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Edited Transcript of IBULHSGFIN.NSE earnings conference call or presentation 6-Nov-19 10:59am GMT

Q2 2020 Indiabulls Housing Finance Ltd Earnings Call

NEW DELHI Nov 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Indiabulls Housing Finance Ltd earnings conference call or presentation Wednesday, November 6, 2019 at 10:59:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Gagan Banga

Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO

* Mukesh Kumar Garg

Indiabulls Housing Finance Limited - CFO

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Conference Call Participants

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* Ashwinder Bakhshi

* Divyesh Mehta

* Gurpreet Arora

* Kamlesh Agarwal

* Kunal Shah

Edelweiss Securities Ltd., Research Division - Associate Director

* Manish Ostwal

* Subramanian Iyer

Morgan Stanley, Research Division - Equity Analyst

* Vipul Kanoria

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Presentation

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [1]

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A very good day to all of you, and I welcome you to the quarterly -- quarter 2 FY '20 earnings call.

Before we get into the numbers for the quarter, I want to speak briefly about the business model going ahead, which was also shared with you in our previous call on the 11th of October. We will now be largely exclusively a retail-focused business with an asset-light model. We will look to keep only 1/3 of what we source on our books, and the rest will pretty much equally be split between co-origination and loan sell-downs. Our franchise is in capacity to source over INR 40,000 crores of retail loans a year through our around 5,000 retail loan sourcing team, a robust online home loan -- loan origination platform and ample capital. However, we are mindful of the constraints from higher cost of capital. As the developer book runs down both in its normal course and through refinance, it will generate liquidity, which can be deployed to extend retail loans.

As we complete a year since the onset of the liquidity squeeze in September 2018, I'm very proud of the way the business has held up through what can only be described as a hyper-stress test. Through everything that the sector has gone through and all the challenges that Indiabulls Housing has had to face, the objective measurable facts are that: One, we have the highest capital adequacy amongst all NBFC/HFC peers. Our capital adequacy at the end of September, 28. -- at the end of September stood at 28.93% compared with an average of 18.3% for the top 5 NBFCs, excluding us. Our Tier 1 ratio at north of 22% is also higher than what is the total capital adequacy for our peers amongst the larger NBFCs. We have the highest level of on-balance sheet liquidity at 19.3% of balance sheet in cash and liquid investments compared with 5.2% for the top 5 NBFCs. [It] does have 4x the liquidity our peers carry. Maintaining liquidity at 15% to 20% of the balance sheet in cash and liquid investments is a strict and self-imposed discipline we have followed for over 10 years now since 2008. Our liquidity coverage ratio over the next 30 days of stressed net outflows is 783%, which is nearly 16x the 50% number that RBI has stipulated for NBFCs, which has to be followed by NBFCs from December 2020 onwards. So we are at 16x currently of what RBI requires NBFCs to follow from 1 year from now.

Despite the book running down, the business continues to deliver ROAs in excess of 2.5% and has consistently delivered ROEs of over 20%. The annualized ROE for H1 fiscal '20 in a mode where we are not really growing is also north of 16%. We are one of the least levered in the NBFC/HFC sector with a net leverage of only 3.6x compared with an average of 6.1x for the top 5 NBFCs and HFCs.

Despite a tough credit and business environment across the board, our asset quality has held up. Our gross NPAs at the end of September '19 are at 1.51%, and net NPAs are at 1.07%. Compared with this, the average gross NPA of the top 4 housing finance companies is at 1.67%. The net NPAs have declined due to proactive provisioning and our long-standing policy of using all one-off incomes to create provisions. Please note that all manner of scrutiny, be it in form of our regulators, statutory auditors and government agencies, has got much tighter in the last 12 months, especially in the last 6 months, the period from April 2019. So these NPA levels are tightly scrapped and are, therefore, doubly verified numbers.

In this background, the asset quality numbers this quarter are extremely important. What's also to be appreciated is that the book has grown -- has de-grown materially over the last 1 year at about 32%. And despite that de-growth, what one has seen is that we have continued to maintain NPA levels at about 1.51%. So despite a significantly smaller denominator of [about] 28% reduced book, this NPA has stood up, and the net NPA has actually on a quarter-on-quarter basis declined. Even the gross NPA on a quarter-on-quarter basis has declined in absolute value. Our Tier 1 capital adequacy is 22.5%. In absolute terms, our net worth of INR 18,700 crores is 23% of our on-balance sheet loan book of INR 82,135 crores.

Through the last 12 months, we faced all manners of allegation -- allegations, culminating in the PIL in the Delhi High Court. Compared with fighting wild allegations circulated on social media, this is something concrete that the court and authorities can objectively look at. We actually welcome this as once and for all, all respective agencies such as MCA or any other statutory body or regulator can scrutinize the business, and we can firmly put this behind us. In the last 12 months, all sorts of allegations have been made, and we've been also subjected to [thorough] scrutiny. There are hundreds of unfounded rumors that additional checks from a variety of government agencies will follow. We are open to all of this as the company is confident of the business it has built. Further, to demonstrate our confidence, we've also done the following to fight the rumormongering: We've addressed all allegations through public disclosures in leading newspapers. Blackmailers have been arrested, and they have also subsequently issued a public apology, yet they continue to be in jail. We filed a case of perjury against the unfounded allegations made in the court, and the court has admitted our case against the alleged whistleblowers.

I will now go through the quarterly numbers. Please refer to the earnings update that we sent across to you, which is also uploaded on the website.

Firstly, please refer to Slide 3. Our loan book declined by 28.5% to stand at INR 82,135 crores. In line with the decrease in our loan book, our profits also declined by 28% to INR 1,511 crores. Our profits for quarter 2 fiscal '20 are INR 710 crores compared with INR 802 crores in the sequential previous quarter. The NII declined by 19.5% to INR 2,776 crores. Our spread on book is at 308 basis points, which is within our guided range of 300 to 325 basis points. I am pleased to announce that the Board has recommended INR 7 per share of interim dividend for the quarter, which is in line with our long-standing dividend payout policy corresponding to 50% of profits. In the last 10 years, we paid over INR 10,800 crores of dividends to shareholders, and our dividend payout policy of paying 50% of profits as dividends will continue to be in place.

Our balance sheet at the end of quarter 2 fiscal '20 stood at INR 1,11,618 crores. Our loan AUM at the end of quarter 2 was at INR 1,06,330 crores compared with INR 1,13,189 crores at the end of quarter 1 fiscal '20. Our on-balance sheet loan book stood at INR 82,135 crores compared with INR 86,389 crores at the end of quarter 1 fiscal '20.

