stage 2. It is less than 3% of the total book liability.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [98]

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Less than 3%.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [99]

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It's exactly -- it's 2.67%.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [100]

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Sorry? Two point?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [101]

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.67% (sic) [2.67] to be concise.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [102]

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Okay. Okay. And just when we compare with one of your peers, okay, which isn't it more or less a similar profile base incomes of customers INR 25 lakhs is also somewhere around 10.2-odd percent. There, we have seen a very sharp rise in GNPL, particularly on the individual side and on the salaried side. But somehow, maybe we have been broadly been able to sustain. So what could be the reason for this kind of disparity between 2 of the players into the similar category of maybe either the customer profile or geographies?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [103]

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I don't know whom you're comparing with. I think I can talk about Can Fin. I don't want to compare with anyone, but I'll talk about Can Fin, why our asset quality is good and why it's even good going forward. There is a full-side broad reasons. One is, as I told, we focus more on salaried than SEP, which is, in comparison, better profiles, a; b, we focus on largely affordable, which means a lower ticket size. So [that's not as] much risk and just in case, if you have to liquidate the asset, you would not make loss, at least on the principal amount.

Number three, we operate in geographies. We look at collaterals, which are safe with a sense we focus on residential property and commercial property. We are not into lending alternate collaterals. We don't do that. And we largely consider declared income for our assessment. And all our variance is based on declared income and nothing is of surrogate. So because of these 4, 5 reasons, asset quality will remain good.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [104]

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Okay. And any sell-downs during the quarter in terms of the entire [parcel] (inaudible) [scheme], which has been there? Have we done any sell-downs during this particular?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [105]

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No. we haven't done any.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [106]

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Okay. And lastly, in terms of the entire disbursement target, what we highlighted in terms of SLR liquidity schedule, so maybe even the last time we highlighted that in Q2, we will be doing around about INR 1,300-odd crores. But thereafter, particularly on the disbursements compared to what one highlighted last time of INR 1,350 crore and INR 1,450 crore, now this quarter, we have revised it to INR 1,650 crore and INR 1,850 crore. So what gives us this kind of confidence? Maybe it's more on the supply side that we are comfortable and that's the reason we see this coming through? Or is it more of the demand and reduced competition?

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [107]

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Yes, this is Joishy. In the earlier question, we would have heard that capital [management] has come down to 18 (inaudible) [18] rate has come down 1/2 percent of that. At that time, we disclosed (inaudible) that we haven't changed the [mission] but not the (inaudible). Because of the [Indian government], they (inaudible) have been come down from 19-plus to 18.88. That amount is (inaudible) disbursement now. Because of that, the response is going to pick up. Further (inaudible) that is why we have projected a higher disbursement fee.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [108]

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So broadly, as a company, we see an opportunity here for next, let's say, 6 to 8 quarters. Without changing the risk profile, if we can grow better than market rate, we see this as an opportunity, and therefore, we have -- pretty confident on achieving the numbers what we have declared.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [109]

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Okay. And 1 last data point. If we can give the GNPL breakup between the salaried and SENP.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [110]

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Okay. So our salaried and SEP (sic) [SENP] is about, in terms of percentage, it's 0.47% and SENP is 1.57%. Stand-alone, whether it is SENP or salary, it is far, far significantly better than what you get in the market. But yes, for Can Fin, if you look at the profile, SENP is higher -- much higher than salaried.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [111]

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And last quarter?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [112]

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Sorry?

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [113]

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In Q1, how much is -- was it salaried and SENP?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [114]

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Let me -- so this is at the portfolio level I'm taking about because our incremental NPA's in a declining trend. I've not checked it, but it should be in the same proportion, I guess, or maybe slightly, SENP would have come down because we have taken some action in Q2 and [winter] also will take.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [115]

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Well, sir, this increase, which was there in GNPL you highlighted, it is largely on account of SENP.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [116]

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No. No. No. I guess I didn't say that. I'm saying, out of my total NPA, the mix is like this. So SENP would have a higher percentage compared to salaried. Not entirely incremental in Q2 is [going to] same thing. No. It could be same. I need to check that, but I think it will be almost same mix. I need to check that.

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Operator [117]

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The next question's from the line of [Bonita Janney] from BNP Securities.

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Unidentified Analyst, [118]

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So if you see the disbursement numbers, it has been coming down over the last 2 quarters as compared to the Q4. Any specific reason for this [being]? And how do we see this going away?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [119]

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Okay. Let me -- I've spoken about market opportunity and focus on asset quality. So when there was -- see, in last 18, 24 months, there is stress, especially in home loan market, right? So we were also quite watchful in terms of trying to scale up in which geography and which product, which segment and stuff like that. So now we see Q2 being better than Q1. We see a lot of opportunity. But going forward, this will go up.

And if you compare H1 of last year to H1 of this year, it's been flat.

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Unidentified Analyst, [120]

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So we expect...

