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Edited Transcript of CHOLAFIN.NSE earnings conference call or presentation 31-Jul-19 4:30am GMT

Q1 2020 Cholamandalam Investment and Finance Company Ltd Earnings Call

Sep 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Cholamandalam Investment and Finance Company Ltd earnings conference call or presentation Wednesday, July 31, 2019 at 4:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Arul Selvan D.

Cholamandalam Investment and Finance Company Limited - Executive VP & CFO

* Arun Alagappan

Cholamandalam Investment and Finance Company Limited - Executive Director

* Ravindra Kundu

Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager

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Conference Call Participants

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* Antariksha Banerjee

ICICI Prudential Asset Management Company Limited - Investment Research Analyst

* Bunty Chawla

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Digant Haria

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

* Jignesh Shial

Emkay Global Financial Services Ltd., Research Division - Research Analyst

* Kunal Shah

Edelweiss Securities Ltd., Research Division - Associate Director

* Nidhesh Jain

Investec Bank plc, Research Division - Analyst

* Nischint Chawathe

Kotak Securities (Institutional Equities) - Senior Analyst

* Nishant Rungta;Premji Invest;Investment Analyst

* Piran Engineer

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Pranay Rajani

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Rohan Mandora

Equirus Securities Private Limited, Research Division - Analyst

* Sanjay Chunilal Shah

KSA Shares & Securities Pvt Ltd - Director

* Shubhranshu Mishra

BOB Capital Markets Limited, Research Division - Analyst

* Shweta Daptardar

Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst

* Utsav Gogirwar

Investec Bank Limited (SA), Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Cholamandalam Investment and Finance Company Limited Q1 FY '20 Earnings Conference Call, hosted by Kotak Securities Limited. (Operator Instructions) I now hand the conference over to Nischint from Kotak Securities. Thank you, and over to you, sir.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [2]

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Hello, everyone. Welcome to the 1Q FY '20 Earnings Conference Call of Cholamandalam Investment and Finance Company Limited. To discuss the financial performance of Chola and to address your queries, we have with us today Mr. Arun Alagappan, Executive Director; Mr. Arul Selvan, Executive Vice President and Chief Financial Officer; Mr. Ravindra Kundu, President and Business Head, Vehicle Finance; Mr. Rohit Phadke, President and Business Head, Housing Finance; and Mr. Rupinder Singh, Senior Vice President and Business Head, Home Equity.

I would now like to hand over the call to Arun Alagappan for his opening comments.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [3]

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Good morning, ladies and gentlemen. I have great pleasure in presenting to you the quarter ending June '19 performance of Chola finance for the financial year FY '20.

At the outset, I'm happy to state that we ended the quarter with a business asset base of INR 57,494 crores, registering a growth of 27% over the last year. The company has adopted Ind AS 116 leases during the quarter and has recognized operating leases on balance sheet.

The following highlights from Q1 FY '20 performance reaffirms Chola's steadfast growth despite the prevailing adversities in the external market.

Aggregate disbursements for the quarter ended June 2019 were at INR 8,572 crores as against INR 7,014 crores in the same period over the previous year, registering a growth of 22%. PBT for the quarter ended June '19 was at INR 484 crores as against INR 439 crores last year, registering a growth of 10%.

Business assets under management stood at INR 57,494 crores compared to INR 45,361 crores last year, registering a growth of 27%. Assets under management, including investments, grew 35% from INR 46,709 crores to INR 62,827 crores. PAT stood at INR 314 crores for Q1 FY '20. The PBT-ROTA for Q1 FY '20 was at 3.4%. ROE was at 20% in Q1 FY '19 and book value is up by 20% to INR 83 per share as of Q1 FY '20 from INR 69 as at Q1 FY '19.

We have increased our branch network to 999 branches out of which 79% are in Tier 3, Tier 4, Tier 5, and Tier 6 cities. We are well on our way to reach 1,200 branches by the end of this financial year. We have maintained a continued focus on our efforts to reduce the nonperforming assets. As per Ind AS, our Stage 3 asset at the end of June 2019 was at INR 1,671 crores as compared to INR 1,617 crores as on FY '18. Stage 3 percentage to total gross assets stood at 2.97% in June 2019 compared to 3.57% in June 2018. Coverage ratio for the Stage 3 improved to 36.2% as of June 2019 from 34.3% in June 2018. We continue to hold INR 50 crores as micro provisions. As per IGAAP GNPA at the end of the Q1 FY '19 was at 2.6% compared to 3.1% at the end of Q1 FY '18.

In absolute terms, the GNPA as of June '19 were at INR 1,517 crores as compared to INR 1,448 crores as of June 2018. Provision coverage ratio was at 46.8% in Q1 FY '20 as compared to 43% -- 43.9% in Q1 FY '19.

Let me also share with you the business-level performance of Vehicle Finance and Home Equity divisions.

Vehicle Finance has delivered a performance with an all-around improvement in disbursement, asset growth, profits and reduction in delinquencies. The vehicle business grew by 21% in terms of disbursements and 28% in terms of closing assets year-on-year. The business recorded a PBT of INR 319 crores as against INR 275 crores last year. ROA is at 3.1% level.