If you refer to Slide 4, we've shown how we scale up on RBI's LCR framework. Our cash and liquid investments at the end of quarter 2 fiscal '20, at INR 21,583 crores. Our cash and liquid investments comfortably cover our next 12 months of debt repayments of approximately INR 20,000 crores. If you refer to Slide 4, which has a liquidity coverage ratio considering our cash and liquid investments, we have 783% of LCR, which is 16x of what RBI has stipulated. Over and above this, on an average for the last 12 months, we have received INR 6,000 crores of repayments on our balance sheet loan book, which we will keep augmenting the cash levels, thus ensuring that we are significantly cash-positive at the end of each day, month or quarter for the long term. Our detailed 10-year quarterly ALM is in the appendix slides of the earnings update.

Moving on to Slide 5. In absolute numbers, our gross NPAs have remained stable and have marginally declined to INR 1,611 crores at the end of quarter 2 compared to INR 1,662 crores at the end of quarter 1 fiscal '20. Our NPA numbers have held up, and our strong demonstrated recovery capabilities will ensure that asset quality is maintained. In the last 5 years, we've recovered nearly INR 2,000 crores, which corresponds to over 70% of the incremental slippages in this period.

For any unforeseen losses from the developer loan book, we have INR 3,500 crores buffer from our investments in OakNorth Bank. Besides this, preprovisioning operating profit for the first half of this year is at INR 2,238 crores, which is also available for provisioning. Eventually, developer loan book will not leave us with losses, and all our projects funded are metro-centric. There are no slums or SRA projects financed. Last quarter, we've recovered as much as INR 700 crores from an NPA developer loan. This was in quarter 1 fiscal '20.

If you now go to Slide 6. Our borrowings now stand at INR 89,565 crores. Net of cash and liquid investments, our net gearing is only 3.6x. As mentioned earlier, our net gearing is the lowest amongst our large NBFC/HFC peers. Our CPs are down to just INR 500 crores, and we have been very successful in elongating the tenure of the liabilities through the course of the last 1 year. Our primary source of capital through the next few months and quarters of consolidation will be from refinance of our developer loan book and loan [sell-downs.]

I request you all now to please turn to Slide 7. Let me now move to spreads in the business. Our spread on loan book for quarter 2 fiscal '20 stood at 3.08%. The spread continues to remain within our guided range of 300 to 325 basis points per book yield. Going ahead, we are confident of maintaining our spreads in this range. Increased securitization has meant that AUM growth has outpaced our own book growth, thus facilitating ROE expansion.

This is an update on our performance during the last quarter. Now let's move on to our business strategy for the future. As I mentioned in my call on 11th of October, our business model would now be completely retail-focused going forward with incremental disbursements spread at 60-40 between home loans and MSME loans, that is loans against property. New origination would be done in the proportion of 40-40-20 between co-origination with banks, securitization and smart [city] loans, respectively. Of all the incremental business that we generate, only about 1/3 will stay on our balance sheet, while the rest will be off-balance sheet. Thus it will be an asset-light model, which is ROE accretive.

For co-origination, we have now entered into co-origination arrangements with a number of public sector banks. The idea is to tie up with different banks with varied risk appetite so as to cover the entire spectrum of loans, from the super prime customer who gets loan at the best possible rate up to a slightly higher risk-category customer operating in a tier 3, tier 4 location, who gets loan at the best rates plus 300 basis points. And thus, we can cater to needs and requirements of all types of home loan customers as well as the risk-adjusted return requirement of all banks, thus maximizing our platform to become the most efficient throughput platform.

We expect this business to build up scale over the course of the next few months. Apart from co-origination, the other 60% is something that the company has been doing for years and has already displayed scale, running into thousands of crores per quarter. So roughly, this will be our business model going forward.

The business is on an extremely strong footing, and this PIL will help us put all the allegations once and for all behind us. As we build up scale over the next 6 months, I'm quite confident that we will be able to pursue the growth strategy. As the third largest housing finance company, we have helped over 1 million families achieve their aspirations of owning a home of their own. We have a nationwide presence of over 200 branches, and this franchise can generate over INR 40,000 crores of retail loans a year, which is the goal for the next 12 months for us.

As we look to grow about INR 40,000 crores and disburse about INR 40,000 crores of retail home loans and LAP over the next 12 months, we will achieve this partially through financing of roughly about INR 14,000 crores to INR 15,000 crores through co-origination, another about INR 15,000 crores through loan sell-downs, and our dependence on incremental borrowings will be restricted to less than INR 10,000 crores.

Our co-origination agreements are in place. The requirements from loan sell-downs is a small number compared with the INR 26,000 crores of loans we sold down last year. And the balanced funding, which we expect to get on balance sheet, is extremely moderate given the scale that the company has historically operated at. Even through the course of the last 13 months, we have generated resources in excess of INR 70,000 crores.

Please now refer to Slide 58. IBH has been on the [road] of trials. Several of our stakeholders have wondered through the last one year if all is lost and IBH is defeated. Our sadist naysayers have made awful things happen to us, blackmailing in June, PIL-related inspections, stock and bond price volatility, [dents in] perception and a massive trust deficit. While [awful] things did happen, which is what makes this road to redemption that much more powerful, what one has come around to understand also is that it's only through struggle that we learn who we are and what we are made of. And much like we proved through 2009 to '13, we will prove again that while naysayers focus on our weaknesses and mistakes made by management, we believe we have to learn from these and move on.

In 2013 to '14, as we reverse-merged and consolidated from being an NBFC into IBH, our market capitalization was pretty much where it is today at around INR 9,000 crores. In just 3 years, this has tripled to over INR 28,000 crores in fiscal '16. We are aiming again for the pinnacle to reclaim our domain within housing finance. This phoenix shall definitely rise and fly by leveraging on our strength of distribution, underwriting capital, efforts of thousands of our employees and with the good wishes of our over 1 million customers who have fulfilled their dream of owning a house and lots of shareholders who have received over INR 10,000 crores of dividend since our listing. I am very confident that we will definitely reclaim the pinnacle.

On this note, the IBH management is now open for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Kamlesh Agarwal from Citibank Hong Kong.