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Girish Kousgi, Can Fin Homes Limited - MD & Director [121]

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More because of another market situation. And also that we wanted to focus on asset quality and other parameters rather than growth.

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Unidentified Analyst, [122]

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All right, sir. And in terms of the asset growth, -- loan asset growth, how would you -- how do you see the second -- I mean, second half of the year going ahead in terms of growth?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [123]

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So what has happened is that, given the market situation, the foreclosures have come down, and we see growth potential in the next couple of quarters. So there should be a slight increase in the growth of book as well because of these 2 factors. One is growth and second is a focus on (inaudible).

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Operator [124]

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The next question is from the line of [Rochelle] (inaudible) from NIV Investment.

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Unidentified Analyst, [125]

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[Rochelle] (inaudible). My questions have been answered.

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Operator [126]

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The next question is from the line of Anand Bhavnani from Unifi Capital. Anand Bhavnani, your line is in the top mode. I would request you to go ahead with your question. May I request you can mute yourself from the handset, please. Due to no response, we will move to next question, which is from the line of Yash Agarwal from JM Financial.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [127]

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Hello?

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Operator [128]

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Yash, may I request you to come a little closer to the phone.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [129]

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Hello. Hello?

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Operator [130]

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Yes. We can hear you better now.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [131]

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Yes. So I had a question on your yield. So I believe in the month of August, you've cut your -- the lending rate by 35 basis. So is the peak -- this -- the 10.2% -- 10.22% number that we're seeing, is this the peak yields post to that? Secondly, is there a requirement to further cut yields, given the larger players have become very aggressive on the below INR 30 lakh segment?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [132]

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It depends on the market situation. As far as the spread is concerned, we want to improve the spread. If net cost comes down, maybe I would reduce the yield. If my cost, by chance, goes up, I will maintain the spread, an incremental spread. Therefore, my yields also would go up. So it depends on the opportunity available in the market and the market situation with respect to interest rate movement.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [133]

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So at the current level of yields, there is demand coming in for you, right? I mean...

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Girish Kousgi, Can Fin Homes Limited - MD & Director [134]

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Yes. Yes.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [135]

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And has balance transfer increased? Or is there any sense that it is going to increase going forward?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [136]

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Yes. Going forward, BT-in would increase for Can Fin. I'm talking about the company. BT-in would increase. BT-out will come down.

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Yash Agarwal, JM Financial Institutional Securities Limited, Research Division - Research Analyst [137]

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So you are getting aggressive to buy loans?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [138]

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It's not aggressive. It is the normal growth without compromising on the risk profile. Since there is market and opportunity for growth, so we want to capitalize on this.

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Operator [139]

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The next question is from the line of Nirmal Bari from Sameeksha Capital.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [140]

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Most of my questions have been answered. Just 1 thing on NCD issues. For the past 5 or 6 quarters, we have not issued any NCD. So given how the cost of funds having moved in the markets, do we expect any NCDs within the near future to further lower costs on...

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Girish Kousgi, Can Fin Homes Limited - MD & Director [141]

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Yes. I'll answer this in 2 parts. Why we haven't raised NCD in the near past is that given the cost of raising the NCDs was much higher than the available rate from banks. And therefore, if you look at our brand [balance] have gone up because we are getting fine rates sometimes. Okay. That's the reason. So what has driven in the past is predominantly cost of funds. Now of course, there are certain stipulations by SEBI and therefore, going forward, we will try and -- we'll make an attempt to raise NCD. Only -- the only difference is in terms of cost. So we'll try and see how best we can try and keep it low.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [142]

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At present, do we see it as a competitive pricing or so even now the pricing is higher?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [143]

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There will be some difference, but may not be significant. When I say some difference, NCD rate could be slightly higher than bank.

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Operator [144]

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The next question is from the line of Augustya Dave from CAO Capital.

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Augustya Dave;CAO Capital;Analyst, [145]

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Congratulations on good numbers and...

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Girish Kousgi, Can Fin Homes Limited - MD & Director [146]

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You're not audible.

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Operator [147]

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Augustya Dave, your line is not audible, sir. Your voice is breaking up, Augustya. Can you please check? Augustya, may I request you to check your line and come back in queue. In the meanwhile, we will move to the next question, which is from the line of Mahesh (inaudible) an individual investor.

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Unidentified Shareholder, [148]

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I think this question was already asked, but I want to go back and confirm again. So your last -- Q2 '19, your loan book growth was higher than Q2 '20. So considering there is lesser competition, you've got more branches, you've got more employees, so do you still see challenges in growing the loan book? And after this, I have a follow-up question.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [149]

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We -- as I mentioned earlier, we see an opportunity for growth. We talked about changing the risk profile. And therefore, we want to stay focused on growth with asset quality and with better margins. So we want to grow in next few quarters.