Over the years, the VF business has diversified its loan book to include products across the spectrum in the automotive sector. In the prevailing scenario of slowdown in the HCV and Car segment such diversification has helped maintain the asset growth by leveraging the product mix in other product segments and focusing on the Used Vehicle business. Adequate liquidity with our company shall continue to support the asset growth in Vehicle Finance throughout the financial year FY '20.

Moving on to Home Equity business. The Home Equity business grew disbursements by 17% and PBT by 48% year-on-year. The business recorded a PBT of INR 84 crores for the year ended June '19 as compared to INR 57 crores last year. Higher recoveries in NPAs supported in the growth. The Home Equity business has been able to improve its ROA level to 2.8% for the quarter ended June '19 as against 2.2% last year. Recoveries continued to be good, leveraging SARFAESI, resulting in higher profitability in this business. The company's capital adequacy ratio as of end of Q1 FY '19 was at 17.6 -- 17.16% with Tier 1 at 12.86%. In order to mitigate the tight liquidity conditions, Chola has been carrying high levels of liquid cash from the second quarter of last financial year and has continued to do so during the current quarter as well. The liquid assets as of June '19 were held in fixed deposits were INR 4,753 crores and balance of INR 591 crores in cash and current account balances with banks. Though this resulted in a negative carry and has adversely affected the net income margins during the quarter, we had pursued this action as a conservative measure.

In the upcoming quarters for FY '20, we look forward to continue on our growth trajectory and ensure value creation for the shareholders. Thank you for -- thank you all for attending the call. Me and my colleagues would be happy to answer any queries now.

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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 Kunal Shah from Edelweiss.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [2]

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Congratulations on the good set of numbers. First in terms of the overall growth, if you can highlight in terms of definitely this quarter has been better for us, but looking at the underlying auto sales if you can give some color in terms of what is the outlook target respective to the overall disbursement growth? And any particular pockets wherein we are concerned about and we are seeing some maybe the competitive dynamics coming up and we were benefiting any of the product segments?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [3]

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This is Ravindra Kundu. Good morning to all of you. See, we have already mentioned in the last earnings call in Q4 itself that we will be trying for 15% disbursement growth, but luckily we have achieved 21%. That is -- the disbursement growth has come because we have got the benefit from the used more, and we continue to expand our product, which we have been continuously seeding for quite some time like two-wheeler, 3-wheeler, tractor and construction equipment. And their market share is in a nascent state and then if you increase little bit disbursement growth can come. So we are hoping that we will maintain this growth trajectory in the coming quarter as well.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [4]

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But in terms of this kind of a mix shift towards the used vehicle, we see overall yields also to be relatively better off?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [5]

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Come again?

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [6]

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Should we see the yield improvement as well given the mix shift towards used vehicle, tractors and other [modes]?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [7]

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That is the objective. If you see that our NIM is still lower than last year Q1 that is because the 10 bps is at the yield level and 20 bps at the cost of fund level. So we want to basically bridge the gap of that 10 bps and hopefully by Q4, we are -- yield will be higher -- book yield will be higher than the previous corresponding quarter of the previous year.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [8]

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Okay. And lastly in terms of the branch expansion, it seems quite significant in this particular quarter. So any locations, I think, maybe broadly the spread across the regions has been maintained even between the rural and semi-urban areas have been maintained. So firstly is maybe why we are looking at this kind of expansion in the branches? Are we likely positive or maybe we are seeing the company's yield coming down and that's the reason we are expanding. So what's the entire rationale behind such an aggressive branch expansion?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [9]

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We have mentioned in the past also that we have a concept of putting up resident locations and once the resident location starts delivering, say, INR 40 lakhs, INR 50 lakhs, we give them small [reminder] which is nothing but the -- by putting up the infrastructure of worth INR 5 lakh. And the person who basically working as the Location Resident Executive, he might become a Branch Manager or we shift somebody from the hub. It is like moving from the district level to taluka level or taluka level to block level. We are opening these branches within the area where we are operating mostly because across the country we are present over there. There are few states we are not present over there. Otherwise, the branches are getting into the deeper location. And if you open up the branches, then it is better to do the collection efficiently. We can collect the money by traveling 20, 30 kilometers from the branch to customer place and that help us to collect money. Second important is that customer service improves, customer can actually come to our office. So both put together without increasing much of OpEx, we are putting up our branches and these branches are being opened up only after getting the result.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [10]

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Okay. So these are mostly in the existing locations?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [11]

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Existing hub. Expansion of hub to location.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [12]

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Okay. Okay. And this would be both vehicle and now Home Equity. So there is no specification in terms of where the concentration is more with respect to the new branches looking at it?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [13]

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So we open up first, then they come later because they are in 250-odd places. So they are going based on their strategy. Definitely, all the branches are co-located.

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Operator [14]

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The next question is from the line of Sanjay Shah from KSA Securities.