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Kamlesh Agarwal, [2]

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I have 3 questions. My first one is, can you please update us on what's the cash sitting on the book right now? Now I'm not talking about the second quarter but the cash right now. Second, there was some rumor about bonds trading at [65] in onshore market. I would want to know more about that. And do you have access to bond market as of now? And third, do you plan to raise any more capital in the future through warrants? Because there were news about that.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [3]

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The cash position of the company will be very similar to what we held as of September 30. We have conducted some buybacks of our bonds which are maturing between October and December. We've also made disbursements and have continued to receive repayments as well as done a few drawdowns from facilities from banks. Net of all of this, the cash position will be very similar to the position that we held as of end of September.

As far as the bond trading is concerned, I believe there was one bond trade, which was reported to us as to have been erroneously entered and it was subsequently not settled. That trade was around INR 200-odd crores. There would be odd bond trades which could happen at rates which are not normal. As I have indicated, we are not really currently looking at tapping the bond market. I don't think that we would want to walk the paths of going back and issuing bonds of 2 to 3 years and then being -- suffering from the shallowness of the Indian bond market. We wish to build a business which is reliant more on long-term sources. And currently, what is very important to understand is that we have continued to focus on refinance of our developer loans, while on a net basis we still do have to make some release of our loans to our developers where construction is going on. On a net basis, there is a reduction in that portfolio, and that itself is generating a lot of money for the company to pursue its retail strategy. So between the monies that we are generating through refinance of our developer loan portfolio, securitization and loans that we are receiving for onward lending from banks, RBI had made a very interesting policy or come back [off] a very interesting policy a few months ago where banks continue to give monies for onward lending. So between these 3 sources, we have adequate capital. And which is why I said we are slowly scaling our retail disbursements back up. And over the course of the next 12 months, we will look to get to between around INR 40,000 crores of disbursements around the retail side.

As far as warrants are concerned, it's an enabling provision that we have taken for both NCDs and NCD [cum] warrants. There is nothing on the table. It is merely an enabling provision, and we will exercise it at an appropriate time. We need to go back to shareholders. So anyways, it's a time-consuming process. The Board was approving the limits for NCDs, and one of the Board members said that this may also be an interesting instrument. This instrument has been used by the company in the past and has done well for the company. So it's an option that we have built. There's nothing on the table as we speak.

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Operator [4]

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The next question is from the line of Manish Ostwal from Nirmal Bank.

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Manish Ostwal, [5]

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My first question on the disbursement during the first half of FY '20, how much we have done? And secondly, what are the average ticket size, sir?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [6]

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So we would have disbursed a little over INR 14,000 crores. The average ticket size for the home loans will be in the handle of INR 20 lakhs and for LAP will be in the handle of INR 60 lakhs.

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Manish Ostwal, [7]

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Right. The second question, on the Slide #9 or #10, which you articulated new asset-light business model. So I mean when we compared some of our peers, it looks like that we are now just originate and then sell down that portfolio to the banks. So I mean do you believe the current environment is giving the structural reason to change your business model? Or what is your thought on the same, sir?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [8]

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Well, we've shared in the past that if you look at the global trend on mortgage financing, very rarely, our long-term mortgages held on balance sheets of originators. So what is clearly a realization is to be wholesale-financed, and to have any sort of wholesale assets on the balance sheet is something which is in the -- over a cycle not something which is really appreciated. So that's clearly a reason why we are changing track and saying that over the course of the next 2 to 3 years, this will become a very, very dominant retail play only. Whatever marginal wholesale loans we had, those will also go away over the next 2 to 3 years. And with the one clear directional shift that we have is that incrementally, apart from the small disbursements that we have to do for construction loans, we will largely stay away from wholesale loans.

The other constraint that we have to appreciate is the constraint around cost of capital as well as the nature of capital available. And I can't possibly have a business which is trying to solve for every stakeholder's requirement. So the primary stakeholder, which is our lender in the short term, very clearly, they deserve an element of stability around the company. And from that perspective, what is very clear is that we will not use volatile wholesale bond funds to underwrite mortgages. From a shareholder perspective, as a stakeholder, the shareholder is desiring a competitive return on equity, which we estimate to be in the ballpark of 20% to 25%. That kind of return on equity can be very effectively achieved through the business model that we have spoken about.

So if both bondholders -- sorry, lenders as well as equity shareholders are getting stability as well as a competitive return on equity, and this model also ensures that there is no volatility, then I'm being able to solve for a lot of what stakeholders require. There are definitely a set of stakeholders cutting across all constituents who would also like to see the balance sheet increasing. I would also like to see the balance sheet increasing. In the Indian mindset, a large balance sheet is also related to power and respect and so on. But this is not the time in the Indian context where our bond markets are just so immature. There is no CDS market. There is, therefore, no balancing out, which happens. A free trade triggers everything. In other markets, credit markets tend to lead equity markets. In India, equity markets tend to lead credit markets. Equity markets can be extremely volatile in the short-term for reasons much beyond the company's control. We are a very high free-float company by stock.

So given all of this, I think it is the time that the bond markets in India mature is the time that we have proper market-making CDS comes in as a proper instrument, which will definitely happen over the next few years. This is the business model that we will choose to follow. This business model will ensure a return on equity of between 20% to 25%. It will ensure a net interest income growth. We've already discussed and shared with you the plan of retail disbursements, which is a very large number at INR 40-odd thousand crores. So in this context, I think within the given constraints, this is the business model that management, to its understanding, feels is the better model to follow.

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Manish Ostwal, [9]

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And sir, what is the update on the buyback status?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [10]

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We have referred, as our Board note had -- our stock exchange filing had shared, we have referred to SEBI for their feedback as to what is the applicable ratio for a company like ours. Is the carve-out, which has been given for NBFCs/HFCs, also applicable to us as an NBFC/HFC holdco? So once SEBI advises us as to what the applicable ratio is, we will accordingly go back to the Board and take their view. So right now, we are awaiting feedback from SEBI as to what is the applicable ratio.

Now the funny thing is that on a slightly lighter note, even before we had formally returned to SEBI, the rumormongering has started that SEBI has rejected our buyback. SEBI is not in the business of approving or rejecting buybacks, and we have not sought any permission from SEBI. All we have sought from SEBI is their advice, given their recent circular as to what is the applicable ratio, given the fact that they have done a carve-out for NBFCs and HFCs. So in this sort of a volatile environment, it is better that the company plays on its strength of capital reserves, liquidity reserves, balance sheet strength, yet continues to leverage on its other strength of distribution, technology, et cetera, and follows the business model that we have chosen to follow.