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Unidentified Shareholder, [150]

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Okay.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [151]

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Actually, quarter-to-quarter (inaudible) has grown.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [152]

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So this is Joishy. Actually, there is a growth if we can grow profitably. There will be (inaudible) around INR [1,185] crores is incremental (inaudible) last year and talking about September '18 compared to INR 1,218 crores this H1. [Around 6% to 4%] growth (inaudible) we are going step by step without making an aggressive decision (inaudible) asset, but it's on the incremental part.

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Unidentified Shareholder, [153]

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Okay. Okay. Mr. Girish, this question is largely for you. So I see about INR 40,000 crores target loan book going forward in last -- in next year. But considering you are growing at an annual about INR 2,500 crores in the past couple of years and considering the challenges in the market, the slow in the real estate, do you still think that can be achieved? Do you want to re-strategize this? Or do you want to change the number? Or do you want to keep that number and go with vigor and more spirit?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [154]

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Very good question. Our focus is going to be on growth, profitability and asset quality. Now as of now, we want to go with a vision of INR 40,000 crores. I'm not saying we do not have a need to relook at that number. At this point in time, we have not because we don't know how the market will unfold, let's say, 3 to 4 quarters from now. So if liquidity position improves, if the demand comes back the way it was earlier, what is looking now, it is possible. So we just want to give some more time to assess this INR 40,000 crores. So maybe we will take another quarter or 2 to judge and decide whether we should go with INR 40,000 crores or maybe some peaking is required. But very clearly, the focus is on growth, profitability and asset quality.

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Operator [155]

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The next question is from the line of Augustya Dave from CAO Capital.

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Augustya Dave;CAO Capital;Analyst, [156]

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Sir, most of the questions have been answered. I had 1 question. Yesterday, RBI has come out with a circular regarding liquidity buffers for NBFCs to be put in place by December 2020. So how are we placed? And what would be the additional cost of -- following those loans? That is first question. And second, sir, you were replying to someone where you mentioned BT-out and BT-in, so I missed the entire conversation. If you could repeat so that would be very, very nice, sir.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [157]

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Yes. I'll answer the second question, leave first question to Joishy to answer. So what I meant was we are -- BT-in is basically doing the loans from other institutions and BT-out is our book depletion. So our book depletion would reduce the pace and I know BT-in would increase.

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Augustya Dave;CAO Capital;Analyst, [158]

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So the depletion part, it -- that highest number I calculated as a percentage of the previous period book and it used to -- it almost reached like 18%, 19%. You are losing a lot of your book through prepayments and repayments. So where do you think long term it will settle at? Can we go back to -- I've seen in few quarters, you guys have been 11%, 12% also. So will we go back to that level?

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Girish Kousgi, Can Fin Homes Limited - MD & Director [159]

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It will be difficult to answer this question. But the only thing is I can say are BT-out, at least, for next few quarters will be low. So another 4 or 5 quarters, -- 4 to 6 quarters it will be low. After that, it all depends on how the market...

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Augustya Dave;CAO Capital;Analyst, [160]

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I understand.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [161]

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So for example, let's say, if everything goes well with respect to market, liquidities, a lot of players come back into business, then, of course, the (inaudible) will be [okay] because 18%, 19% because we are in the same market. And there is a differential in price and customers will try to leverage that. So at least for next 4 to 6 quarters, yes, BT-in will be more and BT-out will be less.

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Prashanth Joishy, Can Fin Homes Limited - Head of Finance & Accounts [162]

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This is Joishy. Regarding your cost question about the maintenance, what is proposed by the RBI as such, this concept also clearly (inaudible) 6 months back (inaudible) also. See at that time only, we had started (inaudible) requirement (inaudible) and all these things. So keeping that in mind only, we are [reading] (inaudible) calculation and presentation. And as you might have been heard (inaudible) commitment for the next 6 months, we have announced a surplus of around INR 300 crores to INR 400 crores informed there. That has been kept -- only keeping this (inaudible) asset also in the (inaudible). So the stress for this maybe next to 2 to 3 quarters may not be that much. But going forward, taking into consideration the volume of book growth and all these things, we have to do a detailed study and do it [as such]. But as the comments [write] in the media, yes, that is going to be little strength of the cost of funds and the return assets, but we have to do the detailed analysis and then we can (inaudible) comment in detail in this figure.

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Operator [163]

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Any other question, Augustya Dave?

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Augustya Dave;CAO Capital;Analyst, [164]

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No. Thank you.

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Operator [165]

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Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

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Girish Kousgi, Can Fin Homes Limited - MD & Director [166]

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Thank you very much for staying interested in Can Fin. We'll assure that we'll try and do our best in terms of growth, in terms of asset quality and in terms of profitability. That's our vision, and we want to stay focused on that. These are difficult times, but we are very confident and hopeful of maintaining and coming out with good results quarter on quarter. Thank you very much.

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Operator [167]

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Thank you. On behalf of Investec Capital Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.