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Sanjay Chunilal Shah, KSA Shares & Securities Pvt Ltd - Director [15]

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Congratulations on good numbers and really maintaining the asset quality too, sir. Sir, I read one very nice quote in your presentation. The fundamental principle of economic activity is that no man you transact with will lose then you shall not. Sir, can you highlight because we see the economy in such a doldrum, and we have been growing in a segment where the OEs are bleeding. So what has gone so well? Sir, I will put this question to Mr. Kundu, Ravindra Kundu, sir. Can you highlight what was the heavy gains on wallet share? Or would you get good business and what went so well for us?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [16]

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See in the country, we believe that finance -- more than financing, it is collection is the main business for us. So our 80% time is spent on collecting and understanding the market where we should fund, which customer we should actually focus on, what make, model we should focus on and how many manpower required for collection. Our collection is done by in-house team and we have more manpower in collection than sales because we are also operating into the rural market. They're meeting to the customer, visiting and going, collecting is also a difficult task. Therefore, we have been focusing this as one of the important aspects of our business. So starting from origination, to doing underwriting to [in for] delinquency management to do collection mechanism, we have been fairly using a lot of analytics, lot of manpower and also using a lot of our effort and time to ensure that our collection is actually on top of the (inaudible). And that has helped us to ensure our NPA at this level. And we are expecting that we have started this year much better than what we were at Q1 as a Vehicle Finance. So if we continue to do this kind of collection, our portfolio will further improve by the year-end.

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Sanjay Chunilal Shah, KSA Shares & Securities Pvt Ltd - Director [17]

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That's great, sir. Sir, can you highlight on your construction equipment business? How it is growing? What is the size right now? And what is your expectation on that?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [18]

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So construction equipment, we are doing it selectively. We are not doing it across all application and across all make model. There are selective make models we have selected out of the application. Construction equipment is a vast product, actually. If you see that, it has got excavator, backhoe digger, compact road builder. So we have selected top of each application 1/1 item on 1/1 brand, and we are focusing that. As of now, our building asset of construction equipment is INR 2,394 crores, and we are doing very well with respect to that. But we are not growing aggressively. We are growing slowly. In terms of our construction equipment if you see that our disbursement growth has been 10%.

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Sanjay Chunilal Shah, KSA Shares & Securities Pvt Ltd - Director [19]

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How much, sir?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [20]

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10%. Construction equipment disbursement has been 10% and you see our disbursement growth has been 10% over the same quarter last year.

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Sanjay Chunilal Shah, KSA Shares & Securities Pvt Ltd - Director [21]

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Right. Right. Right. And how do you see the future of that segment?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [22]

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So as of now if you see that in the month of -- in the Q1, the construction equipment number has come down significantly in terms of our overall industry size. And particularly, pick up only when there is a mining activity improves. So as of now, it is actually down, but hopefully from Q4 onwards we can see some improvement, but the overall correction will come only after 1 year.

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Operator [23]

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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 [24]

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My first question is with regards to your employee increase that's roughly around 3,000 on a Q-o-Q basis. How do I read into that, and what is the split of incremental employees into sales, collections and operations.

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [25]

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As you can see, the increase in our...

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [26]

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It's not audible. Can you speak up, please?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [27]

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We have increased our branch network in this quarter by around 100 branches. Okay. Of that, we needed to put people. Also, we have strengthened our collection and sales teams, especially in the context that we are going into low-ticket items, which is like two-wheelers, et cetera. We need to put more manpower behind this. So we have reshuffled our teams both on the sales side and on the collection side, and we have done. Predominant part of this increase is in the Vehicle Finance business more focused on the North and East side of the geographies.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [28]

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Right. Sure, sir. The second question is with regards to your Slide #64 where you are defining LGD and PD according to various categories? So I just wanted to understand your LGD and PD assumptions for the Home Equity business for Delhi, Tamil Nadu and Gujarat if you can give it to me?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [29]

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See what will happen with LGD across those segments where are kept constant because actually we don't have -- we are not have any crystallized losses in any of these regions. What we are trying to do with this segmentation is only to arrive at the PD. The PDs are different for each of these because the way how it moves on into 90-plus is different. And of course, as you know, the north side is slightly higher and that's why we have made these segments separate. But LGD we are following the 20% norm, which has given when you don't have LGD practically then you need to adopt the 20% norm. This is as per one of the guidelines given by us in FAQ. So that's what it is.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [30]

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So what is the PD assumption for Delhi, Tamil Nadu and Gujarat, sir?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [31]

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I will not be able to share individual numbers because I think these are not shared by anybody in the industry also. So I think right now we would not do.

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Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [32]

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Sure, sir. And one last question with regards to data points. Your result update PDF that says an AUM of INR 62,000 crores versus the investor presentation, which has termed INR 57,000 crores. So what am I missing here, sir?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [33]

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The INR 62,000 crores is including the cash balance because that also forms part of the investment. The INR 57,000 -- so the INR 62,000 crores has got cash and bank into it, but it does not have assigned assisting it. The INR 57,000 has got the assigned assets into it, but not the cash in bank. The cash in bank is INR 5,000 crores, assigned assets around INR 2,000 crores.

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Operator [34]

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The next question is from the line Utsav Gogirwar from Investec.

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Utsav Gogirwar, Investec Bank Limited (SA), Research Division - Research Analyst [35]

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Just couple of questions from my side. Can you just let me know if you have increased yields under Home Equity and Vehicle Finance segment in this quarter? And if yes, by how much?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [36]

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The Home Equity yield has been increased across the book, as we spoke earlier. Right now it is trending in the range of around 9.7% overall. Vehicle Finance, we have selectively increased the yield in different product segments. The high-yield product segment it has been moderate and then the low-yield segments we have increased the rate to the extent of anywhere between 30 to 70 basis points across various products. But in the Vehicle Finance segment, the impact of these will be on the end of March statement because the existing book continues with the rates at which they have been disclosed because it is a fixed rate book.