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Manish Ostwal, [11]

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I understand what you're saying is. But the point is, sir, if we are doing a buyback, is it not better to have a liquidity in this kind of environment and repay the high-cost debt rather than doing the buyback.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [12]

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Our debt is not high costs. Our debt is moderately priced, and the costs of funds, much in line with the overall system, has started declining from quarter 1 to quarter 2. The Board felt that given the confidence that it has in the management team, and it is best placed to understand what is the truth behind all of these allegations, which has led to the price of the stock being where it is, the Board felt that if there is a regulatory window which allows buyback, it will be an appropriate usage of capital, and it will also be a statement of confidence. So given that, I appreciate that we should be preserving liquidity, et cetera, but we are having a liquidity position which is covering 12 months of our liabilities, and we continue to receive in excess of INR 25,000 crores to INR 30,000 crores back from our customers in normal course. And now with our accelerated efforts to refinance these developer loans, that INR 25,000 crores to INR 30,000 crores is only going to increase. So from a liquidity perspective, we are playing to our strength. It is our big strength, and this buyback will be a small loss of liquidity. But from a confidence perspective, it is an investment which can reap a lot of very significant returns for our stakeholders.

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Manish Ostwal, [13]

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Sure. And I mean lastly, very quickly, is there any time line for this buyback, when we can hear the last word?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [14]

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I would not want to second-guess the regulator. It is an advice they will have to, therefore, back to their circular, the workings of that circular. I can't really comment on how long or how short will the regulatory feedback take, and I would not want to second-guess the regulator [before they give] their feedback.

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Operator [15]

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

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Divyesh Mehta, [16]

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I want to know what is the trend of the gross stage 2 loans for the last 4 quarters?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [17]

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I'm sorry, I could not understand that.

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Divyesh Mehta, [18]

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Gross stage 2 loans. Gross stage 2.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [19]

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So gross stage 2 has largely stayed stable between March to September on a days-past-due basis. On a risk perception basis, we continued to add and delete loans. But on a days-past-due basis, our stage 2 has remained largely stable. And as I shared with you, our stage 3 assets have marginally declined by about INR 50-odd crores between quarter 1 and quarter 2.

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Divyesh Mehta, [20]

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Can you (inaudible) Stage 2 in percentage terms at least for this quarter?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [21]

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I can come back to you. Give me 5 minutes.

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Divyesh Mehta, [22]

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Okay. The next question would be, if you can give me the slippage and recovery numbers for the last 2 or 3 quarters or even this quarter.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [23]

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Sure.

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Unidentified Company Representative, [24]

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So this is the net number. They're saying what's slipped in and what came back.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [25]

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So we are just getting you the details. The total number of NPA was INR 1,662 crores, which is now standing at INR 1,611 crores. We can move to the next question and we can come back...

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Divyesh Mehta, [26]

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There's one last question. If you can give me the breakup of our nonhousing loans, what's in there?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [27]

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Nonhousing loans will be a combination of LAP loans and the developer loans.

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Divyesh Mehta, [28]

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Any percentage, if you can share, in that?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [29]

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It is roughly spread equally.

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Divyesh Mehta, [30]

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Okay. Can you share the number of developers in that book, if possible?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [31]

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The number of developers will be close to about 100 developers.

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Operator [32]

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The next question is from the line of Kamlesh Agarwal from Citibank Hong Kong.

As there is no response, we move to the next question from the line of Gurpreet Arora from Aviva India.

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Gurpreet Arora, [33]

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Could you -- my first question is, could you quantify the bond buyback which you have done in the last quarter?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [34]

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In the last quarter, we would have done about INR 1,500 crores of bond buyback.

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Gurpreet Arora, [35]

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And what's the path for the remainder of this year? What plans are there?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [36]

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So we will continue to buy back every quarter, at the start of every quarter, whatever is due for the next of -- rest of the quarter. So we've already offered for buyback everything which is due up until December. In...

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Unidentified Company Representative, [37]

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Q2.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [38]

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Sorry, in Q2, the total buyback that we did was INR 3,677 crores, and we had also made repayments in normal course of about INR 1,321 crores. So we did a total bond repayment of roughly INR 5,000-odd crores.

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Gurpreet Arora, [39]

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Sure. So for 3 December, would you have any bond buyback figures available?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [40]

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So whatever is due for bond until December is, I think, already had been bought back.

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Unidentified Company Representative, [41]

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Small quantity.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [42]

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Some INR 25 crores, INR 50 crores maybe remaining, but everything else has been bought back.

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Gurpreet Arora, [43]

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Okay. My second question is, if you can qualify, I mean, any new exposure to group and related parties, if you can state that.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [44]

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Sure. So the group, which is another very big silver lining of this crisis of the next -- of the last 6 months -- of the last 12, 13 months is that be it for our initiatives of the proposed merger with the bank or the overall deleveraging exercise that Indiabulls Real Estate had already started, if you may have -- if some of you may have followed the stock exchange filings made by Indiabulls Real Estate, it, from a net debt position of approximately INR 10,000 crores, is now sitting on a net debt which is close to 0. And it has repaid a lot of its lenders. But -- and whatever are the residual lenders will also be repaid through the course of the next 60 days as it receives funds, the balanced funds from what it has sold to Blackstone and other sale transactions that it has. So from a group exposure perspective, if they have no borrowings, they [can't] have borrowings from us.

Similarly, Indiabulls Ventures, its subsidiary Indiabulls Consumer Finance, is sitting on [debt] equity which is not even minus [2.1]. And it has access to quite a bit of bank borrowings, securitization program, et cetera. It's entire securitization program is already running with 7 different banks. So both these companies on a stand-alone basis are quite strong. Indiabulls Real Estate on a net worth of just under INR 5,000 crores is practically a 0 net debt company, and Indiabulls Consumer Finance with a net worth of, again, around INR 5,000 crores is not geared [even 1:1] . Even at the promotor level, the promoter is completely debt-free. Earlier in the calendar year, the promoter had also released pledge for all the shares. And as we speak, the promoter is completely debt-free. In order to support Indiabulls Real Estate, the promoter has even bought out an asset which is based in London, and the filing for that was made late last week. So I hope that answers your question.

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Gurpreet Arora, [45]

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Next question, I mean, I wanted to understand where are we in terms of OakNorth. In last call, you mentioned, I mean, this is a fairly liquid investment. They're a private equity investor who can take the stake any time. But I mean, considering that I'm assuming we are more focused on the India business, and OakNorth business has always been an investment for us, so why are we not, I mean, monetizing it? Or what are we waiting for? Or what are our plans over there?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [46]

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It's also an investment which has done exceedingly well for us. So it's an investment where we had put in $100 million, and that investment has already delivered us returns, which are about 6x in a span of 4 years. So in 4 years, if an investment has done 6x and the underlying bank is the fastest-growing bank in all of Europe, the expectation is that, that investment continues to do well. So we are not a desperate seller. There is nothing in our India business which requires those monies as of yesterday. We've always spoken about our OakNorth investment as being a buffer, and that buffer is estimated on the basis of where GIC and SoftBank had made their investments. So it's that kind of a buffer, which is available. Should we need that buffer, we will definitely use up that buffer. But buffers are supposed to be capital buffers. So there is no desperate transaction happening. We do keep getting reverse inquiries from both sovereign funds and private equity funds for that transaction. So on the basis of these inquiries, we are pretty confident that a transaction can happen pretty quickly. Some of our existing shareholders are also shareholders of OakNorth Bank, and they're also interested in upping their stake there.

So through all of this, one is confident that it is a reasonably liquid investment. We will take that call as and when we feel that there is a requirement. Otherwise, something which has made you 6x and is continuing to grow, it does not have the headwinds that Indian finance businesses have. We should allow it to continue to grow and ride along with that.

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Gurpreet Arora, [47]

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I take your point fully, Gagan. My only thought here was that whenever we undertake any such transactions, I mean, regulatory approvals and others and cash coming in might take a lot of time. So I mean, would we want to wait for the [necessity] ? Or would we want to strengthen the balance sheet that was the only thought here.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [48]

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From a regulatory perspective, in terms of Bank of England and PRA and all of that, those approvals are in place. So we don't have to wait for regulatory approvals for being able to undertake any such transaction. Those approvals are in place. That said, we will -- we continue to be watchful of what does our business require and when is the appropriate time to liquidate. Much like you gave us as a stakeholder, the flexibility of making this investment in the first place. All we require is that the Board and the Management be also given the flexibility of when to liquidate it. At this point in time, we feel that the investment is doing extremely well, and our business here is also not requiring that buffer, which is evident from the NPA track. Now on the NPA traction, leave aside, whatever is going on in the real estate industry from a noise point of view, what is -- has to be appreciated and should be appreciated by any financial analyst is that a balance sheet, which has gone down 28% is doing well. And this is despite the fact that our developer loans, we have continued to recognize stress proactively. I was looking at a note where someone was talking about developer loans of another housing finance company being at 2% to 3%. Our developer loan NPAs are much higher than that. And despite that, because of the provisions that we've been creating over years, the overall net NPA are [all of] 1%. So we have been proactively recognizing NPAs. We are extremely mindful of the stress in the real estate industry. We will continue to make provisions. At this point in time, we would want to keep buffers ready and handy. I don't think there is any extreme sort of a situation, which requires us to dip into buffers. Our portfolio is very seasoned. These projects are extremely seasoned. We haven't really grown the developer book for a long, long time. So the portfolio has -- and the underlying projects have seasoned, which is why despite a credit market, where if there is a worse name or a worse industry than NBFCs, it is real estate. Despite that, we've been able to get so much of our portfolio refinanced because of the underlying quality of the projects. So given all of this, I think we will -- as management continue to be proactive in recognizing developer loan losses, continue to provide for them. And our earning power and our PPOP power is strong enough right now to be able to continue to provide for this. There is no immediate risk that our earnings will go for a loss or we need to supplement this through extra provisions.

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Gurpreet Arora, [49]

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My last question, as you were answering to my previous question also, now since the promoters stands pretty deleveraged across businesses, and I think promoters long [time] had made the FSI or lending business as its prime business. Is there any discussion or thought of promoter raising stake in the company.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [50]

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Yes. So I think the promoter has to calibrate his choices between what he needs to do for his individual businesses and their stability. In the immediate term, the promoter has just pumped in money into the real estate business, and it's a significant investment to kind of protect the real estate business from any outcome that may come from Brexit or anything of that sort, and he's made an investment of about INR 1,800 crores into that business, let him digest that. His -- once the real estate business is completely debt free, it will require [no] further support. The other businesses already received large amounts of capital from the promoter over the course of the last 2 years. So at some level, it's now the turn of Indiabulls Housing to also get back, maybe not through a primary issuance, but more from a secondary market support. The promoter in the past has always routed back all the dividends that he has received from all the companies into group companies, and that practice will just continue.

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Operator [51]

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The next question is from the line of Ashwinder Bakhshi from Bearing.

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Ashwinder Bakhshi, [52]

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Just a couple of questions. One, have you had any recent discussions with the credit rating agencies in terms of your negative outlook, I mean, what are they looking for in terms of resolving it potentially positively?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [53]

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So I think what the rating agencies are looking for is an overall stability in the NBFC environment. As far as Indiabulls Housing is concerned, the more specific besides the overall concern around NBFCs is clearly because of this PIL there is a concern, and they would like to see that going one way or the other. And the third thing about the negative outlook would be the nature of our business and how we are, so to say, rebuilding the business. On the rebuild mode, I think we are well on our way. And our presence on the ground from November if you guys will do channel checks has increased tremendously. And with every passing day, you will find us on many more sites. And by the end of November, mid-December, I expect us to be back physically on the same number of sites by number as we used to be perhaps 1.5 years ago. And what we are very clearly communicated to our rating agencies is that if we are getting so much of money from our commercial real estate portfolio that would continue to be option #1 as far as liquidity raise is concerned, and so that book will continue to run down. Retail book will continue to increase. So our ability or our desire to grow the balance sheet in the short term is just not there. It is more around the more measurable financial metric or -- operating metric to be followed is what kind of month-on-month growth do we have in our retail portfolio. Some rating agencies appreciate it. Some others may not appreciate it that much. Those who appreciate that will probably resolve the negative outlook earlier than others. There is a desire, as I said, a short while earlier by a bunch of stakeholders that we continue to raise the balance sheet level. Management feels that at this point in time, the more immediate priority is to become more and more retail and to run down the wholesale book, and that will be the area of focus. And that's how we are conducting our business. Back in the day, one perhaps error in judgment that one made was to run this business, this is what a lot of stakeholders would desire in terms of this is the more desirable outcome or the market will appreciate this more. I think the better way of running the business is to appreciate what is one's constraint and live with that constraint, and that constraint could be micro or macro. The micro constraint is the nature of capital available and the cost of capital. The macro constraint is that our bond markets are not vibrant, are not deep. So within this, the business model that we have chosen is the business model. And I leave it to all stakeholders to then decide as to how they wish to react to this business model.