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Utsav Gogirwar, Investec Bank Limited (SA), Research Division - Research Analyst [37]

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Okay. Sir, my second question is on the employee expenses. So we have done a lot of branch addition and employee addition this quarter. But if I look at year-on-year growth, it's just 3%. So what am I missing here, why it's 3%. Is there any of a limit?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [38]

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No, the employee addition is more on the feet on street. The feet on street does not reflect in the cost as a salary because the feet on street actually are employed in a separate company, which is Chola Business Services, but we, with Services, wanted to Chola predominantly. So that comes under outsourcing cost. It might be in the group under Other Expenses, that's where you see the increase. And the other factor is, the incentive rate to them gets amortized in line with Ind AS norms. So only that fixed salary gets charged off fully; the incentives get amortized. As you know, the fee income on the other side is getting amortized. So these 2 generally net off. Earlier we being in the IGAAP, we were charging them -- charging the full expenses in the expenses and recognizing full fee. But now fee is also amortized on the income side and expenses part on the incentive gets amortized. And this incidentally is also netted off in the income line, again, as per Ind AS because Ind AS requires us to net it off with the income. So that's why the expenses may not reflect this increase.

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Utsav Gogirwar, Investec Bank Limited (SA), Research Division - Research Analyst [39]

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Okay. Sir just last question. If I look at the sale of services that has not grown compared to the disbursement growth this quarter?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [40]

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The sale of service is a onetime sort of in some more like an advertisement income that we could get from some of the other companies who use our branches for selling their products. So this income, when we entered into last year, we had a small upfront income coming in to meet the initial costs of making some changeovers in the branches. So that was an upfront -- small part of it was an upfront and the rest is like a 5-year contract, which they will use our premises to advertise their products. So the rest of the period in last year as well as in the current year, it is the monthly income that comes to us.

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Operator [41]

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(Operator Instructions) The next question is from the line of Piran Engineer from Motilal Oswal Securities.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [42]

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Congrats on the quarter. Just a couple of questions. Firstly on the macro front, can you comment on the trajectory of freight rates and fleet utilization? How that has been trending because it seems that, that has been on a downward trajectory in the last couple of months?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [43]

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Yes. That is correct. That's the reason if you see that heavy commercial vehicle sales have gone down significantly and that is one of the reasons for us not to participate in commercial vehicles. Our -- we have also de-grown in the similar way the market has but we have...

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [44]

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No I meant more in terms of cash flows for your customers?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [45]

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Yes. So this is more -- I mean, what you're saying is applicable more to the heavy commercial vehicle, not the light commercial vehicle, those who are utilizing it within the state or operating it for vegetable transportation, autos or consumer goods transportation. The customers who are into the long haul, the customers who are transporting goods from Hyderabad to Maharashtra or Ahmedabad to Calcutta because the IP has come down or the production is not happening. Therefore, obviously, loads available for these customers are less than what it used to be 1 year back. And that is the reason heavy commercial vehicle, especially the medium fleet operators are under stress. The small guys -- those are small road transport operator who can redeploy their vehicle from one route to other route, one product to other product. They're able to manage their show. And we see that the heavy commercial vehicle as of now, these numbers of visits required for collecting EMI has significantly gone up. But in terms of light commercial vehicle and small commercial vehicle, still things are actually going on. Overall, economy is not doing well. That is the reason it is impacting even lights and a small as well. And it is also across the urban and rural. Therefore, there is a tight situation in terms of repayment of the customer. But we see that because we have taken utmost care in terms of sourcing such customers, going by make model, going by our historical data, we have been successfully collecting the money as of now. And therefore, you will see that our target equity is still lower than the last year's Q1.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [46]

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Okay. But in the past, in previous cycles, have we seen that if this happens in HCVs with the lag it also happens in LCVs?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [47]

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Provided agricultural growth also not there. It has happened in 2012, '13 when GDP was down for 2 years, and then it was also supported with low agricultural growth for 2 years. And we saw that lights in a small also had a problem in '14 and '15. This time -- this year at least in spite of monsoon is late, we are seeing that monsoon is picking up and the deficit is coming down, and hopefully this will be better year also.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [48]

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Okay. Sir secondly on cars. In our cars portfolio, we've grown disbursements 40%. If you could just talk a bit more on who are our key OEMs? What is our trajectory out there, the yield on that business? And how are we just really growing so much faster than the industry?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [49]

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One is that because of the lower base. Base effect is important. For example, our market share of Car, which is to be say -- all together, so our Car MUV we put together. We focus more mainly Maruti, Mahindra and to some extent Hyundai. So Car MUV put together, our market share was 2%. Now it has gone up to 3%. So it is because of the base effect mainly, and this entry-level car or MUVs, which is mainly utilized in the rural market because of the branch network and because of our penetration in those markets, we are able to do it, and we are focusing only Mahindra, Maruti and to some extent Hyundai.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [50]

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And what's our yield in this business?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [51]

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Yes. It is good actually.

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Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [52]

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But how do I read good? Like 14%, 15% or is it...

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [53]

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Segmental, we don’t disclose. But it is better than HCV I can tell you.

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Operator [54]

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The next question is from the line of Rohan Mandora from Equirus Securities.