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Ashwinder Bakhshi, [54]

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I appreciate that. But can I ask you what the things which are not in your [hand] , which is just a lack of confidence within the NBFC space as a whole. There's been talks about potentially what can the regulator of the government do to improve this confidence. There's been talk about a stress test, for example. There was also, for example, the securitization program that was announced in budget, but it appears did not really take off, but can you just give us some color on what measures you are seeing that have already been announced, that could come into effect in the coming months or quarters or potentially new measures that could help improve confidence in the sector per se.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [55]

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So we are -- in the school, which believes that this battle has to be really fought individually and back in October, November 2018, there was a great opportunity for the regulators and everybody else to have perhaps solve all this problem for a variety of reasons, including, at that point in time, some political opposition that came along, that how can you bail out a private company like IL&FS and so on. We are where we are. And the NBFC crisis, so to say, persists. In the meantime, Indiabulls Housing has gone through a hyper stress test of its own. We applied for the bank merger that required us to go through a lot of regulatory inspections. We were criticized, allegations were made, so on and so forth, which required a lot of government agencies to come to look and all kinds of inspections are underway. Some more inspections may happen. So given all of this, I think, on a micro level, Indiabulls Housing has gone through a hyper stress test. What has to be understood is that and accepted is that there is a huge trust deficit firstly, for NBFCs and secondly, for Indiabulls Housing, but where is the trust deficit coming from? I've already explained and detailed, and it is in public domain, and there have been 12, 13 exchange filings as to what is the nature of cash. Today, mutual funds have roughly INR 4,800 crores of investments in my bonds and CP [and I] will have INR 7,000 crores, INR 8,000 crores of investments with the same mutual funds, yet they will still sell a bond and tell me that we don't want to sell a bond, we know that we hold more money of your's than we have invested in you, but it is [same] investor. So in this trust deficit, what we have understood is that this is not a trust deficit around our liquidity. This is not a trust deficit around our solvency at 28%, 29% capital adequacy. This is a trust deficit around the book. And the best way to solve that trust deficit is to continue to degrow this book as we have in the past. If the book was a poor quality, in a scenario where there is no financing available for real estate, the book could not have degrown 32% to 28% without the NPS going through the roof. And with the greatest confidence here in front of hundreds of people, I'm saying that that will be the preferred strategy. So I obviously have the best insight into what is the quality of the book and how I see that getting refinanced. Obviously, the book has to be pristine to get refinanced for someone to pick up my credit. Nobody is going to pick up [like that] . Now that's the best way to solve this trust deficit in my view. This trust deficit will not get solved by looking at Delhi to solve any problem. And that's how I'm approaching it. We, as an industry, individually, have made several suggestions, and there is still a lot that the government can do if it chooses to. And there is always this conflict that the government has between are we bailing out a private business by taxpayers money, et cetera. That's for the company -- sorry, for the government to take a call. From our perspective, we are very, very clear. The 2 operating principles that we have to follow is grow our disbursements on the retail side, and degrow our commercial real estate book. On both, we are making very good progress. On the first, we were holding back all these months. We are not anymore holding back. On the second, which is the commercial real estate book, within the constraints of the last 12, 13 months, we have done well, and we are only accelerating that process. If we make progress on that, I'm sure, like I've highlighted, and if you review Slide 58 of our earnings update, it will be evident that the opportunity is very clear. There was a threefold increase in market cap in the period '14 to '17, there will be a similar increase because why will trust not come back if the book is good.

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Ashwinder Bakhshi, [56]

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All right. And just -- and sorry if I missed it, but on the PIL, you've mentioned in the opening comments. Can you share at all? I mean, I know the Supreme Court had asked for some follow-ups from the government agencies, just in terms of time line, is it fair to say this is likely to be a prolonged process? Or can we expect sort of -- sort of a quicker resolution to it.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [57]

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So it's not the Supreme Court, it's Delhi High Court, Delhi High Court has done the following. It had originally admitted the PIL. Subsequently, we filed perjury. And what was not appreciated enough was that our perjury application, which is usually never admitted was also admitted. So now the High Court is hearing on both the matters together. The next date of hearing, which was originally going to be in December has been expedited on our request to the 29th November. One of the main agencies, which has conducted a very detailed inspection on not only Indiabulls Housing, but the entire group has already filed an affidavit on the 24th of October in the court saying that the inspection is nearing its end, and they would be filing their observations in the court by the time of the next hearing. So that's where the matter is right now. So whoever has been noticed or related agencies, will continue to talk to us, we'll continue to take feedback. I think that process is largely over. But given the fact that the PIL petitioner had written to so many agencies, somebody else may tomorrow decide to get up and ask such questions. So we are very happy. I'm quite optimistic that this is not going to be prolonged. This is the matter which in terms of court argument, as I've been advised by my lawyers, can get over into ours. And if all agencies, either our regulators, which have conducted inspections or other agencies have already taken feedback, there is no reason why they should not be filing their reports. On the facts, we've already put forth our [backs,] loan accounts of our -- which have already been made 0 are being added up and totaled up and been saying that so many thousand crore rupees of borrowings happened, so many thousand crore rupees of loans were given up. It's quite ridiculous that public records have been ignored just to make INR 2,000 crores, INR 5,000 crores kind of numbers. The facts are out there. We've already filed it. I'm quite hopeful that they should not take very long, but it is eventually the court. I do not wish to second-guess the court. They will take the time that they feel they need to decide.

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Operator [58]

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The next question is from the line of (inaudible) from Eastspring.

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Unidentified Analyst, [59]

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I noticed that the cash flow projections that you provided has been revised now. But I would like to find more about your debt maturity profile as in how much debt you have maturing in 2020? And how much is maturing in 2021.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [60]

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So that has been pretty well detailed and not only debt which is maturing in 2020 or '21, but debt maturing over the next 10 years has been detailed. So if you refer to slides 20 onwards. Quarterly debt maturity is -- has been given. So in quarter 3 fiscal '20, we have INR 6,400 crores; in quarter 4, INR 4,000 crores. So for the rest of this year, we have roughly INR 10000-odd crores of maturities. And for the next 12 months, we have roughly INR 20,000 crores of maturity. So just under $3 billion of maturities.

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Unidentified Analyst, [61]

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So what explains the fluctuation as in the difference from the last quarterly report that you provided in the repayment?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [62]

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So there would be some dispersals, which would have been made, there would be some buybacks that we would have done or there would be some borrowings that we would have done. And on the basis of all 3, the maturities would go up or down. So if we have done a borrowing, or we had done a disbursement or we bought back, all of those could either inflate or deflate these numbers.