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Rohan Mandora, Equirus Securities Private Limited, Research Division - Analyst [55]

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Sir, given that there is some slowdown on economy, you're adding new branches. Sir, I just wanted to understand like what kind of an OpEx to average we should expect from next 1 and 2 years? Number one. And secondly, if you would share the Stage 2 and Stage 3 in used vehicles and also incremental yields on the new, used and Home Equity?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [56]

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So the expense ratio will be at the opportune levels of around 3%, and we expect it to improve in the sense of reduce as we grow the assets because of the expansion in most of the expenses in the branches we have incurred so far and the next date of branch increase is, I think, mostly at the [tail-end] of the year.

On the Stage I, Stage II, I wouldn't again want to give this. As you know, that many of the industry players also don't give. Right now, we would say that it has not changed -- the composition between Stage I and Stage II has not changed drastically between what we have been reporting either for the past quarters as well as past year numbers.

What was your last question, sorry I missed it?

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Rohan Mandora, Equirus Securities Private Limited, Research Division - Analyst [57]

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Incremental yields under the new, used and Home Equity?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [58]

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The incremental yields on the Vehicle Finance has gone up by around 60 basis points as compared to last year. And we are -- as per our internal workings, this will start showing up from Q3 onwards in our overall closing efforts. So that yield improvement you'll see from Q3 onwards and if the cost of funds by then is either held at the same level or reduced, we will see a drastic improvement in NIM.

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Rohan Mandora, Equirus Securities Private Limited, Research Division - Analyst [59]

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Right. Sir, one of our competitor like (inaudible) has also shown good numbers in vehicle finance disbursements. There the incremental yields have gone up by around 140, 150 basis points in the vehicle business, and we have increased by around 60, 70 basis points. So just trying to understand like in order to gain market share we are keeping it lower? Or something else is that?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [60]

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Q1 is typically a school bus season. And during this particular season when we finance the school buses, school buses are funded at a finer rate because portfolio quality is also fine. And that is what always Q1 is lower. And then Q2 onwards, the yield will go up, Q2, Q3, it goes up and then Q4, it comes down. That is what is the trajectory, and therefore, we are as per -- we are in line with that. So our Q1 book yield -- sorry, marginal yield minus fee has gone up by 62 basis points in this quarter. And in Q2, I think we will do much better than that, so it will go up by 80 basis points or 90 basis points, I'm expecting that.

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Operator [61]

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The next question is from the line of Bunty Chawla from B&K Securities.

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Bunty Chawla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [62]

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Congratulations on a great set of numbers, sir. Sir, on the asset quality front, we have seen slightly increase in the gross [NP] per se. So can you share how much was due to vehicle financing? And how much was due to Home Equity? Because previously what we were guiding or what we were seeing that there was a good amount of resolution in the Home Equity per se. So -- and on that also, the data point if you can share?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [63]

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The asset quality in every Q1, it tends to be slightly moving up as compared to the Q4 numbers. And you can go through the past few years also and you will find the same trend happening and this is what is sort of typically in any year, and that's what you're seeing here. As a matter of fact, the extent of spike that happens in Q1, normally, we have been able to control it to a much greater extent over the last year as well as this year. And as compared to earlier years, you will see that this spike or the bounce-back on the NPA numbers have been much, much [less]. Then you need to also see that you would see the similar trends in others in the industry also, and I'm sure if you compare the numbers, you will see that the same pattern happens with the rest of the players.

Between Vehicle Finance and Home Equity, the Home Equity numbers have come down actually because we still are leveraging the recoveries on whole of the SARFAESI and these numbers are coming down and that's why we have a reduction. Vehicle Finance has a little bit gone up and that is, as I said, basically [seasonal demand]. And this trend will start coming down from Q3 onwards. Q2, it will remain flattish or maybe marginal improvements from today. But Q3 and Q4, you will see drastic deductions. This is the trend you can go through the numbers from the past for us.

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Bunty Chawla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [64]

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Okay, sir. On the data point, in the Home Equity part, out of INR 265 crores under SARFAESI, we have got already INR 160 crores, INR 170 crores of recovery. So any addition on that during Q1?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [65]

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For Q1, we did some reduction.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [66]

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On SARFAESI particularly, it is around -- so on SARFAESI itself, it is around INR 24 crores what we are due in Q1. So this is a trend and going forward, I think it will continue for a quarter or quarter 2, something like that in the same way.

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Operator [67]

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The next question is from the line of Pranay Rajani from B&K Securities.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [68]

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Congrats on a good set of numbers. Just a small data keeping point. If you can just provide the gross NPA numbers for Vehicle Finance and Home Equity segment that would be great?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [69]

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You want gross NPA number as per the...

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [70]

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As per Ind AS, sir.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [71]

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As per Ind AS. As per Ind AS, the gross NPA number is around -- 2% for Vehicle Finance. Can you hear me?

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [72]

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Yes, sir.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [73]

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2% for Vehicle Finance and around 5% for Home Equity.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [74]

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Okay, it's not audible, can you please repeat it, sir?

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Unidentified Company Representative, [75]

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Vehicle Finance 2%. From this, 2% has come down from 2.55% of June '18, and similarly 5.5% has come down from 6.7%.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [76]

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6.7% was the last year same period, it has come down to 5.5%

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Operator [77]

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The next question is from the line of Nidhesh Jain from Investec.