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Unidentified Analyst, [63]

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So if I want to know what is for a full year, what is the debt repayment maturing. So I suppose to add up the 4 quarters of numbers together, is that correct?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [64]

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Yes. So on Slide 20, if you add up the repayments line, which says [6,463] for quarter 3 fiscal '20; [4,072] for quarter 4 fiscal '20; [4,121] for quarter 1 and [3,494] for quarter 2, that will get you the number. Now if we have, for example, bought back something, which was maturing in quarter 4, then that would reduce the repayment number. So last quarter, for example, we had mentioned that quarter 4 fiscal '20 maturities were INR 4,251 crores, which have now subsequently been reduced to INR 4072 crores.

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Operator [65]

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The next question is from the line of Vipul Kanoria from BlackRock Advisors.

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Vipul Kanoria, [66]

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So you have actually answered 1 of my questions on the time line for PIL. So just 2 more questions. Like any plans for directly applying for the banking license in next 3 to 5 years for the retail bank, maybe given your focus? And any plans on issuing Masala Bonds anytime soon?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [67]

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No, we would first want to -- as I mentioned in my closing remarks, we would want to first retain back the pinnacle of Housing Finance. We had very successfully built large, the third largest. It still is the third largest housing finance company in the country. Unfortunately, because of whatever has paid out for the sector and specifically for us, there is a dent -- despite the size, there is a dent in the perception. I would much rather in the near to medium-term focus on reattaining the pinnacle of housing finance, building back the trust and then only looking at structurally, is there any change that the company wishes to do or not do. So for right now, we are completely focused and extremely confident about the housing finance business, the opportunity, and we are excited about this new business model, which allows me to offer a loan across all -- the entire spectrum. So I used to have a cost income constraint to go into Tier 3, Tier 4 locations, which is a very, very profitable business to do both for the MSME segment as well as allowing the small homes to be purchased there. It's a very, very large business opportunity. We could not do that earlier. With the technology platform that we have built, we can go out there in an efficient manner do that. What you will start noticing from next quarter onwards, is that the management has also invested substantial time over the last 2 months to rationalize our cost income ratio further. It is already the second lowest cost income ratio in the industry, and it will continue to trend down at a very, very hasty pace. This is a lot of consolidation that we are doing on the back of technology. The senior management is forgoing a lot of benefits given the fact that the business instead of growing has degrown. So in that light, I think we are extremely well poised to cover one end of the spectrum and through the co-origination model, we can also focus on covering the most prime customer who, otherwise, we could not have catered to given our cost of capital.

So since we can cover the entire spectrum, since the core of the business is stronger than what it was or has been ever, our capital adequacy is the highest that it has ever been in the last 10 years or so. I think we will first climb back to the pinnacle of housing finance and then see where it goes. Again on a balance sheet growth basis, the management is not really focused on that. What we are [really] focused on is making sure that our disbursements get back to INR 3,000, INR 4,000 crores a month. And for that, whatever resource planning we have to do does not include a Masala Bond issuance right now. It actually does not require any sort of bond issuance right now, so we will focus on securitization, onward lending and all of that and repayments to be able to finance our INR 3,000 crores to INR 4,000 crores -- INR 3,000 crores, INR 3,500 crores of disbursements per month that we are planning to get to over the course of the next few months. So it's not that in November, I'm going to do INR 3,000 crores, INR 3,500 crores of disbursements. But by March, I hope to get to that number.

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Operator [68]

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The next question is from the line of Subramanian Iyer from Morgan Stanley.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [69]

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Just a data question. Can you give me the breakdown of AUM and disbursements by segment?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [70]

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I'm sorry, could you repeat that question, please?

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [71]

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Can you please provide the breakdown of AUM and disbursements by segment that is home loans, loans against property and corporate loans.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [72]

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So we have disbursed roughly about INR 7,000 crores last quarter, of which close to about INR 4,000 crores was between home loans and LAP and INR 3,000 crores was for construction finance projects. The loan AUM breakup is available in the deck.

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Subramanian Iyer, Morgan Stanley, Research Division - Equity Analyst [73]

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Okay. And how does the retail [component] split between home loans and LAP, both on the AUM as well as disbursements.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [74]

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So it's there on the deck. And the AUM on disbursements, we had about INR 2,000-odd crores of home loans and INR 1,800 crores of LAP.

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Operator [75]

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The next question is from the line of Kunal Shah from Edelweiss.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [76]

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Yes. Firstly, in terms of -- since the petition is admitted, if you can just highlight the scope of the investigation and how detailed and intensive the investigation has been compared to when we had earlier put ourselves to the voluntary inspection because there have been a lot, many allegations since May. So is the probe as intensive and detailed as it was earlier?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [77]

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So there has been no specific probe as an outcome of the PIL because we had subjected ourselves to a merger. There was anyway a very detailed inspection being conducted by various departments, including RBI, NHB, MCA, et cetera, et cetera. All of those agencies have come and inspected. If there was any sort of a concern around asset quality or any impact on our financial numbers, then our numbers today reported for as of September 30 would have looked very, very different to what we are looking right now. We have actually filed with the stock exchanges that the management has reviewed the entire PIL, et cetera. And to the stock exchanges, we find that we feel that there is no material impact possible on the financials of the company. So that's how -- so this is not really an overall statement that I'm making on an investor call. This is an actual stock exchange filing which I have signed off and presented to formally to the stock exchanges. So just bear with me for 30 seconds. So this is -- the PIL, there is no more intense or less intense scrutiny process. What happens generally is that a lot of -- generally speaking, these whistleblowers will starting from the Prime Minister's office to every possible agency under the sun, copy them. And then somebody who had perhaps not been party to this -- our inspections, et cetera, may now start asking us questions or anything of that sort may happen. It's the same set of questions. We can't give different answers to the same set of questions. The questions are very simple. There are 5 groups that they've mentioned, 3 of those groups we don't even have any loans outstanding to, the other 2 groups never made any investments into our promoters companies. So the case is an open-and-shut case. People can continue to go around and around, continue to make fresh allegations. For the last 13 months, I've been hearing that there are linkages between us and the private sector bank. Reserve Bank of India has come and conducted inspections on that private sector bank and not found anything, but the same allegations are linked up again and have been [made] up. Our promoter has no borrowings from that private sector banks, yet those allegations are made. So these allegations are pretty open. It's a pretty easy case if one is allowed to present data, annual reports, stock exchange filings, et cetera. Unfortunately, they've been ignored. So there is -- because it's so easy to prove this, one does not feel any intensity. Otherwise, I may have felt intensity, [one was] in an uncomfortable position.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [78]