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Nidhesh Jain, Investec Bank plc, Research Division - Analyst [78]

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Sir, on the growth aspect, given your own commentary is slightly bit concerning on the -- on the concerns in the fleet operator and the transport segment and we continue to hear that there is a quite a bit of stress in the SME segment primarily focusing on your HE portfolio. So what give you confidence of such strong growth of this quarter, given the environment is so volatile and concerning? So are we tracking any forward-looking data points, which give us confidence that the lending that we are doing right now is probably pretty good, the quality of the lending is good?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [79]

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Yes. See, Vehicle Finance, if you see that, I have mentioned that the capacity utilization and the freight and all is more towards the heavy commercial vehicle, where we are not growing or we de-grow by 32% in heavy commercial vehicle as against the industry de-growth of 30%. Our growth has come from the used and as we mentioned that, we have rural branches wherein car financings are also happening, there also we got the growth. And our core product like commercial vehicle, small commercial vehicle, there also we are doing better. In addition to that, we have also improved our market share little lately in tractor, two-wheeler and construction equipment, there is slight amount of improvement. These are happening based on our underwriting models that we are using it and we are tightening our underwriting models time to time. Our early default, in fact delinquency is the biggest indicator of how the portfolio is behaving. We are seeing that those parameter like early default nonstarters are actually continuing to coming down. So therefore, we are quite comfortable with this in terms of Vehicle Finance. Arun?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [80]

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And if I talk about Home Equity particularly, it has been observed through analytics also that more into the retail size, smaller ticket size, it behaved much better than the bigger ticket size. So focus going forward is more on the retail side as well as moving to the new markets like Tier 2, Tier 3, where the impact of these things are comparatively less. And obviously to track this for future, the important piece around here is again an early default and how the Stage 2 is behaving. So both of these 2 categories are in control. And it looks like the couple of quarter is where we can show the planned -- we'll be able to maintain the plan -- that budget what we planned at the start of the year.

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Operator [81]

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The next question is from the line of Antariksha Banerjee from ICICI Prudential Asset Management.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [82]

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Two quick questions. One is on the liquidity front. Can you please help me with what is incremental cost of borrowing you're deploying each instrument at? And this cash balance of INR 2,000 crores, which is increased in this quarter, if the situation prevails the way it is today, how do you see that balance -- I mean, are you keeping it as a percentage of your disbursement of your assets? What is the thinking there?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [83]

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See, the incremental cost is in the range of around 50 to 60 basis points and primarily this is from the bank lending, where we borrow from the bank. The cash balance with the way we keep it is, we try and keep 2 months of maturity as cash balance or 2 months of maturities primarily. We are also, on the other hand, evaluating the new guideline, which is given by RBI on the liquid cover ratio and trying to see that how to -- in that scenario, how do we bring -- keep the adequate cash. While the provisions of that draft guidelines is little onerous, but we feel that RBI will go forward with the same features of what they've asked for because primarily it reflects the Basel III norms. And as they are bridging the gap between India's seasoned banks, these LCR conditions may not be changed too much. So we need to build that, and accordingly, we need building this liquid cover ratio by maintaining these high-quality liquid assets, so which is -- which we don't want to play with various GSEC, et cetera. And we want to keep it as simple fixed deposits and cash in hand.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [84]

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Okay. So this will remain as broadly what you're saying?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [85]

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This will remain more or less at similar levels.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [86]

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Okay. And the second question is for Mr. Kundu, you said construction equipment growth is 10%, is that right?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [87]

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Our disbursement growth, I said. Our disbursement.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [88]

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In construction equipment?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [89]

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Yes, construction equipment, like our overall disbursement growth is 21%. In that, for construction equipment growth has been 10%.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [90]

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But in the share of the disbursement growth, that number is unchanged at 5%. So can you help with the absolute number, if that is possible?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [91]

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This is the share of the total disbursement, new growth over previous year versus current year.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [92]

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Yes, if the share is 5% and that is unchanged and the total disbursement has grown by 21%, ideally construction equipment also has grown by 21%, right?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [93]

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It would be very marginal because the rest of the portfolio is growing, no?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [94]

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Other products are also growing, no?

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [95]

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If you have the absolute number, it will be great or else I'll take it offline.

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [96]

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Construction equipment?

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [97]

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Absolute disbursement number if you have it?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [98]

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Of construction equipment?

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [99]

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Yes, yes.

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [100]

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So I think this is -- I mean I presume, you are not auditing us.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [101]

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Sorry?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [102]

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You need to understand that you take the numbers as we are presenting. It's not like I'm really -- I mean surprised that you want exact numbers of that. We don't give those numbers.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [103]

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Okay, fine. And how is the collection efficiency going on in HCV, the early warning indicators that you track?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [104]

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So collection efficiency, as I mentioned, that our early default nonstarters are coming down, and it is improved over the previous quarter Q1. Q1 to Q1 if you see that our 30, 60, 90 everything has come down and collection efficiency has improved.

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Antariksha Banerjee, ICICI Prudential Asset Management Company Limited - Investment Research Analyst [105]

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Across product?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [106]

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Yes, yes.

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Operator [107]

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The next question is from the line of Shweta Daptardar from Prabhudas Lilladher.

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Shweta Daptardar, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [108]

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Sir, couple of questions. The ECL Stage III coverage ratio has come down. So is it the indication that the asset quality ahead will be stabilizing? So that's number one. Second, sir, I'm not pressing on you revealing the PD and LGD numbers, but how frequently your -- are these assumptions reset? And lastly sir in the Home Equity side, loan loss provisioning quarter-on-quarter and year-on-year has shown sharp improvement. But you also highlighted concerns in the [PPT] on the self-employed segment with elongated working capital cycles and liquidity crunch. So do you see risk to these loan loss provisions going forward?

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Unidentified Company Representative, [109]

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Okay. See what happens is, as you know, these provisions under the ECL methodology is calculated for different segments differently. That is even within the Vehicle Finance, the segmentation is based on the [cost] like heavy, light, et cetera. As you know, the last year, the growth in heavies was large and today, the movement into the Stage 3 is more from the heavies that is moving into the Stage 3. The loss ratio, the LGDs for heavies are lower as compared to other high-yield products, so that is where even though the NPAs have moved up, provision requirements has been lower and that's where the provision coverage is seeming to be, marginally down. So there is nothing like we are changing any assumptions in this. The methodology of ECL calculation is changed once in a year. We changed it in March '19, and it will be changed again in March '20 based on the previous 10 years of data. So this is what -- this is how I'd approach this. The question on -- do you want to answer that?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [110]

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Yes. So in this Home Equity, when you talk about, yes, there were a lot of reduction. And when you talk about, there is always, yes, with caution approach we took, keep in mind. Please understand market is risky, we also understand, but what we need to do that is prudently keeping in mind the collections for -- on which we are fortifying across there. Obviously, there will be a benefit of further SARFAESI support in terms of reduction, the already existing accounts and in the case any new account comes into it. So that statement is all about that we are cautious about it, how the market is operating, and we are prepared and geared about it. Let's see how it takes up, but the point is on both sides whether for the previous reduction, yes, there are a lot of scopes still, and we are working on that. And secondly, if anything comes, we are prepared accordingly.

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Operator [111]

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The next question is from the line of Jignesh Shial from Emkay Global.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [112]

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I had 2 specific questions here. Number one, we're seeing that overall securitization pool has been reducing for us if you see the borrowing patterns of debt. From 12% it is right now close to around 10%. So is there any specific reason behind that? Or are we seeing that particular pool to go back to 12% levels and that could support our cost of funds? That is number one. And number two, had been now we are almost at the bottom as far as margins are concerned, 6.75%, that is my calculated number, so what kind of trajectory are we looking out to? Obviously I see the yield has been increased by 60 bps, 70 bps.

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Unidentified Company Representative, [113]

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Sorry, your voice is breaking. Hello?

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Unidentified Company Representative, [114]

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Your voice is slightly lower, can you speak loudly please?

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [115]

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Yes, is it better now?

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Unidentified Company Representative, [116]

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Yes.

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Unidentified Company Representative, [117]

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Yes, yes.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [118]

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So first question was on securitization pool, which has reduced. And number two, what is your view of the margin trajectory, which has already hit the low of 6.75%. So what's the trajectory you think margin should be looking like going forward? That's my 2 questions here.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [119]

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So we plan doing a securitization more in the process of the -- this is available of demand at the right price. So -- and predominantly, we do securitization of priority sector as well to enable the better rates that are prevailing in the market for such assets. Normally, the demand for this peaks in the Q3 and Q4, and that's where you will see the trend happening more towards the later part of the year.

In the first quarter, we have done 2 deals of securitization and we have done 3 deals of assignment. And so with that -- because the assignment does not show up here on the borrowings under the Ind AS. That's why you're not seeing the total number out here. But between assignment and securitization, we have been maintaining our cash flows for this sort of opportunity at similar levels.

The second question on the margin, yes, the margin will improve. As we said, there are multiple levers we are working on. One is the product mix, which Ravi spoke about and that would include the yield. And from my mind, I will also be working on further reducing the cost of funds, making more of external commercial borrowing [than] maybe leveraging a little bit more on securitization, et cetera. And OpEx will come down in the coming quarters, predominantly by way of a little bit more on the productivity side as well as the denominator effect of the assets growing in the coming quarters. So we fairly see the returns improving, but at this juncture, there are variables of little -- we need to be a little bit more assured over the next 1 or 2 quarters by which we will be able to be -- more clarity will emerge.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [120]

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But do you think the margins can even dip further from current levels? Or you see that to be more or less to be stabilizing and then probably you can see an upward trajectory?

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [121]

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I don't see further reduction because I see cost of funds were not going up any further. So cost of funds has been the major drain on the margins. So in all probability, hopefully that should be some sort of an advice to the bank, et cetera, coming from the ministry or from RBI to pass on the cost of fund benefit to the ultimate borrower as well as NBFCs or otherwise. Once it comes, I think -- and world over, the rates have been more on the softer side, and I think even in India, we expect the rates to either come down or at best to stay where they are rather than increase further. So I don't see that impacting margins further.

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Operator [122]

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The next question is from the line of Nishant Rungta from Premji Invest.