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Yes. And just in terms of maybe post the inspection, the outcome in terms of the maybe the proceedings of the merger that was adverse in terms of RBI denying it. So in terms of here, maybe how to gain the confidence or the comfort that, okay, maybe even post this inspection or maybe the probe, definitely, we have been quite transparent in terms of call but what kind of confidence would you want to provide so that [getting] might not be so adverse whenever there is the judgment out there in November or December.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [79]

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So I'm quite confident that there [can't] be -- and what can the judgment be. In other words, the judgment can be that Agency ABC, look at it. They anyway looked at it. One of the agencies has anyway said that we have conducted a detailed inspection and [they] are on record. It's a public document, where they say that we have received several complaints, including this PIL and we've looked into it, and we are about to conclude our inspection. So they will only -- the court in the worst case, the court has been told to look into this. The court in the worst case can tell these agencies to look into it, where they already looked into it. The facts are there, much like I had invited any analysts to come to my office to look at the liquidity position of the company with proofs of DEMAT statements and bank statements. I invite anyone to come and my team will run you through as to how ridiculous these allegations are. We made front page ads and brought out the facts of these allegations. So from a concern point of view, I don't think that, at least from our perspective, there is any operating concern. And I go back to the point that I was making that organizations such as us and stakeholders who are mature, appreciate that first generation companies have to go through that. This will pass. If it does not pass in 30 days, it will pass in 60 days. What has to come through for the company is asset quality. And on that, we are being proactive in making provisions. We are being proactive in taking repossession and making sure that the asset gets sold. We are being proactive in working with wherever we see a project getting a little weak to get a development partner, so that a stronger brand comes in and sales happen. We are being proactive in refinancing. We are being proactive in getting equity. The first Chinese investment of all places from China that Fosun has made into India is also on the project, which is financed by Indiabulls. The first investment that QIA had made in India was on a project which was mortgaged to Indiabulls, which was several years ago. When Brookfield made its first investment that was on a project, which was mortgaged to Indiabulls. So that's the quality of the portfolio which is there. Blackstone made a very material investment that was on something which is mortgaged to us. So that's the work to be done. So I go back to the point that I've been making again and again is what management today deals with is making sure that our developer book gives us liquidity, the asset quality, which we are extremely mindful of sustains at a certain level. And we have to be proactive through several measures to make sure that this happens. If the underlying book is behaving, which it is behaving today despite a 28% contraction in the book. Back in the day, people used to tell us that you will be trading at a discount to x, y, z because you have grown at a certain pace and the book is not seasoned. Now the book is more seasoned than anybody else on the street. The liquidity level is higher, 4x that of anybody else on the street or size. The capital adequacy is higher by 1,200 basis points than the average of our peers. So all of this, on all those numbers, there can be no argument. they are balance sheet numbers. The portfolio has to behave. The management fully sees, and the management would like to give you the statement with all confidence that we are working to make sure that no unforeseen event happens. In case of an unforeseen event, which management does not expect to happen, we have buffers. And we will dip into those buffers. We are not hungry for reporting profits and getting a pop on the stock tomorrow morning. We have proactively created provisions. We will continue to use our buffers to create provisions the kind of levels that the market is trading us at. It seems to believe that all of our network is wiped out, which is not the case, and which should be evident after today's earnings. I think today's earnings are in that sense monumental.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [80]

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Yes, sure. Generally in terms of the overall [loan] book of INR 82,000 crores, so what would be the yield on that in order to understand the sustainability of this revenue pool?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [81]

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Yields will be in the [handle] of 11%. We can -- total yield is 11.93%. I haven't yet -- I don't have a split between on and off-balance sheet. In your interactions with the investor team, they will anyway give it to you.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [82]

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And in terms of the breakup of this book,would it be similar to the AUM [65,70, 70,] how would that be?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [83]

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No, no, no, it can't be similar. It will have, obviously, more -- slightly more wholesale loans than the overall AUM. And the endeavor is to make it very similar by -- in the next few months.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [84]

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Sure. And lastly, in terms of the breakup of this liquid assets, maybe [which] used to give earlier into, say, fixed deposits and also maybe 21,000. How is it?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [85]

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I'll give it to you right now on, 1 second. So our current account balance and fixed deposit is INR 12,000 crores, mutual fund investments are INR 4,500 crores, sovereign bonds are INR 4,276 crores, corporate bonds are INR 455 crores, investment in bank CDs is INR 199 crores.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [86]

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Okay. And how much would be the overlap between the borrowings and these investments in terms of the players?

So maybe FD of say INR 12,000 crores and against that, that would be borrowing some banks as well. And so if the case.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [87]

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It will be 100% overall -- overlap. In terms of -- I will only borrow from banks, mutual funds, banks and mutual funds [largely] , and I will have to invest with banks and mutual funds only. That's the interconnecting.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [88]

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Is it similar?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [89]

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Sorry?

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [90]

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So NIMs would also be similar, maybe if I would have borrowed from, say, 1 mutual fund.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [91]

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No NIMs. So like I have INR 7,000 crores, INR 8,000 crores.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [92]

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I was just saying overlap in terms of the NIMs, so say, mutual fund X so we have borrowed, and we have -- maybe the investments out there as well. So would there be a more or less a similar kind of overlap in the... ?

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [93]

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We have an investor repayment trust where we put all our monies to make repayment in advance and then that repayment trust manages that, that has a mandate to invest in the top 5. [

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Mukesh Kumar Garg, Indiabulls Housing Finance Limited - CFO [94]

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] Top 5, 20% each.

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Gagan Banga, Indiabulls Housing Finance Limited - Vice Chairman, MD & CEO [95]

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Top 5 mutual funds, 20% each, right? So similarly, our investment policy would have caps in terms of per mutual fund, how much we can keep and so on and so forth. So given that, it's a pretty well spread portfolio. Now I will have a very large borrowing from, let's say, the #2, #3, public sector banks, but I don't have fixed deposits there, but I will have fixed deposits with maybe the fifth largest public sector bank, where the borrowing will be relatively small. So I have to be opportunistic to minimize the negative carry and whoever is interested in maximizing their term deposit base and gives me a better yield is where my term deposits will land up.

So we'll conclude this call now. And I thank you again for joining us, and look forward to speaking to you next quarter after the quarterly earnings.

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Operator [96]

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Thank you very much.