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Nishant Rungta;Premji Invest;Investment Analyst, [123]

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I have a couple of questions, sir. First on the vehicle financing industry per se. What we've seen over the last 6, 8 months is basically from various financial encounters that there has been an elongation in tenor on the vehicle financing loans to the portfolios, while LTVs have remained pretty high. We are nowhere the -- most of the players are operating at roughly 90%, 95% sort of an LTV and probably more in some cases. With most of the fleet operators lying at replacement tenor of about 4 years, is that not taking a high risk on the LTVs already for the industry? Will that not lead to asset quality challenges for the industry, and how will that impact for our company? Specifically in that context, I know you are cutting back on SUV disbursements a bit. You highlighted but what happens to the back book generally in that context?

And my second question is, given the way in which we're seeing the regulatory arbitrage converging between NBFCs and banks and given the kind of goodwill and vintage that you have in the industry, is there not a growing case for you to look at an [on-tap] banking license or a small finance bank license given the kind of liquidity issues that we've seen? Does it not make sense for the management to look at an opportunity like that, sir?

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Ravindra Kundu, Cholamandalam Investment and Finance Company Limited - Associate VP and National Business Manager [124]

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So this LTV which you mentioned about it and for the fleet operator, which is particularly applicable for heavy commercial vehicle. The heavy commercial vehicle comes with a chassis or cowl chassis. So therefore invariably all finance companies are financing 100% of the chassis. And since chassis cost is actually the -- invoiced by the manufacturer, that is actually the asset value we consider. So therefore, there is no confusion as that we will fund less than 100%. It is 100% of the chassis. Body is built by the customer. I also mentioned that industry de-grew 23% in terms of heavy commercial vehicle. We de-grew by 32%. That is the reason because one is that LCVs are funded at much lower price, which is impacting our marginal book yield and book yield again. Second is that in the heavy commercial vehicles, as of now, the capacity utilization and other things are not that great. So therefore, we find that lot of customers are [in heavy debt and will be so then] so that customers are not qualifying for that. But that we don't fund fleet operator and therefore, we have to focus on the small road transport operator only. And therefore, we are selectively identifying such customers who are good and who can actually build their body on their own and we can finance them 100% of the chassis.

In terms of the price of the vehicle, as of now in this BS4 era, the prices are at the same level. In fact, some discounts have gone up. So therefore, we are considering the discounts at the time of giving the [LTV]. So we don't do gross of discount funding. We do net of discount funding and the discounts are also considered. So if MRP is, say, INR 30 lakh and say, INR 4 lakh, INR 5 lakh or INR 5 lakh is the discount, we consider asset value as INR 25 lakh, and then on that, we provide 100% funding. So -- and most of the finance companies are doing like that only. So therefore, there is no worry in terms of LTV offering to the customer. The important problem is that today the customers are not having freight or load available, therefore, they are not able to serve the loan every month and that is what is the challenge for us to how to get the money. And that's the reason we have been doing very less in terms of heavy commercial vehicle. Always as a strategy, we have never increased our disbursement, which is actually helping us.

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Nishant Rungta;Premji Invest;Investment Analyst, [125]

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Understood, sir. On the other question, if you can elaborate?

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [126]

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On the other question, in order to convert into small finance bank, I think you have already seen our choice of not wanting to become payment bank. Ultimately in sort of -- you're seen vindicated by many of the other finance -- small finance banks getting out of the system. I see the small finance bank also very tough, it is not that the deposits are attractive, the rates at which these deposits come are very expensive. Our borrowing costs are even cheaper than these things. We need to wait and watch and see how RBI looks at larger NBFCs and I think in the current context of the larger NBFCs, they will come with certain new regulations surrounding the larger NBFCs. We will be fine. More importantly, as it stands now, the regulation does not allow us to become a bank. So there is no point in trying to become bank when the regulation doesn't permit you.

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Operator [127]

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We'll be able to take one last question. The last question is from the line of Digant Haria from Antique Stockbroking.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [128]

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Just one question that I have. So it was a very refreshing annual report where you talk about a physical strategy, which is digital plus physical. So in line with that, I see a lot of initiatives have been taken to get closer to the customer and maybe to help customers grow their business. So in that context, where are we in terms of our cost-to-income cycle, like when do the benefits of all this starts flowing into it? Or there would -- we are looking at maybe growing more and not looking at cost benefits out of all these initiatives? That's the only question I have.

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [129]

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Digant, that's an interesting question. While there will be cost benefits, what I have frankly experienced is the cost of obsolescence and the cost of keeping abreast of technology is a constant churn. So we need to keep investing more continuously in this endeavor. And it is like, if you don't do this, your survival itself could be challenged. So this is something you need to keep doing. And you need to keep doing this to keep yourself ahead of the rest of the players. So I don't see -- I mean, while there will be cost benefits, I don't see that becoming a big game changer. I hope I'm making myself clear.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [130]

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Yes, sir, yes, sir. But anyhow it was a great annual report reading all these initiatives.

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Operator [131]

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Thank you very much. We'll take that as the last question. I would now like to hand the conference back to Mr. Nischint from Kotak Securities for closing comments.

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Nischint Chawathe, Kotak Securities (Institutional Equities) - Senior Analyst [132]

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Thank you, everyone, for joining the call today. We thank the management for providing us with an opportunity to host the call. Thank you very much.

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Arun Alagappan, Cholamandalam Investment and Finance Company Limited - Executive Director [133]

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Thanks.

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Arul Selvan D., Cholamandalam Investment and Finance Company Limited - Executive VP & CFO [134]

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Thank you.

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Operator [135]

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Thank you very much. On behalf of Kotak Securities, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.